Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 30
For further information on the impact of
carbon taxes refer to “Item 3.D—Our ability to respond
to climate change could negatively impact our growth
strategies, reduce supply/demand for our products,
increase our operational costs, reduce our
competitiveness, negatively impact our stakeholder
relations and adversely affect our legal licence to
operate and our access to capital and financing”.
jurisdictions are already more established than in
others. These compliance challenges are further
impacted by the fact that, in some instances, legislation
does not adequately provide for sufficient and/or
flexible transitional arrangements for existing plants to
comply with the imposed more stringent requirements.
Ensuring that we are compliant with these requirements
is a significant factor in our business. We continue with
transparent disclosures and engagements with our key
stakeholders in an effort to address these challenges. A
failure to comply could have an impact on our licence
to operate, as well as result in administrative and
criminal enforcement, and could harm our reputation
and relationships with stakeholders.
Changes to waste management legislation in
South Africa, particularly around landfill prohibitions,
are compelling our South African operations to find
alternative solutions to waste management and
disposal. The changing regulatory landscape introduces
increasingly stringent waste disposal restrictions,
extended producer liabilities and punitive fiscal reform
measures including potential waste levies. We continue
to quantify the potential costs associated with meeting
these requirements. We depend on regulatory
authorities clarifying the interpretation and applicability
of specific requirements to our waste streams, to
determine whether there would be compliance
challenges associated with technical and feasibility
constraints.
Sasol’s highly energy-intensive operations in
South Africa are running in the midst of rapidly
evolving national legislation on GHG emissions. In
support of the Paris Agreement, the South African
government published the “Draft Climate Change Bill”,
promulgated the Carbon Tax Act 15 of 2019 effective 1
June 2019 and also promulgated the Pollution
Prevention Plan and Greenhouse Gas Mandatory
Reporting Regulations. Sasol submitted its GHG
inventory data for South Africa in compliance with the
regulations and successfully obtained internal approval
for its first mandatory “Pollution Prevention Plan” for
the five year cycle from 2016 to 2020. We subsequently
submitted the required annual report on our pollution
prevention plan in March 2020 which in turn informed
our carbon tax payment. In March 2021, we submitted
the final annual report for the first five year cycle and
kicked off the second five year cycle submission which
will include data from 2021 to 2025. We envisage that
compliance with carbon budgets will become
mandatory once the enabling carbon budget regulations
are finalised. This will follow the finalisation of the
Climate Change Act which we anticipate being gazetted
in the second half of calendar 2021. The recent
transition of presidential administrations in the US has
created uncertainty for our US operations due to
increased scrutiny of environmental and climate change
issues (including environmental justice and disclosures
of environmental and climate related data) by
governmental agencies, investors and communities.
Administration changes (both at federal and state level)
could lead to revocation and revision of existing
environmental and disclosure regulations. The costs
associated with compliance with additional or increased
regulation of environmental and climate issues could be
significant and could have a material adverse impact on
our business, operating results, cash flows and financial
condition.
Water use licences being issued by the South
African Department of Water and Sanitation include
increasingly stringent requirements, such as waste
water discharge limits, that must be complied with over
time. This may not be achievable.
From a chemicals management perspective,
our products must be registered in accordance with
regulatory requirements for many of the countries in
which we operate, and sold in line with permit
conditions, among other considerations. These include
filing of Registration, Evaluation, Authorization and
Restriction of Chemicals (REACH) registrations for
chemicals we produce or import into Europe, and
chemical notifications for other regions, especially the
US, Canada and China, as well as South Korea, Taiwan
and other Asian countries. Many countries are in the
process of revising their chemicals regulations based on
the EU REACH regulation, which is also expected to
be updated soon. These changing chemical regulations
come with further obligations and requirements with
which Sasol will need to comply. Sasol is preparing to
file UK REACH registrations following Brexit.
South Africa is also in the process of
localising in its national regulations many international
commitments on safe chemicals management. This
process includes the adoption of the Globally
Harmonized System of Classification and Labelling of
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