Introduction

The Sherwin-Williams Company (the Company or Sherwin-Williams) recognizes the importance of measuring and analyzing our carbon footprint. We actively seek out ways to reduce our greenhouse gas (GHG) emissions and use our products and technologies to help improve energy efficiency and reduce global carbon emissions. The Company has established related aspirational goals, tracks metrics and reports on its progress annually. In early 2021, we established our 2030 environmental footprint goals against a 2019 baseline. This report has been prepared in accordance with the framework established by the Task Force on Climate-related Financial Disclosures (2017) (TCFD) using data from 2025.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this report constitute “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, anticipated future performance (including sales and earnings), expected growth, and future business plans. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “anticipate,” “aspire,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “project,” “seek,” “should,” “strive,” “target,” “will,” or “would” or the negative thereof or comparable terminology.

 

Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside our control, that could cause actual results to differ materially from such statements and from our historical results, performance and experience. These risks, uncertainties and other factors include such things as: general business and economic conditions in the United States and worldwide; inflation rates, interest rates, unemployment rates, labor costs, healthcare costs, recessionary conditions, geopolitical conditions, terrorist activity, armed conflicts and wars, public health crises, pandemics, outbreaks of disease and supply chain disruptions; shifts in consumer behavior driven by economic downturns in cyclical segments of the economy; shortages and increases in the cost of raw materials and energy; catastrophic events, adverse weather conditions and natural disasters (including those that may be related to climate change); disruptions to our information technology systems, including due to digitization efforts or cybersecurity incidents; our ability to attract, retain, develop and progress a qualified global workforce; the loss of any of our largest customers; increased competition or failure to keep pace with developments in key competitive areas of our business; our ability to successfully integrate past and future acquisitions into our existing operations; risks and uncertainties associated with our expansion into and our operations in South America, Asia, Europe and other foreign markets; policy changes affecting international trade, including import/export restrictions and tariffs; our ability to achieve our strategies or expectations relating to sustainability considerations, including as a result of evolving legal, regulatory and other standards, processes and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite suppliers, energy sources, or financing and changes in carbon markets and carbon accounting rules; damage to our business, reputation, image or brands due to negative publicity; the infringement or loss of our intellectual property rights or the theft or unauthorized use of our trade secrets or other confidential business information; a weakening of global credit markets or changes to our credit ratings; our ability to generate cash to service our indebtedness; fluctuations in foreign currency exchange rates and changing monetary policies; our ability to comply with a variety of complex U.S. and non-U.S. laws, rules and regulations; increases in tax rates, or changes in tax laws or regulations; our ability to comply with numerous, complex and increasingly stringent domestic and foreign health, safety and environmental laws, regulations and requirements; our liability related to environmental investigation and remediation activities at some of our currently- and formerly-owned sites; the nature, cost, quantity and outcome of pending and future litigation, including lead pigment and lead-based paint litigation; and the other risk factors discussed in Item 1A of our most recent Annual Report on Form 10-K and our other reports filed with the SEC.

 

Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.

 

This report and related information made available on or through our website does not cover all information about our business. The inclusion of information or references in this report, including the use of “materiality,” “significant” or similar terms, should not be construed as a characterization regarding the materiality or importance of such information to our business or financial results or that such information is necessarily material to investors or other stakeholders for purposes of U.S. federal or state securities laws and/or any other federal, state or foreign laws, regulations and requirements (unless otherwise expressly so stated). The goals and targets presented in this report or that are made available on or through our website are aspirational and not guarantees or promises that such goals and targets will be achieved. In addition, historical, current and forward-looking information included in this report may be based on standards, methodologies and practices for measuring progress that are still developing, internal controls and processes that continue to evolve, and estimates and assumptions that are subject to change. Accordingly, such historical, current and forward-looking information, including goals and targets and underlying estimates, assumptions and data, may be subject to modifications in future reports due to such developing standards, methodologies, practices and controls and processes. Certain sustainability- and environmental-related historical data for dates and periods prior to 2025 presented, discussed, referenced or otherwise included in this report has been revised to reflect updates made as a result of our internal review processes and developing standards, methodologies, practices, and processes and controls. However, neither future distribution of this report nor the continued availability of this report in archive form on our website should be deemed to constitute an update or re-affirmation of this data as of any future date. Any future update will be provided only through a public disclosure indicating that fact. Any reference to the Company’s support of, work with, or collaboration with a third-party organization within this report does not constitute or imply an endorsement by the Company of any or all of the positions or activities of such organization.

