BACK TO MENU SUSTAINABILITY REPORT 2021 www.eskom.co.za SUSTAINABILITY REPORT 31 March 2021 TOWARDS A NEW ENERGY FUTURE i | SUSTAINABILITY REPORT | 31 MARCH 2021 BACK TO MENU ACRONYMS CONTENTS AEL Atmospheric emission licence ABOUT THIS REPORT 2 ARC Audit and Risk Committee STATEMENT BY THE CHAIRMAN OF THE SOCIAL, ETHICS AND SUSTAINABILITY 3 COMMITTEE B-BBEE Broad-based black economic empowerment STATEMENT BY THE GROUP CHIEF EXECUTIVE 4 CDM Clean Development Mechanism OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT 6 CDP Carbon Disclosure Project Eskom Factor: driver of sustainable development 6 CFL Compact fluorescent lamp Our commitment to the National Development Plan 6 COP Conference of Parties Sustainable Development Goals 7 Future aspirations 9 CSI Corporate social investment GOVERNANCE AND STRATEGIC CONTEXT 10 CSIR Council for Scientific and Industrial Research Governance and leadership of sustainable development and related issues 11 DFFE Department of Forestry and Fisheries and the Environment Our group overview 12 DMRE Department of Mineral Resources and Energy Risk and resilience 12 DPE Department of Public Enterprises Our strategy 13 Dx Distribution – one of Eskom’s three operational divisions Our stakeholder engagement 17 Our material topics 18 EV Electric vehicle OUR ENVIRONMENTAL PERFORMANCE 19 EVP Employee value proposition Our alignment with the NDP 20 Exco Executive Management Committee Our environmental sustainability matters 20 GCE Group Chief Executive Environmental management approach and governance 25 GHG Greenhouse gas Our green economy contribution 25 GIS Gas Insulated Switchgear OUR CLIMATE CHANGE PERFORMANCE 27 Our climate change performance 29 GRI Global Reporting Initiative Our mitigation measures 29 Gx Generation – one of Eskom’s three operational divisions Engagement, compliance and disclosures 30 IPP Independent power producer Annual internal carbon dioxide reviews 30 JET Just Energy Transition Disclosures: Carbon Disclosure Project 30 King IV TM King IV Report on Corporate Governance for South Africa, 2016 Disclosures: Carbon footprint 30 KPI Key performance indicator Our climate adaptation measures 34 Climate change management approach 35 MES Minimum Emission Standards OUR SOCIAL PERFORMANCE 36 NDP National Development Plan Contributing to national transformation imperatives 37 NERSA National Energy Regulator of South Africa Our people 38 NNR National Nuclear Regulator Skills development 38 NT National Treasury Being a good employer 38 RE Renewable energy Organisational effectiveness 39 Health and wellness 40 SADC Southern African Development Community Procurement 40 SDGs United Nations’ Sustainable Development Goals Electrification 40 SED Socio-economic development Capital expansion programme 40 SES Social, Ethics and Sustainability Committee Impacting local communities 41 SIS Strategic Intent Statement Coal 42 SME Small and medium enterprise Ash beneficiation 42 Socio-economic impact studies for the shut down and repurposing of Eskom power stations 43 SOC State-owned company ECONOMIC PERFORMANCE 44 SSEG Small-scale embedded generation Just Energy Transition Transaction opportunity 45 TCFD Task Force on Climate-Related Financial Disclosures Financial risks posed by climate change 45 Tx Transmission – one of Eskom’s three operational divisions Financial sustainability – a risk to climate change efforts 45 Opportunities brought about by climate change 46 CONTACT DETAILS 47 ESKOM HOLDINGS SOC LTD | 1 BACK TO MENU ABOUT THIS REPORT STATEMENT BY THE CHAIRMAN OF THE SOCIAL, ETHICS AND SUSTAINABILITY COMMITTEE Report objective Approval As the Chairman of the Social, Ethics and Sustainability This is our first Sustainability Report. The objective The Board Social, Ethics and Sustainability Committee (SES) Committee, which the Eskom Board has delegated of our report is to provide insight into our sustainable (SES) and the Board have approved the contents of this to perform the oversight role of all sustainability matters development impact and performance. We believe that report on 23 August 2021. of Eskom, it gives me pleasure to share our Sustainability our sustainability as an organisation can be achieved Report for the 2020/21 financial year. through our sustainable development practices. Our suite of reports The SES Committee has continuously provided oversight Our 2021 suite of reports are available online at on matters critical to Eskom’s operations, including We subscribe to the definition of sustainable development www.eskom.co.za/IR2021, and consist of the following: social and economic development, the demonstration of as defined in the World Commission on Environment and Development Report, 1987 (the Brundtland Commission) good corporate citizenship, governance, environmental, which is “development that meets the needs of the present climate change, health and safety programmes, and without compromising the ability of future generations to sustainability audits, among others. meet their own needs”. Eskom is the engine of the economy of South Africa, and stakeholders are at the centre of our business. Reporting frameworks Therefore, effective stakeholder engagement is a critical The sustainability report is guided by the reporting enabler of our strategy and a high priority for Eskom. principles of the Global Reporting Initiative (GRI) and the Against this backdrop, we publish the Sustainability United Nations’ Sustainable Development Goals (SDGs). Integrated report and supplementary information Report on an annual basis to complement Eskom’s This report is supplementary to our integrated report The integrated report provides an overview of how Integrated Report. and is also additional to the Eskom Factor report (2019). Eskom creates value by considering our value creation The Eskom Factor report provides a deep dive into model, strategy, risks and opportunities, performance The Sustainability Report allows us to restate our our impact over an extended period of time (the 2019 and outlook, as well as governance of these areas. It is commitment to the prosperity of South Africa by report assessed the period from 2012 to 2018) while the prepared in accordance with the IIRC’s International demonstrating our support of the Government’s sustainability report is a snapshot of our impact over a Framework. Supplementary information of interest priorities as outlined in the National Development Plan financial year. to a variety of stakeholders is available as fact sheets at (NDP) and towards the SDGs. As stated in the NDP: the back of the report. As noted earlier, our Assurance “South Africa belongs to all its people, and the future This report is largely focused on our performance from and Forensic Department (A&F) has verified certain of our country is our collective future. Making it work 1 April 2020 to 31 March 2021, against material topics aspects of the report, and the external auditors provided is our collective responsibility.” As an organisation, and related to the environment, society and the economy. reasonable assurance on specific Key Performance even more apt for a state-owned enterprise (SOE), We use the GRI’s materiality assessment methodology to Indicators (KPIs). Eskom is mindful of this collective responsibility and determine our organisation’s significant environmental, is committed to creating an enabling environment for social and economic impacts or that which substantively Annual financial statements sustainable development. influences the assessments and decisions of our Our independent auditors, SNG Grant Thornton stakeholders. In addition, the report deals with our Inc, have audited the consolidated annual financial Indeed our challenges as an organisation are many, but future aspirations in these areas within the context statements of Eskom Holdings SOC Ltd, which have so are the opportunities. As you may be aware, there of national and international priorities on sustainable been prepared in accordance with International Financial are ongoing efforts to transform and turn around our development. Reporting Stantards (IFRS) as well as the requirements organisation to be financially secure with good corporate of the Companies Act, 2008 and the Public Finance governance and to deliver on our mandate sustainably for Reporting boundary Management Act (PFMA), 1999. the well-being of all South Africans, the environment and Aligning to our 2021 integrated report, information the economy. Sustainability report in this report refers to the performance of the Eskom Through this transparent reporting, I trust that we will This is our first Sustainability Report. Previously, we used group, which includes the business of Eskom Holdings be able to objectively share topical issues relating to to publish standalone Eskom environmental reports that SOC Ltd (Eskom) operating in South Africa and our sustainable development, thereby affirming Eskom’s evolved into integrated reports with the adoption of major operating subsidiaries, unless otherwise stated. status as a good corporate citizen. integrated thinking. We consider it best practice to publish Data and assurance a standalone sustainability report due to our significant positive and negative sustainable development impacts. Some of the information in this report was sourced from The sustainability report supplements and provides more our 2021 integrated report. For this information, our detailed information on our sustainable development Dr Banothile Makhubela Assurance and Forensic Department provided reasonable impact than that provided in the integrated report. The Chairman: assurance on certain quantitative information, and to a report is guided by the reporting principles of the GRI. It Social, Ethics and Sustainability Committee lesser degree, some qualitative aspects of the report. also considers our contribution to the SDGs. In addition our Assurance and Forensic Department provided limited assurance to ensure alignment of information sourced from the 2021 integrated report. 2 | SUSTAINABILITY DEVELOPMENT REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 3 BACK TO MENU STATEMENT BY THE GROUP CHIEF EXECUTIVE We only have one world Eskom is mandated by the South African Government to provide a stable electricity supply in a sustainable and efficient manner in order to assist in lowering the cost of doing business in South Africa, thereby enabling economic growth. By virtue of being a state-owned enterprise, Eskom is entrusted with the responsibility to support socio-economic development, transformation, broad-based black economic empowerment, as well as enabling job creation and skills development. Due to the magnitude of our impact on the economy, our existence and sustainability as a company are pivotal to the well- being of South Africans. We have faced many challenges in the recent past relating to our operations and lapse in governance, which have impacted our ability to deliver satisfactorily on our mandate. As indicated in our 2021 Corporate Plan, we are on the right track to positively transform Eskom through the implementation of our turnaround strategy. This strategy, which outlines how we will transform our Zero Harm organisation and enhance its sustainability using a phased approach, is underpinned by three pillars which are designed to stabilise, optimise and grow the business. It is therefore important that as we embark on this journey, we continue to build trust with our means taking care stakeholders. This Sustainability Report, which provides insight into our social, economic and environmental of the environment impact for the 2020/21 financial year gives impetus to our efforts in this regard. Overall, our analysis shows that we - it looks after you have a positive impact on socio-economic development in South Africa. However, due to our high dependence on I am confident that with all our efforts, Eskom is on the every day. coal, our environmental footprint remains negative. From an economic perspective, we have both a negative and a right path towards financial and operational sustainability. positive impact on the country. Through the provision More than proving a detailed and comprehensive update of electricity we fuelled South Africa’s economy. At the on Eskom’s footprint, the Sustainability Report also same time, our operational challenges, which resulted in highlights our commitment and contribution to both the implementation of loadshedding have had undesirable the national and international agendas on sustainable consequences on the economy alongside our financial development, namely the NDP and SDGs. As signatory challenges which continue to be a burden on the fiscus. to the United Nations Global Compact, we remain committed to the United Nations Global Compact Be aware. Take care. In efforts to ensure our sustainability, and in keeping with global best practice, we are embarking on an ambitious, and its principles relating to Human Rights, Labour, unique and transformative Just Energy Transition (JET) Environment and Anti-Corruption. In the spirit of strategy. The JET strategy outlines our phased transition enhanced disclosure and transparency, I am proud to towards a cleaner and greener energy future while present the Sustainability Report for the period 2020/21. enabling the creation of sustainable job opportunities for those displaced by the transition. Our ultimate goal is to achieve net zero carbon emissions by 2050, with an increase in sustainable jobs. Given the multifaceted benefits of the JET strategy, we believe that our environmental and economic challenges André de Ruyter will be alleviated, while we continue to contribute Group Chief Executive positively to socio-economic development. Based on its dependency on coal as the primary source of energy, South Africa can lead the way in demonstrating a replicable Just Energy Transition model. Our unique situation as a country enables us to demonstrate our ability to stand on the precipice of a crisis and use that Zero injuries. Zero fatalities. very pressure point to pivot from crisis to opportunity. Powering your world Zero environmental incidents. www.eskom.co.za Eskom Holdings SOC Ltd Reg No 2002/015527/30 4 | SUSTAINABILITY REPORT | 31 MARCH 2021 Issued by Eskom Risk and Sustainability July 2018 ESKOM HOLDINGS SOC LTD | 5 BACK TO MENU OUR COMMITMENT TO SUSTAINABLE Our contribution and challenges in achieving the above goals are shown in environmental, social performance section of this report. In addition, we explain how we contribute to the NDP through our impact and contribution to: DEVELOPMENT • National transformation imperatives such as skills development, employment creation, procurement, employment equity, CSI contributions and special projects • Local communities and our employees • The green economy and the South African economy It is important to note that our sustainability journey is Forthcoming iterations of the Eskom sustainable contextualised and is embedded in our Strategic Intent development framework are aimed at outlining the Sustainable Development Goals Statement and our strategic objectives. proposed sustainability leading KPIs in both the integrated report and the sustainability report. Eskom Factor: driver of sustainable This exercise will further allow for more effective development contribution to be measured. To comprehensively understand our historical and It is through this framework that we aim to further current sustainable development impact, both positive embed sustainable development by: and negative, we proactively embarked on an Eskom • Influencing the organisation to execute its vision, Factor determination journey in 2011 and 2018 that mission and mandate in the context of sustainable focused on the environmental, social and economic development impacts of our organisation. The Eskom Factor identifies key impact areas and allows improved understanding • Influencing the implementing our overall strategy of such areas and their impact on the country, with the • Further defining governance and leadership goal of improving our performance, especially from a requirements and support for the business to meet its sustainable development perspective. The Eskom Factor strategic vision, intent and objectives report seeks to objectively determine our sustainable In order to further entrench sustainability throughout development impact and material issues. the business, we are committed and are implementing Based on the outcomes of the Eskom Factor (2019), both the national (NDP) and international (SDGs) we have to: sustainable development agendas. • Maintain and build on our positive performance in the Our commitment to the NDP following areas: – Contributing to national transformation imperatives The NDP is a long-term development plan for South Africa such as employment equity and procurement from that was published in 2012. The NDP aims to alleviate local suppliers key national challenges and as the triple challenge of From an international perspective, we are committed to Our overall progress on the implementation of the SDGs poverty, unemployment and social inequality by 2030, on supporting and implementing the SDGs. They showcase is as follows: – Positively impacting local communities through the path towards a sustainable future. As a State-owned the risk areas and material matters that a company has • We understand that the SDGs support the NDP’s various investments and reducing externalities Company (SOC), we have the responsibility of supporting to manage to ensure its sustainability. Our approach to mandate by highlighting risk areas we face in South (externality is a positive or negative outcome of a Government in achieving the objectives of the NDP the implementation of the SDGs is based on the SDG Africa and in Eskom. These risks are already being given economic activity that affects a third party that and therefore contributing to sustainable development. Compass Report developed by the GRI, UN Global addressed through our comprehensive enterprise risk is not directly related to that activity) Our mandate is articulated in Chapter 4 of the NDP: Compact and the World Business Council for Sustainable management process • Improve on the following: “Economic infrastructure” – the foundation of social and Development. – Positively contributing to and building the South • We have selected seven priority SDGs to deliver economic development. Africa economy through GDP and employment and Our approach to implementing the SDGs against. Our criteria for selecting these