Germany based asset manager Union Investment has reduced its holdings in French energy giant TotalEnergies amid allegations of human rights abuses linked to a $15 billion oil project in East Africa.
The move follows a call by Union Investment for an independent audit to investigate the accusations surrounding TotalEnergies’ involvement in the East African Crude Oil Pipeline (EACOP) and associated developments.
This development comes just days before TotalEnergies’ annual shareholder meeting, potentially affecting the company’s standing among investors prioritising environmental, social, and governance (ESG) matter.
Union Investment, one of the world’s top 20 investors, took action after reviewing a report by the non-profit group Just Finance International (JFI).
The report accused security forces at Uganda’s Kingfisher oil site of serious human rights violations, including forced evictions, violence against women, beatings, and extortion.
The Kingfisher site is a key part of the EACOP project, where TotalEnergies holds a 62 per cent stake.
Henrik Pontzen, Chief Sustainability Officer at Union Investment, stated that the decision to cut exposure to TotalEnergies followed a detailed review of the draft JFI report and subsequent engagement with the organisation.
He explained, “This decision takes into account our assessment of TotalEnergies’ approach to addressing serious controversies related to Mozambique and the EACOP project.”
Union Investment has requested that TotalEnergies commission an independent international audit to improve transparency and accountability in its East African projects. Pontzen added that the firm is pushing for more clarity on the company’s response to the allegations.
A spokesperson for TotalEnergies mentioned the company’s June 2024 response to an earlier JFI report, noting that after internal investigations, the concerns raised do not appear connected to the Kingfisher project operations.
TotalEnergies is also expecting the completion of a separate report on EACOP commissioned last year, due in 2025.
Despite TotalEnergies’ efforts to expand renewable energy investments, the company has faced repeated criticism from human rights groups and environmental activists. The EACOP pipeline and the Mozambique liquefied natural gas (LNG) project have attracted controversy over their social and environmental impacts.
TotalEnergies is currently under investigation in France over allegations of failing to assist workers displaced by a jihadist attack on its Mozambique LNG project in 2021.
The company denies wrongdoing and plans to resume construction on the project this summer.
Union Investment’s partial divestment is significant, given the firm manages assets worth approximately €500 billion.
Data from Morningstar Direct showed that Union held about €50 million in TotalEnergies shares and bonds across its sustainability funds before the reduction.
It still maintains a stake worth around €900 million in other funds.
Other major oil companies such as BP, Shell, and Equinor have recently scaled back investments in renewables, while TotalEnergies continues to push forward with clean energy initiatives, aiming to appeal to investors seeking to support the energy transition.
Meanwhile, JFI’s report on Kingfisher, released in May, was based on interviews with over 40 residents and workers in the area over a two year period.
The report detailed numerous alleged abuses by security personnel linked to the project.