We believe a summary of the global scope of our business is important in understanding our climate-related disclosures. Our business consists of three reportable segments:

• Paint Stores Group is engaged in servicing the needs of architectural and industrial paint contractors and do-it-yourself homeowners. These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, original equipment manufacturer (OEM) product finishes and related products. The majority of these products are produced by manufacturing facilities in the Consumer Brands Group. In addition, each store sells select purchased associated products..
• Consumer Brands Group manufactures and distributes a broad portfolio of branded and private-label architectural paint, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks and adhesives to retailers, including home centers and hardware stores, dedicated dealers and distributors throughout North America, Latin America and Europe. Sales and marketing of certain controlled brand and private-label products are performed by a direct sales staff. The products distributed through third-party customers are intended for resale to the ultimate end-user of the product.
• Performance Coatings Group develops and sells industrial coatings for wood finishing and general industrial (metal and plastic) applications, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and performance-based resins and colorants worldwide.  

GOVERNANCE

a. Describe the board’s oversight of climate-related risks and opportunities.

b. Describe management’s role in assessing and managing climate-related risks and opportunities.

 

Board of Directors’ Oversight

Our Board of Directors is responsible for overseeing the assessment and management of the Company’s exposure to various risks. We have an enterprise risk management (ERM) program that includes the processes used to identify, assess and manage our most significant enterprise risks and uncertainties that could materially impact the long-term health of the Company or prevent the achievement of strategic objectives. These risks are identified, measured, monitored and managed across the following key risk categories:

• Strategic: including acquisition, business disruption, reputational and sustainability risks
• Operational: including cybersecurity, information technology and artificial intelligence, supply chain and sourcing, and talent attraction, retention and development risks

• Financial and macroeconomic: including economic condition, geopolitical and financial control risks

• Compliance: including litigation, regulatory, tax and intellectual property risks

Our Chief Financial Officer (CFO), who reports to our Chief Executive Officer (CEO), facilitates and reviews the ERM program with the board at least once per year, including the methodology and approach used to identify, assess and manage risks; enhancements to the ERM program during the preceding year; and existing risks and significant emerging risks across the Company’s key risk categories. Due to their immediacy and risk level, the Company’s most significant risks identified through the ERM program are discussed in greater detail with the board, including the potential impact and likelihood of the risks materializing over the relevant timeframe, future threats and trends, assigned risk captains, and the actions, strategies, processes, controls, and procedures used or to be implemented to manage and mitigate the risks.

 

The CEO, CFO and other senior management may review specific risks with the board throughout the year, as necessary and appropriate, including as a result of the Lead Director or the board requesting more frequent updates or information about specific risks. In reviewing specific risks with the board, the CEO, CFO and other senior management may incorporate reports and presentations from third-party advisors and consultants designed to advise with respect to future threats and trends and risk identification, management, and mitigation actions, strategies, and processes, as well as to discuss with, and obtain input from, the board. To assist the board in overseeing the Company’s exposure to various risks, the board has delegated specific risk areas to each board committee. The CFO and other senior management review these delegated risks with each board committee, and the committees provide regular reports to the full board.

 

The Audit Committee’s support of the board includes overseeing the Company’s ERM process and compliance with legal and regulatory requirements, including those that may be related to environmental and climate-related requirements. The Nominating and Corporate Governance Committee’s support includes overseeing the Company’s key environmental (including the impacts of climate change), product stewardship, occupational health and safety, sustainability and corporate social responsibility policies and strategies. The Compensation and Management Development Committee is responsible for evaluating our CEO’s annual performance, which is appraised across several categories, one of which is leadership in sustainability, which includes the development, integration and execution of our sustainability strategy as part of the Company’s overall business strategy.

 

Senior Management’s Role

 

Enterprise Risk Management

While our Board of Directors has oversight responsibility of management and various risks, the Company’s management and their teams, under the direction of our CEO, are responsible for managing the business and day-to-day affairs of the Company. As noted above, our CFO facilitates the Company’s ERM program, which includes a formal assessment of the Company’s risk environment, including climate-related risks at least once per year. Because risks are considered in conjunction with the Company’s operations and strategies, including long-term strategies, risks are identified and evaluated across different timeframes depending on the specific risk. For the most significant risks identified, the ERM program team engages with senior management and other senior leaders in the functional areas and business units specific to the risks to develop and support risk management and mitigation actions, strategies and processes across the short, medium and long term, as necessary and appropriate, and to assist in aligning such actions, strategies and processes with the Company’s relevant controls and procedures. Senior management and other senior leaders also may consult with outside advisors and experts in developing risk management and mitigation actions, strategies, processes, controls and procedures and anticipating future threats and trends relating to the most significant risks.

