Union Investment cuts TotalEnergies stake over East African project allegations
LONDON/PARIS, May 22 (Reuters) - Germany's Union Investment has dropped French oil major TotalEnergies (TTEF.PA), opens new tab from its sustainability funds and called for an independent human rights audit following fresh allegations of abuses at a $15 billion project in East Africa.
The move by Union, a top-20 investor according to LSEG data, comes ahead of TotalEnergies' annual shareholder meeting on Friday and could potentially undermine its standing among investors focused on environmental, social and governance issues.
TotalEnergies denied the allegations made by non-profit Just Finance International (JFI) concerning the Kingfisher oil site in Uganda, part of the East African Crude Oil Pipeline (EACOP) project in which Total has a 62% stake.
A spokesperson for the oil major added it was in talks with Union Investment about its African projects.
Union declined to confirm the scale of its divestment. Data from industry tracker Morningstar Direct showed Union held around 50 million euros worth of TotalEnergies shares and bonds across its sustainable funds, and still holds a stake of around 900 million euros ($1 billion) across other funds.
While rival oil majors such as BP (BP.L), opens new tab, Shell (SHEL.L), opens new tab and Equinor (EQNR.OL), opens new tab have walked back promises to invest in wind and solar, Total has continued to add renewables, winning support from those keen to play the sector's transition to a lower-carbon economy.
The company, however, has faced criticism from human rights and environmental activists over the impacts of East African pipeline and Mozambique LNG projects.
JFI said it found evidence of alleged forced evictions, violence against women, beatings and extortion by Ugandan security forces at the Kingfisher oil site in late 2024.
JFI's report, opens new tab, released in May, was based on interviews with more than 40 people living and working in the area over the course of two years.
Union decided to drop Total from its sustainable funds after reviewing a draft of the report and engaging with JFI over its findings, said Chief Sustainability Officer Henrik Pontzen.
"This decision takes into account our assessment of TotalEnergies' approach to addressing serious controversies related to Mozambique and the EACOP project," he said.
The TotalEnergies spokesperson cited the company's June 2024 response to a previous JFI report that, after investigating, "the highlighted concerns do not appear to be related to the Kingfisher project operations".
Kingfisher is majority-owned by TotalEnergies, which has an about 57% stake, but is operated by partner China National Offshore Oil Corporation which owns 28%. Uganda's national oil company owns 15%.
CNOOC, Uganda's national oil company and the Ugandan government did not respond to requests for comment.
TotalEnergies is the subject of a criminal complaint and investigation in France that it failed to assist workers at its LNG project in Mozambique fleeing a 2021 jihadist attack. It denies any wrongdoing and hopes to resume building the LNG project this summer.
Pontzen said Union, which manages 500 billion euros in assets, had asked the company to commission an "independent international audit" into the controversies and wanted improved transparency and accountability.
TotalEnergies said a report it commissioned on EACOP last year would be completed in 2025.
($1 = 0.8853 euros)
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