The resolution, co-filed by shareholder organisation Just Share and the Raith Foundation, sought to bind Sasol to publishing environmental performance details in its annual reports.
Sasol and other South African companies are coming under increasing pressure to take more action on climate change. The company is South Africa’s second-biggest producer of greenhouse gases and operates the Secunda coal-to-fuel plant, the world’s biggest single-site emitter of greenhouse gases. The company is aiming for a 10% reduction of greenhouse gas emissions by 2030.
This is the third consecutive year that Sasol has refused a climate-related shareholder resolution. The company has argued that shareholders are not entitled to vote on the resolution’s subject matter.
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It’s now “critical” to get certainty on the proper interpretation of the law in South Africa, said Emma Schuster, responsible investment researcher at Just Share. “It may, therefore, become necessary to mount a legal challenge to Sasol’s interpretation of the Companies Act which prohibits shareholders from proposing climate-related resolutions.”
Sasol points to due process to support its rejection.
- “The proposed resolutions did not reach Sasol in time to be included in our Notice of AGM, which was already in the physical printing and distribution process. This process is specifically scheduled to enable the notice to reach shareholders in time, according to the Companies Act and required regulations,” CEO Fleetwood Grobler, who took over in late 2019, said on November 11.
- Fleetwood added that shareholders can take part in a non-binding advisory vote on Sasol’s climate change strategy at the 2021 AGM.
Just Share and the Raith Foundation asked Sasol to include in its annual reports:
- Its strategy to align its global operations with the goals set out in the Paris Agreement in particular, holding the increase in global average temperature to well below 2°C above pre-industrial levels.
- Short, medium and long-term greenhouse gas reduction targets for Sasol’s global operations.
- Details of how executive remuneration will incentivise achievement of the company’s Paris-aligned transition strategy and emission reduction targets.
The drafters of the motion acknowledge that Sasol has published climate change reports in June 2019 and June 2020, which have expanded the company’s disclosure on climate risk.
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Yet, they argue, the company’s targets are not aligned with the Paris goals, are only applicable to South African operations and are not strongly linked to executive remuneration.
Just Share points to the overwhelming acceptance by shareholders of banks such as Absa, Nedbank and Investec.
- “We cannot overestimate the message this sends to the world and to Sasol’s investors,” Schuster said.
- “While in the rest of the world, and increasingly at home, climate resolutions are being used by shareholders as a vital element of corporate governance and climate action, Sasol chooses to take a narrow, controversial view of the law to prevent shareholders having a voice.”
Shareholder concerns on the environment won’t go away: Sasol needs to get ahead of the curve.
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