PulteGroup Inc: Adopt Emission Reduction Targets and Comprehensive Plan

WHEREAS: The residential building sector is responsible for 20% of U.S. greenhouse gas emissions and is increasingly the focus of new, climate-protective regulations.[1] Home customers, too, are demanding more affordable energy efficient homes. PulteGroup, a leading residential construction company operating across 26 states, has not disclosed a comprehensive strategy to address these trends or to meet the Paris Agreement’s greenhouse gas goals.

Climate-protective building regulations are increasing at the municipal and state levels. To date, municipal or state-wide policies that limit the use of fossil fuels in buildings have been adopted in eight states in which PulteGroup operates.[2] Notably, five of those states are in PulteGroup’s western segment which generated 20% of the Company’s 2023 home sales revenue.[3] Governments are also passing legislation to incentivize the adoption of low-carbon building technologies such as heat pumps and rooftop solar panels. The Inflation Reduction Act offers $8.8 billion in rebates for investments in home energy efficiency, electrification, and low-carbon appliances.[4]

While PulteGroup has set a modest goal that all its new homes be capable of the ENERGY STAR 3.1 certification starting in 2025, it has not set Paris-aligned goals.[5] The ENERGY STAR 3.1 certification is a relatively weak energy efficiency standard that PulteGroup’s average home has already exceeded and is insufficient to meet many climate-related municipal and state regulations.[6] For example, California required all new residential buildings to be net zero ready by 2020 and most Massachusetts municipalities require residential buildings to reach a far greater energy efficiency than ENERGY STAR 3.1 certified homes.[7]

PulteGroup’s peers Thrive Home Builders and Unity Homes offer net-zero ready homes at scale and have significantly better average energy efficiency performance.[8] As another indication that PulteGroup lags its peers, Meritage Homes began selling 100% ENERGY STAR homes in 2009.[9] PulteGroup’s comparatively weak energy efficiency performance puts it at a competitive disadvantage as customers increasingly seek more affordable homes.

By adopting Paris-aligned emission reduction goals and developing a comprehensive, forward-looking climate transition plan, PulteGroup can remain competitive, mitigate regulatory risk, and provide investors with confidence that the Company is prepared to thrive in a low-carbon economy.

BE IT RESOLVED: Shareholders request the Board adopt Paris-aligned greenhouse gas emission reduction goals.

[1] https://www.eia.gov/tools/faqs/faq.php?id=86&t=1

[2] ttps://buildingdecarb.org/zeb-ordinances

[3] https://d18rn0p25nwr6d.cloudfront.net/CIK-0000822416/b0afcae4-9a3c-421f-90a2-2d3fc04b062f.pdf

[4] https://www.usgbc.org/sites/default/files/2024-02/USGBC-IRA-Green-Buildings_0.pdf

[5] https://pultegroupcares.com/sustainability/2023-report/, p.11

[6] https://www.pulte.com/energy-star-builder#:~:text=The%20HERS%20Index%20(Home%20Energy,to%20save%20on%20electricity%20annually; https://www.meritagehomes.com/why-meritage/energy-efficiency

[7] https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/energy-efficiency/zero-net-energy#:~:text=All%20new%20residential%20construction%20will,will%20be%20ZNE%20by%202025; https://www.mass.gov/info-details/building-energy-code#energy-efficiency-provisions-of-the-state-building-code-

[8] https://www.sunnova.com/-/media/Files/pdfs/Sunnova-Carbon-Neutral-Building-Thrive-Case-Study-20240202.pdf; https://unityhomes.com/blog/sustainable-homes-from-a-solar-powered-factory/

[9]https://d1io3yog0oux5.cloudfront.net/_e12b68c7bd4e63256b8e5d3d3c9b352d/meritagehomes/db/845/7273/pdf/Meritage+Homes_2023_ESG+Report__FINAL.pdf, p.7

Resolution Details

Company: PulteGroup Inc.