FTSE 100 oil giant BP held its annual general meeting on Thursday, and as expected, the event was disrupted inside and outside its London venue by climate change protesters.
Away from the drama and noise, investors were more interested in two resolutions designed to register shareholder disaffection with the company’s climate transition targets, which were scaled back in February (our explainer looks in detail at the AGM’s resolutions).
Resolution 4, to re-elect chair Helge Lund, was opposed by some significant pension investors – Nest, the UK’s largest pension scheme, plus the Universities Superannuation Scheme (USS), Brunel Pension Partnership, Boarder to Coast Pensions Partnership, and the Local Government Pension Scheme Central.
Just over 90% of votes were cast in favour of his re-election – compared with 98.72% supporting the chief executive’s re-election – but nearly 10% against still sends a message to the board, says Lindsey Stewart, director of investment stewardship research at Morningstar:
“There was a 9.6% vote against the re-election of BP chair Helge Lund. Given that the average vote against FTSE 100 director elections was only 4%, that appears to be a sizable protest against the absence of a shareholder vote on BP’s revised net-zero strategy. So, it’s something for the BP board to consider and engage with their shareholders on, but they won’t be reaching for the panic button.”
So what about Resolution 25, put forward by Dutch climate activist group Follow This – which aimed to align the company’s Scope 3 emissions reductions targets for 2030 with the Paris Climate Agreement (to limit global warming to well below two degrees above pre-industrial levels)? Norway’s sovereign wealth fund, which owns nearly 3% of BP shares, voted against Resolution 25, as did institutional shareholders ISS and Glass Lewis. The UK’s Local Authority Pension Fund Forum (LAPFF) voted in favour.
“The 16.8% vote in support of the shareholder proposal on Scope 3 greenhouse gas emissions targets is the kind of result that often has both sides claiming victory. It doesn’t quite reach the 20% threshold that usually compels a UK board to take action, but it’s also a pretty significant one-sixth of shareholders,” Stewart adds.
“What’s clear in this case is that there still isn’t a consensus among institutional investors on the extent to which company boards should be held responsible for Scope 3 (i.e. emissions caused by the use of a company’s products, and those in its supply chain).
“UK and European investors generally are keener to see companies disclose and set strategies on Scope 3 – less so among US money managers. Similar proposals at other energy companies in the coming weeks may provide more clarity, but the need for regulation to level the playing field on what companies should disclose is very apparent.”
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