Toyota facing investor climate transparency push

May 16, 2023

Japanese car giant Toyota is being urged to strengthen its reporting around climate change activities, after a proposal was successfully added to its upcoming Ordinary General Meeting.

Proposed Resolution 4, which would see the company’s Articles of Incorporation change, is being tabled by three major asset managers with stakes in the business. These are APG, Storebrand Asset Management, and KapitalForeningen MP Invest.

The investors are pushing for Toyota to conduct a comprehensive annual review of the company’s climate-related lobbying activities and for a report to be produced on this.

Toyota is a signatory of the Paris Agreement and this report would assess how the Japanese company is aligning with these goals.

Any misalignment would therefore require reporting under the new resolution, with plans also published on how to address these disparities.

Toyota already publishes updates about its sustainability efforts but the trio of investors have expressed dissatisfaction with the standard of this reporting.

According to the trio, these disclosures “fall short of investor expectations as set forth, for example, by the Climate Action 100+ Net Zero Company Benchmarks for Climate Policy Engagement”.

As such, this party is pushing for greater transparency from Toyota for the benefit of other investors.

Using benchmark criteria from Climate Action 100+, the proposal filing has scored Toyota’s disclosure on climate policy engagement in December 2022 as low as 36 out of 100.

Toyota is already targeting “carbon neutrality” by 2050. This includes targets such as achieving global sales of 3.5 million electric vehicles per year by 2030 and at least halving global carbon emissions from new vehicles by 2035

In a lengthy response, the board laid out why it would be opposing this by listing its numerous activities around sustainability and the efforts it has gone through with reporting.

Here, the board has claimed that in order to be responsive, changes to the corporation’s Articles of Incorporation are not the best way to proceed.

Stating that disclosure levels are subject to change, the board has argued: “Generally, the articles of incorporation are intended to define the basic details of a corporation and its operation, and is not for stipulating matters related to specific business execution such as those in this shareholder proposal. Therefore, we would like to maintain our current Articles of Incorporation.”

The resolution will be voted on at the meeting on June 14.