Climate Change Data

Environmental Metrics

ESG Focus Areas

• Financial resilience
• Climate change
• Our people
• Social licence to operate
• Macro-environment

Environmental Achievements

• Achieving a score of B in the 2019 CDP — two levels better than the coal industry in SA
• Received a management level score for taking coordinated action on climate change
• Carbon budget approved by government
• Climate change position statement published
• Compliance with environmental licences improved
• Water intensity targets achieved
• No environmental stoppage directives
• All mines have concurrent rehabilitation plans approved
• Environmental provisions have improved by over 200%

Social Achievements

• Fatality-free year and zero high potential incidents (HPIs)
• Sustainability Summit at Grootegeluk
• Khetha Ukuphepha group-wide safety campaign
• Coal Safe Awards for Matla Mine 1 and Leeuwpan mine for 40 fatality-free years
• Move to the conneXXion
• Health and wellness strategy approved
• Improved compliance training with multimedia-rich content
• Smart workforce programmes launched for future skills and competencies
• 372 employees trained in leadership and management programmes
• Silver Service Design Loerie award for MyNexxt employee upskilling platform
• Runner-up in South African Graduate Employers Association Employer awards
• Introduced digital interview guides at business units (paperless interviews and questionnaire preparation reduced from five hours to 20 minutes)
• Partnered with Biomimicry for Africa Foundation to produce online training programme for global audience (20 Exxaro graduates now biomimicry practitioners)
• Enterprise and supplier development initiatives improved B-BBEE enterprise and supplier development score by approximately 13%
• Disbursements of over R170 million to 31 enterprise and supplier development beneficiaries
• Absa Business Day Supplier Development Newcomer award
• Localisation and Enterprise and Supplier Development Recognition award at South Africa Investment Conference
• Small, medium and micro enterprise (SMME) ecosystem support study in Mpumalanga and Limpopo

Governance Achievements

• King IVTM gap analysis conducted internally in 2019
• King IVTM internal audit review conducted in 2019, with no material findings
• Board charter reviewed annually
• Board governance sessions are conducted twice a year and are mandatory for directors and executive management
• Subsidiary directors receive formal training on an annual basis
• ESG forms part of the executive management STIs and LTIs
• Revised code of ethics approved and rolled out

Climate Goals & Targets

Environmental Challenges

• Climate change concerns
• Loss of social licence to operate
• Water allocation and shortage
• Cybersecurity threats
• Safety and health concerns
• Legal and regulatory non-compliance
• Capital project execution
• Competition and project execution
• Cost competitiveness of products
• Price and currency volatility
• Competition and product substitution
• Community unrest
• Labour unrest
• Eskom systemic risk
• Country risk (political)
• Short-term focus of investor/shareholder
• Infrastructure access and capacity
• Implementation of legislation, regulated by the Department of Mineral Resources and Energy in South Africa, which presents compliance risks and project delays as permits, including water use licences aligned with mineral rights and environmental licensing procedures, are not issued timeously
• Integration of complex proposed laws dealing with climate change, pollution prevention and carbon tax
• Poor response by employees to adult education/portable skills training
• Enterprise and supplier development committee revised loan terms of certain beneficiaries
• Delays in municipal approvals for infrastructure development
• Community protests at all business units

Mitigation Strategies

• Focus on minimising impact on environment and communities
• Adherence to legislative requirements
• Air quality management planning
• Risk management
• Monitoring, measurement and reporting
• Reviewed air quality management system at various business units
• Air quality awareness and educational campaigns
• Improved responsiveness to stakeholder needs and the number of engagements by our business unit and head office stakeholder affairs teams with key local, provincial and national stakeholders, as well as the activities of the social facilitators appointed at all operations, and our local procurement strategy
• Implementation of reviewed safety strategy
• Investigation of every LTI, fatalities and HPIs by skilled committees
• Safety improvement plans, self-assessments and corporate audits
• Training-on-the-job
• Safety communication, safety indabas, Exxaro Group Safety Leadership Day
• Managing high-risk and non-routine tasks
• Using innovation and technology to improve safety
• Heightened compliance audits through tier 1 audits
• Ilima safety audits at Grootegeluk and Matla
• Approved health and wellness strategy
• Improved medical surveillance programme
• Improved healthcare management
• Improved preventative programmes
• Alignment of health solutions across business units
• Integration of prevention and control of chronic diseases into workplace health programmes
• Awareness programmes promoting healthy living
• Rehabilitation and return-to-work programmes
• Partnership with Department of Health
• Employee assistance programme
• Strategic workforce planning
• Learning and development initiatives
• Strategic sourcing
• Mentorship and coaching programmes
• connect2NEXT programme
• Revised code of ethics
• Fraud and ethics hotline
• Revised conflict of interest policy
• Supplier code of conduct
• Crisis management policy and implementation plan

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier code of conduct
• Green procurement programme
• Supplier excellence programme

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI, UNGC, King IV

Certifications: ISO 14001

Third-party Assurance: PwC

UN Sustainable Development Goals

• 3
• 4
• 5
• 7
• 8
• 9
• 12
• 13
• 15
• 16

Exxaro's strategy supports the implementation of the National Development Plan and the SDGs, focusing on those most material to its business.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Frost and Sullivan Visionary Innovation Leadership Award
• Deloitte Best Company to Work For
• Best risk information system implementation award from Institute of Risk Management South Africa
• Top 10 in EY Excellence in Integrated Reporting Awards
• Global bronze medal in RobecoSAM 2015 sustainability reference guide
• Best Corporate Governance Award for Africa region
• Mid-cap winner in Chartered Secretaries Southern Africa Integrated Reporting Awards
• Coal Safe Awards for Matla Mine 1 and Leeuwpan mine
• Silver Service Design Loerie award for MyNexxt employee upskilling platform
• Runner-up in South African Graduate Employers Association Employer awards
• Absa Business Day Supplier Development Newcomer award
• Localisation and Enterprise and Supplier Development Recognition award at South Africa Investment Conference
• Top empowered company certificate

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainability
• Renewable Energy
• Just Transition

Environmental Achievements

• Achieved a 5 Green Star rating from The Green Building Council of South Africa (GBCSA) for its headquarters, the conneXXion, resulting in 76% less water consumption than national best practice.
• Developed renewable energy projects (e.g., Cennergi Tsitsikamma and Amakhala wind farms) in collaboration with local communities.

