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Group overview

Delivering sustained value

Traction

Traction refers to the friction between a moving object and the surface it moves on. Just as traction allows a vehicle to move forward without slipping, it enables our business to progress steadily.

With the introduction of our Thrive25 business strategy in 2020, we moved through phases of Adapting, Advancing, and Reshaping. Now, having gained traction, our momentum is driving significant progress.

We also observe this traction in social settings, such as the growing consumer preference for renewable and recyclable products. In response, we continue to expand our range of renewable solutions, enabling society to meet sustainability goals and support the global transition to a low-carbon, circular economy.

We are also gaining traction in our efforts to extract value from the whole tree. Traditionally, papermaking used only half of the raw wood material. Sappi is continually developing new processes and applying innovative technology to extract more value from each tree. Our paper packaging reduces plastic use, and we utilise every part of the trees harvested – whether for our biomaterials, dissolving wood pulp, speciality papers, or bio-energy – finding eco-friendly alternatives for a better future.

Responding to our context

Pace

‘Keeping pace’ in nature, refers to the ability of organisms to adapt and evolve in response to environmental changes. For species to survive, they must continuously adjust to shifting conditions, such as climate change, availability of resources, and interactions with other species. It’s a dynamic process that requires resilience, flexibility, and the capacity to innovate.

At Sappi, we see this as our competitive agility – our ability not to be outpaced by market trends, technological advancements and consumer demands. Momentum in business involves maintaining a steady flow of progress and growth, which we achieve through continuous improvement, innovation, being close to our customers and strategic planning.

It is this ability that allows us to progress steadily and consistently while always keeping pace and staying abreast of market changes through continuous innovation and adaptation. By understanding and responding to the latest environmental regulations and market innovations, we comply to and integrate global sustainability standards, ensuring that we remain effective and relevant in our commitment to the planet and our efforts to advance a circular economy.

Diving deeper into our
performance and prospects

Headway

Much like ships of old navigated through uncharted waters to discover new lands, ours is often a journey of discovery as we find new ways to develop technologies that address critical challenges, driving progress in fields like renewable energy and biotechnology.

We are making headway in reducing our carbon footprint through renewable energy projects and we have made significant strides in our sustainability efforts. Our milestone Power Purchase Agreement with EnPower will appreciably reduce our Scope 1 and Scope 2 emissions – not only supporting our own decarbonisation objectives – but also contributing to the transformation of the South African electricity supply industry by providing cleaner and more affordable power.

Sappi is also making headway as we enter exciting new markets with our innovative technology for producing furfural using the hemicellulose co-product from our Verve cellulose operations. By utilising this co-product, we maximise the portion of the tree used to create renewable, value-added products. This approach ensures that our furfural production is supported by the same sustainability and forest stewardship credentials as our Verve production, much like navigating new waters with a trusted and reliable vessel.

Governance and compensation

Rise

In a world where companies pursue accelerated growth through irresponsible and short-term actions, activities like deforestation and pollution, place a collective toll on natural resources. As a company reliant on sustainable woodfibre, we recognise the critical role of ecosystem services. By investing in sustainable forestry practices, we build resilience, safeguard resources, and potentially reduce long-term costs, all while pursuing accelerated growth in a responsible manner.

It’s vital to focus not only on net-zero targets and reducing greenhouse gas emissions but also on a nature-positive approach. We future-proof our business by restoring biodiversity and regenerating ecosystems, aligning with the Taskforce on Nature-related Financial Disclosures (TNFD). We disclose our actions not just because we must, but because we believe it’s the right way to secure our existence as a company committed to the circular economy.

Our plantations are designed with sustainability at their core, supporting biodiversity and ecosystem services. We integrate conservation areas within our plantations, setting aside significant portions of land for active protection. These areas include indigenous forests, wetlands and grasslands that serve as habitats for local wildlife, supporting a variety of species, some endangered or rare.

While we pursue accelerated growth, we do so with foresight, mindful of the impacts of our actions and the measures needed to balance them. Embracing a nature-positive strategy enhances ecological outcomes and drives value creation, positioning Sappi to thrive in a future where nature, alongside carbon, becomes a central element of sustainability.

Appendices

Speed

In business, gathering speed is crucial for driving progress and achieving goals. Equally important is to control this speed to prevent things from spiralling out of control. This balance is essential for sustainable growth and long-term success.

In our efforts towards sustainability, speed determines whether we meet customer expectations and whether we are ready for new rules whether domestic or global. However, we must also keep a steady hand on the ship, steering it in the right direction towards success with careful planning and execution.

Our move towards digitisation exemplifies this balance. By streamlining our IT systems and processes for greater efficiency along our entire value chain – from procurement, through logistics, and into manufacturing systems like the Manufacturing Execution System (MES) at our mills – we are making headway in enhancing our operational capabilities. Additionally, aligning our Sales, Supply Chain, Logistics, and Finance processes through SAP marks a significant milestone in our journey towards a streamlined, data-driven future.

Through global collaboration, we are paving the way for enhanced productivity, transparency and operational excellence across our organisation. We are driving this transformation with a sense of urgency, but also with the necessary caution. By thoroughly testing systems and taking a phased approach, we ensure that our efforts are sustainable and effective.

Together, we are navigating new waters, gathering speed and steering our ship towards a successful and sustainable future.

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Corporate governance

Sappi is committed to the highest standards of corporate governance, which form the foundation for the long-term sustainability of our company and the creation of value for our stakeholders.

100%

overall committee attendance rate

Good governance at Sappi contributes to living our values through enhanced accountability, a transparent and ethical culture, strong risk management, a focus on effective control of the business, legitimacy and good performance. Governance is one of our key enablers to unlocking and protecting value, as we optimise the use of our capitals, address our key risks while taking advantage of exciting opportunities (refer to Risk management), while minimising the negative impacts of trade-offs that have to be made, as set out in the presentation of Our key material issues.

