Managing sustainable development

The business world is experiencing a pronounced shift towards more socially and environmentally sustainable corporate practices based on clear business benefits. At SPAR, sustainable business practices are incorporated as part of our strategy. This focus has been driven by external and internal challenges, set out in the section on operating environment. These include:

Increasing market volatility, resulting in fluctuating input costs and food prices
Securing supply sources for the long term
Consumers and society demanding a greater degree of good corporate citizenship
Opportunities to innovate, drive revenue and reduce costs

Sustainability thinking has been integrated into all aspects of the SPAR strategy. The group vision is built on an understanding that our retailers and their communities are interdependent. The following sustainability drivers are at the core of our business thinking:

Financial returns are aimed at stakeholders and shareholders
Supply chain optimisation and innovative energy management will achieve cost and carbon footprint reduction
Economic sustainability for the group and its retailers depends on a profitable financial model
We foster collaborative relationships with our key stakeholders
We focus on employee engagement by enabling a motivated, competent workforce
SPAR provides leadership to retailers through emerging farmer integration into the supply chain, energy-saving initiatives and sustainable development

To ensure the successful implementation of its sustainability strategy, SPAR has made the following commitments to drive operational alignment:

Commitment Focus areas Progress during 2014
Reducing our direct environmental footprint
Biodiesel and fuel efficiency
Energy savings
Waste management (recycling)
Water management
See Environmental performance
Innovation in our house brands
House brand packaging review
South African Sustainable Seafood Initiative (SASSI) implementation
Sustainability product criteria
See Environmental performance ‘Product responsibility’ and ‘Packaging
Suppliers’ and retailers’ business practices
Supplier sustainability baseline and plans
Supplier collaboration
Retailer engagement (energy and waste)

See Environmental performance ‘Product responsibility’ and ‘Packaging’ and ‘Effluents and waste

Joint business planning entrenched

Raising awareness and improving education
Sustainability champions
Work is still being done on the buyer education programme, which will be reviewed to make it more accessible to a greater number of employees. We are also exploring the possibility of including suppliers in the training
Work on retailer awareness and education continues with the inclusion of a sustainability section into the retailer induction programme
Consumer awareness

See Social performance ‘Community investment

See Social performance ‘Our retailers’ and ‘Our consumers

Previously disadvantaged or marginalised person participation
Emerging farmer inclusion in Fresh supply chain
Expand black retailer base
Small building contractor development

See Social performance ‘Our suppliers’ and ‘Our retailers’.

Build it initiative to make home building simpler

Philanthropic role
The group’s involvement with a project is seen as an opportunity for both the business and the beneficiary and should add value to both
Focus areas include:
 
Healthcare
Hunger
Safety
Sport
See Social performance ‘Community investment

GOVERNANCE OF SUSTAINABILITY

The executive team has been mandated with the implementation of the sustainability strategy, with specific accountability and a dedicated Risk, Governance and Sustainability Executive. The Social and Ethics Committee monitors the implementation of our sustainability strategy and progress against this strategy is reported to the board. The following steps were taken during the year to engage the broader organisation and to create awareness of sustainability:

Incorporation into employee induction programme
Presentations at internal conferences and at distribution centre executive meetings
Presentations at Management Growth Programme (MGP) and Senior Leadership Development Programme (SLDP)
Appointment of additional resources to co-ordinate risk and sustainability initiatives

SOCIAL PERFORMANCE

There is growing global consensus that organisations have the responsibility to respect human rights and improve the social environment in which they operate. At SPAR we take our social responsibility seriously and seek to invest in our social and relationship capital, as well as our human capital. We endeavour to uphold the human rights of every person involved in SPAR’s value chain. We are pleased to report that no incidents of discrimination or violations of rights were reported during 2014. However, our desire goes beyond simply doing no harm; we wish to add value to the lives of the people involved with or affected by our organisation.

