The Pensions Are Revolting!

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    Stockholm (NordSIP) – Greenrinse (ɡriːn rɪns) – verb: The practice of adjusting previously set sustainability targets when it becomes clear that they will not be met in time.  Example: “While announcing a doubling of its profits to almost USD 28 billion, BP greenrinsed its climate targets, hoping nobody would notice.”

    Well, it seems that some people have indeed noticed, and they are gathering at BP’s gates with pitchforks and burning torches.  The pensions industry is usually one of the quieter corners of the financial markets.  Pensions managers normally busy themselves carefully steering their slow-moving ships towards a very distant investment horizon.  However, it seems that despite their tranquil demeanour you had better not make them angry.  Five large UK pension schemes with combined assets worth EUR 275 billion have got Helge Lund, BP’s Norwegian Chairperson firmly in their sights.

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    The National Employment Savings Trust (NEST), Brunel Pension Partnership, LGPS Central, Border to Coast and Universities Superannuation Scheme (USS) have signalled their intention to vote against the Chair’s reappointment, which is due to take place at the oil giant’s AGM today, April 27th, 2023.  This growing shareholder revolt was instigated among others by Follow This, the activist group originally set up by Mark van Baal in response to Shell’s inaction in the face of public pressure on climate change.  BP’s decision to revise its 2030 emissions reduction from 35-40 % down to a much less ambitious 20 – 30 % was met with universal dismay, as the decision was not put to shareholders and flies in the face of the goals of the Paris climate agreement.  Follow This has issued its annual call for action ahead of the oil company AGM season, which kicks off with BP’s.

    Follow This has filed a resolution that goes further than just objecting to BP’s recent greenrinsing move.  It is also targeting the company’s persistent avoidance of Scope 3 emissions reductions, which means that even BP’s original reduction targets set in 2020 are highly insufficient.  The company is not alone in doing this, with the likes of Aramco also trumpeting planned Scope 1 and 2 reductions while neglecting the vast emissions generated by the actual end-use of their core products.

    It remains to be seen whether the large multinational oil companies that have so far seemingly ignored pressure from the United Nations and non-governmental organisations to implement credible transition plans will finally sit up and take notice when large institutional shareholders join the ranks of the activist rebels at company AGMs.  With oil companies and in some cases even their individual directors also targeted by climate-related litigation, will the combined pressure be enough to compel them to finally change course?  The net does appear to be gradually closing in, particularly in Europe, where much of this climate-related shareholder activism is concentrated.

    Stop Press (Friday 28 April): Reports from the BP AGM indicate that almost 10% of shareholders voted against Lund’s reappointment.  This is markedly up from the 3% rebellion of last year.  The 5 pension funds also voted in favour of the Follow This resolution, which gained support from 16.75% of shareholders.  If these trends continue, and large institutional investors join the barricades like this, perhaps the oil giants will finally start to sweat a little.

    Image courtesy of Kalhh from Pixabay
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