| INTEGRATED ANNUAL REPORT 2011 | GRI RESPONSES |
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4.1 - 4.17
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4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight .
Integrated annual report 2011 - Report scope and boundary
Integrated annual report 2011 - Board of directors
Integrated annual report 2011 - Corporate governance reportThe board and its committees are constituted in terms of the requirements of the Companies Act and The King Report on Governance for South Africa (King III), and are governed by written terms of reference.
The board recognises it is the central point for and custodian of corporate governance. As such, the board always strives to ensure that the group aligns itself with local and international codes of good corporate governance, seeks to apply best practice and follows relevant trends of good corporate governance.
King III became effective in the group’s 2011 financial year. The board initiated a gap analysis to determine the extent to which Barloworld applied the principles and recommended practices in King III.
This analysis identified the governance principles already being applied and those that the company needed to address. The analysis also identified areas of improvement or ways in which the group’s governance practices could be enhanced.
The group applies the governance principles contained in King III and continues to further entrench and strengthen recommended governance practices in its governance structures, systems, processes and procedures.
The company’s 2010 annual report, was ranked third in the Nkonki/Financial Mail Integrated Reporting Awards held in July 2011. The awards considered the extent to which companies on the JSE Top 40 index and on the JSE’s Socially Responsible Investment index complied with the integrated reporting disclosure requirements of King III.
Membership of the board, which is the ultimate governance structure as well as the group’s other governance structures, is reflected in the table below.
Name Year
appointedAudit General purposes Nomina-
tionRemunera-
tionRisk and
sustain-
ability*Social,
Ethics and
TransformationIndependent non-executive directors DB Ntsebeza (chairman) Dumisa (BM) (61) 1999 Chairman Chairman Member Member SAM Baqwa Selby (BM) (60) 2005 Member Member Member Member AGK Hamilton Gordon (WM) (66) 2007 Chairman Member Member Member Member SS Mkhabela Sibongile (BF) (66) 2006 Member Chairman MJN Njeke Johnson (BM) (52) 2009 Member Member Member SS Ntsaluba Sango (BM) (51) 2008 Member Member Chairman SB Pfeiffer Steve (WM) (64) 2001 Member Member Chairman G Rodriquez de Castro Garcia de los Rios Gonzalo (WM) (69) 2004 Member Non-independent, non-executive directors TH Nyasulu Hixonia (BF) (57) 2007 Member Executive directors CB Thomson (chief executive) Clive (WM) (45) 2003 Member Member Member PJ Blackbeard John (WM) (54) 2004 Member Member PJ Bulterman Peter (WM) (55) 2009 Member M Laubscher Martin (WM) (51) 2005 Member OI Shongwe Isaac (BM) (49) 2007 Member Member DG Wilson Don (WM) (54) 2006 Member Key: BM = Black male; BF = Black Female; WM = White male; Figure in brackets () is age of director.
* Previously the empowerment and transformation committee, the committee was reconstituted as the social, ethics and transformation committee.Board composition by percentage
Age < 50 yrs 50 - 60 yrs > 60 yrs Male Female White Other 13% 60% 27% 87% 13% 53% 47% -
4.2 Indicate whether the Chair of the highest governance body is also an executive officer
Integrated annual report 2011 - Corporate governance report
The chair of the highest governance body, the board of directors, is not an executive officer.No individual has unfettered powers of decision-making. Responsibility for running the board and executive responsibility for conducting the business are differentiated. Advocate Dumisa Ntsebeza SC, an independent non-executive director, is chairman of the board and Clive Thomson, an executive director, is chief executive officer.
The roles of the chairman and chief executive are separate and clearly defined. The chairman is responsible for leadership of the board, ensuring its effectiveness on all aspects of its role and setting its agenda. The chief executive provides leadership to the executive team in running the business and co-ordinates proposals developed by the executive committee for consideration by the board.
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4.3 For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.
Integrated annual report 2011 - Equality, empowerment and transformation
The Barloworld board has a majority of independent non-executive directors. The board considers eight of the nine non-executive directors to be independent. Ms Hixonia Nyasulu is not regarded as independent given of her participation, either directly or indirectly in the company’s black ownership transaction that resulted in some 10% of the company’s equity issued to black partners.
