Institutional Shareholder Services (ISS) advised Toyota Motor Corp (7203.T) shareholders to support a resolution demanding the carmaker to disclose its climate change advocacy.
ISS also found three of Toyota’s four outside director nominees unindependent. Toyota stated all candidates were independent.
Green investors and climate campaigners have criticized Japan’s largest company by market capitalization for being slower to adopt all-battery electric vehicles (EVs).
Danish pension fund AkademikerPension, Norway’s Storebrand Asset Management, and Dutch pension investment APG Asset Management want Toyota to agree to an annual review of climate-related lobbying to avoid losing out on EV sales.
A Toyota representative cited a board statement urging shareholders to vote against the plan, stating the fluidity of such disclosure rendered it unsuitable for enshrining in the articles of incorporation.
“Toyota does not provide shareholders with enough information to evaluate its lobbying activities,” ISS concluded.
“Shareholders would benefit from the company disclosing information about direct, indirect, and grassroots lobbying in the various regions where it operates.”
Toyota’s shareholders include suppliers and other business partners, making the resolution’s two-thirds majority requirement difficult to meet.
Glass Lewis, a proxy adviser, opposes the resolution because Toyota has “significant responsiveness” to shareholders.
Toyota, which aims to sell 1.5 million all-battery EVs by 2026, has long advocated for various power alternatives, including battery-petrol hybrids and hydrogen fuel cells, to reach carbon neutrality.
This month, Toyota’s chief scientist said focusing on all-battery EVs could encourage drivers to keep polluting vehicles and that a shortage of resources meant battery-only cars could not be the industry’s main response to climate change.
ISS also claimed three of Toyota’s 10-member board members, whom the carmaker said were independent, were “affiliated” due to the firm’s links with their current or past organizations.
Toyota’s major lender, Sumitomo Mitsui Financial Group Inc (8316.T), and the International Paralympic Committee have mobility partnerships.
“We have determined there are no concerns regarding the objectivity, independence and ability to conduct appropriate oversight,” Toyota stated.
Tokyo’s main exchange companies must have at least one-third of independent directors under Japan’s corporate governance rules.
ISS advised voting for the candidates because voting otherwise “may run the risk of actually increasing management dominance of the board.”
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