A group of institutional investors is suing the German carmaker as they fear some of its lobbying activities go against the climate goals set by the company
Institutional investors investing in Volkswagen have sued the company. They are concerned that despite public pledges to fight climate change, the German automaker may be lobbying behind the scenes on issues that go against its environmental ambitions. However, this is not being disclosed to investors, reports environmental organisation ClientEarth, which supports the case.
A number of Swedish pension funds, Denmark’s AkademikerPension and the Church of England pension fund, argue that the potential contradiction exposes the company to reputational and operational damage, which also threatens the safety of their investments.
They now want to enforce through the courts that this issue is put on the agenda at the company’s upcoming shareholder meeting. Volkswagen had previously vetoed this.
Volkswagen says the motion proposed by the plaintiffs is inadmissible because it would affect the board’s powers and shareholders would not be able to legally adopt it even if they wanted to. The company nevertheless shares the view in the report that climate protection deserves more attention and is currently considering different approaches to this, it said.
The company already reports on climate-related issues, among others, on a voluntary basis, Volkswagen said. The company said all its activities serve to support its strategic goals, and a key part of this is supporting the Paris Climate Agreement and the European Green Deal.
Responsible corporate lobbying
“The success of the Paris Agreement depends on responsible corporate lobbying,” says Emma Henningsson of Swedish pension fund AP7. “As a long-term owner, we encourage Volkswagen to keep pace with its competitors and ensure that its stated climate ambition and its lobbying activities are not skewed.”
She calls it worrying that shareholders’ right to contribute to the agenda of the annual meeting was refused. “As a result, we felt the need to go to court to clarify this grey area for corporate law in Germany.”
According to ClientEarth, the case should reveal whether shareholders have the right to put an item on the agenda of the annual meeting.
This article originally appeared in Dutch business newspaper FD, on 20 October 2022