A dispute has arisen between BP and defined benefit BP pensioners. The previous bp CEO rejected a discretionary cost-of-living pension increase proposed by the BP Pension Trustees. Pension campaigners believe the decision is not consistent with a pensions increase policy dating to the early 1990s. They also believe that circumstances of the decision are not consistent with BP’s code of conduct
A pension campaign has been running since April 2023, to try to resolve this and other pensions issues. If BP continues the line of ‘no engagement’ set by it’s previous CEO, the pension campaign will initiate a legal claim.
It seems that the issue boils down to whether a discretionary pension increase – which is permitted under the pension scheme rules – is fair and affordable. One way of trying to resolve the situation is an independent review of the previous BP CEO’s decision on the discretionary pension increase.
It has been reported that BP has appointed Freshfields to conduct an investigation into the previous CEO and the wider BP culture. BP should consider taking this opportunity to include the pensions issue in this independent review.
I see a breakdown in values at BP which has led to a toxic culture, running in quite the opposite direction to ESG.
The behavior of Former CEO Bernard Looney suggests a corporate culture where conflicts were rife and where senior employees behaved with impunity. The FT reports today
Looney accused of promoting BP women with whom he had undisclosed relationships
Behind the headline is a chilling paragraph, suggesting just what the corporate culture at BP has become
Current and former BP employees, particularly those based at its London headquarters, have said that Looney’s history of romantic relationships with colleagues had been quietly discussed by staff for years.
If such behavior was condoned, small wonder BP’s executive thought it could run roughshod over the interests of pensioners.
BP – above all other British companies has a case to prove that it is not toxic to the environment.
If we are to take ESG as a single concept , we must realise that environmental , social and governance issues are linked. While BP does not own its pension scheme, it provides the sponsor’s covenant and the pension scheme is still key to the benefits of its employees.
In doing so , it will lose control of £30bn of assets that could be invested productively for the good of our society and the planet. The pension scheme is – and could continue to be – an offset to the impact of BP’s core activities;
If its trustees carry through their discussions with insurers, BP will have allowed the hand-over of the governance of the assets and the management of liabilities that amount to a third of the market capitalisation of BP itself. It is hard to think of a bigger potential abnegation of responsibility in BP’s history.
We cannot go on with the wholesale destruction of value that results in mighty pension schemes such as BP considering it is “de-risking” by handing over the keys to the pension mechanism.
These “liabilities” are better referred to as the pensions of its current and former employees. The priority BP places on keeping promises to these “stakeholders” is low, as you can see from the text of the Telegraph’s article (thank you Mike Slingsby who is quoted)
William McGrath is right to encourage an “employee revolt” and I will continue to offer the platform of my pension group, to those who campaign for better pensions, better governance and for a better BP management culture.
In the meantime we might ponder with Adrian Boulding how different things would be if BP operated a CDC scheme
— Henry Tapper (@henryhtapper) October 2, 2023