Energy and chemicals company Sasol has taken exception to nonprofit organisation Just Share accusing it of shirking its responsibility to meet its previously stated goal of reducing its greenhouse-gas (GHG) emissions by 30% by 2030, claiming that the disclosure of risks is simply part of being a responsible corporate citizen.

“It is misdirected to view disclosure of these risk factors as Sasol conceding to not meeting targets. It is consequently also misleading to report it as such. We remain committed to our reduction targets and are progressing all reasonable available avenues to unlock related barriers in this regard,” Sasol said in a statement on November 3.

Just Share was commenting on Sasol’s 2023 climate disclosures ahead of its annual general meeting (AGM) scheduled for November 17.

The nonprofit said Sasol had now conceded that it might not meet its 2030 GHG emission reduction targets.

“Its long-stated preference for ‘optionality’ and its continued failure to set short-term decarbonisation goals against which management can be held accountable make this admission unsurprising,” Just Share said on November 3.

It accused Sasol of taking no responsibility for its potential failure to meet the 2030 targets, saying the company chose to instead blame various external “vagaries and variables”, and “headwinds”, which are “resulting in an emerging gap to targets and needs to be managed to achieve competitive returns”.

“Most worrying is that Sasol does not appear to have a Plan B – or at least not one it has disclosed to its investors and other stakeholders,” Just Share said.

In contrast to Just Share’s claims that Sasol had failed to set any short-term targets, Sasol insisted that it had indeed committed to short-term targets, which were outlined in all the company’s Climate Change reports.

“These include a 5% reduction of GHG emissions by 2026 for the energy business in South Africa. In the 2023 financial year, the energy business achieved approximately a 4% reduction relative to 2017, contributing towards the total Sasol group reduction,” Sasol said.

In addition, the company stated that it had exceeded its 2026 renewable energy commitment, signing more than 600 MW of renewable energy power purchase agreements.

“These commitments are linked to our executive remuneration incentives. In addition, we have progressed energy and process efficiency improvements on our South African sites and have reduced total Sasol group GHG emissions by approximately 5% to date, off a 2017 baseline,” the company said.

However, Just Share remained unimpressed, accusing Sasol of backtracking on its renewables commitments by allowing itself an extra year for integrating 600 MW of renewable power into its operations and by its removal, without explanation, of a previous commitment to procure 40% renewables by 2026 for its energy business.

Just Share said it was important for Sasol to meet its targets, alleging that Sasol was the biggest private emitter of GHGs in South Africa and one of the biggest corporate emitters of GHGs on earth.

“Its Secunda facility is the world’s largest single point source of GHGs. Sasol’s decarbonisation strategy and targets, and whether or not it achieves them, are crucial to the decarbonisation trajectory of the country,” Just Share said.

The nonprofit said it was confused by Sasol reporting that it was “moving beyond a predominant focus on addressing climate change”, since Just Share believed that the company had not made any meaningful progress in meeting its emission reduction targets.

By contrast, the nonprofit alleged that Sasol’s Scope 1 and 2 emissions had increased in the past reporting year, and that it expected emissions to increase further in the near term.

Just Share criticised Sasol’s achievement of its 2030 GHG emission reduction target being contingent on emissions of toxic air pollutant sulphur dioxide (SO₂) from the Secunda coal boilers being regulated through an alternative load-based emission limit, for which Sasol unsuccessfully applied in June last year. Just Share also pointed out that SO₂ was not strictly classified as a GHG, although many consider it to be an indirect GHG.

“In other words, Sasol states that, unless its SO₂ minimum emission standards (MES) appeal succeeds, it will not achieve its committed GHG target to reduce emissions by 30% by 2030,” Just Share said.

However, Sasol said it was merely communicating the risks in an effort to be transparent.

“Sasol, as a responsible corporate citizen committed to transparent disclosures based on the Task Force for Climate-Related Financial Disclosures is required to disclose potential risks and opportunities related to our energy transition. In this regard, we have disclosed the key risks, outside of our locus of control, that may impact our transition journey, including a stable and reliable electricity grid, renewable energy grid allocation by the South African government, delays in regulatory approvals for renewable projects, macroeconomic and pricing of liquefied natural gas, among others,” Sasol said.

SHAREHOLDER RECOMMENDATIONS

With the AGM only two weeks away, Just Share has implored shareholders to demand clearer short- and medium-term targets and milestones, detailed action plans and meaningful accountability mechanisms for executives and board members.

“This is essential to enable them to regularly assess whether Sasol’s ambition is feasible, whether it is making adequate progress and the likelihood of Sasol meeting its longer-term emission reduction objectives,” the nonprofit said.

Just Share also recommended that shareholders vote against the re-election of nonexecutive director Muriel Dube.

“Sasol does not have a board committee dedicated to overseeing the company’s management of climate risk, but it reports that the Safety, Social and Ethics Committee (SSEC) ‘is appointed to provide integrated strategic direction on sustainability, safety, social and ethics matters, including Sasol’s climate change response’. Considering Sasol’s multiple failures on this front, Dube, as chair of the SSEC, should not be reappointed,” Just Share said.

At the upcoming AGM, Sasol has asked shareholders to endorse its “commitment to and progress on its decarbonisation pathway which supports the Company’s ability to create long-term value”.

In 2021, Sasol published a new decarbonisation plan for “Future Sasol”, including targets to reduce its GHG emissions by 30% by 2030. In its 2021 Climate Change Report, Sasol indicated that it had “identified opportunities that exceeded expectations” and its “tailored target setting and roadmap approach” would “ensure a scientifically sound, robust and credible process”.

Sasol had reported that its energy business would meet the 2030 target through the decommissioning of boilers, the increased use of renewable energy, and the introduction of about 40 PJ/y to 60 PJ/y of LNG to reduce Sasol’s reliance on coal.

Just Share and other stakeholders pointed out, in 2021, that there was a lack of detail about several crucial elements of Sasol’s ambitions and actions, which made it difficult to assess their feasibility and credibility. Just Share had maintained ever since that Sasol’s decarbonisation ambitions were not accompanied by short-term milestones and detailed action plans.

“Sasol has not changed its emission reduction target, associated levers or strategy. In 2023, we have provided clarity on the affordability of LNG to supplement production while we decarbonise. Notwithstanding, LNG is not required to meet the 2030 targets. Key levers remain renewable energy integration, coal reduction through boiler turndown and energy/process efficiency improvements,” Sasol stated.