Activist shareholder turns the screws on Sasol
December 3, 2007
By Mathabo le Roux
Johannesburg - Pressure is mounting on petrochemicals giant Sasol to bring more urgency to its climate action strategy, with shareholder activist Theo Botha the latest to weigh in on the debate.
Known for giving executives a hard time on corporate governance issues, Botha raised concerns at Sasol’s annual general meeting on Friday about the level of Sasol’s commitment to reducing emissions.
Its aim to reduce greenhouse gas emissions 10 percent by 2015 off the base of 2005 emissions was “setting the bar too low” and meant it would take 100 years for the company to reach zero emissions, he said.
Botha also pointed out that Sasol had already made the commitment to reduce emissions by 10 percent as far back as 2000. He said that this target had not been revised over the past seven years, despite a marked shift in the global debate on climate change since last year’s release of Nicholas Stern’s seminal climate change report.
Botha’s comments echo similar concerns raised by stakeholder groups. The biggest emitter of carbon dioxide in South Africa after Eskom, Sasol was responsible for 71-million tons of carbon emissions this year.
With the cost to offset carbon at $15 (about R102) a ton, Sasol’s 71-million ton carbon dioxide emissions translated into a liability of more than R7 billion, said the Worldwide Fund for Nature’s trade and investor adviser Peet du Plooy.
“If I were a shareholder I’d be very concerned,” he said.
Climate change interest groups in dialogue with Sasol have questioned the sustainability of the group’s business model, urging it to focus product offering on “mobility” rather than fossil fuels - a suggestion the group turned down.
But there was also little indication from Sasol’s recently released sustainability report that it would make concrete capital commitments to mitigate the effects.
In the report, Sasol listed the need for climate change as one of four key sustainability focus areas. However, nowhere in the report does the group commit to concrete timelines.
A R4 billion commitment to improve energy efficiency to reduce carbon dioxide emissions by 6-million tons is expected to take place “over the following years”.
Essentially, Sasol’s entire climate change strategy hinges on carbon capture and sequestration (CCS). The feasibility of CCS is not yet clear cut and its full-scale implementation might be decades away.
Peter Willis, the South African director of the Cambridge Programme for Industry, a prominent think tank, faulted Sasol for its vague timelines. What was missing from the report, he said, was a sense of the scale and speed at which the disaster of climate change was unfolding.
Sasol has also indicated its deployment of CCS will be conditional on cost factors. The report suggests that Sasol might be awaiting state incentives to move on CCS, stating that the “early deployment of CCS at any of Sasol’s coal-to-liquids plants” would depend on preconditions, which included “some form of offset to the combined cost of capture and storage, such as policy-based carbon dioxide mitigation incentives”.
Botha said while shareholders had been consistently rewarded on the strength of Sasol’s performance, receiving dividends worth R5.6 billion this year, Sasol had yet to make capital commitments to address environmental issues.
Essentially, Sasol was treating stakeholders differently to shareholders, he said.
“Shareholders have to acknowledge that this company is making substantial profits but is damaging our environment. This damage has a knock-on effect on the community.”
He said it was important to disclose a complete breakdown of the funds the company spent yearly on environmental and social issues.
|
|
