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Main Post Office, P.O. Box 751 |
www.asyousow.org |
Berkeley, CA 94704
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BUILDING A SAFE, JUST, AND SUSTAINABLE WORLD SINCE 1992 |
Notice of Exempt Solicitation Pursuant to Rule 14a-103
Name of the Registrant: Public Storage (PSA)
Name of persons relying on exemption: As You Sow
Address of persons relying on exemption: Main Post Office, P.O. Box 751, Berkeley, CA 94704
Written materials are submitted pursuant to Rule 14a-6(g)(1) promulgated
under the Securities Exchange Act of 1934. Submission is not required of this filer under the terms of the Rule, but is made voluntarily
in the interest of public disclosure and consideration of these important issues.
Public Storage (PSA)
Vote Yes: Item #5 – Shareholder Proposal Regarding Greenhouse Gas Reduction Targets
Annual Meeting: May 2, 2023
CONTACT: Daniel Stewart | dstewart@asyousow.org
THE RESOLUTION
Shareholders request the Board
issue short and long-term Scope 1-3 greenhouse gas reduction targets aligned with the Paris Agreement’s 1.5°C goal requiring
Net zero emissions by 2050.
SUPPORTING STATEMENT: Proponents suggest, at management’s
discretion, that the targets:
| · | Take into consideration approaches used by advisory groups such as the Science
Based Targets initiative; |
| · | A timeline for setting a net zero by 2050 GHG reduction target, and 1.5°C
aligned interim targets; |
| · | An enterprise-wide climate transition plan to achieve 1.5°C
aligned emissions; and |
| · | Annual progress towards meeting its emissions reduction goals. |
SUMMARY
The window for limiting global warming to 1.5°C
is quickly narrowing,1 requiring immediate, sharp emissions reduction from all market sectors.2 Failure
to reach Net Zero emissions by 2050 is projected to have disastrous economic consequences,3 impacting companies and investor
portfolios. In response to this growing material risk, shareholders seek clear, consistent disclosures and science aligned greenhouse
gas reduction targets from the companies in which they invest.
_____________________________
1 https://www.ipcc.ch/2021/08/09/ar6-wg1-20210809-pr/
2
https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_FullReport.pdf
3 https://www.nytimes.com/2021/04/22/climate/climate-change-economy.html
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2023
Proxy Memo
Public
Storage | Set Net Zero Targets
|
The real estate industry will play a critical role in global decarbonization
efforts due to its significant value chain emissions – from use of power and natural gas in buildings, to embodied emissions in
construction materials and transportation – all significant sources of global emissions.
Public Storage is a global leader in self-storage facilities with thousands
of locations and over 170 million net rentable square feet of real estate.4 In its 2021 Annual Report, Public Storage states
that climate change poses both physical risk to its facilities and transition risk as society decarbonizes.5
Public Storage, however, has not set science-aligned greenhouse gas
reduction targets. It has set an emission reduction target of only 5% for its Scope 1 and 2 emissions by 20226 and has not
set targets for its value chain emissions. Without science-aligned emissions reduction targets, Public Storage lacks the foundation to
ensure that it is reducing its climate-related risk and it remains out of alignment with baseline investor expectations on climate risk
management. We urge a “Yes” vote on this proposal.
RATIONALE FOR A YES
VOTE
| 1. | Public Storage is exposed to disruptive risks associated with climate change. |
| 2. | Public Storage has provided insufficient emissions reduction targets to manage its climate risks. |
| 3. | Public Storage is failing to meet investor expectations and falling behind peers in setting net zero-aligned
targets for Scope 1-3 emissions. |
DISCUSSION
| 1. | Public Storage is exposed to disruptive risks associated with climate change. |
The global Paris goal
of achieving a net zero economy by 2050 will require mass decarbonization of the building sector, which is responsible for 30% of global
final energy consumption.7
With
170 million net square feet of rentable storage space operating under the Public Storage name, our Company is contributing to global climate
risk. It also faces substantial risks from a warming climate. According to its 2021 Annual Report, as global temperatures increase, Public
Storage properties may face increased destructive weather events such as floods, fires, and drought that could
cause damage to facilities and reduce demand for use of them.8
Beyond these physical
risks, Public Storage details how it faces growing governmental, political, and social pressure to address its climate impacts and reduce
its emissions. In the U.S., governments are developing greener building standards. For example, 100 cities in 11 states have developed
policies that require or encourage the switch to electric cooling and heating.9 As state and federal policymakers continue
to focus on climate legislation, Public Storage, with properties in 40 states, is likely to incur significant costs or other adverse impacts
on its business operations were it, or other entities in its value chain, required to install additional equipment, alter operations to
incorporate new technologies or processes, or reduce emissions to specific levels.
