Pension fund turns up heat on BP over fossil fuel investment

Nest, the UK’s biggest workplace pension scheme, is pushing BP to provide more “clarity and confidence” over its pivot back to oil and gas after an investor revolt at the energy giant’s annual meeting last week.

Diandra Soobiah, Nest’s director of responsible investment, said investors were becoming concerned about shareholder rights at BP, especially after the new chair Albert Manifold declined to meet the pension fund.

Last year, the company announced a return to its fossil fuel roots with increased investment in oil and gas. BP shares are up more than 30% so far this year.

Soobiah said shareholders are not asking BP to scrap its new strategy, but to provide evidence it will be “value-accretive for long-term shareholders”.

The move signals renewed investor appetite to confront management over the climate, which could spell trouble for NatWest and HSBC ahead of annual meetings in the next few weeks. Both banks face pushback over oil and gas financing.

A resolution co-filed by Nest and activist group ACCR pushing for disclosure on how BP takes a “disciplined approach to capital expenditure” won more than 25% shareholder support. Under the UK’s corporate governance code, this level of dissent requires BP to give a response within six months.

Soobiah said: “BP has shown leadership in its sector for many years. This year we felt there was a shift away from that, we weren’t able to meet the new chair, there’s been a change in tone in the way they have been engaging with shareholders.”

BP was also defeated on a resolution asking shareholders to revoke some climate-related reporting, as well as to hold virtual-only annual meetings. In a sign of shareholder disquiet, more than 18% voted against the election of Manifold, who was appointed last October. He said in a statement that all the board’s decisions at the AGM were made “with an aim to build a more valuable BP for our shareholders”.

BP also refused to table a resolution, filed by activists Follow This, on the financial risks of falling oil and gas demand. Mark van Baal, its chief executive, said: “BP is in a governance crisis and is completely in denial.”

Photograph by Ina Fassbender/ AFP via Getty Images