PGGM votes for climate proposal at BP AGM

PGGM Investments, in its capacity as investment manager and as attorney-in-fact for Pensioenfonds Zorg en Welzijn (PFZW), will vote FOR a climate-related shareholder proposal filed by Follow This, which calls for a Paris-aligned mid-term greenhouse gas (GHG) emissions target.

The resolution asks shareholders to “support the company to align its existing 2030 reduction aims covering the greenhouse gas (GHG) emissions of the use of its energy products (Scope 3) with the goal of the Paris Climate Agreement: to limit global warming to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C. The strategy for how to achieve these aims is entirely up to the board.”

Does BP need such a resolution?
Although BP is a front-runner among oil and gas companies, there is insufficient evidence to conclude that the company’s transition plan is aligned with the goal of the Paris Agreement, which requires a significant decrease in oil and gas production and increase in the supply of low carbon solutions. No independent, third-party source shows that BP is Paris aligned in 2030.

Despite recently rolling back its ambitions, BP is the only oil and gas major that has a clear commitment to reduce oil and gas production by 2030 and its expected production cut of 25% between 2019 and 2030 is substantial. However, further disclosure is required on how oil and gas will separately develop, which IPCC categories and scenarios it used to benchmark itself, and if the decline takes into account abated vs. unabated fossil fuel use.

BP’s low carbon ambitions are focused on scaling up its production of hydrogen and bioenergy and the number of electric vehicle charging points, which supports its aim of reducing the carbon intensity of sold products by 15-20% by 2030. However, the company does not explain how this is aligned with a 1.5°C degree warming pathway.

Why are we voting in this way?
We are voting in this way in pursuance of our client PFZW’s climate policy and as part our fossil fuel program. We believe that the adoption and implementation of this resolution will reduce the risk of stranded assets and/or increase the opportunities afforded by the energy transition.

The resolution does not prescribe that the company must implement absolute emissions targets, only that its existing mid-term target should align with Paris. This allows BP to either cut hydrocarbon production further or increase its low carbon targets. This flexibility leaves room for the company to implement the resolution without compromising its profitability.

While we acknowledge that scope 3 targets are dependent on the demand for fossil fuels, this should not inhibit increased ambition. PGGM is also voting in favour of similar resolutions at the AGMs of companies on the demand-side of energy so that efforts by oil and gas companies will be mirrored by their customers.