Exxaro Resources Limited and Thungela Resources Limited have refused to table non-binding, advisory shareholder resolutions filed on 19 April by Just Share, Aeon Investment Management, and Fossil Free South Africa, ahead of Exxaro’s 18 May and Thungela’s 31 May AGMs.
The resolutions filed at Thungela and Exxaro ask the companies to report to shareholders, in accordance with the Global Standard on Responsible Climate Lobbying, on the alignment of their own lobbying and policy engagement activities, and those of the industry associations to which they belong, with the goals of the Paris Agreement.
The co-filers dispute, supported by a legal opinion, that directors of JSE-listed companies have discretion to refuse to table shareholder-proposed resolutions that comply with the procedural requirements of the Companies Act. They cannot refuse to table them simply because they do not like the substance of the resolution. This is particularly the case in relation to advisory resolutions which are not binding on the company even if shareholders vote in favour of them.
The filing and tabling of shareholder resolutions requesting disclosure on corporate climate lobbying is common in the USA, Canada, Europe, and Australia.
Climate lobbying disclosure is particularly important for coal mining companies with a clear vested interest in delaying government climate action. Thungela for example is a member of the World Coal Association (WCA). According to InfluenceMap, an independent think tank which produces data-driven analysis on how business and finance are impacting the climate crisis, the WCA engages negatively on climate policies and “appears generally oppositional to ambitious global climate change policy”.
Neither company has provided a justifiable reason for refusing to table the resolutions.
Thungela stated in its response to the co-filers that its disclosure of industry association memberships in its Climate Change Report would satisfy the request of the resolution. This is disingenuous. The resolution makes clear that the disclosure required is much more detailed than simply providing names of industry associations, which is all that Thungela’s report does. As such, it does not align with the Global Standard on Corporate Lobbying, nor does it even comply with the JSE’s guidance on climate change and sustainability disclosure in relation to lobbying activities.
The Companies Act provides that shareholders must be notified of a resolution at least 15 business days before the AGM. Exxaro failed to respond to the co-filers until after this deadline had passed (and then only on prompting from the co-filers), calling into question the company’s purported adherence to high standards of corporate governance.
Exxaro states: “we firmly believe that the Proposed Resolution is within the purview of the directors of the Company and hence should be addressed accordingly”. A “firm belief” does not constitute a justifiable ground for refusing to table a non-binding, advisory resolution.
Why did we file climate lobbying resolutions?
Fossil fuel companies have significant influence over government climate policy – directly and through industry associations like Business Unity South Africa (BUSA), the Minerals Council of South Africa, and the Energy Council of South Africa.
Since there is no legal requirement in South Africa to disclose lobbying activities, disclosure of the kind the co-filers request is the only way for investors to ascertain whether investee companies are using their influence to align the country’s climate policy with the Paris goals.
Major investors in both companies include Old Mutual Investment Group, Sanlam Investment Management, Ninety One, M&G Investments, and Coronation Fund Managers, all of which state that they engage with investee companies in relation to climate risk. Understanding the impact of corporate lobbying on national climate commitments and just transition investment plans should be high on these investors’ list of priorities.
Context on Thungela and Exxaro’s anti-climate lobbying activities
InfluenceMap’s corporate climate lobbying platform finds that Thungela is “actively engaged in … the maintenance of coal as a primary energy source in South Africa, contrary to IPCC science” and that Thungela “does not appear to explicitly support the need for government regulation on climate change or the need to reduce [greenhouse gas (GHG)] emissions in line with the IPCC.”
Thungela’s membership of the WCA is of particular concern. According to InfluenceMap, the WCA engages negatively on climate policies and “appears generally oppositional to ambitious global climate change policy”. In its Climate Change Report, Thungela describes the WCA as representing “industry leaders committed to building a sustainable future for global coal”.
InfluenceMap reports that Exxaro, despite consistently expressing positive positions on climate policy and the energy transition, has limited transparent engagement on climate-related policies.
Exxaro discloses some of its industry associations in its 2022 ESG report, but provides no detail of the nature of its membership, or the alignment of the associations’ climate-related engagement with the Paris goals.
Exxaro is a member of the Minerals Council, the Industry Task Team on Climate Change, BUSA, the Energy Intensive Users Group, and Business Leadership South Africa, and a founding member of the Energy Council.
Organised business has successfully lobbied to weaken and delay the implementation of key climate-related regulation and policies, including against the introduction of an effective carbon tax in South Africa (putting a price on carbon is widely seen as the most cost-effective and flexible way to achieve GHG emission reductions). National Treasury has called corporate South Africa out for its “lack of vision” and “lack of leadership” in relation to its position on the carbon tax.
InfluenceMap finds that the Minerals Council is “actively and negatively lobbying climate change policy in South Africa, particularly on the issue of the carbon tax and the role of coal in the energy mix.” It also appears to lead an initiative called “Coal Mining Matters”, which aggressively advocates in favour of “clean coal technologies”, even though all evidence makes clear that there are no solutions to neutralise all – or even most – of the dire environmental, health, and climate change impacts caused by the mining, production, supply and disposal of coal.
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