BP plc plans to acknowledge more about its role in how its operations may impact the climate after shareholders -- with full board support -- overwhelming passed a resolution at the company’s annual meeting urging more disclosure.
Special Resolution 25 received 98% of shareholder support, according to a tally of the vote. The resolution needed 75% of the votes to make it binding. BP management had urged its passage.
"Climate change is a clear challenge for the world," Chairman Carl-Henric Svanberg told shareholders on Thursday. He noted that BP's energy outlook to 2035 is forecasting global demand for energy over the period to increase by 37%, with greenhouse gases increasing by 25% (seeDaily GPI, April 2; Feb. 17). "The world has made encouraging headway in disconnecting these historic trends through energy efficiency and low carbon initiatives. But the increase is still in excess of what scientists and governments say is needed to keep the temperature rise within 2 degrees."
BP wants an "orderly transition to a low carbon economy." Svanberg said. "First and foremost, we want to put a price on carbon as we believe is the most efficient way to steer toward lower carbon alternatives. Second, we want to push for a transition from coal to gas. This reduces emissions to half and will buy critical time over the next decades as renewables mature."
BP, like many of its peers, for years has applied a carbon price in making investment decisions (see Daily GPI, Dec. 5, 2013). Although many U.S. legislators have fought against imposing carbon taxes, BP, ExxonMobil Corp. and Shell executives have argued that taxing carbon dioxide (CO2) emissions actually creates incentives to invest in research and development (R&D) to implement new technologies (see Daily GPI, Feb. 13; April 16, 2010; Feb. 14, 2007).
Group CEO Bob Dudley said BP executives had "consistently advocated for stronger government action and have been open and transparent about our environmental impact. The challenge ahead is to make the case for the necessary role of fossil fuels, and further transparency supports that case. BP's portfolio is already 50% natural gas. We are working on a number of major projects that will add more gas," including Shah Deniz 2 in Azerbaijan, the Southern Gas Corridor to Europe, Khazzan in Oman and a $12 billion investment in Egypt.
The shareholder resolution followed announcements by high-profile investors that include the Church of England, which have pressured BP and Royal Dutch Shell plc to disclose climate risks. Last December the Church of England became the first mainstream religious organization in the UK to raise the prospect of divesting its fossil fuel investments unless the oil majors took more action to tackle climate change.
The Church of England's announcement was followed with action in January by a coalition of about 150 churches and pension funds that together represent about 1% of BP's and Shell's total shares. The groups, led by ClientEarth and ShareAction, urged the oil giants to assess, announce and tackle issues posed by changes in the climate. Shell, which is holding its shareholder meeting in May, already has voiced support for a similar resolution.
The coalition praised the resolution's passage by BP shareholders.
"As a result of the vote, annual reporting at BP will now be significantly expanded with additional transparency around operational emissions management, asset portfolio resilience, low carbon energy R&D and investment, executive incentivization during the low carbon transition and public policy activity relating to climate change," the coalition said.
The resolution also calls on BP to commit investments toward renewable energy, a business in which the oil major at one time was a global leader. BP today invests in energy efficiency technologies and alternative energies for operations and products, which include R&D investments through proprietary research, corporate venturing investment and university programs.
In fact, BP, which years ago advertised that the company’s business went "Beyond Petroleum," in 2006 received a score of 90 points out of 100 from investor coalition Ceres for working to develop climate-friendly technologies (see Daily GPI, March 22, 2006). However, in 2009 BP downsized the alternative energy unit in part because of the recession (see Daily GPI, July 2, 2009).
"Based on mixed investment outcomes in alternative energies, where we invested $8.7 billion since 2005, we are now focused on scalable Brazilian biofuels, which do not require a subsidy or regulatory regime to be cost effective," the board said in its support for the resolution. "Brazilian biofuels will now compete for capital with other business opportunities in our portfolio. Other alternative energies businesses have been divested or disbanded, with the exception of U.S. wind, which is currently retained as an operational asset, with no further growth investment planned."