RI Comment: BP’s AGM – where’s Deepwater?

Remember BP? The oil giant at the centre of the biggest environmental disaster story ever…
Well, it has posted its annual general meeting (AGM) circular ahead of the April 14 event and it makes for interesting reading. There are 23 resolutions to be voted on at the AGM. But not one relates to the Deepwater Horizon disaster last year. It’s like it never happened.
There’s also no mention of the Canadian tar sands controversy, nor BP’s plans to drill in the Russian Arctic. These, it seems, are not ‘votable’ issues for investors. A mooted shareholder resolution calling for BP to assess its operations in the wake of the Gulf of Mexico catastrophe was dropped in January. We’ve heard nothing since. This has lead to the rather surreal situation where the opportunity will be missed to debate Deepwater in a public forum where shareholders can demand constructive answers from management. Institutional investors will argue that they are in intense ‘behind-the-scenes’ dialogue with the company. After all, why engage in megaphone diplomacy when better outcomes can be achieved through private channels? Institutions may feel BP has enough to contend with and doesn’t need the distraction of a bruising AGM fight. Or perhaps they feel that more heat than light is generated by debate at the AGM. One can counter this by pointing to CalPERS’ recent success over director elections at the Apple AGM. If it’s not on the agenda, it can’t be voted on. Indeed, small shareholders andstakeholders may have been relying on their larger institutional peers to bring the issue up at the AGM.

There is a moral vacuum in asking for more transparency from companies and not exercising the same openness with regards to corporate engagement.
As things stand, BP is dodging a grilling from its owners. And the public impression will be that institutions are not exercising shareholder responsibilities as well as rights, confirming Lord Myners’ “absentee landlord” charge. It leaves ‘pressure’ groups such as environmental law organisation ClientEarth to hold BP to account publicy.
The BP AGM is a golden opportunity for institutional investors to demonstrate “stewardship”. Lest we forget, one year on from Deepwater BP’s share price still languishes some 20% off its pre-accident level, and shareholder dividends have been slashed along the way. BP also faces serious continuing difficulties, legal, regulatory and reputational, which could yet impact further on investors.
The Stewardship Code calls on institutions to monitor their investee companies. It specifically calls on them to intervene if they have concerns about a company’s “approach to the risks arising from social and environmental matters”. It’s time for institutions to quit the poodle act and become fiduciary guard dogs that both bark and bite.