From climate controversy to overwhelming approval, the Chairman of BP p.l.c. Sponsored ADR (BP.US) wins shareholders' trust. Oil and gas ambitions outweigh the narrative of energy transition.

European energy giant BP p.l.c. Sponsored ADR (BP.US) chairman Albert Manifold has won his first election, overcoming long-standing opposition from shareholders questioning the transparency of the company's board; previously, a crucial climate and Clean Energy Fuels Corp. transition resolution was not allowed to be voted on. According to preliminary voting data displayed at the annual shareholders meeting on Thursday, slightly over 81.8% of shareholders voted in support of Manifold as chairman of BP p.l.c. Sponsored ADR. This result was better than the approximately 76% support that his predecessor, Helge Lund, received last year; at that time, a symbolic protest vote was initiated by shareholders as he was about to step down. Some institutional investors, including the eighth largest shareholder Legal & General Group Plc, stated that they would oppose Manifold's election; meanwhile, proxy advisory firm Glass Lewis & Co. also advised investors to do so as a climate proposal submitted by the activist group Follow This was excluded from the vote. L&G was also one of the investors who opposed Lund's re-election in protest of BP p.l.c. Sponsored ADR's renewed emphasis on fossil fuels impacting its climate commitments. This shareholders meeting was also the first for Manifold and new CEO Meg O'Neill. O'Neill took over the British super energy giant earlier this month, with one of her tasks being to streamline business operations and refocus on oil and gas production. Manifold, a former executive in the construction materials industry, took over the board in October and had warned of making difficult decisions as activist investor Elliott Investment Management had been calling for operational reforms. Norway's $2.2 trillion sovereign wealth fund is one of the institutional investors supporting Manifold's election. BP p.l.c. Sponsored ADR has committed to increase investments in oil and gas. After Helge Lund and then CEO Bernard Looney made a misstep towards low carbon and renewable energy businesses in 2020, Elliott and other institutional investors have been urging the company to refocus on oil and gas, ignoring climate-related issues. This latest shift has significantly helped boost BP p.l.c. Sponsored ADR's stock price and market value after years of poor performance. So far this year, BP p.l.c. Sponsored ADR's stock price performance ranks second among the five largest oil giants, with an overall increase of over 30% in US dollars. It was reported that a proposal submitted by the activist shareholder group Follow This requested BP p.l.c. Sponsored ADR to disclose how the company would adjust its strategy and create value if global oil and gas demand declines in the future. However, after seeking legal advice, BP p.l.c. Sponsored ADR's board determined that the proposal did not meet the relevant legal requirements and thus excluded it from the agenda of the shareholders meeting. This incident sparked strong backlash not just because the proposal was not voted on, but also because several institutional investors and proxy advisors believed it reflected a lack of transparency and communication willingness from the board on climate transition issues; at the same time, BP p.l.c. Sponsored ADR has also pushed to revoke some old resolutions related to climate disclosure, arguing that these contents have been replaced by new standardized disclosure frameworks, but opponents believe that this actually weakens shareholders' oversight of the company's climate strategy. BP p.l.c. Sponsored ADR has now clearly shifted its strategic focus back to the oil and gas core business. Under pressure from the new management and activist investors like Elliott, BP p.l.c. Sponsored ADR has publicly committed to increasing investments in oil and gas, focusing on increasing oil and gas production, streamlining operations, and improving profitability; this is why the market sees it as a return to its stance prior to the 2020 "low carbon turn." In other words, BP p.l.c. Sponsored ADR's current path is not to "abandon all climate commitments," but to weaken the climate priority and strengthen the oil and gas profitability priority; from a capital market perspective, this shift has indeed supported stock price and valuation recovery in the short term, but also is the fundamental reason for the dissatisfaction of climate-oriented shareholders.