CLIMATE CHANGE

We recognise the impact of climate change on the planet and support the global climate change goals outlined in the United Nations Framework Convention on Climate Change and the Paris Agreement, which aim to stabilise GHG concentration at a level that would significantly reduce the risks and impact of climate change.

Climate change risks and opportunities

Based on a high-level assessment by a climate change consulting group, we have deduced the potential impact of climate change on our operations. The framework used for the assessment is one developed by the Task Force on Climate-related Financial Disclosures, which defines two main categories of exposure:

Transition: risks and opportunities associated with the low-carbon economy transition; and

Physical: risks and opportunities associated with changing physical climate.

All transition risks and opportunities were assessed against the most ambitious transition scenario developed by the International Energy Agency, called Net Zero Emissions by 2050. The results showed that the highest transition risks for the group were in the areas of policy and legal, specifically in the areas of enhanced reporting obligations and increased pricing of GHG emissions. Some of our divisions are exposed to carbon tax, which could increase their tax liability.

For the initial physical risk assessment, 10 key group production sites were selected. The basis for selection was the materiality to group revenue and/or the location of the site in an area known to be affected by climate change dynamics. The risk was measured against the worst of the five scenarios used by the Intergovernmental Panel on Climate Change (‘IPCC’), called Shared Socioeconomic Pathway 5-8.5, for future annual carbon emissions. The following physical risks were considered: fire, water stress and drought, rainfall-induced landslides, extreme rainfall and flooding, river flooding, and extreme cold and heat. The preliminary assessment indicated that the overall physical risk to key sites was low to moderate.

From an opportunity perspective, self-generated/internally generated renewable energy provides us with a high-return capital allocation opportunity and mitigates potential interruptions in energy supply, which would enhance our position as a reliable local supplier.

Our strategic response to climate change risks and opportunities

Our response to the two main categories of exposure is as follows:

Transition: We are in the process of enhancing our sustainability data collection and reporting, in line with key reporting frameworks. Additionally, we are increasing renewables in our energy mix, which will also lower our GHG emissions and carbon tax. Our current renewable energy capacity is 19 MWp, and we have the potential to generate another 70 MWp through projects we are currently reviewing. Our divisions are also implementing initiatives across the group to improve energy efficiencies, which ultimately reduces energy consumption and thus GHG emissions.

Physical: Our most material near-term physical risks are an increase in wildfires, which could negatively affect PG Bison’s forestry operations. As a risk mitigation measure, we invest in fire detection and firefighting capabilities and implement standard forestry fire-prevention practices. We also conduct annual fuel load risk assessments and constantly engage with landowners, stakeholders and communities to manage this risk on a collaborative basis.

Electricity and diesel consumption

Our electricity consumption for the year was 383 779 MWh, a 1% increase compared with last year. Approximately 6% of our electricity consumption was supplied by internally generated renewable electricity from Safripol’s Sasolburg PV plant and PG Bison’s Boksburg and Mkhondo PV plants. The modest increase in electricity consumption was largely due to increased production at some of our sites and reduced loadshedding. PG Bison and Safripol account for most of the electricity consumption in the group.

We are pursuing energy-efficiency initiatives throughout the group to lower electricity consumption across our divisions. However, with the completion of the new MDF line at Mkhondo, we expect electricity consumption to increase.

Our diesel consumption for the year was 110 million litres, a 7% reduction from the prior year, mainly due to lower volumes and kilometres travelled by Unitrans following the closure of low-margin, low-return activities. The 24% reduction in our diesel consumption since FY20 is largely attributable to a continued decline in volumes at Unitrans with a resultant decrease in kilometres travelled. Unitrans contributes 96% to our total diesel consumption and is pursuing a reduction in its fuel consumption by:

using routing algorithms and real-time data analysis to ensure optimal delivery routes and thus less kilometres travelled;

employing driver training programmes to enhance driver skills in fuel-efficient driving practices;

using data visibility systems to monitor fleet fuel consumption; and

deploying new technology engines with better fuel consumption/efficiency.

GHG EMISSIONS

Our carbon footprint is determined in line with the GHG Protocol Corporate Accounting and Reporting Standard. We use emission factors from the 2006 IPCC Guidelines and the 2021 Technical Guidelines for Validation and Verification of Greenhouse Gas Emissions by Industry of the DFFE. Our GHG emissions are verified each year by an independent third-party.

