<SEC-DOCUMENT>0001214659-22-004112.txt : 20220318
<SEC-HEADER>0001214659-22-004112.hdr.sgml : 20220318
<ACCEPTANCE-DATETIME>20220318151824
ACCESSION NUMBER:		0001214659-22-004112
CONFORMED SUBMISSION TYPE:	PX14A6G
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20220318
DATE AS OF CHANGE:		20220318
EFFECTIVENESS DATE:		20220318

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VALERO ENERGY CORP/TX
		CENTRAL INDEX KEY:			0001035002
		STANDARD INDUSTRIAL CLASSIFICATION:	PETROLEUM REFINING [2911]
		IRS NUMBER:				741828067
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		PX14A6G
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13175
		FILM NUMBER:		22752232

	BUSINESS ADDRESS:	
		STREET 1:		P.O. BOX 696000
		CITY:			SAN ANTONIO
		STATE:			TX
		ZIP:			78269-6000
		BUSINESS PHONE:		2103454524

	MAIL ADDRESS:	
		STREET 1:		P.O. BOX 696000
		CITY:			SAN ANTONIO
		STATE:			TX
		ZIP:			78269-6000

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Mercy Investment Services, Inc.
		CENTRAL INDEX KEY:			0001699865
		IRS NUMBER:				263224636
		STATE OF INCORPORATION:			MO
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		PX14A6G

	BUSINESS ADDRESS:	
		STREET 1:		2039 NORTH GEYER ROAD
		CITY:			ST. LOUIS
		STATE:			MO
		ZIP:			63131
		BUSINESS PHONE:		314-909-4609

	MAIL ADDRESS:	
		STREET 1:		2039 NORTH GEYER ROAD
		CITY:			ST. LOUIS
		STATE:			MO
		ZIP:			63131
</SEC-HEADER>
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<FILENAME>b318222px14a6g.htm
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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Valero Energy Corporation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Vote Yes: Proposal #4 &ldquo;Report On Near-
And Long-Term Greenhouse Gas Emissions Targets&rdquo;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Annual Meeting: April 28, 2022</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONTACT: Mary Minette, Mercy Investment Services
| mminette@mercyinvestments.org</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="width: 100%; font-size: 10pt"><FONT STYLE="font-size: 12pt"><B>SUMMARY</B></FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As long-term investors in Valero Energy (&ldquo;Valero&rdquo; or &ldquo;the
Company&rdquo;), we are concerned that the Company is not adequately managing the risk that climate change poses to its core business
of refining and selling fossil fuels. Without targets to ensure that it is reducing not only its operational emissions but also the emissions
associated with its products, investors have no way to evaluate if Valero is taking advantage of opportunities to expand investments in
innovative, lower-emission alternatives and managing its long-term climate risk. Accordingly, investors are encouraged to vote &ldquo;FOR&rdquo;
this proposal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="width: 100%; font-size: 10pt"><FONT STYLE="font-size: 12pt"><B>RESOLVED CLAUSE</B></FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Shareholders request Valero issue a report within a year, and annually
thereafter, at reasonable expense and excluding confidential information, that discloses near- and long-term GHG reduction targets aligned
with the Paris Agreement&rsquo;s goal of maintaining global temperature rise at 1.5 degrees Celsius, and a plan to achieve them. Reporting
should cover the company&rsquo;s full range of operational and supply chain emissions.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

