Dear shareholders,
I am pleased to present the SERC report for the year ended 31 December 2023. The committee executed its statutory and board mandates by overseeing Exxaro's impact and ethical performance in sustainably creating value and entrenching responsible corporate citizenship in the group.
Geraldine Fraser-Moleketi
SERC chairperson
In terms of the company's MoI, committee members are elected annually at the AGM by shareholders on recommendation from the board.
The committee is chaired by the lead independent non-executive director, enhancing the importance and relevance of the shareholder-entrusted, social, ethical and corporate responsibilities.
Isaac Mophatlane, independent non-executive director and committee member, retired by rotation at the AGM held on 18 May 2023. The committee welcomed the CEO and finance director as new members of the committee, including the appointments of Dr Phumla Mnganga and Nosipho Molope.
The committee comprised a majority of independent non-executive directors in 2023, as per King IV recommendations, which facilitated the application of independent judgement on committee deliberations and decisions.
As per the standard committee terms, the chairperson of the board and all board members are welcome to attend all meetings as observers.
The chief people and performance officer and chief sustainable impact officer are standing invitees to meetings. Other individuals with specific skills and expertise are also invited to report and assist members in their deliberations, including the information officer, head of legal, chief audit executive and chief risk officer. The group company secretary shall attend each meeting and is the committee secretary.
Gender and racial diversity
Four committee meetings were held in 2023, and two interactive stakeholder engagement days were hosted in May 2023.
The table below provides an overview of member designations and attendance:
| Members | Designation | Attendance at quarterly meetings |
| Geraldine Fraser-Moleketi | Lead independent non-executive director and SERC chairperson | 4/4 |
| Karin Ireton | Independent non-executive director | 4/4 |
| Likhapha Mbatha | Non-executive director | 3/4 |
| Dr Phumla Mnganga | Independent non-executive director | 3/3* |
| Peet Snyders | Independent non-executive director | 4/4 |
| Dr Nombasa Tsengwa | Executive director and CEO | 2/2** |
| Riaan Koppeschaar | Executive director and finance director | 2/2** |
| Isaac Mophatlane | Independent non-executive director | 2/2*** |
| * | Dr Phumla Mnganga will be recommended for appointment at the 2024 AGM. |
| ** | Dr Nombasa Tsengwa and Riaan Koppeschaar were appointed members of the SERC at the AGM held on 18 May 2023. |
| *** | Isaac Mophatlane retired by rotation at the 2023 AGM. |
The committee mandate derives from Exxaro's commitment to proactively managing its economic, environmental and social impacts, and public interest, in addition to section 72(4) of the Companies Act, read with Regulation 43, the MoI and King IV.
The company recognises that it forms part of an interrelated community and, as such, may have positive and negative impacts on public interest and the global goal of sustainable development. The board has primarily entrusted the committee to oversee the company's impact on public interest and its ethical performance. It ensures compliance with Exxaro's statutory duties and oversees that the core purpose and values, strategy and conduct are aligned with the group's responsible corporate citizenship.
The committee oversees the company's ethics regarding business practices, its relationships with employees, other stakeholders and the natural environment. It also assists the board by monitoring the group's achievement of its shared sustainability goals and has oversight of stakeholder management and ethics management.
As part of its responsibility mandate, the committee has oversight of how the company impacts planet, people and prosperity.
ESG oversight by board committeesThe committee's terms of reference were reviewed and approved by the board in 2023. The terms of reference align with legislation, regulation and King IV.
Although there is no regulatory requirement to conduct an annual committee performance evaluation, Exxaro evaluates committee performance every second year, in line with King IV's recommendation regarding regular performance evaluations for board committees.
At the end of 2023, we conducted an internal evaluation of the committee's performance and effectiveness in accordance with King IV recommendations. The evaluation aimed to identify and record areas needing strengthening or refinement while considering internal and external dynamics and factors that may positively or negatively impact the committee's ability to enhance its performance and effectiveness in these areas. The assessment concluded that the committee functions effectively.
| Key highlights | Material themes |
| Oversaw the implementation of the DEI strategy to maintain Exxaro's momentum of transformation, focusing on women, youth and people living with disabilities – contributing to Exxaro being recognised as a top employer in 2023 |  |
| Oversaw the implementation of the ethics strategy and management plan, including an amendment to provide for outcomes of business partner review |  |
| Reviewed the refined Social Impact strategy for board approval, including the integration of the Exxaro social vehicle structures |  |
| Evaluated business relationships with suppliers, in light of the findings and recommendations of the state capture report and flowing from our zero tolerance of unethical conduct, to consider the impact of such relationships on Exxaro and the way forward with such suppliers |  |
The committee has a statutory and board mandate to oversee the company's impact on the public interest and its ethical performance, to assist in sustainably creating value, considering the economy, society and natural environment, and to entrench responsible corporate citizenship within the group.
