It’s been quite a week for changes at the top of the blue chips. Today we learned BP’s chief executive Bob Dudley is stepping down next year, after running the oil major during one of the most turbulent periods in its history.
He’s the third FTSE 100 chief to step down this week. It started with the surprise announcement that Tesco’s chief executive Dave Lewis would leave the supermarket chain next year. This was closely followed by news that Alison Cooper, chief executive of Imperial Brands (formerly known as Imperial Tobacco) would also be standing down.
Three FTSE 100 companies, in three highly competitive markets under increasing pressure to meet rising environmental, social and governance (ESG) concerns.
I’m sure the new chiefs will be very aware of the tough ESG challenges they will face - from addressing food miles and plastic waste, to the effects of fossil fuels on the environment, to the ongoing health risks of tobacco consumption and new concerns over the risks of e-cigarettes.
BP’s Bob Dudley was appointed at probably one of the most challenging times in the company’s history. He took over after Tony Haywood stepped down following the April 2010 Deepwater Horizon disaster in the Gulf of Mexico that killed 11 rig workers and led to the largest oil spill in US history.
Back then, the company was on the brink of bankruptcy, as assets had to be sold to pay for more than $60bn in legal and clean-up costs. To add to the company’s woes, the oil price crash in 2014 forced a string of cost cuts to keep BP afloat in a new era of low crude prices.
Now, as one of the largest companies on the FTSE 100, it’s been a remarkable turnaround story. Yet, like other oil and gas companies, BP is under increasing pressure to take responsibility for the impact fossil fuels are playing on the environment.
News this week that the Royal Shakespeare Company said it would end its partnership with BP, after concerns were raised by students about the company’s impact on the environment, further shows the challenges that lie ahead for Bernard Looney, who takes over as chief executive in February.
While we might not be as vocal as Greta Thunberg or the Extinction Rebellion protesters, I think it’s fair to say we're all thinking more about the impact our lives are having on the world around us. We've only got one planet and we want to hand it on to the next generation in good shape.
Fortunately, with ESG becoming a priority for companies, as investors we can also choose to do the right thing and invest in companies that are putting sustainability first. More and more fund managers are putting these concerns at the heart of their investment processes too, rigorously examining the companies they invest in to ensure only those that meet the strictest criteria are part of their portfolio. In effect they look to generate returns and benefit society at the same time.
There's a lot more to sustainable investing than looking after the environment. Treating customers and workers fairly and promoting good values and governance is not just the right thing to do; it's good business too. So whether you're committed to an ethical approach already, or just exploring what it means, sustainable investing is here to stay.
Find out more on ESG investing
What is ESG investing?
Important information The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Please note that the Investment Manager’s focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
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