 

The ERM program also facilitates the incorporation of risk assessment and evaluation into the strategic planning process and the provision of regular reports to senior management, including the CEO, regarding the actions, strategies, processes, controls and procedures specific to managing, mitigating and anticipating significant risks.  Members of senior management and other senior leaders are responsible for managing key risks specific to their functional areas.

 

Sustainability Governance

Our sustainability framework is centered on a foundation of governance and ethics, with our governance structure designed to enable broad engagement and appropriate oversight across the organization.

 

Our Sustainability Council consists of subject matter experts from business and corporate functions and representatives of cross-functional workgroups focused on topics across our sustainability framework, including our environmental footprint (which includes topics such as emissions, waste, water, nature, etc.), occupational health and safety, belonging and culture, product stewardship and sustainability reporting. The Sustainability Council oversees the development, implementation and monitoring of the Company’s key sustainability metrics, targets, goals, strategies, policies and practices, as well as the monitoring, assessing and addressing of trends, risks and opportunities with respect to sustainability topics most significant to the Company and its stakeholders. Members of the Sustainability Council provide periodic updates to the Sustainability Steering Committee.

 

Our Sustainability Steering Committee supports alignment across the organization in overseeing the work of the Sustainability Council. The Sustainability Steering Committee is composed of members of senior management and other senior leaders across the organization, including the general counsel, presidents of the Business Divisions and senior vice presidents of environmental, health and safety; sustainability; human resources; and investor relations. The Steering Committee meets biannually to discuss the Company’s key sustainability strategies, policies and practices, including those relating to climate change. Members of the Sustainability Steering Committee provide updates to the CEO, the board and board committees on an annual basis, at minimum.

STRATEGY

a. Describe the climate-related risks and opportunities the organization has identified over the short, medium and long term.

b. Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy and financial planning.

c. Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

 

Sherwin-Williams Climate Strategy

Sherwin-Williams retained the services of a third-party consultant to help us further assess the risks and opportunities associated with climate change and to help us prepare for this report and related disclosures. This was a comprehensive, data-driven assessment that evaluated a wide range of physical and transition risks at the enterprise, business unit, product and individual location levels.

 

The information utilized in the assessment is based on 2024 data relevant to the Climate-Related Financial Disclosures. We also refer you to our latest Sustainability Report and Annual Report on Form 10-K for supplemental information regarding our business and sustainability initiatives, including those relating to environmental and climate change-related risks and other information. You can also find other supplemental information about our business and sustainability initiatives beyond what is required for this report on or through our website.

 

Sherwin-Williams assesses risk factors that may materially and adversely affect our business, results of operations, cash flows, liquidity or financial condition. In assessing climate risks in line with the TCFD framework, Sherwin-Williams considers two primary types of climate risks: physical risks and transition risks. Our third-party consultant considered the following time horizons, which are consistent with Sherwin-Williams existing strategic and business planning time horizons, for modeling purposes:

• Short term: 0 to 2 years

• Medium term: 3 to 7 years

• Long term: 8+ years

The following risk and opportunity categories are considered in our climate-related assessment, which focuses on our top 1,000 locations:

Physical Risks

We leveraged the expertise of an external consultant to assess impacts on our top 1,000 locations by insured asset value. The analysis evaluated the potential physical risks that may impact our operations, considering different scenarios of global warming by 2050. To evaluate the potential risks of climate change on our business, we considered two distinct climate scenarios that are commonly used in conjunction with the TCFD framework:

Our 2030 goal of reducing our absolute Scope 1 and Scope 2 emissions by 30 percent compared to a 2019 baseline was developed to reflect a science-based targets approach influenced by global efforts to limit global warming to below 2 degrees Celsius above preindustrial temperatures.

 

For additional supplemental climate-related risk information beyond what is included in this document, see the risk factor discussions related to climate change in Item 1A within our most recent Annual Report on Form 10-K on file with the SEC. 

 

Our environmental footprint reduction goals for 2030, versus a 2019 baseline, are as follows:

1. Reduce absolute Scope 1 and 2 GHG emissions by 30 percent by 2030;
2. Increase electricity from renewable sources to 50 percent of total electricity usage by 2030; and
3. Reduce waste disposal intensity by 25 percent by 2030.

