Approach to Sustainability
I am again honoured to write this report as the chairman of the Harmony social and ethics committee. Sustainability is the crux of Harmony’s objective to leave lasting legacies for our employees, for our operations’ host communities and for the countries in which we operate.
As a committee we assist the board in ensuring that Harmony remains a committed, responsible corporate citizen that creates lasting value for its stakeholders. This is done by overseeing the company’s policies and activities in social and economic development, in partnership with the many teams who work with and within Harmony. This includes the management teams responsible for the safety, health, social investment and environmental portfolios. The terms of reference of this committee and a summary of its responsibilities are available on the company website, and I can confidently report that the members of this committee discharged these vigorously and responsibly.
Harmony does not work in isolation but, rather, is part of a larger community that encompasses our employees, our community members and the countries in which we work. We can only operate effectively by understanding the legitimate expectations of our stakeholders, and how we are able to meet these. We also understand the synergies of these relationships – our stakeholders have as much of an impact on our business as our business has on them. As long as these relationships remain mutually beneficial our business and our stakeholders can thrive, together.
With this in mind the social and ethics committee annually reviews our Stakeholder Engagement Policy. We approved improvements to it in August 2013 and have again seen the benefits of its implementation over the past year.
ACTIONS IN FY14
SAFETY
We were deeply saddened by the Doornkop accident in which nine of our colleagues lost their lives. On behalf of the committee I would like to extend my condolences to their friends and family and those affected by other accidents during the year, and I can assure you, we have invested considerable time in learning from this tragic incident.
As ever, safety has remained a critical concern for the committee. As a mining company we prioritise this and seek the most effective ways of keeping our employees safe at work. We are in the process of embedding proactive management with particular focuses on:
- Empowering our leaders to speak of safety as the first priority at Harmony. Coupled with this we embedded the ‘Safety First’ culture that established shared values throughout our organisational structure, as well as systems to support safety conscious behaviour. We emphasised the implementation of safety management systems and standards that align our policies and procedures with internal and external best practice. In our operations we made sure that physical barriers are in place to eliminate risk and exposure to harm. Fatal risk control protocols are being developed and implemented, especially for rail-bound equipment and falls of ground, with many mining industry occupational safety and health initiatives being put in place at our operations
- Audits and controls are central to our safety processes. We have set up a central audit team that evaluates compliance and opportunities to improve safety throughout the group. This allows us to standardise safety practices across the organisation. Harmony’s chief executive officer and senior management themselves inspect underground working areas regularly
- We use the opportunity of being part of a safety community to learn from others and have employed the services of an external party to further strengthen our strategy and operational controls. From this we introduced external best practices and adapted them to suit the needs of our operations
MINING CHARTER TARGETS
The Mining Charter was developed to assist in transforming the South African mining industry, and 2014 sees the compliance deadline of its initial targets. At Harmony we always strive to do more than simply comply; an approach we have applied to the Mining Charter as well. This is an appropriate time to reflect on our successes as well as the areas on which we will be focusing more closely in the future.
When it comes to transforming our workforce we have met all the group-wide targets, with the appropriate number of historically disadvantaged South Africans in all levels of management as well as of women in mining. Now we are doing additional work to ensure that we are fully transformed at operational level too. For more on this see the employees section.
We have achieved or exceeded our targets for empowerment spending on capital goods and consumables. Rather than relying on individual suppliers to inform us of their broad-based black economic empowerment credentials, we have put in place our own checking system. As a result, we are confident that we have truly met these targets. However, the picture is slightly different with purchases of services, where we have fallen slightly below target. Nevertheless, we remain committed to accelerating the development of empowered service providers through our Enterprise Development Centres.
To formalise our commitment to the Mining Charter we have produced and adhered to Social and Labour Plans for each of our operations. In the financial year under review we continued to deliver projects in line with our commitments and in line with the expectations of the regulators and our host communities. For more on our Social and Labour Plan projects, see the communities section.
