European investment heavyweights Amundi, Man Group and the asset management arm of HSBC have co-filed two pioneering climate proposals at J-Power, urging the Japanese coal powered utility to ramp up its decarbonisation efforts. The climate proposals are the first to be filed by institutional investors in Japan.
The three investors – representing $3 trillion in assets under management – collaborated on the resolutions with influential Aussie-based non-profit, the Australasian Centre for Corporate Responsibility (ACCR), a seasoned and prolific filer of ESG shareholder proposals.
The group is calling on J-Power – also known as Electric Power Development – to amend its articles of association to include a commitment to “set and disclose a business plan with science-based, short-term and mid-term GHG emissions reduction targets aligned with Articles 2.1(a) and 4.1 of the Paris Agreement”. The company would be expected to provide updates on progress against this plan in its annual reporting.
A second proposal from the investor group calls for a further amendment to its articles, requiring J-Power to annually disclose how it matches its capital expenditure plans with its emission reduction goals.
In their rationale, the investors stated: “While we welcome the company’s intention to achieve carbon neutrality by 2050, the company’s targets are not yet aligned with the goals of the Paris Agreement. This presents a range of material financial risks to shareholders.”
The filing at J-Power – Japan’s largest operator of coal-fired power stations – follows months of engagement by the investors.
Caroline Le Meaux, head of engagement, voting policy and ESG research at Amundi, said: “Given the high emissions from J-Power’s coal business, and the low level of economic and technical feasibility attaching to technologies detailed in the company’s Blue Mission 2050 [strategy], the current direction of travel is highly concerning.”
Brynn O’Brien, executive director at the ACCR, added: “Every major emitter in every economy needs a credible, detailed business plan consistent with the goals of the Paris Agreement. J-Power’s current strategy would see shareholders’ capital wasted to prolong the life of the company’s coal-fired power generation.”
Climate proposals are still a relatively new feature of the Japanese corporate governance landscape. The first was filed in 2020 at Mizuho Financial Group by climate campaigners Kiko Network, securing 34 percent support.
Last year, Paris-alignment proposals were filed in the country at trading giant Sumitomo Corporation and Mitsubishi UFJ Financial Group. Neither achieved majority support. The proposal at Sumitomo was filed by environmental non-profit Market Forces, and the one at Mitsubishi, which achieved around 23 percent support, was filed by Kiko Network.
Amundi’s foray into filing in Japan follows its first ever shareholder proposal in the US last proxy season. Europe’s largest asset manager partnered with US non-profit The Shareholder Commons to ask McDonalds to improve its disclosure on the use of antibiotics in its supply chains.
Speaking earlier this year on the proposal at the US fast food giant, Amundi’s Le Meaux told Responsible Investor: “It’s logical [to co-file] when you see a resolution where you will add value.”