Outcome: Withdrawn after influencing Marathon Petroleum to establish modest GHG emissions intensity reduction targets. The Company has also tied achievement of this goal to executive compensation, which we believe will help ensure accountability.
RESOLVED: Shareholders request that the Marathon Petroleum Corporation (“Company”) board of directors develop a strategy to increase the scale and pace of the Company’s efforts to reduce its contribution to climate change, including establishing any medium- and long-term goals deemed appropriate by board and management that demonstrate this increased pace, with an eye toward the global commitments of the Paris Agreement.
In 2016 the Paris Agreement set a goal of keeping global temperature rise well below 2 degrees Celsius. This has resulted in national, state, and local regulations to address climate change and reduce greenhouse gas (GHG) emissions, including in six states where the Company currently operates refineries. In 2018 the Intergovernmental Panel on Climate Change outlined disastrous impacts if emissions do not decrease significantly by 2030 and reach net zero by 2050.
Climate change has the potential to adversely impact the Company’s business. As the Company notes in its most recent 10-K, the cost to comply with potential further climate change-related regulation could be significant, and the Company could face increased climate-related litigation with respect to its operations or products.
In 2017 the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommended that companies adopt targets to manage climate-related risks and disclose related strategies. Global financial firms responsible for assets in excess of US $118 trillion have announced their support for the TCFD and its work.
Sixty-three percent of Fortune 100 companies have established targets that will lead to emissions reductions (Source: Power Forward 3.0), including several of Marathon’s peer companies. In September 2019, the members of the Oil and Gas Climate Initiative collectively committed to setting GHG targets. BP, Chevron, ConocoPhillips, Equinor, Suncor and Shell have all set targets to reduce their GHG intensity, in many cases linking these goals to executive compensation. GHG goal setting is quickly becoming an investor expectation in this sector.
We acknowledge the Company’s efforts to address its climate challenges as outlined in its three Perspectives on Climate-Related Scenarios reports. The most recent of these reports mentions a Company goal to reduce its scope 1 and 2 GHG emissions but provides no details nor does it address the Company’s significant scope 3 emissions from its products. The Company has improved the energy efficiency of its operations, but the efficiency and emissions impact of these efforts has slowed in recent years. The Company is a significant producer of ethanol and biodiesel, but its investments in next generation biofuels lack the ambition needed to meet international emissions targets.
All this suggests that, as the largest independent petroleum product refining, marketing, retail and midstream business in the United States, the Company needs to accelerate the scale and pace of its efforts
to assure investors it is adequately managing the risks associated with climate change and making the transition to a low carbon future.