AkademikerPension has, via Kapitalforeningen MP Invest, submitted a shareholder proposal to Toyota Motor Corporation, for the annual general meeting on June 18, 2024. The proposal urges Toyota to enhance its reporting on climate-related lobbying activities to protect the long-term value of its company and shareholder interests.
The proposal asks Toyota to improve its reporting on its climate-related lobbying activities, both its own direct lobbying and indirectly through industry association in Toyota’s key markets, and how these activities align with the goals of the Paris Agreement. AkademikerPension finds that its continued lobbying creates risks for the company and its shareholders.
Anders Schelde, Chief Investment Officer, AkademikerPension:
“After dialogue with the company since 2021 we have decided to submit a shareholder proposal on corporate lobbying reporting to Toyota Motor Company for their 18 June AGM. Continued lobbying in favor of Toyota’s multi-pathway strategy and thereby implicitly against battery electric vehicle mandates creates unnecessary risks for the company and its shareholders, in our view."
"AkademikerPension firmly believes that global policies promoting electric vehicles and binding regulations favoring zero-emission vehicles are imperative to realizing the goals of the Paris Agreement. Ultimately, we believe this favors strategies for battery electric vehicles, and not vehicles relying on internal combustion engines in order to meet the goals of the Paris Agreement. Consequently, we find it questionable if Toyota’s multi-pathway strategy is the optimal solution to meet these goals and encourage Toyota to report better on how its direct and indirect lobbying align with the scientific pathway to meet the goals of the Paris Agreement.”
Disclosures falling short of investor expectations
AkademikerPension has been engaging intensively with Toyota since March 2021 leading to Toyota promising to review and change its lobbying practices.
Toyota has published and developed its annual lobbying report, and AkademikerPension welcomes the increase in the number of industry associations reviewed and the third-party evaluation. However, the report falls far short of investor expectations as set forth, for example, by the Climate Action 100+ Net Zero Company Benchmarks for Climate Policy Engagement. Using the CA100+ Benchmark criteria, the InfluenceMap January 2024 assessment of Toyota’s 2023 report found no improvement from the Company’s 2022 report, scoring it 21 out of the maximum 100 points.
AkademikerPension would like to see the third party disclosed and an elaboration of the methodology used to review Toyota’s assessments and what constitutes alignment or misalignment and disclose whether the review finds an overall alignment on the positions reviewed. AkademikerPension would also like to see reporting on Toyota’s engagement activities in all key markets, including markets such as the US, Europe, and Australia. We believe the assessment should apply to all relevant climate engagement across geographies. Last, but not least, AkademikerPension would encourage Toyota to publish detailed review of its own climate policy engagement and report on how this aligns with a scientific pathway to meet the goals of the Paris Agreement.
AkademikerPension believes that appropriate reporting on its scientific pathway to meet the goals of the Paris Agreement and alignment of its climate-related lobbying reporting is essential for the long-term value creation at Toyota.
Timeline of AkademikerPension’s engagement with Toyota (2021-2024)
2021
- Q1: Dialogue with Toyota on climate lobbying, together with other investors (AP7 and Church of England), where we also highlight our intention to send a shareholder proposal on climate-related lobbying activities.
- Q2: AkademikerPension withdraws its shareholder proposal as Toyota promises to publish a lobby report.
- Q3-Q4: Engagement continues and in November Toyota shares its first draft of the report. We share our input and where we see opportunities for improvement.
- December 2021: Toyota's first lobbying report is published.
2022
- Q1-Q2: The investor group meets again to discuss the quality of the report and assesses that it does not meet investors' expectations. AkademikerPension prepares and submits a shareholder proposal on April 20, 2022, which is rejected by Toyota as it was a day late for an undisclosed deadline.
- Q3-Q4: We continue engagement with Toyota and representatives come to Denmark for a dialogue meeting.
- Q4: In December 2022, Toyota's second lobby report is published, which offers only a few improvements.
2023
- Q1-Q2: Engagement continues with in-person dialogue meetings.
- Q2: The investors submit a proposal to the general meeting in 2023 and ask for support from Toyota's board of directors. The commitment continues.
- Q2: The shareholder proposal is unsurprisingly voted down (requires 2/3 of the votes to pass), but the proposal gains great support from the foreign investor base.
- Q4: Engagement continues on Toyota's updated upcoming report.
2024
- Q1: Toyota's third lobbying report is published. There are improvements, such an increase in the number of industry associations reviewed and that the assessment is carried out by a third party (although unknown). However, the quality of the content still falls short of investor expectations and InfluenceMap scores the report the same score as the previous year's report 21/100.
- Q2: Engagement with Toyota continues and both explores opportunities for further collaboration on the topic of climate lobbying. To strengthen the report and public commitments, AkademikerPension files a shareholder proposal for the annual general meeting on June 18, 2024.
The 2024 shareholder proposal
1. Proposing Shareholders Kapitalforeningen MP Invest
2. Details of the Proposal
It is proposed that the following provision be added to the Articles of Incorporation. The provision number will be decided by the Company. “The Company shall issue a comprehensive and objective report annually (at reasonable cost, omitting proprietary information) describing if, and how, the Company’s climate-related lobbying activities (own direct and indirect through industry associations both in key markets) align, overall, with the goals of the Paris Agreement. The report should disclose any instances of misalignment with those goals, along with the planned actions to address these.”
3. Reason for the Proposal
The new provision in the Articles of Incorporation is intended to ensure that the Company makes robust disclosures, as part of its annual reporting, of (i) which lobbying activities directed at the issue of climate change the group companies are pursuing (whether directly or indirectly through influencing the legislative and administrative process or through public influence activities), and (ii) the extent to which these serve to reduce risks for the group companies from climate change and how they are aligned with the 1.5 degrees Celsius goal of the Paris Agreement of 12 December 2015. The proposing shareholder recognizes and appreciates that the Company issued a third report on climate-related lobbying in January 2024; “Toyota’s Views on Climate Public Policies 2023”. However, like the second report, this report falls far short of investor expectations as set forth, for example, by the Climate Action 100+ Net Zero Company Benchmarks for Climate Policy Engagement. Using the CA100+ Benchmark criteria, the InfluenceMap January 2024 assessment of Toyota’s 2023 report found no improvement from the Company’s 2022 report, scoring it 21/100. The proposing shareholder supports the Company in strengthening the Company’s disclosures in 1) scope, covering the Company’s own climate policy engagement activities and relevant associations in key global markets engaging on cli-mate change policies, and 2) rigour in the analysis of potential misalignment with the 1.5 degrees Celsius goal of the Paris Agreement. Such disclosures could serve to mitigate reputational and other risks, including potential backlash from customers, business partners, employees and investors associated with the Company’s climate-related lobbying activities in recent years. The proposing shareholder and like-minded institutional shareholders of the Company have engaged intensively and constructively with the Company since 2021 and encourage the Board of Directors to support and recommend a vote for this proposal.
Legal disclaimer
Nothing in this document is intended to be, nor should it be construed as, a “solicitation of proxies” under the FIEA. The shareholder is not soliciting any action based upon this document and will not be responsible for any decision by any shareholder or other person based on, or by reference to, any information given or opinions expressed in this document.
Media inquiries
Troels Boerrild, Head of Responsible Investments
trb@akademikerpension.dk
