Shareholders of BP are advocating for a ballot regarding the company's climate targets
BP Shareholders Urge Strategy Overhaul and Focus on Capital Discipline
BP is facing mounting pressure from its shareholders ahead of a crucial capital markets day next week. Institutional investors, including Robeco, Rathbones, Phoenix Group, and others collectively representing £5trn in Assets Under Management or Engagement, are urging BP to allow shareholders to vote on its climate strategy at the firm's upcoming AGM in spring.
The push for greater influence comes amid concerns about BP's weakening of its climate targets and transition plans. Colin Baines, stewardship manager at Border to Coast Pensions Partnership, one of the signatories of the letter, expressed his concerns.
The shareholders aim to send a signal to BP about the need for a fundamental strategic reset and a strong focus on capital discipline, particularly for the upstream business. Nick Mazan, company strategy UK lead at the Australasian Centre for Corporate Responsibility (ACCR), stated that shareholders are setting out their position ahead of BP's capital markets update on 26 February.
However, the investors' push occurred amid mixed sentiments and some hesitation toward backing certain climate-related shareholder proposals in the oil and gas sector broadly. Some shareholder groups intend to vote against BP management on climate risk management topics while generally supporting resolutions that increase climate accountability.
At BP's AGM in April 2025, shareholders advocated for a shareholder vote on the company's climate transition plans. There was notable support for resolutions that called for improved climate risk management and governance on climate issues.
The investors' concerns are not limited to carbon emissions disclosures. They have also targeted more ambitious demands such as disclosures on Scope 3 emissions (indirect emissions across the supply chain) and requests for comprehensive transition plans that account for just transitions considering social impacts on workers and communities.
BP has struggled with poor performance in recent years. Its share price has risen significantly slower than that of its peers, and its Q4 results failed to meet analyst expectations. The investors will continue to engage BP to ensure a transition plan that aligns with net zero pathways.
Earlier this month, activist hedge fund Elliott took a significant stake in BP, becoming its third-largest shareholder. Elliott's interests as an activist investor in distressed debt may find common ground with long-term shareholders on the question of capital discipline.
Mazan emphasized that there has been little focus on capital discipline in BP's upstream business, which accounts for the majority of its cash flow. He suggested that capital discipline should be applied to BP's upstream business, not just to renewables.
The letter from the investors warns that increased investments in fossil fuels could lead to stranded or value-destructive assets as the energy transition progresses. They also express concern that BP might abandon its 2030 carbon reduction targets entirely. Baines believes that long-term value in BP is dependent upon a quality transition plan that aligns with pathways to net zero.
The investors draw attention to the fact that BP has significantly scaled up investments in new fossil fuel production. They urge BP to reconsider its strategy and focus on a more sustainable future. The outcome of the shareholder engagement will be closely watched by the industry and investors alike.
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- BP's institutional investors, including Robeco, Rathbones, Phoenix Group, and others, are advocating for a strategic reset in BP, with a focus on capital discipline, particularly in the upstream business.
- The investors' concerns for BP extend beyond carbon emissions disclosures, as they have targeted more ambitious demands such as disclosures on Scope 3 emissions and requests for comprehensive transition plans that consider social impacts on workers and communities.
