EDITORIAL: Is Sasol’s climate about-turn capitulation or procrastination?
The decision by synthetic fuels and chemicals producer Sasol to table a climate-related resolution at its 2021 annual general meeting (AGM) looks either like capitulation in the face of growing activist pressure, or a play for time. Perhaps it is a bit of both.
Until now, Sasol has stood firm against a growing trend of shareholder activism pushing large listed companies to table climate-related resolutions at their AGMs. In recent months, five SA companies — mostly banks — have done so.
But Sasol was one of the first companies to be targeted.
It is, after all, a veritable bull’s-eye for climate activists. In producing synthetic fuel from coal at its Secunda plant, Sasol produces fossil fuel from fossil fuel. A cash cow though it may be, it’s an unfortunate business to be in as climate-change efforts intensify.
After Eskom, Sasol is the largest emitter of greenhouse gas in SA and Secunda is reportedly the largest single-source point of emissions on the planet.
Activists first approached Sasol in 2018 to table a climate-related resolution at its AGM.
Since then, the company has relied on legal opinion to refuse the tabling of such a resolution, claiming it would usurp the powers entrusted with management.
Interestingly, Standard Bank, the first SA company to table climate-related resolutions, at its 2019 AGM, this year relied on the same reason as Sasol when refusing to table further such resolutions as proposed by shareholder activists.
On Tuesday this week, after being informed of Sasol’s further refusal to table climate resolutions at its AGM next week, shareholder activist groups Just Share and the Raith Foundation announced they had written to the Climate Action 100+, a global investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.
Despite rejecting all climate-related resolutions for three years now, on Wednesday Sasol announced it would table such a resolution — though it would be a non-binding advisory vote and won’t be tabled next week but at the 2021 AGM.
As is the practice with non-binding advisory votes on remuneration, if more than 25% of the votes go against the resolution, the board will commit to a consultation process.
The move fits with Sasol’s apparent modus operandi on the climate issue — which is to buy time.
The company has promised to publish a 2050 climate road map in 2021, ahead of the tabling of a resolution at its AGM. Its decarbonisation strategy depends on securing vast amounts of natural gas at an affordable price — something it is yet to do.
Sasol’s promises seem to have worked to get the local asset managers off its back on climate issues for a while.
The 2021 commitment is perhaps intended to have the same effect on CA100+ too.
But Just Share wants to keep the pressure on. They say evidence shows that whenever climate strategies are left up to fossil fuel companies they do it at a pace and scale that suits them, and not at the speed required by the planet.
Greening Sasol’s operations will be a costly endeavour. Of course, with the disastrous Lake Charles project in the US stretching the group’s balance sheet to unsustainable levels and a possible rights issue on the cards, Sasol is not in a position to splash out on any new big investments yet.
But not doing anything also comes with a hefty monetary cost. With Eskom exempted from paying carbon tax for now, Sasol is by far the largest payer of carbon tax in SA with the cost expected to be between R1bn and R1.5bn per annum, and ramping up each year.
Sasol may have so far played well for time, but the clock is rapidly counting down.
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