Performance and value creation

Strategic direction

King IV articulates the responsibilities of the board, which is to steer an organisation strategically in line with its core purpose and values by approving as well as monitoring an informed short, medium and long-term strategy while considering sustainability-related impacts, risk and opportunities.

The board sets Exxaro's short, medium and long-term strategic direction through our Sustainable Growth and Impact strategy. It enables sustainable value creation through approval of a new capital allocation model and budget, setting and monitoring performance and culture expectations as well as a governance framework for the group.

Our strategy: positioning Exxaro for sustainable growth and impact

Business continuity and crisis management plans

The board adopted an emergency response plan in 2019, focusing on capability interfaces for crisis management and business continuity, to ensure integrated disaster or incident response and recovery.

The RBR committee oversaw the process of updating the following business continuity governance documents:

Emergency response plan
Crisis management policy
Business continuity plan
Information management disaster recovery plan to reflect changes in the internal and external environment

Furthermore, this process sought to align BUs with the board-approved business continuity plan template, which is aligned to ISO 22301 and British Standards Institution 11200:2014.

Internal reporting

We introduced a new format for internal reporting to the board in 2022. Management is required to detail the outcomes of proposed recommendations to the board in respect of:

Strategy implications
Financial implications
Risk and compliance analysis
ESG implications

Transparency

The board is committed to clear and comprehensive financial reporting and disclosure as well as constructive shareholder engagement, including transparency of activities and performance. The board therefore ensures that reports issued by the company enable stakeholders to make informed assessments of the group's performance as well as its short, medium and long-term prospects.

Assurance

Refer to the assurance report for detail on assurance over key sustainability information in this report.

Performance evaluation

KPIs track the execution of Exxaro's strategy for the board, board committees, group and energy executive committees.

Exxaro uses a strategic performance dashboard that supports reporting on the achievement of these KPIs. The dashboard was reviewed in 2022 and its reporting philosophy revised. To measure execution of Exxaro's refined Sustainable Growth and Impact strategy, reporting will focus on exceptions (out of appetite or worst tolerable) going forward to ensure execution and tracking of performance towards achieving the strategy and desired portfolio.

Through a cascade principle, the group executive committee drives and reports on the selected board KPIs. The status of the strategic performance dashboard is reported at board meetings throughout the year, focusing on reporting to the board what matters.

Strategic performance dashboard

Performance targets to support our Climate Change Response strategy

To strengthen GHG mitigation and business resilience efforts, we included targets on water security and efficiency as well as energy efficiency in the group-wide GIS in 2022.

The energy efficiency targets relate to diesel and electricity consumption. Diesel accounts for over 95% of our scope 1 GHG emissions, while coal-based electricity is 100% of our scope 2 emissions.

Implementation of these two KPIs is a progression of our Climate Change Response strategy, our goal to be carbon neutral by 2050 and further alignment with the TCFD.

Applying good corporate governance to support the achievement of our strategic objectives

Purpose: Powering better lives in Africa and beyond
Vision: Resources powering a clean world
Capital
Board-approved strategic objectives	1 Transition at speed and scale	2 Make our minerals and energy business thrive	3 Empower people to create impact	4 Be carbon neutral by 2050	5 Become a catalyst for economic growth and environmental stewardship
Board-approved strategic KPIs and performance	Core operating margin	Capital project delivery	Number of fatalities	Carbon intensity (scope 1 and 2 GHG emissions)	B-BBEE dtic scorecard target
Board-approved targets	20%	0%	Zero	5% less than actual in the previous year	Level 1
Corporate governance measures	Board-approved Sustainable Growth and Impact strategy Audit committee oversight on financial reporting matters Investment committee review and monitor material acquisitions, mergers/ investments Enabling Group Governance Framework and group-wide policies	Review of group-wide delegation of authority Subsidiary delegation of authority review in 2023 Revised board and committee reporting template implemented to address strategy, risk, compliance and ESG impacts RBR committee oversight of resilience, risks, compliance and information management governance oversight	Safety performance Retain "safety moment" as standing agenda item for all board, committee and executive meetings Board-approved diversity, equity and inclusion strategy Remuneration committee, SERC and RBR committee oversight Board members participate in annual Leadership Safety Day and BU safety indabas	Become carbon neutral through our board-approved decarbonisation plan Board composition to include sustainability skills and experience Board-approved climate change response strategy, climate change position statement and performance targets Performance targets included as part of the group-wide GIS in 2022 SERC and RBR oversight Establishment of ESG steering committee	Board-approved social impact strategy Board-approved diversity, equity and inclusion strategy Revised application of Exxaro's ESD initiatives SERC and RBR committee oversight Board composition through the nomination committee Board-approved policies