Toyota's annual shareholder meeting is expected to focus on the company's electric vehicle strategy, as foreign investors are raising concerns about falling behind competitors due to the company's "multi-pathway" approach. This approach involves offering customers various options by selling gasoline and hybrid cars while investing in EVs, hydrogen, and carbon-neutral fuels. Some investors are also calling for transparency on lobbying over climate policies that favor EVs or that seek to ban vehicles that burn fossil fuels.
While shareholder meetings in Japan have typically been pro forma affairs, recent meetings are becoming opportunities for institutional shareholders to voice their concerns and draw attention to issues of climate change and corporate governance. Wednesday's meeting at Toyota's headquarters near Nagoya marks the first for the new CEO Koji Sato, who has echoed his predecessor's strategies, while championing an 'EV-first' approach.
However, foreign investors pushing for EVs to be the company's primary focus argue that "the growing battery electric vehicle market represents an opportunity for Toyota to regain its status as an innovator and leader during the historic transition of the transportation industry."
Toyota has rejected suggestions that it has been slow in responding to the demand for electric vehicles. In late 2021, the company announced a $28.7 billion commitment to accelerate its shift into EVs. Nonetheless, critics argue that the company is not moving fast enough.
The California Public Employees Retirement System and the New York City Comptroller's office, two major pension funds in the US, plan to vote against chairman Akio Toyoda's reappointment. Glass Lewis & Co., a proxy advisory firm, has also urged shareholders to vote against Toyoda, citing concerns over a shortage of independent directors and non-male board members.
Toyota claims that it follows the Tokyo Stock Exchange's requirement that independent directors must account for a third of the company's board. Meanwhile, three European asset managers, who collectively hold $400 million in Toyota shares, have called on the company to improve its disclosure of lobbying against climate policies.
With Toyota pledging to sell 1.5 million battery EVs annually by 2026, and 3.5 million by 2030, the company recently invited journalists and analysts to its research facility to show off its technology. Even in a challenging business environment, a Toyota spokesperson stated that "Chairman of the Board Akio Toyoda has been strengthening our competitiveness from a long-term perspective."