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Editor’s note: This is the third story in a series about trucking companies’ conflicts with investors over environmental reporting and goal-setting proposals. Read previous installments on Paccar and Knight-Swift Transportation Holdings.
Old Dominion Freight Line opposes a shareholder push to require the carrier to set goals to reduce greenhouse gas emissions under the Paris Agreement.
The carrier must reduce its carbon footprint and decouple its growth from climate impact as it works respond to changing customer preferences for low-carbon transport, the proposal says. It also calls on the air carrier to report on its annual progress in these efforts, at management’s discretion.
“By failing to act on climate change, Old Dominion risks losing customers to higher-performing competitors or to alternatives such as rail and battery-electric trucks,” the proposal states. “It also faces the risk associated with being unprepared for new state and federal regulations.”
The Thomasville, North Carolina-based LTL company is advising investors to vote against the proposal by As You Sow, a Berkeley, California-based nonprofit corporate accountability firm, at Wednesday’s shareholder meeting.
“We believe that a binding, one-size-fits-all approach to the shareholder proposal is not in the best interests of the Company.” Old Dominion said in a filing.
Paccar, Knight-Swift Transportation Holdings and Old Dominion’s responses to similar shareholder proposals provide a window into how some of the industry’s most dominant and powerful companies view their role in combating climate change, a critical global threat that has turned into a political blunder.
“No single path” to net zero by 2050
In the 2015 Paris Agreement, almost all countries in the world agreed that governments should work to prevent catastrophic impacts by trying to prevent the rise beyond 1.5 degrees Celsius.
The agreement envisages a 45% reduction in global emissions by 2030 and reaching zero by 2050.
But the goal of a net-zero global economy, Old Dominion argued, “is not the same as, and does not require, every single company in the world to be a net-zero company.”
The LTL carrier has defended its environmental record. He noted that he operates one of the youngest and most efficient fleets in the country, with an average tractor age of 4.5 years, and emphasized his normal wins in the Environmental Protection Agency’s SmartWay program, among other honors.
“There is no single path to net zero by 2050,” Old Dominion said. “The shareholders’ proposal articulates a one-size-fits-all approach: setting intermediate and long-term goals for AFTs. However, the Company, using its judgment and appropriate discretion, reviewed and rejected this approach and instead implemented a more holistic, fact-based strategy.”
Urging shareholders to reject the proposal, Old Dominion cited “significant flaws, including that its focus on individual corporate goals is inconsistent with accelerating the economy-wide transition to net zero.”
“It encourages the setting of corporate goals without a clear and methodologically rigorous view of how such goals can be achieved, which has significant potential to mislead shareholders and others,” Old Dominion said in its response.
Old Dominion has an ESG task force and an executive-level steering committee that reports to the company’s board of directors ESG progress.
An informed vote on the proposal would require an understanding of an LTL carrier’s ability to realistically affect the goal of net zero by 2050 through setting emissions targets, the company said.
“Therefore, we believe it would be irresponsible to commit to the actions requested by the proponents before completing the necessary fundamental steps, many of which were underway prior to receiving the shareholder proposal,” the company said.