Exxaro Resources Limited
Integrated report 2022
We protect and maintain our licence to operate by building long-term, stable, mutually beneficial relationships, enabling us to create shared value with stakeholders. Our engagements also serve as a key treatment in the response to and management of organisational risks.
The value we create for our stakeholders is as important as the value we create for ourselves. We understand our social impact, as well as stakeholder needs and interests, which we identify through regular and ad hoc in-person engagement as well as through social impact assessments and a variety of surveys. This understanding enables us to respond appropriately during the course of business. We live our purpose to strengthen and maintain our stakeholder relationships, facilitating shared, sustainable value creation and impact.
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Refer to the ESG report for more information about our approach to Stakeholder management and engagement planning. |
We have differentiated the layout of the stakeholder report between the ESG report and the Integrated Report. For this report, we describe our stakeholder management through the lens of our enterprise risk framework – that is, where stakeholder management was instrumental in responding to a key risk in 2022. However, in the ESG report, we have maintained a stakeholder lens to describe key stakeholder relationships and the issues we addressed during our engagements.
We use our ERM process and regular BU and project workshops to identify our stakeholders and assess our impact on them, and their impact on our business. We categorise our stakeholders into four main clusters of government, communities, business and value chain participants and identify relevant engagement strategies and engagement objectives as required.
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Stakeholder management in the ESG report explains the nature and quality of our relationships with strategic stakeholder groups discussed on the pages that follow. |
Engagement effectiveness is assessed through assurance and audits on our procedures and changes in risk ratings. We also measure perceptions of our engagement performance as part of a stakeholder survey. We conducted our first reputation tracking survey in 2022 following a baseline study in 2018.
Exxaro has many stakeholders but for the purpose of this report, we have focused on engagements most material to value creation and preservation. The related stakeholders and the detail of specific engagement are unpacked accordingly.
| Quality of relationship | ||
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No existing relationship or the relationship has challenges | |
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Established relationship but can be improved | |
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Good relationship with opportunity for improvement | |
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Very strong relationship based on mutual trust and respect |
2022 risk: Unavailability of rail capacity
Engagement purpose: Collaborate in finding solutions to improve logistics
2022 risk: Key dependency on Eskom as a key customer
Engagement purpose: Eskom continues to be a key customer for Exxaro. In 2022, 75% of Exxaro's sales was attributed to Eskom. The long-term agreements with Eskom at Matimba and Medupi place the coal business in a defensive position. We engage regularly in light of the challenges facing Eskom.
2022 risk: Community unrest
Engagement purpose: We aim to build relationships and our understanding of community needs to enable collaboration and the successful delivery of socio-economic development projects. Engagements enable us to proactively resolve any issues or concerns raised before protest action occurs. We further aim to communicate how we create shared value through local employment and procurement, community development initiatives, skills development and ESD.
Stakeholder: Communities
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Our business risks and opportunities and social licence to operate |
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Communities(ESG report) |
Our communities expect Exxaro to employ, uplift and empower locally, enabling South Africa's development. Communities highlighted infrastructure, service delivery, procurement and youth and skills development as key issues during the year.
2022 risk: Fatal risk incidents
Engagement purpose: Align employees' focus with our health and safety strategy and culture for competitive advantage and resilient business performance.
Stakeholder: Transnet
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Our business risks and opportunities and our people |
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Employee engagement (ESG report), health and wellness (ESG report), and safety (ESG report) |
2022 risk: Climate change concerns
Engagement purpose: Understand regulatory policy, empower employees, communities and value stream participants to manage climate change impacts, contribute to thought leadership and communicate our decarbonisation plan.
Stakeholder:
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Our business risks and opportunities |
| TCFD | |
| Our people | |
| Social licence to operate | |
| Our environment |
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Climate change resilience(ESG report) and social (ESG report) |
Government and regulators
Engagements with leading national authorities on climate change and carbon budgets included effective application of instruments designed to meet South Africa's international climate change obligations, particularly the NDC. We engage with the Department of Forestry, Fisheries and the Environment (DFFE) (lead department on climate change) and National Treasury (lead department on the Carbon Tax Act). Discussions with the Department of Energy included our renewable energy strategy and potential future investments in renewable energy.