As for physical risks, the third-party assessment of our top 1,000 locations by insured asset value determined that, in the aggregate, we are generally at low risk for adverse impacts resulting from acute or chronic risks, such as wildfires, landslides, floods, sea level rise and hurricanes.

 

The assessment identified temperature extremes as a chronic moderate physical risk at some of our locations. In addition, we review the baseline water stress of our major global manufacturing facilities annually, using the World Resources Institute Aqueduct Water Risk Atlas Tool.

 

RISK TYPE: Acute Physical¹

TIME HORIZON: Short, medium and long term 

DESCRIPTION: As noted in the introduction to this disclosure, Sherwin-Williams has a global presence and an integrated network of manufacturing, distribution and sales locations. We have historically located our stores in promising markets, some of which could have exposure to physical risks from climate change. We believe our experience operating in these environments has made us a reliable and trusted neighbor in these communities.

 

Associated Costs/Financial Effects: From time to time, adverse weather conditions and natural disasters, including those that may be related to climate change or otherwise, have caused business disruptions and have had an adverse effect on our sales, manufacturing and distribution of our products. For example, unusually cold and rainy weather could have an adverse effect on sales of our exterior paint products. In the event a natural disaster or adverse weather conditions cause significant damage to any one or more of our principal manufacturing or distribution facilities, we may not be able to provide the products needed to meet customer demand, which could have an adverse effect on our sales of certain paint, coatings and related products.

 

These risks may also affect our suppliers. The impact of these risks on our suppliers also has had or may have an adverse effect on our sales, manufacture and distribution of certain of our products. Adverse weather conditions and natural disasters have in the past adversely impacted, and may in the future adversely impact, the availability and cost of raw materials and fuel supplies, and our ability to meet customer demands for some of our products, adequately staff and maintain operations at affected facilities and our costs generally.

 

Risk Mitigation:  In the event of adverse weather conditions and natural disasters, we focus on responding to and mitigating the impacts quickly, including, but not limited to, redistributing resources within our network (people, materials, etc.) and/or providing temporary solutions (opening mobile stores in impacted areas, for example).

 

RISK TYPE: Chronic Physical²

TIME HORIZON: Long term

DESCRIPTION: Severe weather events have the potential to disrupt operations at manufacturing, distribution and sales locations within certain regions. Our Global Supply Chain (GSC) consists of a highly efficient manufacturing and distribution system for paint, coatings and related products. GSC is integrated and geographically distributed in such a way that the risk created by a particular location being forced out of service may be mitigated, including by shifting production to other locations, if necessary. We will continue to focus on these physical risks for climate strategic planning purposes.

 

Temperature extremes have been identified as a chronic moderate physical risk at some of our locations and we focus on responding to and mitigating impacts quickly, as noted above. We actively monitor local weather conditions and implement site-specific response plans to support the safety of personnel and operational continuity. In periods of extreme heat, sites provide training on hydration and self-monitoring for heat-related symptoms and establish designated cooling areas or scheduled cooldown times. During forecasted cold-weather events, our facilities activate cold-weather preparedness plans, which include securing buildings, maintaining adequate indoor heat, and protecting equipment and processes from temperature-related damage. Beyond these near-term measures, our long-term approach to managing temperature-related risks leverages our flexible manufacturing footprint, which allows us to shift production across sites when necessary. This operational agility enhances our ability to respond to localized climate impacts, helping safeguard our people and maintain the resilience of our operations.

Transition Risks

We leveraged the expertise of an external consultant to assist us in assessing transition risks to our business. The analysis utilized the scenarios in the World Energy Outlook (WEO) developed by the International Energy Agency to assess policy risk. Market risk is assessed based on potential cost increases in key supplier markets driven by exposure to carbon pricing and other transition-related pressures. Reputational risk and technology risk are assessed through benchmarking the Company’s climate performance, disclosures and transition alignment against industry peers.

 

RISK TYPE: Public Policy

TIME HORIZON: Short, medium and long term 

DESCRIPTION: Our operations are subject to various domestic and foreign health, safety and environmental laws, regulations and requirements, including those related to climate change. Increased global focus on climate change may result in the imposition of new or additional regulations or requirements applicable to, and increased financial and transition risks for, our business and industry. TCFD breaks down categories of policy and legal risk into the following categories: (1) policy actions that constrain actions that would otherwise lead to adverse effects on the climate, and (2) policy actions that promote adaptation to climate change.

