Can BP calm climate critics?
ThE rows in the arts world about BP’s sponsorship of the British Museum and the royal Shakespeare Company aren’t just a question of luvvies grandstanding – it should make shareholders in the oil giant stop and think.
Actor and director Mark rylance stepped down from the rSC last month over its relationship with BP, while novelist Ahdaf Soueif resigned from the British Museum partly over its financial support from the oil major.
Both object to BP bathing itself in the warm glow of culture, history and the creative riches of Shakespeare at a time when they blame the company for being complicit in the destruction of the planet.
it is a blow to the corporate image so carefully cultivated by former boss Lord Browne, an art lover and renaissance man.
Bob Dudley, BP’s chief executive, says he views the protests against arts sponsorship as ‘odd’ and claims the company’s view on climate change is closer to that of the protesters than they think.
Maybe he is right, but whether he can persuade the world of that is another matter.
BP has been through a lot since its predecessor, the Anglo Persian Oil Company, was set up in 1908. it will no doubt survive odium from actors, writers and artists.
But investors – i have a small number of BP shares myself – need to take notice. Concerns over climate change are having a real impact on investment. A case in point is Cambridge University, where a number of successful money managers running the £3.3billion endowment fund quit a few months ago after criticism from students over holdings in oil and gas.
For the moment, however, BP is attracting a huge amount of interest from small shareholders. Broker AJ Bell tells me it was the most purchased stock in the past week and the sixth most bought in the past month, probably thanks to its 6pc yield.
that is attractive at a time when rates on savings accounts are vanishingly small.
the firm, which presents half-year results this week, is finally putting the recovery from the Gulf of Mexico catastrophe in 2010 behind it and getting back to growth.
Dudley is back on the deal trail. he took advantage of gushing profits last autumn to buy $10.5billion of shale assets from BhP, in the company’s largest deal for 20 years. Not only is shale controversial with the environmental lobby, the purchase is also a huge bet that BP can do better with the acreage than BhP, which struggled.
Dudley also embarked on a sugar cane ethanol venture in Brazil this month with Bunge, the American agricultural trader. the business will have 11 biofuel mills producing sugar and ethanol, which can be used as a greener alternative to petrol.
however, there is still some debate about how harmful it is to the environment.
there is likely to be more information this week about green projects and greenhouse gas emission management.
the shares have fallen around 7.5pc in the past 12 months. they would benefit from a surge in the oil price, but the stand- off between the UK and US with iran has not offered as much support to crude as might have been thought due to the relatively weak fundamentals of the market.
Longer term, like other oil majors, BP is reshaping by scaling down conventional oil assets and moving into cleaner energy projects that will pay off in the future.
that is easier said than done, as it is not clear which technologies will come good and which will prove expensive failures.
transforming the company and placating critics is a tall order, but if Dudley fails to convince them he is serious about climate change, then there is more trouble ahead.