Ahead of the Volkswagen and Daimler annual general meetings on Tuesday 14 May and Wednesday 22 May respectively, Dr Hans-Christoph Hirt, Head of Hermes EOS, outlines Hermes EOS’ voting recommendations and highlights the auto manufacturers’ preparedness for a low-carbon world as the key topic that speakers will raise:
- Hermes EOS will raise questions about the companies’ climate change strategies, their alignment with the Paris Agreement and related targets
- At Volkswagen, Hermes EOS recommends voting against the candidates proposed for election to the supervisory board
- At Daimler, Hermes EOS recommends voting in favour of the new divisional structure of the group and supports the appointment of Ola Källenius as new CEO
“We encourage automotive companies to continue intensifying their efforts in preparing for a low-carbon world. With pressure on auto manufacturers to adapt to this immediate threat to their business models, we would like to see them develop and clearly articulate their strategies for managing this transformational process. This requires setting short-, medium- and long-term targets to be aligned with the goals of the Paris Agreement, including for average fleet emission reductions, low-carbon vehicle sales and capital expenditure targets.
“Through our role as co-lead engager for the Climate Action 100+ initiative for Volkswagen and Daimler, we have discussed their actions to date and their strategies for further decarbonising their business and value chains.
“Volkswagen has taken a leading role in the transition, setting targets to become carbon neutral in its operations and products by 2050. It is thinking broadly about how it can encourage emissions reductions in its supply chain, as well as setting intermediate targets for electric vehicle sales and capital expenditure. We encourage other companies to follow this trajectory and welcome Daimler’s announcement yesterday in this regard.
“Investors want to see companies demonstrate the long-term viability of their business models and product offerings so that they are in a position to prosper in a net-zero emissions economy. Consistent with this, we expect all companies to be advocating for policies which advance the goals of the Paris Agreement. We would like to see further improvement in the transparency of direct and indirect lobbying activities.”
Volkswagen: Supervisory board elections, corporate governance and culture
“Despite our positive view of the company’s strategic decision to become a leader in electric vehicles and its commitment to climate protection, we still have significant concerns about Volkswagen’s governance structure, particularly the composition of its supervisory board.
“Volkswagen has nominated Hessa Sultan Al-Jaber, Ferdinand Oliver Porsche, and Hans Michel Piëch for election to its supervisory board. The company’s choice of candidates is disappointing, as it fails to address significant shortcomings in the board’s composition. We recommend voting against all three of these nominations as we consider them to be non-independent. The election of these candidates will result in a board with almost zero independent representation and a lack of sufficient sector and market experience amongst its members.
“The supervisory board has yet again missed a chance to address the obvious gaps in experience and skills that would support the company’s transformation into a leader in electric transportation in key markets.
“It has been almost four years since the emissions scandal broke and we urgently need to see tangible and credible evidence of improving governance and culture. We urge the company to conduct and report on an externally-facilitated supervisory board evaluation to identify experience and skills gaps and confirm the need for more independent expertise. This is of particular importance given the reported ongoing legal investigations into the company’s former CEO Martin Winterkorn’s role in the emissions scandal.”
Daimler: Management board changes and new corporate structure
“In response to current challenges facing the automotive industry, the supervisory board of Daimler has rightly accelerated succession planning and has decided to appoint Ola Källenius as new chair of the management board, effective at the end of the annual general meeting.
“We support this appointment and recommend voting in favour of the new divisional structure of the group. This should give the legally independent divisions a stronger market and customer focus and greater entrepreneurial freedom. It should also facilitate faster and more flexible partnerships (as illustrated by the co-operation with BMW Group on future mobility). However, it remains important that the new entities – created under the roof of Daimler AG – continue to generate and safeguard synergies.”