Global asset managers with close to US$3 trillion AUM support climate shareholder resolution filed with J-Power - flag voting ‘no’ on director
Three major institutional investors who have been part of a group co-engaging with the Electric Power Development Co. Ltd (J-Power) on its decarbonisation strategy today announced their support for a new climate shareholder resolution filed with the company - with each also signalling an intent to vote against the director principally responsible for J-Power’s climate strategy.
At this AGM, this is Representative Director (Executive Vice President) Hitoshi Kanno, responsible for the company’s flagship decarbonisation plan the ‘Blue Mission 2050’.
The co-engaging group includes Man Group, the world’s largest publicly traded hedge fund company, Amundi, the largest European asset manager, and HSBC Asset Management, along with the Australasian Centre for Corporate Responsibility.
The resolution was co-filed by Amundi, HSBC and ACCR, and is supported by Man Group. It contains two shareholder proposals calling on J-Power to:
- Set and disclose credible short and medium-term emissions reduction targets, aligned with the goals of the Paris Agreement, and;
- Disclose how remuneration policies incentivise progress against emissions reduction targets.
The filing states that long term institutional investors in J-Power see its corporate value depending upon a credible decarbonisation strategy. J-Power’s targets are still not Paris-aligned or science-based, and the company has presented no indicative schedule for retirement of its coal-fired power assets - instead presenting a plan that involves capital expenditure into speculative technology such as ammonia co-firing prolonging the life of these assets.
It says this presents a range of material financial risks to shareholders, and setting science-based targets and disclosing a business plan to achieve them would best manage these risks.
In 2022, Man, Amundi and HSBC were part of the first investor group-led climate shareholder resolution filed in Japan, with a proposal to J-Power on emissions targets receiving support from more than one-quarter (26%) of shareholders.
The failure of J-Power to meaningfully respond to a material shareholder vote, and the escalating risks to long-term value of the current climate plan, have prompted each in the co-engagement group to signal their intention to vote against the company director principally responsible for overseeing J-Power's decarbonisation strategy.
Jason Mitchell, Head of Responsible Investment Research at Man Group said:
“Setting a clear decarbonisation strategy with Paris-aligned, credible, short and medium-term targets is vital to protecting J-Power’s long-term value given the risks and opportunities associated with the global shift away from fossil fuels.”
“We are concerned that JPower’s continued reliance on co-fired ammonia as a solution in its climate plan is not compatible with global decarbonisation targets, and continuing down this path will impact long-term shareholder value.”
“Despite a number of meetings over two years, we remain disappointed by the Blue Mission strategy. We do not have confidence that the company’s approach to the urgent challenge of decarbonisation will evolve under the current leadership, so we have decided to take voting action.”
Caroline le Meaux, Head of ESG research, engagement and voting Amundi, said:
“We are concerned by Blue Mission 2050, notably the high emissions from J-Power’s coal power business, and the low level of economic and technical feasibility attaching to technologies detailed in the company’s plan.”
“OECD countries need to be on a pathway to complete coal phaseout by 2030, and J-Power’s plans are inconsistent with this critical objective. Its strategy bets against the success of the Paris Agreement, and risks shareholder value in the process.”
“As the company’s climate strategy is falling short of our minimum requirements, we will continue to vote against the renewal of board members following our voting policy.”
Sachi Suzuki, Senior Manager – Investment Stewardship, HSBC Asset Management, said:
“We expected the last AGM result would encourage a shift from the current high-cost, coal-based strategy to a more credible decarbonisation strategy, in line with investor expectations. Regrettably, we have not seen evidence of such a shift. Under J-Power’s existing plan, shareholder money will continue to be spent on speculative technologies to prolong coal power, rather than focusing on expanding renewables. This would likely expose the company to risks associated with costs, sourcing and adverse regulatory changes and potentially cause a loss of value to investors.”
“We think that climate risk has strategic implications for J-Power and therefore the responsibility of the board. We are concerned that directors have shown insufficient consideration of climate risks and we want other investors to know that, despite our intensive engagement, we are unsatisfied with their response and believe it is important for us to signal this through our votes.”
Brynn O’Brien, Executive Director, ACCR, said:
“J-Power’s leadership has demonstrated no understanding of how their strategy needs to evolve in line with investor expectations. Despite last year’s vote and several meetings this year with Director Kanno, we have seen no material progress.
“We commend the leadership of the investors in our co-engagement group in situating accountability where it needs to be: with the directors most responsible for the weakness of the company’s plans. “
About HSBC Asset Management
HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight.
As at 31 March 2023, HSBC Asset Management managed assets totalling US$641bn on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.
About Man Group
Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $144.7 billion* and operate across multiple offices globally. We invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group’s single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.
Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.
We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group’s global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility
Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com
*As at 31 March 2023. All investment management and advisory services are offered through the investment “engines” of Man AHL, Man Numeric, Man GLG, Man Solutions / FRM and Man GPM.
Amundi, the leading European asset manager, ranking among the top 10 global players, offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets. This offering is enhanced with IT tools and services to cover the entire savings value chain. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €1.9 trillion of assets.
With its six international investment hubs, financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.
Amundi clients benefit from the expertise and advice of 5,400 employees in 35 countries.
Amundi, a trusted partner, working every day in the interest of its clients and society.