BP's Shareholder Resolution Controversy: A Clash of Governance and Strategy

BP's recent decision-making has come under scrutiny following the exclusion of a shareholder resolution proposed by Follow This, a Dutch investor group advocating for climate accountability. The resolution aimed to require BP to outline strategies for protecting shareholder value amid declining demand for oil and gas. Albert Manifold, BP's chair, deemed the proposal invalid after consulting legal advisors, stating it would be ineffective if passed. This decision has sparked criticism regarding BP's governance approach, particularly in light of the company's pivot back to oil and gas and away from low-carbon assets to address a weak share price.

The Guardian

In contrast, Shell, BP's larger competitor, has embraced a more open approach to shareholder resolutions. Shell's chair, Andrew Mackenzie, allowed a similar resolution from Follow This to proceed without contention, demonstrating a willingness to engage in dialogue with investors. Shell's transparency included a detailed explanation of their stance against the proposal, emphasizing that scenarios are not forecasts and that sufficient information is already available for investors to assess financial resilience.

The Guardian

Manifold's handling of the Follow This resolution appears to have backfired, leading to significant dissent among shareholders. Notably, a resolution to abolish BP-specific climate impact reporting requirements, established in 2015 and 2019, garnered only 47% support, falling short of the 75% needed for approval. Additionally, a proposal to eliminate in-person annual meetings also faced rejection. Most concerning for Manifold was the 18% opposition to his re-election, a stark indicator of shareholder discontent during his initial tenure.

The Guardian

Legal & General Investment Management, a prominent investor, cited the exclusion of the Follow This resolution as a key reason for their opposition to Manifold's re-election. Critics argue that the board's heavy-handed approach to shareholder democracy could have detrimental effects on BP's governance and long-term strategy. The presence of experienced non-executives, such as Amanda Blanc from Aviva and Tushar Morzaria, raises questions about whether they advised Manifold against this obstinate stance.

The Guardian

BP's board has defended its strategy, asserting that the direction towards oil and gas is aligned with shareholder interests. However, the lack of engagement with the Follow This proposal has led to calls for a more inclusive dialogue with investors to foster trust and transparency.

The Guardian

• “The board, having taken legal advice, concluded that the proposal from Follow This was not valid and would be ineffective were it to pass,” — Albert Manifold, Chair of BP

The Guardian

• “Manifold deserved the kick he got.” — Nils Pratley, Financial Commentator

The Guardian

As BP navigates shareholder discontent and strategic shifts, the company faces pressure to reassess its governance practices and enhance engagement with investors. Future annual meetings will likely be scrutinized for their inclusivity and responsiveness to shareholder concerns, particularly regarding climate accountability.

The Guardian