Sustainable development is
an integral part of Bidvest doing business. Sustainability
for Bidvest is about sound business practices,
risk management, good governance, taking account
of stakeholder needs, stewardship of natural resources,
BEE and developing employees, an ongoing process
of learning and a source of innovation and new
business opportunities.
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Bidvest’s empowerment
rating has been reaffirmed to be “A”,
with improvements noted all round
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A number of business
units have obtained improved and first-time
empowerment ratings
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Increasing acceptance
of Bidvest’s BEE credentials in the
market
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An electronic system
is being launched to vet supplier empowerment
credentials
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Bidvest is one of
only four South African companies listed
in the Dow Jones Sustainability World Index
2007 and the JSE has reaffirmed Bidvest
as a founding constituent of the SRI Index
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Total training spend
R101,9 million (R83,0 million in South Africa)
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Women employees –
42,4% (women employees in South Africa –
46,6%)
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Corporate social investment
spend increased to R28,7 million, equating
to 0,8% of pre-taxation profit (R25,7 million
and 1,1% of profit before taxation in South
Africa)
Introduction
This is the third year that
Bidvest is reporting on its sustainability performance.
A comprehensive account of the Group’s non-financial
performance is provided in the 2006
sustainability report .
The Group has made good progress in promoting
sustainable development. As an international company
firmly rooted in South Africa, the advancement
of BEE and skills development of HDIs in the South
African operations is a principal focus in the
journey towards achieving sustainability. Southern
African businesses are taking the HIV/Aids challenge
seriously and continue to expand and improve their
response programmes. A Group-wide prevalence study
and an assessment of HIV/Aids programmes are being
undertaken.
Sustainability for Bidvest is about sound business
practices, risk management, good governance, taking
account of stakeholder opinions, stewardship of
natural resources, black economic empowerment
and developing employees; it is about “doing
the right thing” and is an integral part
of business.
The sustainability report follows the Global Reporting
Initiative’s (GRI) recently released G3
guidelines.
SUSTAINABILITY
PERFORMANCE OVERVIEW
Disappointments
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Twelve work-related fatalities
Challenges
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In South Africa, a lack
of clarity in the definition of supplier
empowerment status criteria is resulting
in inconsistent assessment criteria being
used in the market place
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Developing a comprehensive
sustainability strategy and management framework
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Establishing more effective
programmes for managing HIV/ Aids in the
workplace
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Ensuring continued compliance
with intensifying environmental regulations
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Attracting and retaining
senior-level HDIs
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Addressing general skills
shortages
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Managing exposure of
several business units to strike action
The
award-winning Rally to Read
The Rally to Read is a reading development programme
organised
nationally by McCarthy with advertising and educator
skills support from
the Financial Mail and the Read Educational Trust
respectively.
MANAGING SUSTAINABLE
DEVELOPMENT
Bidvest is a geographically
diverse and multi-faceted business. Operations
function independently, autonomously managing
their sustainability objectives and priorities
according to their material issues, yet derive
the benefits of being part of a larger group.
Bidvest provides guidance with financial management,
corporate governance and transformation.
At divisional and corporate level, sustainability
is largely managed as part of the risk management
process, for which the individual boards and corporate
and divisional audit committees take responsibility.
Business units monitor and manage day-to-day performance
across the triple bottom-line.
Bidvest continues to evaluate what sustainable
development means for the Group and seeks to develop
systems to more effectively coordinate an approach
which integrates sustainable development across
the Group. The Group intranet, “the Village”,
is an important tool for sharing knowledge and
ideas.
Bulk
Connection - managing runoff
and dust
Significant capital investment
has been made to modernise the
facilities and
address contaminated water runoff
and dust problems.
Management
systems
Formal management
systems are implemented in business
units where deemed material. Operations
where health, environmental or quality
issues are of particular concern,
often have certified quality (ISO
9000) and environmental (ISO 14000)
management systems in place.
In-house systems are used to manage
quality standards, including health
and safety and environmental practices.
Informing the
course of sustainable development
Identifying the interests and
concerns of the Group’s stakeholders is
an essential part of the process of understanding
how to shape the course of sustainable development
at Bidvest.
In 2005 a range of external Bidvest stakeholders
was interviewed to obtain their opinions on the
Group’s sustainability performance and feedback
on these opinions is provided in the 2006 sustainability
report.
