This year's annual general meeting (AGM) will be the first for BP under new chief executive Meg O'Neill. The meeting is set against a backdrop of shareholder scrutiny over the company's strategic pivot back to oil and gas, a move initiated last year after its share price eroded. While some investors welcomed this return to its core business, it has disappointed climate-focused shareholders.

Shareholder Resolution Demands Transparency

Ahead of the AGM, the shareholder activist group ACCR, alongside institutional investors managing £191 billion in assets, filed a resolution. This resolution requests a detailed breakdown of BP's capital expenditure plans and strategies for all new oil and gas developments. The investors seek transparency to assess whether this new spending will create shareholder value or repeat past mistakes, expressing concern that growing upstream exposure without clear capital discipline is a red flag.

Specific Demands and Performance Concerns

The resolution calls for specific details from BP, including the cost-competitiveness of each project, how the company accounts for cost overruns and delays, and how continued exploration investment creates value. ACCR criticizes BP's historical performance, stating its shareholder returns have underperformed the market and its peers over multiple timeframes. It highlights that $22 billion invested in new oil and gas projects over the last six years has created only $0.9 billion in shareholder value under forward prices.

BP's Stated Strategy and ACCR's Track Record

BP's strategy reset in February last year pledged to allocate capital only to the highest-return opportunities, with projects screened for returns above 15% and a new wave of major upstream projects expected to deliver over 20%. Although the shareholders behind the resolution own just 0.42% of BP's capital, ACCR has a history of successful activism. Last year, it secured the 20% backing required to force Shell to formally respond to financial risks linked to its LNG strategy.

Leadership Context and Strategic Direction

The upcoming AGM marks Meg O'Neill's debut as CEO. Climate activists hoping for a renewed focus on renewable investment under her leadership will be disappointed, as the company has confirmed she will be focused on executing the current oil and gas-focused strategy.