Areas of focus for SPAR include:

Our brand
Our employees
Our suppliers
Our retailers
Our consumers

Our brand

Our social and relationship capital consists not only of our key stakeholder relationships but also the intangibles associated with our brand and the reputation that SPAR as an organisation has developed. We understand that the SPAR brand is a critical element of our success. It is the power of the brand that creates the demand by independent retailers to be part of the SPAR family, which then spurs the demand for SPAR’s goods and services. With this understanding in mind, we actively drive and manage our SPAR brand through ongoing national and regional initiatives designed to create awareness.

As a retail brand, the awareness of SPAR is firstly developed through the customer experience in our stores. SPAR, through its Retail Design, Brand Design and Retail Operations manuals, provides know how to support retailers to create a unique SPAR experience, incorporating best international practice. Through the SPAR Brand Manual, a consistent use of the SPAR logo, trade names and trademarks is maintained.

Community investment

SPAR also builds awareness of the SPAR brand through its corporate social investment programmes and the resultant international exposure. A focus on sport has become synonymous with SPAR. Through our sport sponsorships, we communicate our commitment to the local community, to health and wellness, sustainability and good causes, and strive for excellence. We are also actively engaged at a national, distribution centre and community level in many other corporate social investment initiatives.

Our broad focus areas are:

Healthcare
Hunger
Safety
Sports

Funding proposals are selected according to our CSI policy, based on proposals submitted, and are reviewed on an annual basis. The group invested R13.2 million in its CSI initiatives in 2014 (2013: R11.8 million). Random visits are paid to beneficiary organisations during the year as part of the continuing evaluation of these projects.

CSI project highlights

SPAR builds awareness of the SPAR brand through its long-term sport sponsorship programmes and the international exposure resulting from these. Through this long-term commitment, SPAR is closely identified with encouraging healthy lifestyles, which is in line with SPAR’s family values. During 2014, SPAR’s contribution to these sponsorships amounted to R17.5 million. Examples follow of some of the projects supported by the group during 2014:

During 2014, the SPAR Lowveld distribution centre’s staff were encouraged to become involved in a community project, one of whom were selected as the SPAR Hero with a R10 000 donation towards the community project. The 2014 winning project was Huis Bethlehem, a place of safety for traumatised women and children. Having had great difficulty deciding on a winner and as each participant’s involvement was a community victory in itself, it was decided that every participant’s project would receive a R5 000 donation as well.
Khulisa Social Solutions, a crime prevention organisation, in collaboration with the SPAR Lowveld distribution centre, established the SPAR Ubuntu Community programme in the Luphisi region. The Ubuntu Club seeks to empower community members in a variety of projects related to crime prevention. It is a multi-faceted programme that includes a selection process for the participants, training of participants and rolling out of relevant community-based projects that reach the wider community. During 2014, there were 17 girls and 11 boys involved in the project. Thus far, positive feedback has been received from the participants themselves, from their parents and from the participants’ educators.
During 2013, the SPAR South Rand distribution centre launched the Junior Achievement South Africa programme at Hulwazi Secondary School. The programme provides entrepreneurial and life skills, and raises awareness of economic issues, business management and career planning. This project continued during 2014 with great success.
The SPAR South Rand distribution centre sponsors three environmental entrepreneur programmes. These programmes include a variety of activities that introduce the concepts of climate change, recycling and entrepreneurship, and aim to reduce the carbon footprint of schools. During the year, R100 000 was invested into these educational programmes.
SPAR supports a feeding scheme named Isonka (meaning “bread” in Xhosa). The project aims to fight hunger and fulfil a basic human need. All Isonka projects are located in close proximity to SPAR stores and are run by the local communities. During 2014, R1 million was invested in the feeding schemes (2013: R1 million).
During 2014, the SPAR Lowveld distribution centre’s Human Resources and Retail Operations departments advertised a tender for local companies to provide retail risk related services to our retailers. A proper tender process was followed and a company called ACS Security was appointed to manage this service to our retailers, in conjunction with the distribution centre.
The SPAR Western Cape distribution centre continued its school food garden project, which has proven to be a huge success in providing community members the opportunity to grow their own vegetables and fruit. The children learn the skills of maintaining a sustainable garden while the community is able to enjoy the fresh produce harvested from these gardens. During the year, four schools participated in this project.
The SPAR KwaZulu-Natal distribution centre assisted in various feeding schemes during the year, including providing fresh and dry groceries for Gozololo, a daycare centre for needy children centred in KwaMashu, as well as supporting the Hammarsdale Operation Hunger SPAR soup kitchen by providing funding and food. During 2014, R710 000 was invested in the feeding schemes (2013: R445 000).
The “Roundabout” water project is a group project and is centred on places where children congregate. Merry-gorounds are erected where the children play and in the process of playing on the merry-go-rounds they pump water into reservoirs. SPAR has branded and supported seven sites in South Africa.

