Integrated report 2020
Exxaro report selector 2020
Exxaro Resources Limited
ESG report 2020
REPORT SELECTOR
Integrity finds centre stage with our board and it sets the tone for building a truly ethical culture in Exxaro.
King IV refers to organisational ethics as ethical values applied to decision making, conduct and the relationship between the organisation, its stakeholders and broader society.
Building organisational ethics is a journey. The board assumes responsibility for the governance of ethics and sets the direction for the approach to ethics and how it should be addressed by the organisation. Through the code of ethics, the company confirms the ethical principles of the organisation that, when followed, promote values such as trust, acceptable good behaviour and fairness.
Our values provide general guidelines for our interactions with each other and our stakeholders, and reflect what is important to us and how we conduct ourselves. Recognising that our public reputation is one of our most important assets, the organisation is committed to achieving the highest ethical standards in all our business operations. We recognise our obligations to all our stakeholders, particularly shareholders, clients, employees, business partners, competitors, the authorities, the environment and the wider community. Maintaining the trust and confidence of all our stakeholders is the responsibility of every employee. In all our actions, the values and associated behaviours must guide and direct the way we conduct ourselves.
The code of ethics is supported by our company policies and procedures relating to specific issues, processes and situations. It should also be read in conjunction with all the company’s policies and procedures. The following policies support the establishment of an ethical culture:
The board monitors the ethical culture of the group through its reporting structures, which include two board committees (the social and ethics committee, and the audit committee), and the ethics committee (a management committee).
Our internal auditors conducted an integrity survey in the group during 2020. Select employees participated in the survey and gave valuable feedback about the integrity culture, employees living the Exxaro values, employees’ adherence to these values and the code of ethics. Based on the survey results, the board made the following observations:
The survey results were positive overall and key areas identified that require focus and/or intervention are being addressed.
Our board charter and code of conduct (board charter) regulates the parameters in which the board operates, and ensures application of good corporate governance principles in all dealings by, in respect and on behalf of the company and the group. It sets out the roles and responsibilities of the board and individual directors, including the composition and relevant procedures.
The board charter requires board members to be individuals of calibre and credibility with the necessary skills and experience. In this regard, the remuneration and nomination committee must ensure continuity of directorships and undertake succession planning on behalf of the board. This includes identification, mentorship and development of future candidates. Exxaro also engages with shareholders about the required skills, competencies, gender and diversity targets for the board’s effective functioning.
In terms of the board charter, all directors are required
to undergo continuing professional development, as
approved by the board from time to time, on
recommendation by the remuneration and nomination
committee, and to attend regular briefings arranged by
the company on changes in legislation, governance and
the business environment. The board also undertook a
three-week,
self-driven effective directorship training
programme with the Stellenbosch Graduate Institute. In
addition, the company secretary hosts annual, fixed,
relevant governance-related intervention sessions.
JSE induction training for new directors will be held as soon as possible.
The themes of the two governance sessions in 2020 were:
Board preparedness with fit-for-purpose leadership in response to the In terms of the Companies Act and King IV, directors and prescribed officers have specific duties regarding the disclosure of actual direct and indirect conflicts of personal financial interests as well as the perception of a conflict.
Accordingly, annual general declarations are required from the directors and prescribed officers of outside interests in accordance with section 75(4) of the Companies Act. In addition, an item dealing with declarations of interests at the beginning of each meeting appears on every executive committee, board, board committee and management committee agenda. All attendees are required to formally declare that none of them, nor their related parties, have any personal financial interests in any matter on the agenda. This is recorded in meeting minutes. Similarly, a director or prescribed officer is required to indicate personal financial interest in a matter to be decided through written resolution by informing the company secretary.
Progressive broadening of the definition of related parties, and the conflict of interest policy, were updated and rolled out throughout the group in 2020 to include certain additional prohibitions. The policy places responsibility on directors, prescribed officers and employees to avoid conflicts of interest. The responsibility does not end with directors, prescribed officers and individual employees but extends to their close family and related parties, as defined in the Companies Act.
We implemented an electronic platform to facilitate reporting, workflow approvals and an auditable trail of communication for disclosures in 2020. The platform also enables employees without access to computers to make disclosures. This prompted a change to the conflicts of interest policy.
Following approval of the new policy, and to ensure successful implementation of the electronic platform, information sessions on the application of the conflicts of interest policy for employees and their related parties were rolled out at BUs. This enabled clear understanding of outright prohibitions and disclosure processes.
Disclosures by proposed vendors during the supply chain processes were expanded to avoid conflicts.
