By David Dolan and Daniel Leussink
TOKYO (Reuters) -A trio of European asset managers has submitted a shareholder proposal urging Toyota Motor (NYSE:TM) Corp to improve disclosure of its lobbying on climate change, likely the first time such a resolution will go before the Japanese automaker's investors.
The move by the three funds, which collectively hold shares in the world's biggest automaker worth around $400 million, highlights the pressure new chief executive Koji Sato faces from green investors and climate activists over the company's environmental lobbying.
Toyota's board on Wednesday recommended that shareholders vote against the resolution, to be put to the company's annual general meeting in June.
The Japanese firm was once the undisputed global leader in environmentally friendly cars with the Prius hybrid, but more recently it has been criticised as slow to embrace battery electric vehicles (EVs). Think tank InfluenceMap has given it low ratings for opposing policies that would mandate the long-term phase-out of the internal combustion engine.
Toyota on Wednesday also said it expects a five-fold jump in pure electric vehicle (EV) sales this business year.
Danish pension fund AkademikerPension, Norway's Storebrand Asset Management and Dutch pension investment company APG Asset Management want Toyota to commit to a comprehensive, annual review of its climate-related lobbying, they said on Wednesday.
That would include a report detailing whether such lobbying, including through industry associations and public statements, reduces risks for the company from climate change and aligns with the goals of the Paris Agreement as well as Toyota's own goal of carbon neutrality by 2050, they said in a statement.
"We're concerned that Toyota is missing out on profits from soaring EV sales, jeopardising its valuable brand and cementing its global laggard status," said Anders Schelde, AkademikerPension's chief investment officer.
"We need concrete policy changes and a better annual review drawing on independent data to calm international investors."
Toyota's board urged shareholders to vote against the proposal, saying there were still many obstacles to the mass-market adoption of electrified vehicles, including inadequate supplies of clean energy in some countries. As such, reaching carbon neutrality meant the use of hybrid and fuel-cell vehicles, it said.
The board said Toyota planned to this year improve the annual report it has been publishing since 2021 that details its public-relations efforts on climate. This will include the appointment of an "accredited third party" to review the evaluation of its work with industry associations.
LONG ENGAGEMENT
It will be the first time that Toyota faces such a climate-related resolution at its annual general meeting, the funds said.
AkademikerPension has been engaging with Toyota for some two years over the issue. It first planned to submit a shareholder proposal in 2021, but withdrew that after it received assurances that Toyota would review its climate lobbying.
The fund said that Toyota's own reports on its climate policy engagement fall "far short of investor expectations" when compared with benchmarks established with InfluenceMap and used by a large number of investors.
A Toyota spokesperson said no other Japanese company and not many globally have made disclosures on climate policy engagement the way Toyota has, adding it had received some amount of recognition for doing so.
The spokesperson said Toyota has also questioned InfluenceMap about it evaluation methods and the fact that its EV target is not taken into account. It has not received firms answers and there is no information about the objectivity and transparency of the evaluation method, the spokesperson said.
AkademikerPension submitted a proposal for last year's shareholder meeting but that was rejected for arriving one day too late, it said.
Reuters reported last year how Toyota's former head, Akio Toyoda, lobbied the Japanese government to make clear it supported hybrid vehicles as much as battery electrics or risk losing the auto industry's support.
Toyota said last month it would introduce 10 new battery-powered models and target sales of 1.5 million EVs a year by 2026. Including its Lexus luxury brand, Toyota now has just a handful of battery models on the market and last year sold fewer than 25,000 of those worldwide.