BP backtracks on climate aim, increasing investments in oil and gas

Response Follow This to BP’s 2022 results and plans

BP backtracked on its aim to reduce emissions: the company changed its ‘Aim 2’ to reduce the Scope 3 (product) emissions from its own oil and gas production to 20-30% by 2030 (from 35-40%) (slide 26); BP also announced to increase investments in oil and gas by around $1 billion per year (slide 18).
“If the bulk of your investments remain tied to fossil fuels, and you even plan to increase those investments, you cannot maintain to be Paris-aligned, because you will not achieve large-scale emissions reductions by 2030,” responds Mark van Baal, founder of Follow This, activist shareholder in Big Oil. 

According to the The International Energy Agency (IEA):There is no need for investment in new fossil fuel supply in our net zero pathway. 

“Apparently, BP sees the windfall profits in oil and gas not as an opportunity to massively increase investments in renewables, but as an encouragement to increase investments in fossil fuels.”
Investments in renewables
Thanks to a large acquisition, BP’s investments (capital expenditure) in renewables increased to $4 bn. out of $16 bn. (25%), the company’s 2022 Stock Exchange Announcement published today show. 

Investments in ‘low carbon energy’* fell to $1 bn. (page7), but were amply offset by the $3bn. acquisition of waste emissions to gas producer Archaea Energy (page 12). BP claims to invest $4.9 bn. (30%) in ‘Transition growth engines’ without giving a breakdown.
“We welcome this increase in renewables, but investments in oil ($5.3 bn.) and gas ($3.2 bn.) still eclipse investments in renewables,” “because the company doesn’t have a target to slash its total CO2 emissions this decade (#), as is required to reach Paris.” 

(#) BP repeatedly said, “We anticipate that the absolute level of emissions associated with our marketed products will
grow up to 2030, even as the carbon intensity covered by aim 3 falls.” (Sustainability report, page 31, 1st column). 

“The current windfall profits should be used to make the large investments in renewables necessary to address the climate crisis and to ensure the long-term future of the company.”
“Institutional investors, who have much to lose if Paris is not met, have to compel BP to set a Paris-aligned CO2 reduction target for 2030 and invest accordingly.”
45% by 2030
“To meet Paris, global emissions must fall by 45% by 2030; yet the BP lacks an aim that leads to a large-scale emissions reduction this decade (#); this lack is reflected in the investments in renewables. With our climate resolutions, we support BP to set Paris-aligned targets and invest accordingly.”
Shareholder resolution at AGM will bring clarity
In May, shareholders will again cast their votes on the Follow This climate resolution, which this time focuses on BP’s 2030 Scope 3 (product) emissions – which account for around 90% of BP’s total emissions, as reported by the Financial Times (Activist group Follow This launches climate campaign against Big Oil), Reuters, and Bloomberg

“This focus will bring clarity about which investors are determined to reach Paris’ key condition – slashing emissions this decade – and which investors enable Big Oil to ignore this key condition,” Van Baal says.

Low Carbon
* “[BP’s] low carbon business includes solar, offshore and onshore wind, hydrogen and ccs [carbon capture and storage] and our share in BP Bunge Bioenergia.” (2021 annual report, page 41) Since ‘low carbon energy’ also includes carbon capture & storage (CCS) and ‘Power trading is reported under low carbon energy’ (page 7), the actual investments in renewables are lower.
Further, it’s questionable if BP’s $0.5 bn. acquisition of power trader EDF Energy Services can be labeled ‘low carbon energy’.

“The picture is clear now, no oil major has plans to drive down emissions this decade. Now it’s up to the shareholders. Together with major investors, we continue to compel BP to put its full weight behind the energy transition.” 

With best regards on behalf of the Follow This team,   

Mark van Baal +31 6 22 42 45 42
McKenzie Ursch +31 6 40 16 26 72 
Jesper Vaarwerk +31 6 83 13 97 36

Attachments: climate resolutions Shell, BP, Chevron, and ExxonMobil

Press images

Media coverage of the Follow This climate resolutions in December 2022:
Financial Times: Activist group Follow This launches climate campaign against Big Oil
Reuters: Investors ramp up pressure on Big Oil firms to set 2030 climate targets
Bloomberg: Big Oil Investors Call for More Aggressive Climate Targets
Responsible Investor: ESG resolution round-up: Refined Follow This proposals filed at oil majors