On December 2, investors will get only their second vote on the climate change policy presented by petrochemical firm Sasol. It’s a big deal, considering how few firms give shareholders such a vote — let alone one that happens to run Secunda, the largest single-point greenhouse gas emitter on the planet.
Well, you’d think, Sasol’s climate policy must be top-tier. And, after flipping through its 65-page “Climate Change Report”, you might be tempted to give it a green tick.
Dig a little deeper, however, and you can see why Sasol is only asking shareholders for a “nonbinding advisory vote” on its climate plan.
The problem is a crisp one. Sasol says its goal is to reduce direct emissions by 30% by 2030, from 2017 levels. By 2026, it wants to reduce emissions by 5% for its energy business, and 20% for its chemicals business.
That sounds admirable — until you realise it has no actual plan to do this.
There are no year-by-year targets, no way to gauge progress, and its management may not even be around by 2030. Sasol’s “decarbonisation roadmap”, critics say, is just hot air, designed to greenwash how little it’s doing.
And while its “Climate Change Report” is soothing, investors who’d read its 20-F annual report filed in the US will have got another message entirely. There, Sasol says: “We can provide no assurances that Sasol’s plans to reduce greenhouse gas emissions pursuant to our roadmaps or otherwise will be viable or successful.”
Nonetheless, last year just 3.3% of shareholders voted against the climate policy. This year, investors will likely give it the benefit of the doubt again, simply for being bold enough to table it — more than most companies do.
The problem is that without clear targets to hold executives accountable, [Sasol’s] goals remain woolly
Institutional Shareholder Services (ISS), a London-based firm which advises investors on how to vote at AGMs, has issued a new report saying Sasol’s climate proposal “warrants qualified support”. This is because it “generally meets expectations in terms of disclosure and governance surrounding climate change” and there was “some progress made”.
But ISS warns there are “concerns” that Sasol’s targets are “not aligned with the global warming limit” of restricting the rise in temperatures to 1.5°C. It adds that Sasol’s long-term plan “requires more clarity”.
To be fair, Sasol has provided some flesh to its “Future Sasol” plan.
For example, it wants to switch to “low-carbon energy sources”, improve energy efficiency and use “cleaner alternative” sources, such as gas and green hydrogen. It also promises to spend up to R25bn to meet its 30% reduction target by 2030, and up to R35bn on all its “sustainability” plans.
The problem is that without clear targets to hold executives accountable, these goals remain woolly.
Shareholder activism organisation Just Share this week released a scalding critique of Sasol’s climate change plan, recommending that investors vote against it at the upcoming AGM.
“Fundamentally, nothing has changed since last year,” Just Share’s Robyn Hugo tells the FM. “They haven’t set any short-term milestones or accountability measures, but they want shareholders to tell them they’re doing a good job anyway.”
This lack of specifics is no accident.
In its climate report, Sasol says it has “intentionally not committed to a specific 2050 pathway”, because it wants to “avoid potential regret capital spend, infrastructure lock-in and stranded assets” as policy and technology change.
When it comes to its 2030 goal, Sasol says it will make “firmer commitments” as “technology choices become clearer”. But it is clear that “year-on-year reductions are not possible”.
Just Share says this doesn’t cut it: “Not one of Sasol’s 2030 targets is aligned with the requirement of climate science to cut emissions by almost half by 2030.”
Sasol admits it doesn’t go that far.
But it argues that to cut emissions by that degree, “we would need mitigation to be available, which it is not, and would therefore mean a turndown of significant portions of the operations to achieve the target. This would have serious implications for [South Africa] from a socioeconomic perspective.”
Which may be true, but doesn’t seem to accord with the assurances it gives elsewhere.
Another eyebrow-raising tactic is that Sasol judges its progress based on its own “Sasol-developed methodology”, taking into account “national circumstances” rather than the metrics agreed upon by climate scientists.
Says Hugo: “This is not aligned with climate science, but is … tailored specifically for Sasol, by Sasol. This is a flagrant example of greenwashing.”
Sasol disagrees. Either way, investors are likely to support its climate plan at the AGM — even if their patience is running out.
Old Mutual Investment Group’s Nicole Martens tells the FM that Sasol’s climate change report “does leave a lot to be desired in terms of details regarding the exact path it’s taking”.
She says her team isn’t “overly impressed” with Sasol’s progress since last year, and has engaged it to “emphasise the need for clarification”.
Still, she says Old Mutual will vote in favour of the report, though “we expect far greater detail in the next one”.
Rob Worthington-Smith, who runs ratings agency FarSightFirms, believes Sasol is being judged harshly. The truth is, he says, that industrial giants can’t power themselves using renewable energy. That’s why you can arguably forgive some of them for “greenwashing” their promises.
Hugo disagrees. “Sasol tells us they have a plan to decarbonise, so they ought to tell us the details of that plan and how they plan to achieve it. But without setting any short-term milestones or accountability measures, this looks like spin,” she says.
It’s a criticism that Sasol, eager to burnish its green credentials, ought to take to heart.
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