20 SUSTAINABILITY REPORT 22 Powering growth ... sustainably Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance ACRONYMS CONTENTS AEL Atmospheric emission licence INTRODUCTION 2 ARC Audit and Risk Committee About this report 2 B-BBEE Broad-based black economic empowerment STATEMENT BY THE CHAIRMAN OF THE SOCIAL, ETHICS AND SUSTAINABILITY COMMITTEE 3 BIC Eskom Business Investment Competition STATEMENT BY THE GROUP CHIEF EXECUTIVE 4 CDP Carbon Disclosure Project OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT 5 CFL Compact fluorescent lamp Our commitment to the NDP 6 Sustainable Development Goals 6 COP Conference of Parties SDGs related to our environmental and climate change performance 8 Our alignment with the United Nations Global Compact Principles 8 CSI Corporate social investment GOVERNANCE, LEADERSHIP AND ETHICS 9 CSIR Council for Scientific and Industrial Research Governance and leadership of sustainable development and related issues 9 DFFE Department of Forestry, Fisheries and the Environment Strategic context 12 DMRE Department of Mineral Resources and Energy Strategic direction 13 Our business risk management 15 DPE Department of Public Enterprises Integrating risk and resilience 16 Our stakeholder engagement 20 Dx Distribution – one of Eskom’s three operational divisions Our material matters 22 EV Electric vehicle ESKOM’S JUST ENERGY TRANSITION 23 EVP Employee value proposition Eskom JET strategy 25 Exco Executive Management Committee JET as a thrust to Eskom’s strategy 26 The Eskom JET office achievements 26 GCE Group Chief Executive OUR ENVIRONMENTAL PERFORMANCE 28 GHG Greenhouse gas Our environmental sustainability matters 30 GIS Gas Insulated Switchgear Environmental management approach and governance 36 GRI Global Reporting Initiative The road ahead for environmental management 36 OUR CLIMATE CHANGE PERFORMANCE 37 Gx Generation – one of Eskom’s three operational divisions National climate related targets 38 IPP Independent power producer/s Our climate change management roles and responsibilities 38 JET Just Energy Transition Eskom climate related risks and opportunities 38 Our climate-related metrics and targets 41 King IV TM King IV Report on Corporate Governance for South Africa, 2016 OUR SOCIAL PERFORMANCE 43 KPI Key performance indicator Contributing to national transformation imperatives 44 MES Minimum Emission Standards Our people 45 NDP National Development Plan Skills development 45 Skills development to support a Just Transition 45 NERSA National Energy Regulator of South Africa Being a good employer 46 Organisational effectiveness 47 NNR National Nuclear Regulator Eskom organisational culture and change management 47 NT National Treasury Eskom Employee Value Proposition 48 Eskom Employee Engagement Programme 49 RE Renewable energy Health and wellness 49 RR Risk and Resilience Procurement 49 Capital expansion programme 50 SADC Southern African Development Community Impacting local communities 50 Coal 56 SDGs United Nations’ Sustainable Development Goals Circular economy – ash beneficiation 57 SED Socio-economic development Socio-economic impact studies for the shutdown and repurposing of Eskom power stations 58 SES Social, Ethics and Sustainability Committee ECONOMIC PERFORMANCE 60 SIS Strategic Intent Statement Climate funding 61 Investing in renewable energy 61 SME Small and medium enterprise Sales and revenue 61 SOC State-owned company Municipality debt 61 Coal 62 SSEG Small-scale embedded generation Human capital 62 Eskom employee benefit cost optimistaion 64 TCFD Task Force on Climate-Related Financial Disclosures Socio-economic targets (shareholder compact) 65 Tx Transmission – one of Eskom’s three operational divisions Learner pipeline and learner intake 65 Training spend 66 |1 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance INTRODUCTION STATEMENT BY THE CHAIRMAN OF THE SOCIAL, ETHICS AND About this report Report objective Our suite of reports Our 2022 suite of reports is available online at SUSTAINABILITY COMMITTEE The objective of this report is to provide our stakeholders www.eskom.co.za/investors/integrated-results with a transparent account of our company’s contribution Despite facing many challenges, there are also numerous and performance on sustainability matters. These opportunities, as I reflect on the contribution we have stakeholders include, but are not limited to, our employees, made in the social and economic development of the labour unions, investors, market regulators, suppliers, country and the continent, I see our Corporate Plan, civil society and customers. In this report, we also reflect Turnaround Strategy and Just Energy Transition (JET) on our past performance and give insight to the future, strategy as the compass that will guide us on our journey. in respect of environmental, social and governance (ESG) As we transition towards a cleaner, greener energy initiatives. business, we have developed and are implementing a JET strategy that not only enables us to reduce our emissions Reporting frameworks Integrated report and supplementary information and water consumption, but also to create net positive jobs Our sustainability report is guided by the reporting The integrated report is prepared in accordance with for many years to come. principles of the Global Reporting Initiative (GRI) and the the integrated report Framework. It considers our agenda of the United Nations’ Sustainable Development value creation model, strategy, risks and opportunities, In our efforts to always be a good corporate citizen, we Goals (SDGs). It is also influenced by the United Nations’ performance and outlook, as well as governance of these continue to promote equality, prevent unfair discrimination, Guiding Principles, the recommendations of the Task Force areas. Supplementary information of interest to a variety reduce corruption and contribute to the development on Climate-related Financial Disclosure (TCFD) and the of stakeholders is available at the back of the report. of communities, particularly in our areas of operation. Carbon Disclosure Project (CDP). The external auditors provided reasonable assurance As most of our power plants reach the end of their useful on specific Key Performance Indicators (KPIs), while the lives and we shut them down, we are ensuring that we bring This report is focused on our performance from the communities affected along with us by endeavouring 1 April 2021 to 31 March 2022 against material topics Assurance and Forensic Department verified certain aspects of the report. not to leave them worse off as we cease operating. related to the environment, society and the economy. We use the GRI’s materiality assessment methodology to Annual financial statements Our employees are integral to our success. Their safety determine our organisation’s significant environmental, The consolidated annual financial statements of Eskom and wellbeing are of high importance. As such, we have social and economic impacts or that which substantively Holdings SOC Ltd have been prepared in accordance with developed and regularly review Eskom’s environmental, influences the assessments and decisions of our International Financial Reporting Standards (IFRS) as well health and safety and sustainability policies, procedures and stakeholders. In addition, the report deals with our future as the requirements of the Companies Act, 2008 and the As a Social, Ethics and Sustainability (SES) Committee, standards and monitor performance against them and their aspirations in these areas within the context of national and PFMA, 1999 and have been audited by our independent our role is to assist the Eskom board in fulfilling its progressive implementation. We also monitor the impact international priorities on sustainable development. auditors, Deloitte & Touche. statutory obligations by making recommendations for its of our operations on society and the environment and – consideration and approval. Such recommendations are where appropriate and necessary – amend our policy or Reporting boundary Sustainability report centred around social and economic development, good strategy. With a diverse generating capacity, which includes Aligned to our 2022 integrated report, information in this The sustainability report supplements and provides more corporate citizenship, the environment, climate change, nuclear, we are cognisant of the need to ensure that we report refers to the performance of the Eskom group, detailed information on our sustainable development health and safety, consumer relationships, stakeholder provide assurance to Eskom’s stakeholders and the public which includes the business of Eskom Holdings SOC Ltd impact than the integrated report. The report is guided relationships, labour, employment, people issues, ethics at large on nuclear safety. (Eskom), operating in South Africa and our major operating by the reporting principles of the GRI and considers our management and sustainable development. subsidiaries, unless otherwise stated. contribution to the United Nations’ SDGs. As the board SES Committee, we are tasked, among With Eskom being a vital engine to South Africa’s economy, others, to monitor consumer relations, including the Data and assurance it is important to communicate and engage with our advertising and public relations functions and compliance Some of the information in this report was sourced from stakeholders. with the company’s consumer protection laws in order the Eskom 2022 integrated report. For this information, to improve relationships with stakeholders. We also have our Assurance and Forensic (A&F) Department verified This report gives us the opportunity to reaffirm our to ensure decent working conditions, good employment aspects of the report to provide reasonable assurance on commitment to South Africa’s prosperity by clearly relationships and the educational development of our the quantitative information and to a lesser degree, some demonstrating our support for government’s priorities, employees in line with the relevant legislation, legal qualitative aspects of the report. In addition, A&F provided as chartered in the National Development Plan (NDP) requirements, or prevailing codes of best practice. limited assurance to ensure alignment of information and by indicating our commitment to the 10 principles sourced from the Eskom 2022 integrated report. of the United Nations Global Compact (UNGC) and As the Chairman of the SES Committee, which the alignment to the Sustainable Development Goals (SDGs). Eskom board has delegated to perform the oversight role Approval As an organisation and even more aptly for a state-owned of all sustainability matters of Eskom, it gives me great The Eskom Executive Management Committee (Exco) and enterprise (SOE), Eskom is mindful of this collective pleasure to share our sustainability report for the 2021/22 the Social, Ethics and Sustainability Committee (SES) have responsibility and is committed to creating an enabling financial year. approved the contents of this report. environment for sustainable development. Mr Bheki Ntshalintshali Chairman: Social, Ethics and Sustainability Committee 2| |3 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance STATEMENT BY THE GROUP OUR COMMITMENT TO CHIEF EXECUTIVE SUSTAINABLE DEVELOPMENT a quest to ensure we replace such skills. Retention and development of skills through a targeted employee value proposition are essential to ensure that we have the required skills to meet the organisation’s needs, especially considering operational challenges and financial constraints. Our current poor environmental performance with regard to compliance and our safety performance – where fatalities and serious injuries continue to occur – has led to the implementation of key strategic initiatives aimed at achieving a marked and continuous improvement in behaviour and practices and preservation and protection of the environment. This leads to an improved Safety, Health, Environment and Quality (SHEQ) culture. Eskom subscribes to international management systems and embarks on various SHEQ initiatives to improve performance continually. We are committed to our duty of care in minimising the impact of our activities on ecosystems and enhancing ecosystem services through responsible land management practices. While our efforts continue to deliver the outcomes of the turnaround plan, a deliberate focus will be placed on aligning our future investments, utilising the JET as the key guiding principle. The JET serves as a pivotal point WHAT YOU WILL FIND IN THIS SECTION 1 to Eskom’s future, enabling Eskom to focus on many of Eskom plays a critical role in assisting with lowering the its challenges in the short term while pursuing long-term Our commitment to the NDP 6 cost of doing business in South Africa, enabling economic growth and sustainability. The JET is in support of national Sustainable Development Goals 6 growth and providing stability of electricity supply by goals to decrease greenhouse gas (GHG) emissions, providing electricity efficiently and sustainably. As a SDGs related to our environmental and promote job creation through reskilling and stimulate 6 state-owned enterprise (SOE), we are responsible for climate change performance economic growth by leveraging the opportunities presented supporting the South African government in achieving the by the transition to a cleaner and greener energy future, Our alignment with the United Nations objectives of the National Development Plan (NDP) 2030 8 while creating new job opportunities for those displaced Global Compact Principles and contributing to sustainable development. To enable us by the replacement of coal with cleaner technologies. It to make a meaningful contribution to the national agenda, means a transition towards a low-carbon, climate-resilient the Department of Public Enterprises (DPE) has outlined a economy. transformation framework that guides the involvement and requirements of SOEs, including Eskom, in achieving the Given the conflation between rapid developments in NDP goals. renewable technology, Eskom’s aspiration for achieving net zero carbon emissions by 2050, more stringent We have committed ourselves to contribute to the environmental legislation and Eskom’s ageing fleet, Eskom strategic objectives of the NDP and other related will prioritise repurposing and repowering coal power policies through the turnaround plan and Just Energy stations as they are shut down. This will be done while Transition (JET) Strategy, in accordance with Eskom’s driving key enablers to expedite future utility-scale social commitment to communities. The social compact procurement programmes, mitigate negative socio- aims to ensure a fair and just transition when repurposing economic impacts by delivering on the social and skills generation assets, to partner with local stakeholders when plans, promote local industrialisation and job creation introducing greener energy technologies and to deal with and focus on enhancements to improve environmental the challenges of unemployment, poverty and inequality, performance. including contributing to inclusive growth and development, all towards a greener footprint in the country. In the continued spirit of enhanced disclosure and transparency, I am proud to present the Eskom Our people are integral to our business and in ensuring the sustainability report for the period 2021/22. sustainability of our business. We employed 40 421 people as at 31 March 2022 (2021: 42 749). The employee benefit cost amounted to R33.0 billion (2021: R32.9 billion), constituting about 15% of operating costs. We invest extensively in developing our employees through various skills programmes comprising internal and external training interventions, further studies and on-the-job training. André de Ruyter We have over the years lost critical specialised skills that Group Chief Executive have impacted on our business continuity but we are on 4| |5 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT Our sustainable development journey is guided by national Our commitment to the NDP Our contribution and progress against the seven prioritised SDGs are as follows: and international frameworks and the NDP and the SDGs, As a State-Owned Company (SOC), we must demonstrate together with other relevant frameworks and programmes support and commitment to government in achieving the such as UN Global Compact (UNGC), TCFD and the objectives of the NDP and contributing to sustainable CDP. We continuously strive to improve our sustainable development. The Department of Public Enterprises development performance and ensure its integration to our (DPE) is our shareholder ministry and sets our mandate. Priority Objective Strategic objective Summary of our impact and management business operations. To enable meaningful contribution to the national agenda, Chapter 5: Produce net zero emissions Negative impact on climate change and environment that is the DPE has outlined a transformation framework that Environmental sustainability by 2050 with an increase in managed through our Turnaround, JET and Environmental As part of our efforts to integrate sustainable development and transition to a sustainable jobs strategies. throughout the business further, the following measures guides the involvement and requirements of SOCs, low-carbon economy were undertaken in FY2021/22. including Eskom, in achieving the NDP goals. We are mandated to play a pivotal role in enabling national socio- Chapter 4: Facilitate future open energy Positive: We support economic growth and improve the • Awareness sessions and training on material matters that economic development goals. In line with this mandate, we Economic infrastructure industry quality of life of South Africans and the region through our influence our sustainability are a crucial enabler of economic growth and development, electrification programme and enabling the Integrated • Consultations with divisions and subsidiaries to ascertain driving the creation and development of black industrialists Resource Plan (IRP) and Renewable Energy IPP Procurement understanding and business needs and to ensure Programme (REIPPPP). and entrepreneurs. alignment and inclusiveness for sustainability initiatives Negative: The cost of electricity, particularly tariff increases • The Eskom Sustainable Development Framework is In the FY2021/22, we continued to contribute meaningfully for an already economically vulnerable society. being reviewed. This framework is aimed at illustrating to the following areas: Chapter 3: Pursue financial and Our energy business and electrification programme allows for how we integrate, monitor and report on sustainable • Electrification Economy and employment operational sustainability economic growth, business opportunities and provides direct development and recommending areas for improvement, • Social equity employment to over 40 000 households. Chapter 4: Produce net zero emissions thereby placing our business on a path of long-term • Employment creation Economic infrastructure by 2050 with an increase in sustainability • Enhancement of education, training and innovation sustainable jobs through skills development and research programmes Chapter 1: Modernise the power system Through our electrification programme, smart meters, • The green economy and the South African economy Key drivers of change research and development and key account customers we support economic growth, innovation, technology Chapter 4: advancement and industrialisation. Economic infrastructure Sustainable Development Goals Chapter 5: Pursue financial and Negative: Our impact on biodiversity – some of our power Environmental sustainability operational sustainability stations have had a negative impact on the biological health of water bodies downstream of our operations. Positive: We declared three nature reserves through the National Environmental Management Protected Areas Act, 2003. Chapter 5: Pursue financial and Negative: High relative water consumption at power Environmental sustainability operational sustainability stations. Positive: We manage our water challenges through environmental and water management policies, strategies, performance scorecards and management action plans. Chapter 15: Pursue financial and We have various partnerships across the world, government, Transforming society and operational sustainability society and business spheres. uniting the country The SDGs are a collection of 17 interlinked global goals designed to be a “blueprint to achieve a better and more sustainable future for all”. Behind the 17 goals is a more detailed list of 169 targets and 230 indicators. The goals call for building peaceful, inclusive and well-governed societies with responsive institutions as the basis for shared prosperity. The goals are people-centred and planet-sensitive, they are universal, applying to all countries, while recognising the different realities and capabilities of each country. In supporting our government and although all the SDGs apply to our business in one way or another, we have prioritised seven goals that are presently most applicable to us. 6| |7 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT continued GOVERNANCE, LEADERSHIP AND ETHICS SDGs related to our environmental and climate change performance Based on the environmental and climate change performance, we affect the following SDGs: Positive (+) or NDP Negative Summary of impact/ Material topic contribution Associated SDG where applicable ( _ ) impact contribution to NDP and SDGs Climate Chapter 5: – Addressed through Eskom change Environmental JET Strategy sustainability and transition to a low carbon economy Particulate Chapter 5: – Addressed through Generation and gaseous Environmental Recovery Plan, Minimum Emission emissions sustainability Standard Projects and JET Strategy Water use Chapter 5: – Addressed through Generation’s Environmental strategic water management sustainability implementation plan and implementation comprehensive water strategy implementation and management plans across all coal-fired power stations Waste Chapter 5: + Ash beneficiation production Environmental sustainability – Our need to dispose of waste Environmental Chapter 5: – The non-compliance is being incident and Environmental addressed through a Generation WHAT YOU 2 compliance sustainability Environmental Compliance Steering Committee to give priority to resolving and avoiding environmental WILL FIND IN legal contravention incidents at THIS SECTION power stations. Biodiversity Chapter 5: – The impact between wildlife and our and land use Environmental infrastructure Governance and leadership of sustainable 9 sustainability development and related issues Strategic context 12 Strategic direction 13 + Management of nature reserves Our business risk management 15 Integrating risk and resilience 16 Our alignment with the United Nations Global Compact Principles Our stakeholder engagement 20 As a signatory to the UNGC, we are committed to its principles relating to human rights, labour, environment and Our material matters 22 anti-corruption. Our commitments are reflected in compliance with the principles of the UNGC and the Organisation for Economic Co-operation and Development (OECD) recommendations on anti-corruption. We submit our annual communication on progress (COP) to the UNGC, which enables us to show our commitment to the ten principles and the SDGs and thus building our credibility and brand value, measure and demonstrate our progress and to compare our progress against other peers through comparable corporate sustainability data. 8| |9 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance GOVERNANCE, LEADERSHIP AND ETHICS continued Governance and leadership of sustainable Audit and Risk Committee The board, through its Social, Ethics and Sustainability • considered environmental performance, including development and related issues The committee’s roles and responsibilities include: Committee, is responsible for the governance of ethics contraventions and non-compliance notices, as well As we execute our mandate, we align with our governance • the statutory functions of an audit committee are in Eskom, by establishing an ethical culture and providing as risks relating to ash disposal facilities. framework that clarifies roles between the Shareholder, set out in the Companies Act, 2008 and the PFMA, oversight of ethics strategies and policies in accordance with King IV TM. Focus areas for the coming year include: the board and the management of the Eskom group. 