Exxaro Resources limited

Environmental, social and governance report 2021

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OVERVIEW

OVERVIEW

OVERVIEW

Introduction About this report About Exxaro Evolution of a 21st century company Our ESG perspective Measuring our performance Strategic key performance indicators Stakeholder management

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
ENVIRONMENT

ENVIRONMENT

ENVIRONMENT

Environment Air quality Climate change resilience Energy management Water security management Waste management Biodiversity Environmental liabilities and rehabilitation

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
SOCIAL

SOCIAL

SOCIAL

Social People Communities Human rights

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
GOVERNANCE

GOVERNANCE

GOVERNANCE

Governance Ethical culture Performance and value creation Adequate and effective control Trust, good reputation and legitimacy Board of directors Our executive team Remuneration and nomination committee report

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

Remuneration committee report Nomination committee report Risk and business resilience committee report Social, ethics and responsibility committee report Audit committee report Investment committee report King IV application register Remuneration report

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
ADDITIONAL INFORMATION

ADDITIONAL INFORMATION

SOCIAL

GRI index SASB index Task Force for Climate-Related Financial Disclosures (TCFD) Assurance report Appendix A: Criteria Glossary Administration

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
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Task Force for Climate-Related Financial Disclosures (TCFD)

This is Exxaro's second year of reporting in line with the recommendations of the TCFD. Our ability to report in line with these recommendations reflects Exxaro's internalised and proactive position on climate change and our ESG commitments.

The table below provides an overview of our responses and provides links to relevant coverage in this report, our ESG report and other supporting documents available online. In 2020 we published a separate Climate Change Response strategy (CCRS) report and our Climate Change Positioning statement, which provides additional detail on some areas of our response to climate change and is available at https://exxaro-prod.azureedge.net/sitestorage/media/t4pj4zri/climate-change-position-statement.pdf.

Responding to the TCFD reporting requirements

Aspect

Recommended
disclosure

Indicator

Guidance and response

Governance

aDescribe the board's oversight of climate-related risks and opportunities.

In describing the board's oversight of climate-related issues, organizations should consider including a discussion of the following:

The board has oversight on climate-related risks and opportunities through the Risk and Business Resilience (RBR) subcommittee of the board. The Governance section in the ESG report outlines the process of oversight

processes and frequency by which the board and/or board committees (e.g., audit, risk, or other committees) are informed about climate-related issues

Contained in the RBR report in the ESG report

whether the board and/or board committees consider climate-related issues when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, and business plans as well as setting the organization's performance objectives, monitoring implementation and performance, and overseeing major capital expenditures, acquisitions, and divestitures

Contained in the RBR report in the ESG report

how the board monitors and oversees progress against goals and targets for addressing climate-related issues

Contained in the RBR report in the ESG report

bDescribe management's role in assessing and managing climate-related risks and opportunities.

In describing management's role related to the assessment and management of climate-related issues, organizations should consider including the following information.

The interface between the Board and Executive management on climate change matters is through the office of the CEO and Executive Head: Sustainability. The CEO provides leadership on all strategic climate change initiatives (decarbonisation project management office). The EH Sustainability attends the RBR meetings to report on progress climate change performance

whether the organization has assigned climate-related responsibilities to management-level positions or committees; and, if so, whether such management positions or committees report to the board or a committee of the board and whether those responsibilities include assessing and/or managing climate-related issues

Executive team composition and roles and responsibilities in the ESG report

a description of the associated organizational structure(s)

Executive team composition and roles and responsibilities in the ESG report

processes by which management is informed about climate-related issues; and

Executive team composition and roles and responsibilities in the ESG report

how management (through specific positions and/or management committees) monitors climate-related issues.

ESG report: Environmental management section

Strategy

aDescribe the climate-related risks and opportunities the organisation has identified over the short-, medium-, and long-term.

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning where such information is material. Organizations should provide the following information.

Climate-related risks and opportunities are widely integrated into the organisation from strategy to operational activities

a description of what they consider to be the relevant short-, medium-, and long-term time horizons, taking into consideration the useful life of the organization's assets or infrastructure and the fact that climate-related issues often manifest themselves over the medium and longer terms;

RBR report climate change section in the ESG report

Climate change and Decarbonisation program in the ESG report

a description of the specific climate-related issues potentially arising in each time horizon (short, medium, and long term) that could have a material financial impact on the organization; and

Integrated Report material matters section

a description of the process(es) used to determine which risks and opportunities could have a material financial impact on the organization.

Integrated Report: Our business risk and opportunities section

bDescribe the impact of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning.

Building on recommended disclosure (a), organizations should discuss how identified climate-related issues have affected their businesses, strategy, and financial planning. Organizations should consider including the impact on their businesses, strategy, and financial planning in the following areas:

	Products and services
	Supply chain and/or value chain
	Adaptation and mitigation activities
	Investment in research and development
	Operations (including types of operations and location of facilities)
	Acquisitions or divestments
	Access to capital

Integrated Report: Our business risk and opportunities section

Integrated Report: Section on Our strategy: Positioning Exxaro for enduring success with specific reference on the Sustainable Growth and Impact strategy performance and future focus

ESG report section on climate change resilience and decarbonisation

Organizations should describe how climate-related issues serve as an input to their financial planning process, the time period(s) used, and how these risks and opportunities are prioritized. Organizations' disclosures should reflect a holistic picture of the interdependencies among the factors that affect their ability to create value over time

Integrated Report: Our business risk and opportunities section

Organizations should describe the impact of climate-related issues on their financial performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities). If climate-related scenarios were used to inform the organization's strategy and financial planning, such scenarios should be described.

