Upload
others
View
17
Download
0
Embed Size (px)
Citation preview
The SAB group comprises a diverse portfolio
of businesses, operating in a wide range of countries
and cultures. The group mission and statement
of values and principles are based on, and take into
account, standards already set by our operating
companies. The group has designated an inner core
of non-negotiable values with regard to integrity,
honesty and our responsibilities to society;
the operating companies may specify additional
standards relating to their specific circumstances.
Through this process, SAB has ensured that
there is consistency across the group, which enables
us to communicate to the outside world what
we stand for. The group’s values and principles are
stated, and treated, as the reality
rather than a distant ideal, but we recognise the
inevitability of lapses and shortcomings.
We commit ourselves to learning from mistakes
and to continuous improvement.
SOUTH AFRICAN BREWERIES plc
The Mission summarises our overall purpose as a group.
Each operating division within the group also defines its own
divisional goals to give practical effect to this Mission.
SAB is an international company committed to achieving sustained
commercial success, principally in beer and other beverages, but also
with strategic investments in hotels and gaming. We achieve this by
meeting the aspirations of our customers through quality products and
services and by sharing fairly among all stakeholders the wealth and
opportunities generated. Thereby, we fulfil our goals of business growth
and maximised long-term shareholder value, while behaving in a socially
responsible and progressive manner.
62.1 mTotal beer volumes up 18%to 62.1 million hectolitres
9.0 mSAB’s corporate social investment in local communities amountedto US$9 million – 1.4% of pre-tax profit
6.0 hl/hlAverage water consumption rate for clear beer downto 6.0 hl/hl beer produced
M I S S I O N S TAT E M E N T
C O M PA N Y VA L U E S
As we apply the Mission, our Comp
in the business – our stakeholders
C O N T E N T S
g 1. We conduct our business with integrity, respecting all
applicable laws.
g 2. We are straightforward and honest in the commitments we
make: seeking mutually beneficial and enduring relationships;
and being open and accurate in our communication.
g 3. We respect the rights and dignity of individuals. We value
cultural diversity and promote inclusivity through employee
participation and empowerment.
g 4. We optimise the creation of wealth to provide fair reward, and
recognition, for the contributions of all our stakeholders.
g 5. We create and sustain a safe and healthy working environment
that, in addition, provides job satisfaction and the development
of each employee’s potential.
g 6. We provide products and services of uncompromising quality to
meet the needs of our customers.
g 7. We are a responsible corporate citizen and fulfil our
responsibilities as an integral member of society. In our
business decisions, while asserting our right to trade freely, we
give appropriate consideration to social and environmental
impacts.
g 8. We expect these company values to be upheld by all
employees and by the third parties we engage to act on our
behalf, such as our suppliers, contractors and other agents.
In joint ventures, we seek to ensure that our business partners
apply these values.
Chief Executive’s Review 1
Core Business Activities 2
Corporate Accountability and Governance 4
Economic Report 10
● Cash Value Added
● Shareholders
● Franchisors, Joint Ventures and Minority Shareholders
● Customers and Consumers
● Suppliers
● Governments
Social Report 26
● Employees
● Social Aspects of Alcohol and Gaming
● Communities
Environmental Report 38
External Commentary 48
Index to GRI Indicators 49
Incorporated in England and Wales under the Companies Act, 1985
Registration number 3528416
SOUTH AFRICAN BREWERIES plc
pany Values guide us in our relations with all those who have a direct interest
– and inform the Business Principles which govern those relationships.
C o r p o r a t e C i t i z e n s h i p R e v i e w
3 1 M A R C H 2 0 0 1
The usual chief executive’s foreword – trotting out the mantra of the
‘win-win’ virtuous circle of corporate citizenship, where social
responsibility is good for business and business success is good for
society – is in danger of becoming a cliché.
Though the sentiment is undoubtedly true, in practice it is not as simple
as it sounds. South African Breweries began one hundred years ago in
Johannesburg. Today we operate in over 25 mainly developing and
emerging markets. Trying to be a good corporate citizen in the global
economy is more complex than ever.
Our people fight a daily battle to get top quality products to our
customers on time, and are expected to outperform the competition.
They constantly have to balance the immediate demands of the
market with our long-term duties to stakeholders – to investors, a fair
return; to employees, a safe and rewarding job; to suppliers, fair
dealing; to governments which tax and regulate us, open and honest
relations; to local communities and wider society, a commitment to
enhance the environment and work for the common good.
Cliché though it may be, a ‘win-win’ for business and society is more
often than not an elusive pursuit: it can never simply be taken for granted.
However, if we get the balance right in each individual business
decision we take – weighing the economic, social and environmental
consequences, now and for future generations – then in the long-term
there need be no trade-off between commercial success and social
responsibility.
That is a challenge I commend to you, as you read this, our fourth
corporate citizenship report, to see the efforts we are making to strike
the right balance.
GRAHAM MACKAY
Chief Executive
18 June 2001
“. . . there need be no trade-off between
commercial success and social
responsibility”
Chief Executive’s Review
Corporate Accountability and Governance
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
4
GOVERNANCE
For SAB, good corporate governance
implies that the board should lead
business practice
in a way that not
only maintains,
but enhances,
the company’s
licence to operate.
In practice, this
requires a
broadening of the
traditional concept
of corporate
governance beyond regulatory
compliance and accountability to the
owners of the business. In our view,
this does not diminish the fundamental
importance of legal and shareholder
issues; in fact, the responsibility of
directors and staff to address our
broader constituency of stakeholders is
unquestionably in the long-term
interests of the company – and
ultimately, of the societies in which we
operate. Our products, services and
conduct have an impact on our
stakeholders, giving rise to perceptions
that influence our reputation and, over
time, our shareholder value.
Corporate governance is essentially
about efficient, honest, responsible and
accountable leadership. As such, it
makes sense from a corporate
perspective that governance is the lead
agent – not only in consolidating
aspects of corporate citizenship,
corporate social responsibility and
“I believe that SAB has made good progress in the
area of Corporate Accountability over the past year.
The company involves its non-executive directors
closely in this field, and welcomes their independent
contribution in monitoring both process and
performance.” Lord Fellowes Non-Executive Director and Chairman of the Corporate Accountability and Risk Assurance Committee
Outgoing Executive Corporate AccountabilityCommittee
From left (seated): Alan Clark, GrahamMackay, Malcolm Wyman, Pete Lloyd;(standing): Andrew Tonkinson, Nigel Cox,Alison Ramsden, André Parker, RobertFellowes, Mike Simms and Norman Adami
sustainable development – but also in
integrating these agendas into
mainstream business activities.
To give weight to this philosophy,
SAB has been developing systems
progressively for accountability over
several years.
In the initial stages, this process was
overseen by an executive corporate
accountability committee. It
spearheaded the drive toward best
practice in ethical, social and
environmental accountability through
the advancement of value statements,
business principles, policies and
related guidelines. In addition, this
committee (which continued to
function until 31 May 2001) determined
the scope of internal and external
reporting mechanisms, which measure
performance and compliance, and
contribute to the measurement and
control of operational and
accountability-related risk. SAB’s
commitment to good corporate
citizenship through this committee was
enhanced by the fact that its
membership comprised the chief
executive, chief financial officer,
managing directors of each of the
operating units, and a number of other
senior group executives – with
independent non-executive director,
Lord Fellowes, in the chair.
South African Breweries Corporate Citizenship Review
5
SAB PLC CORPORATE ACCOUNTABILITYSTRUCTURE AND PROCESS
AssuranceProcess
ManagementProcess
ReportingProcess
SAB plc Board
SAB plcAudit
Committee
SAB plc CorporateAccountability and
Risk AssuranceCommittee“CARAC’
GroupExternal
Audit
Internal AuditReporting
Mechanism(Under review)
InternalAudit
WorkingCommittee
InternalAudit
ExternalAudit
Audit/AssuranceCommittee
Group CorporateAccountability
DepartmentGroup Finance
Department
AccountabilityWorkshopCommittee
Business UnitFD
Business Units
Managing DirectorDivisional Board
SAB plc Excom
The Board:
● The board of directors
currently comprises five
executive and ten non-
executive directors.
● The roles of the chairman
and chief executive are
separate with responsibilities
divided between them.
● All directors are subject to
retirement and re-election by
shareholders every three
years.
● The executive directors
generally have responsibility
for making and implementing
operational decisions.
● Non-executive directors
complement the skills and
experience of the executive
directors, contributing to the
formulation of policy and
decision-making through the
knowledge and experience
of other businesses and
other sectors.
● All directors have access to
the advice of the group
secretary and independent
professional advice is
available to directors in
appropriate circumstances
at the company’s expense.
As of 1 June 2001, the outgoing
executive committee is replaced
with a newly constituted board
committee, the corporate
accountability and risk
assurance committee (CARAC).
CARAC is chaired by Lord
Fellowes and comprises four
non-executive and three executive directors.
The other nominated non-executive
members include Messrs Kahn and
Ramaphosa, while the executive members
are Messrs Mackay, Wyman and Adami.
Its main objective is to assist the board in
the discharge of its duties relating to
corporate accountability and associated risk
in terms of the direction, assurance and
reporting for the group. The committee will
also provide independent and objective
oversight, and will review information
presented by management on corporate
accountability and specifically associated
risk, taking account of reports by
management and the audit committee to
the board on financial, business and
strategic risk.
As in the past, this new committee will
continue to utilise the services of the group
corporate accountability department to
progress its activities, as well as co-opting
management and technical specialists in bi-
annual accountability workshops, to ensure
the representation and participation of all of
the business units within the group.
Board Committees:
The Audit Committee
● The audit committee, which meets no fewer than three
times a year, is chaired by a non-executive director,
Mr Collum.
● The audit committee reviews at least annually, with
management, that adequate and appropriate internal
controls are in place and are appropriate to meet future
needs; that significant business, statutory and financial
risks have been identified and are being monitored and
managed; that appropriate standards of governance,
reporting and compliance are in operation; and it
advises the board on issues relating to the application of
accounting standards to published financial information.
The Nomination Committee
● The nomination committee, chaired by Lord Renwick,
considers the composition of the board, retirements and
appointments of additional and replacement directors
and makes appropriate recommendations to the board.
The Remuneration Committee
● In addition to assessing and approving senior executive
pay structures, the committee’s overall strategy is to
ensure that employees are rewarded for their contribution
to the group’s operating and financial performance, as
well as the requirements of collective bargaining.
● The remuneration committee is chaired by Lord Renwick.
The Corporate Accountability and Risk Assurance
Committee (with effect 1 June, 2001)
● Meets twice a year and is chaired by a non-executive
director, Lord Fellowes.
● Assists the board in the discharge of its duties relating
to corporate accountability and associated risk in terms
of the direction, assurance and reporting for the group.
● Provides independent and objective oversight and
review of the information presented by management on
corporate accountability and specifically associated
risk, also taking account of reports by management
and the audit committee to the board on financial,
business and strategic risk.
