Oil company BP reports lower profit. Is its retreat from sustainability investment to blame?

British company BP announced on Tuesday that its net profit fell in the first quarter. The reason is said to be controversy over revisions to its business strategy. The company recently said it would once again focus more on producing fossil fuels instead of low-carbon alternatives. Total revenue fell by four percent to just under $48 billion. Reuters reports.

BP and other major oil companies have been hit by the recent drop in oil prices amid fears that US President Donald Trump's tariffs could cause a recession and affect demand.

For the British oil giant, investor pressure has been accompanied by a shift in investment decisions, with fossil fuel extraction increasingly taking centre stage as it is considered more profitable. Analysts say the recent drop in oil prices has nevertheless called this goal into question.

BP also announced that its head of sustainability strategy, Giulia Chierchia, will step down in June and will not be replaced. The new strategy includes cutting investment in clean energy by more than $5 billion a year. It should be noted that BP is not the only oil company cutting its investment in renewables; rival Shell has done so too, for example.

The company's shares fell by more than four percent in morning trading on London's FTSE 100 index, which was broadly unchanged overall. On Tuesday, the company also reduced its quarterly share buyback to $750 million, at the lower end of expectations.

BP responds to global changes

The strategy review followed a difficult business year for BP, which is under pressure from investors to raise its share price. Last week, the company confirmed that US activist investment fund Elliott Investment Management had acquired a stake of just over five percent in BP. Analysts say the fund is known for pushing for corporate changes at the groups in which it invests.

BP said in early April that chairman Helge Lund, who took up the role in 2019, would leave the company next year.

"Geopolitics and trade tensions are more complex today than they have been for a long time. This uncertainty is affecting BP," Lund told shareholders at the company's annual general meeting in April.

Lund has worked with three chief executives at BP, including helping to steer the company through the turbulent years of Covid, when energy demand slumped.

"BP is doing the best it can in a difficult situation," said Derren Nathan, head of equity research at Hargreaves Lansdown.

The group is expanding its global exploration programme and plans around 40 wells over the next three years, including up to 15 this year. It recently announced a new oil discovery off the US Gulf Coast.

"However, weaker oil prices in the second quarter mean that the company's management will be under more pressure than ever to meet the expectations of its largest shareholder," Nathan added.