Carbon Strategy and Climate-Related Risk

Lockheed Martin recognizes the importance of effective strategic decarbonization programs and management of climate-related risk. In 2021, at the request of our Board of Directors, we began exploring opportunities to take more aggressive action to reduce our carbon emissions and increase our commitment to renewable energy sources. We conducted an analysis of our operational footprint, technical opportunities and investment requirements, using subject matter experts across all responsible functions including sustainability, facilities, capital planning, energy and each of our business areas. This analysis resulted in two updated carbon-related goals that will accelerate our carbon reduction and renewable energy strategies.

Carbon Reduction

By 2030 , reduce Scope 1 and 2 absolute carbon emissions by 36% from a 2020 baseline.

Renewable Energy

By 2030 , match 40% of electricity used across Lockheed Martin global operations with electricity produced from renewable sources.

Our updated carbon emissions reduction goal represents a shift from intensity-based emissions models to a commitment in absolute terms and from an updated baseline. Lockheed Martin was an early adopter of science-based carbon reduction goals. Our initial 2025 SMP emissions reduction goal aligned with the methodology of the Center for Sustainable Organizations (CSO), one of the first organizations to tie climate science to more tangible corporate goal-setting. At that time we selected an intensity-based goal that was established to outperform the CSO model criteria for aligning with a 1.5°C outcome in the long-term. In updating our performance commitment, we included three transformational elements: a shift to an absolute carbon reduction measurement, an acceleration of the total carbon reduction to which we are committed, and an update of the baseline year from which we measure our performance to make that commitment more current, relevant and challenging. Our updated commitment, which received executive-level approval, is to reduce our absolute Scope 1 and Scope 2 emissions by 36% from a 2020 baseline. This updated commitment is in line with the absolute contraction model well-below 2°C scenario.

Complementing our updated carbon emissions reduction goal, our updated renewable energy goal represents a 33% acceleration of our previous goal. We remain committed to advancing renewable energy sources through both on-site installations and investment in off-site generation. Renewable energy strengthens the resiliency of our facilities and communities, our relationship with our customers and our engagement with employees. The graphic below illustrates our investment in renewable energy across our global operations, both through on-site installations and power purchase agreements.

Our executive leadership team and Board of Directors recognize the investment required to achieve these accelerated goals and the need to incorporate these commitments in our long-range business plans. Through these commitments, we also recognize that more ambitious targets are needed to continue progress beyond 2030. With this in mind, we have programs and governance structures in place to ensure that we regularly monitor performance and continue to evolve our carbon strategy and carbon reduction efforts over time.

Addressing Scope 3 Emissions

Lockheed Martin was one of the earliest in the aerospace and defense industry to perform a high-level economic input-output life-cycle analysis (LCA) of cradle-to-gate to better understand environmental impacts throughout our supply chain. This analysis was completed and disclosed in our 2010 CDP Response. In addition, we began detailed estimations and disclosure of Scope 3 emissions in 2012 and continue to refine our Scope 3 emissions methodologies using recognized standards and the latest available data sets.

