A shareholder resolution tabled at BP's AGM calling for more financial, environmental and social information on the implications of extracting oil sands has managed to achieve 6% of votes in favour. Taking abstentions or votes positively witheld, the company was only able to achieve 85% support for its approach to this controversial exploration scheme. Over 140 institutional investors, including several major US, UK and Australian pensions funds alongside asset managers, had argued for greater disclosure by the company ahead of the meeting.

Tar Sands Voting

Number

%

For

11,140,212,207

6%

Abstain

622,272,418

9%

Against

1,020,301,075

85%

Total Votes

9,497,638,714

The campaign spearheaded by FairPensions attempted not only to mobilise investors to vote on the issue, but also encouraged pension trustees and their investment consultants to ask wide ranging questions about their fund managers' approach to ESG issues.

After the vote, supporters of the resolution claimed BP had "carried the vote but not the argument". A possible set-back for the campaign was the lack of support from the UK's Local Authority Pension Fund Forum. The LAPFF represents 52 local authority pension funds whose combined pension assets of more than £90bn (€101bn). In a circular issued before the meeting, it suggested that members should oppose the resolution as BP had provided it with "sufficient evidence that its approach was well-grounded".

Dialogue has improved transparency

Supporters of the resolution believe that their approach has brought about a considerable change in the way that company has tackled the tar sands project. Karina Litvack, Head of Governance and Sustainable Investment at F&C Asset Management said: "F&C abstained on this resolution in recognition of BP's considerably improved transparency regarding its involvement in Canadian oil sands. We credit this shareholder proposal for having prompted a more productive stance by the company on investor engagement. However, F&C feels that the company still falls short in certain important respects of the standard of disclosure that we believe was requested in this resolution. We want to take this opportunity to encourage BP to take a more prominent leadership role in industry-wide efforts to find ways to better manage the cumulative impacts of oil sands development in Canada."

While the number of votes in favour may appear somewhat low, ESG-related shareholder resolutions at UK companies are not only rare, but according to Manifest's Vote Watch database, rarely exceed 5% support. Catherine Howarth, chief executive of FairPensions said: "Shareholder resolutions are primarily a means to draw attention to an issue of concern to investors. The vote today is only one outcome of a wider process, which has catapulted tar sands risks to the top of BP’s agenda, and has become a major topic of debate in the City. The task for investors now is to make the most of the disclosures made to date, and continue to robustly engage with BP into the future. This will be matched by an unprecedented level of scrutiny from campaigners, politicians and members of the public."

An oil sands resolution has also been tabled at Shell’s AGM on May 18th.

Links

FairPensions Tar Sands Campaign Resources >>