OUR EMPLOYEES

One of the key enablers of SPAR’s strategy is competent and motivated employees. In a business based on relationships, finding and retaining the right people enables our success.

The most significant risks to the group in this regard include:

Losing key employees to competitors
Pace of transformation
Wage negotiations which, if not resolved, could result in strikes
Challenges as a result of the pending legislation concerning labour brokers
Shrinkage

The group has proactively started seeking solutions to the challenges regarding labour broking under the proposed new labour legislation and the other risks are constantly monitored and managed.

Employee demographics

Occupational levels SPAR categories 2013 %* 2014 %*
Board of directors Executive and non-executive directors
Paterson Grades EU and F
30.0 27.3
Senior management Group and divisional executives and specialised group functions E band 18.6 19.1
Professionally qualified and experienced specialists and mid-management Middle management
Paterson Grades DL and DU
42.6 43
Skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents Supervisory and technical positions
Paterson Grades CL and CU
73.9 71.3
Semi-skilled and discretionary decision-making Operators and clerical staff 94.4 97.8
Unskilled and defined decision-making Defined decision-making positions
Paterson Grade A
90.6 100
Total permanent black employees as a percentage of total employees   80.4 80.7
* Black employees as defined in the BBBEE Act.

Talent management and employee development

The group’s talent and employee development programme focused on developing future leaders during 2014. The following development programmes are in place:

Programme for Management Development (UCT)
SPAR Leadership Development
Management Growth Programme
Supervisory Development Programmes (various)
Graduate Trainee Programmes

Training covering the following areas also took place during 2014:

Computer skills
Driver training
Mentoring and coaching
ABET
First aid
Fire fighting
Forklift/pallet truck
Average days of training
  2013 2014
Number of days of employee training 12 984 9 182
New employee hires and employee turnover

Attracting and retaining the right people is key to SPAR’s success, while a level of turnover is healthy in any organisation to create opportunities for personal growth.

The number and rate of new employee hires indicates SPAR’s ability to attract diverse qualified employees, which reflects on the state of our social capital, namely the strength of our brand as an employer.

New employee hires and employee turnover
  2013 2014
  Number of
new
employees
Number of
new
employees
Total –18 139
New employee hires

Controllable turnover rate is an important indicator for SPAR to manage as its impacts can be far reaching. A high rate of employee turnover can indicate levels of uncertainty and dissatisfaction among employees, or may signal a fundamental change in the structure of the organisation’s core operations. Turnover results in changes to the human and intellectual capital of our organisation and can impact productivity. Turnover has direct cost implications in terms of either reduced payroll or greater expenses for recruitment of workers. As an organisation, we have enjoyed a trend of low staff turnover and will work to maintain this trend in the coming year.

  2013 2014
  Number of
employee
exits
Employee
turnover
rate
Number of
employee
exits
Employee
turnover
rate
Total 263 6.0% 197 4.7%

Health and safety

SPAR provides a healthy and safe work environment for its employees as a basic right and acknowledges that a healthy and safe workplace improves employee morale and productivity.

Health and safety requirements are monitored and reviewed in terms of the group’s risk management framework and legislative compliance is required as a minimum standard. To this end, a comprehensive risk management programme is in place, which is audited on a regular basis by an external risk management service provider. The five components of the programme are emergency planning, health and safety, transport, fire and security.

