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Who are the 'Aiming for A' coalition and what are their aims?

What did the BP resolution propose?

'...members of a public company may require the company to give, to members of the company entitled to receive notice of the next annual general meeting, notice of a resolution which may be properly moved and is intended to be moved at that meeting.'

Pursuant to , such requests must come either from either 100 or more members having the right the to vote on the resolution to be proposed and holding shares on which there has been paid up an average sum, per member, of at least £100, or members together representing at least 5% of the total voting rights of all members who have a right to vote at the annual general meeting.

The special resolution was worded as follows:

'Special resolution—strategic resilience for 2035 and beyond

That in order to address our interest in the longer term success of the Company, given the recognised risks and opportunities associated with climate change, we as shareholders of the Company direct that routine annual reporting from 2016 includes further information about: ongoing operational emissions management; asset portfolio resilience to the International Energy Alliance's (IEA's) scenarios; low-carbon energy research and development (R&D) and investment strategies; relevant strategic key performance indicators (KPIs) and executive incentives; and public policy positions relating to climate change. This additional ongoing annual reporting could build on the disclosures already made to CDP (formerly the Carbon Disclosure Project) and/or those already made within the Company's Energy Outlook, Sustainability Review and Annual Report.'

The BP board of directors reacted by supporting the resolution (in the AGM notice) and, in doing so, set out a series of responses to the issues raised by the resolution by reference to how BP has performed and what its approach is.

What happened at the BP AGM?

What is proposed at the Shell AGM?

'...will provide additional reporting in relation to risks associated with climate change in 2015, in advance of full reporting in response to this resolution in 2016.'

Is the passing of the BP AGM resolution an activist victory?

The 'Aiming for A' coalition's purpose in proposing the resolutions at the BP and Shell AGMs was clearly stated in its supporting statements for both resolutions:

'We believe that supportive but stretching shareholder resolutions can play a positive stewardship role in the UK. They could amplify the need to balance the short-term and longer-term aspects of shareholder value creation.'

Reaction to the passing of the resolution has largely been to report it as a victory for activism. CDP (an international not-for-profit organisation providing a global system for companies to measure environmental information) described its passing as a 'game changing day. The way that BP's management and shareholders have come together to pass this resolution is unprecedented'. Several representatives of institutions within the 'Aiming for A' coalition have also seen it in these terms. For example, the Church Commissioners stated:

'BP's commitment to increased disclosure on its climate change strategy will set a new standard and is a significant development in the relationship between institutional shareholders and the oil and gas industry on sustainability.'

PIRC, the corporate governance and institutional shareholder advisory consultancy, have noted the potential for a gap between European-based companies (domiciled in markets where climate and carbon risks are broadly accepted as a political and economic reality) and the US, where the issues 'are more fiercely contested'. While the 'unprecedented action' of both the coalition requisition at BP and the numbers voting to approve it 'will not have escaped notice' in the US (and has triggered investors to call on the SEC to enforce more disclosure by US oil and gas companies on carbon-related risk issues), PIRC believes that climate-based resolutions at energy companies' AGMs in 2015 are unlikely to be carried. Therefore, establishing a global standard of transparency and disclosure on climate and carbon risk 'could be contingent on the effectiveness of shareholder engagement strategies' on the European side of the Atlantic divide.

Online news service 'The Carbon Brief' is more sceptical, noting that some of the demands in the resolution do not go much beyond what BP already choose to disclose (which the BP board acknowledged in its statement that 'many of the requests made in the resolution are already provided through BP's existing disclosure processes'). Its analysis concludes that while 'shareholders will be engaging with BP in the future to ensure that the resolution means that they get the information they need to continue pressuring the company to adopt a greener approach', the 'real success behind the resolution now will be to whether BP fulfils its end of the deal'.

Echoing this view, ShareAction, a UK-based non-governmental organisation campaigning for responsible investment by pension funds and other institutional investors and itself one of the groups involved in presenting the resolution, have commented that:

'If you're talking about 55 institutional investors, some of them are going to be naturally more progressive than others in this area. To get 98% of the vote through, I think it's fair to say we filed resolutions that were supportive of the company, but stretching. The real question now is the rigour with which BP lives up to its commitment on this stuff.'

While there clearly remains room for arguing that this shareholder activism actually represents more of a collaborative engagement with energy companies' corporate strategies rather than a repudiation of them, the BP result does give a boost to the role of pension funds and asset managers in their ongoing dialogue with the world's leading energy companies.

James Hayden, solicitor in the Lexis®PSL Corporate team.