WHEREAS: The Intergovernmental Panel on Climate Change has advised that greenhouse gas (GHG) emissions must be halved by 2030 and reach net zero by 2050 to limit global warming to 1.5°C.
Every incremental increase in temperature above the Paris Agreement’s goal of holding warming to 1.5°C will entail increasingly severe physical, transition, and systemic risks for companies and investors alike. 
In its 2022 10-K, Kadant Inc. (or “Kadant”) highlighted its climate risk, noting the impact intensifying extreme weather has already had on manufacturing locations in the southeastern United States. Kadant also noted that as an effect of climate change, “our customers in the forestry industry may face damage to assets and losses from business interruption, which could lead to [...] disruption of supply chains of which we may be a part.”
Despite acknowledging its climate risk, Kadant’s mitigation strategy does not appear to be sufficient to shield it from climate-related risks.
Kadant trails its competitors in setting GHG reduction targets and managing climate risks. Valmet has a near-term 1.5°C aligned science-based target through the Science Based Targets initiative (SBTi). Voith and Adritz also have goals to reduce their GHG emissions.
Kadant does not have emissions reduction targets aligned with the goals of the Paris Agreement and it relies, in part, on renewable energy credits to meet its renewable energy goals. Renewable energy credits do not allow Kadant to reap financial benefits from clean energy deployment.
In contrast, Kadant positions itself as a “global supplier of technologies and engineered systems that drive sustainable industrial processing”[1] and seeks to build business by offering energy efficiency solutions. Issuing near and long-term science-based GHG reduction targets aligned with the Paris Agreement will help it build trust with existing and potential customers decarbonizing their supply chains. Ramping up its climate-related initiatives may also unlock opportunities for Kadant’s growth by preparing it for future climate-related regulations.
Investors seek increased disclosure of how companies are addressing the climate crisis and plan to transition their business model to one that aligns with limiting warming to 1.5°C. To assist companies in developing viable transition plans, groups including We Mean Business, CDP, State Street Global Advisors, and the Task Force on Climate-Related Disclosures have provided guidance.