BP’s new boss hit with shareholder revolt over climate rules

Shareholders have clashed with BP over plans by the energy major to scrap climate reporting and move its annual general meeting online, in an early setback to the company’s new leadership.

The FTSE 100 group was defeated on two resolutions that would have given it the option to reduce its climate reporting requirements and hold fully virtual annual meetings.

BP was seeking permission to revoke two resolutions approved in 2015 and 2019 that required it to release climate-related data, including how its strategy is consistent with the goals of the Paris Agreement to limit the rise in global temperatures.

It also failed to pass a proposal to allow electronic AGMs, in addition to in-person or hybrid meetings, which the company said would allow for better engagement among a broader number of investors.

Both special resolutions only received 47 per cent support from the votes cast, far short of the 75 per cent threshold needed to pass.

Shareholders also rebelled against Albert Manifold, who was appointed as BP’s chairman in October, with 18 per cent of shareholders voting against his election.

Legal and General, which is a top ten shareholder in BP, with a 1.5 per cent stake, refused to back Manifold, who, they said, was ultimately responsible for resolutions that would “have a negative impact on shareholders’ insight into how the company is addressing financially material long-term risks, and seizing long-term value creation opportunities, associated with the energy transition”.

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Ahead of the AGM, Glass Lewis, the influential shareholder advisory group had recommended a vote against Manifold’s election. It claimed that BP had taken “unprecedented action” in refusing to table a resolution filed by Follow This, the Dutch climate activist and shareholder advocacy group, and a group of pension funds that called on the board to set out strategies for maintaining shareholder value if oil and gas demand declines.

However, ISS, another proxy adviser, recommended shareholders vote in favour of Manifold’s election. He was also supported by other large investors including Norges Bank, which manages the Norwegian sovereign wealth fund and is among BP’s five largest shareholders.

A source familiar with Elliott Management, the activist investment firm that has built a stake of more than 5 per cent in BP, said that it believed Manifold had been a positive catalyst for change and that it looked forward to continuing to work with him to deliver long-term shareholder value, adding that the turnaround at BP was still in its early phase. 

The AGM was an early test for Meg O’Neill, who took over as chief executive at the start of the month, as it pivots back towards increasing oil and gas production in an effort to revive its market valuation. She told investors that BP needed “to accelerate the progress we have made so far, keeping a tight focus on safe, reliable and cost-efficient operations”.

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A resolution filed by a group of British pension funds and the Australasian Centre for Corporate Responsibility, another shareholder advocacy group, calling on the company to justify how a sharp rise in spending on new oil and gas projects will help to deliver a turnaround in the embattled oil major’s performance, also received backing from almost 26 per cent of votes cast.

Manifold told shareholders gathered at the AGM that “all of the board’s decisions relating to the resolutions at this year’s AGM were made in good conscience, made with an aim to build a more valuable BP for our shareholders”.