The newly constituted board committee, CARAC.
Norman Adami, Meyer Kahn, Malcolm Wyman, Graham Mackay, Cyril Ramaphosa
and Robert Fellowes
C O R P O R A T E A C C O U N T A B I L I T Y
A N D G O V E R N A N C E
continued
THE ACCOUNTABILITYPROCESS
In this year’s review we continue to
report against our present
framework of some 90 key
performance indicators (KPIs),
covering economic, social, ethical
and environmental aspects of
corporate performance. These
measures, and other aspects of the
framework, are currently being
scrutinised, to ensure that they
remain relevant and add value to our
businesses, conform where possible
to external voluntary standards and
meet the expectations of our
stakeholders. As the SAB group
expands into new and mainly
emerging markets, we need to take
into account the varying degrees of
maturity of the different business
units. As a result, the time spent on
the review process, although
valuable, has been longer than
originally anticipated. This has
delayed greater attention to the
performance aspects that the
discipline demands.
Internal reports, based on a
selection of 30 core KPIs, are
collated quarterly and presented half
yearly for consideration by the
board. For the purpose of internal
reporting, all businesses where
SAB has significant management
influence or management control are
incorporated. This is a broader
definition than that used in the
Annual Report and Accounts, where
associated companies, for example
China, have a
different accounting
treatment. For
external reporting,
there is a two-year
exemption for
operations newly
acquired or built; as
such, for this year’s review, our
operations in India are not included.
South African Breweries Corporate Citizenship Review
7
Accountability Workshop Committee
RESEARCHING – REVIEWING BESTPRACTICE
• Defining The Scope
• Reviewing Valuesand BusinessPrinciples
• Assessing andIncorporating ExistingSystems
PLANNING THE PROCESS
• Identifying Stakeholders
• Defining Impacts and Issues
• Identifying Performance Indicators
• Developing the Measures
• Strengthening Awareness andInvolvement
EVALUATION OF PROCESS ANDREFINING OF SYSTEMS
• Setting the Targets and Benchmarks
• Strengthening Internal ReportingNetworks and Information Flows
• Checking for Completeness,Comparability, Reliability and Materiality
reporting. The
recent UK
Pensions Act
requires trustees
of occupational
pension
schemes to
disclose their
policy on
socially
responsible
investment
(SRI). Guidelines
published by the
UK government
are encouraging
environmental
reporting, while
the Foreign and Commonwealth
Office is promoting the goals of
corporate citizenship.
Non-governmental pressure
groups are increasingly active
in their particular sectors.
International efforts are growing
to enhance the quality of reporting,
notably the Global Reporting
Initiative (GRI), the Institute for
Social and Ethical Accountability’s
AA1000 standard, and the
ambitious effort by the British
Standards Institute and others
(with UK government support)
to devise a comprehensive
approach complying with ISO
standards through the SIGMA
initiative.
INTERNATIONALDEVELOPMENTS
With the steep rise of external
interest in, and pressure for,
corporate accountability, it
might be assumed that
companies are primarily reacting
to external factors rather than
following their own values,
economic purpose or performance.
In reality it is a balance between
these two approaches that is driving
the process forward.
In the first instance, governments
are playing an active role in
influencing the business agenda.
This can be seen in proposals in the
current UK Company Law Review,
broadening the scope of mandatory
C O R P O R A T E A C C O U N T A B I L I T Y A N D G O V E R N A N C E continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
8
FRONT COVER
A n n u a l R e p o r t
3 1 M A R C H 2 0 0 1
Web site references:
Association of British Insurers www.abi.org.uk
Company Law Review www.dti.gov.uk/cld/review.htm
Department of the Environment,
Transport and the Regions www.detr.gov.uk
Foreign and Commonwealth Office www.fco.gov.uk
Global Reporting Initiative www.globalreporting.org
Institute for Social and
Ethical Accountability www.AccountAbility.org.uk
Sigma www.projectsigma.com
SustainAbility www.sustainability.co.uk
The Corporate Citizenship Company www.corporate-citizenship.co.uk
United Nations www.un.org
United Nations Environment Programme www.unep.org
South African Breweries plc www.sabplc.com
C o r p o r a t e C i t i z e n s h i p R e v i e w
3 1 M A R C H 2 0 0 1
In our approach, we have applied
elements of AA1000 as well as the
GRI’s guidelines, although not in the
prescribed technical format, since
our own report aims to serve a
broader audience of stakeholders.
We have also taken note of many
other voluntary standards of best
practice, including the initiatives of
the United Nations and the
Commonwealth and, more recently,
the impending guidelines of the
Association of British Insurers.
In addition to this review, we articulate
our approach and performance to
interested parties directly, or by means
of completing questionnaires – the
majority of which come from investors
and fund managers. A growing number
of ratings agencies seek to rank
companies according to their non-
financial performance. This year, SAB
has made application for endorsement
with two of the major indices and
participated for the first time in
Business in the Environment’s Index of
Corporate Environmental Engagement.
These efforts to interact with
external stakeholders are not meant
to be indicative of end goals, but
rather to reflect our ongoing internal
progress towards achieving our
company’s mission and values.
In a first-ever survey of global
sustainability reporting, undertaken
as a joint UNEP/SustainAbility
project, SAB plc was ranked 20 in
the world, scoring 84 out of a
possible 196 points. The detailed
rating was applied to 50 leading
reports, selected from 200 reviewed.
The assessment focused on the
business context for sustainable
development, commitments made
and management quality, as well as
economic, social and ethical, and
environmental performance,
accessibility and assurance.
In the overall ratings, SAB received
top scores in both the economic
and the social and ethical
categories. In its assigned industry
sector (consumer), it added a further
leading place in management quality
– by including governance,
accountability and management
systems in its report.
The trend in the other reports
reviewed in this sector was for a far
stronger performance on
environmental aspects, rather than
social and ethical or economic
performance. Here SAB scored less
well, mainly due to pressing social
development needs in emerging
markets, where SAB operates.
South African Breweries Corporate Citizenship Review
9
UNEP/SustainAbility Global ReportingSurvey – SAB plc ranked 20 out of50 leading reports, selected from
200 reviewed
Economic
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
10
Above all else, South African Breweries is a business. It exists to achieve sustained
commercial success and maximise long-term shareholder value, while behaving in a
socially responsible manner. Every day around the world, SAB people work to satisfy
the needs of our many customers and
consumers, bringing them enjoyment
through our beer and other beverage
products and our leisure interests in
hotels and gaming.
This activity creates wealth for more
than 40,000 people employed in
subsidiary and associated companies
and for their dependants too. It
sustains many thousands of jobs in our
suppliers and business partners,
perhaps as high as three quarters of a
million around the world. From the
wealth created, governments take a
share, directly through excise duties,
“SAB is the world’s leading emerging market
brewer, contributing to the development of local
economies in the 25 countries in which
we operate.” Malcolm Wyman Chief Financial Officer
Components of Value Added and Distributed
NET CASH GENERATED STAKEHOLDERS
● Sale of products ● Customers/consumers
● Payment for supplies and services ● Suppliers
● CASH VALUE ADDED
CASH UTILISED
● Remuneration ● Employees
● State and excise taxes ● Government
● Social investment ● Community/environment
● Interest/finance costs ● Lenders
● Dividends ● Shareholders
● CASH DISBURSED
CASH UTILISED
● Funding of growth and replacement ● Management
betting levies, sales taxes and taxes on
our profits, and indirectly by taxing our
employees’ incomes; in all, around
US$1.1 billion last year.
After paying these taxes,
compensating employees, paying
lenders for sums borrowed and making
a contribution to the community
through corporate social investment,
shareholders are entitled to the
remaining balance – some is taken as
dividends and some retained in the
business for growth and further wealth
creation for the benefit of all
stakeholders in the future.
Economic impact – at a glance● total shareholder return since London listing in March 1999,
10.7%
● new strategic partnerships formed in Africa and China
● record high payments to governments – US$ 855 million in
tax and excise duties. (Including indirect employees’ tax –
US$ 1.1 billion)
● US$ 331 million in net capital expenditure
● maintained creditor’s days at 51
● 2,359 job losses through retrenchment, down on last year
● strong ethics and anti-bribery policy enhanced
Our economic business principles– in brief
Investors and joint venture partners
● maximise total shareholder return, achieving a compound
growth rate in dividends and share price which betters
comparable investments
● an open governance process, meeting legal requirements
and best practice
● communicate regularly and openly, providing reliable and
timely information
● do business with joint venture partners and franchisors
who share our values, while respecting the values and
cultures of the countries in which we operate
Customers and consumers
● brands and services of consistent and uncompromising
quality and value, always safe for their intended use, so
meeting the needs and standards of our consumers and
industry customers
● in pursuit of free market competition, not commenting
unfavourably on the products, management or operations
of competitors, nor seeking to prevent others from
competing freely, within applicable competition laws
Suppliers and contractors
● meeting legal and contractual obligations, including
paying bills on time; working together to achieve the
highest standards in materials and services supplied
● encouraging diversity, particularly by involving
disadvantaged people, minorities and local firms
Governments and wider society
● complying with the law and other regulations and, while
protecting commercial interests and influencing
government policies, not engaging in party political
activity
● seeking a positive impact on local economies, through
profitable and sustainable commerce
SAB’s corporate accountability framework is based on acomprehensive set of 26 detailed Business Principles, coveringeconomic, social and environmental impacts (see www.sabplc.com).
CASH VALUE ADDED
By law, conventional company accounts must present the financial effects of this
wealth creation through a profit and loss account, showing the earnings due to the
owners of the business. An alternative way to present the information, and the role all
stakeholders play, is through a cash value added statement.
Value is created by transforming bought-in resources through human and
technological skills into products customers want to purchase. The cash value added
is the surplus after suppliers have been paid for these goods and services. The cash
value added statement shows how that is distributed to employees, who provided
their skills and labour, to lenders and shareholders, who supplied the capital funds, to
governments and local communities, and that retained in the business.
In the year to 31 March 2001, SAB’s cash value added from continuing operations,
was maintained at US$2 billion.
Governments took a larger share (up from 38% to 42%) and more was paid out to
shareholders (up from 4% to 12%). Less was retained in the business (down from
24% to 20 %) and employees’ share fell (from 30% to 21%), partly due to the trend
towards world class manufacturing and the consequential increase in capital intensity.
Our corporate social investment spend of US$9 million, accounted for 0.4% of the
distribution of value added (1.4% of pre-tax profit).
