Our approach to sustainability

Building a sustainable business requires ARM to continue to create an acceptable return for shareholders while at the same time understanding, managing and mitigating the impacts of its mining and smelting operations on the environment and societies in which it operates.

Our commitment to improving our sustainable development performance is guided and strengthened by on-going developments in legislation, commercial requirements, external reporting frameworks and stakeholder expectations.

Our approach to sustainability is guided by:
Our values	ARM aims for operational excellence and continuous quality improvement, which includes employing a leading practice sustainable framework to fulfil our aim of achieving leading environmental and health performance and a safe, injury-free workplace. ARM works responsibly and seeks to achieve a balance in managing the social, economic andenvironmental aspects of our business and creating value for our shareholders in a sustainable manner.
ICMM	Principle 2 – Integrate sustainable development considerations within the corporate decision making process. Membership requirements include transparent GRI-based reporting and external assurance.
Mining Charter	Facilitating sustainable transformation, growth and development of the mining industry.
JSE Listings Requirements	The JSE Listings Requirements include compliance with King III.
King III	Sustainability issues should be integrated with financial considerations.
Carbon Disclosure Project	ARM participated in the Carbon Disclosure Project (CDP) for the third consecutive year in F2012.

As a JSE-listed company, we need to comply with the JSE Listings Requirements, which include compliance with the principles set out in the third report on corporate governance in South Africa, referred to as King III.

The Corporate Governance section of our Sustainability Report as well as the comprehensive Corporate Governance report in our Integrated Annual Report (IAR) provides detail on our performance in this regard.

ARM has also participated in and met the requirements of the JSE Socially Responsible Investment (SRI) Index for the past four years. This pioneering set of criteria, against which companies are assessed, provides guidance on environmental, economic and social sustainability as well as governance best practice. The Index further offers a platform to recognise listed companies that incorporate sustainability principles into their everyday business practices and is a tool which investors can use to assess companies on a broader base.

The International Council on Mining and Metals (ICMM)

ARM became a member of the ICMM in September 2009 because it shares the ICMM vision of a respected mining and metals industry which is widely recognised as essential for society and a key contributor to sustainable development. The ICMM is a CEO-led organisation representing some of the world’s largest mining, minerals and metals companies as well as regional, national and commodity associations.

As a member of the ICMM, ARM also subscribes to the Extractive Industries Transparency Initiative (EITI) – a global standard that promotes revenue transparency and the management of revenues from natural resources. The EITI is a combined initiative of governments, companies, civil society, investors and international organisations which support improved governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas and mining. The aim of the EITI is to strengthen governance which prevents the exploitation of natural resources by improving transparency and accountability in the extractive sector.

As a member of the ICMM, ARM is required to act in accordance with ICMM position statements and comply with the three elements of the ICMM Sustainable Development Framework, namely:

1. implementation of the 10 ICMM Sustainable Development Principles throughout the business;
2. a commitment to transparent and accountable reporting practices (we continue to report in line with the GRI G3 framework); and
3. independent third-party verification that we are meeting the ICMM commitments.

The table below sets out how we are addressing each of the ten principles of the ICMM

