MASSMART STAKEHOLDER ENGAGEMENT 2012

Transcription

1 MASSMART STAKEHOLDER ENGAGEMENT 2012 The importance of stakeholder engagement for Massmart Stakeholder engagement, including formal approaches such as a or workshop and less formal discussions, correspondence and site visits, is increasingly becoming a part of mainstream business practice and central to decision-making delivery. It is being used as a means to improve communications, obtain wider community support and buy-in for projects, gather useful data and ideas and enhance corporate reputation. At Massmart, we believe that stakeholder engagement should be at the heart of any sustainable development agenda and as a responsible corporate citizen, various forms of engagement with our internal and external stakeholders is necessary for us to gain an understanding of their needs and expectations. Through stakeholder engagement, those we do business with, and those whose lives we impact by doing business, are given various platforms to air their views, such as meetings and public seminars to employee helplines to more structured workshops and s. Open and ongoing discussions, dialogues and correspondence is encouraged and our stakeholders are invited to voice their opinions on Massmart s current conduct and policies and also share their ideas on Massmart s future direction in terms of certain key issues. Massmart is also sensitised to certain issues that we believe require a more focused approach and so more formal forms of engagement are utilised. Stakeholder engagement can reveal emerging issues that Massmart had not previously considered but that stakeholders had identified as being important.

2 Mechanisms of stakeholder engagement Massmart maintains an open-door-policy with our stakeholders and whilst we utilise more formalised mechanisms of engagement such as workshops and s to track our stakeholders perceptions and feedback, throughout the year stakeholder engagement takes the form of less formal dialogues and discussions as well as regular correspondence. Site visits also provide us with the opportunity of engaging with stakeholders at their place of work so that we can better understand their businesses. In 2012, Massmart focused on the following formal mechanisms of engagement to track our stakeholders perceptions, gauge emerging issues and learn from their feedback: Discourse analysis Stakeholder Workshops Surveys Discourse analysis Massmart is very much aware that it is essential for us to have a clear comprehension of the relevant societal priorities that impact the communities in which we operate. Massmart thus conducted web-based research to remain updated on public policy issues and those specifically relevant to the retail industry. For this purpose, in 2011 we employed a Stakeholder Research Manager who is dedicated to investigating and providing guidance on these issues. We also had ongoing engagements with subject-matter experts to assess if we remained current in our focus and were managing their expectations. In addition, Massmart utilised an in-house tracking tool to research the leading societal issues on social media such as Facebook and Twitter and to search for mentions on other online media. We also engaged our media relations company to conduct research on print media, examining how journalists had reported on the Group. The objective of the media research was to ensure that we continued to be aware of socially relevant issues and align our accountability objectives. Our media review focused on the following key areas: Energy security Waste Water security Education Healthcare/HIV and Aids Corruption BBBEE Job security Food security. Page 2