E C O N O M I C continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
12
Employees 20.9%
State Treasuries 42.3%
Lenders 3.8%
Shareholders 12.3%
Retention for future growth 20.3%
Corporate social investment 0.4%
SAB MAINTAINS AN EQUITABLEAND BALANCED DISTRIBUTION OF
VALUE ADDED AMONG ALL THESTAKEHOLDERS IN THE BUSINESS
South African Breweries Corporate Citizenship Review
13
GROUP CASH VALUE ADDEDfor the year ended 31 March 2001
2001 2001
US$m Rm
Net cash generated
Customers and consumers
Cash received by SAB for the supply of its products
and services 3,678 26,980
Suppliers
Cash payments outside the group for materials,
facilities and services purchased (1,659) (12,169)
Group cash value added 2,019 14,811
Distribution of cash value added
Remunerate employees for their services 421 3,088
Pay direct and excise taxes to state treasuries 855 6,271
Provide lenders with a return on borrowings 76 555
Provide shareholders with cash dividends 248 1,824
Corporate social investment (1.4% of pre-tax profit) 9 65
Cash retained in the business to fund future growth 410 3,008
2,019 14,811
SHAREHOLDERS
Investors provide the long-term
operating funds which, together with
borrowing, allow the company to make
capital investments. They have the
responsibility of owning the business
and only earn a return once the other
stakeholders – notably employees,
suppliers and governments – have
been paid.
The best measure of the value which a
company returns to its owners is total
shareholder’s return (TSR) – the
combination of share price appreciation
and dividends paid over the medium to
long term. Since SAB’s primary listing in
London in March 1999, the company
has returned 10.7% (5.2% pa). During
the year covered by this report, the
share price as quoted on the London
Stock Exchange fell 6.3%, at a time
when the FTSE Index dropped by 13.9%.
In the year under review, SAB’s net
capital expenditure was US$331 million
around the world.
OPEN ANDACCOUNTABLE
SAB operates an open governance
process, in which we not only meet
legal requirements, but also aspire to
best practice in corporate governance.
Our business principles commit us to
regular and open communication,
providing reliable and timely
information. The company’s London-
based investor relations (IR) function
organises site visits and seminars for
investors and analysts, recently
covering central Europe and China,
and with plans for Africa. In November
2000, it launched a new section of the
corporate website (www.sabplc.com)
devoted to IR enquiries.
During the year under review, there
were no unresolved disputes with
regulatory bodies or any instances of
non-compliance with relevant
government practices. Our
commitment to open and accountable
governance and communication
extends to minority shareholders in
group companies. Even within unlisted
group companies, governance
conforms to local legal requirements
and sometimes exceeds local norms.
FRANCHISORS, JOINTVENTURES ANDMINORITYSHAREHOLDERS
An important element of SAB’s
international growth strategy is forming
strategic relationships with joint venture
partners. These can take three forms.
One is through franchise agreements,
such as Beer South Africa brewing
Amstel and Heineken under licence, or
our bottling relationship with Coca-
Individuals 11,285 2.18
Category No. %
Pension and provident funds 35 0.53
Banks, nominees andfinance companies 1,228 66.07
Insurance companies 10 20.46
Other corporateentities 164 10.52
13,098 100.00
Trust funds andinvestment companies 376 0.24
SAB plc ORDINARYSHAREHOLDING ANALYSIS
Number of shareholders in each main categoryand % held by category
E C O N O M I C continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
14
KEY STATISTICS ONSHARE OWNERSHIP
Delegates at the SAB seminar in Londonon the company’s operations in China
Cola in several southern African
countries.
The second is through jointly-owned
companies where SAB generally
maintains management control and
partners have a minority holding.
A notable exception is our joint venture
in China, CRE Beverage Ltd, in which
we have a 49% holding, alongside
China Resources Enterprise Ltd – a
Hong Kong listed company and
constituent of the Hang Seng Index.
China is widely acknowledged as the
second largest beer market in the
world, after the USA.
Then there are broad joint ventures,
such as the strategic share exchange
between SABI Africa and the Castel
group, which operates largely in
francophone Africa. Announced in
February 2001, it took effect
subsequent to the current
financial year.
Such joint ventures bring cost savings
and opportunities for expansion
through valuable insights into local
market conditions. Depending on their
structure, they can offer a way to share
the wealth created with local providers
of capital. They also raise questions, in
our corporate accountability process,
about the extent to which SAB
business principles and values should
be applied, and adherence assessed.
In many of SAB’s markets, standards
of corporate behaviour are not yet well
developed and there is a sensitivity
about perceived outsiders ‘imposing’
their norms.
There are five elements to our
approach. First, we will not enter
partnerships where there is potential
for a fundamental conflict. SAB is clear
that it will not compromise its values in
pursuit of short-term business goals.
Second, once agreed, we openly
declare the names of our partners, their
holdings and the nature of the venture,
so that all SAB’s stakeholders can trust
the integrity of the process.
Third, all businesses where SAB has
significant management influence or
outright control must take part in the
quarterly accountability process,
assessing performance against the
26 Business Principles.
Fourth, we treat all external
shareholders, including minority
shareholders in unlisted companies,
not just in accordance with the letter of
the law, but in keeping with the spirit of
open governance, which characterises
our approach to our own shareholders.
Fifth, where operational management is
not our direct responsibility, we will
nonetheless keep our partners’
performance as corporate citizens
under scrutiny.
South African Breweries Corporate Citizenship Review
15
Capital investment:IbhayiBeer South Africa’s newest
brewery, Ibhayi, in the Eastern
Cape, officially opened in
March 2001. Costing
R630 million (US$90 million), it
has a capacity of 2.3 million
hectolitres a year and employs
a production staff of 120. It is
fully compliant with ISO 14000,
the environmental manage-
ment standard.
Sixty per cent of the construc-
tion costs were spent in
South Africa, with more than
R155 million (US$22) million in
the immediate locality – a third
of this with disadvantaged
communities. Hundreds of new
jobs were created during the
construction phase and
contractors had to ensure
those recruits received full
training to help them succeed
in the labour market once work
was complete.
SAB’s principal
subsidiary and
associated
undertakings
listed in their
countries of
incorporation:
SAB effective
interest in
ordinary share
capital
● Accra
Brewery Ltd,
Ghana 69%
● National
Breweries plc,
Zambia 70%
● Tanzania
Breweries Ltd,
Tanzania 66%
● Zambia
Breweries plc,
Zambia 90%
● Amalgamated
Beverage
Industries Ltd,
South Africa 74%
● Delta
Corporation Ltd,
Zimbabwe 23%
● Distell
Group Ltd,
South Africa 30%
The 2001 review examined the extent
of dialogue on corporate accountability
issues within joint ventures and each
group company reported on any known
conflicts between SAB’s principles and
those of the partner. No instances of
substantive conflict were cited. In some
cases, statements of corporate
principles and values are actually
included in formal documentation; for
most this remains a matter for dialogue.
CUSTOMERS ANDCONSUMERS
SAB’s success as a commercial
enterprise rests on continuing to satisfy
its customers. Each day all around the
world every one of our products and
services faces competition, both from
rival brands and from other types of
leisure activity. If we cease to offer the
highest standards of quality and
outstanding value for money; if we fail
to promote our products effectively or
to innovate and improve continuously; if
we abuse the position we have built in
many of our markets; if we allow
employees to damage our reputation
through corrupt practice, then the
business will suffer, and with it the
wealth created for all our stakeholders.
Those who criticise business behaviour
and call for greater corporate account-
ability sometimes overlook the
centrality of the consumer in all we do.
In a competitive free market global
economy, among our primary
stakeholders, consumers are important
E C O N O M I C continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
16
SAB’s franchise partners include:● Heineken – Amstel and Heineken are brewed under licence in South Africa
● The Coca-Cola Company – ABI is Coke’s largest bottler in southern Africa
● Bass Hotels and Resorts – Southern Sun operates Inter-Continental and
Holiday Inn hotels in South Africa
● Accor Hotels – Southern Sun also operates Formule One hotels in
South Africa
ABI’s Phoenix bottling plant near Durban
arbiters of good corporate citizenship,
through their perceptions of our
behaviour. As a customer-focused
company, SAB has nothing to fear from
greater scrutiny, as we are accountable
to our customers every day in the
market place. Here we offer an
account of how we perform against our
stated business principles.
CONSUMER ATTITUDES
Virtually all SAB’s beverage products
reach the end-consumer through
intermediaries, such as bars and
restaurants, wholesalers and retailers.
This distribution is increasingly
outsourced and so, despite stringent
procedures, the final quality cannot
always be guaranteed absolutely. That
is why all group companies (bar one)
not only address immediate customer
complaints, but have developed
systematic procedures to respond to
comments or complaints from end-
consumers.
As part of the accountability review, the
level and type of consumer comments
around the world are monitored,
revealing wide variations in the degree
to which consumers choose to or are
able to exert their rights. SC Ursus in
Romania, for example, received only
seven complaints in total during the
year, out of 190 million bottles
produced. In Mozambique, Cervejas
de Moçambique has a
customer complaints and
product defect recording
system to monitor the
incidence of dissatisfaction. This found
only one complaint of any sort on
average for every 400,000 bottles
produced.
Beer South Africa’s monitoring
system actively encourages contact,
with a free telephone ‘care line’ for
customers to request information on
products, services or promotions as
well as to register complaints. The
number is displayed on all the labels on
bottles and cans produced by SAB Ltd.
SAFETY AND QUALITY
In addition to rigorous local controls
and SAB’s own groupwide internal
standards, SAB companies are
increasingly adopting externally
certified quality systems. In South
Africa, our Prospecton brewery added
to its long standing ISO and NOSA
awards to become the first in Africa to
South African Breweries Corporate Citizenship Review
17
Dreher being delivered to a customerin central Budapest
Consumer in Maputo enjoying the leading brand, 2M, produced by Cervejas de Moçambique
receive HACCP certification, an
international food safety system, which
identifies potential hazards and tests
controls.
In addition, group companies are
increasingly putting in place
precautionary ‘crisis and emergency’
plans, so as to respond swiftly in the
unlikely event of product
contamination. This year, the number
of countries with such plans has risen
to cover all beverage production.
PROMOTINGCOMPETITION
In SAB, we are proud of our products
and services and vigorously promote
them, always seeking opportunities to
achieve growing sales. We believe in
free competition as the most effective
way to secure the long-term prosperity
of all our stakeholders. Equally, we
recognise this commitment means that
we must not abuse our market position
or unfairly prevent others from
competing too. Within applicable
competition laws, group companies are
prohibited from commenting
unfavourably on the products,
management or operations of
competitors.
E C O N O M I C continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
18
Total Quality Management (TQM) at CompañiaCervecera de Canarias (CCC):
CCC has long made a priority of quality control. In 1997 it was one of the
first of the SAB companies to obtain the independently certified ISO 9002
award. Since then cross-functional TQM teams of employees have
generated a stream of innovations and improvements.
Over 20 such groups operated during the last year. A Continuous
Improvement Committee is also in place: of the 209 suggestions made this
year, 48 were accepted.
Last year, the company joined the European Foundation for Quality
Management and is now applying the EFQM ‘business excellence’ model
to drive performance up to the best European levels. The company
is sponsoring a new benchmarking group, with 20 leading European
companies, including Nokia, Unilever, Yellow Pages UK, Volvo and Siemens.
Historically, we have used the
South Africa-based National
Occupational Safety Association
(NOSA) system for safety
management.