While no formal stakeholder engagement was conducted
this year, KPMG was asked in addition to their
assurance report to conduct a high-level sustainability
gap analysis against best practices.
The KPMG findings are described in the 2006 sustainability
report and are being debated to agree how best
to address the identified sustainability gaps.
ECONOMIC VITALITY
Bidvest is one of South Africa
’s largest and most diverse industrial groups
and has produced consistent returns for shareholders
for the last 18 years.
Bidvest achieved revenues of R77,3 billion (2005:
R62,9 billion) and operating profit of R3,7 billion
(2005: R3,0 billion) and headline earnings reached
R2,4 billion (2005: R2,0 billion). R13,9 billion
of wealth was created,0 while R8,3 billion (59,7%)
was distributed to employees and R915,5 million
(6,6%) to the government. Total exchanges with
government including amounts collected on their
behalf amounted to R14,7 billion. Foreign operations
contributed 37,7% to Group revenue and 23,9% to
trading profit.
SOCIO-ECONOMIC
TRANSFORMATION
Promoting black
economic empowerment
Bidvest, with 78 029 employees
in South Africa, is one of the largest employers
in the country, where the issues of value creation,
wealth distribution and the role of business are
increasingly seen in the context of BEE policies.
A commitment to leveraging a significant opportunity,
by virtue of the Group’s size and diversification
across numerous industries, to make a far-reaching
contribution towards socioeconomic transformation
and black economic empowerment, has been the thrust
of the Group’s sustainability drive.
Bidvest’s empowerment rating has been reaffirmed
to be “A”, with improvements noted
all round. Where scores decreased, this was as
a result of changes in the new BEE codes. The
organisation is emerging as a leading catalyst
for positive change across many industries. The
Group’s empowerment partners in the Dinatla
consortium play an important role in assisting
the Group to achieve transformation objectives
and strive for “AAA” empowerment credentials.
Effective empowerment
holdings
Economic BEE ownership, calculated
in terms of the BEE codes of good practice, is
41,4% with a 29,2% effective BEE control. The
Dinatla BEE consortium effectively owns 15,0%,
the Public Investment Corporation 13,4% and a
further 16,6% is controlled by BEE asset managers.
The Dinatla transaction completed in 2003 was
at the holding company level, including both the
local and offshore operations of Bidvest. If Dinatla
had bought into the South African operations only,
at the same transaction value, the total percentage
BEE direct and indirect ownership, at the time
of the transaction, would have been in excess
of 50%.
The Dinatla consortium of BEE partners enables
a broad-based and representative empowerment grouping
to share and influence the future of Bidvest,
in South Africa and abroad. The partnership has
proven to be a highly effective model, creating
opportunities and delivering value for all parties,
while generating a pool of capital creators with
production capacity who will in turn contribute
to the growth of the economy. The refinancing
of the Dinatla transaction within the originally
envisaged timeframe has been announced.
Managing transformation
The Group’s transformation
committee is responsible for driving socio-economic
transformation within the Group. The committee
receives strategic input from the commercial directors’
forum which comprises the Group’s commercial
directors. The commercial directors are responsible
for driving transformation and business development
across their respective divisions. The commercial
directors excel in their roles, providing strategic
guidance to divisional chief executives. There
is greater appreciation at executive level that
BEE presents an opportunity, though there remains
a need for BEE to be embraced more widely across
the Group.
The Group’s transformation strategy focuses
on progressing skills development and employment
equity at all levels, increasing levels of procurement
of goods and services from HDIs and promoting
the development of small; micro-and medium-sized
black-owned enterprises. The strategy is guided
by the Bidvest Charter, which all business units
subscribe to, as systems to measure and monitor
BEE performance. Bidvest is developing an electronic
reporting tool which will greatly enhance the
process of collating scorecard data to ensure
the highest standards.
The government’s draft BEE codes of good
practice are expected to be finalised and made
law before the end of 2006 and will bring welcome
certainty to the BEE regulatory framework. In
the new regulatory environment, BEE performance
will be assessed on a broader basis, looking beyond
equity ownership at a number of areas of performance
providing a level playing field for business.
The Group’s transformation strategy will
be diligently aligned with the new regulatory
requirements.
An increasing number of businesses are in the
process of obtaining or strengthening empowerment
ratings. BEE credentials have enabled the business
units to retain business and gain new contracts.
