Investors challenge bp over oil and gas spending

INSTITUTIONAL investors have filed a legal challenge against bp over what they describe as “undisciplined” capital allocation to oil and gas projects.

bp recently announced it would increase its spending on its upstream business by 17%, reallocating funds previously committed to clean energy investments.

Funds managing almost £200bn (US$270bn) in assets – including Nest, London CIV, Wales Pension Partnership, Greater Manchester Pension Fund, Merseyside Pension Fund and Pensions Authority Publica (PUBLICA) – have filed a shareholder resolution calling on the company to demonstrate how increased spending on upstream operations will enhance shareholder value.

Investors unconvinced

The investors say they are “unconvinced” that prioritising oil and gas investment will address bp’s recent underperformance.

According to the Australasian Centre for Corporate Responsibility (ACCR), the company’s total shareholder returns have underperformed both the wider market and its peers over three, five, ten and 15-year periods.

Resolution demands

Through the shareholder resolution, investors are asking bp to provide evidence of the cost competitiveness of its upstream projects, explain how delays will be accounted for and clarify how continued exploration will create long-term value.

Diandra Soobiah, director of responsible investment at Nest, said: “bp has underperformed for the past decade, including the period they were prioritising oil and gas production.

“Now they have dropped their renewables strategy, investors need to be reassured that any expansion to their upstream oil and gas portfolio will be governed by robust capital discipline and generate sustainable returns.”

The investors say the resolution was lodged after repeated attempts to engage with bp. The company is expected to respond to the resolution by April 2027.