Social impact, which is part of Exxaro's strategy, seeks to address material social and compliance matters, which require an integrated and long-term perspective, leveraging resources and collaboration. Exxaro's Social Impact strategy aims to provide a proactive response to step up Exxaro's community engagement and development efforts in line with Exxaro's purpose.
ESG imperatives increasingly shape the future of mining and energy industries. As such, the SERC oversees management's plans to take advantage of opportunities identified for the minerals and energy business, including resource transition, linking ESG outcomes to value creation, unlocking new sources of value such as reskilling employees beyond mining services, mining responsibly and strategically for the future and decarbonising our business.
The board is invested in a just transition and supports the path to sustainability in an era of climate change. Demonstrated commitments include Exxaro's investment in wind power and preparation for a response to various global climate scenarios. The committee confirms that the company aims to be carbon neutral by 2050.
Climate change position statement (sustainability tab)
The committee was informed of Exxaro's biodiversity management programmes and the regulatory framework within which the group operates. The committee confirmed that as part of mining right applications, environmental impact assessments were conducted to assess biological diversity in mining right areas to identify and classify wetlands, conduct ecological mapping and sensitivity zoning, and identify invasive and endangered species. The measures used to manage biodiversity are included as conditions in the relevant environmental authorisation.
Exxaro therefore manages biodiversity as part of our environmental strategy which was developed in 2016. Each mine has a biodiversity plan which is aligned with the group biodiversity management standard. The plan guides how inspections, audits and biomonitoring programmes should be conducted, including mitigation or management of any impacts identified through monitoring. To emphasise the linkages between biodiversity and climate change, Exxaro reported on biodiversity in terms of the CDP in 2023.
All environmental incidents and mitigation measures are reported to and monitored by the SERC. The committee monitored the development of the 2050 carbon neutrality roadmap that would reflect short-term, medium-term and long-term targets. The plan is anticipated to be presented for approval early in 2024.
Environmental incidentsThe committee oversees the implementation of the Social Impact strategy, an integrated socio-economic development strategy in response to the dual challenges of social inequality and the systemic impacts of climate change. The Social Impact strategy is based on three pillars:
The committee and management continue ensuring delivery of the group's SLP commitments, economic development implementation targets and ESD programmes. The committee continues to engage robustly with the social impact function to ensure successful performance.
The Khetha Ukuphepha safety campaign highlights efforts made to improve health, safety and integrated wellness within Exxaro. Safety indabas held at our BUs by leadership to ensure increased visibility through more frequent and focused presence are also evidence of the commitment to health and safety in the workplace.
In response to occupational disease cases in 2022, a multidisciplinary task team was established to focus on the effectiveness of preventive controls, resulting in a reduction in NIHL and TB cases.
Exxaro's integrated wellness approach has been renewed and continues to improve, and is designed to support employees holistically. Management makes concerted efforts to support the emotional, financial and occupational dimensions of all employees. The committee is pleased with this approach's outcomes, impact and demonstrated results.
Prioritising safety outlines our approach and performance.
Leadership's pledge to DEI is to have a gender-balanced workforce and achieve demographic parity. The approach adopted is to maintain the transformation momentum, focusing on women, youth and people living with disabilities.
Oversight of the challenges and solutions brought about by this ideal is part of the joint accountability model employed by the committee.
Engaged employeesExxaro launched an employee engagement and culture survey early in 2023 as part of the DEI journey. The survey included employee engagement, leadership, DEI and culture. The survey results were independently managed and indicated employee sentiments which will set the baseline for tracking progress, including the Exxaro strategic dashboard.
Culture and engagement surveyThe committee oversaw the implementation of the DEI strategy in support of Exxaro's Sustainable Growth and Impact strategy as a key business value driver.
An implementation framework was developed to set out the group DEI-enabling initiatives. Key objectives of the framework include:
See our website under careers for more on our DEI journey.
The Code of Good Practice on the prevention and elimination of harassment in the workplace (code on harassment), published in 2022 in terms of the Employment Equity Act 55 of 1998, recommends that employers update their sexual harassment policy to cover all aspects of bullying and harassment in the workplace. On recommendation of the committee, the Exxaro sexual harassment policy was revised and substituted with a work harassment policy, which is more broadly drafted as per the recommendation of the code on harassment. The policy applies to all employees in the group, individuals and third parties dealing with the organisation.
