Environmental, social and governance overview
Corporate Affairs, Risk and Sustainability
FTSE4Good Index Series
Corporate Affairs, Risk and Sustainability
FTSE4Good Index Series
Effectively managing the ESG consequences of our activities and actively striving to uphold our commitment to all stakeholders, secures stakeholder trust and our reputation as a good corporate citizen to invest in, do business with and work for.
Our business model is not a direct carbon or water-intense business. We aim to operate in an environmentally conscious and responsible manner and in line with this commitment we set new targets for the next three years to F2024 based on F2019 activity. These targets are more robust and relevant than our prior targets, which aimed to reduce the overall reduction of resource consumption.
We acknowledge that our business of selling vehicles that produce emissions has a major impact on the environment. We have limited influence on the provision of electric and hybrid vehicles in the South African market, which requires changes to national policy and infrastructure, as well as government support in the form of subsidies. Through our membership of naamsa and our participation on its fuel committee, we will provide feedback on the draft New Energy Vehicle Green Paper, – a first step towards establishing a long-term strategy to enhance South Africa's competitiveness in the global transition to electric and hybrid vehicles.
We engage with our OEMs on electric and hybrid vehicles to assess their relevance for the markets we operate in and to ensure that we are prepared when they are introduced into the markets in which we operate. In other parts of our business, the Financial Services strategy to develop innovative ways to support 'mobility as a service' could deliver solutions that reduce environmental impact, while Aftermarket Part's membership in Nexus, the largest automotive global parts buying group, will enable us as part of the collective to benchmark our ESG activities to worldwide standards, and transform the industry starting with 'clean green' workshops.
Water purchased from municipalities
The year-on-year decrease in water consumption was largely driven by the branch closures in Car Rental, which were heavily impacted by COVID-19. We achieved our 2021 target.
Looking forward, we will enhance the accuracy of our water usage reporting, reduce our reliance on municipal estimates, explore additional water saving solutions and continue to drive awareness and consistent messaging around water usage and conservation across our businesses.
(tonnes of CO2)
Purchasing a vehicle is a paper-intensive exercise. However, advances in technology are making it possible for the purchasing process to become more automated with less need for paper, while still meeting regulatory requirements and customer needs. As part of our POPIA responsibilities, we are encouraging the use of online platforms or paperless solutions. We manage hazardous and non-hazardous waste responsibly, comply with applicable national waste management laws and ensure relevant disposal certificates are issued. This year we started measuring waste and plan to be in a position to set waste and recycling targets in 2022.
Supplying high-quality products and services to the market depends on our ability to build strong relationships with our stakeholders. To remain the OEM dealer of choice, it is critical that we maintain high standards and meet their targets, both in terms of customer service and quality controls. Our relationships with regulators ensure that we adhere to legislative requirements and provide our customers with automotive and financial services offerings that are competitive, cost effective, fair and contribute to their safety on the road.
We assist OEMs to maintain their safety and brand standards. Our effective recall procedures enable the timeous engagement with customers to ensure their vehicle parts are promptly replaced in the event of an OEM recall. Our warranty departments track claims, component failure rates and recurring problems, providing the importer brands with this data to inform their quality improvements. Customer-facing employees, workshop technicians and quality controllers receive OEM training supplemented with our own training programmes. Workshop tools and equipment are regularly maintained in line with OEM standards, using third-party specialists where required.
Under the new Right to Repair guidelines, which came into effect on 1 July 2021, service and maintenance plans must be sold separately to the vehicle, and warranties are no longer automatically voided if a vehicle is serviced by an independent service provider or has non-original spare parts fitted. We are in the advanced stages of implementation with external legal advice sought to ensure our response is in line with the requirements of the Competition Act. Our vehicle sales and finance and insurance staff have been trained to ensure that customers understand the implications of opting out of taking a service or maintenance plan.
Our Risk Management and Compliance Programme sets out customer due diligence processes, including anti-money laundering and anti-terrorist financing controls, for our businesses that operate as authorised financial services providers. Regulated products, and their associated processes and policies are regularly reviewed to ensure that commissions and disclosures are transparent in the sales process. All employees subject to the Financial Sector Conduct Authority's 'fit and proper' requirements receive the necessary training and continuous professional development to achieve their accreditation to sell products.
A critical element of securing our systems and data is employee behaviour. Throughout the Group we have increased our training and awareness on data privacy and information security policies, standards and practices.
During the year employees received training on POPIA (over 10 600) and the Right to Repair guidelines (over 5 700), and 13 agents in Financial Services achieved their regulatory exam qualification.
There were no material incidents of non-compliance with regulations and/or voluntary codes, including those concerning the quality, health and safety impacts of our products and services.
COVID-19 has highlighted the deep socio-economic and equality challenges facing South Africa. This has spurred the South African Government to look towards co-operating with the private sector to drive more effective economic inclusion and transformation outcomes. The South African automotive industry is a major industrial and economic force that adds real value every day – providing mobility, facilitating trade, creating sustainable jobs, moving people, goods and services, serving communities and creating prosperity for South Africa's people.
We share our expertise and experience to contribute to broader national strategies and thought leadership, and to progressing our industry and markets. Our memberships help us to identify opportunities to support localisation in South Africa and investigate new ways in which we can contribute to society at large, over and above our community initiatives. Our progress in transforming our workforce to reflect South Africa's demographics is discussed herein.
Small businesses play a critical role in South Africa's socio-economic recovery, especially in creating desperately needed jobs. It is government's intention to grow local production and manufacturing, and open big business supply chains to SMEs. Leveraging our entrepreneurial spirit, we are developing sustainable working models for black-owned and managed businesses, which also give Motus access to new markets. Progress on our three flagship transformation projects includes:
In the Importer business, there are 30 independent black-owned Hyundai, Kia, Renault and Mitsubishi dealerships out of a total of 188 dealerships.
