PIC’s Sasol investment shifts the debate to shareholder responsibility

The Public Investment Corporation (PIC) increased its stake in Sasol from 15% to just over 20%, making it the company’s largest shareholder by a significant margin. Unsurprisingly, the move has prompted criticism. Why would a state-owned asset manager with a developmental mandate increase its investment in one of the world’s largest corporate greenhouse gas emitters?

It is a fair question. But it is not the most important one. The more important question is this: now that the PIC owns one-fifth of Sasol, what should South Africans expect it to do with that influence?

Whether the PIC should have bought more Sasol shares is ultimately a debate about portfolio construction. Whether – and how - it uses the influence that comes with those shares is a debate about ownership.

Because ownership at this scale is not passive. It creates both power and responsibility.

Sasol sits at the centre of one of SA’s greatest economic challenges. It supports thousands of jobs, anchors critical industrial value chains and contributes materially to the economy. At the same time, it is SA’s largest corporate greenhouse gas emitter and a significant source of local air pollution, with profound consequences for public health, water security and the country’s long-term competitiveness. These realities are not mutually exclusive. They are precisely why Sasol matters.

The PIC is not simply one shareholder among many. It is the anchor shareholder in one of SA’s most strategically important companies. It cannot dictate outcomes, but it has the influence to shape them.

Directors know that a shareholder of this size cannot be ignored. Management will pay attention to the questions it asks. Other investors will watch how it votes. And where necessary, the PIC has both the credibility and the influence to build coalitions around better governance.

Increased agency

The PIC has not simply increased its exposure to Sasol. It has increased its agency.

This is significant, because the PIC is not an ordinary investor. It is a signatory to the Principles for Responsible Investment. It has committed itself to active ownership and responsible investment. It has a developmental mandate. And, as one of the world’s largest universal owners, it manages the long-term savings of millions of South Africans whose financial futures depend on the health of the economy as a whole.

These are not competing responsibilities. They reinforce one another.

Universal owners cannot diversify away from systemic risks. If pollution, climate change, weak governance or social instability undermine economic growth, increase healthcare costs or weaken financial stability, those costs eventually find their way back into investment portfolios. Long-term investors therefore have a direct financial interest in ensuring that the companies they own create value without imposing unacceptable costs on society.

Sasol is perhaps the clearest example of why this matters. Over the next decade, the company will make decisions that will shape its future for generations. It will decide where to invest capital, which technologies to back, how quickly to reduce emissions and how to position itself in a carbon-constrained global economy.

Many of those decisions, once taken, will be difficult or impossible to reverse. They will determine not only Sasol’s competitiveness, but also SA’s industrial trajectory and emissions profile for decades to come.

Given this background, it is very concerning that Sasol has recently significantly reduced its focus on decarbonisation and “reversed [its] earlier greenhouse-gas-driven coal-reduction strategy”.

This is where the PIC’s ownership becomes meaningful.

South Africans should expect the PIC to insist on a transition strategy that is credible, properly financed and supported by measurable, meaningful milestones. They should expect it to ask whether the board has the expertise to oversee one of the most complex industrial transitions on the continent.

They should expect executive remuneration to reward delivery rather than aspiration, and capital allocation decisions to reflect the realities of a rapidly changing global economy. They should expect transparent reporting on progress, and where progress falls short, they should expect the PIC to use every tool available to a shareholder of its size – engagement, voting, filing shareholder resolutions where appropriate and, if necessary, speaking publicly.

Responsibilities of a long-term owner

They are the responsibilities of a long-term owner. Ownership also means accepting both sides of the ledger.

The PIC will rightly share in the value Sasol creates – the returns earned for pension beneficiaries, the jobs it supports and its contribution to SA’s economy. But ownership also means accepting responsibility for influencing the company’s wider impacts. The same shareholding that entitles an investor to celebrate value creation also carries an obligation to reduce value destruction. Investors cannot claim the upside while distancing themselves from the consequences of corporate decisions that are foreseeable, material and within their influence to change.

This debate is critical.

Too often, responsible investment is presented as a choice between financial returns and broader societal outcomes. In reality, the interests of long-term investors and society are increasingly aligned. SA cannot prosper if one of its most systemically significant companies fails to adapt to the profound economic changes already under way. Equally, Sasol cannot create durable value if it ignores the environmental and social risks that increasingly shape its licence to operate, its cost of capital and its long-term competitiveness.

The PIC now has a rare opportunity.

Few investors anywhere in the world combine a shareholding of this scale in a globally significant emitter with a developmental mandate, universal ownership and a public commitment to responsible investment. If the PIC uses its influence well, it could demonstrate that active ownership is not about ideology.

It is about exercising responsibility. It could help steer one of SA’s most important companies towards a future that is commercially resilient, environmentally responsible and socially sustainable. In doing so, it would not only strengthen Sasol’s long-term prospects, but also help safeguard the long-term interests of the millions of South Africans whose savings it manages.

The debate, then, should not be whether the PIC owns 20% of Sasol.

The debate should be whether it acts like a 20% owner.

That is what South Africans should expect. The PIC must embrace that responsibility. Because this share purchase is not simply an investment in Sasol – it is an investment in SA’s future. DM