BP and Shell divestments offset by major shareholders increasing stake
Despite dozens of investors parting ways with oil giants BP and Shell in recent months, their divestments have little impact on the two oil giants.
Any divestment from BP and Shell by investors is cancelled out by their top 20 shareholders increasing their stakes in oil and gas firms. Since signing the Paris Agreement, the top 20 shareholders in both firms have increased their total number of shares by three quarters of a billion in BP, and half a billion in Shell.
A new report that was shared with Net Zero Investor this morning, which focused on the impact of growing demands made upon shareholders to divest from fossil fuels, found that although 47% of BP shareholders and 54% of Shell shareholders have reduced their stake in Shell and BP, net share ownership has risen by 10% in both BP and Shell.
Moreover, what might look like divestment "can not always be read as such," the researchers said.
A quarter of the 20 investors who made the most significant reductions in shareholdings in either BP or Shell increased their shares in the other company, the Centre for Climate Crime and Climate Justice at Queen Mary University of London, and Corporate Watch examined.
Any trend towards divestment amongst the 47% and 54% of BP and Shell shareholders is being cancelled out by the largest shareholders, who include some of the world’s largest asset managers.
60 institutional investors have sold all their shares in the two oil firms, the researchers said. This represents 3% of BP and 4% of Shell shareholders.
Professor David Whyte, who is the director of the Centre for Climate Crime and Climate Justice, Queen Mary University of London, said that "the enormous increase in both market capitalisation and share price for the two oil giants since the Paris Agreement reaffirms the conclusion that divestment campaigns are not having the necessary impact."
He added: “It is clear that the level of divestment needed to mitigate global warming will not be achieved by simply transferring the ownership of shares, unless those shares are acquired by organisations that will keep the fossil fuels in the ground."
The report provides data of the largest 20 divestors by number of shares for BP and Shell, respectively, revealing five of BP’s biggest divestors have increased their shareholding in Shell, and seven of Shell’s biggest divestors have increased their shareholding in BP.
“On this basis, divestment is not divestment at all: it is reinvestment” Whyte argued.