Caterpillar Inc. | Report on climate policy

Status
96.05% votes in favour
AGM date
Previous AGM date
Proposal number
4
Resolution details
Company ticker
CAT
Lead filer
As You Sow
Resolution ask
Report on or disclose
ESG theme
  • Environment
ESG sub-theme
  • Net Zero / Paris aligned
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Industrials
Company HQ country
United States
Resolved clause
Shareholders request that Caterpillar issue a report within a year, and annually thereafter, at reasonable expense and excluding confidential information, disclosing interim and long term greenhouse gas targets aligned with the Paris Agreement’s goal of maintaining global temperature rise at 1.5 degrees Celsius, and progress made in achieving them. This reporting should cover the Company’s full scope of operational and product related emissions.
Whereas clause
Shareholders are increasingly concerned about material climate risk and seek clear and consistent disclosures from the companies in which they invest, including credible climate transition plans. BlackRock’s CEO notes that investment flows into climate aligned assets will drive long term outperformance and that companies should disclose plans for how their business model will be compatible with a net zero economy.

In response to material climate risk, the Climate Action 100+ initiative (CA100+), a coalition of more than 615 investors with $60 trillion in assets, issued a Net Zero Company Benchmark (Benchmark) outlining metrics that create climate accountability for companies and transparency for shareholders. Indicators 1 through 5 of the Benchmark seek reporting on companies’ net zero emissions ambitions; short, medium and long term greenhouse gas (GHG) reductions goals; and strategic actions planned to achieve decarbonization targets.

Caterpillar is a leading manufacturer of construction and mining equipment, engines, turbines, and locomotives. Our Company has not set targets to reduce GHG emissions across its entire enterprise, including supply chain emissions, or disclosed a plan for how to achieve Paris-aligned GHG emissions reductions. Caterpillar’s emission reduction targets only address Scope 1 and 2 emissions. In contrast, 30 peers in the construction materials sector have committed to validate their GHG targets through the Science-Based Targets initiative.

Climate-related decisions by a company have portfolio and economy-wide implications. Setting net zero GHG targets and developing a climate transition plan aligned with such goals is an important means of assuring that management is comprehensively reducing its climate contribution and taking seriously the growing risks of climate change, benefitting both the company and investors.

Caterpillar has failed to take meaningful action on this request, despite a 48 percent vote of support last year.

The increasing rate and number of climate-related disasters affecting society is causing alarms to be raised within the executive, legislative, and judicial branches of government, making the corporate sector’s contribution to climate mitigation a significant policy issue.

In addition to environmental and social harms, climate change is creating systemic risks to the economy. The Commodity Futures Trading Commission last year underscored that climate change could impair the productive capacity of, the U.S. economy.
Supporting statement
Proponents suggest, at Company discretion, the report further describe:

Caterpillar’s climate transition plan for achieving its GHG reduction goals, including aligned capital allocation where relevant;
A rationale for any decision not to set targets aligned with the Paris Agreement’s 1.5 degree goal;
Other information deemed appropriate.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
Sandbar Asset Management LLP For
ACTIAM (Delisted) For Caterpillar is in a high greenhouse gas emitting sector and has not yet outlined a clear decarbonisation strategy explaining how it intends to meet reduction targets. Although it has set a medium-term target for 2030, it is missing shorter term targets as well as longer term targets that include scope 3 emissions. We expect to see a defined set of targets and related actions, including alignment of capital expenditure to support the plan. We therefore are in favour of the proposal asking it to disclose this information and report on progress in achieving these. ACTIAM expects all companies in high-emitting sectors to demonstrate their adaptiveness for the transition to a low-carbon economy and actively play a role in mitigating climate change
LocalTapiola Asset Management Ltd For A vote FOR this proposal is warranted, as additional information on the company's efforts to reduce its carbon footprint and align its operations with Paris Agreement goals would allow investors to better understand how the company is managing its transition to a low carbon economy and climate change related risks.

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