Sasol Climate Change Report 2022 - Book - Page 16
INTRODUCTION
RISKS AND OPPORTUNITIES
OUR FUTURE SASOL STRATEGY
GOVERNANCE
DATA AND ASSURANCE
RISK MANAGEMENT (CONTINUED)
Our risks (continued)
BUSINESS AS USUAL (BAU)
RISKS MANAGED UNDER ‘REDUCE’
These risks relate to the current business
operations, their resilience to exogenous
variables and how they affect our ability to
execute the Future Sasol strategy. These risks
are broadly covered by the climate change
risk drivers and events and includes issues
such as the Russia/Ukraine conflict, which
is causing energy price increases across
Europe and further disrupting global supply
chains on the back of COVID-19 induced
disruptions. Importantly for Sasol, these
issues are impacting timelines for renewable
energy supply, as well as gas and oil pricing.
In managing BAU risks, we face competing
priorities to maintain and deliver on our
current production targets and priorities,
while pursuing our transition commitments.
KEY DRIVERS AND RESPONSES RELATING TO OUR TRANSITION JOURNEY
Key risk drivers
Not achieving the
Sasol 2.0 targets1
Sasol Energy
and Chemicals
not delivering on their
decarbonisation plans
and targets
TRANSITION RISKS MANAGED
UNDER ‘TRANSFORM’
As part of the Sasol top risk landscape review
and update process, a new top risk under
the theme of Sustainability and Transition
was approved by the Board and added to
the top risk profile. This risk focuses on
how Sasol is positioning as we traverse the
decision-making landscape in pursuit of our
Future Sasol strategy. For example, our plans
to transition with gas will have an impact
on profitability, depending on price and
therefore decisions relating to these issues
must be assessed holistically.
Policy and regulatory
changes imposing
more onerous
compliance
requirements
RE-INVENT RISKS MANAGED
UNDER ‘SHIFT’
Our ability to concretise the full range of
options to deliver on our transformation
agenda remains a focus. As we take decisions
to transform, the degree of uncertainty
regarding the timing and competitiveness
of technologies can over time undermine
the value of investments. In some cases,
the impact of external trends or events
(such as feedstock prices) could change from
a threat to an opportunity or vice versa as the
business evolves.
• Continue applying a disciplined capital allocation approach
• GEC led Sasol 2.0 programme (cash management) with annual targets linked to
remuneration of top leadership
– Maintaining a healthy project pipeline to play a lead integrator role in the
Southern Africa green hydrogen ecosystems;
– Renewable energy procurement for our facilities; and
– Undertaking research and development into new technologies.
TRANSITION RISKS3
62% 31%
PHYSICAL RISKS3
38% 38%
• Monitoring and responding to the shifting macroeconomic trends, including carbon
tax requirements
Assets or
business
Assets or
business
Activities
Activities
• Signpost monitoring of the policy and regulatory landscape and responding accordingly
• Assessing our market positioning against emerging trends, setting targets,
transforming our product portfolio, maintaining product supply and collaborating
with our customers to meet their requirements
• Proactive stakeholder engagements to align on key requirements and demonstrating
leadership through proactive and visible engagements to deliver on the just transition
imperative in South Africa
Eroding value because
of feedstock switching
from coal to gas
• Exploring affordable alternatives and optimising options to minimise operating
costs and preventing value erosion from the current businesses, while driving
initiatives to meet our GHG targets
Inability to find flexible
alternatives to realise
sustainable business
opportunities
Percentage of our operations affected
by climate change2
• Tracking progress against the emission-reduction roadmaps through set milestones.
For example:
Not meeting
stakeholder
expectations and
commitments
Inability to secure
sufficient volumes of
gas timeously
1.
Key risk responses
• Maximising affordable gas supply from current Mozambique assets to extend
plateau production
CLIMATE-RELATED
OPPORTUNITIES4
REMUNERATION5
77% 62%
Assets
Business
activities
100%
2. Sasol internal assessment which has not been subject to
independent verification or auditing.
• Developing a go-to-market and technology strategy roadmap for a prioritised
regional approach, in alignment with our targets
3. Numbers of operational assets or activities vulnerable to transition
or physical risks based on down-scale modelling and internal risk
assessments. Risks include the global shift from coal and production
interruption from weather events.
• Exploring opportunities across the green hydrogen value chain through partnerships,
pilots and proof-of-concept projects in a number of jurisdictions across the world
4. Numbers of operational assets or businesses aligned with
climate-related opportunities based on internal risk assessments
and scenario analysis.
• Pursuing circular economy opportunities in support of Future Sasol
5. Number of assets with advancing sustainability-linked incentives.
For further information on Sasol 2.0 targets refer to
IR
page 37.
SASOL CLIMATE CHANGE REPORT 2022 15