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    <TD STYLE="width: 100%; font-size: 10pt"><FONT STYLE="font-size: 12pt"><B>SUPPORTING STATEMENT</B></FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>In assessing targets, we recommend, at management&rsquo;s discretion:
</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&bull; Taking into consideration approaches used by groups like
the Science Based Targets initiative; </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&bull; Developing a low-carbon transition plan showing evidence
of implementation to meet Valero&rsquo;s goals; </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&bull; Considering support targets for renewable energy, energy
efficiency, alternative fuels production and other measures deemed appropriate by management; and </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&bull; Committing to reduce local community health impacts from
cumulative operational emissions. </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="width: 100%; font-size: 10pt"><FONT STYLE="font-size: 12pt"><B>RATIONALE FOR A YES VOTE</B></FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 18pt">1)</TD><TD>Valero is falling behind its peers, who are both disclosing their full range of emissions (scopes 1, 2 and 3) and setting targets
to reduce them. Valero does not disclose scope 3 emissions, and its only emissions target is limited in scope and term and relies on misleading
offsets.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18pt"><B>2)</B></TD><TD><B>Valero is failing to meet investor expectations for climate risk mitigation. Investors, including the largest investors in the
market, increasingly expect companies to set full value chain targets for mitigating climate risk, aligned with achieving net-zero emissions
by 2050 and aimed at limiting warming to 1.5 degrees Celsius. </B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18pt"><B>3)</B></TD><TD><B>Without targets to guide future business plans and capital investments, Valero risks falling behind peers who are aggressively
moving to take advantage of new business opportunities in low-carbon fuels and renewable energy. </B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 18pt">1)</TD><TD>Valero is falling behind its peers, who are both disclosing their full range of emissions, including scope 3 emissions, and setting
targets to reduce them.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">In the last year,
Valero&rsquo;s closest competitors in the U.S. market, Phillips 66 and Marathon Petroleum, have begun disclosing their scope 3 emissions
from use of their fossil fuel products. Both companies have also set targets to begin reducing their scope 3 emissions. In addition, both
have mid-term scope 1 and 2 targets that are more ambitious than Valero&rsquo;s:</FONT></P>