Sappi is listed on the JSE Limited and complies in all material respects with the JSE Listings Requirements. Sappi subscribes to full compliance with the Companies Act, and the relevant laws governing its establishment, specifically related to its incorporation. Sappi operates in conformity with its memorandum of incorporation (MOI). Furthermore, Sappi endorses the recommendations contained in the King Code of Governance™* for South Africa 2016 (King IV) and applies the various principles in the achievement of the following good governance outcomes.

An application register of how Sappi applies the King IV principles is provided on the group's website www.sappi.com.

The group is listed on the JSE Limited and complies in all material respects with the JSE Listings Requirements, regulations and codes.

The board of directors

The basis for good governance at Sappi is laid out in the board charter, which sets out the division of responsibilities between the board and executive management. The board creates and protects sustainable value by collectively determining strategies, approving major policies and plans, taking responsibility for risk management, and providing oversight as well as monitoring, to help to ensure accountability. The board is comfortable that the board charter ensures a clear division of responsibilities between management and the board and that no director has unfettered authority. The board is satisfied that it has fulfilled its responsibilities in accordance with its charter for the reporting period.

For further information about the board and the board charter please refer to www.sappi.com

The Sappi board and diversity

Sappi operates globally and across a variety of markets, jurisdictions and cultures, requiring a diverse mix of experience, skills, gender, age and backgrounds. It is important that our board composition reflects this diversity, both in a South African context as well as globally. Diversity gives Sappi access to an increased range of talent, which helps to provide insight into the needs and motivations of a broader stakeholder base.

* Copyright and trademarks are owned by the Institute of Directors South Africa NPC and all of its rights are reserved.

Board experience (%)

Sappi's board members have experience across multiple industries and leadership roles

The composition of the board and attendance at board meetings and board committee meetings is set out in the table below for the year ended September 2024:

    Board   Board committees   AGM  
                           
Name         Audit and Risk   Nomination and Governance   Human
Resources
and
Compensation		   SETS % attendance during tenure      
Independent Non-executive Directors                              
BR Beamish                
100
   
MA Fallon              
100
   
JM Lopez              
100
   
NP Mageza  
       
100
   
ZN Malinga    
           
100
   
B Mehlomakulu                
100
   
MV Moosa            
100
   
RJAM Renders                
100
   
Sir Nigel Rudd
 



93
   
LL von Zeuner              
100
   
NL Sowazi
 

90
   
E Istavridis                  
100
   
Executive Directors                              
SR Binnie (CEO)      
100
   
GT Pearce (CFO)                
92
   
Lead director
Committee member or invitee (Mr Sowazi was a member of the Audit and Risk Committee (ARC) for the first three months)
Chairman
Ex officio
Absent
By invitation
Appointed as member of committee on 08/05/2024
Appointed as Chairperson on 08/02/2024
Retired on 08/02/2024

Directors' independence (%)

Directors' ages (%)
(average 62 years old)

Directors' tenure (%)
(as at year-end) (average 8 years)

Diversity (%)

Strategic and other focus areas

The board focused on the following items in 2024:

All the top risks as well as emerging risks have been focused on by the board during 2024.

The following areas will receive specific focus by the board in 2025:

Induction and training of directors

Stakeholder communication

The board is responsible for presenting a balanced and understandable assessment of the group's position in reporting to stakeholders. The group's reporting addresses material matters of significant interest and is based on principles of openness and substance over form. The reporting includes information on key trade-offs that have to be made. Various policies have been developed to guide engagement with Sappi's stakeholders such as the Group Stakeholder Engagement Policy and Group Corporate Citizenship Policy on www.sappi.com/policies. Sappi has a policy addressing Alternate Dispute Resolution (ADR) and relevant ADR clauses are generally included in contracts with customers and suppliers. There have been no requests for information for the period under review in terms of the Promotion of Access to Information Act (South African legislation).

Refer to Our key relationships for more information.

Board and management committees have been established and are discussed below.

Board committees

The board has established committees to assist it to discharge its duties. The committees operate within written terms of reference set by the board.

Audit and Risk Committee

Zola Malinga (Chairperson)

Membership details at September 2024:
  • ZN Malinga
  • RJAM Renders
  • B Mehlomakulu
  • LL von Zeuner
  • E Istavridis

100%

overall committee attendance rate

Stakeholders

The ARC has helped to create and protect value for the following stakeholders: employees, customers, shareholders and regulators.

Refer to Our key relationships for further details.

Risks

The ARC has focused on all of the top 10 risks:

  • 1 Safety
  • 2 Cyclical macroeconomic factors
  • 3 Cyber security
  • 4 Sustainability expectations
  • 5 Supply chain disruption
  • 6 Evolving technologies and consumer preferences
  • 7 Climate change
  • 8Uncertain and evolving regulatory landscape
  • 9Employee relations
  • 10Liquidity

For further details refer to Risk management.

Key roles and responsibilities

The ARC consists of five Independent, Non-executive Directors. The committee assists the board in discharging its duties with oversight of:

  • The risk management function
  • Sustainability and climate change risks including the quality and transparency of sustainability information presented in the Annual Integrated Report and the external ESG assurance provided by KPMG
  • IT risks, related controls and governance. The committee continued its special focus on the increasing threats of cyber attacks and security in the operational technology area
  • Non-financial risks and controls
  • Safeguarding and efficient use of assets
  • Operation of adequate systems and control processes
  • The integrity of financial information and the preparing of accurate financial reports in compliance with applicable regulations and accounting standards
  • Combined assurance
  • Compliance with the group's Code of Ethics and external regulatory requirements
  • The external auditors' qualifications, experience, independence and performance, including a review of IRBA reporting
  • Review and approval of non-audit services, undertaken by external audit
  • The performance of the internal audit function, this included review of the results of the annual Internal Quality Assurance Review
  • The performance of the finance function
  • Group treasury policies, developments, refinancing arrangements and liquidity
  • Captive insurance matters
  • Risks and governance relating to joint ventures
  • Retirement fund risks, developments and independent assurance
  • Pending litigation and legal compliance programme feedback
  • Land claims review, initiatives and outlook
  • Taxation policies, congruent with responsible corporate citizenship
  • Asset impairments and treatment of assets held for sale
  • An internal review of the committee's operating effectiveness and performance every two years by way of an assessment with feedback being provided to the board
  • Review and approval of the Annual Integrated Report in a joint sitting of the ARC and the Disclosure Committee.
Strategic and other focus areas

