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Chevron South Africa – Progress made in Implementation of the Liquid Fuels Industry Charter
Presentation to Minerals & Energy Parliamentary Portfolio Committee
30 August 2006
2
Shaping our future
Our purpose today is to clearly communicate our
unequivocal commitment to contributing to South
Africa’s socio-economic transformation and, in
particular, the economic empowerment of
historically disadvantaged South Africans
3
Chevron Vision
To be the global energy company most
admired for its people, partnership, and
performance
4
Chevron Values
We conduct our business in a socially responsible and ethical manner.
We respect the law, support universal human rights protect the environment, and benefit the communities where we work
Integrity High Performance
Trust Responsibility
Partnership Growth
Diversity
5
The Definition of Black Economic Empowerment
It is an integrated and coherent socio-economic process.
It is located in the context of the country’s national transformation initiative, the RDP.
It is aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer the ownership, management and control of South Africa’s financial and economic resources to the majority of its citizens.
It seeks to ensure broader and meaningful participation in the economy by Black people to achieve sustainable development and prosperity.
(Black Economic Empowerment Commission Discussion Document, Sep. 2000)
6
Our Assessment of the Necessity for Black Economic Empowerment
Without stability and the participation of the majority of its citizens in the economy, South Africa cannot attain and sustain high levels of economic growth.
Government has taken the lead in Black Economic Empowerment by enacting various supporting pieces of legislation, for example the Employment Equity Act, Skills Development Act and the Preferential Procurement Act.
Chevron takes pride in its reputation and concern for the communities and the environment in which it operates.
7
Our Commitment
In November 2000, a historic milestone was reached when Chevron SA became a signatory organisation to the CHARTER FOR THE SOUTH AFRICAN LIQUID FUELS INDUSTRY ON EMPOWERING HISTORICALLY DISADVANTAGED SOUTH AFRICANS.
The Charter provides a framework for progressing the empowerment of HDSA’s in the liquid fuels industry
8
Strategic Alignment and Corporate Culture
BEE Strategic Model
9
Strategic Alignment and Corporate Culture
To ensure that our commitment is practically realised Chevron has embraced a strategic model for integrating its empowerment initiatives with our corporate culture and functional strategies.
The model ensures that alignment is achieved with shareholders, management and staff across the organisation.
10
Key Interventions
11
Employment Equity
0
200
400
600
800
1000
1200
1400
Semi Skilled 7-9 50 0 50 93% 4 0 4 7% 0 0 0 0% 0 0 0 0% 54
Craft/Clerical 10-14 155 16 171 61% 63 5 68 24% 11 1 12 4% 19 9 28 10% 279
Supervisory 15-19 120 36 156 30% 122 64 186 35% 26 9 35 7% 95 54 149 28% 526
Middle Mgnt 20-22 37 15 52 16% 60 16 76 24% 28 7 35 11% 126 31 157 49% 320
Snr Mgnt 23-24 5 1 6 11% 6 4 10 18% 2 0 2 4% 32 6 38 68% 56
Executive 25-26+ 1 0 1 10% 2 0 2 20% 1 0 1 10% 6 0 6 60% 10
Total 368 68 436 35% 257 89 346 28% 68 17 85 7% 278 100 378 30% 1245
AM AF Total A % A CM CF Total C % C IM IF Total I % I WM WF Total W % W Total 2006
July 2006July 2006
12
Employment Equity
Leader: Jean-Marie Diskin
Acting GM Human Resources
Key Interventions
Employment equity frameworkBU EE PlansConsultative Committees Diversity management interventions
Affirmative recruitment45 % new hires / 83% promotions in 2006 YTD
Co-operative education8 in-service (Chem Eng / IT focus)Corporate Bursaries
Accelerated Developmentmanagement development candidates are ongoing
Training & DevelopmentOn-going programs
Staff Movement 2006 YTD
0123456789
F M F M F M F M
B C I W
Nu
mb
er
New Hires
Promotions
Terminations
Total
13
Demographics profile for total company
0%
10%
20%
30%
40%
50%
60%
70%
Black Wh it e
2 0 0 6 YTD
Fem a leMa le
African, Asian, Coloured
14
0%
5%
10%
15%
20%
25%
30%
35%
2005 2006
In 2006 Chevron established a BEE Branded Wholesale Marketer in the Eastern Cape thus reducing our total BEE retail
contracts in the region
Retail Partnering
Leader: Shashi Rabbipal GM-Retail Operations
Key Interventions
• HDSA retailer financial empowerment management & support
• HDSA joint capital ventures• HDSA representation on
the Franchise Council• Taxi re-capitalisation
project• Service station staff
HIV/Aids policy
15
Leader: Pete LinnegarGM Commercial & Industrial
Key Interventions• Marketing strategy for distributors
• Additional distributor coordinators to actively support new distributors
• Partnerships between existing and new HDSA distributors
• Seek out suitable HDSA distributors
• Diversity has increased from 0 to 6 since 2001
Wholesale Partnering
White; 8
Coloured; 0
African; 2
Asian; 4
July 2006 YTD
16
BEE Procurement
Leader: Letitia Jentel
BEE Procurement Manager
Broad Aim:
The supplier diversity process will promote an inclusive business environment and will achieve greater competitive advantage for Chevron South Africa by pursuing long-term relationships with SMME’s, BEE and women owned businesses which develop initiative, cost effective, value-added solutions that fuel our mutual growth through increased accessible spend
17
BEE procurement Policy
We are committed to:
Give preferential treatment to SMME’s, BEE and women-owned businesses which develop innovative, cost effective, value-added solutions that fuel our mutual growth.