Integrated annual report 2011 - Board of directors
Integrated annual report 2011 - Corporate governance report
Considerable thought is given to board balance and composition. Collectively the board believes that the current mix of knowledge, skill and experience meets requirements to lead the company effectively. The board has 15 directors, comprising nine non-executive directors, and six executive directors.Name Year
appointedAudit General purposes Nomina-
tionRemunera-
tionRisk and
sustain-
ability*Social,
Ethics and
TransformationIndependent non-executive directors DB Ntsebeza (chairman) Dumisa (BM) (61) 1999 Chairman Chairman Member Member SAM Baqwa Selby (BM) (60) 2005 Member Member Member Member AGK Hamilton Gordon (WM) (66) 2007 Chairman Member Member Member Member SS Mkhabela Sibongile (BF) (66) 2006 Member Chairman MJN Njeke Johnson (BM) (52) 2009 Member Member Member SS Ntsaluba Sango (BM) (51) 2008 Member Member Chairman SB Pfeiffer Steve (WM) (64) 2001 Member Member Chairman G Rodriquez de Castro Garcia de los Rios Gonzalo (WM) (69) 2004 Member Non-independent, non-executive directors TH Nyasulu Hixonia (BF) (57) 2007 Member Executive directors CB Thomson (chief executive) Clive (WM) (45) 2003 Member Member Member PJ Blackbeard John (WM) (54) 2004 Member Member PJ Bulterman Peter (WM) (55) 2009 Member M Laubscher Martin (WM) (51) 2005 Member OI Shongwe Isaac (BM) (49) 2007 Member Member DG Wilson Don (WM) (54) 2006 Member Key: BM = Black male; BF = Black Female; WM = White male; Figure in brackets () is age of director.
* Previously the empowerment and transformation committee, the committee was reconstituted as the social, ethics and transformation committee.Board composition by percentage
Age < 50 yrs 50 - 60 yrs > 60 yrs Male Female White Other 13% 60% 27% 87% 13% 53% 47% -
4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.
Integrated annual report 2011 - Stakeholder engagement
Integrated annual report 2011 - Our people
Integrated annual report 2011 - Our people
Integrated annual report 2011 - Letter from chairman
Integrated annual report 2011 - Question form for annual general meeting
Integrated annual report 2011 - Shareholders’ diary and map
Integrated annual report 2011 - Notice of Annual General Meeting
Integrated annual report 2011 - Form of proxy
Integrated annual report 2011 - Notes to proxyThe company is a strong proponent of transparency, best-practice disclosure, consistent communication and equal and timely dissemination of information to shareholders. It encourages an active participation by shareholders at general meetings and maintains an investor relations programme which, inter alia, organises for corporate and divisional executives to attend regular meetings with shareholders and potential investors.
The company has regular dialogue with institutional shareholders where it believes this to be in the interests of shareholders generally. Feedback from these visits is shared with the board. The chairman routinely offers key shareholders the opportunity of meeting to discuss governance, strategy or other matters.
The interests of private shareholders remain paramount and, recognising their needs, our website contains a range of investor relations and material issues, including an update on activities, copies of all presentation materials given to institutional investors and further explanation of matters in the integrated report.
The Annual General Meeting is normally attended by all directors. Shareholders are encouraged to attend and to ask questions. They also have the opportunity to meet with directors after formal proceedings have ended.
The notice of annual general meeting, detailing all proposed resolutions appears in the integrated annual report.Barloworld complies with all legal communication requirements. The group regularly engages its shareholders and the investor community through a number of interventions, including:
• Bi-annual results presentations • Annual general meetings • Annual reporting • Investor conferences and presentations • Investor site visits • Media releases • Focused surveys Employee engagement processes provide opportunities for our people to make recommendations and influence direction and include:
• Individual meetings • Structured team forums • Individual and team performance discussions • Briefings • Strategic plan briefings • Anonymous, structured individual perception surveys • Global leaders conferences at which the top leadership team participates in formulating the company’s strategy and related issues. These are held every two years, with the most recent conference in March 2011.
Company contacts
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4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization's performance (including social and environmental performance).
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Remuneration reportThe remuneration committee makes recommendations to the board on the structure and development of policy on executive and senior management remuneration, taking into account market conditions. It determines the criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities. It also determines remuneration packages for the chief executive officer and executive directors of the company.
For non-executive directors, the committee makes recommendations to the board on fees to be paid to each non-executive director for services rendered as a member of the board or a board sub-committee. Once these fees have been adopted by the board, they are submitted to shareholders in the general meeting for approval prior to implementation and payment. Details of fees proposed to shareholders for approval are set out in the notice of annual general meeting.
Where appropriate, the committee consults with the chief executive or other executive or non-executive directors in fulfilling their duties under the committee’s terms of reference.
