BP Faces Investor Pressure as It Reverses Green Energy Commitments
British Petroleum (BP) is set to announce a major shift in its energy strategy, slashing investment in renewables and prioritising oil and gas production. The move, expected to be confirmed this week, marks a significant departure from the companie’s earlier commitment to reducing fossil fuel output. It comes after increasing pressure from investors who argue BP has been underperforming financially compared to its competitors.
Five years ago, BP set one of the most ambitious targets in the oil sector—vowing to cut oil and gas production by 40% by 2030 while ramping up renewables. That goal was later watered down to a 25% reduction. Now, reports suggest the target will be abandoned altogether, with renewable energy investments slashed by more than half. CEO Murray Auchincloss has described the move as a “fundamental reset,” indicating BP will focus on what it sees as more profitable ventures.
BP’s decision follows similar moves by Shell and Norwegian energy giant Equinor, both of which have scaled back green investments in response to financial pressures. The shift is also in line with broader trends in the industry, as oil-rich nations and companies respond to policies favouring fossil fuels, such as former US President Donald Trump’s pro-drilling stance.
Some investors are welcoming BP’s return to oil and gas, pointing to its financial struggles. Last year, BP’s net income fell to $8.9bn (£7.2bn), a steep drop from $13.8bn the previous year. Over the past five years, BP’s total returns to shareholders—including dividends—have reached 36%, while its rivals Exxon and Shell have delivered 160% and 82%, respectively. These figures have fuelled speculation that BP could become a takeover target or even consider moving its main stock market listing to the US, where energy firms tend to receive higher valuations.
Not all shareholders are on board with the reversal, however. A group of 48 investors, including Royal London Asset Management, has called for BP to hold a vote before making any major changes to its renewables commitments. A spokesperson for the asset management firm said: “As long-term shareholders, we recognise BP’s past efforts toward energy transition but remain concerned about the company’s continued investment in fossil fuel expansion.”
Environmental groups have also criticised the move, warning that BP will face backlash from both campaigners and investors. Greenpeace UK’s senior climate adviser Charlie Kronick said: “BP can expect pushback and challenge at every turn if it doubles down on fossil fuels—not just from green campaigners but from its own shareholders.” He also pointed out that governments will increasingly look to energy firms to fund climate-related disaster recovery, making long-term reliance on fossil fuels a risky strategy.
Sir Ian Cheshire, a veteran business leader with roles at companies such as Barclays and B&Q owner Kingfisher, questioned whether BP’s decision would stand the test of time. “The climate change issue has not gone away, the science hasn’t changed. The overall energy transition is still going to come,” he told BBC Radio 4’s Today programme.
BP has already started making changes behind the scenes, including shifting its offshore wind business into a joint venture with Japanese firm Jera. The company is also looking for a partner to offload part of its solar energy business. Insiders suggest that BP may sell off more non-core assets as part of its strategic overhaul.
More than 20 years ago, BP’s then-CEO Lord John Browne famously rebranded the company as “Beyond Petroleum,” positioning it as a forward-thinking energy firm. Now, as it pivots back towards fossil fuels, some are calling it “Back to Petroleum”—a shift that is likely to delight some investors while dismaying others.
The UK government’s energy policies play a crucial role in shaping corporate decisions, and you can find more details on their latest strategies here.
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