The ARC helped to create and protect value by providing oversight and guidance for a wide range of topics, including the following areas related to Sappi's strategy:

  • Governance and risk aspects of projects to accelerate the group's ability to take advantage of opportunities in higher-margin growth segments, such as with Project Elevate at Somerset Mill
  • Oversight of restructuring activities, risks and controls relating to the SEU asset sale of Lanaken Mill
  • Cyber security incidents and disaster recovery plans
  • Business and IT continuity arrangements
  • Sappi's forensic activities relating to cases reported and whistle-blower arrangements
  • Governance and risks relating to joint venture arrangements.

Areas of oversight for the committee in 2025 will include:

  • Additional focus on IT cyber security threats and other digital developments
  • Sustainability risks and revised reporting for ESG matters and procedures for financial reporting attestations
  • The roll-out of the various Global Business Systems projects and related risks and control activities
  • Capital, IT and business projects governance.

For more information refer to the Audit and Risk Committee report in our group Annual Financial Statements www.sappi.com/annual-reports.

The ARC confirms that it has received and considered sufficient and relevant information to fulfil its duties, as set out in the Audit and Risk Committee report.

The external and internal auditors attended ARC meetings and had unrestricted access to the committee and Chairman. The external and internal auditors met privately with the ARC during 2024.

Mr NP Mageza was the Chairman and designated financial expert and retired from the board and the ARC on 08 February 2024. Ms ZN Malinga was appointed as Chairperson and designated financial expert, on 08 February 2024.

Mr NL Sowazi resigned from the ARC on 08 February 2024 following his appointment as Chairman of Sappi Limited. Mr Sowazi attends the ARC ex officio. The committee is satisfied that it has fulfilled its responsibilities as set out in its terms of reference.

The committee is satisfied that it has fulfilled its responsibilities as set out in its terms of reference.

Nomination and Governance Committee

Nkululeko Leonard Sowazi (Chairman)

Membership details at September 2024:
  • NL Sowazi
  • MV Moosa
  • MA Fallon

100%

overall committee attendance rate

Stakeholders

The Nomination and Governance Committee has helped to protect value primarily for the following stakeholders: shareholders and regulators.

Refer to Our key relationships for further details.

Risks

The Nomination and Governance Committee focused on governance, independence and composition of the board, board committees and executive management positions to effectively address all material risks facing the company including all the top 10 risks.

  • 1 Safety
  • 2 Cyclical macroeconomic factors
  • 3 Cyber security
  • 4 Sustainability expectations
  • 5 Supply chain disruption
  • 6 Evolving technologies and consumer preferences
  • 7 Climate change
  • 8Uncertain and evolving regulatory landscape
  • 9Employee relations
  • 10Liquidity

For further details refer to Risk management.

Key roles and responsibilities

The Nomination and Governance Committee consists of three Independent Directors. The committee considers the leadership and governance requirements of the company including a succession plan for the board. The committee identifies and nominates suitable candidates for appointment to the board in line with Sappi's policy on the promotion of gender and race diversity at board level, for board and shareholders' approval. The committee considers the independence of candidates as well as directors. The committee makes recommendations on corporate governance practices and disclosures, and reviews compliance with corporate governance requirements. The committee has oversight of appraising the performance of the board and all the board committees. The results of this process and recommended improvements are communicated to the Chairman of each committee and the board. The committee had oversight of the actions to implement the policy on broader diversity at board level. The functioning and performance of Sappi's board and board committees were assessed internally in 2024 and established that the board and board committees functioned well. The committee reviews of the type of training provided to directors, including the online training made available during 2024.

Member of the committee and Lead Independent Director, Mr MV Moosa, will retire from the board and the committee on 31 December 2024. Ms ZN Malinga will be appointed as member of the committee. This appointment is effective from 01 January 2025.

Strategic and other focus areas

The Nomination and Governance Committee helped to protect value by providing oversight and guidance in 2024 over:

  • Handover process from the outgoing Chairman Sir Nigel Rudd to the new Chairman, Mr Nkululeko Sowazi
  • Corporate governance
  • Succession plans for senior executives and the board with a focus on board composition, chairmanships, rotation and replacement of directors, as well as the appointment of replacements for direct reports of the CEO
  • The promotion of broader diversity at board level policy, which includes diversity indicators. This included the validation of gender and race targets for Non-executive Directors and in particular as relates to directors from the Southern African geographic region
  • Assessment of the board and board committee performance
  • Reviewed the Sappi Limited directors' shareholdings and dealings in securities.

Focus areas for 2025 will be:

  • Optimise board composition for an increasingly complex and changing business environment
  • Consider how best to oversee new and changing risks and opportunities (ESG, AI, geopolitical, etc) relevant to business and sector
  • Board succession planning, performance evaluation and gender and race targets in light of the recent retirements and appointments.

The committee is satisfied that it has fulfilled its responsibilities as set out in its terms of reference.

Human Resources and Compensation Committee

Michael Anthony Fallon (Chairman)

Membership details at September 2024:
  • MA Fallon
  • RJAM Renders
  • BR Beamish
  • JM Lopez
  • LL von Zeuner

100%

overall committee attendance rate

Stakeholders

The Human Resources and Compensation Committee has helped to protect value primarily for the following stakeholders: employees, shareholders and regulators.

Refer to Our key relationships and to the Remuneration report for further details.

Risks

The Human Resources and Compensation Committee has focused on the following of the top 10 risks:

  • 1 Safety
  • 2 Cyclical macroeconomic factors
  • 4 Sustainability expectations
  • 7 Climate change
  • 8Uncertain and evolving regulatory landscape
  • 9Employee relations

For further details refer to Risk management.

