Challenges Identification

TotalEnergies is present in about 120 countries. The nature of its activities and its geographical footprint in sometimes complex environments place the Company at the junction of a range of society’s concerns relating to people, the environment and business ethics. Energy is at the heart of the most daunting challenges of the 21st century, defined in the U.N.’s 2030 Agenda in the form of its 17 Sustainable Development Goals (SDGs). To achieve its 2050 Net Zero Ambition, together with society, the Company affirms its purpose: to provide as many people as possible with energy that is more reliable, more affordable and more sustainable, and places sustainability at the heart of its strategy, its projects and its operations.

Identification and assessment of main challenges and risks

The Company employs a continuous process of identifying and mapping risks in order to develop sector-specific policies that reflect the desired level of control. The Company manages its activities through internal management systems implemented at the different levels of the Company.

In doing so, the Company performs regular assessments, following a variety of procedures, of the risks and impacts linked to its activities in the social topics, people’s health and safety, the environment, climate, human rights and business ethics, as well as its supply chain.

  • The risks and challenges relating to health, safety and the environment are identified as part of a dynamic process that draws in particular on lessons learned, which are included in the HSE (Health, Safety and Environment) reference framework known as One MAESTRO (Management and Expectations Standards Toward Robust Operations).
  • The identification of climate-related risks and challenges is carried out by the Sustainability & Climate division.
  • The Human resources division is responsible for identifying risks and challenges related to the workforce.
  • In terms of human rights, TotalEnergies relies in particular on the UN Guiding Principles (UNGPs) Reporting Framework to identify its salient risks.
  • In terms of purchasing, a mapping of CSR risks has been drawn up and regularly updated since 2012.

In conjunction with these risk identification processes, a dialogue based on stakeholders’ involvement and participation is implemented in order to develop constructive and transparent relationships with them and to identify the main challenges and expectations and contribute to their evaluation and prioritization.

These assessments are generally carried out:

  • Prior to investment, acquisitions and divestitures decisions on the Company’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 Company’s climate strategy, prior to review by the Executive Committee),
  • 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 Company 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 thus 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 health, safety, climate change, the environment, social information, human rights, the fight against corruption and tax evasion, societal policy and relations with sub-contractors and suppliers.

For each of the challenges identified, the Company has deployed policies and operational action plans with quantitative and qualitative objectives aimed to reduce the negative impacts and increase the positive impacts of its operations from an economic, social and environmental perspective.

Health and safety for everyone challenges

It is around safety, core value of the Company, in accordance with the strictest standards and with regard to health that the operational measures and indicators used to manage the Company’s activities are based.

The activities of TotalEnergies involve health and safety risks for its employees, contractors, and residents in the vicinity of its industrial sites. Furthermore, certain products marketed by TotalEnergies may present risks for the health and safety of consumers.

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

  • risk of major 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.

The risks and challenges relating to people’s health and safety are identified as part of a dynamic process that draws in particular on lessons learned, which are included in the HSE reference framework known as One MAESTRO (Management and Expectations Standards Toward Robust Operations).

More information on our health and safety for everyone challenges

Climate change-related challenges

TotalEnergies supports the objectives of the Paris Agreement, which calls for reducing greenhouse gas (GHG) emissions in the context of sustainable development and eradicating poverty, and which aims to hold the increase in the planet’s average temperature 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 to as many people as possible with less GHG emissions concerns society as a whole, with governments, investors, companies 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’s global risk management processes. In particular, they cover

The identification and the impact of climate-related risks form an integral part of TotalEnergies’s 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 Company’s assets and for investment projects (refer to point 3.1.1 of chapter 3).

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(1), 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 transportation.
  • Gas and sustainable biofuels will be attractive and credible alternatives to conventional fuels and the Company intends to develop them.
  • The development of gas production is accompanied by measures to control methane and CO2 emissions (Scope 1+2). This development could be accompanied by an increasing share of biogas. The development of hydrogen could also contribute to meeting energy demand.
  • Helping customers improve their energy efficiency also offers opportunities and forms part of a trend that will be accelerated by digital technology. TotalEnergies wants to be innovative and bring them new product and service offerings. The Company aims to develop this approach for industrial and mobility applications.
  • 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. TotalEnergies therefore intends to maintain its investment in the development of natural carbon sinks.
  • Finally, certain sectors, such as cement and steel, could struggle to reduce their GHG emissions. They will therefore require carbon capture, utilization and storage (CCUS) technology. Consequently, the Company intends to step up the development of CCUS.

More information on our climate change-related challenges

(1) IEA, World Energy Outlook 2023.

Challenges related to the environment and nature

The Company’s activities incur risks for the environment and nature, for which TotalEnergies has developed a structured management policy.

In this context, the Company has 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 nature by projects and operations, especially those located in sensitive natural environments,
  • environmental risks associated with the production of final waste.

The risks and challenges relating to the environment and nature are identified as part of a dynamic process that draws on the Company’s expertise and lessons learned, which are incorporated in the HSE reference framework known as One MAESTRO (Management and Expectations Standards Toward Robust Operations).

More information on our challenges related to the environment and nature

Social challenges

Being a responsible player in the world of energy also means contributing to the well-being of people by being a benchmark as a responsible employer. This ambition primarily concerns employees, whose commitment and skills are the main drivers of the Company's long-term performance.

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

  • attracting and retaining talents throughout their diversity based on the key skills sought by the Company, while abiding by the principle of non-discrimination and equal opportunity,
  • supporting talents in the context of changes in business lines and technologies and maintaining the employability of employees in the long term with a view to a just transition,
  • ensuring a high level of commitment based on respect for each other, an inclusive corporate culture and improved quality of life at work.

More information on our commitment to the employees

Human rights challenges

The main challenges associated with the effects of the Company’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”, i.e., the human rights at risk of the most severe negative impact through the Company’s activities or business relationships.

On this basis, the Company identified 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.

More information on our human rights challenges

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 Company is present in about 120 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 about 120 countries, the Company carries out its operations in a constantly changing environment and is subject to an increasingly complex set of tax regulations, which may raise risks related to their articulation and their interpretation.

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 is available to the public on the website of TotalEnergies.

More information on our challenges related to fighting corruption and tax evasion

Challenges related to value creation for host regions

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 Company’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 Company’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 Company is committed to the public interest.

In this context, the Company has identified its main risks and opportunities with regard to creating and sharing value:

  • fostering the economic development of the territories where the Company is present;
  • managing societal challenges related to the Company’s activities;
  • engaging in citizenship initiatives.

More information on our challenges related to value creation for host regions

Supply chain challenges

TotalEnergies’ activities generate hundreds of thousands of direct and indirect jobs worldwide. Present in about 120 countries, the Company works with a network of over 100,000 suppliers of goods and services.

The activities of the Company's contractors and suppliers are likely to present the same risks as those associated with TotalEnergies' activities. The main risks relate basically to human rights in the workplace (forced labor, child labor, discrimination, decent work), health and safety and security, corruption, fraud, environment including climate, biodiversity, circular economy and responsible use of natural resources (water, forests).

The Company attaches particular importance to working with sustainable suppliers who respect both human rights and the environment, throughout its value chain.

More information on our supply chain challenges

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 Corporation 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 aforementioned Articles, this statement also includes information about the impact on climate change of the Corporation’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 Corporation and their impact on the Corporation’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(2).

(2) 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 in view of the nature of the Company’s activities.