Union Pacific Climate Lobbying Alignment Assessment

Introduction

Union Pacific operates in 23 states across the western two-thirds of the United States. The decisions of federal, state, and local governments affect Union Pacific daily. Government policies impact our business, which can affect our employees, customers, shareholders, and the communities where we operate. We believe it is necessary to actively participate in the policy-making process.

In an effort to further our transparency and disclosures, we performed an analysis of our key trade association memberships to determine if, and how, our direct and indirect (i.e., trade associations) lobbying activities align with the Paris Agreement - limiting global warming to well below 2°C above pre-industrial levels and pursuing efforts to limit it to 1.5°C.

Union Pacific engages in lobbying in the United States at both the federal and state levels to advocate positions that affect our company and the railroad industry. We belong to rail industry and other trade organizations that represent an array of professional and industrial interests. These organizations provide a forum to allow members to focus on issue advocacy and promote best practices. Through our membership in trade associations, we can collaborate and combine efforts with others in the industry on various issues we face, including climate change.

Our membership in any such association or organization does not indicate we endorse or support every position these groups may take. Climate change issues are complex, and Union Pacific may not agree with every stance taken by each of the organizations where we participate. Even so, continued engagement allows us to influence positions in alignment with the interests of our stakeholders. We will not support organizations that spend an abundance of resources toward objectives that either work against our business and policy interests or are misaligned with the goals of the Paris Agreement.

Union Pacific takes its role seriously as a good corporate citizen and fully complies with all federal, state, and local requirements associated with participating in the policy-making and political process. This compliance includes reports to the Federal Election Commission on receipts and disbursements from the Company's political action committee (PAC), the Union Pacific Fund for Effective Government (FFEG), as well as all applicable reporting and registration requirements at all levels of government.

Union Pacific files all required quarterly and semi-annual lobbying activity reports with the U.S. House of Representatives and the U.S. Senate, pursuant to the federal Lobbying Disclosure Act. These reports are publicly available and provide information on activities affecting legislation through communication with any member or employee of a legislative body, or with any covered executive branch official. As required by law, these reports also disclose our lobbying expenditures, describe specific pieces of legislation that were the topic of communication and identify the individuals who lobbied on behalf of the Company. These can be accessed through the Office of the Clerk of the U.S. House of Representatives. Union Pacific also complies with the various lobbying disclosure laws in the 23 states we operate in where we have state government lobbying presence.

Approach to Climate Advocacy

Climate change is occurring across the globe as widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere are accelerating, rather than abating. Global surface temperature is expected to increase until at least the mid-century under all emissions scenarios considered. We know that serious, concerted actions must be taken before it is too late to mitigate the catastrophic effects of climate change.

The Paris Agreement is a legally-binding international treaty that sets a foundation for climate policy by aiming to address the intricacies of climate change – which is a heavy lift. We know that in addition to doing our part, we must engage all members of our value chain – our employees, suppliers, customers, communities and policy influencers. To this end, we support the goals of the Paris Agreement.

Union Pacific is proud to be a part of the climate solution. Railroads are uniquely positioned to aid North America and the rest of the world in mitigating the effects of climate change and transitioning into a low-carbon economy. Freight rail leads other forms of surface transportation when it comes to minimizing greenhouse gas (GHG) emissions. Research shows that on average, trains are three to four times more fuel-efficient, and produce 75% fewer greenhouse gas emissions than trucks. Therefore, shifting shipments from truck to rail actively supports meeting the goals of the Paris Agreement.

Building on rail’s environmental advantage over trucks and other modes of transportation, Union Pacific is committed to doing its part to protect the planet by reducing its carbon footprint. Our commitment to mitigating the impacts of climate change is underscored by our science-based target to reduce absolute Scope 1 and 2 GHG emissions on a well-to-wheel basis from locomotive operations 26% by 2030 from a 2018 base year. We expect to continue to take bolder and broader actions to drive reductions in our absolute GHG emissions. For instance, we have formally committed to working with the Science Based Target Initiative (SBTi) to revise our near-term emissions reduction target, and to set a 2050 net zero target.

In addition to revalidating our targets, Union Pacific has taken thoughtful and deliberate steps to reduce our environmental impact. We have developed a target to increase the percentage of low-carbon fuels consumed to 10% of our total diesel consumption by 2025, and further increase that consumption to 20% by 2030. Achieving this target should enable considerable progress toward achieving our SBTi 2030 goal. We also announced plans to purchase battery-electric locomotives for testing in yard operations. The combined purchases and required upgrades to yard infrastructure to support battery-electric locomotive operations are expected to exceed $100 million, which represents the largest investment in battery-electric technology by a U.S. Class I railroad. For more information, our climate actions are broadly outlined in our 2022 Climate Action Plan.

