- BP is bracing for a shareholder revolt at its annual general meeting, with some of the UK’s biggest pension funds planning to increase pressure on the oil major over its climate strategy.
- A separate shareholder rebellion could see some pension funds vote against reappointing chairman Helge Lund in response to the company’s decision to scale back its green pledges without shareholder consent.
- Scientists have repeatedly warned that time is running out quickly to avoid the worst of what the climate emergency has in store.
BP, which was one of the first energy giants to announce its ambition to reduce its emissions to zero “by 2050 or before”, urged shareholders to oppose the resolution proposed by Follow This.
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BP is bracing for a shareholder revolt at its annual general meeting on Thursday – some of the UK’s biggest pension funds plan to increase pressure on the oil major after it canceled its emissions reduction targets following record profits.
Dutch group Follow This, a small investor activist and campaign group with stakes in several major oil companies, tabled a resolution at BP’s shareholders’ meeting.
It calls on the energy giant to align its climate goals with the landmark Paris climate accord and commit to absolute carbon emissions reductions by 2030. Those emissions reductions, according to Follow This , should include emissions generated by customers’ use of their oil and gas, known as scope 3 emissions.
The National Employment Savings Trust, the UK’s largest pension fund, the Universities Superannuation Scheme, Border to Coast and Britain’s Local Authority Pension Fund Forum have all indicated they will support the resolution.
Meanwhile, a separate shareholder rebellion could see some pension funds vote against reappointing chairman Helge Lund in response to the company’s decision to scale back its green pledges without shareholder consent.
A BP spokesperson did not respond to a CNBC request for comment.
Follow This says it expects BP’s annual general meeting to be ‘controversial’, warning investors will be ‘rightly concerned’ that BP will backtrack on its climate strategy amid the crisis ever-worsening climate.
“We are confident that investors who hoped the vote was unnecessary in 2022 are now realizing that the vote is crucial to getting BP to align with Paris,” said Mark van Baal, founder of Follow This, before BP’s annual general meeting.
“Paris-aligned voting must regain momentum in 2023.”
BP, which was one of the first energy giants to announce its ambition to reduce its emissions to net zero “by 2050 or before”, has urged shareholders to oppose the resolution proposed by Follow This , saying it impinges on the board’s responsibility and accountability for corporate strategy.
He also described the resolution as “unclear”, “simplistic” and “disruptive”.
Proxy advisers ISS and Glass Lewis recommended that BP shareholders vote against the resolution filed by Follow This. The same is true for Norway’s $1.4 trillion sovereign wealth fund, Reuters reported last week.
Scientists have repeatedly warned that time is running out quickly to avoid the worst of what the climate emergency has in store.
Certainly, the burning of fossil fuels, such as oil, gas and coal, is the main driver of the climate crisis.
For investors, a warming planet is seen as a growing investment risk to their portfolios, and many shareholders are demanding better information from companies about the nature of these risks and how they plan to mitigate them.
Lindsey Stewart, director of investment management research at Morningstar, said pension funds potentially voting against the reappointment of BP chairman Helge Lund were “a good example” that investors intend to hold. specific administrators responsible for companies’ net zero strategies this year.
“When it comes to investment management, voting against a corporate president is one of the strongest escalations a shareholder can implement. So clearly there is very deep frustration on the part of pension funds that intend to vote against the re-election of Helge Lund as President,” Stewart said. said.
BP had previously promised emissions would be 35% to 40% lower by the end of the decade. However, he said on Feb. 7 that he was now aiming for a 20-30% cut, saying he needed to keep investing in oil and gas to meet demand.
Morningstar’s Stewart said many BP shareholders were unhappy with the company’s decision to adopt less ambitious net zero goals without giving shareholders a chance to vote.
Energy giants have come under immense pressure from shareholders and activists to invest in clean energy as oil demand slumped during the peak of 2020 shutdowns.
But when the five largest Western oil companies raked in combined profits of nearly $200 billion in 2022 as fossil fuel prices rose after Russia’s full-scale invasion of Ukraine, the push for a green reform has run out of steam.
After ultimately failing with several climate resolutions in 2022, Follow This’ van Baal told CNBC earlier this year that it was clear from talks with the oil majors that they were once again determined to fend off pressure from activists. and shareholders and continue with their oil and gas base. companies.