OPINION: This year’s annual general meeting season for the major oil companies is proving a testing time for the industry.

Climate concerns have shot up the agenda and an AGM is one very public event when activist shareholders can challenge the board — and grab media attention.

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BP chief executive Bernard Looney might have expected to win some plaudits for more details on his bold energy transition strategy last week.

Instead, it seems that each step down the path to change is being met with heightened expectations from critics.

Activist investors are being driven by growing public knowledge and concern about global warming.

This in turn is putting pressure on pension funds and other financial investors to show they are either pushing oil companies for large-scale change or that they are divesting.

The BP board easily defeated a demand from Dutch shareholder group Follow This for a quicker transition.

The argument against the oil company’s strategy was that it was not yet fully consistent with the Paris climate agreement goals, even though BP claims otherwise.

The oil company received strong backing from a majority of investors but over 20% of them voted for Follow This.

That is up from 8% on a similar demand in 2019 and is enough to ensure that BP must discuss shareholder concerns with them to meet UK corporate governance rules.

Looney last year pledged to make BP a net-zero emission business by 2050.

He promised oil and gas output would be reduced by 40% by the end of this decade and there would be a massive increase in renewable power investment.

“Going back to the drawing board on strategy, targets and aims would disrupt our business plans and set us back at the very time shareholders are asking us to focus on execution,” said BP.

But Follow This argues that carbon emissions will still grow in the coming years, while BP’s customer-derived carbon dioxide output remains unclearly reported.

Calpers — the huge US pension fund that currently chairs the Climate Action 100+ (CA100+) group of investors — drew a lot of criticism from some of its fellow shareholders for voting with BP.

The calculations from CA100+ suggest BP only partially meets the Paris climate targets.

Shell — another supermajor leader in the energy transition field — was also under fire in the run up to its AGM, held on 18 May.

Follow This called on the Anglo-Dutch group to set “inspirational” targets to reduce greenhouse gas output aligned with Paris.

The influential Pensions & Investment Research Consultants (PIRC) — an adviser to big investors — recommended supporting the Follow This resolution, saying Shell “does not seem to have a clear plan for the competitive aspects of the energy transition".

At its AGM on Tuesday, Shell won nearly 89% of investors' support for its own energy transition plan.

But more than 30% supported the Follow This proposal – higher than the 14.4% support for a similar measure last year.

Like BP, Shell insists its ambitions are “completely consistent and compatible with the Paris agreement”.

Credit agency Fitch Ratings has argued that Shell and BP are best placed to benefit out of the European oil majors from transition.

Meanwhile, Shell is already facing legal action from Friends of the Earth, which has claimed the oil giant is failing in a duty of care to citizens.

There are gathering court actions of this kind on both sides of the Atlantic.

Strategies for change at BP and Shell still require refinement, while many others in the industry need to start planning fast.

The AGM season is hotter than ever but this may well just be the warm-up round.

(This is an Upstream opinion article.)