Toyota AGM: shareholders reject climate lobbying resolution
Investors remain concerned about the company’s political footprint.
Akio Toyoda was expected to be the centre of attention at the 2024 Toyota annual general meeting. As chairman of the Japanese car manufacturer, Toyoda had been under pressure following safety test violations last year at Daihatsu, a subsidiary. While Toyoda’s re-appointment was approved, the magnitude of support declined – 71.9% of shareholders backed Toyoda, down from 85% in 2023 and 96% in 2022.
Amidst Toyoda's election, the company’s shareholders also rejected a climate-related shareholder resolution targeting the firm’s lobbying. Over 90% of shareholders voted against the resolution.
We continue to have serious concerns about reports that Toyota and its industry associations are actively lobbying to block climate policies
Climate-lobbying
The resolution was filed by Kapitalforeningen, an asset manager on behalf of AkademikerPension – a Danish pension fund. The resolution takes aim at the company’s climate-related lobbying disclosures despite a dedicated report published by the company in January 2024. According to the resolution, the report “falls far short of investor expectations”.
The Church of England Pensions Board had pre-declared a vote in favour of the resolution.
Laura Hillis, the Board’s Director of Climate and Environment said, “while Toyota has published some disclosure on this topic, we continue to have serious concerns about reports that Toyota and its industry associations are actively lobbying to block climate policies for the automotive sector globally”.
For asset owners, Toyota’s climate policy engagements amounted to sources of reputational and governance risks. The lobbying issue has been a focal point for investor engagement with the Japanese carmaker for several years. The 2024 resolution follows a similar resolution filed last year.
The board had recommended a vote against the resolution. The board claims that the company had engaged with AkademikerPension “over 10 times” in the previous four years. “As of May 2024, we are the only Japanese company that issues a report on our lobbying activities related to climate public policies”, the board said in a response to the resolution.
Hillis disagrees with the board’s optimism. “Toyota’s disclosure and actions to date to address these risks fall short of our expectations, and we would like to see Toyota develop more robust disclosures of its policy positions and meaningfully address the misalignment with its own net zero goals”, she says.
Strategic disagreement?
The debate about strategic direction between Toyota and its investors also extends beyond the lobbying issue. The board’s response to investors suggests a fundamental disagreement regarding the future of electric mobility.
The board does not believe in the viability of a primarily battery-powered EV transition. Instead, the company has placed its bets on hydrogen-based synthetic fuels.
“Toyota cars alone make up around 100 million of the vehicles currently in use globally, and replacing each and every one of them with battery electric vehicles is not a realistic expectation”, the board said.
While it does not outright reject the battery mobility proposition, it maintains that the company is “committed to providing a variety of mobility options that are in tune with a diverse range of energy situations and customer needs”.