SDGs are limiting the strain on public finances As stated in the NDP, Government’s aspiration for South based on the significance of the impact (materiality, Africa is that by 2030, the country should have an energy intensity of likely risks and those that support and – Providing reliable, predictable and competitive sector that promotes the following goals: enhance the execution of our mandate and priority electricity • Economic growth and development through adequate as a company). Below we have outlined priority SDGs – Continually improving relations with our employees and their alignment with the NDP 2030 investment in energy infrastructure. The sector should • Apply stringent measures to continually improve and provide a reliable and efficient energy service at monitor the following key areas that were of major competitive rates, while supporting economic growth concern: through job creation (page 167, NDP) – Reducing Eskom’s impact on the environment • Social equity through expanded access to energy at – Governance and leadership affordable tariffs and through targeted, sustainable Going forward, we will continue to use the impact areas subsidies for needy households identified in the most recent Eskom Factor report to • Environmental sustainability through efforts to reduce improve and inform our sustainable development agenda. pollution and mitigate the effects of climate change • Employment creation To further integrate, embed and guide sustainable • Building an inclusive economy through the supply chain development, we have developed the Eskom sustainable opportunities development framework. The framework highlights how we manage and monitor sustainable development, • Improving education, training and innovation through thereby placing us on a path to long-term sustainability. skills development and research programmes In this framework we also illustrate how we contribute • Building safer communities and improved healthcare to the NDP and SDGs. through community development and corporate social investment (CSI) programmes 6 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 7 BACK TO MENU OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT continued We continue to challenge ourselves in: • The Just Energy Transition will focus on transitioning • Setting ambitious goals and performance targets that efforts over a 30-year time horizon between 2020 and can enhance the implementation of the NDP and 2050. The key aspirations for 2050 are: Summary of our impact and SDGs – To achieve net zero emissions in partnership with Priority Objective Strategic objective management • Identifying and mobilising key enablers and resources to other businesses and industries Chapter 5: Strive towards net zero carbon We have a negative impact due to achieving the ambitious goals and targets we have set – To promote net job creation from a national Environmental sustainability dioxide emissions by 2050 with greenhouse gas emissions and we mitigate and transition to a low carbon an increase in sustainable jobs this through our climate change strategy and • Fostering a culture of sustainable development and perspective economy our draft JET strategy integration across the organisation and our supplier • We believe that by following a Just Energy Transition (See more details in section on climate and customer value chain pathway, it will be possible to simultaneously spur change) economic growth, which will invite investment into We are committed to reporting and communicating our Chapter 4: Facilitate future open energy Positive impact: We support economic our country, create sustainable jobs and put emissions contribution to sustainable development through our suite Economic infrastructure industry growth and improve the quality of life into structural decline, thereby ensuring an electricity in South Africa and region through our of reports. Going forward, our sustainability journey and supply that enhances our competiveness electrification programme progress will be reported in the sustainability report. Negative impact: Our emissions impact: • The added benefits of transitioning are that we Future aspirations simultaneously deal with the challenges of poor air (See more details in section on climate change) We are aware of our positive and negative sustainable quality, reduced water consumption which consequently development impacts. We strive to maximise our positive frees up desperately needed water for household Chapters 3 Pursue financial and operational Through our electrification programme we impacts and mitigate the negative ones. In line with this, consumption, and improved land use over time Economy and Employment sustainability and strive towards support economic growth and improve the our future aspirations are as follows: net zero carbon dioxide quality of life in South Africa and the region • We aspire to build large-scale renewables aligned Chapters 4 with the DMRE's Integrated Resource Plan between emissions by 2050 with an • Gradually shift from fossil fuel-based power generation Economic infrastructure (See more details in sections on social and increase in sustainable jobs to cleaner power generation, while managing the 2022 and 2030. The availability of green financing on economic performance) impact on the livelihoods of communities dependent concessionary terms together with a risk mitigation Chapters 1 Modernise the power system Through our electrification programme, we on our operations measure of procuring such plants with engineer, Key drivers of change support economic growth and improve the procure and construct contracts allow us to build quality of life in South Africa and the region • The Just Energy Transition is about a transition Chapters 4 towards a cleaner and greener energy future while renewable energy plants at costs that are lower than Economic infrastructure (See more details in section on social IPPs, thus adding significant value to South Africa. We performance) enabling new job opportunities and socio-economic growth through reindustrialisation, and exciting career would also welcome opportunities for public-private Chapter 5: Strive towards net zero carbon Negative impact: Our impact on partnerships Environmental sustainability dioxide emissions by 2050 with biodiversity paths for our youth an increase in sustainable jobs • To participate in the small-scale embedded generation Positive impact: We declared three nature business on a commercial basis reserves through the National Environmental Management Protected Areas Act, 2003 (See more details in section on environmental performance) Chapter 5: Strive towards net zero carbon Negative impact: High water consumption Environmental sustainability dioxide emissions by 2050 with at power stations an increase in sustainable jobs Positive impact: We fully supports the achievement of the goals and targets of SDG 6 through our environmental and water management policies, strategies, performance scorecards and management action plans. (See more details in section on environmental performance) Chapter 15 Pursue financial and operational We have various partnerships across Transforming society and uniting sustainability Government, society and business spheres the country 8 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 9 BACK TO MENU GOVERNANCE AND GOVERNANCE & LEADERSHIP OF SUSTAINABLE DEVELOPMENT AND RELATED ISSUES STRATEGIC CONTEXT The Board has expressed its commitment to rooting out corruption and addressing issues related to past corporate governance breaches, in order to restore our The committee’s responsibilities include: • The statutory functions of a social and ethics committee as set out in the Companies Act, 2008 reputation as a trusted corporate citizen and further, to • Oversight of social and economic development; good improve the organisation’s sustainability. corporate citizenship; environmental, climate change, Governance and leadership are cornerstones to our health and safety programmes; and the sustainability sustainability as an electricity utility, hence our leadership audit has implemented a number of measures to restore • Supervision of nuclear policies, strategies and ethical practices in Eskom. Such measures include guidelines, as well as nuclear safety in terms of the strengthening of ethics and fraud frameworks and regulatory requirements and international best enhancement and focus on consequence management. practice • Serving as the statutory social and ethics committee For further details, refer to the governance, leadership and ethics section in the 2021 integrated report for Eskom’s wholly owned subsidiaries Executive Management Committee (Exco) In relation to sustainability, the following governance structures are in place: Exco is established by the GCE, and is accountable for executing the strategy of the Board, as well as exercising Board executive control over day-to-day operations. Exco is Governance of the group and the responsibility for supported by various subcommittees in the execution of promoting good corporate citizenship is vested in the its duties. Board. For ease and effectiveness of its function, the Risk and Sustainability Division Board has delegated a number of responsibilities to its various committees. The committees that influence our The Risk and Sustainability Division is mandated to drive sustainability matters are briefly discussed below. long-term sustainable business performance through functional leadership, assurance and oversight in the Board Strategy Committee areas of integrated risk and resilience management; The committee’s responsibilities include: research and development; innovation; safety, health, environment and quality; and sustainable development • Oversight of Eskom’s response to and implementation thereby enabling a low-carbon energy company. of Government directives, roadmaps and policy documents relating to the restructuring of Eskom and the electricity supply industry • Making recommendations to the Board on the transfer of assets, liabilities and resources, as well as functional and legal separation • Interacting with Government and associated offices on these matters Audit and Risk Committee The committee’s roles and responsibilities include: • The statutory functions of an audit committee set out in the Companies Act, 2008 and the PFMA, 1999, including oversight of financial reporting and disclosure, risk and compliance management and internal control systems, as well as the internal and external audit functions • Oversight of strategic and business risks and Governance and leadership of sustainable development and 11 opportunities related issues • Governance of information and technology Our group overview 12 • Serving as the statutory audit committee for Eskom’s Risk and resilience 12 wholly owned subsidiaries, with the exception of Escap, which has its own audit committee in terms of Our strategy 13 the Insurance Act, 2017. Our stakeholder engagement 16 Social, Ethics and Sustainability Committee Our material topics 18 The Board delegates the leadership of sustainability and ethics matters to the Social, Ethics and Sustainability (SES) Committee. 10 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 11 BACK TO MENU OUR STRATEGIC CONTEXT Our group overview Eskom’s strategy to manage the sustainable development roles and responsibilities to these in terms of our Our mandate is to provide stable electricity in an efficient manner to contribute to lowering the cost of doing business risks indicated above. Risks and treatment plans are Incident Command standard. in South Africa and thereby enabling economic growth. This mandate is executed by the Eskom group below. undertaken by the Climate Change and Sustainable Development Department within the Risk and Group/Divisional Executives are accountable for Sustainability Division as well as the appropriate line resilience planning within their divisions including: Oversight and regulation divisions. • Emergency and disaster planning at site level • Business continuity planning for all critical business Shareholder ministry Eskom Holdings SOC Ltd The Enterprise Resilience Programme addresses our processes and operations Department of Public Enterprises readiness to respond to disruptions and disasters – Main subsidiaries based on our compliance with legislation (the Disaster • Disaster planning within their functional areas Policy ministry Support functions Management Act, 2002, as amended), international good Department of Mineral Resources Eskom Enterprises SOC Ltd This accountability includes the need for management practice (ISO 22301 for business continuity management) and Energy oversight and adequate resourcing. Escap SOC Ltd and the FEMA/ZA Incident Command System. Functional Oversight ministries Generation accountability for shaping site-level emergency Business continuity plans and site emergency plans National Treasury Eskom Finance Company preparedness lies with Eskom’s Occupational Health and developed in the divisions are the cornerstones of Department of Forestry, Fisheries SOC Ltd Safety function. The divisional oversight role of risk and national and provincial disaster contingency plans. and the Environment Distribution resilience includes the status of these emergency plans. Eskom Development Eskom has established integrated emergency command Regulators Foundation NPC Refer to section on risk and opportunities in the 2021 integrated report National Energy Regulator of Transmission structures at strategic, tactical and operational levels. for our detailed risk information South Africa and National Nuclear Group Executives are required to assign the necessary Regulator Assurance 2022: Our strategy Auditor-General Transmission company Our immediate priority is to address our financial and operational issues to stabilise the business to create a sound platform to leverage our capabilities, to pursue a growth trajectory that supports national strategic imperatives such as the prevailing South African Economic Reconstruction and Recovery Plan and the JET. Our strategy remains aligned to Sustainability practices are embedded and detailed plans is evident in their decision-making processes and the the key areas set out in the Department of Public Enterprise’s Strategic Intent Statement (SIS) as depicted below: are unpacked in the corporate and divisional plans for outcomes. All divisions are required to develop a risk implementation throughout the group. and resilience management plan aligned to the divisional Eskom strategic objectives 2021 – 2023 SIS objective1 business plan. A single Integrated Risk Management Risk and resilience Information System is used for risk management For an entity to be sustainable it should manage risk and information across the organisation. Ensure and maintain a financially viable be resilient. This translates into the ability to manage and sustainable company Our risk landscape is currently being monitored, tracked the effect of uncertainty on objectives, and the ability to and reported in the seven risk categories approved by the Pursue financial and anticipate and adapt, respond and recover, and transform Board, namely financial, operations, people, information operational sustainability Support transparency including itself in the face of uncertainty, change and disruption. We have established an integrated management approach technology, stakeholder management, compliance/ divisional reporting to improve line to risk and resilience. governance and environment/climate change. of sight of operations and align to Risks affecting organisational and business continuity regulatory framework Our risk and resilience policy, risk and resilience objectives are identified, and robust treatment plans are management plan and risk appetite and tolerance developed, and implementation is tracked and monitored framework are the key governing documents through embedded governance structures (in line approved by the Eskom Board. This is aligned to the with King IV TM). Risks are rated according to Eskom’s Provide reliable, predictable and recommendations on good governance in the King IV TM Facilitate future open consequence and likelihood table. High consequence affordable electricity in line with Report on Corporate Governance for South Africa, energy industry and likelihood are referred to as priority 1 risks which NERSA models 2016 (King IV TM), which has introduced the oversight of require the focus of Exco and the Board. resilience (business continuity) as a board-level priority. Sustainable development risks are related to Our business is governed by standards for integrated environmental and climate change, people (including risk management, emergency preparedness, business safety), stakeholder management, financial sustainability, continuity management, disaster management and governance and compliance matters – all of which incident command. These standards are consistently Modernise the Respond to the changing energy impact Eskom’s operations. The priority 1 risk for applied across Eskom and our subsidiaries for the power system landscape climate change is our failure to transition and implement management of all types of risks (including risks impacting low carbon initiatives, potential loss of our licence to on our strategy). Performance against the strategic plan operate due to poor performance on social matters as well as all priority 1 and emerging risks are reported and non-compliance with environmental requirements quarterly to Exco and the Board who provide oversight Reduce the impact of Eskom's and legislation. The priority 1 risk for environmental is as recommended by King IV TM. operations on the environment “the loss of licence to operate due to environmental performance and regulation/legislation non-compliance Produce net zero emissions The effective management of risk is essential for Eskom, by 2050 with an increase in Consolidate socio economic given the role we play in the South African economy leading to plant shut down and/or litigation”. and our impact on society and the environment. sustainable jobs contribution to ensure alignment to Opportunity management is essential in treating national imperatives for economic Hence, management of risk is the accountability of the these risks for the long-term sustainability of Eskom growth, industrialisation, skills risk owners, which mainly happens in the divisions/ and South Africa. The Just Energy Transition (JET) is development and job creation subsidiaries in their own