Recent reports state that Toyota shareholders are questioning Akio Toyoda’s stand on Japan’s plan to ban conventional cars, by 2035. This has occurred not long after the firm had stated that they were aiming to become carbon neutral by 2050. This is why many shareholders are pondering why the president's response to the ban is ambiguously vague and unconfident. This raises the question of whether or not they are yet ready for the global shift to all-electric innovations. The setting stone for this was five investors, who compromise of around $500 billion collectively in assets under management, who state that Toyota risks falling behind competitors.
These competitors are the likes of Tesla who have already gained monumental first-mover advantages since the establishment of Tesla in 2003, building a huge international consumer base and selling millions of their electric vehicles every year. As a result, Toyota is in desperate need to step up their game and pursue the electric car field, with much funding and investment needed for this. In terms of the shareholder’s value, as Toyota now has to invest a lot of valuable resources and most of all money into new schemes, less dividend will be paid to its shareholders, which will leave them unhappy and less likely to keep their share in the long run, as it does not create stability, but instead high volatility. This also makes them less likely to complain and retrospectively can answer why they are rightfully concerned over Toyoda’s recent statements. Danish fund said they would consider selling shares of Toyota if there was no change after engagement with the company. This is alongside giving cover to other companies that seek to avoid climate goals.
Toyota’s stance changed last month in response to activists and investors pressure as the company said they would be more ‘transparent’ on steps taken. This comes alongside international states all collectively signing the Paris agreement to become carbon neutral by 2050, such as the UK. Furthermore, they have also banned the production of new petrol and diesel cars by 2035, which also has been an incentive for various electric car manufacturers to get ahead of the game early and join the global shift prior to this. Consequently, for Toyota there is a rapid change in market forces because of the shift to carbon neutrality, meaning they must adapt quickly to not miss out on sales. This may be a reason for Toyoda’s speculation over Japanese legislation recently introduced as he may not feel prepared for the shift this early. Three days later the President questioned Japan’s decision to ban new combustion engine vehicles by 2035, saying ‘what Japan needs to do now is to expand its options for technology. I think regulations and legislation should follow after...
This is a massive questioning point with regards to his actions, as no one expected Toyota to have this back-tracking standpoint, as investors stated that they are worried the company may not be on board with plans despite previous statements from Toyota on their plans moving forward. CEO of AkademikerPension Jens Munch Holst stated ‘We're genuinely concerned that Mr Toyoda does not seem to realize what is at stake here,’ This is due to the monumental benefactor’s carbon neutrality will have on the world stage. An example of this is for the Japanese economy. Toyoko currently has ‘moderate’ air quality according to the WHO, however it is still one of the most polluted cities on the planet and is the cause for many pollution-related illnesses too. If carbon neutrality was to come into effect, this would see a huge reduction in city emissions, as CO2 PPM would fall, and air quality would improve. As a result, public health for Japan would therefore improve too. Subsequently, people are healthier overall, and less likely to take days off of work. Consequently, people are more efficient, allowing firms to maximise productivity and also workers see an increased utility too.
In judgement, these positive externalities present here are undeniably a benefit to society, and also create a sustainable future for our planet. The speculation over Mr Toyoda is still ongoing, however with him and his associates on the line, only time will tell as to whether he is all for, or in fact against legislation and willing to take his micro-step, to a vast macro effort to a better future for our planet.
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Wrriten by Euan Taylor
Research compiled by Jonas Theaker.