23 November 2022 at 12:49 pm
Climate science makes clear that global greenhouse gas (GHG) emissions must be reduced by almost half by 2030 in order to limit warming to 1.5°C. Fossil fuel company Sasol Limited is the country’s largest private GHG emitter and its toxic emissions have negatively impacted fenceline communities for decades.
Just Share and the Centre for Environmental Rights (CER) have reviewed the 2022 annual reports of Sasol and have analysed its progress on a range of issues, primarily related to climate change and air quality, ahead of its 2 December 2022 AGM.
Many of Sasol’s commitments and plans remain too vague or too distant to allow meaningful assessment. Sasol has deferred any responsibility for its decarbonisation until at least 2026, more than halfway into this critical decade for climate action. Such action as Sasol has taken fails to demonstrate that it is on track to deliver its promised longer-term commitments. Failing to take adequate, timeous climate action will result in significant financial risk to Sasol, in addition to the climate and environmental risks the company faces.
At its November 2021 AGM, Sasol tabled its decarbonisation roadmap, setting out its plans and emission reduction targets to decarbonise the company’s operations. Despite the many gaps and other inadequacies of the plan, Sasol’s shareholders voted in support of the decarbonisation roadmap.
Sasol has now tabled a resolution for its 2 December 2022 AGM in which it asks shareholders to “endorse, on a non-binding advisory basis, Sasol’s climate change management approach, including its climate change ambition, strategy and progress towards achieving the 2030 target and 2050 net zero ambition”.
As the briefing reveals, Sasol’s decarbonisation commitments and strategy still fail to provide adequate details, accountability measures and incentives for these to be considered a feasible, measurable plan for Sasol to achieve its emission reduction targets.
“Rather than endorsing Sasol’s approach, responsible shareholders should demand clearer short- and medium- term targets and milestones, and detailed action plans. 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”, says Robyn Hugo, Just Share’s director of Climate Change Engagement. “This is critical, particularly given that Sasol’s current management will not be running the company by the time the longer-term targets are due to be achieved, and so cannot be held accountable if these targets are not reached”.
“Sasol should be taking a much more honest approach to the climate-related and other risks it faces, and seriously addressing the inevitable phasedown of its carbon-intensive and polluting operations”, says Leanne Govindsamy, head of CER’s Corporate Accountability and Transparency Programme.
Emissions and targets
Although Sasol claims, in its Climate Change Report 2022 (CCR 2022), to “remain on track with our commitment to achieve a 30% reduction by 2030”, it does not provide evidence to support this. Its emission reductions for 2022 are largely due to low production volumes, and Sasol expects emissions to increase in 2023.
Sasol states that it has used a “science-based approach” to set its targets. However, not one of Sasol’s 2030 targets is aligned with the requirement of climate science to cut emissions by almost half by 2030 in order to limit warming to 1.5°C.
“Instead”, says Hugo, “Sasol has applied a Sasol developed methodology for this purpose, one that is not aligned with climate science, but which is convenient in that it is tailored specifically for Sasol by Sasol. This is a flagrant example of greenwashing.”
Sasol’s ability to decarbonise remains closely tied to the affordability and availability of adequate quantities of fossil gas, which remains a highly uncertain prospect.
Sasol reports, in its CCR 2022, that it has extended its gas plateau production until 2028. It also recognises, in its Form-20F filed with the United States Securities and Exchange Commission (SEC), that, when compared with Liquified Natural Gas (LNG), “there is an inherent technical risk and a lower probability of success associated with exploration opportunities” and that pipeline gas has a “higher probability of becoming stranded and/or causing infrastructure lock-in in the long term”. Sasol is finalising terms to secure LNG via Matola (Mozambique) for delivery in 2026, and has plans to secure LNG in other areas.
Lobbying and carbon tax
Sasol continues to lobby against the implementation of an effective carbon tax in South Africa, and was a key participant in the “organised business’ joint position on carbon tax” which, if acceded to, would hinder South Africa’s ability to meet its obligations under the Paris Agreement, and to achieve a just transition to a low-carbon and climate-resilient economy and society.
Corporates regularly rely on their industry association representatives to lobby on their behalf to prevent or delay climate regulation.
In 2021, following two climate-related lobbying resolutions filed by Just Share and Aeon Investment Management, Sasol committed to further enhancing its monitoring, assessment and disclosures on lobbying, including by annually taking account of third-party assessments.
In its CCR 2022, Sasol has enhanced its 2022 disclosures on lobbying with the inclusion of third-party assessments by InfluenceMap, an independent think tank producing data-driven analysis on how business and finance are impacting the climate crisis. However, in each case where there is a discrepancy between InfluenceMap’s assessment and Sasol’s internal assessment, Sasol reports that “Sasol’s review remained unchanged”.
Sasol’s approach is illustrative of the limits of self-assessment when it comes to providing an accurate view of a company’s involvement in anti-climate lobbying.
Air pollution is the world’s largest environmental health risk. In a separate briefing, Just Share and CER provide context to the significant air quality challenges in South Africa, particularly in the Mpumalanga Highveld Priority Area (HPA) – one of the world’s worst air pollution hotpots. Sasol is a major contributor to the dire impacts of this toxic pollution. For instance, expert evidence estimates that emissions from Sasol’s Secunda facility, Eskom’s 12 coal-fired power stations and the Natref refinery in the HPA resulted in between 305 and 650 early deaths in and around the area in 2016.
In March 2022, the High Court recognised that the HPA’s poor air quality breached residents’ constitutional right to an environment not harmful to their health and well-being.
Sasol also played a leading role in opposing, weakening and delaying the implementation of the minimum emission standards (MES) and has brought several applications to postpone – and in some cases be exempt from – MES compliance. This despite the fact that South Africa’s MES are very weak, even compared to developing countries.