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Special Report: Sasol's Liability Absence

Since 2005, Sasol has failed to satisfy any of its greenhouse fuel emissions targets. Nevertheless, these objectives have been revised 3 times upwards and the company has little rationalization or recognition.

Learn: Eskom, Sasol emits greater than half of SA's greenhouse gases.

Sasol's analysis of the 2000 reporting exhibits that it has repeatedly failed to take action repeatedly by setting targets to scale back its greenhouse fuel intensity – which measures how a lot CO2 it produces per tonne of product. Actually, its greenhouse fuel content was greater in 2018 than in 2002, when the company announced the primary measure.

Learn: South Africa Challenges Eskom, Sasol Air Air pollution in Coal Belt

This points to a scarcity of joint motion by a company utilizing the world's largest single point emission supply – a coal-liquid plant in Secunda. Given the federal government's increased local weather change measures, Sasol will probably be at high danger if pressured to cope with emissions from this plant.

Read: Sasol South African Crops Threatened by Emission Standards

Frequent change of goals additionally demonstrates the shortage of corporate accountability. Sasol first introduced its intention to scale back its greenhouse fuel depth in 2002, stating that using more natural fuel within the course of than carbon would scale back carbon emissions. In 2005, it announced its first actual target for these reductions.

Learn: Decide Kathy Satchwell interrupted Sasol's board for lunch.

Nevertheless, as the table under exhibits, the corporate has never achieved any of its objectives.

Sasol carbon emission reporting yr greenhouse fuel emissions (carbon dioxide emissions / tonne of product) declared depth target 2002 3.49 next yr 2003 three,12 2004 three,16 2005 3,09 As a way to obtain no less than a 10% discount in greenhouse fuel emissions from baseline in 2005 (ie 2.78) by July 2015. 2006 three.04 2007 three.40 2008 3.14 2009 three.24 to scale back the depth of greenhouse fuel emissions. all present actions by 15% of the baseline in 2005 (or 2.63) by 2020. 2010 three.05 [19659017] 2011 2.99 2012 3.02 2013 2.98 2014 3.28 2015 ] 3.58 to scale back greenhouse fuel emissions by 2.47 (CO2 equal / tonne product) in all operations by 2020. 2016 3.68 Sasol give up its greenhouse fuel intensity goal as an alternative of approving a carbon price range that the South African authorities had allotted for absolute emissions. 2017 three.66 2018 3.78

Source: Sasol, Previous Mutual Funding Group

This exhibits how Sasol has repeatedly deployed new objectives without ever attaining them. ] Firm rationalization

"Sasol has had voluntary global greenhouse gas emissions targets for several years and the first target was committed in 2005," Sasol explained to Moneyweb. “This voluntary greenhouse fuel intensity target was revised and updated in 2009 to improve the greenhouse fuel depth of all our current activities by 15% by 2020, from the 2005 baseline.

“In 2013, we dedicated to do a new assessment of our greenhouse fuel intensity. objectives in response to government policy developments, as well as modifications in baseline emissions following the divestment of Arya Sasol Polymer Company and Sasol Solvents in Germany (these are lower carbon, larger manufacturing amenities) and excluding Oryx GTL reporting from our SD reporting framework. "

Little progress and never much ambition

The sale of the German operations of Arya Sasol Polymer and Sasol Solvents elevated the corporate's greenhouse fuel emissions as these have been low-emission and excessive manufacturing crops. Nevertheless, even before the divestment of those companies, Sasol had not reached its target. Its greenhouse fuel depth in 2012 was only barely decrease than it was in 2005.

Sasol's latest choice to approve its carbon price range because its emissions target can also be formidable. It isn’t a reduction goal in any respect.

As the corporate itself said, “Sasol in South Africa has a carbon dioxide (emission restrict) finances for 2016-2020. In complete, our SA operating finances intends to restrict 301.7 MB [megaton] of carbon dioxide equivalent over five years, which leaves room for progress. "

This finances equals 60.34 MB of carbon dioxide equivalent per yr. In 2018, emissions from the company's operations in South Africa have been 55.27 million tonnes. Thus, Sasol does not need to scale back its local emissions, but provides itself permission to increase them.

