SOMO: Shareholders over solutions

European Commission President Ursula von der Leyen is set to unveil the long-awaited Clean Industrial Deal. This policy package is expected to follow the tenor of the Antwerp Declaration, a lobbying document endorsed by over 1,000 of the most influential firms from Europe and the US, along with major business associations. 

The declaration advocates for a fundamental shift in EU industrial policy, built on two key pillars: increased access to capital for companies and regulatory reform. Strongly backed by industry, it frames public financing as essential for companies to fund their energy transition plans.  

Our new investigation in collaboration with Friends of the Earth Europe, however, exposes a different reality. Despite their claims to the contrary, major European companies in key energy transition sectors already have substantial access to capital.

The data speaks – profit over people and planet

Evidence shows the core problem is not the lack of access to capital, but a misallocation of existing financial resources. These companies prioritise massive payouts to shareholders instead of investing in their own businesses and adapting for the energy transition.
 
Over the 13-year period we investigated, the total set of 841 publicly listed firms in key energy transition sectors generated €49.4 trillion in combined sales, made €2.1 trillion combined net profit, and distributed €1.6 trillion to shareholders, which corresponds to 75.3% of their total net profits. Since the 2015 Paris Agreement, this trend has intensified. Collective net profits reached €1.4 trillion, with €1.1 trillion paid out to shareholders. 

The payout to shareholders (dividend and share buyback) increased consistently as a share of turnover from 2.4% in 2010 to 4.4% in 2023. At the same time, the energy transition- distributed 97% (Shell), 86% (Total Energies) and 40% (Mercedes-Benz Group AG) of their profits to shareholders. Some major players like Eni, Glencore, and BP paid shareholder dividends that exceeded their net profits. 

Ironically, the same fossil fuel companies which since the 1970s have actively lobbied against effective climate action are now calling for public money to make the energy transition possible.  

A system that favours shareholder payouts 

Our findings directly contradict the narrative central to the EU commissioned Draghi Report on Competitiveness and the Antwerp Declaration that advocates for the urgent need for public funds to “de-risk” private investment.  

For over 40 years, corporate governance has prioritised shareholders, driving record-high payouts through dividends and share buybacks. This approach diverts funds from investments, wages, taxes, and research and development, leading to “hollow firms”. Our report reveals that investment rates have steadily declined, on average, from 18.4% in 2010 to 14.9% in 2023. Despite this, current policies continue subsidising firms that favour shareholder profits over long-term sustainability.

The problem is systemic. It’s not just about payouts exceeding investment, but a financial model that prioritises short-term shareholder gains at the expense of our collective future. 

Public funds for public interests

By breaking the cycle of excessive shareholder compensation and implementing responsible public investment strategies, the EU can ensure that public funds are used effectively to build a sustainable and equitable future.  

Instead of providing unconditional public funds to shareholder-driven, already profitable corporates, the EU must: 

• Align public and private investments with democratic oversight, ensuring clear social and environmental conditions. 

• Prioritise public investment and control in key sectors rather than simply de-risking private investments. 

• Impose strict conditions on any public funding to ensure it is used for genuine investment, not shareholder payouts. 

• Shift support towards decarbonised industries and hold polluters accountable for environmental damage. 

It is time to end the practice of rewarding companies for failing to invest in their own growth while leaving public services and critical infrastructure underfunded. EU policy must focus on responsible investment that balances the needs of people, the planet, and the economy – not on subsidies that disproportionately benefit the wealthy few at the expense of the many.