	ICMM Principles	Key management commitments and activities	Section
1	“Implement and maintain ethical business practices and sound systems of corporate governance”	The Board is the foundation of ARM’s corporate governance systems and provides effective control through a clear governance structure that has established various Committees to assist it. The ARM Code of Conduct was updated during F2012 and all employees are subject to the Code, which includes specific clauses regarding bribery and corruption and provides the platform for enforcement. The Code covers issues such as proper conduct, respect for Human Rights, legal and regulatory compliance, conflicts of interest, employee equity, health and safety, environmental impacts, political activities, stakeholder interaction, share trading and administration of funds and assets. ARM actively participates in various industry bodies, particularly with respect to the Mining Charter and labour issues. We continue to implement policies and mechanisms (such as whistleblowing and internal audit) which are aimed at preventing and reporting of unethical behaviour. We continue to focus on and comply with legislative requirements.	Corporate Governance section and the full Corporate Governance report in the Integrated Annual Report
2	“Integrate sustainable development considerations within the corporate decision making process”	Sustainable Development considerations are escalated to the Board, who carries the ultimate responsibility. Sustainability principles are integrated into the decision-making process through inclusion on the agenda of the Management Risk Committee, the Audit & Risk Committee and the Social and Ethics Committee. Group policies exist for Sustainable Development and each operation has its own policies and procedures, which are aligned with the Group policies, and most operations have obtained ISO 14001, 9001 and OHSAS 18001 certification. ARM has integrated sustainable development issues into the enterprise risk management system on operational and corporate level and these issues are addressed and resourced with oversight from the Management Risk Committee and the Audit and Risk Committee. The principles of sustainability are applied at all stages in our operations: from planning and designing through operation, provision for rehabilitation and closure. We engage with all our stakeholder groups and facilitate training in sound sustainable development, both on corporate and operational level. We actively participate in the structures of the ICMM through benchmarking, learning and implementing best practice.	Our strategy; the Executive Chairman’s report; the Chief Executive Officer’s report and Our approach to sustainability
3	“Uphold fundamental human rights and respect cultures, customs and values in dealings with employees and others who are affected by our activities”	First and foremost, ARM adheres to the Constitution of South Africa, which is the primary source of national guidance on respect for human rights. ARM publicly discloses that its Code of Conduct bans any use of forced, compulsory and child labour by the Company, its suppliers or contractors. Fair remuneration is an on-going discussion point with employees and unions and all non-management employees are afforded freedom of association. Approximately 80 % of the workforce are unionised. We engage with our employees and unions on an on-going basis and at various levels on matters of mutual concern. We continuously review and ensure implementation of policies and procedures designed to eliminate harassment and unfair discrimination as well as maintain the anonymous whistleblowing facility. We embrace our cultural diversity and are committed to the process of transformation in our business. ARM respects the culture and heritage of the communities around our operations.	Corporate Governance section Human capital section
4	“Implement risk management strategies based on valid data and sound science”	ARM has a comprehensive risk management system including policies and procedures in place at both the corporate and operational levels. Each operation has its own risk register which is updated on a quarterly basis, and submitted to Group for quarterly consolidation and review by the Management Risk Committee, which reports to the Audit and Risk Committee of the Board. The risk determination process is an on-going process that seeks to identify and/or mitigate risks proactively (where possible), and also utilises information flowing from stakeholder engagement activities, particularly at the operational level. Stakeholder engagement and communication is structured primarily around the need to ensure that all potentially affected parties are kept abreast of any significant risks from mining, minerals and metals operations and of ARM’s measures to mitigate the potential risks. Each operation has specific ‘balanced scorecards’ that include the following risks: electrical supply interruption, fires and explosions, flooding, mechanical, mining and other risks. It should be noted that ARM’s Risk Report (a confidential document for insurance purposes) includes comprehensive discourses around physical risks at each operation, as well as explanations of how ARM manages and mitigates these risks. External physical risk management audits which include consideration of control effectiveness are conducted at each operation annually for insurance purposes. We will continue to improve the risk assessment process in all areas of our business, including the social, health, safety, environmental and economic impacts associated with our activities.	Corporate Governance section and the full Corporate Governance report in the Integrated Annual Report