The place's the examine?

Still, shareholders appear to be largely unnoticed by this fixed shift of paint factors. Moneyweb spoke to several main trustees who’re major shareholders within the company and none might precisely describe the company's emissions targets, how that they had changed or had ever been achieved. Solely Allan Grey seemed to have a real concept of ​​the objectives and how typically that they had been changed.

One of many massive trustees was not so conscious of Sasol's accountability in this matter that it started by telling Moneyweb that it was "applauding" Sasol's environmental policy. As Sasol's share worth is lower in the present day than it was 10 years ago, plainly asset managers can’t afford to put the company beneath closer scrutiny.

The essential situation is that the shareholders of a company like Sasol absolutely perceive and recognize. funding dangers, they should have full info. Additionally they want coherence to measure progress over time.

"I think it's important that stakeholder reporting is meant to enlighten people," Tracey Davies, CEO of Simply Share, informed Moneyweb. "It is meant to assist them understand your risks and alternatives.

" But such reporting confuses people. "

Whereas it’s clear that the majority of Sasol's major shareholders haven’t been as diligent as they need to be. Retaining a company accounted for by Sasol's fixed change of aims has made them unnecessarily difficult."

"Shareholder commitment is based on that what these companies disclose, "Davies explained." If their disclosure regarding emissions, targets and baselines is confusing or opaque, it will make it very difficult for shareholders to have a level playing field with the company. This in turn will make it difficult for them to understand their risks. "

Who's Watching?

While Sasolin has a transparent want for improvement on this space, control has additionally been diminished, the company's major shareholders, of whom solely Allan Grey has sued Moneyweb. This is in contradiction with the fact that a lot of the commenters referred to as Moneyweb stated they have been deliberately partaking with Sasol in looking for to study more concerning the company and to encourage extra consistent action to handle the risks of climate change.

Jon Duncan, Director of Accountable Investment at Previous Mutual Funding Group, stated this may be partly because buyers are taking a look at totally different measures. For instance, their main measure is the firm's greenhouse fuel depth per revenue unit, which signifies whether the company is successfully decreasing its carbon dioxide emissions to its revenues.

The frustration of many trustees can also be broader than Sasol's reporting normally and his want to debate mitigation methods.

"It is clear that the awareness of shareholders, society and government has grown significantly over the last three years about the risks of climate change and the short time needed to act," stated David Couldridge, CEO. ESG Dedication at Investec Asset Administration. “We’ve got been making an attempt to enhance the transparency and knowledge obtainable from Sasol, as a result of on the finish of the day, if a Carbon Liquid or Liquid Gasoline Firm closes as a result of situations that you simply can’t imagine in the meanwhile, we should have a clear understanding of the dangers. We have now requested the company to use TCFD [Task Force on Climate-related Financial Disclosures] for this objective. "

Local weather Change Report

Allan Gray ESG analyst Raine Naudé believes that an organization like Sasol must be a great distance off. more lively in this matter. It ought to contain shareholders in the administration of contracts, not vice versa.

"I believe a company like Sasol should approach shareholders and ask, 'What do you want to know? "" Naudé explained to Moneyweb. "It will permit for a more meaningful dedication."

In a constructive step, Sasol is committed to publishing a comprehensive local weather change report this month as a part of its annual report.

The purpose of this, based on him, is to include: “Update on Sasol's Local weather Change Software; an summary of measures to manage the risks and alternatives of climate change; an summary of our adaptation strategy; and a view of long-term greenhouse fuel targets and inner taxation instruments. "

Shareholders are cautious about hoping that this can provide a greater understanding of the company's strategies.

" I hope to see a clear plan to reduce or offset the Secunda plant's emissions, "Naudé stated. "And I hope they see clear timelines as they plan to do things."

It is very important Couldridge that what Sasol produces is concrete and credible.

"The critical question is what they go through. From a strategic perspective, to these very serious challenges ahead," Couldridge stated. "At the moment, it almost seems like the can is just kicking off the road."

In the second part of this particular report, week: fixing the complicated difficulty of Secunda's greenhouse fuel emissions