UNITED PARCEL SERVICE, INC. | Integrate GHG emission reduction targets into executive compensation at UNITED PARCEL SERVICE, INC.

Status
17.97% votes in favour
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
UPS
Lead filer
Zevin Asset Management
Resolution ask
Report on or disclose
ESG theme
  • Environment
ESG sub-theme
  • GHG targets / emissions
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Industrials
Company HQ country
United States
Resolved clause
Shareholders request the United Parcel Service (UPS or the Company) Board Compensation Committee prepare a report assessing the feasibility of integrating the UPS’ committed GHG emissions targets, goals, and other relevant sustainability measures, (as determined by the Board) into the performance goals, metrics, and vesting conditions applicable to senior executives under the UPS' compensation incentive plans. GHG emissions targets are defined as those goals and targets disclosed by the company in its proxy statement and other public documents. Sustainability measures are defined as the environmental and related considerations, and related financial impacts, that are integrated into long term corporate strategy.
Whereas clause
UPS has announced a goal to achieve carbon neutrality in its operations by 2050 and a 50% reduction in emissions per small package delivered by 2035. However, UPS has not set a goal that covers its Scope 3 emissions, which represent 54% of its overall footprint. Additionally, shareholders do not know if UPS plans on achieving net zero through actual emissions reductions or through the purchase of carbon offsets.
We believe that alignment of a corporate climate transition strategy with executive compensation metrics and incentives can increase the likelihood of UPS achieving a timely climate transition. Achievement of a climate strategy that supports UPS’ overall corporate strategy helps to protect long-term shareholder value.

A review of UPS' compensation structure for senior executives did not identify meaningful linkages between reducing GHG emissions and executive compensation. While compensation structures, especially for equity grants, are understandably linked primarily to shareholder returns, we believe these returns are impacted by the success of the Company in achieving its emissions targets and goals.
The achievement of the Company's committed carbon reduction targets is intended as an integral element of the success of overall corporate strategy. UPS has not committed to setting independently verified, science- based goals covering Scopes 1-3, which would provide shareholders with objective assurance that UPS is strategically reducing emissions in a comprehensive and timely manner.
Peer DHL and 46 other air freight transportation and logistics companies have committed to setting targets via the Science-Based Targets Initiative (SBTi). Chevron Corp., Marathon Petroleum Corp., and other Scope 3- intensive companies in recent years have tied executive compensation to reductions in their GHG emissions.
Supporting statement
Examples of approaches to linkages between GHG emissions reductions targets and compensation structures that the board could consider include:
- Design quantitative climate-related metrics with measurable payout or long-term incentive components
- Adding a vesting requirement for a portion of performance equity grants that vest upon the achievement of interim GHG emissions targets
- The interim targets would provide a pathway to the achievement of overall, longer-term targets
- The interim period could align with typical equity grant vesting cycle
- Adding a requirement for the achievement of one-year interim GHG emissions targets to the annual bonus plan
- Adding similar short- or longer-term compensation goals to other, related, material ESG-related targets.

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
Anima SgrForFollowing UPS’s commitment to reach the carbon neutrality by 2050, with interim goals to 2025 and 2035, the company says its executive incentive compensation programs are designed to motivate toward the achievement of key performance metrics that support its long-term goals, including GHG emissions reductions. However, it is not entirely clear from its disclosures what this means. In its Proxy Statement and CDP Response, it appears that the company does not have executive metrics related to GHG emissions but may once have had them for some employees. Its peers generally appear to include sustainability or climate goals in their executive compensation. Given the ambiguity around whether and how the company's executive compensation program includes the company's carbon reduction and sustainability goals, this proposal would be beneficial for shareholders.
VidaCaixaFor
Rothschild & co Asset ManagementFor

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