Toyota shareholders submit proposal on climate disclosure, in test for new CEO

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TOKYO — Three European asset managers have submitted a proposal to shareholders urging Toyota Motor Corp. to better disclose its climate change lobbyists, potentially the first time such a decision has been made by the Japanese automaker’s investors.

The move by the three funds, which collectively own shares in the world’s largest automaker worth about $400 million, highlights the pressure new CEO Koji Sato is facing from environmental investors and climate activists about the company’s environmental pressure.

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Toyota’s board of directors on Wednesday recommended that shareholders vote against the decision, to be tabled at the company’s annual general meeting in June.

The Japanese company was once the undisputed global leader in eco-friendly cars with its Prius hybrid model, but more recently it has been criticized as being slow to embrace battery electric vehicles (EVs). The think tank InfluenceMap gave him low ratings for opposing policies that would force a long-term phase-out of the internal combustion engine.

Toyota also said Wednesday that it expects a fivefold jump in pure electric vehicle (EV) sales this year.

Danish pension fund AkademikerPension, Norway’s Storebrand Asset Management and Dutch pension investment firm APG Asset Management said Toyota wants to commit to a comprehensive annual review of climate-related lobbyists.

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That would include a report detailing whether such pressures, including through industry associations and public statements, reduce the company’s risks from climate change and align with the goals of the Paris Agreement as well as Toyota’s goal of carbon neutrality by 2050, they said. per permit.

“We are concerned that Toyota is losing profits from rising electric vehicle sales, putting its valued brand at risk and cementing its underdeveloped global position,” said Anders Schelde, chief investment officer at AkademikerPension.

“We need concrete policy changes and a better annual review based on independent data to calm international investors.”

Toyota’s board urged shareholders to vote against the proposal, saying many obstacles remain to mass market adoption of electrified vehicles, including insufficient supplies of clean energy in some countries. As such, achieving carbon neutrality means using hybrid vehicles and fuel cells.

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The board said Toyota plans this year to improve the annual report it has published since 2021 that details its climate PR efforts. This will include appointing an ‘approved third party’ to review the assessment of its work with the industry associations.

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The funds said it would be the first time Toyota faced such a climate decision at its annual general meeting.

AkademikerPension has been dealing with Toyota for about 2 years on this issue. It first planned to file the shareholder proposal in 2021, but withdrew it after receiving assurances that Toyota would review its climate lobbying.

The fund said Toyota’s own reporting on its involvement in climate policy “falls short of investors’ expectations” when compared to benchmarks set with InfluenceMap, which is used by many investors.

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No other Japanese company and not so much has disclosed globally about participating in climate policy the way Toyota has, a Toyota spokesperson said, adding that it had received an amount of appreciation for doing so.

The spokesperson said Toyota also questioned InfluenceMap about its evaluation methods and the fact that its EV target is not taken into account. The spokesman said he had not received answers from the companies and there was no information about the objectivity and transparency of the evaluation method.

She added that AkademikerPension submitted a proposal to the shareholder meeting last year, but that was rejected because it arrived a day too late.

Reuters reported last year how former Toyota chief Akio Toyoda pressured the Japanese government to make clear it backs hybrid cars as much as battery electrics or risk losing auto industry support.

Toyota said last month that it would introduce 10 new battery-powered models and target sales of 1.5 million electric vehicles annually by 2026. Including its luxury brand Lexus, Toyota now has only a few battery models on the market and last year sold fewer than 25,000 of those in the whole world. (Reporting by David Dolan and Daniel Lusink; Additional reporting by Maki Shiraki and Nobuhiro Kubo; Editing by Kenneth Maxwell and Louise Heavens)