{"id":21299,"date":"2022-05-09T16:05:16","date_gmt":"2022-05-09T14:05:16","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=21299"},"modified":"2023-03-29T15:42:06","modified_gmt":"2023-03-29T13:42:06","slug":"bps-agm-shareholders-must-vote-against%e2%80%afbps-climate-plan","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2022\/05\/09\/bps-agm-shareholders-must-vote-against%e2%80%afbps-climate-plan\/","title":{"rendered":"BP’s AGM: shareholders must vote against BP\u2019s \u201cclimate\u201d plan"},"content":{"rendered":"

Decoding the coming AGM \u2193<\/strong><\/em><\/p>\n

On the 12th of May, investors will be called to vote upon BP\u2019s climate plan and progress toward Net Zero summarized in its \u201cNet Zero ambition report\u201d (1). Despite recent improvements on its decarbonization targets (2), the oil and gas producer\u2019s ambition is still far from aligned with what climate science requires to stay on a 1.5\u00b0C pathway (3). By 2050, our calculations based on the company\u2019s data show it will overshoot its 1.5\u00b0C carbon budget by at least 50.9%. While the latest Intergovernmental Panel on Climate Change (IPCC) report made clear short-term action is key to mitigating climate change, BP is investing in new oil and gas fields, and is expected to consume more than 80% of its carbon budget as early as by 2030 (4). For the Annual General Meeting (AGM), we call on climate-conscious shareholders to a) vote against BP\u2019s flawed climate plan, b) vote for the alternative resolution filed by shareholders demanding Paris-aligned targets, and c) sanction the companies anti-climate oil & gas expansion plans by voting out incumbent Directors.\u202f <\/b><\/span><\/p>\n<\/div><\/div><\/div>

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BP\u2019s decarbonization targets: good from afar yet far from good<\/h1><\/span>
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In February 2022, BP announced improved decarbonization targets (5), aiming to cut its scope 1 and 2 emissions by 50% by 2030, and to achieve net zero lifecycle emissions over its energy products by 2050. However, as ambitious as these targets may seem, BP missed the opportunity to set for the first time a real and meaningful target for its absolute scope 3 emissions in the short-term. Currently, BP aims to cut scope 3 emissions by 35-40% by 2030. However the devil lies in the details: due to hidden methodological choices, this target covers only 26.7% of its total reported scope 3 emissions (6). All in all, the company aims to decrease its total emissions (scope 1 to 3) by a mere 11.6% by 2030, less than a third of the 41% required cut in emissions prescribed by the International Energy Agency (IEA) Net Zero scenario (7). It\u2019s no small issue: scope 3 emissions accounted for more than 95% of the group\u2019s total reported emissions in 2019 (8).<\/p>\n

At the same time, BP set itself new targets for the carbon intensity of its sold energy products for 2030 and 2050: the group aims for a 15 to 20% cut in its carbon intensity of sold energy products (9) by 2030 (against 2019 levels), and for net zero by 2050. However, to align with a 1.5\u00b0C scenario by 2030 (10), BP\u2019s carbon intensity should decrease by 47%, which is almost three times more ambitious than its current target. Moreover, carbon intensity targets should be considered carefully by investors, as they do not guarantee a decrease for absolute emissions and need to be considered along with changes in the volumes of sold energy products (11). BP is a textbook case to illustrate this metric\u2019s shortcoming: the company itself declared it anticipates \u201cthe absolute level of emissions associated with [its] marketed products will grow up to 2030, even as the carbon intensity covered by aim 3 falls. This is mainly driven by [its] growth plans in fast-growing markets\u201d (12).<\/p>\n<\/div>

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BP\u2019s plan for the future: more (unconventional) oil and gas<\/span><\/span>\u00a0<\/span><\/h1><\/span>
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In 2020, BP announced it would reduce its own upstream production by 40% (13), equivalent to a 30% cut when including Rosneft\u2019s contribution. Following recent developments in Ukraine and the subsequent exit of the company from Rosneft, it is not clear yet how the company will revise this target. In any case, BP\u2019s upstream production decline strategy is problematic: rather than committing not to develop new fields, the group is reorganizing its portfolio through \u201clow-cost\u201d new fossil development, and divestment from least profitable assets (14). As a result, divested fields will be operated by other actors, and the development of new fields will result in a net increase of emissions at the global scale.<\/p>\n

Currently, BP is developing 3189 Million Barrel of Oil Equivalent (MMBOE) of new upstream assets, enough to increase its producing resources by 15% over the next few years. Of this development, more than half will happen in unconventional sectors (15) carrying high environmental risks: 26% will come from fracking known for its methane – a potent greenhouse gas – leakages (16). 31% is planned in ultradeep waters, a risky sector prone to environmental disasters, including one generated by BP (17).<\/p>\n

The group\u2019s heavy focus on oil and gas is also reflected in its CAPEX allocation strategy. BP plans to dedicate 23% of its total investments to its low-carbon activities in 2025 ( 3bn to $4bn) (18). Here again, the devil lies in the details: the low-carbon business segment of BP also includes Carbon Capture and Storage (CCUS), which the company aims to use to produce blue hydrogen, an energy product whose climate benefit is highly contested (19). Aside from this, BP also plans to develop 50 GW of renewable power by 2050. If the group meets this target, and sticks to its hydrocarbon reduction plan, renewable energy could represent up to 21% of its primary energy production by 2030 (20). However, increasing renewable energy production will bring no climate benefit if the company simultaneously increases its absolute emissions. Although renewable power is needed to drive the energy transition, one should be careful not to confuse transition strategies with diversification strategies, and should not assess the group\u2019s company on its sole renewable ambitions.<\/p>\n<\/div>

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How to vote for the climate at BP\u2019s AGM?<\/span><\/span>\u00a0<\/span><\/h1><\/span>
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For the first time, BP will consult its shareholders on its climate strategy, through an advisory \u201cSay on Climate\u201d vote (resolution n\u00b03, asking to support the company\u2019s \u201cNet Zero – from ambition to action\u201d report).<\/p>\n

As the analysis above clearly demonstrates, BP\u2019s so-called climate strategy is very far from being aligned on a 1.5\u00b0C pathway. Results from the CA100+ \u201cNet Zero Company Benchmark\u00a0\u00bb confirm this finding (21): the oil & gas major\u2019s transition plan meets none of the nine criteria assessed in the benchmark – this is one of the worst performance among European oil & gas actors, even if none of those present adequate climate plans. Faced with the risk of rubber-stamping an incomplete and unambitious climate plan, BP shareholders should therefore vote against resolution n\u00b03 and oppose BP\u2019s deeply flawed \u201cSay on Climate\u201d.<\/p>\n

This vote against the company\u2019s in-house climate resolution should be completed by a vote for resolution n\u00b024, filed by a group of shareholders coordinated by Follow This and asking BP to set Paris-aligned climate targets. The company\u2019s decision not to support this resolution appears to be based on weak arguments:<\/p>\n