Social, Ethics, Transformation and Sustainability (SETS) Committee Report

Introduction

The Social, Ethics, Transformation and Sustainability (SETS) Committee presents its report for the financial year ended September 2018. This committee is a statutory committee with a majority of independent non-executive members, whose duties are delegated to them by the board of directors. The committee conducted its affairs in compliance with a board approved terms of reference, and discharged all its responsibilities contained therein.

The committee was established during the 2012 financial year in response to the requirements of section 72(4) of the South African Companies Act 71 of 2008, read with regulation 43 of the Companies Regulations, 2011. These regulations required the establishment of a Social and Ethics Committee, to which were added the Transformation and Sustainability oversight roles previously contained in the Sustainability and Human Resources and Transformation Committees.

Multi-functional regional sustainability councils provide strategic and operational support to a Group Sustainability Council which in turn provides support to the SETS Committee in dealing with key sustainability issues.

During the financial year the committee formally met three times at which meetings it deliberated on all aspects relating to its terms. A 100% attendance record was achieved by board committee members for 2018.

Objectives of the committee

The role of the SETS Committee is to assist the board with the oversight of the company and to provide guidance to management's work in respect of its duties in the fields of social, ethics, transformation and sustainability. The committee relies on international best practice as well as the laws and regulations under which Sappi's businesses operate to ensure that the group not only complies with, but also fully implements all requirements. The committee addresses issues relating to corporate social investment, ethical conduct, diversity, transformation and empowerment initiatives and targets and ongoing sustainability practices to ensure that our business, our environment and our people can prosper on an ongoing basis. The responsibilities include monitoring the company's activities, having regard to any relevant legislation, other legal requirements and prevailing codes of best practice. The committee meets a minimum of three times each year.

Membership of the committee

The members of the SETS Committee during the 2018 financial year were:

  • Mr MV Moosa (Chairman from 01 March 2016)
  • Mr SR Binnie
  • Mr RJ DeKoch (until August 2018)
  • Dr B Mehlomakulu (from 01 March 2017), and
  • Dr R Thummer (until December 2017).

Three members of the committee were independent non-executive directors; one is a non-executive director and one the Chief Executive Officer. In addition, the chairman of the board attends committee meetings ex officio. The regional Chief Executive Officers, the Group Head Strategy and Legal, the Group Head Technology, the Group Head Human Resources, the Group Head Corporate Affairs, the Executive Vice President Dissolving Wood Pulp and the Group Head Investor Relations and Sustainability attend meetings by invitation.

Committee activities reviewed and actioned during the year
  • Reviewed and revised the committee terms of reference and annual work plan.
  • Approved the public affairs and CSR programmes and policy.
  • The corporate social development programme.
  • Reviewed the UN sustainable development goals most relevant to Sappi.
  • Sappi's standing in terms of:
    • The principles set out in the United Nations Global Compact Principles
    • The OECD recommendations regarding corruption
    • The Employment Equity Act, and
    • The Broad-based Black Economic Empowerment Act (BBBEE).
  • Reviewed the Code of Ethics, ethics programme and their effectiveness.
  • Obtained feedback from the ethics reporting hotlines.
  • Reviewed the South African Skills Audit as well as the training and development plan.
  • Reviewed the staff training progress.
  • Reviewed the company performance relative to the Employment Equity Act, BBBEE Act and the company's transformation strategies.
  • Reviewed the Sappi Southern Africa Transformation Charter.
  • Reviewed Sappi's policy and standing in terms of the International Labour Organisation (ILO) protocol on decent work and working conditions.
  • Reviewed the group safety programmes, safety performance and actions being taken to improve the safety performance of the group.
  • Reviewed the Group Sustainability Charter and Group Environmental Policy.
  • Reviewed the material indicators of the group's environmental performance.
  • Reviewed regional sustainability performance against goals for 2018.
  • Reviewed regional and global public policy matters affecting the group and its operations.
  • Reviewed the various production unit operating efficiencies, reliability and unscheduled downtime metrics for 2018.
  • Approved the revised Group Woodfibre Procurement Policy and the new Supplier Code of Conduct.
  • In-depth review on the group's energy and emissions profile and future strategies in this regard.
  • In-depth review of Saiccor Mill's environmental footprint and improvements resulting from the proposed 110,000 tons expansion project.
  • In-depth review of community and government engagement in South Africa and global corporate citizenship activities.
  • Reviewed the SETS Committee Report for the Annual Integrated Report as well as sustainability information presented in the Annual Integrated Report.

At each meeting a topic is selected for an in-depth review, typically matters which in the view of the committee represent key risks or opportunities for the business. In the past year the three focus areas were energy production and opportunities to lower cost and emissions through increased self-generation, particularly from renewable energy. Secondly, the planned investment at Saiccor Mill, which not only results in increased production but importantly would also lead to improved energy and water efficiency as well as lower specific emissions and improved air and water quality. These improvements align with the growing emphasis on sustainability in the textile value chain. Lastly, the committee reviewed the company's engagement with governments and communities within which they operate as part of the corporate citizenship programme.

Conclusion

The committee confirms that the group gives its social, ethics, transformation and sustainability responsibilities the necessary attention. Appropriate policies and programmes are in place to contribute to social and economic development, ethical behaviour of staff towards colleagues and other stakeholders, fair labour practices, environmental responsibility and good customer relations. In fulfilling their mandate, the committee has sought to ensure the needs of a wide set of stakeholders, including employees, local communities, customers and shareholders are considered and that key sustainability risks are identified and managed.

There were no substantive areas of non-compliance with legislation and regulation, nor non-adherence with codes of best practice applicable to the areas within the committee's mandate that were brought to the committee's attention. The committee has no reason to believe that any such non-compliance or non-adherence has occurred.

MV Moosa

Chairman

Social, Ethics, Transformation and Sustainability Committee