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A group of 48 institutional investors has called on BP to give shareholders a vote on any plan by the oil major to row back on its climate goals, setting up a potential clash with US activist hedge fund Elliott Management.
The intervention by investors, including Rathbones Investment Management, Phoenix Group, Robeco and Royal London Asset Management, follows a pledge by BP chief executive Murray Auchincloss to “fundamentally reset” the group’s strategy in the face of pressure from Elliott to boost performance.
Elliott has built a nearly 5 per cent stake in BP and is pushing Auchincloss to divest significant parts of the business, including some of its green energy investments, the Financial Times reported last week.
But other investors are concerned that Auchincloss will water down climate commitments and refocus on oil and gas production at an investor day in London next Wednesday.
“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,” the investors said this week in a letter to BP chair Helge Lund, seen by the FT.
The group holds a combined 2.5 per cent of BP shares, according to FT calculations, a little more than half of Elliott’s stake, underlining the hedge fund’s clout as the company assesses its options.
The demand increases the pressure on Lund and Auchincloss ahead of the investor day, which is viewed by Elliott and other shareholders as a crucial test of BP’s leadership.
Under an industry-leading decarbonisation strategy, spearheaded by Lund and former chief executive Bernard Looney, the company in 2020 pledged to cut its oil and gas output by 40 per cent by 2030.
Two years ago it pared back that commitment to a 25 per cent reduction and some investors expect the goal to be scrapped completely.
Auchincloss, who was appointed in January 2024, has already outlined new expenditure on oil and gas that analysts expect will keep BP’s production at current levels. BP remains the only oil and gas major with a hard target to cut output.
Should the production target be lowered or removed, the shareholders want BP to disclose more detailed information about its spending on fossil projects to ensure it will continue to reduce emissions and is not left with stranded assets as oil demand declines.
“We need a clearer picture of this expenditure’s resilience and alignment with the Paris goals,” said Carola van Lamoen, head of sustainability at Robeco, referring to the 2015 UN climate agreement.
In 2022, 88 per cent of BP shareholders voted in favour of the company’s strategy, including the commitment to cut oil and gas output. The group has not offered shareholders a vote on the decarbonisation strategy since.
Given the changes Auchincloss is expected to announce next week, “it is timely to request that shareholders be given the opportunity to vote on the [strategy] at the 2025 AGM”, the investors said in the letter.
BP confirmed it had received the letter, adding it would respond in due course.
Lund, a former chief executive of Norwegian energy group Equinor, has been chair of BP since 2019 and was instrumental in developing its current strategy. Auchincloss has been on the board since 2020 and was chief financial officer before taking the top job.
While Elliott has not publicly stated its expectations, the hedge fund wants to see a “fundamental pivot”, according to a person familiar with its thinking.
That does not have to mean short-term growth in oil and gas production but must include “strong capital allocation, right-sizing their costs [and] a divestiture plan”, the person added.
Elliott declined to comment.