Integrated Report: Section on Our strategy: Positioning Exxaro for enduring success with specific reference on the Sustainable Growth and Impact strategy performance and future focus

Organizations that have made GHG emissions reduction commitments, operate in jurisdictions that have made such commitments, or have agreed to meet investor expectations regarding GHG emissions reductions should describe their plans for transitioning to a low-carbon economy, which could include GHG emissions targets and specific activities intended to reduce GHG emissions in their operations and value chain or to otherwise support the transition.

cDescribe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2℃ or lower scenario.

Organizations should describe how resilient their strategies are to climate-related risks and opportunities, taking into consideration a transition to a low-carbon economy consistent with a 2℃ or lower scenario and, where relevant to the organization, scenarios consistent with increased physical climate-related risks. Organizations should consider discussing:

	where they believe their strategies may be affected by climate-related risks and opportunities;
	how their strategies might change to address such potential risks and opportunities;
	the potential impact of climate-related issues on financial performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities); and
	the climate-related scenarios and associated time horizon(s) considered.

Integrated Report: Section on Our strategy: Positioning Exxaro for enduring success with specific reference on the Sustainable Growth and Impact strategy performance and future focus

ESG report section on climate change resilience and decarbonisation

ESG report section on climate change resilience and decarbonisation

Risk Management

aDescribe the organisation's processes for identifying and assessing climate-related risks.

Organizations should describe their risk management processes for identifying and assessing climate-related risks. An important aspect of this description is how organizations determine the relative significance of climate-related risks in relation to other risks.

Integrated Report: Section on Our strategy: Positioning Exxaro for enduring success with specific reference on the Sustainable Growth and Impact strategy performance and future focus

Integrated Report: Section on Our strategy: Positioning Exxaro for enduring success with specific reference on the Sustainable Growth and Impact strategy performance and future focus

ESG report section on climate change resilience and decarbonisation

ESG report: Environmental management, Land, Biodiversity and Rehabilitation management section

ESG report section on climate change resilience and decarbonisation

ESG report Energy management section

ESG report: Water management section

ESG report: Water management section

Organizations should describe whether they consider existing and emerging regulatory requirements related to climate change (e.g., limits on emissions) as well as other relevant factors considered. Organizations should also consider disclosing the following:

	processes for assessing the potential size and scope of identified climate-related risks and
	definitions of risk terminology used or references to existing risk classification frameworks used.

bDescribe the organisation's process for managing climate-related risks.

cDescribe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation's overall risk management.

Organizations should describe how their processes for identifying, assessing, and managing climate-related risks are integrated into their overall risk management.

Organizations should provide the key metrics used to measure and manage climate related risks and opportunities. Organizations should consider including metrics on climate-related risks associated with water, energy, land use, and waste management where relevant and applicable.

Where climate-related issues are material, organizations should consider describing whether and how related performance metrics are incorporated into remuneration policies.

Metrics and Targets

aDisclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management.

Organizations should consider including metrics on climate-related risks associated with water, energy, land use, and waste management where relevant and applicable.

Integrated Report: Section on Our strategy: Positioning Exxaro for enduring success with specific reference on the Sustainable Growth and Impact strategy performance and future focus

ESG report: Environmental management, Land, Biodiversity and Rehabilitation management section

ESG report section on climate change resilience and decarbonisation

ESG report Energy management section

ESG report: Water management section

ESG report: Waste management section

Where climate-related issues are material, organizations should consider describing whether and how related performance metrics are incorporated into remuneration policies.

Where relevant, organizations should provide their internal carbon prices as well as climate-related opportunity metrics such as revenue from products and services designed for a low-carbon economy.

Metrics should be provided for historical periods to allow for trend analysis. Where appropriate, organizations should consider providing forward-looking metrics for the crossindustry, climate-related metric categories, consistent with their business or strategic planning time horizons. In addition, where not apparent, organizations should provide a description of the methodologies used to calculate or estimate climate-related metrics

bDisclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.

Organizations should provide their Scope 1 and Scope 2 GHG emissions independent of a materiality assessment, and, if appropriate, Scope 3 GHG emissions and the related risks. All organizations should consider disclosing Scope 3 GHG emissions.

GHG emissions should be calculated in line with the GHG Protocol methodology to allow for aggregation and comparability across organizations and jurisdictions. As appropriate, organizations should consider providing related, generally accepted industry-specific GHG efficiency ratios.

GHG emissions and associated metrics should be provided for historical periods to allow for trend analysis. In addition, where not apparent, organizations should provide a description of the methodologies used to calculate or estimate the metrics.

cDescribe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.

Organizations should describe their key climate-related targets such as those related to GHG emissions, water usage, energy usage, etc., where relevant, and in line with anticipated regulatory requirements or market constraints or other goals. Other goals may include efficiency or financial goals, financial loss tolerances, avoided GHG emissions through the entire product life cycle, or net revenue goals for products and services designed for a low-carbon economy. In describing their targets, organizations should consider including the following

	whether the target is absolute or intensity based;
	time frames over which the target applies;
	base year from which progress is measured; and
	key performance indicators used to assess progress against targets.
Organizations disclosing medium-term or long-term targets should also disclose associated interim targets in aggregate or by business line, where available.
Where not apparent, organizations should provide a description of the methodologies used to calculate targets and measures.

Task Force for Climate-Related Financial Disclosures (TCFD)

Responding to the TCFD reporting requirements

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