Why pressure is mounting at BP ahead of its annual general meeting

A growing chorus of opposition investors appears to be increasing the pressure. blood pressure before the annual general meeting.

Local Government Pension Fund Forum (LAPFF), the UK’s leading pension fund body. in question Late last week, it announced it would recommend its members vote against other resolutions supported by BP Chairman Albert Manifold and the board at the April 23 meeting.

He follows the advice of two influential proxy advisors, Glass Lewis and ISS, and one of Europe’s largest asset managers. Legal and General Investment Managementshareholders voting against BP’s wishes.

Glass Lewis and ISS have a significant influence on how institutional investors tend to vote at AGMs and rarely advocate voting against a firm’s board.

BP’s AGM comes at a time when the energy sector is in the process of moving away from renewables and back into its oil and gas core business, with former Woodside Energy boss Meg O’Neill taking the reins as CEO.

Shares in the London-listed firm have been on the rise since early April last year, when the company found itself firmly in the spotlight as a takeover candidate. BP has gained nearly 32 percent so far this year, outpacing most of its U.S. and European rivals.

In a statement, LAPFF called on its members to vote against the re-election of BP Manifold, who only took on the chairmanship in October, to reject pressure from BP to withdraw two resolutions requiring company-specific climate reporting, and to oppose a decision to allow only virtual AGMs.

LAPFF said its recommendations came due to “serious governance concerns” and cited BP’s recent move to exclude a shareholder proposal put forward by Dutch activist group Follow This.

The motion, introduced by Follow This, which has a long history of pushing Big Oil to do more to combat climate change, would require BP to share its long-term strategy under falling oil and gas demand scenarios.

BP said the board concluded after taking legal advice that the proposal was not valid and would have been ineffective had it been accepted at the AGM.

Manifold at a Q&A with the BP chief late last month in question The company would seek to retire two climate-related resolutions because the world had made progress since they were adopted in 2015 and 2019, and the requirements under those BP-specific resolutions were “substantially duplicate” of what the firm has announced under other industry regulations.

Referring to the plan to rescind these climate decisions, a BP spokesperson told CNBC: “Following extensive discussions with our largest investors, we are fully focused on building a simpler, stronger and more valuable BP. That’s why we’re making these recommendations to provide transparent, standardized disclosures that support clear comparisons between companies.”

The company also sought to make clear that repealing these orders would not change the firm’s net zero goal.

Mark van Baal, founder of Follow This, which is backed by European investors and represents less than 0.3% of BP shareholders, said the company had “crossed a red line” by refusing to table the group’s offer.

“We’re just talking about creating value for shareholders. BP wants to have as little influence as possible from shareholders, and they call it simplification. We want transparency,” Van Baal told CNBC via video call.

“I think what’s at stake here is bigger than BP. What’s at stake here is shareholder democracy,” he continued. “If BP gets away with opting out of a decision, then shareholder democracy will take a big hit because if BP can get away with it, so can other companies.”

LAPFF said it would also support a proposal put forward by climate group ACCR, known as Resolution 24, that calls for clearer disclosure on how BP assesses the cost-competitiveness, execution risk and long-term value of its oil and gas investments.

Glass Lewis, on the other hand, advised investors to support resolution 24 and also oppose BP management in resolutions 23 and 4, which refer to climate reporting requirements introduced several years ago and the election of the president.

While ISS recommended voting against BP management in resolutions 22 (switch to virtual AGMs only) and 23, Legal and General Investment Management publicly announced their intention to vote against BP in resolutions 22, 23, 24 and 4.

BP’s Manifold said ACCR’s proposed solution would “pull the company in the opposite direction to where we want and need to go, which is simpler, standard and comparable reporting.”

Manifold also said that many other large global companies currently hold virtual-only general meetings and that the support of the firm’s shareholders would give BP’s board the option to do the same from time to time.