Illovo’s integrated business sustainability model
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Sustainability practices
Our existing business model and our robust growth strategy on the African continent are focused firmly on the need to deliver ongoing value to shareholders and maintain the financial sustainability of the group. At the same time we remain conscious of the strong interdependence with the communities and natural environments in the regions in which we operate and subscribe to the principles of sustainable development. Through our business strategies, we aim to ensure that sound, sustainable practices are developed and maintained, following the guidance provided by internationally recognised frameworks. Further information in this regard is provided in the Social and Ethics Committee report and the Socio-economic impact report.
In line with our integrated business approach, our reporting process is guided by the GRI guidelines on sustainability reporting, the requirements of the JSE’s SRI Index, local socio-economic and environmental issues, and key stakeholders’ requirements.
In 2013, we qualified for inclusion in the JSE’s SRI Index for the seventh consecutive year, being named amongst the six companies which met its “best performer” threshold. Illovo was one of the “best performers” in the High Environmental Impact category.
Integrated Reporting & Assurance Services (IRAS) has provided independent third party assurance over the sustainability information contained within this report, confirming that it meets the GRI’s Application Level B requirements (B+ with its assurance). A summary of this assurance statement is provided, with the full statement appearing on our website.
Our management is assisted in the sustainable development of the group business by the Risk Management Committee, which, in conjunction with the Audit Committee and the Social and Ethics Committee, ensures effective governance of risks that may have a potential impact on the achievement of sustainable development, such as safety and health, environment, regulatory, market and financial performance, as well as reputational issues and community relationships.
Economic and social
Illovo strives to support the advancement of all communities where its operations are located and our corporate social investment (CSI) strategy entrenches this philosophy. Sustainable community development is achieved, inter alia, through employment, procurement and supply chain development.
Driven by the contribution we can make to the economic development and wellbeing of our stakeholders and the communities in which we operate, Illovo plays a significant economic role as a creator of wealth, contributing to the empowerment of emerging markets in the six African countries in which we operate, as reported in our Socio-economic impact report. We create value, not only by transforming raw materials into products for our customers and providing much needed employment, but also through the wealth creation provided by the substantial revenue created for our suppliers, contractors, distributors, service providers, and the returns provided to our shareholders and investors. Significant economic benefits accrue to governments through direct and indirect taxes and also through the provision of infrastructure, education and healthcare, thereby directly and indirectly benefiting the surrounding communities, and generally providing much needed social benefits and supply opportunities in the developing regions of Africa.
Accordingly, over and above the usual costs of production which would typically be found in the more developed sugar-producing countries, in the year under review, Illovo:
- provided social benefits to our employees, amounting to approximately R245 million;
- provided revenue to the local farmers who supply sugar cane to its factories across the group, aggregating approximately R1.6 billion, benefiting these growers directly and indirectly and leading to significant multiplier effects within the associated communities; and
- procured 54.1% of its supply requirements from local suppliers in the countries in which it operates, valued at R4.4 billion.
The group’s Socio-economic impact report and the Socio-economic impact assessment within this report, together with the Value-added Statement, and our Five-year Review of financial performance and statistics provide further information on the considerable positive economic impact our operations have on the socio-economic development of the regions in which we operate and the wealth we have been able to create for our shareholders through manufacturing, trading and investment and our subsequent distributions to shareholders and reinvestment in the business.
Human capital
Illovo strives to be an employer of choice within the agri-business sector in which we operate. We recognise the importance of our own human capital in the delivery of Illovo’s stated goals and objectives, and the broader long-term sustainability of the African sugar industry. Our philosophy for human excellence extends to providing meaningful employment and safe environments within which to work, promoting equal opportunity, an environment which promotes talent development and the continual pursuit of excellence. Staffing and targeted manpower succession planning is a key pillar for the development of our existing employees whose continued growth and good performance is recognised, irrespective of race or gender. Further information in this regard is provided in the Human Capital Report.
Human rights and ethics
Our Code of Conduct and Business Ethics embodies our key principles and values, and prescribes the conduct required of all employees to achieve these values. The Socio-economic impact report provides further information in this regard and demonstrates our application of:
- the United Nations Global Compact Ten principles and other internationally accepted human rights principles;
- the Organisation for Economic Co-operation and Development (OECD) recommendations regarding corruption; and
- the International Labour Organisation (ILO) standards.
Environment
Illovo’s direct environmental impacts are primarily associated with our agricultural and manufacturing operations. As the largest sugar producer in Africa, Illovo has a substantial agricultural footprint. It uses intensive manufacturing processes that consume water, generate solid waste and result in emissions to air and discharges to water bodies. We have identified energy, water, air emissions, effluent and waste, and biodiversity as the most material environmental indicators throughout the group’s operations.
Our environmental sustainability reporting, guided by the GRI, is structured to reflect the inputs, outputs and modes of impact the organisation has on the environment. Materials, energy and water represent three standard types of inputs used by all of our operations. These inputs result in outputs of environmental significance, which are captured under the parameters of emissions, effluent and waste. Land and biodiversity are also regarded as inputs to the extent that they can be viewed as a natural resource. Our underlying environmental strategy is continually to investigate means to reduce the environmental impact of our operations. We are particularly mindful of the possible impacts of our operations on the use of natural resources and strive to minimise our impacts through efficient use in a responsible and sustainable way and through committing ourselves to continuous improvement. We strive to comply with all applicable in-country environmental regulations. Further information in this regard is contained in the Climate Change Report.