Integrated Report 2021

Nomavuso Mnxasana

Social, ethics and transformation committee review

The social, ethics and transformation committee (SETC) is constituted as a statutory committee in terms of its duties set out in section 72(4) and (5) of the Companies Act and its associated regulations.

NOMAVUSO MNXASANA
Chair Social, ethics and transformation committee

As a subcommittee of the board, the SETC has a clearly defined framework aligned with the Companies Act, King IV and other relevant legislation and standards. The terms of reference under which the committee operates are available on our website (www.barloworld.com).

The committee's statutory functions overlap with the functions, mandates or terms of reference of other committees of the board. Where appropriate, these functions have been aligned with the committee's mandate.

The SETC performs an oversight and monitoring role with regard to the overall direction and control of our social responsibility performance and ensures that our business is conducted in an ethical and properly governed manner. It strives to apply relevant codes of best practice including, but not limited to, the United Nations Global Compact Principles (UNGC), the UN Sustainable Development Goals (SDGs), the Organisation for Economic Cooperation and Development (OECD) guidelines regarding corruption, the International Labour Organization's Decent Work Agenda, and the principles of good corporate citizenship as espoused in King IV.

The SETC has access to any director, prescribed officer or employee of the company. Where appropriate, employees provide information or explanations necessary to enable the committee to deliver on its mandate.

The committee carried out the following duties:

Human capital

The committee monitored the impact of Covid-19 and the company's response strategies, which included a One Barloworld Covid-19 policy, as well as various initiatives implemented to ensure overall employee wellness as well as contain costs during this period. Sadly, we lost 29 employees to Covid-19. The names of the departed are shared, in an effort to honour them and provide closure to their colleagues. Healing programme sessions are held periodically to debrief employees as well as help build internal leadership capacity for empathy and transparency.

After considering various factors such as the lifting of some Covid-19 restrictions and the gradual resumption of economic activity in most operating regions, from December 2020 the group reinstated full salary payments. We also recommenced the pension fund contributions for all the people whose pension fund contributions were halted since May 2020.

Employees were given time off as special paid Covid-19 vaccination leave to enable those who wanted to get vaccinated to participate in the vaccination programmes being run throughout southern Africa. Interactive vaccination awareness sessions, presented by medical professionals, were arranged to educate and create awareness about the benefits of getting the Covid-19 vaccine. These gave employees the opportunity to ask questions, air their views and make more informed decisions.

The company ran the One Barloworld Employee Engagement Survey. The results provided insights into how employees are experiencing the organisation from a leadership, culture, talent and human experience perspective. In response, Barloworld implemented various leadership, talent growth and employee experience focused initiatives with the aim of improving employee engagement. To assess the effectiveness of these actions, we implemented our first Employee Engagement Pulse Survey in February 2021.

Human capital continued

Going forward, Barloworld will be running the Employee Engagement Surveys every two years, with the Pulse Survey run twice every year to ensure progress.

A phased approach was adopted to the process of harmonising and integrating the Ingrain SA and Mongolia operations into Barloworld. As part of the integration of Ingrain its employees attended Ingrain Emotional Impact sessions. The integration of the employees from the two businesses is substantially complete.

Diversity and inclusion

The FY2021 targets for diversity and inclusion remained at a higher weighting (20%) on the divisional balanced scorecards. In FY2021, focus was on the levers available to the group relating to appointments, promotions, internal transfers and retention to ensure that it did not regress from the FY2020 achievements. The committee monitors the attainment of these targets through biannual reports that it receives and reviews.

Barloworld is focused on identifying and eliminating any employment barriers – perceived or real – and promoting demographic representation in the workplace that more closely resembles those of the communities in which we operate. Outside South Africa, the strategy is to limit expatriates and increase the representation of women at all levels.

Ethics

The data repository for the anti-bribery reporting process was revised to further promote and instil an ethical culture. The amended process has enhanced the effectiveness and independence of the investigations carried out across the group. An area for improvement would be group-wide communication of the outcomes of investigations across the group.

