BP’s bunker mentality hints at its strategic woes

Take an investor-backed capital discipline resolution, a hostile attitude to shareholder rights, and a new CEO and chair. Add a pinch of poor financial performance and a sprinkle of climate rollbacks, and you might just have the recipe for BP’s most dramatic AGM to date. You also have, without doubt, an immensely consequential moment for shareholder democracy at UK public companies. We believe that a sizeable proportion of institutional investors have grasped this and may vote in numbers to defend their rights.

Capital discipline on the ballot

Last year, BP announced a major strategic shift to increase capital expenditure to its upstream business from $8.5bn to $10bn while largely shelving its investments in its transition business, blaming the latter for its underperformance. But ACCR research shows that BP’s chronic underperformance predates its most recent pivot to clean energy, with total shareholder returns faring worse than both the market and its peers on a three, five, ten and 15 year basis.

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Our research also shines the spotlight on BP’s historic capital allocation. BP has invested an eye-watering $22bn into new oil and gas projects over the past five years, which has only created $0.9bn in shareholder value under forward prices.

That’s why major UK and European pension funds, alongside ACCR, have co-filed a shareholder resolution for the AGM (resolution 24 on the ballot). We ask the question: how can increasing upstream and exploration capex be consistent with BP’s commitment to capital discipline? Shareholders need evidence that BP’s proposed surge in upstream investment will deliver value. The resolution seeks confirmation of whether BP’s projects are cost-competitive, how the company accounts for project execution, and whether continued spending on exploration will provide genuine returns for shareholders.

Having met with a large proportion of BP’s top institutional investors to discuss the resolution over recent weeks, we see strong alignment that this information is useful and relevant to investment decision-making. Our asks are a light lift for a company that states that it already has the mechanisms in place for assessing the effectiveness of its investments and learning lessons from project delivery, as we contend in our response to BP’s notice of meeting.

Erosion of shareholder rights

There is widespread unease among BP’s shareholder base at the company’s attempt to erode shareholder rights. BP has taken the unprecedented step of unilaterally excluding a special resolution (backed by 16 institutional investors) after confirming the resolution met the threshold for a valid filing. The company has provided no explanation to the market as to why it took this extreme measure. The rejection of legitimate resolutions by BP is an affront to healthy corporate democracy and smacks of tactics used by BP’s American peers in the vacuum left by a Trump-cowed SEC. Are these tactics welcome at the London Stock Exchange? We have our doubts.

BP’s proposal to allow for virtual-only AGMs is especially revealing of the company’s attitude to shareholder participation in corporate democracy. That it is attempting it should surprise no one, given BP’s contempt for shareholder participation that I observed and documented at last year’s AGM.

AGMs are the one moment in the annual corporate calendar where boards and CEOs are accountable to investors, in public, in person. I’ve been to at least fifty, and they can certainly be uncomfortable. I can understand why boards may wish to avoid this discomfort. But discomfort creates the necessary space for constructive dialogue that is ultimately protective of corporate governance standards and shareholder value. Closing down that space could have the opposite result.

The company also wants to retire two climate disclosure resolutions that passed with a supermajority. While it is the company’s right to seek shareholder support for this, the board’s reasoning that the resolutions are no longer needed due to its ‘notable progress’ will grate with investors who have seen rollback after rollback of climate commitments. Platitudes will ring hollow when the company is simultaneously growing investment in oil and gas while slashing low-carbon capex, and its scope 1 and 2 emissions have grown each year since 2022.

Corporate governance standards must be defended

Read together these actions do not emanate confident, calm corporate governance. Exuding a bunker mentality towards shareholder engagement does nothing to assuage investor concerns after 2025’s strategic pivots, dizzying leadership shuffles, and a historic vote of no confidence in the chair. One can only wonder who has been calling the shots, and who has been advising, with the recent appointment of a new Chair and a permanent CEO in waiting.

At least that chapter is now closed, and a new one has begun as Meg O’Neill starts as CEO today. Will she set off by icing out shareholders and tarnishing the UK’s proud history of good governance norms in public markets?

Shareholder rights are not things to be taken for granted, discarded when the going gets tough. They must be respected by companies and defended by investors when companies discount their value. Thankfully, shareholders have recourse to channel their discontent into resolutions that do remain on the ballot on 23 April. We are expecting to see a strong turn-out of institutional investors who are justifiably uneasy about BP’s dismissive approach to their foundational rights.

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