Continued emphasis was placed on health and safety training during 2014, especially at the seven distribution centres and central offices, each with its own health and safety committee. The distribution centre health and safety committees deal with issues as and when required to do so. Unresolved issues are reported to senior management. During 2014, 3 047 employees received health and safety training (2013: 2 938 employees).

Event 2013 2014
Disabling injuries 7 11
Non-disabling injuries 142 144
Deaths on duty Nil Nil
Number of staff using onsite clinic 8 771 10 168

SPAR provides a wellness service to its employees through onsite clinics. SPAR invested R3 million in these services in 2014 (R2.9 million in 2013). The clinic services are provided free of charge to all employees: permanent and temporary. Through these clinics, employees have access to support initiatives that focus on health and wellness, alcohol and substance abuse.

The group has an HIV/Aids policy and management framework in place and HIV-positive employees are provided with counselling and support. HIV/Aids awareness campaigns and training are provided on an ongoing basis, including training of peer counsellors to deal with workplace challenges relating to HIV/Aids.

A decision was taken to provide all employees with annual access to a medical examination. This is voluntary but the uptake has been encouraging.

Diversity and equal opportunity

Having an employee base that reflects the diversity of the societies in which we operate contributes to our organisational strength through access to a range of skills and talent. By sharing the level of diversity within our organisation, we hope to provide insight into SPAR’s human capital. In this endeavour, we support the principles contained in the BBBEE Act, No 53 of 2003, and the BBBEE Codes of Good Practice.

Broad-based black economic empowerment (BBBEE)

During the past year, the SPAR Group changed service providers for the verification of the BBBEE contribution. As a result of the change, several areas of measurement were redefined and measured on an adjusted basis, which impacted the overall score for the group negatively.

The verification period was for 2014 and included the head office as well as seven distribution centres. According to the latest verification, the group is a level 7 contributor with a 50% recognition level.

BBBEE scorecard
Element 2012* 2014
Ownership 6.1 8.8
Management and control 2.2 4.1
Employment equity 12.7 4.8
Skills development 4.5 4.4
Preferential procurement 8.9 2.4
Enterprise development 11.5 14.8
Socio-economic development 3.0 3.4
Overall score 48.9 42.6
* No rating in 2013    

Due to a more comprehensive investigation into the parameters included in the management control and enterprise development by AQRate, a more realistic score in these categories was achieved. It is encouraging that these important elements have now been scored correctly. It was, however, disappointing to see the lower scores for employment equity and preferential procurement. The employment equity score was reduced as a result of the DTI increasing the targets for senior management (43% before 2013 increased to 60% post 2013) and junior management (from 68% to 80%). The impact on the score in these categories was due to a subminimum of 40% scoring to be achieved. The lower preferential procurement score was due to discrepancies in the figures used by the previous rating agency. It is concerning that a number of our suppliers have ratings of between levels 7 and 8 which will continue to impact on our score.

Freedom of association and collective bargaining

Strikes are costly to both the group and its employees. They disrupt our service to our retailers and may negatively impact on SPAR customers through stock shortages. With growing strike action in the country and its impact on specific companies’ economic performance as well as the economic performance of our country as a whole, this aspect is of material importance to the sustainability of SPAR.

SPAR respects employees’ rights to freedom of association and collective bargaining. Where distribution centres have majority union membership, this is formalised through recognition agreements with the representative trade unions. The KwaZulu- Natal, North Rand and South Rand distribution centres are unionised and have recognition agreements with the South African Commercial Catering and Allied Workers Union. Senior management in these unionised distribution centres are responsible for union negotiations.

The Lowveld distribution centre has no recognition agreement with a union due to the low union representation among employees. The other distribution centres are not unionised.

We have a long history of excellent relations with our workforce and the trade union. There were no incidents of strike action during 2014, and we continue to engage with both our employees and unions to maintain this trend, given the increasing levels of union activism in South Africa during the past year.