3 Energy security, water security and waste Environmental concerns received high media visibility in The issue of energy security was highlighted in coverage of government s decision to lift a moratorium on shale gas exploration in the Karoo, which aims to bolster South Africa s energy security, drive economic growth and create jobs. However, the extraction of this gas often involves hydraulic fracturing (fracking), a technique which has been criticised by environmentalist groups. Waste was also rather topical, with particular focus on Africa s unfortunate status as a dumping site for the cheap electronic waste of various corporations and countries. This can result in various health issues to both people and the environment, such as lead poisoning. Finally, numerous reports on water security noted a potential looming water crisis in South Africa. Reports highlighted the government s assertions that investment in South Africa s water resources needs to double in the next 10 years if the country is to meet growing demand. In addition, increased water scarcity will escalate competition between business and local communities, which could lead to conflicts. Healthcare and education Corruption and BBBEE Matters of public concern like healthcare and education were also at the centre of the news in With regard to business, two topics which featured prominently in the media were corruption and The Limpopo textbook crisis, which prompted civil broad-based black economic empowerment society organisations to take the Department of Basic Education to court, highlighted poor administration. In addition, sobering reports on school facilities included statistics such as 3,600 South African schools having to run without electricity, 2,400 operating without water and 20,000 schools having to do without libraries, computer centres or science laboratories. (BBBEE). It was highlighted that corruption in government and business is increasingly harming the economy and undermining government s service delivery obligations. A by anticorruption organisation Transparency International revealed that most bribes in South Africa are paid in order to avoid problems with the authorities. Reports on BBBEE stated that this initiative had succeeded in improving the sustainability of the black middle class As far as healthcare was concerned, focus was placed on South Africa s flawed private healthcare model and the government s plan for National Health Insurance (NHI), which calls for more affordable health care for all. HIV and Aids was largely reported on as a social issue with the main themes discussed being the impact of HIV and Aids, the usage of ARVs, and HIV and Aids programmes in the workplace. but had failed to address the structural economic and social inequalities. The Act has fallen victim to tender abuse and fraudulent claims of compliancy, where companies are stating that they are BBBEE compliant by positioning black individuals in roles that give the perception of black ownership. This has resulted in a call for better and more thorough regulation as well as steeper punishment. Job security Food security The issue of job security received a fair amount Finally, the subject of food security was moderately of media visibility due primarily to the proposed covered by the media. The release of the results of Labour Bills to regulate or ban labour brokers. The Statistics SA s General Household Survey showed an initiation of these bills may increase the job security improvement in South African households access of temporary workers, but they could also increase to food. Meanwhile, reports suggest that food unemployment levels as the cost of labour will shortages are likely to spiral as prices surge. Changes increase. The labour unrest in the mining industry has in climatic conditions and the growing number of also been cited as a major concern as mineworkers people without enough nutritious food also featured jobs are under threat as a result of these strikes. at the top of the agenda regarding food security. Page 3

4 Stakeholder workshops A key platform for our stakeholders to air their views is through workshops. Massmart uses these forums to discuss important emerging issues and give our stakeholders the opportunity to raise issues which we had not previously identified. Environmental sustainability WORKSHOP Social sustainability WORKSHOP Sustainable palm oil Palm oil is a product found in many food and nonfood products obtained from the fruit of oil palm trees located in tropical areas of the world. Because of the rapid expansion and wide-scale use of palm oil, it is currently a high priority in the US and Europe. Palm oil production has been associated with many negative environmental and social issues, especially in Malaysia and Indonesia. These include deforestation, threats to critical habitats for endangered species, burning and air pollution, soil erosion, damage from the use of pesticides and fertilisers and conflicts over land rights. Although palm oil usage is not currently an important issue in South Africa, as we import only 1% of the global palm oil trade, it is of great concern to Walmart, one of our stakeholders. Walmart has committed to sourcing Round Table of Sustainable Palm Oil certified palm oil in its private label products by Massmart also acknowledges that the palm oil industry is growing due to the plant s high yield and low cost of production. In light of this fact, Massmart aims to encourage the use, and increase the viable availability of, sustainably certified palm oil in the South African market and its own private label offering. Sustainable palm oil WORKSHOP Marine advocacy WORKSHOP still believed that Massmart should continue engaging suppliers on their commitments towards sourcing sustainable palm oil. It was also pointed out that involving the entire supply chain in our sustainability efforts was essential. Workshop participants maintained that setting a goal for sustainable palm oil sourcing would show initiative, but was not essential in the advocacy process. Stakeholders emphasised that Massmart has significant influence as a retailer and we should, therefore, bring stakeholders, including suppliers, customers, and other companies to the table to promote future change. For these reasons Massmart facilitated a palm oil workshop that brought together relevant stakeholders in the South African palm oil industry. Workshop participants included representatives from Nestle, Nola and Greenpeace. Our workshop confirmed that the utilisation of sustainable palm oil represents a relatively minor issue in the context of the South African market, even though it is a high priority for Walmart. However, stakeholders Palm oil nursery Page 4

