Investors urging BP to hold a vote on climate change objectives
In a significant development, a group of investors, including Robeco, Rathbones, Phoenix Group, and others, collectively managing or engaging £5 trillion in assets, have expressed concern over British Petroleum (BP)'s climate strategy. The investors, led by the Australasian Centre for Corporate Responsibility (ACCR), have penned a letter to BP chair Helge Lund, expressing apprehensions about BP potentially abandoning its 2030 carbon reduction targets.
The investors' concern stems from BP's increased investments in new fossil fuel production, despite a binding 2019 resolution to align its strategy with the Paris Agreement targets. This investment pattern has been a subject of scrutiny, with shareholders at BP’s 2025 AGM showing increased willingness to challenge BP’s climate approach by supporting resolutions related to climate risk management.
The industry-wide mechanism to benchmark Paris alignment, the Science-Based Targets initiative (SBTi), has faced hurdles, with the development of an oil and gas emissions standard paused amid disagreements affecting several major companies. While BP's direct involvement in this issue is unclear, the context illustrates difficulties in establishing consensus on Paris-aligned climate goals in the sector.
The investors are urging BP to allow shareholders to vote on its climate strategy at the upcoming AGM in spring. This call for transparency and accountability comes before a capital markets day for BP investors next week.
Nick Mazan, company strategy UK lead at the ACCR, has stated that shareholders are setting out their position ahead of BP's capital markets update on 26 February. Colin Baines, stewardship manager at Border to Coast Pensions Partnership, one of the signatories of the letter, shares the concerns about BP's weakening of its climate targets and transition plans. Baines believes that long-term value in BP is dependent upon a quality transition plan that aligns with pathways to net zero, and the investors will continue to engage BP to that end.
The situation remains dynamic with ongoing scrutiny from investors and challenges in industry-wide standard setting. The deadline to file a shareholder resolution at BP’s upcoming AGM has passed, but investors could still file a resolution at an additional cost, according to Mazan.
Meanwhile, Elliott, an activist hedge fund, recently took a significant stake in BP, becoming its third-largest shareholder. Mazan believes that Elliott's interests as an activist investor in distressed debt might find common ground with long-term shareholders on the question of capital discipline for BP's upstream business. However, Mazan did not provide any specific information about Elliott's stake in BP's renewables business.
BP has struggled with poor performance in recent years, with its share price rising significantly slower than that of its peers and its Q4 results failing to meet analyst expectations. Mazan emphasized the need for a strategic reset and a strong focus on capital discipline, particularly for BP's upstream business, which accounts for the majority of its cash flow.
The investors warn that increased investments in fossil fuels could expose shareholders to stranded or value-destructive assets as the energy transition progresses. As the energy landscape continues to evolve, BP finds itself under increasing pressure to align its strategy with the Paris Agreement targets and to provide greater transparency and accountability to its shareholders.
- Recognizing the significance of environmental science and climate-change, the investors, led by the Australasian Centre for Corporate Responsibility (ACCR), have penned a letter to BP chair Helge Lund, urging BP to realign its strategy with the Paris Agreement targets, as they believe BP's increased investments in new fossil fuel production could expose shareholders to stranded or value-destructive assets as the energy transition progresses.
- In connection with their concerns about BP potentially abandoning its 2030 carbon reduction targets, these investors are advocating for greater transparency and accountability in BP's financial decisions, particularly with regards to its climate strategy, as they believe a quality transition plan that aligns with pathways to net zero is crucial for the long-term value in BP.
- Within the context of the industry-wide mechanism to benchmark Paris alignment, the Science-Based Targets initiative (SBTi), the investors are increasingly investing in businesses that prioritize climate risk management, as they aim to maximize returns while promoting environmental-science-based strategies that support the global effort to mitigate climate change.
