A coalition of major City investors have emerged as key players in forcing BP to be more transparent in how it fights climate change.
Investors holding just under a tenth of all BP shares, equivalent to more than £10bn in value at Monday’s prices, put their names to the shareholder resolution, to be voted on at the company’s annual meeting next week, the Climate Action 100+ investor group revealed on Tuesday.
The resolution is thought to represent the strongest level of support for a climate-related resolution at a major publicly listed company.
Under the Climate Action 100+ resolution, BP will have to provide a detailed strategy on how it will comply with the Paris agreement, the global deal reached in 2015 on climate change that aims to limit global warming to only 1.5ºC above pre-industrial levels.
Seven of the top 20 BP shareholders co-filed the resolution, including the UK’s biggest asset manager, Legal & General Investment Management, as well as Aviva Investors and M&G Investments.
Other major investors who signed up to the resolution included Royal London Asset Management, Schroders, UBS Asset Management, Jupiter Asset Management and the pension funds of the churches of England, Scotland and Wales.
Steve Waygood, chief responsible investment officer at Aviva Investors, described the resolution as only the first step in tackling the climate emergency.
He said: “The scientific consensus is crystal clear on the need for far-reaching action by corporates, with the next decade critical in limiting global warming to 1.5°C. Investors have a responsibility to hold companies to account and to ensure they consider their alignment with the Paris agreement.”
However, the resolution has faced criticism because it stops short of mandating emissions targets, which include all of the greenhouse gases produced when BP’s products are burned, known as “scope 3” emissions, on top of BP’s own operational emissions.
BP has opposed another resolution, co-ordinated by the campaign group Follow This, which would force the company to set targets to reduce total emissions from BP fuel.
Mark van Baal, the founder of Follow This, said: “BP does not want to take responsibility for the admissions for their products.
“As long as an oil major has no targets for scope 3 they can never say they are committed to the Paris agreement.”
The Follow This resolution is expected to receive support from multiple major investors but the presence of a separate, less strict resolution may mean fewer back it. Aegon, the Dutch insurer and investor, has committed to vote in favour of the carbon limits.
Eric Rutten, chair of Aegon’s responsible investment committee, said: “These large oil and gas companies should follow Shell’s example to play a leading role in the transition to climate-neutral energy supply.”
Investors in the Climate Action 100+ initiative, including some who proposed the BP resolution, were part of the coalition in December 2018 that forced Shell to commit to carbon targets that included its products, a much tougher requirement than that demanded of BP. Shell executive pay is also linked to the targets.
The resolution backed by BP includes a commitment to measure scope 3 emissions. The company will also have to provide details of how new investments will meet the Paris goals, what metrics it uses to measure its success and its progress on combating climate change during the past year.
Oil and other fossil fuel extractors have come under particular pressure in recent years as the scientific and diplomatic consensus has acknowledged the need for immediate and radical action to reduce carbon emissions in order to prevent catastrophic climate change.
The pressure on oil companies has been heightened by recent Extinction Rebellion climate protests and the declaration by MPs that the UK faces a climate emergency.