Investors back away from climate resolution at South Africa’s second largest emitter

NGOs file proposal at CA100+ target company Sasol for second year running, but this time without support of big investors

South African NGO Just Share has co-filed a shareholder proposal at Sasol calling on the energy giant to set Paris-aligned targets. It is the second year in a row that Just Share and the Raith Foundation have put forward a climate proposal at the Johannesburg-based firm, but this year’s filing is without the support of the country’s larger investors. 

Last year, six institutional investors – including Old Mutual Investment Group – took the “unprecedented” step and co-filed a proposal with the NGOs asking Sasol to report on how its emission reduction strategy aligns with the goals of the Paris Climate Agreement

Sasol blocked that resolution on the basis of an undisclosed legal opinion, claiming that such proposals “would constitute a usurping of the powers of the Board by the shareholders”.

Just Share disputes the company’s interpretation of South Africa’s Companies Act and points to similar proposals voluntarily tabled at financial groups in the country this year, including Absa, Nedbank and Investec – all which received 99% shareholder support. 

Just Share’s Director for Climate Change Engagement, Robyn Hugo told RI: “It is disappointing that, since that refusal, none of those [co-filing] investors appear to have taken any further steps to clarify the position on the tabling of climate change shareholder resolutions in South Africa.”

None of the investors who co-filed in 2019 have returned to co-file this year either.

Old Mutual has not responded to a request for comment on whether it will support this year’s proposal should it go to vote. 

Coronation Fund Managers, which also co-filed the 2019 proposal and is one of the few South African members of global investor engagement initiative Climate Action 100+ (CA100+), declined to comment on its support.

‘…investors should be taking a much stronger and more public approach to their engagement with Sasol’ – Robyn Hugo, Just Share

Sasol is a target company of CA100+, whose 500+ investor members, representing over $47trn in assets, seeks to steer the world’s dirtiest companies towards Paris-aligned strategies. 

Environmental activist Greenpeace found Sasol to be second only to South Africa’s state-owned energy firm Eskom in terms of emissions and regards its coal-to-liquids plant near the town of Secunda to be “the world’s biggest single-point source of emissions”. 

Hugo told RI that “investors should be taking a much stronger and more public approach to their engagement with Sasol”, given the company’s “significant GHG emissions and the serious climate risk it poses, its very weak emission reduction plan; and its refusal to table shareholder resolutions”.

There was confusion last year over who was responsible for leading engagement with Sasol as part of CA100+, but RI now understands that it is US-based Alliance Bernstein and Fidelity International. 

Alliance Bernstein’s Director of Environmental Research & Engagement, Sara Rosner, told RI that it is “in the process of reviewing” Just Share’s latest proposal, but doesn’t disclose its votes ahead of annual meetings. 

“Although Sasol has made significant advances in its climate disclosures and strategy in the past two years, we believe there is room for further improvement and we’re looking forward to working with the company on this critical issue”, she added.

Fidelity’s Head of Stewardship and Sustainable Investing, Jenn-Hui Tan, told RI that “Fidelity International has a strong track record of supporting climate-related resolutions, including all of those put forward for CA100+ companies we owned in 2020”. He echoed Rosner by acknowledging the “advances” Sasol has made around climate disclosures and strategy in the last couple of years, but said that there “remains room for continuous improvement”.

This year Sasol, whose emissions (including Scope 3) for 2019 are believed to be in the region 108,8 Mt CO2e, stated in its climate report that it aims to achieve a 10% reduction in emissions (against a 2017 baseline) by 2030, and indicated that it will announce a “2050 reduction ambition and roadmap”. 

Just Share’s Hugo called on Sasol, under its new CEO, Fleetwood Grobler, to “respond to investor concern about the impact of the climate crisis on the value of investments, and to allow shareholders to vote on this resolution at the 20 November AGM”.

Sasol had not responded for comment at the time of writing.