_____________________________
4 https://www.publicstorage.com/our-story
5 https://s1.q4cdn.com/588671402/files/doc_financials/2021/ar/Public-Storage-Annual-Report-2021-vF.pdf,
p.11
6 https://s1.q4cdn.com/588671402/files/doc_downloads/Sustainable-Moving-Supplies/07/Public-Storage-Sustainability-Report-2022-vF.pdf,
p.10
7 https://www.iea.org/reports/buildings.
8 https://s1.q4cdn.com/588671402/files/doc_financials/2021/ar/Public-Storage-Annual-Report-2021-vF.pdf,
p.11
9 https://buildingdecarb.org/zeb-ordinances.
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2023
Proxy Memo
Public
Storage | Set Net Zero Targets
|
It is in Public Storage’s
best interest to proactively comply with global climate policy momentum and align internal processes, as well as its capital allocation
decisions, to a business model that will succeed in a net zero economy. Committing to targets and working on a transition plan aligned
with the Paris Agreement now will reduce the risk of hasty, ineffective, and costly decarbonization compliance in the future.
| 2. | Public Storage has provided insufficient emissions reduction targets to manage its climate risks. |
Proponent has been engaging with Public
Storage on climate for over two years. Proponent recognizes and supports Public Storage’s improving climate related actions, such
as its short-term goals to reduce energy consumption and operational carbon emissions, and its decision to measure and disclose its Scope
3 emissions. However, Public Storage fails in setting net zero-aligned short- and long-term targets that cover its full range of Scope
1, 2, and 3 emissions. Setting Paris-aligned 1.5°C goals ensures investors that Public
Storage’s actions are aligned with the rate and pace of global decarbonization. Setting net zero goals ensures that its progress
is planned across time, that 1.5°C related investments and actions are being made timely
and across all material value chain emissions sources, and ensures that its value chain partners are similarly proactively addressing
climate risk and setting 1.5°C aligned targets. Additionally, by setting net zero goals,
Public Storage can plan for adequate progress against peers and send a strong signal to investors that Public Storage is positioning itself
for success in a transitioning economy.
| 3. | Public Storage is failing to meet investor expectations
and falling behind peers in setting net zero-aligned targets for Scope 1-3 emissions. |
Shareholders
are increasingly concerned about material climate risk to both their companies and their portfolios and seek clear and consistent disclosures
and robust science-aligned target setting from their issuers. Currently, more than $130 trillion of assets under management is committed
to achieve 1.5°C.10 The Climate Action 100+ initiative, a coalition of 700 investors with over $68 trillion in assets,
outlines metrics of climate accountability in its Net Zero Company Benchmark, including: 1) a net zero goal; 2) short, medium, and long
term GHG reduction targets aligned with the Paris Agreement; and 3) a transition action plan, among other measures. The CA100+ supports
reducing company emissions at the rate necessary to achieve Paris goals and avoiding risks associated with the transition to net zero.11
The Science Based Targets initiative (SBTi) is widely considered the global gold standard of science-aligned target setting. Across the
market, over 1,463 companies have joined the Science-Based Targets initiative’s Business Ambition for 1.5°C campaign, committing
to set net zero emission reduction targets in line with a 1.5°C future. As Paris-aligned goals and transition plans become the norm,
Public Storage risks becoming a laggard if it does not set 1.5oC aligned goals across its full range of operational and value
chain emissions. In contrast to Public Storage, 51 North American companies in the real estate
sector have committed to establish valid GHG targets through the Science Based Targets initiative.12
_____________________________
10 https://www.gfanzero.com/press/amount-of-finance-committed-to-achieving-1-5c-now-at-scale-needed-to-deliver-the-transition/
11 https://www.climateaction100.org/progress/net-zero-company-benchmark/
12 https://sciencebasedtargets.org/companies-taking-action
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2023
Proxy Memo
Public
Storage | Set Net Zero Targets
|
Currently, Public Storage’s lack of short- and long-term net zero targets do not align with the expectations of the CA100+ Benchmark
or SBTi’s Net Zero Standard. Investors are concerned that Public Storage’s inability to meet the standards of these science-aligned
organizations will put the Company at risk in an industry that is being redefined by climate change.