The bulk of our emissions stem from our logistics operations due to their use of vehicles to deliver their services to customers, with no near-term, practical or economical solution available to move to zero-emission vehicles. The remainder of our emissions relate to the electricity used in the group, primarily in our manufacturing divisions.

Our Scope 1 and 2 emissions for the year were 867 977 tCO₂e, a 7% decrease from the prior year. The lower emissions are largely a result of lower kilometres travelled by Unitrans and the use of self-generated renewable energy in the group, which resulted in a 2% reduction in emissions from the prior year.

Scope 1 emissions make up 51% of our carbon footprint. At 76% of emissions, Unitrans is the biggest contributor to our Scope 1 emissions, due to the diesel used in its transport fleet. Scope 2 emissions make up 49% of our carbon footprint, with PG Bison and Safripol contributing the majority of the emissions due to the electricity consumption at their plants.

Carbon absorption

PG Bison’s plantations are net absorbers of carbon. The division quantifies the carbon absorbed by its plantations and submits these metrics to the DFFE for approval for carbon tax purposes. The DFFE has approved the 205 772 tCO₂e of carbon absorbed for the 2023 calendar year compared with 157 332 tCO₂e in the 2022 calendar year. In addition to this, the carbon permanently stored in our wood-based decorative panels produced at our operations in the 2023 calendar year was 526 396 tCO₂e compared with 400 179 tCO₂e in the 2022 calendar year. PG Bison’s carbon emissions during the year were therefore mostly offset by the carbon absorbed through its own operations.

PG Bison continues to use renewable biomass to generate energy (heat and steam) for its processes. It is typically offcuts or shavings from the timber it processes, which would otherwise end up in landfill. The use of this biomass not only diverts waste from landfill, but also displaces coal that would have been used in its place. PG Bison applies sustainable forestry management practices, in line with global certification standards as set out by the Forest Stewardship Council (‘FSC’), with only a portion of trees harvested each year in line with the sustainable yield of the plantation. The harvested areas are replanted with new trees.

WATER MANAGEMENT

We withdraw most of our water from municipal supply with some water supply from third parties and groundwater/boreholes. In our manufacturing operations, we use water predominantly for our manufacturing processes and cooling, whereas for our logistics operations, we use it mainly for the washing of vehicles in dedicated wash bays.

Our water risks and opportunities

Potential water interruptions or restrictions may therefore impact our ability to operate continuously. We believe that the near-term risk related to water supply is failing infrastructure rather than availability. During the year, PG Bison’s Boksburg operations were affected by water disruptions due to municipal supply issues, although this was not material on a group level.

There are also several communities around our major operations. Service delivery failures, including water, may affect our employees who live in these communities. Service delivery failures may also result in community unrest, which may impact our operations.

We believe that, by proactively mitigating the risks associated with potential water disruptions, we can entrench our position as a reliable local supplier. Additionally, improved water efficiency safeguards a scarce resource.

Our strategic response to water risks and opportunities

We have finalised our water strategy for the group. Its aim is to:

mitigate supply risks;

reduce consumption;

become water independent (where possible) to ensure sustainability; and

ensure responsible use and compliance with legislation.

Our initial focus is to update our baseline of all water used in the group and ensure the accurate measurement of water by installing electronic metering across the group. Our divisions’ initiatives to reduce water consumption include:

ensuring our water infrastructure is adequately maintained to avoid water leaks in our operations;

increasing the reuse of water used in manufacturing processes to reduce the amount of effluent and water consumption; and

increasing the harvesting of rainwater in the group.

The new PG Bison MDF line in Mkhondo considered water supply risks in its scoping. The site is therefore self-sufficient with water secured from boreholes, surface water (a dam) and an on-site water treatment plant.

Our water management practices

We use a combination of water meters, utility bills and, in some instances, estimations to determine water withdrawals and discharges. During the year, water meters have been installed at certain sites, with full coverage of all material sites planned in FY25. This will improve the accuracy of our water data collection and enable us to measure the impact of our water efficiency measures.