1999, including oversight of internal and external audit functions, financial reporting, internal control systems, • executing ongoing supervision of environmental We continue efforts to enhance our governance and Adherence to our Code of Ethics, known as the as well as risk and compliance management sustainability matters; leadership as we understand that these are cornerstones “The Way”, is not optional. It is the way we do business in • oversight of risks and opportunities and governance of • overseeing Eskom’s ethics review to improve the to our sustainability. For further details on our overall Eskom, guiding the way in which the board and employees information and technology ethics management strategy and related policies and governance matters, refer to the governance, leadership interact with one another as well as with our shareholder, procedures; and and ethics section in the 2022 integrated report. • serving as the statutory audit committee for Eskom’s customers, suppliers, the public, other stakeholders and wholly-owned subsidiaries, except for Eskom Captive • driving improved financial and operational sustainability Social, Ethics and Sustainability (SES) the environment. Insurance Company (Escap), which has its own audit through Eskom’s transformation. The board fulfils the primary roles and responsibilities of a “The Way” is defined by six core values, which form the committee in terms of the Insurance Act, 2017 Executive Management Committee governing body outlined in King IV™ by: foundation of our values-driven organisation and reflect The committee also monitored and considered some The Executive Management Committee (Exco) is • Setting the strategic direction of the organisation and our commitment to the highest standards of governance sustainability-related reports from management on the accountable for exercising executive control over day-to- treating strategy, risk, performance and sustainability as and ethical behaviour. following areas: day operations to deliver on the strategy set out by the inseparable. board. • Providing oversight through effective governance • quarterly reports to the Shareholder, covering Eskom’s Zero Harm means protecting the Eskom Way frameworks and approving policies and plans that enable financial, operational, ESG performance as well as risks Refer to the IR for the composition of the board and Exco, strategy. and opportunities including information on skills as well as racial, gender and • Monitoring management’s performance and • financial performance and liquidity, IT governance and Integrity means acting the Eskom Way age diversity implementation of the strategy, ensuring accountability performance, PFMA compliance, enterprise risk and and promoting the integrity of reporting. resilience, forensic and technical investigations, black- Innovation means thinking the Eskom Way Divisional boards for Generation, Transmission and start capability and readiness and feedback on new Distribution were established to drive separate • Ensuring identification and management of compliance legislation, litigation and other significant matters accountability for each division, as a transitional structure requirements and risks through effective internal Sinobuntu means caring the Eskom Way and a first step towards Eskom’s legal separation. The controls, supported by a risk-based internal audit Social, Ethics and Sustainability Committee divisional boards do not constitute a board of directors in function. Customer satisfaction means serving the The board delegates the leadership of sustainability and accordance with the Companies Act, 2008, but function as • Promoting a high-performance ethical culture ethics matters to the SES Committee. This committee Eskom Way operational boards until the legal separation is concluded. aligned with Eskom’s values and operating as a reports to the board quarterly. Although the divisional boards function relatively responsible corporate citizen – ethically, socially and Excellence means working the Eskom Way independently, they report to Exco on a regular basis environmentally. The committee’s responsibilities include: to ensure that decision-making is aligned with Eskom’s • the statutory functions of a social and ethics committee The committee considered the following and, where overall strategy. Board Strategy Committee/Governance and are set out in the Companies Act, 2008; required, recommended matters for approval or noting by Strategy Committee Eskom’s legal separation will ultimately result in the • oversight of socio-economic development, good the board: The board Strategy Committee’s mandate has been formation of wholly-owned subsidiaries with independent corporate citizenship, environmental, climate change, • Operational and environmental sustainability expanded to include governance matters and has been boards for Transmission, Generation and Distribution, health and safety programmes and the assurance of performance, including challenges and mitigating renamed as the Governance and Strategy Committee. The starting with the National Transmission Company select KPIs through the sustainability audit; measures committee’s responsibilities include the following: South Africa SOC Ltd. The boards of the wholly-owned • supervision of nuclear strategies and policies, as well as • Human resources sustainability and compliance • Oversight of Eskom’s response to and implementation of subsidiaries will still be accountable to the board of nuclear safety in terms of regulatory requirements and with labour and employment regulations, as well as government directives, roadmaps and policy documents Eskom Holdings SOC Ltd, in line with good governance international best practice; and occupational health and safety performance relating to the restructuring of Eskom and the electricity practices. supply industry. • serving as the statutory social and ethics committee for • Progress on the capacity expansion programme Eskom’s wholly-owned subsidiaries; and • Making recommendations to the board on Eskom’s long- • Initiatives to improve Eskom’s B-BBEE rating and Risk and Sustainability Division term strategy, including the JET, legal separation and the • ensuring that the sustainability reporting is in line with socio-economic transformation, including supplier The Risk and Sustainability (R&S) Division has set transfer of assets, liabilities and resources. the Global Reporting principles, namely the stakeholder development, localisation and industrialisation out strategic objectives and deliverables in line with inclusiveness, sustainability context, materiality and • Interacting with the government and associated offices • Corporate social investment, stakeholder engagement Eskom’s overall strategy and corporate plan. It has the completeness and that the disclosures in Eskom on these matters and customer relations clear mandate to lead and support sustainable business integrated report are aligned to the recommendations • Nuclear oversight, nuclear waste management and performance through functional leadership, assurance Some of the key sustainability activities that were tabled of King IV TM. associated risks and oversight in the areas of integrated risk and resilience and influenced by this committee include: • Ethics report and progress on forensic and anti- management, occupational health and safety, environment, • Eskom’s JET strategy and roadmap and the international climate change and sustainable development, quality and funding announced during COP 26. corruption initiatives renewable energy in support of Eskom’s vision. • Progress on Generation’s strategic repurposing and To address the prior year’s focus areas, the committee: repowering of ageing coal-fired power stations and • monitored Eskom’s transformation and progress on the Transmission’s infrastructure expansion and grid planning turnaround plan; projects and associated funding. • reflected on compliance with the principles of the • Initiatives and levers to address the debt burden, UNGC and the OECD recommendations on anti- together with the classification of debt, core assets and corruption; and non-core assets amid Eskom’s legal separation. 10 | | 11 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance GOVERNANCE, LEADERSHIP AND ETHICS continued Strategic context modular model based on bi-directional flow of power. • The “4Ds” namely decarbonisation, decentralisation, digitisation and democratisation are Globally and locally, the energy sector is transforming, This shift introduces new players to the industry and global trends influencing businesses driven by fundamental shifts in policy, technology, as well an unfolding series of demand-centric, value-adding • Increased commitment to address environmental footprint towards climate neutrality goals as economic and environmental demands. The industry is applications. The most significant of these is the shift towards greener, cleaner technology, which aims to reduce • Global trends show a shift away from large scale coal assets towards cleaner, decentralised evolving from a predictive, vertically integrated model that systems underpinned by the advancements in renewable technology, data-driven businesses leverages economies of scale with centralised generation overall emissions in line with South Africa’s commitment to the Paris Agreement. models and increased customer choice flowing in a single direction towards a decentralised, • A constrained fiscus with growth further inhibited by COVID-19 may affect government support and investment as funds are diverted to health and welfare Global • High unemployment and poverty place greater limitations on government’s support for Strategic risk Shaping our future RSA increased tariffs Scanning our appetite and risk of through strategy • Increased focus on addressing climate and environmental issues limiting the continued environment ESI strategy options development impact of the coal fleet on CO2 emissions and unacceptable particulate emissions • Given the dynamics in the local context, and a series of previous decisions, the industry Eskom evolution needs to align with the shifts in a way that will avert crisis • A number of policy and regulatory decisions are at varying levels of implementation (e.g. NDP, IRP 2019, DPE’s Roadmap, amendment of acts applicable to Eskom) which further Integrated and Risk of strategy define Eskom’s parameters Emerging risk and proactive strategy misalignment and • Eskom’s mandate and available resources define the scope of our possible solutions strategic risk profile development and critical assumptions which should translate into key actions to navigate out of the current crisis towards a execution sustainable entity • Financial challenges are driven by under-recovery of costs, inadequate tariffs, declining sales, escalating municipal debt and high level of borrowings • Operating challenges such as maintenance constraints, unplanned outages, excessive diesel Monitoring and cost and loadshedding Planning strategy • Environmental legal contraventions and the cost of addressing emissions compliance adjusting our Risk of execution execution (around R330 billion) direction A number of developments and considerations inform A number of external factors also have an impact on our Strategic direction The turnaround plan is aimed at addressing immediate Our desired end state is an organisation that is able to operational and financial challenges to set the organisation our strategic context and thereby influence our long-term sustainability and therefore, shareholder and political contribute to providing electricity to meet growing demand on a sustainable path, by achieving the following: strategy – global trends and influences, factors at a national support is critical. Policy shifts to enable Eskom to operate level, developments relating to the electricity supply efficiently given the evolution of the industry, specifically and demonstrates positive environmental and socio- • Reshaping Eskom’s business and operating models and industry and Eskom’s financial and operational challenges. around issues such as Eskom’s debt, arrear municipal debt, economic impacts, with a significantly reduced financial establishing an agile organisation to respond to rapid National Treasury decision-making and NERSA’s tariff dependence on the South African government. changes without disrupting daily services We operate in a financially constrained environment determination, remain fundamental. • Committing to greater efficiencies across the and have posted significant financial losses over the past The introduction of renewable and other cleaner organisation, reducing wasteful expenditure and few years. Our financial sustainability continues to be Our financial and operational challenges have been technologies, as well as the expected shutdown of around optimising revenue threatened by a lack of cost-reflective tariffs. NERSA exacerbated by volatile global and local economic 20GW of nominal capacity at coal-fired power stations that reach their end of life between now and 2035, will require • Improving corporate governance and acting against awarded a tariff increase of 9.61% for FY2023, which is conditions, affected over the past two years by the corruption and mismanagement significantly lower than the 20.5% for which we applied. COVID-19 pandemic and the associated lockdowns, significant strengthening and expansion of transmission infrastructure, in line with the requirements of the • Ensuring greater transparency in the governance of We are still grappling with non-payment of arrear debt by travel restrictions and a decline in tourism. Most recently, Transmission Development Plan. Eskom needs to further Eskom and its subsidiaries delinquent municipalities, an unsustainable debt burden and the Russian-Ukraine conflict continues to impact the high debt servicing costs. In addition, high levels of fraud sustainability of the global energy sector. We are already position itself to respond to the changing environment While our focus is on delivering the outcomes of the and corruption remain a concern and we are still recovering affected by rising fuel prices and declining fuel availability, through the introduction of technology for better turnaround plan, we will continue to drive the JET to from the scourge of state capture. Continued government which may pose significant challenges for Eskom and the efficiencies, the establishment of a Distribution System serve as a pivotal point in Eskom’s future, enabling us to support will be required to bolster liquidity if the challenges country. Operator to manage and coordinate distributed generation address many of our challenges in the short term, while threatening our financial sustainability go unresolved. as a neutral facilitator of open markets and active ensuring long-term growth and sustainability. The JET will partnering to solve incapacity and non-payment challenges also assist in supporting national goals to decrease GHG Furthermore, operational performance remains a major at municipalities. gas emissions, promote job creation through reskilling and challenge, with loadshedding set to continue, at least in While our longer term aspirations are driving towards stimulating economic growth. the short to medium term, unless we receive a substantial financial injection. This is largely due to the unreliable and new and improved infrastructure, operations and financial ageing generation plant, older stations reaching the end sustainability, the focus for the next two to three years of their life, a decrease in the capital expenditure budget, is on executing the turnaround plan and legal separation, environmental non-compliance and the loss of core, critical while positioning the organisation for the transition. and scarce skills. 12 | | 13 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance GOVERNANCE AND LEADERSHIP OF SUSTAINABLE DEVELOPMENT AND RELATED ISSUES continued Turnaround objectives Long-term objectives Industry Pursue financial and trends operational sustainability Decarbonisation Facilitate a future competitive Decentralisation energy industry Digitisation Just Energy Modernise the power system Our business risk management We intend to remain a key player in the electricity sector and Democratisation Transition Identification and assessment of risks a vital contributor to economic growth, job creation, socio- The Enterprise Risk and Resilience Department have economic development and the creation of a stable, equitable Strive for net zero Accelerate the repurposing established risk structures within each division, consisting of and cohesive South Africa. We contribute to the national emissions by 2050 long-term development vision guided by the NDP policy. and repowering of stations risk owners, risk coordinators and R&R practitioners. The risk owners are accountable for identifying, assessing and We are mandated by our Shareholder as an SOC to play a Actively pursue a share of managing the risk, which is integrated into the management developmental role, promoting transformation, sustainability, processes and is evident in decision-making processes and economic development and broad-based black economic renewable energy allocation development. We also understand that this mandate enables outcomes. Risks are classified from Priority I to Priority IV. our social licence to operate, enhancing our reputation with Implement an integrated Risk management in Eskom internal and external stakeholders. socio-economic strategy Although we are not certified to ISO 31000, we are aligned to the standard for risk management We apply an integrated Based on the outcomes of the Eskom Factor 2.0 report, approach to managing risks according to the IRM Framework our social impact is positive because of: and Standard. • our contribution to national transformation imperatives, such as employment equity, skills development, preferential Integration into Eskom overall risk management procurement, localisation, supplier development and Industry trends Digitisation Eskom’s R&R Policy, with its Enterprise R&R Management industrialisation; Our long-term strategy responds to major industry Digitisation and digitalisation have become more prevalent Plan and Eskom’s Risk Appetite and Tolerance Framework, • our impact on local communities through various trends that are shaping the future of the electricity to incorporate and coordinate distributed generation make up the key governing documents approved investments and by reducing externalities; and sector, which can be summarised around four key themes, efficiently and to improve the overall efficiency of the by the Eskom board. This standard aligns with the grid and operations across value chains. The industry is recommendations on good governance as contained in • our development of internal and external know-how. namely decarbonisation, decentralisation, digitisation and democratisation. experiencing an increase in digital electricity infrastructure King IV TM, which introduced the oversight of resilience investment and decreasing costs for grid technologies. (business continuity) as a board-level priority. All Priority Decarbonisation New data, generated globally, will lead to new ideas and has I and emerging risks are reported to Exco and the board, The industry is experiencing huge shifts towards more huge value creation potential. which provide oversight as recommended by King IV TM. carbon-efficient energy sources, resulting in global climate neutrality goals. This shift is driven by the continued Democratisation reduction in renewable energy technology costs and Future energy systems will incorporate many customer more stringent environmental policies aligned to the technologies through decentralised generation and Paris Agreement. decentralised ownership. Consumer choice of electricity source and supply will broaden. Artificial intelligence, Decentralisation blockchain, the Internet of Things and advanced analytics Distributed energy gives rise to new roles and participants start-ups are also disrupting the status quo and driving in the power market. The uptake of residential and innovation in this space. commercial rooftop photovoltaics (PV) has increased significantly in South Africa, particularly in light of new regulations permitting consumers to generate their own electricity for self-consumption. Decentralisation will require utility operations to be decentralised for local area control. 14 | | 15 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance GOVERNANCE AND LEADERSHIP OF SUSTAINABLE DEVELOPMENT AND RELATED ISSUES continued Integrating risk and resilience Strategic risks Risk appetite refers to the amount and type of risk Political instability materialised in July 2021 through Treating the following long-term risks are paramount for Enterprise risk management process an organisation is prepared to pursue or accept in waves of social unrest following the incarceration We have an established, integrated approach to managing Eskom’s future success: achieving its objectives, while risk tolerance refers to of former President Jacob Zuma. Infrastructure and risk and resilience across Eskom and its subsidiaries. • The financial sustainability of Eskom being compromised an organisation’s readiness to bear the risk after risk service delivery were impacted, predominantly in the The board is responsible for the governance and oversight due to declining sales, lack of cost-reflective tariffs, poor treatment. This risk appetite and tolerance process serves KwaZulu-Natal province. Eskom’s disaster management of risk in line with King IV TM, approving the risk appetite operational performance necessitating increased reliance as an early warning mechanism when adverse risk trends plans were implemented and working groups conducted and tolerance levels of the organisation as well as the on expensive open-cycle gas turbines (OCGTs) to avoid reach unacceptable limits. risk assessments and monitored risks relating to each Enterprise Risk and Resilience Management Policy and Plan. or minimise loadshedding, escalating arrear debt from area of our operations. Thankfully, no incidents were non-paying customers and high levels of borrowings As management is considered the first line of defence We employ one integrated risk management information reported at Eskom sites. Nevertheless, prolonged periods of unrest could have created generation supply • Deterioration in generating plant performance, loss of when treating risk, the responsibility to implement and system for all organisational risk management information, constraints due to the unreliability of generating plant. and inability to attract critical skills, capacity constraints execute effective risk and resilience management has been with accountable owners assigned to each risk. Key risk and inability to sustain and maintain transmission delegated to Exco by the Board. Exco and its Risk and indicators are in place for all risks, to ensure that they Given the violent nature of the unrest, the safety and network reliability, leading to potential system Sustainability Committee, together with ARC, review the are managed proactively and to understand the rate and security of our people and assets were considered constraints, the risk of a national blackout and a decline key priorities and deliverables of our Risk and Resilience direction in which they are moving. Our integrated risk paramount. Non-essential work was deferred and in stakeholder confidence Management Plan annually and monitor the organisation’s management process is outlined below. employees and contractors were not dispatched risk management performance in line with the Risk • Loss of licence to operate due to poor environmental to volatile areas without an integrated route risk performance, leading to plant shutdown and/or litigation Appetite and Tolerance Framework. assessment to prevent hijacking and other crime • Critical applications and various IT platforms being while responding to faults. At the height of the violent compromised due to attacks against network unrest, Eskom was in constant communication with the infrastructure and business systems, cyber-security COMMUNICATE AND CONSULT WITH STAKEHOLDERS National Joint Operational Centre to address security shortfalls or instability leading to severe business requirements, including the safe transportation of disruptions fuel. Contracted private security, SAPS and the South • Failure to transform and transition from a coal-based African National Defence Force were deployed to power system to a low-carbon and climate-resilient provide support at various Eskom sites in affected areas. Establish Identify Analyse Evaluate Treat company at an adequate rate, while complying with context risks risks risks risks policies and regulations Assessment of risk • Legal separation delays caused by a lack of alignment Integrating and effectively managing risk and resilience with external stakeholders, leading to reputational ensures that we are able to formulate and execute our damage and a decline in investor confidence strategy, operate our business with minimal disruption, MONITOR AND REVIEW proactively leverage opportunities as they arise and Our risk landscape is monitored, tracked and reported respond to and recover from disruptions should they across seven risk categories which address these long-term materialise. It is therefore important that risks that affect risks. These include finance, operations, environment and our strategic objectives are identified, managed effectively climate change, people culture and safety, information In November 2020, DPE published its Risk and Integrity National blackout and monitored continuously. technology, stakeholder management as well as governance Management Framework (RIMF), which is aimed at strengthening practices by SOCs in the areas of risk management, sustainability reporting, conflict of interest Severe supply constraint Nuclear incident ! and compliance. management, vetting of employees and general ethics Economic or financial collapse management. We have begun implementing our plan to Cyber-attack or critical systems failure address the requirements of the RIMF and thereby enhance National industrial action governance, risk monitoring and risk reporting. Drought and water-related disaster Enterprise resilience Environment or climate disaster We ensure compliance with the Disaster Management Solar or geomagnetic storm Act, 2002 and manage our response to major threats and Pandemic disruptions through our Enterprise Resilience Programme. Terrorism or political instability Technical and non-technical vulnerabilities are continuously reviewed, with simulation exercises conducted regularly to ensure that the organisation can continue to operate and is The worldwide COVID-19 pandemic, as well as severe able to recover within a reasonably short time in the event generation supply constraints, continued to affect of serious incidents or disasters. our operations during the year under review. Eskom’s Emergency Response Command Centre (ERCC) has Disaster risks are classified as those inherent to our handed over the response to the COVID-19 pandemic operations that, while having a relatively low likelihood to the Human Resources Tactical Command Centre to of materialising and adequate controls, would have a be integrated into Eskom’s normal business operations. significant consequence should they materialise. The However, we remain ready to activate the ERCC to following national disaster risks are managed through our respond to any of the national disaster risks should the Enterprise Resilience Programme, which caters for disaster need arise. management and emergency preparedness. Accountability for risk monitoring and response planning for each has been assigned to individual Exco members. 