Sasol Climate Change Report 2023 - Book - Page 16
INTRODUCTION
TRANSFORMING FOR RESILIENCE
GOVERNANCE
CLIMATE ADVOCACY AND POLICY
DATA AND ASSURANCE
RISKS AND OPPORTUNITIES
Sasol’s climate change risk management
CLIMATE CHANGE RISKS //
Climate change risk is considered a key priority at Sasol and is managed as a Group Top Risk (GTR) following a
standardised risk management process anchored in the One Sasol Enterprise Risk Management (ERM)
framework and approach.
The Sasol process follows a systematic ‘Plan, Do, Review,
Improve’ approach, which entails identifying and
understanding risks, executing mitigation measures,
monitoring and governing the risk management process,
ensuring assurance, and reporting on the outcomes (for
more detail on Sasol’s risk management, see page 31
of our 2023 IR ).
Group materiality lens applied
Sasol places significant emphasis on addressing climate change
risk by prioritising the risk through the application of a Group
materiality lens. The potential significant impacts associated
with climate change risk are assessed applying our risk matrix,
where a range of potential financial and non-financial impacts
are defined. In combination, these provide thresholds at the
Group level to assess materiality. Our materiality lens reflects
high impact evaluation criteria, both quantitative and
qualitative, and assists in filtering the most significant risks to
provide the basis for escalation to the Board as top risks.
This means that aspects relating to climate change risk are
prioritised and managed in alignment with the company's
strategic imperatives. As part of the GTRs, climate change risk
is continuously monitored, reviewed and updated annually and
approved by the GEC and the Board accordingly.
ALL SASOL GTRs ARE ANCHORED WITHIN THE
FOLLOWING FOUR ASPECTS:
short-term business resilience and viability;
medium-to long-term business viability
and sustainability;
employee value proposition; and
stakeholder impact.
These aspects are defined as business imperatives, the
outcomes of which may materially impact our ability to
achieve our strategy. We identify climate change-related risks
as being directly related to ‘long-term business viability’
although, as will be readily appreciated, climate change risk
has obvious linkages with the other three aspects as well.
Governing and providing assurance
SUB-RISK EVENT
provides governance oversight over the GTRs, including
climate change, in terms of the Board committees’ terms of
reference, which also guide how the GEC reports into these
committees. We follow a collaborative process to provide risk
assurance at the GEC and Board levels, and for the GEC to
report to the Board accordingly. Through a combined
assurance model approach, regular assurance on climate
change risks is provided by different assurance providers.
The Board is the ultimate custodian of our risk management
process and plays a pivotal role in ensuring that our
climate-change risk responses are appropriate.
Sasol’s inability
to develop and
implement an
appropriate
climate change
mitigation
response
HOW WE ARE RESPONDING
• Benchmarking against peers and relevant institutions
• Implementing our emission-reduction roadmap, framed by our threepillar emission-reduction framework
• Assessments to understand emissions; monitoring the landscape to
understand policy developments, setting of targets
• Tracking technology, market and policy signposts
• Monitoring global best-practice development
• Enhancing transparency and disclosure
• Participating in international think tanks and platforms on net zero
pathways
Managing climate change risk
We focus efforts on prioritised risks and opportunities with
the potential to have the greatest impact on delivering our
short and long-term business objectives. We identify risks
applicable to the business scenarios and their ranking and
focus, using the Sasol risk matrix. We consistently evaluate
and consider the trend towards increasing and more intense
extreme weather events. We then assess the potential
impacts of these events on our business and operations, with
a specific focus on vulnerable areas that may be more
susceptible to climate-related risks.
Sasol’s inability
to implement
appropriate
adaptation
responses to
ensure long-term
resilience of
business
operations
• Enhancing and implementing our adaptation response strategy in a
phased manner, focusing on at-risk operational sites
To supplement this understanding, we continue to disclose
our climate change risks in line with the TCFD
recommendations. The TCFD approach provides a structured
way for us to explore, analyse and identify appropriate key
risks and responses. In using the TCFD recommendations, we
have identified three sub-risk events (see alongside), which
essentially are the key drivers of the climate change GTR. To
effectively respond to the risk, Sasol has robust internal
controls in place. These controls include policies, procedures,
processes, and personnel dedicated to effectively manage and
address climate change risks within the organisation. Specific
controls are noted in the table to demonstrate how we are
responding to the risk of climate change.
Increasing
societal pressure
impacting market
access and
product
competitiveness
• Setting and disclosure of emission-reduction targets and roadmaps
• Annual robustness scenario analysis, including qualitative and
quantitative analysis
• Long-term net zero ambition by 2050, with optionality on the
decarbonisation pathway
• Interim targets set for 2030
• Proactive stakeholder engagement
• Achievement of progressive emission reductions
• Responsible and transparent advocacy
• Tracking of the climate-change landscape
• Progressing a just transition
• Non-binding shareholder advisory vote on climate-change
management approach
• Executive remuneration linked to achieving GHG targets
In addition, we have identified other high-level transition risks
(see following page), with our responses.
In reporting our climate change risk information, we ensure
that detailed external communications and filings are aligned
with our environmental, social and governance strategy and
imperatives and that the reported information is reliable,
accurate and complete.
We govern all our GTRs in accordance with the Sasol Risk
Policy and ERM framework directives. The Sasol Board
SASOL CLIMATE CHANGE REPORT 2023
• Integrated modelling (people, planet, profit metrics) to understand
strategic drivers and choices as we decarbonise
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