By calculating its full value chain emissions and setting 1.5°C
aligned emission reduction targets, Public Storage can provide investors with assurance that management is adequately addressing concerns
about growing climate risks.
RESPONSE TO PUBLIC
STORAGE BOARD OF DIRECTORS’ STATEMENT IN OPPOSITION
Public Storage touts its efforts to reduce its Scope 1 and 2 emissions
such as committing to installing solar at over 1,000 properties by 2025, doubling the number of Green Building certified facilities to
approximately 140 by the end of 2024, and completing over 2,500 LED lighting conversions. While good first steps, Public Storage has thousands
of facilities and no overarching GHG reduction goal beyond its current 2022 goal of 5% reduction in its Scope 1 and 2 GHG emissions. It
does not appear Public Storage’s actions are sufficiently ambitious to reduce its full range of operational and value chain emissions
in line with global net zero by 2050 goals.
Proponents have been in discussions with Public Storage for several
years on the topic of taking responsibility for its full range of GHG emissions. By setting and working to achieve net zero goals, Public
Storage can contribute to reducing its own, and its suppliers’ emissions, with the goal of avoiding the most catastrophic climate
impacts. The Board claims that the Proposal includes a one-size-fits-all approach, but global GHG reduction goals can only be achieved
by collective 1.5oC-aligned action across every industry sector. Such goals will drive down energy needs, which will allow
energy companies to decarbonize, it will drive innovation, allowing low carbon technology to spread.
Thousands of other companies have made
commitments to address their contribution to climate risk by aligning with net zero emissions and have begun to inform investors about
their transition plans. While Public Storage pushes back on the requested timeline for setting net zero goals (12 months for Scopes 1-2
and 24 months for Scope 3), these timelines are typically sufficient to commit to science-aligned targets. For example, the Science Based
Targets initiative affords 24 months to companies to develop targets after a commitment. To protect the global economy from the impacts
of climate change and protect investor value, limiting global warming to 1.5oC requires every
company, regardless of industry or emissions intensity, to set net zero targets.
Public Storage suggests that it should wait for the final SEC climate
disclosure rule before it acts. Yet, shareholders continue to ask for full emission disclosure and for the setting of net zero targets
to address climate-related risk regardless of the outcome of the proposed SEC rule. The SEC itself states that the rule is reflective
of shareholder’s current need for disclosures related to climate action. Waiting for the Rule impedes investors from obtaining the
information necessary to understand which companies are taking net zero aligned actions and which are falling behind the global energy
transition. Delay also prevents investors from knowing which companies face a range of risks and lost opportunities and which companies
are proactive and timely in addressing their value chain emissions. Investors are asking not for minimum regulatory compliance but best
practice in science-aligned climate performance.
|
2023
Proxy Memo
Public
Storage | Set Net Zero Targets
|
Thus, this shareholder request to set science-aligned targets is by
no means unique, unnecessary, or prescriptive but rather, basic, and fundamental. Once set, management has the freedom and authority to
decide when and by what means it will reach its 1.5°C targets, as long as they are
science aligned. By delaying a decision to set targets, the Company is sacrificing the critical time it needs to complete foundational
steps and orient towards a net zero future.
CONCLUSION
By failing to set net zero targets,
Public Storage misaligns with benchmarks underpinned by climate science, lacks goalposts to develop a clear roadmap to reduce emissions
across its full value chain, and cannot, therefore, be considered to be on track to meet net zero emissions. We urge a “Yes”
vote on this resolution.
Vote “Yes” on this Shareholder Proposal 5
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For questions, please contact Daniel Stewart, As You Sow,
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5
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