BP’s AGM – Chair faces major shareholder backlash

The Australasian Centre for Corporate Responsibility (ACCR) is commenting on the results of BP’s Annual General Meeting, where a record-breaking vote was recorded against Chair Helge Lund.

24% of shareholders voted ‘no’ on Ordinary Resolution 3: to re-elect Helge Lund as a director.

Ahead of the AGM, a number of investors pre-declared they would be voting against the Chair, including Legal & General and Robeco.

Commenting on the results, Nick Mazan, UK Company Strategy Lead, ACCR, said:

“This is by far the largest vote against the re-election of a BP Chair over the past decade.

“With no other climate-related item on the AGM ballot, it is safe to assume that this vote against the Chair is in part a reaction to the ongoing climate governance concerns linked to the dropping of the scope 3 target and failure to respond to investors requesting a vote on the energy transition strategy.

“BP is desperate to repair the damage done to its reputation through the continued misallocation of capital. The attempts to do this through increasing upstream capex when fossil fuel demand is in structural decline, is misguided and investors are clearly unconvinced.

“Whoever is chosen to be the next Chair of BP must take note of this investor dissent. Investors understand that the energy transition and accelerating physical impacts of climate change are realities that the company must confront, not avoid. Investors want consistency and capital discipline, neither of which are being provided by the Company.

“BP sought to reset its strategy, however, investors remain unconvinced. Throwing capital at the problem is not the solution, and BP must take the time to reflect on this investor discontent and reconsider its approach to capital allocation.

“We saw a similar vote against Mr Lund in 2023 after BP’s scope 3 target was first watered down, and backlash against the Shell chair in 2024 after it downgraded its NCI targets. But we’re in a very different political climate now, one in which fossil fuel companies feel increasing impunity and shareholder rights are under attack. In light of this, a vote of 24% against an incumbent chair is even more notable.

“While it seems the company tried to diffuse pressure by having Lund announce his planned resignation ahead of the vote, 24% of shareholders have nonetheless made the powerful symbolic gesture of voting against his re-election.

“We know that shareholder votes against the chair are a powerful tool, but they are also a blunt tool. Investors who voted against the chair will now be seeking to communicate the rationale behind their vote to the company, and will no doubt want to convey the need for new safeguards in the company’s investment framework to ensure capital discipline in the absence of the now scrapped production target. “

Background

As reported in the Financial Times last week, 48 investors – including Phoenix Group, Rathbones Investment Management, Robeco and Royal London Asset Management – signed a letter sent to BP’s chair, Helge Lund, that called for a shareholder vote on any potential roll-back of the company’s climate targets and aims.

In January this year, ACCR released “BP: Capex beyond Paris”, which found that BP’s capital allocation towards new oil and gas projects is not consistent with the goals of the Paris Agreement despite a binding 2019 commitment to shareholders. It is available to read online.