Climate Transition Plan and GHG Reduction Goals

Resolution Text

WHEREAS: The Intergovernmental Panel on Climate Change has advised that greenhouse gas (GHG) emissions must be halved by 2030 and reach net zero by 2050 in order to limit global warming to 1.5° Celsius and avoid the most severe impacts of climate change. The industrial sector makes up nearly 25% of global carbon dioxide emissions within the United States todayi. 

Every incremental increase in temperature above 1.5° Celsius will entail increasingly severe physical and transition risks to companies, investors, and the economy. Climate change mitigation is critical to address investment risks and avert the economic losses projected if sufficient action is not taken. 

In its 10-K, Comfort Systems USA, Inc. (“Comfort Systems” or the “Company”) acknowledges the physical and financial risks associated with climate change related to potential resource scarcity, increased project costs, and the delay or cancellation of projects ii. Each of these risks presents potential impacts to the Company’s business in the short and medium-term. Additionally, Comfort Systems’ Taskforce for Climate-related Financial Disclosures (TCFD) index acknowledges the transition risks associated with climate change, specifically describing how evolving legislation and regulation related to climate change could negatively impact its operations and those of its customers.iii 

Within its 2022 Sustainability Report, the Company states, “Our two largest environmental impact areas are energy consumption and GHG emissions.” Comfort Systems trails competitors in setting holistic GHG emissions reduction targets and managing climate risks. In contrast to many of its peers, Comfort Systems has yet to disclose a comprehensive emissions inventory inclusive of Scopes 1, 2, and 3 emissions. Further, the Company’s absolute Scope 1 and 2 emissions rose approximately 30% from 2021 to 2022, yet the company has not set GHG emissions reduction goals nor disclosed initiatives to reduce these emissions.iv 

Ramping up the scale, pace, and rigor of its climate-related initiatives to comprehensively address its climate impact may help Comfort Systems bolster resilience to the physical impacts of climate change across its value chain; mitigate transition risks associated with future climate regulations; and capitalize on new market opportunities driven by future customer demand for energy efficient products as those customers transition to a clean energy economy. 

RESOLVED: Shareholders request Comfort Systems USA, Inc. establish near- and long-term science-based greenhouse gas emissions reduction targets aligned with the Paris Agreement’s ambition of limiting global temperature rise to 1.5 °Celsius and disclose plans to achieve them. 

SUPPORTING STATEMENT: Shareholders recommend Board and Management consider: 

Establishing emissions reduction targets for the Company’s full GHG emissions footprint, aligned with the latest climate science and taking into consideration approaches used by advisory groups, such as the Science-Based Targets Initiative; and 

A transition plan detailing how the Company intends to achieve such targets, including strategies for mitigating physical and transition climate risks. 

i https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions 

ii chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://investors.comfortsystemsusa.com/static-files/223a1905-17bc-45d6-a29c-74ee57603e40 

iii https://investors.comfortsystemsusa.com/static-files/aab0077b-9dab-461e-b518-a83d071a8b97#page=46 

iv https://investors.comfortsystemsusa.com/static-files/aab0077b-9dab-461e-b518-a83d071a8b97