 

Category One: Many government authorities and agencies have introduced, or are contemplating, regulatory changes to address climate change, including the regulation and disclosure of GHG emissions. The outcome of new and emerging legislation or regulation in the U.S. and other jurisdictions in which we operate may result in fees or restrictions on certain activities or materials and new or additional requirements, including to fund energy efficiency activities or renewable energy use and to disclose information regarding our GHG emissions performance, renewable energy usage and efficiency, waste generation and recycling rates, climate-related risks, opportunities and oversight and related strategies and initiatives across our global operations. 

 

Category Two: We may also face policy actions to promote climate change adaptation such as incentives for renewable energy use; the funding of energy efficiency activities; transformative technologies; renewable energy use and efficiency, and implementation of extended producer responsibility programs. 

 

Associated Costs/Financial Effects: Compliance with these climate change initiatives has in the past and may in the future result in additional costs to us, including, among other things, increased production costs, additional taxes, additional investments in renewable energy use and other initiatives, reduced emission allowances or additional restrictions on production or operations. We may not be able to timely recover the cost of compliance with such new or more stringent laws and regulations, which could adversely affect the results of our operations, cash flows, or financial condition. Despite our efforts to timely comply with such initiatives, implement measures to improve our operations and execute on our related strategies and initiatives, any actual or perceived failure to comply with new or additional requirements or meet stakeholder expectations with respect to the impacts of our operations on the environment or on our customers or employees and related strategies and initiatives may result in adverse publicity, increased litigation risk and adversely affect our business and reputation, which could adversely impact our results of operations, cash flows and financial condition.

 

We expect health, safety and additional environmental laws, regulations and requirements to continue to evolve and to be applied with increasing stringency on our industry. Our costs to comply with these laws, regulations and requirements may increase as they become more stringent in the future, and these increased costs may adversely affect our results of operations, cash flows and financial condition.

 

Risk Mitigation Strategies: Sherwin-Williams participates in various regional and industry trade associations such as the American Coatings Association (ACA); the European Council of the Paint, Printing Ink and Artists’ Colours Industry (CEPE); the Retail Industry Leaders Association (RILA); the National Association of Manufacturers (NAM); and groups such as the U.S. Green Building Council. This active involvement demonstrates our collaboration within the industry and with other groups about the connection points between public policy and our focus on technical innovation. This engagement also informs the development of our strategies for addressing current and emerging trends, risks and opportunities and complying with applicable laws, regulations and requirements relating to the environment and climate change.

 

RISK TYPE: Market

TIME HORIZON: Short, medium and long term 

DESCRIPTION: As described in prior sections of this report, we believe our primary climate-related market risks are the potential for increased costs, insufficient availability of the raw materials we need to produce our products and any actual or perceived failure to comply with new or additional requirements or meet stakeholder expectations with respect to the impacts of our operations.

Our suppliers may continue to have exposure to climate-related risks that may disrupt our ability to acquire raw materials or result in higher costs due to unexpected shortages. In addition, environmental regulations, including regulations related to climate change or otherwise, have in the past and may in the future negatively impact us or our suppliers in terms of availability and cost of raw materials, as well as sources and supply of energy. Furthermore, risks of shifting consumer behavior and preferences are relevant to our business. 

 

Associated Costs/Financial Effects: Failure to respond in a timely manner to changing customer needs could result in reduced demand for our paints and coatings. We anticipate that any associated R&D expenditures required to adapt parts of our product portfolio will be managed through our standard R&D expenditure allocation process as we have done historically. 

 

Risk Mitigation Strategies: 

Where possible, we strive to find ways to respond to these risks, trends and our customers’ needs and requests with respect to the premium products, quality and service that they have come to expect from us, including through the expansion of our portfolio of products with sustainability attributes, as further described below. Technology, product quality, and product innovation and development, including product sustainability attributes, are among the key competitive factors for our business. As our customers continue to show increased interest in the sustainability attributes of our products, it will be important for us to keep pace with such demand. Through our sales teams, we regularly engage with customers to understand their product needs and competitive pressures, including incorporation of lower carbon footprint products.

 

RISK TYPE: Reputation

TIME HORIZON: Short, medium and long term 

DESCRIPTION: Our reputation, image and recognized brands significantly contribute to our business and success. Our reputation and image are critical to retaining and growing our customer base and our relationships with other stakeholders.

