Santam is an authorised financial services provider (licence number 3416).

REPORTING YEAR: 1 JANUARY – 31 DECEMBER 2014BUSINESS CATEGORY: INSURANCE

Santam creates value by contributing to a robust, inclusive and responsible general insurance industry that offers policyholders value and stability. This supports a healthy South African economy. Our long-term sustainability relies on the group’s ability to manage the size and quality of its risk pool to diversify our product and service offering and to improve operating efficiency. Our business ethos “insurance good and proper” speaks to the group’s commitment to a sustainable and resilient world, echoed in our support of the United Nations Principles for Sustainable Insurance (PSI) and the ClimateWise principles.

Through our strategic choices, implementation and our participation in global associations and locally with the South African Insurance Association (SAIA), we aim to promote sustainable insurance that is essentially about reducing risk, developing innovative solutions, improving business performance, and contributing to environmental, social and economic sustainability.

We remain committed to embedding both the ClimateWise and UNEP FI PSI principles in our business and across our value chain. We continue to seek further opportunities to enhance our awareness-raising around Environmental, Social and Governance (ESG) issues at appropriate levels and segments of the business. This we strive to extend to our stakeholders, across the industry and through national and global initiatives.

Our response to driving the principles subscribed to as members of ClimateWise is summarised in this report. It is noted that this feedback should be read in conjunction with our 2014 Integrated Report that can be accessed at www.santam.co.za/financial/integrated-report-2014.

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LEAD IN RISK ANALYSISPRINCIPLE 1

1.1. Support and undertake research on climate change to inform our business strategies and help to protect our customers’ and other stakeholders’ interests. Where appropriate, share this research with scientists, society, business, governments and NGO’s in order to advance a common interest.The group strategy process included ESG in the environmental scanning and relevant material aspects were addressed as part of the strategy conversation. The environmental scanning and analysis conducted in 2014 identified prominent future shaping forces, which have a direct and material impact on the global context within which the group operates. We acknowledge that climate change is a strategic and systemic risk for the business and have responded by ensuring that the revised, integrated sustainability framework drivers highlight its significance. Evidence of this can be found in our 2014 Integrated Report (pg. 35).

In addressing climate change risks going forward, Santam has expanded its disaster risk management approach to a more holistic shared risk management approach that aims to address climate change risks through partnerships with a wider range of stakeholders, including business, land owners and district and local government. Santam launched this approach at the end of 2014 through partnering with Four Returns, Livinglands, Commonlands and GIZ to undertake an ecosystem restoration programme in the Baviaans, Kouga and Kromme catchment areas that provide water to the greater Port Elizabeth metropole.This programme is premised on a strong researched base conducted by Livinglands over the past eight years of which Santam made a contribution. The impact of water scarcity has a direct bearing on Santam business from an Agriculture perspective as well as downstream impact at individual and business client level.

During 2013/’2014 Santam participated in an action research study on SME’s in collaboration with the University of Stellenbosch Business School and Ashridge Business School. This programme, referred to as the EStar (Enabling Sustainability through action research) initiative, focussed on SME development and was initiated to support the pilot Santam Resilient Investment Fund participants, whilst presenting Santam with key learning to support our sustainable investment and enterprise development approaches. The project highlighted the challenge of simultaneously addressing climate risk together with black economic empowerment objectives in terms of the South African regulatory environment as the investment pipeline was thus very narrowly defined. As a result of the intitiave Santam decided to pursue enterprise development activities with EdgeGrowth as specialists and to review its sustainable investment approach.

1.2. Support national and regional forecasting of future weather and catastrophe patterns affected by changes in the earth’s climate.

SYSTEMIC RISK MANAGEMENT INITIATIVE: BUSINESS-ADOPT-A-MUNICIPALITY (BAAM)

In 2014 we focussed on deepening Santam’s work with local government through our BAAM programme. (Five adopted municipalities focusing on disaster risk management). The first phase of BAAM, which rolled out in 2013/2014, involved the donation of firefighting equipment and training in fire assessments, fire prevention, firefighting and “train the trainer” education programmes to drive community awareness of fire risk.

The second phase of BAAM addresses flood risk. The objective of the second phase is to understand the drivers of flooding, evaluate the capacity of the municipalities and communities to deal with the impact of floods and propose recommendations to assist in dealing with these events more effectively. Further to this Santam has expanded its work in municipalities by identifying risk nodes across the country where it had direct risk exposure.