management processes and 12 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 13 BACK TO MENU OUR STRATEGIC CONTEXT continued Short to medium-term strategy Long-term strategy The transition is not without its challenges, including Our short to medium-term strategy is as follows: The long-term strategy positions our organisation as job losses and the negative impact on the coal industry. an enabler to the JET . We intend to be an enabler and Financing the transition is also a challenge that requires driver of the JET in the energy sector. The long-term innovation in financing models, sources of revenue and strategy is underpinned by five industry trends that new ways of financing projects (e.g. climate and green are shaping the future of the electricity sector, namely financing). Our strategy will provide details of these decarbonisation, decentralisation, deregulation, digital potential challenges and how they will be addressed. transformation and democratisation. Success factors for the JET strategy Our JET journey is dependent on a number of enablers Refer to section on strategy overview in our 2021 integrated report for such as policy and financial support. Other important STRATEGY TO A NEW ESKOM our detailed strategy information. enablers include cost-reflective and unbundled tariffs Just Energy Transition (JET) as a pivot for our long- that provide clear signals for services provided by the term strategy network as well as resourcing and enabling a rapid, large- VISION As an organisation, we are no stranger to change and scale expansion of the Transmission network. Drive economic growth by being a financially stable provider upheaval. Our 98-year history is testament to the of energy solutions across Africa To date our strategic objectives include: organisation’s tenacity and resilience in good and bad times. While we have been experiencing the troughs • Clean energy technology pathways in recent years, our challenges, ironically, provide the – Acceleration of large-scale renewables build ideal opportunity for us to peak again. As the world 1 STABILISE 2 OPTIMISE 3 GROW acknowledges that climate change poses a significant – Acceleration of repurposing and repowering of power plants threat to our environmental health, we know that our best chance to decarbonise the economy quickly and – Research into technological solutions for the 2050 • Improved liquidity • Divisionalised • Quick return projects efficiently is to transition to a lower carbon electricity roadmap, including storage (battery, pumped • Improved profitability Transmission, Distribution aligned to strategy supply. The confluence of the decarbonisation drive, the storage, etc.) options in the short to medium and • Cost reflective tariff path and Generation under • Build growth capability MAIN HEADING need for socio-economic growth and the fact that we the hydrogen economy in the far future. • Retain existing customers Eskom • Renewables and gas AT 31 MARCH 2020 • Cumulative savings • Divisions have own player Turnaround objectives Six Capitals are shutting down coal plants, provides an extraordinary • Social elements • Debt relief service functions and • E-mobility Operations recovery Financial capital opportunity for Eskom to pivot to an electricity company – Detailed social impact –studies for the shutdown of • Improved receivables clear accountability • Storage at the forefront of a JET. coal plant • Improve electricity • Lean and efficient Eskom • Micro and mini grids Our JET strategy aims to advance a lower carbon, – Assessing reindustrialisation and local reliability Improve income statement Manufactured capital socially inclusive future, while also contributing to solving manufacturing capability – including skills • Improved governance Improve balance sheet Natural capital our capacity and financial constraints. Additionally, requirements, retraining and quantifying the we will collaborate with Government, labour, civil potential for local manufacture and supporting the TURNAROUND PLAN society and business to stimulate local manufacture, reindustrialisation agenda – pursuing job creation Business separation Human capital reindustrialisation and contribute to a Just Energy • Financing Transition for South Africa. – Optimising green and climate financing People and culture Social and relationship capital The JET occurs in a phased manner. To ensure that we opportunities. succeed and have a focused drive on this JET strategy, we – Agreements with funders for repurposing power Operations Improve income Strengthen Business People and have established a JET office, a first among businesses in statement balance sheet separation Intellectual capital plants, greenfield renewables, SSEG options and recovery culture South Africa. grid strengthening Definition of “net zero” carbon emissions in our • Communication, engagement and collaboration context – Collaboration with government, business, business Values-driven approach Our carbon emissions will be reduced as much as is associations, academia and civil society to drive the 05 | INTEGRATED REPORT | 31 MARCH 2020 technically and financially feasible over the next 30 years; Just Transition in the country the pace at which this occurs will take into account socio- Advocacy and stakeholder engagement – Increased transparency of our JET initiatives economic impacts, system requirements, costs, and our ability to build and scale up rollout of the new capacity. through local, national and international standards Co-creating an industry and market structure for disclosures and reporting The “net” in the net zero target means that we will still – Input to country level JT roadmaps through have residual emissions over the coming years as we the National Business Initiative, Business Unity work towards decarbonising the grid. At the end of the South Africa, and the policy landscape through period, remaining emissions left in the system may be the The Presidency, Department of Public balanced by: Enterprises, Department of Mineral Resources • Investing in projects that remove carbon emissions and Energy, Department of Forestry, Fisheries from the atmosphere, e.g. agriculture and forestry and the Environment, National Treasury, National projects Planning Commission and the Presidential Climate • Deploying technologies that will help us achieve this Commission. goal, when these technologies become commercially available 14 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 15 BACK TO MENU OUR STRATEGIC CONTEXT continued In summary, JET presents a unique opportunity to pivot our organisation into a sustainable energy industry beyond the Our stakeholder engagement Stakeholder groups turnaround, thereby underpinning South Africa’s economic growth. As mentioned in our 2021 integrated report, Eskom Our key stakeholder groups have been classified faces unprecedented business challenges in a context as authorisers, influencers, partners or enforcers. The JET strategy is part of our corporate strategy to assist us to pivot into a sustainable organisation where disruption is the new norm. We are operating in Stakeholder groups have been categorised based on their a highly regulated market that is undergoing fundamental perceived influence on Eskom, and our impact on them. Eskom Turnaround Plan Transitioned utility reform in the context of South Africa’s energy security, Strategic shift from engagement to leverage • Strengthen balance sheet • Pursue net zero carbon decarbonisation and transformation agendas, all of Eskom has reset its stakeholder engagement approach to: Short emissions by 2050 while which have implications for our approach to stakeholder • address emerging strategy-driven opportunities and • Improve income term factoring in the need to engagement. The Government and Regulatory Affairs threats; statement continuously nurture Division is responsible for inclusive relationship • Build high performing management – with Government, various regulators, and • shape the structure of both existing and new markets, economic growth and as well its strategic positioning within those markets; culture create sustainable jobs also domestic and international stakeholders – as well as Growth effective communication, image and brand building. • enhance the Eskom’s brand and overall reputation; and • Improve operations market and • Ensure effective and • Drive restructuring product Long equitable access to • determine win-win outcomes with external Through SES Committee, the Board provides oversight diversification term stakeholders. electricity by modernising of the effectiveness of stakeholder engagement, and our power system delegates the management of stakeholder relationships We are repositioning our internal capability to leverage • Facilitate competitive to Exco. Various functions within Eskom are responsible external stakeholder engagements in order to deliver Just Energy energy industry for the for engagements with different stakeholder groups, on strategic intent. This includes identifying and driving Transition future under the oversight of Exco. business responses as well as track outcomes. • Financially and Restoring stakeholder trust in Eskom is critical to our Through integration of our stakeholder, reputation and operationally stable future success. By improving the way we engage with issue management activities across the organisation we stakeholders and seeking to understand and respond to are improving performance by avoiding duplication and stakeholder interests and needs – including trade-offs building synergies. Just Energy Transition and opportunities – we aim to promote energy security • Accelerate the repurposing and repowering of stations in the long term. • Actively pursue a share of renewable energy allocation in line with DMRE's 2019 IRP • Implement an integrated socio-economic strategy including reskilling Stakeholders' influence on Eskom • Smart industrial policy can drive manufacturing investment and job creation High Investors Parliament Regulators Employees Government Medium The five year priority landscape of our JET strategy is captured as follows: Business and Civil society Customers suppliers Job creation Local Social impact manufacture JUST Low studies industrialisation Doing better for people and the planet, growing International Media localisation and industrialisation groups Cooperation Repowering Low Medium High agreements Repurposing JUST Accelerated ENERGY Eskom's impact on stakeholders renewables Storage Cleaner, sustainable electricity provision Partners Enforcers Authorisers Influencers Policy options ESKOM JET alignment ENABLERS ENERGY STRATEGY Dual fuel/ midlife gas TRANSITION Improving quality of relationships Matters raised by stakeholders Microgrid, SSEG, EVs Transformational change of business models, attracting As stated in our 2021 integrated report, we recognise Environmental matters Change TRANSITION management green financing the importance of rebuilding and strengthening • Environmental compliance monitoring at Medupi Grid upgrades, smart grids confidence and trust in Eskom by implementing our during construction turnaround plan and improving our performance, to • Eskom air quality improvement plans Funding ENABLERS and financing JET ensure that we are able to deliver on our mandate and • Compliance with environmental legislation options transaction Collaboration across constituencies Partnership the Roadmap for Eskom in a Reformed Electricity Supply • Environmental authorisation and waste management options Industry released by DPE in October 2019 (DPE’s licences Roadmap) to transform the electricity industry. As part • Application to delist ash as a waste and to exempt the of that process, we need the continued support and ash utilisation programme commitment of our employees and all stakeholders as we transition towards a more desirable future for Eskom and • Tracking and expediting the Eskom Water Use Licence the country. Improving the quality of our relationships application with stakeholders will enable that process. • Conservation of the high-altitude 8 000 hectares of grassland at Ingula 16 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 17 BACK TO MENU OUR STRATEGIC CONTEXT continued OUR ENVIRONMENTAL Governance and leadership matters • Governance and corruption challenges We are addressing all the above issues, because we The key material topics are: • Particulate and gaseous emissions • Water use PERFORMANCE understand that our sustainability is dependent on • Waste production resolving these. Most importantly, we are always striving • Environmental incidents and compliance to be a responsible corporate citizen, ethically and socially. • Biodiversity and land use Refer to section on stakeholder engagement in our 2021 integrated • Climate change report for our detailed information on stakeholder engagement. Social material topics The key material topics are: Our material topics • Contributing to national transformation imperatives We understand that our sustainability as a company is including employment equity and contribution to local based mainly on how well we address and manage our suppliers material topics. The material topics addressed in this • Skills development report are based on the GRI materiality principle. In • Impacting on local communities: through various line with the GRI materiality principle, this sustainability investments and reducing externalities report reflects the broader lens of materiality, our organisation’s significant environmental, social and • Being a good employer economic impacts that substantively influence the • Safety (see 2021 integrated report for safety assessments and decisions of our stakeholders. These performance) material impacts include those that have a direct or indirect impact on our ability to create, preserve or Refer to further details on the above in the social performance section of this report erode environmental, social and economic value for us, our stakeholders, the environment and society at large. This approach assists us in mitigating and improving Economic sustainability topics our impact on society, the local economy and the The key material topic is driving the economy by environment. providing electricity, contributing to public finances and employment. Our material topics reported include: Aligned to the GRI, we aware that our material impacts Environmental and climate change material create both risks and opportunities for us as a company. topics Our sustainability is therefore dependent on how well The environmental issues that we have reported on we manage these material topics. Refer to sections on are based on those aspects that are material to us and environmental, climate change and social performances our stakeholders. We have determined environmental for further information. materiality though our environmental management system of quantifying the significant impacts arising from the environmental aspect of our activities undertaken in the generation, transmission and distribution of electricity. We also take into account the environmental legislative framework in which we operate, our environmental licences and the conditions on these as well as the expectations of our stakeholders. Our alignment with the NDP 20 Our environmental sustainability matters 20 Environmental management approach and governance 25 18 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 19 BACK TO MENU OUR ENVIRONMENTAL PERFORMANCE continued Our alignment with the NDP Eskom’s environmental management policies, strategies In March 2019, we submitted MES postponement Four contracts have been signed to date, namely the In ensuring our contribution to the NDP, our and systems provide the framework for ensuring we applications for most of our power stations. On 14 July health study; planning, monitoring and verification; the environmental management practices are undertaken in have our plant and equipment correctly installed and 2020, the Department of Forestry and Fisheries and Kwaza project management office; and Kwaza insulation. pursuit of our value of Zero Harm, which is underpinned maintained. We set out standards and procedures that the Environment, (DFFE) provided approval to Eskom The initial engagements between the Kwaza community by the framework of our environmental compliance require compliance with applicable environmental laws, to operate its stations under pre-1 April 2020 emission and some of the appointed service providers took place obligations set out in South African legislation and our regulations and authorisations granted to us. Lastly, we limits until decisions on the MES applications had been in October and November 2020. Unfortunately, this shareholder compact. Our environmental management maintain a high-performance culture that strives for zero finalised; this approval was subject to Eskom providing offset project has been delayed and it is anticipated that practices are based on understanding the impact of our harm, zero contraventions and zero incidents. all outstanding information by August 2020. As required the retrofitting of houses will start during 2021. activities on the environment, what our stakeholders’ by the DFFE, Eskom submitted the information for the Over the last few years our environmental performance 2019 MES applications and additional applications for Managing emissions at Kendal Power Station: expectations are, setting environmental objectives and was well outside tolerance levels we set ourselves As reported in Eskom’s 2020 integrated report, Kendal KPIs, putting in place the controls to monitor and report Grootvlei, Acacia, Port Rex, Medupi and Matimba power in relation to relative particulate emissions, specific stations by the end of August 2020. In November 2020, Power Station’s electrostatic precipitators and flue gas on performance and also respond to risks, incidents and water use, environmental compliance and our impact conditioning were designed to emit below the existing shortcomings in our performance. the DFFE indicated that it hoped to process all the on red data bird species that are classified as “critically submitted applications within 12 months. plant limit of 100mg/Nm3 for particulate matter. During endangered” in South Africa, Lesotho and Eswatini. the strike action in 2018, the units at Kendal continued Our environmental sustainability matters Air quality offset programmes: The amended AELs to run to avoid system failure, however, operating with We have a responsibility to ensure our operations are Air emissions: