UPS Faces Shareholder Pushback Over Climate Transparency

United Parcel Service, Inc. (UPS) is coming under growing pressure on its climate commitments, with its investors calling for more transparency and practicability of the firm's environmental objectives. The key moment came at the 2025 shareholders' annual meeting when Proposal 5 was brought by the Free Enterprise Project (FEP) of the National Center for Public Policy Research. The decision required an open evaluation and disclosure of UPS's voluntary greenhouse gas reduction commitments and the legal, financial, and reputation risks they impose. Shareholder action is but a component of a broader movement since regulatory bodies like the U.S. Securities and Exchange Commission (SEC) increase their oversight of corporate environmental, social, and governance (ESG) reporting.

UPS has set ambitious climate targets, including minimizing Scope 1, 2, and 3 greenhouse gas emissions. Yet, the FEP claims that the company has been unable to fully consider the achievability of the targets. The proposal, as per requirement, has no clear information on technology and sources of finance through which UPS would go to achieve net zero emissions. This lack of transparency can expose the company to enforcement by the SEC, having recently charged companies for greenwashing—making unsubstantiated environmental claims without adequate evidence.

The increasing intervention of the SEC has forced companies to ensure that their climate goals are not only ambitious but also realistically achievable. UPS's current disclosures have been faulted on depth and transparency. The shareholders are concerned that in the absence of concrete implementation plans for its ESG commitments, it could invoke legal liabilities and reputational damage, affecting long-term shareholder value.

Proposal 5 actually requests the company to submit in writing a risk assessment of its ESG strategy with the aim of reporting whether its carbon reduction objectives are supported by action-oriented strategies and available technology. The rationale for requesting transparency is that without an open plan, corporate climate commitments become liabilities rather than assets. Investors are being asked to step forward in anticipation to protect their interests from potential risk of overly ambitious or unchecked ESG goals. In its defense, UPS said that it is already making appropriate disclosures of climate-related risks under its existing reporting. Issues were, however, raised on the company's refusal to exclude Proposal 5 on grounds that it was "substantially implemented," an SEC standard exemption under which companies may exclude shareholder proposals if the subject matter has already been dealt with. Lack of tangible references or citations on these disclosures also further heightened issues on the adequacy of UPS's disclosure on ESG.

The FEP is now calling on shareholders to vote for Proposal 5 as the first step towards increased corporate responsibility and avoiding the threat of regulatory action.
The group also released a Proxy Navigator voters guide that not only supports Proposal 5 but also calls for rejection of the entire board of directors as well as abstention on other key proposals, including those relating to executive compensation and approval of auditors. These guidelines follow as there has been greater disillusionment with some of the shareholder constituencies as to how ESG goals are being governed and reported. While more companies greenwash, regulators and shareholders increasingly demand that businesses back up their assertions to be sustainable. Those companies that fail to make clear and supported disclosures risk greater reputational damage, shareholder unrest, and regulation. The UPS case illustrates how voluntary made climatic commitments, if operated opaque and unresponsibly, can turn into gigantic business threats.

The stress on UPS is merely one of many signs that investors want more than pie-in-the-sky goals. Investors want accountability, transparency, and measurable movement toward getting there. The trend will only gain steam as the regulatory landscape tightens and investors grow more educated and active on ESG processes. For big business, matching sustainability goals with quantifiable strategy is no longer a nicety—it's a business imperative.

Whether the shareholder approval of Proposal 5 succeeds or fails and UPS's response to these demands would serve as an example to other companies with similar problems. Transparency will be the thread as long as the dialogue on ESG accountability continues. Shareholders are making it known that they would not accept promises that are neither verified nor specific, especially where such promises translate to expenses.

Source and Credits:

National Center for Public Policy Research via KnowESG