VW faces legal action from shareholders on climate lobbying grounds
Six institutional investors are taking legal action against Volkswagen (VW) over concerns that the firm is not being transparent about its climate-related policy lobbying.
A lawsuit was filed at Germany’s Braunschweig court by four public Swedish pension funds, the Church of England Pensions Board and AkademikerPension late last week. Collectively, these six investors represent less than half a percent of VW’s shares.
The documents allege that VW is not disclosing sufficient information in its annual reports or at its annual general meetings, with some investors believing that trade bodies of which VW is a member are lobbying against stronger climate policies.
This, the document argues, could undermine VW’s stated climate targets and public messaging around the importance of the low-carbon transition for the energy and transport sectors. VW committed in 2019 to achieving a ‘climate-neutral’ value chain by 2050 and to ensure that its electric vehicle (EV) portfolio included at least 70 models by 2028. It has since achieved verification for science-based targets through to 2030, covering its Scope 1 (direct) and Scope 2 (power-related) emissions.
VW does disclose which trade associations it is a member of to its investors. However, it is being pressed to assess whether the aims of each association are aligned with VW’s own climate plans. The court ruling could end the right of corporates in Germany to ban this sort of discussion from annual general meeting agendas. This may also have ripple effects across Europe.
“After repeated attempts to access information on potential misalignments stalled, the investors resorted to tabling an agenda item at Volkswagen’s 2022 AGM, but the company vetoed this too – so they are taking the matter to court,” environmental law firm ClientEarth, which is supporting the investors, summarised in a statement.
The Church of England Pensions Board’s chief responsible investment officer, Adam Matthews, wrote: “A ruling in our favour would significantly improve corporate accountability and transparency for shareholders in German companies. The impact would also apply to other topics, such as diversity and inclusion, discrimination or conflicts of interest.”
The Pensions Board is working towards a 2050 net-zero financed emissions target and stated this spring that it is likely to meet this ambition by 2040.
edie contacted VW for a comment on the filings. A company spokesperson said: “The distinction between the legal and substantive assessment is important. In legal terms, Volkswagen is of the opinion that the applicants’ request for an addition to the agenda, which has now been asserted before the District Court of Braunschweig, is inadmissible. This is because the petitioners are attempting to amend the Articles of Association to include a provision that would inadmissibly interfere with the management authority of the Board of Management and could therefore not be validly adopted by the Annual General Meeting.
“In terms of content, however, we share the assessment that aspects relevant to climate protection deserve an even higher priority in reporting. We are currently considering various approaches to this.”
The spokesperson emphasised that VW already follows voluntary frameworks on emissions and climate risk reporting, including the Taskforce on Climate-related Disclosures’ (TCFD). It produced its first TCFD-aligned disclosures for its 2021 sustainability report.
Lobbying – the next frontier?
Back in March, a coalition of investor groups collectively representing $130trn of managed assets launched a new standard designed to stop corporates from lobbying to “delay, dilute and block” action in line with climate science.
The Standard and its accompanying statement stipulate that organisations supporting it will take action against corporates that “lobby… to delay, dilute or block climate action”. Investors may choose to divest from such firms but this is not a requirement from the standard; in the first instance, they must “escalate the issue”, for example, by filing shareholder resolutions.
Also included in the new Standard is a commitment for supporters to funnel more money into businesses that can prove they consistently lobby in support of the goals of the Paris Agreement – and to support coalitions that exist for the sole purpose of coordinating lobbying for Paris-aligned policies.
Since then, in the auto sector, Volvo Cars has confirmed its withdrawal from the European Automobile Manufacturer’s Association (ACEA), citing conflicting aims on the pace of the EV transition.
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