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Independent third party assurance statement

To the Board and stakeholders of African Rainbow Minerals (ARM):

SustainabilityServices.co.za (SS) was commissioned by African Rainbow Minerals (ARM) to provide independent third party assurance (ITPA) over the content of their 2010 Sustainable Development Report (the ‘Report’, covering the period 1 July 2009 to 30 June 2010). The assurance team comprised primarily of Michael H. Rea, our principal Sustainability Assurance Practitioner, with 11 years’ experience in environmental and social performance measurement, including sustainability reporting and assurance.

AccountAbility AA1000S (revised, 2008)

To the best of our ability and significant experience in sustainability report assurance, this engagement has been managed in accordance with AccountAbility’s AA1000AS (2008) assurance standard, where the format of the engagement was structured to meet the AA1000AS Type I (Moderate) requirements.

Independence

SS was not responsible for the preparation of any part of the Report and has not undertaken any prior commissions for ARM. Responsibility for producing the Report was the responsibility of ARM and its advisors. Thus SS is, and remains, an independent assurer over the content and processes pertaining to this report.

Assurance objectives

The objective of the assurance process was to provide ARM’s stakeholders an independent ‘moderate level assurance’ opinion on whether the sustainability content of the Report, in its printed and .pdf formats, meets the AA1000AS (2008) principles of Inclusivity, Materiality and Responsiveness, as well as to assess the degree to which the Report has met the Global Reporting Initiative (GRI) G3 guidelines Application Level B reporting requirements.

Assurance approach and limitations

The process used in arriving at this assurance statement is based on AccountAbility’s AA1000AS (2008) guidance, the GRI’s G3 Application Level requirements, as well as other best practices in sustainability reporting assurance. Our approach to assurance included the following:

  • A review of sustainability measurement and reporting procedures at ARM’s head offices to determine the context and content of sustainability management by the company;
  • A review of the information and/or data collection, collation and reporting procedures undertaken by ARM to define the content of the Report by looking at materiality of issues included in the Report, determination of sustainability context and coverage of material issues;
  • A review of the approach of management to addressing topics discussed in the Report;
  • A review of drafts of the Report for any significant errors and/or anomalies; and,
  • A confirmation that the requisite number of GRI G3 performance indicators had been adequately discussed within the Report.

The process was limited to the content and assertions made within the printed Report, and the subsequent .pdf version made available via the internet, for the period under review, and did not extend to a comprehensive analysis of the accuracy, reliability, completeness and/or consistency of any of the data presented by ARM. Rather, sustainability data presented within the Report was subjected to a series of reasonability tests during final proof editing. The process was further limited to reviewing policies and procedures for stakeholder engagement, and did not extend to the physical engagement of any stakeholders to arrive at our assurance opinion.

Findings

Based on our review of the Report, as well as the processes employed to collect and collate information reported herein, it is our assertion that:

  • ARM adequately adheres to the Accountability AA1000APS principles of Inclusivity, Materiality and Responsiveness, although room for improvement exists with respect to both pro active stakeholder engagement (ie, ‘Inclusivity’) and feedback on stakeholder-specific concerns (ie, ‘Responsiveness’)
  • The Report adequately meets the GRI G3’s requirements for Application Level B (responses to all required indicators, as well as no fewer than 20 Core indicators, with at least one from each of Economic, Environment, Human Rights, Labour, Society and Product Responsibility). However, it was found that the reporting of performance against some GRI G3 indicators continues to require either data quality improvements, or further detail in disclosure.

Conclusions and recommendations

Based on the information reviewed, SustainabilityServices.co.za is confident that this report provides a comprehensive and balanced account of ARM’s environmental, safety and social performance for the period under review. The data presented is based on a systematic process and we are satisfied that the reported performance data accurately represents ARM’s current environmental, safety and social performance, while meeting the AA1000AS (2008) principles of Inclusivity, Materiality and Responsiveness. Moreover, and although the quality or quantity of data of some GRI G3 indicators can be improved, this Report appears to meet the GRI G3’s requirements for Application Level B (B+ with this assurance engagement).

However, the following recommendations have been identified:

  • With respect to adherence to AccountAbility’s AA1000APS principle of Inclusivity, ARM should ensure that stakeholder engagement continues to progress towards the active inclusion of all significant stakeholders, and that a regular review of stakeholders tests for completeness and relevance. A formal stakeholder engagement plan should be developed at both the head office and mine/operational levels, and should be managed to ensure that stakeholder engagement continues to inform risk management and operational strategies towards ongoing sustainable development.
  • With respect to adherence to AccountAbility’s AA1000APS principle of Responsiveness, ARM should ensure that feedback to stakeholders on sustainability matters occurs in line with King III’s recommendations for ‘Integrated Reporting’, such that all presentations of results – including interim results – include a reasonable discourse regarding ARM’s most material sustainability issues.
  • Reporting on social performance, particularly with respect to Corporate Social Investment (CSI) and/or Socio-Economic Development (SED) expenditures, should be structured to improve the quality of data regarding actual developmental impacts. While the current case studies, in most cases, provide interesting commentary on ARM’s contributions to the communities in which the company operates, there is little data to support an assertion that the investments are having a material impact on intended developmental objectives.
  • Based on the potential for possible data inconsistencies at the mine/operational level, ARM should consider extending its reporting cycle to accommodate for assurance over interim (ie, quarters 1 through 3) and year-end data, in line with the expectations of Accountability’s AA1000AS (Type II) assurance model, ultimately seeking Type 2 (High) levels of assurance in future Reports.
  • Having addressed the requirements of GRI G3 Application Level B, it is our recommendation that ARM review the process followed in compiling the Report and, while making further improvements on the quality of data required for Application Level B, begin addressing the requirements of Application Level A.

For more information about the assurance process employed to assess the ARM’s 2010 Sustainable Development Report, email michael@sustainabilityservices.co.za

SustainabilityServices.co.za
29 November 2010
Johannesburg

 

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