Integrated annual report
for 52 weeks ended 27 December 2015
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Social and Relationship capital

At the heart of our social sustainability approach is a desire to support social equality initiatives. We believe creating opportunities for our employees, and emerging suppliers is fundamental to realising this significant objective. We aim to create transparent trust-based relationships with our stakeholders through ongoing engagement to understand their views, and inform our corporate accountability approach
In 2015…
What we did well:
Our school mobile kitchen programme enabled the hygienic preparation of 40 million meals supplied through the National School Nutrition Programme.

Supported 3,805 young learners through the Makro and Hope Worldwide Early Childhood Development partnership.
Invested in developing the capabilities of 28 local small business suppliers.

Conducted 14,000 face-to-face interviews with customers.
MASSMART DEFINES NATURAL CAPITAL AS OUR COMMITMENT TO COLLECTIVELY REDUCE OUR ENVIRONMENTAL FOOTPRINT AND TO ENABLE SUSTAINABLE SUPPLY AND CONSUMERISM.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Right:
Reapso is 100% Black woman-owned business that manufactures chefs’ jackets for Makro under the Aro, Bakers and Chef Private Label brands. The SDP funding has supported them in acquiring upgraded machinery and fulfilling Massmart’s Responsible Sourcing and ISO compliance and certification requirements.

 

We aim to create transparent trust-based relationships with our stakeholders, recognising that by learning from their insights we are able to make thoughtful choices for a better future for our planet and the people whose lives we touch. Our approach is, as far as possible, to practise an open-door policy with all stakeholders. This is supplemented by a pro-active programme of engagement that includes stakeholder workshops, surveys and one-on-one issue specific meetings.

Engaging our stakeholders

Our stakeholder engagement covers a range of topics enabling customers, suppliers, civil society and employees to provide input and feedback in areas of mutual interest including:

  • Customer satisfaction: covering price competitiveness, product quality & safety, product availability, online shopping and Consumer Protection Act compliance. We also placed significant emphasis on measuring customer trust in 2015, specifically the extent to which customers trust our trading brands to act ethically;
  • Supplier partnering: dealing with supply chain ethics, brand custodianship, logistics efficiency and operational practices. An additional area of discussion with suppliers in 2015 related to exploring opportunities to co-ordinate our socio-economic development initiatives for better social impact;
  • Employee engagement: career development, equal opportunities, status of temporary employees and ethical practise in the workplace;
  • Environmental sustainability: covering waste management in the supply chain, energy efficiency, sustainable seafood and timber sourcing. This year we also, in response to consumer feedback, focussed more attention on improving our understanding of their perspective relating to animal welfare in the retail supply chain;
  • Socio-economic development: involving our corporate social investment priorities, our BBBEE progress and our approach to small enterprise supplier development; and
  • Citizens bribery survey: specifically the launch, in partnership with Ethics Institute of South Africa, of the South African Citizens Bribery Survey which aimed to gain a clearer picture of the extent of bribery in South Africa as experienced by ordinary citizens.

 

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What we learned from our Stakeholders

* The full report can be viewed here 

 

Consumer Protection Act performance indicators >

 

 

SDP

 

 

 

 

 

 

 

 

 

MASSMART ACHIEVED AN EMPOWERDEX VERIFIED SCORE OF 68.23 IN 2015.
 

 


Supporting small business development

The Massmart Supplier Development Programme (SDP), which is focused on providing small and emerging suppliers with access to the Group’s supply chain, has concluded its third full year of operation. Since inception, the SDP has disbursed more than R78 million to South African small business suppliers.

Current participants in the programme include suppliers who manufacture a range of products, from bricks, steel door frames, and paints to cooler boxes, hollow-core doors, adhesives, cleaning aides, maize and fruit juices. In 2015, we disbursed R36 million to SDP beneficiaries and enrolled a further 9 suppliers in the programme, bringing the total number of active projects currently underway to 28. This included 5 import substitution projects. Collectively, since the SDP was initiated, we have provided support to 194 suppliers.