"Corruption is not simply a matter of theft but a betrayal of trust"
– Christopher Merrett (former director of administration at the University of KwaZulu-Natal)
As part of our ethical culture, Exxaro encourages employees and stakeholders to report
suspected fraud or corruption to its fraud and ethics hotline, independently managed
and reported to the social and ethics committee.
In the reporting year, the board requested a comprehensive evaluation of the fraud and
ethics hotline environment, and recommendations to address control weaknesses that may be identified as part of the evaluation. The results indicated that most elements contributing to an effective whistleblowing mechanism were in place. However, areas needing improvement were identified and are being addressed by management.
Exxaro’s supplier code of conduct communicates the company’s mandatory standards for suppliers:
The board ensures the organisation's strategy and conduct reflect in its drive to be a responsible corporate citizen and purpose to power better lives in Africa and beyond.
As the organisation is an integral part of society, the board sets the direction and ensures that the company's responsible corporate citizen efforts include compliance with the Constitution of South Africa (including the Bill of Rights), the law, leading standards, and its own codes of conduct and policies.
Continuous training at strategic, tactical and operational level ensures that every director and employee understands the importance of good corporate governance, and plays a part in ensuring the group acts as a responsible corporate citizen.
DEALING WITH COVID-19COVID-19 mitigation measures are informed by the group's health and wellness strategy, which is based on three pillars: diagnosis, management and a preventive strategy.
Exxaro put various measures in place to deal with the pandemic. These include two COVID-19 testing laboratories for employees and contractors. The laboratories have a turnaround time of three hours. In addition, we have free isolation and quarantine facilities. The measures help identify infected people and remove them from the work environment before they infect others. We also observe mandatory measures such as social distancing, sanitising, wearing PPE and amended business processes.
BUSINESS CONTINUITY AND CRISIS MANAGEMENT PLANS DURING THE PANDEMICThe board adopted an emergency response plan in 2019, focusing on capability interfaces for crisis management and business continuity, to ensure integrated disaster or incident response and recovery. The plan documents procedures that guide Exxaro's response, recovery and restoration of operations to a predefined level after disruption.
When the South African government announced a national state of disaster and lockdown from 26 March 2020, the company immediately implemented its crisis management and business continuity plans across the group. The plans included health and safety controls and preventive measures implemented immediately and considered necessary to sustain our business. These plans also ensure we continue serving stakeholders, and protecting and supporting employees and their families.
Exxaro was able to continue its production activities subject to approval of an application demonstrating that our activities were essential and necessary measures were taken to prevent possible COVID-19 infections. Arrangements were made for business continuity and necessary protocols were activated across BUs to ensure efficient and safe ways of working. Our coal mining operations have additional disease prevention protocols.
The board ultimately considers and approves the short, medium and long-term strategy, as formulated and developed by management.
During assessment and formulation of the strategy, the board engaged with executive and senior management in several strategy sessions throughout 2020. The board appreciates that the company's core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are inseparable elements of the value creation process. The insight that conditions are changing and there is a need to become future fit continues to drive decisions and measure transition going forward.
Our strategy is illustrated in our 2020 integrated report in Our strategy: positioning Exxaro for sustainable growth and impact.
The board ensures the integrity of the company's integrated report as well as its alignment with best practice in integrated reporting, including other reporting by the company from time to time.
The board also oversees the publication of our annual financial statements, ESG report, audit committee report, social and ethics committee report, remuneration report, and other online or printed information that complies with legal requirements and/or meets the legitimate and reasonable information needs of stakeholders. Reports issued by Exxaro strive to enable stakeholders to make informed assessments of the organisation's performance as well as its short, medium and long-term prospects.
The Transparency in Corporate Reporting: South Africa 2020
report, released by Corruption Watch and the Overseas
Development Institute, an independent London-based global
think tank, in partnership with the NBI, examined the
corporate governance practices of 100 corporations in South
Africa. The focus was on corporate reporting practices and
transparency of activities as well as performance with a view
to measuring anti-corruption among key private sector
players. By perusing annual reports and websites, the partner
organisations reviewed public disclosure practices of these
companies according to three themes: anti-corruption
programmes, levels of organisational transparency and
country-by-country reporting mechanisms. Exxaro was
among the top five companies, which averaged 85.3% across
all themes and 88.6% for anti-corruption programmes. The
board is committed to building on transparency in
stakeholder engagements going forward.
The board requested a high-level evaluation of its performance and effectiveness, and that of its committees and specific individuals in 2020.
Please find details of the board’s performance in Board of directors.