Environmental, social and governance overview

Berenice Francis

Corporate Affairs, Risk and Sustainability

FTSE4Good Index Series

Environment

Social

Governance

Environment
Social
Governance

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.

Strategic priorities
Environment
  • Ethically harness cleaner energy and water sources (solar panels and batteries, rainwater harvesting systems and greening new developments) and reduce fuel consumption.
  • Find responsible recycling opportunities, working with reputable business partners.
  • Work with industry bodies to contribute to policy development that supports electro-mobility in South Africa.
Social
  • Apply stringent quality controls to ensure high-quality workshop services, vehicle rentals, pre-owned vehicles and parts supplies.
  • Provide legally compliant, value for money and responsible financial services offerings.
  • Ensure personal information and data is protected and proprietary systems are fit for purpose.
  • South Africa: maintain our B-BBEE rating at Level 4.
  • South Africa: increase the number of black-owned Motus-aligned franchise dealerships and establish a network of black-owned second tier workshops.
  • South Africa: enhance our procurement processes to direct more spend to B-BBEE compliant businesses within our controllable spend parameters, and deliver supplier and enterprise development initiatives for black-owned small and medium-sized enterprises (SMEs).
  • Maintain our long-standing relationships with our partners on our CSI initiatives within our chosen pillars – education, skills development, road safety and health – that enable us to make a difference and alleviate the needs of the communities in which we operate.
Governance
  • Conduct a more robust ESG maturity assessment to identify ESG areas of improvement, and assign key performance indicators to ESG focus areas, including more informed targets. This will be driven by the SES committee in the coming year.
  • Align our ESG activities to the United Nations Sustainable Development Goals.
  • Review the sustainability management system to achieve more efficient reporting processes.

Environment

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.

Read more in our environment chapter of the ESG report online.

Water purchased from municipalities (Group)

Water purchased from municipalities
(kilolitres)

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.

Carbon footprint (Group)

Fuel consumption
(litres)

Water purchased from municipalities
  • Road fuel usage was 16 114 297 litres, 16,0% lower than prior year and well below our 2021 target by 26,3%. Decreases are attributable to fuel cost initiatives in many businesses and remote working due to COVID-19.
  • Electricity usage was 73 317 megawatt hours, 3,2% lower than prior year and 10,5% lower than 2021 target. Businesses continue to implement initiatives to reduce electricity consumption, including energy saving lightbulbs and motion sensors; therefore, the increase mostly corresponds to the increase in our footprint during our expansion in the UK and Australia in 2020.
  • While Scope 3 emissions have significantly reduced due to less air travel (94% reduction), this will increase again as business returns to normal activity. However; it is rewarding to see the steady decrease of overall carbon emissions over the past three years.

Carbon footprint
(tonnes of CO2)

Water purchased from municipalities

Looking forward

  • All business segments are investigating where solar photovoltaic power installations are feasible and, where there are solar plants in place, to ensure that we effectively use solar power without wastage.
  • Given OEM strategies and market conditions where feasible, we will adapt our company vehicle fleet to include more fuel-efficient demo vehicles, where possible.
  • Our businesses will continue to install energy-efficient lighting and light timers and replace old electronic equipment with energy-efficient alternatives, when retrofitting projects are undertaken or equipment becomes redundant.

Paper and waste management

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.

High-quality products and services

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.

Community upliftment

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:

  • We purchased the property for the majority black-owned Toyota satellite dealership in Tembisa, where we will hold a minority share and provide operational support and training. The building process has commenced.
  • Two informal sector mechanical workshops are open; based in Alexandra (Gauteng) and KwaMhlanga (Mpumalanga), supporting 10 mechanics. We provide technical support and SME-linked business training. Two new sites are under development and will be operational later in 2021. Beyond this, an additional two workshops are being considered.
  • Project Q, in partnership with a local taxi association in KwaMhlanga, Mpumalanga, is an independent parts retail store, which serves the association's members. Motus provides guidance to taxi owners and operators on the suitability of products with special emphasis on safety critical components. The project was delayed during the year due to conflict among taxi associations.

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.

B-BBEE scorecard rating

Aiming to achieve a
Level 41
B-BBEE rating
(2020: Level 6)

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.

1 At the date of report sign off, the B-BBEE verification was still being finalised.

Preferential procurement

61%
of suppliers (excluding OEMs) in South Africa have valid B-BBEE scorecards

63%
of our controllable procurement spend in South Africa was with preferential suppliers
(2020: 70%)
  • Our procurement spend for 2021 totalled R56,7 billion, of which 35% was categorised as controllable. Within our controllable spend:
    • R2,3 billion was with >51% black-owned businesses (2020: R1,3 billion) against a target of R1,1 billion.
    • R1,0 billion was spent with 30% black women-owned businesses (2020: R498 million) against a target of R550 million.
    • R2,0 billion was with exempt micro enterprises and qualifying small enterprises (2020: R1,3 billion) against a target of R1,0 billion.
Enterprise development

R76 million
a 153% increase compared to 2020
  • Of our enterprise development spend, 71% (R54 million) qualified for the B-BBEE scorecard. This equated to 3,1% of net profit after tax (NPAT), meeting the dtic Codes' target of 3% of NPAT and scoring 15 out of 15 points (2020: 3,7% of NPAT; R26 million).
  • Our ongoing objective is to expand the inclusion of black-owned SMEs in our value chain supported by enterprise and supplier development spend.

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.

Key highlights of our CSI projects include:

1

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.

2

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.

3

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.

4

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.

CSI spend (Group)(Rm)

Water purchased from municipalities

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).

Read our full ESG social report online.

Governance

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:

  • A formal process was introduced to self-declare conflicts of interests and compliance with ethical standards for the top executives and senior managers in the Group, including confirming their adherence to and understanding of our ethics-related statements and policies. By the end of August 2021, all senior managers had completed the exercise, which was then extended to Financial Services. To date, 770 out of 1 090 targeted employees have completed their declarations. This will be an annual exercise going forward and will be expanded to all business segments.
  • Updated the Code of Ethics to include data privacy requirements in line with the POPIA.
  • Worked to ensure that employees used the correct channels to report issues, to prevent grievances coming through the whistle-blowing hotline and to avoid employee frustration when wanting to report a grievance. This is reflected in the reduction in our people-related tip-offs from 73 in 2020 to 51.

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.