As has been noted in previous years with respect to investment, preference but not exclusivity, is given to Black-and Black-woman owned enterprises.

In 2016 the SDP will consolidate its manufacturing focus whilst continuing to transition out of agricultural and agri-processing projects. This is consistent with our experience that Massmart is able to add most value in areas in which we occupy a position of market leadership including, for example, categories such as building materials.

Responsible sourcing

In 2012, under Walmart’s guidance Massmart established 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, all facilities that Massmart directly imports from (i.e. Massmart is the Importer of Record) have undergone a third party Responsible Sourcing audit. In addition, Walmart and Massmart facilitate a number of training and capacity building programmes with suppliers. In 2015, over 750 supplier facilities that supply to Massmart have undergone some form of training and capacity building.

Broad-based black economic empowerment

Massmart achieved an Empowerdex verified score of 68.23 in 2015, for the BBBEE measurement period from January to December 2014. This included modest improvement in the areas of Employment Equity and Preferential Procurement.

Our BBBEE activities covering the 2015 measurement period from January to December 2015 involved aligning our BBBEE practice to the requirements of the Amended Codes of Good Practice. For example, given the emphasis placed on Enterprise and Supplier Development under the amended BBBEE codes, Massmart invested a total of R37 million, representing 3% of profit after tax, in Enterprise and Supplier Development projects during the period.

Our initial unverified estimate is that we will achieve a score of 56 under the amended codes which will translate into a level 7 rating. We anticipate however, that this will be reduced to level 8 based on the view that we will not achieve the required sub-minimum ownership threshold of 10% given that the Massmart Thuthukani Empowerment Trust is fully vested. Thuthukani, which was launched in 2006, with a strike price of R49.98 paid out R1.4 billion at an average price per share of R155.93. We anticipate that many of our suppliers will be adversely affected by the Amended Codes and that this will result in lower BBBEE scores that will further undermine Massmart’s scorecard, specifically preferential procurement, in the measurement period from January to December 2016.

Socio-economic development

Massmart’s Corporate Social Investment (CSI) is focused on school nutrition, early childhood development (ECD), and school maintenance and infrastructure, in which we aim to invest a minimum of 1% PAT. In 2015 we broadened our focus to include food donations to food insecure recipients, whilst our CSI spend for the period amounted to R20.4 million, equivalent to 1.7% PAT.

Group highlights

In 2015, Builders Warehouse invested a total of R5 million in education and school infrastructure related projects.  During the period, the Builders’ Build-A-Class project was successfully completed with a further six schools receiving classrooms, bringing the total number of classrooms built from the ground up through this project to 15, and more than 210 classrooms being renovated. We estimate that this project has benefited approximately 100,000 learners between the ages of 3 and18.

Makro continued its long running partnership with HOPE Worldwide, to support and upgrade ECD Centres that serve children in vulnerable communities. Over the 2015 period, Makro enrolled a further four ECD centres in the programme and established 12 new parent support Groups. Since the project’s inception, Makro has provided assistance to a total of 78 centres that benefit more than 3,800 young learners annually.

Game and Masscash together contributed a further 12 mobile kitchens in support of the Department of Basic Education run school feeding schemes, bringing the total number of kitchens provided by Game, the Walmart Foundation and Masscash to 292. These kitchens ensure the hygienic preparation and consumption of meals at schools that participate in the national School Nutritional programme. We estimate that 40 million Schools Nutrition Programme meals are prepared for approximately 200,000 primary school learners through Massmart-funded mobile kitchens each year.

Beyond the CSI contributions made by our Divisions, during the period, Massmart provided emergency relief support, including food aid, to people affected by the widespread flooding in Malawi, donating food and hygiene products to people displaced during the Xenophobic attacks in Johannesburg and Durban, and most recently, by providing 50,000 litres of water and water storage tanks to Free state and KwaZulu-Natal communities that have been impacted by water shortages.

Aligned with our expanded focus, we donated more than R2 million worth of surplus food to redistribution charities though our Cambridge stores and formalised a national food donation agreement between Game and Foodbank SA.

CSI performance indicators >

BBBEE performance indicators >