Employment equity
and skills development
A high value is placed on leadership
development and on increasing the representation
of blacks and females across management, technical
and professional categories, recognising this
as critical for meeting long-term objectives.
The Group’s workforce in South Africa grew
by over 2 000. Divisions budget a minimum of 1%
gross total payroll for skills development programmes.
Training spend in South Africa has increased to
R83,0 million. Integrated employment equity and
skills development programmes with targets for
black representation at all levels are rolled
out across all divisions and at each business
unit. Succession-planning strategies are implemented
to ensure the movement of black candidates into
management positions and there are retention strategies
and mentorship programmes for black employees.
The majority of businesses are making steady progress
in meeting employment equity and skills development
targets. Improving representation at senior and
executive management levels is an ongoing challenge
in view of the industry-wide skills shortages
in South Africa. The Group will focus on developing
core skills to enhance current efforts to develop
and advance entrepreneurial individuals to senior
levels.
Indirect empowerment:
preferential procurement and enterprise
development
Business units pursue policies
that promote the use of black-owned and empowered
enterprises. Maintaining supplier relationships
often depends on solid empowerment credentials.
Divisions are increasingly implementing initiatives
to develop levels of BEE understanding among suppliers
and encourage suppliers to obtain and strengthen
empowerment ratings.
A challenge industry-wide in South Africa, is
a lack of clarity in the definition of BEE. There
is variation in the assessment criteria used by
suppliers and businesses which results in differing
interpretations and problematic inconsistency
in the market.
The commercial directors are responsible for spearheading
enterprise development and CSI projects which
are coordinated as division-wide initiatives and,
therefore, have more impact than the current fragmented
approach pursued by business units. CSI continues
to increase and now approaches 1% of operating
profit.
Bidvest’s commitment to promoting enterprise
development involves engaging with financial institutions
to negotiate favourable financing terms for small
BEE suppliers, providing BEE suppliers with favourable
credit and payment terms, and offering mentorship
and advice to small BEE suppliers to ensure effective
skills transfer and sustainability. The advanced
Bidvest BEE supplier database will assist suppliers
with marketing their goods and services.
WORKFORCE
Bidvest employs 78 029 in South
Africa and 93 325 people in total. Businesses
comply with statutory requirements: the South
African Labour Relations, the Basic Conditions
of Employment, the Skills Development, the Employment
Equity, the Broad-based Black Economic Empowerment,
Unemployment Insurance and the Occupational Health
and Safety Acts, or their equivalents in other
countries. Business codes, policies and procedures
typically cover recruitment and selection, business
conduct, non-discrimination, industrial relations,
employment equity, grievance and dispute settlement,
HIV/Aids and other life-threatening diseases,
employee conduct, freedom of association, ethics
and sexual harassment. Many of these were negotiated
and agreed with unions. Companies tend to have
formal grievance procedures in place, which, in
South Africa, are in accordance with Schedule
8 of the Labour Relations Act.
Many businesses have structured employee development
programmes and related performance appraisal systems
in place and a growing number of businesses conduct
formal employee satisfaction surveys.
The
Bidvest Academy continuing
to change people’s
lives
The Bidvest Academy, now
in its fourth year, provides
a platform for developing
young executive talent
within the Group. Since
March 2003, 368 young
managers have participated
in the Academy’s
six-month programme, which
provides exposure to Bidvest’s
executive management,
Group operating methodologies
and divisional business
strategies.
Communication
Communication and
interaction with employees at business
unit level and as part of the Group
is an important part of ensuring that
employees are informed of diverse
developments and encouraged to contribute
towards further developments. Communication
takes place using a variety of channels,
including a quarterly internal magazine,
an employee report, corporate videos,
an intranet and business-specific
magazines. Bidvest’s intranet,
the Village, is developing as a powerful
tool for enhancing internal communications,
encouraging a growing sense of a Bidvest
community and assisting in developing
business synergies.
Health and safety
Bidvest is concerned about
the well-being of employees and is committed to
pursuing best practice safety practices in all
work-related activities. Business units have designated
personnel and systems in place to monitor and
manage health and safety standards. Operations
are compliant with relevant occupational health
and safety legislation and regulations. Business
units which involve a hazardous working environment
have formal systems to ensure that the strictest
health and safety standards are enforced. Business
units are required to identify health and safety
risks in the workplace and take steps to eliminate
or mitigate risks by implementing the necessary
controls. Training and maintaining an awareness
of risks and precautions are an important part
of this process.