5 Marine Advocacy Engaging with our seafood suppliers was another priority for Massmart in Our stakeholders had indicated that supplier advocacy should be our primary concern to ensure that responsible environmental and social practices in our supply chain were promoted. In addition, with 85% of the world s fish stocks being either overexploited or exploited to their full capacity, it is clear that Massmart s seafood supply chain needs to be carefully monitored (Food and Agriculture Organisation of the United Nations). Our workshop participants for this research included representatives from I&J, the Endangered Wildlife Trust and Foodcorp. Stakeholders believed that the best way to ensure that Massmart achieves a balance between environmental sustainability and commerciality in its seafood offerings is through consistent and meaningful engagement with key suppliers and traders. Thirdparty engagement should also promote collaboration between neighbouring countries such as Namibia and Mozambique. Stakeholders also highlighted the fact that Massmart needs to be fully aware of the species of fish we stock, as well as the fishing gear used to obtain the fish. A key area of concern related to the sourcing practices and policies of seafood traders currently supplying the Group. Seafood traders are not involved in the direct procurement of seafood but rather sell seafood to Massmart as middle men. As such, more direct engagement with seafood traders is required to identify potential sourcing issues, sensitise traders to the environmental and social impacts of commercial fishing operations and gain insight into the procurement practices currently employed by traders. Environmental sustainability Social SUSTAINABILITY Massmart also took the initiative to engage stakeholders such as Empowerdex, the South African Institute of Race Relations and the Black Management Forum on our social responsibility priorities. The topics of concern covered areas such as Massmart s employee healthcare benefits, employee HIV and Aids benefits, BBBEE, socio-economic development, education, nutrition and women s economic empowerment. Stakeholders maintained that of the issues mentioned, Massmart should focus on employee healthcare benefits, socioeconomic development, school nutrition and women s empowerment as these are areas in which it was felt we could have a lasting impact. Stakeholders key priorities under environmental sustainability included the reduction of waste, climate change, sustainable agriculture and the promotion of environmentally responsible consumerism. Regarding waste reduction, packaging rationalisation was high on the list of stakeholder priorities, as was effective storelevel waste management. Stakeholders in this workshop, who included representatives from the World Wildlife Fund, Hewlett Packard and Canon, encouraged us to be vigilant of energy usage in stores, and to investigate renewable resources such as solar energy to mitigate our carbon footprint. As a food retailer, stakeholders believed that Massmart could play a significant role in the South African agricultural sector through the adoption of policies that promote sustainable agriculture. They encouraged us to foster emerging farmer pilot projects and align them with land security projects. Stakeholders also emphasised the necessity of training to develop small-scale farmer knowledge of biodiversity and the responsible management thereof. Page 5

6 Massmart s three accountability themes Workshops are also a forum for stakeholders to discuss important issues emerging from Massmart s three accountability themes. In 2010, stakeholder feedback indicated that our communication on Massmart s corporate accountability commitment needed to be more memorable and easy to understand. Thus in 2011 Massmart outlined three broad accountability themes which we now use in order to communicate our accountability interventions with greater clarity. These three accountability themes are: enabling sustainable supply & consumerism minimising our environmental footprint championing social equality initiatives 1. Enabling sustainable supply and consumerism (Fig. 1) Enable sustainable supply & Consumerism Consumer Empowerment Consumer e-waste recycling post Consumer waste recycling sustainable agriculture eco-label advocacy primary packaging rationalisation supplier advocacy Stakeholder feedback on our accountability theme of enabling sustainable supply and consumerism indicated that Massmart was heading in the right direction. However, there were some areas that they maintained we needed to focus on. At the forefront of these issues was supplier advocacy in terms of encouraging an environmentally friendly supply chain to our stores, as well as promoting the use of eco-labelling and nutrition-orientated labelling on products displayed on our shelves. Stakeholders also believed that it is Massmart s responsibility to empower customers to make healthy choices by encouraging transparency around product labelling. When asked to indicate what they believed was of highest priority, stakeholders indicated that supplier advocacy, primary packaging rationalisation and eco-label advocacy were the most important issues. Page 6