We value the human dignity of our employees and have prioritised improving their housing and living conditions by promoting home ownership, integrating mining communities into local structures and converting hostels to single-unit accommodation. Some of Masimong’s redundant accommodation infrastructure has been converted into family units – a project awarded a coveted National Govan Mbeki Housing Award in both 2013 and 2014. This integrated approach, we believe, will help to ensure that the housing we provide is sustainable and remains useful even after we have left an area.
Five other hostels are being evaluated for development along the lines of Masimong, while a further 1 000 family units are currently being built at the Merriespruit 3 project.
For more details on our Mining Charter disclosure, refer to progress against Mining Charter targets.
BUILDING RELATIONSHIPS WITH OUR EMPLOYEES AND STAKEHOLDERS
We endeavour to have lasting relationships with our employees, the members of the Harmony family. Our first priority is to ensure that they are safe while at work and to keep them informed as to the health of the company, the industry and the role each of them plays. We are building a company for which people want to work and are stabilising our workforce from the inside out. For more on our employee relations see the employees section.
In South Africa the five-month strike of platinum miners underscored the potential fragility of labour relations on South African mines. Harmony’s mines were peaceful in the past year aside from some industrial activity that was quickly settled at Hidden Valley in Papua New Guinea. We are not complacent about this aspect of our operations – it is something we consider to be a key risk and material issue. Our approach to labour relations is proactive and, in the year under review, we undertook an extensive communications campaign while biennial wage negotiations were underway. For more information see the employees section.
We appreciate that our employees are not our only key stakeholders, and we dedicate ourselves, as a company, to engaging honestly and appropriately with all relevant stakeholders. For more on our stakeholder engagement see stakeholder engagement. During FY14 we were pleased to be part of an initiative in conjunction with other gold producers – This is Gold – which aims to provide balanced information about the South African gold industry to a wider audience. For more on this see the website: www.thisisgold.co.za.
ENVIRONMENTAL MANAGEMENT
Environmental management, particularly our rehabilitation plans, remains central to sustainability. Our resources, much like the life span of our business, are not infinite. As a result, we’re working now to leave a positive legacy when our mines close.
The Free State rehabilitation project began in 2010 and, to date, we have:
- Reduced the environmental footprint through land reclamation, waste recycling, metal reclamation and recycling
- Restored the affected area to support alternative land use
- Advanced socio-economic development, job creation, community skills development and local procurement
- Transformed the land to create value for society through local enterprises
During FY14 we were awarded platinum status in the Johannesburg Stock Exchange top 100 companies for the Carbon Disclosure Project, with a score of 98% for disclosure, and were ranked 8th on the Nedbank BGreen Exchange Traded Fund.
The production of bio-energy in the Free State is something we find really exciting. Our aim is to develop environmentally sustainable green products and services, as well as renewable energy technology. This environmentally friendly project has the potential to create jobs, to help rehabilitate impacted land and to contribute towards lowering operational costs in the area – outcomes that speak to so many sustainability issues we care about. We are currently in phase one of the project and will report back on our progress next year.
ASSURANCE AND REPORTING
Each year we review issues across the group to establish how relevant they are to the reporting period. This assists in identifying our material issues and our sustainability-related key performance indicators which, in turn, affect our level of assurance. The current review indicated that our assurance levels are more than adequate, and we have kept the same process in place. Papua New Guinea is included in the Sustainability Assurance scope annually, except where explicitly excluded. For FY14, Papua New Guinea was only excluded for the assurance of the housing and living, procurement spend and employment equity key performance indicators.
This year we have chosen to produce a single report – a sign of our progress along the journey of integrated reporting. We decided to continue with the disclosure guidelines of the Global Reporting Initiative as we believe, particularly in areas relating to sustainability, this adds value to our reporting. Consequently, our online integrated report is produced in line with G4 recommendations.
THANKS
Our business is built on the strength of our people. Their commitment to safety, health, governance and environmental issues makes our job on the social and ethics committee much easier. Thank you to each of our loyal employees – you are what keeps Harmony going. In addition, thank you to members of the social and ethics committee and the board for their guidance and inputs. I look forward to another year of working successfully together.
Modise Motloba
Chairman: social and ethics committee
23 October 2014