VW rejects climate lobbying proposal from European pension funds

Volkswagen AG (VW) has voted to reject a climate lobbying shareholder proposal backed by seven European investors, including the Church of England Pensions Board and Sweden's AP7.

The proposal sought to update the company’s Articles of Association to ensure that future sustainability reporting included an assessment of its lobbying’s impact and alignment with climate goals, after shareholders argued that more than three years of dialogue with VW on the issue had not yielded any significant improvement.

The filing group also included Schroders, Swedish pension schemes AP2, AP3 and AP4, and Denmark’s AkademikerPension, and was supported by EOS at Federated Hermes, which, whilst not part of the co-filing group, has been actively engaging with VW on climate policy since early 2019.

Despite this backing, a statement from the Church of England Pensions Board revealed that the proposal was rejected after the company deemed it beyond the competence of the general meeting, stating that the board of management alone is responsible for deciding on the content of the non-financial report.

AP7 sustainability strategist, Charlotta Dawidowski Sydstrand, however, argued that it "speaks volumes" that the amendment was rejected on the basis of saying the board knows best, "yet the board is still failing to deliver transparent oversight of the company’s climate lobbying".

“As long-term shareholders we would have preferred VW to make this commitment voluntarily," she continued. “We filed the amendment as we are determined to ensure that the company registers the importance of this issue at the highest level."

Church of England Pensions Board senior engagement manager, Clare Richards, said that the decision was “all the more disappointing” as Volkswagen had the potential to be a "leader" on responsible climate lobbying.

Richards noted that both BMW and Mercedes-Benz had responded positively to investor requests for greater disclosure on their climate lobbying.

“VW says it wants to play a leading role in a world of zero-emission and autonomous mobility, but then it fails to make, let alone deliver, on a public commitment to greater transparency on how it supports ambitious climate policies," she continued.

This sentiment was echoed by AP4 senior sustainability manager, Pia Axelsson, who said that the decision was "particularly disappointing since the proposal is supported by so many institutional investors”.

“It is unfortunate that VW now sends this negative message that it does not intend to report on its climate lobbying, something which could counteract the necessary transition to a net-zero economy,” Axelsson concluded.

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