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Climate Change, Inclusive Growth

Activist investors put climate change on BP’s agenda

Responsible Business | Feb 11, 2019

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Several of the world’s largest investment groups are backing a shareholder resolution at the oil major BP, which would commit the company to align its business with the Paris Agreement goals of limiting global warming to within 2°C of pre-industrial levels. 

The resolution was designed and proposed by investors including the California Public Employees’ Retirement System, the largest public pension fund in the US, alongside private firms including HSBC Global Asset Management and Manulife Asset Management, under the auspices of the Climate Action 100+ initiative. 

“Investors remain concerned that the Company has not yet demonstrated that its strategy, which includes growth in oil and gas as well as pursuing low carbon businesses, is consistent with the Paris Goals,” it reads. “It also presents a potential inconsistency between the Company’s actions and its stated corporate purpose ‘to power economic growth and lift people out of poverty’ given climate vulnerabilities in many developing countries.”

Investors want BP to measure its plans to invest in new resources against the need to limit carbon emissions, and to improve the metrics that it uses to monitor and report the emissions associated with its operations. They have also called for BP executives to have their bonuses linked to the company’s progress towards sustainability targets.

BP’s board say that they will support the resolution, which will be voted on at the company’s annual general meeting in May.

Climate Action 100+, which was founded in December 2017, has the support of more than 300 investors who collectively represent more than US$32 trillion in assets under management. 

Activist investors previously pushed climate change onto BP’s agenda in 2015, when the ‘Aiming for A’ investor coalition requested disclosures on the company’s climate change risks.

Global investment companies are increasingly demanding greater action and transparency from oil and gas businesses, as the economic cost of climate change becomes clearer, and as social pressure rises. Research by the shareholder advocacy group As You Sow found that between 2012 and 2018, 160 climate-related shareholder resolutions were filed at US-listed oil and gas companies. More than 1,000 institutional investors, representing more than US$6 trillion in assets under management, have begun to divest entirely from fossil fuel investments, according to a 2018 report from Arabella Advisors.

“Investors are helping to ensure climate change is firmly on the boardroom agenda, which is especially important for the oil and gas sector,” said Stephanie Pfeifer, a member of the global Climate Action 100+ Steering Committee and the CEO of the Institutional Investors Group on Climate Change. “It’s encouraging to see major companies such as BP moving in the right direction. Global carbon emissions need to be reduced urgently and investors expect other companies in the sector to follow suit.”

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