5	“Seek continual improvement of our health and safety performance”	Health & Safety performance is an on-going priority area for ARM, as reflected by its positioning as one of the top risks. Safety concerns include the top activity-specific risks such as falls of ground, working at heights, fatigue, moving machinery, etc., whereas health concerns include issues such as noise, HIV & Aids, TB, chronic diseases and employee wellness. Every operation undergoes an annual external legal compliance audit, which includes safety & health. Every second year, as a directive from the Board, external legal and process experts audit each operation to ensure that policies, procedures and systems adequately mitigate risks. All employees undergo health and safety training as a function of their initial induction training, as well as regular refresher courses and on-the-job specific training. All employees, contractors and suppliers undergo relevant health and safety training and undergo medical fitness surveillance prior to commencing work. ARM, through annual reporting on compliance with the Mining Charter Scorecard, participates in the Mining Industry Occupational Safety and Health (MOSH) benchmarking process, using evaluations as an opportunity to identify improvement areas and implement best practice. Occupational health and wellness is being integrated to ensure entrenchment of hazard identification and risk assessment in terms of the hygiene and health implications of all activities. ARM’s operations implement safety and health management systems (OHSAS 18001 certification and alignment to these systems where certification has not yet been obtained) which focus on continual improvement and mitigation of risk to the health and safety of our employees, contractors and the communities where we operate.	Safety section Occupational health and wellness section TB, HIV & Aids section
6	“Seek continual improvement of our environmental performance”	Environmental performance is an on-going priority area, as reflected by the positioning of specific environmental issues within the list of the top Group risks. Environmental concerns include climate change, water consumption, energy consumption and related emissions, waste management, incidents, etc. All new projects and/or changes within operations include Environmental Impact Assessments (EIA) and Environmental Management Plans (EMP). Every operation undergoes an annual external legal compliance audit, which includes environmental management. Every second year, as a directive from the Board, external legal and process experts audit each operation to ensure that environmental policies, procedures and systems adequately mitigate risks. All employees and contractors undergo environmental training as a function of their initial induction training, as well as regular refresher courses and on-the-job specific training. Corporate Standards have been drafted and have been updated and include environmental monitoring, rehabilitation, waste management, biodiversity and the reporting of environmental incidents. As per mining legislation, all mines have closure plans and financial provisions for environmental liability in terms of rehabilitation and closure are set aside on an annual basis and are audited. All of our operations have implemented environmental management systems (and most are certified in terms of ISO 14001) which focus on continual improvement.	Environmental section
7	“Contribute to conservation of biodiversity and integrated approaches to land-use planning”	ARM has biodiversity action plans for all sites, including ARM’s commitments to protected areas such as wetlands, zones of endemism, archaeological and heritage sites, protected and endangered species (as per IUCN). Where applicable, ARM provides access to sites for scientific research purpose and often works in concert with Government and/ or academic institutions to promote biodiversity protection, including relocations of protected species and removal of alien vegetation. Land use planning is a function of EIA and/or EMP processes, and is addressed within community forums and meetings with local municipalities and other affected stakeholders. We provide training to employees, contractors and communities in regard to sensitive and endangered species around our operations.	Environmental section
8	“Facilitate and encourage responsible product design, use, re-use, recycling and disposal of our products”	ARM participates in Industry Forums such as the ICMM and Chamber of Mines and keeps abreast of insights and developments relating to the properties of metals and minerals and their life-cycle effects on human health and the environment. ARM does not directly sell/market products, this is done through agreements with our respective joint venture partners. As a responsible mineral extraction company, ARM is a member of the ICMM’s Materials Stewardship Task Force to keep abreast of developments and best practice in this area. ARM, with its joint venture partners, develops and provides regulators and other stakeholders with comprehensive material safety data sheets and information regarding our products and operations.	Product stewardship
9	“Contribute to the social, economic and institutional development of the communities in which we operate”	ARM actively participates in the socio-economic development of the communities affected by its operations. Socio-economic impact identification and mitigation forms part of the EIA process for all new projects, as well as for changes to operations whereby ARM engages with interested and affected parties during planning of new projects or change/expansion to our operations, to communicate regarding concerns, issues or conflicts arising from our activities. ARM has lodged applications for conversion of all its mining licences to new order mineral rights, including social & labour plans for all of its mining operations. The majority of these have been approved while a few are still being finalised in consultation with the DMR. Closure plans include Socio-Economic Development (SED) initiatives, and there is a growing trend towards linking Enterprise Development (ED) initiatives to post-mining strategies. ARM actively engages as appropriate with Government and Non-Governmental Organisations for the purpose of developing partnerships (or to link strategies) to ensure that community health, education, local business development and infrastructure development programmes are well designed and effectively delivered. Poverty alleviation and job creation (ex-mining) are key elements within the SED/CSI strategies of all of ARM’s operations. We will continue to contribute to development that is aligned with our transformation targets, aiming to further the agenda of previously disadvantaged groups and minority groups.	Environmental section Corporate social responsibility Transformation
10	“Implement effective and transparent engagement, communication and independently verified reporting arrangements with our stakeholders”	The ARM risk management process has identified stakeholder engagement as one of the top risks to be closely monitored and managed. We have an extensive stakeholder engagement process in place, both on the corporate and operational levels with dedicated senior and executive resources who seek to engage with our stakeholders in a transparent and constructive manner. Stakeholder and community engagement is part of the agenda of operational, divisional and Board meetings.	Stakeholder engagement section