Key responsibilities and role of the committee include:
• Determining any criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities • Reviewing the terms and conditions of the chief executive and executive directors’ service agreements, taking into account relevant market information and information from comparable companies where relevant, to ensure that they are fairly, but responsibly appraised and rewarded for their individual contributions towards enhancing the company’s performance • Determining specific remuneration packages for the chief executive and executive directors of the company, including but not limited to basic salary, benefits in kind, any annual bonuses, performance-based incentives, share-based incentives, pensions and other benefits • Determining any grants to executive directors and other senior employees made pursuant to any executive share scheme adopted by the company in the annual general meeting. Executive incentivisation includes addressing central aspects of group strategy including sustainable development objectives such as energy and emissions efficiency. Managing of this process is facilitated through an integrated performance scorecard system.
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4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance reportThe board recognises the importance of acting in the best interest of the company and protecting the legitimate interests and expectations of its stakeholders. The board consistently applies the provisions of the South Africa Companies Act and JSE listing requirements on disclosing or avoiding conflicts of interest. Directors are required to declare their interests in general annually, and specifically at each meeting of the board.
Among other measures to deal with conflicts of interest the company has a policy that addresses accepting gifts. This requires that gifts be officially declared and registered on the company’s gift register.
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4.7 Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance reportTo ensure a rigorous and transparent procedure, any appointment of a director is considered by the board as a whole, on recommendation of the nomination committee.
The selection process involves considering of the existing balance of skills and experience and continuously assessing the needs of the company. Barloworld’s commitment to empowerment and transformation and the ideal that its employee and leadership profile should reflect the society in which it operates, is an essential element of this process. Non-executive directors are required to devote sufficient time to the company’s affairs.While there is no formal limit on the number of other appointments directors can hold, approval must be obtained from the chairman prior to accepting additional commitments that may affect the time that can be devoted to the company. Non-executive directors are required to advise the board of subsequent changes or additional commitments from time to time as approved by the chairman.
Executive directors are permitted to accept external non-executive board appointments limited to a single external ‘for profit’ board.
Independence of non-executive directors
The Barloworld board has a majority of independent non-executive directors. The board considered the independence of directors, evaluating the rationale and purport of the requirements of independence in King III. An assessment, considering the salient factors and unique circumstances of each person, was performed for each non-executive director.
In addition, the independence of non-executives who have served on the board for longer than nine years was assessed. The board is satisfied that eight of the nine current non-executive directors are independent.
Hixonia Nyasulu is not regarded as independent in view of her participation, either directly or indirectly, in the black ownership transaction that resulted in some 10% of the company’s equity being issued to black partners. Despite the determination reached on Ms Nyasulu, the board believes that the skills, knowledge and experience of this director remain valuable to the organisation. -
4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.
Integrated annual report 2011 - Group vision and strategy
Integrated annual report 2011 - Stakeholder engagement
Integrated annual report 2011 - Limiting our environmental footprint
Integrated annual report 2011 - Equality, empowerment and transformation
Integrated annual report 2011 - Corporate governance reportA number of these have been developed and contextualised in an overall framework.
The commitment to building and sustaining an ethical organisational culture is entrenched in the company’s vision, mission, strategies and operations. The board assumes ultimate responsibility for the company’s ethics performance by delegating to executive management the task of setting up a well-designed and properly implemented ethics management process.
In May 2011 the board approved an ethics and compliance programme for the group. This is designed to further entrench and integrate the requirements of good corporate governance throughout the group. The programme addresses ethics and governance, include executive commitment, the worldwide code of conduct, systems infrastructure and due-diligence standards. The compliance standards provide the operational requirements for setting and maintaining policies, training, communication and reporting.
The business of the group and its relationship with stakeholders is governed by a worldwide code of code of conduct and a code of ethics, both are approved by the board.
The worldwide code of conduct articulates Barloworld’s commitment to doing business the right way, according to best practices, guided by the values of integrity, excellence, teamwork and commitment. The code of ethics enjoins Barloworld directors, management, employees and stakeholders to obey the law, respect others, be fair, honest and protect the environment.
These guiding principles are supported by a group anti-fraud policy and a further policy dealing with directors and prescribed officers, agents, distributors, intermediaries, trade restrictions, export controls and sanctions. All these instruments appear on our website (view pdf downloads below).
The company also maintains an Ethics Hotline introduced in South Africa in 2002. This is an independent and confidential system for stakeholders to report unethical, dishonest or risky behaviour, including non-compliance with company policies, as well as corruption and fraud. All incidents reported are investigated and, where appropriate, action is taken.
The hot line is outsourced to Tip-offs Anonymous, an independent body within Deloitte, the group’s external auditors. Our commitment not to victimise whistle-blowers, as prescribed in legislation, enables transparency and promotes ethical conduct.
The board and management understand that the company is not only an economic entity but a corporate citizen and, as such, it has a social and moral standing in society with all the responsibilities of that status.