OUR SUPPLIERS

SPAR’s sustainability strategy has highlighted the need for a proactive approach to grow the group’s base of fresh produce suppliers. This will ensure that the group can consistently deliver excellence in Fresh. Emerging farmer inclusion into the Fresh supply chain is one of SPAR’s sustainability commitments – see the Stakeholder section for detail about our initiatives.

Implement biological farming across the entire farmer base

Currently 41 (2013:36) Freshline farmers, representing 58% (2013: 52%) of farmers used by SPAR in the Fresh supply chain, have been trained in biological farming methods. There is a drive to train more farmers and to develop criteria and an audit checklist to enable SPAR to conduct audits on the Freshline supply base.

Ensure the ethical treatment of farm workers

Ethical supply chain management is a critical aspect of responsible business. We believe that it is our responsibility to make informed decisions regarding our choice of suppliers. In doing so, we believe that significant potential negative impacts may be prevented or mitigated. SPAR has therefore decided to begin surveying our top suppliers and screening new suppliers using criteria for impacts on society, on labour practices and human rights. It is our ambition to be able to report on the percentage of suppliers that were screened using these criteria by 2015.

SPAR has also adopted the Sustainable Initiative of South Africa (SIZA) standard and began to audit farmers against it during 2014. The purpose of the audit is to identify areas on the site that are non-compliant and require correcting and improvement. The aim of the SIZA programme is to support producers in ensuring there is compliance and ongoing improvement in labour conditions on their sites. The ethical audit is therefore not a tick box exercise and involves more involved proof of evidence and interviews with employees on site.

Ensure food safety

With the inclusion of small-scale emerging farmers into the SPAR value chain, the group has adopted LocalGAP as an entry-level food safety standard towards full compliance with GlobalGAP within two years. Large-scale commercial farmers are expected to comply fully with Global Gap. The benefits of this strategy are not only long-term sustainable supply, but it also enables SPAR to better manage its supply chain risks, ensures a more diverse supplier base, stimulates economic growth and increases loyalty to the SPAR brand by a large range of stakeholders.

OUR RETAILERS

The SPAR Group’s customers are independent retailers who have chosen to take part in The SPAR voluntary trading system. For more information on our voluntary trading model, see The SPAR Group at a glance section. Unlike in many other countries around the world, SPAR South Africa remains almost entirely focused on our independent retailers.

We provide a suite of services across the entire wholesale and retail value chain. Through the provision of such services, SPAR retailers are far better placed to compete effectively in a market that is dominated by supermarket chains, while enabling them to maintain their independence.

SPAR is continuously developing new ways to support its retailers to create a unique SPAR experience through best international practice and to ensure their sustainability as individual operations. SPAR has provided retailers with tablet devices that contain the “Fresh Studio”, and a full online manual that provides information about every department, its products and systems. It includes all relevant legislation, recipes, food labelling, merchandising, display, as well as costing recommendations.

Other support resources include:

SPAR corporate identity
Store design
Front of store and back of store specifications
Retail operations
Product category innovations
Merchandising best practice
Warehouse and distribution
Store IT
SPAR brand packaging
Public relations
Training
Sustainability and corporate social responsibility
Preferred supplier arrangements
Financial support including access to loan facilities (advancing or securing loan facilities for our retailers to enable them to purchase or revamp stores).

Diversity and transformation are also priorities in new business generation and retailer development. Our black retail membership remained at 228 for the year.

OUR CONSUMERS

Failing to manage product responsibility can result in reputational damage, legal and financial risk due to recall, market differentiation in relation to quality, and employee motivation. As a food supplier, SPAR recognises its responsibility to deliver quality products to our consumers, as well as encouraging consumer wellbeing through our various marketing strategies.

Delivering quality

The group has a central resource to ensure food safety, compliance and audits for all suppliers appointed by SPAR. All SPAR stores are subject to hygiene and safety audits, and scores in these audits continue to improve.

