๐Ÿ”’ Shareholder activist Tracey Davies targets this week’s Sasol, FirstRand AGMs

Fireworks are likely when two of South Africa’s top companies host shareholders at their annual general meetings this week. Tracey Davies, an environmental lawyer turned shareholder activist (LLB at UCT, LLM at NYU), intends peppering questions at the directors of Sasol (Wednesday) and FirstRand (Thursday). In the latest episode of Rational Radio the executive director of JustShare explains what she’ll be asking the companies about, and why their responses thus far have been inadequate. Particularly Sasol, where the company’s promise to cut 10% off pollution emitted at its Secunda plant is deemed unacceptably modest. – Alec Hogg

You heard earlier in the program that David Shapiro was saying we haven’t really seen enough pressure being put on to organisations like Sasol, because of things like greenhouse gases, but that’s about to change. It’s a warm welcome to Tracey Davies who is a director of JustShare. Tracey, just tell us a little bit about JustShare and what got you into it.

JustShare is a non-profit responsible investment and shareholder activism organisation. We were established in 2017 – really because there was a kind of growing realisation within the civil society, social justice sector – that while there’s a lot of focus on government there was not so much focus on the corporate sector and its role in impacting social justice and environmental justice in South Africa. So we’ve been focusing a lot over the past 18 months on climate risk – in the financial sector which is what you’re talking about with regards to Sasol – so focusing a lot on Sasol and its greenhouse gas emissions and disclosure, and also on the banks that finance fossil fuels.

Sasol’s got an Annual General Meeting on Wednesday. This is the one time of the year that shareholders are allowed to talk or to grill the directors of the company and you intend doing that. First of all, I presume you own shares in Sasol to be able to get into to the AGM.

Yes. JustShare will own just one or two shares. You only have to have one to be able to go to the AGM and that’s a fairly well-established strategy around the world for shareholder activism by people like myself. We go there because – in our experience in South Africa – big institutional investors don’t tend to be very vocal at AGM and ask important questions and we think that it’s important that the board gets to answer these difficult questions in public. They need to be accountable for these issues.

The fact that there’s been a change in the chief executives. The joint CEOs leaving and a new CEO coming in. Do you think that’s going to make it a little easier for you to have your message heard?

I honestly have no idea. We’ve been working on Sasol’s disclosure for a couple of years, and as you may know, they’ve recently released a climate change report which does go further than their previous disclosures – as far as climate risk to their business and their shareholders is concerned – but it still doesn’t go nearly far enough. I think you’ll find that it’s not just activists who think that, a lot of institutional investors think that too. That was all done under the auspices of the previous joint CEO’s. We’ve had no indication yet of what the approach of the new CEO will be, or for that matter – the new chairman of Sasol – to this issue. But we’re really hoping that they are coming into this job with a full realisation of what a crucial issue this is for the company.

So you’ll be there on Wednesday 10:00am when the AGM starts at the campus. What are you going to ask?

That’s correct. First of all it won’t just be us who’s there. There’ll be a large number of civil society activists and we’re hoping – as a result of recent developments – that there’ll also be some some institutional investors asking difficult questions and that our questions will really be focused predominantly on Sasol’s plans to reduce emissions, particularly from Secunda – it set a 10% emission reduction target by 2030 – but that’s just not good enough. We perfectly understand the constraints that the company faces and the crucial role that it plays in the South African economy. But the bottom line is that if we as a society and as the corporate sector don’t take proactive steps to address climate risk, then there are going to be some really serious consequences imposed on us by the rest of the world and that’s not going to be good for the economy either.

So they haven’t gone far enough in your opinion?

No, not nearly far enough. Secunda emits more greenhouse gases every year than most small countries on earth, it has a massive greenhouse gas footprint and in circumstances where we have entire countries setting targets for net zero greenhouse gas emissions by 2030 a 10% reduction in emissions from Secunda, which will knock about 7m tonnes of carbon dioxide off their profile a year, is just not going to come close to meeting the Paris agreement’s goals.

It’s not just Sasol that is in your sights. You’re also going to be going to the FirstRand AGM on Thursday and they seem to be a a pretty responsible organisation. What’s your beef there?

Yeah. We have been working with/against all of the big banks that had initially signed up as potential funders of new privately owned coal fired power stations. What we discovered – when we started engaging with the banks a few years ago – was that they had done no climate change or climate risk assessments of these projects and that they were unaware of the modelling that shows that South Africa doesn’t need any new coal fired power generation. Also not taking into account the risks to their own businesses by virtue of financing potentially stranded assets. So what we want the banks to do is to have policies which describe publicly what they are planning on doing when it comes to financing fossil fuels. There’s a shareholder resolution tabled at FirstRand by JustShare, if it passes the bank will be required to publicly adopt a policy on fossil fuel financing and also provide a report to shareholders on its assessment of how big a risk climate change poses to its future business operations. So really, our beef as you call it is around disclosure. We are not trying to dictate what banks finance or how they finance it. What we want is them to show shareholders – and the broader society – that they are cognisant of the risks and to explain to people how they are addressing those risks and that’s what the policy would do.

Have they been co-operative?

Absolutely. FirstRand in particular. We did this the first time round, with Standard Bank earlier in the year and they tabled the resolution without a problem. The board did not endorse the resolution, they recommended that shareholders vote against both resolutions at Standard Bank – although one of them did pass – the FirstRand board has endorsed the resolution requiring a policy, it hasn’t endorsed the resolution requiring an assessment because it says it needs more time to compile the report – which we dispute – but even so the board has said in the notice of AGM that it fully supports and agrees with the need for it to provide that assessment. So it’s clear that the banks have moved extremely fast in becoming aware of the fact that this is a serious risk that they need to address. The question that remains to be seen as whether they will move fast enough in addressing the risk, rather than just disclosing it.

Tracey Davies is the director at JustShare – a non-profit a shareholder activist organisation – she’ll be at the annual general meetings of both Sasol and FirstRand this week. If you’re a shareholder of either of those companies I hope you’l be there too. We’ll be picking up with her next week to find out exactly how things have gone.