AXA and Amundi/Crédit Agricole, two investors quick to boast of their commitment to fight climate change, voted against a resolution calling on the biggest polluter of the CAC 40, Total, to do more about climate. Ouch!
One year ago, on 13 June 2019, Crédit Agricole adopted a climate strategy that aims to do nothing less than align the group with the Paris Agreement, i.e. to limit global warming as close as possible to a 1.5°C target by 2100. Later in 2019, AXA joined the Net-Zero Asset Owner Alliance and committed as an investor to aligning its investment portfolio with a 1.5°C trajectory. So far so good.
Climate science is very clear: the target of carbon neutrality by 2050, which is necessary to meet the 1.5°C target, may seem far away. However, to meet it requires acting quickly and decisively. According to the IPCC, the efforts to be made are unprecedented but feasible and, above all, desirable. The biggest shift is to be made now, in order to halve GHG emissions by 2030.
For financial players, this means conditioning their financial services on the companies’ adoption and implementation of measures that will enable a radical transformation of their activities and their alignment with a 1.5°C trajectory. When it comes to the first CAC 40 emitter, Total, we understand fairly quickly that inaction is not an option. While a commitment period may be justifiable, it cannot be allowed to drag on when the changes to be made are gigantic. If the Total liner has to change tack, it is better not to procrastinate for long.
Not only is Total in no way aligned with a 1.5°C trajectory, but its climate commitments announced at the beginning of May show that it does not intend to align itself.
- Total’s announced objective of carbon neutrality by 2050 does not cover all its emissions, and the oil company’s target by 2030 is only to reduce the carbon intensity of its products by 15% by 2030.
- Far from committing to a gradual phase-out of fossil fuels, Total intends to increase its hydrocarbon production by 12% between 2018 and 2030.
- 90% of its capex will remain devoted to fossil fuels over the next few years and around 80% in 2030. According to Carbon Tracker, 67% of its capex would be at risk under the IEA’s Paris Agreement alignment scenario.
To sum up, Amundi and AXA will not meet their climate objectives if investee do not align with a 1.5°C trajectory. We could then expect the to support efforts to push companies to set decarbonization targets to align with a 1.5°C trajectory. And yet, far from voting in favour of the climate resolution submittted to the vote of Total’s shareholders on May 29th, both AXA and Amundi voted against.
Failing to vote in favor, as shareholders holding 14.93% of the voting rights did, they could have abstained, as shareholders representing 11.12% of the voting rights did. But no, these two great climate advocates, in public, voted against it, in private. Bad luck, some dirty secrets are surfacing and this one resurfaced in an AFP dispatch published on Friday 19 June.
Failing to vote in favor of the resolution, as shareholders holding 14.93% of the voting rights did, AXA and Amundi could have abstained, as shareholders representing 11.12% of the voting rights did. But no, these two financial institutions that are very quicky to speak about their climate’s commitments, in public, voted against it, in private. Bad luck, some dirty secrets are surfacing and this one resurfaced in an AFP wire published on Friday 19 June.
Their vote imply that Total that, before the Covid crisis, planned on digging 25 new wells to grow its production by 5% a year from 2017 to 2022, is doing enough on climate.
It would be extremely hypocritical for AXA and Amundi to point out a flaw in the form or content of the resolution. Contacted by the group of 11 investors, they were given ample opportunity to comment on it and amend it before the resolution was tabled. Knowing full well that the resolution would not be adopted, the main aim was to send a strong signal to the first CAC 40 emitter. BNP Paribas AM, the lead investor that worked with Total for its May climate announcements, acknowledged itself that the commitments made by Total are insufficient and that the resolution was a step in the right direction. Without denying its own work with Total, BNP Paribas AM therefore abstained.
In conclusion, the Amundi slogan must be appreciated at its true value: “trust is earned”. As for AXA, it would be better to withdraw from the Net-Zero Asset Owner Alliance rather than make commitments that it does not intend to keep.