Investors call on TotalEnergies to split CEO and chairman roles ahead of May Annual General Meeting

By América Hernández

PARIS (Reuters) – A group of investors in French oil company TotalEnergies is calling on the company to split the roles of CEO and chairman, which they say could accelerate its move away from fossil fuels.

“The separation of functions could improve dialogue with the board… on climate transition issues and ensure a better balance of power at a time when many investors are of the opinion that TotalEnergies’ transition strategy is not ambitious enough,” it says The resolution to be proposed at the company’s annual general meeting on May 24.

The proposal was presented by 19 international investors who hold around 20 million shares in TotalEnergies, together with the Swiss group of pension fund investors Ethos Foundation and the French Forum for Sustainable Investment (FIR).

The move challenges the dominance of Patrick Pouyanne, who served as CEO and president of the world’s fifth-largest publicly traded oil company for nearly a decade, leading a strategy to grow oil and gas production and, at the same time, increase in renewable energies.

Pouyanne is running for another three-year term at the Annual General Meeting.

“In France, company governance is, by law, a competence of the Board… and it is likely that the Board will not consider such a resolution as receivable,” said a TotalEnergies spokesperson.

Climate-focused investors have increased pressure on the world’s top oil and gas companies in recent years to reduce carbon emissions and shift away from fossil fuel production.

TotalEnergies does not foresee a major reduction in emissions from its products until 2030.

At last year’s Annual General Meeting, 30% of TotalEnergies investors voted in favor of faster emissions cuts, contrary to the company’s recommendation.

“We really have the feeling that these investors were not heard by the board,” said Ethos Fund CEO Vincent Kaufmann.

“There was a question about whether we would vote against Pouyanne’s renewal, but we wanted it to be constructive and not a frontal attack, so this is a consultative poll on what the best governance model should be,” Kaufmann added.

Fourteen companies listed on the French CAC 40 index have shared the roles of chairman and CEO since 2016, while 12 still have a single CEO/president.

The chairman of the board of directors has the power to set the agenda and filter investor requests, the resolution says, adding that in 2022 the Pouyanne-led board refused to submit a resolution related to climate change for a vote on a technical detail that was much debated.

Under TotalEnergies rules, the lead independent director, who must identify conflicts of interest and be a counterbalance to Pouyanne’s dual position, can be fired by a board vote at any time.

The story continues

Jacques Aschenbroich, chief independent director of TotalEnergies, last month defended Pouyanne’s dual management role as “the most appropriate to deal with the challenges and specificities of the energy sector” due to the “unity of command” it provides Pouyanne in negotiations with countries and other companies.

(Reporting by America Hernandez in Paris; Editing by Jamie Freed)