Directing proceedings from a stage emblazoned with BP’s green and yellow sunburst livery, chairman Carl-Henric Svanberg appeared aglow with satisfaction at the oil-and-gas group’s shareholder meeting two weeks ago as plaudits rained in from the unlikeliest quarters.
Environmentally concerned investors, led by those acting for the Church of England, were queuing up to shower Britain’s biggest fossil fuel company with praise for what they saw as the board’s “completely unprecedented” decision to endorse a resolution tabled on climate change by a coalition of activists, some of whom had links to BP’s fiercest critics.
Bill McGrew, global governance manager at America’s largest pension fund Calpers, had flown to London especially. “Calpers says thank you to BP … for its leadership on this issue,” he told the meeting.
Helen Wildsmith of CCLA, which manages £1.5bn of funds for the Church of England, said: “I would like to thank you for the constructive engagement we’ve had with BP … the company’s support for this resolution demonstrates both leadership and responsiveness to shareholder concerns.”
But a series of Guardian interviews with activist shareholders raises uncomfortable questions about the extent to which leading campaigners collaborated with oil firms behind closed doors, leaving a misleading impression of a dramatic victory for environmentalists.
When it came to the voting, the BP resolution — thanks in large part to an endorsement from the board — won near-unanimous support, backed by 98% of shares cast. The result was heralded as a famous victory.
Catherine Howarth, chief executive of ShareAction, whose members include Greenpeace and Friends of the Earth, described it as “an important day for shareholder democracy”, adding: “Climate change is everybody’s business, and today proves it.”
Five years earlier, ShareAction (then called FairPensions) had led an earlier activist campaign at BP and Shell, forcing climate change resolutions on to the meeting agenda. On that occasion, the resolution had been called for the companies to review their investments in Canadian oil sands. Both BP and Shell responded by advising investors to vote down the proposals. They were duly rejected, each, coincidentally, by the same margin of 94%.
ShareAction played only a supporting role in this year’s resolution and a spokesman made clear it had not been involved in discussions with BP. He said the campaign group was proud of the vote, adding: “We’re glad the Guardian is asking questions that prompt all of us to consider what the next generation of investor engagement [with companies] might look like.”
Investor-requisitioned ballots are a rarity. Ordinarily, resolutions at stock-market-listed companies are drafted under the authority of the board; few stray beyond the dry and uncontroversial requirements of company law – the re-election of directors, the appointment of auditors, etc – and most pass on a wave of strong support from institutional shareholders.
Of those shareholder-generated resolutions that do make it on to meeting agendas, most are drafted by investors hostile to management. Typically they are advanced by financially motivated shareholders seeking to overturn board policy, or even oust directors.
But, however unorthodox BP’s vote appears, it looks set to be quickly replicated next month by similar activist interventions at two other oil groups. Landslide votes are expected in the Netherlands at Shell, and in Norway at Statoil, after their respective boards announced support for climate change resolutions tabled by many of the same activists behind the BP vote and almost identical in substance. Each calls for greater disclosures from the companies about how climate change might affect their future business.
Revealing Statoil’s support at the end of last week, the company told shareholders: “Statoil’s board welcomes shareholder interest in better understanding the company’s risk exposure and strategic approach to climate change … [and] recommends the general meeting to support the proposal.”
But the Guardian has learned that, behind the scenes, it was in fact Statoil which first made contact with the activists, not the other way round.
Wildsmith said: “[Statoil] called us up and said: ‘We’d find it really useful to have a shareholder resolution like this [the BP resolution], can some of your co-filers quickly get themselves together and file something for us?’.”
In a statement, Statoil described the conversation differently. It explained that every year it contacts shareholders it suspects might put forward resolutions. This was “to assist them on the practicalities”.
The statement added: “We did not ask for the [climate change] resolution to be filed … [and] how the board would assess the suggested resolution was not part of our dialogue [with activists].”
But Guardian interviews with activist shareholders repeatedly raised questions about the extent to which the shareholder resolutions had been contrived for presentational effect, and whether later endorsements from company boards had been stage-managed.
