Our approach to ESG

Transition at speed and scale

Make our minerals and energy businesses thrive

Empower people to create impact

Be carbon neutral by 2050

Become a catalyst for economic growth and environmental stewardship

Our ESG objectives support the achievement of our strategic objectives

Exxaro's strategy considers ESG matters across the asset, portfolio and enterprise levels. By embedding ESG into our strategy, processes and capital allocation model, we are building momentum and resilience for sustainable growth and impact in a just, sustainable and responsible manner.

Environment

	Decarbonisation and resilience
	Rehabilitation programme
	Biodiversity management
	Energy and water management
	Waste management
	Strategic partnerships

Social

	Health and safety
	Social (sustainable) impact
	Human rights
	DEI
	Land management
	Partnerships and funding

Governance

	King IV and TCFD
	Ethical practices and anti-bribery and corruption
	Governance framework
	Capital allocation framework
	Compliance and risk management
	Board composition

Our ESG policy sets out the principles that inform our approach to ESG matters and describes our commitment to sustainability and maintaining sound governance procedures. It outlines the actions we are taking to embed ESG in our organisation. It also informs stakeholders about our commitment to responsible investment practices as we integrate ESG considerations into our investment decisions and management processes. The development of our ESG policy is at an advanced stage and will be completed in 2024.

We adopt a stakeholder-inclusive approach, as stakeholders are a critical enabler of our sustainable development and business success. We collaborate, engage and partner with key stakeholders in achieving our goals and implementing initiatives. Each section under the environment and social chapters includes this information.

Our approach to ESG is embedded in how we are transitioning into a low-carbon business – responding to climate change by transforming the business in a systematic and responsible manner.

To ensure we effectively respond to ESG matters and improve our performance, we are conducting a baseline assessment and gap analysis of our ESG projects and initiatives. The assessment will be completed by the end of 2024.

What drives our approach

Exxaro voluntarily endorses the United Nations (UN) 17 SDGs. We also participate in South Africa's National Business Initiative (NBI) to align the 17 SDGs with the country's National Development Plan and implement leading practices to uphold the most material SDGs so that our business leaves a lasting positive impact.

We will be setting targets aligned with the SDGs for our Social Impact strategy once we complete a baseline assessment of community needs for the three impact pillars in 2024.

The SDGs that Exxaro materially impacts are highlighted in colour.

Supporting global decarbonisation and energy transition objectives

Exxaro's climate change position statement unpacks our journey to be carbon neutral by 2050, and our Climate Change Response strategy explains how we aim to achieve this and our efforts to build portfolio resilience in line with our Sustainable Growth and Impact strategy. We will be updating our response strategy and position statement in 2024 to consider new developments in the climate change space.

Supporting global best practice and recommendations

Further reading

We support TCFD recommendations and align our reporting and business processes accordingly. Our Climate Change Response strategy also aligns with TCFD recommendations.

TCFD index (databook)

We participated in the UN Climate Change Conference of the Parties (COP28).

Climate change adaptation and resilience

We are a signatory to the UNGC Active level and support the 10 principles.

2021 UNGC COP (investors tab under integrated reports 2021)

Respecting and upholding human rights

Exxaro participates in the CDP climate change, forestation and water programmes.

Climate change adaptation and resilience and water security

Target setting and remuneration

Our executive remuneration includes material ESG targets for water and energy efficiency.

Remuneration report

Performance incentives

Our group short-term incentive (STI) and long-term incentive (LTI) schemes incentivise delivery against key financial, operational and ESG goals aligned to approved annual business plans.

Governance

Group-wide ESG policies, procedures, strategies and frameworks

We are guided by umbrella and respective ESG policies, procedures, strategies and frameworks that support our approach to ESG management and performance.

Environment, social and governance

Responding to evolving ESG priorities

The global imperative for companies to enhance their ESG practices and report on their impact timeously and transparently has gained significant traction and prominence. These are driven by international bodies and include the recent formulation of the IFRS^® Sustainability Disclosure Standards – focusing on the quality and comparability of ESG data; and are the focus of annual summits, such as COP28 in Dubai. Exxaro remains vigilant in understanding and aligning to these requirements. Current areas of focus in this regard include:

• Scope 3 emissions occur outside of our direct control. Over 98% of our scope 3 emissions emanate from the generation of power by Eskom using Exxaro coal. Although Exxaro will not set targets for scope 3 emissions currently, we are pursuing opportunities to monitor and manage scope 3 emissions for our customers and suppliers (including inbound and outbound logistics); prioritising green procurement of goods and services; contributing to research and development on decarbonisation technologies and reduction of emissions related to employee travel. More importantly, our strategy to diversify to low-carbon transition minerals and growing our energy business will be key in addressing our scope 3 emissions and ensuring our contribution to the just energy transition
• Responding to industry challenges, such as criteria for measuring and quantifying emissions from discard dumps, carbon pricing, eg the European Union (EU) Carbon Border Adjustment Mechanism. Exxaro is also an active member and contributor to discussions on overcoming the current energy security challenges facing business and other stakeholders

Governing our ESG approach and performance

The board is ultimately responsible and accountable for the delivery of ESG commitments. The board is supported by:

• The risk and business resilience (RBR) committee for environmental and climate change impact and management
• The social, ethics and responsibility committee (SERC) for the oversight of:
  • Compliance with its statutory duties and best practice, including environment, health and safety
  • Impact on planet, people and prosperity ensuring the group's conduct is congruent with being a responsible corporate citizen
  • Stakeholder management and ethics management
  • Working conditions, relationships and development of our people
  • Community support and development

Implementation is overseen by the relevant executive leadership and operationalised by business unit (BU) managers.

Refer to the governance section for details on board committee mandates and management.

Tiered ESG governance framework across the organisation

The ESG steering committee is a committee of the group executive committee. Established in 2022, the committee's role is to support Exxaro's ongoing commitment to ESG, sustainability and other relevant public policy matters. The ESG steering committee ensures integration of ESG as part of our strategy, and that we consciously embed ESG into everything we do. Exxaro's ESG portfolio management office (PMO) monitors execution and drives accountability across the organisation. To ensure the PMO's success and management of multistakeholder organisational change, we are aligning the right resources and necessary skills sets, which include project management, risk management, systems and assurance, financial management and internal ESG experts. The key objective is to ensure that ESG-related goals and targets fit into the organisation's strategic objectives.

The committee and PMO drive ESG implementation and ensure decarbonisation and other critical ESG factors are integrated across all business levels. The committee is also responsible for reviewing the decarbonisation project business cases, monitoring budget spent and advising the technical team on further risk mitigation.

The ESG steering committee reports to the group executive committee on ESG performance, measurement and improvements.