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Ubben’s ValueAct Capital Buys Into BP On Carbon-Cutting Pledge

Scott Deveau

(Bloomberg) -- BP Plc’s ambitious plan to go green is winning accolades from at least one high-profile investor.

ValueAct Capital Management started building a position in BP after an “inspired” presentation Wednesday from the energy giant’s new boss about his plans to eliminate almost all its carbon emissions, according to ValueAct Chairman Jeff Ubben.

The bet is on BP Chief Executive Officer Bernard Looney’s vision for the oil and gas company, which goes far beyond any of its peers, Ubben said in an interview. While Ubben had been studying the company for a while, he was inspired to buy shares during Looney’s pledge to cut greenhouse gas emissions from operations and production to net zero within 30 years.

“I just started buying while I was watching,” Ubben said. “Someone needs to stand up and reward these guys.”

The investment was made through the $1 billion ValueAct Spring Fund, which is focused on social and environmental investing, Ubben said. BP’s strategy is exactly the sort of investment the fund is looking for, he said. He didn’t disclose the size of his stake.

While peers including Royal Dutch Shell Plc, Total SA and Equinor ASA have responded to investor pressure by adopting targets for emissions curbs, none has promised to zero them out like BP.

It highlights the perils of investing in companies with so-called environmental, social and governance agendas, Ubben said.

“ESG is total crap,” Ubben said, noting that the five most owned stocks in ESG funds are Microsoft Corp., Alphabet Inc., Visa Inc., Apple Inc. and Cisco Systems Inc.. “It is worse than greenwashing, since these investors ignore the externalities of Google mining your privacy; Visa earning monopoly rents on the back of small business; and Apple’s extractive business model of selling you a new phone full of mined materials as often as possible.”

He said to actually have an impact, investors have to get involved with the companies where their core business deals directly with the biggest problems of the day, which he said is climate change. To that end, he said the ValueAct Spring Fund has joined the board of power producer AES Corp. to help facilitate its move away from fossil fuels and the private board of Nikola Corp.

Representatives for Apple, Visa, and Alphabet weren’t immediately available for comment.

ValueAct on Wednesday also was granted a seat on the board of Hawaiian Electric Industries Inc. Eva Zlotnicka, managing director of the Spring Fund, will join the board and also sit on its compensation committee.

ValueAct, which owns a 1.5% stake in the utility, had urged Hawaiian Electric to look externally for a successor to CEO Constance Lau in a November letter to stakeholders, arguing it needed a shift in corporate culture. ValueAct also raised concerns that the company wouldn’t reach its renewable targets.

“As an island economy, sustainability is must,” Ubben said. “It is an inspired place, with legislative and regulatory leadership that wants to reward innovation. Hawaiian Electric management and board have taken on the challenge to move faster off of base-load oil.”

The San Francisco-based hedge fund disclosed its original stake in Hawaiian Electric in October 2018 through the Spring Fund. Total shareholder returns since ValueAct disclosed its position have been about 38%, according to data compiled by Bloomberg.

Last month, Ubben, the founder of ValueAct, was replaced as CEO of the activist firm by Mason Morfit. Ubben remains chairman and will continue to help run the Spring Fund.

--With assistance from Laura Hurst.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Matthew Monks, Michael Hytha

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