A lot has happened in sustainable finance since the last AGM season: an energy crisis in Europe, an escalating legal campaign against ESG in the US, a credibility crisis for the world’s biggest net zero investment group, and ground-breaking political agreements to protect the planet’s natural resources and marine ecosystems.

And things aren’t getting any less eventful as we head into this year’s voting season, with the threat of another banking crisis dominating headlines, broader economic challenges and the IPCC’s latest report reiterating the reality of the climate emergency.  

Shareholders will be under pressure to respond to all these developments at the ballot box to demonstrate their sustainability credentials.

Perhaps the most important vote will be at BP’s AGM later this month. The oil giant has positioned itself as a frontrunner on climate. Last year, 88% of its shareholders voted in favour of its transition strategy in a ‘say on climate’ vote.

But, after record-breaking profits as a result of last year’s boom in fossil fuel prices, BP has decided that its decarbonisation efforts can wait. It wants to reduce oil and gas production by 25% by 2030 instead of 40% (as previously promised) and allocate less than planned to renewable energy.  

This leaves shareholders with three choices going into BP’s AGM:

  • They can back resolutions asking the company to take climate change more seriously.
  • They can vote against the board, on the basis that deciding to do things that undermine a shareholder-approved strategy is a governance issue, not a climate one. 
  • They can accept BP’s decision, because it is good for shareholders.

If investors opt for the last – and it is likely that many will – they will have to follow up with a change to their own strategies. If ‘say on climate’ plans can be ignored as soon as they don’t align with near-term profits, then responsible investors should stop their obsession with shareholder engagement and spend their time pushing governments to introduce policies which increase the cost of doing the wrong kind of business.

BP’s AGM will be held on 27 April.

Sophie Robinson-Tillett, Contributing Editor, ESG