Statement of strategic ethical intent: Exxaro aspires to build an ethical culture based on Exxaro’s values. To do this, Exxaro is committed to operating ethically by living the Exxaro values with dignity, transparency, consistency, fairness and respect in all that we do.
Recognising that our public reputation is one of our most important assets, we are committed to achieving the highest ethical standards. We recognise our obligations to our stakeholders, particularly shareholders, customers, employees,business partners, competitors, authorities, the environment and the wider community. Maintaining the trust and confidence of our stakeholders is the responsibility of every Exxaro employee. As we are committed to doing the right thing, even when no one is between right and wrong and commit to what is right. By emphasising our ethical commitment, we continue to grow as a business.
Our board is committed to effective ethical leadership and establishing an ethical culture. Flowing from this commitment, the board adopted a number of codes, policies and practices outlining the group’s ethics and values to which employees and suppliers are required to adhere.
To support the board, the SERC is responsible for overseeing the group’s ethical performance, and it therefore oversees ethics management. Membership of the SERC was reviewed in 2023, with new members – including the CEO and finance director – appointed at the 2023 AGM.
A management ethics committee exists to ensure that high ethical standards are maintained in Exxaro’s business conduct. The committee is responsible for evaluating all instances of fraud, extortion, bribery, corruption, possible conflicts of interest, violations of the code of ethics or any other ethics-related matters. It also oversees the continuous anti-fraud and anti-bribery initiatives associated with a robust programme in terms of both local and international laws and regulations.
Guided by our ethics strategy and management plan, the ethics officer is responsible for embedding an ethical culture and ensuring that integrity is maintained within the group.
Following ENS Africa’s ISO 37001 readiness assessment in 2018, we introduced due diligence processes for suppliers, customers, employees and business partners.
A comprehensive evaluation of the fraud hotline in 2020 identified areas needing improvement, such as the composition of the management ethics committee, a process for tabling forensic reports, monitoring BU investigations; and updating escalation protocols. All the recommendations have been addressed and reaudited to the satisfaction of the internal auditor. As part of this, Exxaro is committed to an independent review of the hotline every three years. The next audit is in 2024.
In addition, we reviewed the ethics management training and anti-bribery and anti-corruption programmes, and the executive committee approved an updated anti-bribery and anti-corruption programme.
To ensure compliance with our conflict of interest policy, we implemented mechanisms to proactively identify any conflict of interest between Exxaro employees and suppliers or prospective suppliers.
Building organisational ethics is a journey. Our board assumes responsibility for ensuring that organisational ethics is managed effectively and governs the group’s ethics to support the establishment of an ethical culture. In line with this responsibility, the board adopted a statement of strategic ethical intent as well as an ethics strategy and management plan.
The board approved a detailed ethics strategy and management plan in 2022 following an independent risk assessment by The Ethics Institute. During the year, we updated the ethics strategy and management plan to include prioritisation of group-wide policies. The aim is to review all group-wide policies for adequacy, consolidation and completeness to ensure proper implementation of the ethics strategy
The board monitors the group’s ethical culture through its reporting structures, including two board committees (SERC and audit committee), the management ethics committee, the internal audit function, head internal audit and our ethics officer.
A culture and engagement survey launched in January 2023 was designed to measure employees’ perceptions and engagement against the following categories:
Independent consultants were appointed to manage the survey roll-out and results consolidation. While none of the dimensions scored below the critical weakness cut-off point, the following areas of concern were identified:
Positive findings of the survey included employees’ pride in working at Exxaro, DEI, strong buy-in on Exxaro’s values and vision, and gender issues. On request from the SERC, management will develop an action plan based on the survey, which will be done in 2024.
As part of ethics management, Exxaro conducted a benchmark on business ethics trends globally. Exxaro is trending positively against the five major global trends listed in the Ethics & Compliance Initiative’s Global Business Ethics Survey® 2023 report, with only one finding (fear of retaliation/psychological safety) featuring in the Exxaro culture and engagement survey of 2023. This was reported to the SERC with the recommendations outlined in the survey report. These will be incorporated to enhance our ethics management programme for 2024.
Our code of ethics confirms that Exxaro’s ethical principles promote values such as trust, acceptable behaviour and fairness.
Our values provide general guidelines for interactions with each other and our stakeholders and reflect what is important to us and how we conduct ourselves.
The following fundamental values are expressed in the code
of ethics:
| 1 | Empowered to grow and contribute |
| 2 | Teamwork |
| 3 | Committed to excellence |
| 4 | Honest responsibility |
Our executive team shared its expectation of employee behaviours, emphasising that everyone should live up to our values, culture, standards and expectations. Employees are encouraged to speak out without fear of reprisal on issues of discrimination, harassment and poor leadership.
We developed a family code of conduct that includes 10 principles to clearly outline acceptable behaviour (encouraged in Exxaro) and unacceptable behaviour we will not tolerate.
The CEO introduced honesty boxes throughout the organisation, which serve as a communication channel for employees to share concerns and innovative ideas. The honesty boxes are primarily intended for employees to raise matters of concern that have not been resolved through the existing conflict resolution mechanisms. Several communication channels have been used to promote the use of honesty boxes, including LCD screens, posters group emailers, intranet and BU toolbox and safety meetings, indabas and imbizos. Formal feedback is provided to individuals who request it, and when concerns are raised anonymously, site-specific communication channels are used to give feedback.
