KAP's reaffirmation letter in support of the Ten Principles of the UNGC will be published on the website before the end of November 2021:

SOURCES OF INFORMATION: see KAP website
INTEGRATED REPORT 2021:https://kap.co.za/wp-content/uploads/2021/10/kap-integrated-report-2021.pdf
CODE OF ETHICS: https://kap.co.za/wp-content/uploads/2020/02/kap-code-of-ethics-14022020.pdf
SUPPLIER CODE OF CONDUCT:https://kap.co.za/wp-content/uploads/2020/01/kap-supplier-code-of-conduct.pdf
SOCIAL AND ETHICS COMMITTEE REPORT: https://kap.co.za/wp-content/uploads/2021/10/kap-social-and-ethics-committee-report-2021.pdf

EXTRACTS: CODE OF ETHICS 12. Labour Practices and Human Rights
KAP is committed to fair labour practices in the workplace and expects its employees to take appropriate steps to ensure that they subscribe to the same principles and practices, which include:
• a prohibition of all forms of unfair discrimination;
• an intolerance of the inhumane treatment of employees and behaviour which is tantamount to any
form of harassment in the workplace;
• a prohibition of the use of child and forced labour;
• the prohibition of excessive working hours;
• meeting or exceeding minimum wage;
• the recognition of the right of employees to freedom of association, organisation and collective
bargaining;
• respect for the privacy of all employees; and
• the provision of equal opportunities without discrimination on the basis of age, colour, creed,
disability, race, ethnic origin, gender, marital or family status, religion or sexual orientation. In addition, all promotions and recognition will be based purely on merit.
KAP expects all employees to treat fellow employees and KAP’s other stakeholders with respect and consideration. Harassment or unequal treatment of other employees is not permitted.

SUPPLIER CODE OF CONDUCT:
9. Labour Practices and Human Rights
KAP is committed to fair labour practices in the workplace and expects its Suppliers to take appropriate steps to ensure that they and their suppliers subscribe to the same principles and practices, and comply with labour laws of the country in which they operate, which include:
• a prohibition of all forms of unfair discrimination;
• an intolerance of the inhumane treatment of employees and behaviour which is tantamount to
any form of harassment in the workplace;
• a prohibition of the use of child and forced labour;
• a prohibition of excessive working hours;
Page 3 Ref: KAP-CPP-143 | Version 2 | 20-01-2020
• meeting or exceeding minimum wages;
• the recognition of the right of employees to freedom of association, organisation and collective
bargaining;
• respect for the privacy of all employees; and
• the provision of equal opportunities without the discrimination on the basis of age, colour, creed,
disability, ethnic origin, gender, marital or family status, religion or sexual orientation. In addition, all promotions and recognition will be based purely on merit.

STATEMENT:
CEO IN INTEGRATED REPORT
In October 2020, we became a participant in the United Nations Global Compact and have begun mapping our activities to the SDGs. We are committed to making the Global Compact and its principles and practices part
of the strategy, culture, and day-to-day operations of the company. We believe that the SDGs are the most comprehensive set of goals that capture not only the emerging ESG dimensions that are critical to business, but also integrate the economic imperative of why we need stable, growing businesses.
While we use FTSE4Good and the SDGs as valuable measurement and benchmarking tools, the principle of sustainability is becoming integrated into the group’s strategy, products, services and processes, making it an essential component of our business philosophy and operating model. This is illustrated by the evolution of our strategic intent toward building exceptional businesses that create lasting economic and social value.

PG 52 INTEGRATED REPORT
KAP’s strategic intent is to build exceptional businesses that create lasting economic and social value. As part of our commitment to this goal, we follow an approach that aims to integrate sustainability principles and practices into our business and to create a common framework that we can use to communicate the contributions we make to creating a sustainable world.
United Nations Sustainable
Development Goals (‘UN SDGs’)
In October 2020, we committed to making the United Nations Global Compact (‘UNGC’) and its principles an integral part of our strategy.
As a business, we are therefore undertaking a process of aligning to the UN SDGs, 17 goals that are aimed at addressing a number of global issues such as ending poverty, working to improve education and healthcare, reduce inequality, support economic growth, and protect and sustain the natural environment on a global basis. We believe these are the most comprehensive set of goals related to the environmental, social, and governance (‘ESG’) issues that we face in business and society today.

INTEGRATED REPORT PG 54:
Human rights
KAP subscribes to the principles of human rights, as expressed in the Constitution of the Republic of South Africa (1996), the United Nations Universal Declaration of Human Rights (1948), and the 10 principles set out in the United Nations Global Compact (2000).
Human rights principles are incorporated into all of our policies and practices, and are an integral component of our code of ethics. Compliance with human rights principles is monitored by the social and ethics committee and we are in the process of publishing
a dedicated human rights policy. This will create a standardised framework for use throughout the group

PG 62:
Creating an ethical culture
The KAP code of ethics was reviewed in FY20 and updated. The code, which is available on the KAP website, is supplied and explained to all employees as part of our induction process. The company and its employees have a duty to comply with applicable laws and regulations and to behave in a responsible and ethical manner.
As an expression of our ethics, we subscribe to the principles of free and fair competition, as embodied in the competition laws that apply to our business. There is ongoing training on competition law and the changing competition regulations for senior and selected middle management across all operations. Managers are also measured on the fulfilment
of their B-BBEE and employment equity targets, health and safety performance, succession planning, internal audit, compliance, and governance targets.
Suppliers are expected to comply with the group’s supplier code of conduct, which sets out the principles by which we work and the expectations we have of suppliers who conduct business with us. In addition, any supplier, employee, or representative providing on-site services at a KAP facility is required to adhere to our safety standards and site rules.
As part of the process of monitoring our ethics,
we have an anonymous whistle-blower hotline
called KAPREF. This allows anyone to report illegal
or unethical behaviour, including mismanagement, discrimination, harassment, vandalism, corruption, violence, and theft. KAPREF is available to both national and international callers. Hotline activities are reported to the social and ethics committee.
Diversity
The group’s commitment to creating a diverse workforce is illustrated in our board diversity policy. We are also fully compliant with the provisions of
the Broad-Based Black Economic Empowerment Act (No. 53 of 2003) (‘B-BBEE Act’), as well as with the amended black economic empowerment codes of good practice. As a group, KAP has a Level 5 B-BBEE rating, with some divisions being rated as Level 2, 4, 5 and 6. Our B-BBEE verification process is conducted independently by AQRate.
Gender diversity is also a key focus and management has set internal tangible targets to improve both race and gender diversity in leadership positions over the next five years. At board level, 44% of the independent non- executive directors are women, with 27% of the total board composition being made up of black women.
While women make up 19% of our total staff complement, they occupy 24% of all critical and specialist positions in such areas as finance, tax, and human capital. At operational level, women are employed as general managers, operations managers, key account managers, and sales managers.
Several initiatives are in place to increase female representation across all operations and levels of management in the future.

SOCIAL AND ETHICS:

2022 TARGETS
Review and develop a standalone Human Rights Policy to be published in 2022 See intent on pg 54 and
increase our diversity ratio
Human rights
KAP subscribes to the principles of human rights, as expressed in the Constitution of the Republic of South Africa (1996), the United Nations Universal Declaration of Human Rights (1948), and the 10 principles set out in the United Nations Global Compact (2000).
Human rights principles are incorporated into all of our policies and practices, and are an integral component of our code of ethics. Compliance with human rights principles is monitored by the social and ethics committee and we are in the process of publishing
a dedicated human rights policy. This will create a standardised framework for use throughout the group.

15. Reporting Ethical Concerns
Any employee should report improper behaviour that violates this Code to the KAPREF ethics report line. These communications shall remain confidential and shall be disclosed to others as necessary to investigate the activity, take appropriate action or as otherwise required by law.
KAPREF can be reached on the following numbers:
Calling from within South Africa : 0800 200 651 Calling from outside of South Africa : +27 12 543 5311

