Dutch activist Follow This will not file a climate proposal at BP for the 2024 proxy season, founder Mark van Baal has told Responsible Investor.
It will be the first time since 2019 that the UK oil major has not faced a filing from the non-profit over its emissions reduction targets.
On Monday, Follow This announced that it had filed a new “advisory” iteration of its proposal at Shell, this time co-filed by a 27-strong investor group including Europe’s largest asset manager Amundi and big UK and Swedish asset owners.
The proposal calls on Shell to “align its medium-term emissions reduction targets covering the greenhouse gas emissions of the use of its energy products (Scope 3) with the goal of the Paris Climate Agreement”.
“Most investors consider a climate resolution at Shell more urgent, because Shell’s new CEO seems to be backtracking on climate commitments,” Van Baal said.
He added that there is also a perception among some investors that BP’s climate targets are more ambitious than Shell’s. Van Baal, however, disagrees with this assessment. “Both are far from being Paris-aligned.”
In April 2023, around one-tenth of shareholders voted against BP’s chair. It followed the company’s announcement in February that it was cutting its medium-term emissions reduction goal, amid record profits.
That announcement came less than a year after shareholders endorsed BP’s climate plan through a so-called Say on Climate vote, angering some investors.
The unexpected departure of BP’s CEO Bernard Looney – who quit in September after failing to disclose past relationships with company colleagues – also means investors are willing to give the company more time, Van Baal suggested.
BP said on Wednesday that its interim boss, Murray Auchincloss, would take over permanently. Auchincloss, who was serving as chief financial officer, has been with BP since 1998.
Follow This has been filing proposals at Shell since 2016 but has widened its targets in subsequent years.
The group first filed at BP in 2018 for the company’s 2019 annual general meeting and has followed up with a resolution every year since.
Its 2020 proposal was withdrawn in response to the oil major’s then newly announced net-zero ambitions.
There were plans for a jointly worded proposal between BP and Follow This in 2021, but that unlikely partnership broke down. The company recommended a vote against the activist’s proposal that year.
For the 2023 proxy season, in addition to BP and Shell, Follow This filed its resolution at France’s TotalEnergies, and US majors ExxonMobil and Chevron.
Decisions on whether to file at other companies this year will be made later, Van Baal said.
Co-ordinating the proposal at Shell, given the number of co-fillers, required a lot of work and Van Baal pointed out that the non-profit is a small team.
Irrespectively, he told RI that the co-filing at Shell sends a market signal.
“Pressure on Shell will be heard in the other board rooms,” Van Baal said. “One clear-cut climate resolution is enough to make clear which investors vote for tackling the climate crisis and which investors vote against.”
Last year’s iteration of the Follow This proposal asked firms to set Paris-aligned medium-term Scope 3 emission reduction targets, including those linked to the use of firms’ products.
It attracted the support of 17 percent, 20 percent and 30 percent of shareholders, respectively, at BP, Shell and Total.
The tally at Total equalled the highest level of backing for a Follow This resolution at a European major. Unlike previous versions, however, it was a “consultative” proposal – a response to the firm’s refusal to allow a similar but binding shareholder resolution to go to a vote in 2022.
Support for Follow This at US companies collapsed in 2023, attracting around a third of the support it achieved in 2022, with 11 and 10 percent, respectively, at Exxon and Chevron. The results raised eyebrows given the prevailing view that European oil giants are more progressive when it comes to responding to climate risks.