To embed an ethical culture, we adopted the theme “Mining with Morals”, which focused on:
In our internal group-wide communication, we reminded employees to be guided by business ethics and the Exxaro family code of conduct. Exxaro expressed our commitment to fighting fraud, corruption, theft and unethical behaviour and acting without fear or favour.
By purposefully building ethical guidelines within our business, we are keeping our employees' and stakeholders’ best interests in mind while maintaining a positive influence on those we impact through our processes.
We encourage employees and stakeholders to report suspected fraud, corruption or human rights violations to our fraud and ethics hotline.
The hotline is independently managed and reports to the SERC and management ethics committee, with guiding escalation protocols in place.
Due to the importance of retaining the integrity of the hotline, we must, as far as reasonably possible, protect the interests of the disclosing parties.
Exxaro fraud and ethics hotline
Free call: 0800 203 3579
Fax: 0800 007 788
Email: exxaro@tip-offs.com
Website: www.tip-offs.com
We developed the supplier code of conduct to assist employees in selecting suppliers who operate in a manner consistent with our values and relevant standards. The code aims to communicate our mandatory selection standards to prospective suppliers and promotes a commitment to ethical conduct among its suppliers.
As part of the supply chain pre-qualification process, suppliers must disclose details of shareholders, directors and other associates who are current or former employees in compliance with the conflicts of interest policy.
Employees who evaluate requests for proposals or recommend contract awards must declare that they have neither an interest in nor a close relationship with the supplier that may be construed as a conflict of interest.
The board has expressed a zero-tolerance stance towards bribery and corruption and approved the group-wide anti-bribery and anti-corruption policy.
To support the board, the SERC is responsible for overseeing the group’s ethical performance, which includes detection and response to fraud and corruption. The RBR and audit committees oversee risks, including controls and fraud risks. The SERC receives quarterly reports on forensic investigation statistics and progress on initiatives under the fraud prevention and anti-bribery and corruption programme.
Social, ethics and responsibility committee report
To improve broader operating environment and culture to combatcorruption, our standard operational and capital-relatedexpenditure terms and conditions with suppliers contain specificprovisions around sanctions, corrupt practices, fraud andprohibited practices in respect of local and international legislation,including the UN and EU, which terms are considered material tothe relevant agreement.
Guided by the code of ethics and supplier code of conduct, we evaluated our business relationships with various suppliers in light of findings and recommendations contained in the state capture report. The outcome of this evaluation was reported to the management ethics committee, group executive committee and SERC.
We developed guidelines to provide a framework on how to deal with implicated companies currently doing business with Exxaro for approval by the group executive committee. We will also use the framework in other instances where suppliers and service providers are mentioned adversely in the media or where it comes to Exxaro’s attention that the company is under investigation or involved in any dealings (actual or alleged) that could put Exxaro into disrepute. Should a supplier whose services are critical to us be charged, we would issue a holding statement and continue with the existing contract, but not enter into any new contract.
Our board charter and code of conduct (board charter) regulate the parameters in which the board operates and ensures good corporate governance principles are applied in all dealings in respect and on behalf of the company and the group. It sets out the roles and responsibilities of the board, individual directors, chairperson, CEO, lead independent non-executive director and group company secretary.
The board charter and nomination and appointment policy require board members to be individuals of calibre, integrity and credibility, with the necessary skills and experience.
The nomination committee must ensure continuity of directorships and undertake succession planning on behalf of the board. This includes identifying, mentoring and developing future candidates. The nomination committee is also responsible for conducting independent background checks on all proposed candidates prior to recommending appointment to the board.
The board charter was slightly reviewed in 2023 to align with new executive designations and nomination and logistics committees.
The board hosts two annual, fixed, board governance-related
intervention sessions, to which 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 and operating environment. The 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 |
In terms of the Companies Act and King IV, directors and prescribed officers have specific duties to disclose actual direct and indirect conflicts of personal financial interests as well as the perception of a conflict, including that of their related parties.
Directors, prescribed officers and employees (and their related parties) are obliged to actively avoid any conflict with Exxaro’s best interest. Annual general declarations of outside interests are required from directors and prescribed officers in accordance with section 75(4) of the Companies Act. The conflict of interest policy also requires annual declaration from directors, prescribed officers and all group employees.
In addition to our annual declarations, management of conflicts of interest are further addressed through the following:
We implemented and reviewed an electronic platform to facilitate reporting, workflow approvals and an auditable communication trail for disclosures by directors and employees, including a gifts and benefits register, director trade clearances and policy management.
Conflicts of interest policy and register (reflecting material disclosures in line with the JSE Debt Listings Requirements)
Exxaro agrees that a clear policy on political funding provides for certainty and consistency and reduces the suspicion that companies are funding parties for their own interest. It is acknowledged that the primary purpose of political donations is to strengthen and consolidate democracy by ensuring that political parties can function effectively within a multi-party democracy.
The group has a board-approved political donation policy in line with national legislation, guiding all political donations and contributions. The board requested that donations rather be directed to the Independent Electoral Commission (IEC) in support of democratic stability. The update to the policy will be submitted to SERC for consideration and recommendation to the board for final approval in 2024.
The board is satisfied that the group has not suffered any monetary loss as a result of legal proceedings (including fines) associated with fraud, insider trading, anti-trust, anti-competitive behaviour, market manipulation, malpractice or violations of other related industry laws or regulations.
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