SOCIAL AND ETHICS COMMITTEE: RESPONSIBILITIES see Social and Ethics report
The operations of the KAP social and
ethics committee (‘the committee’) are guided by formal terms of reference and contain provisions that are in line with
the requirements of the Companies Act of South Africa (No.71 of 2008), as amended, and the Companies Regulations (2011) (collectively ‘the Companies Act’), the Listings Requirements of the JSE Limited (‘JSE LR’) and the recommendations of the King IV Report on Corporate GovernanceTM for South Africa (2016) (‘King IVTM’). The committee’s terms of reference have been approved
by the KAP board of directors (‘the board’) and are reviewed annually for relevance.
The committee is both a statutory committee and a board committee in respect of other duties assigned to it by the board.
The committee enjoys the support – and draws on the competencies and experience – of the members serving on the audit and risk committee, the nomination committee, the human capital
and remuneration committee, and the executive committee (‘Exco’) in exercising certain overlapping duties. These occur in the areas of integrated reporting, remuneration, human capital, employment equity (‘EE’), broad-based black economic empowerment (‘B-BBEE’), and other aspects of the company’s business.
Objective and scope
The role of the committee is to assist the board with the oversight of social and ethical matters relating to the KAP group. The overall objectives of the committee are:
• to monitor KAP’s activities with regard to the duties that are required of it by the Companies Act, the JSE LR and King IVTM, with a specific focus
on those duties stated in regulation 43(5) of the Companies Act, which relate to:
– social and economic development;
– the prevention of fraud and corruption;
– the promotion of ethical behaviour;
– good corporate citizenship;
– the environment, health, and public safety;
– public relations and consumer relationships;
– employment and labour relations;
– compliance with applicable legislation; and
– the impact of the company’s activities, products
and services on communities;
• to draw matters within its mandate to the board’s
attention as required; and
• to report to the company’s shareholders on the matters within its mandate.
Duties and responsibilities
The committee’s duties and responsibilities are
as specified in the committee’s own terms of reference, the Companies Act, the JSE LR, and King IVTM. These are presented below as an overview, which is representative but should not be regarded as exhaustive:
Among others, the committee deals with issues and reports relating to:
• the company’s standing in terms of the goals and purposes of the principles set out in the United Nations Global Compact (‘UNGC’) in the areas of human rights, labour, the environment, and corruption;
• the instruments of the Organisation for Economic Co-operation and Development (‘OECD’) that are aimed at combating corruption and averting the solicitation of bribes and extortion;
• the instruments of the OECD that are aimed at promoting economic and social well-being;
• the protocols and recommendations of the International Labour Organisation (‘ILO’) on
decent work and working conditions, freedom of association, the right to collective bargaining, and the elimination of forced or compulsory labour and discrimination in the workplace;
• the company’s employment relationships with its employees and labour unions;
• the company’s contribution towards the educational development of its employees and other
employee benefits;
• compliance with:
– the Employment Equity (‘EE’) Act;
– the Broad-Based Black Economic Empowerment
(‘B-BBEE’) Act and the new Codes of Best
Practice (‘the Codes’);
– the Occupational Health and Safety Act (No. 85 of
1993) (‘OHASA’); and
– other relevant and applicable legislation in the
areas of labour, the environment, health and public safety, insider trading, etc.

HUMAN RESOURCE POLICIES: See Integrated Report pg 54
Responsible employment
As a group, we subscribe to the principles outlined in the United Nations Global Compact (‘UNGC’),
the recommendations of the International Labour Organisation, and the regulatory framework defined by the Organisation for Economic Cooperation and Development (‘OECD’). We measure the group’s practices against these benchmarks annually.
Our code of ethics provides employees with information about the core principles of the group, including legal compliance, ethical dealings, labour practices, human rights, and gender and race diversity. We recognise the right of employees to freedom of association, organisation, and collective bargaining.
We also meet or exceed all minimum wage requirements as legislated in South Africa. During the reporting period, we completed a detailed review and analysis of the vertical pay gap to ensure that KAP remunerates fairly, responsibly, and transparently.
We also submitted all required employment equity plans and reports in line with the Employment
Equity Act (No. 55 of 1955) and completed a detailed analysis of pay differentials to ensure that all of our divisions comply with the principle of equal pay for work of equal value.
Furthermore, our staff have the option to voluntarily participate in both medical and health schemes. Membership of a retirement scheme is compulsory for permanent employees. Overtime is strictly monitored and reported on by each division to ensure that we remain compliant with all relevant labour laws.
We also comply with the provisions of the Basic Conditions of Employment Act (No. 75 of 1997), which prohibits forced labour, and we do not employ children under the age of 18 years.

STAKEHOLDER EXTRACT PG 54 INTEGRATED REPORT
Community relations
Some of our manufacturing businesses operate in communities that have been negatively affected by unemployment, poverty, poor service delivery, and related socio-economic issues. As many of our workers live in these communities, we are deeply committed
to ensuring that they are stable and sustainable. Each division therefore deals directly with the local communities situated near their operations through recognised community-based structures in order to facilitate positive socio-economic development in the area.
The perception of the role of business in the communities in which we operate is often unpredictable. It has therefore become a key component of our strategy to establish structures and relationships that will enable our businesses to manage engagement with local communities in an open and collaborative way.
Our approach to community relations is based on building mutually respectful, beneficial, and lasting relationships with all community stakeholders through transparency, social justice, integrity, and accountability.
As an integral part of this process, we provide stakeholders with formal channels that they can use to address concerns and grievances with the company in a structured and reliable way.
We also continuously monitor developments within communities and evaluate the extent to which they may impact on our operations. We do this through regular engagement with both formal and informal structures and by proactively developing plans to deal with community issues as and when they arise.
Given the extent to which we engage with communities, our community relations strategy enables our businesses to maintain mutually beneficial and stable relations with communities and local authorities in the areas in which they are situated.
For example, the Durban-based PET plant of our polymers division, Safripol, established a community engagement forum in 2016 to facilitate discussions with local communities regarding potential employment opportunities following an upgrade to the plant. The forum continues to meet on a regular basis to discuss various issues of importance to affected communities, including environmental issues, community health
and safety, employment, and the provision of financial support to local schools.
In another example, as our PG Bison cluster in the Eastern Cape is the biggest employer in the region, we have a great deal of responsibility to the communities in Ugie and Maclear, where our forests and board plant are situated. We use an integrated community engagement approach to facilitate relations with these communities. Our activities include a community forum that is managed and supported by the local
and regional municipality, direct engagement with the provincial government, and partnerships with local taxi associations and small business associations. We also support the local municipality in the provision of key infrastructure and services.
Our logistics businesses engage with communities
in a similar way. Unitrans South Africa has a 36-year service relationship with Richards Bay Minerals (‘RBM’). As incidents of violence and unrest frequently occur in the communities neighbouring RBM operations, Unitrans has partnered with the leadership of the local traditional authority and other community structures to address some of the causes of this instability. This partnership has gained the required level of acceptance within these communities, and enables us to make a positive contribution to social development and to run our business operations effectively. On various mine personnel transport contracts, Unitrans Passenger also partners with communities.
Given the extent to which we engage with communities, our community relations strategy enables our businesses to maintain mutually beneficial and stable relations with communities and local authorities in the areas in which they are situated.

VIOLATIONS AND REPORTING;
There are no investigations into any Human Rights abuses. The anonymous , independently managed whistleblowing mechanism is available to all stakeholders to report any abuses or violations. Each report is investigated by the internal audit function and reported back in the various Audit Committees, which are attended by both internal and independent external auditors. The Social and Ethics committee, which is mandated by the Board, will be made aware of any human rights violations

PROGRESS:
Creating an ethical culture
The KAP code of ethics was reviewed in FY20 and updated. The code, which is available on the KAP website, is supplied and explained to all employees as part of our induction process. The company and its employees have a duty to comply with applicable laws and regulations and to behave in a responsible and ethical manner.
As an expression of our ethics, we subscribe to the principles of free and fair competition, as embodied in the competition laws that apply to our business. There is ongoing training on competition law and the changing competition regulations for senior and selected middle management across all operations. Managers are also measured on the fulfilment
of their B-BBEE and employment equity targets, health and safety performance, succession planning, internal audit, compliance, and governance targets.

SOURCES OF INFORMATION:
INTEGRATED REPORT 2021:https://kap.co.za/wp-content/uploads/2021/10/kap-integrated-report-2021.pdf
CODE OF ETHICS: https://kap.co.za/wp-content/uploads/2020/02/kap-code-of-ethics-14022020.pdf
SUPPLIER CODE OF CONDUCT:https://kap.co.za/wp-content/uploads/2020/01/kap-supplier-code-of-conduct.pdf
SOCIAL AND ETHICS COMMITTEE REPORT: https://kap.co.za/wp-content/uploads/2021/10/kap-social-and-ethics-committee-report-2021.pdf
SEE WEBSITE: https://kap.co.za/sustainability/social/

EXTRACTS: CODE OF ETHICS
9. Labour Practices and Human Rights
KAP is committed to fair labour practices in the workplace and expects its Suppliers to take appropriate steps to ensure that they and their suppliers subscribe to the same principles and practices, and comply with labour laws of the country in which they operate, which include:
• a prohibition of all forms of unfair discrimination;
• an intolerance of the inhumane treatment of employees and behaviour which is tantamount to
any form of harassment in the workplace;
• a prohibition of the use of child and forced labour;
• a prohibition of excessive working hours;
• meeting or exceeding minimum wages;
• the recognition of the right of employees to freedom of association, organisation and collective
bargaining;
• respect for the privacy of all employees; and
• the provision of equal opportunities without the discrimination on the basis of age, colour, creed,
disability, ethnic origin, gender, marital or family status, religion or sexual orientation. In addition, all promotions and recognition will be based purely on merit.

EXTRACT INTEGRATED REPORT PG 62
Responsible employment
As a group, we subscribe to the principles outlined in the United Nations Global Compact (‘UNGC’),
the recommendations of the International Labour Organisation, and the regulatory framework defined by the Organisation for Economic Cooperation and Development (‘OECD’). We measure the group’s practices against these benchmarks annually.
Our code of ethics provides employees with information about the core principles of the group, including legal compliance, ethical dealings, labour practices, human rights, and gender and race diversity. We recognise the right of employees to freedom of association, organisation, and collective bargaining.
We also meet or exceed all minimum wage requirements as legislated in South Africa. During the reporting period, we completed a detailed review and analysis of the vertical pay gap to ensure that KAP remunerates fairly, responsibly, and transparently.
We also submitted all required employment equity plans and reports in line with the Employment
Equity Act (No. 55 of 1955) and completed a detailed analysis of pay differentials to ensure that all of our divisions comply with the principle of equal pay for work of equal value.
Furthermore, our staff have the option to voluntarily participate in both medical and health schemes. Membership of a retirement scheme is compulsory for permanent employees. Overtime is strictly monitored and reported on by each division to ensure that we remain compliant with all relevant labour laws.
We also comply with the provisions of the Basic Conditions of Employment Act (No. 75 of 1997), which prohibits forced labour, and we do not employ children under the age of 18 years.

