Sasol’s AGM highlighted growing concerns over its climate commitments, with rising emissions and a fading roadmap. Yet, shareholders appeared indifferent. More on this from Ann Crotty of Currency.
The petrochemical giant, which owns the largest single point of emissions in the world, didn’t bother giving shareholders a chance to vote on its climate plans at its AGM. And shareholders, it seems, couldn’t care less.
Has Sasol gone rogue? And more importantly, do its major shareholders even care?
On Friday, the petrochemical giant endured another tense AGM – though, at one hour and 27 minutes, it was considerably shorter than in recent years.
Not that it was short of drama. Frustrated shareholder activists, as in previous years, badgered the board for signs that they would finally take the environment seriously, and take decisive action. And once again, the board made vague commitments that sounded exactly like the ones they’ve made in each of the past five years – commitments they have decisively ignored.
The thing is, it’s impossible to know where Sasol has gone or is going, at least when it comes to its climate commitments, now that it has abandoned its “roadmap”, which was launched with much fanfare in 2021.
Sasol doesn’t actually use the word “abandoned” to explain the effective disappearance of this roadmap, the Emission Reduction Roadmap (unfortunately acronymed ERR), which was supposed to guide its strategy to reduce its carbon emissions.
This is an existential issue, not just for Sasol but for the country, as it is the second-largest greenhouse gas emitter in South Africa, after Eskom.
Remarkably, its plant at Secunda, which converts coal into synthetic fuels, is the largest single point of greenhouse gas emissions in the world – accounting for about 80% of Sasol’s emissions. Converting Secunda to using sustainable feedstocks is apparently not economically viable, so Sasol is looking at a massive stranded asset within a few years.
At the centre of Sasol’s roadmap was a 30% reduction in emissions by 2030, and a net-zero target by 2050.
As Just Share executive director Tracey Davies pointed out during the AGM on Friday: “You have made almost no progress in the three years since you set the target.”
Worse: in the past two years emissions have increased and, according to Sasol, are expected to increase during its 2025 financial year as the group is planning to increase production.
While it is true that Sasol reduced emissions in 2021, this was only because of the reduced production that year. “When you set your 2030 targets in 2021, did you genuinely think that the targets were achievable or were you being overly optimistic in an effort to appease shareholders and climate activists?” asked Davies.
CEO Simon Baloyi replied that the company was serious about hitting those targets at the time, but rather quickly had to review this plan because of an unexpected shortage of gas.
Sasol CEO Simon Baloyi. Image supplied
If it sounds vague, it is. Baloyi explained that Sasol has not yet revised the targets in its emissions roadmap – but he said the board plans to do that ahead of the company’s capital markets day next May.
Davies then asked: when will Sasol resume putting its climate plan to shareholders for a vote?
Surprisingly for a company that is front and centre of South African emissions, Sasol removed its climate resolution from this year’s AGM agenda, which meant shareholders were not able to cast an advisory vote on whether they felt its climate plans were up to scratch.
Sasol’s rather thin excuse for this is that its board felt this was unnecessary, as there had been no change to the emissions targets set in 2021.
This made no sense to Just Share, as that resolution was put to shareholders in 2022 and 2023, even though targets had not changed in either year.
When Davies asked when Sasol will resume putting its climate plan to shareholders for a vote, the answer was along the lines of “yes, maybe, sometime”.
Net-zero accountability
Sasol’s apparent do-nothing strategy on climate appears to be influenced by government’s reluctance to take any decisive action against it. In April, the group successfully appealed against an earlier decision by the national air quality office, rejecting Sasol’s application to be regulated on a more favourable emission load basis.
Nor is there much sign of a punitive tax rate being applied any time soon. As Just Share told the AGM: “We have a very low carbon tax with significant tax-free allowances and a rate that remains far too low to incentivise a ‘just transition’ and to ensure that the ‘polluter pays’.”
The government has much influence over Sasol – its largest shareholders are the state-owned Government Employees Pension Fund, and the Industrial Development Corporation – but has done virtually nothing to pressure it to clean up its act.
The prospect of economics winning out against the environment has also encouraged other investors – such as Allan Gray, which added significantly to its Sasol holding between March and June – to go along for the ride.
This suggests some investors are unperturbed not only by environmental concerns, but also by the remarkable churn of top executives and directors at Sasol.
This year, the company appointed a new CEO and CFO: Baloyi replaced Fleetwood Grobler, who had only been CEO since 2019, while Walt Bruns is the third CFO is as many years.
Sasol’s board has been just as much of a revolving door. Muriel Dube was appointed chair in 2024 to replace Sipho Nkosi, who abruptly resigned just days before the aborted AGM in November 2023. Stephen Westwell, who briefly stepped into the top seat when Nkosi departed, retired earlier in 2024. And Andreas Schierenbeck, only appointed to the board in October 2023, quit within months – and didn’t even make a cameo appearance in the group’s annual report.
Presumably those enthusiastic investors believe that despite the many concerns looming large over Sasol, the steep share price decline in the past two years – from R420 a share to R95 a share now – suggests that the stock is in for a bounce. Clearly, they are not investing in Sasol for its environmental fundamentals.
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