2.5 Risk and materiality
Gold Fields uses a set of four well-defined processes to assess its risks, opportunities and material issues:
- Key risks – and mitigating actions – are identified using an Enterprise-wide Risk Management (ERM) process
- The Group takes into account the views and concerns of a wide group of stakeholders through direct and indirect stakeholder engagement processes
- As part of the integrated reporting process, the Group conducts comprehensive interviews with key management, collects operational, financial and sustainability data, and analyses the short-, medium- and long-term strategic trends affecting the business
- Material sustainability issues are assessed and prioritised according to the GRI G4 Guidelines, and comprehensive internal and external stakeholder interviews conducted to determine the relative ranking of material issues
The outputs from these four processes have informed the identification of the risks, opportunities and material issues contained in this Integrated Annual Report (IAR). Key elements of the four processes are set out alongside.
Internal assessment: Enterprise-wide Risk Management (ERM)
Gold Fields’ mature ERM process is aligned with the ISO 31000 international risk management standard, as well as the risk management requirements of South Africa’s King III Code.
The ERM process – which prioritises risks on the basis of probability and severity – is based on the following process:
- Workplace risk assessments: Managers carry out ongoing workplace risk assessments in accordance with international standards (for example, ISO 31000 and the SAMREC guideline)
- Mine/region reviews: Each regional and mine ExCo conducts a review of the top risks and mitigating strategies on a quarterly basis
- Presentation to the Group ExCo: Each mine manager presents the top 10 risks and mitigation actions to Exco during quarterly business reviews – and mitigating actions are assessed for relevance and effectiveness
- Compilation of Group Risk Register: The Group Risk Manager extracts the top risks from the regional and operational registers in line with the tolerance levels set by the Board, and compiles the Group Risk Register
- Assessment and moderation: The risks are assessed and moderated at a Group-level by relevant risk owners and ExCo members
- ExCo risk meeting: Every six months, ExCo reviews the top risks and sets and monitors Group-wide mitigation strategies
- Audit Committee review: The Audit Committee reviews the top risks and mitigation strategies twice a year. This work will move to the reconstituted Risk Committee during 2016 (AFR – p2).
- Internal audit review: The internal audit function assesses progress against – and adherence to – mitigation strategies on a regular basis
The Group heat maps on pages 46 – 49 set out:
- The Group’s top 10 risks as well as top five risks per region, as identified through the ERM process (i.e. the Group’s top operational and strategic risks at the end of 2015)
- Key movements in the top 10 Group risks between 2014 and 2015
- Key mitigating strategies to avoid and/or mitigate the top 10 Group risks for 2015, and the top five risks per region
External assessment: Stakeholder engagement
Proactive and frank stakeholder engagement plays a vital role in helping Gold Fields identify its material issues. All stakeholder engagement activities are informed by the AA 1000 principles of:
- Inclusivity
- Materiality
- Responsiveness
Gold Fields’ engagement activities fall into two categories:
- Direct engagement, including organised dialogues, roundtable discussions, one-to-one meetings, internal surveys and regular engagement with local communities and other stakeholders at each operation and project
- Indirect engagement, including the use of external benchmarks and standards (such as the UN Global Compact) that are designed to reflect and address societal expectations
Operational engagement
At an operational-level, all mines
identify, prioritise and directly engage
stakeholder groups that have the
potential to affect their operational,
sustainability or financial
performance.
This includes, for example, ongoing engagement of:
- Employees and their representatives by our human resources teams and general managers
- Local communities by our community relations teams and general managars
- Regulators by our discipline heads and general managers
- Key contractors and suppliers by our procurement teams, health and safety managers and operational personnel
Strategic engagement
At a strategic-level, Gold Fields’
corporate and regional management
teams implement an ongoing
programme of direct and indirect
engagement. This includes ongoing
engagement of:
- In-country peer companies by the regional Executive Vice-Presidents (EVPs)
- Central, regional and local governments by the Group’s corporate affairs teams and legal teams, as well as members of the Group ExCo and regional EVPs
- Shareholders and potential investors by the Group investor relations team, CEO, CFO and regional EVPs
- Materiality assessment process (p45)
The outcomes of stakeholder engagement are integrated into Gold Fields’ internal reporting processes – including its quarterly regional board reports, sustainable development reports and other documents. In addition, they inform Gold Fields’ ERM process, and external reporting processes.
