"Diversity is the what and inclusion is the how!"

– Mail and Guardian webinar, 26 October 2020

COMPOSITION

The committee comprised a majority of independent non-executive directors throughout the period as per the recommendations of King IV, which facilitates the application of independent judgement of committee deliberations and decisions. The chairperson of the board is a standing invitee at all committee meetings, as well as the CEO, FD and executive head: stakeholder affairs. Other people with specific skills and expertise are also invited to assist members in their deliberations, including the chief audit executive and chief risk officer.

The committee's composition is considered every year. Nominations for new members were passed at the AGM on 28 May 2020 with changes in membership effective from that date.

MEETINGS

We held five meetings in 2020, including one governance workshop on committee mandate and impact enhancement. Committee attendance throughout the year illustrates high levels of engagement by members.

The following table provides an overview of member designations and attendance.

* Anuradha retired by rotation on 28 May 2020.

2020 OVERVIEW – THE POWER OF BEING PRINCIPLED

Summary of social and relationship capital and human capital under this committee's mandate

At the forefront of this committee's priorities were employees' and contract workers' safety and uninterrupted operation. Exxaro continued to lead and set the industry standard in its efforts to care for the health and safety of employees and communities around its operations.

Two COVID-19 screening facilities were jointly procured, certified, staffed and equipped with testing kits to create additional capacity in the production and turnaround of laboratory results. Procuring the units not only demonstrated the collective buying power of mining houses but prioritisation of health and safety. Committee members were proud contributors in this instance of social good.

Coupled with physical health and wellbeing was the appreciation that a programme of integrated wellness was also required with particular attention to mental health support for employees and contractors alike. Additional support, tolerance and empathy were specific points of deliberation in respect of the multiple role burden placed on an employee as worker, educator, healthcare service provider, partner, breadwinner and many more as a consequence of work-from-home protocols.

Further details regarding the expansive and inclusive integrated wellness programme can be found on Sustainability, risk and compliance committee report. We provide information about workers' access to non-occupational medical and healthcare services, and the scope of access provided to employees.

The committee made every effort to expedite access to income generation on available farming land. The farm leasing programme, social infrastructure projects and Hlobane feedlot programmes were among the committee's many social investment focus areas. Progress and establishment of the community benefit scheme, Matla Setshabeng, also received particular committee attention. The committee is pleased to announce the appointment of the directors and launch of the first meeting of the newly established Matla Setshabeng board.

Diversity and inclusion strategy

The committee focused on achieving its workforce transformation mandate. It took a stance beyond mere compliance with relevant transformation legislation to achieve the spirit and purpose of such legislation. Much excitement was generated with the involvement of widely representative work streams in forming a gender charter. The challenges facing women in mining are still rife but there is a targeted programme with specific oversight by this committee. Although we focus on achieving targets in these areas, it is important to highlight that our transformation journey seeks to create an enabling environment in all people-related matters like development, talent management, retention and fair remuneration of historically disadvantaged people. The improvement in significant milestones of inclusion demonstrates the value added by the committee in its determination to lead in an inclusive manner.

The committee also focused on leveraging supply chain opportunities more effectively and increasing spend with black-owned companies. In addition, enterprise development forms part of a varied programme of interventions. Under the guidance of this committee, the company achieved level 2 status with the best performing elements being ownership, ESD and socio-economic development. We are pleased to report that spend for the year exceeded the targets across all elements, including local black-owned and black women-owned businesses.

Ethics programme

During 2020, the company implemented the following:

• Compulsory online anti-bribery and anti-corruption training for all employees at top, senior and middle management levels
• Completion of an ethics survey and culture baseline study to determine if there are additional areas in need of improvement regarding anti-bribery and anti-corruption as well as organisational culture with respect to ethics
• Reporting mechanisms were tested for effectiveness and some areas were recommended for improvement:
  • Initiation of a dedicated advice line
  • The chief risk officer should chair the ethics management committee
  • Clarity and training on an available channel for tabling grievances and fraudulent or corrupt activity
  • Concerns about the transparency or outcome of unethical or unlawful behaviour with the impression that nothing was done when it most certainly had been addressed

Exxaro was positively ranked three out of 100 corporations in a report released by Corruption Watch and Transparency in Corporate Reporting 2020. This report looks at 100 corporations operating in South Africa and reporting publicly on three themes:

1. Anti-corruption programmes
2. Organisational transparency in relation to disclosure of information on subsidiaries and other associated companies
3. Country-by-country reporting of key financial data from operations outside South Africa

The results excellently reflect Exxaro's work over the past few years to enhance and entrench its anti-corruption programme.

It is noteworthy that the company's ethics programme encompasses identification and combatting at least two different forms of bribery-related activity, especially when engaging with organs of state as well as suppliers of goods and services.

Contractors, vendors and third parties are also made aware that they are welcome and indeed expected to report corrupt activity. The mechanisms are written in a contract and published on our website as well as visible posters.

The underpinning code of ethics was thoroughly reviewed for relevance and effectiveness. The committee was satisfied that the required standards were clearly communicated and adopted a revised code of ethics. In addition, a revised fraud investigation policy, a revised fraud response policy and a revised fraud prevention policy were adopted in support of the reporting, investigation and management of actual or suspected unethical conduct.

The table below discloses the forensic investigation activity in 2020:

Other key issues that received attention during the year

• Development of a sustainability and impact socio-economic development strategy: The sustainability and impact strategy is an integrated socio-economic development strategy as part of the overarching Exxaro strategy to ensure social impact with regard to powering better lives in Africa and beyond. The programme includes topics material to key stakeholders and the company. For example, the municipal capacity-building programme is born out of the realisation that, without sound and functioning local government, the burden of service delivery shifts to privately owned business. Although local government has the budget, there may be areas where skills, expertise and resources could better support public administration
• The environment, health and public safety: Mine invasions, copper cable and diesel theft as well as community unrest in many areas were highlighted as real concerns for the mining industry and government. The committee recognised the need for better communication within communities where Exxaro operates to ensure transparency of investment contributions made by Exxaro
• Holding statements: Throughout the year, the committee considered holding statements issued against various service providers, which expressed the serious need for corporate South Africa to address the root causes of irregularities and strong commitment to ethics
• Terms of reference: The committee's terms of reference were reviewed by external assurance providers and recommendations for improvements are being implemented

The table shows the average rating for each KPI. A rating of one to four was used with one as the lowest and four as the highest score.

PERFORMANCE

There is currently not a legal or regulatory requirement for the committee to complete annual performance evaluations. While King IV recommends regular performance evaluations for all board subcommittees, it has become governance practice at Exxaro to biannually evaluate the committee's performance and effectiveness.

DISCLOSURE

The committee, in carrying out its duties as prescribed by the Regulations to the Companies Act, duly regards the principles and recommended practices of King IV, and discharges its responsibilities in accordance with its terms of reference.

The committee is satisfied that it has fulfilled its mandate in terms of the Regulations to the Companies Act and that there are no material instances of non-compliance to disclose. If any material non-compliance existed, it was duly considered.

On behalf of the committee

Geraldine Fraser-Moleketi
Social and ethics committee chairperson
19 April 2021