EXTRACT PG 63 AND 64 INTEGRATED REPORT
DIversity
The group’s commitment to creating a diverse workforce is illustrated in our board diversity policy. We are also fully compliant with the provisions of
the Broad-Based Black Economic Empowerment Act (No. 53 of 2003) (‘B-BBEE Act’), as well as with the amended black economic empowerment codes of good practice. As a group, KAP has a Level 5 B-BBEE rating, with some divisions being rated as Level 2, 4, 5 and 6. Our B-BBEE verification process is conducted independently by AQRate.
Gender diversity is also a key focus and management has set internal tangible targets to improve both race and gender diversity in leadership positions over the next five years. At board level, 44% of the independent non- executive directors are women, with 27% of the total board composition being made up of black women.
While women make up 19% of our total staff complement, they occupy 24% of all critical and specialist positions in such areas as finance, tax, and human capital. At operational level, women are employed as general managers, operations managers, key account managers, and sales managers.
Several initiatives are in place to increase female representation across all operations and levels of management in the future.
Employee engagement
We strive to create an open, inclusive culture and an environment in which staff are encouraged to voice their opinions and participate in building a unified organisational culture supported by common values. Our values encompass our commitment to fairness, accountability, transparency, and ethical leadership and are aligned with the guidelines set out in the King IV Report on Corporate GovernanceTM for South Africa (2016) (‘King IVTM’).
Workplace initiatives put in place in response to the initial Covid-related lockdown were continued, as appropriate, throughout the reporting period. Digitally enabled communications are in place in all of our divisions to facilitate communication between staff, some of whom are still working remotely. Our CEO, Gary Chaplin, also continues to present webcasts to employees to keep them updated of important developments. Senior management participates in a regular inter-divisional engagement forum to share experiences and case studies. These forums are also used as a channel for further development and training on relevant topics, such as ethics, governance, competition law, and leadership-related matters.
Human capital continued
The divisional managers regularly communicate with their staff using various mechanisms, including established union structures, divisional CEO roadshows, and plant meetings. All the operations have detailed grievance procedures, which enable all employees to raise grievances without fear of victimisation to ensure the ongoing respect of employees’ rights.
We endorse the democratic values of human dignity, equality, and freedom as enshrined in the South African Constitution and the Bill of Rights, and are guided by these in every aspect of our engagement with employees.
Labour relations
Effective management of labour relations is critical to the sustainability of all of our businesses. Widespread evidence shows that organisations with strong structures in place to determine conditions of employment and manage labour disputes experience fewer incidents of labour-related conflict.
At both group and divisional level, we are recognised as an industry leader in labour relations. We have sound relationships with all stakeholders, including industry organisations and trade unions, and we create an environment conducive to achieving mutually beneficial outcomes and collective agreements with these unions. We also play a meaningful role in industry structures, including in the bargaining council structures and employer associations in the industries in which our divisions operate, and maintain relationships with
key regulators.
We build strong relationships with other employers to ensure the employee associations adopt collective bargaining strategies that are consistent with our objectives.
During the reporting period, the impact of Covid-19 compelled labour, business, and government to cooperate in order to deal with the economic impact of the various levels of lockdown and the resulting impact on employees. We successfully executed the roll-out
of the socio-economic stimulus measures such as
the Unemployment Insurance Fund (‘UIF’) Temporary Employment Relief Scheme (‘TERS’) and an amendment to pension fund regulations in order to support distressed employees.
At KAP, scheduled wage negotiations took place in four of our seven divisions during the reporting period and new wage agreements were put in place.
As reported in the financial results, Covid-19 had a significant impact on several operations and unfortunately these operations were forced to restructure. We restructured our Automotive Components division in anticipation of subdued global vehicle demand and closed our Intercity and Tourism operations, which resulted in retrenchments. These unavoidable lay-offs were handled not only according to legal requirements, but also in an ethical and empathetic way. In the process we worked through the labour structures and within the labour laws.

As part of the process of monitoring our ethics,
we have an anonymous whistle-blower hotline
called KAPREF. This allows anyone to report illegal
or unethical behaviour, including mismanagement, discrimination, harassment, vandalism, corruption, violence, and theft. KAPREF is available to both national and international callers. Hotline activities are reported to the social and ethics committee.

EXTRACT PG 63 INTEGRATED REPORT:
Employee engagement
We strive to create an open, inclusive culture and an environment in which staff are encouraged to voice their opinions and participate in building a unified organisational culture supported by common values. Our values encompass our commitment to fairness, accountability, transparency, and ethical leadership and are aligned with the guidelines set out in the King IV Report on Corporate GovernanceTM for South Africa (2016) (‘King IVTM’).
Workplace initiatives put in place in response to the initial Covid-related lockdown were continued, as appropriate, throughout the reporting period. Digitally enabled communications are in place in all of our divisions to facilitate communication between staff, some of whom are still working remotely. Our CEO, Gary Chaplin, also continues to present webcasts to employees to keep them updated of important developments. Senior management participates in a regular inter-divisional engagement forum to share experiences and case studies. These forums are also used as a channel for further development and training on relevant topics, such as ethics, governance, competition law, and leadership-related matters. The divisional managers regularly communicate with their staff using various mechanisms, including established union structures, divisional CEO roadshows, and plant meetings. All the operations have detailed grievance procedures, which enable all employees to raise grievances without fear of victimisation to ensure the ongoing respect of employees’ rights.
We endorse the democratic values of human dignity, equality, and freedom as enshrined in the South African Constitution and the Bill of Rights, and are guided by these in every aspect of our engagement with employees.

FAIR PAY EXTRACT FROM INTEGRATED REPORT
Our code of ethics provides employees with information about the core principles of the group, including legal compliance, ethical dealings, labour practices, human rights, and gender and race diversity. We recognise the right of employees to freedom of association, organisation, and collective bargaining.
We also meet or exceed all minimum wage requirements as legislated in South Africa. During the reporting period, we completed a detailed review and analysis of the vertical pay gap to ensure that KAP remunerates fairly, responsibly, and transparently.
We also submitted all required employment equity plans and reports in line with the Employment
Equity Act (No. 55 of 1955) and completed a detailed analysis of pay differentials to ensure that all of our divisions comply with the principle of equal pay for work of equal value.
Furthermore, our staff have the option to voluntarily participate in both medical and health schemes. Membership of a retirement scheme is compulsory for permanent employees. Overtime is strictly monitored and reported on by each division to ensure that we remain compliant with all relevant labour laws.

HEALTH AND SAFETY EXTRACT FORM INTEGRATED REPORT
Occupational health and safety (‘OHS’)
The health and safety of our employees is a key strategic objective and is considered in every decision we make. All of our divisions comply with the health and safety regulations in place for their various industries. We have implemented workplace safety and health measures to maintain, as far as reasonably practical, a working environment that protects the health, safety, and welfare of employees, and that safeguards members of the public who may be exposed to risks from work activity.
Policy
Our code of ethics sets out our commitment to health and safety and applies to all employees and contractors working on-site. The KAP CEO, Gary Chaplin, is ultimately responsible for health and safety within the organisation, a responsibility which he has delegated to specific individuals at divisional level. Each business identifies, measures, and reports on health and safety matters. Compliance is reported quarterly at the divisional audit and risk committee meetings.
Procedures
Our continuously evolving OHS procedures include a risk management plan that is supported by a legal, risk,
and incident register, which allows for the identification of hazards as well as regular risk assessments, internal audits, safety training, management reviews, and third-party audits, which are undertaken on both existing business and any new projects. Targets are set by each business and their performance is measured against these. In-depth investigations of all OHS incidents are conducted and mitigation procedures are reviewed regularly. Individually, senior executives are measured on their divisional health and safety targets.
At operational level, comprehensive safety management systems, processes, and procedures are in place. Safety representatives are appointed from the shop floor in accordance with the Occupational Health and Safety Act
(No. 85 of 1993). We also continuously train staff and contractors in health and safety procedures. During the period under review, 9 870 people were trained or benefited from OHS interventions (FY20: 9 534). All of our divisions are regularly audited by accredited independent specialists to ensure compliance with statutory and legal requirements.
Healthcare
Various programmes are also in place to ensure the general health of our employees.
HIV/Aids is addressed in all divisional policies, and each division has a holistic and comprehensive programme in place to promote awareness, prevention, and voluntary testing, as well as to provide support. Policies cover issues such as confidentiality, protection from discrimination, and our commitment to the implementation of programmes that are relevant – and of value – to each division and its employees. Where applicable, local communities are involved in initiatives such as World Aids Day and HIV/Aids education is ongoing.
Where appropriate, certain businesses have invested in on-site occupational and primary healthcare clinics for their staff. The clinics play a crucial role in dealing with injury-on-duty cases and offer first aid assistance. They are staffed by qualified nursing staff, who are assisted by medical doctors. The services they offer include workplace health risk assessments, chronic disease screening and management (including for TB), industrial hygiene, and medical surveillance. They also offer primary healthcare medication and family planning guidance. Where there is no clinic on site, an occupational health practitioner is contracted to perform medical surveillance.
Within our transport environment, mobile clinics are available on the main routes we use. These clinics test for chronic conditions and dispense chronic and other primary care medication.

