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BP Backs Shareholder Resolution Linking Emission Cuts to Executive Pay

BP is supporting a shareholder resolution at its annual meeting today that calls for greater transparency about its greenhouse gas emissions, links between emission reductions and executive pay, and an indication of how its future investments will match up with the targets in the 2015 Paris Agreement.

“The motion, proposed by BP and a group of 58 shareholders holding 10% of its shares, known as Climate Action 100+, is expected to pass at BP’s annual meeting in Aberdeen,” Reuters reports, in what the news agency calls “the latest signal from investors that they want the oil and gas industry to do more to clean up its act.”

The lobbying by activists and a growing number of shareholders comes after BP’s 2018 emissions came in at their highest level in six years. “Some investors want BP to go further and follow the lead of rival Royal Dutch Shell, which bowed to years of lobbying and set the toughest industry targets for cutting greenhouse gas emissions,” Reuters notes.

BP’s biggest Dutch investor, Aegon, is also backing a resolution developed by activist investors at Follow This that would require the company to cut the carbon content of its products as well as its operations. “BP now is at the same stage as Shell was two to three years ago,” said Eric Rutten, head of Aegon’s responsible investments committee. While that resolution looks unlikely to succeed, Reuters says there’s wider support for tougher climate commitments from BP.

“We’d like to see the company set its own targets,” said Ashley Hamilton Claxton, head of responsible investment at Royal London Asset Management, one of BP’s top-20 investors, who planned to abstain on the tougher resolution. “We’d consider supporting more stringent targets, such as those proposed by Follow This, if the board fails to make meaningful progress.”

BP “has said it aims to keep emissions from its operations flat in the decade until 2025, despite strong growth in its business that has been rebuilding after facing US$67 billion in fines and clean-up costs following the disastrous 2010 Gulf of Mexico oil spill,” Reuters states. The company’s operating emissions fell from 56.6 to 54.4 megatonnes between 2017 and 2018.

“But BP’s overall carbon dioxide emissions, including from the fuels and chemicals it sells to customers, known as Scope 3, rose in 2018 to the highest level since 2012, reflecting higher oil and gas output,” the news agency notes. “Scope 3 emissions climbed to 437 million tonnes in 2018 from 412 million tonnes a year earlier, according to Refinitiv data.”

BP CEO Bob Dudley “has repeatedly opposed setting Scope 3 reduction targets, as proposed by the Follow This resolution, saying consumption is outside BP’s control,” Reuters states. Bloomberg adds that Dudley “has spoken about his support for climate change action,” but “has taken aim at some measures the company has been asked to adopt. He said detailed disclosures can be fodder for class action lawyers which look to profit from minor and unpreventable inconsistencies.”

The 18-month-old Climate Action 100+ coalition, with combined assets of $33 trillion, is pushing more than 150 of the world’s biggest companies to align their business strategies with the Paris targets, Bloomberg notes. Most recently, it persuaded Royal Dutch Shell to adopt short-term climate targets and coal giant Glencore to cap production.

“There’s 161 companies on the focus list, so around the world we’ve got groups of investors engaging with each one of those,” said Stephanie Pfeifer, CEO of the London, UK-based Institutional Investors’ Group on Climate Change. “There’s plenty of time to have more dialogue, and sort of ratchet up the asks, as well.”