Key roles and responsibilities

The Human Resources and Compensation Committee consists of five Independent Directors.

The Human Resources and Compensation Committee ensures that the policy governing compensation practices and structures within the group support the group's strategy and performance goals. The policy also enables the attraction, retention and motivation of executives and all employees.

The committee ensures that the compensation philosophy and practices of the group, including the CEO's performance objectives, are aligned to the group's Thrive strategy and performance goals. It reviews and agrees the various compensation programmes and in particular the compensation of Executive Directors and senior executives as well as employee benefits. It also reviews and agrees to executive proposals on the compensation of Non-executive Directors for approval by the board and ultimately by shareholders. The committee is updated on the Industrial Relations Climate Training initiatives and engagement survey results and action items.

Mr NP Mageza retired from the board and the committee on 08 February 2024.

Mr JM Lopez and Mr LL von Zeuner joined the committee on 08 May 2024.

The Chairman of the committee, Mr MA Fallon, will be appointed Lead Independent Director and as such will resign as Chairman of the committee, but will remain a member. Mr LL von Zeuner will be appointed as Chairman of the committee. These changes will be effective from 01 January 2025.

Strategic and other focus areas

The 2023 report was supported at the AGM on 07 February 2024 with a vote of 87.78% on the remuneration policy and 93.58% on the implementation report. This has been a significant endorsement by the shareholders in relation to our ongoing commitment to good governance and disclosure.

Apart from its normal annual workplan, the key focus for the committee was on the following:

Recommended and approved:

  • The allocation of 2024 performance share awards to Executive Directors and all other eligible participants
  • Salary increases and bonus payments for Executive Directors and other key senior managers for 2024
  • Fee levels for Non-executive Directors of the Sappi Limited board for consideration and recommendation to shareholders for approval
  • The allocation model and the comparator peer group for the 2024 performance share plan (PSP)
  • Design the 2025 Sappi Management Plan
  • The cash flow return on net assets (CFRONA)
  • Design of a sustainability measure for inclusion in the PSPs
  • Fees for the board
  • Discontinuation of the executive bonus scheme.

Reviewed:

  • The 2023 remuneration report, including the content of the company compensation policy and practices, which was put to shareholders for a non-binding vote at the AGM on 07 February 2024
  • Development of the 2024 remuneration report for shareholder approval in February 2025
  • The succession, retirement and development plans for key management positions
  • The group's industrial relations policy and implementation
  • The group's training and development policy and implementation
  • The investor feedback on the 2023 remuneration report
  • The status of all benefits funds.

The strategic focus areas for the committee in 2025:

Key activities for the committee in 2025 will be, inter alia, the approval of the remuneration and bonuses for Executive Directors and senior management. Reviewing and approval of measures for both long and short-term incentives. After the visits to some key shareholders in end of August 2024, the committee will also focus on the following:

  • Implementation of the Sappi Management Plan
  • Implementation of the new measures for both the long-term and short-term incentive plans
  • Gender representativity across all Sappi operations
  • Implementation of the changes as recommended by the new Companies Act.

In addition to the annual work plan as approved by the committee, the Chairman of the committee and senior executives from Sappi will, if required, also be visiting key shareholders to discuss issues of mutual concern.

The committee is satisfied that it has fulfilled its responsibilities as set out in its terms of reference.

For more information refer to the Remuneration report.

Social, Ethics, Transformation and Sustainability Committee

Mohammed Valli Moosa (Chairman)

Membership details at September 2024:
  • MV Moosa
  • SR Binnie
  • B Mehlomakulu
  • BR Beamish
  • JM Lopez

100%

overall committee attendance rate

Stakeholders

The SETS Committee has a broad spread of stakeholders for which it helps to protect (or create) value: suppliers, customers, employees, regulators, shareholders and society.

Refer to Our key relationships for further details.

Risks

The SETS Committee has focused on the following of the top 10 risks:

  • 1 Safety
  • 2 Cyclical macroeconomic factors
  • 4 Sustainability expectations
  • 5 Supply chain disruption
  • 6 Evolving technologies and consumer preferences
  • 7 Climate change
  • 8Uncertain and evolving regulatory landscape
  • 9Employee relations

For further details refer to Risk management.

Key roles and responsibilities

The Social, Ethics, Transformation and Sustainability (SETS) Committee comprises four independent Non-executive Directors and the CEO. A 100% attendance record was achieved by board committee members for 2024. Other executive and group management committee members attend SETS Committee meetings by invitation. It should be noted that a number of other Non-executive Directors attend SETS Committee meetings ex officio. The Chairmen of the ARC and SETS Committee attend each other's committee meetings to avoid unnecessary repetition of discussions.

The committee's mandate is to oversee the group's sustainability strategies, activities addressing climate change, nature impacts, ethics management, good corporate citizenship, labour and employment practices, health and safety, as well as its contribution to social and economic development and, with regards to the group's South African subsidiaries, the strategic business priority of transformation. The committee monitors progress towards and ensures that appropriate programmes are implemented to achieve the company's sustainability targets. The committee regularly reviews targets to ensure that they are both relevant to our operating context and reflective of an appropriate level of ambition.

As environment, social, governance (ESG) reporting and disclosures become increasingly important to stakeholders and aligning with our strategic imperative to enhance trust, the committee is mandated to oversee the company's public disclosures ensuring that reporting is aligned with appropriate global standards and compliant with regulatory requirements.

The SETS Committee is supported by the Group Sustainable Development Council (GSDC) as well as by Regional Sustainability Committees in dealing with day-to-day sustainability issues and helping to develop and entrench related initiatives in the business.

The Chairman of the committee and Lead Independent Director, Mr MV Moosa, will retire from the board and the committee on 31 December 2024. Mr BR Beamish will be appointed as Chairman of the committee. Ms E Istavridis will be appointed to the committee in 2025. Both appointments are effective from 01 January 2025.