Integrated reporting process
The outputs of the ERM and stakeholder engagement processes are analysed alongside the information collected for the IAR. This includes:
- Gold Fields’ operational, financial and sustainability data generated through our data management systems
- The output of dedicated integrated reporting interviews with managers and executives at operation-, region- and Group-level
- Short-, medium- and long-term strategic analysis of the external environment
This is with the aim of:
- Gaining greater insight into the Group’s material issues
- Identifying and assessing the management actions taken in response to each material issue – as well as the effectiveness of such actions
- Defining the content of this IAR
The IAR is prepared on the basis of this process and is subject to a rigorous internal assurance process. The Board – through the Audit Committee – is ultimately responsible for the contents of this IAR.
Materiality assessment
Gold Fields has carried out a formal process to assess and prioritise its material sustainability issues. It has done so using criteria aligned with those set out in the GRI G4 Guidelines taking into account the actual or potential impact of these issues on Gold Fields and its stakeholders.
Materiality process
Gold Fields’ GRI G4 materiality
process is based on a series of
iterative assessments using a
common, quantitative scoring
framework. It draws on a range of
internal and external sources, as
outlined below:
- National and international legislation and regulation
- Standards
Internal:
Gold Fields’ Vision and Values; Sustainable Development Framework; Stakeholder Charters; and Code of Ethics
External:
10 Principles of the UN Global Compact; UN Guiding Principles on Business and Human Rights; ICMM 10 Principles on Sustainable Development; and ISO 14001 (environment) and OHSAS 180001 (safety) management standards - Documentation
Internal:
Gold Fields Board reports; Safety, Health and Sustainable Development reporting; and ERM output documents
External:
Media reports; NGO commentary; and sector analysis - Engagement
Internal:
Engagement around the specific requirements of the GRI with senior management
External:
Engagement with external stakeholders
Each step of the G4 materiality process is outlined below with the outcome shown in the table below.
These steps involve detailed engagement to determine the ranking of Gold Fields’ material sustainability issues. Senior executives at the Company, including its regional operations, and representatives of external stakeholders – including industry, government, community and environmental organisations – were briefed on the GRI process and asked to evaluate all G4 aspects in terms of importance to Gold Fields and its stakeholders. This took the form of a ranking with 1 being the most critical to Gold Fields and its stakeholders, and 10 considered not material at all.
Once these rankings had been made they were averaged and a score reached for each aspect. A score between 1 and 5 means that these issues are material to Gold Fields. Scores between 5 and 10 suggest that internal and external stakeholders consider these issues of less material importance to Gold Fields and its stakeholders. However, this does not mean that they will not be addressed by our management team when the issues arise.
The outcome – depicted in the table alongside – ranks health and safety, water management, social licence to operate and management of environmental issues as the key GRI aspects that internal and external stakeholders consider most material to Gold Fields and its wider stakeholder base.
Winder house at South Deep |
Flow from operating environment to risks, materiality and strategy
Prioritised materiality issues
Initial research and engagement | STEP 1 |
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Development of initial results | STEP 2 |
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Integration of feedback | STEP 3 |
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Development of the final materiality results | STEP 4 |
Prioritised material issues
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Group and regional risk tables
Gold Fields – Top 10 risks
Top 10 risks in 2015 – Mitigating strategies
2014 Risks – How we performed in 2015
2014 RISK RATING
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Group and regional risk tables
Top 5 risks in 2015 – Americas region |
Top 5 risks in 2015 – Australia region |
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Top 5 risks in 2015 – South African region |
Top 5 risks in 2015 – West African region |
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