Stockholm (NordSIP) – On April 4, a group of seven European investors led by Swedish State pension fund AP7 and the Church of England Pension Board (CEPB) announced the filing of a shareholder proposal challenging automotive giant Volkswagen AG (VW) to disclose information about climate lobbying.
AP7 and the Church of England Pensions Board started engaging with VW on climate lobbying at the end of 2018. According to non-profit information platform LobbyMap, citing research by InfluenceMap, German automakers BMW, Mercedes Benz and VW collectively disclose “an EU lobbying spend of over €10 million per year.” The research finds that “All three companies are board members of the German Association of the Automotive Industry (VDA), with active negative climate policy engagement at the German and EU-level, and the European Automobile Manufacturers Association (ACEA), with mixed to negative engagement in the EU.”
For investors such as AP7, transparency is key to understanding how these funds are being used, and to evaluating the alignment between sustainability policies, statements or even consumer-directed PR and the company’s influence at the government or EU level. AP7 together with the CEPB and BNP Paribas Asset Management has been spearheading a responsible climate lobbying standard which was launched last month after extensive consultation.
In its research, InfluenceMap points out a clear misalignment as the automakers invest in “sophisticated ‘green’ PR campaigns linking their brands and industry to ‘sustainable mobility’ and ‘electrification’, while lobbying against climate legislation to promote EVs.” In particular the platform highlights how “BMW’s global PR ‘sustainability’ campaign to launch its iX and i4 series of EVs in ‘long-term collaboration’ with Coldplay, featuring an advert with models wearing clothes printed with taglines including ‘THERE IS NO PLANET B’ and ‘MAKE EARTH COOL AGAIN’ […] starkly contrasts with BMW’s and [German Association of the Automotive Industry (VDA)]’s advocacy to weaken and delay key EV-related climate legislation in Germany and the EU.”
While the InfluenceMap research highlights VW’s “mixed but increasingly positive direct climate policy engagement,” the company remains “a key member of industry associations, including the VDA, with active negative climate policy engagement.”
“A climate lobbying review enables investors, and indeed the companies themselves, to take stock of lobbying activities and their alignment – or misalignment – with the goals of the Paris Agreement,” Emma Henningsson, Active Ownership at AP7 comments for NordSIP.
“Investors have been actively engaging with all three [major German automotive] companies,” Henningsson continues. “We warmly welcome Mercedes Benz’s first report which was published on March 30st, 2022, and its commitment to an annual review and update.”
“Whether the lobbying is directly targeted at the political process or delivered through public influence activities, it’s vitally important for society’s interests as well as VW’s transition strategy that they ensure all of their advocacy is supporting Paris-aligned policy making, rather than putting road blocks and diversions in the way,” said Charlotta Dawidowski Sydstrand, Sustainability Strategist at AP7, in a press release.
Despite AP7 and the Church of England Pension Board’s long-term engagement efforts as well as those of EOS at Federated Hermes leading the efforts on behalf of Climate Action 100+, VW’s reaction has not met expectations.
“It’s disappointing that VW is left trailing behind its neighbours and peers, such as Bayer, E.ON and Mercedes-Benz, who have responded positively to investor requests for greater disclosure on their climate lobbying. The time for responsible lobbying in support of action on climate change is right now, because the policies being debated this year will shape our world for decades to come. It isn’t good enough for VW to keep delaying and dodging a reasonable request for greater transparency and accountability on the lobbying it enables,” said Clare Richards, Senior Engagement Manager at the Church of England Pensions Board.
“Whilst VW does disclose its trade association memberships, the company lacks a comprehensive disclosure of how those associations’ lobbying goals and activities align with its own climate goals. Without that assessment VW risks impeding progress on its climate transition strategy and reputational damage,” the joint press release explains.
As a result, advised by litigation specialist law firm Hausfeld, a group of seven investors, including Swedish pension funds AP2, AP3 and AP4, Denmark’s AkademikerPension and asset manager Schroders led by AP7 and the Church of England Pensions Board, has filed an amendment to the company’s Articles of Association “intended to ensure that future sustainability reporting includes an assessment of their lobbying’s impact and alignment with its climate goals.”
“This is not a shareholder resolution,” Henningsson clarifies for NordSIP. “On the German market it is almost impossible to get a resolution onto the agenda. AP7 and other investors tried in 2019 to file resolutions with multiple German companies without success. They were all rejected.”
“As a result, we consulted a specialised law firm who developed a new approach, suggesting a change to the Articles of Association instead. You could say that if this proposal gets accepted to the agenda of VWs AGM it will be a groundbreaking step for minority shareholder rights in Germany, not only on climate change but more generally,” Henningsson adds.