The governance clash over a shareholder proposal blocked by the board of BP has escalated after proxy advisers recommended voting against re-election of the oil giant’s chair, over concerns about sustainability reporting.

Glass Lewis told investors that the refusal of BP to allow a resolution from Follow This, a campaign group, raised issues about transparency.

The Financial Times cited Glass Lewis’ advice, saying action to keep the resolution from a shareholder vote had been unnecessary and raised “concerns about transparency, shareholder communication and responsiveness”.

Legal & General, the fund managers, say it too will oppose re-election of Albert Manifold, BP’s chair.

The latest conflict stems from a resolution submitted by Follow This in January, calling on BP to report on how it would “protect shareholder value” in a scenario where demand for oil and gas declines.

Though it received support from some investors, the resolution was excluded from the AGM agenda.

Follow This went on to threaten legal action if BP failed to revisit its decision. Follow This chief executive Mark van Baal said at the time: “This case is bigger than one resolution at one company.

“Shareholder democracy in the UK is at stake. If BP can block a valid resolution without explanation, any company can. We will not let that stand.”

Resolution ‘unnecessary’

BP has argued the resolution was unnecessary because mandatory sustainability reporting already covers the Follow This question.

According to BP’s website, the company reports in line with Financial Conduct Authority (FCA) listing rules that require disclosures against Taskforce for Climate-related Financial Disclosures (TCFD) under the “comply or explain” principle.

TCFD requires organisations to report across four key “pillars”. The “strategy” pillar asks companies to report on “actual and potential impacts of climate-related risks and opportunities”.

The risk pillar requires disclosures on “how the organisation identifies, assesses and manages climate-related risks”.

The resolution clash does, however, raise questions about the ability of shareholders to propose resolutions. The FT reports that this may be the first time a FTSE 100 company has blocked a shareholder proposal.

In the US, regulators have shifted to telling companies they must decide for themselves which resolutions should and should not be excluded from AGMs. This follows a long period in which boards sought guidance from watchdogs to exclude resolutions through so-called “no-action” letters.

That may be further complicated by declarations this week from the Securities and Exchange Commission that state authorities and courts should be more involved in governance regulation, rather than federal bodies.

Climate transition is a live issue and reains contentious. Companies must address the mounting risk, while not-for-profits are in the business of cajoling them into action. The clash has a long way to go.