Our commitment to ethical and good governance
Our compliance with applicable laws and regulations and adopted codes and standards is an integral part of our commitment to being ethical, practicing good governance and ensuring we provide our clients with:
- Safe products
- Information on the products we sell that will keep them safe
- Help them reduce their impact on climate change
- Reduce their costs so they can live better
Embedding Responsible Business practices
We are thoughtful about what we sell to our customers and recognise that we have a level of responsibility in this regard to ensure the decisions our buyers make are well thought through. We need to make sure our products are safe and that they are produced in safe facilities. We want our customers to be able to trust that what we are selling is responsibly sourced and sustainable from both an environmental and social perspective.
Our Responsible Sourcing Compliance team assists with the integration of responsible sourcing practices into merchant strategies, processes, systems and buying decisions, which includes the selection of suppliers and the development of new products. Merchants and sourcing associates receive training that helps them understand how their decisions can influence supply chain conditions and the role they can play in reinforcing appropriate working practices with suppliers.
We promote responsible labour practices in our supply chain, which helps mitigate business risks. Our Standards for Suppliers make clear our expectations of those who sell their products to us for resale, as well as the facilities and agents they use.
Through our Responsible Sourcing Compliance programme we help combat practices such as forced and under-age labour and unsafe working conditions. We monitor Private Label and Direct Import suppliers’ facilities for compliance with our Standards, even when there are no allegations of misconduct.
At year-end 2020 Massmart had over 500 Private Label and direct import suppliers participating in our Responsible Sourcing Compliance programme, with over 800 facilities required to undergo regular social compliance audits. 94% of the audits conducted in 2020 showed a good level of compliance. Social compliance audits are not common practice in South Africa. As a result, domestic manufacturers are less familiar with the requirements and tend to have more non-compliances identified. At the beginning of 2019 only 49% of our domestic manufacturers achieved a good level compliance. By year-end 2019 this had improved to over 70% and in 2020 through engagement with our suppliers it was at 84%.
Should we receive information alleging violations of our Standards by a supplier or their facilities, the allegations are evaluated through a global case management process.
Facilitating small business participation
Our efforts to increase our preferential procurement from black and women owned businesses or to buy local include purchasing products from suppliers that may have challenges in completing a social compliance audit. To facilitate the participation of these suppliers in our supply chain we have a small supplier programme as part of our responsible sourcing approach that affords an alternative option to the traditional third-party audits. We currently have approximately 80 facilities participating in our small supplier programme.
Food safety and hygiene
Our Food Safety programme includes food safety audits (external and internal) at stores, manufacturing plants and suppliers. It also includes product and environmental testing, food fraud testing, product recalls, regulatory inspection management and food safety training and monitoring programmes.
A Global Walmart Hazard Analysis and Critical Control Point audit has also been rolled out in our stores and Group-owned manufacturing sites.
To improve safety standards at our distribution centres (DCs) they are all audited against a Global Food Safety Standards. Audits by an independent third party against the highest global and local food safety standards revealed a significant improvement in our overall food safety results in 2020.
We work with our Private Label suppliers to implement the Global Food Safety Initiative (GFSI) standards and have seen good progress with overall compliance. Product testing was conducted by a SANAS-accredited laboratory at both product and store level to ensure compliance with food safety standards.
Consumer protection and product safety compliance
Our Consumer Protection and Product Safety Compliance programmes evolve to support our overall compliance strategy and commitment to applying King IV Principle 13. A key focus for Massmart is putting the customer at the centre of everything we do.
The growth in online shopping requires new standards and controls for product safety and consumer protection, and issues such as restricted and prohibited goods, which was a particular challenge during the Covid-19 lockdowns.
We also engage with our regulatory authorities regarding future international and national policy on products.
During 2020 we launched a new food safety management system and training in our DCs. We retained a 100% Global Food Safety Initiative (GFSI) Certification against the FSSC 22000 Food Safety Management System for our manufacturing sites and rolled out digital food safety audits for our Rest of Africa stores that were not accessible due to Covid-19 travel restrictions. We also rolled out a food safety programme in Builders Warehouse to cover their sale of snacks and pet food.
