Ninety-six Percent of Caterpillar Shareholders Vote to Back Climate Action

Ninety-six percent of Caterpillar shareholders supported a resolution asking management to release a report disclosing interim and long-term greenhouse gas targets aligned with the Paris Agreement’s goal of maintaining global temperature rise at 1.5°C, and progress made in achieving them. The resolution was filed by As You Sow, Amalgamated Bank, Canada Post and SHARE. 

“Today’s majority vote is a loud and clear call from Caterpillar’s ownership that the company must address its significant climate impact and step into a leadership position in decarbonizing the industrials sector,” said Ivan  Frishberg, chief sustainability officer at Amalgamated Bank.

Caterpillar is a leading manufacturer of construction and mining equipment, engines, generators, turbines, and locomotives. Currently, the company has failed to set 1.5°C science-aligned targets and has no targets covering its emissions from customers’ use of its products, according to the filers of the resolution. The Climate Action 100+, a coalition of 700 investors with $68 trillion in assets, lists Caterpillar as a focus company and one of the largest carbon emitters globally.

“As demonstrated today, shareholders are speaking up for climate action, and Caterpillar’s response to this vote will dictate their ability to remain competitive in a low-carbon economy,” said Karen Lockridge, director of ESG investing at Canada Post Corporation Pension Plan. 

“Caterpillar’s continued inaction to align its climate targets to the CA100+ Benchmark exposes the company and investors to risk as the global economy transitions rapidly toward net-zero emissions. Investors want to see appropriate targets immediately,” said Anthony Schein, director of SHARE.

This past week’s vote is the result of a multi-year engagement effort to align Caterpillar’s climate strategy with investor net-zero interests. In 2021 As You Sow filed a similar resolution in support of net-zero target setting, which received a 48 percent vote. Despite this significant show of investor support for action, the company did not make progress in setting adequate targets over the past year to address this request, the resolution supporters said. Its current targets fail to incorporate its Scope 3 emissions, and absolute target reductions of 30 percent of Scope 1 and 2 emissions by 2030, far below the 50 percent deemed necessary to be in alignment with the Paris Agreement’s goal of 1.5°C, according to the shareholders.

Caterpillar trailing other manufacturers, shareholders say

Caterpillar is falling behind peer industrial manufacturers that are adopting ambitious target-setting and more transparent disclosures, said the shareholders. Deere & Co. set targets to reduce Scope 1 and 2 emissions by 50 percent and Scope 3 emissions by 30 percent by 2030 and is in the process of validating its targets to be 1.5°C-aligned through the science-based targets initiative. GE set a net-zero-by-2050 target that explicitly covers the emissions produced from the use of the products it sells such as jet engines and natural gas turbines. 

“Investors are starting to lose confidence in management’s ability to control climate risk as the company continues to ignore shareholders’ expectation that the company will quickly set science-aligned targets to avoid the worst effects of climate change and develop a transition strategy,” said Daniel Stewart, energy program manager at As You Sow.

Caterpillar for its part recently outlined its progress.

“Our long-standing commitment to sustainability inspires us to continue reducing greenhouse gas emissions from our operations while also developing innovative products, technologies and services to help our customers achieve their climate-related objectives,” said Caterpillar Chairman and CEO Jim Umpleby recently. “We’re pleased to highlight our progress as we contribute to a reduced-carbon future.”

The 2021 Sustainability Report outlines Caterpillar’s approach to environmental, social and governance (ESG) issues. The report also describes the company’s focus on sustainability as part of its strategy for long-term profitable growth.

Highlights from the report include:

• An announcement that Caterpillar will disclose estimated Scope 3 greenhouse gas emissions beginning in 2023.
• A commitment to utilize the Task Force on Climate-Related Financial Disclosures (TCFD) framework to further enhance the company’s sustainability reporting beginning in 2023.
• Progress toward Caterpillar’s 2030 sustainability goals, as well as product stewardship in support of its customers’ climate-related objectives.

The 2021 Sustainability Report also describes the board of directors’ enhanced oversight of sustainability and ESG, including the creation of a new Sustainability and other Public Policy Committee as further detailed [on page 22] in the company’s proxy statement at https://www.caterpillar.com/en/investors/financial-information/proxy-statement.html.

The 2021 Caterpillar Annual Report is also available at https://www.caterpillar.com/en/investors/reports/annual-report.html. Both reports can be read at caterpillar.com/reports, as can the company’s updated Climate & Energy Statement at https://www.caterpillar.com/en/company/sustainability/energy-climate.html.