16 | | 17 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance GOVERNANCE AND LEADERSHIP OF SUSTAINABLE DEVELOPMENT AND RELATED ISSUES continued Risk appetite statement Related material Risk appetite statement Related material per risk category Risk summary matters High-level treatment options per risk category Risk summary matters High-level treatment options Finance Eskom’s liquidity in the short term and financial • Financial • Review of standard tariff plans, structures People culture and safety The loss and lack of skills is a root cause to Operational stability • COVID-19 protocols and rollout of the High appetite to reduce sustainability in the medium to long term sustainability (long and rates, as well as legal review of High appetite for a skilled many risks and will continue to impact Eskom’s Adequate skills and employee vaccine programme Eskom’s loss to less than are at risk due to a declining customer base, term) NERSA decisions workforce and a high- sustainability. In addition, a breakdown in high-performance • Safety awareness and education R5 billion by the end of escalating arrear municipal debt, high levels of • Government • Government support to bolster liquidity performance ethical culture relationship with labour and management ethical culture programmes FY2024 by increasing borrowings and debt servicing, unacceptable support and debt • The Eskom Compact signed by labour, affects productivity and creates a harmful • Staff engagements revenue, operating at levels of fraud and corruption, as well as structure High appetite for Zero working environment and in extreme cases, business and government at NEDLAC Harm among employees, • HR strategy implementation, including a an efficient cost base, regulatory uncertainty and the lack of cost- • Liquidity (short to could affect our ability to supply electricity improving debt collection reflective tariffs. These challenges may lead • Eskom’s turnaround plan, including cost contractors and members to customers. The physical and mental health skills audit medium term) and curtailment initiatives of the public by eliminating • Implementation of a hybrid work model and stabilising the balance to compromised operations, an inability to going concern and the safety of people are compromised by sheet. This will require maintain Eskom’s status as a going concern and • Weekly meetings with DPE and fatalities and reducing a failure to effectively implement occupational • Development of Eskom’s Culture support from government failure to meet our mandate • Operational National Treasury, focusing on liquidity injuries. Furthermore, there health and safety improvement initiatives Transformation Programme to deliver a and possible policy changes, stability management is no appetite to negatively high-performance ethical culture where necessary • Engagement with DPE and National affect human health, both • Mental health awareness and education Treasury on ways to address the debt physical and mental programmes – not only focused on burden educating about mental health, but also • Municipal debt management strategy to reduce the stigma and discrimination and escalation of arrear municipal debt that people with mental illness face in challenges to government communities and at work Operations The deterioration in operational performance • Liquidity (short to • Generation recovery plan Information technology The evolving IT environment requires Operational stability • Continual enforcement of security High appetite to meet is linked to Eskom’s constrained financial medium term) and • Koeberg long-term operation project to High appetite to proactively continuous investment to prevent cyber- Adequate skills and compliance on all applications, as well the country’s electricity position. This is exacerbated by ageing plant, going concern avoid shutdown in 2024 improve Eskom’s security intrusions affecting information and high-performance as collaboration between group IT and demand, prevent a national lack of adequate maintenance over many • Operational • Eskom’s turnaround plan, focused information technology operational technology. This is exacerbated ethical culture application vendors blackout and protect the years, running ageing plant at unacceptably stability on improving reliability, reducing direction, while enabling, by cyber-security shortfalls and the loss of • Addressing critical supplier disputes national grid using load high utilisation levels, coal quality challenges • Adequate skills and loadshedding and addressing design empowering and co-creating core, scarce and critical IT skills, which pose a • Development of new key risk indicators reduction and loadshedding at some stations, the loss of core, critical high-performance defects innovative technology risk to Eskom’s IT infrastructure, network and to enhance risk monitoring as control measures. This and scarce skills, procurement and National ethical culture solutions for Eskom’s business systems and may lead to compromised will be achieved by operating Treasury delays, as well as low staff morale. • Transmission sustainability improvement • Megawatt Park data centre replacement customers confidentiality and integrity of business plant efficiently and safely In addition, new plant not achieving desired plan project information through a skilled and levels of performance, due to a combination • Distribution energy losses initiatives competent workforce, while of plant design deficiencies and operational programme Stakeholder Failure to sufficiently assess and proactively Government support • Implementation of the stakeholder limiting environmental harm and maintenance inefficiencies, contribute to • Plans are being revised to respond to management respond to external stakeholder expectations and debt structure engagement plan, including continuous and obtaining support from supply constraints. The ageing national grid increasing network equipment crime High appetite to enhance impacts our financial and operational Governance, internal and external stakeholder government where required is also plagued with intolerable levels of theft • Improving consequence management to Eskom’s relationship with sustainability. In addition, the decline in socio- compliance and ethics engagements and vandalism of network equipment. Delays address poor performance stakeholders, including the economic conditions exacerbates associated • Various engagements with DPE and in connecting IPPs to the grid adds to the communities in which we community-related risks such as theft and National Treasury • Engagements to address National operate, government and vandalism of our infrastructure and potential unreliability of power supply. These factors Treasury delays in procurement processes • Implementation of Eskom’s reputation pose a fundamental risk of loadshedding to the shareholder, to achieve harm to members of the public exposed to our strategy protect the national grid from a national common value. This is products and infrastructure, leading to legal, blackout, leading to a further decline in underpinned by an effective, reputational and financial risks stakeholder confidence efficient, timeous and integrated communication Environment and Poor environmental performance and • Environmental • Extensive integrated work on a response plan and by managing climate change non-compliance with environmental performance and that considers emissions, cost, tariff, external risk factors that High appetite to comply regulations and legislation could lead to the compliance net present value, practicality, alternate have an impact on Eskom’s with environmental loss of Eskom’s licence to operate and plant • Climate change technology options and energy provision sustainability regulations and legislation, shutdown. Contributing to this risk is the lack and Just Energy • Securing funding for emission projects to prevent harm or damage of disciplined execution of operations as well Governance and Non-compliance with sections 50 and 51 of the Operational stability • Addressing vacancies on the board Transition and Eskom’s JET to the environment and as a lack of adequate project management compliance PFMA, 1999, has proven an ongoing challenge Environmental • Implementation of the Fraud Risk • Adequate skills and • Establishment of a Clean Energy No appetite for any non- and has led to qualified audit opinions for the performance and people living in communities and funding to implement initiatives aimed at Management Plan high-performance Department in Generation to oversee compliance with obligations past few years. This has been caused by a lack compliance close to Eskom’s plant ensuring environmental compliance and the ethical culture the development, design, construction and • Establishment of a dedicated task team reduction of our environmental footprint which may cause harm to of specialised oversight on key PFMA-related Governance, to address the recommendations of High appetite to transition execution of clean energy projects the organisation, including processes, which could lead to reputational compliance and ethics the Judicial Commission of Inquiry to a low-carbon and climate- Eskom’s failure to transform and transition non-compliance with damage, financial loss, fruitless and wasteful into Allegations of State Capture resilient company, while from a coal-based power system to a low- compulsory regulations expenditure and criminal prosecution of (Zondo Commission) addressing socio-economic carbon and climate-resilient company could and legislation, as well as directors voluntary commitments. • System improvements to enhance imperatives and complying lead to penalties from authorities and/or In addition, there is no This is exacerbated by fraud, corruption, controls, management of conflicts of with policies and regulations potential loss of Eskom’s social licence to appetite for unethical unethical behaviour, employees not complying interest and consequence management operate. This is driven by a lack of alignment on the net zero pathway, coupled with no conduct, fraud, corruption with policies and procedures, as well as • Reviews and investigations by A&F allocation by DMRE of low-carbon technology or criminal behaviour in regulatory and litigation challenges facing • Establishment of the PFMA loss control to Eskom, which may lead to failure to general Eskom function to execute and report on PFMA determine an optimal combination of clean compliance technologies to achieve emission reductions • Implementation of the procurement roadmap to improve commercial governance processes • Ethics risk assessment, as well as compulsory training on ethics, fraud awareness and PFMA requirements 18 | | 19 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance GOVERNANCE AND LEADERSHIP OF SUSTAINABLE DEVELOPMENT AND RELATED ISSUES continued Organisational risks At 31 March 2022, we had 33 Priority I risks (2021: 49), The following graphic indicates the total engagements per stakeholder group on material matters during 2021/22: Organisational risks are classified from Priority I risks at which include strategic risks and those affecting 60 the highest level to Priority IV risks at the lowest, based achievement of the shareholder compact, with their on the magnitude of the consequence and likelihood of the corresponding positions on the risk matrix shown below in 50 occurrence. All Priority 1 and emerging risks are reported terms of our Risk Appetite and Tolerance Framework. 40 quarterly to Exco and the board, which provide oversight as recommended by King IV TM. 30 Priority 1 level risks at March 2022 Priority 1 level risks at March 2021 20 6 6 4 2 6 6 4 9 12 10 5 6 5 8 5 0 Financial International Business Trade Unions Top customers Regulator Parliament Government Consequences Consequences 4 4 3 4 10 Q4 2021/22 Q3 2021/22 Q2 2021/22 Q1 2021/22 3 2 3 1 2 2 Material matters raised by stakeholders We are involved in enhancing stakeholder engagement to 1 1 These material impacts include those that have a direct bring visibility to strategic issues and thereby influence or indirect impact on our ability to create, preserve, or policy, legislative and regulatory reforms to enable Eskom’s A B C D E A B C D E erode environmental, social and economic value for us, strategic intent. Likelihood Likelihood our stakeholders, the environment and society at large. Stakeholders and Eskom shared the following touch points: Eskom’s response to strategic issues JET: Achieving Eskom’s Just Transition objectives requires Environmental matters profound changes in market outcomes and social and We have achieved an improvement in the number of The Russian invasion of Ukraine in February 2022 poses Key material topics: political relationships. We had various community Priority 1 risks as a result of several risk management a significant emerging risk to Eskom and the broader • Emissions from power stations roadshows, stakeholder forums and workshops to interventions implemented during the year. An “attacking energy sector. Eskom is likely to continue to be affected • Eskom air quality improvement plans empower the affected citizens and support social solidarity. the causes” initiative was introduced to address root by supply chain disruptions, rising fuel prices and declining Management roadshows were conducted to engage with • Birds and power lines causes and ensure alignment to risk controls. Furthermore, fuel availability, which will lead to increased costs amid displaced workers. Through COP26, the country was information captured in the risk management system was an already constrained financial position and further • Compliance with environmental legislation positioned as a preferred investment destination and, reviewed by divisional risk managers and independently generation supply constraints, thereby increasing the risk of Social matters in addition, secured funding for our Just Transition to reviewed by the Enterprise Risk Management Department. loadshedding. Key material topics: cleaner energy. A number of findings were identified and shared with risk To mitigate this risk, our financial plan for FY2023 has been • Ensuring women’s participation in the energy industry Loadshedding: The GCE held frequent media briefings to owners to address the shortcomings. Risk inquiries were also conducted on long outstanding Priority 1 risks to adjusted to accommodate potential fuel price fluctuations. • Ensuring a JET with inclusive growth update the public on the system’s status. Eskom launched improve management accountability. We will collaborate with suppliers and government to • Economic diversification the Power Alert campaign requesting voluntary residential ensure continued availability of critical resources. • Education and skills development demand reduction between evening peaks. In response to Regrettably, financial sustainability and liquidity risks the electricity shortage, we rolled out the “use electricity Our stakeholder engagement • Support for displaced workers continue to remain at the highest level of risk, namely 6E smartly” campaign. A public safety campaign warned and are a contributing factor to many other risks in the We believe that transparent reporting to the shareholder, Economic and financial matters electricity users against the impact of illegal connections. business. Treatment plans are monitored to ensure that our stakeholders and the broader public is key to restoring Key material topics: The media and other key stakeholder groups, were hosted they are achievable within specified timelines and to identify trust in Eskom. Advocacy and stakeholder engagement • Eskom’s escalating debt at power stations to explain the source of the problem and where escalation is required for risks that are outside of remain key enablers of our strategy and turnaround plan our initiatives to address the issue. • Eskom’s turnaround plan vs legal separation Eskom’s control. and, as such, our engagements with stakeholders are carefully planned in terms of the approach, scope and • Eskom’s procurement processes vs the Public Finance Eskom’s legal separation: Workstreams enable Emerging risks intended outcome. Management Act, 1999 collaboration with stakeholders to allow legal separation. Emerging risks are assessed on a regular basis through • Procurement and supply chain management We respond to policy maker concerns through advisory scanning our environment and identifying changes in Our stakeholder engagement plans are developed to • Generation capacity committees to address decision-making problems. our operating environment due to global and local address the challenges facing Eskom’s structural, financial Trade union concerns are addressed through the Eskom • Cable theft and vandalism developments, as well as changes reported in the business. and operational sustainability. Several strategic platforms Restructuring Consultative Forum. The identification of emerging risks is critical to ensure were created during this financial year to engage on issues • Infrastructure to support industrial diversification that these risks are managed proactively. As with existing of Eskom legal separation, JET and repurposing of power • Technological innovation and new sources of energy Eskom will engage consistently and collaboratively organisational risks, emerging risks are tracked and stations. These meetings were used to clarify Eskom’s • Funding plans and borrowing limits to address all the above stakeholder concerns. reported quarterly to Exco and the board. security of supply and decarbonisation value-proposition Most importantly, we strive to be responsible corporate and socio-economic contribution and trade-offs we Governance and leadership matters citizens, ethically and socially. need to balance. The success of Eskom’s turnaround plan Key material topics: will rely on Eskom’s commitment and the support of its • Leadership accountability and corruption challenges stakeholders to achieve a sustainable energy future for • Lack of oversight and consequence management South Africa. 20 | | 21 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance GOVERNANCE AND LEADERSHIP OF SUSTAINABLE DEVELOPMENT AND RELATED ISSUES continued ESKOM’S JUST ENERGY Improving the quality of relationships The key material topics are: TRANSITION As stated in our 2022 integrated report, we recognise the • Particulate and gaseous emissions importance of rebuilding and strengthening confidence • Ambient air quality and related air quality offsets and trust in Eskom by implementing our turnaround • Greenhouse Gases (GHG) and, in particular, carbon plan to ensure that we can deliver on our mandate dioxide emissions and the Roadmap for Eskom in a Reformed Electricity Supply Industry released by DPE in October 2019 • JET and the move away from coal (DPE’s Roadmap). As part of that process, we need the • Renewable energy continued support and commitment of our employees and • Water use all stakeholders as we transition towards a more desirable • Waste production 3 future for Eskom and the country. Improving the quality • Environmental incidents and compliance of our relationships with stakeholders will enable that WHAT YOU • Interaction between birds and power lines WILL FIND IN process. • Biodiversity and land use THIS SECTION Refer to the section on stakeholder engagement in our 2022 • Climate change integrated report for detailed information on stakeholder engagement Social material topics Eskom jet strategy 25 The key material topics are: Our material matters • Contributing to national transformation imperatives, JET as a thrust to Eskom’s strategy 25 The material topics addressed in this report are based including employment equity and contribution to The Eskom JET office achievements 26 on the GRI materiality principle. In line with the GRI local suppliers materiality principle, this sustainability report reflects the • Skills development broader lens of materiality, our organisation’s significant • Affecting local communities through various investments environmental, social and economic impacts that and reducing externalities (an externality is a positive substantively influence the assessments and decisions of or negative outcome of a given economic activity that our stakeholders. These material impacts include those that affects a third party who is not directly related to that have a direct or indirect impact on our ability to create, activity) preserve or erode environmental, social and economic value for us, our stakeholders, the environment and • Being a good employer society at large. This approach assists us in mitigating and • Safety improving our impact on society, the local economy and the • The future shutting down of coal-fired power stations environment. Economic sustainability topics Our material topics reported include: The key material topics are: • Driving the economy by providing electricity and Environmental and climate change material topics contributing to public finances and employment The environmental issues that we have reported on are based on material aspects to our stakeholders and us. • Loadshedding We have determined environmental materiality through • Electricity tariffs our environmental management system of quantifying the • Eskom’s debt significant impacts arising from the environmental aspect of our activities undertaken in the generation, transmission We know that our material impacts create risks and and distribution of electricity. We also consider the opportunities for us as a company. Our sustainability environmental legislative framework in which we operate, is, therefore, dependent on how well we manage these our environmental licences and the conditions of these material topics. For further information, refer to the as well as the expectations and requirements of our sections on environmental, climate change and social stakeholders. performance. 22 | | 23 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance ESKOM’S JUST ENERGY TRANSITION continued The prevailing industry trends towards decarbonisation, This funding facility was largely supported by the Eskom The Generation strategy integrates the power station shutdown and repurposing plan, coal strategy, emissions reduction decentralisation, digitisation and democratisation, which JET Strategy, which underpinned South Africa’s proposal planning and JET, which aligns with the 2035 Strategy. To support the development and accelerate additional capacity, Eskom are shaping the evolving electricity industry, have created to funding nations. Eskom is accelerating its project has been given support to make some of the usable vacant land around the power stations in Mpumalanga available to IPPs opportunities to leverage the country’s ageing fossil readiness to secure allocation of available JET funding, and customers planning to implement large-scale distribution-embedded resource (DER) projects. Apart from accelerating electricity generating infrastructure to transition to low- with the knowledge that the country’s access to further additional capacity, this will ensure the optimal usage of Eskom land at power stations, provide additional revenue through carbon technologies, enabling South Africa to support concessional funding to drive the transition hinges on the land leases and wheeling charges and reduce the impact and investment required for the grid. global agreements to redress the impact of climate change. reduction of fossil fuel generation through the effective While the Eskom turnaround plan remains the platform delivery of repowering, repurposing and utility-scale Eskom JET strategy for ensuring future business sustainability, Eskom is also greenfields projects, enabling a competitive power system, Job leveraging the JET to pivot towards its long-term strategic while embracing the shift in the role of the consumer to creation Local objectives. Pre-emptive action by Eskom and the South that of being a prosumer. Social impact manufacture JUST studies industrialisation African government, with inter-ministerial support before Doing better for people and the planet, COP26 (2021 United Nations Climate Change Conference To enable the government’s goals for the JET transaction, growing localisation and industrialisation held in Glasgow, Scotland), has culminated in South Africa Eskom has developed a prioritised list of projects and Repowering Cooperation securing concessional funding of ~USD8.5 billion from an will advocate for the timeous release of COP26 funding, agreements Repurposing JUST international consortium of countries to support its just based on Eskom’s readiness to execute JET projects across Accelerated Generation, Transmission and Distribution. renewables ENERGY transition plans. Cleaner, sustainable electricity provision Storage As Eskom, we have developed the JET strategy as part of Policy ESKOM JET options alignment ENABLERS ENERGY our long-term corporate plan to assist us in evolving into a STRATEGY Dual fuel/ midlife gas sustainable organisation. TRANSITION Microgrid, SSEG, EVs Transformational change of business models, Change TRANSITION management attracting green financing Grid upgrades, Eskom turnaround plan Transition utility smart grids • Strengthen balance sheet • Pursue net zero carbon Funding JET ENABLERS • Improve income Short emissions by 2050 while and financing options transaction Collaboration across constituencies term factoring in the need to Partnership statement options continuously nurture • Build high performing economic growth and culture create sustainable jobs • Improve operations Triple The first five years of the transition are deemed to be the Actively pursue a share of renewable energy bottom-line • Ensure effective and • Drive restructuring Long equitable access to most critical to enable the sustainable success of the just allocation sustainability term electricity by modernising transition of both Eskom and the country and to make Accelerating the transition to renewable energy will our power system a vital contribution to economic growth, job creation, improve the carbon profile of South African industries and socio-economic development and the creation of a stable, will retain competitiveness. Renewables will be enabled • Facilitate competitive Just Energy equitable and cohesive South Africa. Key focus areas in through their own build, partnerships and PPAs. Potential energy industry for the Transition the immediate and short term include the repurposing for local manufacture, optimisation regarding established future and repowering of stations, ensuring alignment with the special economic zones (SEZs) and renewable energy • Financially and government’s JET plans, actively pursuing renewable energy development zones (REDZs) will be leveraged. operationally stable allocations and implementing an integrated socio-economic strategy, as discussed below. Implement an integrated socio-economic strategy Some of the additional benefits of moving towards Just Energy Transition Accelerate the repurposing and repowering lower-carbon technologies are the potential to create • Accelerate the repurposing and repowering of stations of stations new and exciting jobs and a greater conservation of This initiative is aimed at repurposing and repowering biodiversity in South Africa. The increase in investment • Actively pursue a share of renewable energy allocation in line with DMRE’s 2019 IRP the power stations that will be shut down to enable and in cleaner technologies will open the door for social • Implement an integrated socio-economic strategy including reskilling optimise the just transition from coal to more carbon- upliftment through job creation, the creation of demand • Smart industrial policy can drive manufacturing investment and job creation efficient generation, solar PV, wind, battery storage and gas. along the supply chain and the development of previously These are some of the immediate technologies prioritised disadvantaged groups, including black- and women-owned for repowering initiatives, with the investigation of other companies, as well as promoting community-based technologies to be considered in the medium to longer ownership. The initial focus on re-industrialisation in the term. Komati Power Station will be Eskom’s flagship site to Mpumalanga region will contribute to this. demonstrate the repurposing and repowering ambitions for a JET. Eskom’s alignment with the National JET plans In driving initiatives within Eskom, alignment with national JET plans is critical. Collaboration and integration with the various government ministries, as well as the Presidential Climate Commission, will be driven on all matters involving the transition, including targets, funding mechanisms, localisation, industrialisation and socio-economic impacts. 