J-POWER responds to shareholder pressure: five coal-power units to close by 2030

The Australasian Centre for Corporate Responsibility​ (ACCR) is responding to the release of Electric Power Development Co Ltd’s (J-POWER) FY 2024-2026 medium-term management plan, which updates the company’s Blue Mission 2050 decarbonisation strategy.

As part of the plan, J-POWER has committed to closing five coal power generation units within domestic coal plants by FY 2030.

ACCR estimates that collectively these closures will prevent the release of 16.2Mt of CO2 per year .

The announcement follows two consecutive years of shareholder dissent over J-POWER’s decarbonisation strategy:

• At the 2022 annual general meeting (AGM), 26% of shareholders voted in support of a shareholder proposal asking J-POWER to set credible emissions reduction targets and disclose plans to achieve them. Co-filers included Man Group, a global active investment management firm, Amundi, Europe’s largest asset manager, HSBC Asset Management and ACCR.
• At the 2023 AGM, 21% of shareholders voted in favour of a shareholder resolution calling on J-POWER to set and disclose credible short and medium-term emissions reduction targets aligned with the goals of the Paris Agreement. The resolution was filed by Amundi, HSBC Asset Management, ACCR, and was supported by Man Group.

Announcing the coal-power unit closures last week, J-POWER’s President, Hitoshi Kanno, said: “We deemed it necessary to demonstrate to shareholders our strategy for coal power plants on a site-by-site or unit-by-unit basis.”^[1]

Further changes to the Blue Mission strategy include:

• Improved transparency on decarbonisation spend - investing ~$US 1.924 billion towards decarbonisation over the next three years, including ~$US 1.284bn on expanding renewables, ~$US 385 million on enhancing networks, and ~$US 192.6 million on thermal power transition, with significant investment in nuclear and hydrogen-based power after FY2027
• A new renewables target, aiming to increase renewable power generation in Japan by 4 billion kWh/year by 2030, against a baseline of FY2022.

Commenting on the release of the plan, Brynn O’Brien, Executive Director, ACCR, said:

“This welcome announcement by J-POWER shows the company understands its strategy needs to evolve in line with investor expectations.

“Investors have been sending a clear and consistent signal to J-POWER for a number of years that it needs to accelerate its decarbonisation strategy in order to remain competitive in Japan’s transition to a low carbon economy, and this is an important first step.

“Investors now have some clarity on how J-POWER is planning to achieve its 2025 and 2030 emissions reduction targets, after years of asking for it.

“The granular detail on asset level technology plans, a schedule for coal fired power plant closures and increased transparency on decarbonisation spend over the next three years will go some way to providing clarity for investors wanting to understand J-POWER’s exposure to risk under the energy transition.

“This result shows the role engagement and escalation by institutional investors can play in assisting a company to adopt a more credible decarbonisation strategy. We look forward to continuing engagements with J-POWER.”