Sasol rejects demand for climate resolution
South African diversified chemicals and energy firm Sasol has rejected calls from activist shareholders to consider climate-related resolutions at its annual meeting.
It is the third consecutive year that South Africa's second largest greenhouse gas (GHG) emitter has refused to table such resolutions.
Shareholder organisation Just Share and non-profit Raith Foundation requested that Sasol include three climate-related resolutions at its meeting on 20 November. The resolutions called for Sasol's annual reports from 2021 onwards to outline a global strategy and scope 1, 2 and 3 greenhouse gas (GHG) emission reduction targets aligned with the Paris climate agreement, as well as executive remuneration to incentivise achievement of these goals.
The firm's 160,000 b/d Secunda coal-to-liquids (CTL) refinery is the world's largest single-site emitter of GHG.
But Sasol said that under South African company law "shareholders cannot usurp the authority of the directors or interfere in the management of a company." It said that the resolutions "take away the discretion of Sasol's board to act in the best interests of the company" by "seeking to impose specific methods for implementing complex policies." The company further said that shareholders are not entitled to vote on GHG resolutions.
Just Share and Raith Foundation said that this interpretation elevates the board to a position of dominance over shareholders that is contrary to the fundamentals of company law. They pointed out that five listed South African firms — Standard Bank, FirstRand, Absa, Investec and Nedbank — have tabled shareholder resolutions on climate risk in the past 15 months.
Sasol has said that its goal of reducing its South African operations' emissions by 10pc from a 2017 baseline to 60mn t CO2e by 2030, is aligned with the Paris climate agreement. But even under a best-case scenario, where Sasol achieves this and South Africa meets its Paris commitments, Sasol would still be responsible for 9.6pc–14.9pc of the country's emissions.
The activists said that Sasol does not show how its target is linked to the Paris goals. The firm has said that the target is "based on climate science, national targets, probability of success of potential reduction opportunities, associated risks, economic viability and balance sheet capability to finance these activities."
Sasol said that it has already committed to deliver its 2050 roadmap and associated reduction target for its South African operations next year – and then identify further mitigation opportunities for its international chemicals business. It intends to provide further details on scope 3 GHG emissions reduction targets and an increased weighting of climate change-related targets in its incentive plans from 2021.
Just Share and Raith Foundation, along with several other international activist organisations, have now written to some of Sasol shareholders in a bid to enlist their support. The letter, seen by Argus, was addressed to Ninety One, Coronation Fund Managers, Fidelity International and AllianceBernstein. In the letter, the organisations seek the intervention of Climate Action 100+ (CA100+), a grouping of more than 500 investors with more than $47 trillion in assets under management. CA100+ engages the world's biggest corporate GHG emitters to try to persuade them to take action on climate change.
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