By Carina Wessels – Group Company Secretary
Exxaro Resources Limited is one of the largest South African-based diversified resources groups, with interests in coal, titanium dioxide, ferrous and energy commodities and business interests in South Africa, Republic of the Congo, Botswana, Inner Mongolia and Australia. We are the second-largest coal producer in South Africa with an estimated annual production of 40 million tonnes and we are listed on the Johannesburg Stock Exchange (JSE Limited), where we are a constituent of the Top 40 and the Socially Responsible Investment (SRI) indices respectively.
Our vision is to be a powerful source of endless possibilities, creating value for our stakeholders through innovation and passion. We value empowering people to grow and contribute, developing and using our knowledge and ingenuity to achieve Exxaro’s vision. We succeed together through teamwork and a climate of respect and equality. We take an honest responsibility to speak the truth and be accountable for our actions and we are committed to excellence, always striving to achieve excellence for ourselves, others and Exxaro.
Governance has always been a critical strategic element for Exxaro, but three years ago we decided to develop a bespoke corporate governance strategy, in enablement and support of the overall group strategy, thereby truly crossing the Rubicon and starting our journey to a much more elevated focus on corporate governance. The strategy was underwritten by the principle of ‘corporate governance supporting and enabling the business strategy’ and ‘going beyond compliance’ instead of ‘governance for the sake of governance’.
Thus the focus turned to the value added to the business by good corporate governance (be it in real financial metrics such as share price performance or, inter alia, improved reputation and stakeholder support) rather than a tick box approach, which is often followed by many companies that have not recognised the real impetus for and impact of good corporate governance.
Recognition of excellence
We believe that delivering on this strategy, underpinned by strong executive and board support setting the corporate governance tone from the top, as well as a commitment to excellence (one of our values and demonstrated by many of the local and international awards we receive on an annual basis) are what have enabled us to be recognised by this award. Although we do not direct our activities for purposes of being recognised, it is always delightful to receive a confirmation that the excellence we aspire to is indeed visible and tangible to independent evaluators. We would like to sincerely thank Ethical Boardroom for having included Exxaro in this process.
“We take an honest responsibility to speak the truth and be accountable for our actions and we are committed to excellence”
One of the key deliverables of Exxaro’s governance ‘strategy was to entrench the principles contained in the King Code of Governance Principles and the King Report on Governance for South Africa 2009 (commonly known as King III: not only the applicable corporate governance code in South Africa, but also globally widely regarded as best practice and adopted by many other countries as their own applicable code) and to aim for full application of these principles over as short a period as possible.
During an external assurance assessment conducted in early 2014, in accordance with the Institute of Directors’ King III measurement tool, our application of King III was confirmed as AAA: the highest possible application, thereby truly authenticating our application of global corporate governance best practices. It would be impossible to discuss all steps taken during the last three years, all of which have been disclosed in our last three integrated reports, but to highlight a few:
An improved board composition: the board changed from 33 per cent independent non-executive directors in 2011 to 58 per cent (70 per cent on exclusion of the two executive directors) at present.
In 2011, only the audit committee consisted of a majority of independent non-executive directors, but presently all committees consist of a majority of independent non-executive directors. The audit committee and sustainability, risk and compliance committee now consist of only independent non-executive directors.
Bi-annual full-day corporate governance sessions were implemented where critical information, such as legislation, industry and general global trends, risks, economic and global outlook and international corporate governance best practice is shared with the board.
Quarterly corporate governance information packs are included in board packs, sharing local and international information with the board to ensure they remain at the forefront of global developments.
A complete revamp of the scope and responsibilities of board committees was conducted in 2011 and have been implemented and improved on over the past three years. Key performance metrics and strategic dashboards (based on Exxaro’s top risks, risk appetite, six capitals model and material issues) have been implemented to ensure the board and committees remain aware of and focus on the substantive issues that could impact on the achievement of the group’s strategy and Exxaro’s ability to create and sustain value.
Significant strides have also been made in the area of integrated reporting, for which we have received numerous accolades over the past three years, the latest of which being the top award in the Nkonki Integrated Reporting Awards, where the top 100 South African listed company reports were assessed and Exxaro received the number one award, as well as the number one in industry award and an excellence award. This recognises the manner in which we communicate to our stakeholders: openly, honestly, transparently, concisely and in understandable language, as well as the substance of what is communicated.
We have implemented a comprehensive and world class enterprise risk management framework that aligns to best practice standards such as ISO3100, ISO14001, ISO9001 and OHSAS18001. Again, an area where we have been well recognised, inter alia, by receiving the South African Institute for Risk Management’s award for the best implementation of a risk management information system. We have entrenched a robust annual board and committee assessment process, ensuring that we retain the best calibre directors to guide and lead Exxaro and that any development needs or required improvements are appropriately addressed.
We have completely reviewed our anti-bribery and corruption programmes (including our code of ethics and conflicts of interest and whistleblowing policies and processes), ensuring that we not only comply with applicable legislation and best practices, but live up to our corporate values and zero tolerance approach.
Despite the successful road behind us, we recognise that corporate governance is a journey and not a destination. As such we will continue to, as long as it adds value to the business and ultimately to our stakeholders and supports and enables the group’s overall strategy, seek higher mountains to summit during this journey.
So, watch this space…
About the Author:
Carina Wessels is an admitted advocate of the High Court of South Africa, and a fellow and past President of Chartered Secretaries Southern Africa (CSSA). She also currently represents South Africa as President of the Corporate Secretaries International Association (CSIA). CSIA is an international federation of professional bodies promoting best practices in corporate governance, compliance and secretarial advisory services. It is recognised by the OECD as the global voice of corporate secretaries and governance professionals and represents in excess of 100 000 corporate secretaries and governance professionals in more than 80 countries. She spent nine years with De Beers in various operational and head office positions, including human resources, business improvement and corporate secretariat, as well as a period with Investec Limited as corporate secretariat legal advisor. She was appointed as Group Company Secretary of Exxaro Resources Limited in June 2011 and serve on the executive committee.