As sustained value creation is founded on good governance and responsiveness to significant social and environmental challenges, we continuously monitor and assess our strategy and formally present to the board for approval at least once a year.
The board considered progress, timing and scenario considerations related to the execution of the Sustainable Growth and Impact strategy. The board also approved the consolidated ESG framework as a lens through which to view the Sustainable Growth and Impact strategy.
As part of the strategy development and review process, we conduct a risk and opportunity assessment, including emerging risks and material sustainability issues. Our top five risks for 2023 and the key events we anticipate may impact on our ability to achieve our strategic imperatives for 2024:
| 2023 top risks | 2024 key events | |
| Unavailability of rail capacity | Unavailability of rail capacity | |
| Key dependency on Eskom as a key customer | Not achieving growth objectives | |
| Cybersecurity attack impacting business | Fatal risk incidents | |
| Fatal risk incidents | Cybersecurity attack impacting business | |
| Not achieving growth objectives | Country risk |
On 23 November 2023, coal mine dust class action litigation was launched against Exxaro. The action relates to mineworkers who contracted coal mine dust lung disease in the form of pneumoconiosis caused by exposure to coal mine dust at various Exxaro mines, as well as dependants of those mineworkers who have died and whose deaths were probably attributable to coal mine dust disease.
Exxaro takes its health and safety obligations seriously and is investigating the facts pertaining to the class action. Our management team continuously works on addressing risks and ensuring preventive measures are properly implemented to address the potential of any novice occupational health diseases at Exxaro.
In response to Exxaro's top risks for the past two years and the possible impact on our sustainable growth, the board established a non-remunerative ad hoc board logistics committee early in 2023 to monitor and report to the board on:
Based on the longer-term nature of logistical challenges within the industry and, on recommendation from the nomination committee, the board approved this committee as a standing board committee.
| Members | Categorisation | |
| Zwelibanzi Mntambo | Committee chairperson, non-executive director | |
| Ben Magara | Independent non-executive director | |
| Dr Phumla Mnganga | Independent non-executive director | |
| Mvuleni Geoffrey Qhena | Independent non-executive director | |
| Peet Snyders | Independent non-executive director | |
We believe our greatest opportunity is to help steer South Africa towards a sustainable future by focusing on low-carbon minerals and energy with the goal to be carbon neutral by 2050. The board goes beyond compliance and responds to climate change through its commitment to mitigating the impact of climate change with a robust Sustainable Growth and Impact strategy.
The board oversees climate-related impacts, risks and opportunities. These are mainly included in the SERC and RBR committee terms of reference and annual work plans. Climate change adaptation and resilienceClimate Change Response strategy report (investor tab under integrated reports 2020)
Exxaro works to integrate and embed ESG into the organisation beyond mere compliance using a tiered governance structure and lens through which to view the Sustainable Growth and Impact strategy. The board sets the ultimate direction for sustainability considerations, including committee and individual responsibilities for overseeing 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 therefore sets our strategy and sustainable growth performance targets which include ESG matters, while our executive team manages and monitors ESG risk and impact, supported by management and various management committees. Our management ESG steering committee supports the executive team in ensuring the integration of decarbonisation and other critical ESG factors.
In addition to Exxaro's ESG commitments and climate change position statement, the ESG steering committee is responsible for developing and reviewing an ESG framework policy for approval by the board. Other policies supporting our ESG focus are referenced throughout this report. In addition to policies and to highlight the importance of ESG in everything we do, all reports submitted to our board, its committees and executive committee require management to reflect on strategy and financial implications and provide directors with a risk analysis of major risks applicable to the matter and its ESG implications.
For more on our tiered ESG governance structure reflecting management roles and responsibilities, see our ESG report for the distribution of ESG matters among our board committees.
We held an annual governance roadshow for our domestic equity shareholders from 4 to 6 September 2023. A series of nine-hour-long meetings was held with shareholders. Key issues included our strategy and capital allocation; our response to the proposed resolution on climate change lobbying; and clarification of remuneration structures and practices. The board is committed to keeping shareholders informed on our progress in addressing these.
In terms of our directors' nomination and appointment policy and King IV, we annually review the structure, size and composition (including the skills, knowledge and experience) of the board and board committees. The following directors were appointed:
| Independent non-executive directors | Appointed | |
| Nondumiso Medupe | 3 January 2023 | |
| Nosipho Molope | 3 January 2023 |
Changes to the board:
Board composition, diversity and experience (ESG report)
Underpinning Exxaro's strategic objectives is our drive to enhance our business resilience through safe production, delivering financial results, effective capital allocation, compliance excellence, entrenching innovation and capitalising on digitalisation. Innovation and digitalisation are part of Exxaro's culture in driving business resilience and helping our people thrive.
The following digital enablers are highlighted:
We continue increasing our competencies across mining and energy. Through our growing competence in innovation, we have built multiple products and capabilities across our business that position us to meet our energy business targets.
Driving innovation and information managementWe assessed the increased probability of sanctions against South Africa and the impact on the financial stability of the country, exacerbated by existing risks such as grey listing and higher interest rates, among others. This matter received focused attention during our second annual board governance session, with the theme of "adapting to a changing context: South Africa macro-security and grey listing". These risks are continuously monitored after being analysed to determine their impact on Exxaro and were presented to the RBR committee and the board.
The board conducts two annual, fixed, governance-related intervention sessions, to which the executive leadership is also invited. These sessions are an opportunity to provide directors with a deeper understanding of corporate governance matters, including an opportunity to focus on new regulations or amendments to the regulatory environment within which Exxaro operates. These sessions are included in the annual corporate calendar to ensure maximum attendance by directors.
Board governance session themes for 2023
| April | Responsible environmental stewardship: Directors' ESG oversight role |
| October | Adapting to a changing context: South Africa macro-security and grey listing |
The below outlines the board's quarterly progress in addressing our material themes to achieve our governance outcomes:
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| Safety moment and reporting | Safety moment and reporting |
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| Annual conflict of interest declaration and assessment by directors, prescribed officers, employees and contractors | Obtained AGM shareholder approval through the non-binding advisory vote on the remuneration policy and its implementation | Approved the terms of reference for the logistics committee |
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Considered an energy blackout crisis management plan and guidelines in the unlikely event of a total grid collapse, which includes procedures for emergency evacuation |
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Approved the:
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| Approved the integrated suite of documents for publication, including the King IV report and JSE compliance certificate | Requested that the unwind of the 2017 replacement transformation transaction be included as a standing agenda item | Noted progress on the integration of the group social impact structures |
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| Approved the revised business rules policy | Approved the:
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Noted continued focus by the RBR committee on information technology (IT) security, risk and governance | Approved the integrated report material matters following a double materiality test |
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| Approved a revised workplace harassment policy | Noted:
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Noted:
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| Approved the transaction agreements in respect of the LSP at Grootegeluk Coal Mine as cost saving and scope 2 emission reduction between two wholly owned subsidiaries |
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Noted:
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| Noted changes to the Companies Act | Noted the change to the JSE Listings Requirements on auditor accreditation model | Approved an updated POPIA policy and PAIA manual | Considered the proposed changes to the Companies Act |
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Appointed:
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Appointed chief growth officer, Richard Lilleike | Appointed:
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Approved the organisational effectiveness programme and structure |
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