Traceability for products delivered to our distribution centres and warehouses is in place, and the group continues to persuade retailers to buy ethically. SPAR expects its suppliers to comply with its food safety standards and provides leadership to its retailers with regard to the standards expected from direct suppliers. All suppliers are expected to comply with the Global Foods Safety Initiative (GFSI).

The group has an in-house customer care line that addresses consumer complaints and queries relating to products sold at retailers’ stores. The customer care line number appears on all SPAR branded products. All queries related to non-SPAR branded products are directed to the relevant suppliers.

Responsible use of alcohol

SPAR sells alcohol through its TOPS stores. The group is committed to encouraging the responsible consumption of alcohol and is a member of the Industry Association for Responsible Alcohol use (ARA). Several advertising campaigns during the year supported the “Don’t drink and drive” message. Joint business planning meetings with our main liquor suppliers have resulted in an agreement to jointly address the adverse effects of alcohol on society.

Nutritional strategy

SPAR has developed a nutritional strategy in support of its sustainability commitment to innovate in its house brands and to raise awareness about healthy nutrition. The strategy also supports the group’s commitment to responsible product supply. The following are the core principles of the strategy:

Providing enough information to enable consumers to make informed choices
Leveraging our house brands and our suppliers’ brands to deliver on our strategy
Ensuring compliance with legislation at all times
Fortifying products for lower LSM customers on an economically sustainable basis
Collaborating with the government where possible to deliver nutritious food to the bottom end of the market

ENVIRONMENTAL PERFORMANCE

The environmental dimension of sustainability concerns our impact, as an organisation, on our natural capital, including living and non-living natural systems.

In discussing our impact on this capital, we seek to address inputs (such as energy and water) and outputs (such as emissions, effluents and waste). Other aspects, including products and services, compliance issues, as well as supplier environmental assessments have also been identified as material to SPAR.

In terms of the sustainability strategy, the executive management team has identified focus areas for the group. The following strategic environmental imperatives and enablers are directly relevant to the environment:

Drive excellence in Fresh
Social and environmental commitment
Reducing our direct environmental footprint
Suppliers’ and retailers’ business practices

 

 

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Fuel

The average price of diesel decreased by 0.2% in the year to September 2014 (2013: increased by 11%). The amount spent on fuel to perform our day-to-day activities is approximately R184 million a year, thus managing this cost materially contributes to our sustainable long-term financial performance.

Increasing numbers of trucks in the fleet are now operating on a 95:5 (diesel:biodiesel) fuel mix. As part of our recycling initiative, used cooking oil is collected from certain SPAR retail stores for conversion into biodiesel. This has been successful in reducing transport-associated emissions, and has also resulted in financial savings with biodiesel being cheaper than conventional diesel.
Biodiesel use
Distribution centre 2014
Litres used
Western Cape 10 000
KwaZulu-Natal 84 500
South Rand 7 500
Lowveld 36 400
Total 138 450

 

The fitting of 20 aerokits on long-distance vehicles has been implemented to reduce drag.
SPAR collaborated with truck and trailer body manufacturer Serco to develop a new-concept trailer prototype, designed to reduce fuel costs as well as carbon dioxide emissions, while also practical to load. The key issue for Serco was to optimise the aerodynamic efficiency of the 15 metre long and 4.3 metre high trailer without compromising the interior loading volume, which can handle 30 tons of perishable products using pallets and insulated lugs. The trailer is fitted with an electronic braking system for improved road safety. Electronically controlled air suspension reduces the overall height of the truck and trailer and enables the trailer to adjust to a normal dock height for loading and unloading. One of the main challenges in designing the green trailer was to ensure that the new features could be developed without significantly increasing the cost of the trailer, while ensuring a favourable return on investment for SPAR. Six of these trailers are now in use.
Driver training has been implemented at all distribution centres to improve the efficient use of vehicles. All drivers are assessed at least once a year as part of the group’s comprehensive fleet management programme.


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Energy

Energy consumption has a direct effect on operational costs and can increase exposure to fluctuations in energy supply and prices.