The board is therefore responsible for ensuring that the group protects, enhances and invests in the wellbeing of the economy, society and natural environment and pursues its activities within the limits of social, political and environmental responsibilities outlined in international conventions on human rights.To give effect to the group’s commercial, social and moral responsibilities, a number of standards, guidelines, policies and codes of practice apply, including:
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4.9 Procedures of the highest governance body for overseeing the organisation's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance reportThere are essentially three aspects to this:
1. Oversight and approval of the group’s strategic plan 2. Review of group performance at quarterly board meetings. This includes: a. Economic b. Social c. Environmental aspects. 3. Review of performance based on the terms of reference of various board committees which include: Board of directors a. Audit b. General purposes c. Nomination d. Remuneration e. Risk and sustainability f. Social, ethics and transformation committee (previously the Empowerment and transformation committee) g. Executive The newly constituted social, ethics and transformation committee’s responsibilities include adherence and compliance to internationally agreed standards, codes of conduct and principles, including those in the United Nations Global Compact.
The board is responsible for ensuring that the group complies with applicable laws and regulations and considers adhering to non-binding rules, codes and standards.
The board recognises that the group’s operations cover many jurisdictions. These are at different levels of maturity and the rule of law exists in varying degrees with hybrid systems of governance developing in some instances.
The board strives to ensure appropriate structures, processes and procedures with appropriate checks and balances are established to assist it in discharging its legal responsibilities and overseeing legislative compliance.
Processes are also in place to ensure that the board is kept abreast of significant developments in applicable laws, rules, codes and standards. Compliance risk thus forms an integral part of the company’s risk management process and the board delegates to management implementation of an effective compliance framework and associated processes.
The board and management understand the company is not only an economic entity but a corporate citizen and, as such, it has a social and moral standing in society with attendant responsibilities.
The board is therefore responsible for ensuring the group protects, enhances and invests in the wellbeing of the economy, society and natural environment and pursues its activities within the limits of the social, political and environmental responsibilities outlined in international conventions on human rights.
Identifying of risks and opportunities follows a robust and systematic process. A comprehensive risk management policy is in place throughout the group, complemented by the Barloworld Limited risk management philosophy. This includes dedicated divisional risk assessments with internal audit and group risk management services present. Risk management is incorporated into the group’s strategic planning process.
In line with international best practice, risks are assessed on their probability, severity and quality of the existing control environment. These measures result in residual risk scores that indicate the importance of the risk and evaluate assessment of progress in addressing identified risks.
Risks are detailed, comprehensively assessed and managed through acceptance, transfer, avoidance or reduction measures. Details are recorded in divisional and group risk registers.
Formal reporting to the risk and sustainability committee takes place bi-annually and to the board annually. Initiatives to address identified risks include developing and implementing business continuity and disaster recovery plans. These include information technology and communications solutions as appropriate.
While this planning is regularly reviewed at executive and board levels, internal audit plays a significant role in reviewing processes, procedures and controls.Barloworld group top risks – 2011
These risks are presented in alphabetical order
Key risks Category of risk and management response Acquisition underperformance The risk of future net cash flows from acquisitions failing to realise the projections upon which the initial purchase consideration was based may lead to value destruction for shareholders and a need to impair the related goodwill or assets.
Acquisition risk
A business acquisition policy and procedure is in place that sets out a structured approach and framework to be used when acquisitions are being made. This includes a pre-acquisition phase that includes the requirement to conduct a comprehensive strategic analysis of intended targets, development of acquisition criteria, both strategic and financial, and quantification of risk-adjusted value creation potential for the respective business unit and the group. The CEOs and CFOs of each business unit are responsible for ensuring that the policy and procedures are adhered to. Following acquisitions, planning and task teams are established to focus on the realisation and management
of possible synergies.Competitor actions Competitor actions will erode our competitive position and have a significant impact on the value we create for shareholders.
Competitor risk
Continually reduce costs by focusing on operational efficiencies and staff training. Continually improve service and the provision of innovative solutions to customers. Develop key customer plans which contain all the information and strategies to satisfy the customer. Currency volatility Movement of currencies against one another, mainly the movement of other currencies against the rand which creates risks relative to the translation of non-rand profits, the marking-to-market of financial instruments taken out to hedge currency exposures and the cost of imports into South Africa.
Financial risk
The responsibility for monitoring and managing these risks is that of line management. A group treasury policy is in place which clearly sets out the philosophy of hedging, guideline parameters within which to operate and permissible financial instruments to be utilised. Preventive measures are implemented around determination of pricing mechanisms and structuring of
commercial contracts to reduce the impact of any adverse currency fluctuations.Defined benefit scheme exposure One of the key risks for the UK’s defined benefit scheme over the past few years has been the reduced real yield on AA-rated corporate bonds which is used to value the liabilities. In addition, increased life expectancy of members will have an adverse impact on the scheme’s funding position.
