Organization: Union Pacific Corporation

Year: 2010

Description: WHEREAS: We believe that sustainability reporting on environmental, social and governance (ESG) business practices makes a company more responsive to the global business environment, an environment with finite natural resources, evolving legislation, and increasing public expectations of corporate behavior. Reporting also helps companies better integrate and gain strategic value from existing corporate social responsibility efforts, identify gaps and opportunities, develop company-wide communications, publicize innovative practices and receive feedback.
 
Many companies are preparing sustainability reports which provide disclosure on how they are positioning themselves to be viable long-term investments. According to a 2008 KPMG report on sustainability reporting, of the 250 Global Fortune companies, 79% produce reports compared to 52% in 2005. Of the 100 top U.S. companies by revenue, 73% produce reports compared to 32% in 2005. Increasingly, companies are identifying ESG factors relevant to their business and addressing them strategically through sustainability programs and reports.
 
Transparency on climate change is particularly crucial as it is one of the most financially significant environmental issues currently facing investors. The Intergovernmental Panel on Climate Change’s 2007 report observed that, “taken as a whole, the range of published evidence indicates that the net damage costs of climate change are likely to be significant and increase over time.”
 
The Carbon Disclosure Project (CDP), representing 475 institutional investors globally with $55 trillion in assets, annually requests disclosure from companies on their climate change management programs. Companies are increasingly providing this climate change disclosure. The response rate to the 2009 CDP for the S&P 500 was 66%, compared to a response rate of 47% to the 2006 survey.
 
Union Pacific has not prepared a sustainability report and did not respond to the questions presented in the 2009 CDP survey, instead providing limited information on the company’s climate change management efforts.
 
According to Union Pacific’s 2008 annual report, the company acknowledges that it is subject to extensive federal and state environmental statutes and regulations covering matters such as health, safety, labor, and environmental issues and that failure to comply with applicable laws and regulations could have a material adverse effect on the company.
 
In a recent Newsweek analysis assessing the environmental performance of companies, Union Pacific ranked 439 out of 500 companies that were considered and was the lowest ranked railroad company.
 
RESOLVED: Shareholders request that the Board of Directors issue a sustainability report describing the company’s short- and long-term responses to ESG-related issues, including greenhouse gas emissions data and plans to manage emissions. The report should be prepared at reasonable cost, omitting proprietary information, and made available to shareholders by November 30, 2010.  
 
Supporting Statement: The requested sustainability report should include a company-wide review of company policies, practices, and metrics related to ESG performance. Union Pacific could use the Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines (G3). The G3 provides guidance on report content which addresses the sustainability issues that investors seek disclosure on and provides a flexible reporting system that allows companies to report incrementally over time.