UK energy giant BP decision to sell off its onshore wind business has come under fire from shareholder activists who accuse the oil giant of “putting the company’s future at risk."
Energy giant BP announced earlier this week that it is to sell its $2bn US Onshore Wind Business in a bid to consolidate its renewable energy presence focused on solar developer Lightsource bp.
BP had started the process of acquiring Lightsource at the end of last year, the process is due to be completed later this year, the energy firm said. The firm emphasised that renewables would remain an important part of its strategy.
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A key reason for the planned sale might be the fact that BP's onshore wind assets are old and in need of renewal.
But shareholder campaign group Follow This issued stark criticism of the move, warning that BP intended to stay in fossil fuels as long as possible. “The board not only endangers the global economy by exacerbating the climate crisis, but also puts the company’s future at risk. Policy interventions, disruptive innovation, stranded assets, and accountability for climate change costs all jeopardize the future of oil and gas corporations” warned Mark van Baal, founder of Follow This.
BP has been seen as one of the more ambitious energy companies with former CEO Bernand Looney delivering his 2020 Energy Transition Strategy which included a pledge to reach net zero by 2050 combined with ramping up the firms’ renewables business.
But the strategy was punished by shareholders, the firm’s share price dropped by nearly 20% since the announcement and the firm has since started to gradually roll back from its green promises, the recent sale of its US onshore wind business being the latest evidence of this trend. Shareholders appeared to approve of the decision, the firm’s share price rose by 3.5% since the announcement.
Over the longer term, BP could be facing increased pressure from long-term institutional shareholders. At this year’s AGM, asset owners have held off from filing a climate activist resolution due to current CEO Murray Auchincloss being relatively new in his role. One of the investors closely watching the firm is the LGPS Pool Brunel.
The fund told Net Zero Investor ahead of the AGM in May. " We are keen to see that the climate change strategy isn't weakened and is implemented by the new CEO - we will continue to monitor this and will cast votes accordingly in 2024" a spokesperson said.
BP has promised shareholder significant share buybacks for 2025. However, with oil prices dropping from more than $80 to $70 per barrel within the last year, it remains uncertain whether the firm can sustain its strategy.
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