TE Connectivity

TE Connectivity is a US-based manufacturer of electronic components and wireless systems. The company’s main market is the automotive industry where its products are used to improve safety and fuel efficiency through increased levels of automation and electrification. The company also sells products into industrial and telecommunications markets where they are often used in applications to help improve energy efficiency and safety.

Engagement objective

TE Connectivity has already committed to strong and credible near-term targets in line with the Science Based Targets initiative (SBTi). Still, as long-term targets are crucial, our objective is for the company to commit to SBTi NZC by 2050. We are also keen to discuss plans for reducing Scope 3 emissions and how climate-related governance is structured.

Background

As one of the top 10 emitters (by financed emissions) in the strategy, TE Connectivity is a high priority company for our NZC engagements. We had already been engaging TE Connectivity and encouraging it to scale its climate ambition (by moving from greenhouse gas - GHG - emissions reductions targets to setting a 2050 NZC target) when we joined the Net Zero Engagement Initiative (NZEI) in 2023.

Actions

Established by the IIGCC in March 2023, the NZEI wrote to target companies¹ requesting disclosure of a comprehensive corporate NZ transition plan that includes: 

1. a comprehensive net zero commitment;
2. aligned GHG targets;
3. emissions performance tracked; and,
4. a credible decarbonisation strategy.

Although TE Connectivity initially acknowledged receipt of this letter, the company failed to respond to several further attempts to discuss the letter in more detail. These were made by a sub-group of its investors that are members of the IIGCC including us, another asset manager and a private bank and involved contacting the company’s investor relations team as well as its brokers.

Our aim had initially been to applaud the company for its progress so far whilst also encouraging further action. For example, TE Connectivity has committed to strong and credible near-term targets in line with the Science Based Targets initiative (SBTi) covering absolute reductions in all scopes. Still, the need for both long and near-term targets is crucial and we agreed that committing to SBTi NZC by 2050 will strengthen the company’s position as a sustainable leader. We were also keen to discuss plans for reducing Scope 3 emissions and how climate-related governance is structured.

After six months with no response, we suggested that the group should consider how to escalate this engagement. The group decided to first try contacting the investor relations team a final time and then, if that was also unsuccessful, formally writing to the Chair requesting a response, otherwise we would make a statement at the forthcoming AGM.

As the investor relations contacts remained unresponsive, we wrote to the Chair in January 2024 as planned. We also invited another of TE Connectivity’s institutional investors to sign the letter, adding further weight to our requests.

Outcome: Milestone 2 - Company shares or agrees to disclose information on the issue

The escalation proved successful, as we are now in the process of scheduling a call with TE Connectivity to discuss our requests. The company’s investor relations contacts also confirmed that its Corporate Responsibility team plans to announce progress against its goals in May 2024.

If the forthcoming call and/or announcement on progress do not include a commitment to a NZC 2050 target or credible plans towards making such a commitment, we may escalate further, for example by filing a shareholder resolution in the 2025 proxy season.