Integrating inclusive strategies for all competitive sourcing opportunities
Creating a supplier development plan for selected SMME’s, BEE and women-owned businesses.
Practicing effective supplier management processes with preferred suppliers.
Working actively with government, industry and other stakeholders to facilitate the achievement of the broad Black Economic Empowerment objectives
18
BEE Procurement Strategies
Key StrategiesRe-evaluate existing supplier data baseProvide preferential payment terms to 100% BEE suppliersProvide supplier development opportunities to strategic 100% BEE suppliers Work with SASDA to identify development opportunitiesEnsure that BEE is represented in the sourcing process of goods & services
0%
5%
10%
15%
20%
25%
30%
35%
40%
2001 2002 2003 2004 2005 2006
19
Total Procurement SpendR1,508,383,593
Civil And Maintenance; 18%
IT & IM; 2%
Additives; 1%
Marketing & Advertising; 1%
Industrial & Mechanical Maintenance; 1%
Other; 1%
Electrical and Instrumental Maintenance; 1%
Food, Catering & Off ice Services; 1%
Logistics; 4%
Service Industries; 4%
Total Non-BEE; 66%Includes parastatal spend
BEE Procurement Spend
R997,288,192Total BEE; 34%R511,095,401
20
Corporate Social InvestmentLeader: James NguboManager – Corporate Social Investment
The company’s Corporate Social Investment (CSI) programmes have established partnerships in the following areas:
Education and TrainingCommunity and Rural Development
Health and WelfareArts, culture and environmental conservationCommunity service
Our philosophy is about investing in people, investing in partnerships and investing in performance of communities and organisations that are focused on making a positive impact on the outlook and lives of funding recipients
2006 Initiatives Amount (ZAR)
Education 4,500,000
Community & Rural development
2,500,000
Environmental Conservation
850,000
Total Spend 7,850,000
21
Leader: James Seutloadi
GM – Chairman Chevron Soutn Africa
Chevron South Africa has always played a constructive role in this country’s socio-economic transformation. As a business we are committed to operating in a manner that contributes to the creation of a better life for all South Africans by supporting economic growth and sustainable development.
In January 2002, the Company signed a shareholders agreement with a black empowerment consortium led by African Legend Investment Limited. Incorporated in this agreement was an employee share trust that provides our employees with a stake in the company.
The agreement provides for broad-based black empowerment ownership of 25% of all facets of Chevron South Africa’s business in South Africa including:Supply . Retail Marketing
Refining · Commercial Marketing
Distribution · Aviation
Business support · Lubricants
Ownership / Equity
22
Ownership Equity – Key Characteristics
The key features of the agreement include proportional representation on the Chevron South Africa Board of Directors, and active participation and involvement in Board Sub-Committees (e.g. Audit, Strategy and Business Planning and Human Resources) and Shareholder Consultative Committees (e.g. Marketing and New Business Development, Corporate and Government Affairs.)
23
Ownership Equity - Our Partners
African Legend Investment Limited is a national organisation that was established in 1996 as the National Empowerment Corporation Limited. It represents shareholders from business, organised labour, women’s groups, entrepreneurs, professionals and developmental organisations.
Lithemba Investments is a black-owned women’s organisation, with primary interests and experience in the oil and gas sector.
SANTACO is the national representative of the taxi industry in South Africa. With more than 80 000 members, it is a key player in the taxi re-capitalisation programme.
Ditikeni Investments benefits a broad range of 21 Non-Governmental Organizations involved in serving capacity-building community groups across South Africa.
A unique feature of Chevron South Africa’s empowerment transaction is the establishment of the CSA Employee Participation Plan. This Trust will benefit all Chevron South Africa employees (currentlyapproximately 2/3 of whom are black) equally irrespective of race, job grade, seniority, length of service, or any other factor.
24
Shareholding and Control
The vesting of BEE shares is on schedule and is expected to reach the 25% equity target ten years after the signing of the deal.
BEE shareholders have a 25% share of the economic interest in the dividends from CSA.
BEE shareholders have had 25% +1 voting rights since the inception of the deal.
BEE partners participate fully in board committees and shareholder consultative committees.
50% of executive management is made up of blacks whiles black women representation is 20%.
25
Conclusion
Our task is to take Caltex SA’s
performance to a higher level.
We accept and embrace this vision and
are excited about the new interventions and
opportunities we have identified.
Questions and Answers