EXTRACT FROM WEBSITE: https://kap.co.za/sustainability/social/Health and safety
A key objective for the group is the creation and maintenance of an injury-free and safe workplace. Health and safety are managed through committees by divisional and regional health and safety managers, risk managers and occupational health and safety representatives, including representatives from the shop floor.

The CEO is ultimately responsible for health, safety and the environment, which he delegates throughout the organisation. Each business reports back to the board on safety, health and environmental issues. Targets are set by each business, and management are measured against these targets.

External consultants and administrators are appointed when specialised expertise is required or when audits are conducted. Regular hazard identification and risk assessments, internal audits, safety training, management reviews and third-party audits are undertaken.

All new operational employees and all contractors receive health and safety induction training, with regular and ongoing reviews and training. In the logistics businesses, where operational risks could have a direct public impact, annual medical assessment of our drivers are compulsory, and regular training includes driver training, the conveyance of dangerous goods by road, safe work procedures, defensive driving training and fatigue management. Training also includes first aid, firefighting and general safety awareness.

Integrated computerised safety, health, environmental and quality (SHEQ) management systems are in place and assist greatly in the compilation of accurate and timeous SHEQ reports. In-depth investigations are conducted into all incidents, and mitigation procedures are continuously reviewed.

We strive to go beyond mere compliance with relevant legislation. Accordingly, most of the divisions have been certified with international and national standards. Regular supplier and standard audits are carried out at these certified sites to ensure the retention of certifications. None of the group’s divisions failed certification compliance audits during the year.

CONSULTATION / PARTICIPATION EXTRACTS FROM INTEGRATED REPORT
Employee engagement
We strive to create an open, inclusive culture and an environment in which staff are encouraged to voice their opinions and participate in building a unified organisational culture supported by common values. Our values encompass our commitment to fairness, accountability, transparency, and ethical leadership and are aligned with the guidelines set out in the King IV Report on Corporate GovernanceTM for South Africa (2016) (‘King IVTM’).
Workplace initiatives put in place in response to the initial Covid-related lockdown were continued, as appropriate, throughout the reporting period. Digitally enabled communications are in place in all of our divisions to facilitate communication between staff, some of whom are still working remotely. Our CEO, Gary Chaplin, also continues to present webcasts to employees to keep them updated of important developments. Senior management participates in a regular inter-divisional engagement forum to share experiences and case studies. These forums are also used as a channel for further development and training on relevant topics, such as ethics, governance, competition law, and leadership-related matters.The divisional managers regularly communicate with their staff using various mechanisms, including established union structures, divisional CEO roadshows, and plant meetings. All the operations have detailed grievance procedures, which enable all employees to raise grievances without fear of victimisation to ensure the ongoing respect of employees’ rights.
We endorse the democratic values of human dignity, equality, and freedom as enshrined in the South African Constitution and the Bill of Rights, and are guided by these in every aspect of our engagement with employees.
Labour relations
Effective management of labour relations is critical to the sustainability of all of our businesses. Widespread evidence shows that organisations with strong structures in place to determine conditions of employment and manage labour disputes experience fewer incidents of labour-related conflict.
At both group and divisional level, we are recognised as an industry leader in labour relations. We have sound relationships with all stakeholders, including industry organisations and trade unions, and we create an environment conducive to achieving mutually beneficial outcomes and collective agreements with these unions. We also play a meaningful role in industry structures, including in the bargaining council structures and employer associations in the industries in which our divisions operate, and maintain relationships with
key regulators.
We build strong relationships with other employers to ensure the employee associations adopt collective bargaining strategies that are consistent with our objectives.
During the reporting period, the impact of Covid-19 compelled labour, business, and government to cooperate in order to deal with the economic impact of the various levels of lockdown and the resulting impact on employees. We successfully executed the roll-out
of the socio-economic stimulus measures such as
the Unemployment Insurance Fund (‘UIF’) Temporary Employment Relief Scheme (‘TERS’) and an amendment to pension fund regulations in order to support distressed employees.
At KAP, scheduled wage negotiations took place in four of our seven divisions during the reporting period and new wage agreements were put in place.

MONITORING:
SOCIAL AND ETHIC COMMITTEE
Duties and responsibilities
The committee’s duties and responsibilities are
as specified in the committee’s own terms of reference, the Companies Act, the JSE LR, and King IVTM. These are presented below as an overview, which is representative but should not be regarded as exhaustive:
Among others, the committee deals with issues and reports relating to:
• the company’s standing in terms of the goals and purposes of the principles set out in the United Nations Global Compact (‘UNGC’) in the areas of human rights, labour, the environment, and corruption;
• the instruments of the Organisation for Economic Co-operation and Development (‘OECD’) that are aimed at combating corruption and averting the solicitation of bribes and extortion;
• the instruments of the OECD that are aimed at promoting economic and social well-being;
• the protocols and recommendations of the International Labour Organisation (‘ILO’) on
decent work and working conditions, freedom of association, the right to collective bargaining, and the elimination of forced or compulsory labour and discrimination in the workplace;
• the company’s employment relationships with its employees and labour unions;
• the company’s contribution towards the educational development of its employees and other
employee benefits;
• compliance with:
– the Employment Equity (‘EE’) Act;
– the Broad-Based Black Economic Empowerment
(‘B-BBEE’) Act and the new Codes of Best
Practice (‘the Codes’);
– the Occupational Health and Safety Act (No. 85 of
1993) (‘OHASA’)

REMUNERATION COMMITTEE REPORT EXTRACT:
Fair and responsible
remuneration
The committee reviews remuneration differentials across job grades each year to ensure that there
are no disproportionate income differentials. Where disproportionate income differentials are detected, immediate corrective measures are implemented. Disproportionate income differentials refer to unfair and irrational differences in pay that cannot be justified based on the nature of the work performed, seniority, tenure, qualifications, ability, competence, or any other
relevant non-discriminatory factors. The committee is satisfied that no disproportionate pay differentials exist and that all pay differentials are justifiable and not attributable to gender or race bias.
In addition, guaranteed executive package increases are set by reference to, among other things,
the remuneration of the broader workforce. KAP divisions manage collective bargaining through industry bargaining councils and participate in centralised bargaining structures to establish sector- based conditions of employment wherever possible. There are also collective bargaining arrangements
in the southern African countries in which Unitrans Africa operates. Careful measures are taken to ensure that wage increase settlements are appropriate within the context of local market and economic conditions. The committee is satisfied that the remuneration of bargaining unit employees is appropriate relative to the sectors in which KAP’s businesses operate, and that measures are in place to eliminate and reduce any unjustified pay differentials. In addition, the committee is satisfied that the remuneration of executive management is fair and responsible within the context of overall employee remuneration.

NO VIOLATION WERE RECORDED.
The Social and Ethics Committee and the Remuneration committee are headed up by non-executive directors and are mandated by the Board.
We report on gender and race diversity. The latter is independently audited in terms of B-BBEE credentials.

Progress on the B-BBEE and Employment Equity targets are reviewed quarterly and progress is reported to the Board and Social and Ethics Committee

IMPROVEMENT:
Extract from Social and Ethic Committee:
Under guidance from the committee, management succeeded in improving the company’s overall B-BBEE score to a Level 5 contributor status. KAP’s B-BBEE certificate is available on the company’s website.

DIVERSITY:
Diversity
The group’s commitment to creating a diverse workforce is illustrated in our board diversity policy. We are also fully compliant with the provisions of
the Broad-Based Black Economic Empowerment Act (No. 53 of 2003) (‘B-BBEE Act’), as well as with the amended black economic empowerment codes of good practice. As a group, KAP has a Level 5 B-BBEE rating, with some divisions being rated as Level 2, 4, 5 and 6. Our B-BBEE verification process is conducted independently by AQRate.
Gender diversity (IMPROVED YEAR-ON-YEAR) is also a key focus and management has set internal tangible targets to improve both race and gender diversity in leadership positions over the next five years. At board level, 44% of the independent non- executive directors are women, with 27% of the total board composition being made up of black women.
While women make up 19% of our total staff complement, they occupy 24% of all critical and specialist positions in such areas as finance, tax, and human capital. At operational level, women are employed as general managers, operations managers, key account managers, and sales managers.
Several initiatives are in place to increase female representation across all operations and levels of management in the future. SEE TABLE ON PAGE 63 FOR IMPROVEMENT IN FEMALE REPRESENTATION

We have a Level 5 B-BBEE rating (FY20: Level 6)
91% of our employees are black (FY20: 90%)
SEE WEBSITE: https://kap.co.za/sustainability/social/

SOURCES OF INFORMATION:
INTEGRATED REPORT 2021:https://kap.co.za/wp-content/uploads/2021/10/kap-integrated-report-2021.pdf
CODE OF ETHICS: https://kap.co.za/wp-content/uploads/2020/02/kap-code-of-ethics-14022020.pdf
SUPPLIER CODE OF CONDUCT:https://kap.co.za/wp-content/uploads/2020/01/kap-supplier-code-of-conduct.pdf
SOCIAL AND ETHICS COMMITTEE REPORT: https://kap.co.za/wp-content/uploads/2021/10/kap-social-and-ethics-committee-report-2021.pdf
ENVIRONMENTAL POLICY ON WEBSITE: https://kap.co.za/sustainability/environmental/

EXTRACTS:
CODE OF ETHICS
KAP is committed to the principle of sustainable development by striking an optimal balance between economic, environmental and social development and will strive to innovate and adopt best practice, working in consultation with its stakeholders. KAP expects its employees to take sustainability seriously including:
• minimising KAP’s consumption of natural resources (including water) and waste generation;
• minimising the impact of KAP’s operations on the environment including energy consumption,
carbon dioxide (CO2) and other greenhouse gases (GHG);
• maximising KAP’s recycling where possible; and
• minimising pollution and protecting the biodiversity.