24 | | 25 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance ESKOM’S JUST ENERGY TRANSITION continued JET as a thrust to Eskom’s strategy The Eskom JET office achievements Eskom’s long-term strategy positions the utility as an It has been a journey of just over 24 months since we enabler of a JET and a key role player in executing the started the JET work in earnest. In that time, through IRP2019. JET is about leveraging the opportunities marginal gains, Eskom JET efforts have become the talk of presented by the transition to a cleaner and greener the town even among the COP26 international delegates. energy future, while creating new job opportunities for The flow diagram below highlights some of the key those displaced by the replacement of coal with cleaner accomplishments during this period. technologies. It means a transition towards a low-carbon, climate-resilient economy and society in a manner that does not impede socio-economic development but results in an increase in sustainable jobs. It is not a sudden shift in economic activity but occurs in a phased manner over time. 1 2 Eskom was the first South African Eskom JET announced a goal of net zero business to establish a JET office to focus by 2050, with an increase in sustainable solely on the Just Energy Transition. jobs, again a first among South African This was lauded by national banks, businesses and the only company international funders and the government. worldwide to include a social component. 4 3 JET has also developed an Eskom Financing Facility The JET Strategy started as an “aspirational document” of Strawman, a first of its kind, which is being applauded what we would like to do to manage issues such as climate as “the best”, most comprehensive JET plan in the change, socio-economic challenges and an ageing coal-fired world. This is a direct quote from entities such as the fleet. Through the hard work of cross-divisional teams international World Bank Team, the UK government from EVERY line division and corporate functions, we have and the European Commission. formulated a comprehensive JET strategy. 8 9 5 6 7 JET’s extensive engagements with Eskom’s positions on the JET are now an integral part of the Extensive modelling work JET has completed comprehensive socio-economic A business case for business, civil society and the South African Just Transition position through the Presidential has been done to get us to a impact studies at Komati, Grootvlei and Hendrina. projects at the Komati government have led to an outpouring of Climate Commission and are firmly included in the DPE’s draft Just point where we can publicly Jet worked with the DFFE and the funders to Power Station did support for Eskom’s JET plan. Everyone Transition framework, firmly endorsed in the DFFE’s Nationally and confidently speak about secure grant funding to complete seven more of commence before COP26 is rooting for the success of this, Determined Contribution (submission to the Paris Agreement), the a decarbonised goal and the these studies. The studies have given the JET team in November 2021 and this effectively shouting down the naysayers. business view on Just Transition through the NBI and the BUSA JET policy infrastructure and excellent leverage with civil society, labour and reflects significant progress positions. financing support required NGOs, which see that Eskom is serious about the and commitment from for this goal. JUST part of the transition. Eskom. 10 11 JET has established a firm relationship JET has a terms of Agreement (ToR) with the DTIC with the Manufacturing Circle, which to advance collaboration with the local manufacturing is working hard to drive Eskom’s sector and a Memorandum of Understanding (MoJ) messages among its members. with Sasol to collaborate where it makes sense to do so. 12 13 14 It is rare to find any media on The economy of the COP26 may One of the most important the Just Transition in the country not be fully appreciated. It is accomplishments is the that does not make a mention not a conference but an actual awareness and excitement of Eskom’s plans in this regard. government-to-government that our Internal Change Most media articles, tweets negotiation process. Several Management Team has and reports quote the Eskom engagements with the COP26 produced. Employee morale has numbers and the Eskom plans. preparation teams in several been buoyed by what is seen as It was mentioned in the SONA countries reveal that they are all a future for our organisation. and repeated several times by working hard to make the Eskom Younger employees are also the President in different forums. JET work. This includes the UK abuzz with new ideas and excited COP president’s team. to see JET progress. 26 | | 27 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR ENVIRONMENTAL PERFORMANCE One of the critical actions contained in the NDP is that • A growing awareness amongst stakeholders, politicians, of interventions to ensure environmental sustainability. industry and the general public regarding the impact A commitment to achieving a minimum standard of living of climate change is expected to continue to drive acknowledges the need for a clean environment and momentum away from fossil fuels towards a low carbon building environmental sustainability and resilience. economy going forwards, increasing the risk of stranded carbon assets and increased scrutiny of individual energy Our approach to environmental management is as follows: infrastructure investment. 4 • Concerns about the health effects of air emissions are WHAT YOU likely to grow and regulations will become more stringent; • The electricity grid is increasingly threatened by extreme WILL FIND IN weather patterns. Resilience to the expected changes in thus, the probability and magnitude of impacts on the climate is likely to require new approaches to network THIS SECTION Eskom business are likely to increase. planning, risk analysis and contingency management and • Regulatory changes and increased scrutiny may lead innovation. to increased environmental enforcement and future • The continued rise in renewable energy, distributed Our environmental sustainability matters 30 environmental compliance costs could have a material generation, battery storage and overall lower growth in Environmental management approach 36 adverse effect on cash flows and operational effectiveness. the demand for energy have introduced new players to the and governance • Failure to comply with legal requirements could subject market. The road ahead for environmental 36 the business to substantial penalties and fines including • Government’s own national development plans aligned management criminal prosecution of individuals. with the United Nations’ 17 Sustainable Development • The World Bank also forecasts that water availability in Goals (SDGs) could lead to a need for more holistic cities could decline by as much as two thirds by 2050, as environmental and socio-economic approaches. a result of climate change and competition from energy generation and agriculture, thus the probability and We measure our environmental performance through magnitude of the impact of water management on financial several KPIs, including relative particulate emissions, results on the electricity utility is likely to increase. specific water consumption and the number of reported legal contravention incidents. Target Target Target Target Actual Actual Actual Measure and unit 2025 2023 2022 met? 2022 2021 2020 Relative particulate emissions, kg/MWh sent out SC 0.28 0.30 0.31 0.34 0.38 0.47 Specific water consumption, ℓ/kWh sent out SC, 1 1.25 1.39 1.33 1.45 1.42 1.42 Net raw water consumption, Mℓ n/a n/a n/a n/a 283 610 270 736 286 553 Red data bird mortalities (no targets set, 243 270 300 241 359 392 but tolerance levels to ensure continual improvement) Environmental legal contraventions (no targets set, 14 17 18 65 81 59 but tolerance levels to ensure continual improvement) Environmental legal contraventions reported as a result of significant failure of business systems, 1 1 1 7 7 5 number2 Carbon dioxide (CO2), Mt 3 n/a n/a n/a n/a 207.2 206.8 213.2 Sulphur dioxide (SO2),kt 3 n/a n/a n/a n/a 1 671 1 604 1 721 Nitrous oxide (N2O), t4 n/a n/a n/a n/a 1 561 1 527 2 826 Nitrogen oxide (NO x as NO2),kt4 n/a n/a n/a n/a 822 804 851 Particulate emissions,kt n/a n/a n/a n/a 66.65 71.35 94.92 1. Relative particulate emissions values and specific water consumption include Medupi Units 2, 3, 4, 5 and 6 and Kusile Units 1 and 2, but exclude units synchronised but not yet in commercial operation. Units are only included one year after achieving commercial operation. Therefore, Kusile Unit 3, as well as Medupi Unit 1, are still excluded. 2. Particulate emissions reported at certain coal-fired power stations, specifically Kendal and Kriel, exceeded the range of the station’s particulate emission monitors for periods during the year. This may have resulted in an understatement of particulate matter emissions. However, the extent of the understatement and its impact on the materiality of final figures cannot be quantified. 3. Specific cases of environmental legal contravention incidents that are considered to be of very high significance in terms of their impact on the environment and/or on Eskom in that they have a material business impact and illustrate a significant failure of business systems recorded as incidents as a result of a significant failure of business systems. 4. Emission figures are calculated based on coal characteristics and power station design parameters using coal analysis and coal burnt tonnages. Figures include coal-fired and gas turbine power stations and oil consumed during power station start-ups. For carbon dioxide emissions, it also includes the underground coal gasification plant. 5. N2O and NO x reported as NO2 are calculated using average station-specific emission factors (measured intermittently) and tonnages of coal burnt. 6. No target is set for net raw water consumption or emission volumes. Therefore, the target for these measures is shown as not applicable. 28 | | 29 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR ENVIRONMENTAL PERFORMANCE continued Over the last few years, our environmental performance (NEMA) requires the installation of technology to reduce was well outside the tolerance levels we set ourselves in emissions. We have implemented pollution reduction relation to relative particulate emissions, specific water technology since the early 1980s, reducing PM emissions use, environmental compliance and our impact on red data by more than 80%. bird species classified as “critically endangered” in South Africa, Lesotho and Eswatini. Eskom emission reduction history Air quality improvement programme: Relative particulate In ensuring our contribution to the NDP, our emission performance has improved since the previous environmental management practices are undertaken in financial year because of focused maintenance of generating pursuit of our value of Zero Harm, which is underpinned plant under the Generation recovery plan, particularly an by the framework of our environmental compliance improvement in the performance at Kendal Power Station. obligations set out in South African legislation and our Nonetheless, the year-end target was not achieved. The Shareholder Compact. Our environmental management most significant contribution to the poor performance practices are based on understanding the impact of came from Duvha, Grootvlei, Kendal, Lethabo, Matimba, our activities on the environment, our stakeholders’ Matla and Tutuka power stations because of ash plant expectations, setting environmental objectives and KPIs, challenges, electrostatic precipitator performance, fabric putting in place the controls and monitoring and reporting filter bag problems and SO3 plant failures. on performance. This allows us to respond to risks, incidents and shortcomings in our performance. We continue to drive the implementation of the previously committed Minimum Emission Standards (MES) projects. Our environmental sustainability matters Good progress has been made on PM projects and all of We have a responsibility to South Africa and all its citizens these projects will probably be completed by 2025. There and our stakeholders in South Africa and outside our is a risk that some Tutuka units with PM upgrades may be borders to ensure our operations are not materially completed after the legal requirement of 31 March 2025, contributing to an environment that is harmful to the health but work to minimise this risk is ongoing and alternatives and wellbeing of our society. Environmental duty of care are also being considered. regarding air quality, land use, biodiversity, water and waste We remain at risk of not meeting commitments made in and ash management ensures our operational sustainability. previous minimum emission postponement applications Our business of generation, transmission and distribution because of project delays and constraints on available funds. of electricity, as well as the construction activities Our strategy is to facilitate the development of a future we undertake, have an impact on the environment. electricity sector that is competitive and enabled by Accordingly, we are subject to several South African modern power system technologies as South Africa laws, regulations and licencing requirements relating strives to achieve net zero carbon emissions by 2050. to the environment. We are regulated by a number Our proposed JET is a pathway that would make it possible We received a decision on our application from DFFE in We submitted an appeal to the authorities for the eight of authorities, including the DFFE, the Department of to simultaneously spur economic growth, create sustainable November 2021. A positive postponement decision was stations with unfavourable decisions in December 2021, Water and Sanitation (DWS) and provincial and local jobs and put emissions into structural decline, thereby issued for power stations shutting down by 2030, namely which suspended the decision and allowed us to continue conservation and licencing authorities. These governmental ensuring an electricity supply that does not compromise Grootvlei, Arnot, Hendrina, Camden, Komati, Acacia to operate legally, while the Minister of DFFE considered authorities protect the public interest and the environment economic growth. and Port Rex. However, our request for postponements our motivation for a balanced and sustainable way forward. by regulating our material activities to ensure effective at Matla, Duvha, Matimba, Medupi and Lethabo were all environmental protection. MES for South Africa were published in 2013 and amended refused in their entirety by the National Air Quality Officer In March 2022, the Minister granted Eskom’s request in in 2018. They stipulate emission limits, which require (NAQO). Postponement applications for Majuba, Tutuka, the appeal to invoke a consultative process on our MES Zero Harm is one of our six values and is defined as the Eskom to reduce gaseous emissions of sulphur dioxide and Kendal and Kriel were partially approved. applications in accordance with the provisions of section 3A prevention of harm to people and the environment through nitrogen oxides as well as particulate emissions. These of the National Environmental Management Act, 1998, visible and felt leadership, including implementing effective aim to ensure reasonable measures are in place to prevent The impact of full compliance would necessitate the in which all appellants, stakeholders and interested and controls and practices. pollution and ecological degradation and secure ecologically expenditure of about R330 billion, which Eskom and South affected parties could participate. The appeal process sustainable development while promoting justifiable Africa simply cannot afford given Eskom’s financial position will be held in abeyance while the consultative process is Eskom’s environmental management policies, strategies and the required additional increase on the tariff. It would under way. and systems provide the framework for ensuring we have economic and social development. also result in upgrading stations that would shut down our plant and equipment correctly planned, built, operated In 2014 and again in 2019, we committed to retrofitting before or shortly after upgrades are completed. The impact Various emission abatement technologies have been and maintained. We set out standards and procedures that several power stations to reduce emissions under on installed capacity would be the immediate loss of around installed at our stations. These include: require compliance with applicable environmental laws, postponement applications granted by the then 16 000MW at Majuba, Kendal, Lethabo, Tutuka, Duvha, • Electrostatic precipitators (ESPs) at Duvha, Kendal, regulations and authorisations. Department of Environmental Affairs. Full compliance Matla and Kriel. A loss of around 32 000MW would be seen Komati, Kriel, Lethabo, Matimba, Matla and Tutuka Air emissions: Particulate and gaseous emissions with the new plant standards requires all coal-fired power by April 2025. This lack of capacity cannot practically be • SO3 flue gas conditioning plants to improve the efficacy The emissions from our coal-fired power stations are one stations to implement emission reduction technologies, provided for and would result in Stage 8 loadshedding being of ESPs at the stations mentioned before, except at of the most significant environmental aspects with which such as fabric filter plant (FFP), low NO x burners and/or required immediately, with Stage 15 loadshedding by 2025. Tutuka we are faced. The production of electricity by burning coal flue gas desulphurisation (FGD). • FFP at Arnot, Camden, Duvha, Grootvlei, Hendrina, produces four major pollutants in the form of emissions: Kusile, Majuba and Medupi We submitted postponement applications in terms of particulate matter (PM), carbon dioxide (CO2), sulphur the MES to DFFE during August 2020, with additional • Boilers with low NO x design at Kendal and Matimba dioxide (SO2) and nitrogen oxides (NO x). The National information submitted early in January 2021. • Low NO x burners at Camden, Kusile and Medupi Environmental Management: Air Quality Act, 2004, • FGD at Kusile 30 | | 31 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR ENVIRONMENTAL PERFORMANCE continued In line with our commitments, we are undertaking Air quality offset programme Gaseous emissions Eskom and other major users are collaborating as members additional emission reduction projects to reduce The amended Atmospheric Emissions Licences (AELs) for SO2 emission limits of the Strategic Water Partners Network and Mine Water PM emissions, as well as sulphur and nitrogen oxides. our coal-fired power plants require us to implement an Exceedances of daily SO2 limits were recorded by all Co-ordinating Body and other catchment forums to Progress during the year includes: offset programme to reduce PM pollution in the receiving coal-fired power stations on 132 days in total during the mitigate against shared risks in various catchments where • ESP refurbishments were completed at Kendal Units 5 environment adjacent to the power stations. The offset will year (2021: 279). Of those exceedances, 68 occurred at Eskom’s power stations are located. and 6 and the refurbishment of the remaining two units be carried out on specific low-income houses and includes Medupi, which is now operating under a monthly AEL limit the installation of ceilings to improve insulation as well as rather than a daily limit. Medupi exceeded the monthly Reducing water consumption has been scheduled electric and gas stoves to replace coal stoves. limit in April and May 2021. Matimba, which also operates South Africa is water-scarce because of low average rainfall • High-frequency power supply (HFPS) projects to further and Eskom accounts for about 2% of the country’s total reduce PM emissions were installed at Kendal Units 1, 5 under a monthly AEL limit, reported 15 exceedances on its Several contracts have been signed to date, including that units but did not exceed its monthly limit during the year. freshwater consumption annually. Eskom is classified as a and 6, Lethabo Units 2 and 3, Matla Unit 2 and Tutuka for the health study; planning, monitoring and verification; strategic water user and is responsible for managing water Unit 4 The poor SO2 emissions performance at these stations the Kwaza project management office; and Kwaza is because of the generally higher sulphur content of efficiently in the generation and distribution of electricity. • Contracts have been placed for the ESP refurbishment insulation. Progress to date is as follows: Waterberg coal. Generation’s strategic water management implementation and SO3 flue gas conditioning at Lethabo and planning is • Lead implementation at KwaZamokhule (near Hendrina under way NOx emission limits plan identifies seven objectives that are driven by the Power Station) that was started in April 2022 and • At Kriel, the HFPS upgrade contract was awarded in Exceedances of allowed daily NO x emissions were recorded generation of electricity: runs to June 2024 targets 3 450 households. All the December 2021 and engineering design is under way. components (stoves, heaters and ceilings) to begin by all coal-fired power stations on 225 days in total during • Secure water for electricity generation Commercial challenges have delayed the ESP and SO3 installations in homes in KwaZamokuhle have been the year (2021: 125). Of these, only 66 were true non- • Maintain high water use efficiently upgrades and the planning is being revised received compliances with the daily NO x limit, with the remainder • Maintain Zero Liquid Effluent Discharge (ZLED) • Work on the NO x projects at Majuba, Matla and associated with monitoring issues. Lethabo reported • Ensure legal compliance with water legislation • Lead implementation at Ezamokuhle (near Majuba Power Tutuka remain on hold, pending a reassessment of 38 exceedances during the year. The remainder of the Station) is planned to start in August 2022 and will run • Manage water supply activities to third parties the requirements for these projects considering exceedances were reported at Matla, Tutuka and Camden to August 2023 and will target 2 100 households • Implement the JET engagements with the authorities regarding the MES and were generally because of monitoring issues. • Sharpville Waste Management Solution (near Lethabo • Maintain high-level stakeholder engagement and advocacy applications Power Station) is planned to start in October 2022 and Water management • Elements of the technology approach for the PM will run to October 2024 and will target three-monthly Eskom’s power generation is predominantly coal-based We are implementing comprehensive water strategy and reduction at Tutuka have been reassessed given funding clean-ups for 18 months and relies on raw water from rivers and dams for the management plans across all coal-fired power stations to constraints. Revised commercial documentation is being power station processes, including cooling. Eskom’s reduce water consumption, ensure compliance with water prepared The health study undertaken by the Medical Research Energy Efficiency campaign and the programme have also use licences and maintain our assurance of water supply. • The World Bank has approved extending the loan Council (MRC) was closed by the end of March 2022 reduced Eskom’s energy output and thus its water usage. because of the impact of COVID-19 on the study. Feedback As a strategic water user, we are assured of water supply agreement for the Medupi SO2 reduction FGD project Going forward, Eskom’s water footprint will reduce even to the individuals surveyed regarding the results of the in the short to medium term. Nevertheless, given the vast until June 2027. A revised procurement strategy has further with the decommissioning of its coal fleet and health tests is being provided as required. amounts of water we consume, we continue to implement been developed and planning to meet the revised date diversification of its energy mix towards renewables. comprehensive strategic water implementation and is under way Eskom has also invested in dry cooling technology because management plans at all coal-fired power stations to reduce of the water scarcity situation in South Africa. Dry cooling water use and ensure compliance. Disappointingly, the uses approximately a tenth of the water consumption of a 0.75 implementation of the water strategy has not yet resulted wet-cooled power station. in a reduction in water usage at coal-fired power stations. 0.65 The Vaal River system, which feeds most of Eskom’s power Water performance remains a challenge. The deterioration 0.55 stations, is backed up by water transfers from Lesotho and is attributed to several inadequate water management KwaZulu-Natal. Eskom has signed some agreements with 0.45 practices at some power stations. Attempts to address this the DWS to develop and build water transfer infrastructure have yielded some positive results. 0.35 to ensure adequate and secure water supply to its power stations. Eskom manages the water supply operations with The increased energy sent out across the fleet also 0.25 its water suppliers daily to ensure continuous water supply affected the specific water usage. Apart from poor water to Eskom’s power stations. management practices, the poor technical performance of 0.15 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar coal-fired stations is another contributory factor, together Eskom works very closely with the DWS to ensure with ageing plant and long lead times to address some of 2021/2022 2022/2023 Tolerance level adherence to the DWS Annual Operating Analysis rules the root causes of high-water consumption and poor water that require inter-basin water transfers between the Relative PE performance (kg/MWh sent out) for the 2021 and 2022 financial years management practices. This goes against Eskom’s intent to catchments and dams to provide high assurance of water achieve ZLED and comply with legislation. supply to the power stations and to mitigate against drought and low dam levels. In hydrological terminology, There is an additional focus on power stations addressing Eskom receives its water at a 99.5% level of assurance to the root causes of high inflows and preventing water mitigate against curtailments during droughts. However, pollution in dams by improving water management a one in 200-year drought event will see Eskom being practices. Regrettably, focused monitoring of the effective curtailed. These criteria are used to model and manage implementation of water management action plans, inter-basin transfers of the water resources supplying both at the power station level and by the Generation Eskom. Environmental Compliance Steering Committee, has not yet led to a significant decrease in such events compared to the previous financial year. 32 | | 33 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR ENVIRONMENTAL PERFORMANCE continued Ash utilisation/beneficiation The criminal action against Eskom in terms of Kendal Power Ash produced from coal combustion by our power Station emissions, as reported in Eskom’s 2021 integrated stations is the largest source of waste from our report, is related to Kendal Power Station’s electrostatic operations. Our power stations produced 32.90Mt of ash precipitators and flue gas conditioning that was designed (2021: 30.84Mt), with Lethabo and Matimba the biggest to emit below the existing plant limit of 100mg/Nm3 for contributors. Ash sold from six stations in terms of our PM. During the strike action in 2018, the units at Kendal ash utilisation strategy reduced slightly to 2.8Mt for the continued to run to avoid system failure. However, year (2021: 3.1Mt), to be used to manufacture bricks, operating with ash backlogs significantly damaged some of cement, for soil amelioration, road construction and the units and affected their ability to operate within the mine backfilling. legal limits. There are instances when the power stations cannot comply with the emission limits set out in their (a) As noted earlier, the ash dam solution at Camden AELs. In such cases, load losses are taken and appropriate Power Station has been completed, with the station reporting mechanisms implemented in terms of the AELs. now ashing on the new ash dam. There have been no load losses because of ash dam constraints from In September 2019, Eskom was served notice of criminal December 2021. charges in respect of alleged contraventions of the National Environmental Management Act, 1998 and the 3.5 National Environmental Management: Air Quality Act at 3.0 Kendal Power Station. In November 2020, Eskom was issued a summons in connection with these charges and 2.5 was represented in court on 28 January 2021. The matter 2.0 was postponed to 20 August 2021. Eskom attended court on 20 August 2021. The matter was postponed to 1.5 14 January 2022. Eskom attended the Witbank Magistrate’s 1.60 1.0 Court, where the matter was set down for a pre-trial 1.55 hearing on 25 March 2022. One of the charges related 0.5 1.50 to “providing misleading information” was dropped. 