The battle over Sasol’s handling of climate change cranked up a notch after the group rejected a climate lobbying resolution filed by two of its shareholders.
Aeon Investment Management and non-profit shareholder activism organisation Just Share this month co-filed the resolution with Sasol.
Sasol spokesperson Alex Anderson confirmed the company received the resolution but rejected it. Anderson said that the disclosure contained in Sasol’s climate change report for the year ended June 2021, which the company released after receiving the resolution, largely complied with the resolution’s requirements.
Aeon and Just Share co-filed the resolution on September 14, while Sasol’s climate change report is dated 20 September. In that report, Sasol committed to enhancing its disclosures considering, among others, the matters raised in the proposed non-binding advisory vote, Anderson added.
‘Therefore, there is no need for shareholders to vote on the resolution as Sasol has met its objectives, by and large, in the climate change report for 2021,’ he said.
Aeon CIO Asief Mohamed said it was ‘extremely disappointing’ that the Sasol board rejected a lawful request by its shareholders.
‘The non-binding lobbying resolution has to be seen in the context of companies and trade associations that actively delay and prevent the introduction of carbon taxes and associated environmental protection legislation.
‘Lobbying is also evident in the anti-transformation lobbying by well-paid lackeys from trade associations aimed at slowing down efforts for a more equal gender and race-based society. In its rejection of this non-binding resolution, the Sasol board shows that it does not support the resolution’s objective of reducing climate change risks, food security risks and inequality,’ he added.
Mohamed said that from an investment perspective, if South Africa and the world did not sort out the climate risks, the world would be in a worse place.
Just Share executive director Tracey Davies said that Sasol sent a letter to Just Share and Aeon on the day it released its 2021 climate change report.
‘Just Share and Aeon reviewed Sasol’s 2021 lobbying disclosure, which is an improvement on its 2020 disclosure,’ Davies said.
But she said that Sasol’s disclosure in its latest report omitted key elements of the resolution. For example, Sasol deals exclusively with the climate change-related positions of the industry associations it is a member of.
She said that these associations often say one thing in public but lobby for something different behind closed doors. However, Sasol did not disclose anything about those engagements, Davies said.
Sasol representatives hold key positions in trade associations, which have members facing climate change challenges.
Sasol principal climate change specialist Shailendra Rajkumar is chair of the Industry Task Team on Climate Change. Sasol vice president of climate change Shamini Harrington is chair of the environmental subcommittee of Business Unity South Africa. In addition, Sasol Mining MD Lucky Kgatle is a Minerals Council South Africa board member.
Davies said that Sasol unlawfully continued to unilaterally ‘decline’ to table shareholder resolutions.
‘In the legal opinion received by Just Share this year, advocates Tembeka Ngcukaitobi SC and Chris McConnachie concluded that directors do not have a unilateral discretion to refuse to table shareholder-proposed resolutions,’ she said.
The resolution filing comes ahead of Sasol’s annual general meeting (AGM) on November 19. Anderson said Sasol would issue its AGM notice on October 18.
Aeon held almost 1.7 million Sasol shares, worth R420 million at Thursday’s close, on behalf of its clients as of 20 September, Aeon research analyst Tinyiko Mabunda said. Just Share spokesperson Annette Gibbs said the organisation owned a few Sasol shares.
Gibbs said that the latest Sasol resolution was its third collaboration with Aeon on AGM climate change resolutions. Earlier this year, they submitted a resolution to Standard Bank. In 2019, they collaborated on an AGM resolution submitted to Sasol.
Call for improved disclosure
In the resolution, Aeon and Just Share requested Sasol improve and expand its direct and indirect climate lobbying disclosure in its reports, including disclosing the annual membership fees paid to industry associations involved in climate lobbying.
The resolution states that the two shareholders want to assess whether Sasol’s and its associations’ climate-related lobbying were consistent with Sasol’s stated support for the Paris agreement and the transition to a low-carbon economy.
Aeon’s Mohamed said the fund manager knew that corporates like Sasol paid lots of fees to trade associations, which used that money to lobby governments and state officials.
In the US, Sasol must disclose funds spent on lobbying. OpenSecrets calculated, based on data from the US Senate Office of Public Records, that Sasol spent over $2 million (R30 million) on lobbying from 2016 to 2019, according to Just Share. In response, Sasol’s Anderson said that the group did not have the OpenSecrets document, so it could not verify its calculations.
Just Share said shareholders had filed climate lobbying resolutions with fossil fuel companies in other jurisdictions for many years, but this was the first South African resolution.
‘Unlike many other jurisdictions, South Africa has no legal requirements for disclosing lobbying,’ Just Share said. However, the organisation said that transparency about lobbying was a key to fighting corruption.
Mohamed said that Sasol indicated to Aeon that it would table a climate disclosure resolution at its latest AGM. Aeon and Just Share submitted a climate change disclosure resolution in 2019, but Sasol rejected it, he added.
Sasol’s Anderson said that the group announced in 2020 it would include a non-binding advisory vote in its 2021 AGM notice. That resolution will allow shareholders to vote on Sasol’s approach to climate change.