Total Investors Urge Oil Major to Adopt Tougher C02 Goals

(Bloomberg) -- Total SA investors called on the oil major to put broader limits on carbon emissions, increasing pressure on the French company to match commitments made by peers ahead of its annual shareholder meeting.

The request, made by 11 European asset managers, is the latest sign that Big Oil’s own shareholders are forcing companies to take responsibility for their emissions -- and those of their customers. But it catches Total at a difficult time, as the coronavirus crisis destroys fuel demand and prompts the industry to make sweeping cost cuts.

While Total has already adopted plans to reduce greenhouse-gas output from its own projects and from the generation of energy that it buys -- known as scope 1 and 2 emissions -- it’s now being urged to curtail emissions caused by the use of its products, or scope 3.

“As long-term shareholders, we have to take into account the climate risk in the management of our portfolios,” the 11 investors said Wednesday in a statement. The group, accounting for 1.35% of Total’s capital, includes Meeschaert Asset Management, Candriam France SAS and La Banque Postale Asset Management.

Under the investors’ proposed resolution for Total’s May 29 shareholder meeting, the company would set up an action plan with medium and long-term targets to reduce emissions in absolute terms, including scope 3.

A spokesman at Total declined to comment on resolutions ahead of the shareholder meeting.

Current Plans

So far, Total has said it’s seeking to reduce the carbon intensity of products sold to customers by 15% by 2030 and by 40% by 2040 as it expands in renewables and increasingly favors natural gas over oil.

It also plans to reduce its scope 1 and 2 emissions to less than 40 million tons of carbon dioxide equivalent by 2025 across its operated oil and gas projects, from 46 million tons in 2015.

Total Chief Executive Officer Patrick Pouyanne has said it’s more important to set immediate action plans because managers setting long-term goals won’t be in charge by the time deadlines come around. Nevertheless, he conceded last month that the company will have to go further and cut emissions to 20 million tons, without giving a specific timeframe.

Competitors BP Plc and Repsol SA have pledged to zero-out carbon emissions by 2050, while other European oil producers such as Royal Dutch Shell Plc and Equinor ASA have also vowed to offset emissions from the fuels they sell to customers.

Total’s current commitments don’t allow investors to assess its progress toward reaching the goals of the Paris climate agreement, the investors said. In particular, Total’s ambition to reduce the carbon intensity of its energy products doesn’t guarantee a reduction in greenhouse-gas emissions in absolute terms, including scope 3, they said.

Follow This, a separate group of activist shareholders, said it’s “delighted that institutional investors have now filed a resolution with the exact same request as ours,” according to a separate statement. “Similar resolutions have been effective with Shell in 2017 and with BP and Equinor in 2019.”

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