In an open letter to BP Board Chair Helge Lund, BP interim CEO Murray Auchincloss and BP Pension Trustees Chair Brendan Nelson. Alex Kent – a BP pensioner writes
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.
As William McGrath is arguing, it’s time for employees and it’s time for corporates to treat pensions as the flagship of their ESG.
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.
But BP is now looking to banish its pension scheme to the balance sheet of an insurer.
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
Interesting nuance on the debate @AdrianBoulding https://t.co/d8E3TSpscQ
— Henry Tapper (@henryhtapper) October 2, 2023
In these instances, always track / follow the incentives in the remuneration report for the execs. Shareholders / stakeholders should insist on ESG to include treating former workers with dignity and fairness given the obvious affordability in this instance.
Sadly the caring side of BP’s senior management was slowly eroded from the mid 1990s onwards. The last half of my working life with BP was blighted as various staff perks were lost when BP absorbed various USA oil companies (might not have been the sole reason). Now, having been pushed into retirement due to redundancy a while ago (and yes, the redundancy payment did boost my “Pension Fund”) my retirement is being blighted! We can only hope that BP will “see the light” and again become a beacon of sound, caring management both for current staff and those who laboured for it over the years!
If you’re affected by this you should join here. https://bppensionergroup.org/
Robin, I am interested to read your comments : our paths crossed in the mid 1990s for several years ……. at Trustee Board level. Do I detect a level resentment on your behalf because you feel you lost some staff perks: do I also detect some sense of resentment / entitlement when you say you were pushed into retirement due to redundancy and your retirement is blighted – what are you moaning about ? The majority of folk who worked for this company, including me, were fortunate enough to have had amazing careers with them – we were hardworking and made a positive contribution – we have also never complained since leaving, whether due to retirement/redundancy or both. Apart from you, I worked with some truly amazing people; together we achieved and delivered positivity for this company – what ever your problem is, hopefully you found “a place to be happy now” in Dorchester and St Albans can finally breath a sigh of relief