Sasol still “optimising the execution” of its emission reduction roadmap while emissions continue to rise

• Just Share’s latest briefing on Sasol’s 2024 climate disclosures highlights that the company’s recent communications strongly suggest it may be preparing to pull back from its 2030 emission reduction targets.

Sasol’s new CEO Simon Baloyi has introduced ambiguous language about “realistic and achievable” goals and a “moving target of between 25-35% GHG emission reduction”, while the company’s latest reports contain many hedging phrases like “redefining the pathway to Future Sasol”, “optimising the Emission Reduction Roadmap to include value-creation opportunities” and adopting a “balanced and measured approach”.

When questioned about these statements, Sasol has offered vague explanations and promised more details at an as-yet-unscheduled 2025 Capital Markets Day. This pattern of communication is particularly concerning considering Sasol’s confident launch of its emission reduction strategy in 2021. At that time, it claimed that it had “identified opportunities that exceeded expectations” and touted its “tailored target setting and roadmap approach” as ensuring “a scientifically sound, robust and credible process.”

Moving the goalposts

Sasol’s continuous moving of the goalposts and extensive use of qualifying language undermines its credibility: the company consistently avoids clear tracking of its performance against targets and does not provide detailed implementation pathways and clear accountability mechanisms. Its regular “restating” of key climate data is a significant barrier to effective tracking of progress.

Sasol’s comments about “policy engagement”, and its emphasis on “coherent and integrated climate policy” and an “appropriately paced” transition also suggest that the company is positioning itself to continue its campaign to delay pending climate policies and argue for their slower implementation based on “context”.

Sasol did not publish a separate climate report in 2024, as it has done annually since 2019. In addition, for the first time since it announced its emission reduction roadmap and 2030 targets in 2021, Sasol is not inviting shareholders to vote on its climate plans this year.

Sasol’s 15 November 2024 AGM will again be electronic-only – as was the AGM it reconvened earlier this year after cancelling the November 2023 meeting when it was interrupted by protestors.

Sasol shares are 45.29% down year to date. Source: JSE

No climate vote

The decision not to allow shareholders to vote on its decarbonisation pathway this year appears to be a strategic move by Sasol to avoid what would likely be an embarrassing level of shareholder opposition. The pattern of declining support for these resolutions – from 94.54% in 2021 to 77.36% in January 2024 – demonstrates growing shareholder scepticism about Sasol’s commitment to its climate plans and its ability to implement them successfully.

By avoiding a “Say on Climate” vote altogether while claiming to be “optimising” its emission reduction pathways, Sasol can sidestep immediate shareholder scrutiny while it prepares potential revisions to its climate commitments.

Lack of clarity on progress

Sasol’s first emission reduction target is, by 2026, to reduce scope 1 and 2 emissions from its Energy Business (excluding Natref) by 5%; and from its International Chemicals business by 20%. By 2030, in addition to a 20% emission reduction from sold energy products of its Energy Business, Sasol has committed to reduce scope 1 and 2 emissions by 30% for the Energy business (with some exclusions) and International Chemicals business, respectively.

As the briefing points out, Sasol does not report clearly on its progress against its various emission reduction targets. However, its emissions have increased for the second consecutive year.  When Sasol has reported small reductions in emissions, these are related to production variances rather than any dedicated mitigation efforts. It expects production to increase in 2025, as a result, inter alia, of increased gas production volumes in Mozambique, and increased production volumes at Secunda and Natref. In other words, emissions are also expected to increase next year.

If Sasol does adjust its GHG emission reduction targets, this will expose it to the risk of having approval withdrawn for the sulphur dioxide (SO₂) emissions it was granted for its coal boilers at Secunda by former Minister of Forestry, Fisheries and the Environment. A condition of Minister Creecy’s decision granting Sasol its “alternative load-based” SO₂ limit for the boilers, was that it must “continue to implement its integrated solution and must achieve the reductions in emissions of all pollutants as undertaken in its application and appeal”.

Shareholder concerns

Many of the concerns set out in Just Share’s briefing were raised by analysts and shareholders attending Sasol’s 5 November 2024 ESG roundtable. Participants asked questions about, for example: Sasol’s failure to table a “Say on Climate” vote this year; its progress on its emission reduction commitments; why Sasol is collaboratively exploring, with Eskom, the potential of future liquified natural gas (LNG) requirements when it states that LNG is too expensive for it to use as feedstock at Secunda; and Sasol’s plans regarding SO₂ emissions compliance when its current minimum emission standards leniency expires on 31 March 2025.

Download the full briefing here

Source: Just Share 

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