I am pleased to present the RBR committee report for the year ended 31 December 2022 which reflects the committee's focus on Exxaro's reputation as a good corporate citizen and resilience in a changing environment.
The decarbonisation project management office was established in June 2021 to coordinate decarbonisation activities across the group and compile a detailed baseline of our GHG emissions. A multi-functional projects team, comprising 10 functional and four cross-functional streams, was established to develop a group-wide decarbonisation system model and 2050 carbon neutral pathway streams. The team compiled a detailed emissions baseline and identified potential emission reduction opportunities in planned projects. The organisation has opportunities to reduce current emissions by 40% by 2025 with the implementation of the identified initiatives:
To ensure that the activities of the decarbonisation project management office are supported and regular feedback is received, an ESG steering committee has been established by management that will take responsibility of reviewing the decarbonisation project business cases, monitor budget spent and advise the technical team on further risk mitigation.
Following a dam collapse incident within the mining industry, the committee received confirmation that the operations, including mines in closure, and management procedures of Exxaro dams are audited regularly. All five yearly inspections were up to date and dams were all found fit for purpose in terms of inspections done to date. Due to the nature of mining activities and good systems in place, this was considered a low risk to the company.
Gender and racial diversity
|Committee calendar highlights linked to key focus areas for 2022
The committee is a board committee in terms of section 72 of the Companies Act, the company's MoI and King IV. The committee's role is as follows:
The committee's role is to oversee the implementation of an effective policy and plan for risk management that will enhance the group's ability to achieve its strategic objectives and that disclosure regarding risk is comprehensive, timely and relevant.
Risk management is the process effected by the board, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the organisation and manage risks to be within its risk appetite, and ultimately to provide reasonable assurance regarding achievement of the organisation's objectives. Risk governance refers to the governance structures and mechanisms established within the organisation in terms of which decisions regarding risk are taken and implemented.
The committee is responsible for reviewing the ERM process, including key risks facing Exxaro as well as responses in place to address these risks with particular focus on:
Business resilience is the ability of an organisation to absorb and adapt in a changing environment to enable it to deliver its objectives, survive and prosper. Risk, incident, crisis and business continuity management are among the four key elements of business resilience. The role of the committee is to oversee the appropriateness of Exxaro's crisis response plans and frameworks.
For the year under review, the committee consistently had four members with a majority of independent non-executive directors. With the retirement of Ras Myburgh, the committee welcomed the appointment of Ben Magara as member. The board is satisfied that the committee members have a suitably balanced blend of skills and experience to enable the committee to discharge its functions.
Standing invitees to committee meetings include the CEO, FD and chief risk officer. Other individuals, including members of management, external consultants and service providers, are invited to attend meetings of the committee from time to time in consultation with the committee chairperson.
The committee held four scheduled meetings, as determined by its terms of reference, during the period under review and one special meeting. The committee's attendance of 100% throughout illustrates high levels of engagement by RBR committee members. The table below is an overview of meeting attendance in 2022.
|Attendance at four quarterly meetings
|Attendance at one special meeting
|Independent non-executive director and chairperson
|Independent non-executive director
|Independent non-executive director
|Independent non-executive director
The committee's terms of reference were reviewed and enhanced in accordance with the IoDSA 2022 guidance, and approved by the board. The terms of reference continue to be aligned with legislation, regulations and King IV.
Under the oversight of the committee, the following matters received attention in addition to the key highlights:
The committee discussed the root cause of the Belfast fatality and HPIs as well as corrective and preventive measures it will monitor quarterly.
In line with the annual workplan, the committee quarterly receives the updated board strategic risks profile highlighting the material risks for the group, including an analysis of key stakeholders being managed and updated emerging risks. A security risk profile has also been included on request from the committee.
During the period under review, the committee considered the top 10 information management risks, governance review and the group security posture. Progress was monitored by the committee with management providing comprehensive quarterly updates, reflecting on challenges and steps taken to address those challenges.
Exxaro's rehabilitation management risk was a priority. It is being addressed through strategy and policy changes.
Exxaro's reputational resilience relates to the ability to withstand and respond to negative news or actions regarding the organisation business conduct or misconduct. Print, broadcast, social media and other online media platforms are used to monitor and measure Exxaro's reputation, in terms of sentiment, on a quarterly basis.
The Exxaro-Globescan stakeholder reputation survey 2022 provided additional insights from media and other stakeholders on stakeholders' perceptions of Exxaro's business conduct.
Exxaro's approach to medium to long-term reputational resilience will continue to be proactive to manage its own narrative, and hence the predominately neutral and positive public sentiment. All publicity is through earned media, which shows the authenticity and credibility of Exxaro's content, initiatives and the business strategy.
Exxaro's safety improvement initiatives monitored by the committee included:
|Exxaro embarked on a safety campaign across the group to highlight the importance of risk identification. Training will be rolled out to full-time health and safety representatives to stop the escalation of incidents.
|In addition to one-on-one briefing sessions, the leadership safety day on 20 October 2022 and scheduled meetings, executive committee members were deployed to BUs to interact with employees.
|Leadership interventions included executive committee members communicating risk awareness messages to the broader workforce on the identified safety risks as part of the Khetha Ukuphepha campaign. Pre-recordings of executive committee members on dedicated focus areas were broadcast across the group on various communication platforms.
|Ongoing awareness campaigns encourage employees, particularly vulnerable groups, to have COVID-19 booster shots.
The table below shows the key focus areas of the committee.
|Review relevance of current KPIs and completeness of current and emerging risks in line with approved strategy
|Review risk governance efforts to ensure monitoring of key risks impacting strategic objectives (includes review of completeness of current and emerging risks in line with strategy)
|Ensure effective plans are in place based on the impact of business disruption (plans are up to date and no significant incidents occurred that led to business disruption)
|Review Exxaro's risk appetite
|Review Exxaro's key compliance risks related to licence to operate
|Based on the key risks, recommend appropriate predictive and proactive reporting as well as engagement with key stakeholders (including integrated report)
|Review governance of technology and information to ensure incorporation of technology and information risks to enable strategy delivery and ensure business resilience
|Review business resilience key elements to ensure business strategy compliance
There is currently no legal or regulatory requirement for the committee to complete annual performance evaluations and, while King IV recommends regular performance evaluations for all board committees, it has become a governance practice at Exxaro to have the committee's performance and effectiveness evaluated every two years.
During the period under review, an independent evaluation was conducted in respect of the performance and effectiveness of the board, its committees and specific individuals. The purpose was also to identify and record possible areas in need of strengthening and/or refinement while considering internal and external dynamics as well as factors that may positively or negatively impact the board's ability to enhance its performance and effectiveness in the said areas. The evaluation found no significant matters of concern. Focus on the group's safety performance will intensify, a project to assess procurement processes at the Grootegeluk mine will commence as well as the committee's understanding of risks in the energy business. The overall conclusion is that the committee functions effectively.
The committee is satisfied that it has discharged its responsibilities and fulfilled its mandate in accordance with its terms of reference, the Companies Act and King IV.
On behalf of the RBR committee
RBR committee chairperson
14 April 2023