Activist fund Oasis Management Co. is calling on Kao Corp. to convene an extraordinary general meeting, seeking a probe into the Japanese company’s supply-chain risk management and internal control.
Oasis received numerous whistleblower allegations concerning Kao’s supply-chain practices, including potential links to deforestation and human rights violations, it said in a statement on Thursday. The Hong Kong-based fund urged shareholders to support a proposal to commission an independent review.
“We have discovered something that cannot be ignored,” said Seth Fischer, chief investment officer and founder of Oasis in a briefing Thursday. “This could potentially derail the brand growth significantly and hurt the company. We’re very concerned about the longevity of the company and the viability of the company.”
Kao’s leadership can’t investigate this fairly because the president Yoshihiro Hasebe overseas the environmental, social and governance initiatives and his pay is tied to the metrics, creating conflict of interests, he said.
Kao will review and verify the relevant facts and provide an appropriate explanation as needed, a company spokesperson said Thursday. The company has consistently positioned ESG initiatives as one of its key management priorities and has conducted its business in compliance with regulations, the spokesperson said.
Kao shares pared early gains and dipped as much as 2.2 percent in Tokyo on Thursday.
Oasis’s campaign on Kao comes days after another activist investor Elliot Investment Management ended a high-profile standoff with the Toyota group over the buyout deal of Toyota Industries Corp. Oasis — now with a 6.6 percent stake in Kao and its fourth-biggest shareholder as of January — has pressed the Japanese cosmetic and household goods maker to improve underperforming brands and strengthen overseas expansion.
The fund revealed a 3 percent stake in Kao in April 2024 and called on the company to improve its business, saying the stock has the potential to exceed 10,000 yen ($64). It raised its stake to 5.2 percent in December that year and bought more shares in January this year. Oasis also submitted a proposal in 2025 calling for changes to the company’s outside directors.
In its latest documents, Oasis said Kao relies on several high-risk suppliers and cited eight examples. It said FGV Holdings Bhd/Federal Land Development Authority, a major Malaysian palm oil supplier, were subject to US import ban over allegations of forced labor, child labor and sexual abuse from 2020 to 2026. Unilever has suspended trading with FGV and FELDA since 2018, Oasis said.
The fund also identified Indonesian plantation operator PT Astra Agro Lestari, another key supplier, with whom Kao’s trade is increasing. Norges Bank Investment Management excluded the group from its investment universe, it said.
Many investors have voted against boards which have worked with suppliers facing such allegations and “this should be fairly easy to win,” Fischer said.
Oasis has repeatedly sought a meeting with Kao’s president Hasebe, who declined to engage, Fischer said. Although the company’s investor relations team reached out to arrange talks recently, it withdrew the offer after Oasis informed Kao of its plan to submit a notice for an emergency general meeting.
“That’s a dramatically wrong approach,” Fischer said.
Kao’s portfolio includes premium skincare line SK-II, Molton Brown bath and beauty products and Bioré facial cleansers and sunscreen. The company generates roughly 60 percent of its revenue in Japan.
Operating profit rose 11.9 percent to ¥164 billion ($1 billion) last year on revenue of ¥1.68 trillion. The company forecasts operating profit to rise 11 percent to ¥182 billion for the current year.
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