Proactive Investors - Activist European hedge fund Bluebell Capital Partners has called on FTSE 100 oil producer BP (LON:BP) to rethink its energy-transition strategy for fear of losing market value and netting poor returns in solar and wind farm projects.
Headed by Giuseppe Bivona and Marco Taricco, Bluebell argued that BP’s expectation of a “drastic decline in oil and gas demand” is “utterly unrealistic”.
Bivona told The Guardian that BP should “stay away from businesses in which they have no right to win” and where expected returns are poor.
BP is targeting net zero by 2050, though this strategy does not appear to be winning votes from either side.
Climate activist shareholders say BP, as well as other oil majors, aren’t doing enough, while earnings-focused shareholders including Bluebell are calling for an increase in near-term oil production.
Despite Bluebell’s protestations, BP did, in fact, water down its environmental targets under former chief executive Bernard Looney.
The company previously promised that emissions would be 35-40% lower by the end of this decade but Looney eased this target to 20-30% in February 2023.
Looney resigned last September over allegations of inappropriate personal relationships with colleagues.
Looney admitted to BP’s board that he had not been fully transparent in his disclosures about his relationships with colleagues, the company said at the time of his resignation.
Newly instated boss Murray Auchincloss has yet to indicate a pivot on these emissions targets amid testing time for the oil major’s share price.
The stock is down around 5% year on year, compared to a nearly equivalent upside gain on Shell PLC (LON:SHEL) shares.
Bluebell contended that BP’s share price should be at least 50% higher than where it stands currently.
At a 4.2-times price-to-earnings (PE) ratio against Shell’s 7.4-times PE ratio and Exxon Mobil Corp (NYSE:XOM)’s 10.2-times PE ratio, it is hard to disagree.
Despite being a vocal activist investor, Bluebell does not command a noteworthy stake in BP shares, thus its influence is limited unless it gets more influential stakeholders on board.
Despite howls of wokeism in BP’s corporate strategy, the firm has drawn criticism for ‘greenwashing’, a deceptive marketing practice in which a company or organisation exaggerates or fabricates the environmental benefits of its products, services, or practices.
This came to a head last December, when BP’s £50 million donation for the renovation of the British Museum in Bloomsbury (LON:BLPU), London was slammed by campaigners including Greenpeace.
“BP have wormed their way back into the British Museum with what must surely be one of the biggest, most brazen greenwashing sponsorship deals the sector has ever seen," Greenpeace UK policy director Doug Parr said at the time.
“The climate is teetering on the edge of collapse and, like most of the exhibits on display, BP’s relationship with the British Museum needs consigning to the history books.”