Strategic and other focus areas

In 2024 the committee provided oversight of:

  • Sappi's social and economic development standing (UNGC and OECD)
  • Review of the decent work and working conditions in terms of the International Labour Organization protocol
  • Safety performance across the three operating regions, safety incidents and key safety initiatives and action plans
  • Progress towards the 2025 sustainability targets for the three operating regions and Sappi Forests and consolidated group performance
  • Progress towards the validated science-based targets (SBTs) and the approved climate change strategy, including the climate action aligned with the TCFD and the transition plan
  • External assurance on selected ESG KPIs: group LTIFR, group Scope 1 and Scope 2 emissions, group certified fibre, group waste-to-landfill and specific water usage in South Africa
  • SSA's performance against the applicable BBBEE legislation, the Employment Equity Act and the Forestry Charter, including unfair discrimination and equality policy
  • Sappi's Code of Ethics, ethics training programme and its effectiveness
  • Group training and development programmes
  • Production unit operating efficiencies, reliability and unscheduled downtime metrics
  • Sappi's public sustainability disclosures
  • Reviewed and approved various policies:
    – Group Sustainability Charter
    – Group Environmental Policy
    – Group Climate Change Policy
    – Group Water Stewardship Policy
    – Group Woodfibre Procurement Policy
    – Group Product Safety Policy
    – Group Human Rights Policy
    – Group Occupational Health and Safety Policy
    – Group Diversity and Inclusion Policy
  • Approved a new policy: Group Anti-bullying and Psychological Harassment Policy
  • Review and approval of the Group Corporate Citizenship Policy and endorsement of the public affairs and social impact programmes
  • Review of global public policy development and impact to Sappi
  • Review of group safety statistics
  • Consolidated HR report on key training and development initiatives
  • Review of company policy on diversity and inclusion
  • Deep dives were conducted into the following areas:
    – Nature action: Global trends and disclosure expectation/requirements
    – Sustainable procurement
    – Review of key sustainability risks and opportunities in Sappi Europe
    – Biodiversity in South Africa.

The committee is satisfied that it has fulfilled its responsibilities as set out in its terms of reference.

The committee will provide oversight of the following strategic business areas in 2025:

  • Further development of the approach to nature-related disclosures aligned with the Task Force on Nature-related Financial Disclosure (TNFD)
  • Progress towards the validated SBTs and the climate change strategy
  • Alignment of group sustainability disclosures to comply with European Corporate Sustainability Reporting Directive for FY2026 reporting period
  • Progress towards Thrive sustainability targets for 2025
  • Set new set of sustainability targets for the next strategic five-year period 2026 to 2030
  • Production efficiencies and events
  • Employee Engagement Survey results and proposed action plans.

For more information refer to the SETS Committee report and to Our global sustainability goals.

Management committees

The board assigns responsibility for the day-to-day management of the group to the CEO. To assist the CEO in discharging his duties, a number of management committees have been formed. Some of these committees also provide support for specific board committees. The management committees are a key component of Sappi's second line of defence and assurance. Refer to below for additional details of Sappi's approach to risk, controls and assurance.

Executive Committee

This committee comprises Executive Directors and senior management from Sappi Limited as well as the CEOs of the three main regional business operations, and the dissolving wood pulp business. The CEO has assigned responsibility to the Executive Committee for a number of functional areas relating to the management of the group, including the development of policies and alignment of initiatives regarding strategic, operational, financial, governance, sustainability, social and risk processes. The Executive Committee meets at least five times per annum. All key topics discussed at board level are subject to review and discussions by the Executive Committee.

Group Risk Management Committee

The committee is known as the Group Risk Management Team (GRMT) and is mandated by the board to establish, coordinate and drive the risk management process throughout Sappi. It has established a risk management system to identify and manage significant risks. The GRMT reports regularly on risks to the ARC and the board. Risk management software is used to support and report upon the risk management process. During 2024, key initiatives included updating the regional risk registers and business continuity plans, including IT security risks. In 2025 the GRMT will review policy, procedures and assurance, and provide oversight of group, regional and unit level emerging risks. This includes risk assessments and analysis required for climate change and ESG-related risks and exposures.

Group Sustainable Development Council

The Sappi Group Sustainable Development Council (GSDC) leads on all sustainability-related policies and practices and provides support to the SETS Committee. Members meet quarterly to report progress against sustainability goals and key initiatives, share best practices, and exchange information on emerging issues. Members review regional information for various disclosure mechanisms, including the CDP's Climate Change, Forests and Water Programmes and the annual Group Sustainability Report.

Key focus areas for 2024 included:

  • Oversite and review of the Thrive sustainability targets
  • Sappi's climate change strategy and action plans including:
    – Alignment of Sappi's decarbonisation roadmap with the Science Based Targets initiative (SBTi)
    – Assessment, and improvement, of our resiliency to risks and opportunities posed by climate change, as framed by the TCFD
    – Integration of decarbonisation and sustainability metrics in capital investment procedures
  • Sustainable procurement, roll-out of EcoVadis to our top suppliers
  • Social impact strategy for South Africa
  • Identifying collaboration opportunities to further Sappi's sustainability objectives and leverage Sappi expertise to contribute to the SDGs.
Brand Council

The Brand Council's mission is to enhance Sappi's brand awareness and reputation, ensuring that Sappi's values and identity are consistently reflected in every touchpoint and region served. The council is dedicated to fostering brand cohesion and driving strategic alignment across all levels of the organisation, playing a critical role in supporting sustainable growth by increasing and optimising communication activities. The council is committed to understanding the results and impact of Sappi's marketing and corporate communications, sharing insights and learnings to drive continuous improvement and deliver value for corporate and commercial teams. The council undertakes annual brand and corporate identity audits to review alignment and best practice. Council members meet monthly and serve as a unifying force, working collaboratively across departments to inspire action and strengthen Sappi's brand in support of the overall purpose, vision and business strategy.

During 2024, key initiatives included:

  • Rolling out new digital channels for internal and external brand awareness as well as overall communication
  • Development of an employer brand programme
  • Strengthen sustainability and brand positioning internally and externally
  • Refresh segment and product architecture to improve cross-segment and cross-region market presence.
Project Steering Committees

For key strategic projects, steering committees are established to oversee successful execution of the project.

