Social and Ethics
Committee report

The Social and Ethics Committee is pleased to present its report for the financial year ended 31 March 2018 to the shareholders of TFG.

  • Meeting attendance for the committee is set out in the Corporate Governance report.
  • Each member’s qualifications and experience is set out in their profiles.
  • Details of fees paid to committee members appear in note 32 of the annual financial statements.

COMMITTEE MANDATE AND FUNCTIONING

The committee is responsible for assisting the Supervisory Board with the monitoring and reporting of social, ethical, transformational and sustainability practices that are consistent with good corporate citizenship and assisting the Group in discharging its business responsibilities in relation thereto.

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, as well as those of King IV™. The committee fulfilled its responsibilities in accordance with its charter during the 2018 financial year.

The committee held two meetings during the 2018 financial year. At each of these meetings the committee received reports detailing matters relevant to each of the areas within its mandate.

The focus areas of the committee are:

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

In discharging its duties, the committee takes into consideration any relevant legislation, other legal requirements or prevailing codes of best practice.

TFG’s sustainability overview report deals with and provides more detail in respect of some of the aspects falling within the mandate of the committee.

SOCIAL AND ETHICS COMMITTEE MEMBERSHIP

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.

Members

F Abrahams (Chairperson)
B L M Makgabo-Fiskerstrand
A D Murray
N V Simamane

Invitees

A E Thunström

KEY AREAS OF FOCUS FOR THE REPORTING PERIOD

  • local supply chain development;
  • employee empowerment;
  • transformation;
  • wage negotiations and labour law developments;
  • resource efficiency, which included environmental metrics for waste, electricity consumption, paper use and recyclables;
  • corporate social investment initiatives;
  • governance, ethics and accountability;
  • implementation of action items arising from the United Nations Global Compact principles;
  • compliance with consumer laws;
  • an assessment of the application of King IV™ (specifically in respect of the roles and responsibilities of the committee);
  • approval of TFG’s Stakeholder Engagement Policy as recommended by King IV™ (refer to Key resources for more detail on stakeholder engagement); 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. However, additional details on transformation are provided as this remains a key focus area.

TRANSFORMATION REPORT

The Supervisory Board recognises the critical role it has to play in the transformation process in South Africa. The Supervisory 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 (B-BBEE) and the associated codes of good practice.

The role of the committee is to achieve sustainable empowerment and it has an ongoing responsibility to govern and oversee all aspects of the Group’s B-BBEE strategy and implementation. At its meetings during the 2018 financial year, the committee received feedback detailing matters relevant to each of the functional areas within its transformation mandate.

Transformation strategy

Each year, the transformation strategy is reviewed and clear guidelines are defined for each of the five pillars of the B-BBEE scorecard. By delivering shared value through our empowerment initiatives, we are making a meaningful contribution to many of our stakeholders, while ensuring the long-term stability and profitability of our business.

Our B-BBEE performance

The commitment of the Group to transformation has yielded a Level 7 rating with a score of 60,05 points out of 109. We have also achieved a recognition rating of 50% for preferential procurement and Empowering Supplier status in terms of the dti’s B-BBEE scorecard.

A detailed review of our performance against the full scorecard is provided in our sustainability overview report. Some highlights of our 2018 performance:

Ownership

We maintained our black shareholding with black rights originating from mandated investments. A score of 11,15 (2017: 12,31) was achieved.

Management control

The black representation at both the Operating Board and executive and senior management levels is being secured through a continued focus on diversity in the succession planning and talent management processes.

Employment equity remains a critical aspect of the Group’s transformation agenda. In line with this, the alignment of Group and divisional targets with the national economically active population of South Africa remains a key focus. While reasonable progress continues to be made in transforming our managerial ranks, employment equity progress at the senior management level remains a key strategic focus area. A number of initiatives has been put in place to build a pipeline of talent to assist us in reaching our targets. Development opportunities at senior management level continue to be aligned to the selection of employees from designated groups. This year saw the completion of our first Retail Executive Programme in partnership with Duke Corporate Education.

A total score of 6,65 (2017: 6,15) was achieved.

Skills development

The Group continues to support the government’s strategy of job creation and skills development by investing in key skills required to sustain and grow the retail sector and its own workforce. As with the employment equity scorecard, the skills development targets are based on racial demographics of the economically active population.

The committee is very pleased to report that TFG was accredited as a training provider this year and as such, accredited training for our customer-facing employees is now available. Our other key initiatives this year included the provision of bursaries to 25 of our employees towards the study of a formal qualification as well as eight external bursaries. The establishment of a Talent Acquisition team resulted in the placement of 139 internship opportunities in our retail operations, 859 learnership opportunities in our retail operations and 160 learnership opportunities in our factories.

A score of 15,32 (2017: 13,95) was achieved.

Enterprise and supplier development

The collection of supplier B-BBEE certificates for preferential procurement remains a focus, as well as reviewing possible opportunities for black-owned and black women-owned suppliers.

Our main contribution to enterprise development continues to be clothing, fabric and machinery donations. Supplier development initiatives included loans and advances, donation of machinery and fabric, preferential payment terms and human resources capacity support. R19,2 million was spent on Supplier Development and R22,5 million on Enterprise Development. A score of 21,93 (2017: 18,55) was achieved.

Socio-economic development

Socio-economic development expenditure continued to be directed towards initiatives that meet the needs of the communities in which we operate. The focus remained on educating to empower. Recognising the impact of the drought in the Western Cape, we increased effort to enhancing quality of life though the provision of water within these communities.

One of our flagship initiatives, The Sew Good programme, continued to assist on average 100 women annually by providing training to previously unemployed women to create tens of thousands of purple blankets that are distributed to those in desperate need.

R21,5 million was distributed through socio-economic development activities this year, to beneficiaries that have a black base of at least 75%.

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

F Abrahams

Chairperson: Social and Ethics Committee

29 June 2018