While our sustainability programmes benefit from being integrated with Walmart’s global sustainability efforts that prioritise people and the planet, they are also designed to address issues specific to our local conditions. By integrating the global knowledge Walmart has gained from driving positive impacts across global supply chains for over 15 years with Massmart’s understanding of our local environment, we ensure that not only are our programmes locally relevant, they also achieve the maximum benefit and impact for Massmart and its stakeholders.
Our efforts to reduce our impact on the environment include:
- Water use efficiency
- Climate change mitigation and adaptation
- Reducing waste generation
- Sustainable sourcing and product screening
Water use efficiency
By 2030 substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and substantially reduce the number of people suffering from water scarcity.
Massmart is not a significant consumer of water resources, however, as water scarcity is a significant and growing social and business risk across sub-Saharan Africa, and with South Africa listed among the 30 driest countries in the world, we are making every effort to reduce our consumption of municipal water usage. This includes installing water saving devices in our stores and planting water-wise indigenous plants in the gardens.
One area where we do use higher volumes of water is in our larger Makro stores and our Builders nurseries. To address this, we have implemented rainwater harvesting at 84 Builders and Makro stores to offset our municipal consumption. This harvested water is used primarily for irrigation in our car parks and in-store nurseries. Our Makro stores have also incorporated unique water reuse systems in their refrigeration plants. These capture condensate water from ice that forms on the cooling coils of our refrigeration plants and which, if not defrosted, reduces the efficiency of the plants. The water is reused for irrigation around the store and to humidify air in our refrigeration plants to improve their efficiency. These two initiatives reduce our consumption of municipal water by approximately 25 million litres a year.
One area of focus has been to actively monitor water usage in real time, which allows us to identify leaks and instances of high consumption and create benchmarks for the optimal consumption of water in our stores. In 2019 we installed a centralised remote water meter and monitoring system across our Makro stores. As a result of the success of this project we started installing remote water monitoring capabilities at additional standalone facilities in 2020.
We also help our customers to reduce their consumption through the cost-effective water-saving devices we sell in our stores. The purchase of these devices helped reduced our customers’ water consumption by approximately 435,000 kL in 2020.
Climate change mitigation and adaptation
By 2030 double the global rate of improvement in energy efficiency.
Affordable and clean energy
Our electricity costs are a substantial contributor to our cost base. Reducing this cost helps us achieve our purpose of Saving our customers money so they can live better. We set ourselves a target of achieving a 10% overall business as usual reduction in electricity intensity between 2010 and 2020. We have exceeded this objective by achieving around a 20% reduction in electricity intensity over this period. As a result we have avoided approximately R100 million in electricity costs annually. Currently, Massmart has two key energy priorities, which are to:
- Use less electricity
- Where feasible transition to renewable energy alternatives.
Using less electricity
To achieve our first priority of using less electricity we have developed a centralised energy monitoring capability, which provides real-time monitoring day and night of our South Africa store operations. This enables us to track energy consumption, reconcile billing, alert stores to any unnecessary consumption and create benchmarks for the optimal use of energy. Using this energy monitoring capability we initiated a behavioural energy efficiency programme starting with our Makro and Game stores. This initiative alone enabled us to achieve a R10 million electricity saving during 2020. We will be expanding this behavioural programme to include our other trading brands during 2021.
We also incorporate energy efficiency technology to drive down consumption. These technologies include building management systems, LED lights, daylight harvesting cells, high-efficiency evaporative cooling systems and refrigeration plants. In addition, we have piloted energy-saving refrigeration doors at three sites which has resulted in a 40% reduction in refrigeration energy usage and improved cold holding temperatures at these sites. We will be rolling these doors out to additional sites during 2021. We will also be embarking on an LED retrofit at 30 stores and distribution centres across South Africa.
