Sasol’s gamble that analysts at their shareholders’ companies possess only the most rudimentary of climate risk awareness is very bold indeed. Despite last week’s assertion by CEO Fleetwood Grobler of the seriousness with which the group is taking climate change, very little digging is required to disprove this position — and investors should be worried.
An international group called Climate Action 100+, representing over 500 investors with more than $47-trillion in assets under management, has placed Sasol among the top 100 worst emitters on the planet. It has been enlisted by the shareholder activist organisation Just Share to stress the seriousness of the matter ahead of Sasol’s annual general meeting on Friday.
The reason for the enlistment of Climate Action 100+ is two-fold. The first is that Sasol’s Secunda facility is the single largest point-source emitter of greenhouse gases (GHG) on the planet. The second is to support Just Share’s right as a shareholder to table resolutions that would require Sasol to align with the Paris Agreement on climate change and link executive remuneration to the success thereof.
Sasol declined the resolutions on the grounds that it is “already aligned to the Paris Agreement” and that the resolutions “take away the discretion of the Sasol board to act in the best interests of the company in relation to the commitment to the Paris Agreement”.
Sasol also stated that the resolutions “seek to micromanage the company” and that neither the Companies Act, nor Sasol’s memorandum of incorporation, nor JSE listing requirements nor the King IV Code “entitle shareholders to vote on the specific subject matter of the GHG resolutions”.
This first claim that its climate change strategy is aligned with the goals of the Paris Agreement simply does not hold water. Sasol’s ambition is a 10% decrease in emissions by 2030 from a 2017 baseline as part of SA’s nationally determined contributions (NDCs) to the Paris Agreement. Our NDCs, however, are rated as “highly insufficient” and are not only inconsistent with holding warming to below the Paris Agreement’s 1.5°C limit but in fact “set us on track for warming of between 3°C and 4°C”.
This 10% emission reduction target first surfaced in Sasol’s 2019 climate report, in which the company made no claim to be aligned with the goals of the Paris Agreement but rather that it was “based on the probability of success of potential reduction opportunities, associated risks, economic viability and balance sheet capability to finance these activities”.
Never mind that though. The Climate Action 100+ investor group is actually calling for a 45% global GHG reduction below 2010 emission levels by 2030, not 10%. And given our status as the fifth most carbon-intensive economy per unit of GDP in the world, our “fair share” of reductions could in fact be even higher than 45% under the principle of common but differentiated responsibility for emission reductions.
Sasol’s second set of reasons can be summed up as follows: “It’s none of your business, we’ve got it under control, nothing to see here.” Surely being identified as one of the 100 worst climate offenders in the world by an investor group controlling $47-trillion, in the year that the Task Force on Climate-Related Financial Disclosures is mainstreamed and the carbon tax is implemented in the fifth most carbon-intensive country in the world, should justify shareholder concern?
Grobler did state last week that the group would table a non-binding climate resolution at its 2021 annual meeting, but he pointed out the elephant in the room himself when he said “there is no technology and no alternative feedstocks in the next five to 10 years to really say coal is no longer a feedstock that we will use”.
The truth is that the board can only kick the can down the road so far before investors see that the horse that Sasol is riding is on its last legs.
• Maguire holds a master’s degree in global change studies from Wits University and has been developing green economy solutions for the private sector, NGOs and the state for more than a decade.
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