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Jun 16, 2022

Builders FirstSource shareholders back emission targets proposal

Board made no voting recommendation

The shareholders of Builders FirstSource have overwhelmingly backed a proposal for greenhouse gas (GHG) goals after the company declined to make a voting recommendation.

According to an SEC filing, 87.6 percent of votes cast at Builders FirstSource’s AGM on Tuesday supported a proposal filed by Green Century Capital Management asking the company to ‘adopt short, medium and long-term science-based [GHG] emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 or sooner and to effectuate appropriate emissions reductions prior to 2030.’

In its supporting statement, Green Century recommends that in setting targets the company: 

  • Consider approaches used by advisory groups such as the Science Based Targets initiative (SBTi)
  • Include all GHG Protocol-defined sources of Scope 3 emissions, including from deforestation and forest degradation, in accordance with limiting temperature increases to 1.5°C
  • Set goals within its operations for renewable energy sourcing, energy efficiency improvements and transitioning to zero-emissions vehicles.

‘Companies, such as Builders FirstSource, that provide construction services and forestry products are vulnerable to the physical, operational and supply-chain risks caused by climate change,’ Green Century writes. ‘With predicted increases in the severity of hurricanes, heat waves, wildfires and long-lasting droughts, [Builders FirstSource’s] wood product supply may be disrupted and its facilities, vehicles and equipment may be damaged or destroyed.’

Green Century says in a statement following the AGM: ‘We’re very pleased with the majority vote, which signals to us that investors have significant concerns about how Builders FirstSource is managing its climate risk. In our view, how a company manages climate risk is also an indication of how it’s managing other material risks. Even though Builders FirstSource has been growing rapidly in recent years, we expect it to keep pace with evolving investor expectations.

‘Adopting a science-based [GHG] emissions reduction target should not be an unreachable goal for Builders FirstSource… More importantly, however, we believe the process of target-setting forces companies to understand what their emissions are and where they’re coming from. With this analysis, we think Builders FirstSource will be better prepared to comprehensively address its climate risk.’

Ahead of the AGM, Builders FirstSource’s board had taken the unusual step of not making a recommendation on the proposal.

The board wrote in the company’s proxy statement: ‘While the board does not believe the stockholder proposal benefits the company, the board is not making a recommendation with respect to the stockholder proposal because: (i) the company already has plans to substantially comply with the goals of the proposal; and (ii) the disclosures and timeline that would be required to comply with the proposal are overly burdensome for the company in light of the recent merger.’ Builders FirstSource completed its merger with BMC Stock Holdings in January 2021.

The board wrote that, as part of its efforts to cut GHG emissions, the company is committed to actions such as:

  • Quantifying and disclosing its Scope 1 and Scope 2 GHG emissions in 2023
  • Assessing setting a net-zero science-based target with the SBTi
  • Integrating zero-emission vehicles into its fleets
  • Prioritizing the sourcing of wood from Sustainable Forestry Initiative or Forest Stewardship Council-certified vendors.

A spokesperson for Builders FirstSource declined to comment beyond the proxy statement.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...