BP investors turn up the heat over climate change

BP shareholders have overwhelmingly backed demands led by the Church of England and institutional investors requiring the oil major to be more open about how climate change might affect its business.

The 98 per cent vote in favour of tougher reporting requirements had been supported by BP management ahead of the company's annual meeting in London on Thursday.

In a sign of energy companies' growing willingness to enter the global warming debate before an international climate agreement is due to be sealed in Paris this December, Carl-Henric Svanberg, BP chairman, said he would support carbon taxes and renewable power subsidies.

Both measures would cut demand for the company's oil and gas products.

Separately, BP executives told the annual meeting they would not automatically be drawn into any industry consolidation prompted by the proposed £47bn takeover of BG Group by rival Royal Dutch Shell, unveiled earlier this month.

Bob Dudley, chief executive, rejected suggestions BP itself should have targeted BG. "I think it is not the thing for BP to have done," he said. "We are really happy with our portfolio."

Mr Svanberg questioned whether mergers between leading oil companies would necessarily deliver value, saying: "It is not a given that if you take two oil majors and put them together you have enough synergies to make them stronger."

The chairman's support for tougher measures to tackle climate change come as countries have started calling for the Paris climate deal to include a measure phasing out fossil fuel emissions as early as 2050.

Mr Svanberg said oil and gas would inevitably remain a key part of the world's energy mix for decades to come, but switching from coal to gas power would go a long way towards cutting the greenhouse gas emissions driving global warming.

The resolution passed by BP's shareholders asks the group to show how it is reducing its own emissions, and whether the projects the company is investing in will be viable in a low carbon economy. It also asks the group to disclose what public policies the company is lobbying for.

Edward Mason, head of responsible investment at the Church Commissioners, the Church of England's endowment fund, said the resolution was "a step change in the relationship between BP and its investors on the issue of climate change".

"On the back of this disclosure, investors will be able to judge whether BP is positioning itself to be a sustainable player in the energy system."

Campaigners are seeking to pass a similar resolution at Shell's forthcoming annual meeting. However BP executives were still attacked by shareholders for the environmental record, particularly support for extraction of tar sands in Canada. One shareholder said BP's attack on coal burning and attempts to take a lead on climate change policy jarred with its commitments to tar sands developments.

BP also faced a protest when investors voted 11 per cent of shares cast against acceptance of its resolutions on executive pay. The backlash came after Mr Dudley received a 25 per cent rise in total pay and bonuses to $12.74m last year in spite of deteriorating shareholder returns.

Glass Lewis, a proxy voting company, had recommended voting against the pay package at the end March. However the protest was less than one last year in which a third of shareholders voted against BP's executive pay policy.

Additional reporting by Pilita Clark

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