BP’s shareholder meeting, in Aberdeen, was surrounded by climate-change protesters demanding tough targets for carbon emissions. Royal Dutch Shell’s, in Amsterdam, was not. This may have been a transport issue: jetting into Schiphol to denounce an oil company’s use of resources looks a bit Hollywood; bussing it up the A1 to protest outside a petrol station is a bit more Balamory. However, Tuesday’s contrasting scenes were probably more to do with BP and Shell’s different policies on emissions, profits and pay.
While Shell had set targets for cutting greenhouse gases from all its products – and linked pay to them – BP said it would only set targets for its own operations. And only support a shareholder resolution on this lesser ambition. BP argued this more focused resolution was worthy of support, as it committed the group to the end goals of the Paris climate-change accord and linked pay to factors executives could control. It noted it had the backing of Climate Action 100+, a group of big investors who hold 10 percent of BP shares. It duly won over a further 89 percent, to gain near-total approval.
However, BP refused to support a second resolution demanding targets for emissions from its products, as this would commit it to something inflexible on something unknowable: investment in a fast-transitioning world energy system. Chairman Helge Lund noted on these pages that, while fixed emission targets had the backing of activists Follow This, they would restrict BP’s ability to transform itself, risking its financial strength. It duly secured 92 percent opposition.
Follow This did not seem to grasp that leading can be costly. In 2005, BP committed to $8bn of investment in renewable energy, in a pioneering move “Beyond Petroleum”. Today, the investment is worth less than half that, as BP’s solar facilities could not foresee or compete with China’s commoditized panel manufacture, and its carbon capture plants never got off the ground as governments would not provide the fiscal foundations. How could BP set emission targets now, “knowing … the world will have radically to change course, but not knowing when or how?” asked the chairman. It would be the Lund leading the blind.
But, surely, if anyone should know how the world energy market will change – and how best to capitalize on it – it is the management of BP. This is precisely what a listed energy company exists to do: take shareholders’ risk capital and make highly informed decisions on the best way to deploy it.
Also, if anyone should know which way the political wind is blowing – and how to respond to it – it is the management of a company supposedly committed to renewables.