BP plc

This global energy company is one of M&G’s largest holdings, held in both passive and active equity funds.

About BP

Industry: Energy
Headquarters: London, UK

BP plc is a global energy company with a market capitalisation of £88 billion, a workforce of 74,500 and operations in over 70 countries world-wide, making it one of the UK’s largest companies. Its current strategy recognises the need to look for low carbon alternatives to mitigate the concerns over climate change.

Case study - BP 

Engagement with BP

As a responsible investor we proactively engage on any issue which may affect a company’s ability to deliver long-term sustainable performance and value. Our engagement activities with BP plc therefore draw on a variety of issues, such as, sustainability, strategy, remuneration, board composition and succession planning. Examples of areas we have discussed include:

Executive Remuneration

At BP’s Annual General Meeting in May 2016, the remuneration report was voted against by 60% of the shareholders who voted. This reflected significant concerns amongst shareholders with the remuneration.

As a general principle, remuneration should be simple, transparent and should clearly align with the company’s strategy. Over the last year, numerous discussions were held with the Chairman of the Remuneration Committee on simplifying the structure, reducing the overall quantum, maintaining the focus on health and safety and supporting the development of low-carbon/natural gas technologies.

In May 2017 shareholders were asked to vote on a new remuneration policy for executive directors. The revised policy reflected these discussions and, on this basis, we voted in favour of the new remuneration policy.  The revised policy was supported by 97% of shareholders who voted.

Diversity

Board and senior management diversity is a growing focus for M&G. Given the lack of diversity on the BP Executive Committee, we discussed how diversity was considered across the organisation. We were reassured that there is a strong and diverse talent pool at senior management level.

Sustainability

At M&G we believe in the value of meaningful engagement with companies on material ESG issues. Having held a number of sustainability-focused meetings with BP over the years, we are considering an engagement to assess how BP is managing its transition to a lower carbon world. This will be in addition to engaging with BP on the Financial Stability Board’s Task Force on Climate Related Financial Disclosure. We believe BP can play an important role in setting market standards on sustainability disclosures.

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.

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