Influential proxy adviser Institutional Shareholder Services has recommended that investors in TotalEnergies back a shareholder resolution urging the group to do more to cut its emissions, as activists try to pressure the French oil major to roll back some gas projects.
Dutch shareholder activist Follow This, along with 17 investors making up some 1.4 per cent of Total’s capital, is calling on the oil and gas group to cut its emissions more aggressively by 2030 in a resolution to be voted on at a shareholder meeting on May 26.
In particular, the resolution urges Total to be more aggressive on its Scope 3 targets, which cover the carbon produced when a product sold by the company is burnt. The investors say the pathway set out by Total cannot be aligned with the ambitions of the Paris Climate Agreement — or the goal of keeping global warming well below 2 degrees centigrade above pre-industrial levels — in part because the company plans to continue new oil projects for now.
According to an ISS recommendation seen by the Financial Times, the proxy adviser has said investors should vote for the resolution. The motion is not binding, but ISS’s advisory could give it further momentum.
“The proposed shareholder resolution has some merits as it is identified there is some missing information to provide comfort the Scope 3 goals are taking this trajectory of the Paris agreement,” ISS said in its note.
Significant shareholder dissent is generally regarded as being a vote against a management recommendation by at least 20 per cent 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”.
ISS did not return requests for further comment. The proxy group has occasionally backed such motions in the oil and gas industry before, although only in the US and in Norway in recent years.
It supported a successful drive by hedge fund Engine No. 1 to install three board directors at Exxon in 2021 in a push to make it improve its carbon footprint.
Follow This called the ISS recommendation on Total “a breakthrough” and said it marked welcome support for its drive, which it hoped would be expanded to its campaigns at other oil majors. It is making a similar push at Shell, BP, Chevron and ExxonMobil.
“These supermajors will only change if shareholders massively vote for change,” said Mark van Baal, Follow This founder.
However, the chances of the resolution gaining anywhere near majority support are slim. Total has urged investors to vote against the motion, which was also brought by investors including Edmond de Rothschild, Mandarine Gestion and Sycomore Asset Management.
Total has been increasingly investing in renewable energy assets, dedicating $5bn of its investment budget this year to spending on such projects compared with $4bn previously.
But investors such as Sycomore have said this is not enough, and urged the group to curtail new oil and gas projects.
Total has forecast that its Scope 3 emissions will stand at less than 400mn tonnes of CO₂ equivalent by 2030, but it already achieved that last year with a figure of 389mn tonnes.
Total last year blocked a climate resolution from Follow This and it was never put to a vote. Total put forward its own climate motion, which was rejected by 11 per cent of investors. In 2021 a resolution led by asset manager Meeschaert urging Total to do more on emissions was backed by 17 per cent of investors.