Market volatility remains a risk, with 50% of the scheme’s assets invested in equities, although a small (8%) diversification into absolute return funds was made in the year.
A deterioration in the funding level may require additional company contributions over and above the scheme’s current normal contribution rates.
The year-end valuation indicates that the deficit has increased to approximately £71 million, largely due to an adjustment in the longevity assumptions as compared to the September 2010 year-end and reduced asset yields.
Market risk
A suitably qualified representative board of trustees exists which, together with a separate investment sub-committee, is responsible for regularly evaluating the effectiveness of investment decisions. Professional investment advisors are used to assist in the management of the investment portfolios with a view to conservatively preserving and enhancing fund valuations. Complex investment risk models are run by the investment advisors and actuaries to assess optimum risk balance. The actuary also conducts regular valuations. Funding shortfalls are planned to be made up within sensible time frames via market-anticipated increased
interest rates, positive returns on investments and potentially increased company and/or employee contributions.The defined benefit scheme in the UK was closed to new members in 2002 and benefits were changed to a CARE basis in 2006 to assist in managing future liabilities. The scheme is now mature with only 7% active membership. All new employees in the UK are automatically enrolled in the UK’s defined contribution scheme. Dependence on principals and suppliers Some of the businesses in the group are dependent on a small number of principals and/or suppliers.
Our success is therefore linked to their ongoing financial stability, the competitiveness and quality of their products and services and the availability of equipment to meet customers’ needs.
In order to ensure sustainable value creation, we depend on suppliers of infrastructure in the countries in which we operate. Most of our businesses are dependent, inter alia, on reliable power and water supply and appropriate transport networks.
Strategic risk
Add value by giving constant feedback to our principals on market movements and product competitiveness. Continually improve/build our relationships with our principals and major suppliers and attempt to ensure
that we are a preferred dealer/customer.Provide excellent customer service and lead in our markets. Build long-term partnerships with customers. Build relationships with local authorities. Align strategies and targets with those of our major principals as far as possible. Exposure to political risks, terrorism and crime in the countries in which we operate
The group's people and assets are spread through numerous countries around the world, while our activities are conducted in many more. The possibility exists that our people and assets, and the viability of the businesses, are exposed through acts of terrorism, political turmoil or crime in some of the regions in which the group operates, as well as in those that may be the subject of expansion. Business growth initiatives require that new markets and territories are the focus of our business expansion. These opportunities come with their own distinct risk exposures.
Operational risk
Minimise exposure in high-risk countries through thorough and in-depth risk assessments, coupled with the application of preventive and corrective risk management activities. Maintain flexible business models. Maintain Business Continuity Plans that incorporate emergency response actions, crisis management and business recovery plans specific to the businesses and the respective territories in which the businesses operate. Exposure to significant customers and dependence on channels to market
The risk that we are exposed to certain large customers and/or industries and that well-established distribution channels may change or consolidate.
Market risk
Build long-term partnerships with customers Develop customer solutions which differentiate and expand our offering from product-based businesses. Diversify customer base. Develop new channels. Slow recovery of global economies The effect of the prolonged slowdown on our businesses, customers, suppliers and funders and the continued risk that funding constraints within the supply chains could result in a double-dip recession and/or impede growth. This, in turn, could lower commodity prices and impact mining company investments.
Financial risk
Inflationary pressures to be carefully monitored and managed, as appropriate, in each business. Reduce costs and improve operating efficiencies. Monitor our customers’ ability to spend and access credit. Reduce working capital, limit capital expenditure and improve cash flow. Secure adequate committed borrowing facilities. Regulatory environment Many of the group’s activities are governed by regulations. Due to the complexity and changing nature of these regulations across the industries and geographical spectrum of the group’s activities, there are challenges in staying abreast of all developments and maintaining full compliance.
Regulatory risk
Management is responsible for the ongoing monitoring of all pending and actual changes to the group’s regulatory environment. Due to the large number of jurisdictions which govern the group’s activities, this monitoring occurs in each relevant country of operation. Where feasible, the group will comment on proposed changes to the regulatory environment that may adversely affect the group in a particular jurisdiction. Strategic employee skills Barloworld’s key asset is the intellectual capacities and skills of its employees. This necessitates ongoing management of the challenges regarding recruitment, succession planning, skills retention and development.
