Social and ethics committee report

This financial year, the Committee enhanced its approach to ESG matters, placing greater emphasis on energy efficiency and gender inclusivity.

The Social and Ethics Committee is a statutory Committee in terms of section 72(4) of the Companies Act, read in tandem with Regulation 43 of the Companies Regulations, 2011. The Committee fulfilled its duties in terms of its approved terms of reference.

We develop an annual work plan aligned to our terms of reference, which serves as a guide for the activities to be executed in the financial year. The work plan promotes the visibility of the Committee’s activities, promoting transparency and the execution of our responsibilities. Based on the 42 activities planned for FY2024, 41 items were completed. One item was postponed due to operational challenges in the Group and will be addressed in FY2025.

EG Matenge-Sebesho

Chairperson
Social and Ethics Committee

Q&A with the Committee Chairperson

The Committee provides oversight of several ESG matters. How is the Committee confident that it has sufficient structures, processes, and skills in place to effectively execute its duties?

Our terms of reference stipulate the development and implementation of the ESG strategy. We are tasked with making sure that material stakeholders’ expectations and business significance are identified and addressed through the material topics across the ESG pillars. We are also tasked with ensuring that Telkom’s ESG activities promote an inclusive, safe working environment and leadership accountability and transparency.

While we are largely responsible for deliberating ESG matters, we recognise that building a sustainable business is a full-Board responsibility. Both the Risk and Remuneration Committees also play a crucial role in ensuring that economic and ESG risks are centred on the business’ risk radar, and that ESG performance is linked to pay to create meaningful commitment and incentivise the right corporate and individual behaviours.

We leverage the collaboration between Committees. The Chairperson of the Social and Ethics Committee is a member of the Risk Committee, and the Remuneration Committee Chairperson is also a member of the Social and Ethics Committee. This cross-membership supports effective sharing of information and decision-making and ensures that all risks are identified and mitigated.

We are confident that the Committee has the right skills and people in place to perform its functions efficiently. The Nominations Committee evaluates and recommends the constitution of Board Committees to the Board for approval. They do this after considering the suitability of candidates in relation to the skills and qualifications required to fulfil each Committee’s statutory obligations.

With that, I extend my deepest appreciation to the Board and fellow Committee members for their support and contributions this year.

We are also aware that continuous professional development plays a key role in helping us effectively execute our mandate. The training we received this year provided the Committee with insight into compelling investor engagement on ESG matters. The training covered topics such as why ESG information drives investment decisions, how boards can improve their shareholder engagement given growing investor demand, anticipated trends in the ESG space, and how to put ESG at the centre of an investment case. As the ESG domain evolves, we will continue to ensure the Committee receives relevant training.

Read more about our ESG strategy.

Greenwashing is a key risk for organisations globally. How has the Committee ensured that Telkom’s approach to sustainability is underpinned by transparency and accountability?

Telkom has sound processes and practices to ensure that we comply with sustainability requirements and have reliable information. We rely on the Group’s combined assurance approach which consists of internal and external audits and management reviews for non-financial data. Telkom also monitors compliance with environmental statutes and by-laws through site inspections, audits and regular reviews of our procedures and operations.

We also noted the ESG maturity assessment that was performed this year and will continue to support management’s efforts to increase our maturity level.

We thank management for their commitment and for providing us with comprehensive reports and input in our Committee meetings.

While there is always room for improvement, we take comfort in the credibility of the team supporting this work and its regular and comprehensive engagements with the Committee.

With loadshedding being a pain point for many local organisations, are you comfortable that Telkom is doing enough to manage the associated risks?

We have supported management’s efforts to drive energy efficiency through the development and implementation of an energy strategy. The strategy seeks to prioritise technologies that maximise energy security and decarbonisation and optimise utilities. This includes on-site mature generation technologies, such as solar PV and batteries, and emerging energy generation technologies, such as quad generation and hydrogen fuel cells.

Telkom also has energy efficiency interventions such as lighting retrofits, smart real estate infrastructure (smart meters), free cooling retrofits, and HVAC optimisation, as well as planning off-site generation alternatives, such as wheeling and virtual wheeling options that supply clean energy through the Eskom grid.

We gain comfort from the strategic approach management is taking to the loadshedding challenge, while considering the opportunities to progress the ESG strategy further. This year, Telkom’s total emissions (Scope 1 and Scope 2) reduced by 9%.

Read more about Telkom’s Climate strategy.

Maintaining a diverse and inclusive employee landscape is essential for Telkom’s human capital strategy. How did the Committee endorse diversity in the workforce, especially for Black women representation and women in leadership?

In FY2024, we approved a diversity, equity, inclusion and belonging strategy – underpinning our drive to build and retain a richly diverse workforce. The strategy supports our ambition to increase the representation of women in leadership by ensuring that they – as well as all other gendered identities – see the value in remaining with us.

We focus specifically on women representation as we believe that they add richness and balance to decision‑making and enhance the overall quality of management.

Telkom supports employees through talent and succession management programmes. This includes growing female leadership through the FLDP and WiO. This year, the percentage of women in leadership positions at Telkom increased to 34.1% (2023: 33%).

Read more about our commitment to Diversity, equality and inclusion.

The work of the Telkom Foundation speaks to the Group’s ESG focus on investing with purpose. What is the Foundation’s role in the Group’s corporate social responsibility, and how did the Committee assess its impact this year?

The Foundation is responsible for implementing the Group’s CSI programme and engaging directly with communities. Its main objective is to contribute to transforming disadvantaged communities through sustainable development programmes focusing on developing ICT skills. The Foundation has an independent Board of Trustees with expertise in key areas such as education, ICT, finance, and innovation. This ensures that its programmes are aligned to strategy, research-based, and impactful for communities.

This year, we supported the implementation of the Foundation’s revised strategy, which will run from 2023 to 2028. The strategy consists of incremental and scale components. The incremental component builds on the existing strategy with the aim of improving more students’ lives by increasing the range of services offered at schools. The scale component focuses on education from a school-based view through ICT enablement, including future-fit ICT skills, digitising psychosocial support and unlocking employment in ICT. The Committee monitors the Foundation’s strategy implementation progress through quarterly reports made available by the Foundation.

We are proud of the significant impact the Foundation has made on the lives of thousands of learners, teachers, and other stakeholders since it was established in 1998.

Read more about the Telkom Foundation, as well as our investments into FutureMakers.

How has Telkom enhanced whistle‑blowing protection measures to encourage more individuals to report unethical conduct?

Enhancing whistle‑blowing protection is crucial for preventing corruption in South Africa. This is evident in the legislative recommendations made by the Commission of Inquiry into Allegations of State Capture (Zondo Commission).

This year, Telkom focused on improving its whistle‑blowing processes to ensure the safety of whistle‑blowers. Individuals who come forward are protected and have the option to remain anonymous. However, it is encouraging to see that many whistle‑blowers are willing not to conceal their identities when reporting allegations. In FY2024, 93% of our whistle‑blowers revealed their identity, and 4% claimed partial anonymity , which demonstrates the trust that employees have in Telkom’s ability to protect whistle‑blowers.

The Committee oversaw the development of a whistle‑blowing procedure document and the review of the Group Ethics Handbook, which was updated to include enhancements to the protection of whistle‑blowers. This includes physical protection, emotional, legal, and reputational support, as well as limited financial support. This is in line with the most recent review of the ISO 37002 standards for whistle‑blowers. The document also considered the recommendations of the Zondo Commission.