It has been a privilege to lead BP’s board for the past year, especially given the important decisions we have taken together. BP now begins the new decade with a new direction. Our new purpose, to reimagine energy for people and our planet, is supported by a new ambition - for BP to get to net zero by 2050 or sooner, and to help the world get to net zero too. And we have appointed a new chief executive officer, Bernard Looney, who under the board’s oversight, will lead BP in achieving both its purpose and its ambition.
BP’s board has been deeply involved in each of these changes. It is the board’s responsibility to define and set the company’s purpose, its values and its strategy, and to be assured that these are aligned with BP’s culture. Our strategy and evolving portfolio have been discussed with the management team at every board meeting in 2019. Our new purpose is the result of a period of careful development and wide debate with the management team and also reflects the valuable feedback we have received from a number of our stakeholders, both inside and outside of BP.
During the year, the board, through its nomination and governance committee, took equal care in its executive succession planning, including in our appointment of a successor to Bob Dudley. When we began that planning in earnest in autumn 2018, we knew that Bob’s many achievements in the role set a high bar for his eventual successor. That was reflected in the time we took to define the qualities we were looking for in the new leadership of BP at a time of considerable change. A year on, we were delighted to welcome Bernard Looney to the role. He is both capable, performance oriented and deeply aware of the importance that we attach to working in close dialogue with BPs stakeholders.
The board itself is an important component of BP’s leadership. The most effective boards – and the most effective board meetings – are inclusive, collaborative, open and transparent. During 2019, I was pleased with the support I received from my colleagues on the board as we fostered an atmosphere with the management team in which those standards are clearly exhibited.
These improvements have gone in-hand with improvements to the board’s efficiency and productivity. We have strengthened how we manage the board’s meeting agenda, the materials developed for the board and the division of labour between the committees and the board. I believe that these changes have enabled us to effectively manage both the leadership succession and develop our new purpose and ambition.
The make-up of the board has also evolved, and I expect that to continue in future as we seek to ensure we have the right balance of skills, experience and diversity. In November last year, Nils Andersen was appointed Chairman of Unilever, and therefore stepped down from BP’s board on 18 March after a period of transition. On behalf of the board, I thank Nils for his service to BP. In Nils’ place, Melody Meyer agreed to chair the safety, environment and security assurance committee (SESAC), recognizing her strong operational and safety experience. Separately, the board has assumed direct oversight of ethics and compliance matters, previously the responsibility of SESAC.
One of the chairman’s responsibilities is to ensure cohesion of the board over time, especially during times of transition. To provide continuity, Sir Ian Davis and Brendan Nelson have kindly agreed to stand for re-election at the 2020 AGM for up to a further year. Because they have now each exceeded nine years in the role, in putting them forward for re-election this year the board carefully considered whether, they still demonstrate the necessary qualities of independence. I am pleased to confirm that the board is satisfied that they do, and I am grateful for the support and wisdom that Sir Ian and Brendan bring to the board. Our nomination and governance committee has, as you would expect, begun a process to identify successors to these important roles.
While continuity is important, BP’s new direction gives reason to examine whether the board’s composition is optimally aligned to BP’s new direction. We’ll always need a core cadre of members with global executive experience from similar industries, but different specialist skills may also be valuable. These include skills relevant to BP’s ambition, individuals with strong digital and transformational skills and those with broader energy and sustainability experience. In light of the changes ahead of us, but also as a consequence of natural succession, I anticipate that we will add new competences and experiences to the board during 2020.
The year 2019 also marked a transition for executive remuneration. In order to develop a new remuneration policy, which will be proposed at the 2020 AGM, the remuneration committee sought candid feedback from some of our largest shareholders. Consequently, while we will retain our current structure, which is simple and well understood, we will strengthen the elements relating to our energy transition ambition. More details of our new policy are set out in the Directors’ remuneration report on page 100.
This year also marks the first year in which the board is required to report on how it has fulfilled its duties under section 172 of the Companies Act, which requires directors to promote the success of the company for the benefit of its members, and in doing so to have regard to our stakeholders, including employees, suppliers and customers, the impact of our operations on communities and the environment, and the likely consequences of any decision in the long term. Regard for a wider group of stakeholders is not new. Indeed, it has been incorporated into the board’s working for some time. But new reporting requirements are an opportunity to explain the processes we have followed, and how dialogue with stakeholders has shaped decisions. Details can be found on page 66, and information about how the board has engaged with BP’s workforce is on page 88.
Finally, I want to express my gratitude to Bob Dudley, Bernard Looney, the executive team, our employees and my board colleagues for their hard work, their commitment, and their contribution to BP’s new direction. I am optimistic for our future and look forward to working with our teams to compete effectively in a changing energy market.
Information about our Annual General Meeting including the Notice of Meeting and speeches made by members of the board
An overview of the key activities, events and results in 2019, together with commentary on bp’s performance and our priorities as we move forward