7 50 minimise the group enviromental footprint 45 (Fig. 2) 45 Minimising the Group environmental footprint Massmart s second accountability theme is focused on ways we can minimise the Group environmental footprint. Stakeholders who participated in our 2012 workshops believed that Massmart needed to focus on reducing our logistics footprint and ensuring that the land used by our stores had minimal impact on the biodiversity of surrounding areas Secondary Packaging recycling water efficiency Energy Efficiency Operational issues such as hazardous waste disposal and carbon emissions were also a focal point for stakeholders. In terms of the products that our divisions stock, stakeholders felt that we needed to focus on fairtrade aspects, ensuring that we have a comprehensive knowledge of the source and methods used to acquire our products. When asked to provide an indication of priority, stakeholders believed that energy efficiency should receive the most attention. Championing social equality initiatives socio-economic impact of the wm-mm merger 52 employee healthcare benefits 55 b-bbee (Fig. 3) 57 employee hiv/aids benefits 62 socioeconomic development Championing social equality initiatives Given the scale of Massmart s business, social equality is an area in which stakeholders felt we could have a lasting impact on South African society. Poor education and lack of skills development were of concern to stakeholders as they believed these were some of the root causes of inequality within our country. Massmart was encouraged to focus our efforts on creating a skills development programme, with emphasis on career planning. Separate to this, stakeholders felt that a staff wellness programme, focusing on both mental and physical wellbeing, should be incorporated as a separate initiative from our HIV and Aids employee assistance efforts. Finally, stakeholders also maintained that the demographic of Massmart s executive committee should represent that of the country in order to be more reflective of the society in which we operate. Page 7

8 Supplier relationship Palm oil advocacy Environmental s Engagement with Massmart s stakeholders also took the form of various supplier and customer s, where we were able to ascertain opinions and perspectives on the practices of our suppliers in the areas of environmental sustainability, marine advocacy and sustainable palm oil. Supplier s also give Massmart the opportunity to communicate to suppliers what we expect of them and to advocate Massmart s position and policies. Through the s we are thus also able to gauge whether the practices of our suppliers are aligned with ours in terms of our three accountability themes. Marine advocacy Customer intercept Environmental Massmart continues to focus on intensifying environmental advocacy efforts with suppliers which includes ing their environmental practices. The aim of this research was to assess the status of the environmental initiatives of our key suppliers and to determine suppliers approaches to various environmental dimensions, including product packaging, environmental disclosure, manufacturing and distribution practices, supply chain management, climate change, water scarcity and biodiversity and the ecosystem. The also investigated the extent to which our suppliers practices/ products have, during the past 12 months, been subject to any form of environmental sanction/censure. High-level results from the indicated that a combined total of 44% of respondents had launched environmentally friendly products and had developed a strong reputation for producing environmentally friendly products. Pleasingly, only 1% of suppliers ed this year indicated that they had been negatively targeted by NGOs/activists, compared with 21% of our 2011 respondents. In addition, 32% of our suppliers indicated that they had defined specific environmentally-friendly packaging standards, set a definitive timetable for implementing environmentally-friendly packaging standards, or had introduced or were pilot-testing environmentally-friendly packaging standards from standard products. However, only 15% of respondents indicated that they have environmentally sustainable product packaging for 70 to 100% of their products. Page 8