RISK NODE PROJECT

The Santam high-risk node project aims to build on the lessons learnt with BAAM and will focus on flooding as a key risk. We want to identify ways to reduce the potential impact for Santam, while supporting the disaster management structures in each municipality, thereby preventing disasters from occurring. The project was launched in 2014 and more details regarding the participating municipalities can be found in our Integrated Report (pg.36).

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Key performance areas (KPAs) were scoped for the district and local municipalities and have been officially signed off. We have also created monitoring and reporting structures. We have created partnerships with the National Disaster Management Centre, the Municipal Infrastructure Support Agency, the Department of Water Affairs and the South African Local Government Agency (SALGA). (Refer to the 2014 Integrated Report – pg. 46).

FOUR RETURNS PROGRAMME

To enhance the work we are conducting from a disaster risk perspective, and to ensure the sustainability of the actions we have driven to date, Santam believes that the link that would close the loop is adopting a shared risk approach in dealing with the climatical risks. The way Santam is addressing this is through it’s pilot programme which the business has adopted with Four Returns as mentioned in the previous point.

1.3. Use research and improve data quality to inform levels of pricing , capital and reserves to match changing risks.One of the core requirements in managing general insurance risk, is the analysis of accurate and available data. High-quality data and the analysis thereof enables Santam not only to refine its risk assessment and pricing, but also to apply proactive risk reduction measures. The weather warning SMS initiative focusing mainly on hail is an example where this has been successfully implemented and managed both to the advantage of the client as well as the group’s underwriting margin.

Santam is also currently utilising Geographic Information Systems (GIS) to better manage other perils of which flooding is currently the most notable. Flood prone areas are identified either through collaborations or projects which in turn are then used to gain in-depth understanding of potential exposure. Not only is data used for underwriting purposes, but also in collaborating initiatives to build capacities within responsible bodies to better manage future risk.

As part of our business operations in the Agricultural division, Santam is the only South African insurer with a scientific experimental farm that conducts accurate, in-depth hail damage simulation research on crops in order to ensure accurate damage assessments. Our research entails specific analysis of crop damage at different growth stages that are unique to South Africa’s climate, soil and cultivars.

1.4. Evaluate the risks associated with new technologies for tackling climate change so that new insurance products can be considered in parallel with technological developments.

SANTAM AGRICULTURE

Our Agricultural division continue to use the learning from our experimental farm to improve our underwriting capability which includes revising rating for advanced farming methods such as the use of soil moisture conservation and drought resistance crops. The aim is to improve the quality of this portfolio through better risk assessment and management, which ensures that we assess losses to growing crops accurately.

The experimental farm is utilised to host groups of farmers and intermediaries showing them the impact of hail on different crops and when it occurs at different growth stages. We ensure that our assess- ment procedures keep up with any changes in weather or climate patterns and share with our stakeholders accordingly.

This business unit has also been actively involved in knowledge sharing, raising awareness, detailed studies and on-going training on the issues of fire risk management. Opportunities and innovative solutions to the risk of fires are constantly being investigated .

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INFORM PUBLIC POLICY MAKINGPRINCIPLE 2

2.1. Work with policy makers nationally and internationally to help them develop and maintain an economy that is resilient to climate risk.

RISK NODE PROJECT

The Santam high-risk node project (referred to in 1.2, level 3) is evidence of how Santam is enhancing its response to a key climate change risk through collaboration with government structures. The collaboration aims to support the disaster management structures in the municipalities identified, with the focus on promoting better flood risk management in local government and reducing the potential impact of flooding on Santam. The project was launched in 2014 and more details can be found in our 2014 Integrated Report (pg. 46).

Through its stakeholder relations strategy, which was approved at the end of 2013, Santam aims to build and maintain quality business relationships with all material stakeholders. Through effective dialogue and collaboration, we want to create a more resilient and sustainable business environment in support of our long-term strategy. We further engage on the issue of climate change through the following stakeholder platforms: UNEP FI PSI: Santam subscribes to the Principles of Sustainable Insurance (PSI) which is focussed

on driving a global industry agenda on increasing landscape resilience. Santam actively participated in the PSI Global Resilience Project and PSI events throughout the period under review.

SAIA: Santam is represented at the SAIA Risk Committee.

One of the key strategic focus areas within our stakeholder relations strategy is proactive risk management through formalised collaboration with local government on the drivers of risk within their control. The partnerships formed through BAAM and the Risk Node project and the potential opportunity with the Four Returns programme, allows us the opportunity to influence and guide risk management practices at ground and strategic levels.

