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Legal and General is one of several shareholders planning to vote against the re-election of BP’s outgoing chair at its annual general meeting on Thursday, in a sign of growing discontent over the oil major’s green energy strategy.
L&G, which is a top 10 shareholder with a 1.8 per cent stake, said it was “deeply concerned” about BP’s February decision to shift back towards oil and gas and away from a radical investment in renewables, and the lack of a vote on the strategy.
“We believe that climate change represents a financially material and systemic long-term risk to our clients’ portfolios,” L&G’s investment stewardship team wrote in a statement on its website on Friday announcing its plans to vote against Helge Lund’s re-election.
“We value the significant steps BP has taken in recent years regarding its climate-related commitments and efforts . . . However, we are deeply concerned by the recent substantive revisions made to the company’s strategy.”
BP said this month that Lund planned to step down “most likely during 2026” having taken on the role at the start of 2019 with a mandate to help guide the FTSE 100 company through the energy transition and select a new chief executive.
His pick as chief executive, Bernard Looney, put in place the aggressive push towards renewables, before he was dismissed in 2023 for failing to tell the board about his relationships with BP colleagues.
BP appears unlikely to have averted a potentially embarrassing vote against Lund’s re-election by announcing his exit. Asset manager Robeco is also planning to vote against the chair, as are fellow small investors UK pension funds Nest and Border to Coast Pensions Partnership.
In an article published earlier this month, Michiel van Esch, head of voting at Robeco, said it had “growing concerns over [BP’s] resilience through the energy transition, and over the consistency of its approach to climate governance.”
The shareholders’ views highlight the difficult situation facing BP and other oil majors as they grapple with whether to stick to fossil fuels amid global pressure to tackle climate change, or pivot to renewables, which typically have lower, albeit stable, returns.
Looney’s strategy put BP ahead of rivals in efforts to shift to greener energy, but it also attracted pushback, and ultimately failed to win enough shareholder support. That made the company vulnerable to pressure, including from activist investor Elliott Management, which has built a nearly 5 per cent stake in the company and has been pushing for sweeping change.
However climate-focused investors have been unhappy about BP’s decision under chief executive Murray Auchincloss to abandon its radical plan to become a green energy company. Diandra Soobiah, director of responsible investment at Nest, which has a £30mn equity stake in the company, said BP’s flip-flopping had “undermined confidence and trust” in the board.
She added: “This latest shift — scaling back renewables while increasing oil and gas production — ignores the company’s climate impact and exposes shareholders to greater stranded asset risk.”
Colin Baines, stewardship manager at Border to Coast, which has a 0.14 per cent stake in BP, said it was “deeply concerned over the direction of BP” and its failure to seek a new mandate from shareholders.
“We are taking the unprecedented step of voting against BP on a raft of measures at its upcoming AGM due to its failure to put its strategy reset to a shareholder vote,” he said.
Legal and General added that while Lund’s plans to step down were positive, it wanted the succession process to “follow a clearer and swifter timeframe”.
BP said it had “received widespread support for our reset strategy and the changes we laid out” in an “extensive programme of engagement with shareholders” since the February announcement. It added: “The consistent message also received is that our focus should be on delivery — executing the strategy and hitting the targets we set out. That is our priority.”