The Mining Charter

ARM is committed to the spirit of the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry (the Mining Charter), which is to bring about “a globally competitive mining industry that draws on the human and financial resources of all of South Africa’s people and offers real benefits to all South Africans”.

The Mining Charter was developed through a consultative process between Government, labour and the mining industry, and was ratified in October 2002. Measures for assessing the contribution of mining companies to the socio-economic goals of the Mining Charter were developed. The Mining Charter was revised in September 2010. Revisions included amendments to the Scorecard and the nine key elements which focus on:

Full details of ARM’s compliance with the requirements of the Mining Charter can be found in the Transformation section of this report.

UN Global Compact

The UN Global Compact (UNGC) is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten principles in the areas of human rights, labour, environment and anti-corruption. The Regulations to the Companies Act require the Social and Ethics Committee to monitor the Company’s activities against these ten principles.

ARM recognises the importance of the ten principles of the UNGC and is committed to upholding them as they apply to its business.

United Nations Global Compact Principles		Section	Page Ref
Human Rights – Businesses should:
Principle 1	support and respect the protection of internationally proclaimed human rights	Corporate Governance	page 39
Principle 2	make sure that they are not complicit in human rights abuses	Corporate Governance	page 39
Labour - Businesses should uphold:
Principle 3	the freedom of association and the effective recognition of the right to collective bargaining	Human capital	page 75
Principle 4	the elimination of all forms of forced and compulsory labour		page 21
Principle 5	the effective abolition of child labour		page 21
Principle 6	the elimination of discrimination in respect of employment and occupation		page 22
Environment - Businesses should:
Principle 7	support a precautionary approach to environmental challenges	Environmental section	page 106
Principle 8	undertake initiatives to promote greater environmental responsibility	Environmental section	page 106
Principle 9	encourage the development and diffusion of environmentally friendly technologies	How our products make a difference	page 5
Anti-corruption
Principle 10	Businesses should work against corruption in all its forms, including extortion and bribery	Corporate Governance	page 39

During F2012, we continued to broaden our approach to sustainability reporting and have further integrated issues material to our sustainability into our risk management system. We are in the process of revising our sustainable development model to incorporate our combined assurance process and will continue to use the model to integrate sustainability across our business.

ARM’s sustainable development model

Managing sustainability in our business

The Executive: Sustainable Development reports to the Chief Executive Officer of ARM with oversight from the Social and Ethics Committee (formerly called the Sustainable Development Committee). She is responsible for reviewing sustainable development policies, strategies and targets and ensuring that they are aligned with the Board’s commitment to zero tolerance of harm throughout our business.

The purpose of the Social and Ethics Committee is to monitor and report on the manner and extent to which ARM protects, enhances and invests in the economy, society and the natural environment in which ARM operates in order to ensure that its business practices are sustainable. The Committee also reviews and considers the efficacy of ARM’s systems to promote local economic development opportunities to enable historically disad vantaged South Africans (HDSAs) to develop economically while meeting the requirements of mining rights conversions, the Mining Charter and other requirements detailed in the Mineral and Petroleum Resources Development Act, 2002 and other legislation.

The Social and Ethics Committee has three members, all of whom are Independent Non-executive Directors as described in the Corporate Governance report in the Integrated Annual Report.

The ARM Management Risk Committee is a management subcommittee of the Audit and Risk Committee tasked with assisting the Audit and Risk Committee in discharging its duties relating to risk matters. It does this by implementing, co-ordinating and monitoring a risk management plan, policy and processes to ensure that broader strategic and significant business risks are identified and quantified with attendant controls and management assurance. The Leader: Risk Management and Executive: Sustainable Development attend the Social and Ethics Committee meetings, are members of the Management Risk Committee and are instrumental in integrating sustainability risks which are identified on operational and corporate level, into ARM’s comprehensive risk management process. Both these individuals attend Board meetings to respond to any risk-related matters raised by the Directors.

Our Sustainability model aligns to both King III and the JSE Socially Responsible Investment (SRI) Index requirements. The JSE SRI Index is based on criteria that identify requirements that companies must meet in order to show that they have integrated triple bottom line (TBL) practices into their activities. The indicators are structured along three broad categories: Environmental, Social and Governance (ESG). In line with our model, our most material issues can be classified as economic, social and environmental in nature while ensuring that we maintain the highest standards of corporate governance.