The Intergovernmental Panel on Climate Change has advised that greenhouse gas (GHG) emissions must be halved by 2030 and reach net zero by 2050 in order to limit global warming to 1.5 °C. Every incremental increase in temperature above 1.5 °C will entail increasingly severe physical, transition, and systemic risks for companies and investors alike. Up to 18% of global economic value could be lost by 2050.[1]

In its 10-K, Mattel (“the Company”) acknowledges that "the effects of global climate change create financial, operational, and reputational risks to Mattel's business,” such as potential supply chain disruptions and increased production costs. Despite acknowledging these risks, the proponent believes the Company’s mitigation strategy falls short of what is needed to shield Mattel and its investors from climate-related risks.

While Mattel has set emissions reduction targets covering its scope 1 and 2 emissions, the Company does not disclose its scope 3 emissions and has not set scope 3 targets. By contrast, competitors like Hasbro and LEGO have set targets validated by the Science Based Targets initiative (SBTi) that cover both their operational and value chain emissions. LEGO’s scope 3 emissions comprise almost 99% of its total emissions footprint, and, in order to mitigate the associated climate risk, LEGO is requiring its largest suppliers to set GHG reduction targets by 2026.[2] Similar to LEGO, the majority of Mattel’s emissions likely also stem from the Company’s value chain.

Enhanced climate disclosure and risk mitigation measures may help Mattel prepare for upcoming climate disclosure requirements. Regulations such as climate disclosure laws in California and the European Union’s Corporate Sustainability Reporting Directive may require the Company to disclose its scope 3 emissions and additional information about how it is mitigating climate risk.

The proponent believes that actions such as disclosing material value chain emissions and adopting science-based emissions reduction targets will help investors better understand the Company’s climate-related risks and opportunities and may help Mattel reap benefits from increased efficiency, lower energy costs, more resilient supply chains, and better preparation for climate-related regulations.