Shareholders ramp up pressure on BP plc to increase transparency on climate change issues.
BP plc (British Petroleum) could come up against tension from a group of City investors and activists in a weeks’ time to establish and implement new ways of countering global warming, after concerns about climate change rattle shareholders who are demanding changes to the way the oil industry regulates preventative measures against global climate change.
BP’s carbon emissions last year were recorded at their highest level since 2013, triggering protestors and an expanding amalgamation of investors to hike up pressure for the oil and gas company to adhere to targets set in the Paris climate agreement four years ago to help reduce the damaging effects of global warming.
“At COP 21 in Paris, on 12 December 2015, Parties to the UNFCCC reached a landmark agreement to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future. The Paris Agreement builds upon the Convention and – for the first time – brings all nations into a common cause to undertake take ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort.”
“The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. Additionally, the agreement aims to increase the ability of countries to deal with the impacts of climate change, and at making finance flows consistent with a low GHG emissions and climate-resilient pathway. To reach these ambitious goals, appropriate mobilization and provision of financial resources, a new technology framework and enhanced capacity-building is to be put in place, thus supporting action by developing countries and the most vulnerable countries, in line with their own national objectives. The Agreement also provides for an enhanced transparency framework for action and support.”
“The Paris Agreement requires all Parties to put forward their best efforts through “nationally determined contributions” (NDCs) and to strengthen these efforts in the years ahead. This includes requirements that all Parties report regularly on their emissions and on their implementation efforts. There will also be a global stocktake every 5 years to assess the collective progress towards achieving the purpose of the agreement and to inform further individual actions by Parties.”
Click here to read the full report from the United Nations Framework Convention on Climate Change (UNFCCC) eHandbook.
BP has supported a proposal that will be offered to shareholders which highlights key actions such as increasing BP’s transparency regarding carbon emission figures and demonstrating how prospective investments comply with the UNFCCC’s Paris Agreement on climate change.
BP’s proposition is likely to be approved in its anticipated yearly meeting in Scotland next week by a team of nearly sixty investors who own approximately 10 percent of the oil company’s shares.
On the other hand, some shareholders are pressing for BP to do more and follow in the footsteps of its competitor, the Anglo-Dutch oil and gas company, Royal Dutch Shell, after it introduced stringent objectives for the oil and gas industry regarding preventative measures and procedures for decreasing carbon emissions.
The following major City investors supported the proposal for stricter climate change regulations: M&G Investments, Aviva Investors, Legal and General Investment Management, Royal London Asset Management, Schroders, Jupiter Asset Management, UBS Asset Management.
Steve Waygood, Chairman of the SRI Advisory Committee at Aviva Investors supported the resolution and suggested that it should act as an important catalyst for confronting the climate change crisis that the world faces today. “The scientific consensus is crystal clear on the need for far-reaching action by corporates, with the next decade critical in limiting global warming to 1.5C. Investors have a responsibility to hold companies to account and to ensure they consider their alignment with the Paris Agreement. We hope that this first, but important, step represents a shift by the oil and gas sector in tackling today’s climate emergency head-on.”
Taken from businessgreen.com.
BP has already rejected a different carbon emissions proposal orchestrated by the activist group Follow This, which demands that oil and gas company takes immediate action to decrease the overall greenhouse emissions from BP products.
When Dr. Dominic Emery, the Vice President of Group Strategic Planning at BP, was asked how the change in climate change regulations is affecting BP, he said:
“Our strategy embraces the transition and is intended to be flexible and resilient to change. Since launching our low carbon ambitions in 2018 we’ve seen real momentum across BP to reduce our own emissions, improve our products to help customers lower their emissions and create low carbon businesses. The focus on the role we play in the energy transition is helping to drive tangible actions towards delivering a cleaner, better energy future.”
Taken from bp.com.
Are other oil and gas companies facing pressure to reduce their carbon footprint?
Some activists have approached other companies such as Exxon Mobil, Chevron and Equinor with the intention of pressuring them into setting climate change goals for the future.
BP has said that it has seen a reduction in its carbon emissions:
“We saw a decrease in our direct greenhouse gas emissions in 2018. The decrease was primarily due to actions taken by our businesses to reduce emissions in areas such as flaring, methane and energy efficiency. Other factors contributing to the decrease included operational changes, such as lower throughput at some of our downstream sites in Germany and increased gas being captured and exported to the liquefied natural gas facility in Angola, as well as the divestment of some of our North Sea assets.”
Click here to read the full statement.
However, BP’s total emissions of carbon dioxide, together with the oil products it offers to its consumers, increased last year to levels last recorded seven years ago, which highlights a rise in demand for and usage of oil and gas products.
BP’s group chief executive, Bob Dudley, on April 10th, 2019, in BP’s sustainability report wrote the following:
“Our ‘reduce, improve, create’ framework focuses the whole of BP on reducing emissions in our operations, improving our products, and creating low carbon businesses. We are backing this up with clear targets and I am pleased to report we made good progress in 2018. To maintain the momentum, we are now incentivizing around 36,000 employees who are eligible for an annual cash bonus to play a role by linking their reward to one of our emissions reduction targets. We firmly believe our strategy is consistent with the climate goals of the Paris Agreement and have welcomed a resolution from a group of institutional investors for a range of additional reporting. This will help further understanding of how our strategy is consistent with the Paris climate goals.”
The motion endorsed by BP comprising of a pledge to closely monitor carbon emissions that result from scope 3.
What are the 3 scopes of greenhouse gas emissions?
“The GHG Protocol Corporate Standard classifies a company’s GHG emissions into three ‘scopes’. Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy. Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.”
Click here to read the full article by ghgprotocol.org.
BP will also be required to present information that summarizes how future investments will comply with the Paris Agreement, and the methods used to gauge its progress towards reducing greenhouse gas emissions.
Companies that mine and source unrenewable fossil fuels have encountered growing scrutiny and criticism, especially in recent years because of increasing concerns regarding global warming and the devastating consequences that carbon emissions are having on the planet and consequently on the sustainability of limited resources.
On May 1st, Labour Party leader, Jeremy Corbyn spoke out about climate change and said:
“This House must declare an environment and climate emergency. We have no time to waste. We are living in a climate crisis that will spiral dangerously out of control unless we take rapid and dramatic action now.”
Watch the full announcement here.
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