BP calls on investors to vote down climate resolution

BP's board has called on shareholders to vote against a resolution by Dutch activist investor Follow This that would require the UK major to set even more ambitious targets for reducing emissions over the coming decades. The resolution will be considered by investors at an annual general meeting on May 12.

BP and Follow This agreed in March 2020 to work together to draft a climate resolution, but the oil and gas firm told Bloomberg in December that year that the two sides "were unable to agree the wording of a potential joint resolution to enable shareholders to show their support for BP's net-zero ambition."

BP announced a radical shift in strategy last year, pledging to become a net-zero company by 2050 and scale back its oil and gas production by 40% over the next ten years. It is also looking to grow its renewable energy capacity 20-fold by 2030. However, Follow This argues there are "discrepancies" between BP's current ambitions and targets consistent with the Paris agreement.

According to the investor, BP's current strategy envisages an increase in its emissions over the next ten years, while the Paris agreement's success requires a 25-45% reduction over the period. Furthermore, the UK major is only seeking to halve its overall emissions by 2050, as its net-zero ambition only covers Scope 1 and 2 emissions, Follow This argues. The investor has urged BP to set new targets that comply with the Paris agreement.

Resolution 'counter-productive': BP

The oil company's board told shareholders on March 26 to vote against the resolution by Follow This, however. The resolution "would have a negative impact on BP's ability to deliver its Paris-consistent strategy and value for shareholders, the board said. "Therefore, we do not support it and recommend shareholders vote against it."

The board noted that BP  had developed its targets and aims through extensive consultation with investors and that they were inextricably linked with its strategy. "So, although the resolution suggests otherwise, asking us to change our targets and aims now would necessitate a change in strategy," it said. "Going back to the drawing board on strategy, targets and aims would disrupt our business plans and set us back at the very time when shareholders are asking us to focus on execution."

Furthermore, the resolution "would also compromise BP’s resilience by constraining the board’s ability to adjust the strategy to changing circumstances," the board argued.