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Church of England Commissioners applaud BP on its carbon stance

Posted on: February 5, 2015 3:49 PM
Photo Credit: Shutterstock
Related Categories: England, environment

BP Board Advises Shareholders to Support Resolution on Climate Change at 2015 AGM 

From the Church of England

One of the world’s biggest oil companies will be recommending to its shareholders that they back a shareholder resolution calling for a greater commitment to moving to a low carbon economy. 

The Church Commissioners for England - members of the “Aiming for A” coalition - have welcomed the decision by the BP Plc Board to recommend shareholders accept the recently filed climate change resolution: ‘Strategic Resilience for 2035 and Beyond’. The recommendation follows a similar announcement by the Royal Dutch Shell Plc Board last week.

The decision by the boards of two of the world’s biggest oil companies to recommend the resolutions heralds a potential paradigm shift both in terms of corporate shareholder activism and an acceptance of the need to act on Climate Change by oil and gas producers. 

Welcoming the announcement from BP Edward Mason Head of Responsible Investment for the Church Commissioners said: 

"The positive way in which BP and Shell have responded to our shareholder resolutions is completely unprecedented. This represents a step change in engagement between institutional shareholders and the oil and gas industry on the strategic challenge that climate change poses to the industry. The next step is for investors to back the boards of both companies and to vote for the disclosures that we have requested and that the companies have said they will provide. We look forward to seeing the new in depth reporting from both companies later this year and to continued engagement”.

The Commissioners are part of the £160bn ‘Aiming for A’ Investor Coalition compromised of a range of large church, charity, local authority and individual investors which was launched in 2012 as a new investor initiative to engage on climate change with the 10 largest extractives and utilities companies listed on the London Stock Exchange. BP and Shell have the biggest carbon footprints of all the companies listed on the London Stock Exchange

The initiative is led by CCLA Investment Management, the specialist church and charity fund managers who manage over £1.5bn of Church of England money in the CBF Church of England funds.  The investor coalition also includes the £150bn Local Authority Pension Fund Forum (LAPFF) and Rathbone Greenbank, the ethical fund manager.

Helen Wildsmith, Head of Ethical & Responsible Investment at CCLA, the charity fund manager that built the ‘Aiming for A’ investor coalition said:  "BP's response indicates that supportive but stretching shareholder resolutions can play a positive stewardship role. They focus attention on an increasingly complex capital allocation challenge for energy companies, long-term investors and policy makers.”

Kieran Quinn, Chair of the Local Authority Pension Fund Forum (LAPFF) and co-filer Greater Manchester Pension Fund said:  “This development from BP is a clear example of the effectiveness of shareholder engagement backed by investor commitment. Universal owners taking an active approach to long-term risk, sustainability and carbon management issues has benefits both for our beneficiaries and for our underlying investments,” 

The shareholder resolutions are intended to challenge the companies to run their businesses so that they participate constructively in the transition to a low carbon economy.  The resolutions also provide an opportunity to the shareholders of both companies to signal that they want to see BP and Shell adapt their businesses over the long term.  

The resolutions will be voted upon by shareholders at the BP and Shell AGMS this spring. 

Charities and churches also welcomed news of BP’s recommendation on grounds of transparency and governance. 

Nick Perks, Trust Secretary, The Joseph Rowntree Charitable Trust said:  “We are delighted that BP has embraced its owners' very real concerns.  We particularly welcome its willingness to disclose its public policy positions relating to climate change because, given the significant influence of corporate lobbying on national and international climate change policy making, it is important that we, as investors, understand what actions are being taken in our name,”  

Bill Seddon, Chief Executive of the Central Finance Board of the Methodist Church and Chair of the Church Investors Group (CIG) said: “Transparency and disclosure are at the foundation of good corporate governance for institutional investors. BP has taken another significant step forward in recognising that shareholder concerns on climate and carbon issues need to be addressed. Communication and engagement is the starting point and BP joins Shell in providing the lead to other participants in the global energy sector,”