Management approach disclosures

Overall

The group’s strategic intent is to develop products and services to capitalise on emerging sustainable business opportunities, realise cost savings through energy efficiency and other sustainable business practices as well as enhance Barloworld’s reputation by leading in sustainable development. We are committed to providing leading customer solutions that address environmental stewardship and customer competitiveness and adopt a similar approach to our internal operations. This is incorporated into strategy and addressed by:

An integrated management approach entrenching accountability for economic, environmental and social activities in each of our businesses
An aspirational group target of a 12% efficiency improvement in non-renewable energy and greenhouse gas (GHG) emissions (scope 1 and 2) efficiency by the end of our 2014 financial year off a 2009 baseline. A new aspirational group target of a 2% efficiency improvement for these aspects has been set for our 2015FY against a business as usual perspective (tracking revenue as a proxy for business activity) and off a 2014 baseline. This will allow the group to align its subsequent target period with its strategic period being 2016 to 2020.
Minimise our carbon footprint and off-set where appropriate to achieve a carbon-neutral status
Provide solutions that create value for our customers by assisting them to achieve their sustainable development objectives
Identify and pursue emerging sustainable business opportunities as well as cost-saving opportunities
Integrated sustainability reporting ensuring credibility, transparency, completeness and comparability.

The group is a signatory to the UN Global Compact, of which Principles 7 to 9 specifically address the Environment. The group Chief Executive has expressed continuing support for the UNGC’s 10 Principles (see GRI 1.1 and Barloworld’s 2014 COP). For details on the UN Global Compact, see: www.unglobalcompact.org

The methods and means of environmental reporting are constantly being enhanced to ensure we are leading in this aspect of our business. It is anticipated that our enhanced data measurement and management will improve day-to-day management and monitoring of environmental issues.

Our reporting systems have been assured by both internal and external audit (Deloitte).

The group’s internal audit function continues to be involved in the assurance process for non-financial data, particularly of fuel, water and electricity data. During the year the Equipment southern Africa, Equipment Russia (Vostochnaya Technica) and Handling South Africa divisions were formally reviewed by the group’s internal audit function. The principal issue centred on the structure of the data collection process. This has been addressed by ensuring this data is collected on the financial reporting platform.

None of the operations listed above have scored below a ‘Satisfactory’ internal audit rating, which provides management with added confidence that reporting systems are functioning as intended with sound controls around completeness and accuracy. Recommendations made have been mostly implemented to further improve the data collection and reporting process.

In addition to the above assurance engagements, the group’s internal audit function also conducted two consulting engagements in our South African operations, one of which was at Avis Rent a Car and the other at Avis Fleet Services.

To assist the group in preparing a credible and accurate integrated report, an assurance matrix continues to be developed which maps the content of the integrated report against a number of assurance standards and indicates responsibility for applying each of the standards. While still in its infancy, the completion of this matrix has progressed over the past financial year. The matrix will assist the Audit Committee in fulfilling its responsibility for overseeing the group’s integrated reporting, as defined by the King III principles.

External auditors provide assurance over reporting of material aspects as agreed with the Audit Committee. This review is conducted in line with the ISAE 3000 standards.

Refer assurance statement

Materials

Materials are sourced from Original Equipment Manufacturers (OEMs) and other suppliers and used to support the retail and service nature of the group’s operations. Materials that have a high impact on the environment are monitored.

The group remains committed to reporting material use by weight to ensure consistency and comparability.

As Barloworld predominantly represents OEMs and principals, opportunities for using recycled materials are limited. Re-treaded tyres are the most significant in this regard. Barloworld Equipment has significant rebuild and remanufacture facilities in Russia and South Africa which provide extended and multiple lives to equipment and components reducing the demand for new materials as well as reducing waste volumes.

Energy

As a responsible corporate citizen and aligned with global imperatives, in 2009 the group had set an aspirational target of a 12% efficiency improvement in its non-renewable energy consumption by the end of this 2014 financial year, off a 2009 baseline.

The majority of our operations have performed ahead of our group aspirational 12% efficiency improvement target for non-renewable energy consumption and greenhouse gas emissions (scope 1 and 2) set for the end of this financial year off a 2009 baseline. However, our overall group target was not achieved due mainly to a number of investments made in logistics road transport business which has higher energy and emissions compared to our other businesses.