Particulate and gaseous emissions for our coal-fired power plants require us to implement ash backlogs led to significant damage to some of the not contributing to an environment that is harmful to the We started implementing pollution reduction technology an offset programme to reduce particulate matter units and affected their ability to operate within the legal health and wellbeing of our society. Our environmental as early as the 1980s and have successfully reduced pollution in the receiving environment adjacent to the limits. There are instances when our power stations are strategy, which is in line with our zero-harm value, aims particulate matter emissions by more than 80%. power stations. The offset will be carried out on specific not able to comply with the emission limits set out in to ensure the ongoing improvement in our controls and Unfortunately, particulate emission performance in 2019 low-income houses and includes the installation of their AELs, and in such cases load losses are taken and practices, through visible felt leadership behaviours that and 2020 were the worst in 20 years, primarily because ceilings to improve insulation as well as electric and gas appropriate reporting mechanisms implemented in terms effectively prevent harm to people and the environment. of operational challenges experienced at Kendal Power stoves to replace coal stoves. of the AELs. There has been a significant improvement As a corporate citizen of South Africa, we continue to Station. However, there was a marked improvement (19%) in our fleet of coal-fired power stations’ relative ensure our processes and practices reduce the impact of towards the end of the 2020/21 financial year. particulate emission performance in this financial year our operations on the environment. compared to the previous two financial years, with the year-end performance at 0.38kg/MWh sent out Eskom emission reduction history (2020: 0.47kg/MWh sent out). Two of the Kendal units 6 POWER STATION COMMISIONED WITH ESP (FFP - MAJUBA ONLY) are off on long-term outages and will return after full SO3 FLUE GAS CONDITIONING RETROFITTED TO ESPs refurbishments of the electrostatic precipitators. MATLA IN FFPs RETROFITTED (I.E. ESPs AND SO3 PLANTS REMOVED) DUVHA DECOMMISSIONED AND/OR MOTHMALLED OLDER STATIONS 5 START DECOMMISIONING SIMUNYE 4 KRIEL SO3 IN MATLA & KRIEL MATLA ESP UPGRADE COMPLETION SO3 REFURB ON 4 UNITS. HFPS OF 6 YEAR 3 ENHANCEMENT TIALS ON DUVHA MATIMBA INVESTIGATION HENDRINA SO3 IN SO3 IN UNIT 5 &D LETHABO Rewiring + TUTUKA & LETHABO IN HENDRINA 1- 5 BAGGED CAMDEN UNIT 3. ESP REFURB ON DUVHA 4 & 5. Draught proofing Certificate of MATIMBA IN BAGGED 2 MATLA SO3 IN ARNOT 4-6 PJFF STATIONS Compliance HENDRINA BAGGED 6-10 BAGGED SUSTAINING GX CAMDEN, GROOTVLEI, KOMATI, KENDAL IN LETHABO PERFORMANCE INGAGANE, SALT RIVER OUT SO3 IN DUVHA 4-6 MAJUBA GROOTVLEI 2-4 1 ARNOT 1-3 COLENSO, KLIP, UMGENI SO3 IN IN BAGGED BAGGED Relative particulate emissions performance (kg/MWh sent out) for the 2020 and 2021 financial years HEXRIVER, VAAL, VIERFONTEIN, WESTBANK DUVHA U1-3 BAGGED 0.8 & WILGE OUT KENDAL SO3 IN 0 0.7 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0.6 0.5 Air quality improvement programme: The The South African MES were published in 2010, requiring Generation nine-point recovery plan includes fixing Eskom to reduce its sulphur dioxide and nitrogen oxide 0.4 the emissions through two key objectives. Firstly, by gaseous emissions, in addition to particulate matter, in 0.3 ensuring that the retrofit projects required to meet line with the stipulated emission limits. This required 0.2 existing and new plant standards by 2025, as committed Eskom to comply with existing plant standards by April 0.1 to in the postponement applications in 2014 and 2020, 2015, while more stringent limits had to be met by 0.0 are completed on time. Secondly, by improving the April 2020. In this regard, we committed to retrofitting Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar compliance and performance of operating power stations several power stations in 2014 and again in 2019 to 2019/2020 2020/2021 Emissions Target in line with their atmospheric emission licences (AELs). reduce emissions; continued focus resulted in general improvements in the delivery of these projects. Several We have adopted a phased approach to our air quality of the particulate matter projects are progressing improvement programme that considers the remaining and will be completed by 2025. However, there is an lives of the power stations and their impact on the increasing risk of delays to the completion dates of ambient air quality. In terms of the National Environmental these projects. Management: Air Quality Act, 2004, all of Eskom’s coal and liquid fuel-fired power stations are required to meet the Minimum Emission Standards (MES). 20 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 21 BACK TO MENU OUR ENVIRONMENTAL PERFORMANCE continued In September 2019, we were served notice of criminal Water management SDG 6.4.1 (Water use efficiency) last financial year. A total of 668kt of ash was diverted to charges in respect of alleged contraventions of the Reducing water consumption • Monitoring of water use efficiency at the power a nearby mine as backfill material during the year. Despite National Environmental Management Act, 1998 and the South Africa is water-scarce due to low average rainfall stations and facilities zero ash sales due to COVID-19 in April 2020, total ash National Environmental Management: Air Quality Act at and Eskom accounts for about 2% of the country’s total sold in the 2021 financial year was 3.1 Mt, a 6.7% increase • Reuse of mine water at some power stations Kendal Power Station. In November 2020, Eskom was freshwater consumption annually. Eskom is classified on the 2.9Mt reported during 2020. issued with a summons in connection with these charges as a strategic water user and has a responsibility • Reuse and recycling of water at the power stations and was represented in court on 28 January 2021. The to manage water efficiently in the generation and Phasing out polychlorinated biphenyls (PCBs): • Water accounting programme at the power stations matter was postponed to 20 August 2021. distribution of electricity. In terms of the Stockholm Convention, South Africa is • Drought risk management plans required to phase out PCBs contaminated equipment Gaseous emissions We are implementing comprehensive water strategy by 2025. The DFFE published regulations in 2014 under SDG 6.6 (Water-related ecosystem) SO2 emission limits implementation and management plans across all coal- section 44 of the National Environmental Management Exceedances of daily SO2 limits have been recorded fired power stations to reduce water consumption, • Environmental and water authorisations Act, 1998 to phase out the use of PCB materials and by all coal-fired power stations on 279 days in total ensure compliance with water use licences and maintain • Biomonitoring programmes contaminated materials (>49ppm) by 2023. In 2015, we during the year (2020: 449). Of those exceedances, our assurance of water supply. • Alien species eradication plan submitted our PCB phase-out plan to the DFFE. This plan 160 occurred at Matimba, which is now operating under was independently audited in 2020 and submitted to the a monthly AEL limit rather than a daily limit. Medupi, Specific water performance is dependent on a number of • Partnership with NGOs for the management of DFFE in fulfilment of the requirements of the regulations which also operates on a monthly AEL limit, reported variables, including load factor, energy mix, rainfall and wetlands and wildlife for the phase-out of PCBs. We currently have less than 86 exceedances on its units. The poor SO2 emissions overall water management efficiencies at power stations. Waste management 50 pieces of PCB contaminated equipment that remain to performance at these stations is due to the generally Regrettably, our water use performance remains We support the Government’s commitment to waste be phased out by 2023. higher sulphur content of Waterberg coal. unsatisfactory, mainly due to poor technical performance at stations, ageing plants and long lead times to address management in order to protect human health and the Environmental compliance NOx emission limits root causes of high water consumption, such as leaks environment as defined in the National Environmental Regrettably, there were 80 reported environmental Exceedances of allowed daily NO x emissions have been from the plant and poor water management on site. Management Act and the national waste management contravention incidents1 that occurred during the financial recorded by all coal-fired power stations on 125 days Our year-end performance for specific water use was strategy which is a legislative requirement of the National year (2020: 59). Most of these were water-related in total during the year (2020: 409). Lethabo reported 1.42ℓ/kWh sent out, the same as the previous financial Environmental Management: Waste Act, 2008. incidents and all occurred at power stations. All the 65 exceedances during the year. The remainder of the year (2019/20: 1.42ℓ/kWh sent out). Ash utilisation/beneficiation: There has been an incidents were investigated to determine the root causes exceedances were reported at Kendal and were generally increase in the utilisation of ash produced through the to ensure corrective and preventative measures were put due to monitoring issues. electricity generation process at our coal-fired power in place. Eskom Rotek Industries and the Distribution and stations, predominantly in the brick and block industry. Transmission divisions did not record any environmental Specific water use performance (ℓ/kWh sent out) for the 2020 and 2021 financial years contravention incidents during the past two financial years. 2.0 Total ash utilised during a 10-year period, tons 3 500 000 Our focus remains on improving water management practices across the power stations to prevent legal 1.5 3 000 000 contravention incidents due to non-compliance with the 2 500 000 conditions of the water use licences. The Generation 1.0 2 000 000 Environmental Compliance Steering Committee focuses on emission, water and ash disposal facilities 1 500 000 at the power stations. In addition, the Generation 0.5 1 000 000 Division’s maintenance plan, which aims to improve the 500 000 performance of the plant, will in turn address many of the 0.0 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar environmental challenges being experienced with regard 0 2011/ 2012/ 2013/ 2014/ 2015/ 2016/ 2017/ 2018/ 2019/ 2020/ 2012 2013 2014 2016 2016 2017 2018 2019 2020 2021 to emissions and water. 2019/2020 2020/2021 Water Target Environmental management systems In March 2020, the Minister of the DFFE approved our All our operational divisions (Generation, Transmission, Over the past financial year, more focus was given of more coal-fired power stations thus making Eskom application to exclude ash and gypsum at our sites from the Distribution and Group Capital) and our subsidiary to improving water management practices at power less reliant on limited freshwater resources and more definition of waste when extracted for beneficial use. The (Eskom Rotek Industries) have maintained certification stations. The monthly Generation Environmental resilient to the impacts of droughts. exclusion by DFFE of ash and gypsum from waste requiring against the ISO 14001 environmental management Compliance Steering Committee meeting, chaired by the a waste management licence, when extracted for beneficial system standard. Group Executive: Generation, focused on the review of We monitor and report on our progress and performance use at our sites, provides additional opportunities for ash to the Department of Human Settlements, Water and beneficiation – such as the use of ash in bricks, cement, soil The assessment of our environmental performance stations’ water management action plans to ensure that Sanitation on the following SDG 6 goals and targets: amelioration, road construction and mine backfilling. using several key performance indicators (KPIs) is an the treatment actions are viable, approved and tracked. integral part of our environmental management system Despite the poor water use performance, our total SDG 6.3 (Water Quality and Wastewater): Our ash is sold from five of our 13 coal-fired power to drive continual improvement. Our KPIs include air, water usage (million cubic metres per annum) has been • Water use licences/general authorisations for stations. These ash sales are contracted to commercial water, waste and biodiversity management. Red data bird steadily reducing over the past 10 years and will continue various sites partners. Over the past 10 years, ash sales by volume mortalities are monitored, together with proactive and to do so over the next 10 years if one excludes the water have increased steadily. Camden Power Station has had reactive mitigation programmes to prevent mortalities. • Reuse and recycling of water on site as per Eskom’s use requirements for any FGD retrofits beyond Kusile portions of its ash utilised for mine backfilling during this zero liquid effluent discharge (ZLED) philosophy and Medupi power stations, due to the implementation • Reuse of mine water at some of the power stations of efficient boiler technologies, dry cooling technologies, (Lethabo and Tutuka) diversification of the energy mix towards renewables and use of alternative water resources such as mine • Water monitoring programme (surface and 1. 2.3.6.2 Environmental legal contravention incident: An incident where a provision of environmental legislation (national, provincial, or local) and/or a condition water. This trend will continue with the decommissioning groundwater) of an environmental approval (for example, environmental authorisation, water use licence, waste licence, licence in terms of the National Forests Act) or any other legal document issued in terms of environmental legislation is contravened. (An environmental legal contravention incident is considered a breach in terms of compliance reporting.) 22 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 23 BACK TO MENU OUR ENVIRONMENTAL PERFORMANCE continued Biodiversity practices associated with wildlife interaction on electrical We also contribute to improving the natural environment infrastructure and the feasibility of implementing mitigation. through our responsibility to protect, manage and mitigate the impact of our activities on the biodiversity. Nature reserves: In consultation with both national This is in support of our objective to minimise and provincial authorities, we have formally declared the impact of our activities on ecosystems and to three nature reserves (Ingula Nature Reserve, Majuba enhance ecosystem services through responsible land Nature Reserve and Koeberg Nature Reserve) through management practices. the National Environmental Management: Protected Areas Act, 2003. The declaration of the nature reserves One of our material impacts relates to birds being injured enables us to have the licence to operate our power and killed on our power lines. We track, investigate, generation activities within these natural environmental take action and keep record of all reported incidents, in areas where the power stations have been constructed particular the red data bird mortalities. Regrettably, at while protecting South Africa’s biodiversity and ensuring the end of the 2021 financial year 359 (2020: 392) such the long-term security of our country’s natural heritage. mortalities had taken place. The key initiatives we are undertaking to address this environmental impact include: In 2019, our Ingula Partnership won the Stewardship category at the South African Wetland Society Awards. • Implementing proactive bird mitigation programmes This partnership is between Eskom, BirdLife South Africa Environmental management approach and The Green Economy Accord was signed between on high risk powerlines and Middelpunt Wetland Trust for the work completed governance Government and its social partners in November • Implementing the recommendations that emanated in the declaration of the Ingula Nature Reserve and the 2011 as an outcome of a social dialogue on the New from investigations undertaken on red data bird securing of vital wetland habitats. Environmental duty of care in terms of air quality, land Growth Path. The Accord consists of the following 12 mortalities use, biodiversity, water, waste and ash management commitments: In May 2021, the Ingula Nature Reserve was included ensures our operational sustainability. It is critical • Research work through our own Research, Testing • Commitment 1: Rollout of solar water heaters in the International Ramsar2 Convention on Wetlands to maintaining Eskom’s licence to operate, and and Development function in partnership with the of International Importance, an international treaty also underpins our principle of zero harm to the • Commitment 2: Investment in the green economy Endangered Wildlife Trust for the conservation and sustainable use of wetlands. environment while operating under complex and evolving • Commitment 3: Rollout of renewable energy In order to share our best practices, we hosted a This international acclaim is the culmination of many environmental requirements. years of hard work by the Ingula Partnership to • Commitment 4: Energy efficiency World Bank and utilities delegation from West Africa in preserve the wetland that hosts Eskom’s Ingula Pumped Zero Harm is one of Eskom’s six values and is defined as • Commitment 5: Waste recycling, reuse and September 2019. The purpose of the engagement was Storage Scheme. “the prevention of harm to people and the environment recovery to assist the World Bank and the utility on the current brought about through visible and felt leadership, including • Commitment 6: Biofuels the implementation of effective controls and practices”. • Commitment 7: Clean coal initiatives Our environmental management is undertaken in pursuit • Commitment 8: Retrofitting of our value of Zero Harm, which is underpinned by the framework of our environmental compliance with South • Commitment 9:  Reducing carbon emission on our African legislation and what our stakeholders expect of roads us. Our environmental management is therefore based • Commitment 10: Electrification of poor on our management systems and understanding the communities and reduction of impact of our activities on the environment, what our fossil-fuel, open-fire cooking and stakeholders’ expectations are, setting environmental heating objectives and KPIs, putting in place the controls to • Commitment 11: Economic development in the monitor and report on performance and to respond to green economy and promotion of risks, incidents and shortcomings in our performance. localisation, youth employment, Our environmental practices are supported by a team of cooperatives and skills environmental professionals, an environmental strategy, development policies, procedures, standards and improvement plans. • Commitment 12: Cooperation around the United Nations’ COP17 and its follow-up Our green economy contribution We are a critical and strategic contributor to ensuring We report to the Department of Economic the security of electricity supply in the country. We Development by giving feedback on these four requested are also seen as underpinning economic growth and commitments: Clean Coal initiatives (7); Retrofitting development in order to support the transition to (8); Economic development in the green economy (11); the green economy. In line with relevant legislation, and Cooperation around the United Nations’ COP17 such as the National Development Plan 2030 and the and others to form a basis for the report to the Minister Green Economy Accord of 2011, we have to drive of Trade, Industry and Competition and also to the green economy development through our business Department of Public Enterprises. This reporting is done activities. We define “green economy” as reducing the every year with the exception of last year when reporting environmental footprint by pursuing and investing in low- was not done due to the COVID-19 pandemic. carbon technical growth opportunities; social inclusivity; Our Green economy contribution linked to the NDP and growing the economy through the supply of electricity SDGs which is in line with the South African Government; and international institutions’ plans and programmes to promote sustainable living. 