Employees and labour unions
Our energy management efforts and implementation of cleaner energy sources at our operations drive carbon emissions reductions. Reducing and offsetting our footprint in line with the NDCs is a priority.
Communities
We are engaging with communities on climate change mitigation, adaptation and resilience with the aim of increasing the adaptive capacity of host communities. We are also communicating our decarbonisation plan.
Investors
We have shared our strategic approach to climate change mitigation, adaptation and business resilience as well as risks and opportunities, carbon pricing, TCFD recommendations and broader ESG issues.
Customers
We engaged with downstream customers who impact our carbon footprint, business strategy and ambition to be carbon neutral by 2050 about our Sustainable Growth and Impact strategy, decarbonisation plan and divestment from some coal operations. Engagement explored collaboration in emissions reduction, aiming to reduce our scope 3 emissions and customers' scope 1 and 2 emissions.
Suppliers
Our green procurement strategy prioritises sustainable supplier engagement with critical objectives including increasing the adoption of environmentally friendly, natural resource-efficient equipment, products and technology at Exxaro's operations.
Trade and research associations
As a member of the Industry Task Team on Climate Change, we worked with government and other businesses to address South Africa's international climate change obligations, supporting the low-carbon transition, carbon price merits, collaboration and the just transition.
Our NBI membership enables us to contribute to thought leadership on issues such as the just transition and the role of business in ensuring the transition to a low-carbon economy, preparation for COP meetings and alignment with the SDGs.
Through the Minerals Council, we were involved in discussions with government on the implications of environmental policy, carbon tax, and waste and water management in a changing climate.
We engaged with other businesses through Business Unity South Africa on macro-economic and high-level issues that affect the country at national and international levels.
Exxaro was also among the Business Leadership South Africa members focused on securing energy supply.
As part of the Energy Intensive Users Group of South Africa, we worked with government, power utilities, industry and other stakeholders to ensure a financially viable, technically healthy and well-managed energy supply sector for South Africa. We discussed energy efficiency, energy strategy and policy implementation with government and other businesses through the Energy Efficiency Leadership Network.
We also engage with various stakeholders such as government, NGOs, communities and industry, on air quality management in priority areas through multi-stakeholder reference groups and implementation task teams for the Highveld and Waterberg-Bojanala priority areas.
2022 risk: Loss of social licence to operate and country risk
Engagement purpose: Proactive engagement supports our efforts to drive business resilience and manage risk. Collaborating and partnering with government is how Exxaro plays a role in finding solutions to socio-economic challenges and contributes to shaping government policies.
Stakeholder: Government
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Our business risks and opportunities |
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Social (ESG report) |
* This is a multi-stakeholder issue.
Case study: Reputation management top of mind
Perceptions of Exxaro's reputation and business ambitions have improved significantly since 2018 among the majority of Exxaro's key stakeholders, according to the stakeholder reputation survey conducted in 2022.
The survey reached out to 1 487 participants (government, investors, media, civil society, customers, suppliers, organised labour, communities and employees) online, by phone and in group sessions.
The survey was conducted against a global climate of generally declining trust in business to operate in the best interest of society. However, among Exxaro's stakeholders, trust in mining companies to operate in the best interest of society was up from 2018. The overall results show significantly improved trust and reputation indicators for the company compared to the baseline survey conducted in 2018.
Key findings
While all stakeholders agree that Exxaro delivers on its purpose, they also feel that there is an opportunity for us to increase the intensity of feedback, especially to communities. It is interesting to also note that other than communities, all stakeholders believe that we have a role to play in South Africa's transition away from fossil fuels.
Expectations from Exxaro on the community front remain very high. While our community development efforts are acknowledged, "more and better" is expected from the company given the increasing level of social and economic distress among our local communities.
Reputation resilience
The survey outcome shows that, while our overall relationships with stakeholders (measured through stakeholder engagement efficiency) are good, additional effort is required in relation to civil society and communities. In response, we have developed strategies for each stakeholder group to guide future engagement that will address concerns and reinforce mutually beneficial areas.
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