Toyota, the world's leading automaker with sales of 9.4 million vehicles in the fiscal year that ended in March, faced a significant challenge at its annual shareholders meeting as investors expressed dissatisfaction with Chairman Akio Toyoda's leadership amid ongoing scandals surrounding fraudulent vehicle testing and certification.
At the meeting held on June 18, 2024, in Toyota city, central Japan, shareholders rejected a climate-related proposal requiring Toyota to strengthen its reporting on climate-related lobbying activities and global carbon-neutral goals. The rejection of this proposal was a clear indication of investors' concerns regarding the company's governance and transparency.
Toyota Industries Corp., the No. 2 shareholder, and Denso Corp., the sixth biggest shareholder, were among those expressing their discontent with Toyoda's leadership. Institutional Shareholders Services (ISS) and Glass Lewis & Co., two major proxy advisory companies, had recommended that shareholders vote against Toyoda's reappointment as chairman due to concerns over governance issues and the lack of independent board members.
Despite these challenges, Toyota remained committed to its goals of climate change measures and carbon neutrality by 2050. The company's profits had doubled in the fiscal year that ended in March, but this success did not seem to be enough to quell investors' concerns over governance and transparency.
The ongoing investigation into improper checks on vehicles, including collision tests, at Toyota and its group companies had raised questions about the appointments of board members and the need for more independent board members. These issues were further compounded by Toyoda's involvement in motorsports as a personal hobby, which some shareholders perceived as a distraction from his duties as chairman.
The scandal involving fraudulent vehicle testing and certification was not limited to Toyota alone. Japanese automakers such as Daihatsu Motor Co., Hino Motors, Honda Motor Co., Mazda Motor Corp., and Suzuki Motor Corp. were also under scrutiny for similar issues.
The scandal had significant implications for the reputation of Japanese automakers, which have long been known for their excellent quality and commitment to safety. The revelation of these fraudulent acts raised questions about the effectiveness of internal controls and government oversight in Japan.
