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26 Mar 2021 | 10:22

BP rejects shareholder resolution on climate change

(Sharecast News) - BP has rejected a shareholder resolution calling on the company to set stricter targets to meet goals to combat global heating.

Follow This, a group of more than 6,000 shareholders, has submitted a resolution to BP's annual general meeting asking the company to establish targets consistent with the Paris climate agreement. The group said the targets should cover short-, medium- and long-term greenhouse gas emissions from the company's operations and use of its energy products.

The shareholders asked BP to report on its strategy for reaching the targets at least once a year with the aim of limiting global heating to well below 2 degrees above pre-industrial levels and to pursue efforts to limit the increase to 1.5 degrees.

BP and Follow This agreed in 2020 to work on a joint resolution for the company's 2021 AGM but they were unable to agree, leading the FTSE 100 oil group to advise shareholders to oppose Follow This's resolution.

Follow This said BP's strategy was at odds with the Paris goals because BP plans to increase emissions by 2030 before meeting its 2050 target to be a net zero company. BP's 2050 target also only covers its own emissions and not those created by its products, Follow This said.

BP said its strategy was consistent with the Paris goals and that it had set detailed targets, discussed with shareholders, that are inextricably linked to its strategy. Changing the targets would be an unwelcome distraction, BP said in its letter to shareholders.

"Although the resolution suggests otherwise, asking us to change our targets and aims now would necessitate a change in strategy," BP said. "Going back to the drawing board on strategy, targets and aims would disrupt our business plans and set us back at the very time when shareholders are asking us to focus on execution."

Mark van Baal, Follow This's founder, said BP's position gave responsible investors a stark choice when the AGM is held on 12 May. He said the two sides' failure to agree was a setback in the fight against climate disaster because BP was the first oil company to work with Follow This to come up with a shareholder mandate.

"During the constructive meetings about the joint resolution, we have taken all of BP's input into account, but increasing emissions is completely off-limits," he said.

"BP's message to shareholders is: we know you expect us to act in the climate emergency, so we have promised to reduce emissions in the distant future while we implement 'new' strategies that will increase emissions in the next decade."

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