It is with deep regret that
Bidvest has to report twelve work-related fatalities.
This is unacceptably high and efforts are being
made by Bidvest businesses to continually improve
health and safety management processes.
Getting
serious about HIV/Aids
Following the approval of IVS’s
HIV/Aids policy last year, a
comprehensive support programme
has been launched at the Durban
site.
Anonymous VCT and treatment
is provided via the company’s
on-site clinic, which is staffed
by a full-time nurse and a stand-by
doctor. The nurse conducts regular
site visits to help generate
awareness and provide general
wellness training. To date,
four staff members have come
forward for VCT and one staff
member is already receiving
ART. The programme will be rolled
out to other IVS sites and will
form part of the formal wellness
programme.
HIV/Aids
The impact of HIV/Aids
in the workplace is increasingly felt
across the South African operations.
Businesses are to varying degrees
proactively implementing HIV/Aids
awareness and prevention measures.
While some have made progress in managing
the disease and several have outstanding
HIV/Aids programmes, many businesses
must improve their response strategies.
A Group HIV/Aids policy, which serves
to guide businesses in developing
appropriate programmes, has been finalised
and is awaiting formal adoption.
A South Africa-wide HIV actuarial
prevalence study and an assessment
of programmes are being conducted
and will be used to more effectively
manage the HIV/Aids at Bidvest. While
the studies are not yet complete,
preliminary findings indicate that
the HIV prevalence rate in the South
African businesses is around 17,3%,
which is an average and, given Bidvest’s
diversity, cannot be applied to any
one business unit in isolation.
Bidvest has become a member of SABCOHA,
the South African Business Coalition
on HIV/Aids.
Training
The sustained success of the
business is dependent on maintaining a motivated
and competent, quality workforce. The provision
of relevant and diverse training for the development
of employees is essential to attract and retain
talented, quality individuals, especially given
South Africa ’s skills shortage. The development
and promotion of HDIs is an essential process
to improve the Group’s employment equity
profile.
Internal and external training programmes are
structured to develop individual competencies
in line with business needs. Education and training
encompass: adult basic education and training
(ABET), learnership programmes, specific technical
and industry-related skills, and leadership and
management development.
The Group’s training investment has increased
by 19,0% to R101,9 million, of which R83,0 million
was spent in South Africa. This equates to R1
092 being spent on training per employee Group-wide
(R1 064 in South Africa).
Master
chefs in the making
Bidfood is a proud sponsor of
a
bursary programme aimed at talented
students from historically disadvantaged
backgrounds who wish to train
as chefs. Elias Kafi, a young
man from Khayelitsha, was talent-spotted
by master chefs, Garth Stroebel
and Paul Hartmann, of the
South African Chefs’ Academy.
COMMUNITY
Customers
Bidvest interacts
with a broad range of corporate and
private customers. While some businesses
conduct formal customer-satisfaction
surveys, most interact with their
predominantly corporate clients on
a regular basis and feedback is used
to enhance service delivery. A number
of businesses formally log all customer
feedback and subsequent actions, often
as part of a quality management system
such as ISO 9000.
Community
activities
Bidvest invested
R28,7 million (0,8% of profit before
taxation) in CSI activities (R25,7
million and 1,1% of profit before
taxation in South Africa).
Bidvest CSI activities cover:
education and training, health and HIV/Aids, community
development, sports, arts and culture, environmental
initiatives, economic empowerment and job creation,
safety and security, and welfare.
ENVIRONMENTAL
PERFORMANCE
Bidvest consists of services,
trading and distribution businesses which have
varying degrees of environmental impact. The JSE
SRI Index in 2005 has classified Bidvest as a
business with a “medium” environmental
impact.
A Group environmental policy, which encourages
businesses to take a more proactive approach to
the environment as a sustainability issue, has
been finalised and is awaiting formal adoption.
Business units are responsible for their environmental
performance and comply with relevant environmental
legislation. Business units which work with toxic
products maintain strict standards to avoid hazardous
incidents and practise responsible waste management.
Most businesses have recycling initiatives.
Some business units proactively identify and introduce
measures to improve their environmental performance.
UK-based 3663 First for Foodservice is a leading
example in the Group and has been used as a case
study in the sustainability report.
While improvements have been made to the data
collation process, data collation and ensuring
business management takes information ownership
remain an ongoing challenge in a group as diverse
and decentralised as Bidvest.
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