Shareholders at fossil fuel giant BP are disappointed with the company’s alleged backslide on its ESG commitments and have warned they will vote in favor of a climate resolution from activist group Follow This.
The shareholder activist has campaigned for BP to align its ESG goals with the Paris Climate Agreement to help limit global warming to 1.5°C. But BP is urging shareholders to vote against the resolution.
‘A vote in favor of shareholder resolution 25 is the only way to urge BP to reduce overall emissions this decade; voting against will enable the company to persist in delaying emission reductions by 2030 and endanger the overall value of your portfolio,’ says Follow This in its shareholder resolution filing.
In February BP said it would reduce its ESG targets after raking in the highest profits in the company’s 114-year history. The $121 bn energy conglomerate saw profits reach $27.6 bn in 2022, up from $12.8 bn the previous year, reflecting the impact price increases have had on the energy sector.
In 2019, BP committed to reducing its oil and gas production by 40 percent by 2030 but this new strategic move will see the company lower its expectation to a target of around 25 percent.
Serious concerns grow
During its AGM today, several shareholders – many of them pension funds, such as Nest, the Universities Pension Scheme, LGPS Central, Brunel Pension Partnership and Border to Coast – were all able to vote on certain resolutions, including the climate initiative from Follow This.
Diandra Soobiah, head of responsible investment at Nest, said: ‘While it’s disappointing to see BP rowing back on its climate pledges, what’s particularly worrying is that it hasn’t gone back to shareholders and given us a chance to vote on such a significant decision.
'If BP continues on this path, we have serious concerns about it reaching its net-zero goal and the long-term success of the company.’
Paris-aligned climate goals
Speaking at the AGM, however, BP chair Helge Lund asked shareholders to reject the resolution posed by Follow This.
‘We share [its] desire for the world to meet the Paris goals, but this resolution is not the answer. What it calls [for] BP to do is unclear,’ he said. ‘It does not recognize our strategic ambitions, nor does it take into account the update to our strategy in February and it would be disruptive for the strong progress BP is making on behalf of its shareholders.’
In response, Mark van Baal, founder of Follow This, told shareholders at the AGM: ‘The resolution is indeed simple and can therefore not be unclear. It leaves a strategy entirely up to the board. And it’s only disruptive if you’re not Paris-aligned.
‘Today, investors have the opportunity to leave no doubt that meaningful Scope 3 targets by 2030 are a crucial component of meaningful climate action. They can do so by voting for resolution number 25.’
The results of the voting have yet to be announced.