Sasol

Sasol currently has an ambition to reach net-zero scope 1, 2 and 3 (use of sold products) emissions by 2050; however, it has not set a firm target to confirm its commitment. The company has set a 2030 target to reduce emissions from the operations of its energy and chemicals segments by 30% from 2017. Sasol should strengthen its commitment to the low-carbon transition by setting a clear target to achieve zero scope 1, 2 and 3 emissions by 2050. The company should further support this with interim targets no more than five years apart to incentivise near-term actions on its long-term goals.

Sasol is dedicating USD 0.93-1.54 billion cumulative capital expenditure (CapEx) to be spent on decarbonisation by 2030. This amounts to approximately USD 0.15 billion a year, which only makes up about 9% of Sasol’s predicted total CapEx in 2023. However, oil and gas companies should aim to dedicate 77% of CapEx to low-carbon technologies to align with a 1.5°C pathway. Sasol will therefore need to dedicate the majority of its CapEx to low-carbon activities to grow its alternative business models and be successful in a low-carbon economy.

Sasol is currently at the early stages of developing new business areas. The company can improve its performance on the low-carbon transition by ramping up the planned expansion of its new business models such as green hydrogen, sustainable aviation fuels (SAFs) and carbon capture and storage (CCS). Sasol can support the deployment of these projects by dedicating more of its CapEx and research and development (R&D) expenditure to their development.

Sasol has board-level management of climate change issues and some members of the board have significant climate change expertise. The company has also developed a plan to transition its business model and decarbonise. However, Sasol can improve this plan by including more detailed short-term and long-term action plans to support the achievement of its emission reduction targets. Additionally, the company can decouple management incentives from fossil fuel growth to further support its transition away from high-carbon activities.

Sasol has set a 2030 target to reduce scope 1 and 2 emissions from the operations of its energy and chemicals segments by 30% from 2017. The company also has an ambition for net-zero scope 1, 2 and 3 emissions by 2050; however, it has not set a target to confirm its commitment.

Sasol is planning to reduce emissions using existing infrastructure, transform using new feedstocks and thereafter shift its business model to low-carbon solutions. The company is focused on expanding the production of SAFs and developing green hydrogen and CCS projects. However, Sasol’s transition plan is missing long-term production goals to support the expansion of low-carbon businesses.

Sasol has allocated USD 0.93-1.54 billion cumulative CapEx to be spent on decarbonisation by 2030. This amounts to approximately USD 0.15 billion a year, which only makes up about 9% of Sasol’s predicted total CapEx in 2023. The company does not report data on its exact low-carbon CapEx and R&D spending in the reporting year ended June 2022. Sasol has, however, indicated strategic decisions not to invest in new coal reserves and fossil fuel expansions, although the company will maintain its current operations.

In 2021, Sasol announced its ambition to reach net-zero scope 1, 2 and 3 emissions by 2050. It also increased the ambition of its target to reduce scope 1 and 2 emissions by 30% by 2030 from 2017, compared to only 10% previously. However, Sasol’s scope 1 and 2 and scope 1, 2 and 3 emissions intensities have not significantly decreased between 2018 and 2022. To align with its 1.5°C pathway, Sasol needs to decrease its scope 1 and 2 intensity by close to 9% annually and its scope 1, 2 and 3 emissions intensity by over 4% annually.

The company recognises it needs to transition away from its coal activities towards lower-carbon feedstocks, but it has not yet developed projects or implemented measures that have led to significant emissions decrease. While the company pledged not to invest in new coal reserves, it has not set firm targets to reduce its current production. As such, Sasol’s portfolio is not in line with a 1.5°C pathway.

The company commits to engaging in social dialogue with workers and unions. It also discloses the categories of stakeholders it engages with on a just transition, including communities, employees, NGOs, industry and government. However, no evidence was found to demonstrate the company’s ongoing social dialogue and meaningful engagement with affected stakeholders on just transition. The company incorporates social dialogue and stakeholder engagement in its just transition planning. However, no evidence was found that the company has a set of time-bound, measurable indicators to mitigate the social impacts of the low-carbon transition on workers, affected stakeholders and its business relationships.

The company has a commitment to create and support access to green and decent jobs as part of the low-carbon transition. Furthermore, it discloses the actions it takes to create direct and indirect jobs through its export hub for green hydrogen. However, no evidence was found of the company’s actions to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. Additionally, no relevant disclosure was found of the company’s assessment of employment dislocation risks. The company has a commitment to reskill and upskill workers and stakeholders affected by the low-carbon transition and discloses the actions it takes in this regard. For instance, it works with colleges on their curricula to develop a workforce equipped with skills compatible with a green economy. Furthermore, the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. It does this through a three-year leadership programme for persons with disabilities and an engineering business incubation programme for women. However, no relevant disclosure was found of a process for identifying skills gaps for workers and affected stakeholders in the context of the transition.

No relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. The company discloses information on the misalignment of its lobbying activities with policies and regulations that support the just transition. However, no evidence was found of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights and the ILO fundamental rights at work, and it expects its business relationships to respect the ILO fundamental rights at work. The company has a clear process to identify its human rights risks to and impacts on people. The company also describes its global system to take action to prevent, mitigate or remediate its general human rights risks. However, no evidence was found that the company discloses what it considers to be its salient human rights risks. The company does, however, have a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. The company discloses that its minimum wage is higher than what is considered a living wage for each jurisdiction. However, no evidence was found that the company discloses the proportion of its total direct workforce in all its operations covered by collective bargaining agreements or its required working hours. The company discloses some indicators of workforce diversity, including age and gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity. The company commits to gender equality and women’s empowerment.

The company commits to protecting personal data. However, no evidence was found of the company having a privacy statement regarding the collection, sharing and access to personal data of all stakeholders, including employees and customers. The company discloses its global tax strategy and the corporate income tax it pays in each relevant jurisdiction. The company has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. While the company specifies that it does not make political contributions, no evidence was found of its lobbying and political engagement policy. While the company discloses its expenditure on memberships of various associations which are involved in policy advocacy, no evidence that the company report the details of its lobbying expenditure across its whole operations.