Outcome: Successfully withdrawn following a commitment from the company to set quantitative greenhouse gas (GHG) reduction targets. The goals will cover both scope 1 and scope 2 emissions from their 1,600 stores located across 49 states. The company has committed to make these goals public by the end of 2018. Following their emissions evaluation Tractor Supply will begin responding to the Carbon Disclosure Project (CDP).
Resolved: Shareholders request the Tractor Supply Company adopt quantitative, time-bound, company-wide, science-based goals for reducing total greenhouse gas (GHG) emissions from products and operations, and issue a report at reasonable cost and omitting proprietary information, on its plans to achieve these goals.
In order to mitigate the worst impacts of climate change, the IPCC estimates that a 50 percent reduction in GHG emissions globally is needed by 2050 (relative to 1990 levels) to stabilize global temperatures, entailing a U.S. target reduction of 80 percent
The costs of failing to address climate change are significant and according to a 2015 report by Citigroup, could lead to a $72 trillion loss to global GDP. Risky Business, an analysis of climate change impact, finds serious economic effects including property damage, shifting agricultural patterns, reduced labor productivity, and increased energy costs. These effects could substantially impact a company’s business operations, revenue, or expenditure.
Setting GHG emissions targets is widespread among U.S. companies and can have positive financial outcomes. Presently, 60 percent of Fortune 100 companies have GHG reduction commitments, renewable energy commitments, or both.
Investors with $95 trillion in assets have supported the Carbon Disclosure Project (CDP) which received responses from more than 5,500 companies in 2015. Tractor Supply Company declined to participate in the 2015 CDP survey and has not publicly set GHG emissions goals.
A report published by WWF, CDP, and McKinsey & Company, The 3% Solution: Driving Profits Through Carbon Reduction, found that companies with GHG targets achieved an average of 9% better return on investment than companies without targets. Additionally, 79% of companies in the S&P 500 that report to CDP earn a higher return on their carbon reduction investments than on their overall corporate capital investments. These goals enable companies to reduce costs, build resilient supply chains, and manage operational and reputational risk.
Currently Tractor Supply Company does not disclose its GHG emissions, carbon reduction efforts, or any climate related goals. We are concerned Tractor Supply Company may be lagging behind industry peers. Lowe’s and Home Depot have already adopted several quantitative climate goals. For example, Lowe’s plans to reduce scope 1 & 2 emissions 20% by 2020. Home Depot has a public goal to reduce energy use 20% by 2020 and to increase renewable energy procurement to 135 megawatts per year. Through these goals Home Depot has reported a 17% reduction in electricity use in just the last three years. By not setting and pursuing GHG reduction goals Tractor Supply Company may not achieve the benefits realized by its peers—a competitive disadvantage for the company and shareholders alike.
Tractor Supply Company’s response to date on how it is managing GHG emissions and climate related risks and opportunities falls short. We believe this may have negative consequences for Tractor Supply Company and that it should address these issues with consideration of IPCC guidance.