Social Capital

Massmart defines social capital as our commitment to champion social equality initiatives in our business and our supply chain
R23.6million
invested in nutrition projects

 

27 million meals served
to learners through the Amalunchbox and Econo mobile kitchen projects

 

Investment in social projects:
R41.5million
(equivalent to 3.6% PAT)

 

R71.2m
invested in developing small suppliers since the inception of the Supplier Development Fund

 

 

At the heart of our social sustainability approach is a desire to support social equality initiatives in our business and supply chain. We believe that nurturing talent and creating opportunities for our employees, and emerging suppliers is fundamental to realising this significant objective.

 

Prioritising social equality initiatives

All our social equality initiatives are vetted against stringent assessment criteria including legislation, commercial relevance to Massmart’s global sustainability commitments and reputational benefit.

 

Priority Area Assessment Criteria
    Is there a legislative /regulatory driver for this initiative? Is there direct commercial benefit associated with this initiative? Does this initiative have resonance with Government and civil society driven social discourse? What is the relevance of this initiative for Walmart’s Global sustainability commitments? What positive leverage does this initiative present for Massmart-Walmart’s reputation in Africa? What practical influence is Massmart able to exert over this issue?
1 Broad Based Black Economic Empowerment   The Broad Based Black Economic Empowerment Act and associated Codes of Good PracticeEmployment Equity Act, 55 of 1998, Women Empowerment and Gender Equality BillBroad Based Black Economic Inadequate performance could undermine access to business –to-business and public infrastructure sales opportunities Transformation and economic empowerment are a national imperative with high resonance in the public narrative The BBBEE emphasis on women is closely aligned to Walmart’s commitment to Women’s economic empowerment Demonstrates that we are a fair and equal opportunity employer presents significant reputational benefits. Massmart has significant opportunity to promote transformation BBBEE directly in our own operations and supply chain.
2 Socio-economic Development   Broad Based Black Economic Empowerment act: and associated codes of Good Practice Community development engenders brand loyalty and can be leveraged as a sales driver. National concern about inequality, poverty and unemployment create justifiable public expectation that corporates should be pro-actively involved in social development Corporate Philanthropy is a critical Walmart agenda item. Demonstrates that we are a relevant and empathetic corporate that is in –touch with the communities that we serve. Dedicated budget to invest in community development, ability to leverage organisational capabilities for good and advocacy opportunity in supply chain.
3 Women’s Economic Empowerment (WEE)   Women Empowerment and Gender Equality BillBroad Based Black Economic Empowerment act: Codes of Good Practice Supplier diversification and   a critical imperative for talent attraction and retention goals extensive public awareness and advocacy of women’s rights in the workplace has created high resonance Women’s economic empowerment in the supply chain and the workplace is a high Walmart priority The African Union has declared 2010-2020 African Women’s Decade. The purpose of which is to enhance the implementation of initiatives that promote   gender equality and women’s empowerment. As such, Massmart and Walmart’s focus on Women’s Economic empowerment resonates strongly with AU’s stated priorities. By designing recruitment, career development, workplace management and merchandise sourcing practices to increase focus on women
 4 Supplier Development   In 2011, as a consequence of Walmart’s acquisition of Massmart, we volunteered to set aside a fund to support  local supplier development. This proposal was subsequently adopted by the Competition Tribunal and then rendered as a Competition Appeal Court Order in October 2012.
 5 Responsible Sourcing   It is an intuitive priority to ensure responsible practise by suppliers in our supply chain with regard to human rights practises, Walmart’s global health and safety standards and environmental compliance.

 

 

 

Supporting small business development

Massmart has established an in-house small supplier development unit comprising a team of nine professionals. The team is tasked with identifying and facilitating small and medium local supplier access to opportunities within the Massmart supply chain. Because retail is customer demand-driven, the programme applies a demand-driven strategy, placing emphasis on structural supply shortages in areas of demonstrated customer demand within the Massmart supply chain.
Our overall focus is on assisting small and medium enterprises, with a maximum turnover of R50 million. Preference, but not exclusivity, is given to women–owned and black-owned enterprises. The programme currently targets small manufacturing and agricultural suppliers. To this end, we are working with 24 manufacturers and 146 small holder farmers distributed across six provinces. These enterprises supply a diverse range of manufactured products, fresh produce and meat.
For the 15 months ending 28 December 2014, Massmart disbursed more than R50 million in funding to SMME suppliers. Altogether, approximately R43.4 million was disbursed as grants and R6.7 million as loan guarantees. The remainder was utilised, primarily, on support services. 47% of funding was invested in manufacturing with the remainder being deployed to assist small holder farmers.