0 1.45 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 The matter has been postponed to October 2022. /10 /11 /12 /13 /14 /16 /16 /17 /18 /19 /20 /21 /22 1.40 1.35 Total ash utilised during a 13-year period Environmental management systems 1.30 All our operational divisions (Generation, Transmission, Phasing out polychlorinated biphenyls (PCBs): Distribution and Group Capital) and our subsidiary 1.25 In terms of the Stockholm Convention, South Africa is (Eskom Rotek Industries (ERI)) have maintained 1.20 required to phase out PCB-contaminated equipment certification against the ISO 14001 environmental 1.15 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar by 2025. management system standard. 2021/2022 2022/2023 Tolerance level The DFFE published regulations in 2014 under section 44 of Assessing our environmental performance using several the National Environmental Management Act, 1998, to phase KPIs is an integral part of our environmental management Specific water use performance (ℓ/kWh sent out) for the 2021 and 2022 financial years out the use of PCB materials and contaminated materials (> system to drive continual improvement. Our KPIs include 49 ppm) by 2023. In 2015, Eskom submitted its PCB phase- air, water, waste and biodiversity management. Red data out plan to the DFFE. This plan was independently audited in bird mortalities are monitored, together with proactive and We monitor and report on our progress and performance 2020 and submitted to the DFFE to fulfil the requirements of reactive mitigation programmes to prevent mortalities. SDG 6.6 Water-related ecosystem: to the DWS on the following six SDG goals and targets: the regulations for the phase-out of PCBs. Eskom currently • Environmental and water authorisations has less than 10 pieces of PCB-contaminated equipment that Biodiversity SDG 6.3 Water quality and wastewater: • Biomonitoring programmes In consultation with national and provincial authorities, will be phased out by the end of 2023. • Water use licences/general authorisations for • Alien species eradication plan Eskom formally declared three nature reserves (Ingula various sites • Partnership with NGOs for the management of Environmental compliance Nature Reserve, Majuba Nature Reserve and Koeberg • Reuse and recycling of water on-site according to wetlands and wildlife Regrettably, 65 environmental legal contravention incidents Nature Reserve) through the National Environmental Eskom’s ZLED philosophy took place between April 2021 and the end of March 2022. Management: Protected Areas Act, 2003. The declaration • Reuse of mine water at some of the power stations Waste management (Lethabo and Tutuka) Most of these have occurred in the Generation Division of the nature reserves enables us to have the licence to We support the government’s commitment to waste and are mostly related to the uncontrolled release of operate our power generation activities within these • Water monitoring programme (surface and groundwater) management to protect human health and the environment contaminated water. Eskom’s focus remains on improving natural environmental areas where the power stations as defined in the National Environmental Management water management practices across the power stations have been constructed while protecting South Africa’s SDG 6.4.1 Water use efficiency: Act and the national waste management strategy, which • Monitoring of water use efficiency at the power to prevent legal contravention incidents because of biodiversity and ensuring the long-term security of our is a legislative requirement of the National Environmental non-compliance with the water use licences. country’s natural heritage. stations and facilities Management: Waste Act, 2008. • Reuse of mine water at some power stations The Generation Environmental Compliance Steering In May 2021, the Ingula Nature Reserve was included in • Reuse and recycling of water at the power stations Committee focuses on emission, water and ash disposal the International Ramsar Convention on Wetlands of • Water accounting programme at the power stations • Drought risk management plans facilities at the power stations. In addition, the Generation International Importance, an international treaty for the Division’s maintenance plan, which aims to improve the conservation and sustainable use of wetlands. performance of the plant, will, in turn, address many of the environmental challenges experienced regarding emissions and water. 34 | | 35 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR ENVIRONMENTAL PERFORMANCE continued OUR CLIMATE CHANGE Environmental management approach and difficulties in accessing financing and changes to the PERFORMANCE governance macro industry environment significantly altering the The environmental practices are supported by a team of energy supply industry (ESI). The JET presents a unique environmental professionals, governance committees, opportunity to pivot Eskom into a sustainable energy an environmental strategy and relevant environmental industry and significantly contribute to the achievement policies, procedures, standards and improvement plans. of South Africa’s revised Nationally Determined Contribution (NDC) emission target range of 350 to Our environmental management is undertaken in pursuit 420 megatons of carbon dioxide equivalent (MtCO2e) of our value of Zero Harm, which is underpinned by the in 2030. While the focus continues to be on fixing the 5 framework of our environmental compliance with South current business, our 2035 plan focuses on building on African legislation and what our stakeholders expect of us. the objectives that will prepare us for the future. The WHAT YOU Our environmental management is therefore based on our focus of this plan is to (i) facilitate a competitive future WILL FIND IN management systems and understanding of the impact of energy industry, (ii) modernise our power system and THIS SECTION our activities on the environment, what our stakeholders’ (iii) strive for net zero emissions by 2050 with an increase expectations are, setting environmental objectives and in sustainable jobs. This plan will prepare Eskom for National climate related targets 38 KPIs, putting in place the controls to monitor and report competition and will leverage technology and transition on performance and to respond to risks, incidents and responsibly while maintaining grid security. The road to Our climate change management roles 38 shortcomings in our performance. 2035, therefore, covers the shutting down of several coal- and responsibilities fired power stations by 2035, repurposing and repowering, Eskom climate related risks and 38 The road ahead for environmental delivery of clean generation projects, expansion of the opportunities management Transmission grid and the roll-out of micro grid solutions, Our climate-related metrics and targets 41 Eskom’s 2035 strategy encompasses the journey that among others. The aim is to achieve a reduction of Eskom intends to take in response to the changing energy 38% in carbon emissions by 2035 as well as estimated environment and the impact this has on a sustainable power reductions of (i) 45% sulphur dioxide, (ii) 55% nitrogen utility. This strategy is necessitated by the challenges that oxides and (iii) 77% PM. This will require Eskom to invest Eskom faces as a business as well as the global and local in grid infrastructure construction covering ~8 000km shifts occurring in the energy sector, particularly with transmission and ~7 500km of distribution lines to enable respect to environmental and climate change challenges, the connection of new clean generation capacity. 36 | | 37 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR CLIMATE CHANGE PERFORMANCE continued Climate change is one of the greatest challenges facing Prevention Plans that cover five years (currently 2021 to Table 1: Eskom’s climate-related risks humanity and it is a measurable global reality. The world 2026) and to report on their progress annually. Eskom Short to long Medium Medium is already beginning to experience increased temperatures previously participated in the DFFE’s voluntary carbon Timeframe (1–30 years) (3–7 years) (3–7 years) and observing more frequent and severe weather events. budget process and has applied for an extension of this until Climate change will endanger the livelihoods of hundreds of the mandatory budgets come into effect. Risk Inability to safeguard Eskom Failure to meet the 2030 JET targets Evolving climate change assets and operations against legislation millions of people around the world and impose increasing climate change costs on our societies if nothing is done. Our climate change management roles and responsibilities IRM priority Priority II Priority I Priority II South Africa is vulnerable to climate change, given that local rating The GCE is the highest management-level position warming is approximately twice the global rate because of Risk This risk refers to the inability Eskom’s failure to transform and transition from its coal-based This risk refers to the change responsible for relaying the main climate change its geographical location and socio-economic state. South description of divisions/subsidiaries power system to a lower-carbon and climate-resilient company and evolution of existing national decisions and guidelines set by the board to the rest of to implement divisional at an adequate rate while complying with various policies and legislation concerning energy Africa is committed to achieving the goals of the Paris the organisation. The Exco R&S Committee informs the adaptation plans to ensure regulations. transition and resilience, which Agreement, keeping global warming well below 2°C above GCE and Exco of the progress made in addressing the the resilience of Eskom assets may affect Eskom activities, pre-industrial levels by 2050 and pursuing efforts to limit and operations to extreme This risk refers to Eskom’s failure to meet the JET strategy 2030 including the Climate Change climate-related issues. The R&S Division comprises various the temperature increase to 1.5°C. As part of the Eskom weather events and/or goal. Bill, Carbon Tax Act, carbon departments, including the Climate Change and Sustainable long-term climate change. budget regulations, GHG JET Strategy, we have further committed to reaching net Development (CCSD) Department. CCSD is mandated to reporting regulations, etc. zero by 2050 while promoting net job creation. provide strategic direction and safeguard evolving climate Risk types Physical risk – Acute Transition risk – Technology and market Transition risk – Emerging National climate-related targets change compliance and sustainable development best considered regulation practices for Eskom to maintain an appropriate external Primary risk driver: Primary risk driver: Transitioning to lower emissions The Paris Agreement requires governments to put forward Increased severity and technology/Changing investor behaviour. Primary risk driver: Enhanced profile and its social licence to operate. 2030 pledges and targets to cut carbon emissions to limit frequency of extreme weather emissions-reporting obligations. warming. According to the 2018 IPCC Report, coal-fired CCSD is responsible for developing and ensuring the events such as cyclones and power generation needs to be reduced by 78% by 2030 floods. implementation of Eskom’s climate change-related to keep the 1.5°C goals within reach. Meeting the goals strategies and policies. CCSD has developed the Climate Financial 1. Increased direct costs: 1. Decreased access to capital: Access to funding and 1. Increase direct costs: set out in the Paris Climate Agreement is a race against Change Policy and the Eskom Integrated R&R Management impact Increase the associated export of goods and services by our customers are becoming The existing, predominantly time. Whether we succeed or fail depends on the speed costs to manage and increasingly restricted as investors call for a faster transition coal-based generation fleet Procedure for Adaptation to Climate Change. The R&R monitor adverse climatic away from fossil fuels. Several institutional investors have will increasingly be subject with which we phase out coal-fired power production Governance Committee reports key risks to the Exco events, such as floods and already withdrawn from financing new coal projects. A faster to various cost pressures worldwide. However, the speed at which coal-fired R&S Committee. The R&S Committee is responsible for heatwaves, appropriately. transition to low-carbon energy sources is required to reinstate driven by changes in climate production can be phased out in South Africa depends on supporting and monitoring priority climate change risks and Such events may result in and retain the eroding investor base. change legislation, which the rate at which replacement generation capacity can be damage to infrastructure will become more costly recommending them to Exco. and supply interruptions, 2. Increase debt: Combating climate change requires funding. over time. Several costs rolled out and all the financial, skill, regulatory and logistical all leading to an increase Our current financial position and the affordability of electricity within the existing fleet have support required to enable that. Otherwise, there will be Additional governance structures to manage climate in costs unless adequately to customers could pose a risk to the country’s ability to steadily escalated, including change risks include the Sustainable Development Advisory advance the transition to the extent and pace of change dire socio-economic consequences for the country. addressed. Over the longer required. Eskom will require financial capital through either coal costs, environmental Committee, the Environmental Steering Committee and term, failure to address debt funding or equity. Eskom initiatives will be achieved by abatement capex and Almost all countries have submitted their own NDCs to the Research, Testing and Development Department’s climate change will increase borrowing from the market, forming partnerships with the various taxes on fossil- the UNFCCC. South Africa’s first NDC included a target exposure and vulnerability. based generation, before Research Steering Committees. There are also divisional private sector and/or by green financing available to support factoring in externality range of between 398 and 614MtCO2e in 2025 and 2030, governance structures to identify, assess and manage risks, the roll-out of cleaner and greener electricity on a concessional basis. costs. A continued rise in as part of a “peak, plateau and decline” trajectory to 2050. including climate change-related risks. these costs will threaten the In September 2021, South Africa submitted its updated Access to funding from concessional financiers with specific long-term viability of coal mandates to drive climate change, which would substitute the NDC to the UNFCCC. The updated NDC target range Eskom climate-related risks and existing debt, can provide finance at lower rates over longer generation as renewables become cheaper. is between 398 and 510MtCO2e in 2025 and between 350 opportunities tenures to assist us in managing the debt burden and keep the and 420MtCO2e in 2030. This update conveys a significantly Climate-related risks and opportunities with high levels of lights on while we embark on our transition to cleaner sources more ambitious mitigation target that allows South Africa of power. uncertainty regarding their nature, timing, development to remain on a well below 2°C pathway and continue and deployment were identified for different time horizons. 3. Decreased revenues because of reduced demand for products and services: There will be a partial defection striving for a 1.5°C pathway. We have prioritised three key climate-related risks and of customers because of emerging technologies, including four opportunities, with the highest likelihood of impacting embedded generation, smart systems and competition, as To shift the country onto a low-carbon pathway, the Eskom’s business, strategy and financial planning. These customers will be allowed to procure directly from IPPs. National Treasury implemented a carbon tax in 2019 climate-related risks and opportunities are crucial to Strategic Facilitate the development Eskom has established a JET Office and a JET Strategy to provide Continued national engagements that will send an economy-wide price signal. The national our sustainability and receive consideration at Exco and response of adaptation plans for the a consolidated view of the approach that Eskom will take to on policy development. government further intends to implement mandatory board level. We have defined the risks according to the Eskom divisions (Distribution, transition from coal-fired power to more sustainable, lower- Engagements with the South carbon budgets with formal mitigation plans once the Transmission and Generation) emitting energy sources. African government through short term (1–3 years) from 2021 to 2023; medium term Climate Change Bill is enacted. In the interim, companies and subsidiaries (Eskom Rotek the Presidential Commission on (3–7 years) to 2030; and long term (7–30 years) to 2050. Industries (ERI)), guided by The JET Governance Structures, that is, JET Steering Committee, Climate Change allows Eskom to are required to develop and implement Pollution Eskom’s Integrated R&R Exco and board is to govern and support the management of the engage in Climate Change Policy. Management Procedure for JET initiatives. Risks Opportunities Adaptation to Climate Change Compliance-related engagement Planning. It includes tracking with DFFE enables Eskom to All time horizons: 1–30 years (2021–2050) Short term: 1–3 years (2021–2023) the implementation of the engage in national pollution 1. Inability to safeguard Eskom’s assets and operations against 1. Pursuit of partnerships and funding solutions adaptation plans into the prevention plans and carbon climate change 2. Large-scale rollout of cleaner and greener energy business. dioxide emissions-reporting compliance. Medium term: 3–7 years (2023–2030) Medium term: 3–7 years (2023–2030) 2. Failure to meet the 2030 JET targets 3. Repowering and repurposing existing coal sites Annual reporting of GHG 3. Evolving climate change legislation 4. Re-energising the manufacturing sector emissions to DFFE and annual internal CO2 reviews. 38 | | 39 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR CLIMATE CHANGE PERFORMANCE continued Table 2: Eskom’s climate-related opportunities Climate-related scenarios Annual internal carbon dioxide reviews Timeframe Short (<1–3 years) Short (<1–3 years) Medium (3–7 years) Medium (3–7 years) In the 2019 integrated report, two scenarios were considered, Eskom conducts annual carbon dioxide (CO2) reviews (ACRs) the “soft decarbonisation’’ scenario and the “ambitious at the power stations in the Generation business. Because Opportunities Pursuit of partnerships and The large-scale roll-out of Repowering and repurposing Re-energise the decarbonisation” scenario, based on domestic policy of COVID-19 lockdown restrictions on the movement of funding solutions cleaner and greener technologies existing coal sites manufacturing sector considerations such as South Africa’s NDC under the Paris persons, the last two ACRs have been conducted on 30% Opportunity Opportunity to grow Eskom’s Accelerated investment in new Repowering and repurposing The established Special Agreement, the Department of Mineral Resources and of the coal-fired fleet. These ACRs aim to improve the data description renewables presence through generation, especially clean and of power stations that will be Economic Development Energy’s 2019 Integrated Resource Plan (IRP) and what was integrity within Eskom’s power generation fleet, which is the pursuit of public-private renewable energy technologies, shut down. To accelerate the Zones (SEDZ) and REDZ partnerships (PPP) and the e.g., solar PV, energy storage closure of less efficient and are key to re-igniting envisaged beyond the 2019 IRP to 2050. used to calculate annual emissions. These reviews prepare opportunity to harness and microgrids. This is premised higher-emitting stations and industrialisation and the our power stations for external audits, especially on the CO2 technical and funding solutions on the fact that our country through the use of existing local manufacture of Subsequently, in 2021, Eskom’s Energy Planning and Market KPI. The externally audited emissions figures are reported that have become available is endowed with abundant land to support green energy renewable components. Development Department modelled an energy pathway up in Eskom’s integrated report and used for annual GHG in the context of the global renewable resources, providing generation, ancillary services to 2050 within a set of technical constraints. This pathway reporting to the DFFE. This ACR involves assessing the climate crisis. The South African an opportunity to create the and related community- is considered the optimal coal shutdown plan as part of the Just Transition deal struck at conditions under which a orientated projects. processes, systems and documentation (i.e. work instructions, COP26 is a testament to this. credible, green, reindustrialised emission reduction efforts for GHG and local air pollutants. policies and procedures) put in place and the ISO self- The Eskom JET Plan is at the electricity sector can help power The Eskom 2035 plan and preferred pathway have been assessment compliance to ensure the value chain of data flow heart of this deal. our economic recovery. presented to the board for consideration. has high integrity to yield calculations of higher accuracy. Opportunity Markets Energy source Resilience Markets The pathways and scenarios will be benchmarked against the classification Climate disclosures following four World Energy Outlook (WEO) 2021 modelled TCFD Financial impact 1. Increased access 1. Increased access to 1. Increased access to 1. Decrease in direct scenarios developed by the International Energy Agency (IEA): We have committed to disclose climate-related information to capital: Forming capital: The availability of capital: To fund the costs: Eskom will need partnerships and harnessing green financing to support repowering and repurposing to leverage PPP for skills • Announced Pledges Scenario (APS): This scenario defines in the 2019 integrated report. In 2020 and 2021, we available funding solutions the roll-out of cleaner and of the existing Eskom fleet, development (upskilling, a set of starting conditions, such as policies and targets disclosed climate-related information aligned with the TCFD (concessional or grant) to greener technologies is Eskom will require financial reskilling), job creation (including NDCs) and then sees where they lead based on recommendations. These voluntary disclosures focused on the enable the transition. indicative of global support capital through either debt and local manufacturing. energy system modelling, including market dynamics and qualitative aspects of governance, strategy and climate-related for decarbonisation and funding or equity. Eskom will enables us to add significant need to borrow from the technological progress risk management. We will, over time, incorporate more capacity to address our markets or leverage green • Stated Policies Scenario (STEPS): This scenario is like the APS granular, quantitative aspects of the TCFD into the reporting. generation shortfall at financing and/or PPP. We intend to expand and refine reporting and disclosure of and reflects current policies. The goal of this scenario is to affordable costs. assess what the world may look like in the future based on relevant climate-related information continuously to build an 2. Increased revenue improved understanding with stakeholders of its climate- resulting from increased policies that have been announced demand for products • Sustainable Development Scenario (SDS): This scenario related risks, opportunities and potential financial impacts. and services: Increase maps out a pathway consistent with the “well below 2ºC” Our goal is to embed climate change into overall business in customers demanding goal of the Paris Agreement and aims to meet stricter operations and activities. electricity generated from cleaner and greener sources. SDGs related to universal energy access (SDG 7), cleaner CDP air (SDG 3 and 9) and effective climate change action Since 2009, Eskom has voluntarily disclosed its climate Strategic Partnerships will entail a Eskom is exploring opportunities The repowering and Implement smart response meaningful contribution in an to leverage Eskom’s Renewable repurposing of power industrial policies that (SDG 13) change performance on the global platform called the CDP. unincorporated joint venture Business Unit (RBU) capabilities stations at the end of their can take advantage of • Net zero Emissions by 2050 Scenario (NTZ): This scenario The CDP is a “not-for-profit” charity that runs the global or the procurement of a plant at power stations where operational life including the the scale of construction extends the SDS to target net zero emissions. This disclosure system for investors, companies, cities, states via a financing arrangement environmental approvals are accelerated construction required. This will create scenario responds to the increasing number of countries and regions to manage their environmental impacts. that involves private participant