Resolved clauseRESOLVED: Shareholders request that the Board of Directors publish a just transition report, disclosing how Union Pacific Corporation is assessing, consulting on, and addressing the impact of its climate change- related strategy on affected stakeholders, including but not limited to its employees, workers in its supply chain, and communities in which it operates, consistent with the ILO’s “just transition” guidelines. The report should be updated annually, at reasonable cost, and omit proprietary information.
Whereas clauseWHEREAS: The Paris Agreement underscored the “close links between climate action, sustainable development, and a just transition.” To support implementation of a just transition, the International Labor Organization (ILO) developed guidelines discussing the anticipated employment impacts, importance of skills development and decent work during the energy transition, and adaptation needed by companies and communities to avoid lost assets, livelihoods, or involuntary migration.[1]
Investors increasingly acknowledge the importance of a just transition and providing greater market certainty in the transition to a low- carbon economy. Over 700 investors, managing $68 trillion, support Climate Action 100+, which requests just transition disclosure.
Union Pacific Corporation (“The Company”) has been prudent to consider, strategize, and implement decarbonization efforts, alternative fuel initiatives, and operational efficiency. Proponents believe that without synchronous just transition planning, disruptions to current operations are likely. For example, transition efforts can contribute to significant changes to the number of employees, skills required, and facility size and location, leading to impacts on local communities, including changes to economic activity or tax revenue for local governments.
This impact can potentially be seen with industry peers. CSX has recently sold rail lines associated with coal, and Norfolk Southern’s new operation system reduces emissions by hauling fewer, longer trains. Both transitions could lead to workforce reductions, and industry efforts to scale up alternative fuels could further lead to significant changes in workforce skilling and size needs.
We would like to know how The Company plans to address concerns around scaling the decarbonization transition, with particular emphasis on the impact to workers and communities. Within its “Building America Report” are positive preliminary considerations of green jobs through community giving programs.[2] However, given company efforts and industry wide transitions, planning a just transition for stakeholders affected by the decarbonization phase should be tightly integrated.
Investors would also benefit from more information about how the Company plans to benefit from new government subsidies for the transition efforts, including those linked to support for workers and communities.[3]
Supporting statementSUPPORTING STATEMENT: Shareholders recommend the report include, at Board discretion:
• A set of measurable, time- bound indicators, such as those recommended by Climate Action 100+, World Benchmarking Alliance, or the Glasgow Financial Alliance for Net Zero – and progress against such indicators; and
• Disclosure of the company’s stakeholder engagement process in developing its just transition plan, such as participating stakeholders, their key recommendations, and progress on recommendations made. Key stakeholders to consult may include labor representatives, disproportionately impacted community members, local governments and nonprofit organizations.
[1] https://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/documents/publication/wcms_432859.pdf
[2] https://www.up.com/cs/groups/public/@uprr/@corprel/documents/up_pdf_nativedocs/pdf_up_2022_bar.pdf
[3] https://www.whitehouse.gov/environmentaljustice/justice40/