Resolved clauseRESOLVED: Shareholders request that Timken adopt independently-verified short- and medium-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 in line with the Paris Agreement’s goal of limiting global temperature rise to 1.5 degrees Celsius.
Whereas clauseWHEREAS: Climate change is creating systemic risks to the economy, and immediate, sharp emissions reduction is required.8 Companies lacking ambitious goals to cut greenhouse gas (GHG) emissions may jeopardize shareholder value as climate change poses undiversifiable and unhedgeable risks.9
Acknowledging this, more than 6,500 companies representing a broad range of industries have set or committed to set science-based GHG reduction targets, aligned with a 1.5 degrees Celsius scenario and covering their Scopes 1 – 3 emissions, with the Science Based Targets initiative (SBTi). SBTi provides third party validation of targets.
Although Timken has committed to reduce its GHG emissions intensity by 50% per unit of revenue by 2030, its target focuses exclusively on Scope 1 and 2 emissions, is not aligned with the Paris Agreement’s goal of limiting global temperature rise to 1.5 degrees Celsius, and lacks third party verification. Further, Timken notes in its 2022 sustainability report that by normalizing emissions to Company revenue, its “emissions intensity could experience volatility during both recessions and high growth periods for industrial markets,” creating uncertainty about the reliability of this metric.
Intensity targets may give the appearance of progress even when absolute reductions are moderate or non-existent. For example, Timken reports a 25% Scope 1 and 2 emissions intensity decrease from 2018 to 2022, but its absolute emissions fell only 5.4% during the same period. On this trajectory, Timken would only achieve a 13% reduction in absolute emissions by 2030 compared to the 43% reduction called for by climate experts.
Industry peers SKF, Schaeffler AG, and JTEKT have set or committed to set near-term science-based 1.5 degrees Celsius aligned targets with SBTi, inclusive of Scope 1 – 3 emissions. In Timken’s supply chain, its largest supplier, TimkenSteel, committed to cut its Scope 1 and Scope 2 emissions 40% by 2030, making it easier for Timken to reduce supply chain emissions.
By adopting ambitious targets, Timken may better align with investor expectations for addressing climate risk, bolster its credibility with customers in the renewable energy industry, its largest and growing customer segment, and better prepare the Company for the transition to a low carbon economy.
Supporting statementSUPPORTING STATEMENT: In assessing targets, we recommend,
· Taking into consideration approaches used by advisory groups like SBTi;
· Developing a transition plan showing how the Company plans to meet its goals, taking into consideration criteria used by advisory groups such as Task Force for Climate Related Financial Disclosures, Transition Plan Taskforce, and We Mean Business Coalition.