Employee risk
Barloworld has a comprehensive employee approach and related set of initiatives to align employees with the strategy of the organisation. These identify and align all employee elements of a value-creating organisation to ensure sustainable intellectual capacity and value-creation competence. Through performance management systems, employees’ purpose, role, function and accountabilities are defined, and, using competency-based assessments, employees are regularly reviewed to ensure the appropriate skill sets are available to enable performance at optimum levels Investments in training resources and facilities are continuing to assist and encourage employees to enhance their levels of competence and performance. An appropriate suite of reward and incentive schemes ensures recognition, value-creation for employees and retention of high-performing employees. -
4.10 Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance.
Integrated annual report 2011 - Corporate governance report
Annually, the performance of the chairman, chief executive officer and the board as a whole is appraised. The chairman and chief executive officer do not participate in discussions on their own performance. The chairman holds formal and informal meetings with individual directors during the year and, at the end of the year, there is a formal evaluation exercise.
After the performance evaluation of individual directors by their peers in 2011, the chairman discussed results with individual directors to obtain comment on issues raised by peers and to provide advice, guidance and offer assistance where appropriate.
The group’s Annual General Meeting, full-year and interim result presentations and other ad hoc and ongoing stakeholder interventions give external stakeholders an opportunity to review the board’s performance against an open set of criteria including economic, environmental and social performance. -
4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation.
The group is mindful of the precautionary principle and its related obligations. Its ethics and structured risk management approach ensures that future risks to the public and the environment from its activities are identified and considered. Activities related to any identified risk are addressed. This applies to all group activities, including building new facilities. The group’s leading principals would be mindful of this principle in developing and introducing new products.
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4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.
Integrated annual report 2011 - Report scope and boundary
Integrated annual report 2011 - Limiting our environmental footprint
Integrated annual report 2011 - Equality, empowerment and transformation
Integrated annual report 2011 - Corporate governance report
Integrated annual report 2011 - Corporate governance reportObligatory
1. The King Report on Governance for South Africa 2009 (King III). Effective 1 March 2010 Voluntarily the group:
1. Ratified the UN Global Compact in December 2004 2. Became a signatory to the South African Energy Efficiency Accord in 2005 3. Applies the South African Department of Trade and Industry’s broad-based black economic empowerment scorecard since its introduction in 2007 -
4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organisations in which the organization.
Integrated annual report 2011 - Stakeholder engagement
Integrated annual report 2011 - Limiting our environmental footprintThe group is a member of or / signatory to:
• UN Global Compact • World Wide Fund For Nature (WWF) • National Business Initiative (NBI) • Endangered Wildlife Trust (EWT) • The Business Trust • Business Leadership South Africa • Various Chambers of Commerce and Industry • Various industry and other relevant associations through its respective divisions -
4.14 List of stakeholder groups engaged by the organisation.
Integrated annual report 2011 - Stakeholder engagement
Barloworld recognises that its value-creation activities are underpinned by stakeholder engagement, understanding stakeholder expectations and the impact of these relations on its strategic direction. Stakeholders are identified through a number of criteria, engaged in a variety of ways and on a range of issues. Accountability for stakeholder engagement is centred in operational management and functional structures in the group.
One of the aims of Barloworld’s strategic stakeholder engagement is to identify and expand the links between social improvement and business success, the group’s competitiveness and the health of the communities around it being closely intertwined. This ‘shared value’ intelligence is used to understand and serve the emerging needs in society, such as the provision of products with lower environmental impacts, for instance, to gain operating efficiencies and to anticipate risks and opportunities in the broader environment.
The group appreciates the role of social media in stakeholder engagement and strives to implement structures and systems, as well as allocate resources, in a way that uses the medium to the group and its customers' advantage.
