BP's 'Green Energy' Blue Sky Is Falling

Last month the activist investor group Bluebell Capital challenged oil and gas producer BP to walk away from its net-zero commitments which had been made several years ago by BP’s former, now fired chief executive, Bernard Looney. Increasingly controversial for many reasons, “net-zero” and its inextricable connection to the environmental, social and governance (ESG) scheme creates an obvious conflict of interest for BP’s board and its investors to whom the board is responsible. Bound by a fiduciary obligation to maximize shareholder value, BP’s focus on net-zero commitments and ESG considerations bifurcates its focus into financial considerations and ideological ones, thus creating a potential legal hazard for board members. As Bluebell rightly recognizes, BP seems to have embraced the ideologically-inspired net-zero narrative with no consideration of the market implications. Bluebell’s challenge highlights BP’s diminished market performance, compared to its peers in recent years.

Giuseppe Bivona, a Bluebell partner and co-chief investment officer, pointed out that BP’s depressed share price, relative to its U.S. and European competitors, has been “totally underwhelming” in recent years, and suggested that BP should now consider deploying capital in a “rational way.” He goes on to explain that BP presumed “…a drastic decline in oil and gas demand, which we [Bluebell] consider to be utterly unrealistic.”

The triumph of hope over experience.

But Bivona’s own understanding of the variables affecting BP’s net-zero strategy may also be unrealistic. Like trying to separate the performance of a Triple Crown contender from its jockey, Bivona, seems not to have a full understanding of how BP got here. Like his peers, he seems to accept the premise of a "climate catastrophe," while simultaneously asserting that the board-supported and -promoted net-zero commitments must go. He fails to realize that one begets the other —who did Bovina imagine would “fund” the board’s move away from its profitable core business, oil and gas production, in favor of an ideological wild goose chase? The answer is investors like Bluebell through diminished returns, of course.

In August 2020, BP announced that by 2030, it would integrate 50 gigawatts of renewable energy production including energy from wind, solar and hydro-power into its portfolio, and would reduce their oil and gas production by twenty-five percent compared to 2019 levels. At the time, European oil producers were being pressured by green activist investors, banks, and even some governments to shift away from fossil fuel production. But even back then it was understood that green energy margins were practically speaking, too small. Few CEOs, including BP’s had the objectivity to ask the obvious questions about the practical revenue implications of such an ideological path.

Three and a half years later, driven by failed economics, and a new understanding of the harm the sonar siting process causes whales and dolphins—86 on and off-shore wind projects have been canceled in the U.S. in 2023, BP’s ideologically-inspired green initiatives now seem likewise to be dragging down its core oil and gas business.

But the conflict between the net-zero commitments and the under-performance of BP fundamentally and fatally begins and ends with BP ‘s membership in the World Economic Forum (WEF). An activist organization, underpinned by Marxist ideology, the WEF advocates for a single global government resulting in their control of every aspect of the economy and society, particularly energy and food production. With control of both sectors comes control of entire economies and societies.

All hail the New World Order!

The WEF’s decades’ long effort began with the development of the ESG construct . A necessary first step toward directing capital toward industries and technologies from which WEF members could financially benefit, the ESG framework was cunningly designed to catalyze that process. It was achieved by the investment banks dictating to which industry sectors and companies capital would be accessible and which would be starved of vital capital.

The net-zero narrative was the “pitch” and ESG was the path. By using the contrived concept of reducing carbon emissions, the WEF had a mechanism and willing conspirators to circumvent investors and by scale, market sentiment, making the WEF and its members arbiters of the permissible. But this created an array of market distortions. Bovina knows something is awry but struggles to understand how BP’s ESG efforts are connected to its WEF membership and poor returns.

The impact of net-zero commitments doesn’t stop with fossil fuel producers, however. WEF policies have led to multiple destructive outcomes. Their policy prescriptions led to the overthrow of the Sri Lankan Prime Minister, Ranil Wickremesinghe in March 2022 for his role in the destruction of Sri Lanka’s economy, leading to extreme food shortages.

In a 2018 WEF article that was removed from the WEF website during the 2022 protests, Wickremesinghe wrote about the country’s economic policy, “Vision 2025." In 2018 he wrote, "[the plan] is firmly embedded in several principles, including a social market economy that delivers economic dividends to all.” The article's removal reveals that the WEF sought to bury the impact of its own destructive Marxist policies. The article was ultimately recovered via the Wayback Machine and unequivocally demonstrates the direct reach the WEF has into industries, companies, and even governments.

More recently there have been similarly destructive policy prescriptions proposed by European Union officials-- all of them advocates or members of the WEF. Those efforts have led to unprecedented protests by farmers across many European countries. The WEF policies seek to increase taxes and regulations intended to drive farmers out of business, thus creating dependence on WEF globalists for European food production.

The Germans say nein.

To be a member of the WEF, BP necessarily had to actively ignore the fiduciary obligation it has to investors as it aligns itself with activists instead of its investors. BP is a paying member of club whose central purpose is antithetical to BP’s core business function.

In an article published in February 2023, WEF confirms, “... other fossil fuels, namely oil and gas, must be phased out more rapidly to compensate for coal’s slower exit. This would shift responsibility for mitigating climate change towards developed countries... In all countries, oil and gas production must fall … rather than increasing as most countries plan.” 

If Bluebell Capital wants to succeed in refocusing the BP board on its core business of oil and gas production, Bovina should start by having the BP board resign its WEF membership, and remove its rose-colored ESG glasses. If not, it will fail to notice that the net-zero blue sky actually is falling.