TotalEnergies

TotalEnergies is a leading energy company listed on the French stock market. Most oil & gas companies do not make it through our screening process given their mix of business is deemed unsustainable. However, TotalEnergies is a business adapting to the energy transition and already making enough progress on lower carbon energy sources and renewables to allow us to consider the merits of its investment case. Over half the volume and around 40% of the value of its upstream production is from natural gas. Alongside this, they have one of the world’s leading Liquid Natural Gas (“LNG”) operations, responsible for sourcing and shipping what is an important transition fuel. Its renewable energy portfolio is also of a substantial size with over 10 GW/h of electricity generating assets, primarily from solar power with plans to more than triple that by 2025. Importantly, the company also has minimal unconventional production, such as shale, and has committed to no further investment in these areas. An independent group, the Transition Pathway Initiative, assesses that TotalEnergies’ emissions intensity reduction target is aligned with a 1.5 degree scenario, putting it in a very select group of energy companies expecting to meet that goal. TotalEnergies isn’t perfect, which is why we deem it an improver, but we see enough evidence that it is making strong efforts to transition to be able to consider it as an investment. We are engaging with the company directly and through industry groups, such as Climate Action 100+, to encourage it to accelerate its transformation and enhance its reporting. If the company can deliver its future plans for a sustainable, lower carbon energy company, then we see an attractive investment case. This is a company growing strongly in LNG, renewable energy generation and in new molecules such as biofuels, bio gas and green hydrogen, generating both cash flow for investment and for the payment of a steadily growing dividend.