Insights from Reclaim Finance’s director Lucie Pinson, following the shareholder vote in support of Total’s so-called \u201cclimate\u201d plan<\/strong><\/p>\n Two weeks ago, a large majority of Total\u2019s shareholders put themselves on the wrong side of history by voting in support of Total\u2019s bogus climate plan. At least now we know which (few) investors are serious about climate change and (the many) that are all talk and no action. Some will say my analysis is too black-and-white but it\u2019s time for brutal honesty. If Total\u2019s plan is the new benchmark for \u201cgood enough\u201d on climate, then we can say goodbye to our hopes of a livable future.<\/b><\/p>\n<\/div><\/div><\/div> We have less than nine years to fundamentally transform our energy production model and even the International Energy Agency (IEA) admitted last month what climate scientists have been hammering home for several years: achieving carbon neutrality by 2050 and limiting global warming below 1.5 \u00b0 C means <\/span>no more investment in new coal, oil and gas supply<\/b>. In the light of the IEA\u2019s new net-zero scenario, any shareholder committed to the climate should have voted against Total’s climate plan on May 28. Unfortunately, not enough investors are voting according to what climate science requires. <\/span><\/p>\n And Total\u2019s \u201cclimate\u201d plan is far off the mark. The oil and gas major has no intention of significantly reducing its oil production or of giving up on its 30% increase in gas production by 2030. Total’s climate plan includes:<\/span><\/p>\n Total has rebranded itself TotalEnergies. With an \u201cs\u201d to remind the world that Total is massively developing renewable energy. But a makeover can\u2019t hide the fact that i<\/span>n 2030 Total will still be directing 80% of its investment spending to fossil fuels, and that in 2050 renewables will only represent 4% of Total\u2019s energy production. Hardly a \u201ctransition\u201d.<\/b> And yet, the \u201cs\u201d was enough for 82% of shareholders to justify their vote in favor of the so-called climate plan. And in turn, shareholder support for the climate plan was duly reported as signifying that Total was shifting to green. <\/span><\/p>\n Make no mistake: investors are not climate scientists. Most shareholders are guided by short-term interests. Dividends come first, the climate comes second. In CEO Patrick Pouyann\u00e9\u2019s words after adopting the resolutions on dividends, \u00ab\u00a0it appears my shareholders would rather protect their dividends than let me invest too much in renewables\u00a0\u00bb.<\/u><\/a> It is true that Total is the most generous dividend-paying company in the CAC 40, but this comment says a lot about how the CEO feels about the energy transition.<\/span><\/p>\n<\/div> Patrick Pouyann\u00e9 does not like criticism which might jeopardize his strategy. <\/b>He described the IEA scenario calling for no more investments in new oil and gas projects as too \u201cradical\u201d. He also showed contempt for the 18% (abstentions included) of shareholders who did not support resolution 14. <\/span>As if Total only consulted its shareholders on condition that they would fully endorse the strategy, not question it<\/b>. <\/span><\/p>\n Those investors which did not endorse the climate plan were branded \u201cactivists\u201d. Pouyann\u00e9 was also proud to have stifled a \u201crebellion against the company.\u201d It\u2019s worth noting that the \u201cactivists\u201d and \u201crebels\u201d include Meeschaert, Federated Hermes EOS and MN, the three investors responsible for leading the shareholder dialogue with Total on behalf of the CA100+ coalition. This coalition, which brings together 575 investors managing more than $54 trillion, has in the past been strongly criticized for its timid positions. But <\/span>still, <\/b>today, <\/span>Total fails all but one of nine metrics in their net zero company benchmark.<\/b><\/p>\n These investors and others (Ircantec – also on the CA100+ steering committee – as well as Banque Postale AM, Legal & General, Sycomore, La Fran\u00e7aise and Edmond de Rothschild (1)) have shown consistency by voting against Total’s \u201cclimate\u201d plan.<\/span><\/p>\n<\/div> Conversely, investors like AXA and BNP Paribas supported the climate plan despite their commitments to align with carbon neutrality and the conclusions of the IEA scenario. It\u2019s ironic that not so long ago, <\/span>BNP Paribas AM called on the IEA to publish such a scenario in order to guide its investments<\/u><\/a><\/span>. <\/span><\/p>\n Investors gave Total\u2019s climate plan a green light only a week after 34 CA100+ investors – including AXA and Amundi – signed a declaration pointing out its many limitations and inadequacies. The verdict was clear: Total\u2019s efforts are clearly not enough to respond to the climate emergency and meet its own commitment to carbon neutrality. AXA and Amundi therefore voted in support of Total\u2019s plan in full knowledge that it is incompatible with a 1.5\u00b0C scenario.<\/span><\/p>\n<\/div> Amundi, Total\u2019s 1st biggest investor, voted in favor of the climate plan to celebrate the fact that Total was consulting its shareholders and that part of the management\u2019s revenues would be based on meeting their climate goals. But Total did not commit to regularly consult its shareholders. Furthermore, creating economic incentives for management to meet climate goals does not mean the climate goals are sufficient. In fact these goals are far below what is needed: carbon intensity must be reduced by much more than 20% by 2030 to stay on a 1.5\u00b0C or even 2\u00b0C pathway. Like that of many investors, Amundi\u2019s voting policy is not science-based. <\/span><\/p>\n AXA\u2019s position is even more incoherent than that of Amundi: the insurer released a statement announcing that, in the name of its commitment to carbon neutrality, it would vote for a plan that did not meet this objective of neutrality – and which it had criticized the previous week. It must be pointed out that the statement, signed by AXA\u2019s chief economist failed to mention the IEA\u2019s net zero pathway or even the words \u201cscience\u201d or \u201cclimate scenarios\u201d. <\/span><\/p>\n AXA\u2019s position is comparable to that of BlackRock, which argued in its voting statement that it supported Total\u2019s plan because it \u201cappears to be consistent with the Paris Agreement<\/u><\/a>\u00ab\u00a0. <\/u>Goodbye science and goodbye hard facts. Unfortunately, climate change impacts don\u2019t just <\/span>appear<\/span><\/i> to be severe, they actually are. <\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div> We weren\u2019t expecting a revolution at Total\u2019s AGM this year. But the fact that so many investors pledged to act on climate before supporting Total\u2019s climate plan undermines the credibility of \u2018green finance\u2019. In the eyes of the investor community, Total is \u201cbest in class\u201d when compared to the rest of Big Oil. But the climate doesn’t care about such metrics, only the scientific reality of absolute emissions. Unfortunately, if they don\u2019t start acting according to the latter, investors’ category error might just cost us the earth. <\/b><\/p>\n<\/div><\/div><\/div><\/div><\/div>Total ignores the IEA\u2019s stop sign<\/b><\/h1><\/span>
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A droplet of green in an oil and gas spill <\/b><\/h2><\/span>
A \u201cradical\u201d IEA scenario and \u201cactivist\u201d shareholders\u00a0<\/b><\/h2><\/span>
Inconsistent voting strategies\u00a0<\/b><\/h2><\/span>
Votes that are not science-based<\/b><\/h2><\/span>