Despite the bulk of our purchasing being with OEMs, we continually review our supply chain to identify opportunities to buy from SMEs with a turnover of less than R50 million per annum.
We are targeting a Level 4 rating as a result of improved scores in management control, skills development and procurement. The OEM scorecards have a knock-on effect on our points for procurement in the Motus B-BBEE scorecard. All OEMs have committed to the Equity Equivalency Programme that aims to improve their scores; this should positively impact their scorecards as well as ours. Revised OEM scorecards are expected around December 2021.
We remain grounded in our belief that we can use mobility for good, continuing to drive positive socio-economic impact, strengthening our relationships with our stakeholders, creating employment, growing the automotive industry, and making a difference in the lives of our people and communities. Aligned to our values to make a tangible impact in communities, Motus donated R5 million to food and medical relief efforts in the KwaZulu-Natal province following the dramatic violence in July 2021. This event highlighted the vulnerabilities and deep divide our communities still experience.
In February 2021, we launched our YES Programme, a corporate initiative in South Africa to provide work experience opportunities to unemployed youth between the ages of 18 and 29. Our programme will run to June 2022, providing work opportunities for over 400 unemployed youth, across our different business segments as well as with our CSI partners Unjani Clinics NPC and the Imperial and Motus Community Trust. Learners will also be provided with the funding and tutoring towards their learners' licences and drivers licence.
Contributed: R11,7 million: the Imperial and Motus Community Trust reached a milestone of 52 school resource centres, reaching over 61 300 learners and assisting over 1 600 teachers (2020: 45 resource centres, reaching over 50 250 learners and assisting over 1 400 teachers). The project supports 65 jobs.
Contributed: R1,3 million: invested in initiatives included in our 'Road Safety - Powered by Motus' initiative. Since 2011, the Safe Scholars Programme has reached over 1,8 million learners in over 2 080 schools (2020: over 1,69 million learners reached in over 1 820 schools) and distributed 98 900 reflective sashes (2020: over 91 300 reflective sashes) for children to wear while walking on the road.
Contributed: R1,3 million: provided to the Unjani Clinics network, empowering black women professional nurses to operate and ultimately own primary healthcare container clinics in their communities. The network includes 94 clinics located across South Africa and has created over 346 permanent jobs, including the upskilling of 111 professional nurses. A further R2 million has been invested in the network as an interest-free loan to support the network's expansion. The network services around 60 700 uninsured and under-served patients.
We invested R18,6 million in community upliftment initiatives (2020: R28,1 million). Of this CSI spend, 94% (R17,5 million) qualified for the B-BBEE scorecard's socio-economic development pillar. This equated to 1% of NPAT, meeting the dtic Codes target and scoring five out of five points (2020: 2% of NPAT; R14 million).
For Motus, integrity means always acting with honesty, fairness and transparency and respecting each other, our customers and the communities in which we operate. We strive to operate as a well-governed and ethical company and take decisive action when matters relating to unbecoming conduct are brought to our attention.
Our values are the foundation for our culture and guide our interaction with our stakeholders. Every employee is responsible for exercising good judgement and obtaining guidance on appropriate business conduct, when needed. The Code of Ethics guides them in this responsibility. Our ethics, leadership guidance, standard operating systems and our values, aim to align more than 16 700 individual behaviours.
Unethical behaviour is not tolerated and all instances of alleged misconduct or discrimination reported to management, received through the whistle-blowing hotline or through any other compliance oversight channel are thoroughly investigated.
Of the 75 tip-offs registered on the whistle-blowing hotline for the year, all reports were investigated and closed by year-end. Just under 25% of the tip-offs were valid concerns where disciplinary or remedial action was required. Limited public data is available to assess our reporting against similar organisations; however, we are firmly committed to ensuring the highest standards in maintaining a trustworthy and secure whistle-blowing process.
Enhancements made to the ethics and fraud prevention framework during the year included:
In this year's board evaluation, conducted by an experienced external consultant, ESG was identified as an important area of future focus, and will feature prominently in future SES committee meetings. To improve our reporting, our focus will be to benchmark our ESG disclosure against selected frameworks and stakeholder expectations and experience.
During engagement with our shareholders on the remuneration policy, they raised concern that ESG performance was not holistically considered in our reward structures. For 2022, the short-term incentive criteria for the Group CEO, Group CFO, executives and prescribed officers will cover ESG aspects, tailored to their roles.
In addition to its statutory duties, the SES board committee assists the Group in discharging its ESG responsibilities and implementing practices consistent with good corporate citizenship. The committee oversees Motus' management of ethics, people, transformation, health, safety and wellness, environmental impact, stakeholder relationships and socio-economic development. During the year, the committee's oversight was extended to include IT strategy, innovation and brand management, as an underpin to our sustainability journey and enabler of some of our ESG strategies.
FRRCs within each business segment in South Africa, as well as the FRRCs in the UK, Australia and African operation, support the SES committee and the ARC. They oversee operational risks, ethics, environmental performance, transformation in South Africa, health, safety and wellbeing, regulatory compliance and stakeholder management. All FRRCs are chaired by a senior manager from Group head office other than the Financial Services FRRC's chairman, who is an external independent industry expert. A standardised agenda applies across all FRRCs guided by Group reporting requirements. Material concerns are elevated to the relevant board committee.
Through these governance structures, we are confident that our ESG impacts are identified and understood, and that negative impacts are responsibly mitigated and positive impacts are leveraged to drive value for our stakeholders. This is reflected in our overall score of 3,8 out of five in the FTSE4Good Index Series. We will continue on our ESG journey and strive to improve our reporting and performance every year.