INTEGRATED REPORT PG 58
KAP is committed to protecting natural resources, reducing waste, and investing in technologies that reduce our environmental impact. We acknowledge that this is an ongoing process, which requires continuous monitoring and action. We have therefore developed standards and procedures to govern all of our activities and
to ensure that negative environmental impact is prevented or mitigated where possible.
Governance
At KAP, the preservation and protection of the natural environment is one of our key priorities. The ultimate responsibility for environmental impacts rests with the board, which is responsible and accountable for legislative and regulatory compliance, including the management of environmental risks and opportunities.
The divisional CEOs are responsible for environmental compliance at divisional level and are assisted in the day-to-day management of these issues by managers within their respective divisions. Environmental policies and procedures exist throughout the group and are supported by environmental management systems including, where relevant, ISO certification for some divisions.

PAGE 53:
KAP’s strategic intent is to build exceptional businesses that create lasting economic and social value. As part of our commitment to this goal, we follow an approach that aims to integrate sustainability principles and practices into our business and to create a common framework that we can use to communicate the contributions we make to creating a sustainable world.
United Nations Sustainable
Development Goals (‘UN SDGs’)
In October 2020, we committed to making the United Nations Global Compact (‘UNGC’) and its principles an integral part of our strategy.
As a business, we are therefore undertaking a process of aligning to the UN SDGs, 17 goals that are aimed at addressing a number of global issues such as ending poverty, working to improve education and healthcare, reduce inequality, support economic growth, and protect and sustain the natural environment on a global basis. We believe these are the most comprehensive set of goals related to the environmental, social, and governance (‘ESG’) issues that we face in business and society today.
The SDGs can be mapped to other reporting frameworks and we consider them
as the lens through which our strategy is integrated with our purpose, values, operations, and story. We could describe them as the north star on our sustainability journey.
To give form to where we stand, we have undertaken a back-dated mapping of our contributions to the SDGs over the past three years, which shows that we have been actively making contributions in 15 of the 17 focus areas. This analysis gives us a view of the way in which we map to the SDGs in the normal course of business.
The mapping process, which is illustrated below, has provided a comprehensive view of our unified value proposition throughout all aspects of our business.
In undertaking the process, we considered activities that have spanned what we do for our workforce, what we do in our operations, how we use our supply chain, the influence we have in our partnerships and, finally, the broader fiscal and economic contributions we make to sub-Saharan Africa.

PAGE 15 Material matters are issues occurring in the operating environment that can either directly or indirectly impact on the sustainability of the group and its ability to create value for shareholders and other stakeholders. Both internal and external influences are considered when determining and prioritising material matters and how we respond to them.
We identify critical risks using our risk management framework, which provides the board and the executive committee with a robust means of assessing the risks facing the group. An embedded enterprise risk management process supports and provides input into this framework. A full report on how we identify and manage principal risks is given in the governance section of this report.
ustainability
ESG is increasingly important and material.
We are committed to continuously evaluating and improving our long-term sustainability in
terms of the environment, social commitment, and corporate governance for the benefit of all our stakeholders. We believe that adopting sustainable practices creates commercial opportunities while simultaneously making
a significant difference for all stakeholders. We have embarked on a number of initiatives in this regard.
AND PAGE 71: INTEGRATED TIMBER
Significant fires damaging timber resources

Severe weather conditions and extended droughts create an environment susceptible to significant fires,
which can be caused by humans or environmental factors and can severely damage the division’s timber plantations.
Although the standing timber is insured, the effect of reduced availability of
raw materials remains a critical risk.
The division continues to invest in fire detection and firefighting capabilities
and to implement standard forestry fire prevention practices. In addition, the division continues to look for opportunities to increase its own resource base.
AND
We also continuously monitor the potential impact of climate change on our operations. Although it poses a potential risk, specifically for our timber plantations in the future, it is not rated as critical.
Further, the public perception of plastic waste and its impact on the environment presents a risk in terms of the potentially negative impact on future polymer consumption. Management is actively engaging with various industry bodies to address this risk. The Polymers division is participating in a number of initiatives that assist with plastic waste management. During the reporting period, it also successfully launched a ‘Let’s plastic responsibly’ campaign, which aims to educate consumers about the responsible use of plastics and promote the sustainability of the sector.

REPORTING: SEE INTEGRATED REPORT PAGE 58 -61 https://kap.co.za/wp-content/uploads/2021/10/kap-integrated-report-2021.pdf

EXTRACT SUPPLIER CODE OF CONDUCT:
10. Protecting the Environment
KAP Suppliers shall comply strictly with the letter and spirit of applicable environmental laws and regulations. Suppliers must implement and maintain environmental policies to ensure that their actions are carried out in an environmentally responsible way and be transparent about and accountable for their environmental performance.
11. Quality Requirements
KAP will only do business with Suppliers that produce, package, store and ship products in accordance with good manufacturing practices prevailing in their respective industries. Suppliers are expected to provide goods and services that consistently meet required specifications or at least industry standards.
12. Sustainability
KAP is committed to the principle of sustainable development by striking an optimal balance between economic, environmental and social development and will strive to innovate and adopt best practice, working in consultation with its stakeholders. KAP expects its Suppliers to take sustainability seriously including:
• minimising their consumption of natural resources (including water) and waste generation;
• minimising the impact of their operations on the environment including energy consumption,
carbon dioxide (CO2) and other greenhouse gases (GHG);
• maximising recycling where possible;
• minimising pollution and protecting the biodiversity; and
• requiring Suppliers to share its commitment to sustainability

SDG FOCUS AREAS / GOALS:
SEE INTEGRATED REPORT PAGE 52
Road safety
South Africa has a high rate of road traffic incidents. The safety of our drivers, passengers and of society is important and has been recognised as a focus area for KAP.
Plastic waste
Plastic is a wonderful product with many applications. However, plastic waste does not belong in the environment. The reduction of single-use plastics, the recycling and repurposing of plastic waste, reducing plastic waste in the environment, and managing perceptions about plastic, is key to KAP.
Climate Change
Climate change has become the great defining issue of our time. We recognise that it is a fundamental responsibility to understand its effects on our business and how it may impact on our value chain in the long-term. We are committed to reducing our Green House Gas (‘GHG’) emissions.
Reduction of natural resources
We recognise that it is important to focus on and develop ways to reduce the use of natural resources. We are actively mapping and monitoring our use of natural resources with the aim to reduce water usage, and we are targeting zero waste to landfill. We also recognise the need to reduce dependence on coal for energy in order to reduce our impact on the environment.

INTEGRATED REPORT PG 58-61: https://kap.co.za/wp-content/uploads/2021/10/kap-integrated-report-2021.pdf REFER TO: Climate Change, Green-House Gases; Water Sustainability and Bio-diversity.
EXTRACTS:
Climate change
Our response to climate change continues to evolve. We are considering aligning our climate change reporting with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (‘TCFD’) and nominating a dedicated board member to oversee climate-related issues.
We have adopted the United Nations Sustainable Development Goals (‘UN SDGs’) to assist us in improving our reporting.
Through our integrated risk assessment process, we continue to identify, assess, and manage environmental risks. Climate change has the potential to impact on weather and to lead to extended drought conditions. This, in turn,
can create an environment in which there is a higher
risk of fire in our plantations. We continuously review our
fire prevention, protection, and management strategy to minimise this risk.
We also continue to invest in fire detection and firefighting capabilities and to implement standard forestry fire prevention practices. We conduct annual fuel load risk assessments and constantly engage with landowners, stakeholders, and communities in order to manage this risk on a collaborative basis.

Carbon footprint
Our carbon footprint is a measure of the greenhouse gas (‘GHG’) emissions from activities under our operational control. We calculate our carbon footprint in accordance with the GHG Protocol Corporate Accounting and Reporting Standard and the Intergovernmental Panel on Climate Change (‘IPCC’) Guidelines (2006). We also make use of the South African Department of Forestry, Fisheries, and Environment’s (‘DFFE’s’) Technical Guidelines for Monitoring, Reporting, and Verification of GHG Emissions by Industry.
An independent service provider verifies the accuracy and credibility of our carbon footprint. Divisions that are data providers under the South African National GHG Emission Reporting Regulations report their GHG emissions to the DFFE. These divisions are licensed as carbon taxpayers under the South African Carbon Tax Act (No. 15 of 2019).

