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15th May 2022

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Calpers under fire over opposition to BP climate vote

Calpers and Climate Action 100+, the influential investor group, have come under fire over the US pension fund’s decision to vote against a climate resolution at oil supermajor BP.

The resolution, scheduled for a vote at BP’s annual general meeting on Wednesday, calls for the oil company to rework its net-zero plan and make more drastic emissions cuts to align with the Paris climate accord.

Even as BP seeks to cut production by 40 per cent by 2030 as part of its net-zero goal, and increase renewable power generation capacity 20-fold by the end of the decade, emissions are still expected to rise over the period.

Calpers, which holds the rotating chair position at CA100+, a group that represents investors holding $54tn in assets and campaigns for companies to cut their carbon emissions, has said it will vote against the resolution.

“We understand why oil majors oppose change, but we fail to understand why the chair of the CA100+ votes against change,” said Mark van Baal, founder of Follow This, the shareholder activist group which filed the resolution at BP.

BP said the decarbonisation scheme it announced last year is “consistent with the Paris goals” and is a drastic shift from the past. It added: “Going back to the drawing board on strategy, targets and aims would disrupt our business plans” as it called for shareholders to vote against the resolution.

But CA100+’s own benchmark says BP has no targets that are fully aligned with Paris.

Lucie Pinson, founder and executive director of Reclaim Finance, a group focused on the finance industry’s role in global warming, said Calpers’ decision to vote against the resolution was a “sad reality check of the blunt hypocrisy of most investors on climate”.

“This shows that Calpers, [like] many investors, like to pretend to act on climate rather than really acting on climate. It’s unfortunately not the first time.”

The situation has exposed the increasingly complex position of investors that on the one hand want to be seen as rewarding companies for progress on climate action while also pushing them to do more. There are also inconsistencies in demands made by big shareholders.

Calpers said it is voting against the Follow This resolution because BP “already made a commitment to shareholders to continue to develop its climate strategy in line with the goals of the Paris agreement”.

But Anne Simpson, managing investment director of board governance and sustainability at Calpers and member of the CA100+ steering committee, said that does not mean the pension fund believes BP is doing enough on climate.

Calpers, CA100+ and BP management all previously backed a similar climate resolution, which passed in 2019. Since then, the company has been engaging with investors at board and chief executive level, Simpson said.

“If we don’t get [the response we are looking for] from the company, the next step for us is voting against board members,” she said.

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CA100+ finds itself in a similar position ahead of Royal Dutch Shell’s AGM this month. It has opposed a separate resolution by Follow This, while backing the company’s own energy transition strategy.

Still, critics of CA100+ are not convinced this is enough.

Yossi Cadan, global finance campaign manager at environmentalist group, said the entire concept of net-zero emissions targets for 2050 is a “sham that BP and others use to hide their responsibility and their inaction on climate change”.

“It’s saying: ‘We don’t want to take responsibility now. Let’s delay that so somebody has to do it in the future,’” he said.

Colin Baines, investment engagement manager at Friends Provident Foundation, a non-profit with a £35m investment pot, said it was “remarkable” that groups such as CA100+ and large investors were failing to support resolutions aligned with the Paris accord.

“Clients and members would be shocked to find their investors are using perhaps the most influential tool at their disposal [their vote at company meetings] to block climate science-led action,” he said.

While activists have called on shareholders to support the resolution, Institutional Shareholder Services and Glass Lewis, the world’s largest proxy adviser, recommended shareholders side with BP. Norges Bank Investment Management, which oversees the world’s largest sovereign wealth fund, and Federated Hermes, which is leading CA100+’s campaign at BP, is also voting against the resolution.

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2021-05-09 04:00:59

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