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Sasol Integrated Report 2024 - Book - Page 85


INTRODUCTION
ABOUT SASOL
STRATEGIC OVERVIEW
BUSINESSES
ESG
REMUNERATION REPORT
DATA AND ASSURANCE / ADMINISTRATION
ENVIRONMENT continued
CLIMATE CHANGE
continued
Adaptation
Building physical climate resilience
Sasol is experiencing the impacts of a changing climate.
As part of our commitment to long-term sustainability,
we have begun actively quantifying and managing the
financial costs associated with physical climate risks
across our global operations.
Several years ago, we proactively conducted a detailed
climate-risk assessment. This involved utilising downscaled
climate modelling, which yielded invaluable insights into the
nature, direction and scope of projected physical climate
impacts at our major operating sites. Armed with this
information, we were able to identify risks and prioritise
targeted responses.
However, there were limitations to our downscaled
modelling. Notably, the model did not comprehensively
account for uncertainties and localised impacts related
to future climate physical risks. We also recognised that
addressing the short- and long-term implications of
extreme weather events, such as temperature shifts and
precipitation patterns, will have to remain a critical focus
area into the future.
The IFRS S2 will in future demand rigorous quantification
of physical climate risks. As a result, Sasol has begun
proactively aligning with these new reporting requirements.
Our strategic approach aims to adopt industry best practice
through the development of an in-house methodology to
quantify physical climate risks. We also aim to enhance our
existing climate modelling capabilities. Focus will be placed
on capturing localised and site-specific risks, resulting in a
more comprehensive assessment of projected physical
climate impacts at site level.
This approach extends beyond immediate concerns. We will
consider short-, medium-, and longer-term risk factors.
By integrating these assessments into our existing risk
management frameworks and reporting processes, we
are attempting to enhance transparency and resilience.
In this way, we aim to safeguard our assets and contribute
to a more sustainable future for our fenceline communities.
The development of this methodology takes the following analytical approach which is aligned to our risk management approach in Sasol:
1
IDENTIFICATION OF SITES, BUSINESS STRUCTURES AND CHANNELS THAT ARE VULNERABLE TO CLIMATE RISKS
• Major or large sites and assets that are vulnerable to climate adaptation (chronic) and weather event (acute) risks
• Supply chain assets and channels that affect Sasol’s operations that are vulnerable to climate adaptation (chronic) and weather event
(acute) risks
• Business activities vulnerable to climate adaptation (chronic) and weather event (acute) risks
2
IDENTIFY INHERENT RISK CATEGORIES THAT COULD AFFECT BUSINESS AND ITS OPERATIONS
• Chronic and acute risks that affect the business
• Physical implications that each identified risk may have on the business
• Plan and structure the analysis and assessment of each risk for quantification and prioritisation
3
RISK ASSESSMENT
• Obtain information from climate models and the widely accepted scenarios to predict the magnitude and impact of each risk for each
identified asset and site
• Evaluate the physical impact of each risk on the business, including the supply chain, and any structures that affect the business
• Quantify the potential financial impact on the business, including damages, asset repair and replacement, and lost production/sales
• Where possible, identify the impacts on fenceline communities
• Assess the likelihood of the occurrence of each risk
4
RISK MANAGEMENT
• Prioritise the most critical risks
• Develop mitigation strategies and management plans for prioritised risks
• Quantify residual risks to ensure viability, effectiveness and value-add
5
REVIEW, MONITOR AND IMPROVE
• Review process and share learnings
• Extend the assessment scope to cover other assets and sites
• Apply learnings to future assessment cycles
August 2024
SASOL INTEGRATED REPORT 2024
August 2025
83