Measuring our Scope 3 Emissions

Purchased Goods and Services
  • Estimates are calculated by categorizing purchase order data by North American Industry Classification System (NAICS) code then applying the EPA emissions factor associated with each NAICS code.
Capital Goods
  • Estimates are calculated by categorizing purchase order data for capitals goods by NAICS code then applying the EPA emissions factor associated with each NAICS code.
Fuel and energy related activities (not included in Scope 1 and 2)
  • Transmission and distribution (T&D) losses associated with natural gas are calculated using emissions factors provided by EPA for all natural gas use in global operations.
  • T&D losses for electricity for Canada and Australia operations are estimated using country-specific emissions factors provided by UK electricity based T&D losses provided by UK Department for Business, Energy and Industrial Strategy.
  • T&D losses for electricity use are included in United States Scope 2 data by default through the use of EPA eGrid factors and are not included in Scope 3 data.
Business Travel
  • Personal auto reimbursement emissions are calculated by multiplying the total miles reimbursed multiplied by the average auto miles per gallon in the U.S. provided by the EPA and the CO2e per gallon of fuel. UK emissions are calculated using emissions factors.
  • Fuel usage represents all fuel use (including rental cars) and is calculated based on the average national price per gallon of gasoline in the U.S. and UK to estimate volume per $USD. The fuel volume is multiplied by the emissions factor (CO2e) per gallon of fuel.
  • Airline emissions are obtained from our corporate travel provider and are based on distance traveled and number of segments.
Employee Commuting
  • Human resources provides distance and commute frequency estimates for all US employees with commutes less than 100 miles (>100 miles are considered outliers or full time telecommuters). UK data on distance, frequency and mode of commuting was collected via survey in 2021. UK rates were updated to include 2022 emissions factors for mode of commute. Average emissions rate per employee is calculated using distance, frequency and mode of commute data. Rates are then multiplied by year end employee headcount at each site.
  • U.S. sites use business area level emissions rates. All UK sites use the same average emissions rate. Other international sites use the UK emissions rate as a proxy to include a broader range of transportation modes, versus personal auto use in the U.S., because commuter data for locations outside the U.S. and UK is not available at this time.
Waste generated in operations
  • Emissions associated with waste generated in operations are calculated using emissions factors from the U.S. EPA and
Use of sold products
  • Emissions from use of sold products are estimated by conducting applied lifecycle assessment calculations based on emission intensity by product or fuel use of our top revenue producing programs with tangible product deliveries and is aligned with the GHG Protocol.
  • Aircraft (fixed-wing and rotary) produce more than 99% of our estimated emissions for this category.

Aerospace and defense companies face industry-specific challenges in addressing both upstream and downstream Scope 3 emissions. The defense industrial base relies on a highly specialized and complex supply chain. In addition, our customers both define product specification and fully dictate the ultimate use of our products. Lockheed Martin recognizes that any action to reduce Scope 3 emissions requires strong industry collaboration and expanded customer engagement.

Despite the complex and unique challenges faced by our industry, we are taking action to address Scope 3 emissions. We continue to estimate and report Scope 3 emissions across the seven categories relevant to our business in our ESG Performance Index . We are also engaging in the following activities that address Scope 3 emissions:

  • Educating our suppliers on carbon reduction in conjunction with industry associations.
  • Actively participating with our industry peers in the International Aerospace Environmental Group (IAEG) GHG Management and Reporting work group whose charter was broadened recently to promote industrywide adoption of consistent Scope 3 emissions accounting and reporting practices.
  • Leading and achieving industry support through IAEG to deliver supplier sustainability education across our joint supply chain.
  • Spearheading the development of an aerospace and defense industry Supplier Renewable Energy Program that will support our supplier base to accelerate the adoption of renewable energy and thus reduce Scope 3 emissions across the sector. The program is designed to leverage the scale of a single industry’s global supply chain in a pre-competitive fashion to drive system-level change.
  • Continuing to develop products that reduce customer emissions. We are conducting continued research, development, testing and evaluation related to propulsion enhancements, including sustainable aviation fuel use.
  • Engaging with the White House and the Department of Defense to discuss shared challenges and required collaboration.

Updating Our Climate-Related Risk Analysis

We published our inaugural Task Force on Climate-related Financial Disclosures (TCFD)-aligned Climate-Related Risks and Opportunities report in 2020. Our most recent report revision builds upon our initial qualitative assessments, leveraging refined data analysis to provide additional, quantitative considerations that inform our conclusions.

Our expanded analysis focuses on physical climate-related risks and the impact of carbon emissions on transitional risks. Through our analysis, we established the total value at risk for all physical risk hazards. We also estimated transitional risk impacts on operational and supplier cost based on fixed carbon pricing and projected pricing relative to established climate scenarios based on Shared Socioeconomic Pathways.

To read more about our climate-related risk analysis, download our 2022 (TCFD)-aligned Climate-Related Risks and Opportunities report.