Just Share presses Sasol on climate transition plan

Shareholder activist organisation Just Share is stepping up pressure for petrochemicals giant Sasol to take its transition “seriously” ahead of its annual general meeting on Friday, November 13.

In its report, Driving a credible and just transition at Sasol, released last week, Just Share has raised questions about the pace and credibility of the company’s plan to reduce its greenhouse gas emissions.

However, Sasol has maintained its commitment to climate change, saying it is leading a “deliberately pragmatic and value-led” approach.

Just Share’s report argued that Sasol has ambitious targets without yet demonstrating that it has a sufficiently detailed, funded, deliverable plan to achieve them. It highlighted Sasol’s 2021 plan of a 30% reduction in Scope 1 and 2 emissions by 2030 using a 2017 baseline. However, the report noted that by 2025 Sasol switched its direction towards saving cash, minimising capital expenditure, and ramping-up coal to liquids (CTL) production rates.

“Delivering the targets now requires accelerated emission abatement within the next four years. The company must achieve this at a time when Sasol appears to be placing less reliance on measures previously identified as important to its pathway, including boiler turndown and a shift from coal to gas,” says the report.

The report also argues that Sasol does not provide sufficient process-level detail, annual milestones or quantified contributions from individual abatement measures to demonstrate how this reduction will be achieved.

“The shift from the original 2021 emission reduction roadmap towards a lower-capital-intensity strategy, greater reliance on renewable energy and market mechanisms, and continued high utilisation of coal-based assets raises a fundamental question for investors: Is Sasol committed to structural decarbonisation of the underlying business?”

In its response to Business Times, Sasol insisted it stood firm on its 2030 commitments, saying it is making “measurable” progress, pointing to a net 15% reduction in group scope 1 and scope 2 emissions by the end of the 2026 financial year against the 2017 baseline.

The group also said locally it acquired 1.37GW in renewable energy, with 510MW already operational, while also eyeing having 2GW of renewable energy operational by 2030. “Our focus remains on delivering our 2030 target of reducing Scope 1 and 2 greenhouse gas emissions by 30%, while ensuring that the actions we take are practical, sustainable and support the long-term competitiveness of the business,” it said.

Sasol said it understands the concern about the pace of the energy transition, but it believed progress should ultimately be assessed against measurable delivery rather than ambition alone.

“Our approach is deliberately pragmatic and value-led. We have to balance the need to reduce emissions with energy security, affordability, the competitiveness of our operations and South Africa’s broader socio-economic circumstances. This is particularly important given Sasol’s role in South Africa’s energy and industrial value chains,” the group said.

It said it was bolstering the financial and operational foundation of the business while progressing its transition. It pointed to the 2026 financial year in which Secunda achieved its highest annual production in five years, with adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) increasing by 17% to R61bn and net debt, excluding leases, declining to $3.3bn.

Sasol is a significant employer, supporting 500,000 jobs throughout the value chain and is one of South Africa’s largest taxpayers. It supplies some 30% of South Africa’s liquid fuel requirements, however, it is a massive polluter and is one of the biggest greenhouse gas emitters after Eskom.

Speaking during a panel discussion on the report, director of climate change engagement at Just Share Robyn Hugo said last week that a credible transition at Sasol matters.

This is because of Sasol’s footprint as the country’s largest private greenhouse gas emitter, while its operations are a major source of toxic air pollution, meaning that its decisions affect climate change, public health, industrial development, communities, and public finances. “We say that Sasol’s economic importance is a reason to take its transition more seriously. It’s not a reason to excuse any of the risks associated with its current business model,” said Hugo.

“In fact, the greater the consequences of a poorly managed transition, the more important it is to address those risks early. So its large economic footprint is actually a measure of the systemic value that’s at risk if the transition is delayed.”

She noted that a company can make a substantial economic contribution while also imposing costs that don’t appear anywhere on its income statement.

Sasol said that, as part of its commitment, it continues bringing renewable energy online and making progress on sustainable fuels and other lower-carbon opportunities.

“Our transition is not premised on pursuing projects at any cost. Capital is allocated selectively, with consideration given to project value, readiness and the enabling policy and market environment. This approach is intended to ensure that we reduce emissions while preserving the resilience and long-term sustainability of the business,” it said.

A report by the Centre for Research on Energy and Clean Air (CREA) released in September estimated that Sasol costs 1,000 deaths per year through pollution linked to Sasol’s Secunda Operations, which accounts for 83.7% of Scope 1 and 2 emissions, followed by Sasolburg at 8.4%.

CREA also said industrial emissions from Secunda were responsible for a rotten egg smell for residents and, at times, travel as far as Johannesburg and Pretoria — 150km away — due to the transboundary nature of air pollution.

Business Times