When BP announced a “fundamental reset” of its strategy last month, its chief executive officer Murray Auchincloss said it was “all in service of sustainably growing cash flow and returns”.
But his use of the word “sustainably” isn’t reflective of the new plan’s green credentials – quite the opposite.
BP will scale back its efforts to support the low-carbon energy transition in favour of growing its fossil fuel business.
“This is a reset BP,” said Auchincloss. “With an unwavering focus on growing long-term shareholder value.”
Diandra Soobiah, the director of responsible investment at UK pension fund NEST, isn’t convinced.
“BP’s belief that increasing oil and gas production will drive long-term shareholder value is misguided,” she tells IPE.
“There are clear risks of these high-cost projects failing to deliver promised returns as the energy transition accelerates and demand for oil and gas falls.”
NEST is one of nearly 50 shareholders calling for a ‘Say on Climate’ at BP – a formal vote on its change of strategy at its annual general meeting (AGM) next month.
Others include KLP, Phoenix Group, Generali and Royal London Asset Management.
BP held such a vote when it developed its net zero strategy back in 2022, and almost 90% of its shareholders backed the plan. Since then, it has twice revised down its ambitions, but never returned to the ballot to get the changes signed off.
Colin Baines, a stewardship manager at UK pension pool Border to Coast Pensions Partnership, says “as things stand, we will be voting against the re-election of the chair at the forthcoming AGM” in response to its refusal to put the strategy to vote.
In lieu of a Say on Climate in 2025, the fund wants BP to publish a more detailed climate transition plan next year, explaining its compatibility with its reset strategy, and allow investors to vote on that.
SEC proposals on voting
But, given the current mood among corporates, it seems unlikely that the oil major will be any more inclined to play ball in 2026.
As Europe and the US continue to shift to the right, recent data from proxy solicitation firm Georgeson shows companies feel increasingly emboldened to snub shareholders’ sustainability requests.
In the US, issuers have already lodged 330 requests with the Securities and Exchange Commission (SEC) to block ESG votes this proxy season. This compares with 266 for the whole of last year.
The boom in submissions, known as ‘no action’ requests, is driven partly by the SEC’s decision to revert guidance introduced when Donald Trump was last in office, that makes it easier for companies to strike proposals off their ballot if they’re deemed to breach core corporate governance principles.
During Joe Biden’s presidency, the interpretation of those governance principles was relaxed so that more proposals could survive the ‘no action’ process.
But the SEC has announced it will re-adopt the previous guidance which, when last in force, was frequently used to banish ESG-related proposals – especially ones asking firms to set climate targets – on the grounds of micromanagement.
The high number of ‘no action’ requests this year shows that companies are betting on the same backing this time around, and so far the evidence suggests they’re right.
The SEC has begun to support firms’ requests to block lobbying proposals, for example, which have historically survived ‘no action’ attempts.
Kilian Moote, who leads ESG at Georgeson, says the trend marks “a pretty significant departure from the last few years in terms of how the SEC assesses if a shareholder proposal can be excluded or not”.
Filers will probably revise the wording of their requests before submitting them next year, to try to avoid falling foul of the new guidance, he notes. They didn’t have enough notice to do so this year.
“In some ways this is a one-year spike,” Moote says.
“But in other ways, it signals at least a period in which issuers are in a more favourable environment.”
Read the digital edition of IPE’s latest magazine
No comments yet