BP has called on its shareholders to support a climate resolution filed by the Climate Action 100+ investor coalition and oppose a counter one filed by Dutch group Follow This on the grounds that Scope 3 emissions targets restrict the company’s flexibility to adapt to the energy transition.
In the Notice of AGM distributed today to shareholders, BP argues that the Follow This resolution “calls for Scope 3 (end user) emissions that BP does not control” –which can significantly erode “long-term shareholder value”.
But it is backing a proposal from the CA100+ initiative of major institutional investors. The rejection by BP of the Follow This resolution comes after the Dutch NGO withdrew a similar resolution at Shell last week.
Dominic Emery, BP’s Vice President of Group Strategic Planning, told RI that the “carbon intensity of our product is something we will seek to report on in due course” emphasising that this is not the same as Scope 3 emissions.
“What we are not going to be doing is to make an estimate of what kind of demand levels would be of products by a particular kind of customer,” he said.
Emery said that Scope 3 emissions would make some assumptions about the amount of the product that is used and the way it used by customers.
That is different for the carbon intensity of the product for any particular product, which would be measured on a unit basis, for example on a per barrel basis, Emery explained.
There seem to be methodological challenges with the precise definition of Scope 3 emissions concerning oil & gas companies.
Asked whether Scope 3 would be covered, the CA100+ engagement lead on BP, Hermes’ Bruce Duguid, told RI in a statement that “Scope 3 emissions are effectively covered by the requirement for reporting on carbon intensity of products over time”.
According to Duguid, the CA100+ resolution requests BP to set and publish targets for its strategy consistent with the Paris climate goals, but does not specify a particular metric to allow the company flexibility to set and vary its strategy.
Emery said BP prefers the flexibility offered by the CA100+ investors, who have expressed concerns about the company’s strategy consistency with Paris in a supporting statement accompanying the resolution.“We welcome the opportunity to provide more transparency on our reporting on these matters,” Emery said, adding that BP will be able “to convince investors that our strategy is robust and consistent with the Paris goals.”
Asked whether BP would pursue a similar avenue like its peer Shell (a net carbon footprint ‘ambition’ of its energy products tied to short-term reduction ‘targets’), Emery said that BP does not plan to move on that direction at this stage.
Emery said one of the reasons to reject the Follow This resolution is due to its “deterministic” views on aligning with the Paris goals.
“The reality is that there are many ways of getting there,” he said.
“It is important to recognise that oil and gas will continue to be important for a few decades to come. If you look at the IEA sustainable development scenario, there is still about 70 million barrels per day of oil production in 2040 and then it drops significantly beyond that.”
Andrew Grant, Senior Analyst at environmental think tank Carbon Tracker, told RI: “Of course, the devil will be in the detail – it is not difficult to imagine a situation where every company thinks that they are fine and everyone else is the problem. We will have to see how the analysis is performed in practice, and whether it truly is a genuinely stringent and representative challenge, but it’s definitely suggestive of thinking along the right lines.”
Carbon Tracker is a data provider to the CA100+.
Tom Harrison, spokesperson for the Climate Change Collaboration (an initiative backed by a group of charitable trusts) told RI that it should be a cause of serious concern for shareholders that BP believes it is already aligned with achieving the Paris goals.
“It highlights BP’s real strategy. Like the other oil majors, they intend to do just enough to maintain their social license while carrying on with business as usual. The focus on carbon intensity rather than absolute emission reductions is a get out of jail free card for BP,” Harrison said.
He added that investors should prepare to divest if BP fails to set out specific targets to phase out investments in oil and gas.