Institutional investors reject Sasol’s climate plan

The six-member investor group says it plans to engage with the Sasol board further regarding the company’s environmental disclosures in the coming months.

The six-member investor group says it plans to engage with the Sasol board further regarding the company’s environmental disclosures in the coming months.

Six major South African institutional investors have said that Sasol’s climate change plan is not comprehensive enough and that the company’s plans do not align with the Paris climate agreements.

Speaking on behalf of the institutional investors that co-filed the climate risk resolutions, Jon Duncan, head of Responsible Investment at Old Mutual Investment Group, said that while the group acknowledges Sasol’s commitments to reducing its greenhouse gas (GHG) emissions, the commitments should go further.

READ MORE: Sasol executive pay to be linked to emissions?

“Specifically, our concern is that Sasol has not made clear whether the types of disclosures that will be made in the November 2020 roadmap will be aligned to the Paris Climate Agreement, nor how they will be linked to short and long-term executive remuneration.

“Our view is that a vote on these issues would have allowed Sasol to test shareholder appetite for such disclosures, and if passed, would have provided clarity on parameters for future climate disclosures,” he said in a statement on Tuesday.

The six — Old Mutual, Sanlam, Abax Investments, Coronation, AEON Investment Management and Mergence Investment Managers — co-filed a shareholder resolution for the upcoming Sasol annual general meeting that will be held on November 27, “seeking greater transparency from the company on how its long-term greenhouse gas emission reduction strategy and executive rewards align with the Paris Climate Agreement.”

The resolution was submitted in October by the six investors to the Sasol board for tabling during the AGM, but was however rejected by the board which said the matters raised by the group “have been addressed and there is no longer any necessity to consider the legality of those resolutions for the upcoming AGM”.

Tracey Davies of shareholder activism group, Just Share, said that the investor group’s approach to engaging with Sasol represents a fresh approach compared to the traditional approach between investors and companies engaging only “behind closed doors.”

“This collaboration also marks the arrival of a new era of active ownership and responsible investment, and it is very encouraging to see the SA investor community demonstrate this kind of leadership,” she said.

Sasol last week issued its climate report where it commits to “reduce by 2030 the absolute greenhouse (GHG) emissions from [their] South African operations by at least 10%, off [their] 2017 baseline”.

The company’s total global GHG emissions (CO2 equivalent) in 2017 were 67 632 metric tonnes. The report also outlines Sasol’s preliminary assessments for transforming [its] operations and shifting [its] portfolio to one that would be more suited to a low carbon economy.

The transformation of Sasol’s operations would be significant as it is currently the largest emitter of greenhouse gases in South Africa, after coal-powered Eskom.

This is not the first time Sasol shareholders published their concerns regarding the company’s long term plans to transition to a low carbon economy.
In 2018, Sasol rejected shareholder resolutions that would compel the petrochemicals company to align its plans to Paris agreements that aim to keep global temperature increases to below 2°C above pre-industrial levels.

The resolution by the six institutional investors, if tabled and passed at the AGM, would have required Sasol to publish in its annual climate risk reports for the year ending 2020 and on an annual basis and its quantitative greenhouse gas targets aligned with the Paris Agreement.

The investor group says it plans to engage with the Sasol board further regarding the company’s environmental disclosures in the coming months.

Thando Maeko

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