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Commercial Metals Sustainability Report GHG Goals

RESOLVED 
Shareholders request that Commercial Metals Company issue a sustainability report describing the company’s environmental, social and governance (ESG) risks and opportunities including greenhouse gas (GHG) emissions reduction targets and goals. The report should be available by year end 2015, prepared at reasonable cost, omitting proprietary information.
 

SUPPORTING STATEMENT

We believe tracking and reporting ESG practices makes a company more responsive to a global business environment characterized by finite natural resources, changing legislation, and heightened public expectations for corporate accountability. Reporting also helps companies better integrate and gain strategic value from existing sustainability efforts, identify gaps and opportunities, develop company-wide communications, recruit and retain employees, and receive feedback.
 
Support for and the practice of sustainability reporting continues to gain momentum:
 
  • In 2013, KPMG found that of 4,100 global companies seventy-one percent had ESG reports.
  • The United Nations Principles for Responsible Investment has more than 1,200 signatories with over $45 trillion of assets under management.  These members seek ESG information from companies to be able to analyze fully the risks and opportunities associated with existing and potential investments.
  • Carbon Disclosure Project (CDP), representing 767 institutional investors globally with approximately $92 trillion in assets, calls for company disclosure on Greenhouse Gas emissions and climate change management programs. Over two thirds of the S&P 500 now report to CDP.
Commercial Metals has brief webpages on “Environmental Responsibility” and “Safety” that provide short descriptions of programs and guiding principles.  However, the company notably does not provide evaluative metrics or public goals to measure performance overtime.
 
Commercial Metals recognizes in its 10-k that “increased regulation associated with climate change and greenhouse gas emissions could pose significant additional costs on both…steelmaking and metals recycling operations.”  The 10-k also details that Commercial Metals may face material risks related to significant risk of injury or death at some operations and litigation/administrative proceedings for the “alleged release of hazardous substances” (Commercial Metals has is a named potentially responsible party at 10 Federal Superfund sites).  We believe Commercial Metals has a positive story to tell even though shareholders currently have no access to substantial information on how the company manages its environmental footprint, hazardous releases, worker and community safety, or other material ESG risks.
 
Occupational safety and health, labor management, waste and water reduction targets, carbon and toxic emissions, and other product related environmental impacts are important ESG considerations in Commercial Metal’s sector. Not managing these properly could pose significant regulatory, legal, reputational and financial risks.
 
Competitors like Nucor Inc., Nippon Steel & Sumitomo Metal Corp, and Kobe Steel provide comprehensive sustainability reports.  By not reporting, Commercial Metals may be missing opportunities that larger peers are actively recognizing and lagging its peer group in terms of risk management.
 
We recommend that the report include a company-wide review of policies, practices and metrics related to ESG performance. The GRI index could be a helpful checklist for guidance.