African Mining July 2022 | Page 35

ENVIRONMENTAL , SOCIAL AND GOVERNANCE • vital focus area for Exxaro . The largest portion of our emissions lie in scope three , which is the point at which the coal is burned . Disclosure for us is paramount in this area . We have publicly disclosed the detail involved and in making the information available in terms of the sources of our emissions , and with the strategy that we ' ve now put in place , how we ' re going to be managing our emissions . In terms of the different scopes , scope one being what we generate directly , scope two being the energy that we source that is based on coal , and scope three being the emissions burned elsewhere – generated by the coal products that we sell .

By way of example , we plan to replace the electricity that we buy from Eskom to operate with renewable energy . This is one of the key means of reducing our Scope 2 emissions . In Scope 1 , we ' re looking at investing in technologies that are available that will reduce the consumption of fossil fuel diesel in our operations , which is the biggest generator of fossil emissions for us .

We have continued with our ‘ carbon disclosure project ’ and this is something that we have continued to be highly rated on .

More recently , we have also begun to focus on disclosing what we ' re doing in terms of biodiversity . There is a lot of work that we ' ve done in terms of managing biodiversity in the process of building our projects . An example of this is an instance where we were building a road and we came across a colony of rare spiders . Now , it might seem insignificant , but the colony has a place in the local ecosystem that one may not appreciate immediately . We stopped construction immediately and went out of our way to manage the relocation of this colony to ensure its survival . It is this ‘ perspective and concept of an ecosystem ’ which is what actually begins the journey of understanding the protection and conservation of the biodiversity in a location .

Biodiversity includes a holistic consciousness of the smaller and larger projects to protect our environment , as nature is connected . So , it is not just mega biodiversity activities like saving a forest – which is of course important – it is also about the smaller localised biodiversity .

On the social side , for example safety . We announced in March that the company achieved a five-years fatality free rate , and we have been faring extremely well in terms of our lost time injury frequency rate , which is a leading indicator of safety performance . The fiveyear fatality free rate was a record for Exxaro , and we are putting a lot of effort into maintaining it .

With regards to governance , there are some key areas to highlight . Firstly , we have separated the role of chairman and CEO , and we have an independent chairman of the board . Over and above this , we have added an independent lead director , and typically you would find an independent lead director where you don ' t have an independent chair .

We have focused on the diversity of the board . It has been critical for us in the development of our strategy , to ensure that diversity is approached not only from a gender and race perspective , but also from a skills perspective . Whilst this approach has expanded the size of the board , the board has structured itself in a way that it is effective at delivering its fiduciary duties despite its size . The strategic conversation happens at board level , while the board sub-committees make tactical decisions . Distinguishing all the roles , responsibilities and duties between the board and the board subcommittees makes the Exxaro board remarkably effective from a governance point of view .

The organisation also differentiated itself on an ESG level in its response to the concerns of shareholders around remuneration in 2019 , where shareholders voted against the remuneration policy at the time . We responded firstly , with a governance roadshow in order to engage shareholders about their concerns , which were based on the fact that shareholders were unsure about the strength of the link between remuneration , strategy and capital allocation , and secondly being distinct between short term and long-term incentives in our remuneration policy . The result was a restructured Exxaro remuneration policy , and we announced a new short-term incentive policy which took into consideration the shareholders ’ concerns . These are just a few of the areas that are highlights for me in terms of ESG implementation at Exxaro .

SM : As media , African Mining has observed that Exxaro is continually active in communicating what the company is involved in when it comes to supporting host communities .

MM : Absolutely , that has been a deliberate strategy in terms of disclosing to the public what community projects we are involved in and what we deliver to the community . Previously , we would have used the big media houses , but we have deliberately partnered with local media . Besides media helping us to convey the stories of what we ' re doing , our partnership has assisted those local media to survive . The media at a local level – where the mines are based , which is usually rural – is also struggling to survive in this very tough economic climate . As much as we ensure that we communicate our story , I believe it is important that media enterprises at the local level continue to thrive .

We announced in March that the company achieved a five-years fatality free rate .