The existing safety, health and environment (SHE) and sustainable development structures across the group are being reviewed in line with Exxaro’s strategy. Underpinned by a comprehensive analysis of the business case for sustainable development and the triple bottom-line drivers in each area, our approach is determined by formal charters that define our goals and commitment to stakeholders. These charters are, in turn, guided by South African legislation, recommendations on corporate governance and international benchmarks such as the Global Reporting Initiative (GRI) and its sectoral supplements, the United Nations Global Compact, and the International Council on Mining and Minerals. In line with our commitment, sustainability is a key performance indicator in the economic, social and environmental aspects of our business.
The business case for sustainable development is graphically shown overleaf, with the outer ring representing areas that add value for Exxaro and the inner ring value for our stakeholders – the ultimate aim, however, is creating value for all.
The business case for sustainable development (SD)
We believe sustainable development is integral as part of our value proposition to stakeholders. Our shareholders need to understand the coherent process that underpins the way we do business: from the strategy that drives our growth, to our keen understanding of the risks that may impede that strategy and the commitment of our management teams to achieving profitability and sustainability. Therefore, we are giving equal emphasis to strategic growth and sustainable development, acknowledging that Exxaro’s success in South Africa rests on their interdependence. To ensure continual improvement, our strategy is regularly reviewed.
To remain abreast of the changing needs of our stakeholders and the impact of our operations and initiatives, Exxaro businesses have completed socio-economic assessments of most of their operations. Through this process and continual community engagement forums, Exxaro has been able to establish a relationship of trust within communities where it operates.
In finding the balance between economic interests and social and environmental concerns of our stakeholders, Exxaro implements specific interventions and developmental projects guided by the social needs of the community, and by the national priorities of society at large, including:
- Education, training and skills development
- Healthcare promotion, particularly HIV/Aids programmes
- Job creation, SMME (small, medium and micro enterprises) and other business opportunity development
- Conservation of environment, including awareness programmes
- Infrastructure development.
As a mining group, our challenge is to demonstrate that the way we approach our business contributes to sustainable development. This means balancing the opportunities for growth and development that responsible citizenship presents and ensuring that the social, environmental and economic impacts of mining – positive and negative – are managed in an open and accountable way. This will require leadership in promoting sustainability as a business philosophy.
Accordingly, our operations have social and labour plans and environmental management plans, most of which have been approved by authorities. These plans guide the implementation of a balanced approach between Exxaro’s interests and the social and environmental concerns of the community.
By stipulating leadership in sustainable development as one of the elements of our strategic framework, we have committed ourselves to setting and achieving targets that will ensure the legacy we leave is positive for today’s children and tomorrow’s leaders.
Through triple bottom-line reporting, charting our progress towards these targets is a measurable performance indicator for every level of management, and the responsibility of every person in our group. Scope of report
Exxaro’s 2008 annual report includes the group’s sustainable development performance, integrating our economic, social and environmental results for the year for a groupwide understanding. It also sets out the challenges and opportunities that lie ahead.
Although the group is only two years old in its present form, the process of merging the former Kumba Resources and Eyesizwe operations is almost complete and the consolidation of the Namakwa Sands operations began in October 2008. This makes data comparability challenging in some areas. Throughout these processes, however, the group’s earlier adoption of triple bottom-line reporting has remained a cornerstone of our commitment to sustainable development and of our determination to entrench global best practices in all operations. Exxaro therefore reports against the 2006 guidelines of the Global Reporting Initiative (G3), and the content of the 2008 report has been prepared in line with GRI intermediate application level B+.
The methodologics for determining specific indicators are described in the text, eg injuries , carbon footprint and air quality management.
Stakeholder engagement
Stakeholder engagement is fundamental to create value for all our employees, interested and affected parties as well as with authorities. Effective and strategically aligned stakeholder engagement within Exxaro will lead to more equitable and sustainable socio-economic development and will enable better management of risk and reputation.
To strengthen stakeholder engagement, Exxaro has adopted AccountAbility AA1000SES Standards, which include the following processes:
- To develop a database with stakeholders
- To engage with stakeholders in developing a proactive approach
- To determine material issues
- To respond on all issues
- To ensure completeness.
In 2008, Exxaro developed a software system for socioeconomic development which focuses mainly on stakeholder engagement. In addition to the processes of AA1000SES, the system also focuses on project management, donations (cash contributions), donations-in-kind (non-monetary), volunteerism and reporting against the requirements of the mining charter and codes of good practice. The system was installed in five of our operations by July 2008, and by mid-2009 will be fully implemented and operational at all business units.
Communication between Exxaro and each stakeholder group is facilitated in a number of ways:
- Employees are invited to provide views and comments on internal communication within the group through bi-monthly newsletters, an intranet, regular employee surveys and feedback from various forums.