Social Achievements

• Incorporated small-scale renewable energy solutions in operations to reduce Scope 1 and 2 emissions.
• Engaged with communities to improve their climate resilience.
• Supported research and development through three University Chairs, investing R24 million.

Governance Achievements

• Established a Sustainability, Risk and Compliance Committee (SRC) to oversee climate-related risks and opportunities.
• Actively engaged in climate-related policy work through memberships in BUSA, ITTCC, NBI, and Minerals Council South Africa.
• Participated in the CDP process since 2009 and aimed to enhance climate change disclosure by adopting TCFD recommendations.

Climate Goals & Targets

Environmental Challenges

• Contribution of coal to GHG emissions and the potential for policy interventions to restrict its use.
• Physical impacts from extreme weather events, changes in precipitation patterns, and temperature rises on facilities, employees, and communities.
• Transition risks related to policy actions, legal actions, technological substitutions, market shifts, and reputational impacts.

Mitigation Strategies

• Exploring new business opportunities in low-carbon technologies and renewable energy (e.g., acquiring Cennergi).
• Reducing Scope 1 and 2 emissions through low-carbon technologies and self-generated renewable energy.
• Engaging with customers to reduce emissions from product use (Scope 3).
• Building climate change resilience through technology and community partnerships.
• Developing skills retention strategies for different climate scenarios.
• Designing infrastructure to withstand extreme weather events.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Changes in precipitation patterns
• Temperature rises

Transition Risks

• Policy actions
• Legal actions
• Technological substitutions
• Market shifts
• Reputational impacts

Opportunities

• Development of low-carbon technologies and renewable energy

Reporting Standards

Frameworks Used: CDP, TCFD

UN Sustainable Development Goals

• Goal 7
• Goal 13

Supporting access to reliable and affordable energy and limiting the impact of climate change.

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Governance
• Social Licence to Operate
• Environmental Stewardship

Environmental Achievements

• 27% reduction in scope 2 emissions expected on completion of Lephalale solar project in 2025
• 19% and 12% reduction in absolute scope 1 and 2 emissions since 2019
• 168ML of water recycled since 2019
• 20% decrease in carbon intensity (2022: 0.5% increase)
• 30% decrease in water intensity (2022: 0.5% increase)
• Zero level 3 environmental incidents (2022: zero)

Social Achievements

• R1.9 billion invested in community initiatives (17% increase since 2022)
• 71% (R1.48 billion) of community investment directed towards black SMMEs
• Zero employee and contractor fatalities (2022: one)
• Board gender diversity increased by 56%
• Board racial diversity increased from 71% to 81%
• Consistently recognised in the Bloomberg GEI since 2014
• Maintained an average score above 4/5 for governance in the FTSE Russell Index

Governance Achievements

• Endorsed a unified ESG framework and developed an ESG policy
• Enhanced strategic approach to sustainability
• Created a strategic performance management dashboard
• Institutionalised logistics committee as a permanent fixture of governance
• Appointed Nosipho Molope as an independent non-executive director and member of the audit committee

Climate Goals & Targets

Environmental Challenges

• Unavailability of rail capacity due to Transnet Freight Rail challenges
• Eskom's operational challenges impacting coal offtake
• Lower seaborne thermal coal prices due to weak demand and increased renewables
• Geopolitical tensions impacting commodity markets
• Inflation and interest rate increases
• Cybersecurity threats
• Country risk due to political instability and infrastructure challenges
• Coal mine dust class action litigation

Mitigation Strategies

• Developing alternative routes to market for coal exports
• Continuous engagement with Transnet and Eskom
• Early value strategy and market to resource optimisation
• Portfolio management and market diversification
• Cost management and debt reduction
• Robust cybersecurity programme
• Proactive stakeholder engagement and collaboration with government
• Investigating the facts pertaining to the class action and responding appropriately

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Local procurement supporting community businesses
• Supplier code of conduct
• Due diligence processes for suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products
• Investment in renewable energy

Reporting Standards

Frameworks Used: Integrated Reporting Framework, GRI, SASB, TCFD, UNGC

Certifications: ISO 45001 (Matla, Leeuwpan, Grootegeluk)

Third-party Assurance: KPMG (ESG report)

UN Sustainable Development Goals

• Not disclosed

Exxaro voluntarily endorses the UN's 17 Sustainable Development Goals (SDGs).

Sustainable Products & Innovation

• FuelActive fuel cleaning system

Awards & Recognition

• Second place in 2023 ESG Investing Awards for Social Responsibility
• Top Employer in South Africa (fourth time)
• Gender Icon Award at 2023 Standard Bank Top Women Awards
• Trailblazing Women in Mining Award
• Recognition in DEI category at Top Empowerment Awards
• Inclusion in 2023 Bloomberg Gender-Equality Index
• Six COALSAFE Awards