Integrated report 2019
Exxaro Resources Limited
Environmental, social and governance report
Ms GJ Fraser-Moleketi
Chairman
Dear shareholders,
I am pleased to present the social and ethics committee report for the year ended 31 December 2019
The social and ethics committee performs a vital function within the company's governance structures. As a statutory committee of the company, it has oversight of the group's organisational ethics, responsible corporate citizenship, sustainable development, development of transformation objectives, and it ensures that the organisation's culture is supportive of its transformative approach and monitors performance against the approved transformation objectives.
The committee confirms, in accordance with the JSE Listings Requirements, that it has executed its mandate in line with the Companies Regulation issued pursuant to the Companies Act.
The committee consisted of a majority of independent directors throughout the period as per the recommendations of King IVTM, which ensures independent judgement within the committee deliberations and decisions. The chairman of the board is a standing invitee to all committee meetings, including the chief executive officer, finance director, executive head: stakeholder affairs, executive head: sustainability, executive head: human resources and the chief risk officer. Other individuals with specific skills and expertise are also invited to assist members in their deliberations.
The composition of this committee is considered annually and nominations for new members were adopted at the AGM held on 23 May 2019 with the changes in membership taking effect from that date.
Four meetings were held during 2019. The committee attendance throughout the year illustrates high levels of engagement by our committee members.
The following table provides an overview of member designations and attendance since appointment.
| Name | Designation | Attendance (%) | |
| Ms GJ Fraser-Moleketi* | Lead independent non-executive director and chairperson | 100 | |
| Ms D Mashile-Nkosi** | Non-executive director | 100 | |
| Ms L Mbatha | Non-executive director | 100 | |
| Mr LI Mophatlane | Independent non-executive director | 100 | |
| Ms A Sing*** | Independent non-executive director | 50 | |
| Mr PCCH Snyders | Independent non-executive director | 100 |
| * | Ms GJ Fraser-Moleketi was elected as chairperson on 1 August 2019. |
| ** | Ms D Mashile-Nkosi was appointed as a member from 23 May 2019 and resigned as a member of this committee and director of the company with effect from 11 October 2019. |
| *** | Ms A Sing was not available for re-election and retired as a member and chairperson of this committee on 23 May 2019. |
In execution of its mandate and to achieve workforce transformation, the committee considered and recommended to the board for approval a revised five-year employment equity plan to progressively achieve the mining charter 2018 targets.
It also focused on the percentage of women in order to close the gender gap, especially at senior management level and women in engineering. The committee requested that the challenges facing women in mining be investigated to ensure the environment was conducive to attract and retain women. In support of gender equality, the committee requested that a gender charter and policy be formulated. The committee thus confirmed its positive willingness to achieve workforce transformation targets with determination and to lead in an inclusive manner.
The implementation and progress of the Exxaro enterprise and supplier development programme is monitored by this committee, and reported that, through Exxaro's financial support by way of grants and loans, the enterprise and supplier development programme showed success in terms of compliance and social impact.
During 2019, the company implemented the following:
The table below discloses the forensic investigation activity over a comparable period for the past three years following the 2018 approval by the committee of a fraud prevention, anti-bribery and anti-corruption programme implemented in 2019.
| 2019 | 2018 | 2017 | |||
|---|---|---|---|---|---|
| Investigations | Number | 410 | 482 | 330 | |
| Hotline calls | |||||
| Disciplinary enquiries | Number | 245 | 185 | 96 | |
| Criminal cases registered | Number | 124 | 42 | 35 | |
| Arrests | Number | 86 | 49 | 45 | |
| Copper theft | 32 | ||||
| Number of cases | 57 | 54 | 23 | ||
| Value (R) | 3 541 404 | 3 245 438 | 563 255 | ||
| Recovered (R) | 295 397 | 911 148 | 254 082 | ||
| Total value (including copper) | Value (R) | 5 898 067 | 7 197 338 | 4 208 451 | |
| Total recovered (including copper) | Value (R) | 591 654 | 1 868 459 | 1 442 337 |
Notable conclusions are that the programme contributed to greater awareness and is a necessary deterrent to would-be perpetrators.
Since 2012, Exxaro's fraud prevention and anti-bribery and anti-corruption programme has matured significantly to the point of receiving a 98% ISO 37001 assessment by ENS (not certification) and should be able to withstand scrutiny in terms of the UNGC principle on corruption, the OECD guidelines on corruption, the South African Prevention of Corrupt Activities Act, the UK Bribery Act, the Foreign Corrupt Practices Act of the US, as well as the South African Companies Act.
The committee requested the development of an integrated socio-economic development strategy as part of the overarching Exxaro strategy to ensure social impact with regard to powering better lives in Africa and beyond. Emphasis was to be placed on transformation and employment equity with timelines to ensure implementation by 2026.
The mine invasions and community unrests in many areas were highlighted as a real concern to the mining industry as well as government. The committee recognised the need for better communication within Exxaro's host communities to ensure transparency of investment contributions made by Exxaro and to communicate opportunities within procurement, enterprise supplier development, skills development and training.
Under the guidance of this committee, the company achieved a level two status with the best performing elements being ownership, enterprise and supplier development and socio-economic development. The committee confirmed that the economic upliftment of communities surrounding the Exxaro mines remains a key priority to ensure sustainability.
Throughout the year, the committee considered holding statements issued against various service providers, which expressed the seriousness of corporate South Africa addressing the root causes of irregularities and its strong commitment to ethics.
The committee's terms of reference was reviewed by external assurance providers due to the many corporate failures globally and locally. The recommendation to closer align the terms of reference of the board committees was executed and submitted to the board for approval.
Key performance indicators
KPIs in 2019 |
Evaluation |
KPIs in 2020 |
|
Review social and ethics committee KPIs quarterly and understand management plans for out of appetite KPIs and periodically review management plans (including the Mining Charter and B-BBEE targets) |
Achieved |
Transformation: Diversity and inclusion strategy, enterprise and supplier development, communities and land management (farming land) to outline all elements relating to transformation including regulatory requirements which are already measures through the strategic performance dashboard |
|
Review the transformation strategy in support of the overall Exxaro strategy |
Achieved |
Stakeholder management: focus on employee and union engagement, customers and suppliers, investors, media and NGOs |
|
Review the enterprise and supplier development strategy including the targets |
Achieved |
Culture journey: embedding the current culture and considering changes emanating from growth strategy |
|
Review the stakeholder engagement strategy and plan |
Achieved |
Ethics: Anti-bribery and corruption interventions and awareness |
|
Review the ethical culture of the organisation |
Achieved |
Employee wellness: health and safety strategy |
|
Review the anti-bribery and anti-corruption programme implementation including the rolling out of the conflict of interest programme |
Achieved |
Environment strategy (non-regulatory) |
The effectiveness and performance of the committee was independently evaluated during the reporting period. The general outcome of the assessment was that the overall performance of the committee is more than satisfactory.
Herewith the themes that formed part of the assessment (four being the highest rating representing "In line with best practice" and one "needs significant improvement") and the ratings achieved.
Highlights of the assessment were:
The recommendations made as well as points to ponder will be included in the annual work plan for 2020.
The committee, in carrying out its duties, has due regard to the principles and recommended practices of King IVTM and discharged its responsibilities in accordance with its terms of reference. The committee is furthermore satisfied that it has fulfilled its mandate in terms of the Regulations to the Companies Act and that there are no material instances of non-compliance to disclose and, if any material non-compliance existed, that it was duly considered.
On behalf of the committee
Ms GJ Fraser-Moleketi
Chairperson
Pretoria
20 April 2020