As part of our commitment to being a responsible corporate citizen, we offer energy efficient products that reduce our customers’ environmental footprint while also saving them money. In 2020 efficient lighting purchases alone helped our customers avoid nearly 18 million kWh and 18,250 tonnes of carbon emissions.
By 2030 substantially increase the share of renewable energy in the global energy mix.
Our renewable energy programme
We recognise that reducing our emissions by transitioning to renewable energy alternatives is crucial to mitigating our climate change impacts. To this end we have installed nine solar plants with an annual generating capacity of 6.2 million kWh/p.a., which is among the highest solar generating capacity in the South African retail industry. We have produced 13 million kWh of solar energy since commissioning our first plant in 2016.
Our most recent plant, a 420kW peak solar plant at Makro Cornubia was completed in October 2020. It is the first of our solar plants to be back-up generator integrated, which will assist in reducing generator wear and tear and diesel consumption during grid outages.
We have also completed similar generator integration retrofits at six of our existing solar sites. Based on historic load shedding information we estimate that Massmart will realise diesel cost savings of approximately R1 million a year from this retrofit.
To accelerate the introduction of renewables across our business, we conducted a Group-wide solar feasibility assessment in 2020. As a result of this assessment, we have tiered sites based on their suitability for solar installations and are targeting a two-phased roll out of a further 30 solar installations over the next three years.
Our carbon footprint
We monitor our carbon footprint, which is verified and reported on as part of Walmart’s global CDP submission. To further reduce our direct emissions we make use of low impact refrigerants. Twelve of our Makro stores are now using natural gas refrigeration plants, which also reduces their GHG emissions. To reduce their electricity consumption and carbon footprint all our inland Builders Warehouse stores are using evaporative coolers as opposed to heating, ventilation and air conditioning (HVAC) units.
Reducing waste generation
Responsible consumption and production
By 2030 substantially reduce waste generation through prevention, reduction, recycling and reuse.
Massmart has an important role to play not only in minimising waste from our own operations and products, but also by encouraging our customers and suppliers to minimise their waste production and to recycle as much as possible. During 2020 we achieved an overall waste diversion rate of 55% across our total operators (approximately 13,500 tonnes of waste diverted).
We operate in 13 African countries and recycle in approximately 93% of our stores, which is challenging because of the lack of waste recycling infrastructure in many parts of sub-Saharan Africa. However, using innovative thinking we are managing to find ways to collect waste for recycling in remote areas, which sometimes includes reverse logistics when we arrange for recyclables to be returned to our distribution centres.
To assist our customers to appropriately dispose of their packaging we have introduced standardised on-pack recycling logos (OPRLs) on our Private Label packaging to encourage our customers to sort and separate their packaging waste. So far we have implemented these OPRLs on more than 350 SKUs.
Electronic waste (E-Waste) is one of the world’s fastest growing waste streams. Towards the end of 2020, we relaunched the Makro Electronic Waste Recycling Programme at 19 Makro stores in partnership with 53 electronics brands. The E-Waste recycling bins will be available for customers to dispose of their unwanted electronic appliances with the assurance that they will be safely recycled.
Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
We believe that engaging with our suppliers on key environmental issues is a critical element of our sustainability programme.
Our environmental advocacy programme which encourages our suppliers to be responsible about their product sourcing and manufacturing, provides our customers with the comfort that we have done everything possible to ensure the products in our stores are safe, sustainable and/or responsibly sourced.
Through our Supplier Environmental Advocacy Survey we have profiled the environmental practices of suppliers against 14 environmental indicators over the past seven years. These indicators include: water conservation, energy efficiency, sustainable packaging and waste management. Covid-19 disruptions prevented us from conducting this survey in 2020, but we will be continuing with the programme in 2021.
In 2020 we continued screening high priority Private Label commodities including seafood, pulp and paper and palm oil-based products. We also continued to engage with suppliers on poultry welfare and expanded our supplier engagement to include a packaging recyclability assessment of Private Label products as part of our commitment to achieve 100% recyclable Private Label packaging by 2025.
