On behalf of ABP, APG, together with other large investors, filed a climate resolution with oil and gas company BP. ‘This also sends a signal to other companies’, says Lucian Peppelenbos, member of the Responsible Investment Team at APG.
At the end of last year, Shell tightened its climate policy, fueled by large shareholders. Now, the large oil and gas company BP is also under increased pressure. Climate Action 100+, a collaboration of large investors, including both APG and pension fund ABP, has filed a climate resolution with BP, which will be put to the vote at the shareholders’ meeting. The resolution poses three demands on BP: a strategy consistent with the Paris Climate Agreement, formulating climate ambitions and goals for the short, middle and long term, and an annual report on this. Senior executives of the British oil and gas company support the resolution. A breakthrough, according to Lucian Peppelenbos, senior responsible investment & governance specialist at APG, which handles investment of pension funds for ABP, bpfBOUW and SPW, among others, and supports the resolution on behalf of them.
The resolution was filed by Climate Action 100+. What is the organization’s mission?
‘Climate Action 100+ consists of more than three hundred large shareholders, together representing more than 32 trillion dollars. That is about a third of all the money being invested worldwide on behalf of and by parties such as pension funds and insurance companies. APG is a member of Climate Action 100+'s core group. Through global collaboration, we can exert more influence on companies and their climate policies. We focus on 161 companies, that together represent eighty percent of global Co2 emissions. We did this with Shell previously, and now we are doing it at BP through the submission of a resolution.’
At Shell, a joint statement was made by shareholders. Why the choice for a resolution for BP?
‘We have been discussing the Paris Climate Agreement with BP for years. Until now the company was barely prepared to be guided by the Paris Agreement's climate goals. BP just appointed a new Chairman, who clearly does understand the importance of a climate policy in which BP defines its future as a company within the energy transition. The new Chairman prefers a resolution over a joint statement, because of its binding nature. Perhaps BP executives will provide additional mandate internally for a strategy that demonstrably contributes to the Paris Agreement. That commitment is the largest progress we will gain through the resolution.
As of 2020, Shell will set concrete climate goals, and it will link its rewards to this. To what extent does the BP resolution differ from this?
‘The resolution does not go as far as the Shell agreement. Shell will set concrete climate goals for the short, middle and long term. These are aimed at the company's CO2 emissions and at greenhouse gas emissions through the use of third-party products. Rewards for Shell top executives will become partially linked to achieving these goals. The BP resolution is about formulating climate ambitions for the long term, combined with measurable targets for the company's own CO2 emissions in the short run. For greenhouse gas emissions through the use of products, the resolution initially asks BP to start measuring these emissions. The resolution also asks to link rewards to climate policy.’
Does it go far enough? A resolution by activist shareholders collective Follow This is also on the table, with the same requirements for BP as for Shell.
‘Follow This’ BP resolution demands binding long-term targets, until 2050. We believe that it is impossible to set goals that far ahead. After all, no one can predict the future. As long-term investors we would rather see a gradual transition, instead of an overly ambitious, risky climate policy. BP has appointed new top executives, who have the right mindset. Based on this resolution, we will continue the dialogue with them in the years to come for achieving leading climate policies at BP.’
Can we expect more resolutions in the near future?
‘This resolution is also a signal to other companies. We will also ask this climate policy from them: formulating ambitions for the long term, translated into concrete and measurable goals for the short term, connected to reward policies and structural progress reports. We will continue the dialog on this. Many companies’ current strategies end in 2020. In the new strategies, climate has to play an even more prominent role. Not only for oil and gas companies, but also for companies in other industries, such as mining, chemistry or food.’