Global Technology Management Team

The Global Technology Management Team (GTMT) is a global team of managers from operations through to R&D, constituted to coordinate technology management at Sappi which includes the sharing of technical knowledge, establish best practice, enhance manufacturing efficiencies and accelerate innovation in support of our Thrive strategy.

The GTMT is supported by a number of technology clusters to create value as follows:

  • Assisting the Sappi Executive Committee and the Sappi board with the coordination and oversight of the group technology strategy planning and execution
  • Provide oversight of the global innovation portfolio based on business priority and value delivery metrics. Recommend resource allocation and review skills requirements to deliver the Thrive goals
  • Provide oversight of the interregional progress and projects undertaken by the technology clusters to advance knowledge sharing, best practice development and performance achievement in the area of focus of the respective clusters
  • The GTMT provide support to identify best-available technology and share best practice to optimise return on investment, as well as to harmonise procedures and processes towards application of best practice adoption of common standards and measurements via a OneSappi approach
  • Review new to the world technology trends, futures and scout for new and disruptive technology developments in order to recommend how Sappi act or exploit the same
  • Review manufacturing efficiencies and develop processes and procedures to deliver continuous improvement and reverse negative trends
  • Provide oversight of the safety and operational risk mitigation programmes
  • Coordinate technical scrutineering of capital investments to enhance value delivery and mitigate risk
  • Coordinate the Sappi Technical Innovation Awards which recognise innovation and technical excellence across the group.

The GTMT and technology clusters focus on global technical alignment, performance and efficiency measurement as well as new product development.

Disclosure Committee

The Disclosure Committee comprises members of the Executive Committee and senior management from various disciplines. Its objective is to review and discuss financial and other information prepared for public release. It is the ultimate decision-making body, apart from the board, with regards to disclosure.

IT Steering Committee

The IT Steering Committee, assisted operationally by the Group IT Council (GITCO), promotes IT governance throughout the group and is the highest authority responsible for this aspect of Sappi's business, apart from the board. The committee has a charter approved by the ARC and the board. An IT governance framework has been developed and IT feedback reports are presented to the ARC and the board. Sappi IT has implemented a standardised approach to IT risk management through a group-wide risk framework supported by the use of risk management software. The committee has helped to create value for shareholders in 2024 by its oversight of:

  • The implementation of major strategic projects to drive operational excellence in manufacturing, sales, supply chain, finance and logistics among other functions
  • The digital strategy and governance model to drive innovation at scale across all divisions
  • The expansion of the group security function and talent pipeline and tangible progress toward the security strategy
  • The framework to evaluate third-party IT security risks
  • The delivery of a cohesive cloud infrastructure and security strategy inclusive of security resilience
  • The deployment of global operational technology (OT) security solutions across the manufacturing landscape
  • Strategic planning around core enterprise solutions.

A significant part of the IT Steering Committee's responsibility is to monitor and direct Sappi's information and cyber security activities. The ARC oversees these activities. Security matters are shared and discussed with the board at least quarterly. Sappi does have cyber risk insurance. Sappi's internal IT audit team undertakes reviews of information and cyber security.

Oversight by the committee will continue in 2025 for these IT initiatives, as well as:

  • Support for new business priorities to address evolving market conditions in alignment with Thrive priorities
  • Capitalising on innovative new solutions to maximise value realisation
  • Additional security improvements including enhanced recovery capabilities, global OT security standards, central vulnerability management, and further smart partnerships to extend security best practices and capacity
  • Infrastructure simplification through further global harmonisation opportunities and cloud consolidation.
Treasury Committee

The Treasury Committee meets monthly to assess financial risks on treasury-related matters. Specific focus areas in 2024 related to:

  • Refinancing the ZAR1.5 billion SSA08 bond in South Africa with a new local bond issue
  • Conversion of the ZAR1.8 million convertible bond to equity
  • New €150 million seven-year term loan to partially fund the SNA conversion and expansion project.

Key focus areas in 2025 will be:

  • The effective management of cash and interest costs due to the changing interest rate environment
  • Consider appropriate action for upcoming debt maturities
  • Renewal of the €330 million securitisation programme at Sappi Papier Holding GmbH.
Sappi Accounting Standards Committee

The Sappi Accounting Standards Committee (SASC) meets regularly to discuss and decide on the accounting treatment and the application of accounting standards at Sappi. SASC comprises finance, treasury and accounting officers throughout the group. Internal and external audit attend meetings by invitation. A main topic of discussion in FY2024 was the discount rate calculation methodology used in the plantation valuation.

Taxation Committee

The Taxation Committee meets monthly to discuss and address global taxation matters. The main focus areas of the committee for 2024 included:

  • Tax accounting and reporting
  • Tax compliance including transfer pricing and BEPS reporting
  • Tax audits and international mitigation measures to avoid double taxation
  • Tax implications of strategic projects
  • New tax legislation.

These topics will continue to receive oversight from the committee in 2025.

Control and Assurance Committee

The Control and Assurance Committee (CAC) comprises group and regional heads of department representing all the main operating and support functions at Sappi. CAC is supported by the internal control function and internal audit. A multi-disciplinary Combined Assurance Workgroup (CAW) provides oversight and guidance to the business on internal controls and combined assurance for financial, strategic and operational risks. CAW provides input to CAC, who in turn, is accountable to the GRMT and the ARC.

Ensuring leadership through ethics and integrity

Sappi is committed to doing business the right way. Trust is created by operating from a commonly accepted set of values, enhancing and protecting our reputation. We require our directors and employees to act with integrity, to be courageous, to make smart decisions and to execute with speed, in all transactions and in their dealings with all business partners and stakeholders.

Code of Ethics

Our values underpin the group's Code of Ethics and commit the group and its employees to sound business practices and compliance with applicable legislation, which help to promote legitimacy.

All new employees receive training on the Code of Ethics and related topics, such anti-bribery and corruption and anti-competitive practices, as part of onboarding. The Code was refreshed during 2022 and released in 2023. All employees receive refresher training on these courses every three years.

