Social and Ethics Committee report
The company's Social and Ethics Committee is a statutory committee, established by the board in March 2012 in accordance with the Companies Act. The committee comprises five non-executive directors (four of whom are independent), four executive directors, the Human Resources Executive and the Company Secretary. A member of senior management acts as secretary to the committee.
In accordance with its Terms of Reference, the committee is required to meet at least twice a year in order to fulfil the functions assigned to it in terms of the Companies Regulations and such other functions as are assigned to it by the board from time to time, in order to assist the board in ensuring that the group remains a responsible corporate citizen. At each of its meetings it receives reports from other committees and management, and in turn reports on relevant matters within its mandate to the board.
Responsibilities
The objectives and responsibilities of the committee, which are aligned with the committee's statutory functions as set out in the Companies Act and Companies Regulations, and which form the basis of its annual work plan, include the following:
- social and economic development, including the group's standing relative to the UN Global Compact Principles, the OECD recommendations regarding the combating of corruption, and South Africa's Employment Equity Act and B-BBEE;
- good corporate citizenship, including the group's positioning and efforts in promoting equality, preventing unfair discrimination and combating corruption, the group's contribution to the development of communities in which it operates or markets its goods and the group's record of sponsorships, donations and charitable giving;
- the environment, health and public safety, including the impacts of the group's activities and products on the environment and society;
- consumer relationships, including the group's advertising, public relations and compliance with consumer protection laws;
- labour and employment, including the group's standing relative to the ILO Protocol on Decent Work and Working Conditions, and the group's employment relationships and contribution to the educational development of its employees;
- promotion of equality, transformation and social responsibility policies and strategies; prevention of unfair discrimination; and
- generally, the monitoring of the social, ethics, economic, governance, employment and environmental activities of the group against internationally recognised human rights principles and other relevant best practice standards.
The committee monitors adherence to the relevant legislation, regulations and codes of best practice in relation to matters within its mandate.
Performance
During the year under review, the committee met twice, in May and September 2013. This report describes how the committee discharged its responsibilities in respect of the financial year ended 31 March 2014 and will be presented to the shareholders at the AGM to be held on 16 July 2014.
In May 2013, the board approved a new Code of Conduct and Business Ethics (available on the company's website at www.illovosugar.com) which prescribes the standards required from all our group employees, suppliers, service providers and representatives and is guided by the 10 principles of the UN Global Compact and other internationally recognised human rights and other principles and practices.
UN Global Compact Principles
During the year under review, the committee progressed with its ongoing process of monitoring the company's application of the UN Global Compact Principles and embedding them into the company's operations, focusing initially on three of the principles, namely, human rights, child labour and the environment. The respects in which the group has espoused these principles are reported on more fully elsewhere in this report.
The company's Code of Conduct and Business Ethics was reviewed and amended during the course of the year to include more emphasis on the protection of internationally recognised human rights, including those set out in the International Bill of Human Rights and the ILO's Declaration on Fundamental Principles and Rights at Work. In terms of the amendments to the code, the group businesses are required:
- to avoid any complicity in human rights abuses and to adopt practices to protect against abuses of human rights in their activities and in their business relationships with others;
- to conduct business in compliance with all applicable legal requirements and in a manner that respects the rights and dignity of all their employees and the local communities in which they operate, including legitimate tenure rights and freedom of association;
- to adhere to the principle of free, prior and informed consent in all dealings with the indigenous communities in the areas in which our businesses operate;
- to procure that any adverse impacts resulting from their activities are minimised and justly and fairly compensated; and
- to encourage all suppliers and other persons contracting with Illovo to adhere to the same principles.
During the year, a gap analysis was carried out to assess the extent to which the UN Global Compact Principles are currently incorporated in the policies and business practices of the group, the intention being to implement practices across the group in a cohesive manner, and to incorporate the principles into the business practices.
Land and land distribution
In response to global anti-land grabbing campaigns, Illovo has re-affirmed its zero tolerance approach to land grabbing. Illovo is not, and never has been, involved in land grabs or any improper land acquisitions of any kind. One of the key pillars of our Strategic Intent and sustainability model is to be welcomed in the communities in which we operate, without whose co-operation we would not be able to sustain our businesses. We have a comprehensive and compelling business sustainability and corporate social investment profile, with the preservation of community land rights being a key component.
Our practices and procedures require that all proposed projects undergo a stringent stage and gate process, including legal investigation of land tenure rights, working with local legislative frameworks and land reform programmes, consultation with local communities and public authorities, ensuring mutually agreed compensation where communities are affected by our operations, providing technical and financial support to local community farmers supplying sugar cane to our operations, and working with reputable development organisations to ensure projects are in line with accepted international standards.
In South Africa, Illovo has voluntarily sold 52% of its agricultural land holdings to black South Africans (equating to 26 682 hectares, with an area under cane of approximately 17 120 hectares), and to ensure the continued commercial viability of the transferred land, Illovo has instituted an innovative programme to provide technical and financial assistance to new emerging cane growers ensuring the long-term sustainability of farms now under black ownership.
