30 September 2024 – Ahead of TotalEnergies’ Investor Day in New York (2 October), a new briefing from Reclaim Finance reveals how banks and investors are providing increasingly long-term support for the company (1) – allowing it to continue its fossil fuel expansion strategy for decades. Recent bonds issued by TotalEnergies to raise money have unusually long maturity periods – up to 40 years. But while this financing strategy is a win for TotalEnergies, it is a risky gamble for the banks and investors involved – and the consequences for the climate and for people could be devastating. Reclaim Finance urges financial players to stop participating in TotalEnergies’ new bonds and to urgently end their support for companies developing oil and gas projects.
With US$3 billion raised in September 2024, US$4.25 billion in April, TotalEnergies has successfully issued several bonds this year (2) – with the help of a number of banks, including HSBC, Citibank and Deutsche Bank. These bonds have increasingly long maturities with an average of 22 years between 2020 and 2024, compared with an average length of 6 years between 2000 and 2004 (3). The most recent bonds, for example, extend to 2064, which means that TotalEnergies will not have to repay investors for many, many years.
These recent transactions illustrate the crucial role bonds play in TotalEnergies’ financing strategy. As the company’s main source of capital – almost 70% of the funds raised come from bonds (4) – bonds are an easily accessible and advantageous source of financing.
These bonds are a gift for TotalEnergies. Banks and investors don’t have any say in how the money is used. However, the abnormally long maturities of the latest bonds should give us cause for alarm. The financial players provide the ideal conditions for TotalEnergies to carry out its fossil fuel expansion plans, allowing it to secure advantageous borrowing terms over a very long period.
Lara Cuvelier, sustainable investment campaigner
By allowing TotalEnergies to borrow for such long periods, banks and investors are contributing to the oil giant’s planned development of oil and gas fields and fossil fuel infrastructure over the coming decades. While fewer and fewer banks are willing to finance oil and gas projects directly, the money raised by the bonds can be used. For example, the controversial EACOP pipeline project in East Africa is partly financed with shareholder equity, including from TotalEnergies (5) – with money that may have come from the bond market.
It is time that banks and investors stopped this hypocrisy in their climate policies. If Société Générale, for example, excludes direct financing for oil and gas projects on climate grounds, why is it involved in 18 active TotalEnergies bonds, including a very recent one, when the majority of the company’s investments are in oil and gas? Supporting these bonds is dangerous for the climate.
Antoine Bouhey, campaign coordinator for Defund TotalEnergies
While this is a winning financing strategy for TotalEnergies, it is a much riskier gamble for the investors involved. This financing will increase the systemic risks linked to the climate, risks that are already jeopardising the future of the oil and gas sector and therefore the value of its assets (6).
Last May, BNP Paribas and Crédit Agricole announced that they would no longer participate in conventional bonds in the oil and gas sector (7). Other major banks should follow suit as a matter of urgency. And given that one of TotalEnergies’ bonds reaches maturity on 4 October, the company may seek to renew it. Reclaim Finance is therefore calling on the banks involved in this bond and in the latest 2024 transactions, notably HSBC, Citigroup and Deutsche Bank, to take no further part in the issue of new TotalEnergies bonds.
Reclaim Finance is also calling on investors involved in the April 2024 transaction, including Allianz (and PIMCO), Deutsche Bank and GPFG (Government Pension Fund Global) (8), to stop buying new TotalEnergies bonds. More generally, all financial players must end their support for companies developing new oil and gas projects.