A Group Supplier Code of Conduct (Code) has been developed and communicated to help ensure that Sappi's values and ethical standards are clearly understood and supported by all our suppliers, their first-tier suppliers and other stakeholders.

Actions are taken against employees and suppliers who do not abide by the spirit and provisions of our Code. This includes termination of contractual arrangements, and criminal actions.

Refer to www.sappi.com for the Code of Ethics.

Legal compliance programme

The programme is designed to increase awareness of, and enhance compliance with, applicable legislation in place. The group compliance officer reports twice per annum to the ARC.

Sappi's legal compliance programme has been boosted by:

  • The implementation of legal compliance software including Exclaim for SSA, GEORG Compliance Management for the German mills, Syneris, is being used as a compliance management application in Austria, and Policy Passport for group policies and procedures
  • The provision of online training to employees on relevant legal compliance topics. This included social media, procurement, confidentiality, and conflict of Interest training during FY2024.

Key focus areas in 2025 will be:

  • Competition law training
  • Privacy training (POPIA, GDPR and 201 CMR 17.00).

The use of software tools and the related training and online learning is helping to create and protect value primarily for employees, customers, shareholders and regulators.

Conflict of interests

The group has a policy that obliges all employees to disclose any interest in contracts or business dealings with Sappi to assess any possible conflict of interest. The policy also dictates that directors and senior officers of the group must disclose any interest in contracts as well as other appointments to assess any conflict of interest that may affect their fiduciary duties. Sappi undertook a Conflict of Interest policy relaunch with refresher training in FY2024.

During the year under review, apart from that disclosed in the financial statements, none of the directors had a significant interest in any material contract or arrangement entered into by the company or its subsidiaries.

For more information on how Sappi addresses conflict of interest please refer to the Preventing fraud and corruption section of the Code of Ethics, at www.sappi.com

Insider trading

The company has a code of conduct for dealing in company securities and follows the JSE Limited Listings Requirements in this regard.

For further information refer to the Insider trading section of the Code of Ethics which can be found at www.sappi.com

Reporting on compliance and ethics concerns

Sappi employees and stakeholders can report any potential illegal or non-compliant behaviour they observe directly to senior management, internal audit or legal counsel, or alternatively, report anonymously, via telephone or by completing an online web-portal form. Whistle-blower 'hotlines' have been implemented in all the regions in which the group operates. The hotline and web-portal service, operated by independent service providers, enables all stakeholders to anonymously report environmental, safety, ethics, accounting, auditing, control issues or other concerns. Retaliation against whistle-blowers is not tolerated. The follow up on all reported matters is coordinated either by legal counsel or internal audit and reported to the ARC. The majority of calls and ethics reports received related to the Southern African region.

Please refer to the whistle-blower hotline and ethics report graphs for information on the:

  • Number of hotline calls per 1,000 employees
  • Number of forensic cases closed and average time spent per case
  • Categories of hotline calls and ethics reports
  • Outcome of the investigations.

The hotline report rates, categories of reports and outcomes of cases broadly align with international whistle-blower benchmark data. For more information, refer to the Reporting and whistle-blowing section of the Code of Ethics, at www.sappi.com

Financial statements

The directors are responsible for overseeing the preparation and final approval of the group Annual Financial Statements, in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board.

The group's results are reviewed prior to submission to the board, as follows:

Hotline report rate per 1,000 employees per annum

Forensic cases closed and average time taken to close


Hotline and ethics cases by category (%)

Hotline and ethics case outcomes (%)


Risk, controls and assurance at Sappi

Risks facing the group are identified, evaluated and managed by implementing risk mitigations, such as insurance, strategic actions or specific internal controls. Sappi maintains a robust framework of risks and controls which assists in the application of the King IV guidelines and the achievement of governance outcomes by helping to: create an ethical culture; establishing effective control; and promoting legitimacy, all of which help Sappi and its stakeholders to benefit from good performance. The framework includes controls addressing our material matters, by focusing on the main drivers of Sappi and comprises both financial and non-financial controls, which support the achievement of our strategy, within our risk appetite and tolerance levels, across the economic, social and environmental context in which the organisation operates as well as each of the six capitals set out in the International Integrated Reporting Council's model. More information on these capitals and integrated thinking in the context of Sappi's sustainable business model can be found in Our strategy and performance, as well as Our global sustainability goals.

The group's internal controls and systems are designed in accordance with the Committee of Sponsoring Organizations control framework to support the achievement of the group's objectives including strategic, operational and financial performance goals, effective and efficient use of resources, safeguarding assets against material loss, integrity and reliability of internal and external financial and non-financial reporting, and compliance with applicable laws and regulations.

Sappi operates a combined assurance framework, which aims to optimise the assurance coverage obtained from management, and internal and external assurance providers, on the risk areas affecting the group. Combined assurance is overseen by CAC. The committee and its CAW provide holistic feedback to the GRMT and ARC on the state of controls and the quality and coverage of assurance from the various assurance providers across Sappi's three lines of assurance. The workgroup focused on the following risk topics in 2024: fibre certification, fraud and ethics management, cyber security, operational technology, legal compliance, business continuity, contractors and maintenance, energy, waste and safety.

In FY2025 the CAW will assist the CAC to create and protect value by further developing combined assurance, risks and controls relating to IT security, regulatory compliance and sustainability.