Its top perfomance levels (Noscar
and 5 Star) are now being
made compatible
with the internationally adopted
ISO standards.
Noscar 13 26%
Numberof sites
5 star 29 58%
4 star 4 8%
Not graded 3 6%
Lapsed 1 2%
BEER SOUTH AFRICA:NOSA GRADINGS
The new KHS bottling line at Lech Brewery – fully covered to optimise product safety
The malting laboratory at Pilsner UrquellBrewery in the Czech Republic
SUPPLIERS
SAB companies paid US$1.7 billion
during the year to their suppliers.
Spending that money effectively,
controlling costs and ensuring
quality are vital to our competitive
position. Equally, how we direct
that purchasing power is part of
being a good corporate citizen, with
the potential to have a positive impact
more widely throughout society.
Our starting point is to meet
contractual obligations and to pay bills
within agreed terms, as cash flow is
often vital to the survival of small and
growing firms. Payment terms are
agreed at local level, as appropriate for
As part of this year’s
accountability review, group
companies were asked to
report any issues with
competition authorities: the
only one was South Africa
where the Competition
Commission launched an
investigation into the liquor
industry in November 2000. A further
investigation began in February
2001, looking at terms of trade with
inter-depot contractors. Beer South
Africa is confident of the correctness
of its trading position and expects
both investigations to be resolved
satisfactorily.
South African Breweries Corporate Citizenship Review
19
New products and innovations at local level:
Redd’s was introduced successfully into the Polish market during the year,
exceeding its budgeted market share within 10 months. Although based on an
established SAB concept, the product was adapted to meet the local market,
with different positioning, pack design and consumer communication.
In Tanzania, a new apple-
flavoured alcoholic fruit
beverage brand, 49er, was
successfully launched, having
been fully developed and
researched locally.
Meanwhile in Mozambique, a
previously
imported brand, Castle Milk
Stout, has been switched
to local production.
Appletiserprecautionaryplans:Appletiser has drawn upcomprehensive contingencyplans and crisis managementpolicies to cover a range ofeventualities, including productrecall, fire, strikes andstoppages, public defamationand natural disasters. Theseprocedures have been madeavailable for staff to consult,should particularcircumstances arise. Thedocuments outline thefunctional responsibilities ofthe various departments andthe objectives any responseshould attempt to achieve;they provide a detailedexplanation of who should bedoing what in the event of eachpossible crisis. Also listed aremembers and contact detailsfor the crisis managementteam, in order that expert helpcan be easily reached at theearliest opportunity.
Taking product recall as anexample: information is providedon the objective of any action,the possible sources of infor-mation regarding the need forrecall, the circumstances likelyto require a decision, the iden-tification of stock, and commu-nication and press relations,among others.
0
1
2
3
4
5
6
7
90+80to89
70to79
60to69
50to59
40to49
30to39
20to29
10to19
0to9
DISTRIBUTION OF OPERATING UNITS CREDITOR’S DAYS
Number of days
Num
ber
of o
pera
ting
units
each supplier. Group companies report
average payment times, expressed as
a number of ‘creditor days’ typically
around a month, but ranging from
fewer than 10 to as long as 90 days for
some specialist contracts. As reported
in our previous review, groupwide
creditor’s days was maintained at 51.
DEVELOPING SUPPLYPARTNERSHIPS
SAB companies understand that the
best way to reduce
purchase costs and
increase
quality is to
work in long-
term
partnerships
with
suppliers, for
example, by
sharing technology.
Where possible, our approach is to
source purchases locally, when quality
and reliability can be assured at
economic rates, and to work to
develop local suppliers so that they can
meet our needs. The current
proportions of local sourcing vary
greatly, but are typically around three
quarters in each country.
In Poland, this year saw joint
discussions with Kompania
Piwowarska’s (KP) key malt supplier –
Soufflet – on quality issues, capacity
planning and demand management.
Looking ahead, KP plans to install
on-line computer-to-computer
communication with bottle and can
suppliers.
For Botswana Breweries’ sorghum
beer production, the necessary
packing machines are provided by the
carton suppliers and remain their
property, with appropriate training for
SAB’s operatives. Similarly, the main
truck supplier provides training
on vehicle
maintenance
to the in-
house
team.
In some
countries,
such partnerships are
still largely under-developed, due to
the limited number of local suppliers of
strategic raw materials. Nile Breweries
in Uganda, for example, is starting a
supplier partnering programme with
Kioo Glass in Tanzania, together with
fellow SAB group company, Tanzania
Breweries. Over the last three years,
Nile Breweries has successfully
developed local capacity for label
production, offering technical advice.
A local supplier of crown corks has
also received technical support
and input.
E C O N O M I C continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
20
Gary Bull, Director CommercialServices: Europe in the SABI Europecentral procurement offices, based inPrague
However, the trend in business is to
source more supplies at regional hub
level, with larger contracts offering
better prices, quality and consistency.
Previously, our preference for ‘local’
purchases essentially meant looking at
the national economy. Now we are
reviewing the approach to ensure that
we achieve our corporate citizenship
goals, taking into account the wider
economy at regional level.
As the day-to-day boundaries between
a company and its supply partners
become blurred, it is even more
important to share a common
approach to business behaviour. Last
year the corporate accountability
review sought any instances of a
‘values clash’ with major suppliers.
None were reported, and we noted
that the absence of major disagreement
was a good starting point. This year,
the review asked for evidence that
values were being taken into account
during contract negotiations. SAB
companies in Kenya, Uganda and
South Africa now include these issues
when drawing up formal contracts.
SUPPORTINGENTREPRENEURS
SAB group companies around the
world offer practical help and support
to new entrepreneurs wishing to set up
their own businesses. Within South
Africa, this effort to develop an
entrepreneurial culture has a special
focus on ‘commercial equity’ – using
the purchasing power of the supply
chain to develop black-owned
businesses.
Currently Beer South Africa has more
than 5,000 commercial equity
companies registered on its vendor list,
many of them new businesses
supported by outsourced services
such as distribution. Over the last five
years, the total amount spent on
commercial equity has trebled to reach
R532 million (US$73), but the rate of
growth is now slowing.
As a result, a new strategy is being
implemented to help develop major
black businesses over the next two or
three years, so that they will be in a
position to secure some of these
0
100
200
300
400
500
600
200120001999199819971996
Rm
BLACK SUPPLIER PURCHASES:BEER SOUTH AFRICA
Financial year (ended 31 March)
South African Breweries Corporate Citizenship Review
21
MOSI refrigeratedcontainers:Zambian Breweries is helping
some of its current employees
to set up their own businesses,
as part of a drive to extend
sales in rural areas.
Refrigerated containers are
being refurbished and placed
on a company-purchased plot
of land. Each one has the
capacity for 250 cases, with a
small office and secure drop-in
safe for takings.
Container controllers are
recruited from existing
employees and trained in
stock control and financial
management. Once sales have
grown to an average 1,500
cases a month, the individual
is offered a contract as an
independent distributor and
paid a rate for each case sold,
from which operating
expenses must be met. Eight
of the eleven containers
placed during the year were
successfully transferred and
sales are averaging 3,000
cases a month.
Watson Kaira, project manager of theZambian Breweries refrigerated containerproject
Kompania Piwowarska, Lech Brewery, inPoznan
Beer South AfricaEnterpriseDevelopmentCentre:In December 2000, SAB set
up a new centre to spear-
head its growing efforts to
promote enterprise and
develop business opportu-
nities focused on disadvan-
taged communities. This
builds on nearly a decade of
support and includes:
● Kick-Start, a competition
for young entrepreneurs
– over 20,000 partici-
pants have received
training and more than
2,000 have set up in
business.
● Project Noah,
originally a partnership
with the Food and
Allied Workers’ Union,
to help SAB
employees facing
retrenchment find new
jobs, the project
increasingly offers
business development
advice; last year 150
former employees started
businesses with its
support.
● Isando Incubator,
offering workspace,
advice and a supportive
environment to fledgling
enterprises – previously
for SAB retrenchees, it is
now open to anyone with
a good business idea; so
far it has helped create
180 jobs.
contracts in the future. Meanwhile, a
special effort is being launched to
identify procurement areas which can
be outsourced to existing black
businesses almost immediately.
GOVERNMENTS
Governments and their various
regulatory agencies are key
stakeholders in our business – given
their propensity to levy high taxes on
alcohol and gaming, and their power to
grant or withhold licences. SAB
companies engage with political
authorities through open and arm’s
length relationships, so as to protect
their commercial interests. They did not
make political donations or otherwise
involve themselves in party political
activities during the year under review.
This year’s review asked group
companies to report any prosecutions
as a result of breaches in legislation
relevant to corporate accountability.
Only one company reported an issue,
namely Romania, where a long-
standing dispute about the timing,
categorisation and applicability of
contracted investment following
E C O N O M I C continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
22Alec Erwin (right), South African Minister of Trade and Industry with Norman Adami, Chairman of the South African Breweries Ltd, at the opening of the new Eastern Cape Ibhayi Brewery
Coke deliveries to small consumer outlets in South Africa, creates entrepreneurial opportunities
privatisation has
been put into
arbitration. The
government is
seeking fines of some US$2.5
million.
In addition, with regard to disputes,
Lesotho, Malawi, Botswana and
Poland report ongoing discussions
about tax assessments.
LOCALECONOMIC
DEVELOPMENT
During the year under review, SAB
group companies contributed
US$1.1 billion in public revenues,
mainly excise duties, sales taxes
and import duties, but also
corporation tax and employee
payroll contributions (the amount of
US$855 million reported in the cash
value added statement, reflects
corporate and excise tax only). In
some countries, SAB is the biggest
South African Breweries Corporate Citizenship Review
23
Local economicimpact:“Kompania Piwowarska (KP),
SAB’s Polish subsidiary, holds
around 30% of market share,
selling more than seven million
hectolitres in 2001. Tyskie is
the most important brand in
the portfolio. The workforce
is 2,500, which means
that together with
dependants some 7,000
directly rely on KP for
their livelihoods.
The wage bill is US$25
million, of which some
US$5.5 million is paid in
taxes to the national
exchequer.
An estimated 50,000
jobs are sustained in
distribution companies
and retail outlets, with
more in raw material suppliers
and bought-in services such as
advertising. Sales of Tyskie and
our other brands account for
about 2% of turnover in all
Polish retail outlets, while
advertising by the whole beer
sector contributes around
5 – 7% of TV revenues.
A study by CASE-Doradcy
estimates that 56% of Polish
beer industry revenue is paid in
VAT, income tax, excise duties
and other taxes. Across this
tax spread, KP contributes
over US$250 million each year,
equivalent to a third of the
country’s national health
budget or more than is spent
on culture, national heritage
protection, physical fitness and
sport.”
