Sysco Corp – Climate Change (2020)
Outcome: Successfully withdrawn when Sysco committed to adopt our proposal and publish a report discussing if, and how, it can measure and reduce its total contribution to climate change, including the emissions from its supply chains.
Climate change present systemic risk to food-based businesses. The 2018 National Climate Assessment found “climate change presents numerous challenges to sustaining and enhancing crop productivity, livestock health, and the economic vitality of rural communities,” and rising temperatures are “the largest contributing factor to declines in the productivity of U.S. agriculture.” Not only is agricultural production susceptible to climate change, it also reportedly contributes up to 24 percent of global greenhouse gas emissions.
Sysco Corporation (Sysco) derived roughly 85 percent of its FY19 sales from food, with principal product categories based around meat, dairy, poultry, and produce. Thus, the impacts of climate change on, and the emissions generated from, Sysco’s agricultural supply chains are major issues for the Company. Sysco says its supply chain emissions are “relevant,” yet it has not disclosed plans to measure or reduce them.
Sysco’s 2025 sustainability strategy sets a target to reduce the Company’s direct sources of emissions, including diesel fuel used for transportation and energy to power facilities. While this approach is important, neglecting to account for supply chain emissions means Sysco is likely only addressing a small fraction of its total carbon footprint. One recent analysis shows emissions from the supply chain of food and beverage companies are, on average, 5.9 times greater than direct emissions. For instance, General Mills says its direct footprint is only ten percent of its total.
Sysco also identifies emissions from transportation and distribution that is managed by suppliers (roughly half of its total), as “relevant.” This source of emissions is unaccounted for.
Several food, and some transportation-based businesses, including McDonald’s, Walmart, Tyson Foods, PepsiCo, Nestle, Mars, Kellogg, General Mills, Danone, Fedex, CSX Corporation, and Target are not only measuring their full value chain emissions but are also pursuing long-term, science-based emissions reductions consistent with the Paris Climate Agreement’s goal to limit global temperature increases to well below 2°C, ideally striving for 1.5°C. This goal is what scientists estimate is necessary to prevent the worst impacts of climate change.
Each company is implementing different strategies to achieve this common goal. Examples include working with farmers on low-carbon agricultural techniques, focusing resiliency efforts on at-risk producers, finding new sources of efficiency, pursuing alternative product offerings, and collaborating with other companies to scale efforts.
Proponents believe developing a plan to measure and reduce Sysco’s full value chain emissions footprint is a prudent and vital course of action that will help the Company reduce risks associated with climate change, including production and supply disruptions, and help prepare the Company for future carbon-related regulations and industry developments.
Resolved: Shareholders request Sysco Corporation issue a report, at reasonable cost and omitting proprietary information, describing if, and how, it plans to measure and reduce its total contribution to climate change, including emissions from its supply chain, and align its operations with the Paris Agreement’s goal of maintaining global temperature increases well below 2 degrees Celsius.