Our plantations are not irrigated and their water consumption is thus of groundwater and rain. In the cases of plantation fires, water is withdrawn from major water bodies. e.g. dams, which we do not measure.

We adhere to regulatory requirements in terms of water use licences for all our operations, including our plantations.

Where possible, water used in our manufacturing processes is treated on-site and reused. Water used for cooling runs in a circular system to ensure efficient utilisation. In our logistics operations, water used in the wash bays are treated on site. Effluent is treated to adhere to minimum requirements and sent to third-party wastewater treatment sites or, in some instances, discharged in stormwater drains, where minimum legal requirements are met. The water quality of effluent is tested regularly to ensure compliance with legal requirements.

Water used for general consumption is discharged as a municipal wastewater stream. Because our manufacturing operations are carried out within factories or on covered areas, the impact on groundwater is limited.

Water withdrawals

Our water withdrawals were largely unchanged during the year. PG Bison and Safripol account for the highest proportion of water withdrawals in the group, at 28% and 52% respectively. Approximately 17% of the water withdrawn is reused in our processes.

Note: We have refined our water estimations in the group and also excluded reused processed water from our withdrawal calculations, which were included in our prior year disclosure. We have therefore restated FY23 and FY22 data. Currently, less than 10% of our water withdrawals are estimated.

BIODIVERSITY

PG Bison operates commercial forestry plantations in the northeastern and southern Cape areas of South Africa. The forestry businesses consist of North East Cape Forests (‘NECF’) that operate in the Ugie area of the northeastern Cape and South Cape Forests (‘SCF’) that operates in the George area of the southern Cape. In total, these businesses operate on an area of c. 96 157 hectares of which 44 755 hectares is commercially afforested plantations. The remainder consists of indigenous vegetation such as grassland, fynbos, wetlands, riparian zones and a limited number of indigenous forests. NECF also operates a commercial herd of cattle as part of a multiple land use approach.

The management of both NECF and SCF is certified by the FSC. The FSC is an international, non-profit organisation that supports environmentally appropriate, socially beneficial and economically viable management of the world’s forests. It is an association of members comprising a diverse group of representatives from environmental and social groups, the timber trade and the forestry profession, indigenous people’s organisations, community forestry groups and forest product certification organisations from around the world.

Commercial forestry has potential negative environmental impacts on water, soil and biodiversity. PG Bison recognises these potential impacts, and the division’s forestry operational procedures aim to minimise them through detailed operational planning processes that determine the mitigating measures which minimise negative environmental and social impacts.

The management of natural areas is facilitated by a dedicated Conservation Management Plan (‘CMP’) for each plantation. Central to the CMP is the mapping and categorisation of all non-commercial areas on the plantations, using the forestry industry’s Environmental Conservation Database Standards and Methodology. 

Periodic field visits are used to verify the mapping and classification as well as the levels of alien weed invasion of conservation areas.

The general objectives of all CMPs are to provide:

Land cover classification of all areas not planted to commercial plantation compartments

Identification of management units

Identification of areas with high biodiversity and cultural importance requiring specific management programmes

Scheduling of conservation operations for all conservation areas, including weeding, burning and special protection of areas of importance

Long-term protection of biodiversity values and attributes throughout the forestry/conservation landscape

For NECF, a total of 34 Priority Conservation Areas (‘PCAs’) have been identified, totalling more than 18 000 hectares. These include nesting sites of endangered bird species, habitats of rare bird species, significant wetland systems and rare plant communities. For SCF, a total of eight PCAs have been identified, totalling 6 100 hectares. These include indigenous forests, wetland, fynbos and a peat bog.

Numerous rare, threatened and endangered bird, plant, mammal and fish species have been recorded in PG Bison’s plantations and, wherever necessary and feasible, forest management planning and practices consider and mitigate potential negative impacts of operations on such species and populations.

Environmental monitoring is conducted periodically to provide valuable management information on the effect of forest management on the natural environment. Monitoring includes aquatic biomonitoring, water quality monitoring, grassland monitoring, indigenous forest monitoring, observations of rare, threatened and endangered species and monitoring of cultural heritage sites. Monitoring results and management recommendations from specialists indicate where management practices need to be reviewed and revised to achieve conservation objectives.