Exxaro's board is the focal point and custodian of good corporate governance for the group. The board sets Exxaro's short, medium and long-term strategic direction through our Sustainable Growth and Impact strategy. By approving a new capital allocation model and budget, setting and monitoring performance and culture expectations as well as a governance framework for the group, the board enables sustainable value creation.
At the core of Exxaro's corporate governance are principles that guide the board in meeting its responsibilities to the company, the group and its stakeholders. These principles enable the company to achieve the King IV governance outcomes and fulfil its purpose to power better lives in Africa and beyond.
In addition, through good governance, our board is committed to contributing positively to achieving SDG 16, which seeks to promote peaceful and inclusive societies for sustainable development, provide access for all, and build effective, accountable and inclusive institutions.
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The board therefore regards good corporate governance as fundamentally important to create value and achieve the above King IV governance outcomes in its own ethical and effective leadership. In line with King IV's recommendation to apply and explain how Exxaro practices good governance, we include our detailed King IV application register in the ESG report. This sets out each principle with an explanation of steps taken as well as Exxaro's policies and processes.
The following material themes received focused attention in 2022:
|Adapting to a changing context|
|Responsible environmental stewardship|
|Building sustainable communities|
|Helping our people thrive|
|Executing our strategy|
|Driving business excellence|
These material themes were addressed as described below.
The board welcomed Dr Nombasa Tsengwa as CEO of Exxaro from 1 August 2022, and expressed confidence in her expertise and leadership as Exxaro's first female CEO, taking the company further on its journey to achieving its Sustainable Growth and Impact strategy. She succeeds Mxolisi Mgojo who retired on 31 July 2022. The board thanked Mxolisi, who received a Business Leader of the Year award in 2022, for his invaluable contribution and wished him well in his retirement.
The board expressed commitment to contributing to diversity, equity and inclusion in its composition, and to promote independent character and judgement within the board.
To this end, the board achieved the following outcomes:
The following directors were appointed:
|Independent non-executive directors||Appointed|
|Karin Ireton||7 February 2022|
|Dr Phumla Mnganga|
|Nondumiso Medupe||3 January 2023|
Ras Myburgh, an independent non-executive director since 1 September 2016, indicated that he would not be available for re-election at the AGM on 25 May 2022 and retired by rotation. The board expressed sincere appreciation to Ras for his dedication, commitment, and invaluable contribution to Exxaro during his tenure as an independent non-executive director and chairperson of the remuneration committee.
Nondumiso Medupe's appointment as an independent non-executive director and audit committee member (effective 3 January 2023). Vuyisa Nkonyeni and Isaac Mophatlane will retire by rotation, as independent non-executive directors, with effect from the date of the AGM, being 18 May 2023.
|Board composition, diversity and experience (ESG report)|
Following two years of COVID-19 restrictions since the last governance roadshow in 2019, and in an attempt to improve ongoing engagement with shareholders, Exxaro held a three-day governance roadshow with equity shareholders in September 2022.
The purpose was to:
Shareholders' views were considered and the board committed to continuing the annual governance roadshow to keep shareholders informed about progress in meeting the abovementioned commitments.
We intentionally focus on positioning Exxaro for growth, anchored on the just transition principle, which seeks to balance our financial performance, South Africa's economic development needs, ecosystem protection and society's adaptive capacity in the face of climate change.
Exxaro believes that our greatest opportunity is to help steer South Africa towards a sustainable future through undiluted focus on low-carbon minerals and energy with the goal to be carbon neutral by 2050. The board is committed, beyond compliance, to mitigating the impact of climate change with a robust Sustainable Growth and Impact strategy.
The board has oversight of climate-related impacts, risks and opportunities. This is included in the SERC and RBR committee terms of reference and annual work plans.
