Resolved: Shareholders request Illinois Tool Works, Inc. (ITW) adopt quantitative, company-wide targets for reducing greenhouse gas (GHG) emissions, consistent with the goals of the Paris Climate Agreement, and report annually, at reasonable cost and omitting proprietary information, on its plans and progress towards achieving these targets.
Supporting Statement: Proponents recommend ITW consider the methods outlined by the Science Based Targets Initiative (sciencebasedtargets.org) to ensure its emissions reductions targets are consistent with the ambitions of the Paris Climate Agreement.
Whereas: Scientists expect that failure to mitigate climate change will lead to additional sea level rise, more extreme weather, mass migration, and public health impacts from heat waves, fires, and changing disease vectors. To manage these risks, representatives from approximately 195 countries adopted the Paris Climate Agreement, which aims to limit the increase in global average temperature — and the most devastating societal impacts of climate change — by reducing GHG emissions. Aligning corporate practices with this global goal is widely seen as a prudent course of action to help manage the associated reputational, regulatory, and financial risks.
While some of ITW’s divisions have taken action to reduce emissions, ITW’s company-wide emissions intensity increased 9% from 2013 to 2017. Despite this increased emissions trajectory, ITW has not set emissions reduction targets or signaled an intent to align its strategies with the ambitions of the Paris Agreement. Setting GHG reduction targets would enable shareholders to better evaluate emissions performance trends and the effectiveness of ITW’s strategies.
ITW has set company-wide, quantitative goals for other aspects of its business. For example, ITW has a goal for 30% of its global leaders to be women by 2020. The Company has made progress towards this goal every year.
ITW states its emissions intensity is below its peer average. However, this doesn’t offset the fact that ITW’s increased emissions set it apart from its peers that have been steadily reducing emissions for years. According to proponent’s research, 13 out of 17 of ITW’s self-identified peers have set quantitative, company-wide emissions reduction targets. Four of these businesses have committed to science-based targets thus far.
Notable examples include:
• 3M – Reduced absolute emissions 64% from 2002 to 2014 and aims to reduce GHG emissions 50% by 2025 while growing the business;
• Johnson Controls – reduced GHG emissions intensity 41% from 2002 to 2014 and targets an additional 15% reduction by 2020;
• Honeywell – Set its third GHG emissions reduction goal after achieving its first two; reduced emissions intensity more than 65% from 2004 to 2017.
Last year this proposal received a 24.6% vote. As an additional sign of growing investor interest, one of the recommendations of The Task Force on Climate-related Financial Disclosures, whose members include representatives from BlackRock, JPMorgan Chase, and UBS Asset Management is: “Describe the targets used by the organization to manage climate-related risks and opportunities and performance against these targets.”