already in place. of the renewable plant and new job opportunities funding and executing the build, cleaner-fuel technologies, will for manufacturing the and companies that have committed to reaching net backed by a power purchase and In parallel, RBU will explore enable the leveraging of existing components needed for zero emissions, with the aim of limiting the rise in global CDP provides the global financial sector with the most transfer agreement with Eskom. options to expand the Sere transmission infrastructure, renewable power generation temperatures to 1.5ºC by 2050 (with a 50% probability) complete source of self-reported corporate environmental Wind Farm site to help address networks and connections, equipment. data in a uniform and comparable manner that is fully aligned Collaboration and integration the dire need for additional to continue extending economic with the various government generating capacity. Also under Our climate-related metrics and targets with the TCFD. CDP requests over 7 000 of the world’s largest opportunities to communities. ministries and the Presidential consideration is the next phase Metrics companies to disclose their impact on and management of Climate Commission will be of renewable energy installations Eskom’s performance metrics include GHG emissions data climate change, water security and deforestation-related driven on all matters involving at other Eskom sites. issues annually. CDP takes this information in its annual the transition, including funding and compliance with legislation. Additional metrics include mechanisms. Research for innovations such Eskom Factor 1 (total energy sold) and Eskom Factor 2 reporting process and scores companies and cities based on as new storage options and the (total energy generated). their journey through disclosure and towards environmental hydrogen economy is currently leadership. The information is scrutinised by investors, under way, together with our GHG emissions continued focus on microgrids corporations and regulators in making informed decisions on for greater access to electricity. Eskom submits a GHG report to the DFFE following the investing in particular industries, sectors and countries. DFFE Technical Guidelines (for Scope 1 emissions) annually by 31 March. These are based on the 2006 Intergovernmental South Africa has traditionally used a sample of the top 100 Panel on Climate Change (IPCC) GHG Guidelines and 2019 companies by market capitalisation on the JSE 100 listed IPCC Refinements, a regulated reporting method in South shares, but heavy emitting companies not listed in the Africa. top 100 of the JSE have been included to assist in tracking performance against the Paris Agreement. As the biggest state-owned electricity utility in Africa, Eskom plays an important role in stimulating South Africa’s economy. Eskom’s most recent submission was in 2021. However, Eskom was not scored because the CDP questionnaire was submitted after the scoring due date. 40 | | 41 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR CLIMATE CHANGE PERFORMANCE continued OUR SOCIAL Carbon footprint covers a different scope and may utilise different PERFORMANCE Eskom conducted a carbon footprint study to calculate its assumptions to the regulatory reporting requirements. annual carbon footprint for 2021. A carbon footprint estimates Hence, these results are not directly comparable. the total GHG emissions caused by an organisation expressed in tons of carbon dioxide equivalent (tCO2e). This provides The carbon footprint study mainly relies on default emission insights into the sources and magnitude of our GHG emissions factors (EFs) and net calorific values (NCVs) from the 2006 and allows us to manage our GHG emissions better. IPCC Guidelines for National GHG Inventories and global warming potentials (GWP) from the Third Assessment The footprint was calculated in line with the globally Report (AR3) of the IPCC. For coal, an Eskom-specific annual recognised GHG Protocol: A Corporate Accounting and weighted average NCV of 0.01901 TJ/T fuel was used based Reporting Standard. Calculating our carbon footprint on actual measured NVC for 2021. The results of the 2021 carbon footprint study, compared to the 2020 and 2019 results, are presented in the table below: 6 2021 2020 2019 GHG GHG GHG WHAT YOU emissions emissions emissions WILL FIND IN Source (tCO2e) (tCO2e) (tCO2e) THIS SECTION Scope 1 Stationary combustion 207 230 321 201 260 329 212 192 077 Contributing to national transformation 44 Eskom fleet 78 138 37 810 81 797 imperatives Our people 45 Fugitive emissions 52 841 73 904 36 212 Skills development 45 Waste disposal 3 366 3 820 3 468 Skills development to support a Just 45 Non-combustion product use 3 12 9 Transition Being a good employer 46 Scope 2 Organisational effectiveness 47 Electricity and heat purchased Not applicable Not applicable Not applicable Eskom organisational culture and change 47 management Scope 3 Eskom Employee Value Proposition 48 Coal delivery to site 252 743 238 338 269 963 Eskom Employee Engagement Programme 49 Official mileage 6 003 6 669 12 627 Health and wellness 49 Procurement 49 Air travel 937 1 008 3 368 Capital expansion programme 50 Vehicle rental 1 216 2 225 1 903 Impacting local communities 50 Coal 56 Total 207 625 568 201 624 115 212 601 425 Circular economy – ash beneficiation 57 Socio-economic impact studies for the 58 The total GHG emissions for 2021 were 207 625 568 tCO2e. The CCSD Department is in the process of updating shutdown and repurposing of Eskom This is higher than the 2020 emissions of 201 624 115 tCO2e. the existing carbon footprint calculating tool, according power stations This indicates an increase in Eskom’s overall carbon footprint to last year’s recommendations, to calculate a separate attributable to the relaxation of various lockdown measures carbon footprint for each of the line divisions (Generation, implemented in response to the COVID-19 pandemic. Transmission, Distribution) as well as to include data sources Most of these emissions were caused by burning fossil fuels from rail transportation of coal (Scope 3). at power stations to generate electricity. Coal, diesel and kerosene consumption contributed to over 99.8% of our Climate change adaptation GHG emissions. In 2021, the CCSD Department revised the Climate Change Policy. The policy rules include the development A second significant source of GHG emissions was coal and implementation of adaptation plans by the electricity delivery to the site (252 743 tCO2e). These emissions mainly value chain and the incorporation of Eskom’s vulnerability to relate to the transportation of coal to power stations by the negative impacts of climate change (including extreme third-party trucks. This exceeded the reported “delivery to events, climate variability and long-term climate change) site” GHG emissions from 2020. The third highest source in the divisional adaptation plans and the integrated R&R of GHG emissions was the Eskom fleet (78 138 tCO2e). management processes. The ERI and Generation Division have This relates to the fuel consumed by the corporate fleet and developed adaptation plans and are currently implementing heavy trucks owned by Eskom as well as Eskom helicopters these plans. Transmission has incorporated climate change used for power line maintenance and inspections. There risks into its business operations and is reviewing its was an increase in Eskom travel because of the lifting of the adaptation plan. The Distribution Adaptation Plan is currently COVID-19 national travel restrictions. However, there was a under development. We also provide quarterly feedback decrease in SF6 emissions from Transmission and Distribution to DPE on our climate change adaptation progress and operations compared to 2020. participate in the Climate Change Adaptation Technical Working Group. 42 | | 43 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued Our people We are one of the largest employers in the country. Contributing to national transformation Summary imperatives Spend 2022 highlights We employed Our approach to transformation is entrenched into how 40 421 Skills development R0.86 billion we operate our business across the entire value chain, from workforce diversification to our suppliers. Wages and benefits: R33.0 billion We continue to make significant contributions to national Placed 1 971 procurement contracts worth R77.6 billion transformation imperatives, although there are areas for Procurement spend to B-BBEE compliant suppliers people at 31 March 2022 (2021: 42 749) R134.2 billion improvement. In terms of socio-economic development, amounted to our positive contributions related to employment creation, Local content contracted amounted to R67.4 billion We have achieved a notable reduction in our headcount employment equity, training and skills development, over recent years, mainly through natural attrition and, investment in local communities, enterprise and supplier Number of employees 40 421 to a lesser extent, voluntary separation packages, while development and being a good employer. COVID-responsive online employee assistance prioritising the retention of critical workforce segments. programmes (psychosocial services, awareness and Contributing most to the decline in the past year is a net Our current B-BBEE recognition level is 100%, resulting 7 217 education programmes and sports, recreation and reduction of 1 103 fixed-term contractors in ERI because in the B-BBEE Level 4 status. The new certificate is valid culture (SRC) activities) of contracts ending. from 29 October 2021 to 28 October 2022. The process is under way to appoint an advisory consultant to assist us in improving our B-BBEE status level to an even higher The employee benefit cost has remained stable at recognition status. Employees R33.0 billion (2021: R32.9 billion), constituting about 15% of operating Employment We aim to attract and retain skilled, high-performing employees and provide market-related remuneration, benefits and conditions of service within the guidelines set by the Shareholder. costs. This is the second largest component of operating • We contribute to job creation and reduce unemployment – our group headcount (including fixed-term contractors) was 40 421 on costs after primary energy (coal and IPP expenditure). 31 March 2022 (2021: 42 749) Salaries • Eskom’s salaries are competitive • Managerial employees receive a guaranteed package, including benefits such as medical aid, pension, dread disease cover and group life Skills development have transitioned to online platforms, leading to cost and death benefits We are an active participant and major partner in skills savings. There has been increased uptake in further study • Bargaining unit employees receive a basic salary, which includes a 13th cheque (referred to as an annual bonus) and other benefits, such development. We have been at the forefront of skills programmes, with employees obtaining qualifications related as pension, medical aid, death benefits, as well as housing, cell phone and car allowances, subject to qualifying criteria development since the advent of democracy to satisfy the to their line of work, thereby building skills and expanding the • Invested in our employee value proposition to promote retention of workers needs for the national future pipeline. Our programmes leadership potential within our workforce. Skills development • Invested R0.86 billion in skills development (2021: R0.82 billion) increase access to high-quality and relevant education, training Eskom invested R0.86 billion in training and skills Quality education • CSI initiatives on education through the Eskom Foundation, Generation and Transmission operational divisions and Group Capital and development opportunities in the form of technical and Division (GCD) development (2021: R0.82 billion). This represents an increase non-technical bursaries, apprenticeships, learnerships and of 4%. There are 843 employees enrolled for further studies Gender quality • We are committed to achieving gender representation and inclusivity across the business at senior and middle management levels workplace integration learning (WIL) to enable effective (2021: 303), of which 57% are women. We support a healthy • The Eskom Women Advancement Programme has developed Women Mentoring Circles and furthered Women in Operations participation in the economy by all South Africans and to and leaner pipeline of technical disciplines. In total, 1 238 Programmes reduce inequalities. learners (2021: 1 465) were in our pipeline, comprising Reduce inequalities • The Employee Relations Department ensures sound relations in the workplace by facilitating discussions between our leadership, We have become a host employer to provide WIL to learner 1 219 in technical disciplines (of whom 32% are artisans) our employees and organised labour and 29 in non-technical disciplines (representing 3.6% of artisans, technicians and engineers, benefitting young people • Our relationship with organised labour is well regulated, with agreements and formalised processes in place our headcount). across all demographics, with a particular focus on the • Our leaders are integral to supporting meaningful engagement through the Eskom Employee Engagement Programme previously disadvantaged sectors of our society. In partnership CSI and SED • Total CSI investment of R75.1 million benefitting 785 085 people (2021: R67.4 million benefitting 802 635 people) with the Energy and Water Sector Education and Training Skills development to support a • Provided basic services to communities near some of our power stations Authority (EWSETA), we have implemented a successful artisan Just Transition programme that has changed the lives of many young people. The changing world of work, JET and evolving energy industry require the reskilling and upskilling of our workforce. Retention and development of skills through a targeted In July 2021, we commenced with a skills audit to determine employee value proposition are essential to ensure that skills requirements, assess our current skills base and identify we have the required skills to meet the organisation’s training and development needs. The skills audit covers needs, especially considering operational challenges and all technical roles across Generation, Transmission and financial constraints. We invest extensively in developing our Distribution. Unfortunately, progress has been slow because employees through various skills programmes comprising of low participation by employees. Therefore, the audit has internal and external training interventions, further studies been extended into the coming year. The results of the skills and on-the-job training for our people. audit will aid the development of a fit-for-purpose skills strategy that drives the development of future-fit career Regrettably, external training opportunities remain paths, redeployment strategies and training interventions. limited because of our financial challenges. In response to the COVID-19 pandemic, many training interventions 44 | | 45 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued Being a good employer 80.1% from 81.7% over 2021/2022 as both targets were Organisational effectiveness The OE CoE annual Eskom Human Capital Organisational Over the years, we have made a strong contribution achieved. Gender equity at senior and middle management/ The Organisational Effectiveness Effectiveness (OE) Mandate Effectiveness Survey is a diagnostic tool that assesses to employment equity in South Africa from an overall professionally qualified levels have improved since this year. supports and enables the HR strategy and Eskom People Plan employee views on the three areas of organisational employment perspective and representation at various Both targets of 43.9% senior management and 40.3% middle by rebuilding/reinforcing relationships with Eskom Guardians, effectiveness that assist in shaping Eskom’s people management levels. We promote inclusivity and diversity management were also not achieved. driving pride, passion, sense of belonging and connectedness management strategies. The FY2021/22 Eskom Human Capital in terms of race, gender, culture and disability through to the business, while developing agility and resilience to OE Survey achieved a 15.1% response rate, with more than our employment equity plan, supporting the NDP goal At the end of March 2022, 87% of all Eskom employees 6 000 Guardians participating across Eskom. The index score were black, 34% (group) of the total were female and 32% cope with ongoing ambiguity, instability and change. The OE of transforming society and uniting the country. We strategic framework focuses on three multi-dimensional for the FY2021/22 Eskom Human Capital OE Survey is 3.57 have tailor-made programmes focused on improving black females. In total, 2.94% (group) were employees (2021). The quantitative and qualitative reports per division with disabilities, which is above the Eskom target of 2.5% and integrated areas, namely employee value proposition, our diversity status. One of these interventions is the are provided to all Exco members to enable the development and the market average of less than 1%. There continues employee engagement and organisational culture and change Eskom Women Advancement Programme (EWAP), which of specific action plans to close the gaps. promotes the participation of women in technical and to be a decline in persons with disabilities because of management, to embed this high-performance ethical culture in management positions. retirements during the stipulated period. However, Eskom has our business. Eskom organisational culture and change implemented strategies to increase the entry of persons with With the COVID-19 pandemic, the importance of OE CoE management Eskom is a signatory to the United Nations Women disabilities into the business. Our Employment Equity Plan employee engagement and change management support Empowerment Principles in South Africa and continues to Organisational culture is a system of shared assumptions, have engagements with UN Women to address Women 2020–2023 demonstrates Eskom’s commitment to comply during a period of adaptation, as well as business changes with values and beliefs, which governs how people behave in Empowerment Principle (WEP) analysis outcomes. Racial with legislative requirements, including developing persons many employees working from home, has been pivotal and organisations. These shared values strongly influence the equity at senior management improved from 73.7% to 76.6% from designated groups and driving equitable representation conducted through regular COVID-19-related messages from people in the organisation and dictate how they behave, and at middle management/professionally qualified levels across all occupational levels. the GCE, updates to the COVID-19 Leadership Engagement speak and perform their duties. Research also shows that Toolkit, greater awareness of the Eskom EVP Lockdown organisations that focus on nurturing their organisational Programme and a Toolkit for the Reintegration and Return culture tend to have better overall performance, thus giving EWAP case study to Work. There were 356 engagements with visually impaired them a competitive advantage. In 2020 the EWAP won the WEP award under the UN as one of the best programmes for gender equality. Eskom Guardians on the COVID-19 content and GCE Updates conducted in FY2021/22 by the OE CoE to ensure We recognise the ethical culture challenges we have faced in Programme detail inclusivity and provide support. pockets of the business culminating in fraud, theft, sabotage In August 2014, Eskom launched EWAP, with the aim to develop and advance women in the workplace. This is in line with and shoddy workmanship. In February 2022, we launched section 9 of the South African Constitution, which strives to eliminate gender and racial inequality. The Gender Empowerment Eskom’s Culture Transformation Programme as we embark and Equality Bill gives effect to section 9 of the Constitution to advance the empowerment of women and set expectations on on one of our most ambitious and challenging transformation the appointment and representation of women in decision-making positions. journeys. The EWAP is a cutting-edge initiative, which denounces the perceptions of and about women that perpetuates the misrepresentation of women in leadership and technical roles. The programme is committed to influencing and changing the gender landscape through goal-driven interventions. The programme further endeavours to increase the representivity and influence of women at all leadership levels. It further seeks to increase the number of women in technical roles and in nuclear and ensure that the working conditions are conducive. 1:1:6:10 The intervention and commitments are supported by the senior leaders in the organisation, including the board. To ensure success, a budget was allocated for the various initiatives led by women, for example, support for child home care centres. EWAP has five focus areas, as follows: • Implement a Fact-Based Gender Diversity Strategy: equalising 50% gender representation at all occupational levels by 2020 • Confront limiting attitudes towards women in the workplace: A gender equality framework was designed and addressed nine areas, including the eradication of barriers, targeting women for development and advancement, target setting at Exco level and correcting income differentials Eskom Culture • Address male privilege in the workplace and organisation sexism: Eskom is committed to zero tolerance to gender- Transformation Programme based violence and has adopted a multipronged approach and sustained engagement with stakeholders to deal with social norms about gender roles and the acceptance of violence • Create visible opportunities for the advancement of women and exposure 1 1 6 10 • The young women are given exposure through the Rising Stars Programme with full support from the programme Purpose Aspirational Culture Key levers of • Culture change for manager: Created awareness of sexual harassment and workplace bullying and reviewed policies and culture cornerstones organisational culture procedures to eradicate barriers to the advancement of women Powering growth High-performance Accountability Empowerment Technology Since the inception of EWAP, Eskom has made significant strides in advancing gender equality. Between 2018 and 2020, sustainably culture Operational excellence Governance and ethics Change agility 251 women were trained and mentored, while 686 were trained as coaches to support other women. There were 351 females People prioritisation Teamwork Celebration who participated in the middle management programme, representing 54% of participants. This is an enormous improvement looking at where the organisation comes from. Financial prudency Engagement Leadership Values-driven culture Wellness Strategy In 2018, Eskom only had 36% representation of women on an executive level, but in 2020 the number was more than 50%. Customer-centricity In pursuance of equality at work, the organisation further addressed gender pay disparities and the salary of 7 042 women were adjusted to match their counterparts’. Programme deliverables are monitored and reported quarterly and annually to various stakeholders, for example, Exco, the board and the Department of Employment and Labour. Progress is shared with all employees through internal and external communication platforms. 