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SASOL’S response to the climate action 100+ Report

Johannesburg, South Africa – Sasol notes the assessment report by investor coalition Climate Action 100+ (CA100+). It is regrettable that this has already been publicly released and commented on (including in a news article on News24 on 23 March 2021) while Sasol was not provided an opportunity to further comment. We therefore wish to record that we remain concerned that our previous and recent comments on a few key elements has not yet been addressed by CA100+. We accordingly submit that that the scoring is not representative of Sasol’s performance, context (due to the lack of assessment criteria that takes into account the developing country context Sasol largely operates in), the reduction journey we are on and our associated efforts to Justly Transition. We trust that this can be clarified in a meeting with CA100+ scheduled for the 26th of March, since we support that the assessment is correctly positioned to aid investor signatories on their accurate evaluation of a company’s ambition and action in addressing its climate change challenges.

We have consistently indicated that the challenge of this assessment lies in the binary nature of the approach following a process that does not allow for respondents to provide extenuating circumstances that play a critical role in how corporates in developing countries are managing climate change. As such, the CA 100+’s inflexible binary indicators and responses, without qualifiers, in our view lack the ability to recognise valid and real commitment, context and intent by some corporates, including Sasol, to transition. In this situation investors and stakeholders may be wrongly left with believing that Sasol does not want to transition.

Context and timing matters – the Paris Agreement is clear on recognising the need for developing countries, and by implication corporates in these countries, to be on a different or delayed reduction trajectory to others in developed countries. In no way is this counter to the intent of the Paris Agreement or the urgency of the need to transition but rather simply acknowledges legitimate challenges faced in different geographies and locations to be overcome as part of the reduction journey.

Sasol’s carbon footprint is largely associated with its operations in South Africa, deemed as a developing country where climate change challenges have to be addressed amid national priorities for poverty and unemployment alleviation which are significant considering very low economic growth. This is further complicated by the fact that the country lacks key transitioning fuels, without which companies such as Sasol are left with turndown options that cannot be contemplated especially given the significant socio-economic implications. It is for this very reason that Sasol is undertaking exploration activities to secure and source gas for the country and our own needs to realise significant GHG reductions and support positioning for a net zero product environment via the use green hydrogen and renewable energy. In the short- to medium term, we see large-scale reductions as being limited but post 2030, we believe significant and accelerated reductions are possible once gas and renewable energy is unlocked.

We are transitioning with urgency and over and above the already achieved 13% reduction (more than 10mtpa) from 2004, Sasol has set a 2030 GHG reduction target. Since 2017 we achieved a 3% reduction bringing our reduction to 16% so far. This 2030 target was, in fact, assessed as being “partially aligned which is contrary to what is stated in the Just Share media release that it is not aligned with the Paris Agreement. In addition, Sasol has not indicated at any point that a long term GHG target was released and has publicly committed and widely reported on our intent to release at our Capital Markets Day, planned for later this year, our 2050 long-term GHG reduction ambition and roadmap for our SA and international operations. Central to Future Sasol and our strategy is progressing towards a holistic climate change response, taking cognisance of the areas where we operate and the implications of our transition.

Climate change management requires a multifaceted approach that tackles all angles of the challenge. In Sasol’s case we are including reference to a transformation of the organisation, necessitating identification and establishment of key collaboration initiatives and partnerships that enable the transition. Recent milestones achieved include:

  • Our collaboration with the South African government aimed at developing a hydrogen roadmap for South Africa. Sasol is a member of government’s South African Hydrogen Society, which is tasked with developing this roadmap.
  • Our partnership with Ineratec to make available our Fisher Tropsch catalysts for use in the production of green fuels and chemicals which is highly sought after for a low-carbon future.
  • Last year, we sold our air separation units at our Secunda plant in Mpumalanga to Air Liquide which is opening opportunities for both Sasol and Air Liquide to jointly progress our GHG reduction ambitions for the Secunda site.
  • In addition, we are jointly aiming to procure 900MW of renewable energy by 2030 with Air Liquide, this being the largest private renewable energy deal in South Africa. 900MW represents an 50% increase in our original announcement which would not have been realised in a short space of time had we not partnered.

The fact that an activist organisation, such as Just Share, according to media reports regard the report as support for their position that Sasol does not have a clear reduction strategy, is problematic and proves our abovementioned point with regards to such binary assessments. The manner in which the assessment has been considered, has led to the above-mentioned misleading conclusion which is in direct contrast with Sasol’s formal climate change disclosures (which include our suite of annual reports and the CDP available on www.sasol.com). These disclosures confirm our 2030 reduction strategy of at least 10 percent off a 2017 baseline and affirms that we are progressing work on our 2050 ambition for communication at Sasol’s Capital Market’s Day in 2021. In our view it is also premature to presume that the company will not be aligned with the Paris Agreement and CA100+ indicators for setting a long-term ambition, especially when these announcements have not been made yet (will be disclosed later in 2021) and such conclusions are not in evidence. We do not believe that it is the intent of the CA100+ initiative to create such perceptions and are hopeful that the Just Transition indicator, which is unassessed for this cycle, will address the highlighted shortcomings.

We experience the lack of transparency and provision of the full assessment criteria used by CA100+ as a contributory factor to non-representative scoring, since respondents are not privy to how publicly available information is considered for purposes of scoring. It is likely that not all the relevant information is considered holistically and that justifiable nuances in governance approaches by corporates are not provided for/considered as part of the assessment. By way of example, we challenge the assessment that Sasol failed in putting up a position at Board level for climate change.

Climate change management is overseen by the Sasol Limited Board of Directors. The Board is supported by The Safety, Social and Ethics Committee (SSEC) supports the Board to provide integrated strategic direction on group-wide sustainability, safety, social and ethics matters. This Committee, through a recently revised Terms of Reference assesses and approves our sustainability approach, inclusive of climate change as a material issue. The SSEC ensures effective risk management oversight on climate change management.

As previously indicated to CA100+ and disclosed in our suite of annual reports, Sasol in 2018 already appointed Muriel Dube, a Non-Executive Board member (who still serves) with specific sustainability and climate change knowledge and experience to enhance and support the Sasol Board of Directors’ abovementioned oversight role and accountabilities Muriel is the Chair of the SSEC. She brings specific experience on sustainability and climate change and is a former Chief Negotiator for the South African government to the United Nations Framework Convention on Climate Change (UNFCCC). As a responsible organisation, Sasol is focused on delivery and are pursuing all feasible options to reduce GHG emissions in line with the Paris Agreement within the countries where we operate. Sasol is still on a journey and is confident that we will be able to achieve higher scores on the relevant indicators once our climate change approach is announced later this year.

Sasol may, in this document, make certain statements that are not historical facts that relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return, executing our growth projects (including LCCP), oil and gas reserves and cost reductions, including in connection with our BPEP, RP and our business performance outlook. Words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavour”, “target”, “forecast” and “project” and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors are discussed more fully in our most recent annual report on Form 20-F filed on 28 August 2018 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
 
Please note: One billion is defined as one thousand million. bbl – barrel, bscf – billion standard cubic feet, mmscf – million standard cubic feet, oil references brent crude, mmboe – million barrels oil equivalent. All references to years refer to the financial year 30 June. Any reference to a calendar year is prefaced by the word “calendar”. 

More info: https://www.sasol.com/media-centre/media-releases/sasol-s-response-climate-action-100-report

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