Several European pension funds have filed a legal case against Volkswagen (VW) after the car manufacturer vetoed the tabling of an AGM agenda item following its alleged repeated refusal to reveal information on its corporate climate lobbying.

The Church of England Pensions Board, Swedish public pension funds AP2, AP3, AP4 and AP7, and Denmark’s AkademikerPension have brought about the legal action after VW rejected a shareholder proposal to explain how its lobbying activities help address climate risks.

They stated that while the firm is publicly championing the green transition, there were concerns that it may be undertaking lobbying activities that run counter to its stated climate ambitions through its membership to several automotive and business associations.

The investors said this potential contradiction could expose the company to reputational and operational damage, and puts the security of their investments in question.

Following "repeated attempts" to access information on these potential misalignments, the pension funds resorted to tabling an agenda item at VW’s 2022 AGM, but the company vetoed the item.

The legal case will look at whether VW has the right to refuse the inclusion of the AGM agenda item, which proposes a change to the Articles of Association, on the agenda of the 2023 AGM.

The investors will be represented by German law firm Hausfeld Rechtsanwälte LLP and supported by legal charity ClientEarth.

“The success of the Paris Agreement is dependent on responsible corporate lobbying,” commented AP7 head of responsible ownership, Emma Henningsson.

“As a long-term owner we encourage Volkswagen to keep up with its peers and ensure there is no misalignment between its stated climate ambition and its lobbying activities.

“It is worrying that our shareholder right to contribute to the annual meeting agenda has been refused. As a result, we felt the need to go to court to clarify this grey area for corporate law in Germany.”

The case aims to clarify whether shareholders have the right to put an item on the agenda of an AGM, with a ruling in the investors’ favour potentially improving corporate accountability and transparency for shareholders in German companies.

The impact could also apply to other topics, such as diversity and inclusion, discrimination or conflicts of interest.

“VW is failing to demonstrate that the lobbying undertaken and funded by the company through their industry association memberships is aligned to their own climate goals,” said Church of England Pensions Board chief responsible investment officer, Adam Matthews.

“Despite repeated efforts to engage the company to adopt industry best practice it is extremely disappointing to have to turn to the courts to get VW to do the right thing. This is not an unreasonable request and a step many of their peers in the auto sector and in German listed companies have already taken and found beneficial.

“We are shareholders that want to see the company succeed in the climate transition and in order to protect our rights and those of shareholders we are challenging VWs refusal in the courts.”

European Pensions has contacted VW for comment.

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