Environmental activist investor Tracey Davies of JustShare helped turn Sasol’s AGM last week into a feisty affair. In the latest episode of Rational Radio, she reports back on the meeting, and explains her beef with SA’s second largest polluter. The day after the Sasol slugfest, Davies went along to a far more relaxed FirstRand AGM where she got half what she wanted after the board endorsed a resolution relating to more reporting on climate change exposure. But the JustShare director and fellow activists face a tough task in their demand that the bank discloses information on the carbon footprint of those to whom they have lent. From a practical perspective, getting clients to agree to provide the information looks to be an insurmountable challenge. – Alec Hogg
A warm welcome to Tracey Davis, the director of JustShare and you had a busy week Tracey – as you were telling us – you were off to the Sasol meeting on Wednesday and then the FirstRand meeting on Thursday. Tell us how it went. First of all with Sasol.
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Hi Alec, thanks. Yes it was extremely busy and there were two very different AGM’s. The Sasol AGM was long and quite noisy and full, the FirstRand AGM quite different, There were a lot of people at the Sasol AGM – shareholders and a lot of shareholder activists and the board had to face questions from those activists – about its performance – particularly in relation to climate change and climate risk.
And how did they fare?
Sasol was obviously prepared for questions on climate change and in general they were better prepared than they were last year. In the interim period, they released their Climate Change report and they’ve committed to reducing their carbon emissions by 10% by 2030. All of which I might add, is significantly due to pressure from civil society and shareholder activists. So they were much better prepared with their responses to challenges on climate change, but in my view, the board – and even Fleetwood Grobler the new CEO – are still seeing the company’s ability to address climate risk as a kind of a tradeoff. They’re saying we can’t do too much because of our social and economic obligations to our workers and to the South African economy, but that really is missing the point. The point is that if they don’t act faster and more dramatically, then it is precisely those workers and our economy that are going to suffer. I still think that Sasol is operating as if it is in control of the timeframe of these issues, in actual fact, time is moving much faster on climate risk than anyone thought possible and at the moment their ambitions and targets are simply too weak.
You’ve been at them for a while, do you feel there’s been progress after the AGM?
They are still asserting this view – that shareholders are not entitled to table resolutions on climate risk – so they’ve made no progress on that and that’s really the reason why they faced such aggressive questioning at the AGM because they are not giving shareholders a more formal outlet for expressing a view on climate risk. They have made progress in the past year, but as I say, because of the pace of change and the pace of action that we need to take, this kind of slow corporate plodding is unfortunately just not good enough. Even if it does represent progress.
Tracey, what about FirstRand, You went along on Thursday, was it a similar atmosphere?
No. Completely different. Which is to be expected and understandable given the completely different nature of the two businesses. The AGM was much smaller, much quieter, didn’t last for very long at all and we had the two shareholder resolutions that were tabled, the one which the board had endorsed requiring them to adopt a policy on fossil fuel financing and that resolution was passed with 99.9% of shareholder votes and then the other one – which was the resolution which would have required them to assess their exposure to climate related risks – only got 33% of the vote so did not pass. Still a significant chunk of shareholders voting in favour of that resolution but what it means is that most shareholders – most institutional investors anyway – are deferring to management and saying if you say you need more time to do this we’re going to give you more time.
Roger Jardine, the relatively new chairman at FirstRand, how did he perform in your opinion?
FirstRand has demonstrated that it fully grasps these risks and has moved pretty fast to address them. We differ on the pace at which we think that they should be responding, but I guess that’s natural considering the different sides of the story that we both come from. I thought that Roger Jardine – both in his chairman’s note and at the AGM itself – went to great pains to express the bank’s complete agreement with the need for all the disclosure that we’re asking for and again reiterating that it’s really a question of timeframes that they disagree on, so a really strong position from FirstRand – that it takes the issue seriously – and completely understands the need to act, not just saying that they need a little bit more time.
That is interesting because he’s a scientist. That’s his background so I guess he agrees with the science behind climate change.
Yes I would hope so. I think fundamentally though, banks are in the business of assessing risk and it’s becoming so obvious now how material the financial risks are that climate change poses. The banks are looking ahead to the future, looking at things like trade risks if South Africa is perceived to be a real climate laggard by trade partners, there’s potential for us to be punished in those ways. So the banks are rapidly coming to grips with the fact that this is a big risk and that they need to figure out how they going to tackle it.
So on that side, do you feel there was more progress at FirstRand than at Sasol?
Yes, very different businesses, transitioning to a low carbon economy is a very different process for Sasol than it is for FirstRand, but on the other hand Sasol is the one that’s got the most urgent problem. So it’s unfortunate but predictable I suppose that we’re seeing much more of a progressive approach to this issue from the banks than we are on the carbon intensive companies.
Tracey Davies is with JustShare giving us feedback on the two big AGM’s that she attended in the past week.