Extract from Social
Responsibility Report, prepared
by Kompania Piwowarska,
Poznan 2001. Available at
www.browarytyskie.pl
Excise/sales/import duties 76%
Company tax 16%
Employee related taxes 8%
TAXES BY TYPE
single collector and payer of tax,
and our continued commercial
success underpins many vital public
services. To put this in context, the
total amount paid by SAB is enough
to provide life-long clean water to an
extra 65 million people each year,
according to estimates by WaterAid,
the international development
agency.
Our contribution to local economies
extends far beyond tax payments. In
addition to the 40,300 existing jobs
created by group companies and
associates covered in this review,
we support an additional 8,750 in
directly outsourced services,
including 1,800 owner-drivers and
crew.
As part of the accountability review,
group companies also considered
the wider employment impact in the
value chain, downwards through
supply contracts and upwards to
distributors, wholesalers and
retailers. These estimates vary,
depending on the country and
sourcing methods. Compañia
Cervecera de Canarias used
Spanish Brewers’ Association
estimates of 20 indirect jobs for
each direct employment; Kompania
Piwowarska used Polish national
accounts to indicate a similar
multiplier impact. If these estimates
are correct, then more than three
quarters of a million people around
the world may depend in large
measure on SAB companies for
their livelihoods, with many more
benefiting among their families and
dependants.
RETRENCHMENT
Sometimes, it is necessary to
reduce our own direct employment.
During the year, out of a total
workforce of 40,300 including
China, a total of 2,359 employees
were retrenched in SAB companies
around the world, slightly down on
last year. Of these, 1,721 were
enforced redundancies, with the
balance either taken voluntarily (533)
or outsourced (105) with the jobs
preserved.
Of the 11 SAB companies reporting
reductions in their workforce
through retrenchment, nine also
reported active programmes to help
those affected find alternative
employment. Examples include
training in new skills and advice on
starting up in business. While such
retrenchment is always regrettable, it
is essential to maintaining business
competitiveness and ultimately
preserves many more jobs in the
company.
E C O N O M I C continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
24
Enforced 73%
Voluntary 23%
Outsourced 4%
RETRENCHMENTBY REASON
South African Breweries Corporate Citizenship Review
25
What you think matters
Through the day-to-day operation of the business, SAB is in regular
two-way communication with its key stakeholders on many of its
economic impacts, positive and negative. This includes:
● customers and consumers – regular and detailed attitude surveys
● employees – about developments in the business, directly and
through trade unions
● governments – economic development plans and regulatory
policies
● investors – through open governance arrangements
● major business partners – on performance and growth plans
As we strive to be a good corporate citizen, we value
feedback from all sources and will try to act upon it.
Please let us have your comments to:
[email protected], or Fax:+27 11 339 2389
Web site references:European Foundation for QualityManagement www.efqm.org
International Standards Organisation www.iso.ch
Spanish Brewers Association www.cerveceros.es.com
Water Aid www.wateraid.org.uk
South African Breweries plc www.sabplc.com
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
52
Performance measures are reported in accordance
with Triple Bottom Line methodology, and, as
such, data are broadly grouped in economic,
social and environmental categories.
BASTION GRAPHICS
This report is printed on environmentally friendly, chlorine-free paper
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
50
EXECUTIVE DIRECTORS
E A G Mackay (Chief Executive)#
N J Adami (Chairman and Chief Executive,SAB Limited)#
R L Lloyd (Organisation Development Director)
M H Simms (Managing Director – SAB InternationalEurope)
M I Wyman (Chief Financial Officer)#
*Audit Committee †Nomination Committee ‡Remuneration Committee
#Corporate Accountability and Risk Assurance Committee
NON-EXECUTIVE DIRECTORS
J M Kahn (Chairman)†‡#
H R Collum*†‡
Lord Fellowes*#
M J Levett*
P J Manser*
M Q Morland*†‡
M C Ramaphosa#
Lord Renwick of Clifton†‡
H R Slack*
Dr C B Strauss*
COMPANY SECRETARY
A O C Tonkinson
REGISTERED OFFICE
Dukes Court, Duke Street, Woking, Surrey, GU215BH England
HEAD OFFICE
One Stanhope Gate, London W1K 1AF
Telephone +44 (0) 20 7659 0100Telefax +44 (0) 20 7659 0111
South African Breweries plcRegistration number 3528416
South African Breweries Annual Report 2001
51
Your comments on this Review should be faxed, mailed or e-mailed to:
Alison Ramsden
Group Corporate Accountability Manager
South African Breweries plc
OFFICES AT
2 Jan Smuts Avenue
Braamfontein
South Africa
2017
POSTAL ADDRESS
PO Box 1099
Johannesburg
South Africa
2000
Telephone +27 11 407 1716
Telefax +27 11 339 2389
E-mail [email protected]
This Corporate Citizenship Review is available on the Internet at http://www.sabplc.com
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
38
Environmental
“Our industry is recognised as having relatively a
low environmental impact. Nevertheless, we have
taken it upon ourselves to manage our aspects and
our impacts in the best practical manner, given the
challenges that accompany our emerging market
operations.” Andrew Tonkinson Company Secretary
Environmental Policy
SAB plc embraces the obligations of corporate citizenship towards the environments in which it operates and the dutiesof care owed to present and future co-citizens.
Accordingly, SAB plc will seek to conduct its activities wherever located with complete commitment to international bestenvironmental practice, not least by conforming to applicable jurisdictional regulation on the environment, health andsafety.
In order to further this policy, SAB plc will:
● align its risk management and control practices to take account of local conditions, while setting minimum standardsand improvement targets;
● continuously monitor the impact of the movement and use of materials, energy, facilities and other resources in itsoperations on communities and the environment;
● implement natural resource conservation programmes, particularly of water usage in its brewing operations;
● promote recycling initiatives in its businesses and the community, particularly of used packaging materials;
● adapt and implement technologies to limit and reprocess effluents, emissions and waste, including refrigerants, and torehabilitate resources as required;
● locate new facilities within the parameters of environmental impact assessments;
● communicate openly with stakeholders regarding environmental planning and material impact of related activity;
● as a longer-term goal, develop environmental management systems in its various operations in conformity with theInternational Standards Organisation (ISO) 14 000 and ultimately to have these audited by an internationallyrecognised authority; and
● contribute financially to selected organisations promoting aspects of environmental awareness and protection.
Environmental impact is one of the three elements of ‘sustainability’ –
the goal to ensure we can meet the needs of today without cost to
future generations. Previously in SAB, we have placed a greater
emphasis on the other two aspects – economic and social impacts.
They were seen as the priority in the emerging markets where we
mainly operate. In addition, our core activities in beverages, hotels and
gaming were generally accepted as having low environmental impacts.
Our increasing focus on the environment is not simply a response to
growing public concern. It is a recognition of the importance of
maintaining the supply and quality of the natural ingredients – barley,
hops, sugar, fruits and above all, water – that make up the production
of beer and soft drinks.
Much of the business community, along with governments and
individual citizens, now understand better the dangers associated with
global warming, especially so-called ‘greenhouse gases’, such as
carbon dioxide. In some parts of the world, supplies of clean water are
rapidly diminishing: this vital commodity for sustained human life is at
risk. Concern is also mounting in some societies about the detrimental
effects of waste and pollution, especially of consumer packaging.
At the same time, companies such as SAB are discovering that
investment to achieve environmental improvements also makes
prudent financial sense, with realistic payback periods.
That is why last year we announced our intention to institute a
groupwide environmental monitoring system. This has been largely
achieved, and for the first time we are able to report impact data. In
subsequent years, we will be able to show trend data
and we plan to broaden the scope of
issues addressed.
ENVIRONMENTALMANAGEMENT SYSTEMS
Nine major SAB breweries meet best international standards with
ISO 14001 certification, covering just over half of worldwide
production. Three more expect to achieve certification in the current
year and at least two more plan to do so the following year. All major
sites without ISO certification are assessed against internal SAB
standards, related to policies, targets, staff training and emergency
planning. Since our primary listing in London, we have joined the
Environmental impact – at a glance
● first ever groupwide environmental monitoringsystem established
● number of sites with ISO 14001 certification up
● work begun on quantifying carbon dioxide output(in accordance with the UK Department of theEnvironment, Transport and the Regions’guidelines)
● impact of clear beer production down – water downto 6.0 hl/hl; electricity down to 10.2 kWh/hl, andeffluent output down to 4.1 hl/hl (group average)
● only three accidental spills reported
Our environmental business
principles – in brief
SAB supports the goal of sustainable development –to ensure that our actions meet the needs of thepresent, while minimising the cost to futuregenerations
● working towards international best environmentalpractice, with targets for progressive improvement
● minimising the impact of materials, energy, facilitiesand other resources used, especially by conservingnatural resources, notably water
● using technologies to reduce and reprocesseffluents, emissions and wastes, includingrefrigerants
● promoting reuse and recycling initiatives both inbusiness operations and in communities,particularly of used packaging materials
SAB’s corporate accountability framework is based on a
comprehensive set of 26 detailed Business Principles,
covering economic, social and environmental impacts.
(See www.sabplc.com)
Business in the Environment Index, and
our environmental management
systems (EMS) can be benchmarked
and progress tracked more effectively.
As a minimum, all SAB operations are
required to meet legal and regulatory
standards. During the year under
review, Nile Breweries in Uganda
contravened the national statute
governing waste water discharges.
Ugandan industry believes the
requirements of the statute to be
unachievable and are currently
negotiating with government to achieve
a more pragmatic approach.
REDUCING WATERCONSUMPTION
Both beverage production and hotels
depend on a reliable supply of water fit
for human consumption. Long-term
global trends show declining supplies
per capita and in some parts of the
world less than half the population has
safe, clean water. In brewing, water use
is essentially split in two main areas:
● production of beer (between 20 –
30% of total consumption); and
● auxiliary operations such as cleaning,
cooling and steam generation.
The amount actually consumed is
dependent on factors such as the age
and condition of the plant, packaging
processes, type of equipment
employed and the climate in the
country of operation.
SAB companies are working to
increase efficient use of water, by
changing operational processes,
training staff and investing in new
equipment and facilities. Significant
savings can be achieved by capturing
and reusing water progressively for
lower grade uses throughout the
production process, such as floor
cleaning and initial plant rinsing.
During the year under review, we
achieved an overall water consumption
rate for clear beer of 6.0 hl/hl, a good
performance by industry standards and
an improvement on last year. This figure
excludes our operations in China,
E N V I R O N M E N T A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
40
0
2
4
6
8
10
12
Effluent(hl/hl)
Electricity(kWh/hl)
Water(hl/hl)
GROUPWIDE AVERAGE WATER ANDELECTRICITY USAGE, EFFLUENTPER h/l CLEAR BEER PRODUCED
Average
0
2
4
6
8
10
12
BeerSA
SABIEurope
SABIAfrica
hl/hl
CLEAR BEER WATER CONSUMPTION
Average
Municipal water 73.5%
Ground water 19.7%
River water 6.8%
WATER SOURCESGROUPWIDE AVERAGE
Business in the Environment Index
For the last five years, the UK-based organisation, Business in theEnvironment, has produced an Index of Corporate EnvironmentalEngagement, focusing on the activities of major companies listed on theLondon Stock Exchange. Following the listing, SAB decided to take partand the first results were published early in 2001. The index coversenvironmental management systems, communication and some genericperformance measures.
