Dear shareholders, I am pleased to present the social and ethics committee report for the year ended 31 December 2018.
The committee is constituted as a statutory committee of the company for those statutory duties assigned to it in terms of section 72(4) of the Companies Act of 2008 (read in conjunction with regulation 43 of the Companies Regulations, 2011) (the Act), and as a committee of the board for all other duties assigned by the board.
In addition, as emphasised in the King IV Report on Corporate Governance for South Africa, 2016 (King IV™), this committee's role is to have oversight of and report on organisational ethics, responsible corporate citizenship, sustainable development and stakeholder relationships. This will help to ensure sustainability while serving the interests of stakeholders on whom the business depends.
The role of the committee is to:
The committee has an independent role, with accountability to the board. It does not assume the functions of management, which remain the responsibility of executive directors, prescribed officers and other members of senior management, nor does it assume accountability for functions performed by other committees of the board.
The committee comprised a majority of independent directors throughout the period as per the recommendations of King IV to ensure that independent judgement is brought to bear. Standing invitees include the chairman of the board, chief executive officer, finance director, executive head: stakeholder affairs and general manager: risk, compliance and assurance. Other individuals with specific skills and expertise are invited to assist members in their deliberations.
Four meetings were held in 2018, and one special meeting.
|Name||Designation||Attendance since appointment|
|Ms GJ Fraser-Moleketi||Permanent invitee and consultant||100%|
|Ms L Mbatha||Non-executive director||100%|
|Mr LI Mophatlane||Permanent invitee and consultant||100%|
|Mr EJ Myburgh||Former member and independent non-executive director||100% to date of resignation as member|
|Mr PCCH Snyders||Independent non-executive director||100%|
|Ms A Sing||Independent non-executive director and chairman||75%|
|Ms S Dakile-Hlongwane*||Former independent non-executive director||100% to date of retirement|
|Dr CJ Fauconnier**||Former independent non-executive director||100% to date of retirement|
|Dr MF Randera*||Former non-executive director and chairman||100% to date of retirement|
|*||Ms S Dakile-Hlongwane and Dr MF Randera resigned as directors of the company on 6 March 2018|
|**||Dr CJ Fauconnier retired as a director of the company on 24 May 2018|
As responsibility for governance of ethics is one of the principles of King IV, the committee plays a key role in setting the direction for how ethics should be approached and addressed by Exxaro.
In giving direction on organisational ethics, the committee considered and approved for adoption by the board:
It also has oversight of implementation initiatives for Exxaro's anti-bribery and anti-corruption (ABAC) programme to ensure management remains on track with the strategic objectives of the programme and is actively addressing any shortcomings. Initiatives in 2018 included:
The committee ensures that the board is sufficiently equipped to achieve its goal of having a sustainable ethical culture. Although this responsibility has been delegated, the board remains accountable for the way in which this is discharged.
Management supports the committee through its ethics committee that considers and addresses matters of ethics (including all hotline reports and forensic investigations) in detail, and reports to this committee.
Comparable statistics for January to December over a five-year period:
|Criminal cases registered||122||113||107||35||42|
|Value||2 886 989||6 788 634||3 733 342||563 255||3 245 438|
|Recovered||835 179||917 623||1 143 940||254 082||911 148|
|Total value (including copper) (R)||9 272 726||15 875 156||27 809 756||4 208 451||7 197 338|
|Total recovered (including copper) (R)||6 191 047||8 991 011||21 937 978||1 442 337||1 868 459|
Other key issues that received attention during the year:
|2018 KPI||Score (out of 5)|
|Ensure there is clear ownership and accountability of the transformation policy||3.50|
|Ensure that Exxaro submits all charter scorecard returns to the Department of Mineral Resources (DMR) and engages positively and proactively to protect mining rights||3.50|
|Drive tangible delivery from the transformation programme, especially housing||3.00|
|Ensure we make early and demonstrable progress with new social and labour plan (SLP) commitments||3.00|
|Ensure management is addressing our social and ethics obligations in line with King IV||3.50|
|Liaise and improve working relationship with leadership of communities around our mines and proactively assist in ensuring the viability of initiatives they are engaged in for Exxaro||3.50|
|Review SEC KPIs quarterly and understand management plans for out-of-appetite KPIs; periodically review management plans (including 2018 mining charter and BBBEE targets)|
|Review transformation strategy in support of overall Exxaro strategy|
|Review ESD strategy, including targets|
|Review stakeholder engagement strategy and plan|
|Review ethical culture of the organisations|
|Review ABAC programme implementation, including roll out of conflict-of-interest programme|
The committee, in carrying out its duties, has due regard to the principles and recommended practices of King IV. It is satisfied it has considered and discharged its responsibilities in line with its terms of reference.
On behalf of the committee
Ms A Sing
24 April 2019