Engaging ENGIE on its transition strategy: a briefing for climate-conscious investors

French utility ENGIE will hold its Annual General Meeting (AGM) on the 26th of April 2023. ENGIE is the largest independent electricity producer worldwide, and is also one of the most emitting utilities in Europe, ranking first in terms of gas power related emissions in 2021 in Europe. Ahead of ENGIE’s 2023 AGM, climate-conscious investors should question its alarming transition choices on coal phase out, fossil gas expansion and request that the company adopt a detailed transition strategy to address current gaps and lacks of transparency on several key indicators.

Since COP21, ENGIE committed to phase out coal by 2025 in Europe and by 2027 in the rest of the world and has already drastically reduced its coal portfolio. So far, 60% of its total coal capacity has been reduced through selling coal assets. Of the remaining 40% coal capacity reduction since 2016, there is a significant portion of planned conversions to fossil gas or biomass.

On the fossil energy side, the group’s transition strategy entails disposing of its 6 remaining coal assets while increasing its gas power plants fleet, making ENGIE one of the top European developers of gas power plants in the world, with over 4.5 GW of additional capacity currently planned. ENGIE is vaguely planning to fully decarbonize its gas use by 2045, but its LNG-related activities have been growing since the beginning of 2022 and the group is expected to maintain this trend, with import contracts running until 2042 and its involvement in several LNG terminal projects.

In 2022, ENGIE consulted its shareholders through a Say on Climate resolution but there is no indication that a similar resolution is planned for 2023. Yet, the French utility’s transition strategy remains incomplete, lacking key indicators to assess its degree of alignment with a 1.5°C scenario. As regards ambition, its plan is not compatible with 1.5°C: betting on a vaguely defined “gas decarbonization” strategy, ENGIE only commits to contributing to a “well below 2°C” world.

Investors who are serious about accelerating ENGIE’s transition should engage the company ahead of its next AGM, to urge the company to raise its climate ambitions and to provide further details regarding its transition strategy.