We were pleased to represent all of our co-filers at this gathering of all the interested parties, discussing developments from the process so far, and how to move the project on, engaging grass roots supporters, investors and institutions.

A very wide range of people were brought together in this project, including: Platform, Greenpeace, WWF, Amnesty, ClientEarth, PIRC, LAPF, Union Pension Fund, USS, and the organisations represented by the board of trustees of FairPensions:

James Marriott – Platform
James gave an overview of the exposure of RDS and BP in the Tar Sands. This centred around the effect on pension fund returns of the long-term reserves replacement ratio, one of the key reasons why these companies have been so valuable for long-term investors.

The risks are, by now, well known to most parties. The clear environmental damage being wrought, coupled with the water pollution and impacts on First Nations communities are widely documented. But the major framing issue must be climate change. BP's own operations are responsible for 5% of global carbon emissions, roughly twice that of the whole UK. The size of the area to be developed is the land area of the UK – can this realistically be remediated to the highest standard?

The recent hiatus in oil sands development afforded NGOs the opportunity of engaging the industry concerning the long-term economics of the projects, which appear shaky on many calculations. BP has yet to make a long-term commitment to the Husky project, and Shell has announced a slowing down of the development of the in-situ phase of its developments.
The risks are as great now as they have ever been. The resolutions focus on the economics of the project, but this does not mean that the group is unaware of the wider risks of example the increased cancer rates allegedly being suffered in first nations communities. This was discussed in some detail, but centres around some disputed sources, not included in case the company attempted to pick holes in the arguments.

Cooperative Asset Management
The Co-op perform ESG risk assessment to identify areas of advantage and risk for customers. This has led to their work on the oil sands, among other important engagement themes. For example, the Co-op aims to promote involvement in the Carbon Disclosure Project (CDP), and may consider voting against the report and accounts of a company not yet reporting to the CDP. It sees such moves not as rebellions, but as utilising legitimate engagement channels, something which is much more readily recognised in the US. Looking at the progressive record of shareholder resolutions in the UK, the level of voting has been slowly increasing. The latest resolution at M&S showed an unprecedented result, but still 60% of shareholders were unprepared to vote against management even where the issue was relatively clear cut (regarding best practice in corporate governance).

The rest of Co-op is working on oil sands, trying to draw attention to it as a model of unsustainable development. They remain committed to push for mandatory emissions disclosure in UK companies. They are also supporting the Beaver Lake Cree in their legal action. In terms of the climate change positions, some estimations show the world to be at 430ppm of carbon dioxide in the atmosphere, with the ceiling being 450ppm as identified by the IPCC. If fully exploited, oil sands will contribute 9-12ppm, roughly half of the remaining leeway that the entire world has to ‘play’ with as it seeks a low-carbon development pathway.

Louise Rouse – The filing process
FairPensions haven't been engaged with this kind of action before and were keen to explore how their networks could be used to align like-minded parties in complementary engagement. Rathbone Greenbank Investments were mentioned and specifically thanked for their expertise and time.

The resolutions were necessarily business case focussed. In order to open up discussion to a wider amount of shareholders, the resolutions took a position which some in the environmental community may characterise as ‘uncomfortable compromise’. The resolution would have been very different if it had been worded just to gain publicity. Instead, it is aimed at engaging a wider investor base on the very real issues faced with developing the oil sands.

Support for the resolutions among larger institutions was harder to drum up than with individuals. Whilst some were open to the idea thanks to the persistence of big clients, many still felt such a step to be too confrontational. Taking a constructive approach with the company and in meetings also adds to the wider effect of the resolution, perhaps ‘de-demonising’ the responsible shareholder.

The process itself is highly complex and detailed. FairPensions, having worked on this, plans to produce short guides for pension funds and charities on the process, to contribute to wider awareness. It is clear that many shareholders are unaware of how they actually hold their shares, and the many layers of complexity encountered give a window into the difficulties suffered in the financial crisis. FairPensions will be engaging with regulators to make the case that the relevant sections of the companies act are poorly drafted.

Phase two - campaign objectives
There was some discussion of what level of voting would constitute success for the project, or whether success is determined by the specifics of the 'ask' in the resolutions. The resolution should be seen as a catalyst for serious campaigning on the issue, bringing in all kinds of social networks, media, NGOs, local groups.

For more information on Rathbone Greenbank Investments' involvement in this project, please contact Matt Crossman (matt.crossman@rathbones.com).