46 | | 47 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued Eskom Employee Engagement Programme Health and wellness The Eskom Culture Transformation Programme 1:1:6:10 consists of our culture cornerstones (as accountability, operational Employee engagement initiatives are in place to create a The health and wellness of our people are important to us. excellence, people prioritisation, financial prudency, a values-driven culture and customer-centricity). Eskom’s (one purpose, harmonious workplace, increase employee engagement levels We seek to improve work attendance and productivity as one aspirational culture, six culture cornerstone and 10 culture levers) is a key enabler for driving the Eskom turnaround plan and help employees feel a sense of connection and alignment well as the health and wellbeing of every employee through and long-term culture transformation enable a high-performance ethical culture and power growth sustainably over the next with the business and one another, thereby rebuilding the prevention of occupational diseases and injuries, early three to five years. The 1:1:6:10 Eskom Culture Transformation Programme key initiatives and milestones are also being tracked employee morale and creating a common vision as enablers detection of occupational and lifestyle diseases (such as as part of the Eskom turnaround plan and are currently being used by line divisions as they build their optimal “future-fit” towards driving a high-performance ethical culture. The hypertension, diabetes and HIV), medical surveillance and culture, improve productivity and drive business efficiencies. Eskom Employee Engagement Programme has 10 multi- fitness-for-duty assessments, as well as other wellness dimensional and integrated platforms, including leadership site programmes. We also run an employee assistance programme Divisions are implementing their divisional culture Eskom Employee Value Proposition visits, live events, interviews with executives, strategic forums, (EAP) of psychosocial services, including counselling, financial dashboards, culture KPIs and action plans to address the HC digital publications and surveys. wellness and trauma assistance. The SRC activities are a Business consists of employees, investors and customers, all OE survey divisional gaps. Divisional leadership teams are programme available to employees across the business and of whom are people. Part of understanding people, specifically We launched the Eskom Rising campaign, a series of webinars also expected to actively engage, establish commitment, drive it promotes team cohesion and is used as an EVP. SRC teams our employees, is understanding their current values and what where executives share details and progress on Eskom’s performance and obtain buy-in from their employees as we also compete with neighbouring companies, thus promoting they want from their organisation in return for their skills turnaround plan to improve employee understanding and thrive in an ever-changing energy landscape. partnerships. and experience. This can be defined as Eskom’s “EVP”. The awareness. Human Resources OE CoE has developed an Eskom Change Eskom EVP Programme (EVP) has implemented a number of The COVID-19 pandemic has impacted our normal method Management Strategy with three main objectives, that is, key enablers and initiatives across the business according to The Group Chief Executive Engagement (GCEE) platform of service delivery and therefore our wellness services alignment, engagement and buy-in and behaviour modification the Gartner Framework, which focuses on work, rewards, demonstrates leadership involvement and commitment have been conducted virtually rather than face to face, among key stakeholder groups, supported by five distinct organisation, opportunities and people. Our programmes to people. GCE Employee Engagement country-wide protecting our wellness resources and our employees. focus areas (change pillars) around which the relevant change include: sessions, including executive engagements, have seen The online programmes included psychosocial services, management initiatives are built as we drive successful over 13 000 Eskom Guardians engaged from January 2020 awareness and education programmes and SRC activities. • The Eskom Business Appreciation and Induction (BAI) to date. A total of 7 217 employees and dependents were reached completion of numerous strategic projects. Programme, developed in-house, consists of through external EAP services. Of the 7 217 participants Achievements 38 comprehensive virtual modules providing a multifaceted Executive engagements ensure that Eskom’s executive who utilised the service, 2 986 were individual cases yet interesting overview of our business. The programme leaders can engage directly with the GCE, fostering and 4 231 were participants reached through group • The Eskom Change Management Programme has been is well received by Eskom Guardians, as confirmed by the alignment and a sense of connection and inclusivity in the interventions, such as trauma interventions, family developed on the Eskom SharePoint technology platform number of registered employees and the positive feedback organisational strategic direction. counselling, couples counselling and child counselling. to enable and empower Eskom Guardians with the received from participants’ parents published in the Eskom The Advice for André engagement platform and mobile Mental health and stress-related problems, which increased required change management skills to build agility and Guardian application, which was designed and developed in-house, during the COVID-19 pandemic, are receiving attention resilience. There have been over 14 430 Eskom employee • The Eskom Nkanyezi Programme focuses on helping has received an overwhelmingly positive response from through awareness and education programmes. “hits” on the programme’s SharePoint site and many employees to save money, as well as enhancing employee employees are actively using the 938 resources available experience through the implementation of value-added employees to engage with the GCE via this platform and services, discounts on products and services, marketing share their innovative ideas on how to improve Eskom. From the start of the COVID-19 pandemic to on this site exhibitions promoting the 42 active partners on the 21 June 2022, Eskom has recorded 11 626 positive cases, • Over 43 virtual and face-to-face change management comprising 9 535 employees and 2 091 contractors, workshops have been conducted across the country and programme, through our SharePoint and mobile platforms, Internal communication and engagement initiatives keep as well as free partner webinars upskilling employees on with 11 435 recoveries. Sadly, 161 employees and more than 762 HR Business Partners have been fully Guardians informed and help them to feel more connected to key topics such as finance, investment, etc 24 contractors have succumbed to the disease. capacitated to support their line divisions the business and one another. • The Attitude of Gratitude (AoG) Initiative has been All affected employees and their families are offered • There are seven Eskom-wide strategic projects that have psychosocial support. designed to create awareness and appreciation among The internal digital GCE publication, The Guardian, features clear change management and communication strategy Eskom Guardians of the desired benefits, opportunities and key strategic business updates and inspiring stories from and plans within which various initiatives are being rewards to which those employees currently have access. implemented across the business, celebrates and recognises employees who Procurement Close to 30 benefits have been promoted across the have achieved excellence and promotes leadership visibility. We support economic development and supplier business and a new AoG website has developed housing Over 400 Guardians have been profiled through these transformation to foster the creation of a sustainable In FY2021/22, we established an Eskom Change Agent articles and podcasts relating to gratitude/appreciation, publications to date. GCE Short Pictorial Communiques and economy advancing the NDP goals. We also support the Network (CAN), which serves as a strong community ultimately assisting Eskom in embedding a culture of Pop-ups are released to the business in the spirit of employing performance and accountability government’s commitment to local development programmes, of practice across the business that aims to drive a variety of communication and engagement mechanisms. including developing local industries, thereby enhancing awareness, understanding and engagement among • Our HR Care Kit on the intranet continues to be updated Over 170 GCE communiques have been released to the local production and manufacturing as prescribed in the Eskom employees and key stakeholders. Eskom CAN with the latest developments affecting employees on the business from January 2020. Eskom GCE Ambassador profiles Preferential Procurement Policy Regulations (PPPR) of 2017. is critical to supporting various culture transformation HR front highlight the great work of Guardians in the business and We leverage our relatively large procurement spend to initiatives and Eskom-wide strategic projects, such as • The Eskom EVP Lockdown Programme has maintained elevate the importance of acknowledgement and recognition. stimulate black economic empowerment, support localisation the Eskom turnaround plan, Operational Excellence, the quality standard of ensuring that the site continues In light of the importance of acknowledgement, the Honouring and promote local content by emphasising local supply JET and Future World of Work. to house more than 1 000 resources/tips, which offer Organisational Loyalty Journal recognises Guardians with employees and their families psychosocial support across sectors important to our industry. 45 years and above in Eskom’s service. The Eskom CAN currently consists of more than 200 fully eight key holistic categories The ramping down of the capital expansion projects appointed Change Champions and Change Agents from • Eskom provides employees with employment and hybrid within the new build programme has significantly reduced different line divisions and this network is growing rapidly. work practices are now available to employees allowing for Days of national importance are commemorated through opportunities to contribute toward industrial development. There have been over six CAN engagements and over further flexibility and work-life balance various employee engagement initiatives, including the Consequently, the Shareholder granted Eskom permission to 12 Change Champion engagements. The Eskom Change Mandela Month journals, the annual Eskom Heritage Recipe • Eskom’s health, retirement and leave benefits are implement the National Industrial Participation Programme Champions have been instrumental in supporting and still considered above average with regard to market Book and the South African Splendour photo book. (NIPP) from August 2020 going forward. guiding their line divisions when developing their culture comparisons. Employees continue to receive monetary dashboards and KPIs. rewards in the form of benefits such as their 13th cheque, production bonus and Eskom Managers Awards 48 | | 49 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued Total measured procurement spend (TMPS) for the group on New Eskom Corporate Social Responsibility Our flagship projects are discussed below: all active contracts amounted to R176.8 billion for the year, NEW BUILD Strategy and Policy of which 75.89% was spent with B-BBEE compliant suppliers In 2022, we awarded 129 contracts worth Eskom is revising its CSI Policy to a more focused and Eskom Business Investment Competition (2021: R155.6 billion and 64.51%). Procurement spend with R7.6 billion integrated Corporate Social Responsibility (CSR). The CSR The Eskom Business Investment Competition (BIC) rewards black-owned and black youth-owned suppliers improved to Local content of R4.4 billion Strategy aims to encapsulate the understanding of the needs outstanding work in entrepreneurship and encourages SMEs 47.08% (2021: 34.60%) and 5.40% (2021: 3.46%) of TMPS of communities within the South African context unrelated to from previously disadvantaged backgrounds to thrive and In 2021, we awarded 83 contracts worth lead the country’s economic development. The competition respectively, exceeding their targets of 40% and 2%. the six CSR focus areas, that is: R6.9 billion is open to South African, black-owned and registered SMEs Regrettably, procurement spend targets in the remaining Local content of R3.9 billion 1. Skills and capability building that have been operating for more than two years in several categories were not met due to previously compliant 2. Enterprise and supplier development sectors, such as agriculture and Agri processing, engineering suppliers not renewing their B-BBEE certificates, as well Demobilisation has a negative impact on the economy, 3. Localisation and construction, manufacturing and trade and services. as IPP contracts negotiated by DMRE. If IPP expenditure the life and people in the area. Demobilised contractors Total spent on prizes was R1.3 million for FY2021/22, the were excluded from TMPS, preferential procurement would 4. Legacy and community outreach projects competition supports enterprises in taking their operations are offered life skills training to assist them with getting have improved to approximately 92%, against a target of new opportunities. We mitigate the impact of job losses by 5. Manufacturing to the next level. Over and above the financial rewards, 75%. We are seeking to resolve the classification of IPP collaborating with local and provincial government structures 6. Industrialisation business skills and training are provided to contribute expenditure with DMRE and the Department of Trade, to address some of the challenges faced by local communities towards the sustainability of these small businesses. Industry and Competition given the planned growth of the Repurposing and repowering of old power surrounding our new build projects. Infrastructure projects RE-IPP Programme. stations, JET The Eskom Development Foundation has, in line with the Developing infrastructure, empowering communities through Impacting local communities Eskom’s latest B-BBEE certificate was issued in October CSR Strategy, made a budget provision of R2.1 million to sustainable livelihoods and improving quality of life for We engage in CSI and SED projects with our contractors communities is one of Eskom Foundation key priorities. Thus, 2021, improving our B-BBEE recognition level to 100% for social upliftment and community development to SED to enable the Eskom repurposing and repowering of and our B-BBEE status from level 8 to level 4. old power stations, JET. The above will be ringfenced for by upgrading of Rural Schools, based on needs assessments empower local communities and foster relationships with our and could include the addition/ refurbishment of classrooms, stakeholders. We also invest in providing basic services within the incubation of agricultural enterprises and activities considered as crucial contributors to empowering rural administration blocks, ablution facilities, etc. An amount We aim to support sustainable supplier development, these communities, such as electricity, potable water and of R4.6 million has been spent in FY2021/22 towards the localisation and industrialisation by leveraging our waste removal services around some of the power stations, communities and alleviating social ills, employment creation and improved food security. completion of Mokasa Primary School in Taung, North West procurement spend to deliver on the government’s policies which support livelihoods in these communities. province benefiting 491 learners and educators. Construction and transformation objectives. commenced in February 2021 and completed in March 2022. Our contractors make CSI contributions in the areas where Our contribution to nation-building includes supplier they support the capital expansion programme and other The scope of work included construction of an administration development programmes agreed upon with the Shareholder. projects. The CSI programmes focused on education and block, two classrooms, a septic tank and repairs to old Targets for enterprise and supplier development and the social upliftment, with health interventions as the priority classrooms. NIPP were achieved for the year. needs in the country. Capital expansion programme The Eskom Foundation implements CSI programmes to Our capital expansion programme comprises the Medupi and address developmental needs across the country. The flagship Kusile new build sites and large Transmission projects is one and national CSI programmes contribute towards uplifting of our greatest contributors to SED. These projects support communities and creating jobs through enterprise the NDP goals through procurement, job creation, skills development initiatives. The Eskom Foundation focuses on development and CSI. improving quality of life of communities, enhancing Eskom’s reputation and brand, creating an enabling environment for fulfilling Eskom business imperatives and maximising the impact of Eskom’s socio-economic contribution. The Foundation is a non-profit company and is a wholly- owned subsidiary of and receives its mandate from, Eskom. A CSI investment of R75.1 million was made by the Eskom Foundation, affecting 785 085 beneficiaries (2021: R67.4 million and 802 635 beneficiaries). The decrease in the investment is because of limitations posed by COVID-19 restrictions. Completed septic tank Repairs to old classrooms 50 | | 51 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued 2022 Expo for Young Scientists COVID-19 response The Expo for Young Scientists (EEYS) is Eskom’s flagship The impact of COVID-19 on the economy and our lives sponsorship aligned to Eskom’s strategic objective of will be felt for many years to come. The global response supporting the government’s NDP 2030 with an emphasis to COVID-19 – both economically and to the pandemic of developing previously disadvantaged individuals (PDI) and – has shown a multitude of different approaches. We female learners in the scarce skills of Science, Technology, have developed a COVID-responsive CSI programme Engineering and Mathematics (STEM). that implements projects in communities with needs. Unfortunately, COVID-19 restrictions and financial EEYS provides a unique platform and academic support to constraints prevented us from executing all our planned school learners with an interest in STEM from Grade 6 to initiatives. The Foundation is focusing its efforts on Grade 12. Learners conduct scientific research and present optimising the value, impact and sustainability of its their findings as a project in different internationally programmes given prevailing funding constraints. New Administration block and two new classrooms benchmarked categories. The EEYS currently operates in 35 regions in all nine provinces of South Africa and has an international presence. Expenditure for FY2021/22 was R12.3 million. Department of Education Free State Maths Competition (by Kagiso Trust) Total project cost for FY2021/22 was The Maths and Science programme is one of our key priorities to support the country’s developmental agendas, where Eskom aims to find long-term sustainable solutions to South Africa’s many challenges by supporting government’s focus on skills development, training and education in order to provide young R1.5 million people with the skills to help South Africa prosper. The main objectives of the competition, among others, are to: The Free State Maths and Science high school competition is • Generate an interest in Mathematics one of the Eskom’s Maths and Science programmes. It focuses • Promote problem-solving skills in Mathematics on promoting the Maths and Science to the youth to cultivate • Emphasise the importance of reading in Maths activities the scarce skills in South Africa. • Provide a diagnostic tool to enable teachers to identify An impressive 3 250 learners from Grade 8 to 11 participated learners’ misconceptions in the competition, with 18 learners ultimately making it • Increase learner participation and performance to the finals. Winners received coveted prizes, including • Elevate Free State Mathematics standards in schools to be textbooks for their schools, electronic tablets, vouchers, in line with international standards power banks, USB flash drives, cash vouchers, a trip to Cape Town and a laptop for the overall winner. 52 | | 53 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued CSI in ERI Thakhu Shoes Project in Medupi Power Station area ERI uses CSI as a stakeholder management tool to promote stability in hotspot areas and as a goodwill tool to contribute to case study SED within the areas where it is operational. In FY2021/22, ERI reconstituted the ERI Donations Committee by appointing new The Thakhu Trading School project is to assist schools in committee members and approving a new Committee Terms of Reference, which was finalised in September 2021. Lephalale Local Municipality by donating school shoes to learners from disadvantaged backgrounds. The Thakhu Ariadne-Venus 400 kV food donations Project aims to support a local school in Lephalale. The A CSI handover of 600 food parcels took place in February 2022 following the unrest and looting in the province. project was conceived in December 2021 and school The Ariadne-Venus 400 kV transmission line project has operations at Estcourt (Inkosi Langalibalele Local Municipality), visits were conducted in January 2021 to request lists of Howick (Umgeni Local Municipality) and Inadi (Msunduzi Local Municipality) within KwaZulu-Natal. To assist with disaster learners in need. Learners who live in dire poverty were relief after the unrest and looting in the province, as well as to aid site stability on the Ariadne-Venus project ERI donated identified by their teachers and the information was sent food parcels to female-headed households and crafters identified as affected, at the request of the Msunduzi Tourism to Thakhu Trading. On Thursday 10 March 2022, Thakhu Council, supported by the National African Federated Chamber of Commerce and Industry (NAFCOC). Trading donated 103 pairs of shoes to seven schools, four of them in Marapong Village and the other three schools ERI senior management and executives, together with Eskom Power Delivery Projects senior management and executives, in Shongoane – Ditheku and Nelsonskop Primary School, on behalf of the ERI Construction Services Ariadne-Venus 400 kV transmission line project, gathered in the Msunduzi City Hall, Nelsonkop Primary School Phegelelo and Tielelo Secondary Schools in Marapong together with the Mayor and Deputy Mayor of Msunduzi and honourable COGTA delegates who were led by COGTA MEC, Village, then Tshukhudu Primary School in Shogoane 3, Sipho Hlomuka. The donation handover was led by the Msunduzi Deputy Mayor, the MEC of COGTA, Sipho Hlomuka, as well Morakolo Secondary School and Ramojapudi School, both as Simphiwe Makhathini from ERI and Matome Makwela from Eskom. in Shogoane 2. Families were overcome tearfully expressed their gratitude to ERI and Eskom for the donation that will go a long way towards The deputy principal of Tshukudu Primary School, Mr helping their families. Elias Moatshe, thanked the company and their generous efforts in shaping the lives of their learners. He said the school has around 925 learners and many struggle to afford uniforms, which affects their concentration in class. “Everyone who finds himself/herself in an unfortunate situation will not feel well. A child struggling to keep up with the required uniform will not be at his/her best in class because their mind will be occupied by that. We are very thankful for this and hope this kind act does not stop with us.” Phegelelo Secondary School Some of the learners who received the shoes thanked Thakhu Trading and said their generosity would make a Offloading the food parcel content to Everyone in attendance celebrating positive difference in their lives. distribute to the community the donation One of the young learners at Tshukudu said he always wore small-size shoes that hurt his feet when he went to school and the donation of shoes means the end of days of painful feet. The student’s message was that it was not by choice that they found themselves where they are. Parents and guardians were also encouraged to take care of the donated shoes and further inspire their children to respect the shoes. It is noted that most of the learners in the villages live in abject poverty and need immediate attention. Ramojapudi Primary School Everyone in attendance celebrating the donation 54 | | 55 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued Coal Implementing coal haulage and the road-to-rail Circular Economy – Ash beneficiation Our off-takers/contractors are contracted on SD&L to We play a major role in the coal industry because of our large migration plan Our 15 coal-fired power stations generate about 33 million ensure that the communities around their contracted power offtake, accounting for ~50% of total national coal production. tons of ash per year, of which 8.8 tons are available for station are positively impacted. A total of 247 are employed Our rail delivery of coal is through Transnet Freight Rail, (34% women and 22% youth). The off-takers at Kendal, Matla In the 2022 financial year, about 109 million tons of coal were beneficiation. We beneficiate the bottom, fly and clinker utilising B-BBEE-compliant loading sidings and offloading and Kriel Power Stations have also undertaken a CSI project purchased and transported to the power stations and 110Mt ash from the power stations, though a large volume of the sidings. Three power stations are partially supplied with to the value of R7 million to support the surrounding was transported for 2021. We purchased 31% of the coal ash is utilised for effluent treatment as part of the station’s coal on rail, namely Grootvlei, Majuba and Tutuka. Rail communities. The CSI projects focus on education from long-term cost-plus contracts, 28% from fixed-price water use licences. The ash is used in bricks, cement, soil operations to Arnot Power Station are planned to start infrastructure, materials and bursaries. contracts and the majority (41%) from short- and medium- amelioration, road construction and mine backfilling. In in the first quarter of the coming financial year. Less coal term contracts. FY2022, 4 million tons of ash were recycled. • Three new extraction plants were constructed at Kusile, was transported by rail mainly because of the continued Matla and Matimba About 40% of coal was delivered by means of road or unavailability of the rail offloading facility at Majuba Power Challenges Station following a fire incident in December 2019. • A Quarterly Ash Users Forum was held with full rail or a combination of road and rail in the 2022 financial We are facing ashing capacity challenges at most of our Rail operations at Majuba resumed in October 2021 but participation by stakeholders, including DFFE and DPE year. Our large coal purchases, which account for about plants, which put the security of electricity production and 59% of our operational expenditure, offer opportunities remain limited. Furthermore, rail operations are negatively supply at risk. Many of our power stations are fast running • Several webinars were hosted by Eskom RT&D to to contribute to development and transformation across affected by cable theft, vandalism of rail infrastructure and out of coal ash storage space and the costly expansion of introduce ash end users to new ash use research the value chain – sourcing, transport (haulage) and disposal, availability of operational resources, including locomotives. the ash disposal facilities is required unless drastic action is • Mine ash backfilling viability studies were conducted for supporting NDP goals of inclusive economic growth and Eskom Security Services are engaging with Transnet taken. The prioritising of ash recycling for Eskom has become Kriel Power Station ash and earmarked for Matimba Power employment through a shareholding of suppliers, supplier Freight Rail on opportunities to co-operate to reduce the more relevant now than ever as recycling of waste remains Station ash development and localisation, transportation contracts with instances of cable theft. a good alternative to disposal as it helps in the conservation • Discussions were held with Mpumalanga farmers to B-BBEE suppliers and CSI interventions. of natural resources, protection of nature and reduction of determine the viability of constructing high ash content Under our long-term coal procurement strategy, Eskom will pollution. rural roads We are transforming the mining industry by purchasing require about 650Mt of coal for selected power stations. This • An Eskom senior manager was assigned as the sponsor from companies with shareholdings above the mining Policy will lead to economic opportunities in the area and stimulate for the ash beneficiation project. This will also create an charter requirement of 26%. Approximately 1 419 jobs have In March 2020, the Minister of the DFFE approved our the regional economy. We issued requests for proposal (RFPs) enabling environment for collaboration within Eskom and been created from supplier development and localisation application to exclude ash and gypsum at our sites from the to the market for supply to Arnot, Camden, Kriel, Matla and other state-owned enterprises and institutions (SD&L) obligations in these contracts. Furthermore, definition of waste when extracted for beneficial use. The Tutuka and in some cases, contracts were awarded. these companies run various CSI initiatives in areas where exclusion by DFFE of ash and gypsum from waste requiring Ash beneficiation research they operate, such as building schools and houses for the In FY2022, we purchased about 165kt of limestone from a waste management licence when extracted for beneficial Several beneficiation technologies are being researched by indigent, offering bursaries, etc. Idwala Lime in Danielskuil from the Northern Cape. Idwala use at our sites provides additional opportunities for ash Eskom to support off-takers with technical direction on the must subcontract/procure goods and services from entities beneficiation – such as the use of ash in bricks, cement, soil various applications that can be commercialised. A negative impact is the damage to the road infrastructure in amelioration, road construction and mine backfilling. In 2020, that are black-owned within its immediate location to Mpumalanga because of the high number of trucks delivering an ash off-takers’ forum was established between Eskom, Eskom RT&D has research projects that initially investigated transform its value chain and stimulate economic activity in coal to the power stations. To reduce and manage this impact, industry and academia to promote the sales of ash and the use of ash in road construction. The ash is used in the the Northern Cape. It also undertakes skills development for we are implementing our coal haulage and road-to-rail find solutions to the barriers to entry to new participants base and subbase construction, acting as a filler and structural its employees. migration plan. in ash beneficiation in terms of infrastructure, huge capital support in the environment. This project will also result in investment and national policy position. Our ash sales play a developing a guideline on using coal ash in road construction. key role in business development, job creation and localisation It is envisaged that this document will be used by SANRAL in the brickmaking and construction industries. This supports and civil engineers for road construction. the national development goal of an inclusive economy and The use of ash in mine backfilling and acid mine drainage employment. (AMD) treatment is also under investigation. This research is Successes aimed to develop a model which can be utilised by mines to Over the past 10 years, ash sales by volume have increased determine the environmental impacts of ash mine backfilling. steadily but plateaued since the advent of the COVID-19 In addition, a small pilot scale trial will be conducted on an pandemic and the slump in the country’s economy. In active AMD decant point in an abandoned mine. FY2021/22, ash was sold from seven of our 15 coal-fired The use of ash in soil amelioration has been well proven power stations (2021: five stations), with Kusile and Matimba and can be used as a treatment technique in agricultural or coming on board. Three new extraction plants were mine-impacted soils. Both soil types benefit from the pH constructed at Kusile, Matla and Matimba. ERI awarded stabilisation and nutrient availability offered by the coal ash. 10-year contracts to 12 new fly ash and seven new mixed The use of geopolymer (alkali-activated coal ash) concrete ash off-takers at various power stations, bringing the number has been investigated and it has been shown that geopolymer of ash offtake contracts to 32 for fly ash and 10 for mixed/ concrete/mortars can be used to produce any cement-based bottom ash contracts. concrete products. In addition, geopolymer concrete is At Camden Power Station, a total of 241kt of ash was more environmentally friendly to produce and offers better diverted to a nearby mine as backfill material. The ash insulative, fire resistance, acid resistance, alkali resistance dump extension project at Majuba Power Station utilised and marine water resistance properties than conventional 202kt of the waste ash. cement-based concrete. Several applications are being developed for corrosion protection and concrete structure development for the transmission environment. 