Old Dominion Freight Line Inc: Adopt Emission Reduction Targets and Comprehensive Plan

December 17, 2024 As You Sow

WHEREAS: The Intergovernmental Panel on Climate Change reports that immediate emission reductions are required to limit global warming to 1.5°C, thereby avoiding the most catastrophic consequences of climate change. Investor demand for science-aligned emission reduction strategies underscores the reality that companies and investors are increasingly exposed to severe physical, transition, and systemic climate risks.

Old Dominion Freight Line Inc, a leading less-than-truckload (LTL) carrier with a fleet of 10,700 vehicles across the continental United States, faces customer and investor demand for decarbonized supply chains and increasing climate regulations. Despite a shareholder proposal on emissions last year with nearly 25% support, the Company has not demonstrated any meaningful progress.

The Company’s actions remain limited to disclosure of emissions and fuel-efficiency metrics, ongoing route-optimization, and limited pilots of alternative fuels and vehicles.[1] The Company lags competitors in setting emissions reduction targets, integrating alternative vehicles, and providing customer-specific decarbonization services.

Transportation, responsible for 28% of U.S. energy consumption, faces increasing climate-protective regulations. [2] A consortium of 17 states in key operating corridors has set targets to achieve 100% zero-emission truck sales by 2050.[3] California’s Advanced Clean Fleets rule requires commercial fleets to phase out non-zero emission vehicles starting in 2027.[4] Per Old Dominion’s 2024 10-K, the increase in climate-related laws and regulations could increase direct costs and impact operational risks.[5]

Heavy-duty zero-emission vehicle technology is accelerating. Battery-electric Class 8 vehicles are expected to achieve cost parity with diesel models by 2030, driven by higher energy efficiency and lower operating costs.[6] Additionally, current battery technologies provide economically viable alternatives for a variety of other vehicle classes and duty cycles.[7] Setting emissions reduction targets would position Old Dominion to systematically incorporate cost-effective technologies and optimize long-term fleet management.

Competitors in the LTL space, including Knight-Swift Transportation, Werner Enterprises, DHL, and FedEx,[8] have emission reduction targets. DHL and FedEx also provide advanced services to support customer decarbonization, a critical advantage as a growing number of companies set targets to reduce their value chain emissions.[9]

By committing to emission reduction targets and creating a climate transition plan, Old Dominion can address customer, regulatory, and competitive pressures and position itself to benefit from the transition to a low-carbon economy.

BE IT RESOLVED: Shareholders request the Board disclose how Old Dominion intends to reduce its Scope 1 and 2 greenhouse gas emissions in alignment with interim and long-term climate targets aligned with the Paris Agreement.

SUPPORTING STATEMENT: Proponents suggest, at management discretion, the Company disclose:

A timeline for setting emission reduction targets; and
An enterprise-wide emissions transition plan to meet evolving consumer demand and regulations, including anticipated costs and emissions reductions.

[1]https://d1io3yog0oux5.cloudfront.net/odfl/db/515/4165/pdf/ODFL+2023+ESG+Data+Supplement+Report.pdf

[2] https://www.epa.gov/greenvehicles/fast-facts-transportation-greenhouse-gas-emissions

[3] https://www-f.nescaum.org/documents/multi-state-medium-and-heavy-duty-zero-emission-vehicle-action-plan/

[4] https://www.movingforwardnetwork.com/wp-content/uploads/2024/03/MFN_Key-Facts_Understanding-the-Advanced-Clean-Fleet-Rule_2024.pdf, pg.8

[5] https://www.sec.gov/ix?doc=/Archives/edgar/data/878927/000095017024020176/odfl-20231231.htm, p.15

[6] https://theicct.org/wp-content/uploads/2023/04/tco-alt-powertrain-long-haul-trucks-us-apr23.pdf, p.1, 31

[7] https://nacfe.org/research/emerging-technologies/electric-trucks/charting-the-course-for-early-truck-electrification/rch/emerging-technologies/electric-trucks/charting-the-course-for-early-truck-electrification/

[8] https://s24.q4cdn.com/286931391/files/doc_financials/2024/sr/knx-sustainability-report-2023-final.pdf; https://s1.q4cdn.com/812671447/files/doc_downloads/ESG/Werner-2023-CSR-Report.pdf; https://group.dhl.com/en/sustainability/environment.html; https://newsroom.fedex.com/newsroom/asia-english/sustainability2021

[9] https://www.cdp.net/en/corporate-environmental-action-tracker?report=target_setting

Resolution Details

Company: Old Dominion Freight Line Inc

Lead Filers:
As You Sow on behalf of Amalgamated Bank