Union Pacific’s climate actions are integrated into the company’s governance structure and our Board of Directors provides oversight of our sustainability strategy. The Corporate Governance, Nominating and Sustainability Committee is responsible for reviewing current developments in sustainability and recommends adoption of new – or modifications to existing – practices, policies, and procedures. In addition to providing the Board with an annual report on environmental risk management, we provide routine updates on our sustainability activities, which include actions related to climate change. As part of its oversight role, the Corporate Governance, Nominating, and Sustainability Committee of the Company's Board of Directors reviews, at least annually, the Company's political contributions, including those described in this assessment.

Our Policy Positions

Union Pacific advocates for policies that enhance the competitiveness of the freight rail industry and enable Union Pacific to better compete for freight transportation, thereby reducing transportation-related greenhouse gas emissions by diverting traffic away from more carbon-intensive modes of transportation and taking trucks off the road. Union Pacific is particularly focused on reasonable market-based solutions that support the development of appropriate low- and zero-carbon technologies and fuels. Such policies should be mode neutral, technology- and fuel- agnostic and federal in scope to avoid a patchwork of local or state laws. We support reasonable legislation and regulation compatible with these principles. More detail on Union Pacific’s climate change policy positions is available in our 2022 Climate Action Plan. More detail on the freight rail industry’s climate change policies is available on the Association of American Railroads website.

Assessment

It is important we ensure our direct and indirect climate-related lobbying activities are aligned with the goals of the Paris Agreement as well as our own climate-related targets and ambitions. The purpose of this assessment is to facilitate responsive and open stakeholder communication regarding our position on climate change and how that position aligns with the organizations where we are members.

We have reviewed publicly available information for each of the trade associations detailed below to determine whether its respective position on climate change and related lobbying efforts align with the Paris Agreement and Union Pacific’s position on climate change. This assessment includes trade associations where we made non-deductible 2022 payments attributable to lobbying activities in excess of $25,000. We exclude state railroad membership associations, even if our non-deductible payments exceeded $25,000, because these organizations’ lobbying activities are limited to the positions endorsed by Union Pacific and the Association of American Railroads.

Policymaking is nuanced. Stakeholders with shared goals, like those of the Paris Agreement, may disagree on how to accomplish those goals. Union Pacific expects its trade associations will work with policymakers to advocate for reasonable legislation to accomplish those shared goals while minimizing the inclusion of provisions that would impede the railroads’ ability to grow the volume of freight shipped by rail—a key lever to reducing GHG emissions within the transportation sector.

  • Association of American Railroads (AAR):
    • The AAR is the world’s leading railroad policy, research, standard-setting, and technology organization that focuses on the safety and productivity of the U.S. freight rail industry. The AAR supports policies to increase the competitiveness of freight railroads, which are the most fuel-efficient way to move freight over land. Because railroads account for only 2.1% of U.S. transportation-related greenhouse gas emissions, supporting policies to take trucks off the road and move more freight by rail supports the goals of the Paris Agreement.
    • Given the AAR’s statement of recognition of climate change impacts, and their aim to increase the amount of freight moved by rail, thus reducing emissions, we conclude that the AAR’s lobbying activities are aligned with the goals of the Paris Agreement.
       
  • Business Roundtable:
    • Business Roundtable is an association of chief executive officers (CEOs) of America’s leading companies who are working to promote a thriving U.S. economy and expanded opportunity for all Americans through sound public policy. Business Roundtable was among the first national business organizations to publish a comprehensive set of principles and policies “to limit global temperature rise this century to well below 2 degrees Celsius above preindustrial levels, consistent with the Paris Agreement.” Therefore, we conclude Business Roundtable’s policy positions are aligned with the goals of the Paris Agreement.
       
  • U.S. Chamber of Commerce:
    • The Chamber of Commerce of the United States is the world’s largest business organization. Members range from small businesses and chambers of commerce across the country to leading industry associations and global corporations.
    • The U.S. Chamber of Commerce released detailed principles for climate policy and welcomed the Biden Administration’s decision to rejoin the Paris Agreement. The Chamber supports U.S. participation in the Paris Agreement and is clear that inaction is not an option. Of note, the Chamber vigorously supported the Infrastructure Investment and Jobs Act (IIJA) that included significant resources to advance climate and energy technology innovation, electric grid infrastructure and resilience, and EV (Electric Vehicle) infrastructure and supply chains. Therefore, we conclude the US Chamber of Commerce’s policy positions are aligned with the goals of the Paris Agreement.
       
