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Costco Withdraws Request to Exclude Green Century's Climate Proposal, Shareholders to Vote in January

Strategic Insights

— 2 min read

Green Century Capital Management, Inc. recently announced that Costco Wholesale Corporation has withdrawn its request to exclude a shareholder proposal asking the company to adopt net zero science-based greenhouse gas emissions reduction targets. This withdrawal comes after new guidance from the Securities and Exchange Commission (SEC) two weeks ago signaled that proposals asking companies to address climate change will not be excludable. The proposal, which has made headlines as a "litmus test for the SEC on investor requests for Paris-alignment," asks Costco to adopt short, medium, and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 or sooner and to effectuate appropriate emissions reductions prior to 2030. The proposal will now go to a vote at Costco's annual shareholder meeting in January.

Key Takeaways:

  • Costco has withdrawn its request to exclude Green Century's shareholder proposal asking the company to adopt net zero science-based greenhouse gas emissions reduction targets.
  • The SEC's new guidance has made it unlikely that Costco's challenge would succeed, as proposals asking companies to address climate change will not be excludable.
  • Green Century's proposal asks Costco to adopt short, medium, and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 or sooner and to effectuate appropriate emissions reductions prior to 2030.
  • Costco claims to prioritize addressing the climate impacts attributed to its global operations and supply chains, but its emissions from operations and purchased energy (Scope 1 and 2 emissions) have increased in each reported year since 2016.
  • Costco does not plan to announce Scope 1 and 2 emissions reduction targets until December 2022 and has no time-bound plans to set reduction targets for its value chain emissions (Scope 3 emissions), which make up the vast majority of the company's carbon footprint.
  • Walmart, a Costco competitor, discloses that Scope 3 emissions make up a staggering 95% of its total emissions.
  • Costco's lack of target-setting plans for its value chain emissions is particularly concerning, as these emissions are likely responsible for the vast majority of the company's carbon footprint.
  • The proposal will now go to a vote at Costco's annual shareholder meeting in January, giving shareholders the opportunity to directly ask Costco to set emissions targets that meet the scale and urgency of the climate crisis.

Statistics:

  • As of September 30, 2021, Costco Wholesale Corporation comprised 1.16%, 0.00% and 0.00% of the Green Century Balanced Fund, the Green Century Equity Fund, and the Green Century International Index Fund, respectively.
  • Emissions from Costco's operations and purchased energy (Scope 1 and 2 emissions) have increased in each reported year since 2016.
  • Scope 3 emissions make up the vast majority of the company's carbon footprint, similar to Walmart, which discloses that Scope 3 emissions make up a staggering 95% of its total emissions.
  • Costco does not plan to announce Scope 1 and 2 emissions reduction targets until December 2022.

Sources:

  • Green Century Capital Management, Inc. News Release (November 15, 2022)
  • Green Century Capital Management, Inc. (Copyright 2017 Contify.com)

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