Electricity
We have identified electricity consumption as a potential critical risk for KAP. In terms of this we have embarked on a process to develop a clear strategy to mitigate risk, reduce costs, and promote sustainability for the group. Our strategy will encompass the following elements:
• Perform a baseline analysis of current sources and consumption patterns.
• Identify opportunities to change the nature of how we consume electricity in order to improve efficiencies and reduce costs.
• Identify opportunities to invest in new technology to reduce consumption.
• Identify opportunities to self-generate electricity.
• Identify opportunities to generate electricity for sale to independent third-party customers.
We have recently employed an energy specialist to formulate this strategy and to assist our operations in reducing their energy consumption. Our electricity consumption increased by 8% in line with increased economic activity. GOAL THIS YEAR IS TO APPROVE THE INSTALMENT OF A SOLAR PV PLANT FOR OUR SASOLBERG OPERATION

Water
We have identified water usage as a key focus area for KAP. Water is a scarce resource and key to the sustainability of our various operations. Similar to electricity, we will develop a clear strategy around the sustainable supply, use and discharge
of water, together with the required risk mitigation. We are committed to reducing, recycling and reusing water.
Our strategy begins with reliable measurement. Although we made progress in widening the scope of measurement and improving the accuracy of reporting on our water withdrawal and discharge, there is still room for improvement. Where required, our divisions have water use licences (‘WULs’), which specify the water usage parameters within which they must operate.
PG Bison’s water usage will reduce significantly in the forthcoming year as they will consume the last of the burnt timber that was placed under temporary irrigation after the 2017/2018 forest fires in the southern Cape. The fire-damaged timber was harvested and placed under an irrigation deck to preserve it. Water extracted from boreholes on PG Bison’s property constantly sprayed the timber to prevent insect damage and dry rot. This is standard practice in the forestry industry after a fire
has damaged trees. An environmental impact study was done prior to operations commencing and an independent hydrologist routinely monitors the water run-off and the quality of the water. An estimated 80% of the water consumed drains back into the soil.

Biodiversity
PG Bison has two plantations and owns 96 157 hectares of land, of which
43 817 hectares is cultivated forestry land. The NECF plantation accounts for 77% of the plantations and is certified by the Forestry Stewardship Council (‘FSC’) (certificate number SGS-FM/COC-011207 and licence number FSC-C139494). PG Bison is
also a member of Forestry South Africa (‘FSA’), which oversees the environmental standards for forestry in South Africa.
PG Bison is committed to sustainable forestry practices and the sustainable management of the wildlife that resides within and adjacent to the plantations, as well as to the utilisation of resources and products that take into account the benefit to our employees, adjacent communities, and the public.
Forests are biodiversity hubs. Land that is not suitable for commercial forestry is used for other purposes, such as agricultural activities. Our non-commercial land areas have been mapped to record the species of fauna and flora that occur there. These maps include the archaeological, paleontological, and historical sites in those areas.

Waste
Our divisions are setting targets and implementing projects to reduce waste to landfill. Our waste management goal is ‘zero waste to landfill’. Many of our divisions are already reusing and/or recycling waste.

REPORTING: SEE INTEGRATED REPORT PAGE 58 -61 AS WELL AS READ OPERATIONAL REPORT EXTRACTS:
PG 25: Certification and accreditation
All of our panel production lines are ISO 9001 certified and our NECF plantations in Ugie continue to be accredited by the FSC. PG Bison is also a member of the South African Furniture Initiative (‘SAFI’), and the Proudly South African programme.
PG 27& 29: Our industry-leading focus on sustainable practices, which include the procurement and integration of recyclables and the recycling of factory offcuts to reduce waste and limit the consumption of
new raw materials, gives
our products a distinct competitive advantage.
We also aim to use new technologies and international best practices to reduce energy usage, water consumption, and carbon emissions.
7 960 tonnes of recycled waste fabric converted to fibre
PG 35 We changed our product strategy to focus on the production of higher- specification and higher-value polymers, which are more suited to non-single-use applications.
We initiated engagement with brand owners and converters to design packaging materials that will more easily facilitate recycling.
We developed and produced recycled PET (‘r-PET’) containing resin with a 15% to 25% post-consumer content.
pg 37 Innovation
Constant innovation is fundamental to our business model. We work with converters, retailers, and brand owners to develop solutions that not only improve efficiency and profitability, but reduce environmental impact. As an example, we recently developed a new PET formulation that maintains the intrinsic qualities of the material, namely its clarity and viscosity, but which reduces the energy needed in the customers’ production process by 15%, thereby reducing their energy costs and carbon emissions.
Working with one of our major customers, we have also developed a new formulation for a returnable soft drink bottle. This will allow for the bottle to be re-used eight to ten times before it is recycled and will significantly reduce plastic wastage and carbon emissions. The bottle has been launched nationally and is being supported with a targeted marketing campaign. We also have the production capacity to produce PET using bio-based feedstock, thereby reducing the use of fossil-fuel-based raw materials.
We consistently re-engineer our products to ensure that they are more recyclable and are suitable for new, more sustainable product applications. As an example, HDPE, which is typically used in the production of milk bottles, was re-designed in the previous period to improve its recyclability. Several large customers are already using the new formulation in their packaging. At present, we are working on a process that is intended to make HDPE suitable for use in vehicle fuel tanks, which is a more durable application.
Sustainability highlights
We successfully launched our ‘Let’s Plastic Responsibly’ initiative, which is aimed at informing consumers about the many applications and benefits of plastics, as well as about how to use plastics responsibly.
We commissioned The Green House to conduct a life cycle assessment (‘LCA’) of all our products based on the ISO 14044:2006 standard.
We committed to the Operation Clean Sweep® (‘OCS’) pledge. OCS is an international environmental stewardship project, which aims to prevent leakage of plastic pellets, flakes, and/or powder into the environment.
We partnered with the PET Recycling Company (‘PETCO’), an industry initiative that promotes post-consumer PET recycling, to establish three waste collection sites – including a river litter-boom – in vulnerable river catchment areas in KwaZulu-Natal.
We partnered with Green Corridors NPC and a black-empowered enterprise, Tri-ecotours, to scale up the implementation of river litter-booms. Six new booms were installed between April 2021 and year-end.
We partnered with Green Corridors NPC to sponsor and establish the KwaMashu Materials Beneficiation Centre (‘KMBC’) in KwaZulu-Natal to serve as a centre for processing difficult-to-recycle plastics and as a product development hub for developing prototypes for the beneficiation of these plastics.
We donated 1 500 bulk bags and 500 colour-coded recycling wheelie-bins to PETCO for distribution to beneficiaries involved in waste collection and recycling across the country.
PG 41 We provide real-time vehicle monitoring and driver behaviour management services through our UCT, which not only improves efficiencies and secures the safety of goods in transit, but provides critical real-time management information.
One of the benefits of this is that on-road operational issues can be resolved rapidly,
again securing both efficiency and the safety
of vehicles, goods, and drivers. Our monitoring system enables us to improve the fuel efficiency of each vehicle, which reduces costs and carbon
emissions, making a positive contribution towards a more sustainable and environmentally sound future. We also continuously investigate and invest in new-technology vehicles to improve the fuel efficiency of our fleets which reduces carbon emissions.
We consistently strive for zero harm to our drivers and third-party road users. All of our drivers are fully trained and undergo regular refresher courses and testing. In addition, we use leading in-vehicle systems to monitor driver behaviour and fatigue. All vehicles are monitored for speeding, driving hours, and route adherence on an exception management basis. Drivers and monitoring staff are warned of potential accidents through impact alerts and panic alarms so that they can respond immediately. This technology has assisted in systematically reducing road traffic violations and distracted driving behaviours, which potentially lead to accidents.

Waste
Our divisions are setting targets and implementing projects to reduce waste to landfill. Our waste management goal is ‘zero waste to landfill’. Many of our divisions are already reusing and/or recycling waste.
• PG Bison recovers internally generated offcuts, sawdust, shavings, peelings, and wood chips, which otherwise would have been disposed to landfills, to produce heat and steam.
• Restonic recovers and reuses and recycles all its waste. Our Connacher operation purchases waste from the textile and clothing industry and processes it into reusable fibre. This fibre is then sold into the furniture and automotive sector.
• A significant portion of the waste generated by our Automotive Components division is recovered internally. Offcut textiles are reground for reuse, and felt offcuts are torn up in-house and recycled. Offcut carpets are reground and reused in their milling process.
• Safripol changed their packaging to make it easier to recycle.

Electricity
We have identified electricity consumption as a potential critical risk for KAP. In terms of this we have embarked on a process to develop a clear strategy to mitigate risk, reduce costs, and promote sustainability for the group. Our strategy will encompass the following elements:
• Perform a baseline analysis of current sources and consumption patterns.
• Identify opportunities to change the nature of how we consume electricity in order to improve efficiencies and reduce costs.
• Identify opportunities to invest in new technology to reduce consumption.
• Identify opportunities to self-generate electricity.
• Identify opportunities to generate electricity for sale to independent third-party customers.
We have recently employed an energy specialist to formulate this strategy and to assist our operations in reducing their energy consumption. Our electricity consumption increased by 8% in line with increased economic activity.

SEE SOCIAL AND ETHICS COMMITTEE REPORT: PG 74 -75 https://kap.co.za/wp-content/uploads/2021/10/kap-integrated-report-2021.pdf
THERE WERE NO REPORTS OF VIOLATIONS
THE FOLLOWING ARE REPORTEDLY QUARTERLY AT THE DIVISIONAL BOARD MEETINGS AND AT THE SOCIAL AND ETHICS COMMITTEE:
GHG EMISSIONS BOTH SCOPE 1 AND SCOPE 2
WATER USAGE AND DISPOSAL
WASTE

GOALS FOR THIS YEAR INCLUDE:
REVIEW THE ENVIRONMENTAL POLICY
APPOINT AN ENVIRONMENTAL SPECIALIST TO ASSIST THE GROUP TO SET TARGETS
APPROVE A SOLAR PV PLANT TO START THE JOURNEY OF REDUCING OUR RELIANCE ON FOSSIL FUEL BASED ELECTRICITY
INCREASE THE USAGE OF RECYCLED MATERIALS, WEHERE APPROPRIATE, IN OUR OPERATIONS.

