Sasol’s pledges on climate change leave activists cold

Sasol chair Sipho Nkosi had to postpone lunch twice during Friday’s gruelling AGM to allow time to deal with a deluge of questions from shareholders who opted to attend the meeting in person at the company’s headquarters in Sandton.

Comments and questions from activist shareholders accusing the energy and chemicals company of not being ambitious or clear enough in its climate change targets dominated the discussion.

But CEO Fleetwood Grobler hit back at the criticism, saying Sasol was making significant progress towards meeting its decarbonisation targets and there was “more to come over the next few years”.

He said Sasol had to “transition in a responsible manner” that would allow it to self-fund decarbonisation and future lowcarbon business activities from “current profit pools”.

Sasol’s climate and decarbonisation targets include reducing its scope 1 and 2 emissions by 30% (from a 2017 baseline) by 2030, and reaching net zero for scope 1, 2 and some scope 3 emissions by 2050.

“I recognise that there is impatience because we are not moving faster. Sasol has no doubt that it needs to decarbonise and transform its business model. We must create future profit pools. But we need our current profit pools to finance our decarbonisation initiatives,” Grobler said.

Before the meeting and after reviewing Sasol’s 2022 annual reports and other public documents, shareholder activism organisation Just Share and the Centre for Environmental Rights published two briefings on climate change and air quality.

In the climate-related briefing, Just Share said Sasol’s decarbonisation commitments and strategy failed to provide adequate details, accountability measures and incentives to be considered a feasible, measurable plan that will enable Sasol to achieve its emission reduction targets.

For example, the briefing stated that Sasol’s total emissions for scope 1 and 2 were reduced by 5% from the previous year (2021) and by 7% from the company’s restated 2017 baseline.

However, Sasol reported that this reduction was largely a result of lower production rates at its energy business. It expected production to “normalise” in the coming year, most likely leading to higher emissions from some of its plants in 2023.

Activist shareholders affiliated to Just Share asked several questions at the AGM, seeking clarity on Sasol’s interim emission reduction targets up to 2030, and asked for more detail on how the company is planning to achieve these targets.

Grobler said it was not possible for the company to commit to annual emission reduction targets in the run-up to 2030 but this did not mean it was “shifting the goalpost”, only that some of its efforts were linked to capitalintensive projects that would take several years to implement. “We are simply saying that our [emission] reduction will happen systematically over a few years.”

Sasol’s targets for 2030 were “non-negotiable” and it was still refining its “views on a path to 2050”. Grobler pointed out that the business had already agreed to terms to secure 600MW of renewable power, which will start coming online by 2025. By 2030, it wants to have its operations supplied with 1,200MW of renewables, which will bring it close to covering its total energy needs of about 1,500MW.

Sasol is one of the main

600MW of renewable power set to start coming online by 2025 after Sasol agrees terms

5% reduction from 2021 in Sasol’s total scope 1 and 2 emissions

participants in at least two earlystage, large-scale green hydrogen developments in SA, and will start producing some green hydrogen at its Sasolburg plant in 2023.

As part of its longer-term plans Sasol, which uses coal as a feedstock to produce liquid fuel and to power some of its operations, wants to reduce its coal volumes by making more use of renewable power and using gas as a feedstock.

In the run-up to the AGM, Just Share appealed to shareholders, “given the significant shortcomings in Sasol’s climaterelated plans”, not to support the resolution in which it asked shareholders to “endorse, on a non-binding advisory basis, Sasol’s climate change management approach, including its climate change ambition, strategy and progress towards achieving the 2030 target and 2050 net zero ambition”.

The resolution did pass, but in a written response to Business Day, Just Share climate risk analyst Emma Schuster said it was clear there was “growing frustration from shareholders” over Sasol’s unwillingness to provide “robust or detailed responses” about its climate change and decarbonisation plans.

“It is also evident from the decrease in support for Sasol’s climate plans. The percentage of shareholders that did not vote in support of the non-binding climate resolution almost doubled this year.”