Overall we were ranked 139 out of 184 participants. Placed 17 in the non-cyclical sector, we scored 40% against a sector average of 67.8%. Ourstated commitments to improve SAB’s environmental performance shouldresult in a better score in subsequent years.
where accurate data to date have been
unavailable. Water usage is now an
issue of core focus for CRE Beverage,
due in part, to the drought situation in
the country.
Individual consumption rates vary
around the world, depending on the
level of capital investment, size and full
utilisation of capacity. Our best
performing brewery remains Alrode in
South Africa. It is also our biggest
single brewery in terms of volume.
Having cut its water ratio from 4.4 last
year to achieve 4.19 this year, a new
target of 4.0 has been set. Plans
include recovering bottle rinse water for
use in the floor wash recycle system,
together with a further waste water
treatment plant.
SAB companies around the world are
taking action to decrease water use.
Tanzania Breweries has cut
consumption by 29% over the last two
years through new controls on the
packaging line. Dreher Sörgyárak in
Hungary invested US$100,000 in a
scheme to reuse drain water for air
compressor cooling. The capital ‘pay-
back’ period is estimated at three years.
Sorghum beer production requires
lower levels of water – between 2 and
3 hl/hl – and less energy. SAB’s soft
drinks operations monitor water
consumption and are achieving creditable
average rates by international standards
of 5 hl/hl beverage produced.
In Southern Sun, monthly monitoring
of usage rates has been introduced
and simple techniques put into practice,
South African Breweries Corporate Citizenship Review
41
Water quality in
China:
In China, the majority of
brewing water is derived from
wells. The quality is at risk due
to pollution and the declining
water table. SAB has worked
over the last three years with
its Chinese partner to:
● develop a company water
standard which meets
international levels;
● adopt a consistent
technology which meets
these standards;
● select two local suppliers to
assist in upgrading
technology; and
● upgrade water treatment
plants at four breweries, at a
cost of US$4.1 million –
meeting the above
standards and successfully
adopting the new
technology.
Over time, the remaining
breweries and new
acquisitions will adopt this
approach.
The focus
on water
quality is
expected
to give a
competitive
advantage
over other
Chinese
brewers.
International benchmarks
(Clear beer production)
SAB group UNEP
(2000/1) (1999)
Water consumption 6.0 hl/hl 5 – 6 hl/hl
Electricity usage 10.2 kWh/hl 8 – 12 kWh/hl
Effluent discharge 4.1 hl/hl 3.5 hl/hl
Source: United Nations Environmental Programme (UNEP) Technical Report Series, No. 33 Environmental Management in the Brewing Industry.
Effluent plant at Dalian Brewery in China
such as double flush system for toilets
and using waste water for irrigation in
hotel gardens. During the year under
review, Southern Sun’s total water
usage in South Africa amounted to
1.6 billion litres. That provides a
benchmark of some 173,000 litres per
room per annum as a target on which
to base improved performance in
future years.
CONTROLLING ENERGY
CONSUMPTION
Inefficient use of energy is not just
expensive; it causes unnecessary
atmospheric emissions, notably carbon
dioxide. This year we have measured
our electricity consumption around the
world, and have made good progress
in assessing use of primary fuels such
as coal, oil and gas.
The main consumers of electricity in
brewing operations are electric motors,
CO2 recovery plants, effluent treatment
plants, refrigeration, compressed air
plants, the packaging line and office
functions. Overall SAB breweries used
10.2 kWh per hectolitre of beer
produced, good by international
standards. In comparison to last year,
breweries in Africa and Europe reduced
consumption (based on comparable
data), while the trend in South Africa
was up – partly due to the introduction
of an electrode boiler at one of our sites.
Southern Sun has calculated
electricity consumption for its South
African hotels, and calculated a daily
benchmark cost of R11.83 (US$1.60)
per room sold. Research is under way
to find the best way to introduce power
management systems and so cut
consumption and costs, working with
outsourced facilities management.
Monthly monitoring has started and
interim targets set, focused on hotels
currently consuming above the
Southern Sun group average.
We have also started work on
monitoring vehicle fuel consumption
around the world, where the main
impact is the transport of products to
market. In most countries this is now
very largely outsourced to independent
contractors, as a way to control costs
and encourage independent
entrepreneurs. Outsourcing has
complicated the monitoring process.
More efficient routing and scheduling
systems can achieve significant
reductions. During the year, ABI
introduced its enhanced Roadshow
planning and reduced kilometres
travelled and hence fuel usage. This
cut diesel costs by 23.6% and petrol
by 13.0%. Overall delivery fuel usage is
now benchmarked at 5.52 l/hl delivered.
Reducing and reusing
effluents
As we have progressively reduced
water consumption, so the volumes
of liquid effluent in brewing have fallen
– between 60 – 70% of total water
intake typically ends up as waste
water. The main components are
E N V I R O N M E N T A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
42
0
3
6
9
12
15
BeerSA
SABIEurope
SABIAfrica
kWh/hl
CLEER BEER ELECTRICITY USECLEAR BEER ELECTRICITY USE
Average
CLEAR BEER EFFLUENT OUTPUT
0
1
2
3
4
5
6
BeerSA
SABIEurope
SABIAfrica
hl/hl
Average
Municipal treatment 93.35%
Discharged to river 6.65%
EFFLUENT DISCHARGEGROUPWIDE AVERAGE
organic substances skimmed from
the brewing process – notably, spent
grain and surplus yeast which are
almost universally reused as food
ingredients and animal feed. Lesser
components include effluent from the
packaging line, such as labels, and
some chemicals – namely caustic,
acids and detergents used for “cleaning
in place”, bottle washers etc.
During the year, SAB Breweries
achieved an overall effluent ratio of
4.1 hl/hl, an improved performance
on the previous year. Although this
figure excludes our operations in
China, where volumes were not
comprehensively measured, all sites
have effluent treatment plants in
compliance with local regulations. The
best performance was at Prospecton
in South Africa, achieving 2.0 hl/hl,
with Radegast in the Czech Republic
a close runner-up at 3.0hl/hl.
Effluent is primarily discharged to
municipalities/local authorities, where
waste water is treated to local
specification. Several breweries also
have primary waste water treatment
facilities on site, where effluent
undergoes initial treatment to
neutralise it and reduce organic
loading. Some breweries are now
using anaerobic treatment plants to
convert waste into methane gas.
South African Breweries Corporate Citizenship Review
43
Anaerobic
treatment at
Radegast, Czech
Republic:
SAB’s Czech subsidiary,Pivovar Radegast a.s.Nosovice (PRN), convertsbrewery waste into methane,dramatically reducing thevolume of effluent and creatingenergy which is used in theboiler house. The overalloperating costs are half that ofthe 500,000 cubic metres ofgas saved at commercial rates.PRN decided to install ananaerobic pre-treatment plantfor effluent in 1995, using anUpflow Anaerobic Sludge Bed-type reactor first developed inthe Netherlands during theearly 1980s, because of itsefficiency (around 94%) inconverting effluent into energy.The remaining waste sludge istreated in the municipal works,with much reduced levels ofbiological oxygen demand.
Anaerobic treatment in Radegast(beer production 2.1 mil. hl/year + malt house – 24,000 t/year)
HCI NaOH
Buffer tank
Post-aerationtankTo municipal
works
Sludge blanket
Boiler housefor brewery
Flare Gas buffer
UASB reactorBiogas
Natural gas
Staticscreen
CONTROLLING CARBON
DIOXIDE
Carbon dioxide in the brewing industry
arises from two main sources – the
fermentation process itself and auxiliary
operations such as heat generation –
with the latter the most significant
when fossil fuels are used. Additional
quantities are generated in producing
and transporting raw materials, and
then in distributing products to market.
Some CO2 is also released when beer
is consumed, but this is more than
offset by the CO2 captured in the
barley, hops and other natural crops
through photosynthesis during growth.
Through fermentation, sugars in the
wort are converted by yeast into
alcohol and CO2. As a rough average,
this process generates around three to
four kilograms of CO2 per hectolitre of
wort. Such carbon dioxide can be
recovered, purified, compressed and
either reused in the production process
or sold as excess. This is now routine
in SAB breweries across Africa, while in
Europe, where CO2 recovery systems
are not in place, the situation is
currently being reviewed.
For example, at Kgalagadi Breweries
in Botswana carbon dioxide is collected
and recycled for use in the production
E N V I R O N M E N T A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
44
Southern Sun:Hotels managed by
Southern Sun generally
have recycling programmes
for glass and some plastic
containers, with additional
action initiated on an
informal basis by hotel
managers. In order to
quantify the impact and
improve performance, an
initial trial of five Sandton
hotels is nearing
completion. A proposed
system for recycling will
then be presented to the
Southern Sun
Environmental Committee,
with implementation to
other regions thereafter. This
is likely to focus on two
main objectives, which were
set out in Southern Sun’s
first Corporate Citizenship
Report, namely:
● extending the current
head office paper
recycling initiatives, which
have run since 1995, to
all hotels;
● extending recycling in
hotels to include
cardboard, plastics, tin,
aluminium cans
and glass.Recycling paper and plastic at Alrode Brewery, South Africa
process. During the year, the recovery
plant was upgraded to collect more
CO2 and reduce venting to atmosphere.
The upgrade cost was US$240,000
and the target is to achieve savings of
US$65,000 annually on imported CO2.
Meanwhile Castle Brewing in Kenya
installed a new recovery plant, which
became operational in August 2000.
This recovered 275 tons of CO2 during
the year which saved US$103,200.
The target for the current year is
705 tons, based on 3 kg/hl recycled,
rising to 3.75 kg/hl the year after.
The greatest volume of CO2 is emitted
from burning fossil fuels, typically in on-
site boilers, with lesser amounts
generated elsewhere through bought-in
electricity. The
introduction of electrode
boilers – as previously
mentioned – while
increasing electricity
consumption, helps
reduce on-site CO2
emissions.The volume of
on-site CO2 produced
depends on factors such
as the type and quality of
fuel used (with coal worst
and gas best), the
efficiency of boilers and any heat
recovery undertaken. As a rough
average, auxiliary operations can
generate 16 kilograms
of CO2 per hectolitre of
beer produced.
South African Breweries Corporate Citizenship Review
45
Waste minimisation in the Czech RepublicPilsner Urquell, Pivovar Radegast a.s. Nos ovice, Pivovar Velké Povice.
(tonnes per annum) PU PRN VPK
Total waste generated 108,334 32,341 19,703
Feeding and second-use wastes sold 103,561 31,335 18,867
of which recycled 2,976 637 590
Remainder to landfill 4,773 (4.4%) 1,006 (3.1%) 836 (4.2%)
Landfill is kept to a minimum through continuous separation of valuablewastes such as glass, paper and foil. In PU and PRN, detailedwaste disposal guidelines have been prepared as part of theenvironmental management system and used as controldocuments in waste management. In VPK, the documentation isbeing prepared with the introduction of the EMS in compliancewith ISO 14001.
