Coal Giants Thungela, Exxaro Snub Climate Lobbying Resolutions Ahead of AGMs

Coal mining
  1. South African coal producers Thungela and Exxaro have rejected climate lobbying resolutions proposed by activist shareholders before their respective Annual General Meetings (AGMs). The resolutions aimed to align the companies’ lobbying activities with the goals of the Paris Agreement.
  2. Thungela and Exxaro have not provided justifiable reasons for refusing to table the non-binding, advisory resolutions, according to the activist organizations Just Share, Aeon Investment Management, and Fossil Free South Africa. The companies claim the matter can be addressed by their boards and management.
  3. Climate lobbying disclosure is crucial for companies with vested interests in delaying government climate action, according to Just Share. The organization called for major investors in both Thungela and Exxaro to prioritize understanding the impact of corporate lobbying on national climate commitments and just transition investment plans.

South African coal giants, Thungela and Exxaro, have declined to entertain climate lobbying resolutions proposed by activist shareholders before their respective Annual General Meetings (AGMs). Exxaro Resources, a major coal supplier to Eskom, and Thungela Resources, the nation’s top export coal producer, have both dismissed non-binding, advisory shareholder resolutions filed by Just Share, Aeon Investment Management, and Fossil Free South Africa.

The resolutions request that the companies report to shareholders on the alignment of their lobbying and policy engagement activities with the Paris Agreement’s goals, as well as those of the industry associations to which they belong. Emma Schuster, a climate risk analyst at Just Share, emphasized the considerable influence fossil fuel companies exert over government climate policy, both directly and through industry associations. Schuster pointed out that organized business in South Africa has effectively lobbied to weaken and delay the implementation of crucial climate-related regulations and policies, including opposition to an effective carbon tax.

Schuster explained that, in the absence of a legal requirement in South Africa to disclose lobbying activities, such disclosure is the only way for investors to determine whether investee companies are using their influence to align national climate policy with the Paris Agreement’s goals. This type of disclosure is in line with the Global Standard on Responsible Climate Lobbying – a standard developed by Swedish pension scheme AP7, BNP Paribas Asset Management, and the Church of England Pensions Board, and endorsed by investor groups leading climate talks with companies.

The activist shareholder organizations assert that neither company has provided a justifiable reason for declining to table the resolutions. Thungela reportedly told the activist shareholders that disclosing its industry association memberships in its Climate Change Report would satisfy the resolution’s request. Schuster, however, called this disingenuous, as the resolution requires more detailed disclosure than simply providing the names of industry associations, which is all Thungela’s report does. Just Share also argued that this does not comply with the JSE’s guidance on climate change and sustainability disclosure in relation to lobbying activities.

Thungela informed News24 that it is open to engaging with Just Share. The coal mining company stated that its board has invited Just Share to discuss the concerns raised and, given Thungela’s willingness to disclose the information openly, there is no need for shareholders to vote on the matter.

Exxaro, on the other hand, expressed its strong belief that the proposed resolution falls within the purview of the company’s directors and should be addressed accordingly. Just Share countered that a “firm belief” is not a valid reason for refusing to table a non-binding, advisory resolution. The organization also contended that directors of JSE-listed companies, like Exxaro and Thungela, cannot refuse to table shareholder-proposed resolutions that comply with the Companies Act’s procedural requirements simply because they do not like the resolution’s substance. This is especially true for advisory resolutions, which are not binding on the company even if shareholders vote in favor of them, as Schuster noted.

In 2021, Just Share obtained a legal opinion supporting this stance after both Sasol and Standard Bank had refused to table shareholder-proposed resolutions on climate risk. Responding to News24, Exxaro maintained that the issue raised in the proposed resolution is a board matter that can be addressed by the board and management. The company welcomed the engagement from Just Share and invited the organization for further discussion to explore the merits of their proposal, which Exxaro said it can incorporate into its stakeholder engagement practice, reporting, and disclosure.

Schuster emphasized that climate lobbying disclosure is common in developed countries and is particularly important for coal mining companies with a vested interest in delaying government climate action.

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