Our main business functions consist of the procurement, warehousing and distribution of goods to our independent retailers. All of these functions are strongly energy dependent. We use fuel for the procurement and distribution of goods and electricity for the warehousing of goods, especially cold storage. Both of these sources of energy are used in large quantities as business enablers and thus have an impact on operational costs.

SPAR consumed 37 696 714 kilowatt hours of energy in 2014 as opposed to 49 999 540 in 2013. This was as a result of a focus on energy usage in all distribution centres and central office. Energy audits have been performed at the distribution centres and central office with online meters being installed.

A five-year environmental action plan was developed during 2013. This plan contains key environmental goals and measurements. These have been set per distribution centre and will be reported on to the Social and Ethics Committee on a quarterly basis. In terms of energy, SPAR has set the following goals for 2017:

20% reduction in electricity consumption
10% reduction in fuel emissions

The baseline was set in 2013 and thus far the group has achieved a 25% reduction in electricity and a 2% reduction in fuel emissions.


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Electricity

The amount spent on electricity to perform our day-to-day activities is significant, thus managing this cost materially contributes to our sustainable long-term financial performance. To reduce our energy consumption, we consider energy efficiency programmes and alternative energy sources. Measures that were introduced to help reduce this usage include:

SPAR’s electricity usage is most significantly impacted by lighting and air conditioning in its offices and distribution centres. Each distribution centre has an energy management plan and meters have been installed at three distribution centres and the central office. All are in the process of increasing the number of energy saving lights.
SPAR has sizeable refrigeration installations within each of its distribution centres. Initiatives for improvement include the installation of high-speed doors and air curtains, as well as the monitoring and adjusting of set point temperatures to reduce electricity consumption.
Battery bays consume between 8% and 20% of electricity (based on meters at certain distribution centres). Old battery chargers are replaced with high-frequency units that are less energy-intensive.
A shift to more energy-efficient geysers is also underway.


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Water

Most of the water consumed by the group is used to wash trucks and in cooling systems. Three distribution centres have initiatives in place to recycle water and two currently collect rainwater. As part of our five-year environmental action plan SPAR has set the goal of a 30% reduction in the use of municipal water by 2017. The baseline was set in 2013 and thus far the group has achieved a 21% reduction in water usage. This reduction is based on our distribution centres’ and central office usage.


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Emissions

As a responsible corporate citizen and recognising the significant detrimental effect carbon emissions have on climate change, SPAR is committed to measuring its carbon footprint and proactively implementing initiatives that reduce or mitigate our impact in this regard.

Furthermore, greenhouse gas (GHG) emissions are a major contributor to climate change, which is a long-term environmental risk for SPAR. Climate change drives risks that range from food security and supply challenges to mitigation actions that potentially affect the group’s ability to operate its Freshline supply chain. Changes in agricultural land usage patterns could further result in increased transport costs. There is also the possibility of physical impacts on the group’s facilities and distribution fleet from potential climate change consequences such as flooding or droughts.

SPAR participated in the Carbon Disclosure Project for the first time in 2009. The group continues to manage and actively reduce its energy consumption and GHG emissions, as well as generally reduce its impact on the environment. Due to the number of changes the business has experienced over the past few years and a concerted effort to gather appropriate data, the group is in the process of revisiting baselines and resetting targets. The baseline from 2009 to 2012 will thus change going forward.

SPAR’s carbon footprint is calculated according to the International Greenhouse Gas Protocol’s Corporate Accounting and Reporting Standard.

Data was supplied for the 2014 financial year. For this period, SPAR’s activities resulted in a total of 87 634 tonnes of carbon dioxide equivalent (CO2e) (2013: 101 254 – restated to exclude our store electricity usage). Of this, 78 179 tonnes of CO2e arose from Scope 1 and 2 emissions. The remaining 9 455 tonnes of CO2e arose from Scope 3 business travel and employee commuting emissions.

