In 2018, the Intergovernmental Panel on Climate Change updated the goals of the 2015 Paris Agreement to advise that net carbon emissions must fall 45 percent by 2030 and reach net-zero by 2050 to limit warming below 1.5 degrees Celsius, thereby preventing the worst consequences of climate change. However, in 2020, the UN reported the world is "way off track" from achieving these goals and averting catastrophic warming.[1]

Climate change impacts present risks to investors. A warming climate is associated with increased supply chain disruptions, reduced resource availability, lost production, commodity price volatility, infrastructure damage, political instability, reduced worker efficiency, and adverse health impacts that disproportionately affect low-income communities and communities of color.

The U.S. Energy Information Administration identifies the transportation sector as the largest producer of GHG emissions and its emissions are steadily increasing. Expeditors is a non-asset owning logistics provider. Nevertheless, our Company has significant climate change risks related to customer operations, increasingly stringent climate change regulations, and fluctuating fuel prices.

Expeditors has taken steps to measure GHG emissions, and it has set targets for reducing emissions in the past. Evidently, however, those goals have lapsed, and Expeditors has not set new GHG reduction goals.

Science-based targets (SBTs) are important tools to transparently address emissions in a company's own operations and throughout its value chain. SBTs are designed to help align a company's long-term emissions outlook with the objectives of the Paris Agreement. More than 500 major corporations have developed SBTs approved by the Science Based Targets Initiative (www.sciencebasedtargets.org).

Increasing the scale, pace, and rigor of its climate-related initiatives may help Expeditors prepare for future carbon-related regulations. Such efforts may also help our Company unlock opportunities for growth as major corporations are increasingly demanding environmental accountability from business partners.

More than 1,500 companies have now committed to achieve net-zero GHG emissions by 2050.[2] The International Air Transport Association committed to a 50 percent reduction in emissions by 2050 (with carbon neutral growth from 2020) and the International Maritime Organization has a mandatory ship energy efficiency management plan, along with a 2050 target for 50 percent reduction in emissions per ton/km.

In its 2019 10-K, Expeditors states that it "is committed to continual improvement in reducing the impact of our operations on the environment and assisting our customers in their efforts to reduce their carbon footprint." Clear and disclosed GHG reduction targets should be an integral part of this effort.