SOURCES OF INFORMATION:
INTEGRATED REPORT 2021:https://kap.co.za/wp-content/uploads/2021/10/kap-integrated-report-2021.pdf
CODE OF ETHICS: https://kap.co.za/wp-content/uploads/2020/02/kap-code-of-ethics-14022020.pdf
SUPPLIER CODE OF CONDUCT:https://kap.co.za/wp-content/uploads/2020/01/kap-supplier-code-of-conduct.pdf
SOCIAL AND ETHICS COMMITTEE REPORT: https://kap.co.za/wp-content/uploads/2021/10/kap-social-and-ethics-committee-report-2021.pdf

EXTRACTS:
CODE OF ETHICS:
Employees are prohibited from engaging in any private financial relationship with any supplier, its owners, shareholders, directors, partners or members, including the investment in or acquisition of any financial interest for their own account in any supplier business, or with any of the owners, shareholders, directors, partners or members of such business, other than ordinary share dealings through a recognised stock exchange. It is the obligation of each employee to disclose such interests to the appropriate chief executive officer, company secretary or human resources department.
Shareholdings in excess of 5% in the issued capital of companies of competitors, customers or suppliers of KAP, or where an employee holds any influence in the management and/or decision-making of such company, should be formally disclosed. This principle applies equally to other entities, i.e. whether it is a close corporation, trust or other type of entity.
Employees who serve as directors or prescribed officers on the boards of legal entities (including joint ventures) within KAP, must declare any interests that they may have in any business or contract under consideration by that entity to prevent a potential conflict of interests. Such declarations must be recorded in the minutes and the affected employee may not take part in debates or decision-making in respect of such transactions.

Gifts
It is not permissible for employees to give or receive gifts, hospitality or favours that could influence any business decision or that create the appearance of influencing such decision

Anti-bribery
Company policy and anti-bribery laws around the world prohibit KAP and its employees, or their representatives and agents, from giving or accepting money or other inappropriate enticements, directly or indirectly, to coerce or persuade the obtaining, retaining or awarding of a business opportunity to KAP or any person. KAP expects all employees to comply with such policy and laws. Penalties for violating anti-bribery laws can be severe and often include heavy fines and prison sentences.

Ethical Dealings
KAP seeks to deal with its suppliers honestly and ethically and its employees must give all potential suppliers fair consideration. Decisions will be based on objective criteria such as price, quality, B-BBEE status, service capability, reliability, track record and integrity. Employees may not receive any commissions, money or item of value other than regular remuneration and incentives as provided for in their terms of employment, either directly or indirectly, for negotiating, procuring, recommending or aiding in any transaction entered into on behalf of KAP, nor are they entitled to any direct or indirect financial interest in such transactions.
No political contributions by KAP are to be made, directly or indirectly, to candidates for political office or to political parties or committees in any country. Responsibility for compliance with the policy, including the duty to seek guidance when in doubt, rests with each employee.
8. Confidential and Proprietary Information
Employees may not use for their own purpose, or disclose to any third party, KAP’s intellectual property, trade secrets or other confidential, proprietary or sensitive information of KAP without the prior written consent of KAP.

Competition Law
The purpose of competition laws is to maintain a free enterprise system by prohibiting business activities that unreasonably restrain trade or reduce competition. These laws are based on the premise that the public benefits by obtaining the greatest quality and choice of products at the lowest prices through vigorous competition. These laws regulate the anti-competitive behaviour of companies and of their employees, whether this behaviour takes the form of agreements with competitors, suppliers, customers and licensees, “unilateral” initiatives or practices, which might be considered abusive, or structural changes resulting from mergers and acquisitions.
KAP Industrial Holdings Ltd Ref: KAP-CPP-141 | Version 3 | 12-02-2020
KAP subscribes to the principles of free and fair competition as embodied in the relevant competition laws applicable to KAP. KAP, therefore, requires that all employees conduct their business in full compliance with applicable competition laws intended to promote free and fair competition and to not enter into prohibited agreements or practices, formal or informal, such as abuse of dominant position, price fixing, market sharing/division, bid rigging, collusive tendering, etc. Each employee is responsible for bringing to the attention of their management staff any circumstances with anti-competitive implications promptly and before any action is taken on behalf of KAP. Furthermore, all KAP’s contractual relationships should be reviewed in advance by the group’s legal advisers.
10. Insider Trading
Various laws of the countries in which KAP operates, prohibit “insider trading” in any circumstances where employees seek financial gain from the use of material non-public, price-sensitive information. No officer, employee or director of KAP (or their associates) in possession of material non-public, price- sensitive information in respect of KAP in whichever country, may buy or sell securities/shares directly or indirectly (e.g. through a broker) of KAP, or engage in any other action to take advantage of such information. “Associates” include an employee’s spouse and children, as well as trustees of trusts in which the employee may have a beneficial interest. In addition, price-sensitive information may never be shared with any third party.

Reporting Ethical Concerns
Any employee should report improper behaviour that violates this Code to the KAPREF ethics report line. These communications shall remain confidential and shall be disclosed to others as necessary to investigate the activity, take appropriate action or as otherwise required by law.
KAPREF can be reached on the following numbers:
Calling from within South Africa : 0800 200 651 Calling from outside of South Africa : +27 12 543 5311
16. Contravention of Code
Any employee who fails to comply with the Code will be disciplined by KAP and/or may face prosecution in terms of the laws of the country in which he/she operates.

SUPPLIER CODE OF CONDUCT EXTRACTS
Purpose and Scope
This Supplier Code of Conduct (the “Code”) sets out the principles and expectations of the KAP Industrial Holdings Limited group (“KAP”) as to how existing and new suppliers of goods and services to KAP (“Suppliers”), including their affiliates, representatives and employees, are to conduct business with KAP. KAP, including all its employees, has a duty to comply with applicable laws and regulations and, in addition, King IV requires KAP to behave responsibly and ethically. KAP, therefore, expects its Suppliers to operate with values comparable to its own and in a manner that is consistent with good corporate governance.
Suppliers are required to take steps to ensure that this Code is communicated throughout their organisations.
Suppliers may be subject to inspections and/or audits to ensure compliance with this Code and specifically regarding Labour Practices, Human Rights and the Environment. KAP regards any contravention of this Code by a Supplier as a serious matter which could result in the termination of the business relationship and possibly the institution of civil or criminal proceedings.
KAP requires its Suppliers to commit to and comply with the following minimum standards:
2. Competition Law
KAP subscribes to the principles of free and fair competition as embodied in the relevant competition laws of South Africa.
KAP therefore requires that all Suppliers conduct their business in full compliance with applicable competition laws intended to promote free and fair competition and not enter into prohibited agreements or practices, formal or informal, such as price fixing, market sharing, bid rigging, collusion, “kickbacks”, etc.
3. Confidential and Proprietary Information
Suppliers may not use for their own purpose or disclose to any third party, KAP’s intellectual property, trade secrets or other confidential, proprietary or sensitive information (“KAP’s Information”) without the prior written consent of KAP.
Suppliers may disclose KAP’s Information to persons within the Suppliers’ organisation strictly on a “need to know” or “need to use” basis and for the sole purpose of supplying goods and/or services to KAP .
4. Ethical Dealings
KAP seeks to deal with Suppliers honestly and ethically and will give all potential suppliers fair consideration. Decisions will be based on objective criteria such as price, quality, B-BBEE status, service capability, reliability, track record and integrity.
The giving or receiving of any kickbacks, bribes or similar payments of any sort is prohibited. KAP employees may not receive any commissions, money or item of value other than regular remuneration and incentives as provided for in their terms of employment, either directly or indirectly, for negotiating, procuring, recommending or aiding in any transaction entered into on behalf of KAP, nor are they entitled to any direct or indirect financial interest in such transactions.
Suppliers are required to demonstrate the same high ethical standards and to conduct business with integrity and fairness.
KAP employees are prohibited from engaging in any private financial relationship with any Supplier, its owners, shareholders, directors, partners or members including the investment in or acquisition of any financial interest for their own account in any Supplier business, or with any of the owners, shareholders, directors, partners or members of such business, other than ordinary share dealings through a recognised stock exchange.
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5. Anti-Bribery
Suppliers must not engage in any conduct that would put KAP at risk of violating anti-bribery laws.
Company policy and anti-bribery laws around the world prohibit KAP and its employees from giving or accepting money or other inappropriate enticements, directly or indirectly to coerce or persuade the award of a business opportunity to KAP or the Supplier, as the case may be.
Suppliers may not, in their business relationship with KAP, act in any way, that violates KAP’s policy or anti-bribery laws around the world. Suppliers must also ensure that their suppliers in the supply chain do not engage in the giving or receiving of bribes, kickbacks or other similar improper or unlawful payments.
6. Gifts
Suppliers should be aware that it is not permissible for KAP employees to give or receive gifts, hospitality or favours that could influence any business decision or that create the appearance of influencing such decision.
International Trade Regulations
KAP Suppliers must adhere to all applicable trade and import regulations that apply to their activities.

