ESG resolution round-up: Support swells for climate lobbying proposal at Toyota

CalPERS and CalSTRS throw weight behind European investors' resolution at Japanese car maker; anti-ESG filers see low support fall further this proxy season.

Big investors, including Californian pension giants CalSTRS and CalPERS, have thrown their weight behind a climate lobbying proposal filed at Japanese car maker Toyota.

The resolution, which goes to the vote next Wednesday, was filed by Dutch giant APG Asset Management, Danish pension fund AkademikerPension, and Norway’s Storebrand Asset Management.

It is the first time that Toyota has been hit with a shareholder proposal and follows two years of “intense engagement”, according to Anders Schelde, CIO at AkademikerPension.

Influential proxy advisers ISS and Glass Lewis are split on the resolution, with the former reportedly supporting it and the latter opposing.

Other supporters of the proposal include the Office of the New York City Comptroller, which oversees the city’s five pension funds, the Church of England Pension Board (CEPB) and Swedish government pension fund AP7.

Climate lobbying has been a focus area for AP7 and CEPB in recent years. The duo collaborated with French asset manager BNP Paribas Asset Management on the creation of the Global Standard on Responsible Climate Lobbying, which was released last year.

“While we welcome that Toyota has produced previous disclosures related to climate lobbying, we believe we need more depth and detail to properly understand what Toyota is doing,” said Laura Hillis, CEPB’s director of climate and environment.

The resolution, which calls for an annual review of the impact of Toyota’s policy advocacy efforts and its alignment with the Paris Climate Agreement, has been flagged by Climate Action 100+, the multi-trillion-dollar investor engagement group.

According to InfluenceMap, the UK-based think-tank and CA100+ data partner, Toyota has one of the weakest records on climate lobbying among global automakers, both with regards to its direct and indirect lobbying through trade bodies.

According to Responsible Investor’s database, CalPERS co-leads engagement with the car maker as part of CA100+ along with Japanese manager Asset Management One, with Europe’s largest asset manager Amundi acting as a supporting investor.

Asset Management One has not responded to RI at the time of publication on whether they will be supporting the lobbying proposal at Toyota. A spokesperson for Amundi said that it does not comment on votes ahead of company meetings.

Asset Management One is a subsidiary of Mizuho Financial Group, which itself is facing a climate proposal this month along with rival mega-banks Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group.

Climate proposals are still a relatively new feature of the Japanese corporate governance landscape. The first was filed in 2020 at Mizuho by Kiko Network, securing 34 percent support.

Filing of climate proposals has been the preserve of NGOs in the country but last year saw the first from European investors when heavyweights Amundi, Man Group and the asset management arm of HSBC co-filed three at J-Power, urging the Japanese coal-powered utility to ramp up its decarbonisation efforts.

Support for anti-ESG filers goes from low to lower

Support for resolutions filed by “anti-ESG” proponents has fallen further from the meagre levels last year, according to blog by the Sustainable Investment Institute, the US non-profit.

Eight such proposals went to the vote in 2021, securing an average of 3.5 percent support.

More than four times that amount have gone to the vote (as of 31 May) this proxy season, but investor backing is just 2.8 percent on average – half the level required to resubmit them next year under the US Securities and Exchange Commission’s rules.

Only 10 percent of the proposals filed by “anti-ESG” proponents relate to the environment; most focus on diversity.

While support for these proposals is thin on the ground, the broader anti-ESG backlash seems to be having some effect. Last week, RI reported that the number of majority support ESG-focused shareholder proposals looks set to fall substantially this year.

Notable tallies but no majorities

No shareholder proposal secured majority support at Exxon last week.

The best-supported resolution at the US oil major was on methane emissions disclosures, which was supported by 36 percent of shareholders. Another proposal calling for an audited report on the financial impacts of a significant reduction in virgin plastic demand attracted the backing of 25 percent.

Support for an emission reduction targets resolution filed by Follow This plummeted.

At Netflix, just over a third of shareholders supported a freedom of association proposal filed by the New York State Common Retirement Fund.

By contrast, less than a fifth (19 percent) of shareholders supported an anti-microbial resistance resolution filed at McDonald’s by investment heavyweights Amundi and Legal & General Investment Management with Australian super fund HESTA.

The proposal, which asked the fast-food giant to align its business with the World Health Organization’s guidance on antibiotic use, attracted similar levels of support as when it was put to US meat giants Hormel Foods (13 percent) and Tyson Foods (20 percent) earlier this year, once insider votes had been discounted.

More than a third (38 percent) of McDonald’s investors, however, supported a proposal put forward by the Humane Society of the US asking the company to disclose the key welfare indicators used for its animal welfare programme.