Outsourced contractor removing cullet fromKgalagadi Brewery in Botswana for recycling
Recycling waste
In beverage production, the main
sources of solid waste include cullet
(broken glass), boiler ash and
secondary packaging such as
cardboard, scrap metal and wood.
Already substantial volumes from SAB
breweries are being reused or recycled.
SAB’s newest brewery, Ibhayi, near
Port Elizabeth in South Africa, which
opened early in 2001 with a capacity of
2.3 million hectolitres, was designed
from the outset to achieve the goal of
zero waste – the total reuse or
recycling of all by-products and
wastes.
INDUSTRY RECYCLING
SCHEMES
Much of SAB’s beer production is
supplied in reusable containers, such
as kegs and returnable bottles. Indeed,
in some countries virtually all sales
volume is in this form – for Pivovar
Saris in Slovakia the figure is 99.5%.
For others, the market demands other
types of packaging. Here the materials,
such as disposable glass bottles and
E N V I R O N M E N T A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
46
SC Ursus – Littercampaign:SC Ursus in Romania ran aprogramme at the Black Seacoast during the summer of2000 to educate localpeople and tourists aboutrespect for the environmentand the need to keepbeaches litter free. CostingUS$10,000, the schemeincluded beer bottle re-cycling facilities and wasrun in partnership with CIER(Central Information forEducation andRecreation of theBlack Sea).
SC Ursus is also amember of anindustry initiative onsolid wastemanagement, incooperation with theEnvironmentMinistry. This beganin February 2001and other membersinclude Coca-Cola,Colgate Palmolive,Procter & Gamble,Tetrapack andUnilever.
Zambian Breweries – reuse and recycling:Zambia Breweries estimates that more than half its materials are eitherreused or recycled. Plastic crates are recycled and outer crown cartons andpallets are returned to the supplier for reuse. Plastic bags are donated topeople with a handicap for re-work. Scrap metal is sold for recycling.
Zambia Breweries participates in a number of industry schemes, includingthe National Waste Management Strategy, the Environmental SupportProgramme and the Cleaner Production Initiative.
Ursus Brewery: Cluj – Napoca
produce lighter packaging and more
efficient routing reduces transport
costs and CO2 emissions.
Although less of a threat to global
warming, nitrogen oxide and sulphur
dioxide are pollutants and we have
begun to collate data centrally, so as to
be in a position to report trends in our
performance in future years.
CFCs contained in some refrigeration
units have been identified as a threat to
ozone layer depletion. We have started
to monitor local procedures to dispose
of redundant refrigeration equipment,
where specialist contractors are usually
engaged.
cans, are easy to recycle, given
adequate facilities, or are biodegradable,
in the case of sorghum beer cartons.
Most SAB companies, including the
soft drink operations, are engaged in
promoting recycling schemes and
raising public awareness through
education, sometimes working with
industry partners. The accountability
review identified that only Russia in
Europe, Tanzania, Mozambique and
Ghana in Africa, and China are not
active in some way. However, the trend
in the industry is towards more
disposable packaging and the scale of
recycling activity is limited. Steps to
South African Breweries Corporate Citizenship Review
47
What you think mattersSAB companies are in regularcontact with local stakeholdersabout their environmentalimpacts. As we extend ourgroupwide approach toenvironmental management, we are seeking to engage with a broad range ofstakeholders.
We particularly welcome yourviews on the priorities within the list of our environmentalimpacts and how to strike abalance between social,economic and environmentalissues. Please let us have your comments to:[email protected], or fax+27 11 339-2389
co2 RECYCLED FOR REUSE
PRODUCT OUTPUT AND CONSUMPTIONPREPARATION AND PRODUCTIONRAW MATERIAL INTAKE
REDUCE REUSE
FOOD PRODUCTS
LIVESTOCK FEED
RECYCLE AND RESPONSIBLEWASTE DISPOSAL
Web site references:
Business in the Environment www.business-in-the-environment.org.uk
International Standards Organisation www.iso.ch
National Occupational Safety Association www. nosa.co.za
South African Breweries plc www.sabplc.com
Optimising resource consumption
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
26
LENGTH OF SERVICEOVERALL AVERAGE WITH FIVE YEARS PLUS
Groupwide average for 2001 at 58.6%(57.4% in 2000)
2000 2001
0
10
20
30
40
50
60
70
SouthernSun
SoftDrinks
BeerSA
SABIEurope
SABIAfrica
%
At the heart of SAB’s approach to
corporate social responsibility is the
recognition that running a business is
not just an economic activity of interest
to those who gain financially.
Certainly, our principal purpose is to
create wealth by turning natural
resources, human ingenuity and financial
capital into products and services, which
succeed in the market place.
However, SAB has long understood
this activity has both positive and
negative impacts on society far beyond
those immediately involved – and it has
always sought to manage the business
accordingly, whether that be minimising
environmental impacts or engaging
local communities.
We believe this should hold true for
every public company anywhere in the
world. However, the reality for us is that
we operate mainly in emerging
markets. Here, especially, business is
expected to play a pivotal role not only
in building prosperity, but also in
shaping social development and in
upholding high standards.
The way we treat employees, the fact
we always resist paying bribes, the
care we take when promoting our
alcoholic beverages and gaming
activities, the involvement we have in
local communities – all these set an
example of corporate behaviour and
add to the quality of life in the societies
where we conduct our business.
Social
“SAB is changing and growing rapidly. As such, we
are striving to strengthen our sense of corporate
culture and our ability to work for the greater good,
both as an employer and in our relations with society
at large” Pete Lloyd Organisation Development Director
EMPLOYEES
SAB companies seek to offer their employees pay and benefits, which
are fair when related to the skills and performance of the individual,
and to prevailing conditions in the industry and country as a whole.
Furthermore, working conditions must be safe, and individuals allowed
the opportunity to develop to their full potential.
One indicator of employee satisfaction with our performance is length
of service. Over half our staff have stayed with the group for five or
more years – currently 58%, slightly up on the previous year.
However, labour turnover as a whole has started to increase; one in
seven employees left the group last year, up from one in eleven during
the previous year. Operations in Poland, Hungary, and the Czech
Republic, together with Beer South Africa, ABI and Southern Sun
were most affected. A major part of turnover is retrenchment –
discussed above; of some 4,000 individuals who left, nearly 60% are
accounted for by retrenchment of posts. The total number of
redundancies was down slightly on the previous year. Nonetheless,
the rising level of labour turnover is a concern and will be carefully
monitored.
Our social business principles – in briefEmployees
● fair remuneration, according to skills and performance andrelated to competitive industry and country conditions
● continuous improvement in health and safety performance
● an environment in which all individuals and teams candevelop their full potential
● respect for the wide range of human diversity andencouragement of inclusiveness
● honest and respectful communication, freedom ofexpression, right to free association of employees andcollective bargaining
● encouraging employees to be creative, innovative andopen to new ideas
● integrity in business conduct – not engaging in, ortolerating, any corrupt practice
Products and services
● promoting products and services in an honest manner,respecting the values of our consumers’ societies
● engaging with issues of concern in society and, throughconsumer education, seeking to avoid the misuse of our
products and services
Community engagement andconsultation
● partnerships which bring measurablebenefits to people in local communities;particular support for organisations whichstrengthen and develop civil societies
● regularly consult people affected byoperations, both formally and informally,especially on social issues andenvironmental impacts, giving due weightto their views
SAB’s corporate accountability framework is based on acomprehensive set of 26 detailed Business Principles,covering economic, social and environmental impacts (seewww.sabplc.com).
Social impact – at a glance● investment in training up – five days on average for every
employee worldwide
● long service steady – more than half employees stay fiveyears or more – but labour turnover rising – one in sevenleft during the year
● groupwide monitoring system established for women inmanagement – currently one in four
● record commercial equity spending in South Africa, butroom for improvement on employment equity across ourSouth African operations
● new partnership for global alcohol charter endorsed
● action programmes for HIV/AIDS in place for all Africancountries
● corporate social investment spend of US$9 million – at 1.4% of pre-tax profits, slightly down on last year
DISABLING INJURY FREQUENCY RATEPER 200,000 HOURS WORKED
0
0.5
1
1.5
2
2.5
3
3.5
4
SouthernSun
SoftDrinks
BeerSA
SABIEurope
SABIAfrica
A
PAY, PENSIONS AND
HEALTHCARE
SAB companies seek to offer
employees a total remuneration
package that is fair, having regard to
market conditions. In some countries,
this is significantly better than the
comparable local average, taking
into account healthcare
benefits and retirement
provision. This year’s
accountability review
ascertained that all
SAB companies
now offer
access to
primary
healthcare,
going
beyond
occupational
injuries and often
including dependants.
All company employees
have access to either
state or company pension
schemes.
The accountability
review examined pay rates
in each SAB operation, looking
at differentials and averages
among lower paid grades. All are
believed to exceed national legal
minima, where applicable. Next
year, the review will focus on
how local living costs compare
with our rates among the lowest
paid grades.
HEALTH AND SAFETY
SAB’s responsibility as a good
employer goes beyond remuneration to
ensure a safe working environment.
Many SAB companies use the NOSA
occupational health and safety
standard. All sites in our South African
companies are fully NOSA accredited,
along with four in SABI Africa and two
in Europe.
As pledged last year, we have
instituted a standard groupwide
assessment of accident rates, using
the externally recognised DIFR
measure (disabling injury frequency
rate). Monitored site by site, this will
focus attention on poor performers and
so drive down accident rates to the
lowest practical level. This year’s
groupwide average is 1.7, higher than
we would like; nonetheless, more than
half of SAB companies have rates
below 1.5 – a benchmark figure as the
threshold for achieving NOSA’s 5 Star
standard.
The DIFR for Ghana and Canary
Islands was disappointing and action is
being taken to reduce the accident
rate. Most regrettably, during the year,
in China one employee of our associate
company, CRE Beverage, attempted
to rescue a colleague who had
collapsed in a fermentation tank and
died due to high levels of CO2. In
Poland, two employees of a building
contractor were killed while working on
our Tyskie site, with a further contractor
S O C I A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
28
Dental clinic for employees atLech Breweries, KompaniaPiwowarska in Poland
fatality in Poznan – due to
inappropriate use of safety equipment.
In SAB, safety for all employees and
contracted workers is an absolute
priority: in a drive to increase safety,
accident rates are now being
monitored centrally throughout all of
our operations and reported to the
board on a half yearly basis.
FOCUSING ON HIV/AIDS
Last year, we said the scale of our
effort to address the HIV/AIDS
pandemic had to be uplifted
dramatically. This was set as a key
target for improvement. All our
operations in Africa recognise AIDS
as both a human tragedy of
unprecedented proportions and a vital
business issue: disease-related deaths
are noticeably increasing staff turnover
rates. All SAB operations have either
already incorporated awareness,
education, prevention and treatment
action into their strategic business
plans, or will do so in the coming year.