Exxaro is also a signatory to the UN's Women Empowerment Principles, which prioritise gender equality and promote full and productive employment and decent work for all.
Exxaro's commitment to DEI is evidenced by the recognition it has earned over the years. The group was recognised in the 2023 Bloomberg GEI for the fourth consecutive year. It was also recognised as a 2023 top employer in South Africa and a major company to work for. It is the fourth time Exxaro has been honoured by the international Top Employers Institute for our people policies and practices (the first award was in 2014, others in 2021 and 2022).
Achieving the Sustainable Growth and Impact strategy relies on properly executing the people strategy or human capital priorities. The committee is therefore responsible for assuring the company's standing regarding the ILO Protocol on decent work and working conditions and the educational development of employees.
The SERC recommended the approval of a revised human rights policy towards the end of 2022, to be implemented in 2023. The policy confirms the group's commitment to promoting human rights as set out in the ILO's declaration on fundamental principles and rights at work.
Exxaro has an approved stakeholder management policy in which establishing and maintaining strong, trusting and collaborative stakeholder relationships is equally beneficial for all stakeholders. The policy confirms Exxaro's KAM approach to stakeholder management.
The committee identified that managing social and ethics risks requires meaningful engagement with key stakeholders as identified in the committee's terms of reference.
In addition to various stakeholder engagements by management, the committee and management hosted a two-day stakeholder engagement in Belfast, Mpumalanga. It included site visits to various Exxaro social development projects and engagements with regional government and municipal officials.
Relationship building remains a key outcome of the stakeholder engagement strategy in redressing the plight of the poor in communities surrounding Exxaro's operations.
Stakeholder-inclusive approachAs guided by OECD recommendations, the company has an anti- bribery and anti-corruption policy and adopted adequate internal controls, ethics and compliance programmes and measures to prevent and detect bribery.
Based on the board-approved statement of strategic ethical intent, the committee oversees implementation of the ethics management strategy and plan. Throughout the year and through the ethics management committee, measures were assessed and adapted for continued effectiveness, and to mitigate the risk of becoming complicit in bribery, bribe solicitation, small facilitation payments and extortion.
Exxaro has zero tolerance for unethical conduct, which is reflected in various policies, codes and public statements. It also recognises suppliers and business partners' roles in offering sustainable value to support Exxaro's vision and strategic objectives.
Guided by the state capture report findings and recommendations and Exxaro's stance towards unethical conduct, business relationships with various suppliers were evaluated early in 2023. The outcome of the evaluation was reported to the management ethics committee, group executive committee and the SERC.
The evaluation led to the development of a framework for dealing with implicated companies doing business with the group for approval by the group executive committee. Exxaro will be guided by the framework when suppliers and service providers are mentioned adversely in the media or when Exxaro is made aware of the service provider being under investigation or involved in any actual or alleged dealings that could put the business into disrepute. If a supplier whose services are essential to Exxaro is charged, then Exxaro will issue a holding statement and continue with the existing contract but not enter into any new contractual agreement.
Building an ethical culture under this committee's oversight is captured in more detail.
Key focus areas 2023/2024
| Monitoring the coal mine dust class action litigation launched against Exxaro in November 2023 to ensure our conduct aligns with being a responsible corporate citizen |
| Overseeing the development of the 2050 carbon neutral roadmap to support Exxaro's strategy to decarbonise and build resilience to the impact of climate change |
| Reviewing the ongoing anti-bribery and anti-corruption programme implementation, ensuring an ethical culture and respect for human rights, including the whistleblowing mechanisms for effectiveness |
| Overseeing the baseline study for the TNFD framework that will assist with disclosing, reporting and mitigating nature-related risks |
| Overseeing sustainability-related disclosures in line with IFRS sustainability disclosure standards |
| Overseeing the implementation of the proposed employment equity targets |
The SERC is pleased to confirm that, in carrying out its duties, it regarded King IV principles and recommended practices, and discharged its responsibilities in accordance with its terms of reference and the Companies Act. Beyond mere compliance, the committee is also satisfied that it has fulfilled its non-statutory mandate and that there are no material instances of non-compliance to disclose. If any material non-compliance existed, it was duly considered during the year in review.
On behalf of the committee
Geraldine Fraser-Moleketi
SERC chairperson
10 April 2024
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