Pension schemes increasing support for BP climate change resolution

Support for a resolution to make BP more transparent about the business risks presented by climate change regulation is growing amongst major pension fund managers, with seven institutions adding their support in recent days.

Major Dutch pension fund manger APG, French giants Amundi and BNP Paribas, the Pensions Trust and Kames Capital in the UK, Wespath in the US, and large German fund manager Union Investment are the latest shareholders to declare their support for the shareholder resolution on climate change resilience to be put before the BP Annual General Meeting on 16th April.

The resolution, which requires support of 75 per cent of shareholders, would require BP to publish its assessment of the impact on its profitability of a number of scenarios, including an agreement by nations at UN talks in Paris in December to take measures to hold climate change increases at 2 degrees.

The resolution, which seeks to increase transparency and governance procedures rather than require BP to moderate its behaviour, would also require the company to publish details of its lobbying activities against climate change campaigns, as well as details of key performance indicators and executive incentives that relate to a transition to low-carbon energy generation.

Campaigners point to the fact that the UK’s most famous fund manager, Neil Woodford, has no energy stocks at all in his Woodford Investment Management Income fund as evidence that long-term regulatory risks exist for oil companies.

A similar resolution originated by ‘Aiming for A’ has also been lodged with Royal Dutch Shell for a vote at their forthcoming AGM.

In recent weeks Aviva Investors, Jupiter Fund Management, Schroders and the Universities Superannuation Scheme have all announced their intention to back the resolution. Major pension funds Local Government Super, in Australia, CalPERS, and US funds Connecticut Retirement and Vermont Pension Investment have already declared their support. Finnish fund Ilmarninen and the Swedish national AP2-AP4 conglomerate are also backing a yes vote, alongside the UK’s Environment Agency Pension Fund. 

Responsible investment charity ShareAction and environmental law group ClientEarth have welcomed the announcements of the latest set of institutional investors to declare their support for the resolution on climate change put forward by the Aiming for A coalition of investors.

Waltham Forest and Cheshire are the latest local authority pension funds to announce their support, following announcements by 25 other UK members of the Local Authority Pension Fund Forum (LAPFF), which is part of the Aiming for A investor coalition.

Campaigners say the upsurge in support amongst pension funds for the resolution reflects an increase in engagement with pensions by rank-and-file scheme members.

Aegaon pension holder Partick Olszowski says: “Emailing my pension provider felt very strange. Until recently they had been nothing more than a deduction on my payslip. But when I got an email back from them today, saying they’re backing the shareholder resolutions about climate risk, I felt delighted to see that my pension savings are part of a powerful movement to change the world through the investment chain.”

APG senior sustainability specialist Erik Jan Stork says: “APG welcomes BP’s support of this resolution. Structural changes in the energy markets, resulting from policy decisions and technological breakthrough, can alter the long-term outlook for energy companies. We expect BP and other energy companies to take account of these changes in developing their long-term business strategies. For example by taking IEA’s 450 scenario into account, and by explaining to shareholders how uncertainties are reflected in their investment decisions, capital allocation and governance.”

ShareAction chief executive Catherine Howarth says: “This latest wave of institutions publicly declaring their intention to vote yes to these resolutions showcases the broad swathe of support they have attracted among institutional investors. The resolutions have also received widespread support from the public, many of whom have used ShareAction’s online tool to email their pension funds urging them to vote in favour. It is encouraging to see pension funds taking leadership by taking their beneficiaries’ views into account on the critical issue of climate change.”

Bill Seddon, CEO Central Finance Board of the Methodist Church and Chairman of the £15bn Church Investors Group added: “We’re aware that some large UK investors in BP haven’t been able to declare their votes in favour of resolution 25 yet. An early Easter has made it difficult for exceptions to non-disclosure policies to be signed-off. Church investors are, however, delighted to hear that they will be joined by major insurance companies, pension funds and fund managers at BP’s AGM next week.”