BP’s board has recommended that shareholders vote against a climate activist resolution on climate goals at the upcoming annual general meeting (AGM) on April 27th. The resolution, filed by the activist group Follow This, calls for more emissions cuts by 2030, in line with the Paris climate agreement. The resolution also calls for emissions cuts from the combustion of fuels that BP sells, known as Scope 3 emissions.
BP has criticized the resolution as “unclear”, “simplistic” and “disruptive” and claims that it infringes on the board’s responsibility to set the firm’s strategy. Last year, support for Follow This’ resolution fell to around 15% of BP shareholders from around 21% the previous year.
BP’s reversal on emissions cuts to meet climate goals
BP recently rowed back on its plans to cut oil and gas output and emissions. The company now aims to produce 2 million barrels of oil equivalent per day by 2030, down just 25% from 2019 levels compared with previous plans for a 40% cut. As a result, BP reduced its ambitions to cut emissions from fuels sold to customers to 20%-30% by 2030, from 35%-40%. This decision has been a wake-up call for institutional investors, asset managers, and pension funds, said Mark van Baal, founder of Follow This.
According to scientists, in order for the world to have any chance of achieving the Paris Agreement objective of keeping warming well below 2 degrees Celsius over pre-industrial levels, greenhouse gas emissions must be reduced by 43% by 2030 compared to levels in 2019.
UK pension funds won’t have mercy for BP and Shell over climate goals
Two of the UK’s largest pension schemes, the Universities Superannuation Scheme (USS) and Borders to Coast, will vote against the renewal of top directors at BP and Shell unless both companies strengthen their commitments to tackling carbon emissions. The two pension schemes oversee £130 billion ($156.36 billion) in assets. This is part of their efforts to push oil companies and banks to progress faster on their climate change pledges.
The move is aligned with their new stewardship and voting policy that aims to vote against responsible directors where possible. They will do this where a company has not disclosed its climate transition plan, does not meet its diversity expectations, or where executive pay does not align with company performance.
BP’s and Shell’s promised, and unpromised
Shell declined to comment on the matter, while BP and Borders to Coast have not responded immediately to requests for comment. In February, BP announced that it aims to cut emissions from fuels sold to customers by 20% to 30% by 2030, less than an earlier target of a 35% to 40% reduction. It also plans to reduce its total emissions to net zero by 2050. Shell has pledged to be a net-zero carbon company by 2050 and has said that its overall carbon emissions peaked in 2018 at around 1.7 billion tons.
Will the pressure to meet climate goals succeed?
As pressure mounts on companies to take more aggressive action against climate change, institutional investors and pension funds are taking a more active role in holding companies accountable.
It remains to see how successful they will be in pushing companies like BP and Shell to take more ambitious climate targets. Still, their actions are sending a clear message that climate change is a top priority for investors.