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<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; font-weight: normal">&sect;</FONT></TD><TD>Marathon Petroleum <FONT STYLE="font-weight: normal">has pledged to reduce the intensity of its scope 1 and 2 emissions by 30 percent
from 2014 levels. Its targets will be achieved through actual reductions, not offsets. The company also recently announced that it will
reduce its absolute scope 3 emissions by 15 percent from 2019 levels by 2030.<SUP>1</SUP></FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; font-weight: normal">&sect;</FONT></TD><TD>Phillips 66 <FONT STYLE="font-weight: normal">plans, by 2030, to reduce scope 1 and 2 emissions intensity from operations by 30 percent
and scope 3 emissions intensity of its energy products by 15 percent, below 2019 levels. The company&rsquo;s plan also does not include
offsets as a means to reduce emissions.<SUP>2</SUP></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">By contrast, Valero
does not disclose its scope 3 emissions from use of its products. In its opposition statement to our proposal, Valero argues that &ldquo;our
large-scale production of low-carbon fuels contributes substantially toward the reduction of scope 3 emissions due to the lower carbon
intensity associated with the feedstocks, production and the use of these products.&rdquo; This statement seems to indicate that the Company
can determine its scope 3 emissions from products yet chooses not to do so. It is worth noting that scope 3 emissions represent the vast
majority of any refiner&rsquo;s carbon footprint, and therefore constitute most of its climate risk exposure. For peers Marathon Petroleum
and Phillips 66, scope 3 emissions are greater than 90% of the total greenhouse gas (GHG) emissions footprint. Valero's 2035 target, which
covers only its operational emissions and relies heavily on offsets, would therefore seem to do little to actually address the company&rsquo;s
climate risk disclosure.<SUP>3</SUP></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">Efficiency (i.e.,
reduction in scope 1 and 2 emissions, as opposed to &ldquo;offsetting&rdquo;) makes up a small portion of Valero&rsquo;s 2035 target (2.4/32.3=7.4%
reduction by 2035 compared to 2011 levels). This lacks ambition, not only in terms of timing but also in terms of reduction level. In
addition, Valero reached its efficiency target (32.3-2.4 = 29.9 million metric tons CO2e) in 2019 and surpassed it in 2020 (scope 1 and
2 emissions combined are 29.5 million metric tons CO2e in 2019, and 27.5 million metric tons CO2e in 2020).<SUP>4</SUP> This essentially
means that until 2035 the Company will grow its fossil fuels business more than what it is able to gain in emissions reductions from efficiency
measures. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="margin: 0pt 0"><FONT STYLE="font-weight: normal">A significant portion of Valero&rsquo;s target will be reached using a combination
of offsets and carbon capture and storage. While the Company&rsquo;s ambitious carbon capture plans are a valid means to reduce emissions,
interestingly, and questionably, Valero also uses the lower emissions profile of its low-carbon fuels products as an &ldquo;offset&rdquo;
for scope 1 and 2 emissions.<SUP>5</SUP> The production of low-carbon fuels leads to the reduction of emissions in the value chain of
the Company, i.e. scope 3 emission reductions. Considering these emissions reductions as offsets to scope 1 and 2 emissions is misleading,
as it would result in double counting. While low-carbon fuels lower the Company&rsquo;s scope 3 emissions, they should not be used to
counterbalance scope 1 and 2 operational emissions. Instead, this provides a rationale for the company to report and set a target to
reduce its scope 3 emissions, which is where these reductions should be counted. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>_____________________________</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>1</SUP> https://www.marathonpetroleum.com/Operations/Renewable-Fuels/</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>2</SUP> https://investor.phillips66.com/financial-information/news-releases/news-release-details/2021/Phillips-66-Sets-Reduction-Targets-for-Greenhouse-Gas-Emissions/default.aspx</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>3</SUP> https://www.valero.com/responsibility/environmental-stewardship</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>4</SUP> https://www.valero.com/responsibility/environmental-stewardship</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt"><SUP>5</SUP></FONT> h<FONT STYLE="font-size: 10pt">ttps://www.valero.com/responsibility/environmental-stewardship</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">Additionally,
a substantial part of Valero&rsquo;s biofuels production &ldquo;offsets&rdquo; are corn-based ethanol.<SUP>6</SUP> A recent study published
in the Proceedings of the National Academy of Sciences found that the lifecycle emissions of corn ethanol are likely to be at least 24
percent </FONT><I>higher </I><FONT STYLE="font-weight: normal">than those of gasoline,<SUP>7</SUP> further calling into question Valero&rsquo;s
use of its ethanol production as an offset. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">Finally, the Company&rsquo;s
substantial low-carbon fuel production shows that Valero has at least a partial plan to reduce its scope 3 emissions, contrary to what
the Company states in its opposition statement (&ldquo;We think it is unwise to issue proclamations about distant future performance when
there cannot be a clear line of sight on the strategy to achieve such goals&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">In sum, Valero&rsquo;s
limited 2035 target lags behind the plans articulated by its closest peers, lacks ambition, and is misleading.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"></P>