24 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 25 BACK TO MENU OUR ENVIRONMENTAL PERFORMANCE continued Commitments Eskom projects/activities NDP SDGs Commitments Eskom projects/activities NDP SDGs Commitment 7 • Torrefied biomass co-firing as a renewable Investment in green technologies and Eskom’s contribution • Waste management: Coal ash Developing partnerships to play a strong Clean coal initiatives alternative to coal-firing power stations agricultural technologies; adaptation to other commitments [Commitment 5] role in national and regional initiatives • Carbon capture and storage to reduce strategies; growth in renewable energies; of the Green Economy carbon emissions reduction of carbon emissions; creation Accord of awareness. • Medupi and Kusile South Africa will also explore other opportunities to diversify its energy mix away from fossil fuels through, for example, partnering with neighbouring • Masibambisane: Working together for Developing partnerships to play a strong countries to develop hydropower cleaner air [Commitment 10] role in national and regional initiatives resources, initially in Mozambique and Zambia and eventually in the Democratic Republic of Congo. Commitment 8 • Koeberg Power Station steam turbines Investment in green technologies and Retrofitting for • EtaPRO software tool commissioned to agricultural technologies; adaptation improved energy measure station thermal efficiency in real strategies; growth in renewable energies; efficiency time. Status remains unchanged reduction of carbon emissions; and • Remote Monitoring and Diagnostic Centre creation of awareness. • Mainstreaming biodiversity Conservation and restoration of (RMDC). Status remains unchanged protected areas and management of biodiversity. • In-house plant performance-testing capability established at Eskom’s Research, Testing and Development in Rosherville. Status remains unchanged • Plant automation software position paper completed by Eskom’s Group Technology. Status remains unchanged • Fuel oil consumption reduction • Online coal analysers at Eskom coal-fired power stations. Status remains unchanged • Eskom Power Plant Engineering Institute (EPPEI) research strategic plan • Inter-university programme • Emissions reduction programme • Offset programmes Commitment 11 • Local content contracted (procurement Improving education, training and Economic development spend (B-BBEE)) innovation; leveraging the local in the green economy; • Eskom Contractor Academy procurement accord to promote promoting localisation, stronger buyer-supplier relations and youth employment, • Eskom skills development initiatives deeper localisation; involved in public- cooperatives and skills • Eskom Business Investment Competition private partnerships and support from development Government. • Small Business Expo • Integrated Demand Management energy Developing partnerships to play a strong services company development role in national and regional initiatives. Creating employment. 26 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 27 BACK TO MENU CLIMATE CHANGE There is a compelling case for us to transition from • As the counterparty to RE-IPP Programme a coal based to a lower carbon and more climate- • Construction and operation of our own renewable resilient company. Our country, and by extension our energy sources organisation, is extremely vulnerable to the adverse impacts of climate change. In addition, we have a • Technology demonstration projects in off-grid and significant environmental footprint due to our high battery storage systems reliance on coal, and there is mounting pressure against • Ongoing research into new renewable energy, coal use, with little or no financing available for electricity storage and grid stabilisation technologies, as well from coal. as technologies that improve the environmental performance of coal-fired electricity generation, As we embark on this transition, we continue to including future opportunities for biomass co-firing implement an array of mitigation and adaptation and carbon capture, utilisation and storage measures: • Expanding the transmission grid to connect utility-scale • Mitigation refers to our activities to reduce renewable energy projects from around the country greenhouse gases (GHGs); these include the use of lower carbon-emitting technologies (e.g. renewables • Expansion of the distribution grid to accommodate the and nuclear) and the promotion of energy-efficient connection of mini-grid systems technologies and activities. • Ongoing promotion and deployment of smart • Adaptation to climate change is a response that seeks metering systems to reduce the vulnerability of systems to the effects • Studies to enable the deployment of gas and/or or the impacts of short to long-term climate changes. hydrogen infrastructure to support the electricity grid The response includes adapting to the changes in as the supply mix transitions weather, climate variability and long-term changes in • Promotion of market models that accommodate the climate baseline, thus allowing systems to build demand side management, self-generation and their adaptive capacity and long-term resilience; for independent power producers example, agricultural systems through the introduction of drought-resilient seeds and energy systems • Engaging with NERSA on tariff structures that send through investments in drought- or flood-resilient accurate price signals to all market participants to technologies. drive the optimal mix and use of electricity Our mitigation measures Our implementation of carbon-based markets mechanisms The production of electricity from our coal-fired There are several carbon-based market mechanisms that power stations results in approximately one tonne operate globally to promote the scale-up of emissions CO2 for every MWh produced. There is currently no reductions. This includes the Clean Development commercially feasible end of pipe technology to reduce Mechanism (CDM), the Gold Standard Foundation, carbon dioxide from the large coal-fired power stations. the Verra, Joint Implementation and several others. The reduction of carbon dioxide emissions in South We currently have a programme and three registered Africa’s electricity sector is therefore projected to come projects under the CDM to implement the National from the gradual de-loading and closure of existing Energy Efficient Lighting Programme known as the coal-fired power stations as they reach the end of their compact fluorescent lamp (CFL) national rollout operational lives. We anticipate the replacement of programme. Our Sere wind energy facility in the our coal fleet with lower carbon electricity generation Western Cape is also registered as a CDM project. facilities such as wind and solar plant in combination with gas and battery storage. This change in the generation The CFL projects, which were not eligible for CDM, mix is detailed in the DMRE’s Integrated Resource Plan, were registered as one large-scale project under the the most recent publication being gazetted in 2019. As Gold Standard Foundation. This project primarily the energy mix transitions, we are undertaking a number comprises installed light bulbs that were rolled out prior of activities to support this process: to the CFL national rollout programme. We continue • Investigating the opportunity to repurpose coal-fired to explore opportunities of registering more eligible Our mitigation measures 29 electricity generation facilities for lower carbon projects under the CDM. It must also be noted that the Engagement, compliance and disclosures 30 electricity production, grid support and/or community Second Commitment Period of Kyoto Protocol has now development come into force. However, the Paris Agreement has Annual internal carbon dioxide reviews 30 proposed new market mechanisms, which are still under • Investigating new opportunities for demand side Disclosures: Carbon Disclosure Project 30 multilateral negotiations in the annual Conference of management, combined with ongoing operation of Parties. Disclosures: Carbon footprint 30 existing measures Our climate adaptation measures 34 Climate change management approach 35 28 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 29 BACK TO MENU CLIMATE CHANGE continued The CDM is a carbon-offsetting mechanism that is Disclosures: Carbon Disclosure Project Eskom’s GHG emissions The total GHG emissions for 2020 were 201 624 115tCO2e well established at national and international levels. Our annual Carbon Disclosure Project GHG emissions by source, tCO2e 2020 2019 – this is favourable compared to the 2019 GHG emissions The CDM has two objectives; firstly, to assist the Since 2009, we have voluntarily disclosed our climate of 212 601 425tCO2e. This indicates a decrease in Eskom’s developing countries (known as non-Annex I) to meet Scope 1 overall carbon footprint as a result of decreased electricity change performance on the global platform called the their sustainable development agenda; and secondly, to Carbon Disclosure Project (CDP). Since 2000, the CDP, Stationary combustion 201 260 329 212 192 077 demand (and therefore production) attributable to the assist developed countries (Annex I) to achieve their on behalf of institutional investors and stakeholders, various lockdown measures implemented in response to Eskom motor vehicle fleet 37 810 81 797 Kyoto Protocol emissions targets by taking a less costly has challenged the world’s largest corporate companies the COVID-19 pandemic. The majority of these emissions approach by developing projects in the developing to measure and disclose their carbon emissions. This Fugitive emissions 73 904 36 212 were caused by the burning of fossil fuels at our power world. The CDM is governed by internationally agreed is done to encourage them to integrate climate change Waste disposal 3 820 3 468 stations for the generation of electricity. Coal, diesel and rules and procedures under the auspices of the United considerations into their business strategies. The CDP kerosene consumption contributed to over 99.8% of our Nations Framework Convention on Climate Change Non-combustion product use 12 9 GHG emissions. also motivates corporate entities to disclose their climate (UNFCCC). There is an independent governance body change opportunities and risks. It further fosters these Scope 2 established under Kyoto Protocol, known as the CDM The second significant source of GHG emissions was coal entities to demonstrate their tangible efforts in reducing Electricity and heat purchased1 n/a n/a delivery to site (238 338tCO2e). These emissions mainly Executive Board which oversees the administration and GHG emissions, climate risks and vulnerabilities. implementation of the CDM. As the CDM winds down Scope 3 relate to the transportation of coal to power stations by and the new mechanisms under the Paris Agreement We are not a listed company and were not required to third-party trucks. However, this was still less than the Coal delivery to site 238 338 269 963 reported “delivery to site” GHG emissions in 2019. come into operation, we will assess the applicability of report to the CDP during the early 2000s. However, these for our carbon-reducing projects, we willingly participated in the form of a case study Use of employee vehicles 6 669 12 627 The third highest source of GHG emissions was fugitive submission at that time. In 2012, the CDP rules were Air travel 1 008 3 368 emissions (73 904tCO2e). This relates to the incidental Engagements, compliance and disclosures amended allowing for the full disclosure of non-listed Vehicle rental 2 225 1 903 release or leak of sulfur hexafluoride (SF6) gas due to Prior to the currently developing legislation, Eskom companies. Therefore, we decided to voluntarily submit the failure or malfunctioning of Gas Insulated Switchgear had implemented and maintained a proud history of our full climate change disclosure, which was highly Total2 201 624 115 212 601 425 (GIS), circuit breakers and current transformers. Both measuring, reporting and verifying GHGs; we also welcomed by international stakeholders and investors. the Transmission and Distribution operations were actively participate in the studies that have established As the biggest state-owned electricity utility in Africa, 1. As electricity generation is Eskom’s main activity, scope 2 indirect considered, hence the significant increase in we play an important role in stimulating South Africa’s emissions are in principle accounted for as scope 1 direct emissions the basis for South Africa’s climate change response, SF6 emissions compared to 2019. under the GHG Protocol. including among others the introduction of GHG economy. We were unable to participate in 2020 due 2. Due to different scopes and input assumptions, the results are not emissions limit in the Integrated Resource Planning to the delayed release of our 2020 integrated report. directly comparable with our CO2 emissions reported in the table There was a considerable reduction in GHG emissions Process in 2010. However, we will continue to participate in the annual on page 130 in the integrated report. associated with all travel. The Eskom fleet emissions, CDP reporting in 2021. official mileage and air travel emissions reduced As the domestic regulatory regime unfolds, there are significantly as a result of the COVID-19 pandemic’s three pieces of legislation that GHG-emitting companies Disclosures: Carbon footprint and TCFD national travel restrictions. (See the full 2020 Carbon need to comply with: the mandatory GHG Reporting Our carbon footprint Footprint Study on our website.) Regulations 2017 promulgated under the National We conducted a carbon footprint study to calculate Environmental Management: Air Quality Act, 2004; the our annual carbon footprint for the 2020 calendar National Pollution Prevention Plans Regulations 2017; year. A carbon footprint estimates the total (i.e. and the Carbon Tax Act 2019. Internal processes have including scope 2 and 3) GHG emissions generated by been implemented to ensure that timeous and accurate an organisation, expressed in tons of carbon dioxide submissions are prepared. To date, all submissions have equivalent (tCO2e). This provides insights into the been deemed compliant. sources and magnitude of our GHG emissions and allows us to improve the management of our GHG emissions. We also look forward to the upcoming Climate Change Bill that will consolidate South Africa’s climate change The footprint was calculated in line with the globally response. recognised GHG Protocol: A Corporate Accounting and Reporting Standard. Since the calculation of our Annual internal carbon dioxide reviews carbon footprint covers a different scope and may We conduct annual carbon dioxide reviews (ACRs) utilise different assumptions to the regulated reporting within the power stations in our Generation business. requirements, these results are not directly comparable. The purpose of these ACRs is to improve the data integrity within Eskom’s power generation fleet, which The results of the 2020 carbon footprint study, compared is used as inputs to calculate our annual emissions. to the 2019 results, are presented in the table below: These reviews prepare our power stations for external audits, especially on the CO2 KPI. The externally audited emissions figures are reported in Eskom’s integrated report and are also used for the annual reporting to the Department of Forestry, Fisheries and the Environment (DFFE). This ACR involves assessing the processes, systems and documentation (i.e. work instructions, policies and procedures) put in place and the ISO self- assessment compliance to ensure value chain of data flow has high integrity to yield calculations of higher accuracy. 