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UPS – Renewable Energy (2017)

UPS – Renewable Energy (2017)

Outcome: Last November, we co-filed a shareholder proposal encouraging UPS to set a target for using renewable energy. After some negotiation, UPS agreed to announce that it is exploring a renewable energy goal as part of a revamp of its overall climate strategy, and the company joined a group of investors led by Zevin in an intensive dialogue on climate change that will continue through 2017.

Whereas: To limit the average global temperature increase to well below 2 degrees Centigrade, a goal shared by nearly every nation, the Intergovernmental Panel on Climate Change (IPCC) estimates that the United States needs to reduce annual GHG emissions approximately 80 percent. This will involve a significant shift to renewable energy.

Costs of generating electricity from sources like wind and solar have been declining rapidly and are influencing companies’ response to climate change. The EPA currently lists 80 Fortune 500 companies as purchasing renewable energy (or certificates).

UPS has committed to purchase up to 60 million gallons of renewable diesel and renewable natural gas “over the next several years” for its transportation fleet. In its 2015 sustainability report, UPS states that such “purchases are part of our global GHG strategy to reduce the carbon intensity of our operations by 20 percent by 2020.”

In contrast, UPS does not have a time-bound, quantitative plan to drive renewable energy use in its 2,580 facilities, a large global footprint. UPS only has solar power systems at four U.S. sites, and it says it is evaluating further opportunities.

In light of this, investors are concerned that UPS may be behind other large corporations which are developing quantitative renewable energy goals in response to climate change. The RE100, a coalition pushing companies to switch to 100 percent renewable energy, now includes Johnson & Johnson, Procter & Gamble, Walmart, General Motors, and Apple.

By setting quantitative goals to source renewable energy, our Company would demonstrate a proactive approach to: responding to energy market changes; enhancing U.S. energy security; creating jobs in the United States; enhancing UPS’s reputation; and helping to meet the global need for cleaner energy. Such a plan would also have synergies with UPS’s efforts to deploy electric vehicles.

Resolved: Shareholders request that UPS produce a report assessing the climate benefits and feasibility of adopting enterprise-wide, quantitative, time-bound targets for increasing UPS’s renewable energy sourcing. The report should be produced at reasonable cost, in a reasonable timeframe, and omitting proprietary and confidential information. This proposal does not prescribe matters of operational or financial management.

Supporting Statement: Shareholders request that the report consider UPS’s worldwide facilities and analyze options and scenarios for achieving renewable energy targets, for example by using on-site distributed energy, off-site generation, power purchases, and renewable energy credits, or other opportunities management would like to consider, at its discretion.

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