BP facing tense clash over climate transparency and shareholder rights at AGM

BP is bracing for a tense annual general meeting (AGM) where shareholders are set to challenge the board over climate transparency and governance concerns.

The oil major could face investor dissent on several fronts during the meeting at its Sunbury-on-Thames hub in Surrey on Thursday, where security will likely be tight to prevent disruption from climate protesters.

Many are expected to vote against the election of BP’s new chair Albert Manifold as well as other board-supported resolutions amid growing unease over shareholder transparency and engagement.

Ahead of the AGM, the company refused to bring a shareholder climate resolution to a vote, while proposals to rescind previously passed climate resolutions and move future meetings fully online have also attracted pushback.

Proxy advisers Glass Lewis and ISS – which hold substantial sway over how big investors tend to vote at AGMs – have recommended shareholders oppose some of BP’s wishes.

Legal & General, one of Europe’s biggest asset managers, and the Local Authority Pension Fund Forum (LAPFF), a top UK pension fund body, have also backed votes against the board at points.

On the other hand, Norway’s 2.2 trillion-dollar (£1.63 trillion) sovereign wealth fund – which is one of BP’s largest investors holding nearly 3% of its shares – said it will support Mr Manifold, and other board-backed proposals.

It comes amid the wider backdrop of BP’s recent pivot away from renewables and back towards its core oil and gas business, which has been fiercely criticised by climate activists.

BP will likely face conflicting pressure from investors who want to see a turnaround in the company’s fortunes after its failed attempt to pursue a greener agenda left it lagging behind industry rivals and facing takeover threats.

Compounding this will be voices who want the board to capitalise on the recent boost in oil trading results as surging prices driven by the US-Israeli war on Iran pave the way for bumper profits.

BP’s share price has recently risen accordingly, marking a relief for the company following years of flagging performance amid strategic upheaval, lower profits and high debt.

The meeting will also be the first time that new boss Megan O’Neill, who joined BP this month from Australian oil firm Woodside Energy, deals with shareholders as chief executive after becoming the first woman to take on the top job at the 117-year-old company.

Arriving as BP’s third chief executive in under five years, she takes the reins at a time when the firm hopes to continue improving its performance, but also faces divided investors.

Elsewhere, the board could be challenged over its proposal to repeal two previous resolutions that shareholders backed in 2015 and 2019.

Since passing, these have required BP to report detailed climate-related information, such as its management of planet-heating emissions, low-carbon investments, public policy positions and how executive pay is linked to progress.

The company says it now uses industry guidelines which have been developed since 2019, and so these legacy requirements mean it has to share duplicative or overlapping information.

But campaigners argue that repealing these older rules means BP would no longer have to share the same level of detail.

The board may also face questions over its rejection of a shareholder resolution put forward by Dutch activist group Follow This, which is considering legal action.

The group, which tables climate resolutions at the AGMs of several oil majors every year, wanted the company to share plans on creating value for shareholders under future scenarios where fossil fuel demand declines as the world transitions to clean energy.

A similar resolution has been accepted at Shell and will go to a shareholder vote at its meeting next month.

BP said the board decided, having taken legal advice, that the proposed resolution “did not conform to legal requirements” and would be ineffective if it were to pass.

A spokesperson previously said BP was focused on building a simpler company following investor engagement and had a clear strategy to drive long-term shareholder value while remaining committed to industry standards for climate reporting.

Investors will also vote on a separate climate resolution this year, filed by the Australasian Centre for Corporate Responsibility, an activist group which is calling for BP to publish how it promotes a disciplined approach to its long-term investment in oil and gas.

The oil major accepted this resolution but is urging investors to oppose it, arguing that it is duplicative of information it already shares.

Having been backed by several big investors, including Nest and Legal & General, as well as Glass Lewis, the proposal could still garner a sizeable chunk of the vote and pile further pressure on the board.