Total SE (NYSE: TOT) is one of the world’s largest oil companies and one of the seven super-major oil firms along with other leaders like BP, Chevron, and Royal Dutch Shell.
The French multinational company shocked investors and analysts over the weekend with an announcement that it will be leaving the Advanced Petroleum Institute, one of the largest and most influential energy industry lobbying groups.
Move Linked to Disagreements on Climate Policies
Total, like European Peers Royal Dutch Shell and BP, is committed to addressing climate concerns and reducing its carbon impact on the environment. It has decided to leave the Advanced Petroleum Institute because it fundamentally disagrees with some of the decisions made by the lobbying organization.
It said in a statement on Friday in France that it wouldn’t renew its membership for this year or any year in the future. It said that this was due to “certain divergences.” The company mentioned that the Advanced Petroleum Institute’s support of political candidates who were against America’s participation in the 2015 Paris Climate Agreement was one reason for its withdrawal.
Total is currently implementing projects to offset its carbon emissions. It is working towards net-zero emissions by 2050. One of the ways that it will achieve this is by reducing the carbon intensity of its energy products by 60%. Improved efficiency in extraction and processing, as well as the use of renewable energy sources, will contribute to the company’s goals.
The Advanced Petroleum Institute seemingly goes against the long-term goals of Total, because it lobbies against climate initiatives and helps to fund or support politicians who are against them. The institute is the world’s strongest petroleum industry lobbying group and its primary claim to relevance is the fact that it represents the world’s largest oil companies.
Total’s withdrawal will damage the credibility of the group moving forward. Without Total’s membership, the group will also lose one of its major financial backers. In addition, analysts have predicted that BP and Royal Dutch Shell will eventually leave the group for similar reasons, especially considering that American environmental policies often contradict those in Europe.
Will This Impact Total Stock?
Total’s withdrawal from the lobbying group will be considered a positive form of publicity. It may even have a benefit on the stock price, which is up 5.54% in the year to date. Even if this news has a minimal impact, the average target price of $52.79 suggests there will be an upside for investors holding Total shares in 2021.
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