UK pension pool to vote against BP chair over fossil fuel rollback

LGPS Central tells RI it would have ‘welcomed’ opportunity to express views ahead of oil giant’s decision and reveals support for Follow This’ climate proposal.

UK pension pool LGPS Central has told Responsible Investor it plans to vote against the re-election of BP’s chair in response to the oil major’s decision to roll back plans to reduce oil and gas production.  

In February, BP announced that, in addition to posting historic profits, it was cutting its 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 the UK firm’s decision to increase investment in oil and gas projects to the tune of $1 billion per year up to 2030. 

That announcement came less than a year after shareholders endorsed BP’s climate plan via a so-called Say on Climate vote that achieved 88 percent support.    

LGPS Central’s director of responsible investment and engagement, Patrick O’Hara, told RI that the £28.5 billion ($35.5 billion; €32.3 billion) pension pool intends to vote against BP’s chair, Helge Lund.  

“We were disappointed with the company’s decision to scale back their plans to reduce oil and gas production,” he said, adding that the fund would have “welcomed” an opportunity to express their views before BP made the decision.  

“In the absence of such a dialogue and in the absence of an opportunity to vote on this revision to the company’s short-term transition plan at this AGM, we consider it incumbent on us to vote against the chair,” he said.  

Concerns around BP’s lack of consultation were also raised by Iancu Daramus, responsible investment associate at Fulcrum Asset Management, when he spoke to RI in February.  

“I think the signal from the company over the last year or so, including at the AGM and before was, ‘no changes, the strategy is set, we’re executing now’, so there is a concern around management thinking about what precisely led to those changes,” Daramus said.   

The London-based manager formally became a co-lead investor on BP as part of Climate Action 100+ last year, joining the efforts of fellow lead engagers EOS, the stewardship arm of Federated Hermes, and Legal & General Investment Management (LGIM). 

LGPS Central is one of the CA100+ supporting investors on BP.  

Last month, Dutch asset manager Robeco published the results of a survey which revealed that close to a third of respondents felt oil and gas firms had become less receptive to engagement amid rising profitability and concerns around energy security.  

Follow This proposal

O’Hara also told RI that LGPS Central plans to support a proposal filed at BP by Dutch climate activist Follow This, calling on the company to align its 2030 Scope 3 emissions reduction goals with the Paris Climate Agreement.  

“We consider that this resolution is an appropriate ask for the management of BP and it aligns with our own engagement objectives,” O’Hara said. 

EOS declined to comment on how it would vote on BP’s directors and the Follow This resolution. LGIM has not responded at the time of publication.  

Support for the Follow This climate targets proposal at BP dropped to 15 percent in 2022, down from 20 percent the year before.  

The non-profit returned this year with a refined proposal narrowing its scope to 2030 emission reduction targets. Proposals from the non-profit have also been filed this year at Shell, Total, Chevron and Exxon.  

“The focus on Scope 3 by 2030 leaves the oil majors no wiggle room for smokescreens about ‘net zero emissions by 2050’ or reduction targets for operational emissions (Scope 1 and 2, around 5 percent of emissions),” Follow This founder, Mark van Baal told RI in December.