Boardroom decisions do not come much bigger and more difficult than the question of what to do with BP’s stake in Russian state-controlled oil giant Rosneft. The FTSE 100 company had made billions of dollars from its near-20 per cent holding in Rosneft, chaired by Vladimir Putin’s close ally Igor Sechin. But BP chairman Helge Lund and chief executive Bernard Looney immediately agreed that Putin’s invasion of Ukraine on February 24 was a “fundamentally new situation”.
In Lund’s words, the two men worked “extremely closely” over the next few days — and at a Sunday board meeting three days later, BP decided to sever its connection to Rosneft at a cost of up to $25 billion.
“The military action in Ukraine ... changed the situation for us,” Lund said. “This was not a political decision. One way of putting it was that it was a values and value-driven decision. By that, I mean taking a clear stand against aggression. We could not continue our partnership with a state company under those circumstances. But it was also, in our view, a value decision. This will come with some short-term and medium-term cost. But in the longer term, we felt this is the right thing for BP shareholders and the company — in the sense that for attracting talent, building partnerships with other companies, and with an ever- growing customer base, it was important for us to be on the right side of this.”
Lund, 59, is the winner of this year’s FTSE 100 award. The judges were impressed not only with his “open and inclusive” approach to taking big decisions but by the “pivotal role” he has played in guiding BP towards becoming an integrated energy company.
Lund and the board appointed Looney in 2020. Looney has set out bold plans to cut oil and gas output by 40 per cent by 2030, while developing 50 gigawatts of renewable capacity — more than the UK’s current capacity.
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BP is one of the world’s biggest polluters, directly or indirectly responsible for 415 million tonnes of carbon emissions in 2019, the last full year before the pandemic — again, more than the entire UK.
Lund said the main reason he accepted the BP chairmanship in 2018 was the scale of the problem. “If you’re successful in the transition of BP, you not only transform and change BP, but you impact a whole industry and eventually have an impact also on how the world is attacking the climate challenge,” he said.
Considered and softly spoken, Lund is a former McKinsey consultant who grew up in a middle-class Norwegian family. He had four siblings; his mother, a headmistress, drew up a list of 20 chores every Saturday morning and gave the worst one to the child who slept in the longest.
Lund made his name as chief executive of Statoil, the Norwegian state company now called Equinor. Known as “Mr Oil” in his native country, he doubled Statoil’s production, in part by striking a deal to enter the Arctic with a certain Rosneft. He was so excited he tried (unsuccessfully) to steal a pen from the Moscow signing ceremony in 2012.
Reflecting on Russia, he said: “My idea was always that economic collaboration and trade and exchange of people over time would bring us closer together. And of course what has happened now [with Ukraine] is a big setback.”
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Lund’s first taste of non-executive life came when he sat on the board of Nokia between 2011 and 2014. It was going through “a very difficult time — they were the market leader with 40 per cent and suddenly a competing technology was coming”. In one year alone, Nokia’s board met 50 times; the experience taught Lund the importance of flexibility. And it gave him “a growing belief in the value of boards, in that you have, hopefully, experienced people who are not 24/7 on the issues every day, and when you bring them together ... they can shed a different light on issues to the CEO.”
Lund went fully non-executive at BP at 56. He was the youngest board member and oversaw the chief executive succession from Bob Dudley, the American who pulled BP out of the Gulf of Mexico crisis, to Irishman Looney, a company veteran.
Lund has a more collegiate style than many older-generation chairmen. “One of the most important things is what kind of atmosphere are you trying to shape on the board,” he said. “It should be open and transparent ... I try not to think about a board meeting as an exam, much more like a process to solve a problem. And ultimately, the CEO must come to the board with a recommendation — but it’s very important they feel they can also come with unanswered questions. Better-performing boards are ones where there is no dominating voice in the room — everyone feels they can contribute.”
