Emissions Reduction Target

Whereas: Climate change poses systemic financial risk, potentially reducing global GDP by up to19% by midcentury.[1] The Intergovernmental Panel on Climate Change urges “immediate and deep” greenhouse gas (GHG) emissions reduction across all sectors to avoid the worst impacts of climate change.[2]

In its 2024 10-K, Quest Diagnostics (“Quest” or “the Company”) reports that the physical risks from extreme weather events, such as hurricanes, floods, fires, and heat waves, whose increasing intensity and frequency have been linked to climate change,[3] threaten its operations. It also discloses in its 2023 CDP Climate Change report that in instances of extreme weather, “many patients choose to skip preventative, non-critical or elective medical tests and procedures,” which “negatively impacts the demand for our services.”

Despite acknowledging its exposure to climate risk, Quest has not acted to mitigate its risk by setting ambitious goals to reduce its operational and value chain GHG emissions. And while the Company purchases some renewable energy, it has set no timebound goals for sourcing renewable energy, which could serve as motivation to secure long-term contracts and cost savings.

The Company could accelerate its climate risk mitigation by adopting a science-based target, aligned with the Paris Agreement’s ambition of limiting global temperature rise to 1.5 degrees Celsius and to establish renewable energy procurement goals.

Quest’s closest competitor, Labcorp, set a science-based target in July 2023, validated by the Science Based Targets initiative (SBTi) as well as a renewable energy sourcing goal. By 2030, Labcorp intends to reduce its operational emissions by 42% and certain categories of its value chain emissions by 25%.

Additionally, some of Quest’s main suppliers have set SBTi-validated science-based targets, including Thermo Fisher, Abbott, and Siemens Healthineers. Their commitments can facilitate Quest’s implementation of its own science-based target, as they represent part of the Company’s value chain emissions.

Prior to this proposal, investors demonstrated strong support for emissions reduction by the Company. In 2023 and 2024, shareholders filed resolutions requesting that Quest adopt a science-based target, which garnered 48 and 42 percent of the vote, respectively.

Proxy advisory firm, Glass Lewis,[4] advises corporate boards to engage shareholders when support exceeds 30 percent of the votes cast on a shareholder’s proposal, and The Conference Board echoes this advice.[5] Despite this clear guidance, Quest board and management have not demonstrated progress on a matter of clear investor concern.