Sasol Ltd., a South African energy and chemicals firm, is gaining attention. They reported stronger earnings and are shifting their strategy to buy more carbon credits. The move comes as the company, the second-biggest emitter of greenhouse gases in the region, boosts coal production and grows its renewable energy portfolio.
Investors, regulators, and climate observers are watching closely to see how Sasol balances its reliance on fossil fuels with its stated commitment to reaching net-zero emissions.
Earnings Power: Fueling a Dual Strategy
In its latest earnings report, Sasol posted a year-on-year improvement supported by stable product prices and efficiency gains. The company’s operating profit rose due to stronger chemical sales.
However, this was partly offset by higher costs in its coal division. Earnings were strong, giving Sasol the money to invest in fossil fuels and low-carbon projects.
For the fiscal year ending June 30, the company earned 10.60 rand per share. This is a turnaround from a loss of 69.94 rand per share. Asset write-downs fell sharply to 20.7 billion rand, down from 74.9 billion rand last year.
Sasol gained from a 4.3 billion rand settlement with Transnet over oil transport fees. Capital expenditure dropped 16% to 25.4 billion rand. This helped improve the company’s financial profile.
Management highlighted that a resilient balance sheet is critical as the company continues its transition journey.
Sasol has steady cash flows. This helps support its short-term coal operations. It also funds longer-term projects like renewable energy growth and carbon reduction efforts.
Sasol’s renewed profit helped lift investor sentiment. Following the earnings, the company’s shares climbed 7% in pre-market trading. Its stock on the Johannesburg Stock Exchange (JSE: SOL) surged by 44% over the last quarter.
Analysts predict that earnings per share will increase by 20% year-on-year. This shows rising confidence in the company’s ability to balance profit and sustainability.
Rising Carbon Credit Purchases: Flexibility or Delay?
One of the biggest headlines is Sasol’s decision to boost its purchase of carbon credits.
- In the fiscal year that ended in June 2025, Sasol’s carbon credit purchases increased to R723 million, a 25% increase year-on-year.
- This amount was nearly triple the value of the credits it bought in 2023.
- Since 2019, Sasol has acquired more than 11 million South African carbon credits, which has reduced its carbon tax liability by more than R650 million.
Most of these credits come from international renewable energy and reforestation projects, while some are linked to African-based carbon offset programs. Sasol plans to grow its carbon credit portfolio, showing its commitment to climate responsibility.
- Wonderbag: In 2021, Sasol announced it would use carbon credits generated by the Wonderbag project, which provides non-electric heat-retention cookers to reduce household emissions.
- Bethlehem Hydro: In 2020, Sasol purchased over 100,000 credits from Bethlehem Hydro, a 7MW hydropower plant that was the first Independent Power Producer in South Africa.
- Nitrous oxide abatement: As far back as 2007, Sasol received credits for a nitrous oxide abatement project at its nitric acid plants in Sasolburg and Secunda.
However, it recognizes that cutting emissions from its own operations is tough in the near term. The company plans to steadily increase reliance, but acknowledges that credits are a temporary solution.
The use of credits has generated debate. Supporters say it gives companies flexibility to meet interim targets while low-carbon technologies scale.
Critics argue it can delay direct emissions cuts. Sasol’s growing use of offsets shows the urgent climate pressures and the challenges of moving away from coal.
Coal’s Grip: South Africa’s Energy Dilemma
Sasol is one of South Africa’s top coal users. It relies on coal for power and to make synthetic fuels and chemicals. Its Secunda plant is one of the single largest point sources of carbon dioxide globally, emitting more than 56 million tons of CO₂ equivalent each year.
The world’s biggest producer of fuels and chemicals from coal emits around 63 million tons of CO₂ equivalent each year. This makes it one of Africa’s largest industrial polluters.
The company believes coal is still essential for South Africa’s energy and industry right now. This is especially true due to the country’s electricity shortages and its dependence on Eskom, the state utility. Sasol knows that relying on this can lead to risks such as regulatory pressure, investor scrutiny, and possible costs from future carbon pricing.
Counting Carbon: Sasol’s Net-Zero Targets and Progress
Despite its coal footprint, Sasol has stepped up efforts to diversify its energy mix. The company is putting money into renewable energy projects. This includes solar and wind farms. These efforts will help provide cleaner electricity for its operations.
Moreover, partnerships with independent power producers are helping Sasol shift portions of its energy use away from coal-generated power.
In addition, Sasol is advancing work in green hydrogen and sustainable aviation fuel (SAF). Its Fischer-Tropsch technology, long used for coal-to-liquids production, is being adapted for cleaner feedstocks, such as natural gas and green hydrogen. The company announced pilot projects to produce low-carbon chemicals for local and global markets.
Sasol aims to cut its Scope 1 and 2 emissions by 30% by 2030. This goal uses a 2017 baseline, which is about 72 million tons of CO₂e. Progress: current emissions are down about 13% from baseline.
It aims for net-zero emissions by 2050. However, it admits that success relies on policy support, technological progress, and available funding.
In summary, Sasol’s key emission reduction initiatives are:
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Green hydrogen projects – Developing hydrogen production in South Africa through partnerships to support cleaner fuels and power.
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Renewable energy procurement – Securing up to 1,200 MW of renewable electricity (wind and solar) to replace coal-based power at operations.
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Energy efficiency improvements – Implementing process optimization and equipment upgrades to reduce energy use across its facilities.
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Coal-to-gas transition – Shifting part of its feedstock mix from coal toward natural gas, which has a lower carbon footprint.
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Carbon capture and utilization (CCU) – Exploring technologies to capture CO₂ from operations for use in chemicals or fuels.
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Sustainable aviation fuel (SAF) development – Advancing projects to produce low-carbon jet fuel from sustainable feedstocks.
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Offsets and carbon credits – Expanding purchases of carbon credits to compensate for hard-to-abate emissions.
Markets in Motion: Offsets, Renewables, and Risks
Sasol’s strategy reflects broader challenges facing energy and industrial companies worldwide. Carbon credits are gaining popularity. The voluntary carbon market was worth over $2 billion in 2024. It’s expected to grow to nearly $50 billion by 2030, under the best-case scenario.
However, the credibility of offsets is under scrutiny, and investors are demanding more transparency on how credits are used.
At the same time, global coal demand remains strong, particularly in emerging markets. South Africa’s energy system still relies heavily on coal, which generates about 80% of the country’s electricity. This makes decarbonization complex, as companies like Sasol must balance energy security with climate commitments.
Meanwhile, renewable energy costs continue to fall. According to the International Renewable Energy Agency (IRENA), solar and wind are now the cheapest forms of new power generation in most regions. For Sasol, scaling renewables not only helps reduce emissions but also lowers long-term energy costs.
Balancing Growth, Risk, and Climate Goals
Sasol’s higher earnings give it the financial strength to follow its dual-track strategy. This means it can keep expanding coal operations and invest in low-carbon solutions. The company’s growing purchase of carbon credits shows its urgent need to meet climate goals. It also reflects the challenge of cutting emissions from coal-heavy operations.
Sasol’s future will depend on whether it can scale up renewable energy, develop viable low-carbon technologies, and manage the risks tied to its coal reliance. Its net-zero commitment remains a long-term goal. Yet, the company’s latest moves suggest it is trying to walk a fine line between financial performance and climate responsibility.
The post Sasol’s (SSL) Stock Rises on Profits, Carbon Credit Surge, and Net-Zero Push appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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