BP Investors Back Climate-Change Proposal Amid Activist Pressure

(Bloomberg) -- BP Plc investors voted overwhelmingly in favor of the oil major reporting in detail about how its investments are compatible with the Paris climate accord.

The mandate is a clear signal for both the company and the industry to come up with stronger green strategies as they’re put under increasing pressure by activists and investors to cut emissions and play a bigger part in the energy transition. Before BP’s annual general meeting in Aberdeen, Scotland, on Tuesday, one large shareholder said conversations with the company on climate were moving too slowly, and that it was slipping behind competitors.

A resolution at the AGM got the support of almost all shareholders and was also backed by BP’s management. A second more stringent climate filing, proposed by an activist group called Follow This, was not successful.

From next year, BP is set to bring its reports into line with the approved resolution, which was proposed by a group called Climate Action 100+. Those reports could form the basis of shareholders’ decisions on the safety of their investments in the company. A continuous pursuit of high-cost or high-carbon projects would be red flags, Bruce Duguid, director of stewardship at Hermes EOS, said in an interview before the AGM.

Activist Pressure

Climate Action 100+, whose members together manage more than $33 trillion of funds, has already persuaded Europe’s biggest oil company, Royal Dutch Shell Plc, to adopt short-term climate targets and convinced Glencore Plc to cut coal production. The group is asking more than 150 of the largest corporate greenhouse-gas emitters to align their business strategy with the Paris accord.

Investors haven’t yet fled BP or other oil majors in large numbers over worries about climate change. But concern about how they’ll cope with a lower-carbon energy system is a reason share prices have underperformed , according to Sanford C. Bernstein analyst Oswald Clint. Gains among the world’s four largest oil companies this year have lagged behind crude’s 34% surge.

While shareholders strongly backed the Climate Action 100+ proposal, they rejected the Follow This filing. This resolution included more specifics on how BP should manage the energy transition and specifically required it to include the emissions of its customers when setting climate-change targets.

BP Chief Executive Officer Bob Dudley is vehemently opposed to including customer emissions in those calculations because he says the company can’t control other peoples’ choices. He has also warned that some of these rules can open it to potential lawsuits. Rivals Shell and Total SA include customers’ figures in their climate targets.

To contact the reporter on this story: Kelly Gilblom in London at kgilblom@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Amanda Jordan, Rakteem Katakey

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