Sappi's combined assurance framework, incorporating three lines of assurance and oversight by the board and board sub-committees

  First line of
assurance		   Second line of
assurance		   Third line of
assurance		   Oversight by
the board
Risk areas and value drivers, capitals Business management operations supported by appropriate controls and systems   Monitoring and oversight functions   Independent assurance provided by external audit, internal audit and other assurance providers   Board and board sub-committees
Governance, risk and controls – general (core business cycles)
  • Day-to-day risk management activity
  • Established risk and control environment
  • Executive, corporate and regional lead teams
  • Corporate and regional business functions, eg sales, finance, IT, human resources (HR), purchasing
  • Business units, eg forestry, mills, sales offices
  • Business unit operations, eg production, engineering, controlling, materials management.
   CAC, management self- assessments   Internal audit   Audit and Risk sub-committee
Strategy and vision, competition and markets, sociopolitical   Executive Committee, Group Head Strategy, Global Business Council, CAC, management self-assessments   Internal audit   Nomination and Governance Committee
Financial, tax and treasury   Control and assurance, accounting standards, taxation, treasury and Disclosure Committees, management
self-assessments		   KPMG, tax authorities, internal audit   ARC
Legal and compliance   Legal compliance programme, Group Compliance Manager   Legal compliance audits, internal audit   ARC, SETS Committee, Human Resources and Compensation Committee
IT   IT Steering Committee, group IT governance functions, management self-assessments   KPMG, ISA 3402s,
penetration testing, internal audit		   ARC
Planet, environment, natural capital   Sustainability councils, Environmental and Energy (E4) Global Cluster, GRMT   ISO 14001, FSC, PEFC, SFI, EMAS, KPMG, EcoVadis Government reviews emissions effluent etc, internal audit   SETS Committee
Ethics   Group Compliance Manager, ethics surveys, management self-assessments   Internal audit   SETS Committee, ARC
People, HR and transformation   Global Human Resource Committee, regional labour forums, employee engagement surveys, management
self-assessments		   BBBEE audits, internal audit   ARC, SETS Committee, and Human Resources and Compensation Committee
R&D, intellectual property   Group technical cluster, management self-assessments   ISO 17025, internal audit   SETS Committee
Manufacturing, supply chain management, quality, forestry   Technical clusters and platforms, regional safety, health, environment and quality audits, supplier audits, management self-assessments   ISO 9001, ISO 50001, FSC, PEFC, SFI, Matrix,
internal audit		   SETS Committee
Stakeholders, communication, reputation, society   Group corporate affairs, sustainability and investor relations functions   Internal audit   SETS Committee
Safety   Group and regional risk management teams, safety audits   ISO 45001, ISO 22000
regulatory inspections, internal audit		   SETS Committee

A key element of combined assurance at Sappi is derived from the annual control self-assessments completed by control owners, which helps to protect value for stakeholders by providing management and the board with assurance on the state of controls throughout the group. The remediation of control gaps identified through this process is monitored by management, relevant committees, auditors and the board.

The ARC advises the board on the state of risk management and controls, as well as assurance, in Sappi's operating environment. This information is used as the basis for the board's review, sign-off and reporting to stakeholders, via the Annual Integrated Report and Annual Financial Statements, on risk management and the effectiveness of internal controls and assurance within Sappi.

As part of combined assurance with respect to reported information, Sappi has obtained assurance on the data in the Annual Integrated Report from the following sources:

Internal audit

The group has an effective, suitably resourced, risk-based internal audit department. The department operates in terms of a specific charter from the ARC and independently appraises the adequacy and effectiveness of the group's governance, risk management, systems, internal controls and accounting records. Internal audit coordinates combined assurance and reports the findings to local and divisional management, the external auditors, and the ARC.

The head of internal audit reports to the ARC, meets with board members, has direct access to executive management and is invited to attend certain management meetings. The role of internal audit at Sappi is set out in the following diagram:

Internal audit value proposition

During 2024, the risk-based coverage plan was substantially achieved. Apart from the ongoing focus on financial controls, internal audit helped to create and protect value for Sappi and our stakeholders by completing reviews in support of the following strategic objectives:

In 2025 internal audit will support the achievement of Sappi's Thrive strategic objectives by completing advisory and assurance projects in the following areas:

Grow our business: R&D, packaging and speciality papers, capital projects (Project Elevate in Sappi North America), and new businesses eg biomaterials
Sustain our financial health: sales, procurement, treasury, and working capital processes, mill closure activities
Drive operational excellence: sales and operations, maintenance, energy, strategic business and IT projects including global MES projects
Enhance trust: ethics, governance, sustainability, regulatory compliance and cyber security reviews

Internal audit maintains an internal quality assurance programme. Our last external quality assurance review was conducted by the Institute of Internal Auditors (IIA) in 2021. A Generally Conforms rating was received, which is the highest of the three levels of conformance to the IIA's standards. Matters that arose and have been addressed include the upgrading of our automated audit software solution, the adaption of our procedures and our charter and policies to comply with the Global Internal Audit Standards, issued in 2024, including documenting our stakeholder engagement approach, updating and presentation of our strategy and updating our key performance measures. A focus for 2025 will be further updates to internal audit's approach to align with the Global Internal Audit Standards.

Board assessment of the company's risk management, compliance function and effectiveness of internal controls and combined assurance

The board is responsible for the group's systems of internal financial and operational control. As part of an ongoing comprehensive evaluation process, control self-assessments, independent reviews by internal audit, external audit and other assurance providers, were undertaken across the group to test the effectiveness of various elements of the group's financial, disclosure and other internal controls as well as procedures and systems. Identified areas of improvement are being addressed to strengthen the group's controls further. The board has assessed the combined assurance provided in 2024. The results of the reviews did not indicate any material breakdown in the functioning of these controls, procedures and systems during the year. The internal controls in place, including the financial controls and financial control environment, are considered to be effective and provide a sound basis for the preparation of the Annual Financial Statements, Annual Integrated Report and other reports used internally for management's decision making.

Company Secretary

The Company Secretary does not fulfil executive management functions outside of the duties of Company Secretary and is not a director. During the year, the board has assessed the independence, competence, qualifications and experience of the Company Secretary and has concluded that she is sufficiently independent (ie maintained an arm's length relationship with the executive team, the board and individual directors), qualified, competent and experienced to hold this position. The Company Secretary is responsible for the duties set out in section 88 of the Companies Act 71 of 2008 (as amended) of South Africa. Specific responsibilities include providing guidance to directors on discharging their duties in the best interests of the group, informing directors of new laws affecting the group, as well as arranging for the induction of new directors.