The decision comes as energy companies face pressure from investors to dial down their exposure to fossil fuels
BP PLC said it has agreed to draft a shareholder resolution to be voted on next year that would enshrine its pledge to reach carbon neutrality by 2050, as investors urge major oil companies to diversify their portfolios to cleaner energy.
The British energy company said the resolution would address BP’s overall greenhouse-gas emissions from its operations to the products it buys and sells and lay out how it would boost investment in clean energy.
“Listening and engaging with stakeholders has been an essential part of defining our net-zero ambition and aims,” Chief Executive Bernard Looney said in prepared remarks.
In February, BP became one of the first major oil-and-gas companies to pledge to reach net-zero emissions by 2050 in line with the Paris Agreement, but was scant on details. It said Friday it would provide more information at its coming capital markets day in September and that work on a possible resolution would follow. “Over time, as investment goes up in low- and no-carbon, we see it going down in oil and gas,” the company said.
BP said it would work on the shareholder proposal with Follow This, a group of investors in oil-and-gas companies that push major oil companies to fall in line with the Paris Agreement. In response, Follow This said it has withdrawn its climate change resolution that would have been voted on this year by BP’s shareholders.
“We believe that this goal will require a radical shift in BP’s spending away from fossil fuels to renewables,” said Mark van Baal, founder of Follow This. “We thank the investors that voted for our climate resolution that encouraged this step in 2019.”
In 2019, BP’s board eventually supported a different shareholder proposal, backed by the investor group Climate Action 100+, for the company to provide more disclosures around its greenhouse gas emissions and carbon-intensive investments.
Its latest move comes as energy companies are facing pressure from investors to dial down their exposure to fossil fuels as governments ready regulations to punish big polluters.
Last year, the British government set an ambition to reach net zero emissions by 2050. Money managers like UBS Asset Management and DWS Group GmbH, which is majority owned by Deutsche Bank AG, have increasingly backed climate-change-related shareholder proposals at companies.
BlackRock Inc., the world’s largest asset manager with some $7 trillion under management, joined the now $40 trillion strong Climate Action 100+ earlier this year and signaled this month it would vote against corporate directors who fail to act on climate change disclosures.
Some banks also are limiting their fossil fuel funding. Assets on UBS Group AG ’s balance sheet tied to the energy and utilities sectors, excluding renewables, water and nuclear, shrunk more than 40% last year to $1.9 billion, representing just 0.8% of the bank’s product exposure.
“BP has to change, and faster than ever, because the world is changing fast, and so are society’s expectations of us,” Mr. Looney, BP’s CEO, said.