 

Associated Costs/Financial Effects: Damage to our reputation or image, or negative claims (even if inaccurate) or publicity about our business, could adversely affect the demand for some of our products and adversely affect our sales, earnings, cash flows or financial condition.

 

Risk Mitigation Strategies: We work diligently to maintain our reputation as an industry leader and continue to be recognized for our efforts and progress on our sustainability initiatives. The heightened focus on climate change has created opportunities for ongoing review of our sustainability strategies and initiatives for market and regulatory relevancy. Any actual or perceived failure to comply with new or additional requirements or meet stakeholder expectations with respect to the impacts of our operations on the environment or on our customers or employees and related strategies and initiatives may result in adverse publicity, increased litigation risk and adversely affect our business and reputation, which could adversely impact our results of operations, cash flow and financial condition. Company performance on climate-related issues is important to a broad set of stakeholders, including our customers, investors, employees and communities in which we operate. We formally engage stakeholder representatives for feedback during periodic updates to our priority topic assessment and regularly engage stakeholders during normal business operations. We participate in various regional and industry trade associations to maintain awareness of regulatory and industry trends and pursue third-party verifications to help validate claims about product attributes and our Scope 1 and Scope 2 emissions reporting. Additionally, we partner and collaborate with nongovernmental organizations, customers, suppliers and regulators to foster open lines of communication and aid us in being responsive to stakeholder interests.

 

RISK TYPE: Technology

TIME HORIZON: Medium and long term

DESCRIPTION: Evaluation of new and emerging technologies is incorporated into our business operations. When selecting equipment, energy efficiency is often considered as part of the selection process. In addition, sustainability attributes, including environmental footprint, have been built into our research and development processes across much of the business to consider potential climate impacts of new raw materials, formulation technologies and/or product performance.

 

Essential to our product innovation and development processes, innovation and optimization are the foundation of our Sustainability by Design program. The program embeds life cycle thinking, which considers energy efficiency and other climate-related impacts throughout our value chain, into the earliest stages of our product innovation and development processes. As we develop and enhance products, sustainability remains top of mind.

 

From initial concept through commercialization, we identify ways to, where possible, make our products more sustainable and better performing by evaluating health and safety considerations, chemical formulations, resource conservation, circularity product performance, and energy efficiency, among other areas. Aligning the Sustainability by Design program with our Stage-Gate process clarifies and streamlines our approach for business implementation. This formal process also provides flexibility to evolve with the needs of each of our businesses.

Opportunities

OPPORTUNITY TYPE: Downstream Impact on Products and Services

TIME HORIZON: Short, medium and long term 

DESCRIPTION: The risks and impacts of climate change, and global efforts to combat it, can create opportunities for our business. For example, extreme weather conditions can drive demand for our protective coatings if assets are destroyed or need repair as a result.

 

Our coatings are used in a wide variety of asset preservation applications – including extending the useful life of bridges, buildings, heavy equipment, appliances, vehicles and vessels. Without our coatings, these assets may have a shorter lifespan and require earlier disposal and replacement with new assets that utilize additional energy and natural resources in their production. As an example, consider the carbon footprint for manufacturing and installing a steel structure such as a bridge. The structure’s life expectancy would be severely limited if installed without corrosion protection or using inadequate coating technologies. Our products are designed to help extend the life of the bridge, reducing the need to replace it following unabated weathering, corrosion or neglect. Replacement of any structure prematurely may create increased carbon emissions. We believe our ability to provide products designed to withstand extreme weather events and extend product lifespan enables us to contribute to carbon and waste reduction in meaningful ways worldwide.

 

In addition, our coatings help enable assets such as solar panels, wind turbines and marine craft to continue operating efficiently. We also make reflective coatings that reduce energy consumption in buildings and packaging coatings that reduce spoilage and food or beverage waste.

 

OPPORTUNITY TYPE: Innovation

TIME HORIZON: Medium and long term

DESCRIPTION: Technology, product quality and product innovation and development, including relating to increased customer interest in the sustainability attributes of products and our related key strategies and initiatives for expanding our product offerings, are among the key competitive factors for our business.