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<TD STYLE="width: 18pt">2)</TD><TD>Valero is failing to meet investor expectations
for climate risk mitigation.</TD></TR></TABLE>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">Investors,
including Mercy and our co-filers, increasingly expect companies to set targets to indicate that they are anticipating and managing the
risks of climate change to their business and to ensure that the world is on track to meet the goals of the Paris Climate Agreement:</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; font-weight: normal">&sect;</FONT></TD><TD><FONT STYLE="font-weight: normal">At COP26 last November, the Glasgow Financial Alliance for Net Zero (GFANZ) announced that more
than $130 trillion in private capital is &ldquo;committed to transforming the economy for net zero&rdquo; and achieving the 1.5 degree
Celsius goal of the Paris Agreement by reducing their financed emissions. GFANZ members include banks, insurers, pension funds, asset
managers, export credit&nbsp;agencies, stock exchanges, credit rating agencies, index providers and audit firms.<SUP>8</SUP></FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; font-weight: normal">&sect;</FONT></TD><TD><FONT STYLE="font-weight: normal">The Climate Action 100+ initiative, including large and small investors with a total of more than
$60 trillion in assets under management, has established a Net-Zero Benchmark, asking companies to report all emissions in their value
chains (i.e., including scope 3 emissions) and to set short-, medium- and long-term goals aligned with the 1.5 degree Celsius goal of
the Paris Agreement. As a Climate Action 100+ company, Valero has been assessed using the Net-Zero Benchmark and failed to meet any of
the benchmark requirements for setting targets.<SUP>9</SUP></FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; font-weight: normal">&sect;</FONT></TD><TD><FONT STYLE="font-weight: normal">The largest investors in the global market are increasingly asking companies to report all value
chain emissions and set targets to reduce them. For example, BlackRock&rsquo;s 2021 Engagement Priorities state: </FONT></TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: 0in"><I>We expect companies to articulate
how they are aligned to a scenario in which global warming is limited to well below 2&deg;C, consistent with a global aspiration to reach
net-zero greenhouse gas (GHG) emissions by 2050. Companies should provide disclosures aligned with the four pillars of the TCFD framework,
including scope 1 and scope 2 emissions, along with accompanying GHG emissions reduction targets. Carbon-intensive companies should also
disclose scope 3 emissions.<SUP>10</SUP></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>_____________________________</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>6</SUP> https://www.valero.com/renewables/ethanol</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>7</SUP> https://www.pnas.org/content/119/9/e2101084119</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>8</SUP> https://www.gfanzero.com/press/amount-of-finance-committed-to-achieving-1-5c-now-at-scale-needed-to-deliver-the-transition/</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>9</SUP> https://www.climateaction100.org/company/valero-energy-corporation/</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>10</SUP> https://www.blackrock.com/us/individual/literature/publication/blk-stewardship-priorities-final.pdf.
<B><I>See also</I></B> https://corporate.vanguard.com/content/dam/corp/research/pdf/Global%20investment%20stewardship%20principles_final_112021.pdf
(&ldquo;Where climate change is a material risk, Vanguard encourages companies to set targets that align with [the Paris Agreement&rsquo;s]
goals and to disclose them clearly&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Not only does Valero&rsquo;s reporting of emissions fail to meet these
investor expectations, but also the Company&rsquo;s current, limited target does not align with the net-zero goals being set by many of
its investors and lenders. Valero risks losing market share and access to capital as more institutions commit to align their lending and
investments to net-zero goals.</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without targets to guide future business plans and capital investments, Valero risks falling behind peers who are aggressively moving to take advantage of new business opportunities in low-carbon fuels and renewable energy (including batteries).</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In its opposition statement, Valero notes that it is currently a leader
in the production of ethanol and renewable diesel. However, these are considered &ldquo;first generation&rdquo; biofuels<SUP>11</SUP>
and will be difficult to scale up due to limitations in feedstocks.<SUP>12</SUP> To meet an expanding market for low-carbon fuels, new
technologies and feedstocks will need to be developed.</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Valero&rsquo;s peers are not only setting scope 3 targets, but those
targets are also driving and informing investments in research and new technology. For example, Marathon Petroleum currently lags behind
Valero in biofuel production, but its stated plans include &ldquo;increasing the volume of renewable fuels we produce and market, seeking