30 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 31 BACK TO MENU CLIMATE CHANGE continued Climate-related targets The Board is supported by two board-level committees The process by which management (through specific positions and/or management committees) is informed of climate- Eskom’s climate change policy is intended to support which govern all climate-related issues: related issues is noted below. South Africa to meet its nationally determined • The Board Social, Ethics and Sustainability Committee contribution for the country’s GHG emissions at “Peak” (SES) is responsible for providing oversight of Responsible for approving, implementing and executing level (between 398 and 614Mtpa by 2025), “Plateau” level social and economic development; good corporate Group Chief Executive and Exco effective risk and resilience management of the climate (for up to a decade) and “Decline” (in absolute terms citizenship; environmental, climate change, health and change risks. thereafter). The DFFE has proposed an enhanced ambition safety programmes; and the sustainability audit. The to the current targets and Eskom will review its climate committee reviews key sustainability strategies for change strategy accordingly. the organisation and debates how best to integrate sustainable development into the corporate strategy. Just Energy Risk subcommittee Monitor, manage and inform the GCE and Exco on the progress Eskom previously participated in the DFFE voluntary made in addressing climate-related issues. The SES comprises three independent non-executive Transition (JET) (Exco) carbon budget process (2016-2020) and will continue directors. In 2020, the SES held four meetings and Office to do so until the expected mandatory company-level the committee considered and/or recommended carbon budgets are implemented under the proposed Responsible for identifying two issues connected to climate change and the Climate Change Bill. We also submitted our progress and assessing JET-related Risk and Resilience environment for approval or noting by the Board. An Governance report in 2020 for the previous Pollution Prevention risks and opportunities, Report key risks to the Risk and Sustainability Exco example of two climate-related issues shared with controls and treatment Committee (Risk Plan and a subsequent Pollution Prevention Plan for the subcommittee. this committee in 2020 and 2021 include the TCFD plans. Progress is reported and Sustainability 2021-2026 period. recommendations and the sustainability report. directly to the GCE and the Division) The JET strategy aims to set targets for three different time • The Board Audit and Risk Committee (ARC) JET Steering Committee horizons – 2030, 2040 and 2050. The aspirational goals on a monthly basis. These is responsible for setting the direction for risk will be further refined by the ongoing systems modelling risks and opportunities are management and internal controls; governance directly linked to Eskom’s Climate Change work that will be an aid in defining future electricity net of technology and information; compliance; and Reviews and reports the climate change risks, opportunities climate change imperatives. and Sustainable zero pathways and appropriate electricity mix. combined assurance. The committee is comprises Development and treatment plans to the Risk and Resilience Governance three independent non-executive directors. An Responsible for (CCSD) Senior Committee. Carbon tax updating and tracking example of this committee’s key responsibilities is Manager Eskom is not expected to have a carbon tax liability until the risk progress January 2023 due to the rebates allowed in the Carbon the examination of the information to be disclosed quarterly. Tax Act. After that, the carbon tax liability is expected in the integrated report. In 2019, the climate change Responsible for developing and implementing Eskom’s climate to be more than R11 billion per year, which would add 4% priority I risk was shared with this committee. CCSD CCSD change-related strategies and policies, identifying and assessing to 5% to the required tariff increases. The Board subcommittees are regularly informed of Risk Coordinator Department climate-related risks, opportunities, controls and treatment plans. Implementation of the TCFD recommendations climate-related risks and opportunities. These issues In 2020, we disclosed climate-related information are discussed at scheduled annual Board subcommittee aligned to the recommendations of the Task Force on meetings, following the approved governance processes. Climate-related Financial Disclosures (TCFD). This year The proceedings of each meeting are governed by Strategy Climate-related risks and opportunities Eskom aims to disclose further relevant climate-related an agenda plan that is monitored and updated as it Eskom climate-related risks and opportunities information to build an improved understanding of our progresses from one meeting to the next meeting. Climate-related risks and opportunities with high RISKS Priority I climate-related risks are monitored and levels of uncertainty regarding their nature, timing, All time horizons climate-related risks, opportunities and the associated Potential damage to Eskom's assets and operations financial impacts. tracked at Exco and Board levels. development and/or deployment were identified for the due to extreme weather events different time horizons. Three key climate-related risks Governance Management’s role and responsibilities and four opportunities have been identified. These risks Medium term (3–7 years) Board and Executive oversight of climate change The Group Chief Executive (GCE) is the highest Failure to transition and implement low-carbon initiatives, have ultimate relevance and the highest likelihood of The Eskom Board is responsible for examining and management level position responsible for relaying the including associated socio-economic initiatives impacting our business, strategy and financial planning. approving the integrated report, corporate plan, main climate change decisions and guidelines set by the Potential loss of Eskom's social licence to operate These climate-related risks and opportunities are corporate strategy and the annual financial statements. Board to the rest of the organisation. The GCE and the paramount for our sustainability and are considered at The strategy incorporate the objective to strive Chief Financial Officer serve as the interface between the both Exco and Board levels. OPPORTUNITIES for net zero emissions by 2050, with an increase in Board and executive management. Short term (1–3 years) sustainable jobs. We have defined the risks that are short term (1 to Pursuit of public-private partnerships 3 years from 2021 to 2023 – aligned to the Corporate Large-scale rollout of cleaner and greener energy, such as Plan FY22-24); medium term (3 to 7 years from 2023 solar PV, battery storage and microgrids to 2030); and long term (7 to 30 years from 2030 to Medium term (3–7 years) 2050 – aligned to the Eskom JET strategy). In future Repowering and repurposing existing coal sites we will prioritise climate-related risks that may have a Re-energise the manufacturing sector substantive financial impact on the company’s earnings (EBITDA) and define quantifiable indicators. At present, only high-level financial risks and opportunities have been identified and described. 32 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 33 BACK TO MENU CLIMATE CHANGE continued Climate-related scenarios These are based on the 2006 Intergovernmental Panel • Undertaking case-studies (inter-basin water transfers change variables, the impacts and proposed adaptation In the 2019 integrated report two scenarios were on Climate Change (IPCC) GHG Guidelines and 2019 and energy demand, efficiency and supply for Eskom) plans. As part of Eskom’s Adaptation Strategy, our considered: Refinement. on selected sites to assess vulnerability to climate procedure for adaptation to climate change planning • The soft decarbonisation scenario was built on change and climate variability. provides a step-by-step guide on how to manage the domestic policy considerations such as South Africa’s Our climate adaptation measures adverse impacts of weather changes, seasonal shifts, • Provision of unrestricted access to a range of relevant nationally determined contribution (NDC) under the Adaptation to climate change focuses on the anticipated high-resolution raw or derived model data within the extreme weather events, disasters and long-term climate Paris Agreement and the DMRE’s 2019 Integrated climate change and seasonal forecast impacts on our bounds of what the model can produce. change on our infrastructure and systems. Resource Plan (IRP). infrastructure, assets, systems and people. It should be • Promotion of a collaborative partnership in research, Climate change management approach • The ambitious decarbonisation scenario requires more noted that climate change remains a priority 1 risk for us training and exchange of experience between CSIR ambitious action beyond what has been specified in and initiatives undertaken as part of adaptation to climate Through our extensive enterprise risk management and Eskom researchers within the framework of the the DMRE’s 2019 IRP and is envisaged to 2050. change are aimed at managing this risk. process, climate change is identified as a priority 1 Memorandum of Understanding. risk that has the potential to prevent the achievement These scenarios were considered in order to understand Climate change science, extreme weather patterns, of our organisational objectives. Quarterly reviews Lastly, our key businesses, namely Nuclear Business, how climate-related risks and opportunities may impact seasonal forecasts and shifts are integral to enabling are undertaken to assess the effectiveness of the Rotek, Transmission and Generation are in the process Eskom over time and to test our strategy resilience to adaptation to climate change. As such, to develop climate risk treatment tasks, which include initiatives such as of developing or implementing their adaptation plans different futures. There are numerous other studies change science and seasonal forecasts data, we have been the development of our JET strategy and the climate or merely integrating climate information utilising the looking at aggressive decarbonisation (e.g. the Council collaborating with the CSIR for a number of years on measures mentioned above. See the Task Force on abovementioned customised risk maps. Each divisional for Scientific and Industrial Research (CSIR) and the the projection of future climate change in South Africa, Climate-related Financial Disclosures section of this plan provides activities preparing for and responding to University of Cape Town), and the Department of in the context of plausible impacts of climate change report for details on the governance measures on the current impacts of weather variability, both forecasted Forestry, Fisheries and the Environment is also proposing on our business and the country as a whole. We have climate change. climate variability and long-term climate change impacts. an enhanced nationally determined contribution. been storing and generating information from the CSIR’s Each plan’s objective is to provide current weather impact projected climate and lately seasonal data. All generated Based on the environmental and climate change risks, management plans in place, forecasted climate Furthermore, our system modelling team has been information from these maps is presented in GIS format performance we impact the following SDGs: developing Eskom-specific scenarios, which are currently for our integration and suitable spatial analysis use. under discussion. The research on climate change science is the latest Risk management science and the first time that such a high level of Positive (+) or Summary of impact/ Identification and assessment of risks detail has been produced for South Africa. On a NDP Negative contribution to NDP and The Enterprise Risk and Resilience Department have global scale, this research has placed South Africa Material topic contribution Associated SDG where applicable ( _ ) impact SDGs established risk structures within each division, consisting at the forefront on climate change modelling for the Climate Chapter 5: – Dealt with through Eskom of risk owners, risk coordinators, and risk and resilience African region. Through this research, Eskom and change Environmental climate change strategy and practitioners. The risk owners are accountable for the the CSIR have been able to contribute projections of sustainability draft JET strategy identification, assessment and management of risk, which future climate change over Africa to the Co-ordinated and transition is integrated in the management processes and is evident Regional Downscaling Experiment (CORDEX) of the to a low carbon economy in decision-making processes and outcomes. Risks are World Climate Research Programme (WCRP). These classified from priority I to priority IV. projections are therefore not only informing strategies Particulate Chapter 5: – Dealt with through an for climate change adaptation in our company and for and gaseous Environmental emissions improvement plan Risk management at Eskom emissions sustainability and offset project South Africa, but also for the entire African continent. We apply an integrated approach to managing risks This set of high-resolution projections (at both 50km according to the Integrated Risk Management (IRM) and 8km resolution) of climate change on South Africa Water use Chapter 5: – Dealt with through a water Framework and Standard. Climate-related risks are Environmental implementation plan to address detail the future occurrences of extreme events under managed by the CCSD Department, line operations sustainability our negative impact as a net the enhanced greenhouse effect (i.e. climate change). (Generation, Transmission and Distribution) and the JET user and our impact on water This data set is also of value in performing an in-depth quality office, respectively. analysis of the plausible impacts of extreme weather Waste Chapter 5: + Ash beneficiation Integration into Eskom’s overall risk management events on our operations and infrastructure, for near production Environmental Our enterprise risk and resilience policy, risk and future periods (2021-2050) through to the end of the sustainability resilience management plan and risk appetite and 21st century. The CSIR and our teams are also focusing – Our need to dispose of waste tolerance framework comprise the key governing on the following: documents approved by the Eskom Board. This risk • The development of a seamless forecasting system Environmental Chapter 5: – Dealt with through a incident and Environmental Generation Environmental management is aligned to the recommendations on good to monitor climate conditions that may lead to high compliance sustainability Compliance Steering governance contained in King IV TM, which introduced energy demand in South Africa; affect the output of Committee to address the the oversight of resilience (business continuity) as a power generation in South Africa; pose operational environmental legal board-level priority. All priority I and emerging risks are stakes to our infrastructure and assets, frequency contravention incidents at power stations reported to Exco and the Board, which provide oversight and intensity including seasonal shifts that may pose as recommended by King IV TM. operational stakes and changes in our resilience Biodiversity Chapter 5: – The impact between wildlife response systems and infrastructure damages, and land use Environmental and our infrastructure Metrics and targets sustainability including importing and exporting infrastructure to Metrics neighbouring countries. Our performance metrics include GHG emissions data and compliance. • Provision of a monthly narrative on anticipated Management of nature + weather risks for our infrastructure and assets reserves GHG emissions projected on a six-monthly basis. We submit an annual GHG report to the DFFE according to their Technical Guidelines (for Scope 1 emissions). 34 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 35 BACK TO MENU OUR SOCIAL PERFORMANCE We intend to remain a key player in the electricity sector and a vital contributor to economic growth, job creation, socio-economic development, and the activity that affects a third party that is not directly related to that activity) • Our development of internal and external know-how creation of a stable, equitable and cohesive South Africa. We contribute to the national long-term development Contributing to national transformation vision – the NDP. We are mandated by our shareholder imperatives as an SOC to play a developmental role, promoting We continue to make significant contributions to national transformation, economic development and broad-based transformation imperatives, although there are areas for black economic development. We also understand that improvement. In terms of aspects on socio-economic this mandate enables our social licence to operate. development, our positive contributions related to Based on the outcomes of the Eskom Factor 2.0 report, employment, employment equity, training and skills our social impact is positive due to: development, investment in local communities, supplier • Our contribution to national transformation development and localisation, and being a good employer. imperatives such as employment equity and local Our B-BBEE Recognition Level is 10%, resulting in the suppliers B-BBEE Level 8 status. The new certificate is valid from • Our impact on local communities through various 22 October 2020 to 21 October 2021. The process is investments and by reducing externalities (externality underway to appoint an advisory consultant to assist us is a positive or negative outcome of a given economic in improving our B-BBEE status level. Summary Spend 2021 highlights • Socio-economic development R9 billion • Skills development R0.82 billion • Salaries and benefits R32.9 billion • Placed 1 299 procurement contracts worth R102.5 billion • Procurement spend to B-BBEE compliant suppliers amounted to R100.4 billion • Local content contracted amounted to R67.7 billion • Number of employees 42 749 • COVID-responsive online employee assistance programmes (psychosocial services, awareness and education programmes and sports, recreation and culture (SRC) activities) 29 292 Employees Employment • We contribute to job creation and reduce unemployment – our group headcount (including fixed-term contractors) was 42 749 at 31 March 2021 (2020: 44 772). Salaries • Eskom’s salaries are competitive. • Invested in our employee value proposition to promote retention of workers. Skills development • Invested R0.82 billion in skills development (2020: 1.1 billion). Quality education • CSI initiatives on education through the Eskom Foundation, Generation and Transmission operational divisions and Group Capital Division (GCD). Contributing to national transformation imperatives 37 Gender equality • We are committed to achieving gender representation and inclusivity across