Wildsmith, who led activist efforts that culminated in the BP resolution, told the Guardian activists had received “input” from BP while they were drafting the resolution wording. The campaigners later met with Svanberg in early December and BP had privately signalled in advance it expected to endorse the resolution, she said.
Such was the strong agreement between BP and activists on the eventual wording of the resolution, Wildsmith recalled, that an option to drop plans for a vote – instead allowing BP to quietly adopt the agreed measures – was discussed, but rejected.
In a statement, BP said: “While there was consultation and engagement before filing, BP did not influence the wording of the resolution, the decision to file was that of the shareholders alone and BP took no decision on whether to support the resolution until after it had been formally and properly filed and carefully considered.”
The BP resolution had been filed in January and the company announced the board had decided to endorse it on 5 February — well in advance of the shareholder meeting which took place 12 days ago.
Days earlier, Shell had announced that its board was backing a near-identical resolution. Shell declined to answer questions about its dealings with activists. A spokesman said: “Shell has extensive ongoing engagements with investors.”
Wildsmith told the Guardian: “It took two months to write the BP shareholder resolution. Every word has been carefully crafted. We had input from the company … We listened very carefully and thought about what they [BP] were saying.”
From the outset, Wildsmith had made clear that the activist coalition she had been building since 2011 wished to create a “new normal” for shareholder resolutions. Proposals from the group were to be deliberately drafted with a reasonable hope of winning board endorsement, in contrast to the traditionally hostile resolutions previously tabled by activists.
This new approach was described as “stretching but supportive” of the board. But the climate change resolutions have been accused by some of requiring very little new of BP, Shell and Statoil.
One commentary from Reuters’s investment blog Breakingviews argued: “Demands are hardly taxing, so a refusal [by the board] might look defensive.” It added: “The information [demanded in the resolution] will give investors a way to measure progress, but is otherwise pretty benign for now. It’s not as if the coalition is trying to force the company to suddenly change how it does business.”
Another source, who was involved in activist efforts, admitted the resolution was “woolly”, with much hinging on how it was interpreted by the companies. A second long-standing shareholder activist not involved in the coalition, told the Guardian the proposals asked companies “to do something that was not particularly stretching and that many companies were already doing”.
Ian Greenwood, of the West Yorkshire pension fund, who acted as deputy to Wildsmith on the BP resolution, said it marked “a change in the way [shareholders] do engagement” with companies.
“This demonstrates that if you work with the company over a period of years … you can come to something which is actually beneficial to them, and they can demonstrate to the markets they’re doing something that major institutional shareholders think is the right thing to do.”
Describing the activists’ private meeting with Svanberg, Wildsmith said: “We met with the chairman of BP right at the beginning of December. Everybody talked about the fact they were going to take it [the resolution] in the spirit intended — which was a big hint that they were going to support it, but obviously they needed to go through board meetings … It’s certainly fair to say that we took away a strong clue; it’s not fair to say everyone shook hands on a deal.”
According to Wildsmith, such was BP’s support for the proposal in early December that there was a even talk of ditching the resolution and simply allowing BP to adopt the climate change disclosure commitments without further investor involvement. “We did have that discussion: do we just put the resolution in the filing cabinet now and say it’s done its work? We all decided we needed this moment [at the shareholder meeting] where you get to vote for it.
“Resolutions help amplify the voice of the long-term investor because the short-term signals in the marketplace are so strong. Having this vote … stays there on the books, year after year, reminding everybody that us – the providers of capital – are really interested in how this company manages itself through this complex, multi-decade, low-carbon transition to everybody’s benefit.”
Wildsmith said she was aware tactics used by her coalition risked being criticised by some investors for being “overly inventive” but nevertheless argued “supportive resolutions” were emerging as a valuable new tool for long-term investors.
“We’re trying to do something different here. We’re trying to create a new sort of shareholder resolution – a ‘board-supported shareholder resolution’ … It’s almost everybody saying: ‘The long-term matters here.’”