• Our Sustainability by Design program embeds life cycle thinking, which considers impacts throughout our value chain, into the earliest stages of our product innovation and development processes. From initial concept through commercialization, we identify ways to, where possible, make our products more sustainable and better performing by evaluating health and safety considerations, chemical formulations, resource conservation, energy efficiency, circularity and product performance, among other areas. Aligning the Sustainability by Design program with our Stage-Gate process clarifies and streamlines our approach for business implementation. The sustainability attributes we consider fall under the categories of Resource Conservation, Carbon/Climate Impact and Formula Stewardship.  Examples of our innovation in these areas may be found in our annual Sustainability Report.

 

We are pursuing growth opportunities by developing new products and services designed to further preserve existing assets and create products designed to facilitate energy savings. Innovations in coatings technology have led to coatings that require less energy to apply and cure, including:

• Wood coating options with partially plant-based formulations provide similar performance characteristics to equivalent fossil-based products.

• Coatings that required high-temperature bake cycles in the past can now be cured at ambient temperatures because of innovative technology. These coatings reduce energy requirements by eliminating the need for high-temperature bake cycles.

• High-transfer-efficiency powder coatings not only reduce spray time and the energy associated with the spray application process, but also reduce product loss, which further reduces energy use and preserves natural resources.

• Heat- and sun-reflective roof coatings and infrared-reflecting concrete coatings reduce the urban heat island effect and can reduce cooling needs in warmer climates.
• Powder coatings and other types of coating systems can deliver high performance in just one layer rather than competing coatings that may require multiple layers, which requires more energy and material to achieve similar performance.

 

OPPORTUNITY TYPE: Consumer Sentiment

TIME HORIZON: Short, medium and long term

DESCRIPTION: Many consumers and markets are demonstrating an increased preference for products that have lower environmental impact, including a lower carbon footprint. We believe our position to meet those needs is strengthened by our product sustainability initiatives and the transparency of our efforts. In addition, we offer products that are specifically designed to better protect the surfaces they cover, which may result in longer coated product lifespans and reduced waste. Through the preservation of their existing assets and the use of products designed to facilitate energy savings, customers increasingly recognize the beneficial sustainability attributes of Sherwin-Williams products.

 

We believe we have a good understanding of the environmental footprints of our products because we have invested in industry-leading capabilities in life cycle assessments (LCAs) and environmental product declarations (EPDs). We have performed LCAs and drafted EPDs for hundreds of products across our portfolio. Many of these LCAs have been peer-reviewed, published as EPDs and are publicly available.

 

To help us identify opportunities to improve the sustainability profile of our products, we created our Sustainability by Design program. Sustainability by Design is a signature effort in our five-step Stage-Gate process to formally incorporate sustainability attributes within our product development processes. This program enables us to deliver and grow products with sustainability attributes that are important to our customers.

 

OPPORTUNITY TYPE: Geographic Flexibility

TIME HORIZON: Short, medium and long term 

DESCRIPTION: Our Global Supply Chain (GSC) organization consists of a highly efficient manufacturing and distribution system for paint, coatings and related products. GSC is integrated in such a way that the risk created by a particular location being forced out of service may be mitigated, including by shifting production to other locations, if necessary.

 

As for the geographic reach of our store locations, we have historically located stores in promising markets that may have exposure to physical risks from climate change. We believe that our experience operating in these environments has made us a reliable and trusted neighbor in these communities that can be counted on to deliver products to expediently assist rebuilding and recovery efforts. Although severe weather events in these areas may adversely impact our own operations, cause disruptions and reduce the demand for our products, such circumstances can also be an opportunity to serve the needs of our customers in these high-growth regions. In addition, our store location density and mobile platform have helped enable us to initiate sales quickly following certain natural disasters, even if stores in the region were negatively impacted by a severe weather event.

RISK MANAGEMENT

a. Describe the organization’s processes for identifying and assessing climate-related risks.

b. Describe the organization’s processes for managing climate-related risks.

c. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.

 

How We Identify and Assess Climate-Related Risks

In the Governance section of our sustainability website, we describe the Company’s sustainability governance structure; enterprise risk management (ERM) program; and management, board and board committee oversight of the Company’s risk exposures, including relating to the environment, the impacts of climate change and certain other sustainability risks. The Company’s ERM program includes the processes used to identify, assess and manage our most significant enterprise risks and uncertainties that could materially impact the long-term health of the Company or prevent the achievement of strategic objectives. The ERM program facilitates the incorporation of risk assessment and evaluation into the strategic planning process and engagement with senior management and other senior leaders in the functional areas and business units specific to the risks to develop and support risk management and mitigation actions, strategies and processes.

