First institutional investor group-led climate shareholder proposals filed in Japan receive strong investor support.
Marking a significant moment in Japanese investor relations, 26% of shareholders have voted in support of a shareholder proposal calling on Electric Power Development Co., Ltd, known as J-Power, to set credible emissions reduction targets and disclose plans to achieve them. This, alongside substantial support for accompanying shareholder proposals regarding aligning capital expenditure and remuneration with decarbonisation goals, sends a clear signal to J-Power to accelerate its decarbonisation strategy in order to remain competitive in Japan’s transition to a low carbon economy.
The set of three climate shareholder proposals were co-filed by three major institutional investors representing US$3 trillion of assets under management – Man Group, one of the world’s leading global active investment management firms, Amundi, Europe’s largest asset manager, and HSBC Asset Management – alongside Australasian Centre for Corporate Responsibility (ACCR). The proposals received the near-complete backing of the two major proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis.
The proposals called on J-Power to:
● set a business plan and short- and medium-term emissions reduction targets aligned with the goals of the Paris Agreement (receiving 26% support),
● disclose how it assesses the alignment of future capital investment against those targets (18% support), and
● disclose how its remuneration policy incentivises the company’s executives to work towards its climate goals (19% support).
The first-ever institutional investor group backed set of proposals and substantial show of shareholder support mark an important milestone in sharply rising investor engagement on climate change in Japan. J-Power operates Japan’s largest coal fleet and derives more than 40% of its operating revenue from coal according to a company engagement profile published by TransitionZero.
The investor group’s filing stated that it sees J-Power’s corporate value depending upon a credible decarbonisation strategy and science-based short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement and investor expectations. The group believes that their absence presents a range of material financial risks to shareholders.
The J-Power shareholder proposals are among an increasing number of climate shareholder proposals filed in 2022.
Jason Mitchell, Head of Responsible Investment Research at Man Group, said, “We have called for J-Power, as Japan’s largest coal power operator, to lead the sector in setting a clear decarbonisation strategy with Paris-aligned, company-wide targets. We are pleased to see strong shareholder support for this position.”
Sachi Suzuki, Senior Stewardship Specialist at HSBC Asset Management, added, “Long-term investors in J-Power see its corporate value dependent upon a credible plan to decarbonise. We hope this result encourages a shift from the current high-cost, coal-based strategy to a more credible decarbonisation strategy, including increased renewable investment in line with investor expectations.”
Caroline le Meaux, Head of ESG research, engagement and voting at Amundi added, “We remain concerned by 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 Blue Mission 2050. We believe accelerated action to decarbonise, including increased renewable energy development, will best manage stranded asset risk and position the company for success in the transition.”
Brynn O’Brien, Executive Director at ACCR added, “A credible, detailed business plan supported by Paris-aligned targets and transparent annual reporting on progress is in the best interests of the company and its shareholders. J-Power’s current strategy would see shareholder capital wasted to prolong the life of the company’s coal-fired power generation business. This AGM result sends a clear message that the company board and executives need to act now for the company to thrive in a decarbonised world.”
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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 2022, HSBC Asset Management managed assets totaling US$618bn 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 $151.4 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 2022. 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.
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 5,300 employees in 35 countries. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €2.0 trillion of assets.
Amundi, a trusted partner, working everyday in the interest of its clients and society.