EDEN SHARED RISK ENGAGEMENTS

Since the inception of Eden Phase II, WWF in partnership with Santam, have hosted high-level engagements with representatives from dairy, agriculture, tourism, forestry, Local Economical Development (LED) and the local George business chamber. With the partners in these engagements we are now designing a process to engage both the private sector and various state entities to explore what the partnership could achieve to improve resilience within the district. This will include looking at green economy projects that address risk, create job opportunities and ultimately contribute to building resilience within the Eden District Municipality. This process aims to develop new and strengthen current governance structures that allow for public/private cooperation around issues of disaster risk reduction within the district and assist at least two local authorities with the development of level 3 disaster management plans. Refer to the WWF Partnership Review (pg. 20).

2.2. Promote and actively engage in public debate on climate change and the need for action.We participate in the global debate through our membership and support of ClimateWise and UNEP FI PSI. We are represented on the PSI Board actively supported the PSI Global Resilience Project.

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SUPPORT CLIMATE AWARENESS AMONGST OUR POLICYHOLDERSPRINCIPLE 3

3.1. Inform our policyholders of climate risk and provide support and tools so that they can assess their own levels of risk.No significant progress made.

3.2. Encourage our policyholders to adapt climate change and reduce their greenhouse gas emissions through products and services.

SOLAR GEYSER REPLACEMENT INITIATIVE

Take up of the solar geyser replacement initiative launched in 2010. This gave policyholders the opportunity to replace damaged geysers with solar geysers, thereby reducing their energy consumption and carbon footprint. This did not materialise as anticipated. The reason was mainly because, despite the rebate offered by Eskom, the costs that policyholders needed to contribute for the conversion was too high.

We remain committed to the industry initiative as the stakeholders work towards launching a pilot green geyser installation project in 2015. Although the uptake on our solar geyser replacement initiative is slow, we continue to offer the opportunity to policyholders and remain positive that greater strides will be made through the industry initiative.

HAIL CATASTROPHIC MANAGEMENT

Santam acknowledges that catastrophic hail events continue to pose a challenge for the business and requires constant review. We further acknowledge that client awareness and preparedness could greatly reduce the impact of damage caused by hail for both policyholders and insurers, and therefore we introduced the following proactive risk management initiatives:

• Encouraging / incentivising the use of hail resistant materials for property structures, especially in areas that are regularly impacted by severe hail; and

• Encouraging / incentivising the use of hail blankets to cover vehicles that are parked outside.

3.3. Seek to increase the proportion of non-life claims that are settled in a sustainable manner.All Group Sourcing agreements contain a clause whereby we require that all our suppliers adhere to all laws of the Republic of South Africa. Any law, including Occupational Health and Safety (OHS) and Waste Management, would therefore have to be adhered to if applicable to a specific supplier. OHS and/or Waste Management are considered during the request for proposal (RFP) process (when suppliers are considered to be on Santam’s panel) and it is contained in Annexure B of our agreements. We do not currently have any defined actions to monitor or measure this but is engaging with motor body repairers in a pilot study with Golden to understand the levels of awareness and risk management currently in place regarding environmental aspects.

3.4. Through our products and services assist markets with low insurance penetration to understand and respond to climate change.No significant progress made.

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INCORPORATE CLIMATE CHANGE INTO OUR INVESTMENT STRATEGIESPRINCIPLE 4

4.1. Evaluate the implications of climate change for investment performance and shareholder value.Based on the revised sustainability framework as reflected in our 2014 Integrated Report (pg. 35-36), a key driver for the business performance and deemed to be a priority driver, is the driver related to responsible investment and solvency. Santam, for the past three years has been investing into our SRI fund which is managed by our investment portfolio manager - Sanlam Investments. Sanlam Investments as a signatory to the Principles for Responsible Investments (PRI), is viewed by Santam as instrumental in guiding the business on appropriate investment opportunities.

4.2. Incorporate the material outcomes of climate risk evaluations into investment decision making.The Santam Resilient Investment (SRI) Fund is one of the vehicles through which targeted investments were made based on Santam’s ESG needs or focus. The vehicle itself looks at being able to adopt a holistic approach to dealing with the ESG investment agenda. More information can be found in the 2014 Integrated Report (pg. 36).

