Oil giant accused of leaving shareholders £40bn worse off with unrealistic strategy
After an activist investor claimed that they had left shareholders £40bn worse off, BP faces new demands to scrap the “irrational”, net zero commitments promoted by former CEO Bernard Looney.
Bluebell Capital Partners, an investor who has a small stake in BP and previously took on Glencore and Danone (both blue chip companies), accused the FTSE 100 oil company of pursuing a strategy that was unrealistic on Monday.
Bluebell, in a 30-page document, called on BP not to keep its promise to reduce its oil and natural gas business by a third this decade. It also asked BP to stop investing in renewable energy projects and rewrite their net zero targets so that they are achieved “in accordance with society”.
Bluebell argued the targets would artificially restrict BP, and place it at a competitive disadvantage compared with rivals like Shell and ExxonMobil who have not made such commitments.
The company’s investments in renewables, such as solar and Wind, are not generating enough return.
The activist also demanded that BP return an additional $16bn to shareholders in this decade and urged BP to sack a director who had links to the fund giant Blackrock. It branded Blackrock as “a world champion for ESG hypocrisy and inconsistency”.
Blackrock is one of the loudest supporters of what are called environmental, social, and governance investment principles. However, it has come under fire for claims that they have prioritised investor returns over progressive views.
Bluebell claimed that BP was worth “at least 50% more” than the stock market value of £80bn, which stood on Monday. However, this had been dragged lower by an “ill-conceived strategy”.
Giuseppe Bivona is the partner and CEO of Bluebell. He spent a day talking to BP shareholders.
He said: “There is a lot PR involved in this.” I think that we can have an adult discussion today.
“We don’t say they shouldn’t get to zero net by 2050. We say do it better for shareholders, for social causes and the environment.
“Don’t reduce your production in the short-term, as you will be doing the other [oil] firms a favor.”
Mr Bivona said BP shouldn’t be involved in renewable energy sources like wind and solar, where they lack the necessary expertise, and that BP Lightsource (its solar unit) should be sold off.
He said: “It’s clear that you [BP] don’t have the skills to do renewable energy. You took a loss, and it isn’t your business.
You are aiming for a return of 6-8pc? This is unacceptable.”
Mr Looney, BP’s newly appointed chief executive was sacked last year and forced to forfeit millions in bonuses and pay for failing to disclose his past relationships.
Mr Bivona suggested that BP is one of the companies Bluebell has in its sights. He accused too many boardrooms for putting political correctness ahead of sound business decisions.
He added, “I believe you’ll find this in many companies.” “The BP strategy was more about pleasing public opinion than anything else.
We invest in undervalued high-quality businesses. This is what we’ve done in the UK in the past, and it is what you can expect in the future.
A BP spokesperson said: “BP is pleased to engage constructively with our shareholders.”
“We met with many of our largest shareholders in recent months and we continue to receive support from them for our strategy.
We are confident that the strategy will increase the value of BP, as well as deliver long-term sustainable value to shareholders.
Blackrock, Legal & General Norges Bank Aviva and Abrdn, among others, refused to say whether they agreed or disagreed with Bluebell’s arguments.
Greenpeace UK’s senior climate adviser, Charlie Kronick, stated: “Despite Bluebell’s complaint, BP’s transition away fossil fuels is far below the rate required to avoid the most severe impacts of climate change.
“It’s not fair to leave the fate of our planet in the hands of greedy shareholders and executives who are only interested in their bottom line. It would be like putting a fireman in charge of the station.”