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Challenges identification

Challenges

 

Table of contents :

TotalEnergies is present in more than 130 countries. The nature of its activities and its geographical footprint in complex environments place the Group at the junction of a range of society’s concerns relating to people, the environment and business ethics.

Challenges identification

The Group employs a continuous process of identifying and mapping risks in order to develop sector-specific policies that reflect the desired level of control. It manages its activities through internal management systems implemented at the different levels of the company. In doing so, the Group performs regular assessments, following a variety of procedures, of the risks and impacts linked to its activities on the social field, on people’s health and safety, on the environment, climate, human rights and business ethics, as well as on its supply chain.

The Human Resources division is responsible for identifying risks and challenges related to the workforce. The risks and challenges relating to health, safety and the environment are identified as part of a dynamic process that draws on the Group’s expertise and lessons learned, which are included in the HSE reference framework known as One MAESTRO (Management and Expectations Standards Toward Robust Operations). In the area of Human rights, TotalEnergies particularly relies on the U.N. Guiding Principles on Human Rights to identify its salient issues. In conjunction with these risk identification processes, a dialogue based on stakeholder’s involvement and participation is implemented in order to develop constructive and transparent relationships with them (refer to the Stakeholder relationships section).

These assessments are generally carried out:

  • prior to investment decisions on the Group’s industrial projects (evaluation by the Risk Committee of safety and security studies, impact assessments, particularly  environmental and societal, and evaluation of consistency with the Group’s climate strategy, prior to review by the Executive Committee), acquisitions and divestitures; 
  • during operations;
  • prior to placing new substances on the market (toxicological and ecotoxicological studies, life cycle analyses).

These assessments incorporate the regulatory requirements of the countries where the Group operates and generally accepted professional practices. In addition, internal control systems are structured and regularly adjusted to align with the specific nature of the strategic areas and orientations set by the Board of Directors and General Management.

TotalEnergies has therefore identified the main risks and challenges linked to its activities. As part of its statement of non-financial performance, these are listed in the introduction to the sections relating to: 

Social challenges

TotalEnergies set itself the ambition of being the company of responsible energies. Insofar as a company is first and foremost a people-driven adventure, this ambition depends primarily on the men and women who work at TotalEnergies, both now and in the future. Thus, TotalEnergies wants also to be a company that looks after its workforce, especially by offering employees opportunities to develop and thrive professionally.

TotalEnergies has identified its main risks and challenges concerning human resources development:

  • attracting and retaining talent based on the key skills sought by the Group, while abiding by the principle of non-discrimination and equal opportunity;
  • maintaining employees’ long-term employability by helping them acquire skills in order to keep up with changing careers and technology;
  • ensuring a high level of commitment based on respect for each other and improved quality of life at work.

Health and safety challenges

TotalEnergies places safety at the heart of its ambition to be a responsible company. The operational measures and indicators used to manage the Group’s activities are based on this fundamental value, in accordance with the strictest standards and with regard to health. Given their specific nature, the Group’s activities involve health and safety risks for the Group’s employees, the personnel of the Group’s contractors, and residents in the vicinity of industrial sites. Furthermore, certain products marketed by TotalEnergies may present risks for the health and safety of consumers.

In this context, the Group has therefore identified its main health and safety risks:

  • risk of industrial accident;
  • risk of workplace accident;
  • risk of transport accident;
  • risk of damage to health at the workplace;
  • risk of damage to the health and safety of consumers.

Environmental challenges

TotalEnergies places the environment at the heart of its ambition of being a responsible company. The specificities of the Group’s activities incur environmental risks, for which TotalEnergies has developed a structured management policy.

The Group has therefore identified its main environmental risks:

  • risk of accidental pollution;
  • environmental risks that would arise in the event of a liquid, gas or solid discharge or unsustainable use of natural resources;
  • risk of damage to biodiversity and ecosystems during projects and operations, especially those located in sensitive natural environments; 
  • environmental risks associated with the production of final waste.

Environmental risks and challenges are identified as part of a dynamic process that draws on the Group’s expertise and lessons learned, which are included in the HSE reference framework known as One MAESTRO (Management and Expectations Standards Toward Robust Operations).

Climate change-related challenges

TotalEnergies supports the aim of the Paris Agreement, which calls for a reduction in greenhouse gas emissions in the context of sustainable development and eradicating poverty, and which aims to hold the planet’s average temperature increase to well below 2°C above pre-industrial levels. To achieve these targets, the world’s energy systems need to be transformed. This dual challenge consisting of providing more energy for all with less carbon emissions concerns the society as a whole, with governments, investors, compagnies and consumers all playing an important role.

The risks and opportunities related to climate change are analyzed according to different timescales: short term (two years), medium term (until 2030) and long term (beyond 2030).

The identification and the impact of climate-related risks form an integral part of TotalEnergies’ global risk management processes. In particular, they cover:

  • the risks related to transition including those due to regulatory changes, such as the introduction of carbon taxes, as well as
  • the physical risks due to the effects of climate change.

The impact of these risks is analyzed for the Group’s assets and for investment projects (refer to point 3.1.2 of 2021’s Universal registration document).

To achieve carbon neutrality, the energy mix will need to change and in view of this, climate change also provides TotalEnergies with opportunities.

