Norfolk Southern Corporation Releases First Climate Lobbying ReportMarch 9, 2022
Overwhelming investor support for FFC’s proposal at the May 2021 Norfolk Southern meeting prompted the company to release its first climate lobbying report following discussions with Friends Fiduciary after the vote. Our resolution asked the company to evaluate and release a report describing if and how Norfolk Sothern’s lobbying activities align with the Paris Climate Agreement goal of limiting average global warming to well below 2 degrees Celsius.
The climate crisis poses a major threat to economies across the globe and as long-term investors we are concerned about risks the climate crisis poses to our portfolio. This includes risks to operations and infrastructure from extreme weather events and other disruptions.
As a rail transportation company, NSC is strategically positioned as a lower emission means of transporting goods, with trains producing 75% fewer greenhouse gas emissions than trucks. NSC has recently decided to set emissions-reduction targets through the Science Based Targets Initiative to benchmark its GHG emissions reduction to help ensure alignment with the goals of the Paris Climate Agreement.
While the company has been positioning itself for greater sustainability, as investors we remain concerned about the company’s support of and participation in trade associations with track records of lobbying to undermine policies supporting the Paris Climate Agreement goals and the transition to a lower carbon future. The 2021 proxy season was the first in which Paris-aligned climate lobbying proposals were introduced, however there has been increasing support from investors for these proposals.
Norfolk Southern’s report, released last month, notes their trade associations and amounts given to each, as well as an assessment of whether they believe these trade associations align with the Paris Climate Agreement goals. This analysis helped push the company to end its membership in America’s Power, a trade association that advocates on behalf of coal-fueled electricity at state and federal levels.
While we see the release of Norfolk Southern’s Climate Lobbying Report as a positive step, there is still more work to be done. There are trade associations such as the National Association of Manufacturers that the report claims is not misaligned with the Paris Climate Agreement, despite there being concern around the trade association engaging negatively on US climate policy, including opposing GHG emissions regulations, while supporting an ongoing role of fossil fuels in the US economy.
Friends Fiduciary will continue to engage Norfolk Southern on their first climate lobbying report and support the company in continuing a rigorous and comprehensive assessment of the alignment of their trade associations with the company’s stated support of the goals of the Paris Climate Agreement.