Outgoing BP chairman Helge Lund received a near 25% vote against his re-election at the UK oil major’s annual general meeting in a shareholder revolt.
The company’s board was dealt a bloody nose from shareholders as it faced conflicting pressures over climate goals during the meeting at its Sunbury-on-Thames hub on Thursday.
It follows BP announcing a drastic shift away from investing in renewables in February after some shareholders pushed for a refocus on fossil fuels to boost its profits and share price, which have lagged behind its rivals.
But ahead of the AGM, a group of 48 institutional investors criticised the board for not offering a direct vote on the oil major’s revised strategy, while environmental groups fiercely criticised the climate row-back.
A resolution for Mr Lund’s re-election received a provisional 24.3% of opposed votes, which marks a major rebuttal for a FTSE 100 company.
Mr Lund, who played a key role in setting BP’s green agenda, announced he will step down as the company plots a new course, meaning votes against his re-election were largely seen as a protest.
Tarek Bouhouch, from the activist group Follow This, argued a vote against of 10% or more would have a “sole ESG purpose” and send a “strong signal”.
According to the campaign group, a vote against the chairman likely never breached 10% in the firm’s history, or at least in the last decades.
“Double digits is history,” Mr Bouhouch said, claiming BP had never seen an oppose vote hit 10% at an AGM, at least not in the last decade.
Equally, it is likely some shareholders opposed his re-election because they wanted to see more of a shift back towards fossil fuels.
During the 90-minute meeting, board members and executives discussed the new strategy, with a large sign saying “A reset bp” on the set above their seats.
Mr Lund spoke about recent concerns over energy costs and security and “more complex” geopolitical and trade tensions, adding this uncertainty “has had an impact on BP”.
He added: “The company pursued too much while looking to build new low-carbon businesses.”
The chairman sought to assure shareholders that “lessons have been learned”, adding every board meeting in the last year had been focused on a new strategy.
Chief executive Murray Auchincloss told the meeting: “We were optimistic for a fast transition but that optimism was misplaced.
“A fundamental reset was needed which is exactly what we’ve done,” he added, telling investors that the board’s “one simple goal” is to “grow the long-term value of your investment.
“We recognise the valuation gap between BP and our peers and we intend to close it,” he said.
Mr Auchincloss also claimed the energy “transition remains important for BP” but the company will be “disciplined” about how it invests in green technologies going forward.
Matt Crossman, from institutional investor Rathbones, asked the board why shareholders had not been offered the vote on the new strategy, citing the fact a large swathe of shareholders voted in support of the previous net zero plan in 2022.
Mr Lund argued they have been encouraged by shareholder support for the reset after “very, very comprehensive engagement” in recent weeks.
“The majority of our shareholders are not asking for a vote on climate,” he said.
He also argued BP’s net zero ambition by 2050 is “consistent” with UN climate goals, adding details were laid out “very, very extensively” in its annual report.
Later asked about how US President Donald Trump’s tariffs are affecting the business, Mr Murray said: “Overall, the impact on our business so far is not material.”
Dame Amanda Blanc, a senior independent director at BP who is leading the process to find Mr Lund’s successor, said the search is under way and moving at pace.
Mark Van Baal, from Follow This, said the opposition to re-electing Mr Lund also sent a “clear signal” to Dame Amanda that the new chair “needs to be climate and transition competent and resistant to short-term activists”.
He added: “BP’s recent strategic U-turn appears to be driven by panic after a short-term activist reportedly bought shares in the company. We’re hearing significant frustration from long-term investors about this.”
Back in 2020, BP announced some of the most ambitious goals among fossil fuel companies to cut oil and gas production by 40% by 2030 and invest heavily in renewables.
However, BP has now said it wants to increase its production to between 2.3 million and 2.5 million barrels of oil per day by 2030.
It came after it made about £7.2 billion in profit last year, which was down a third compared to the year before, after oil and gas prices fell from the highs seen in the wake of Russia’s invasion of Ukraine.
But the move, which contradicts guidance by global energy bodies designed to help limit climate change, has angered some shareholders and environmental groups.
According to the International Energy Agency, no new fossil fuel projects are compatible with limiting global warming to 1.5C compared with pre-industrial levels, a goal adopted by most of the international community.
Security was tight at the Sunbury-on-Thames venue after previous AGMs were extensively disrupted by climate activists.
A small group of environment and pro-Palestine protesters, who held shares, said they tried to enter the building but were forcibly dragged out by security and moved to what they described as a “protest pen” outside.
