Climate Transition Plan and Long-Term Targets

Resolution Text

WHEREAS: The Intergovernmental Panel on Climate Change (IPCC) has advised that greenhouse gas (GHG) emissions must be halved by 2030 and reach net zero by 2050 to limit global temperature rise to 1.5°C to prevent the worst impacts of climate change[1]. The Food and Agriculture Organization maintains that the global agri-food system is responsible for approximately 31% of anthropogenic GHG emissions and is on course to become the largest contributor to GHG emissions[2]. The agricultural sector is particularly vulnerable to climate change, with the IPCC assessing with statistically high confidence that many regions will experience reduced crop yields due to extreme weather changes[3].

As a leading agribusiness, the Archer-Daniels-Midland Company (“ADM” or “the Company”) has a significant carbon footprint due to its reliance on purchased agricultural commodities, which comprise 83% of its scope 3 emissions[4]. In its 2022 10-K, the Company acknowledges several physical and transition climate risks to its business and recognizes its role in reducing emissions from business activities and the entire agricultural supply chain.

While investors commend the Company for committing to reduce emissions across scopes by 25% by 2035, this target is not aligned with the goals of the Paris Agreement. Furthermore, since setting the target, ADM has failed to make any progress in reducing scope 3 emissions and has yet to set a net zero by 2050 commitment. Delays in emissions reductions compound detrimental impacts of climate change, threaten economic and community stability, and heighten volatility in investment portfolios.

Therefore, investors seek additional disclosure about the strategies the Company will employ to meet its stated targets and position their business for success in the transition to a low carbon economy. Investors believe climate transition plans – detailing the forward-looking, near-term, and quantitative actions the company will take to achieve its medium- and long-term sustainability goals – help the Company mitigate these risks.

RESOLVED: Shareholders request ADM, in addition to its existing targets and related disclosures, set and disclose long-term GHG reduction targets aligned with achieving science-based 1.5°C or net-zero emissions by 2050 at the latest, alongside the strategies to achieve these targets. Disclosure should cover the Company’s full range of operational and value chain emissions. Shareholders should receive regular updates on implementation against this strategic goal. The report may be stand-alone or incorporated into existing reporting, be prepared at a reasonable cost, and omit proprietary information.

SUPPORTING STATEMENT: In developing and implementing the plan, we recommend, at management’s discretion:

Considering guidance by advisory groups such as the Task Force for Climate-Related Financial Disclosures, CDP, Transition Plan Taskforce, Climate Action 100+, and We Mean Business Coalition; and
Quantifying climate strategies against the Company’s emissions reductions targets

[1] https://www.ipcc.ch/assessment-report/ar6/

[2] https://news.un.org/en/story/2021/11/1105172#:~:text=Of%20the%2016.5%20billion%20tonnes,according%20to%20the%20new%20analysis.

[3] https://www.ipcc.ch/srccl/

[4] https://www.adm.com/globalassets/sustainability/sustainability-reports/2022-reports/adm-2022-corporate-sustainability-report_final.pdf/