ways to expand use of renewable energy in our operations, and innovating and deploying emerging technologies that reduce environmental
impact while enhancing business performance.&rdquo; Marathon&rsquo;s strategy includes a research subsidiary, Virent Inc., &ldquo;using
biobased feedstocks to create drop-in replacement fuels and chemicals.&rdquo;<SUP>13</SUP> Another example is Phillips 66&rsquo;s recent
acquisition of a stake in Novonix, a company that develops and supplies in-demand materials for lithium-ion batteries. According to Phillips
66&rsquo;s CEO: &ldquo;This strategic investment [&hellip;] advances our commitment to pursue lower-carbon solutions while leveraging
our leadership position and expertise in the specialty coke market&quot;<SUP>14</SUP></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">In contrast to
peers, whose scope 3 targets are signaling a strong commitment to shift investment in their alternative fuel products, Valero plans to
grow its low-carbon products only as an offset for the fossil fuel-based emissions from its operations. The Company asserts that its fossil
fuel operations will be cost-competitive in and resilient to a carbon-constrained future.<SUP>15</SUP> However, Wood Mackenzie found in
their 2 &deg;C and 1.5 &deg;C &lsquo;accelerated energy transition&rsquo; scenarios that refining faces continued rationalization as oil
demand collapses, with gross refining margin indicators all negative by 2050. Survivors in this shrinking market for refined products
are coastal, primarily NOC-owned integrated refinery/petrochemical facilities located in industrial clusters with low-carbon operations
(e.g., electrified processes, low-carbon hydrogen and carbon capture and storage).<SUP>16</SUP></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>_____________________________</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>11</SUP> https://www.energy.gov/eere/bioenergy/biofuel-basics</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>12</SUP> See, e.g. https://theicct.org/publication/impact-renewable-diesel-us-jan22/
(&quot;In practice, it seems highly unlikely that the full announced [renewable diesel] capacity expansion will be delivered. Limits on
feedstock availability and limits on the support available for renewable diesel production from the RFS and other policies mean that the
market will not support a 5 billion gallons industry as soon as 2024 (if ever). We expect that the next five years will see some projects
delayed or cancelled, and some running far below nameplate capacity.&quot;)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>13</SUP> https://www.marathonpetroleum.com/Operations/Renewable-Fuels/</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>14</SUP> https://investor.phillips66.com/financial-information/news-releases/news-release-details/2021/Phillips-66-Announces-Strategic-Investment-in-NOVONIX/default.aspx</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>15</SUP> Investor Presentation February 2022, p. 13 (https://s23.q4cdn.com/587626645/files/doc_downloads/2022/Investor-Presentation-February-2022.pdf)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>16</SUP> https://www.woodmac.com/news/the-edge/what-different-scenarios-tell-us-about-the-future-of-oil-and-gas/</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-weight: normal">Valero notes in
its opposition statement: &ldquo;We think it is unwise to issue proclamations about distant future performance when there cannot be a
clear line of sight on the strategy to achieve such goals.&rdquo; If Valero plans to grow its low-carbon fuels business as it claims,
a scope 3 goal would not only seem achievable, it would also show a commitment to that part of the Company&rsquo;s business. Valero&rsquo;s
reluctance to set scope 3 targets and more ambitious scope 1 and 2 targets calls into question the strength of its future commitment to
low-carbon fuels, to driving innovation and to overall management of climate risk.</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">Vote &ldquo;YES&rdquo; on this Shareholder Proposal</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As long-term investors in Valero Energy we are concerned that the Company
is not adequately managing the risk that climate change poses to its core business of refining and selling fossil fuels. Without targets
to ensure that it is reducing not only its operational emissions but also the emissions associated with its products, investors have no
way to evaluate if the Company is taking advantage of opportunities to expand its investments in lower emissions alternatives and managing
its long-term climate risk. Accordingly, investors are encouraged to vote &ldquo;FOR&rdquo; this proposal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">--</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">THE FOREGOING INFORMATION MAY BE DISSEMINATED TO SHAREHOLDERS VIA TELEPHONE,
U.S. MAIL, E-MAIL, CERTAIN WEBSITES AND CERTAIN SOCIAL MEDIA VENUES, AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE OR AS A SOLICITATION
OF AUTHORITY TO VOTE YOUR PROXY. THE COST OF DISSEMINATING THE FOREGOING INFORMATION TO SHAREHOLDERS IS BEING BORNE ENTIRELY BY ONE OR
MORE OF THE CO-FILERS. PROXY CARDS WILL NOT BE ACCEPTED BY ANY CO-FILER. PLEASE DO NOT SEND YOUR PROXY TO ANY CO-FILER. TO VOTE YOUR PROXY,
PLEASE FOLLOW THE INSTRUCTIONS ON YOUR PROXY CARD<I>.</I></P>


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