With TotalEnergies’ Annual General Meeting taking place on May 24th, Reclaim Finance is calling on the company’s shareholders to vote against the re-election of Chair and CEO Patrick Pouyanné as the head of the Board of Directors, in order to oppose the company’s climate-wrecking strategy. Despite several years of shareholder dialogue, marked by the filing of climate-related shareholder resolutions, TotalEnergies’ management is still ignoring the demands of climate-conscious investors and pursuing its oil and gas expansion strategy. The time has come for investors to radically change their approach, by sanctioning the head of the company and attempting to block the development of new fossil fuel projects through votes.
At TotalEnergies’ 2024 AGM, shareholders will be asked to vote on the re-election of Patrick Pouyanné, who has led the company for the past 10 years, as a director (resolution 6 on the agenda). This vote takes place every three years, and in 2021 he was reappointed with 77% of favourable votes.
A Chair and CEO accountable for a climate-wrecking strategy
Contrary to the projections of the International Energy Agency (IEA) and scientific recommendations to limit global warming to 1.5°C, TotalEnergies continues to develop new oil and gas projects. In 2023, the company was the world’s sixth-largest upstream oil and gas developer. This fossil fuel expansion strategy locks in decades of additional greenhouse gas emissions, at a time when every effort should be made to avoid new emissions.
By choosing to develop new fossil fuel projects, TotalEnergies has fewer financial resources available to invest in sustainable energy. The IEA projects that 50% of the oil and gas sector’s investments should be dedicated to ‘clean energy’ projects by 2030 to meet a 1.5°C trajectory. [1] However, in its investment plan up to 2028, TotalEnergies plans to invest only 33% of its capital expenditure in its “integrated power and low carbon molecules” division, which is supposed to gather its sustainable activities but also includes activities based on fossil gas. Furthermore, while the company could use its record profits of recent years to finance sustainable energies, in 2023, for every dollar invested in its “integrated power” business, TotalEnergies distributed 3.4 dollars to its shareholders.
As CEO of TotalEnergies since 2014 and Chair of the Board of Directors since 2015, Patrick Pouyanné is the orchestrator of this strateg which is incompatible with scientific recommendations.
A climate-related shareholder dialogue hampered by recalcitrant management
In recent years, a small number of investors have been proactive in their dialogue with TotalEnergies on climate issues, in particular by filing shareholder proposals. In 2023, a resolution coordinated by Follow This, calling for the company’s climate plan to be aligned with the Paris Agreement, received 30.4% of votes in favour. However, TotalEnergies’ management has made no significant announcement since. Even worse, only four months later, the company revised its commitments downwards, announcing an increase in annual oil production of 2% to 3% until 2028. [2] This backtracking illustrates the strong resistance to change in the company’s governance and its lack of consideration for climate-related shareholder dialogue.
Faced with this situation, a group of shareholders coordinated by the French Sustainable Investment Forum and Ethos Foundation filed a resolution in 2024 calling for the separation of the functions of Chair of the Board of Directors and Chief Executive Officer, arguing that this “could improve dialogue with the Board of Directors on climate and transition issues”. But the Board of Directors refused to put this resolution on the agenda of the AGM, as it had already done for a climate-related shareholder proposal in 2022. Based on legal arguments that many experts consider inadmissible, these decisions show once again that TotalEnergies’ management takes neither shareholder engagement nor the climate emergency seriously.
A key vote for climate action
Investors urgently need to react to the ineffectiveness of current engagement practices with TotalEnergies and step up their action at the 2024 AGM. Reclaim Finance is calling on the company’s shareholders to go beyond consultative climate votes and use new means of action such as opposing some strategic routine resolutions, the most emblematic of which is the re-election of the Chair of the Board. Indeed, voting against the Say on Climate resolution on the implementation of TotalEnergies’ climate plan is necessary, but has a limited effect because of its consultative nature. On the contrary, voting against Patrick Pouyanné’s re-election has a direct impact on the company’s overall strategy, and clearly sanctions the governance’s obstinacy in a fossil fuel expansion strategy.
In May 2024, a group of climate-conscious investors sent a public letter to several oil and gas companies, including TotalEnergies, in which they committed to vote against some strategic resolutions on climate grounds, including the re-election of the Chairs of TotalEnergies, Shell and BP. [3] These investors are showing the way for credible shareholder engagement and should be followed by all the others.
At a time of climate emergency, shareholder dialogue must target actions with a strong capacity for influence, and plan escalation in the event of a lack of progress. Faced with TotalEnergies’ inaction, its shareholders must vote against the re-election of Patrick Pouyanné in order to unambiguously oppose the continuation of its inadequate climate strategy.