View the group’s stakeholder policy.Stakeholder matrix
Stakeholder and nature of relationship Nature of engagement Material issue Actions Shareholders and providers of capital Central to sourcing and securing capital; Compliance with all legal communication requirements
Bi-annual presentations of results; Annual general meeting;
Annual reporting; Investor conferences and presentations;
Investor site visits; Ad hoc media releases (see also Governance section)Competitive return on investment;
Strategic direction; market perspectives; Value creation performance; Business unit performance; Strategy and identified growth opportunities; Group’s legitimacy; Sound governance structuresCommunicate early in an honest and transparent manner; Strategic issues are considered and appropriately addressed through group structures;
Executive resource in place to manage investor relationsCustomers Understanding customer sentiment; Understanding customer requirements; Business sustainability; Long-term relationships; Mutual benefit; Identifying potential risks to, and opportunities for, the business
Numerous individual and collective customer engagements/ interventions take place during the year; Regular visits by senior executives; Open days and site visits; Anonymous surveys; Entrenched in ISO 9001 standard;
Customer satisfaction surveysValue of product, service and solution provided; Ability to enhance customers’ value creation activity; Service level agreements Delivery of required products, services and customer solutions; Respect for rights of consumers; Provide information that is honest and relevant; Ongoing customer contact and interaction Employees and their representatives Sustainable value creation for and by employees; Employer of choice
Individual meetings; Structured team forums; Individual and team performance discussions; Intellectual capital reviews; Team briefings; In South Africa: work skills and employment equity forums are established; Anonymous individual perception monitoring (IPM) surveys, conducted at least once every two years throughout the organisation, examine employee perceptions on
a range of issues; Meeting with employee representatives including trade unions in terms of recognition and industry/ national agreementsStrategy, company performance andresults; Individual conditions of employment; Security of employment; Health and safety issues; Career path and development; In South Africa, work-skills plans and progress on employment equity Alignment with leadership philosophy; Continual review of employee value proposition to ensure employee attraction and retention, including:
Conducive/flexible work environment Responsible HR management Equitable remuneration system Open and flexible communication
Investment in employee development; Sustainable organisational restructuring; Awareness of strategic objectives and individual rolesPrincipals and suppliers Delivery of competitive integrated customer solutions; Mutual benefit; Long-term relationships; Governance framework; Strategic frameworks
Dealer, licensee and dealer council meetings; Principals’ conferences; Formal reporting and information sharing; Ongoing informal contact;
Product launches; Supply chain managementProduct issues and innovation; Market positioning; Financial and other performance reviews; Customer issues and satisfaction; Sustainable development matters; Territory issues and expansions; Market information; Supply chain empowerment Successful relationships with mutual value maximised; Leading products and services; Retained distribution rights; Expanded distribution areas/regions/ territories; Mitigation of an identified key risk; Supply chain optimisation; Terms and conditions of relationship updated and maintained; Expanded preferential procurement and empowerment Public sector Government institutions, departments and training authorities; Municipal and local authorities; Diplomatic corps
Consultation on emerging policy frameworks; Compliance issues; Progress on employment equity plans; Fiscal and local issues such as building plans; Training programmes and rebates; Technical and financial assistance for socioeconomic development (SED) Provision of critical public assets and a supportive environment; Socio-economic development in South Africa; Emerging policy and regulations on climate change response and carbon taxes Social compacts and creation of shared value; Collaboration on achievement of social and economic development objectives; Consultation on emerging policy Civil society and local communities Industry associations and organised business organisations; Non-governmental organisations; Beneficiaries of the company’s socioeconomic (SED) and enterprise development (ED) initiatives; Guidance and global best practice
Relevant industry issues, industry lobbying and responses to proposed legislation or regulation; Consultation with, and evaluation of,
educational, environmental and welfare organisationsRelevant industry issues, industry lobbying and responses to proposed legislation or regulation; Development initiatives evaluated for leadership, technical and financial support; Enterprise development opportunities identified Relevant industry responses submitted; Social compacts and creation of shared value; Appropriate initiatives supported through company’s ED and SED initiatives; Appropriate executive and leadership interventions implemented; Climate change response interventions including COP 17 participation Empowerment partners Mutual value creation/ benefit
Ad hoc meetings; Structured interventions; Operational meetings; Value-add opportunities Operational performance and share price; Respective contributions to enhance the relationship Communicate timeously and effectively on material issues; Ensure two-way communication to strengthen relationships and establish mutual interests and objectives; Enhanced company transformation; Enhanced community service group partners’ delivery; Act on stakeholder transformation views and concerns Media Open and co-operative relationship
Annual media day; Operational meetings and site visits; Media releases Thought leadership; Commentary on industry Annual review of media plan; Appropriate exposure in media; Fair reflection of company; Good relationships; Managed positioning of the Barloworld brand -
4.15 Basis for identification and selection of stakeholders with whom to engage.
Integrated annual report 2011 - Report scope and boundary
Integrated annual report 2011 - Stakeholder engagementEssentially Barloworld engages a range of stakeholders with various material interests in the group, those whose activities can materially affect the group, and those which the group’s activities will materially affect.
Barloworld recognises that an important component of its value-creation offering is based on focused, inclusive stakeholder engagement. This engagement is essential as a tool for undertaking its business, a lens through which Barloworld can reflect on itself and refine its activities where necessary. Stakeholders in turn derive comfort from being included in the company’s internal processes.
Stakeholders are identified through a range of channels; sometimes stakeholders come forward and identify themselves. Irrespective, where concerns are legitimate, the company addresses these, listens to suggestions and engages honestly.
Accountability for stakeholder engagement is centred in the operational management and functional structures in the group. View the group’s stakeholder policy.
The group’s key stakeholder groupings include:
• Shareholders and providers of capital • Employees and their representatives • Customers • Principals and suppliers • Public sector • Civil society including local communities and beneficiaries of the groups social economic (SED) and enterprise development (ED) initiatives • Empowerment partners • Media. -
4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.
