ISS recommends vote against BP board's move to scrap some climate reporting

Influential proxy adviser Institutional Shareholder Services (ISS) has ​recommended a vote against the BP board’s move to revoke some previous company-specific climate reporting resolutions, according to a note ‌seen by Reuters.

It is relatively rare for large shareholder advisory groups such as ISS, whose recommendations guide huge chunks of shareholder votes at annual general meetings, to ask investors to vote against the board’s wishes.

BP is pivoting back to a focus on oil and gas following an ill-fated foray into renewables in a major strategic ​shift now being led by Meg O’Neill, who took the helm this week as the company’s fourth CEO since 2023.

BP’s board has called ​for a vote at its April 23 meeting to retire two resolutions from 2015 and 2019 requiring company-specific ⁠climate reporting.

In its analysis explaining the recommendation published late on Friday, ISS called the board’s move “unprecedented in the UK context”.

“We do not consider ​the Board’s argument that the prior resolutions detract from the clarity of reporting and standardised disclosures to constitute a sufficiently compelling case to offset the ​concerns for ‘retiring’ the relevant disclosures,” it said.

BP SAYS MOVE FOLLOWS ENGAGEMENT WITH ‘LARGEST INVESTORS’

BP needs at least 75% shareholder support to scrap the commitments, which were approved with nearly 100% support at the time.

ISS is also calling for shareholders to vote against a measure that would allow BP to hold online-only shareholder meetings.

BP’s board has said ​the climate reporting requirements targeted by its proposal have largely been superseded by mandatory disclosure frameworks that provide more comparable data.

It would still report ​climate data according to broader frameworks such as the Task Force on climate-related Financial Disclosures and climate-related Financial Disclosure Regulations, the company has said.

A BP spokesperson ‌said on ⁠Saturday that the proposal to scrap the requirements followed “extensive engagement with our largest investors”.

“We are fully focused on building a simpler, stronger and more valuable BP. That’s why we are making these recommendations, to provide transparent, standardised disclosures that support clear comparisons across companies,” the spokesperson said.

ISS also recommended a vote against a resolution filed by different group of investors led by activist shareholder ACCR, who say their supporters account for around 0.4% ​of BP’s shares.

That resolution calls on ​BP to publish more information to ⁠prove its strategy of shifting spending from low carbon to oil and gas projects will boost shareholder value.

EUROPEAN INVESTORS’ CLIMATE CAMPAIGN AGAINST BP

The recommendations by ISS follow a broadening climate campaign against BP by some European investors, ​representing less than 0.3% of the company’s owners, led by Dutch activist shareholder group Follow This.

BP did ​not include on ⁠the agenda of this month’s meeting a resolution proposed by Follow This calling on it to disclose its longer-term strategy under scenarios of declining oil and gas demand.

ISS, however, said Follow This and its co-requisitionists meet the percentage of shareholders required to move their proposals as a written resolution.

“Viewed collectively, the ⁠revocation request, ​the decision not to table Follow This’ resolution and, potentially, the amendments to the Articles ​allowing virtual-only meetings could be viewed as a signal regarding BP’s current stance on engagement and shareholder proposals,” ISS said.

The BP spokesperson said the on-line meeting proposal was meant ​to “increase flexibility and enable broader and more cost‑effective participation in our shareholder meetings”.