Sasol rejects shareholder bid
INVESTORS: DISCLOSURE ON EMISSIONS STRATEGY
Company says it will release a detailed climate change report in 2020. Moneyweb
Over the past few years, Sasol has been under growing scrutiny for its approach to the risks posed to its operations by climate change. Major shareholders have been frustrated by the company’s unwillingness to provide clear disclosures and mitigation strategies.
This is a particularly significant issue for Sasol, because it is the second-largest emitter of greenhouse gases (GHG) in South Africa after Eskom. The transition to a low carbon economy, in which emissions have to be reduced and carbon will be taxed, will have potentially major impacts on its profitability.
Shareholder frustrations with the company’s muted response to these risks reached a new level of expression last month when six local asset managers – Coronation Fund Managers, Old Mutual Investment Group, Sanlam Investment Managers, Abax Investments, Aeon Investment Management and Mergence Investment Managers – came together to file a joint shareholder resolution for consideration at its upcoming AGM. The proposal asked that Sasol report on how its GHG emissions strategy aligns with the goals of the Paris Agreement.
The company has, however, rejected the resolution. Shamini Harrington, vice-president: climate change at Sasol, said this was because the company has already committed to doing what it requests. “We have said in our climate change report that we will come out with [a] detailed scenario analysis aligning with the Paris Agreement in 2020,” she said.
Repeat request
This is the second consecutive year in which Sasol has rejected a shareholder resolution asking for more disclosure on its climate change mitigation strategy. Last year, the request came from the Raith Foundation and shareholder activist Theo Botha. It was rejected on the basis that Sasol was going to provide the information they were asking for in its 2019 climate change report.
That report was released along with its annual results last month, and while it was an important step forward, it did not entirely meet shareholders’ expectations. Specifically, Sasol was not explicit about how its plans and targets aligned with the Paris goals of keeping global temperature increases below 2ºC from pre-industrial levels. The company did note it would be publishing an emissions roadmap next year, but the only clear emissions target it set was to reduce GHG emissions from its South African operations by at least 10% by 2030.
“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 Agreement, nor how they will be linked to short- and long-term executive remuneration,” said Jon Duncan, head of responsible investment at the Old
Mutual Investment Group.
Sasol’s continued resistance ... is regrettable
‘Regrettable’
The decision not to table the resolution at the AGM has therefore been met with disappointment. Shareholder activism group Just Share, which supported the drafting of both resolutions, expressed what many shareholders are feeling:
“Sasol’s continued resistance to shareholder attempts to hold it accountable via the tabling of shareholder resolutions is regrettable, especially from a board looking to restore trust,” it said.
It is unclear what Sasol would stand to lose by allowing the resolution to be tabled. Not doing so not only risks making the company appear obstructionist, but also potentially raises questions about its corporate governance.