CA100+ investors remain silent following BP’s rollback on emissions

Lead and supporting investors decline to comment on the UK oil giant’s decision to slash 2030 emission reduction goal.

Investors leading engagement with BP as part of Climate Action 100+ have remained tight-lipped following the UK oil major’s decision to slash its 2030 emissions reduction target. 

On Tuesday, BP revealed that, in addition to posting historic profits, it was cutting the medium-term emissions reduction goal for oil and gas production from 35-40 percent compared with a 2019 baseline to 20-30 percent.  

The rollback was prompted by BP’s decision to increase investment in oil and gas projects to the tune of $1 billion per year up to 2030.  

“We need continuing near-term investment into today’s energy system – which depends on oil and gas – to meet today’s demands and to make sure the transition is an orderly one,” BP’s CEO Bernard Looney said. 

Responsible Investor contacted CA100+ lead and supporting engagers on BP but none would comment on the firm’s announcement. 

RI understands that Legal & General Investment Management (LGIM) and EOS, the engagement business of Federated Hermes, head up efforts on the oil major under the multi-trillion-dollar engagement group, along with supporting investors M&G, UBS Asset Management and Ruffer.  

A spokesperson for LGIM told RI: “Our climate solutions team have not been commenting today – they’re preferring to absorb the detail in the results and work out any implications.” UBS AM and M&G also declined to comment.  

CA100+ is backed by 700 investors representing more than $68 trillion in assets under management and targets the world’s largest polluters with the aim of steering them towards low-carbon futures.

In addition to a record profit of $28 billion, BP also announced plans to hike its dividend per ordinary share “by around 4 percent a year at around $60/barrel, subject to the board’s discretion”. 

One critic of BP’s decision to row back the ambition of its emissions target was Neville White, head of RI policy and research at London investment firm EdenTree Investment Management. Writing on LinkedIn, White said: “BP’s fairly lamentable scaling back of its climate ambitions despite all the ‘greenwash’ seems conclusive climate change can wait given the new oil-rush.”

On Wednesday, French oil major Total also announced record net profit of $36 billion. Five oil and gas majors have now reported historically high earnings in 2022 following announcements by Shell, Exxon and Chevron last week. Profits have surged in the sector following Russia’s invasion of Ukraine.  

Climate proposals 

Support for shareholder proposals calling for Paris-consistent emissions reductions targets at BP fell in 2022, dropping to 15 percent from 21 percent in 2021. At the firm’s May annual meeting, investors also approved the company’s climate strategy, including the original 2030 targets, with 88.5 percent shareholder support. 

At the time, EOS’s head of stewardship, Bruce Duguid, described BP’s goals as “relatively ambitious”. He added, however, that further disclosures and a strengthening of targets “will be required to convince most investors that its strategy is consistent” with international commitments to limit global warming to 1.5C above pre-industrial levels. 

Support for Paris-aligned emission reductions across entire value chains, including Scope 3 emissions, dipped last year at oil majors. As at BP, a proposal filed by Follow This at Shell saw support drop 10 percent to 20 percent in 2022. 

In the US, similar proposals filed by Follow This fared worse in 2022 than those calling for general emission reductions targets the year before. 

The Dutch activist has returned with a refined proposal for the 2023 proxy season, specifically asking Shell and BP to align their existing 2030 emission reduction targets with the goals of the Paris Climate Agreement.   

Responding to BP’s announcement on Tuesday, Mark van Baal, founder of Follow This, told RI: “It is extremely important that responsible shareholders send a strong signal by voting in favour of climate resolutions that request Paris-alignment.” 

He added: “Investors have much more to worry about than the return on capital of oil majors. They have to worry about the returns of their entire portfolio in the global economy, and these are in great danger if the world fails to reach the goal of the Paris Accord.”