BP investors push for a vote on climate goals
Ahead of BP’s capital markets day next week and amid hedge fund Elliott taking a major stake in the oil giant, long-term shareholders are calling for a vote on the firm’s climate strategy
A group of long-term investors, including Robeco, Rathbones and Phoenix Group, have urged BP to give shareholders a say in its climate goals, amid mounting speculation that the firm might be scaling back its ambitions.
The investors, representing £5trn in Assets Under Management or Engagement, are urging BP to allow shareholders to vote on its climate strategy at the firm’s upcoming AGM in spring.
In a letter addressed to BP chair Helge Lund, seen by Net Zero Investor, investors express concern that the company intends to abandon its 2030 carbon reduction targets entirely.
They also draw attention to the fact that, despite a binding 2019 resolution committing the firm to align its strategy with the targets of the Paris Agreement, BP has significantly scaled up investments in new fossil fuel production. “Whilst we can understand the short-term business case for this, in the medium term it increases investors’ potential exposure to stranded or value-destructive assets as the energy transition progresses,” the letter warns.
The statement from shareholders comes ahead of a crucial capital markets day for BP investors next week, where the firm is expected to release further details of its strategy.
BP has struggled with poor performance in recent years, with its share price rising significantly slower than that of its peers and its Q4 results failing to meet analyst expectations.
Earlier this month, activist hedge fund Elliott took a significant stake in BP, becoming its third largest shareholder, further increasing speculation that the firm might sell off its clean energy business.
Colin Baines, stewardship manager at Border to Coast Pensions Partnership, one of the signatories of the letter, said: “We share the concerns of co-signatories to this letter regarding BP’s weakening of its climate targets and transition plans. By further stepping away from its shareholder-mandated transition plan, BP is signalling its prioritisation of short-term gains over rebalancing the business to protect and enhance shareholder value and the ability to generate returns in the long term.
“We believe that long-term value in BP is dependent upon a quality transition plan that aligns with pathways to net zero, and we will continue to engage BP to that end,” he added.
Nick Mazan, company strategy UK lead at the Australasian Centre for Corporate Responsibility (ACCR), said that shareholders were setting out their position ahead of BP’s capital markets update on 26 February.
“The timing is deliberate here, with the capital markets update coming up next week. Investors really want to send a signal in terms of what is expected from the company around a fundamental strategic reset and a strong focus on capital discipline, particularly for the upstream business.
“There has been a lot of rhetoric around capital discipline, but only on the renewables side of the business and never really on the upstream business, which accounts for the majority of BP’s cash flow,” he emphasised.
He also stressed that while Elliott’s interests as an activist investor in distressed debt might often be pitched against those of long-term shareholders, they might find common ground on the question of capital discipline.
“What we really want to do is think of it from a shareholder value perspective and consider what might be in the best interest of shareholders over a longer period of time. Capital discipline really ought to be applied to the firm’s upstream business, not just to renewables,” he stressed.
The deadline to file a shareholder resolution at BP’s upcoming AGM has now passed, though investors could still file a resolution at an additional cost, Mazan told Net Zero Investor.
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