9 Marine advocacy In 2012, Massmart also conducted a Group-wide seafood supplier advocacy. The aimed to determine the environmental status of the fisheries from which Massmart currently sources seafood and assess their management practices and environmental sensitivity. To this end, the considered the following sustainability dimensions in determining supplier environmental sensitivity: fishery management, target stock health, overfishing, by-catch and social responsibility. In addition, the investigated the extent to which suppliers practices/products have, during the past 12 months, been subject to any form of environmental sanction/censure. The results from our indicated that 30% of our seafood suppliers had secured, or were in the process of securing, credible third party certification; 76% of seafood suppliers had engaged with, or partnered with, credible third parties to identify opportunities to mitigate the environmental impact of their operations; and a combined total of 85% of suppliers had put processes in place to deal with by-catch. Sustainable palm oil For this we examined those private label suppliers who we had identified as companies that provide products likely containing palm oil. Out of the 23 suppliers who responded, nine indicated that they utilise palm oil as an ingredient in the products they supply to Massmart. This represents 7% of total private label suppliers. The also found that products containing palm oil represented approximately 4% of total private label offering. The results of the confirmed the conclusion of our palm oil workshop, that palm oil was not yet a high priority issue for South Africa. It must be noted, however, that although this assessment covered all 944 products supplied by Massmart s 137 private label suppliers, it was subject to limitations relating to a lack of product specification data and supplier information. Supplier relationship As the second largest distributor of consumer goods in Africa, the leading wholesaler of basic foods, as well as the leading retailer of general merchandise, liquor and home improvement equipment/supplies, Massmart sources goods and services from around 9,000 active suppliers. The overall research goal of this was to estimate suppliers experience of, and satisfaction with, our conduct, the commercial value offered through our supply chain and the quality of our supplier relations. The focused on nine key areas: Efficiency of the Massmart distribution channel Cost-effectiveness of the Massmart distribution channel Massmart s stewardship of suppliers brands Massmart s responsiveness to market opportunities to optimise sales of suppliers products Operations and point of sale Constructiveness of procurement negotiations with Massmart buyers Ethics practised by Massmart buyers Overall relationship quality The impact of Walmart on the relationship with Massmart. The overall relationship average score was 70.8%, which is a decrease when compared to the score of 73.6% achieved in our There was a noticeable declining trend in scores with the exception being Massmart s responsiveness to market opportunities and the constructiveness of procurement negotiations, which increased by 0.21% and 0.15% respectively. Overall, Massmart is seen as a very professional, ethical and fair player, but also a tough negotiator that can be expensive to do business with. Notwithstanding some problems, most respondents viewed their business relationship with Massmart as positive, with only 2.6% indicating a negative relationship. Page 9

10 Customer intercept Massmart uses the intercept as a mechanism to track customer satisfaction and enable us to respond to customers material concerns or issues. Customers, as a key strategic stakeholder, not only have the power to impact individual brands profit margins, but also to influence our reputation as a corporate citizen. In 2012 Massmart interviewed 8,000 customers throughout South Africa, in six weeks. The main research goal of our customer intercept was to measure customer satisfaction at Massmart stores across the country and compare it to last year s results. More specifically, customer satisfaction was measured in terms of the following aspects: Availability of products Competitive pricing, compared to other retailers Clearly marked products Till point efficiency Helpfulness of staff Staff knowledge of private label products Overall shopping experience Customer loyalty. A secondary research goal was to measure the specific views or intentions of our customers, with regard to the customers preferences for environmentally friendly products, their expectations of how the financial position in the household would change within the next six months and their online shopping behaviour. The results showed that Massmart s customers remain highly satisfied with their experience at the various Massmart stores. Only one dimension of customer satisfaction scored lower than four on the five point scale; that of staff s knowledge of private label products. This dimension was also rated lowest in The highest-scored dimension of customer satisfaction was customers intended return to the stores where they had been interviewed, indicating high levels of customer loyalty. Till point efficiency with regard to accurate scanning of prices, and the availability of products, contributed second and third most to the overall customer satisfaction score for 2012 Page 10

11 Stakeholders helping shape the future of Massmart The feedback which Massmart received from our focused areas of engagement including our discourse analysis, our s and our workshops indicated that our accountability endeavours are aligned with stakeholder concerns. We can conclude, therefore, that we are on the right track in terms of our corporate accountability themes. Stakeholders did, however, identify some emerging issues which Massmart had not previously considered topical. Because successful stakeholder engagement requires a commitment to actively engage with stakeholders on an ongoing basis, listen to them Words by Sarah Beswick Designed by Inklings Design Studio and then respond to their concerns in a mutually beneficial way, we will continue to have open dialogues and discussions and endeavour to further investigate issues in the future. While we used the mechanisms of workshops and s for much of our stakeholder engagement in 2012, we will also consider other methods of gauging stakeholder opinion and input in In the next year, Massmart hopes to increase engagement with stakeholders in areas of women s empowerment, responsible product labelling and ethical sourcing practices. Page 11