- Customer perceptions are regularly surveyed through external service providers
- Supplier interaction is continual through external perception surveys, forums and other initiatives
- Trade unions – regular consultation with all recognised unions by the group’s employee relations management unit
- Government – consultation is at national, provincial, district and local level
- Regulators – senior Exxaro members meet with officials from different and relevant government departments
- Industry bodies – Exxaro’s chief executive officer has just begun his second term as president of the Chamber of Mines, and the group actively participates in chamber issues
- Investors – there is regular interaction between management and the investor community, from financial results presentations to roadshows, open days, site visits and individual meetings. Full use is made of technology to give investors complete access to group operations and management
- Media – regular interaction takes place between management and media representatives
- Communities – in addition to stakeholder engagement plans, operational management members serve on municipal forums for integrated development planning and local economic development, and actively participate in capacity-building initiatives
- Interest groups – Exxaro is building strong relationships with relevant non-government bodies and interest groups such as the Centre for Corporate Citizenship, African Institute for Corporate Citizenship, National Business Initiative and others.
Across the group, issues raised by stakeholders are appropriately channelled. These issues are considered and included in the risk evaluation process, as set out here. Responses are supplied as soon as practical and disseminated across the organisation.
Awards
- Exxaro’s first sustainability report (integrated into the 2007 annual report) was judged best newcomer – large enterprises at the annual Association of Chartered Certified Accountants (ACCA) awards. Hosted by ACCA South Africa, Exxaro competed against 30 companies and was specifically commended for its high standard of reporting and exceptional coverage of human resourcesrelated issues, governance and financial disclosure
- Exxaro’s internal newsletter, xxplore, took the trophy in the annual South African Publication Forum competition
- A supply-chain management initiative between Grootegeluk mine and Hitachi to improve the availability of Hitachi trucks at the mine won a major pan-African accolade in 2008. Judged the “best cross-functional teamwork project” at the Institute of Purchasing South Africa (IPSA) awards, it has boosted production at Grootegeluk with considerable cost savings. This rewarding partnership has also facilitated breakthrough design changes for these trucks which will benefit users across South Africa.
Report scope and boundary
Sustainability performance in this report spans the 12 months from 1 January to 31 December 2008. For the review period, Exxaro reports against the revised GRI guidelines, referred to as G3 to differentiate them from GRI’s 2002 guidelines.
Although Namakwa Sands only officially became part of the group in October 2008, data from this operation is included. This report excludes the following operations where we do not have management control:
- Australia Sands – principal asset is its 50% ownership in the Tiwest joint venture with Tronox Incorporated.
- Chifeng Refinery – as a first step for potential investment in China, Exxaro has an equity joint venture with an existing refinery facility. Exxaro owns 38% of Phase 2 and 25% of Phase 3 in this venture, resulting in an effective 22% economic interest in the expanded operation.
- Mafube
In determining material issues to include in this report, Exxaro has used the methodology recommended by G3 which spans external and internal factors:
- External:
- Key sustainability issues raised by stakeholders
- Sectoral issues and challenges reported by peers and industry bodies such as the Chamber of Mines
- Relevant legislation and voluntary agreements (local and international) of strategic significance to the group and its stakeholders
- High-profile sustainability issues, impacts or opportunities, from climate change to HIV/Aids.
- Internal:
- Exxaro’s values, policies, strategies, processes and targets
- The interests and expectations of stakeholders for whom our corporate progress is paramount, including employees, shareholders and suppliers
- Key risks defined by corporate risk methodologies
- Critical factors for Exxaro’s success, including the synergy between our operations and the universal aims of sustainable development.
The outcome of this process identified numerous material issues detailed in the risk management section. We have focused on the top three – safety, profitability and operational.
Ongoing feedback from a range of stakeholders helps us to contextualise certain issues better for more informed understanding by readers. Feedback is a critical element of our reporting process and should be directed to:
Hilton Atkinson – manager: corporate communication
Email: Hilton.atkinson@exxaro.com
Telephone: +27 12 307 4843
Fax: +27 12 307 4760
Mobile: +27 83 609 1452
www.exxaro.com
SRI compliance
Exxaro again qualified for inclusion in the JSE’s revised Socially Responsible Investment (SRI) index in November 2008. This index identifies best practice in corporate social responsibility and corporate governance in a benchmark index.
Exxaro is classified as having an overall high environmental impact because it is involved in mining and metals. Ranked among the 21 best performers on the SRI, Exxaro exceeds the minimum JSE requirement for environmental policy by including all key issues and specifically the following elements:
- responsibility at board level with supporting resources
the SHE committee is responsible for monitoring and performance, using consulting forums to inform executive management
- commitment to use objectives and targets
- commitment to monitoring and auditing
- commitment to public reporting
- globally applicable corporate operating standards
- commitment to stakeholder involvement
- commitment to address product or service impact.
Solid progress is being made in areas that do not yet fully comply with JSE SRI requirements, specifically providing objectives and targets for all key areas, and reporting on strategic moves towards sustainability:
- Exxaro provides compliance objectives on biodiversity, rehabilitation, water, air quality and greenhouse gas. However, targets are only for energy emissions at present. Targets are being determined for other key impact areas.
- Strategic moves towards sustainability are now covered in Exxaro’s revised SHE policy and the group executive committee commitment statement.
Assurance – broad-based verification
Exxaro has internal systems to record and monitor the quality (accuracy, fullness and consistency) of management information and any data gaps in the group.
In line with our commitment to the triple bottom line, an integral part of reporting to stakeholders is assurance on the quality of disclosure. Previous integrated annual reports have been externally assured, albeit on a limited range of elements. In this report, we have extended our approach to assurance by commissioning a more in-depth external assurance report by Ernst & Young (read more). |
