A group of 46 BP institutional investors has voiced concerns that the company may ditch a target to reduce its oil and gas production to 2mn b/d of oil equivalent (boe/d) by the end of the decade, urging in a letter to BP chairman Helge Lund that a new shareholder vote be allowed on its net-zero strategy.
The letter's signatories include several UK and European pension fund managers and other investors, including Aegon, Investec and Robeco. It comes ahead of BP's capital markets day on 26 February, when the company has said it will "fundamentally reset" its strategy.
The group calls on BP to give another opportunity to vote on its net-zero plans at its 2025 annual general meeting, pointing out that shareholders in 2022 endorsed a BP plan to cut hydrocarbon production by 40pc, to 1.5mn boe/d, by 2030. That achieved 88.5pc support from shareholders, but the group of investors behind the letter note that nine months later BP revised upwards its target for 2030 to 2mn boe/d.
BP's output averaged 2.36mn boe/d in 2024.
The investors are now concerned that increased spending by BP on oil and gas output, due to subsequent strategy tweaks, will raise "potential exposure to stranded assets as the energy transition progresses."
The letter notes there is opportunity for BP to explain how emissions budgets in Paris Agreement-aligned scenarios are considered in the sanctioning of new projects.
"Showing where projects will sit on the global merit curve of producing assets would also allow investors to assess the relative competitiveness and resilience of BP's portfolio and capital expenditure," it states.
In a statement to Argus a signatory to the letter, Royal London Asset Management, said it recognised BP's past efforts toward the energy transition but it is "concerned about the company's continued investment in fossil fuel expansion.
"If BP has decided to scrap its production target, we seek clarity on how capital allocation will shift to ensure resilience through the energy transition," it said. "Will BP scale up investments in renewable energy, carbon capture, and emerging technologies to future-proof the business against regulatory, market, and climate risks?"
Royal London urged BP "to strengthen governance and transparency around transition planning, ensuring that future capex decisions align with a net-zero pathway rather than locking in further emissions growth."
It added: "Robust oversight and clear long-term strategies are essential to delivering value while managing the risks of an accelerating energy transition."
A BP spokesman said the company had received the letter and "will respond in due course."
Environmental pressure group Greenpeace said BP can expect this kind of pushback and challenge from its shareholders "at every turn if it doubles down on fossil fuels".
"Government policies will also need to prioritise renewable power, and as extreme weather puts pressure on insurance models policymakers will be looking to fossil fuel profits as a way to fund extreme weather recovery," Greenpeace said. "BP might want to seriously put the brakes on this U-turn."
Earlier this month BP's shares jumped on media reports that activist hedge fund Elliott Investment Management was building a stake in the UK major. Investment bank analysts that follow BP expect Elliott to attempt to bring about a boardroom shake-up as it has at other resources companies, including at Canadian oil sands business Suncor Energy in 2022.