By 2020 effectively regulate harvesting and end overfishing, illegal, unreported and unregulated fishing and destructive fishing practices an implement science-based management plans in order to restore fish stocks in the shortest time feasible, at least to levels that can produce maximum sustainable yield as determined by their biological characteristics.
Overfishing and declining fish stocks are a significant threat to ecosystem health and food security. We remain committed to ensuring we do not source any threatened, endangered or red-listed seafood species in line with the guidelines of the World Wildlife Fund’s (WWF) South Africa’s Sustainable Seafood Initiative (Sassi). To ensure we source sustainably we conduct a sustainability review of all fresh, frozen and canned seafood products sold across our business. To ensure accuracy and promote seafood supply chain transparency, we also submit our seafood products for third party genetic identity testing.
We submitted 22 canned, fresh and frozen seafood samples to the University of Witwatersrand for analysis in 2020. These samples included all of our Private Label and a number of national brand products. The analysis revealed one instance of the inadvertent procurement of Sassi red-listed species by one of our suppliers. We have engaged with WWF:SASSI and the supplier to review their sourcing procedures and strengthen their chain of custody controls.
Life on land
By 2020 promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forest and substantially increase afforestation and reforestation globally.
Review of Private Label pulp and paper-based products
As part of a global Walmart commitment to help protect, manage or restore 50 million acres of land by 2030, we have completed our annual Private Label pulp and paper-based product sourcing assessment. In 2020, we used approximately 7,112 tonnes of fibre in our Private Label products of which 100% was sourced sustainably through the use of recycled or sustainably certified virgin material.
Assessment of Private Label packaging
To aid our transition towards a circular economy, we initiated a recyclability review of our Private Label packaging. As part of this process, we assessed approximately 4,000 products, which account for over 50% of our total Private Label procurement. This assessment highlighted that approximately:
- 92% of our Private Label packaging is recyclable
- 7% of Private Label packaging is made from recycled content
- 17% of our Private Label packaging is compostable
- 8% of our Private Label packaging is bio-based
Our aim for 2021 is to expand this assessment to include all Private Label suppliers, in pursuit of 100% recyclable Private Label packaging by 2025.
We completed poultry welfare audits at seven laying farms, representing R172 million in egg purchases by Massmart in 2020. During these assessments we have, in consultation with our poultry welfare veterinarian, amended our welfare audit to include cull depots and end-of-lay bird handling.
Good health and wellbeing
Ensure healthy lives and promote wellbeing for all at all ages.
Keeping our associates, our customers and our suppliers safe
Health and safety has always been a key priority for Massmart, but in 2020 the health risks of the Covid-19 pandemic presented us with unique challenges with regard to the health and safety of our associates and our customers. We were able to apply our Health and Safety management system, which follows a risk-based approach, to develop systems, protocols and processes to protect our associates and our customers in our stores. We quickly developed our own app, which allowed us to contact trace associates who may have been contact with someone who had tested positive for Covid-19.
Our Health and Safety programme focuses on people, processes and systems. We see safety as everyone’s responsibility. Massmart’s management team is responsible for ensuring we provide a safe environment for our associates to work in and our customers to shop in. We apply the risk-based approach of our Health and Safety management system to evaluate and develop processes to mitigate existing and potential hazards in our facilities. Every incident and accident is thoroughly investigated. The information this process provides allows us to establish root causes and implement effective preventative measures.
By aligning and standardising our health and safety management systems, digital and technological solutions, safety training and awareness and safety toolkits we are able to achieve a consistent approach to health and safety throughout the Group.
Our key health and safety performance indicator is our Lost Time Case Rate (LTCR). We track the number of incidents that occur in every 200,000 hours worked.
We have made good progress with the implementation of our risk-based health and safety programme. This is reflected in the LTCR improving from 0.62 in 2019 to 0.54 in 2020.
