BP to counter shareholder revolt after the turn of the climate strategy

BP is preparing for a shareholder revolt at its annual general meeting on Thursday – some of the UK’s biggest pension funds are planning to ramp up pressure on the oil major after it backed away from its emissions-cutting targets in the wake of record profits.

Dutch group Follow This, a small activist investor and campaign group with stakes in several major oil companies, presented a resolution at BP’s shareholder meeting.

It is calling for the energy giant to align its climate goals with the landmark Paris climate agreement and commit to absolute reductions in carbon emissions by 2030. Such as Scope 3 emissions.

The National Employment Provident Fund, the UK’s largest superannuation fund, Universities Pension Scheme, Border to Coast and Britain’s Local Authority Pension Fund Forum are all Shown They will support the decision.

Meanwhile, a separate shareholder revolt could see some pension funds vote against reappointing chairman Helge Lund in response to the company’s move to scale back its green pledges without shareholder approval.

A BP spokesperson did not respond to CNBC’s request for comment.

Follow This says it expects BP’s annual general meeting to be “controversialFirst, it would warn investors that they are “rightfully worried” about BP returning to its climate strategy amid a worsening climate crisis.

“We are confident that investors who had hoped a vote would not be necessary in 2022 now realize that a vote is crucial to force BP to align with Paris,” Mark van Pal, founder of Follow This, said ahead of BP’s annual general meeting.

“Vote allied with Paris must regain momentum in 2023.”

BP, which was one of the first energy giants to announce an ambition to cut emissions to net zero “by 2050 or sooner,” urged shareholders to oppose the decision by Follow This, saying it encroached on the board’s responsibility and accountability for the company’s strategy. .

He also called the decision “unclear”, “simplistic” and “disruptive”.

Underwriters advisors ISS and Glass Lewis have recommended that BP shareholders vote against the resolution introduced by Follow This. So is the $1.4 trillion Norwegian Sovereign Wealth Fund, Reuters reported last week.

Scientists have repeatedly warned that time is fast running out to head off the worst of the climate emergency.

The burning of fossil fuels, such as oil, gas and coal, is certainly the main driver of the climate crisis.

For investors, the planet is seen as an increasing investment risk to their portfolios, and many shareholders are calling for better disclosure from companies about what these risks are and how they plan to mitigate them.

Pension funds likely to vote against reappointing BP chairman Helge Lund were “a good example” that investors intend to hold select managers accountable for net-zero corporate strategies this year, said Lindsey Stewart, director of investment stewardship research at Morningstar.

“In investment oversight, voting against the chairman of a company is one of the strongest escalations that shareholders can implement. So, there is clearly very deep frustration on the part of pension funds who intend to vote against re-electing Helge Lund as chairman,” Stewart said.

BP had previously pledged that emissions would fall 35% to 40% by the end of the decade. He. She He said However, on February 7, it was now targeting a cut of 20% to 30%, saying it needed to continue investing in oil and gas to meet demand.

Morningstar’s Stewart said many BP shareholders are unhappy with the company’s decision to adopt less ambitious targets than net zero without giving shareholders the opportunity to vote.

The energy giants came under enormous pressure from shareholders and activists to invest in clean energy as demand for oil plummeted during the peak of the shutdowns in 2020.

But when the West’s five largest oil companies took a combined profit of nearly $200 billion in 2022 as fossil fuel prices soared after Russia’s all-out invasion of Ukraine, the rush for green reform lost momentum.

After failing to pass several climate resolutions in 2022, Van Baal told CNBC earlier this year that it was clear from discussions with oil majors that they were once again determined to fend off pressure from activists and shareholders and stick with essential oil and gas. . Business.