The stock price of BP fell to the lowest since 1995 a week after the launch of the company’s climate plan that would see it turn from a predominantly oil and gas company to what chief executive Bernard Looney calls an integrated energy company.
Save for a sharp dip in late March, when BP’s shares dropped to $17.39 apiece as the pandemic crushed oil prices, the stock was doing well until about mid-August, when it started declining steadily, to reach $17.93 apiece at the time of writing.
“Investors remain skeptical, particularly as this move is being forced on the company by climate change,” Aviva Investors global head of governance Mirza Baig told Bloomberg.
The skepticism seems to linger despite a marathon of presentations BP went on last week, aiming to answer all questions regarding its reinvention.
“BP’s challenge lies in the building up of its skillset in renewable energy solutions and a competitive advantage in its chosen areas that allows investors to believe they can deliver attractive financial returns from the capital allocated,” Baig added in his comments to Bloomberg.
Some believe the reinvention strategy is nothing but greenwashing: a recent report by an anti-oil advocacy group argued none of the supermajors have ambitious enough goals to tackle climate change and their commitments were, overall, grossly insufficient to meet the Paris Agreement emissions targets.
Others worry that BP would be unable to replace oil and gas revenues with revenues from renewable energy, where competition is already intense as it is in the utility industry.
The supermajor plans to increase investments in low-carbon businesses to $5 billion annually as part of its transition, stop oil and gas exploration in new countries and reduce oil and gas production by 40 percent by 2030. It also plans divestitures of assets that are currently stranded because of low oil prices, even if prices rebound.