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Governance report 2020

Each year the board reports on the governance of the company and the work of the committees. The governance report is published as part of the Annual Report and Accounts. You can download the full report or extracts from this page.
2020 tested bp’s governance processes like no other year. Board members, like many colleagues across bp, have achieved and learned a lot together through our new way of working – and there’s much that we will continue. I am grateful for the flexibility, commitment and clear-sightedness of my board colleagues in 2020 – it bodes well for the years ahead.Helge Lund,chairman

New strategy

As a board, our responsibilities include determining bp’s purpose and strategy, monitoring its culture and seeking assurance that these are aligned with our values. For bp, 2020 was a year in which we felt this responsibility especially keenly. With the board’s support, bp adopted a new purpose – reimagining energy for people and our planet, which aligns bp’s capabilities and aspirations with the needs of society.

 

2020 was also the year bp’s new CEO, Bernard Looney, commenced his role. As well as formally launching our new purpose, Bernard set out a net zero ambition, new strategy, financial frame and investor proposition. These actions were taken with the full support of the board following a process of careful debate, and the board is confident that they respect bp’s culture and values.

 

The change that was immediately most consequential for many people within bp was a restructure that will see close to 10,000 colleagues leave bp. It was difficult saying goodbye to people who helped make our organization what it is today – and the board was united with the leadership team in determining that the process should be conducted fairly and respectfully.

 

That process is now largely complete, and I believe, as does the board, that bp is now leaner, flatter and nimbler – better able to fulfil our new purpose, ambition and strategy.

 

COVID impact on working of the board

Change on this scale would be challenging in any company at any time. So, I want to pay tribute to my board colleagues for their contribution during such a difficult period. It is to their credit that we very quickly adapted to a new way of working together – with our many meetings since March held entirely virtually.

 

Indeed, the COVID-19 pandemic justified more regular meetings with bp’s leadership – so early in the pandemic we instituted weekly calls to keep abreast of bp’s response to the pandemic and how the team was taking account of the needs and expectations of all our stakeholders.

 

Maintaining bp’s culture

Since joining bp, I have always been impressed at the strength of the company’s culture – open, co-operative, collaborative and performance-focused. Rather than weaken that culture, I believe that the pandemic has strengthened it further – and has proved its value. bp would not have achieved all it did in 2020 without such a strong culture. We have been careful that the changes introduced throughout the year are respectful of it, and consistent with bp’s values of safety, respect, excellence, courage and one team.

 

Board composition

In 2020 we welcomed Tushar Morzaria, Karen Richardson and Johannes Teyssen to the board. They each have skills, experience and a diverse mindset that is closely aligned to the strategic direction we have set for bp.

 

We also said goodbye to friends who have served bp with distinction over many years – Nils Andersen, Brian Gilvary, Sir Ian Davis, Dame Alison Carnwath and, of course, Bob Dudley. bp has been fortunate to have them, and we will miss them.

 

I was delighted that Paula Reynolds agreed to take over from Sir Ian Davis as senior independent director following the AGM 2020, and that Melody Meyer was able to take over the important role of chairing the safety and sustainability committee after Nils Andersen stepped down from the board. Tushar Morzaria will take over as chair of the audit committee after the AGM in May, following an extensive handover from Brendan Nelson, who will then retire.

 

In the coming year, one of my priorities will be to ensure that the board remains at an appropriate size, with strong composition, and with diversity of both thought and skills in support of the strategic direction we have set.

 

Diversity

The process of reinventing bp provided opportunities to enhance bp’s diversity in other ways, too. Though we have more to do in all areas, we have made particular progress on gender diversity at senior levels. In 2020, we increased female board representation from 42% to 45%; increased female executive committee representation from 15% to 31%; and met the Hampton-Alexander and Parker review targets for 2021.

 

New governance framework

To complement bp’s new strategic direction, we have introduced a new governance framework, covering bp’s board-level corporate governance and facilitating a stronger board focus on strategy, performance, people and governance, with the committees each playing a critical role in support. The emphasis on strategy and its execution is especially important – I believe it to be where the board can deliver most value at this time, encouraging and working closely with the leadership team as they drive forward our strategic progress, safety, financial and operational performance.

 

The governance framework redefines the committees’ roles. Our newly-titled safety and sustainability committee rightly gains an enhanced focus on sustainability, but with no let-up on our core and over-riding priority – safety, while our people and governance committee gains an enhanced focus on our single most important asset – our people. These committees and the insights they provide to the board very much support its effectiveness.

 

Conclusion

2020 tested bp’s governance processes like no other year. Board members, like many colleagues across bp, have achieved and learned a lot together through our new way of working – and there’s much that we will continue. I am grateful for the flexibility, commitment and clear-sightedness of my board colleagues in 2020 – it bodes well for the years ahead.

 

Helge Lund

 

Chairman