Several European pension funds are part of a coalition of 19 international investors that has filed a shareholder resolution calling for the split of the CEO and chair roles at France’s TotalEnergies.

The advisory note has been filed ahead of the company’s annual general meeting (AGM) on 24 May 2024. The pension funds in support include Sweden’s AP7, Switzerland’s Bernische Pensionskasse (BPK), Caisse Inter-Entreprises de Prévoyance Professionnelle (CIEPP), Pensionskasse Stadt Zürich (PKZH) and Publica, France’s Établissement de Retraite Additionnelle de la Fonction Publique (ERAFP) and the UK’s Lothian Pension Fund.

Led by the Ethos Foundation it calls on TotalEnergies’ board of directors to end the combination of the positions of chair and CEO. The Ethos Foundation believes that a high level of shareholder support at the AGM will send a strong message to the company to review its governance model to ensure a better balance of power.

The separation of functions is widely recognised as a good governance practice and is now applied by two-thirds of Cotation Assistée en Continu (CAC 40) companies. "It is also one of the long-standing requirements of the Ethos Foundation and pension funds," Ethos Foundation CEO, Vincent Kaufmann, said.

This shareholder resolution is not intended to call into question Patrick Pouyanné's role as CEO, but to introduce better governance within the group, the Ethos Foundation stated.

The separation of functions could improve dialogue with the board of directors on climate and transition issues and ensure a better balance of power at a time when many investors think that TotalEnergies' transition strategy is not ambitious enough, the foundation added.

Commenting on the filing, AP7 stated: “The separation of the roles is a fundamental principle of AP7’s ownership guidelines and is widely regarded as a matter of good corporate governance. The concentration of power to a single person increases the risk of conflicts of interest since the board of directors’ possibilities to ensure the shareholders’ interests in the company’s operations are weakened.

“Good corporate governance is particularly important for an oil and gas company such as TotalEnergies given the company’s size and the sector’s central importance to achieving global climate goals. Separation of the functions of CEO and chair of the board can strengthen the dialogue between investors and the board on climate and transition issues.”

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