Japan’s J-Power hit with climate shareholder resolution

The climate shareholder resolution is backed by Amundi, HSBC Asset Management and Man Group

Three major institutional investors have tabled a climate shareholder resolution and signalled their intention to vote against the director responsible for Electric Power Development Co’s (J-Power) climate strategy at the company’s upcoming annual general meeting (AGM).

Amundi, HSBC Asset Management and shareholder advocacy group the Australasian Centre for Corporate Responsibility have filed the resolution with the support of hedge fund Man Group, which contains two shareholder proposals.

These two proposals comprise a call for J-Power to set and disclose credible short and medium-term emissions reduction targets aligned with the Paris Agreement and to disclose how remuneration policies incentive progress against emissions reductions targets.

In a statement, the three institutional investors note that J-Power’s targets are not Paris-aligned and the company has not presented an indicative schedule for the retirement of its coal-fired power assets, and instead has presented a plan that involves capital expenditure into speculative technology such as ammonia co-firing prolonging the life of these assets.

This has also prompted the three investors to vote against the company director principally responsible for J-Power’s decarbonisation strategy, executive vice president Hitoshi Kanno.

This is not the first time the three institutional investors have butted heads with J-Power. Last year, the trio filed a similar shareholder resolution, which was the first investor group-led climate shareholder resolution in Japan and garnered the support of 26% of shareholders.

“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,” said Jason Mitchell, head of responsible investment research at Man Group.

“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,” said Caroline le Meaux, head of ESG research, engagement and voting at Amundi.

“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,” said Sachi Suzuki, senior manager for investment stewardship at HSBC Asset Management.