BP has bowed to pressure from investors, including the Church of England, by backing a plan to explain how its strategy and investments are consistent with the Paris climate agreement.
The UK oil and gas company supported a resolution, put forward by a group of shareholders including the investment arms of HSBC, Legal & General and the C of E, forcing it to be more transparent on climate change.
But BP urged investors to reject a tougher climate resolution brought by a Dutch shareholder activist group, which it said was too prescriptive.
The moves are part of a wider, growing wave of shareholder power being exerted on oil and gas companies to be clearer about their contribution to rising carbon emissions, and what they are doing about it.
BP will encourage shareholders at its AGM in May to back the resolution organised by the Climate Action 100+ group, which represents 320 investors managing more than $32tn (£24tn) of assets.
The proposal calls for BP to publish a business strategy in line with two of the Paris deal goals by the end of its 2019 financial year: holding temperature rises to well below 2C and reducing carbon emissions to net zero by the second half of the century.
The company has also been told to justify how capital expenditure in fossil fuel projects was consistent with the landmark climate deal, and set new metrics and targets.
BP and the investors spent months in talks over the resolution, leading to some changes to the proposal but not on the core demand of a business strategy in line with Paris.
The two sides disagreed on whether the company had shown it was consistent with the goals of the climate accord. Investors said BP was yet to demonstrate that.
Helge Lund, BP’s chairman, said: “The additional reporting specified in the resolution will build on BP’s history of progressive action in this area.” The company agreed four years ago to be more transparent about reporting on climate risks.
The resolution said: “Investors remain concerned that the company has not yet demonstrated that its strategy, which includes growth in oil and gas as well as pursuing low-carbon businesses, is consistent with the Paris goals.”
The company’s contribution to climate change could also undermine its stated mission of lifting people out of poverty because of the impact of global warming on the world’s poorest people, the investors added.
However, Bruce Duguid, the lead coordinator of the resolution and the head of stewardship at Hermes EOS, welcomed BP’s decision to back the proposal. “This is good news for both investors and the planet,” he said.
BP has not specified what metrics and targets it might set if the resolution is passed, but they could include targets for the carbon intensity of its products and linking executives’ bonuses to carbon emission cuts.
But the company will not be setting targets any time soon for “scope 3 emissions” produced by customers using its products, such as burning petrol in a car. These emissions are much bigger than those from the company’s operations.
BP said it was not supporting a separate resolution, brought by the Dutch investor group Follow This, seeking to make BP set a goal for scope 3 emissions. The group has previously been credited with influencing Shell’s decision to set such targets.