Social and ethics

committee report

The social and ethics committee is pleased to present its report for the financial year ended 31 March 2016 to the shareholders of TFG.

COMMITTEE MANDATE

The committee is governed by a formal charter, which guides the committee in terms of its objectives, authority and responsibilities. The charter incorporates the requirements of the Companies Act, specifically regulation 43(5) of the Act’s regulations, which requires the committee to monitor matters relating to:

  • social and economic development;
  • good corporate citizenship;
  • the environment, health and public safety;
  • labour and employment;
  • transformation; and
  • consumer relationships.

TFG’s online sustainability overview report deals with some of the aspects falling within the mandate of the committee, such as the environment.

COMMITTEE COMPOSITION AND ATTENDANCE AT MEETINGS

The committee comprises three independent non-executive directors and one executive director, being the CEO. In addition, the CFO and other TFG executives attend meetings of this committee by invitation.

During the financial year, a subcommittee of the social and ethics committee, the transformation subcommittee, was absorbed into the main committee. Therefore, transformation is an agenda item of the social and ethics committee.

The committee held three meetings during the 2015 financial year. At each of these meetings the committee received reports detailing matters relevant to each of the areas within its mandate. The committee specifically dealt with the following aspects: compliance with consumer laws; wage negotiations and labour law developments; environmental metrics for waste, electricity consumption, paper use and recyclables; implementation of action items arising from the United Nations Global Compact principles; corporate social investment initiatives; and a review of TFG’s sustainability strategy and its implementation including approval of TFG’s sustainability overview report.

At this stage, there are no specific matters the committee would like to bring to the attention of shareholders. The committee is satisfied with the efforts and activities undertaken by TFG in each of the areas falling within the committee’s mandate.

Details of fees paid to committee members appear in the remuneration report.

Transformation Report

The board recognises the critical role it has to play in the transformation process. The board’s social and ethics committee, through its governance and oversight role, ensures that an appropriate transformation strategy exists that is aligned with the Broad-based Black Economic Empowerment Act (BBBEE) (as amended) and the associated codes of good practice.

At its meetings during the 2016 financial year, the committee received feedback detailing matters relevant to each of the functional areas within its transformation mandate. The committee specifically dealt with the following aspects: TFG’s BBBEE scorecard and related matters, the alignment of TFG’s transformation strategy with the Broad-based Black Economic Empowerment Act (as amended) and each of the individual BBBEE elements, in particular employment equity and skills development and the various transformation surveys, which TFG participated in.

Transformation strategy

The role of the committee is to achieve sustainable empowerment through alignment with the five elements of the BBBEE codes, being ownership, management control, skills development, enterprise and supplier development, and socio-economic development.

Clear guidelines were defined for each of the five elements of BBBEE, and the committee has an ongoing responsibility to govern and oversee all aspects of the group’s BBBEE strategies.

Meeting attendance

Name of member 21 July 2015 14 October 2015 8 December 2015
F Abrahams (Chairperson)
N V Simamane x
B L M Makgabo-Fiskerstrand
A D Murray
A E Thunström (by invitation)

Our performance

TFG was rated* a level four contributor by Empowerdex, an accredited economic empowerment rating agency (based on information in respect of the year ended 31 March 2015). Our performance over the past two years is recorded below.

We are pleased to report that TFG was ranked third in the 2015 Business Report Top 100 Most Empowered Companies survey within the retail sector.

BBBEE ELEMENT Maximum 2015
Achieved
2014
Achieved
Direct empowerment
Ownership 20 10,5 8,8
Management control 10 4,7 4,8
Indirect empowerment
Employment equity 15 6,8 6,7
Skills development 15 14,2 10,6
Preferential procurement 20 18,2 17,8
Enterprise development 15 15,0 15,0
Socio-economic development 5 5,0 5,0
TOTAL 100 74,4 68,7
BBBEE recognition level contributor Level 4 Level 4
* Note: As per the Broad-based Black Economic Empowerment Act (as amended) and the associated codes of good practice, TFG was rated under the old codes of good practice for the financial year ended 31 March 2015.

Equity ownership

In terms of paragraph 3.4.5 of code 100, statement 100 of the codes of good practice, TFG appointed an external research organisation to undertake a competent person’s report to estimate the extent of black rights measurable in TFG that originate from mandated investments. A score of 10,5 points was achieved and included in our verification certificate.

Management control

In respect of 2015, TFG scored 4,7 out of a maximum of 10 points, which is indicative of the representivity achieved through securing black non-executive directors and senior executives through a continued focus on diversity in the succession planning and talent management processes. The board is satisfied with the progress being made in this area.

Employment equity

Employment equity remains a key focus of TFG’s transformation agenda. The group continues to ensure that there is alignment between the national economically active population and the targets set within the divisions.

TFG’s representation of employees in designated groups to the total employee workforce continues to increase year on year (from 90,36% in 2013 to 92,25% in 2016). Employment equity progress at a senior management level remains a key strategic focus area, with development opportunities aligned to the selection of employees from designated groups. In the last financial year, TFG applied a new sourcing strategy specific to senior management talent attraction, which resulted in the acquisition of top equity female talent appointments across the group.

