VW publishes climate lobbying report following investor pressure

Volkswagen has published the first review of its trade associations this week, less than a year after European pension funds began legal proceedings against the German car maker over its repeated refusal to table a shareholder proposal on the issue.   

In October, six investors, including Swedish government pension fund AP7 and the Church of England Pensions Board (CEPB), started legal action against Volkswagen after the company once again refused to table their climate lobbying proposal, arguing that the topic was beyond the competence of shareholders.

Both AP7 and CEPB declined to comment when contacted by Responsible Investor about Volkswagen’s association climate review due to the ongoing legal case.  

That lawsuit, which is believed to be the first time investors have started litigation on a climate-related matter in Europe, will test whether Volkswagen has the right to exclude such an item from its annual general meeting. The result could have wide-ranging consequences for investor stewardship in Europe. 

AP7 has pushed for the right to table a shareholder proposal at VW for several years. In 2019, RI spoke to the fund’s head of ESG, Charlotta Dawidowski Sydstrand. She said AP7 was “open” to pursuing a legal route, following a refusal by five German firms – including Volkswagen – to table climate lobbying proposals.  

Last month, CEPB, which leads engagement with Volkswagen as part of Climate Action 100+, pre-declared its intention to vote against the company’s management and supervisory boards for the second year in a row, in response to its failure to meet expectations around climate lobbying and emission reduction targets.     

AP7 also voted against Volkswagen’s whole board last year, as it has done for the last several years, mainly in response to the firm’s management of the diesel-gate scandal. 

Dawidowski Sydstrand told RI last month that the fund this year may also vote against the ratification of the auditors “if the auditor statement falls far short of meeting the investor expectations for Paris-aligned accounts”.  

Given the focus on the issue, Volkswagen’s review may be at least in part a response to pressure from investors.  

Despite the company’s opposition to the shareholder proposal, Volkswagen said this week that the review – and the process behind it – were “a good instrument for evaluating the alignment between [our] positions and those of associations on the subject of climate protection”.

“It thus contributes to our efforts to achieve the climate protection goals,” the firm added. 

CEPB, AP7 and BNP Paribas Asset Management, which have led the push on climate lobbying at European companies since 2018, were also behind the creation of the Global Standard on Responsible Climate Lobbying. 

RI understands that more than 30 European firms targeted by CA100+ have now made some degree of disclosure around trade bodies, including Volkswagen’s peers BMW and Mercedes-Benz. 

UK fund manager Schroders was one of the co-filers of the blocked proposal at Volkswagen last year. Climate engagement lead Carol Storey also welcomed the auto maker’s report, describing it as “a positive step towards ensuring accountability for corporate lobbying activities that can significantly impact climate policy and action”.