Decent work and economic growth
Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalisation and growth of micro-, small- and medium-sized enterprises, including through access to financial services.
The aim of the Massmart Supplier Development Programme (SDP), which was established in 2012, is to provide opportunities for small and medium manufacturing enterprises.
The Massmart SDP gives preference to black-owned and black women-owned enterprises. The programme also finds opportunities to assist participants in times when they would otherwise struggle to keep operating, as was the case during the Covid-19 lockdown, where additional support was provided where needed to enable ongoing production.
Currently the programme’s portfolio of 23 businesses manufacture a variety of products including chef wear, toilet seats, detergents, adhesives, cooler boxes, charcoal and paint.
The SDP provides retail and business management training to participants. It helps them increase their overall competitiveness by meeting product quality standards and investing in bespoke manufacturing equipment to build capacity. We also assist our SDP participants, who frequently have cash flow challenges, with upfront loans and early payment arrangements.
A key focus of the SDP is supporting local business and finding localisation opportunities so we can increase the number of local products on our shelves. In 2020 we identified and completed three localisation projects whereby components of toilet seats, selected gym equipment and wheelbarrows is now being sourced locally.
By 2030 empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
Industry-leading Broad-Based Black Economic Empowerment (BBBEE)
Advancing BBBEE is a key driver of economic and social inclusion, a top priority for our business. We maintained our Level 4 contributor status with a BBBEE score of 85.44, which is the highest score Massmart has achieved to date and the highest score achieved by a JSE-listed retailer. Our areas of improvement were: employment equity, preferential procurement and our investment in skills development. We also achieved full points for our enterprise and supplier development and our corporate social investment. Our BBBEE score makes it possible for customers to claim 100% of their spend with Massmart as going towards BBBEE.
Corporate social investment
By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round.
While we remain focused on primary/ foundation phase education initiatives, during the Covid-19 pandemic when schools were closed for a large part of 2020, we changed focus to address the increasing food insecurity in the communities in which we operate. To achieve this we pivoted our programmes with Hope Worldwide and formed a partnership with Food Forward to increase access to food.
During 2020, with the support of our Board, Executive Committee and the Walmart Foundation, we donated approximately 500 tonnes of food countrywide. The support we received from and the contributions from the Massmart Executive Team and our Board made this donation possible. We estimate that our donation provided approximately 2 million meals. We also worked closely with HOPE Worldwide to provide supplemental nutritional assistance to at risk communities in which we support early childhood developmental centres. This included the donation of a further 20 tonnes of food across South Africa and Botswana.
Supporting governments’ efforts to reduce the Covid-19 health risk
Strengthen the capacity of all countries, in particular developing countries, for early warning, risk reduction and management of national and global health risks.
To reduce the health risk South Africa faced from Covid-19 we provided personal protective equipment for frontline medical workers in public healthcare facilities. These included a Massmart donation of 1,300 protective face visors, Walmart International’s donation of 5,000 hazmat suits and the Walmart Foundation’s donation of 100,000 N95 masks. In addition, we donated nonmedical support equipment to the Gift of the Givers for use in Covid-19 testing sites and pre-triage treatment facilities at key state run hospitals. We also supplied 25 tents to Uganda’s Covid-19 Task Force to assist with establishing Covid-19 screening stations at Uganda’s border crossings.
By 2030, ensure that all girls and boys have access to quality early childhood development, care and pre-primary education.
We continued our long-running partnership with HOPE Worldwide to support foundation phase education efforts in underserved communities. However, in response to the Covid-19 pandemic we transitioned these efforts to incorporate additional feeding support programmes described under Zero hunger on page 96. We also funded a poster campaign to educate parents and teachers on how to mitigate the transmission of Covid-19 and provided 20,000 cloth masks and hygiene products to enable the safe reopening of early childhood development (ECD) centres. Notwithstanding the disruptions to education curriculums as a result of Covid-19, a total of 205 ECD centres and 11,000 children were supported by the HOPE Worldwide and Massmart Succeed programme in 2020.