Illovo - Socio-Economic Impact Report 2014/15 - page 5

PROCUREMENT
Illovo supports the long term growth and stability of the communities in which it operates by sourcing
correct quality at an acceptable premium, notwithstanding that economic advantages might otherwise be
gained by sourcing bulk supplies and technologies, through the central group procurement function,
elsewhere. A further benefit for the local communities is the indirect employment creation by suppliers
providing sugar cane and other goods and services to Illovo.
During the year under review, Illovo procured 81% of its supply requirements from local suppliers in the
countries in which it operates, to the value of approximately R7 428 million.
Furthermore, in the year
under review the company procured 8.79 million tons of sugar cane from 12 478 local growers, earning
these growers R3 879 million in revenue. Of this cane 3.7 million tons were from black growers earning
these farmers R1 252 million in revenue. Given that outgrowers employ 34 544 people and based on
the estimated household sizes of between five and seven members through this an estimated 172 720 to
241 808 people were supported by the outgrowers, excluding the outgrowers themselves and their
families.
In South Africa, the company complies with the preferential procurement requirements in terms of which
broad based black economic empowerment (B-BBEE) points are earned for procurement from black-
owned businesses, thus elevating the company as a preferred supplier in the local South African market
in terms of the country’s B-BBEE coding system. To this end, R1 740 million, out of a total of
R2 081 million, in procurement expenditure in 2014/15 qualified as black economic empowerment
expenditure in terms of the B-BBEE codes. During 2014/15, the company’s expenditure of R16.6 million
dedicated to grower development in South Africa was instrumental in the company’s achievement of
maximum points under the B-BBEE category of Enterprise Development.
HUMAN RIGHTS IN THE SUPPLY CHAIN
In addition to our commitment to upholding the human rights of our employees, we are committed to
developing a broader culture of human rights in the communities around our operations and among
those with whom we conduct business.
Further to the direct economic benefits which it brings to its supply chain, Illovo contributes to supply
chain integrity through the promotion of globally accepted human rights practices by requiring its
suppliers, contractors, service providers and representatives to comply with and to seek to develop
similar relationships with their own supply chains, in compliance with all the applicable local laws and
codes of best practice and consistent with the UN Global Compact Principles. These requirements are
embodied in the company’s Code of Conduct and Business Ethics (available on the company’s website
at
and are incorporated into our supplier contracts. These require our employees
and suppliers:
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 persons contracting with Illovo and its suppliers to adhere to the same principles.
1,2,3,4 6,7,8,9,10,11,12,13,14,15,...20
Powered by FlippingBook