Shareholder group calls on BP to rethink oil sands project

Published on Sunday 7 February 2010 20:57

OIL giant BP is facing calls by a shareholder group to review its plans to invest in major oil sands projects in Canada.

FairPensions, which lobbies for companies to adopt "responsible investment practices", has filed a resolution it hopes will be voted on at BP's general meeting in April.

The resolution calls for the risk and audit committees at Europe's second largest oil explorer to review factors such as future carbon prices, potential regulation of greenhouse gas emissions and possible risks to its reputation it might face from investing in oil sands projects.

BP, which had until recently played down the importance of oil sands, is poised to take part in a joint venture with Husky Energy called the Sunrise Project.

Announced in 2007, Sunrise would extract crude from the Athabasca oil sands in Alberta.

Tar sands projects have proved highly controversial because of the impact on the environment.

The process involves removing crude from sand soaked in oil. Environmental campaigners claim the projects have three times as high an impact on the environment as conventional oil recovery.

BP has played down the impact of the project. Last week's chief executive Tony Hayward said BP was not "mining" oil sands, but was using "steam-assisted gravity drainage" which he claimed was "more akin" to conventional reservoir engineering.

It is unclear how much of BP's shareholder base support the campaign so far, however, FairPensions claim its is backed by Co-operative Asset Management, CCLA Asset Management and the Unison Staff Pension Scheme.

While shareholder resolutions are usually non-binding, campaigning groups increasingly use them to raise the profile of their cause. In 2008 Hugh Fearnley-Whittingstall, the celebrity chef, used a resolution to campaign for better treatment of chickens by supermarket giant Tesco.

Some shareholders are also increasingly taking into account the actions of companies in their portfolios when investing.

Last week, the Church of England announced that it had sold its stake in mining company Vedanta Resources, over failure of the FTSE-100 company to reassure it about the impact of a controversial aluminium project in India.