BP faces a green rebellion at its annual shareholder meeting on Thursday as some of Britain’s biggest pension funds prepare to demand the company toughens its plans to reduce its emissions by 2030.
The National Employment Savings Trust (Nest), which represents about 11m individual workplace pensions, plans to back a resolution put forward by climate campaigners at Follow This, which calls for BP to align its emissions reduction plans with the Paris agreement.
The campaign group has also won support from the Universities Superannuation Scheme and the council pensions fund Border to Coast, which have both also agreed to vote for the Follow This resolution.
Oil companies have faced rising dissent from activist shareholders including Follow This in recent years. In 2021, Legal & General Investment Management, one of the oldest fund managers in the City of London, backed a similar resolution put forward by Follow This at Shell’s AGM. The resolution was backed by 30% of Shell’s shareholders.
Mark van Baal, the founder of Follow This, said BP’s existing plans to reduce emissions do not go far enough because they rely on reducing the carbon intensity of the energy BP sells while absolute emissions are expected to keep rising until the end of the decade.
The Paris agreement calls for all countries to limit their emissions in order to keep global temperatures from rising more than 1.5C above pre-industrialised levels by 2050. The 2020s are considered crucial years to cut carbon in order to remain on track.
Van Baal has written to BP’s shareholders urging them to vote in favour of their resolution, saying it was “the only way to compel BP to reduce emissions this decade”.
BP’s board has urged shareholders to vote against the resolution, saying it is “unclear”, “simplistic” and “disruptive”. The company added that it would threaten BP’s “long-term value creation”.
In a separate climate revolt the three pension funds are expected to vote against the re-election of BP’s chairman, Helge Lund, in protest at BP’s decision to water down its green pledges earlier this year without shareholder consent. The local government pensions schemes LGPS Central and Brunel Pension Partnership are planning to join the funds in voting against Lund’s re-election.
BP’s chief executive, Bernard Looney, originally set out a “net zero carbon” plan that included a goal to cut the company’s oil and gas production by 40% compared with 2019 by the end of the decade. However, he reset the target to 25% by 2030 in February after reporting the highest profits of BP’s 114-year history thanks to soaring oil and gas prices.
Diandra Soobiah, Nest’s head of responsible investment, said the fund wants BP to invest more in low-carbon energy and renewables instead of new oil and gas sites.
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“If BP continues on this path, we have serious concerns about them reaching their net zero goal and the long-term success of the company,” Soobiah said. “While it’s disappointing to see BP rowing back on their climate pledges, what’s particularly worrying is they haven’t gone back to shareholders and given us a chance to vote on such a significant decision. Actions like this undermine the confidence shareholders have in the board and their corporate governance.”
Campaigners at Reclaim Finance, which lobbies for the financial sector to align with global climate goals, has also called on investors to vote against the pay awards given to Looney and the chief financial officer, Murray Auchincloss, because the remuneration policy does not go far enough to take BP’s climate responsibilities into account.
Separately, one of the largest proxy shareholder advisers, Glass Lewis, has recommended that shareholders vote against Looney’s £10m pay packet after the death of four workers last year. It was trimmed by only £78,329 to reflect the safety breaches.
