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Leading BP shareholder Legal and General plans to vote against the re-election of the company’s outgoing chair at next week’s annual meeting, in a sign of the discontent over the oil major’s changing strategy.
L&G, a top 10 investor with a 1.8 per cent stake, said it was “deeply concerned” about BP’s decision to pivot back to oil and gas and away from a radical investment in renewables, and the lack of a vote on the subject.
“We believe that climate change represents a financially material and systemic long-term risk to our clients’ portfolios,” L&G wrote in a post on its website on Friday as it announced plans to reject Helge Lund’s re-election. Several smaller shareholders are planning to vote similarly at the AGM on Thursday.
L&G’s position is at odds with some other leading shareholders including the activist investor Elliott Investment Management, which has pushed BP to slash spending on renewables.
The divergent views of its leading investors highlight the difficulty faced by BP and other big oil companies as they grapple with whether to stick with fossil fuels amid global pressure to tackle climate change, or shift to renewables, which typically have lower, albeit stable, returns.
BP said this month that Lund would step down “most likely during 2026” having taken on the role in 2019 with a mandate to guide the oil company through the energy transition and select a new chief executive.
His pick to lead the company, Bernard Looney, put in place the aggressive push towards renewables, before Looney was dismissed in 2023 for failing to tell the board about his relationships with colleagues.
The green strategy put BP ahead of rivals in efforts to shift renewable energy, but it also attracted pushback, and ultimately failed to win enough shareholder support.
That left it vulnerable to pressure, including from Elliott, which has built a nearly 5 per cent stake in the FTSE 100 company and called for sweeping changes.
BP’s decision to abandon its renewables drive was announced in February by current chief executive Murray Auchincloss.
The announcement of Lund’s exit looks to be insufficient to avert a potentially embarrassing AGM vote.
Asset manager Robeco is also planning to vote against the chair, as are fellow smaller investors in the UK pension funds Nest and Border to Coast Pensions Partnership.
Michiel van Esch, head of voting at Robeco, said this month that it had “growing concerns over [BP’s] resilience through the energy transition, and over the consistency of its approach to climate governance”.
Diandra Soobiah, director of responsible investment at Nest, which has a £30mn equity stake in the company, said BP’s flip-flopping had “undermined confidence and trust” in the board.
Colin Baines, stewardship manager at Border to Coast, which has a 0.14 per cent BP stake, said it was “deeply concerned over the direction of BP” and its failure to seek a new mandate from shareholders.
L&G said that while Lund’s plan to step down was positive, it wanted the succession process to “follow a clearer and swifter timeframe”.
BP said it had “received widespread support for our reset strategy and the changes we laid out” in an “extensive programme of engagement with shareholders” since the February announcement.
It added: “The consistent message also received is that our focus should be on delivery — executing the strategy and hitting the targets we set out. That is our priority.”
The AGM row came as UBS downgraded its recommendation on BP stock from ‘buy’ to ‘neutral’, saying market uncertainty made its strategy harder to deliver.
The oil price has slipped over the past two weeks due to concerns about the effect of a trade war between the US and China, and the Opec+ coalition’s plans to increase output from May. Brent crude was trading at about $63 per barrel on Friday, down from almost $75 last Wednesday.
