Nongovernmental organisation Just Share, supported by shareholder activist organisations ShareAction (UK), Majority Action (USA), Follow This (Netherlands) and the Australasian Centre for Corporate Responsibility (ACCR), has written to Climate Action 100+ (CA100+) − the world’s largest investor engagement initiative − seeking its intervention in integrated energy and chemicals company Sasol’s “continued refusal to table climate-related shareholder resolutions”.
CA100+ comprises more than 500 investors with more than $47-trillion in assets under management. It was established to ensure that the world’s biggest corporate greenhouse-gas (GHG) emitters “take necessary action on climate change”.
As one of the 100 companies responsible for up to two-thirds of yearly global industrial GHG emissions, Sasol is among the initiative’s initial focus companies.
Sasol shareholders Ninety One and Coronation Fund Managers are members of the CA100+, but they are not the CA100+ “lead engagers” with Sasol. These are AllianceBernstein and Fidelity International.
For the third consecutive year, Sasol has refused to table a climate-related shareholder resolution, the organisations say.
Just Share and the Raith Foundation filed a resolution on October 19 ahead of Sasol’s November 20 annual general meeting.
On October 30, Sasol advised Just Share that the resolution would not be proposed to shareholders, arguing that shareholders are not entitled to vote on the subject matter of the resolution.
In the letter to CA100+, Just Share sets out in detail the reasons why it disputes Sasol’s legal argument against tabling shareholder resolutions. These reasons include that Sasol’s legal advisers have misinterpreted the Companies Act, to elevate Sasol’s board to a position of dominance over shareholders which is contrary to the fundamentals of company law and South Africa’s Constitution, the organisations say.
“Sasol’s argument has already been entirely undermined by the fact that five listed South African companies have tabled shareholder resolutions on climate risk in the past 15 months, without any adverse legal consequence,” Just Share notes.
It adds that the October 19 resolution would have required Sasol to include, in its annual reports from 2021, its strategy to align its global operations with the goals set out in the Paris Climate Agreement (“the Paris Goals”); short-, medium- and long-term Scope 1, 2 and 3 GHG emission reduction targets, and how these targets are aligned with the Paris Goals; and how executive remuneration will incentivise achievement of these targets.
Sasol’s current target is to reduce its South African GHGs by “at least” 10% (off a 2017 baseline) by 2030. Sasol’s public disclosures state that Sasol supports the Paris Agreement, but do not show how this target is linked to the Paris Goals.
Rather, the 10% reduction target is “based on the probability of success of potential reduction opportunities, associated risks, economic viability and balance sheet capability to finance these activities”.
Sasol has said that Just Share and Raith are trying “to micromanage the company by seeking to impose specific methods for implementing complex policies in place of the ongoing judgements of management as overseen by the directors”.
Sasol claims that the resolution will “take away the discretion of the Sasol board of directors to act in the best interests of the company in relation to the commitment to the Paris Agreement and goals and the reduction of emissions”.
However, Just Share says Sasol’s argument is incorrect.
“The resolution asks it to show how its global strategy and emission reduction target are aligned with the Paris Goals. Given the company’s frequent statements of support for the Paris Agreement in its Climate Change Reports and in public fora, the resolution reasonably asks Sasol to show how its strategy is giving effect to this stated commitment. None of Sasol’s disclosures provide shareholders with this information.
"Further, Sasol’s response implies that by proposing shareholder resolutions, the proposers themselves seek to wield control over the company’s management. This ignores the obvious fact that all shareholders must vote on any proposed resolution, and that it only becomes binding on the company if more than 50% of those shareholders approve it,” the organisation states.
In recent months, CA100+ has called on 161 CEOs and board chairs of the world’s largest GHG-emitting companies, including Sasol, to establish net-zero business strategies and set targets to support the delivery of these strategies.