Summary of demographic representation of South African employee complement*

African Coloured Indian White Foreign
National
Total
Black
2013 Actual 52,98% 32,81% 4,57% 9,21% 0,43% 90,36%
2014 Actual 54,21% 32,39% 4,27% 8,87% 0,26% 90,87%
2015 Actual 56,54% 31,36% 3,75% 8,03% 0,32% 91,65%
2016 Actual 58,64% 30,08% 3,53% 7,45% 0,30% 92,25%
* TFG’s South African workforce profile as at 31 March 2016.

A key contributor to our talent pipeline, the trainee programme, boasts 32 equity trainees out of the 40 trainees placed for 2016 – a total of 80%. In addition, the programme consists of a significant portion (70%) of female employees appointed. The progress over the last three years was exceptional, with a 22% increase in “Total Black placements as a percentage of total placements” and the most notable increase seen from 2015 to 2016. This was due to a targeted approach in our sourcing and selection methods, which focused on attracting and securing African black talent in the market.

Trainee programme demographics as at 31 March 2016

Race Gender
African Coloured Indian Foreign
National
White Total
Black
Female Male
2013 17,24% 37,93% 10,34% 6,90% 27,59% 65,51% 68,97% 31,03%
2014 15,62% 43,75% 3,13% 3,13% 34,37% 62,50% 71,87% 28,13%
2015 20,69% 27,59% 10,34% 0,00% 41,38% 58,62% 68,97% 31,03%
2016 37,50% 37,50% 5,00% 0,00% 20,00% 80,00% 70,00% 30,00%

Another key initiative geared at acquiring top equity talent is our Employee Referral Programme. 84% of appointments through this programme in the last financial year were equity, thereby supporting our transformation agenda.

Executive development and retention initiatives, including the allocation of shares, were part of the drive to recognise and retain key individuals in professional middle management and remain a strategic area of our talent management strategy.

In terms of disabilities, we are committed to seek opportunities for disabled employees and secured this through various initiatives such as learnerships.

Summary of our South African employee complement as at 31 March 2016*

OCCUPATIONAL LEVELS MALE FEMALE FOREIGN NATIONAL GRAND
A C I W A C I W MALE FEMALE TOTAL
Permanent 3 332 1 406 167 379 7 496 4 142 494 1 023 32 24 18 495
  1. Top management
7 1 1 9
  1. Senior management
4 13 12 87 4 14 6 94 1 235
  1. Professional middle management
48 128 34 170 65 207 53 352 13 5 1 075
  1. Skilled junior management
478 297 46 61 1 122 945 145 414 8 5 3 521
  1. Semi skilled
2 703 895 75 53 6 211 2 818 288 163 9 13 13 228
  1. Unskilled
99 73 1 94 158 1 1 427
Temporary 86 30 3 2 209 128 5 10 473
Total 3 418 1 436 170 381 7 705 4 270 499 1 033 32 24 18 968
* The information provided in this table relates to TFG’s South African workforce only.

The bar graph below illustrates the workplace profile in terms of racial representation for the period from 2013 to 2016.

Skills development

TFG continues to support the government’s strategy of job creation and skills development by investing in key skills needed to sustain and grow the retail sector and its own workforce. Learning interventions comprising skills programmes, learnerships and non-accredited in-house training focuses on unemployed and employed learners. The recruitment and training of learners with disabilities continues to be a key focus in this area. The reporting period reflected an 8% increase in skills development numbers to 910 individuals participating in various funded interventions across departments, brands and levels.

The total percentage of training interventions attended by black employees increased by 2% from 2015 to 2016.

The skills spend strategy to support leadership and management development in 2016 resulted in more quality interventions at higher costs increasing overall spend.

2016 2015 2014 2013
Total number of training interventions attended by all employees 115 907 117 737 117 341 126 021
Total number of training interventions attended by black employees 107 707
(93% of total)
107 619
(91% of total)
106 907
(91% of total)
114 886
(91% of total)
Total number of training interventions attended by black female employees 83 045
(72% of total)
88 303
(75% of total)
84 847
(72% of total)
79 814
(63% of total)
Overall cost of training R124 047 452 R120 569 000 R117 553 778 R110 899 791

PREFERENTIAL PROCUREMENT

In respect of 2015, TFG achieved a score of 18,2 points out of a maximum of 20 points and remains pleased with the progress that was made in this area through an ongoing focus on the supply base. 38% of our BBBEE procurement spend applied to merchandise purchases (South Africa only) and 42% to non-merchandise goods and services (South Africa only).

Enterprise development

In respect of 2015, TFG achieved a score of 15,0 points out of a maximum of 15 points, reflecting the commitment that was made to ensure the development of our local supply base.

The development of our local supply base is supported by a number of supply chain enhancement initiatives which are in place.

In addition, during the year under review, we continued to engage with a number of service providers with regard to other opportunities where we can assist in the development of our suppliers.

SOCIO-ECONOMIC DEVELOPMENT

In respect of 2015, we achieved a score of 5,0 points out of a maximum of 5 points.

TFG’s main focus is to create opportunities for employment by leading sustainable developments.

A shared value mindset has become increasingly important within our business and therefore we have strategically partnered with a number of organisations to successfully implement our strategy.

TFG also moved towards a value-added approach where our employees are involved in conveying their knowledge and expertise onto the beneficiaries. This ensures that our investment is more than just monetary as we encourage our employees to be part of our journey. After all, doing good never goes out of fashion!

Further information on our projects can be found in the TFG sustainability overview report.

Prof F Abrahams

Chairperson: Social and ethics committee

29 June 2016