A coalition of 48 institutional investors has urged BP to allow shareholders to vote on any proposed changes to its climate policies. This push could lead to a confrontation with the US activist hedge fund, Elliott Management.
The call to action comes after BP’s CEO, Murray Auchincloss, expressed intentions to significantly change the company’s strategy due to pressure from Elliott to improve performance. Elliott currently owns nearly 5% of BP’s shares and is advocating for the divestiture of crucial parts of the business, including some renewable energy projects.
Many investors are worried that Auchincloss might dilute BP’s climate commitments and shift the focus back to oil and gas production during the upcoming investor day in London. In a letter to BP’s chairman Helge Lund, the group of investors emphasized the importance of shareholder accountability, stating, “BP has previously offered a shareholder vote on its transition strategy and we expect a similar level of accountability to be maintained for future material strategy changes.” Collectively, this group holds about 2.5% of BP’s shares, representing just over half of Elliott’s stake.
This demand strengthens the scrutiny on Lund and Auchincloss ahead of the investor event, which is perceived by Elliott and other shareholders as a pivotal moment for BP’s leadership. Under the previous leadership’s strategy, BP committed in 2020 to reduce its oil and gas output by 40% by 2030. However, there are concerns that this commitment might be downgraded to 25% or even abandoned entirely.
Auchincloss, who stepped into the CEO role in January 2024, has indicated new investments in oil and gas, which analysts suggest may maintain BP’s current production levels. BP remains the only major oil and gas company with a firm target for output reduction.
If BP decides to modify or eliminate its production target, these investors want more transparency regarding funding for fossil fuel projects. They aim to ensure that BP continues to cut emissions and does not end up with wasted assets as demand for oil decreases. Robeco’s head of sustainability, Carola van Lamoen, emphasized, “We need a clearer picture of this expenditure’s resilience and alignment with the Paris goals,” referencing the 2015 Paris Agreement.
In 2022, 88% of BP’s shareholders supported the company’s strategy and its commitment to reducing oil and gas output. However, since then, shareholders have not been offered a vote on the decarbonization plan. With expected changes being announced next week, the investors have requested that shareholders have the chance to vote on the strategy at the 2025 Annual General Meeting.
BP acknowledged receiving the letter and indicated that it would respond in due course. Chairman Helge Lund, who has been at the helm of BP since 2019, played a key role in the development of its present strategy. Auchincloss joined the board in 2020 and previously served as chief financial officer before becoming CEO.
While Elliott has not disclosed its specific expectations publicly, insiders suggest that the hedge fund is looking for a significant strategic shift. This could involve not just a temporary increase in oil and gas output but also “appropriate capital allocation, adjusting their costs, and a divestment plan.”