Image source: Getty Images.

Big oil has never been a champion in the effort to reduce climate change. On the one hand, it's understandable why they wouldn't lead the charge. But big oil is starting to see climate change as a threat, at least on a regulatory front, which could reduce demand for oil and gas long-term. And that's changing the tone from denial of climate change to admission that there's a problem and different strategic reactions for their operations.

One company has taken a more advanced look at climate change and is already changing its business model as a result. Total (NYSE:TTE), the French oil giant that's the #4 oil & gas producer worldwide recently released a report called "Integrating Climate into our Strategy" and it's putting money where its mouth is when it comes to adapting to the reality of climate change in energy. Here's a look at how it could pay off for investors.

Total's view of low carbon investments

It's novel for an oil company to even have a climate strategy and Total has big goals beyond oil & gas, which will shape its future. The report says:

Our ambition is to have low-carbon businesses make up around 20% of Total's portfolio in 20 years.

There are a couple of ways the company can meet that goal in the context of its $143.3 billion in revenue. The first is through its majority ownership of solar company SunPower (NASDAQ:SPWR). The solar panel maker is expecting to generate $3.2 billion to $3.4 billion in revenue this year and is going to triple production in the next five years. But it's what SunPower is building that could have an even bigger impact on Total.

Image source: Getty Images.

SunPower is a solar panel manufacturer, but it's also a solar power plant developer. The company has constructed solar projects around the world and now Total is starting to play a role in helping develop and own these projects. Last month, the two companies announced collaboration on two large projects in Chile and announced a Japan project earlier this year. But it's Africa and the Middle East where the largest opportunity may lie.

In past interviews, SunPower CEO Tom Werner has said that Total's relationship in the Middle East and Africa will help unlock those high potential markets. And Total has said that Africa is a strategic area of growth, so the two clearly have complimentary goals in that region as well.

There are other investments Total is making in carbon capture, use, and storage and even supporting carbon pricing worldwide. And these strategies are meant to reduce the emissions of its existing oil & gas business. So, there's really a two pronged strategy at Total.

A model for other oil giants?

Total may be acknowledging climate change and laying out its plans to de-risk its business over the next two decades, but that doesn't mean big oil companies like Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) are making the same decisions. Both companies defeated climate resolutions proposed by environmentalists this year, although they've softened their stance on the subject and are starting to discuss ways to adapt to renewable energy. But it's clearly not going to be a big part of their business in the near future.

What should concern investors in big oil today is that long-term trends don't appear to be in their favor. After the Paris climate agreement, it's likely that public policy will become friendlier to renewable energy and less friendly to fossil fuels. And we're already seeing renewables out grow fossil fuels by a wide margin over the past decade. They'll need to develop a strategy for how they're going to adapt or they'll slowly be rendered obsolete.

Out of the big oil companies, Total seems to have the most comprehensive strategy for adapting to a cleaner energy future. Whether or not that pays off with higher returns than competitors will take time to tell.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.