Group of shareholders proposes a vote against BP's chairperson
BP, the multinational oil and gas company, is facing a significant challenge from shareholders as they call for a vote against the re-election of its chair, Helge Lund, at the upcoming Annual General Meeting (AGM) scheduled for 17 April.
The shareholders' push for a vote on BP's climate goals continues to challenge the company's transition strategy. This push stems from concerns about chronic underperformance and dissatisfaction with the company's strategic direction under Lund's leadership.
Elliott, a significant shareholder in BP, has taken a £3.8bn stake in the company, becoming its third-largest shareholder. Elliott's position in BP is widely interpreted as a push to adopt a wider focus on fossil fuels. However, the decision to scale back net zero ambitions and increase investment in oil and gas production has not been universally welcomed.
A group of investors, including Robeco, Rathbones, and Phoenix Group, sent a letter to Lund, urging him to give shareholders a say in BP's climate goals. However, their appeal was ignored. Follow This, a shareholder activist group, has also been vocal in its push for a vote on climate goals, with its founder, Mark van Baal, arguing that this leaves investors with no other options.
BP's AGM is still scheduled to be held on 17 April, but no formal vote on climate is included in the agenda. A significant vote against Lund's re-election is being proposed by shareholders as a way to express dissent over BP's refusal to allow a vote on its strategy U-turn.
The opposition reflects shareholder unease about BP's handling of the energy transition and its recent strategic pivot. Under the new chair, Albert Manifold (appointed after a board-led succession process), BP plans to increase spending on oil and gas by $1.5 billion annually while cutting low-carbon investments by $5 billion.
Helge Lund had already announced his intention to step down by the time of the AGM, and the board engaged with shareholders to understand the dissent, informing the chair succession process led by BP Senior Independent Director Amanda Blanc.
Long-term asset owners have raised concerns about BP's transition strategy and its failure to consult investors. The podcast "where next for BP?" features Nick Mazan, discussing these issues in depth. Other major shareholders in BP, according to MarketScreener, include Norges Bank Investment Management, BlackRock, and Vanguard.
BP's CEO Murray Auchincloss has promised a "fundamental reset," including a £10bn increase in investment on new oil and gas production and a scaling back of investments in clean energy. This shift away from renewables toward fossil fuels has been controversial and likely contributed to shareholder activism against Lund.
In summary, the activism against Lund is driven by a desire among investors for stronger performance and clearer commitment to energy transition priorities. The appointment of Albert Manifold, who brings a cost-cutting focus, may steer BP towards more conventional energy investments, but this could risk alienating ESG-focused investors and regulators. The shareholders' push for a vote on climate goals continues to be a significant issue, despite not being included in the agenda for the upcoming AGM.
- The shareholders' push for a vote on BP's climate goals could potentially influence the future direction of the company, shifting its focus from fossil fuels to environmental science, considering the concerns about climate-change.
- The controversy surrounding BP's recent strategic pivot towards increased oil and gas production and reduced investments in clean energy has raised financial and business implications for the multinational company, given the growing interest in sustainable and low-carbon investments.