Scope per GHG protocol 2013 2014
Total footprint (CO2e) 101 254 87 634
Scope 1: Direct GHG emissions from: Vehicles 39% 45%
Scope 2: Indirect GHG emissions from: Purchased electricity1 51% 44%
Scope 3: Other indirect GHG emissions from: Business travel 4% 10%
1 Scope 2 emissions consist of energy consumed in our warehouses, mainly in cooling and air-conditioning.

There has been a decrease of 14% in the total footprint for the group. This was driven by the significant improvements made at distribution centres and central office regarding energy management. It should be noted that the 2013 figures have been restated using electricity usage in stores and by the group. Improvements in the recording and collection of data will be made during 2015 to ensure more reliable data is used. Scope 2 emissions have decreased due to energy saving initiatives. There has been a decrease of 2% in Scope 1 emissions due to initiatives referred to above. Energy saving measures have been and will continue to be introduced into group-owned stores over the next few years.


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Effluents and waste

As part of our five-year environmental action plan, SPAR has set the goal of reducing waste to landfill by 50% by 2017.

In order to achieve our goal, our distribution centres have implemented comprehensive recycling programmes. Two have extended this to include retailers from whom they backhaul waste when deliveries are made.

Cardboard and plastic recycling initiatives are in place at all our distribution centres. During 2014, SPAR recycled 9 995 metric tonnes of cardboard (2013: 9 241 metric tonnes) and 1 037 metric tonnes of plastic (2013: 925 metric tonnes); 27% of SPAR stores are involved in the cardboard recycling initiative and 24% in the plastic recycling initiative.

Other waste initiatives involve the recycling of materials such as fine metals, used vehicle lubricants and refrigeration oils.


Product responsibility

SPAR has an established relationship with WWF’s Southern African Sustainable Seafood Initiative (SASSI) and continues to work at aligning seafood procurement policies for the entire SPAR house branded seafood range with best practice guidelines for sustainable seafood. The group has developed a sustainable seafood policy with SASSI’s guidance.

In addition to the SASSI initiative, the group’s Freshline team has assisted local farmers in the Freshline supply chain to adopt more sustainable farming methods on their farms. The group will continue to engage with its SPAR brand suppliers to gain further knowledge of the sustainable business practices of those suppliers.

Packaging

The disposal of products and packaging materials at the end of a use phase is a steadily growing environmental challenge. Establishing effective recycling and re-use systems to close product cycles contributes significantly to increased material and resource efficiency. It also mitigates problems and costs related to disposal.

The environmental impact of our products and services, specifically the percentage of products sold and their packaging materials that are reclaimed by category, have been identified as an aspect of material importance that SPAR desires to monitor in the future.

While many recycling initiatives are being pursued throughout our operation, by gathering more specific data around our products and the packaging materials used, we hope to gain insight into the extent to which SPAR’s products, components or materials are collected and successfully converted into useful materials for new production processes. Efforts are currently underway to manage this process and gather data in order to identify areas for improvement.

Compliance

Environmental compliance has been deemed a material aspect for SPAR, from both an economic and management indicator perspective.

From an economic perspective, ensuring compliance helps to reduce financial risks that occur either directly through fines or indirectly through impacts on reputation. In some circumstances, non-compliance can lead to clean-up obligations or other costly environmental liabilities.

The level of non-compliance within an organisation helps indicate the ability of management to ensure that operations conform to certain performance parameters.

We are pleased to report that during 2014 no fines were incurred as a result of non-compliance with legislation regarding our environmental stewardship.

Supplier environmental assessment

Our environmental impacts lie not only within our organisation or with our retailers. We believe that it is our responsibility to make informed decisions regarding our use of suppliers. In doing so, we believe that significant potential negative environmental impacts may be prevented or mitigated. SPAR has therefore decided to begin surveying our top suppliers and screening new suppliers using environmental criteria. It is our ambition to be able to report on the percentage of suppliers that were screened using these criteria by 2015.

Joint business planning meetings to include sustainability continued during 2014 with the group’s top six suppliers. SPAR communicated its sustainability commitments to our suppliers at these meetings and co-operation on packaging, transport efficiencies and social investment projects are a work in progress.