Nonetheless our target focussed attention and prompted relevant initiatives which benefitted the group over the past five years and will continue to do so into the future. In order to maintain this momentum, we have set another aspirational group target of a 2% efficiency improvement against a business as usual perspective (tracking revenue as a proxy for business activity) for our non-renewable energy consumption and related greenhouse gas emissions (scope 1 and 2) for end of our 2015 financial year off a 2014 baseline year.

This will allow the group to align its subsequent target period to its strategic period being 2016 to 2020.

At 2014FYE, the group energy intensity was 47.6, which is 27% behind its aspirational energy intensity target of 37.5.

Benefits include mitigating rapidly rising costs, particularly electricity in South Africa, organisational resilience and the associated need to reduce greenhouse gas emissions. These are entrenched in the group’s strategic planning processes and operations. The group focuses on reducing energy consumption, mainly in the form of electricity and fuel for vehicles. In terms of the former, the group’s divisions and their operations have a range of initiatives to reduce consumption spanning timers on light switchers to more energy efficient building designs – in short, any measure that will reduce consumption and cost. In terms of fuel consumption, vehicles are recent models with the latest engines designed to use less fuel and emit less pollutants.

Regular maintenance ensures that engines run optimally and consume less fuel. The group also sources products from its OEMs with the latest fuel saving technologies.
Divisions utilise the skills and resources within their respective operations to assist in identifying and maximising efficiency opportunities internally within the group.

Water

Barloworld is committed to being a responsible custodian of water by measuring, monitoring, managing and reporting its water use as standard business practice and, and where necessary, proactively implementing initiatives that conserve water or mitigate the effects of its use for business operations.

The group recognises that water is an increasingly scarce and critical global resource.  Although none of its operations are particularly water intensive, Barloworld is committed to more efficient water consumption through reduced use, increased recycling and water-harvesting initiatives. 

Through these initiatives, the group strives to minimise the risk of any future water constraints and realise the commercial benefits of effective and efficient water usage.
Barloworld will continue to assess the physical, regulatory and reputational risks associated with water use and, where feasible, adapt its operations, processes and procedures accordingly. It will also pursue identified opportunities.

The group endeavours to reduce consumption through a range of water savings measures and technologies throughout its divisions. These must make economic sense before being implemented but, where commercially sensible, including enhanced resilience, the group would typically adopt them. Where water-savings technologies are part of the group’s product offerings, these new products are added to the group’s portfolio. The main users of water in the group are motor retail operations, vehicle hire companies such as Avis and the trucks in the logistics operations. The group completed the 2014 CDP Water Disclosure  for use as a tool to understand its water use, identify associated risks and opportunities, contribute to general knowledge and global databases, and identify further interventions to reduce consumption. 

Biodiversity

Barloworld’s operations do not have a material direct impact on biodiversity. This is due to the mainly urban location of its operations and the nature of its business. As such, an approach to managing biodiversity is not required as it would be for a mining company, for example. Despite this, the group’s impact on biodiversity will continue to be monitored and should this necessitate a response, a strategy will be developed and implemented.

However, if one of our suppliers was judged to have had a severe impact on an area of high biodiversity value, and therefore be in breach of Barloworld’s own code of ethics, the group would consider an appropriate response.

Emissions, effluents and waste

Indirectly we reduce emissions by using less electricity and, directly, by using fuel more efficiently in our vehicles as well as in our building heating ventilation and cooling systems. In line with our aspirational non-renewable energy efficiency improvement target, in 2009 the group had set an aspirational target of a 12% efficiency improvement in its greenhouse gas emissions (scope 1 and 2) by the end of this 2014 financial year, off a 2009 baseline.

The majority of our operations have performed ahead of our group aspirational 12% efficiency improvement target for non-renewable energy consumption and greenhouse gas emissions (scope 1 and 2) set for the end of this financial year off a 2009 baseline. However, our overall group target was not achieved due mainly to a number of investments made in logistics road transport business which has higher energy and emissions compared to our other businesses.

Nonetheless our targets focussed attention and prompted relevant initiatives which benefitted the group over the past five years and will continue to do so into the future. In order to maintain this momentum, we have set another aspirational group target of a 2% efficiency improvement against a business as usual perspective for our non-renewable energy consumption and related greenhouse gas emissions (scope 1 and 2) for end of our 2015 financial year off a 2014 baseline year against a business as usual scenario that again tracks revenue as a proxy for business activity.