Forced and child labour
During the year under review, Illovo continued its endeavours to eliminate any forced and child labour in its supply chain, its endeavours in this regard having received positive acknowledgment. Meetings were once again held with representatives of the ILO to seek guidance on methods to assist management in implementing procedures to eliminate this scourge. In order to procure compliance by Illovo's suppliers and service providers with the UN Global Compact Principles 4 and 5 relative to forced and child labour, as well as other principles of the UN Global Compact, the company's Code of Conduct and Business Ethics records that the use of forced or child labour in our supply chain is not permitted and we require our suppliers to provide contractual undertakings to adhere to the Code. Our initiatives in relation to child labour are also reported in our Human Capital Report.
Environment
The precautionary approach to environmental challenges required by UN Global Compact Principle 7 is dealt with in the Climate Change Report, which also reports on our continued initiatives relative to the development and diffusion of environmentally friendly technologies.
A new group Environmental Policy as well as an environmental strategy was considered. The environmental strategy process, which covers a range of objectives and responsibilities, defines a five-year approach to the environmental management implementation by the company. Environmental initiatives during the year included Illovo's involvement in the CDP water and CDP climate change reporting process. A comprehensive water footprinting exercise carried out by WSP was completed across all group operations, which will assist the company in determining its water risk profile and identifying water-related opportunities.
Ethics
The Anti-bribery and Corruption Policy, Fraud Policy, Code of Conduct and Business Ethics (more fully referred to Corporate Governance Report), embody our key principles and values.
The group Whistle-blowing Policy, which facilitates the Illovo Tip-offs Anonymous reporting line and Crime-line, operated by Deloitte & Touche, continues to provide an appropriate balance between encouraging reporting and discouraging malicious and frivolous reporting. A review of the Tip-offs Anonymous and Crime-line reporting process is carried out regularly, and during the year training on these facilities was conducted by Deloitte & Touche in conjunction with the company's compliance personnel at all group operations.
Labour
Our Employment Equity Policies embody our commitment to implementing employment equity across the group. Our Employment Equity forums continue to provide input into the employment equity management of the group. During the year under review, attention was again given to our compliance with the Broad-based Black Economic Empowerment Act and codes, as well as to the development and advancement of local talent in the other countries in which the group operates. These initiatives are elaborated upon on here. Skills development remains an area of focus and the various skills development programmes that have been implemented are reported on more fully on here. Entry level accommodation conditions across the group were reviewed during the year, and each operation's current progress relative to the agreed standard was examined.
Health and safety
The group once again achieved a world-class achievement in relation to its health and safety practices and a new group Health and Safety Policy was approved. Health and safety practices continue to improve annually and are reported here.
Safe evacuation of employees from various territories in emergency situations remains a priority and our crisis management plan and evacuation procedures were reviewed and tested. In relation to health measures, attention continues to be given to the impact of HIV and AIDS and malaria initiatives. Our extensive healthcare programmes are reported on more fully here.
Socio-economic development
In line with our Strategic Intent to be welcomed in the communities in which we operate, Illovo strives to support the advancement of all communities where its operations are located and our Corporate Social Investment Policy entrenches this philosophy. Sustainable community development is achieved, inter alia, through employment, procurement and supply chain development. The group continues to provide much-needed employment and other social benefits in the areas in which it operates, as well as providing revenue to the emergent farmers who supply sugar cane to our factories and other suppliers of services and goods, thereby directly and indirectly benefiting the surrounding communities as a whole.
During the year under review, an independent company, Corporate Citizenship, was engaged to conduct a socio-economic impact assessment of the group's operations. Corporate Citizenship's group report is available on the company's website at www.illovosugar.com. The numerous contributions we make are also reported here of this report.
Sustainability
The group's sustainability framework gives focus to energy and emissions, biodiversity, water, sustainable farming practices, economic factors including outgrower development and agricultural productivity, and product responsibility. These matters are elaborated upon in the Climate change report of this report.
The key sustainability risks and opportunities which received focus in the year under review were energy and carbon management; water usage, by adopting a water footprint methodology; and a culture of continuous improvement and "doing more with less" in agricultural productivity, an initiative which is being embedded across the group.
Consumer legislation
During the year under review, the committee's work plan was amended to include provision for the attestation of compliance with applicable consumer laws, as required in terms of regulation 43(5)(a)(iv) of the Companies Regulations 2011. Our endeavours in this regard are more fully reported in the Corporate governance report.
Evaluation of committee performance
An evaluation of the performance of the committee was carried out in March 2014 as part of the evaluation process detailed in the Corporate governance report. The evaluations recognised that although the committee was still in its formative stages, it was evolving and developing its role and was gaining good momentum.
Prof P M Madi
Social and Ethics Committee Chairman
23 May 2014