The goal of the shareholder proposal is to push the company further, says UPP
Alimentation Couche-Tard, the global convenience store operator behind Circle K and Mac’s convenience stores, is facing mounting investor pressure from one of Canada’s largest pension plans to produce a more ambitious climate transition plan.
The University Pension Plan (UPP) recently filed a shareholder proposal urging the Quebec-based retailer to set out a “clear and credible” emissions-reduction strategy. The move was facilitated by the Shareholder Association for Research and Education (SHARE), who partners with UPP on engagement efforts for publicly traded companies in its portfolio.
Delaney Greig, UPP’s director of investor stewardship emphasized that UPP’s stance isn’t about singling out one company for its own sake as she notes that Couche-Tard is “one of the highest emitting companies in Canada” and operates globally, with investors in Europe and Asia expecting not just a disclosure of emissions but a real plan to address them.
“We've been engaging with several companies primarily through climate engagement Canada initiative and Couche-Tard is one of them,” noted Greig. “They’ve taken a couple of steps. They've measured their Scope 3 emissions and they’ve also matched their climate risk more thoroughly. But the goal of this shareholder proposal is to push the company further… What is the strategy to deal with those things, and can we ensure that strategy aligns with international standards?”
UPP’s proposal asks Couche-Tard to establish mid-term greenhouse gas (GHG) reduction targets for Scope 1 and 2 emissions - the pollution directly produced by its operations and the energy it consumes - and to outline how it will address Scope 3 emissions generated across its supply chain and through the use of its products.
The main climate challenge for Couche-Tard isn’t its retail operations but its fuel business, which generates most of the company’s revenue. Greig noted that the retail side, tied to Scope 1 and 2 emissions, is more within the company’s control, making it reasonable to expect mid-term targets over the next five to ten years. The fuel segment, however, involves downstream emissions influenced by global factors.
UPP applies the same climate expectations to all companies in its portfolio, but Couche-Tard stands out because of its high emissions and slower progress compared to peers, noted Greig. Listed among Canada’s largest emitters by Climate Engagement Canada, the retailer has “not taken as many steps as many other peers have,” she said.
Its global reach, from European operations to recent talks with Japan’s Seven & i Holdings, also makes the issue more pressing as international investors already expect Couche-Tard to disclose emissions but “they expect companies to also have a strategy to address those emissions. And that’s where we think that Couche-Tard needs to improve,” said Greig.
She emphasized there’s still room for Couche-Tard and UPP to reach an agreement and for the shareholder proposal to be withdrawn before the company’s annual meeting, even though the shareholder proposal has already been filed and the circular released. For that to happen, UPP wants the retailer to commit to concrete emission-reduction targets and a climate strategy that lays out how those targets will be achieved.
“We’d be happy to withdraw the proposal. Our engagement could continue with the company on a new footing with a more robust base,” said Greig, noting that in other Climate Engagement Canada initiatives, once companies adopted science-based targets or similar measures, the conversation shifted from whether to have a strategy at all to how it should be implemented.
Should pension funds file shareholder proposals?
While it’s still relatively uncommon for Canadian pension funds to file shareholder proposals, the practice is widely used in markets such as the US, Europe, and Australia, noted Greig, adding that there are situations where such proposals can serve as “an appropriate piece of leverage” to address portfolio risks, but cautioned that it’s a tool “that needs to be used wisely.”
“I just want to ensure that pensions understand that they have this tool available to them,” she said.
Greig explained that UPP’s climate engagement with Couche-Tard is part of a broader, long-standing strategy. Since its inception, UPP has operated under a Climate Action Plan, which includes both a climate transition investment framework for screening new investments and a climate stewardship plan aimed at moving portfolio companies toward alignment with climate goals.
For Greig, climate change represents a “system level risk” - something that can hit the entire economy, not just individual holdings.
“We need to be able to provide stable, long-term benefits or pensions for our members. That’s where we need the climate risk to be addressed,” she said.
That focus on systemic financial risk is also what allows UPP to draw a line between fiduciary duty and advocacy as Greig is careful to separate their approach from political activism.
“We’re only looking at issues where there’s an economic case and that kind of system level case for the stewardship side to avoid the politics for pension fiduciaries,” she said, underscoring that pensions should act on climate and inequality, but only where the link to portfolio risk is clear.
She explained that climate risk can be mapped directly onto UPP’s portfolio under different climate scenarios, and the same evidence-based approach applies to other systemic issues like inequality, where research from the IMF, OECD, and World Bank shows negative effects on economic growth and volatility.
Progress with Couche-Tard has been incremental. Since engagement began, the company has improved climate risk assessment and published Scope 3 data. Its June sustainability report showed some improvements in language, though not on UPP’s central request.
“It doesn’t address what we asked for, but it addresses other issues that we saw with the way that they were presenting information,” Greig said.
UPP confirmed that while they are Alimentation Couche-Tard shareholders, the value of UPP’s holdings is not publicly disclosed. UPP is currently the sole filer on the proposal, which will be presented and voted upon at Couche-Tard’s annual general meeting on Wednesday, Sept. 3.