the business at senior and middle management Our people 38 levels. • The Eskom Women Advancement Programme has developed Women Mentoring Circles and furthered Women in Skills development 38 Operations programmes. Being a good employer 38 Reduce inequality • The Employee Relations Department ensures sound relations in the workplace by facilitating discussions between our Organisational effectiveness 39 leadership, our employees and organised labour. • Our relationship with organised labour is well regulated, with agreements and formalised processes in place. Health and wellness 40 • Our leaders are integral to supporting meaningful engagement through the Eskom employee engagement programme Procurement 40 CSI and SED • Total CSI investment of R67.4 million benefitting 802 635 people (2020: R123.8 million benefitting 1 479 395 people). Electrification 40 • Provided basic services to communities near some of our power stations. • Socio-economic development (SED) spend was R9 billion (2020: R5.5 billion). Capital expansion programme 40 Impacting local communities 41 Coal 42 Ash beneficiation 42 Socio-economic impact studies for the shut down and repurposing of Eskom power stations 43 36 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 37 BACK TO MENU OUR SOCIAL PERFORMANCE continued Our people Organisational effectiveness Organisational • Promoting diversity, gender-focus and embraces We are one of the largest employers in the country. Our organisational effectiveness (OE) strategic transformation on all fronts. framework focuses on three multi-dimensional and integrated areas to drive a desired culture of • A strong environmental as well as a social focus, by We employed performance, enable a productive workforce and supporting community initiatives. contribute to the upliftment of the HR function, all 42 749 • The Eskom Business Appreciation and Induction (BAI) directly aligned to and in support of the HR strategic Programme ensures that employees remain connected objectives. Employee Value Proposition, Employee to the business Engagement, and Organisational Culture and Change people at 31 March 2021 (2020: 44 772). Management are the three core areas of Organisational People Effectiveness which directly and indirectly contribute to Benefits available to employees such as having: The slight decrease is due to natural attrition and employee recruitment and retention in Eskom. • Opportunities to work in diverse teams, eligibility for voluntary severance packages. flexi hours and working from home Employee value proposition Eskom is well positioned to attract talent in the • A suite of programmes designed to promote The employee benefit cost has remained stable at engineering field, where it rates as a top employer for engagement, development, agility, resilience and both students and professionals. The EVP programme provide Guardians with psycho-social support R32.9 billion (2020: R33.2 billion). consists of five key enablers that will drive value for employees across the business, and contribute to employee engagement and the building of a high- performance culture based on the dimensions of “work, • Eskom’s mentorship programme, the management development programme, employee engagement programme, the Eskom change management programme, health and wellness programme, rewards, organisational, opportunity and people”. COVID-19 change management and engagement plan Eskom’s EVP is exclusive, relevant and compelling. It is as well as the Eskom EVP lockdown programme critical in understanding what talent wants and desires in • Culture of high performance and recognition Skills development diversity in terms of race, gender, culture and disability the organisation to develop and embed an appropriate, need-meeting EVP. We conduct an annual Eskom Human Capital OE Survey We are an active participant and major partner in skills through our employment equity plan, supporting the where line divisions define their optimal “future fit” to development. We have been at the forefront of skills NDP goal of transforming society and uniting the country. Work environment improve productivity, and drive business efficiencies. development since the advent of democracy to satisfy the We have tailor-made programmes focused on improving • An exciting innovative work environment offering The Survey achieved a 12.6% response rate which was a needs for the national future pipeline. Our programmes our diversity status; one on these interventions is national opportunities and exposure to the full value significant increase from the previous year (2020: 7.1%). increase access to high quality and relevant education, the Eskom Women Advancement Programme, which chain of electricity generation The Eskom Employee Engagement Survey had an overall training and development opportunities in the form of promotes the participation of women in technical and • Biggest build projects in the world that have index score of 3.62 (2020: 3.48) indicating an improved technical and non-technical bursaries, apprenticeships, management positions. celebrated many achievements participation rate. The Eskom Culture baseline/index learnerships and workplace integration learning (WIL) to In January 2021, we became one of 83 signatories to the which assessed employees’ views across the 10 culture • Our African footprint is expanding and employees enable effective participation in the economy by all South United Nations Women Empowerment Principles in dimensions for the Eskom “to be” score was 3.53 have an opportunity to partner with the member Africans and to reduce inequalities. South Africa, amongst the 3 300 in the world. We are (2020: 3.4) indicating the improved understanding of the states in the Southern African Development also one of the top 2% of organisations in the world to Community (SADC), ensuring that demand is met culture to support transformation the organisation is We have become a host employer to provide WIL to achieve a Leader in Gender Equality result based on the within the country as well as across the border undergoing. learner artisans, technicians and engineers, benefiting young people across all demographics, with a particular UN Women SA assessment. Opportunities Employee engagement focus on the previously disadvantaged sectors of our Racial equity at senior management and at middle Employee engagement initiatives are in place to create a • Cross-functional career opportunities using processes society. In partnership with the Energy & Water Sector management/professionally qualified levels has shown harmonious workplace, increase employee engagement such as “Secondment” as well as prospects of working Education and Training Authority (EWSETA) we have significant improvement over the past year, while also levels and to help employees feel a sense of connection on high profile projects implemented a successful artisan programme which achieving the target set by the shareholder. Gender and alignment to the business and one another, thereby has changed the lives of many young people. We invest • Development through further studies process as well equity at senior management and at middle management/ rebuilding employee morale and creating a common extensively in developing our employees through various as available international programmes. professionally qualified levels has shown some vision as enablers towards driving a high-performance skills programmes comprising short programmes, Eskom improvement since the prior year, although targets have • Access to the latest trends in the energy sector culture. Given the COVID-19 pandemic, associated Academy of Learning (EAL) programmes, conferences not been achieved. It can be assumed that this is solely especially renewable energy initiatives had to be adapted to accommodate the “new and further studies for employee development. based on roles being more technical at this level. • Opportunities to network and establish relationships normal”, by leveraging digital and virtual technology. We support a healthy and leaner pipeline of technical with subject matter experts in the field At year end, 85% of all Eskom employees were black, disciplines. Eskom invested R0.82 billion in training and 33% female and 30% black females. In total, 2.93% were Reward and benefits skills development (2020: R1.1 billion), constituting 2.58% employees with disabilities, which is above the Eskom • Competitive compensation of gross employee benefit cost. The slight reduction target of 3.30% and the market average of less than 1%. is due to COVID restrictions. In total, 1 465 learners • Above average suite of benefits (i.e. health benefits, There has been a decline in persons with disabilities from retirement benefits, death benefits and leave benefits) (2020: 1 517) were in our pipeline, comprising 1 440 in 3.01% to 2.93% due to retirements during the stipulated technical disciplines (of whom 59% are artisans) and 25 in period. Our Employment Equity Plan is a commitment • Attitude of Gratitude Initiative unpacks and promotes non-technical disciplines. to develop and grow persons with disabilities with a benefits across the organisation purpose to drive equitable representation of persons • The Eskom Nkanyezi Programme is designed to Being a good employer with disabilities across all occupations. provide Eskom Guardians (employees) with discounts Over the years we have made a strong contribution to on products and services from our external partners employment equity in South Africa from both an overall employment perspective as well as representation at various management levels. We promote inclusivity and 38 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 39 BACK TO MENU OUR SOCIAL PERFORMANCE continued Health and wellness Procurement and supply chain managment The health and wellness of our people is important to us. We support economic development and supplier We seek to improve work attendance and productivity transformation to foster the creation of a sustainable as well as the health and wellbeing of every employee, economy advancing the NDP goals. We also support through the prevention of occupational diseases and Government’s commitment to local development injuries, early detection of occupational and lifestyle programmes, including development of local industries diseases (such as hypertension, diabetes and HIV), thereby enhancing local production and manufacturing medical surveillance and fitness-for-duty assessments, as prescribed in the Preferential Procurement Policy as well as other wellness programmes. We also run an Regulations (PPPR) of 2017. We leverage our relatively employee assistance programme (EAP) of psychosocial large procurement spend to stimulate black economic services including counselling, financial wellness and empowerment, support localisation and promote local trauma assistance. The sports, recreation and cultural content through our emphasis on local supply sectors (SRC) activities is a programme that is available to important to our industry. employees across the business and it promotes team cohesion and is used as an EVP. SRC teams also The ramping down of the capital expansion projects compete with neighbouring companies thus promoting within the new build programme has significantly partnerships. reduced opportunities to contribute towards industrial development. Consequently, the shareholder granted Eskom permission to implement the National Industrial The COVID-19 pandemic has impacted our normal Participation Programme (NIPP) from August 2020 going method of service delivery, and therefore our wellness forward. services have been conducted virtually rather than face to face, protecting our wellness resources and our Total measured procurement spend (TMPS) for the employees. The online programmes included psychosocial group at end March 2021 amounted to R155.6 billion, services, awareness and education programmes and SRC of which R100.4 billion (64.51%) was spent on B-BBEE activities. A total of 26 938 employees were reached compliant suppliers (2020: R154.2 billion, and 65.97%). by internal EAP advisors and 2 354 by external service Procurement spend with black youth-owned and black providers. women-owned suppliers improved to 3.46% (2020: 2.65%) and 12.24% (2020: 10.10%) of TMPS respectively, exceeding their targets of 2% and 12%. By 31 March 2021 contracts to the value of R227 billion Impacting local communities We launched an internal digital publication, The On the negative side, our B-BBEE status has remained have been awarded from inception of the projects, We engage in CSI and SED projects with our contractors Guardian, which features key strategic business updates at level 8 since 2018 due to new rules introduced in the with local content accounting for R169.5 billion. The for social upliftment and community development to and inspiring stories from across the business; celebrates Broad-Based Black Economic Empowerment Act, 2003 total spend by Eskom with (first tier) suppliers for empower local communities and to foster relationships and recognises employees who have achieved excellence; under the B-BBEE Codes of Good Practice and spend subcontracting was R136 billion: with our stakeholders. We also invest in providing basic and promotes leadership visibility. Furthermore, the against independent power producer (IPP) contracts • R86.9 billion was spent with large black suppliers services within these communities, such as electricity, Advice for André engagement platform and mobile which were concluded in terms of the DMRE’s renewable • R18.9 billion was spent with black women-owned potable water and waste removal services around some application was designed and developed in-house. energy IPP (RE-IPP) Programme over which we had no companies of the power stations, which supports livelihoods in these The response has been overwhelmingly positive, with control. Engagements with DMRE and the Department of • R18.1 billion was spent with small and medium communities. employees engaging with the GCE and sharing their Trade, Industry and Competition are intended to discuss innovative ideas on how to improve Eskom. The Eskom enterprises (SMEs)/small black enterprises Our capital expansion programme made a CSI the appropriate classification of IPP expenditure. EVP National Lockdown Programme was launched at the • R12.1 billion was spent with suppliers located within contribution to the surrounding local communities, start of the COVID-19 pandemic. It provides employees Electrification and surrounding projects site positively touching many lives. The CSI programmes with access to useful psychosocial resources, tips and focused on education and social upliftment, with We contribute positively through the electrification Our capital expansion project offers employment activities to benefit the employees and their families contractors supplying food during the COVID-19 programme funded by the Department of Energy. opportunities directly and indirectly through our during the national lockdown. pandemic. These programmes also focused on health 106 669 previously disadvantaged households were suppliers. During the financial year, total of 13 480 people connected to the grid (2020: 191 585 household interventions as the priority need in the country and Organisational culture were employed on the capacity expansion programme connections). The electrification programme enterprise development. Eskom has embarked on one of its most ambitious and as a direct result of contractual obligations (2020: possibly most challenging transformation journeys. promotes the NDP goal of provision of economic 13 318). We also drive skills development and transfer The Eskom Foundation implements CSI programmes to Appropriate and effective culture transformation and infrastructure which is the foundation of social and with our construction partners in the new build. About address developmental needs across the country. The change management strategies are critical in supporting economic development. Since 1991, we have connected 11 400 individuals have been trained by suppliers over flagship and national CSI programmes contribute towards DPE’s Roadmap and our turnaround plan. The Eskom approximately 5.8 million households. the lifetime of these major projects as a direct result the upliftment of communities and create jobs through change management strategy and customised initiatives of contractual obligations. The skills development enterprise development initiatives. The Foundation is have been implemented across all key Eskom-wide Capital expansion programme initiatives focus on employees being upgraded or given an a wholly owned subsidiary of, and receives its mandate strategic projects. The Organisational Culture and Change Our capital expansion programme comprises the Medupi opportunity to acquire market-related skills. from, Eskom. A CSI investment of R67.4 million was made Management Programme was designed to capacitate and Kusile new build sites, and on large Transmission by the Eskom Foundation and other divisions, impacting employees and empower leaders with knowledge, change projects is one of our greatest contributors to socio- Demobilisation has a negative impact on the economy, 802 635 beneficiaries (2020: R123.8 million and 1 479 395 management skills and practical tools to drive the desired economic development. These projects support the the life and people in the area. Demobilised contractors beneficiaries). The decrease in the investment is due to culture. The uptake of this programme has been extremely NDP goals through procurement, job creation, skills are offered life skills training to assist them with getting limitations posed by COVID-19 restrictions. successful, with over 12 700 employees registered and development and CSI. new opportunities. We mitigate the impact of job losses actively utilising the platform. by collaborating with local and provincial government structures to address some of the challenges faced by local communities surrounding our new build projects. 