The aim of the SRI fund is to find investments that are designed to reduce long-term systemic risks for the company, policyholders, fund members and the broader society. Even though this report is aimed more specifically at climate risk investment, the intent of the SRI fund is also aimed at addressing social risks facing the business and environment that we operate in. Santam is cognisant of the fact that the separation of these social and environmental risks is not necessarily the best approach to take when making decisions on funding opportunities. It is for this reason that our focus has been , more particularly on investments in socially driven agendas with the aim to identify linkages to the environment. Of the investments we made to date , one in particular is geared at a homeowner financing business who installs energy efficient products and assists installers with rebate financing. This is a potential to benefit both our policyholders and suppliers. We continually review and look for further ESG investment opportunities.

4.3. Communicate our investment beliefs and strategy on climate change to policyholders and beneficiaries.No significant progress made.

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REDUCE THE ENVIRONMENTAL IMPACT OF OUR BUSINESSPRINCIPLE 5

5.1. Engage with our supply chain to work collaboratively to improve the sustainability of their products and service.No significant progress made.

5.2. Measure and seek to reduce the environmental impact of the internal operations and physical assets under our control.The Santam Environmental Policy commits us to align with relevant environmental laws and regulations, and in 2014 we reported against best practice guidelines and principles such as:• The JSE Social Responsibilities Index (SRI).• The Carbon Disclosure Project ( CDP) for our five main campuses.• The United Nations Principles for Sustainable Insurance (PSI).• The Global Reporting Initiative (GRI) guidelines.• King III corporate governance guidelines in South Africa.

Details regarding some of our impact reduction initiatives can be found at www.santam.co.za ; About us; Environmental Management.

The progress made on reducing our internal environmental footprint can be found on the website referenced in level 2, as well as in our 2014 Carbon Disclosure Project (CDP) submission.

For this report, the current actions to reduce our environmental impact is mainly focussed on the Santam Commerical and Personal Lines areas of business.

5.3. Disclose our direct emissions of greenhouse gases using a globally recognised standard.We used the Greenhouse Gas Protocol Corporate Accounting and Reporting standard to determine our emissions and compiled a carbon footprint report for the period 1 January – 31 December 2014. Scope 1 and 2 emissions of our carbon footprint have been assured by Ernst & Young.

Details of our emissions and performance against our target for the period 1 January – 31 December 2014. Our 2014 CDP submission is available on https://www.cdp.net/reports; Santam Ltd.

We disclose more details on the trends of performance against the emissions targets in our CDP submission. Our 2015 CDP submission is currently being reviewed and not available publicly yet.

5.4. Engage our employees on our commitment to address climate change, helping them to play their role in meeting this commitment in the work-place and encouraging them to make climate change-informed choices outside of work.We continue to engage with our employees around the importance of environmental sustainability, encouraging and guiding them on behaviours that could have a positive impact on both Santam and their personal lives. We create awareness around focussed topics such as water conservation during World Water Month, and use our internal communication platform to share progress on internal savings initiatives.

Santam has embarked on several initiatives to reduce our own consumption and in 2014 we focussed on adapting the head office campus with more efficient lighting and also moved the Sandton office into a five-star green building.

More information regarding our internal environmental initiatives can be found at www.santam.co.za; About us; Environmental Management.

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REPORT AND BE ACCOUNTABLEPRINCIPLE 6

6.1. Ensure that the organisation is working to incorporate the principles into business strategy and planning by encouraging the inclusion of social and economic impacts of climate risks as part of the Board agenda.The Social, Ethics and Sustainability (SES) Board has the highest level of responsibility for climate change issues. Refer to 1.1 (level 1) for more information regarding the process of incorporating climate change into our business strategy and sustainability framework.

Climate change is a systemic risk for Santam and to ensure alignment to our core function as a risk manager, matters relating to climate change are reported on in a risk report and because it is embedded in our sustainability framework, it is also reported at the SES Board meeting.

The above Board meeting is the platform where we report on progress made against our goals, which includes reference to our ESG exposure. Our 2014 Integrated Report has evolved to be an integrated Santam Group Strategy report. By reporting on progress and the group’s ability to deliver on the strategy, the report aims to address all social, economic, environmental, risk and governance aspects that enable Santam to create value over the short, medium and long term.

6.2. Publish a statement as part of our annual reporting, detailing the actions that have been taken on these principles.Santam has compiled a 2014 ClimateWise report, reporting against all sub-principles as defined by our member type. Our support to the ClimateWise principles is included in the strategic positioning in our 2014 Integrated Report (pg. 35).