The Scottish Mail on Sunday
Dirty truth that taints BP chief’s green new leaf
Boss’s Instagram posts claim energy giant is turning over a bright new leaf – but failings at its Russian oil partner have left a black stain
OIL giant BP’s plans to go green will be undermined by its Russian partner Rosneft’s poor record on the environment and human rights, major shareholder groups have warned.
Since his appointment last week, new boss Bernard Looney has posted pictures on Instagram of the company’s electric car charging points and spoken of how seriously he takes the ‘climate crisis’.
On Wednesday, he is expected to set out plans for a substantial shift to green energy at a presentation to the City.
BP is keen to keep its $15.7 billion stake in Russian state-controlled Rosneft in the seismic transition to a low-carbon business – not least because it says the shareholding underpins 10 per cent of BP’s own dividend payouts. But research by The Mail on Sunday has uncovered a series of damaging human rights and environmental failAchinsk ings at Rosneft which experts said last night will increase the pressure on BP to offload its stake.
On human rights, using the respected Corporate Human Rights Benchmark (CHRB) ratings system – which tracks the activities of 200 major global companies including blue-chip British firms such as Unilever and Marks & Spencer – BP scored 53.9 out of 100 overall.
Rival firm Shell scored 57.1 and Glencore, a miner which is under investigation for bribery, came in at 46.1. However, Rosneft managed an overall score of just 32.7. Worse still it was one of 95 global companies that scored zero for human rights ‘due diligence’ which includes managing the risks and keeping track of potential incidents. BP scored 70.
The CHRB report said Rosneft reported 18 fatalities in 2018. In 2014, two of its engineers were jailed in connection with an explosion at the oil refinery in Eastern Siberia which killed eight people. Poor pipeline operation safety was blamed. Rosneft’s poor performance has prompted a coalition of US investors called the Investor Alliance for Human Rights to write to Rosneft’s board, which includes former BP boss Bob Dudley, to urge them to ‘do better’.
BP is also under fire from Greenpeace, which protested outside the company’s St James’s HQ in Central London on Looney’s first day as boss last week.
It said Rosneft was responsible for 4,253 oil spills from their pipelines in 2018 – more than half of all oil pipeline spills in Russia for that year.
A Greenpeace spokesman said: ‘BP’s work in Russia in connection with Rosneft undermines their work on climate change. It shows their focus remains on increasing oil production around the world.’
Joe Brooks, of investor pressure group ShareAction, added: ‘Bernard Looney will have to reconcile continued exploration and production of oil and gas with a commitment to prove that BP’s strategy is aligned with the Paris climate goals.
‘The future of BP’s stake in Rosneft should come into question.’
The Mail on Sunday revealed last weekend that pressure was mounting on BP to ditch its 19.75 per cent Rosneft stake to keep paying its bumper dividend, which is the third highest in the FTSE 100.
Analysts warned that shifting to a more climatefriendly business model could hurt profits. They suggested that cashing in on Rosneft would help to smooth the transition without hammering shareholders.
Dutch shareholder action group Follow This, which represents more than 5,300 shareholders in oil firms, filed a resolution to BP last November calling on it to include so-called Scope 3 emissions – those coming from the fuel it sells to customers – in its carbon reduction targets. BP has previously resisted this move – despite major shareholder M&G Investments voting for the resolution at last year’s AGM. But rival oil majors Equinor, Shell, Total and Repsol have adopted Scope 3 emissions targets, and Looney is expected to follow suit when he sets out his low-carbon strategy this week. BP became a shareholder in Rosneft through a 2013 deal led by former chief executive Bob Dudley. At the time BP was still reeling from the Deepwater Horizon disaster in the Gulf of Mexico and the move stabilised the firm. But a former adviser to Rosneft, who asked to remain anonymous, said BP has ‘no leverage’ over Rosneft or its chief executive, Igor Sechin. The only way BP can generate better returns from Rosneft, the source claimed, is by investing ‘additional billions’ in joint ventures.
When Dudley ran the firm’s previous Russian venture TNK-BP, relations with his Russian partners broke down and he was forced to flee Moscow after suffering ‘sustained harassment’. The source added: ‘If Russia’s relations with Britain were better, BP could get much better deals. Meanwhile, better deals will go to China and India.’
Last week, Dudley defended BP’s interest in Rosneft as he bowed out as chief executive after a decade.
Rosneft, which is listed on the main market of the London Stock Exchange, last week put out a statement saying its human rights rating recognised the firm as ‘the best among other Russian producers’.