BP has fended off a proposal calling for greater action on climate change but shareholder support more than doubled for the demands of the activist group that proposed it.
At the energy supermajor’s annual meeting on Wednesday, nearly 21 per cent of votes came in favour of the resolution by Dutch shareholder activist group Follow This, which sought to make BP set targets that are aligned with the Paris climate goals, in opposition to a recommendation by the board.
While this fell short of the 75 per cent needed to pass, the vote piles pressure on the company and big shareholders that have stood by its corporate strategy.
Under new chief executive Bernard Looney, BP last year pledged to become a net-zero emissions business by 2050. Oil and gas production is set to fall 40 per cent by 2030 while spending on renewable power generation will rise 20-fold.
Follow This argued BP’s plan does not go far enough. Emissions will still increase until 2030 and while attention has focused on the group’s own fossil fuel production, third-party products that the company sells are not adequately scrutinised, it said.
Support for Follow This came in higher than the more than 8 per cent it achieved in 2019 when it called on the company to set hard targets not just on its own emissions but those of its consumers, for example those who use its petrol and diesel.
With more than a fifth of shareholders voting against management, BP will now under the UK corporate governance code be forced to go back to investors and discuss their concerns. The company said it would publish an update on this within six months.
“We will continue to engage with our stakeholders as our plans evolve over time,” BP said after the vote.
Mark van Baal, founder of Follow This, said: “Responsible investors have given a clear signal to the board of BP . . . They’re saying we do not accept empty promises for the distant future any more, we need you to act now.”
Ahead of the shareholder meeting, BP pushed investors to vote against the Follow This resolution, saying its plans were already “consistent” with the Paris goals. “Going back to the drawing board on strategy, targets and aims would disrupt our business plans and set us back at the very time when shareholders are asking us to focus on execution,” the company said.
In recent days Calpers, the US pension fund that chairs the influential Climate Action 100+ investor group, came under fire over a decision to vote against the Follow This climate resolution despite its own assessment that BP’s plans are not Paris-aligned.
Big shareholders have been torn between how to reward a company for taking some action on climate change, while continuing to push them to work even harder.
Major oil companies, particularly in Europe, also face a conundrum — how to divert capital towards cleaner energy businesses when they are less lucrative than traditional fossil fuel divisions that generate the cash to pay for dividends.
Looney on Wednesday said the company’s recent financial results showed the company was able to generate cash, pay down debt and be disciplined with spending while also “delivering cash for shareholders today and transforming BP for tomorrow”.
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