ESG Round-Up: Activist fund targets TotalEnergies over Russian exposure

The latest developments in sustainable finance: ECB threatens to name and shame, EU proposes gender quotas on boards, new sustainability reporting standard for coal companies.

ESG activist fund Clearway Capital has targeted French energy major TotalEnergies  – formerly known as Total – demanding it exits its Russian operations given the invasion of Ukraine or otherwise face a shareholder campaign at its next general meeting. The move is the first public campaign by Clearway Capital, which was founded by investor Gianluca Ferrari at the end of 2020. “We believe there to be a groundswell of support among the company’s shareholder base for decisive action from TotalEnergies,” Ferrari told Reuters. The energy giant has halted new investment in Russia and suspended trade in Russian oil but has not exited its operations in the country, which make up 24% of its proven reserves and includes a stake in gas producer Novatek. If its demands are not met, the fund said it was looking at filing, together with a number of large asset managers, a joint resolution so shareholders could vote on the issue annual general meeting on May 25. 

The European Central Bank (ECB) has threatened to name and shame banks after finding that none of the 109 lenders it oversees meet its climate risk disclosure expectations. Banks will be required to publish more detail on their exposure to climate risks from early next year when new rules from the European Banking Authority (EBA) take effect. The ECB called on banks to take decisive action after finding that none met its supervisory expectations for disclosures and only 15 per cent published data on the emissions of the companies they finance, known as scope 3. “Banks are trying to compensate for the poor quality of their disclosures by issuing a great volume of information around green topics,” said Frank Elderson, an executive board member of the ECB, adding that investors and supervisors were left with “a lot of white noise and no real substance”. 

European employment and social affairs ministers today agreed a ‘general approach’ on proposed EU legislation aiming to improve the gender balance among non-executive directors, according to an announcement. The directive aims to set a quantitative target for the proportion of members of the under-represented sex on the boards of listed companies or those who have at least 250 employees. Companies would have to take steps to reach, by 2027, the minimum target of having 40 percent of non-executive director positions held by members of the under-represented sex, or 33 percent if all board members are included. In October 2021, only 30.6 percent of board members across European member states and just 8.5 percent of board chairs were women, although big differences exist between the 27 member states.  

Climate Action 100+ has “flagged” three key shareholder proposals by its members in North America ahead of the 2022 proxy season to drive greater shareholder action on the climate crisis, according to an announcement. The companies being flagged include Berkshire Hathaway, which is facing an investors’ demand to integrate Task Force on Climate-related Financial Disclosures (TCFD)-aligned reports on physical and transitional climate-related risks and opportunities. The proposal at Valero Energy, filed by Mercy Investment Services, calls on the company to both adopt near- and long-term greenhouse gas reduction targets aligned with the Paris Agreement. The targets should include the company’s full range of operational and supply chain emissions, aligning with peer refiners that have already adopted their own targets covering emissions caused by the use of company products. The third proposal is at Imperial Oil, filed by Aequo, which calls on the company to cease capital expenditures in exploration and developments of new oil and gas fields to align its business strategy with the pathway described in the International Energy Agency (IEA) net zero emissions by 2050 scenario. 

The Eurosystem (19 central banks and the ECB) has selected Carbon4 Finance -a provider of climate and biodiversity data to the financial community – to provide climate-related sustainable and responsible investment (SRI) data, according to an announcement. This is in line with the common approach by the Eurosystem central banks to apply sustainable and responsible investment principles to the non-policy related euro portfolios they each manage under their own responsibility. The European Commission has estimated that in order for the EU to meet its 2030 climate target, new investment of up to €260 billion per year will be required over the next decade. 

Global Reporting Initiative (GRI) has launched a new standard to address sustainability challenges facing coal companies. The new sector standard for coal should enable comparable disclosure on plans to transition away from coal mining, risks related to catastrophic incidents and measures to effectively manage impacts on the environment and biodiversity.