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What's going on?

Investors pushed up BPs share price even after it announced a second-quarter loss and a reduced dividend on Tuesday, but they mightve just been impressed by the oil company’s greener new look.

What does this mean?

While BP had been expected to make a loss, the company actually ended up losing less than analysts had thought. And sure, it suffered from low oil prices and damaged demand, but that was partly offset by the success of its trading arm. That part of the business which puts cheap oil into storage and sells it on for more further down the line took full advantage of swings in the commoditys price to turn a profit.

Even so, BP followed in rival Shells April footsteps by announcing a 50% cut to its dividend its first in a decade. And while those payouts might be restored in due course, investors may be worried they wont be as high as they were before. Still, once its reduced its debts, BP has promised itll return 60% of its spare cash to investors via share buybacks.

Why should I care?

The bigger picture: United they stand.

BP also gave more details about its green ambitions: its planning a 40% reduction in hydrocarbon production by 2030, as well as a ramp-up low-carbon energy investment. Its even promised not to go looking for oil in any new countries. See, BP reckons the pandemic will accelerate the worlds transition to a lower-carbon economy and it seems to want to benefit from that shift or else risk getting left behind.

For markets: Why choose?

Environmental, social, and governance (ESG) investors might worry that companies meeting their civic-minded criteria may offer lower returns than those that dont. And while Finimizers have said that doesnt necessarily matter to them, BPs update arguably shows it doesnt have to be one or the other. Fresh demand from ESG investors, then, could help push its price even higher.

Originally posted as part of the Finimize daily email.

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