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BP announces new climate strategy, stock prices crash to a 25 year low

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It announced its plans to turn from a oil and gas company to an integrated energy company

British multinational oil and gas company BP’s stock prices crashed to a 25-year low after its chief executive Bernard Looney announced its new climate strategy, media reports said.

Bernard Looney recently announced BP’s plans to turn the company from a predominant oil and gas company to an integrated energy company. He and his new management team gave more than 10 hours of presentations over three days last week, in a bid to show the world that the oil and gas giant could adapt to a low-carbon future without sacrificing returns.

In this regard, Aviva Investors global head of governance Mirza Baig told the media, “Investors remain skeptical, particularly as this move is being forced on the company by climate change.”

“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 recent times, major oil giants across the globe has come under immense scrutiny because of their limited efforts to fight climate change. Also, factors such as depleting global oil prices and the coronavirus pandemic has severely impacted oil companies.

Earlier this month, BP released its annual Energy Outlook report, which states that oil demand may have already peaked in 2019, as the rise in renewable energy intersects with the impact of the coronavirus pandemic.

It is reported that BP sees its return on average capital employed in its large oil trading business at around US$2.5 billion annually.

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