French Court Orders TotalEnergies to Address Environmental Risks

A Paris court has ruled that TotalEnergies, one of the world's largest oil and gas companies, failed to meet its environmental due diligence obligations. The decision follows legal action initiated by a coalition of environmental organizations and the city of Paris, which sought to hold the energy conglomerate accountable for the indirect environmental impacts of its products, particularly greenhouse gas emissions associated with their use.

Legal Mandate for Environmental Oversight

The court's verdict requires TotalEnergies to strengthen its existing oversight plan within six months, specifically by including risk assessments for so-called Scope 3 emissions. Scope 3 emissions refer to indirect environmental impacts, such as those arising from customers burning fossil fuels purchased from the company. These emissions typically represent the largest share of a fossil fuel company's carbon footprint, but are often excluded from direct regulatory oversight.

French law, in place since 2017, mandates large companies operating in France and employing over 5,000 people domestically or 10,000 globally to implement and monitor due diligence plans. These plans are designed to identify and prevent serious violations of human rights, health, and environmental standards caused by the activities of companies, their subsidiaries, suppliers, and subcontractors. However, the law does not explicitly mention climate impacts, which TotalEnergies cited in its defense.

Partial Success for Environmental Groups

The lawsuit, filed in 2020 by several prominent environmental groups alongside Paris authorities, called for TotalEnergies to make significant reductions in oil and gas production. The plaintiffs argued that such reductions were necessary to meet the Paris Agreement goal of limiting global warming to 1.5 degrees Celsius. They specifically requested a 37% cut in oil output and a 25% reduction in gas production by 2030. While the court did not mandate these production cuts, it recognized the legitimacy of including customer-related emissions in corporate risk assessments, marking a notable advancement in climate-related corporate accountability.

For the city of Paris, the ruling represents a significant development in the evolution of French climate law, emphasizing that climate-related risks are now considered part of a company's due diligence responsibilities. This sets a legal precedent that could impact other multinational oil and gas firms operating in France.

Company and Prosecutorial Responses

TotalEnergies continues to assert that its compliance plan satisfies existing legal requirements and maintains that climate change does not fall under the statutory definition of due diligence. The company argues that energy demand for oil and gas remains high and that its withdrawal from production would only shift market share to other producers, without materially affecting global emissions.

The Paris prosecutor's office took the unusual step of intervening in the civil trial, supporting TotalEnergies' interpretation of the law. Prosecutors contended that the statute in question does not apply to climate change, which they described as a global issue primarily within the responsibility of governments and the international community, rather than individual corporations.

European Context and Industry Influence

At the European level, legislative progress on corporate due diligence has also faced challenges. In December, the European Union postponed the implementation of its due diligence directive to 2029, following significant amendments by conservative and far-right parliamentarians that weakened its climate-related provisions. Investigations have revealed that a coalition of major oil companies, including TotalEnergies, has actively lobbied to dilute the directive, particularly by removing requirements related to climate obligations.

One notable example of this trend occurred when a Dutch appeals court overturned a landmark ruling that had required Shell to reduce its greenhouse gas emissions. The reversal was seen as a victory for industry interests seeking to limit the legal liability of fossil fuel companies for global climate change.

The Paris court's decision, while limited in its immediate practical consequences, underscores the growing legal recognition of the climate responsibilities of major corporations. It signals a shift in how environmental risks, especially those related to climate change, are integrated into corporate governance and accountability frameworks.