Three European asset owners and managers filed a shareholder proposal Wednesday to force Toyota Motor Corp. to disclose how its lobbying activity aligns with the goals of the Paris Agreement over concerns that it is putting its brand at risk.
AkademikerPension, Gentofte, Denmark, with €18 billion ($19.8 billion) in assets; APG Asset Management, with €521 billion in assets under management; and Norwegian financial firm Storebrand Group said in a statement that the move came after more than two years of "fruitless dialogue" with Toyota over squaring its climate-related lobbying activity with green transition efforts.
For the investors, another concern is that Toyota is missing out on growing sales of electric vehicles and risks being a "global latecomer," said Anders Schelde, chief investment officer at AkademikerPension, in the statement.
The resolution will be addressed at Toyota's June 14 annual meeting. It calls for Toyota to report annually on direct lobbying and trade association climate-related activities, to disclose any instances of misalignment and planned actions to address them.
The Danish pension fund and Storebrand began engaging with Toyota in March 2021 to have it report on lobbying activities related to climate goals. A 2021 shareholder proposal was withdrawn after Toyota pledged to support climate goals and report on lobbying activity, and a similar 2022 proposal was rejected for being filed one day late
The promised reports produced so far "did not in any way live up to investors' expectations," Mr. Schelde said in the statement, and Toyota continued lobbying against climate-related regulation and policies in the U.S., U.K. and Japan, he said.
"We welcomed the dialogue and the annual publication, but we need concrete behavioral changes and a better annual report that draws on independent data to reassure international investors who are concerned about Toyota's actions," he said.
In 2022, pension funds in Denmark and New York raised similar concerns over Toyota's lobbying activities and electric vehicle strategy. New York City Comptroller Brad Lander, fiduciary of the $248.2 billion New York City Retirement Systems, said at the time that the carmaker's approach puts it at a competitive disadvantage compared with its peers.
A statement provided by a Toyota spokesman said that it is the only company in Japan that discloses this type of information. "Comparisons are not easy, as policymaking processes vary around the world and there are differences in external relations in different industries and regions, but we recognize that our disclosure materials are positioned in the top class when compared to European and U.S. automotive companies that already disclose information. We will continue to improve our disclosure and communication while engaging in dialogue with our stakeholders."
In a May 10 memo, Chairman Akio Toyoda said the board of directors opposes the proposal that would change the company's articles of incorporation in part because "the ideal state of disclosure is subject to sudden change."
The memo also said the board "considers climate change measures to be one of its important management tasks and is fully concentrated on seeking to achieve carbon neutrality by 2050," and since 2021 has been carrying out the initiatives stated in the shareholder proposal.
The board also is aiming for annual global sales of 3.5 million units of battery electric vehicles by 2030 and other measures that would reduce emissions, but the memo noted "there are still many obstacles" to mass-market adoption.