BP tar sands resolution campaign hit as UK pension funds back company management

A shareholder campaign backed by a group of UK Members of Parliament aimed at forcing BP and Shell to detail investment risks associated with their oil sands developments in Canada and other countries, has run into resistance from other shareholders after the UK’s Local Authority Pension Fund Forum (LAPFF) called on members to vote with management at BP’s annual general meeting in two weeks time. LAPFF, which represents 52 pension schemes with a combined £90bn (€100bn) in assets, said it had issued the alert to members to oppose the shareholder resolution after its own negotiations with BP had provided “sufficient evidence” that the company’s approach to tar sands development was “well-grounded”.
The tar sands resolution at BP’s April 15th AGM now looks like it could pit active institutional investors against each other. The resolution has been filed by a coalition of UK trades unions, NGOs and investors who also launched a campaign to get thousands of pension scheme members to e-mail their own retirement schemes to get them to back the resolutions. The coalition includes UNISON, the UK and Europe’s biggest public sector union with more than 1.3m members and the Public and Commercial Services Union (PCS), the fifth largest trade union in the UK with over 300,000 members. Other coalition members, which are being brought together by FairPensions, the lobbying group, include Greenpeace, WWF and Co-operative Asset Management, which is joint filing the resolutions. The campaign has also received backing from some US shareholder groups.However, the LAPFF said it had been involved in a prolonged engagement with BP over the tar sands issue, and recently organised a meeting for members to hear BP representatives explain the Canadian oil sands developments in more detail. The LAPFF said it had also met with the resolution backers to hear their arguments. In a statement, the LAPFF said: “Following these meetings there was a clear consensus amongst the LAPFF executive that, whilst the proponents had raised some important issues, no evidence was found to indicate BP had adopted a position that was not supported by technical and economic research. The Forum also does not believe BP or their partner have failed to meet the wide range of local requirements set by Government to protect the environment and local communities.” The LAPFF said that requests for further disclosure from BP from the resolution backers had since been met: “Given the positive steps that the company has taken and its openness to engage with the Forum and other investors, the executive felt that the spirit of the resolution had been met. Cllr Ian Greenwood, LAPFF chairman said: “It is important that shareholders are vocal when they have concerns on environmental, social and governance issues, and the Forum encourages the use of shareholder resolutions to facilitate this. We welcome the proponents’ initiative, and believe this has served to focus attention on an important long-term issue for shareowners. However on this occasion, following extensive engagement with the company, the forum believes a vote with management is appropriate.”