An activist investor fund is reportedly urging BP (LON:BP) to abandon its commitments to reduce oil and gas output and other parts of its clean energy strategy.
The Financial Times (FT) reports London-based hedge fund Bluebell Capital Partners wrote to BP chairman Helge Lund in October shortly after it acquired a small stake in the oil supermajor.
Bluebell reportedly said by transitioning away from fossil fuels faster than wider society, BP was “destroying” shareholder value.
Under former chief executive Bernard Looney, BP pledged in 2020 to increase its investments in renewable energy and vowed to let its oil and gas production fall by two-fifths by 2030.
The company later pared back that commitment last year to a 25% reduction in response to widespread disruption in energy markets caused by the invasion of Ukraine.
BP clean energy sift an ‘irrational strategy’
“This irrational strategy has, quite understandably, depressed the value of BP’s share price,” Bluebell said in its letter according to FT.
BP’s commitment to reduce the size of its oil and gas business is still the only firm target to cut output in the sector, with rivals Shell, TotalEnergies, ExxonMobil and Chevron outpacing the London-listed firm in returns to shareholders.
Bluebell said its investment in BP had predated Looney’s departure and the fund said it would have called for his resignation had he not resigned last year.
Bluebell also said BP should cut its investments in bioenergy, hydrogen and renewables between 2023 and 2030 by around £22bn, or approximately 60%.
The hedge fund said BP could achieve most of that reduction by stopping all renewables investments, a sector in which BP “has no right to win”.
Newly appointed BP CEO Murray Auchincloss has so far remained committed to the company’s renewable energy targets.
A spokesperson for BP told FT that the company welcomed “constructive engagement” with its investors and that “we have met with most of our major shareholders recently and continue to receive support for our strategy”.
While Bluebell has not disclosed the size of the stake it holds in BP, the fund manages around £118m in assets, a small fraction of the more than £80bn market capitalisation of BP.
Despite its small size, Bluebell has successfully forced companies to shift track in the past. In 2021, a campaign led by the hedge fund led to the removal of the CEO of French luxury goods firm Danone.