A consortium of investors, representing around $3 trillion, became the first institutional investors to file a climate resolution in Japan when it called for more ambitious action by J-Power.
The initiative, which has won the award for 'ESG engagement initiative of the year, Asia', was formed in January 2022 by the Australasian Centre for Corporate Responsibility and is made up of Man Group, HSBC Global Asset Management, and Amundi.
The investors had concerns about Japanese electricity company J-Power's decarbonisation strategy due to a lack of short- and medium-term targets to reduce emissions to net zero by 2050. This not only lacked sufficient ambition to utilise renewable sources of energy but was also overly reliant on technology "which is neither proven nor scalable", the investors said.
After months of engagement with the power company, "it became evident that the company was not prepared to engage constructively with the group". The investors, therefore, scaled up action by co-filing the first institutional investor group-led climate shareholder proposals in Japan.
This 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;
- Disclose how it assesses the alignment of future capital investment against those targets;
- Disclose how its remuneration policy incentivises the company's executives to work towards its climate goals.
The resolutions received 26%, 18%, and 19% support respectively. While this is lower than the support needed for it to pass, the investor coalition said it represented a strong call from shareholders to strengthen its decarbonisation strategy.
Discussions with J-Power are ongoing.
Man Group told Environmental Finance it was "delighted to receive this award on behalf of the co-filing group". It said this "recognises the significance of these pioneering climate shareholder resolutions by institutional investors in Japan”.