This will allow the group to align its subsequent target period to its strategic period being 2016 to 2020.  

At 2014FYE, the group GHG emission (scope 1 and 2) intensity was 4.4, which is 10% worse than its aspirational emission intensity target of 4.0.

The group has implemented a wide range of energy-reduction initiatives to reduce GHG emissions. These include communication, monitoring and reporting as well as operational initiatives such as the efficient maintenance of vehicle fleets using the latest clean-engine technologies from OEMs.

Avis RAC South Africa’s customer rental emissions generated are classified as scope 3 emissions and have been disclosed from our 2010 financial year. These emissions have been expanded to cover rental fleets from other operations during the 2014 financial period. While the expended reporting has resulted in more complete data being reported internally, these are not included in the disclosed scope 3 – rental fleet emissions data. Barloworld’s internal audit department is reviewing the reporting processes to ensure assertions around accuracy and completeness are adequately addressed prior to disclosure.

Emissions identified by Barloworld include carbon dioxide, nitrous oxide and methane from combustion of petrol and diesel in trucks, machinery and equipment and vehicles, and from purchasing electricity. This is in line with the nature of our operations and the sources of our emissions. There are no significant ozone depleting substances as emissions sources in Barloworld’s operations.

Barloworld does have other non-Kyoto protocol greenhouse gas emissions sources, namely oxides of nitrogen (NOx) and oxides of sulphur (SOx), given the nature of its automotive operations. Measures to mitigate these non-greenhouse gas emissions rely on consumption of low sulphur fuels and advanced engine technology for cleaner fuel combustion. These measures are outside the control of Barloworld although they are adopted and used internally where feasible.

Effluents emanate from cleaning plant, equipment and vehicles. All effluent is cleaned of pollutants and clean water discharged into municipal reticulation systems. Waste material is disposed of through legitimate contractors at certified waste disposal facilities.

The group does not generate significant volumes of waste. Both hazardous and non-hazardous waste streams are monitored by type, volume, disposal method and destination. The group is committed to reporting all waste by weight or volume to ensure consistency and comparability.

A critical aspect of the group’s waste management and product life-cycle stewardship addresses extended product use. This includes ensuring products have a number of useful lives, facilitated in part through our remanufacture and rebuild programmes.

The group completed the 2014 CDP Climate Change disclosure for use as a tool to understand its carbon footprint, identify associated risks and opportunities, contribute to general knowledge and global database, and identify further interventions to reduce emissions. 

During the current target period (2010 – 2014), the group has continued to use the 2009 energy and emission conversion factors to avoid any impact in the resultant energy and emissions from a change in factors. It is anticipated that the same conversion factors will be utilised for the 2015 financial period after which consideration will be given to update these.

Products and services

Barloworld recognises the environmental impact of its customer solutions and, supported by its principals, is committed to providing leading products and solutions that foster environmental stewardship. The group works with its Original Equipment Manufacturers (OEMs) to ensure customers’ sustainability objectives are met and their competitive position enhanced.

Represented OEMs focus on improving the life-cycle environmental footprint of products that the group offers to customers.

Energy and emission efficiencies as well as product disposal are core aspects being addressed.

The group does not manufacture or extract as part of its operation. It transports items through its logistics operations where it endeavours to plan routes to minimise energy consumption and greenhouse gas emissions. The group communicates to its suppliers information on the latest sustainability technologies and interacts with principals on customers’ requirements for product safety and environmental stewardship.

As part of its customer offerings Avis Rent a Car provides emissions data on its rental invoices. This promotes awareness to customers of their environmental footprint and enables emissions reporting for corporate clients.

Compliance

Entrenched in our Code of Ethics and Worldwide Code of Conduct is the requirement to ‘Obey the law’ and ‘Protect the environment’. This is regarded as the minimum requirement and the group strives to conduct its operations as a responsible corporate citizen. Where possible, we also participate in the formulation of responses to draft policy and legislation.

Transport

Aside from emissions caused by air-travel and business vehicle trips, the group is aware of the potential for accidents as a result of transportation. The group strives to operate modern fleets using the latest technologies as well as to provide appropriate driver training and development, to maximise safety aspects and minimise fuel consumption and emissions.

Drivecam and Drive Smart systems have been implemented in our Logistics fleet that assists in managing both driver and public safety.