  • National Association of Manufacturers (NAM):
  • California Business Roundtable:
    • California Business Roundtable (BRT) supports the state’s climate change goals under AB 32, which were formulated to achieve and exceed the Paris Agreement. Accordingly, the California BRT advocates that policymakers and regulators implement their programs within a framework that ensures an affordable and reliable energy future for all Californians.
    • We do not perceive there to be a misalignment between the climate-related public positions of the California BRT and the goals of the Paris Agreement.
       
  • Nebraska Chamber of Commerce:
    • The Nebraska Chamber of Commerce’s Environmental & Energy Council advises the Chamber’s Board of Directors on energy and environmental policy and initiatives. The Council develops policy and program proposals that promote a clean and safe environment and maintain and preserve our natural resources, while being fair and equitable to business and the public related to environmental legislation or regulation. The Chamber has advocated for state legislation that provides tax incentives for renewable energy investments in the state. The Nebraska Chamber has not explicitly expressed support for, or opposition to, the Paris Climate Agreement.
    • We do not perceive there to be a misalignment between the climate-related public positions of the Nebraska Chamber and the goals of the Paris Agreement.
       
  • Platte Institute for Economic Research:
    • The Platte Institute has not lobbied on climate-related policy issues. The Institute has not explicitly expressed support for, or opposition to, the Paris Climate Agreement.
    • We do not perceive there to be a misalignment between the policy positions of the Platte Institute and the goals of the Paris Agreement.
       
  • Greater Omaha Chamber:
    • The Omaha Chamber has not explicitly expressed support for, or opposition to, the Paris Climate Agreement. The Chamber’s public policy efforts in energy, environmental, or climate-related policy issues have been related to business incentives and tax programs, including tax incentives for renewable energy production.
    • We do not perceive there to be a misalignment between the climate-related public positions of the Greater Omaha Chamber and the goals of the Paris Agreement.

Union Pacific values the opportunity to play a leadership role in these organizations, where we use our influence to advocate for policy positions that align with Union Pacific’s goals, values, and policy aims, including those of the Paris Agreement.

While the viewpoints of trade associations and their members may change and evolve over time, this assessment reflects our analysis of the current positions of the trade associations mentioned above. Union Pacific executives review our trade association memberships annually for alignment with our position on climate. We are also engaged in the appropriate committees and working groups of trade associations to best exercise leadership and influence climate- and business-related policy positions. Union Pacific is committed to open and transparent discussions regarding our involvement in state and federal lobbying and policymaking.

Cautionary Information

Our 2022 Climate Lobbying Alignment Assessment provides additional explanatory information regarding Union Pacific that may not be available, included or directly derived from information in the company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC). Information included in this document, and any issues identified as important for purposes of this document, may not be considered material for SEC reporting purposes. Materiality and/or the term “material” in the context of this document is distinct from and should not be confused with, such terms as defined for SEC reporting purposes. This report includes statements and information regarding future expectations, outcomes or results of the company that are not historical facts. These statements and information are forward looking as defined by federal securities laws. Forward looking statements and information can be identified by use of forward-looking terminology (and derivations thereof), such as “believes,” “expects,” “may,” “should,” “will,” “would,” “intends,” “plans,” “estimates,” “anticipates,” “strives,” “seeks,” “aspires,” “endeavors,” “target,” “projects” and other words or phrases of similar intent. Forward-looking statements and information generally include the following: the company’s expectations, goals, forecasts, targets, and aspirations with respect to sustainability and corporate responsibility matters, including related risks and opportunities; demand for the company’s rail service; enhancing profitability; volume and revenue growth; efficiency improvements and increasing returns; the effectiveness or growth of new and newer services; management of network volumes; increasing shareholder value; total amount of capital investments;; returns on capital investments; improvements regarding the sustainability, emissions, and safety of our operations and equipment; preserving the environment and communities where the company operates; and effectiveness of plans, programs and initiatives related to our workforce. Forward-looking statements and information should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times that, or by which, such performance, targets, goals, or results will be achieved. Forward-looking statements and information are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements and information reflect the good faith consideration by management of currently available information and may be based on underlying assumptions believed to be reasonable under the circumstances. However, such information and assumptions (and, therefore, such forward-looking statements and information) are or may be subject to variables or unknown or unforeseeable events or circumstances over which management has little or no influence or control and may be derived from internal controls and processes that continue to evolve and standards are measuring progress that are still developing. Factors that could cause results or outcomes to differ, including the risk factors in Item 1A of the company’s Annual Form 10-K, filed February 10, 2023, also could affect our future results, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements and information. This report should be read considering these risk factors. To the extent circumstances require or the company deems it otherwise necessary, the company will update or amend these risk factors in subsequent Annual Reports, periodic reports on Form 10-Q or current reports on Form 8-K. Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, regardless of any past practice of doing so. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements. Website references and/or hyperlinks have been provided for convenience only, and the contents therein are not incorporated into, nor do they constitute a part of, this document.