Pressure is mounting on corporate SA to take environmental issues more seriously and annual general meetings have increasingly become a key platform for lobbyists call companies to account.
The most recent example was last week at the AGM of ArcelorMittal SA, the country’s largest steelmaker and one of the top 10 emitters of greenhouse gases in SA. Although the environmental and social effect of the company’s operations was not on the list of items to be discussed, it took centre stage when the Centre for Environmental Rights (CER) and the Vaal Environmental Justice Alliance fired questions at company directors.
The company was asked to provide details on how it is reducing greenhouse gas emissions, rehabilitating areas affected by pollution and implementing the recommendations of its own environmental master plan.
In response to questions about the AGM, an ArcelorMittal SA spokesperson told Business Day that the company considers its effect on the environment one of the most important issues and continues to adapt its “robust environmental strategy” to ensure that it complies with and even exceeds the relevant legislative frameworks.
Despite severe financial constraints over the last decade, more than R1.3bn has been spent on environmental capital expenditure and maintenance projects, and plans are also underway to significantly invest in new technology to substantially reduce emission levels within the next two-and-a-half years.
“[The] CER and other stakeholders have engaged with AMSA [ArcelorMittal SA] for many years and we haven’t seen them take any positive steps or release details of plans to address environmental rehabilitation and their climate change impact,” says Leanne Govindsamy, a CER attorney.
“We are at the point where we need to see detailed plans, we can’t just continue with engagement.”
But, it’s not just large polluters which have come under the microscope.
In fact, at Standard Bank’s AGM on Thursday, SA shareholders will for the first time have tabled and voted on a resolution relating to climate risk. The resolution was proposed by the Raith Foundation and shareholder activist Theo Botha, with support from Just Share, a responsible investment non-profit organisation.
The same parties had attempted to have a climate risk-related resolution tabled at Sasol’s AGM in November 2018 , but the company refused after taking legal advice on the issue.
If the resolution is passed, Standard Bank would be required to publicly disclose information about the extent to which it is involved in activities which expose it to climate change risk. The bank’s board has recommended shareholders vote against the resolution.
According to Piet van der Merwe, environmental, social and governance (ESG) analyst at Momentum Investments, the pressure on companies to consider environmental issues is a growing trend, but is not limited to SA.
“The encapsulation of ESG issues in annual general meetings for management and shareholders is something relatively new. While there have been questions levelled at company boards in the past, shareholders have seldom, if ever, to my knowledge, managed to enforce resolutions,” he says.
“Up to now the emphasis has not been on green issues; rather corporate governance. This has been caused by recent corporate failures, and politics.”
Van der Merwe says there are also a number of growing climate change activist organisations that want their messages to reach the public domain.
“Buying a share in a listed company and asking questions at shareholder meetings is an excellent way to carry a message into the public domain,” he says.
As many SA companies have overseas listings, they are bound to be watched more intently by international activist organisations and the pressure relating to environmental, social and governance factors will no doubt intensify.
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