All eyes will be on Sasol’s major shareholders, the Public Investment Corporation (PIC), Allan Gray and the Industrial Development Corporation (IDC) on how they will vote on the group’s climate report, after two key shareholders indicated they would vote against it.
SA’s biggest asset manager Ninety One and Old Mutual Investment Group (OMIG) will be voting against the company’s climate report when it is tabled at its AGM on Friday, putting pressure on other shareholders to closely look at the report and whether it is in keeping with SA’s energy transition objectives.
Nazmeera Moola, chief sustainability officer at Ninety One, said they were not voting as a block with OMIG, had confidence in management’s decarbonisation targets and noted the progress they had made on elements of their climate plan in the last year.
“However we have insufficient certainty on the gas component of the plan to vote for the Climate Report this year — in line with our declaration on the PRI (Principles for Responsible Investing) website. This uncertainty is partially generated by developments outside the control of management — but it does affect their ability to meet their 2030 targets,” Moola said.
“We have continued constructive engagements with Sasol this week, and believe the company could be in a position to provide the comfort we seek over the next year. If this occurs we would change our vote to support the plan next year.”
OMIG has led the charge against Sasol’s commitment to cutting its emissions — the largest in the listed space.
The asset manager said last week it would vote against Sasol’s climate change report among others. OMIG said the resolution rationale as presented to shareholders implies trade-off between achievement of the original 2030 and 2050 commitments and the creation of shareholder value.
Sasol, whose chair Sipho Nkosi resigned from the role last week, rebuffed OMIG’s position on Monday and said it had blindly relied on a report released by shareholder activism entity the Just Share last week, and this was “most concerning.’
“Institutional investors often follow the AGM voting recommendations of proxy advisory companies. Sasol has received and considered a report from Institutional Shareholder Services (ISS), the most influential proxy advisory service among investors in the US with approximately 20% referring to ISS’s guidance. ISS recommends a vote in favour of all Sasol resolutions being proposed at the general meeting as well as at the AGM,” Sasol said.
Ninety One has now joined the fray and said it will also vote against the climate report. Both Ninety One and Old Mutual are signatories of the Net Zero Asset Managers initiative (Nzami).
According to Sasol’s shareholder register, some of its largest shareholders are the PIC, Allan Gray, the IDC, Ninety One, BlackRock and OMIG.
When approached for comment, the PIC was non-committal and said it engages directly with its investee companies.
“The PIC approaches all engagements through its ESG framework that takes into account the principles for a 'Just Transition' on climate change strategies and their related impact. The SA economy faces idiosyncratic problems, particularly very high unemployment,” spokesperson Adrian Lackay said.
“The PIC's engagements around proposed solutions to reduce climate risks must take into account the social and localised economic impact in communities where our investee companies operate, as well as the longer term sustainability of investee companies.”
In motivating for voting for its climate report, Sasol says in 2021 and 2022 the board sought to shareholders’ support for the company’s climate change ambition and strategy along its journey towards achieving the targets announced in 2021.
“This year, given there have been no material changes to Sasol’s ambition and strategy, the board is seeking to confirm shareholders’ support of the company’s commitment to, and progress on a decarbonisation pathway that balances a long-term sustainable transition and the ability to create value.”
Sasol’s decarbonation targets include reducing emissions 30% in the next seven years and reaching net zero emissions by 2050.
The breakdown of the plan is to reduce absolute scope 1 and 2 emissions 30% by 2030 and absolute scope 3 emissions 20% in the same period. The group has a net-zero ambition for absolute scope 1, 2 and 3 emissions by 2050.
The Johannesburg-based company has committed R15bn-R25bn cumulative capital expenditure to 2030 for the emission-reduction road map.
Nzami is a group of global asset managers with about $64-trillion assets under management.
The initiative brings together more than 300 international group of asset managers committed, consistent with their fiduciary duty to their clients and beneficiaries, to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°’C.
Other signatories to the pact are the world’s largest asset managers including BlackRock, and JPMorgan Asset Management.
OMIG told Business Day that it has decided to implement a hard exclusion for direct support into any greenfield thermal coal production facilities and plants and is committed to phasing out thermal coal within its portfolios over time.
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