Facilitating responsible sourcing

Under Walmart’s guidance Massmart established, in 2013, a responsible sourcing programme focusing on private label, direct import and exclusive brand products. In terms of the programme, participating suppliers are assessed by independent auditors on a broad range of human rights and safety dimensions that include, among other things; fair labour practices and compliance with health, safety and environmental regulations.
During the period under review, 60 suppliers from 9 countries including Bangladesh, China, India, Brazil and Thailand were subjected to independent responsible sourcing audits. Although 38% of participants were found to be fully compliant, 62% of suppliers were required to remedy minor infringements which included, among other things, displaying appropriately warning and emergency exit signage. As a result of this process, two suppliers were removed from Massmart’s supply chain for non-negotiable infringements.
In 2015, we aim to ensure that all direct import facilities have been audited. In addition, we will be focussing on building the capacity of our domestic manufacturers to meet Walmart Global Standards for Suppliers. This capacity building will include responsible sourcing training, conducting one-on-one visits and providing advice, on areas such as the development of corrective action plans, to factories that require additional support. In addition, we have prioritised training buyers on our global responsible sourcing programme and putting controls in place for product and supplier listing.

Promoting Broad-based Black Economic Empowerment

In 2014, we maintained our level 4 Broad-based Black Economic Empowerment (BBBEE) Contributor status achieving a 2.5 point improvement in our 2013 score, due largely to better performance in the areas of skills development and employment equity.
We are particularly pleased by the role that the Massmart Supplier Development Fund (SDF) is playing in developing black manufacturers and producers. The SDF is currently working with 19 black-owned manufacturers and 146 smallholder farmers, who supply products including: bricks; steel doors and window frames; paint; cooler boxes; tea; lampshades; mosaic tiles; cosmetics; fruit juice; biscuits; clothing; maize meal; ceramic pots; insecticides; adhesives; vegetables; and beef to Massmart’s stores. Some of the participants in our Supplier Development programme can be seen on  pages 100 and 101 of this report.
Whilst we continue to prioritise BBBEE as a key performance area, we anticipate that our group BBBEE contributor status will decline in 2015 when the amended Codes of Good Practise come into effect.

Empowering Women

Walmart has prioritised the empowerment of women across their operations and supply chains. As part of this initiative, and as a first step towards identifying opportunities to support and work with our majority women owned suppliers, Massmart conducted a supply chain assessment to identify businesses that have a minimum of 25% women ownership.  The assessment was distributed to over 1,426 suppliers, 59 of whom indicated that they had more than 25% women ownership. Our focus for 2015, will involve engaging with our divisional buying teams to identify opportunities to optimise procurement from these identified suppliers.
Within our own business, we continue to support the progression of woman through the Massmart Chief Executive Officers Council of Woman Leaders and the Massmart Corporate University. Although not focused solely on woman, our Corporate University has in excess of 265 woman participants. Our Graduate Development Programme represents another avenue through which we attract and retain talented women, and we are encouraged that of the 127 female graduates who have participated in the programme since its inception in 2007, 106 remain in the business today.

Supporting socio-economic development

Massmart’s corporate social investment is focused on school nutrition, early childhood development (ECD), school maintenance and infrastructure. We remain committed to investing a minimum of 1% Profit after Tax (PAT) in social projects. We typically exceed this target and in 2014, we invested R41.5 million which is equivalent to 3.6% PAT.
Honouring Nelson Mandela’s legacy
In honour of Nelson Mandela’s 94th birthday in 2012, Massmart on behalf of the Walmart Foundation committed to providing 94 mobile kitchens to 94 primary schools around the country. 2014 saw the completion of the project when we delivered the final Walmart Foundation funded container kitchen to Dikgabane Primary School in Soweto. We were also delighted to have exceeded our original goal by delivering 101 kitchens, versus the 94 originally committed. Further, Game, Masscash and the Walmart foundation have donated 280 mobile kitchens to government schools across South Africa since the project was launched in 2008. These kitchens enable the hygienic preparation of approximately 27 million meals each year.
This year we initiated a process to assess the effectiveness of the mobile kitchen project. The assessment, which took the form of engagement with mobile kitchen recipients through site visits and telephonic interviews, revealed the need to ensure that these kitchens receive ongoing maintenance. We are currently exploring options for facilitating this.

Group highlights

Builders Warehouse continued its nutrition and school maintenance initiatives, investing R4 million in basic maintenance programmes at 101 schools. Since 2011 Builders Warehouse have, through this project, helped maintain 205 schools and Early Childhood Development Centres (ECD’s) around South Africa.
Makro, in partnership with HOPE Worldwide, provided funding to 41 ECD’s in disadvantaged communities. The assistance offered through this initiative includes providing training to teaching staff and facilitating the renovation and registration of these centres. In 2014 the project directly benefited 3,274 children below the age of five.
Game, together with the Kingsley Holgate Foundation, supplied insecticide-treated mosquito nets to combat Malaria in Botswana, Malawi, Mozambique and Zambia. Since 2012, Game have donated 39,200 mosquito nets to assist in preventing the spread of this potentially deadly disease. While over and above their Econokitchen project Masscash, in 2014, invested approximately R0,5 million in feeding schemes across Mozambique, Botswana, Namibia and Lesotho. Notwithstanding the investments made by our divisions, Massmart Holdings participated in a variety of projects, which included contributing food to the SANDF goodwill parcel project, donating generators and equipment to support the South African National Department of Health’s efforts in responding to the Ebola outbreak in West Africa, and donating R1 million to the Nelson Mandela Centre of Memory.
In 2015 our objective is to implement an operating framework that will synergise our social development efforts with those of key suppliers who are engaged in complimentary activities, specifically in the primary schools education arena.