  • In the coming decades, demand for electricity will grow faster than the global demand for energy, and the contribution of renewables and gas to the production of electricity will therefore play an essential role in the fight against climate change. 
  • Electricity alone will not be sufficient to meet all needs, particularly those connected to transport. Gas and sustainable biofuels will be attractive and credible alternatives to conventional fuels. 
  • Controlling methane emissions and reducing Scopes 1 and 2 emissions will be essential in natural gas production; the latter could also be accompanied by increasing use of biogas and hydrogen.
  • Helping customers improve their energy efficiency also offers opportunities and forms part of a trend that will be accelerated by digital technology.
  • In addition, ecosystems, and forests in particular, store carbon naturally. Consequently, their conservation and the restoration of their role as carbon sinks are crucially important in the fight against global warming. 
  • Finally, certain sectors, such as cement and steel, could struggle to reduce their GHG emissions. They will therefore require carbon capture, utilization and storage technology (CCUS). 

Human rights challenges

The main challenges associated with the effects of the Group’s activities in terms of respect for human rights have been identified using the methodology set out in the United Nations Guiding Principles on business and human rights (UNGP) Reporting Framework relating to the “salient issues”, that is to say, the human rights at risk of the most severe negative impact through the Company’s activities or business relationships.

This analysis has led the Group to identify six salient risks subdivided across three key areas:

  • human rights in the workplace of TotalEnergies’ employees as well as of the employees of its suppliers and other business partners:
    • forced labor and child labor;
    • discrimination;
    • just and favorable conditions of work and safety.
  • human rights and local communities:
    • access to land;
    • the right to health and an adequate standard of living.
  • respect for human rights in security-related activities:
    • the risk of misuse of force.

Challenges related to fighting corruption and tax evasion

Fighting corruption

TotalEnergies is a major player in the energy sector where public authorities regularly play a role and where the amounts invested may be very high. In addition, the Group is present in more than 130 countries, some of which have a high perceived level of corruption according to the index drawn up by Transparency International. Aware that it is highly exposed to the risk of corruption, TotalEnergies applies a principle of zero tolerance.

Fighting tax evasion

With a presence in more than 130 countries through 1,118 consolidated entities, TotalEnergies carries out its operations in a constantly changing environment and is subject to an increasingly complex set of tax regulations, which may be in conflict when combined or subject to varying interpretations, thus giving rise to potential tax risk. In this context, TotalEnergies has developed a responsible tax approach based on clear principles of action and rigorous governance rules as set out in its tax policy statement, which was released in 2014 and is available to the public.

Challenges related to value creation for host countries

In line with its ambition to be the company of responsible energies and based on the values and principles formally set out in its Code of Conduct and Safety Health Environment Quality Charter, TotalEnergies strives to be an agent of positive change for society, and to contribute to its development through its societal actions.

At a national level, the Group’s activities generate value for the countries where it operates, and TotalEnergies intends to contribute to the development of economic opportunities for its host regions and communities. At a local level, the Group’s activities can be a source of opportunities for the people, but may also have an impact on the living conditions of local communities and residents. Furthermore, in order to address society’s global challenges, the Group is committed to the public interest.

Within this context, the Group has identified its main risks and opportunities with regards to creating and sharing value:

  • fostering the economic development of the host regions; 
  • managing societal challenges related to the Group’s activities;
  • engaging in citizenship initiatives.

Supply chain challenge

TotalEnergies’ activities generate hundreds of thousands of direct and indirect jobs worldwide. Present in more than 130 countries, the Group works with a network of over 100,000 suppliers of goods and services. In 2020, the Group’s purchases of goods and services (excluding petroleum products and vessel chartering by Trading & Shipping) represented approximately $23 billion worldwide. The allocation of expenditures at Group level is approximately 29% for goods (products, materials, etc.) and 71% for services (such as consulting services, materials supply operations, transportation, etc.).

Through their activities, the Group’s subcontractors and suppliers may face the same risks that the Group encounters in its own activities, including societal and environmental risks. The most prominent risks relate mainly to human rights in the workplace (forced labor, child labor, discrimination, decent working conditions), health, security and safety, corruption, conflicts of interest, fraud and the environment.

Consolidated statement of non-financial performance 

Chapter 5 of the Universal Registration Document constitutes the consolidated statement of non-financial performance as per Articles L. 22-10-36 and L. 225-102-1 of the French Commercial Code and discloses how the Company and the entities included in the scope of consolidation, in accordance with Article L. 233-16 of the French Commercial Code, take into account the social and environmental consequences of their activities, as well as the effects of those activities with regard to respect for human rights and fighting corruption and tax evasion.

 

Pursuant to the abovementioned Article L. 22-10-36, this statement also includes information about the impact on climate change of the Company’s activity and the use of the goods and services that it produces; its societal commitments in order to promote sustainable development and the circular economy; the collective agreements in place within the Company and their impact on the Company’s financial performance as well as on employees’ working conditions; actions aimed at fighting discrimination and promoting diversity; and the measures taken on behalf of people with disabilities(1).

(1) TotalEnergies has not made any specific societal commitments to prevent food waste and food poverty or to promote animal welfare and responsible, fair and sustainable food, as these are not significant issues with respect to the nature of the Group’s activities.