As the world works to curb climate change, big energy firms are being pressured to adjust. The future must be a lower-carbon world. Changes are happening in every company. For example, Royal Dutch Shell was ordered by a court in the Netherland to cut its emissions sooner than the firm had planned. Meanwhile, two board members at Exxon in the US were ousted by a small hedge fund investor to alter the firm’s direction on the climate crisis.
And now, French oil giant Total is rebranding itself as it shifts to renewables, with shareholders voting overwhelmingly in favor of the move and its environmental goals at the annual general meeting. The resolution was passed with over 90% of the vote. Only some small investors opposed the company’s plans saying they didn’t go far enough.
Total’s chief executive Patrick Pouyanné said:
We want to become a sort of green energy major.
[The new name will symbolize Total’s] new commitment to be a leader in a world with more energies and fewer emissions. [The company will have to go through] a genuine transformation to meet its net-zero target by 2050.
Total is the world’s fourth-largest privately-owned oil and gas producer. Its goal is to be carbon neutral by 2050, partly by investing in more wind and solar power projects.
Mike Coffin, financial think tank Carbon Tracker’s senior analyst in oil and gas, said that US energy firms had moved more slowly than their European counterparts to begin the transition away from fossil fuels.
He said:
Total we see in the upper tier, ranking alongside BP, but below Eni. They don’t fulfill all our hallmarks of Paris [climate treaty] compliance, but above Shell and certainly above the North American companies.
The International Energy Agency (IEA) recently shocked the energy market with a report suggesting fossil fuel production needed to decrease far more quickly than firms were planning for. It warned that if the world wanted to reach net-zero carbon emissions by 2050, there can’t be any investment in fossil fuel projects after this year.
Carbon Tracker backs the IEA report saying that state-owned producers and global energy firms will have to leave their booked fossil fuel reserves unexploited. It’s the only way the world will have any chance of meeting its carbon emissions targets.
Mr. Coffin said:
Hedge funds, as well as large investors like Blackrock and pension funds, were beginning to recognize that failing to adjust plans in the light of climate targets represented a financial risk to companies they invest in.
From an environmental perspective, we want these fossil fuels to stay in the ground – they’re unburnable carbon. From an investment perspective, you don’t want to sanction them because you’re wasting your capital. You won’t see the historic returns we’ve seen from oil and gas because of the slowdown in demand.
Finally, those guilty of fueling the climate crisis are beginning to take responsibility. Maybe there’s a chance for a better world after all.
