Investors show dissatisfaction with BP’s climate strategy

May 5, 2023

BP is under pressure to align its Scope 3 emission reduction plans with the Paris Climate Agreement after investors backed a shareholder resolution at its AGM. 

At the meeting late last month, almost 17% of voting investors threw their weight behind a resolution from Dutch campaign group Follow This. The resolution calls for the oil giant to bring its Scope 3 emissions – those that relate to the use of its products – into line with limiting global warming to 1.5°C above pre-industrial levels. 

While 83% of shareholders voted against the resolution, in line with a recommendation from BP’s board, the 16.75% support showed significant support among investors including UK pension funds. This marks an increase over the percentage of supporting votes last year, but does not surpass the highwater mark of 2021.

In addition, 18% of investors voted against the directors’ remuneration report and more than 9.5% voted against re-electing chairman Helge Lund as a director.  

UK pension funds including NEST and the Universities Superannuation Scheme, as well as local authority investment groups Brunel Pension Partnership, Border to Coast, and LGPS Central, all flagged their intention to vote against Lund ahead of the AGM. 

At the AGM, Lund sought to emphasise that BP was committed to playing its role in the transition to a low-carbon economy and reiterated the company’s commitment to building “the energy system of the future” through renewable energy technologies. 

He added: “Not everyone will agree with every decision we’ve made. There will always be a range of views. We are listening to those views, and we are grateful for the broad support shareholders have given so far.” 

Bernard Looney, BP’s chief executive officer, said that, while the energy transition needed to be rapid, it also needed to be orderly to ensure supply still meets demand. The energy system needed to remain secure and affordable while transitioning to low carbon, he added, arguing that BP was well placed to address this “trilemma”. 

“We see two ways that we can help,” Looney said. “Investing to help accelerate the transition, and – not or – investing in today’s system, to keep affordable energy flowing to where it’s needed – while driving down operational emissions.” 

Follow This’ supporting statement for the resolution agreed that BP “could lead and thrive in the energy transition” in this way, but called for its Scope 3 emissions to be brought into line with the Paris targets by 2030.  

“We, the shareholders, understand this support to be part of our fiduciary duty to secure the long-term interest of the company and to protect all our assets in the global economy from devastating climate change; limiting global warming is essential to risk management and responsible stewardship of the economy,” Follow This stated.