 

For additional supplemental climate-related risk information beyond what is required to be included in this document, see the risk factor discussions related to climate change in Item 1A within our most recent Annual Report on Form 10-K on file with the SEC. In addition, we retained the services of a third-party consultant to help us further assess the risks and opportunities associated with climate change and to help us prepare for this report and related disclosures. This was a comprehensive, data-driven assessment that evaluated a wide range of physical and transition risks at the enterprise, business unit, product and individual location level. The results from that assessment defined the risks and opportunities in the Strategy section of this TCFD report.

 

How We Manage Climate-Related Risks

Sherwin-Williams is actively working to mitigate climate-related risks, including through our Scope 1 and Scope 2 GHG emissions reduction goals.

 

The 2030 environmental footprint goals are as follows:

• Reduce absolute Scope 1 and 2 GHG emissions by 30 percent by 2030
• Increase electricity from renewable sources to 50 percent of total electricity usage by 2030
• Reduce waste disposal intensity by 25 percent by 2030

 

We are also working to improve our Scope 3 inventory. In 2025, we completed an analysis of all 15 categories for relevancy and have disclosed emissions for all relevant categories. Additional details are available on our website. We’ve learned that the largest contributors to paint and coatings Scope 3 emissions are from purchased raw materials (category 1) and application of industrial coatings (category 10).

 

We are also actively working with several key suppliers and customers on carbon footprint reduction initiatives. We periodically bring in key suppliers to share our related sustainability expectations and goals.

 

How We Integrate Climate-Related Risks Into the Organization’s Overall Risk Management

In the Governance section of our sustainability website, we describe the Company’s sustainability governance structure; ERM program; and management, board and board committee oversight of the Company’s risk exposures, including relating to the environment, the impacts of climate change and certain other sustainability risks. The Company’s ERM program includes the processes used to identify, assess and manage our most significant enterprise risks and uncertainties that could materially impact the long-term health of the Company or prevent the achievement of strategic objectives. The ERM program facilitates the incorporation of risk assessment and evaluation into the strategic planning process and engagement with senior management and other senior leaders in the functional areas and business units specific to the risks to develop and support risk management and mitigation actions, strategies and processes.

 

Throughout this report, we describe the Company’s climate-related risk exposures and other uncertainties and factors that could materially and adversely affect our business, results of operations, cash flows, liquidity or financial condition. For additional supplemental climate-related risk information beyond what is required to be included in this document, see the risk factor discussions related to climate change in Item 1A within our most recent Annual Report on Form 10-K on file with the SEC.

METRICS AND TARGETS

a. Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.

b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks.

c. Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

 

Metrics

For this TCFD report, we assessed climate-related risks and opportunities using the following metrics and 2025 data on our operational locations:

• Scope 1 (Direct CO2) Emissions (metric tons CO2e)

• Scope 2 (Indirect CO2) Emissions (metric tons CO2e)

• Scope 3 Emissions (metric tons CO2e)

• Total Energy Consumption (megawatt-hours)

 

Scope 1, 2 and 3 GHG Emissions

• Scope 1 (Direct CO2) Emissions: 418,358 metric tons CO2e

• Location-Based Scope 2 (Indirect CO2) Emissions: 252,391 metric tons CO2e 

• Market-Based Scope 2 (Indirect CO2) Emissions: 134,860 metric tons CO2e 

• Scope 3 Emissions: 18,123,290 metric tons CO2e 

• Total Energy Consumption (megawatt-hours): 2,525,673

For insight into our analysis of climate-related risks, see the Strategy section of this TCFD report. 

 

To review our most recent emissions data, see the Environmental Footprint section in our latest Sustainability Report, which can be found at sustainability.sherwin-williams.com.

 

Targets

Our climate strategy reflects a science-based targets approach influenced by the Paris Agreement and its goal to limit global warming. Our 2030 goal of reducing our absolute Scope 1 and Scope 2 emissions by 30 percent compared with a 2019 baseline was developed on this basis. We track our absolute Scope 1 and Scope 2 emissions, in recognition of the need to reduce the physical amount of GHG emissions emitted into the atmosphere and use third parties to validate our Scope 1 and 2 emissions reporting.

Footnotes

1 Per TCFD (2017), acute physical risks “refer to those that are event-driven, including increased severity of extreme weather events, such as cyclones, hurricanes, or floods.”

 

2 Per TCFD (2017), chronic physical risks “refer to longer-term shifts in climate patterns (e.g., sustained higher temperatures) that may cause sea level rise or chronic heat waves.”