A group of institutional shareholders in BP, featuring pension funds and an activist investment outlet, has filed a resolution demanding details on how exactly the company’s return to its core business of oil and gas would boost shareholder returns.
According to a Reuters report, the group includes the Australasian Centre for Corporate Responsibility, a non-profit entity that invests in energy and mining companies with a view to making them invest more in climate change.
The demands, to be tabled at BP’s next annual shareholders’ meeting, include the publication of details about the cost-competitiveness of every project the company embarks on, reports about cost overruns and project delays, and a justification for why the return to oil and gas after a brief stint as a transition company would pay off.
In fairness, the reason BP pivoted back to oil and gas was precisely the damage that its profitability suffered as a result of its attempt to go “beyond petroleum” with its big investment plans for transition industries. Since these investments lost more money than they made, BP returned to what it does best, which is extracting, refining, and selling oil and gas products.
A year ago, in a highly anticipated business strategy reset, BP announced it was increasing its investment in upstream oil and gas to $10 billion per year while slashing spending on clean energy by more than $5 billion a year.
The reason was that the reset was precisely shareholder value and the fact that BP’s stock had been underperforming the stocks of its peers ever since former CEO Bernard Looney announced the company would pivot to green energy. Interestingly, another activist investor played a role in the decision for the reset: Elliott Management has been pushing for an overhaul at the supermajor ever since it acquired a stake in it, with the focus on BP focusing more on its lucrative oil and gas business.
By Irina Slav for Oilprice.com
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