Hedge Fund Urges BP to Withdraw Clean Energy Transition... Pressuring UK Oil Company

"BP Stock Decline Due to Climate Crisis Response Strategy"

[Image source=AP Yonhap News]

Britain's largest oil company BP is facing pressure from an activist hedge fund to withdraw its climate crisis response strategy. The reason cited is that it negatively affects shareholder returns.

According to major foreign media on the 29th (local time), Bluebell Capital Partners, a hedge fund based in London, UK, recently urged BP to abandon its commitment to reducing oil and gas production and transitioning to a clean energy supplier.

BP has presented a concrete goal to reduce oil and gas production by 25% by 2030 compared to 2019 as part of its climate crisis response. Initially, it set a policy to reduce by 40%, but revised the figure once last year due to supply shortages in the European energy market caused by the Russia-Ukraine war. BP's strategy is known to have been established by former CEO Bernard Looney in 2020.

In a letter sent to BP, Bluebell Capital Partners claimed, "(BP's climate crisis response strategy) is at a level much higher than the targets set by our society," and added, "It is nothing less than destroying shareholder value." They further stated, "This unreasonable strategy has naturally lowered BP's stock value."

Since 2020, the stock prices of competing oil companies ExxonMobil and Shell have risen by 47.6% and 8.4% respectively, while BP's stock has fallen by 3.8%. Although most oil companies' stocks rose due to the surge in fossil energy prices caused by international instability, BP is said to have been left out because of its climate crisis response strategy.

Bluebell Capital Partners also opposed BP's business restructuring strategy toward clean energy. Bluebell stated that BP should reduce its target investment amount in bioenergy, hydrogen, and renewable energy from 2023 to 2030 by 60% ($28 billion). Since BP's business scale is larger than that of a purely eco-friendly energy company, its borrowing costs for renewable energy projects inevitably tend to be higher.

Despite the hedge fund's opposition, BP intends to continue implementing its climate crisis response strategy. Murray Auchincloss, BP's CEO who took office this year, said, "There is a need to invest in clean energy technologies to increase profits through the most profitable oil business while building future revenue sources."