56 | | 57 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance OUR SOCIAL PERFORMANCE continued Socio-economic impact studies for the In 2021, the World Bank commissioned technical studies To mitigate the impact of the power station shutdown on Komati’s workforce, Eskom has approved four principles: shutdown and repurposing of Eskom on retiring and repurposing four power stations, namely, Komati, Hendrina, Grootvlei and Camden. The studies will 1. Transfers to other power stations power stations 2. Reskilling and upskilling for deployment to repowered or repurposed units inform the types of repowering technologies deployed at We are committed to transitioning from coal to lower- sites. Selected technologies will be taken through multicriteria 3. Secondments to other critical projects or operations carbon technologies such as renewables and ensuring that evaluation to indicate the preferred technology options. 4. Other levers such as voluntary separation packages the transition occurs in a “just” manner, which does not This will support Eskom’s mitigation plan by identifying jobs, impede SED, but results in an increase in sustainable jobs. economic opportunities and localisation potential from the Komati and repurposing Grid strengthening in the Northern and Eastern Cape is a repowering and repurposing programme, in line with Eskom’s key enabler for the roll-out of new renewable capacity in JET Strategy. these areas. In addition, repurposing and repowering will The 4kWp Agrivoltaics small-scale demonstration allow for the optimisation of grid capacity in Mpumalanga. Pilot at Komati Power Station unit at Komati PS. The vacant land around the unit The JET will support workers, communities and the region Komati Power Station, located in Middelburg, Mpumalanga, is earmarked to the commercial scale 500kWp while scaling South Africa’s renewable energy and alternative was initially commissioned between November 1961 and Agrivoltaics installation green industries. Our primary focus is to ensure reskilling of March 1966. The station was mothballed by 1990 and workers and minimise job losses in communities surrounding subsequently returned to service in October 2013. Komati these projects. has a nominal capacity of 114MW, with the decommissioning of the last coal-fired unit planned for this financial year. To support a JET, Eskom is undertaking various repowering, The station will serve as the flagship site to demonstrate repurposing and impact assessment studies to determine the Eskom’s JET commitment to shift from coal dependency impacts of shutting down coal-fired power stations that have to producing power through renewable energy on existing been identified in Eskom’s Road Map to 2035. Eskom land using existing infrastructure. Eskom Generation’s repurposing and repowering The Komati mitigation plan outlines potential projects programme is aligned with a JET. The plan is to implement that can be undertaken regionally, locally and at the power cleaner energy technologies to replace the coal plant, station to mitigate against direct, indirect and induced effects although the replacement (MW) is not 1:1. The energy of the shutdown. The focus is on job creation, economic technologies considered include renewable energy development, diversifying the local economic base and (solar PV, wind, battery energy storage system), gas and strengthening human and social capital, manufactured capital the conversion of existing generators to synchronous as well as political capital in the local area. condensers. Decommissioning is also incorporated as part of the repurposing and repowering programme. We have begun the installation of a 500kWp agrivoltaic (aquaponics and raised bed agricultural solutions) We are conducting socio-economic impact assessment demonstration plant. An environmental impact studies at 10 power stations. The aim is to identify impacts, assessment for a solar PV plant supported by 244MWh risks and opportunities to mitigate the economic and battery storage is in progress. societal impacts of the station shutdown and create a basis for continued, sustainable livelihoods for the affected A microgrid assembly and fabrication factory is being set up communities and local and district municipalities through in the disused Komati workshops. The targeted production a JET. capacity is 45 containerised microgrids per year. Skills requirements are being established for each intervention, The socio-economic impact assessment studies for the with skills mapping in progress to facilitate internal and shutdown of Komati, Grootvlei and Hendrina power stations external training of local labour to participate actively. have been completed. The key findings and recommendations of these studies have been evaluated and incorporated into The Komati Training Facility is being established in partnership socio-economic impact mitigation implementation plans for with the South African Renewable Energy Technology Centre each of the three power stations. Studies for seven more (SARATEC) to facilitate the skilling of Eskom workers and power stations have commenced namely, Camden, Arnot, the local community in the Komati area. It is also envisaged to Matla, Kriel, Duvha, Tutuka and Kendal. It is anticipated that provide upstream skilling of workers at other power stations. the studies will take about two years to complete. Through the JET Office and DFFE, we secured a grant of $2.1 million Eskom HR has developed a draft 15-year Eskom JET skills for these seven studies from the National Determined plan to address the internal “just” element by ensuring Contribution Partnership (NCD-P), supporting national that employees have the required skills to support and priorities identified by DFFE. implement various technologies. The final skills plan will incorporate inputs from all divisions.Various initiatives will be explored, such as partnerships with external experts, funders and training service providers in preparation for upskilling and training. Preparations are under way to engage organised labour on this plan. 58 | | 59 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance ECONOMIC PERFORMANCE Climate funding Sales and revenue Over the last year, an Eskom team, led by the GCE, has Over the past decade, Eskom has been experiencing a actively engaged with foreign governments such as the declining sales trajectory, averaging around a 1% reduction in United Kingdom, the United States, Germany and France, sales volumes per year. The onset of the COVID-19 pandemic as well as their lending institutions and multilateral banks during FY2021 resulted in a further unprecedented decline who are keen on funding Eskom’s JET plans. Consequently, in sales volumes of more than 6% due to the slowdown of we developed the concept of a financing facility, referred to economic activity. as the Eskom JET Financing Facility. The GCE presented the Eskom facility to the Presidential Climate Commission and In FY2022, sales volumes have partially recovered, increasing received support. by 3.4% to 198.3TWh (2021: 191.9TWh), with the phased 7 easing of COVID-19 lockdown restrictions and higher WHAT YOU The concept is to enable and accelerate the JET from coal to commodity prices leading to higher electricity demand. WILL FIND IN other forms of electricity generation through a multi-tranche, THIS SECTION multi-year facility, funded by a multi-lender syndicate, which Growth in sales volumes was achieved across almost would provide concessional funding to JET projects in South every customer category, with the industrial and mining Africa on a “pay for performance” basis. The funds would be sectors in particular benefiting from the recovery of global Climate funding 61 advanced as progress payments for different stages of various commodity markets. Investing in renewable energy 61 projects. Should project objectives not be achieved as agreed, Sales and revenue 61 Eskom’s revenue improved by 20.7% due to the favourable or should agreed-upon milestones not be met, future releases tariff increase and recovery in sales volumes. The regulatory Municipality debt 61 of funding tranches may be withheld and/or concessional Coal 62 tariff increase received during FY22 was 15.06% for interest rates may be increased. customers supplied directly by Eskom and an increase of Human capital 62 Eskom employee benefit cost 64 Our efforts to source financing for climate projects 17.80% for municipal and metropolitan distributors. optimistaion culminated in the South African Just Transition financing Due to the long-lasting impact of the economic recession, Socio-economic targets (shareholder 65 facility of R131 billion ($8.5 billion) which was approved at coupled with the challenges around the Generation supply, compact) COP26, coordinated by the Climate Investment Funds. This demand is not expected to recover to pre-COVID-19 levels in Learner pipeline and learner intake 65 unprecedented partnership between the SA government and the short to medium term, with our Corporate Plan reflecting Training spend 66 the UK, US, EU, French and German governments has at its a slow decline in sales volumes over the next five years. heart the Eskom JET plan. The financing will be used to fund new clean energy generation projects as well as transmission Municipality debt and distribution infrastructure, together with green hydrogen Municipal overdue debt has steadily worsened over the and electric vehicle projects. Other lenders are also showing recent years despite unremitting focus from the Division. interest in funding various Eskom JET projects, supporting our The actual growth for FY22 was R9.5 billion, taking the net zero emission aspirations. cumulative outstanding debt to R44.8 billion. Payment levels for municipalities and metros averaged at 91.7% for FY22. A technical team, under the auspices of the Presidency, has been set up to coordinate the South African funding deal. Eskom continues with its debt resolution via the prescribed We are participating in the task team, which will work on processes of the Intergovernmental Relations Framework the conditions of the loan, tenure, payback, and interest rates, Act (IRFA) process, litigation, signed payment arrangements among other factors. A key enabler is the “Just” element and ongoing negotiations. A 96% compliance to the IRFA as the socio-economic commitments are key to the deal process was achieved for the year under review. being successful. To enable government’s goals for the JET transaction, we have developed a prioritised list of projects The Supreme Court of Appeal affirmed Eskom’s legal right to and will advocate for the timeous release of COP26 funding, payment for services rendered to municipalities. Despite this based on our readiness to execute JET projects across positive step towards arrear debt collection efforts; many of Generation, Transmission and Distribution. the top defaulters continue not to honour the full payment of current accounts. In the meantime, we are proceeding with bilateral engagements with various lenders for the funding of Eskom In support of municipalities, Eskom has remarketed the Active JET projects, which began prior to the COP26 announcement Partnering programme whereby Eskom offers its technical and continue to cultivate projects that will qualify for funding and administrative services to municipalities to assist with under these agreements. electricity reticulation, distribution and revenue collection services to sustainably improve the electricity value chain and Investing in renewable energy secure payments towards the Eskom bill. Eskom’s Sere Wind Farm contributed 253GWh to the Government and National Treasury interventions are national grid during the year (2021: 305GWh), with an required to resolve challenges with municipalities and stabilise average load factor of 27.54% and an average availability factor payment levels. The National Treasury has subsequently of 77.84% (2021: 33.25% and 94.48% respectively). initiated discussions to stabilise payments on the current We continue to purchase renewable energy from IPPs – account for 43 selected municipalities. The discussion and sources include wind, solar power, biomass, landfill gas and proposals are still at a conceptual stage therefore no benefit small hydro technologies. has been realised to date. 60 | | 61 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance ECONOMIC PERFORMANCE continued The graph below provides a detailed breakdown of staff movements for the period ending March 2022. Eskom employee complement and movements Eskom ERI Group Employee type Race Occupational level 34 690 5 731 40 421 818 (2%) 1 470 (4%) 3 043 Top 11 (7%) management Business area Count 4 915 Senior 330 (12%) management Eskom office of the 38 289 Professionals 6 430 COO Skilled 22 020 Distribution 16 297 Generation 12 049 Semi-skilled 11 311 30 993 (77%) Transmission 2 928 39 603 (98%) Unskilled 319 Eskom Rotek 5 731 Permanent FTC African White Coloured Asian 0 5 000 10 000 15 000 20 000 25 000 Industries Group Capital 987 Gender Provincial Research, testing and 227 12 000 development 13 797 (34%) 10 000 Risk and sustainability 64 8 000 Eskom Enterprises 2 11 324 11 391 Office of the COO 4 6 000 4 000 Finance and services 959 Coal Headcount optimisation 1 445 26 624 3 856 3 541 2 000 3 146 2 971 The Eskom group implemented the headcount optimisation (66%) 707 The increase in the average coal purchase price was Information 599 2 040 contained below the target and inflation, due to the strategy in 2018. The aim of the strategy was to reduce technology Female Male 0 MP GP WC NP KZN FS EC NW NC continued move away from supply under short- and medium- employee benefit costs. To avoid regrettable attrition and Human resources 282 term contracts, coupled with our cost savings initiatives. maintain a healthy contingent of talent in the core and Age Assurance and 110 GWTH/ The reduced coal purchase costs also had a favourable critical segments of our workforce, Eskom implemented YR start reduce forensic 10 000 impact on the coal usage (income statement) cost where the targeted replacement of attrition in Operations with limited replacement of attrition in support functions. Overall Eskom Government and 62 42 749 (2 328) favourable price variance off-set the higher quantity variance 8 000 regulatory affairs when compared to budget. targeted to reduce headcount by 11 833 by the end of FY23. VSPs Net attrition To date, since the inception of the plan, Eskom has reduced Legal and compliance 56 6 000 – (3 392) Human capital headcount by 8 208 through natural attrition, voluntary 11 324 9 872 Strategy and planning 40 Human Resources Division measures and monitors critical separations and limited replacement of attrition. Attributable 7 885 Gross exits 4 000 6 981 Company secretary 15 % factors relating to the sustainability of Eskom’s human 4 984 The Eskom group, inclusive of Eskom Rotek Industries (ERI) capital. These are articulated in an index comprising of key Executive payroll 5 (3 392) 7.9 2 000 2 702 3 131 closed FY22 with a staff complement of 40 421, a reduction 2 219 820 1 740 aspects relating to staff complement, headcount optimisation, of 2 328 from 42 749 in FY2021 resulting in an attrition rate 78 Net hires Promotion 0 9 Sustainability 1 0 employee benefit costs, skills development and the development and <20 21–25 26–30 30–35 36–40 41–45 46–50 51–54 55–59 60–62 63–65 66+ of 5.4%. Although higher than the norm of 4%, the attrition 1 064 1 747 Shareholder Compact, which includes transformation targets just energy rate was factored into the headcount optimisation plan where related to employment equity, learner pipelining, training overutilisation of Fixed-term Contractors (FTC) in ERI was Transformation 1 spend, grant recoveries, health and wellness and lastly People management office reduced. Contributing most to the decline in the past year is Relations (Industrial Relations). a net reduction of 1 103 FTC in ERI due to contracts coming Eskom office of 2 Human Resources contributes towards the Eskom financial to an end. the CE sustainability pillar of the Eskom strategy through two key To replace staff losses in targeted areas, Eskom hired Eskom group 40 421 objectives, that is, headcount and employee benefits cost 1 064 staff from external sources and 1 747 through internal optimisation. Headcount reduction driven through voluntary appointments and promotions. Annualised attrition of 7.9% based on April 2021 to March 2022 exits. Note hires only account for employees that were not part of permanent and FTC in separations, limited replacement of attrition and the March 2021. Higher reduction in February due to terminations of FTCs at ERI efficient management of overtime are three of the initiatives implemented to reduce human capital costs. The key challenges noted in the last financial year, as well as key strategic changes that had informed these focus areas, were the overtime costs that were consistently trending upwards, the legacy of headcount growth for when Eskom was in an expansion phase, which were not in alignment with benchmarked productivity ratio norms. 62 | | 63 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance ECONOMIC PERFORMANCE continued Eskom Employee Benefits Cost Optimisation Year end actual FY2022 (Rbn) vs identified initiatives savings target Year end actual FY2022 (Rbn) vs RMO target The Eskom Group Employee Benefits Expenditure budget for FY2022, was R33.1 billion. The period ending March 2022, depicts an under-expenditure of 0.3% (R0.10 billion) with an actual expenditure of R33.0 billion. 3.0 3.0 2.5 2.32 0.29 2.5 2.32 0.46 12-month view – Eskom employee workforce vs 12-month view – Overtime cost vs budget (Rm) 2.03 2.0 2.0 1.86 employee benefits costs (Rbn) 1.5 1.5 Total EB cost budget FY2022: R33.1 billion YE FY2022 results: Actual R33.0 billion 300 1.0 1.0 Total overtime budget FY2022: R1.9 billion 272 YE FY2022 results: Actual R2.1 billion 0.5 0.5 2.6 2.9 250 2.7 2.6 228 2.7 3.2 2.5 2.9 202 0 0 2.6 200 Saving Excess Target Saving Excess Target 2.4 184 156 2.6 150 155 149 158 3.2 150 141 145 Actual Budget Actual Budget 114 42 686 42 785 42 399 42 325 42 641 42 325 42 199 42 020 41 561 41 319 40 421 100 40 410 50 Year end Year end Year end Actual Target Variance Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 0 Initiative FY2022 FY2022 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Overtime R0.628 billion R0.396 billion R0.232 billion Number of employees EB costs Actual Budget Attrition R1.464 billion R1.605 billion (R0.141 billion) Voluntary separations – Wave 1 R0.239 billion R0.238 billion R0.001 billion (Implemented FY2020) FY22 overtime cost vs budget per group (Rm) FY22 overtime hours Key insights Voluntary separations – Wave II R0.096 billion R0.096 billion R0.000 billion • The results indicate that (Implemented FY2021) 1 200 3% emergency overtime Voluntary separations – BU Wave 1 (R0.107 billion) (R0.304 billion) R0.197 billion * Other includes: hours represent 53% of • Group capital (Implemented FY2022) 1 000 the total overtime hours • Finance and services • Human resources 32% for FY2022 Total R2.320 billion R2.031 billion R0.289 billion 800 • Information technology • Planned and outage • Risk and sustainability overtime represent 35% Eskom employee benefits cost 600 • Executive support Overtime of the total overtime 400 hours 7.4m hours 53% • The representation of Eskom is reviewing the headcount and cost optimisation Learner pipeline and learner intake 200 make-up hours gradually plans to ensure alignment to the future needs of Eskom Eskom’s learner pipeline programme supports the National 3% reduces due to the amid the implementation of legal separation strategy and the Growth Plan 2030, which aims to eliminate poverty and 0 Generation Distribution Transmission ERI Other* 4% changes in conditions of overarching revised transformation strategy. reduce inequality by 2030. Historically, Eskom capacitated 5% service implemented in South African youth in different learning categories, namely Actual Budget July 2021. The practice Socio-economic targets (shareholder artisans, plant operators, engineers, technicians and a cross Source: SAP FI/SAP HR/Team Analysis. is now only applicable compact) Planned Outage P/holiday in ERI. section of non-technical learners. Eskom’s pipeline is informed Notes: 1) EB results exclude Eskom International; 2) Overtime hours Travel Emergency Make-up This section provides an update on the two composite people by the 2030 Workforce Skills Plan while the implementation exclude shift work hours on a Public Holiday; 3) Results may be • Total overtime hours measures included in the Shareholder Compact, along with worked in FY2022 of the Learner Pipeline programmes is guided by the “Eskom affected by rounding. key activities which support the delivery of our scorecard equate to 7.4m Learner Pipeline Management Strategy”. targets. The Shareholder Compact measures are currently at Eskom company level only, thus this section will exclude ERI. On 31 March 2022, the Eskom total learner pipeline was 1 238 learners, representing 3.6% of the total permanent The Eskom group overtime cost for FY2022 amounts Overtime costs at year end reflect a saving of workforce against a target of 2.5% with learner artisans to R2.1 billion, compared to the budget of R1.9 billion, R0.628 billion, R0.232 billion above the year end saving making up 55.8% of the total pipeline. exceeding the budget by R0.2 billion. The excess target of R0.396 billion while attrition reflects a saving of expenditure was mainly due to an increase in maintenance R0.141 billion less than target. and emergency work on our plants. The year end results at the end of March 2022 reflect a saving of R2.320 billion, R0.289 billion above the target of R2.031 billion (note that this measurement is against the internal target set by HR for savings to be derived from the identified initiatives). 64 | | 65 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance ECONOMIC PERFORMANCE continued NOTES 1 500 85 19 1 238 1 200 209 233 900 692 600 300 0 Artisan Engineer Plant operator Technician Non-technician Total New learner intake (as at end March 2022) 106 58 120 51 0 335 Learner pipeline Training spend Eskom’s training costs are made up of Opex and Capex. Included in this bucket are various cost elements e.g., conferences, further studies, bursaries (pipeline), trainees’ stipends, trainer’s employee benefits, training centre operating costs at various sites including EAL, depreciation, skills levy, etc. By end of March 2022, our training spend was sitting at R855 million, which equates to 2.70% of the Eskom company budgeted employee benefits cost. Overall, our ability to achieve our set targets were largely impacted by the effects of COVID on our operations which meant putting our normal training activities on hold during the lockdown period and transitioning to virtual or online training methods. Photography disclaimer Photographs and images used in this report have been sourced from the Eskom library and are the intellectual property of Eskom Holdings SOC Ltd, Reg No 2002/015527/30. 66 | | 67 ESKOM HOLDINGS SOC LTD SUSTAINABILITY REPORT 31 MARCH 2022 Introduction Our commitment to Governance, Eskom’s just Our environmental Our climate change Our social Economic sustainable development leadership and ethics energy transition performance performance performance performance NOTES 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 forensic@eskom.co.za DPE whistle-blowing hotline 0801 212 136 DPE whistle-blowing website www.behonest.co.za dpe@behonest.co.za Eskom Development Foundation +27 11 800 8111 Eskom Development Foundation www.eskom.co.za/about-eskom/ corporate-social-investment/ 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 Sunninghill 2000 Sandton 2157 Group Company Secretary Company registration number Office of the Company Secretary Eskom Holdings SOC Ltd PO Box 1091 2002/015527/30 Johannesburg 2000 Our suite of reports covering our integrated results for 2022 is available at www.eskom.co.za/investors/integrated-results JOINT VENTURE [0007] 68 |