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BP will face shareholder revolt after climate strategy U-turn




  • BP is bracing for a shareholder revolt at its annual general meeting, with some of Britain’s biggest pension funds planning to step up pressure on the oil major over its climate strategy.
  • A separate shareholder revolt could lead some pension funds to vote against the reappointment of chairman Helge Lund in response to the company’s move to scale back its green pledges without shareholder consent.
  • Scientists have repeatedly warned that time is quickly running out to avert the worst of what the climate crisis has in store.

BP, which was one of the first energy giants to announce an ambition to cut emissions to net zero “by 2050 or earlier”, has urged shareholders to oppose the Follow This resolution.

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BP is preparing for a shareholder revolt at its annual general meeting on Thursday – some of Britain’s biggest pension funds plan to increase pressure on the oil major after it rolled back its emissions reduction targets in the wake of record profits.

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

It calls on the energy giant to align its climate goals with the landmark Paris climate agreement and commit to absolute carbon emissions cuts by 2030. Those emissions cuts, says Follow This, should include emissions generated by customers’ use of their oil and gas, known as Scope 3 emissions.

The National Employment Savings Trust, Britain’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 revolt could prompt some pension funds to vote against the reappointment of chairman Helge Lund in response to the company’s move 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 a “contentious one”, warning investors to be “rightly concerned” that BP is scaling back its climate strategy amid a worsening climate crisis.

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

“Paris-aligned voting 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 earlier”, has urged shareholders to oppose the Follow This resolution, saying it impinges on board responsibility and accountability for the company’s strategy.

It also described the resolution as “unclear”, “simplistic” and “disturbing”.

Proxy advisers ISS and Glass Lewis have recommended that the shareholders in BP vote against the resolution from Follow This. So has Norway’s $1.4 trillion sovereign wealth fund, Reuters reported last week.

Scientists have repeatedly warned that time is quickly running out to avert the worst of what the climate crisis has in store.

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

For investors, a warmer planet is seen as an increasing investment risk for their portfolios, and many shareholders are calling for better disclosure from companies about what those risks are 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 was “a prime example” of investors’ intent to hold specific directors accountable for companies’ net-zero strategies this year.

“In investment management, voting against a company executive is one of the strongest escalations a shareholder can take. So there is clearly very deep frustration with the pension funds that intend to vote against Helge Lund’s re-election as chairman,” Stewart said.

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

Morningstar’s Stewart said many BP shareholders were unhappy with the firm’s decision to adopt less ambitious targets without giving shareholders the opportunity to vote.

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

But as the West’s five largest oil companies raked in combined profits of nearly $200 billion in 2022 as fossil fuel prices rose following Russia’s full-scale invasion of Ukraine, the push for green reforms lost ground.

After failing several 2022 climate resolutions, Follow This’ van Baal told CNBC earlier this year that it was clear from discussions with major oil companies that they were once again determined to fend off activist and shareholder pressure and continue with their core oil and gas . companies.



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