40 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 41 BACK TO MENU OUR SOCIAL PERFORMANCE continued Eskom Rotek Industries uses CSI as a stakeholder negative impact is the damage to the road infrastructure In 2020 an ash offtakers forum was established between scheduled for decommissioning by 2040. The goal is to management tool to promote stability in hotspot areas in Mpumalanga due to the high number of trucks Eskom, industry and academia to promote the sales support the JET and ensure that affected workers and and as a goodwill tool to contribute to SED within the delivering coal to the power stations. Our rail delivery of ash and find solutions to the barriers to entry communities are not left worse off. This will assist in areas where it is operational. of coal is through Transnet Freight Rail, utilising B-BBEE to new participants in ash beneficiation in terms of managing and mitigating societal risks brought about compliant loading sidings and offloading sidings. infrastructure, huge capital investment and national by the shutdown of three power stations through One of our flagship projects is discussed below. policy position. identification of possible socio-economic options that will Our long-term coal strategy to supply about 800Mt of promote job creation, industrialisation and localisation. Eskom Business Investment Competition coal to selected power stations was approved in 2019, Socio-economic impact studies for the shut The Eskom Business Investment Competition (BIC) and will lead to economic opportunities in the area and We have also initiated a process to assess the potential rewards outstanding work in entrepreneurship, and down and repurposing of Eskom power stimulate the regional economy. stations for repowering some of the stations using alternative encourages SMEs from previously disadvantaged generation technologies, including renewables, gas, backgrounds to thrive and lead the country’s economic We purchase about 116kt of limestone per annum from We are making progress with plans to seek a sustainable biomass, battery storage and hydrogen. In parallel, the development. The competition is open to South African, Idwala Lime in Danielskuil from the Northern Cape. solution to our ageing power station fleet through utility is assessing prospects for repurposing the sites black-owned and registered SMEs that have been Idwala has an obligation to subcontract/procure goods repurposing in line with our JET strategy. A socio- for non-energy-related economic activities, such as operating for more than two years in several sectors, and services from entities that are black-owned within economic impact study for the shutdown of Hendrina, agriculture and the provision of bulk water services and such as agriculture and agriprocessing, engineering and its immediate location as a way of transforming its value Komati and Grootvlei power stations commenced in water treatment. construction, manufacturing, and trade and services. With chain and stimulating economic activity in the Northern January 2020 and has been completed. Mitigation plans prizes worth approximately R1.3 million, the competition Cape. It also undertake skills development for its are currently being developed with an implementation Our overall social impact and contribution to the NDP supports enterprises in taking their operations to the employees. programme. These are the first of 10 coal plants and SDGs is shown below. next level. Over and above the financial rewards, business skills and training are provided to contribute towards the Ash beneficiation sustainability of these small businesses. Our power stations generate about 33Mt of ash per year, Material Impact/contribution to SDGs of which 10.1% was available for beneficiation in the 2021 matters NDP contribution Associated SDG where applicable (positive/negative) financial year. We beneficiate the bottom, fly and clinker COVID-19 response ash. There has been an increase in the utilisation of ash Contributing • Economy and employment • Positive in terms of our procurement, The impact of COVID-19 on the economy and on our to national • Improving education, training reducing inequality, skills and CSI produced through the electricity generation process transformation and innovation lives will be felt for many years to come. The global at our coal-fired power stations, predominantly in the imperatives • Transforming society and response to COVID-19 – both economically and to brick and block industry. About 72% of the coal ash sold uniting the country the pandemic – has shown a multitude of different in South Africa goes into cement blending and 10% into • Nation-building and social approaches. We have developed a COVID-responsive cohesion ready-mix. CSI programme that implements projects in communities with needs. Our ash sales play a key role in business development, Skills • Improving education, training • Positive contribution leading to job creation and localisation in the brickmaking and development and innovation employability and career growth construction industries. This supports the national Coal development goal of an inclusive economy and We play a major role in the coal industry due to our employment. In January 2020, Eskom’s Exclusion large offtake, accounting for about 50% of total national Regulations application for use of ash in cement, coal production. In the 2021 financial year, 110Mt of coal bricks and blocks, road construction, mine backfilling, was purchased and transported to the power stations treatment of acid mine drainage and other various (2020: 119.3Mt). About 50% of coal was delivered by uses was approved. A fair, equitable, transparent and Impacting local • Transforming society and • Positive developmental and infrastructure means of road or rail during the 2020 financial year. Our competitive process has to be followed to allow for communities uniting the country development new players (see further details on ash amounts in the • Improving education, training • Negative in terms of capital projects large coal purchases, which accounts for the majority and innovation • Managed with CSI and SED interventions of our operational expenditure, offer opportunities to environmental section) • An integrated and inclusive contribute to development and transformation across the In March 2020, the Minister of the DFFE approved our rural economy value chain – sourcing, transport (haulage) and disposal, • Nation-building and social application to exclude ash and gypsum at our sites from cohesion supporting NDP goals of inclusive economic growth and the definition of waste when extracted for beneficial employment through shareholding of suppliers, supplier use. The exclusion by DFFE of ash and gypsum from Being a good • Economy and employment • Positive in terms of job creation, skills development and localisation, transportation contracts waste requiring a waste management licence, when employer • Improving education, training development and employment equity with B-BBEE suppliers and CSI interventions. extracted for beneficial use at our sites, provides and innovation • Transforming society and We are transforming the mining industry by purchasing additional opportunities for ash beneficiation – such as uniting the country from companies with shareholdings which are above the use of ash in bricks, cement, soil amelioration, road the mining charter requirement of 26%. In our current construction and mine backfilling. portfolio of long-term cost plus and fixed price contracts Our ash is sold from five of our 15 coal-fired power (38%), the majority of the short and medium-term stations. These ash sales are contracted to commercial contracts have more than 51% black shareholding. partners. Over the past 10 years, ash sales by volume Approximately 1 419 jobs have been created from have increased steadily. Camden Power Station has had supplier development and localisation (SD&L) obligations portions of its ash utilised for mine backfilling during this in these contracts. Coal haulage by road since inception last financial year. A total of 668kt of ash was diverted to in 2008 also created 5 000 direct and 5 000 indirect jobs. a nearby mine as backfill material during the year. Despite Furthermore, these companies run various CSI initiatives zero ash sales due to COVID-19 in April 2020, total ash in areas where they operate, such as building schools sold in the 2021 financial year was 3.1Mt, a 6.7% increase and houses for the indigent, offering bursaries, etc. A on the 2.9Mt reported during 2020. 42 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 43 BACK TO MENU ECONOMIC PERFORMANCE Refer to the financial review section in our 2021 integrated report for our detailed financial performance and the initiatives we have embarked on to improve our performance. 2. The existing, predominantly coal-based generation fleet will increasingly be subject to various external cost pressures driven by climate change, which will For the context of the sustainability report, our become more costly over time. A number of costs economic performance contribution is as follows: within the existing fleet have steadily escalated including coal costs, environmental abatement capex Just Energy Transition Transaction and various taxes on fossil-based generation, before opportunity factoring in externality costs. A continued rise in these Through our JET strategy, we are currently investigating costs will potentially threaten the long-term viability the feasibility of the JET Transaction (JETT) opportunity of coal generation in the future as renewables become as a lever for improving our financial performance, cheaper. therefore contributing to our turnaround initiatives. The 3. Over the longer term, failure to address climate JETT is an opportunity that is being explored to crowd change will result in an increased exposure and in funding from the domestic and international markets vulnerability to us, our communities and customers to to support Eskom’s transition towards cleaner energy, adverse climatic events such as floods, heatwaves, etc. thereby also supporting South Africa’s energy transition. Such events may result in damage to infrastructure, This large-scale investment will be conditional on a supply interruptions, etc. all leading to an increase in significant reduction in carbon dioxide emissions over costs if not adequately addressed. the next 30 years, in line with national and international commitments. Financial sustainability – a risk to climate change efforts The JETT proposal is two-fold. Firstly, to obtain funding to assist Eskom’s transition and shutdown of Climate change will exacebate our financial woes. coal plants in order to achieve a significant carbon Unless we manage the climate change risks, our financial emission reduction while investing in renewable energy. position will worsen. Secondly, to secure transition finance which is aimed at We are currently addressing the challenges of a weak promoting the socio-economic development of affected balance sheet; a large unsustainable debt burden; the communities and workers as the organisation transitions unreliability of an ageing fleet; and a tariff level that is from coal-fired electricity generation to a renewable not reflective of prudent efficient costs. Investors in energy-based energy system. the power sector, whether Eskom or IPPs, require the The following positive financial benefits are envisaged ability to recover costs that are prudently and efficiently from this transaction: incurred, and earn an adequate return on the assets. Like many regulated markets, we suffer from under recovery • Provide an enabling platform with lenders who are of costs and earn insufficient returns. encouraged to see the transition • Access to cheaper financing The industry requires a sustainable tariff level to encourage investment in the sector and to deliver the • Concessions and favourable terms much needed clean additional capacity required. If the Financial risks posed by climate change sustainable tariff level is not achieved, there will be no incentive for the accelerated ramp-up of renewable The global drive to urgently address the devastating energy. Furthermore, if we continue as the single repercussions of climate change impacts us directly procurer of all the power from IPPs in the absence of a within the production of the electricity value chain, and cost-reflective tariff, then the new power purchases will indirectly through many of our customers who will face negatively impact our financial position. similar pressures to reduce their carbon footprint. Sustainable tariff levels need to be balanced with 1. Market access to raise funding and the export of addressing the affordability of such tariffs by customers goods and services by our customers are becoming as well as ensuring that the tariffs are set at an optimum increasingly restricted as investors call for a faster level to ensure that local industry remains competitive Just Energy Transition Transaction opportunity 45 transition away from fossil fuels. in the global market. The impact that tariffs have on Financial risks posed by climate change 45 • A number of institutional investors have already our customers is clearly illustrated by the erosion of withdrawn from financing new coal projects. A the South African industrial base over the past decade Financial sustainability – a risk to climate change efforts 45 faster transition to renewable energy sources with sales decreasing from ~90TWh to the current level Opportunities brought about by climate change 46 is required to reinstate and retain the eroding of ~70TWh, together with the spiralling arrear debt investor base. accumulation of municipalities and end-customers. • International governments and trading partners Financial sustainability and a just transition are have also started to exert pressure on interdependent. manufacturers to reduce their carbon footprint. Failure to comply with the minimum standards will result in duties and penalties being imposed thus negatively impacting the competitiveness of goods and services. 44 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 45 BACK TO MENU ECONOMIC PERFORMANCE continued CONTACT DETAILS Telephone numbers Websites and email addresses Eskom head office +27 11 800 8111 Eskom website www.eskom.co.za Contact@eskom.co.za Eskom Media Desk +27 11 800 3343 Eskom Media Desk MediaDesk@eskom.co.za +27 11 800 3378 +27 11 800 6103 Investor Relations +27 11 800 2775 Investor Relations InvestorRelations@eskom.co.za Eskom whistle-blowing hotline 0800 112 722 Forensic investigations Investigate@eskom.co.za DPE whistle-blowing hotline 0800 111 628 DPE whistle-blowing website www.thehotlineapp.co.za DPE@thehotline.co.za Eskom Development Foundation +27 11 800 8111 Eskom Development Foundation www.eskom.co.za/csi CSI@eskom.co.za National call centre 08600 ESKOM or Promotion of Access to PAIA@eskom.co.za 08600 37566 Information Act requests Customer SMS line 35328 Customer Service CustomerServices@eskom.co.za Facebook EskomSouthAfrica YouTube EskomOfficialSite Twitter Eskom_SA MyEskom Customer app Physical address Postal address Eskom Megawatt Park PO Box 1091 2 Maxwell Drive Johannesburg Opportunities brought about by climate Access to funding from concessional financiers with Sunninghill 2000 change specific mandates to drive climate change to substitute Sandton the current debt can provide finance at lower rates 2157 The current landscape and favourable market conditions over longer tenors to assist us in managing the debt aimed at accelerating efforts to combat climate change Group Company Secretary Company registration number burden and keep the lights on, while we embark on present significant opportunities that can be leveraged to Office of the Company Secretary Eskom Holdings SOC Ltd our transition to cleaner sources of power. transform the various risks and challenges we face into PO Box 1091 2002/015527/30 opportunities. 3. We are on a journey to return to financial Johannesburg sustainability, of which an integral component is 2000 1. The country currently has an immediate need for a achieving cost-reflective tariffs. The pursuit of the substantial amount of additional generation capacity to most optimal, least cost future expansion pathway meet demand. A number of the coal-fired fleet plants will ensure that this element of the cost base can be Feedback on or queries relating to our report may be directed to IRfeedback@eskom.co.za are reaching end of life, with a significant amount of defended, and allow appropriate recovery of the costs Our suite of reports covering our integrated results for 2021 is available at http://www.eskom.co.za/IR2021 capacity due to be decommissioned by 2030. The rapid in the revenue streams. This can contribute to help decline in the cost of renewable technologies along reset the relationship with the Regulator (i.e. NERSA) with the abundant natural wind and solar resources and contain the future required rise in tariffs to reach have made renewables an economically viable new cost-reflective levels. capacity option to start filling the gap with the benefit of shorter construction times. The rise in tariffs will require a solution to address the affordability challenges for customers deemed to be A mix of the existing coal fleet combined with vulnerable, of which inclusion of the least cost options renewable options will ensure an optimal least cost in the mix would assist in keeping the tariffs at the total power system that will ensure an affordable, lowest possible levels. reliable and stable power supply. The transition to cleaner sources of power is In order to achieve the objective of a transition to the inevitable. The risks posed by climate change are cleaner sources of power, the new capacity would have known and can be transformed into economically to be developed across the country. This will require viable and environmentally sustainable opportunities significant investment in the Transmission grid in order within the current landscape, while assisting us in to integrate the system. This expansion will also take dealing with the various challenges we face. time and would need to be addressed as a matter of urgency. We are committed to fast-track the transition in a responsible way that considers all aspects, including 2. We currently face the challenge of a large those of the coal mining communities that will be affected unsustainable debt burden that has been characterised by the transition. Careful analysis of all the trade-offs by an eroding investor base that is averse to lending to will be undertaken to manage security of supply in the finance coal, high interest costs, shorter debt tenors short run and system stability, including the impacts on and lower than required tariffs leading to reliance on communities. the shareholder for support. 46 | SUSTAINABILITY REPORT | 31 MARCH 2021 ESKOM HOLDINGS SOC LTD | 47 BACK TO MENU NOTES JOINT VENTURE [0006] 48 | SUSTAINABILITY REPORT | 31 MARCH 2021