BP's chairman says 'the world can't continue along its current path' and that the energy giant will become more transparent in response to investor demands
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- BP chairman Helge Lund promised a long-term transformation to a "low-carbon energy system" in a Financial Times editorial.
- At its annual general meeting on Tuesday, BP accepted a shareholder resolution to adopt transparency about how its strategy is in accordance with the Paris Agreement on climate change.
- BP and its competitors are facing significant pressure from investor groups for addressing climate change, including from CA100+, whose members control a total of $33 trillion AUM.
- This article is part of our ongoing series on Better Capitalism.
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BP's chairman is assuring investors that the oil and gas giant's strategy is in accordance with the Paris Agreement on climate change, and that a new level of transparency is on the way.
In an editorial published in the Financial Times on Tuesday, Helge Lund wrote: "We recognise that the world is on an unsustainable path. We believe our strategy is consistent with Paris. And we welcome steps... that are supportive of a faster transition to a low-carbon energy system."
Lund has been chairman of BP, the second-largest company in Europe, since January. He wrote that CEO Bob Dudley is in agreement over the company's long-term vision for transitioning to cleaner energy alternatives at an "unprecedented rate." He added, "We say this not to protect our licence to operate, or as some form of elaborate greenwashing," though he did not offer concrete goals for achieving the company's transition to lower carbon emissions.
Lund's editorial came ahead of its annual general meeting in Aberdeen, Scotland, held later that day. BP was not about to satisfy the Greenpeace protesters who blocked access to BP's headquarters on Monday, demanding the company make a radical switch to renewable energy, but it was open to more moderate requests.
As he mentioned in his piece, BP accepted the resolution from Climate Action 100+, a group of high-powered investors with more than $33 trillion in assets under management, to adopt transparency around how it will do its part in meeting the Paris Agreement of 2015, whose signatories committed to keeping the global average temperature from rising 2°C by the end of this century.
BP did not, however, accept a resolution from the shareholder group Follow This, which called on BP to meet specific emissions targets, including those from its customers. BP dismissed the shareholder resolution on the grounds that the latter was out of its control, but its larger rival, Royal Dutch Shell, agreed this year to meet that resolution beginning in 2020.
While shareholders are still awaiting concrete evidence from BP to back its stated commitment to a necessary transformation, BP is part of a coalition that is lobbying the US Congress for a carbon tax and other regulations that everyone can be happy with. Launched last week, the CEO Climate Dialogue includes the leaders of 12 other companies, including Shell and major chemical producer Dow. If these companies can take ownership of inevitable regulations, then they're much more likely to be favorable.
Lund wrote that BP taking its response to climate change more seriously is in the interests of shareholders and worth the difficulty. "We have transformed many times over as the global energy system has evolved and are in the process of doing so again," he wrote.
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