Stakeholder engagement

The company's approach and strategic intent continue to evolve with regard to stakeholder engagement. The process of mapping stakeholder relationships has been undertaken across the group and the Barloworld stakeholder framework has been denied and embedded in the group strategy. All divisions and business units have identified key strategic stakeholders. There is a structured approach regarding major issues raised by the stakeholders and management's responses to these issues. Stakeholder engagement continues to be key in enhancing the group's sustained value creation.

Empowerment and transformation

The committee continues to review, monitor and report on areas under its mandate, and the concerted effort on making preferential procurement and making this a group focus is bearing fruit. The company's spend with small, medium and large black-owned entities as a percentage of the discretionary spend is increasing.

The transfer of properties under the Barloworld Khula Sizwe empowerment transaction is complete.

The impact of Covid-19 and the difficulties facing small, medium and micro enterprises was of concern to the committee. The response was approval of a Covid-19 salary relief fund of R22 million by Siyakhula, that provided much needed support to the SMMEs' ability to continue trading for a period of six months as well as much needed loan repayment holidays. A total of 50 beneficiaries were supported and 359 jobs sustained.

Social impact

In FY2020 Barloworld Mbewu embarked on an initiative to identify fertile fields to kick-start the sowing season. This initiative symbolises our commitment to incubate and unleash the latent potential of qualifying communitybased social entrepreneurs who continue to be innovative in solving the challenges of their own communities. Mbewu has benefited 29 social entrepreneur cohorts with a proven income stream that demonstrates their ability to be scalable. The first cohort was also provided with business leadership training during the year under review and received combined funding of R13 million. They will be further assisted with access to markets and other development funders in future.

During the year under review our social impact investment was reduced due to the impact of the operating environment on group revenue. The resultant corporate social investment funding support in FY2021 was R16 million (FY2020: R19 million), 50% of which was directed to health and welfare initiatives.

Safety, health and environment (SHE)

The committee receives quarterly updates on pertinent safety, health and environmental aspects through the group’s quarterly safety, health and environment report. In fulfilling its mandate, the committee also has strategic oversight over SHE aspects and related group policies.

The five-year environmental-related targets set in 2016 came to an end in FY2020. New targets therefore need to be established for the next five year period. These will address material environmental aspects, including efficiency targets for non-renewable energy, fuel efficiency, electricity consumption, greenhouse gas emissions (Scope 1 and 2), water efficiency and responsible waste management. During the year, we established divisional- level intensity metrics to allow for enhanced operational management and efficiencies. These are being refined and we anticipate reporting on progress in the next financial period.

Emerging trends, including potential risks, were reported to both the audit and risk as well as the social, ethics and transformation committees. Barloworld also completed the CDP Climate Change and CDP Water Security questionnaires, which assist the group with the identification of physical and transitionary risks stemming from climate change and those related to water scarcity and security.

Safety remains a priority and we continue to implement and refine our approach to ensure the safety of our employees across all our operations as well as our customers. Regular workplace safety assessments and employee engagement on safety measures drive safety awareness and behavioural change.

Safety targets are set for each division and performance is monitored against set targets via our Barloworld Business Systems (BBS) strategy deployment toolkit. Despite a year-on-year improvement in the group’s lost-time injury frequency rate to 0.36 from 0.38, there were regrettably one work-related fatality within our Logistics operation during the year under review. A assessment workshop was conducted during the year on environmental, social and governance (ESG) aspects. The process and outputs assisted the group to prioritise ESG matters and focus management’s attention on aspects that are material to our stakeholders and that have the potential to significantly impact the group.

We were pleased that Barloworld’s efforts in driving an integrated management approach and balancing economic value creation with social and environmental impacts were recognised.

Nomavuso Mnxasana
Chair of the social, ethics and transformation committee

Social ethics