This article first appeared in Moneyweb.
Sasol’s annual general meeting at the Sandton Convention Centre started off sedately enough until group chairman Mandla Gantsho attempted to limit the number of questions from the floor.
Judge Kathy Satchwell leapt to her feet and, microphone in hand, let rip at the board for trying to wrap things up with obvious haste so they could retire for lunch. “This is the one opportunity in the year for shareholders to ask questions and you are limiting the number of questions. I know you want to rush off to lunch, but you can stay where you are until we are done.”
Gantsho asked her to sit down, but Satchwell, representing the Raith Foundation, wasn’t having any of it. “Judge, please sit down – you will get your chance,” said Gantsho. Satchwell’s microphone went quiet but she continued lambasting the board regardless.
Gantsho asked for a moment’s silence for the four Sasol workers who died in the last financial year. When Satchwell again got the microphone, she asked whether any of the directors had visited any of the injured, whether they attended their funerals of those who died, and whether they would donate any of their bonuses to improve safety. “I realise your lunch is waiting,” she added.
Shareholder activist Theo Botha questioned why the group’s key performance indicators gave such a low weighting to fatalities. Sasol replied that weightings were higher at the operational level.
Company secretary Vuyo Kahla said that senior management members visit the scene of all fatalities and assess what can be done to help the families of the deceased. Joint president and CEO Stephen Cornell said the company now tracks the severity of injuries and has introduced stringent safety rules to prevent further deaths. Because most work-related deaths are the result of collisions with machines, proximity detectors are being installed to shut down machines when they get too close to humans.
Rehabilitation costs down R1.4bn
Then it was the turn of Christine Reddell from the Centre for Environmental Rights (CER), who asked why the 2018 financial statements reflect a R1.4 billion reduction for rehabilitations costs, and whether this had been approved – as required by law – by the Department of Mineral Resources (DMR). Sasol replied that the figure had been adjusted downwards due to changes in legislation, a revised discount rate and new rehabilitation methods.
Reddell challenged the board on this, asking what legislative changes they were referring to. She also asked to see the methodology applied. The concern of environmentalists is that rehabilitation funds, which are cash set-asides supervised by the DMR, are seen as a ready source of cash by companies in need.
Vague on climate change
The 2018 integrated report does not mention climate transition or liability risks, added Davies. “It only mentions climate change in the context of other environmental sustainability risks and talks vaguely about improved disclosure. These reports do not mention that all credible modelling shows that Sasol’s Secunda plant must be decommissioned long before 2050 if SA is to meet its climate commitments, and that Secunda is therefore at serious risk of becoming a stranded asset.”
Sasol disputed that Secunda would have to be shut down before 2050. One activist wanted to know why Sasol was such a renowned air polluter, a claim challenged by joint CEO Bongani Nqwababa: “I must push back on that,” he said. “We comply with World Health Organisation guidelines on air, so I would want to see your stats. It’s not the case [that Sasol is an air polluter].”
Another shareholder wanted to know what Sasol is doing to clean up the contaminated water supply in the Vaal Triangle. Kahla replied that the company is engaging with the SA Human Rights Commission to solve the problem.
Friends of the Earth Mozambique wanted to know why Sasol, after 16 years in that country, has only created 300 permanent jobs. Nqwababa replied that 96% of staff in Mozambique are locals and that in addition to the 300 permanent employees, the company has built 15 schools and clinics, all staffed by people on a living wage.
All in all it was a brutal trial for Sasol, and a portent of AGMs to come. Who would want to be a company director when subjected to this kind of microscopy?