BP Shareholders Vote No on Oil Sands Transparency

BP Shareholders Vote No on Oil Sands Transparency

Oil sands protester - http://www.flickr.com/photos/jonathanmcintosh/ / CC BY-SA 2.0

BP shareholders rejected a resolution to report on the financial, environmental and social risks related to the company's involvement in Canadian oil sands drilling at the oil giant's annual general meeting in London yesterday.

Six percent of investors voted in favor of the resolution, while 9 percent abstained and more than 85 percent voted against it.

The BP resolution would have required the company to commission and review reports that explain the assumptions made about future carbon prices, oil price volatility, oil demand, anticipated greenhouse gas regulation, and legal and reputational risks associated with the project at the time that they decided to invest in the Canadian oil sands.

Investors for Shell, ConocoPhillips and ExxonMobil plan to file similar resolutions regarding those companies' investments in oil sands projects. The efforts are being coordinated by FairPensions UK and Green Century Capital Management.

BP Chairman Carl-Henric Svanberg said the rejection of the resolution did not mean that it was a bad idea, according to United Press International. He was quoted as saying, "It only means that we think the concerns raised are in hand."

Supporters of the resolution also see the actual vote on it as a small success. “Shareholder resolutions are primarily a means to draw attention to an issue of concern to investors. The vote...is only one outcome of a wider process, which has catapulted tar sands risks to the top of BP’s agenda," Catherine Howarth, CEO of FairPensions, said in a statement. "The task for investors now
is to make the most of the disclosures made to date, and continue to robustly engage with BP into the future."

In its recently-released Sustainability Review 2009 (PDF), BP explained its decision to invest in the oil sands. Since the Canadian oil sands are the second-largest oil resource in the world, after Saudi Arabia, BP says that it is a "significant and stable source of oil supply to enhance energy security and diversity, particularly for North America."

But, greenhouse gas emissions related to oil sands projects are higher than the average of other conventional oil sources. While BP estimates the emissions to be 5-15 percent higher, others, including the Pembina Institute, an environmental think tank, estimate oil sands emissions are up to 40 percent higher.

Other concerns that have been raised about oil sands projects include deforestation, water use and toxic waste creation.

BP says that it will forego mining techniques in favor of a drilling method called steam assisted gravity drainage that it says is less environmentally destructive. In the Sustainability Review, BP addresses other points, disclosing that 90 percent of the water it uses for steam generation will be continuously recycled, while water that can't be recycled will be stored permanently into underground aquifers.

BP was recently ranked as the most sustainable big oil company by Two Tomorrows, which gave it a score of 59 percent out of 100. BP was also one of three companies to leave the U.S. Climate Action Partnership this year, but maintained that it was leaving only to change its approach to U.S. climate policy, not its stance on climate change.

Oil sands protester - http://www.flickr.com/photos/jonathanmcintosh/ / CC BY-SA 2.0