The influential managing director Institutional Shareholder Services has recommended that TotalEnergies investors support a shareholder resolution urging the group to do more to reduce its emissions, as activists try to pressure the French oil major to roll back some plans gas.
Dutch shareholder activist Follow This, together with 17 investors representing about 1.4% of Total’s capital, are calling on the oil and gas group to reduce its emissions more aggressively by 2030 in a resolution to be voted on in the assembly on 26 May.
In particular, the resolution urges Total be more aggressive about its Scope 3 goals, which cover the carbon produced when a product the company sells is burned. Investors say Total’s path cannot be aligned with the ambitions of the Paris climate agreement – or the goal of keeping global warming well below 2°C above pre-industrial levels – in part because the company plans to continue with new oil projects for now.
In a recommendation from the ISS seen by the Financial Times, the chief executive said investors should vote in favor of the resolution. The motion is not binding, but the ISS advisory could give it further impetus.
“The proposed shareholder resolution has some merit as it has been identified that some information is missing to provide comfort that the Scope 3 goals are taking this trajectory of the Paris Agreement,” the ISS said in its statement.
Significant shareholder dissent is generally considered to be a vote against a management recommendation by at least 20% of the shares voted.
Total said the resolution did not “provide a credible response to the challenges of climate change and would be contrary to the interests of the company, its shareholders and its customers”.
The ISS did not return requests for further comments. The proxy group has occasionally supported such motions in the oil and gas industry, though only in the United States and Norway in recent years.
He backed a successful push by hedge fund Engine No. 1 to seat three boards of directors at ExxonMobil in 2021, with the goal of improving its carbon footprint.
Follow This called the ISS recommendation on Total “a breakthrough” and said it marked welcome support for its push, which it hoped would be extended to its campaigns at other oil majors. AND doing a similar push at Shell, BP, Chevron and Exxon.
“These supermajors will only change if shareholders vote en masse for change,” said Mark van Baal, founder of Follow This.
However, the chances of the resolution gaining close majority support are slim. Total urged investors to vote against the motion, which was also tabled by investors including Edmond de Rothschild, Mandarine Gestion and Sycomore Asset Management.
Total is investing increasingly in renewable energy resources, dedicating $5 billion of its investment budget to spending on such projects this year, up from $4 billion previously.
But investors like Sycomore said that wasn’t enough and urged the group to scale back new oil and gas projects.
Total projected its Scope 3 emissions to be below 400 million tonnes of CO₂ equivalent by 2030, but it already achieved that last year with a figure of 389 million tonnes.
Total last year blocked a Follow This climate resolution and it was never put to a vote. Total presented its climate motion, which was rejected by 11% of investors. In 2021 a resolution led by wealth manager Meeschaert urging Total to do more on issuance was supported by 17% of investors.
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