BP Chair Deserved Backlash for Blocking Shareholder Climate Resolution
Albert Manifold, the chair of BP, excluded a resolution from the Dutch investor group Follow This that would have required the company to explain how it would protect shareholder value if demand for oil and gas declines. The resolution was intended for BP's annual meeting agenda but was blocked, leading to an investor rebellion.
Background of the Dispute
The resolution itself was not radical. It was framed in investor-friendly terms and simply asked BP to outline its strategy for preserving shareholder value in a scenario of falling demand for fossil fuels. Follow This is not a fringe climate group; it claimed support from investors managing $1 trillion in assets.
Despite this, BP's board sought legal advice and deemed the proposal invalid. Manifold stated that the board concluded the resolution would be ineffective if passed, but did not provide a clear explanation for this decision. Some speculated that the issue was procedural, as the resolution was not filed as a special resolution requiring 75% approval. Critics argue that the board could have used common sense to include it in some form.
Contrast with Shell
Shell, BP's larger rival, handled a nearly identical resolution from Follow This differently. Shell's chair, Andrew Mackenzie, allowed the motion to proceed to its annual meeting without obstruction. The meeting notice includes a full page for the resolution and supporting statement, alongside the board's recommendation to vote against it. This approach is seen as mature and confident, allowing shareholders to have their say.
Shell's counter-arguments noted that scenarios are not forecasts and are updated regularly, and that the company already provides sufficient information on break-even points and demand sensitivities. It is unclear why BP could not adopt a similar approach.
Consequences for BP
Manifold's obstinacy appears to have fueled rebellions on other BP resolutions. A proposal to remove specific climate reporting requirements, adopted in 2015 and 2019, received only 47% support from voting shareholders, far short of the 75% needed. A plan to abolish in-person annual meetings also failed.
Most notably, 18% of votes were cast against Manifold's re-election as chair, a poor result for his first annual meeting. Legal & General Investment Management, a top-10 investor, voted against him, citing the exclusion of the Follow This resolution as a key reason.
Boardroom Dynamics
BP's board includes heavyweight non-executives such as Aviva CEO Amanda Blanc and former Barclays finance director Tushar Morzaria. Observers question whether they warned Manifold against a heavy-handed approach to shareholder democracy, or whether BP has become the Albert Manifold show.
While BP's strategy of pivoting back to oil and gas may have broad shareholder support, the incident underscores the importance of allowing debate and presenting arguments. Manifold's handling of the resolution deserved the rebuke it received.
