An international coalition led by faith-based investors has opted to initiate greater shareholder engagement with BP this year in lieu of filing a resolution with the troubled energy producer. The coalition, spearheaded by the U.S.-based Interfaith Center on Corporate Responsibility (ICCR) and the U.K.-based Church Investor Group (CIG), plans to discuss what BP is and should be doing to assess, reduce, manage and mitigate risks, and to improve board oversight.
"We're looking for more open and substantive communications," says Julie Tanner, assistant director of Socially Responsible Investing at Christian Brothers Investment Services (CBIS). CBIS had been the lead co-filer for a 2011 BP resolution that had been prepared but wasn't filed. "We still want everything in the resolution. That demand hasn't changed."
ICCR and CIG want to know what lessons BP has learned from its catastrophic Gulf of Mexico spill and how they're being incorporated into the company's other operations-including what safety measures are being taken and how it's strengthening its contractor relationships, she says.
Partnering with CIG is expected to be an effective way to get BP to engage again with U.S. socially responsible investors-something it stopped doing about three years ago, says Tanner. "Our U.K. colleagues across the pond started to talk to BP on our behalf," she says. Since 40% of BP's shares are held in the U.K., it makes it even more important to work on a transatlantic level, she says. Tanner, who notes that a shareholder resolution CBIS filed last year with BP regarding Canadian tar sands received a lukewarm 5% vote, is hopeful increased engagement will receive a greater reception.
But should BP fail to disclose adequately on operational risk and safety issues by this fall, ICCR has CIG's commitment to back a shareholder resolution for 2012. This is significant because it's uncommon for shareholders in the U.K. to file resolutions, she says.
Mark Regier, director of Stewardship Investing at ICCR member Everence Financial, says the ICCR and CIG's bi-continental social investment coalition is "bringing engagement to a new level with a new level of intensity." It sends a stronger signal to BP and allows global investors to move forward with a more uniform approach, he says. "It's an opportunity for us to bring our voices together with our distinct skills and styles."
London-based CIG also provides more of a local connection to BP's corporate headquarters which, from a proximity point of view, could bring richer, more frequent dialogues, he says.
Regier is hopeful that increased dialogue will work well as Mark Bly, head of BP's new Safety & Operational Risk division, gets his feet under him. Regier notes that historically BP had been committed to shareholder engagement.
Over the next nine to 12 months, the coalition will also be creating a scorecard and benchmarks for what it thinks BP can achieve and when, says Regier. Fringe oil and energy developing strategies, including tar sands, hydro-fracturing, deep sea drilling, and drilling in Arctic waters will be considered.
"Responsible investors always have to balance bettering the world and the company--what's the effective strategy and what will move us forward," says Regier.
ICCR's nearly 300 faith-based institutional investors have combined portfolios worth an estimated $100 billion. CIG, a group of 37 investors connected with the Churches of Britain and Ireland, have combined assets of £12.6 billion (the equivalent of about $20 billion).