Toyota Motor weathered an unprecedented showdown with investors at its annual general meeting on Wednesday as shareholders approved former President Akio Toyoda’s nomination to the board and rejected a proposal demanding better disclosure on climate lobbying activities.

Proxy advisers, U.S. pension funds and European asset managers criticized the automaker’s insufficient corporate governance and environmental efforts, heaping pressure on a fledgling management team already facing intensifying industry competition in electric vehicles.

“The new management is able to get to a start thanks to the chairman’s 14 tough years of management,” Toyota President and CEO Koji Sato told shareholders. “I’d like to pursue a future where cars will always remain a joy, be of more use to society and be safe and secure. … I hope you will give the new management the same support and cheers you gave to Chairman Akio.”

This year’s event at Toyota’s headquarters in the Aichi prefecture city of Toyota had convened with the world’s largest automaker facing unusually strong pressure from its shareholders.

U.S.-based proxy adviser Glass Lewis had recommended that shareholders block the reelection of Toyoda — the chairman, former president and member of the founding family — as a director, holding him responsible for what it claimed was a lack of independence at the company’s board.

The California Public Employees’ Retirement System (CalPERS) and the Office of the New York City Comptroller, two major U.S. public pension funds, had also voted against Toyoda’s reelection, according to their voting records. Institutional Shareholder Services (ISS), another proxy adviser, said in a report that Toyota had relatively lower quality governance practices and relatively higher governance risk.

Seiji Sugiura, an analyst at the Tokai Tokyo Research Institute, said the involvement of foreign investors was significant because many Japanese institutional investors may be “in Toyota’s power.”

He added that it was “hard to think the current executive board would voice any opposition against Toyoda.”

Toyota shareholders also voted down a proposal calling for “robust disclosures” of its climate lobbying activities. Danish pension fund AkademikerPension, Norway’s Storebrand Asset Management and Dutch pension investor APG Asset Management, which together manage $740 billion of assets, had jointly filed the proposal, saying Toyota’s current efforts were insufficient and the two sides could not reach common ground in past dialogues.

Masahiro Yamamoto, the chief officer of Toyota’s accounting group, said the company had spoken with the proposers and was “thankful” for the “various opinions” related to disclosure but the two sides differed over internal combustion engines and the path to carbon neutrality.

“We operate globally, and there are some regions where there is no power, or no charging facilities. … We need various alternatives,” he explained.

The company has committed to achieving global annual sales of 3.5 million EVs per year by 2030 and halving global carbon dioxide emissions from new vehicles worldwide by 2035, compared to 2019 levels.

However, the nonprofit think tank InfluenceMap said Toyota’s climate policy is “misaligned with science-based pathways for achieving the goal of the Paris Agreement to limit warming to 1.5 degrees.”

It added that the company “in 2021-23 appears to have consistently advocated for a long-term role for ICE [internal combustion engine]-powered hybrid vehicles over battery electric vehicles globally,” including in Japan, the U.S. and the EU.

“While there are many strong points to [Toyota’s] views, and they have a right to speak their views, lobbying governments to water down their climate policies probably did not put Toyota in the best light with shareholders and many of their customers,” some of whom are in places like California where “green views have a lot of currency,” said Christopher Richter, an analyst at CLSA Securities Japan.

The three asset managers had claimed such lobbying activities will slow the pace of urgent climate action, cement Toyota’s global laggard status in EVs and jeopardize its brand. The proposal gained support from ISS. The two U.S. public pension funds also voted in favor of it.

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