Outcome: Omitted by SEC
Resolution on developing an ethical investment policy to the BP Amoco p.l.c 2001 AGM.
RESOLVED that shareholders request the Board of Directors undertake the following action for BP Amoco.
(1) Develop a workable set of policy commitments, consistent with the company’s current ethical policy to apply to strategic investments and make these available to shareholders.
(2) Apply these to all future investments
(3) Demonstrate a firm commitment to engage with the board of companies in which BP has strategic investments, such as PetroChina to promote the implementation of standards consistent with BP’s own
(4) Make regular reports, prepared at reasonable cost and omitting proprietary information, available to shareholders on the progress made in pursuing this policy
The Case for the Resolution
BP Amoco Shareholders believe that the company’s social and environmental policies for its direct operations and joint ventures are a highly valuable asset to the company. Through these the company has a good record for corporate responsibility, which has ensured BP’s reputation as an industry leader on these issues. This image, as drawn upon in the company’s new branding has been vital in building a strong and visible identity for the company and in realising long-term shareholder value.
Shareholders are however concerned about the absence of a similar ethical policy for BP’s strategic investments. Unethical conduct, inconsistent with BP’s own policy statements, by companies in which BP invests, threatens to tarnish the image of BP as an investor in and benefactor from those operations. As such, and in order to maintain the company’s reputation for acting with integrity we feel that it is in BP’s long term interest to develop and apply an ethical policy towards its strategic investments as it has for its own operations and joint ventures.
An example of where this might be the case is the company’s investment in PetroChina. This $578m investment was made in March 2000. PetroChina company is associated with human rights concerns in Tibet and East Turkestan. It is feared that gas development and pipeline projects being undertaken by PetroChina in Tibet and East Turkestan will pose serious threats to Tibetan and Uyghur cultures and environments. No known environmental or social impact assessments have been carried out for these projects and the environmental record of existing energy and mineral developments in the area is very poor. Both will facilitate population transfer of ethnic Chinese into the development region and it is feared this will contribute further to the religious and political oppression of these cultures by Chinese Authorities.
In addition, the parent company of PetroChina, China National Petroleum Corporation (CNPC) has been implicated in serious human rights violations in Sudan. Although legally separate companies, PetroChina and CNPC are financially linked. CNPC retains majority ownership and control of PetroChina and as such retains 90% of PetroChina’s profits.
Association with issues such as these, without a demonstrable policy commitment to positively influence them, will prove extremely damaging for the reputation of BP-Amoco and could potentially seriously damage long-term profitability. On the other hand, a set of clear criteria for assessment of strategic investments and policy of engaging with the boards of companies in which BP invests would be extremely beneficial. Such a policy will show that BP is actively and consistently pursuing its ethical policy principles throughout its business activities. This will help to ensure that BP-Amoco continues to lead the industry on these issues.