PACCAR, Inc.: Report on Sustainability Reporting
WHEREAS: The Sustainability Accounting Standards Board (SASB) has established industry-specific standards that assist companies in disclosing financially material, decision-useful sustainability information to investors;
SASB standards are designed to identify a minimum set of sustainability issues most likely to impact the operating performance or financial condition of the typical company in an industry, regardless of location;
Businesses can use the SASB standards to better identify, manage, and communicate to investors sustainability information that is financially material. Use of the standards can benefit businesses by improving transparency, risk management, and performance. SASB standards can help investors by encouraging reporting that is comparable, consistent, and financially material, thereby enabling better investment and voting decisions;
Failure to adequately manage and disclose performance on material sustainability factors can pose significant regulatory, legal, reputational, and financial risk to a company and its shareholders;
Investors support disclosure in accordance with SASB standards: The SASB Investor Advisory Group, 32 global asset owners and asset managers (including six of the world’s ten largest investment advisers) “[b]elieve SASB’s approach—which is industry-specific and materiality-focused—will help provide investors with relevant and decision-useful information,” and “[b]elieve that SASB standards can inform integration of sustainability factors into investment and/or stewardship processes, such as corporate engagement and proxy voting.” Members of the SASB Investor Advisory Group and SASB Alliance, “a growing movement of organizations that believe standardized, industry-specific, and materiality-based standards help companies and investors adapt to the market’s expectations,” comprise among others pension funds of six states;
SASB identifies the Industrial Machinery & Goods industry’s material sustainability issues as Energy Management; Employee Health & Safety; Fuel Economy & Emissions in Use-phase; Materials Sourcing; and Remanufacturing Design & Services. Presently, our company provides insufficient disclosure on these issues. For instance, our company does not disclose how it manages critical materials sourcing risks. Industrial goods companies are exposed to supply chain risks through the use of critical materials and conflict minerals in electronic components. These materials are characterized by availability that could be affected by geopolitical considerations, concentration of deposits in few countries, and low substitution ratios. By limiting use of critical and conflict materials and securing their supply, our company can mitigate the risk of supply disruptions and volatile input prices. The absence of this information challenges investors’ ability to comprehensively evaluate our company’s management of sustainability risks and opportunities;
BE IT RESOLVED: Shareholders request that the Board of Directors issue a report on sustainability to shareholders by 180 days after the 2019 Annual Meeting, at reasonable expense and excluding confidential information, prepared in consideration of the SASB Industrial Machinery and Goods standard, describing the company’s policies, performance, and improvement targets related to material sustainability risks and opportunities.
SUPPORTING STATEMENT: The reporting should include discussion of the company’s strategic approach to managing risks associated with geopolitical conflict that may affect the availability of critical materials for its products.