Social and ethics committee report
The Social and Ethics committee (the committee) presents the following report to shareholders for the 2018 financial year, in accordance with the requirements of the Companies Act, 71 of 2008, as amended (Companies Act).
The members of the committee for the 2018 financial year were independent non-executive directors Phumla Mnganga (Chairperson) and Chris Wells, and executive director Wayne Hook. Their qualifications and experience are available here.
Permanent invitees at committee meetings are the Chairman of the board, the CEO, the Group Risk and Sustainability Executive, the Group Human Resources Executive and the Company Secretary (who acts as the secretary of the committee).
The committee met twice during the 2018 financial year. Members’ attendance at meeting was as follows:
|Member||Status||13 Nov 2017||28 May 2018|
|Phumla Mnganga (Chairperson)||Independent non-executive||✓||✓|
|Wayne Hook||Managing Director Build it Division||✓||✓|
|Chris Wells||Independent non-executive||✓||✓|
Members’ attendance was 100%.
Terms of reference
The committee executes its responsibilities in accordance with a formal terms of reference, which is reviewed annually and is aligned with the King IV™ recommendations. No changes were made to the terms of reference since its last review in 2017.
The committee received assurance on all relevant matters in its terms of reference from the following committees during the 2018 financial year:
- Audit Committee
- Risk Committee
- The SPAR Guild of Southern Africa Social and Ethics Committee
- The Build it Guild of Southern Africa Social and Ethics Committee
The committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference and has performed its statutory duties, as set out in the Companies Regulations.
A copy of the committee’s terms of reference is available here.
Role and responsibilities
The board has allocated the oversight of organisational ethics, responsible corporate citizenship, sustainable development and stakeholder relationships to the committee.
The committee oversees the company’s social and organisational activities relating to the environment and its stakeholders. It monitors the company’s sustainability performance to ensure that the company’s ethics support its culture, it is seen as a responsible citizen, and that there is a balance between the company and the needs, interests and expectations of all stakeholders.
Details of the committee’s duties are contained in its terms of reference.
The effectiveness of the committee is assessed by way of a self-evaluation review every two years and will be performed again in 2019.
Key focus areas
Ethics within the company is addressed through SPAR’s Code of Ethics. The code applies to all the company’s employees and directors. Ethics at SPAR is simply ‘the way we do things here’ and are defined as: ‘Doing the right thing in the best long-term interest of all stakeholders, even when no one is watching.’
The company encourages employees and other stakeholders to disclose serious impropriety or improper conduct. SPAR subscribes to Deloitte’s Tip-offs Anonymous, which is an independent hotline that enables employees to report illegal actions and ethical misconduct confidentially. During the 2018 financial year, 12 reports (2017: three) were received, all of which were investigated and addressed satisfactory by internal audit and management. Disciplinary action was taken where employees were found to have transgressed and corrective actions have been implemented where necessary to improve controls and prevent recurrence of the incidents. Of the twelve reports received none were found to be of material substance.
A Spar Code of Ethics template for all offshore subsidiaries was circulated to the management of those subsidiaries, to be used as the basis for drafting their respective Code of Ethics policies.
An Ethics Culture Assessment was undertaken at the end of the 2018 financial year by the Ethics Institute and the outcome of the assessment will be disclosed in the 2019 integrated report.
During the 2018 financial year:
- SPAR’s anti-bribery and corruption policy was adopted and implemented within the South African divisions. This policy expresses SPAR’s stance against all forms of bribery, corruption, unethical or unlawful conduct, or any other business activities that violate the values or spirit of human rights and good governance and is applicable to all employees and directors.
- SPAR’s whistle-blowing policy was adopted and implemented within the South African divisions. This policy encourages employees and other stakeholders to disclose serious impropriety or improper conduct, and to assist in establishing a culture of disclosure, within which all stakeholders can responsibly and confidentially disclose information about serious impropriety or improper conduct.
During the 2018 financial year, the committee received feedback from management on the following matters:
- the sustainable development goals and the National Development Plan;
- the climate disclosure report results for 2017, as well as internal carbon pricing;
- recyclable plastic bags, paper bags and plastic alternatives;
- Transparency in Action and the sustainable procurement of eggs;
- SPAR’s emerging farmer development programme and its rural hub businesses;
- the RASET alignment initiative, in conjunction with the KwaZulu-Natal Provincial Government;
- SPAR’s participation in sustainability week, which was held at the CSIR International Convention Centre during June 2018;
- SPAR’s water security assessment;
- various community awareness initiatives such as the Vuka Khumluma Programme, SPAR’s partnership with Unilever and the Department of Basic Education;
- compliance with the International Codes of Best Practice;
- SPAR’s BBBEE scorecard rating;
- SPAR’s R20 million contribution to support Government’s Youth Employment Services (YES) programme;
- wage negotiations; and
- challenges faced in 2018 in the human resources area.
Detailed feedback on a number of the above-mentioned matters can be found here.
The Sustainable Seafood Procurement policy was reviewed and approved by the board during the 2018 financial year. This policy outlines SPAR’s requirements on sustainable sourcing, product criteria, product quality and food safety, traceability, communication by retailers and suppliers to consumers, labelling, training and education.
During the 2018 financial year, a comprehensive review of the company’s South African strategy was conducted. This review resulted in a refocus on the content of the discussions undertaken with the various stakeholders. The Joint Business Planning forums continue to function well, and a start has been made to consider more strategic alignments with suppliers in these forums. Collaboration with Government in value chain activities have also commenced with a view to consider the way in which a greater impact can be made through these value chains by collaboration between stakeholders.
Focus areas for 2019 financial year will be:
- Expand the Anti-bribery and Corruption policy and make it applicable to all our suppliers, service providers, consultants, agents and any third party authorised to act on our behalf.
A review of the following policies:
- SPAR’s Code of Conduct
- Suppliers Code
- Employment Equity Policy
- A review of the following policies:
- Social Media Policies
- Safety, Health and Environmental Policy
- Sustainability Policy
- A review of the Stakeholder Relationship Policy and Framework
Thank you to the members of the committee for their commitment, passion and constructive contributions to the functioning of the committee.
Chairperson of the Social and Ethics Committee
13 November 2018