Actions that honoured this commitment in 2022 included:
|Climate Change Response strategy (2020 investor tab)|
|Governance oversight of climate change (ESG report)|
As sustained value creation is founded on good governance and on responsiveness to significant social and environmental challenges, our strategy is continuously monitored and assessed, and formally presented to the board for approval at least once a year. Before executive leadership's strategy presentation to the board, iterative strategy workshops, following bottom-up process, and board governance sessions afford integration of inputs into the group strategy. The board therefore supports King IV principles regarding strategy setting through an iterative process.
As part of the strategy process, a risk and opportunity assessment is conducted, including emerging risks and assessment of material sustainability issues.
Top five risks at the end of 2022:
|Unavailability of current rail capacity|
|Eskom systemic risk|
|Health and safety concerns|
|Our business risks and opportunities and our strategy: positioning Exxaro for sustainable growth and impact|
Exxaro's diversity, equity and inclusion strategy (ESG report) supports the achievement of our transformation commitments through employment plans, Mining Charter III targets and the B-BBEE scorecard that uphold our licence to operate.
The board approved the strategy in July 2022 when diversity, equity and inclusion principles, strategic priority areas and success measures were identified. The concept of "equity" was added as a key success factor for diversity, equity and inclusion within Exxaro. The strategic objectives include gender identity and equity, racial equity, disability competence, inclusive culture, external inclusivity, leadership, and communication.
Our diversity, equity and inclusion principles include:
Promoting an environment of respect for all
Building an environment of trust
Establishing processes free from prejudices
Zero tolerance of discrimination and harassment
Promoting diversity, equity and inclusion
Exxaro's gender equality charter (launched in 2021) was enhanced with our anti-gender-based violence (GBV) footprint and implemented in the first quarter of 2022.
|Outcomes and value delivered (ESG report)|
|Quarter 1||Quarter 2||Quarter 3||Quarter 4|
|Approved the group's annual financial statements and final dividend declaration||Approved re-pacing of the Sustainable Growth and Impact strategy relating to minerals and energy as well as capital allocation||
||Mandated management's COP27 participation|
||Information management deep dive: information management strategy, governance processes, risk management, applications and current initiatives||Approved the group interim financial results and interim dividend declaration||Deliberated and approved the group's Social Impact strategy (ESG report)|
Considered and approved:
||Considered amended conflicts of interest, gifts and benefits policies||
||Approved the consolidated group annual budget|
||Held the group's third hybrid AGM||Governance roadshow|| Approved group delegation of authority and human rights policy
|Executed return-to-work action plans to minimise production impact, focusing on cost containment and productivity||
||Stakeholder days||Second governance session|
"We conduct our business activities in a way that creates success for Exxaro and society. From how we mine to what we mine, we are stewarding our natural assets and social capital to uplift our communities." Dr Nombasa Tsengwa
The company recognises that it forms part of an interrelated community. As such, it may have positive and negative impacts on society and the global SDGs. Exxaro believes that investing responsibly and strategically in commodities will help sustain life on the continent, and is committed to being an environmentally responsible organisation, driving sustainability throughout our business while building on our delivery track record.
The board sets the ultimate direction for sustainability considerations, including committee and individual responsibilities for oversight of sustainability-related impacts, risks and opportunities by ensuring these are reflected in board and committee terms of reference, annual work plans, and other relevant policies and processes.
The board's oversight of sustainability is best illustrated by the distribution of ESG matters among the respective board committees reporting to our board (as outlined below).
Board and board committee oversight of ESG matters (per committee terms of reference and captured in annual work plans):
|Energy, water and waste||x||x|
|Biodiversity and land use||x||x|
|Training and education||x||x|
|Diversity and equal opportunity||x||x||x|
|Health and safety||x||x||x|
|Privacy and security||x||x||x|
|Local community impact||x||x||x|
|Board diversity and structure||x||x|
|Anti-bribery and anti-corruption||x||x||x|
|Audit and assurance||x||x||x|
|Information technology governance||x||x|
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