Integrated annual report 2011 - Stakeholder engagement
View the group’s stakeholder policy.
Shareholders and providers of capital:
The group regularly engages with its shareholders and investor community through:• Bi-annual results presentations • Annual general meetings • Annual reporting • Investor conferences and presentations • Investor site visits • Media releases • Focused surveys Customers
Barloworld’s relationships with customers are critical, therefore the group has comprehensive engagement processes in place across all divisions. By engaging and listening to its customers, the group can quickly determine material issues and respond appropriately.Numerous individual and collective customer engagement interventions took place during the year focused on long-term relationships and mutual benefit. All divisions appreciate the importance of these interactions and conduct appropriate interventions, including open days and focused surveys.
Engaging with customers includes daily contact to evaluate service levels, invitations to give feedback and suggestions, and regular visits by senior executives.
Principals and suppliers
As a distributor of leading international brands, Barloworld represents a significant number of high-profile global principals.Distribution agreements, long-term relationships, structured meetings, reporting requirements and performance reviews, and ongoing informal communication ensure frequent contact with principals.
Our people also attend principals’ conferences where strategic issues, including product launches, are shared. Participants have an opportunity to engage with principals and raise concerns, make suggestions and participate in related workshops and discussions. Ongoing principal interactions cover product issues, market positioning, financial performance, customer satisfaction, sustainability matters, territory issues, market information, and the relationship in general.
Mutual benefit, trust and transparency underpin the success of these relationships.
A range of other suppliers including major contractors, long-term and ad hocsuppliers are engaged as appropriate.
Employees and their representatives
Employees are the focus of numerous and detailed engagement processes. These are formal or informal, structured and ad hoc, individual and collective. Employee interaction is key to ensuring that the workplace supports productivity, employee contentment and allows them to further their personal and professional ambitions.These engagement processes enable employees to make recommendations and influence direction and include:
• Individual meetings • Structured team forums • Individual and team performance discussions • Briefings • Anonymous individual perception monitoring at least every two years across the organisation. • Meeting with employee representatives (including trade unions) in terms of recognition or industry agreements for collective bargaining, organisational restructuring and other specified matters. Public sector, civil society and local communities
We routinely engage government institutions and departments, municipal and local authorities, industry organisations and non-government organisations. We also engage with applicants and beneficiaries of our social economic development and enterprise development initiatives.Empowerment partners
The company meets with its empowerment partners as required or appropriate for the different categories. Central themes are operational performance, our share price and the respective contributions by the parties to our value-creation activities. We also address the relationship between the company and, its empowerment partners and in the case of our trusts, dividends.Media
Barloworld regards the media as an important stakeholder and we are committed to accessible, open and transparent engagements. A wide range of initiatives includes statutory disclosures, integrated reporting, advertising ad hoc announcements, editorial comment and publications, formal and informal meetings and briefings. -
4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.
Integrated annual report 2011 - Stakeholder engagement
Through our various engagement processes, we arrive at set of material stakeholder issues which we use to refine our strategy and define report content. These issues are reflected in the following table.
Many of the issues raised by key stakeholder groups are dealt with as part of the engagement that takes place during the year. Given that customers are a key group, and that the business relies solely on their loyalty, issues and concerns raised by customers are prioritised. They are essentially individually focused and service oriented.
Issues raised by employees and investors, principals and other service providers, are also addressed as quickly as possible during the year. Again, given the nature of Barloworld’s activities, geographic spread and range of principals, these are usually of an individual and specific, rather than collective and broad-based.
In annual reporting, these issues are categorised and disclosed with a 12 month perspective focussing on themes rather than the individual issues.
Key topics by stakeholder are shown in the following table:
Stakeholder Material issues raised
Relevant indicator
Shareholders and providers of capital - Nature of returns
- Market perspectives
- Value creation performance
- Under-performing business units
- Strategy and identified growth opportunities
Customers - Value of products, services and solutions provided
- Ability to enhance customers’ value creation activity
- Customer satisfaction
Employees and their representatives - Strategy, company performance and results
- Individual conditions of employment
- Security of employment
- Health and safety issues
- Career path and development
- In South Africa, work-skills plans and progress on employment equity
Principals and suppliers - Product issues
- Market positioning
- Financial performance
- Customer issues and satisfaction
- Sustainability matters
- Territory issues
- Market information
Public sector - No material issues raised
Civil society - Relevant industry issues, industry lobbying and responses to proposed legislation or regulation
- Funding requests evaluated
- Enterprise development opportunities identified
Empowerment partners - Operational performance and share price
- Respective contributions to enhance the relationship
Media - Open and co-operative relationship
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