INTEGRATED REPORT EXTRACTS
The social and ethics committee reviews the company’s ESG targets in the context of FTSE4Good and also monitors its standing in terms of:
• the goals and purposes of the 10 Principles as set out in the UNGC regarding human rights, labour, the environment and anti-corruption;
• the recommendations of the Organisation for Economic Co-operation and Development (‘OECD’) regarding anti-corruption;
• the Employment Equity (‘EE’) Act;
• the Broad-Based Black Economic Empowerment (‘B-BBEE’) Act;
• good corporate citizenship;
• the environment, health and safety;
• consumer relationships;
• labour and employment;
• training and development; and
• contact with politically exposed persons.

Creating an ethical culture
The KAP code of ethics was reviewed in FY20 and updated. The code, which is available on the KAP website, is supplied and explained to all employees as part of our induction process. The company and its employees have a duty to comply with applicable laws and regulations and to behave in a responsible and ethical manner.
As an expression of our ethics, we subscribe to the principles of free and fair competition, as embodied in the competition laws that apply to our business. There is ongoing training on competition law and the changing competition regulations for senior and selected middle management across all operations.

As part of the process of monitoring our ethics,
we have an anonymous whistle-blower hotline
called KAPREF. This allows anyone to report illegal
or unethical behaviour, including mismanagement, discrimination, harassment, vandalism, corruption, violence, and theft. KAPREF is available to both national and international callers. Hotline activities are reported to the social and ethics committee.

SOCIAL AND ETHIC COMMITTEE REPORT EXTRACTS:
Duties and responsibilities
The committee’s duties and responsibilities are
as specified in the committee’s own terms of reference, the Companies Act, the JSE LR, and King IVTM. These are presented below as an overview, which is representative but should not be regarded as exhaustive:.....
....the instruments of the Organisation for Economic Co-operation and Development (‘OECD’) that are aimed at combating corruption and averting the solicitation of bribes and extortion...

....The committee was appraised of and expressed satisfaction with the controls and safeguards relating to conflicts of interests, ethics, and codes of conduct, as well as the awareness programmes relating to corruption and fraud, which include a fraud-prevention hotline through which unethical actions can be reported anonymously for investigation by independent investigators. The audit and risk committee takes responsibility for monitoring the hotline process. Fraud and corruption were addressed through the application of policies, the hotline process, the awareness campaigns, and through training at induction.
In view of the events relating to state capture and other unethical incidents in South Africa, the KAP Exco directs all divisions to investigate and evaluate the risk that corruption poses to each business. On an annual basis, each division investigates whether there are areas of risk in their businesses in which politically exposed persons or prominent and influential persons
may potentially abuse their positions or their influence for the purpose of money laundering, corruption, bribery, fraud, and related activities. The assessments were conducted as directed during the reporting period and it was concluded that this risk is very low throughout the group.
No material incidences of non-compliance with the code of ethics or the supplier code of conduct were recorded, both of which demand high ethical conduct. The committee saw this as evidence that the code
of ethics has been embedded deeply into the daily operations and lives of the company’s employees. The company also has a code that encourages suppliers of goods and services to adopt values comparable to those of KAP and in a manner that is consistent with good corporate governance.
There were no prosecutions for non-compliance with regulations or legislation during the period. PG Bison, a subsidiary of KAP, and the Competition Commission remain involved in legal proceedings relating to allegations that PG Bison had allegedly been involved in price-fixing or anti-competitive behaviour in the period between 2009 and 2016. This is reported as a contingent liability in the group's annual financial statements and a comprehensive explanation of
the matter is available on the company’s website. Competition law awareness and training are ongoing focus areas throughout the group.

As specified by the committee, the company follows a consistent approach of actively pursuing and prosecuting perpetrators of fraudulent or other illegal activities throughout its business operations.

The committee received and considered reports confirming KAP’s stance and constructive approach in, among others:
• the promotion of equality throughout the company’s operations;
• the prevention of unfair discrimination in labour practices;
• the promotion of collective bargaining;
• the promotion of freedom of association;
• the promotion of human rights as espoused in the Constitution; and
• the application of anti-fraud/corruption policies and awareness programmes within its business operations.

SEE REFERNCE TO KAPREF: Any employee should report improper behaviour that violates this Code to the KAPREF ethics report line. These communications shall remain confidential and shall be disclosed to others as necessary to investigate the activity, take appropriate action or as otherwise required by law.
KAPREF can be reached on the following numbers:
Calling from within South Africa : 0800 200 651 Calling from outside of South Africa : +27 12 543 5311

This is an independently managed hotline where all stakeholders can report issues anonomously and these are then investigated and reported back to the Audit Committee and Social and Ethics Committee

In the year POPIA training as given to all employees regarding the Protection of Private Information Act.

INTEGRATED REPORT EXTRACT
Employee engagement
We strive to create an open, inclusive culture and an environment in which staff are encouraged to voice their opinions and participate in building a unified organisational culture supported by common values. Our values encompass our commitment to fairness, accountability, transparency, and ethical leadership and are aligned with the guidelines set out in the King IV Report on Corporate GovernanceTM for South Africa (2016) (‘King IVTM’).
Workplace initiatives put in place in response to the initial Covid-related lockdown were continued, as appropriate, throughout the reporting period. Digitally enabled communications are in place in all of our divisions to facilitate communication between staff, some of whom are still working remotely. Our CEO, Gary Chaplin, also continues to present webcasts to employees to keep them updated of important developments. Senior management participates in a regular inter-divisional engagement forum to share experiences and case studies. These forums are also used as a channel for further development and training on relevant topics, such as ethics, governance, competition law, and leadership-related matters.

SOCIAL AND ETHICS COMMITTEE IS MANDATED BY THE BOARD:
EXTRACT
Objective and scope
The role of the committee is to assist the board with the oversight of social and ethical matters relating to the KAP group. The overall objectives of the committee are:
• to monitor KAP’s activities with regard to the duties that are required of it by the Companies Act, the JSE LR and King IVTM, with a specific focus
on those duties stated in regulation 43(5) of the Companies Act, which relate to:
– social and economic development;
– the prevention of fraud and corruption;
– the promotion of ethical behaviour;
– good corporate citizenship;
– the environment, health, and public safety;
– public relations and consumer relationships;
– employment and labour relations;
– compliance with applicable legislation; and
– the impact of the company’s activities, products
and services on communities;
• to draw matters within its mandate to the board’s
attention as required; and
• to report to the company’s shareholders on the matters within its mandate.

ADDITIONAL EXTRACT
The committee was appraised of and expressed satisfaction with the controls and safeguards relating to conflicts of interests, ethics, and codes of conduct, as well as the awareness programmes relating to corruption and fraud, which include a fraud-prevention hotline through which unethical actions can be reported anonymously for investigation by independent investigators. The audit and risk committee takes responsibility for monitoring the hotline process. Fraud and corruption were addressed through the application of policies, the hotline process, the awareness campaigns, and through training at induction.
In view of the events relating to state capture and other unethical incidents in South Africa, the KAP Exco directs all divisions to investigate and evaluate the risk that corruption poses to each business. On an annual basis, each division investigates whether there are areas of risk in their businesses in which politically exposed persons or prominent and influential persons
may potentially abuse their positions or their influence for the purpose of money laundering, corruption, bribery, fraud, and related activities. The assessments were conducted as directed during the reporting period and it was concluded that this risk is very low throughout the group.
No material incidences of non-compliance with the code of ethics or the supplier code of conduct were recorded, both of which demand high ethical conduct. The committee saw this as evidence that the code
of ethics has been embedded deeply into the daily operations and lives of the company’s employees. The company also has a code that encourages suppliers of goods and services to adopt values comparable to those of KAP and in a manner that is consistent with good corporate governance.
There were no prosecutions for non-compliance with regulations or legislation during the period. PG Bison, a subsidiary of KAP, and the Competition Commission remain involved in legal proceedings relating to allegations that PG Bison had allegedly been involved in price-fixing or anti-competitive behaviour in the period between 2009 and 2016. This is reported as a contingent liability in the group's annual financial statements and a comprehensive explanation of
the matter is available on the company’s website. Competition law awareness and training are ongoing focus areas throughout the group.
Read more: https://kap.co.za/news-posts/pg-bison-competition-commission-investigation/

SEE IMPLEMENTATION ABOVE
EXTRACT FROM SOCIAL AND ETHICS COMMITTEE REPORT (ON WEBSITE)
There were no prosecutions for non-compliance with regulations or legislation during the period. PG Bison, a subsidiary of KAP, and the Competition Commission remain involved in legal proceedings relating to allegations that PG Bison had allegedly been involved in price-fixing or anti-competitive behaviour in the period between 2009 and 2016. This is reported as a contingent liability in the group's annual financial statements and a comprehensive explanation of
the matter is available on the company’s website. Competition law awareness and training are ongoing focus areas throughout the group.
Read more: https://kap.co.za/news-posts/pg-bison-competition-commission-investigation/

As specified by the committee, the company follows a consistent approach of actively pursuing and prosecuting perpetrators of fraudulent or other illegal activities throughout its business operations.

All incidents of corruption, when they occur are investigated by the internal auditors, and if required external auditors, and the finding reported to the Audit and Risk Committee.