In Kenya, for example, all employees
have attended mass awareness
workshops and 13 specially trained as
peer educators. Ten have volunteered
to serve on the HIV/AIDS coordinating
committee and they have upgraded the
staff medical scheme to include
treatment for HIV/AIDS (excluding anti-
retroviral drugs).
In Malawi, Chibuku Products is now
running awareness education sessions
and has introduced the free issue of
condoms at two of the four breweries.
The programme will be extended to the
remaining
breweries and
to taverns
during the
coming year.
In Mozambique,
HIV/AIDS is
now a key focal
area in the
strategic plan.
A ‘knowledge,
attitudes and practices’ survey
was recently conducted and a
communication and awareness
programme implemented in all areas
of the business. Free condoms are
distributed in all their clinics to staff.
A task team and union officials have
been trained, with peer group leaders
now being identified.
TRAINING AND
APPRAISAL
A commitment to offer all employees
the opportunity to develop their
skills can ring hollow if adequate time
is not set aside. On average, all
employees received five days training
during the year under review, up
a quarter on the previous period. This
includes employees on lower-skill
grades. The accountability review
examined the allocation of time
and found hourly-paid staff benefit
equally with managerial and executive
levels.
South African Breweries Corporate Citizenship Review
29
TRAINING SPEND AS APERCENTAGE OF PAYROLL
*Excludes China
0
1
2
3
4
5
SouthernSun
SoftDrinks
BeerSA
SABIEurope
SABIAfrica
%
Staff regularly attend training at Beer South Africa’s Training Institute
0
10
20
30
40
50
60
70
80
90
BeerSA
AppletiserABISouthernSun
%
SELECTED DIVERSITY DATA(SOUTH AFRICA ONLY – % BLACK,ASIAN, COLOURED)
*Excluding hourly paid employees
Executive/management Total staff
WOMEN IN MANAGEMENT
Groupwide for 2001 at 23%(24% in 2000)
2000 2001
0
10
20
30
40
50
SouthernSun
SoftDrinks
BeerSA
SABIEurope
SABIAfrica
%
To provide a recognised external
benchmark, the review also
examined training budgets as a
proportion of total payroll costs. This
revealed that 74% of group
companies equalled or bettered the
overall American Society for Training
and Development’s 2001 benchmark
of 1.8%. SAB’s South African
companies all exceed this level, but
there is some evidence that they may
be falling behind the investment
made by other comparable national
companies. For example, a survey by
P-E Corporate Services in 2000
among 750 employers in South
Africa representing 1.5 million
employees found that companies
typically spend 4.3% of payroll on
training, up from 3% in 1997.
DIVERSITY
Last year, we highlighted the different
managerial and executive grading
systems in use across the SAB group
and explained how this caused
difficulties in compiling consistent
data about the participation of
women in senior roles. These have
now been successfully reconciled.
Women account for 23% in
management grades, roughly equal
to the figure for the workforce overall.
This is currently standing at 24%,
down slightly from 25% last year
(excludes China).
Given the nature of our industry and
the disproportionately low levels of
women promoted to senior roles in
business generally, we believe this
performance to be positive.
However, the overall average is
boosted by the strong performance
of Southern Sun and so masks
some poor performing divisions.
Partial data from last year’s
accountability review identified
relatively low levels of participation in
SAB’s workforce by people with a
disability, compared with the general
population. This year’s review
examined whether disability issues
are addressed in strategic business
plans – with disappointing results.
However, Beer South Africa’s
Isando region has taken a lead.
Their newly formed Employment
Equity Consultative Committee (a
requirement of the Employment
Equity Act) highlighted the need for
action to promote and implement
equity for all sections of society.
Thus, two opportunities for workers
with a disability were created,
including a receptionist position at
the regional office. During the year,
evidence of such good practice will
be shared around the group.
In South Africa, companies are
required under the Employment
Equity Act to address imbalances in
the composition of the workforce.
S O C I A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
30
We continue with our efforts to focus
on this issue and report an average
executive/management percentage
of 15.3 and total staff percentage of
74.6 for this region.
A survey by P-E Corporate Services
in 2000 among 750 employers
in South Africa representing
1.5 million employees found
the percentage of black senior
managers to be 16%, up from 4%
in 1994 but still well below the
proportions in the workforce as
a whole (85%).
HUMAN RIGHTS
SAB companies seek to respect
fundamental human rights; this goes
beyond our core principles of valuing
diversity and encouraging
inclusiveness. We seek to respect
the 1948 UN Universal Declaration of
Human Rights and the various
subsequent International Labour
Organisation (ILO) conventions. For
example, no children under the age
of 16 are employed or otherwise
engaged anywhere in the SAB group.
However, we have not yet codified
this approach into a formal policy.
This is a task for action in the current
year. At present we are confident that
no SAB company uses any form of
forced labour. We have not checked
the incidence among suppliers,
although we are not aware of any. As
regards site security arrangements,
we have yet to establish groupwide
standards and ensure they are
adopted by contractors. At present,
we are not aware of any complaints
about current local arrangements.
EMPLOYEEINVOLVEMENT
SAB companies believe in freedom
of expression and the right of
employees to join trade unions for
collective bargaining purposes. They
try to build a sense of common
purpose through open and honest
communication.
Across SAB, levels of participation in
trade unions are generally on a par
with or higher than equivalent
national rates, according to ILO data.
Currently 55% are members, slightly
down on last year.
Last year, as a result of industrial
action, SAB lost in total 60,000
working days, while during this
reporting period only ABI suffered a
dispute – losing 1,490 working days
as a result.
SAB operating units reported a total
of 383 applications to industrial
tribunals arising from a variety of
grievances by staff about alleged
failures in employment procedures.
Almost a third of these cases were
still outstanding at the year end; of
those that have been concluded,
61% were found in favour of the
company and only 11% against, and
28% were settled before being heard
by a tribunal.
South African Breweries Corporate Citizenship Review
31
0
20
40
60
80
100
ChinaSouthernSun
SoftDrinks
BeerSA
SABIEurope
SABIAfrica
%
UNIONISATION
Groupwide average 55.0%
COUNTERING
BRIBERY
SAB does not tolerate any
form of corrupt practice. Yet in
some markets, this is far from
the national norm and runs
contrary to what some regard
as the customary way of
doing business. It is, therefore,
commendable that, out of
more than 40,000 employees covered
by this review, only 20 staff were
suspected during the year of being
involved in cases of bribery or
corruption (excluding cases of petty
theft).
Group companies either translate into
local languages SAB’s code of conduct
and ethics or draft their own (no less
strong) local code. These are then
disseminated to managers and
employees. Depending on local needs,
briefings are added to induction
procedures for new staff, workshops
held for existing staff and other action
taken.
Last year we reported that two
countries did not take steps to
communicate internally what
procedures and activities are
considered acceptable behaviour; we
pledged to strengthen reporting
procedures. This has now been
achieved and a complete groupwide
approach is in place.
Now our focus is
shifting to
S O C I A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
32
Cases of
alleged
bribery and
corruption
Instances identified duringthe year, as follows:
Castle Brewing Kenya –two staff involved inseparate instances; courtcases are pending
Kompania Piwowarska –two cases involving foursuspects, although theevidence was not strongenough to sustain aprosecution
Beer South Africa – oneemployee suspected ofsoliciting a payment from amaintenance contract; acriminal investigation isunder way
ABI – ten separateinstances, each involvingone staff member
Appletiser – one case of anemployee receiving a giftfrom a supplier; dismissalresulted
Southern Sun – two minorinstances at hotelsresulting in both staff beingdismissed
Implementing
ethical standards:In Poland, Kompania Piwowarska(KP) has drawn up its own standards,documented in ‘Ethical and PeoplePrinciples’, which is aimed particularly atexecutives and managers. Workshops involving employee representativeshave discussed company values during the year and the SABI EuropeEthics Policy is being rolled out internally. Once adopted, KP will extend it tosuppliers.
In Slovakia, Pivovar Saris drafted a company values statement with thedirect involvement of 60% of the workforce. The standards relating tobribery and corruption are communicated to major suppliers andcustomers. At induction employees are given training concerning:
● code of conduct
● mission, vision and values
● company policies
SAB International – europe
Ethics involves a clear conscious commitment
to do the right thing at all times. It supports
us in our behaviour with our stakeholders as
we apply our values to achieve our Mission.
BUSINESS ETHICS
Guidelines to Employees
BUSINESS ETHICS
Guidelines to Employees
communicate this strong ethical stance
to suppliers, customers and other
stakeholders as appropriate. So far ten
countries covered by the review do so
formally, for example, by providing
copies of the ethics code or including
cancellation clauses in contracts. In
other countries procedures are more
informal, and this is a focus for
attention in the year ahead.
SOCIAL ASPECTS OF
ALCOHOL AND GAMING
Since the earliest times, alcohol has
played an important part in social life
and community celebrations. Today, in
diverse cultures around the world,
many millions enjoy having a drink,
while relaxing with friends and family.
SAB fully recognises, however, that a
small minority is at risk from alcohol
abuse, and this can cause serious
problems, for individuals, their families
and society as a whole.
That is why we adopt a highly
responsible approach to advertising
and promotion, with stringent codes,
especially to protect young people.
PARTNERSHIPS FOR
PUBLIC EDUCATION
Along with others in our industry, we
fund consumer education, warn of the
dangers from misusing our products,
and support research into the
incidence of alcoholism. In South
Africa, SAB was a founder member
of the Industry Association for
Responsible Alcohol Use (ARA) and is
a member of the Washington-based
International Center for Alcohol
Policies (ICAP).
In other countries, we are adopting a
similar developmental role. For
example, in Botswana, Kgalagadi
Breweries is helping to implement a
new code of advertising and promotion
practice.
The accountability review asked each
group company to outline its current
activities to consider social aspects of
products and services. All companies
bar three reported having active
programmes.
For example, in Botswana the two
SAB companies contribute 1%
of profit after tax each year to the
KMS Trust, which contributes to
social developments, including social
aspects of products and services.
The trust board comprises members
of management and community
representatives, and meets formally
four times a year to review requests
and amend policies.
South African Breweries Corporate Citizenship Review
33
Responsible
gaming:
The South African casinosector launched a NationalResponsible GamblingProgramme (NRGP) in June2000, run by the NationalCentre for the Study ofGambling at the University ofCape Town. Southern Sun’sGaming Division is a fullparticipant in the programme,which addresses problemsassociated with pathologicalgambling through research,public education andawareness, treatment andcounselling.
Activities include stafftraining, public servicecampaigns, new researchinto treatment and a ‘problemgambling’ free helpline.Southern Sun contributed
R773,441(US$105 445) tothe programmein the currentyear, around15% of thetrust’s totalbudget, basedon its size in theindustry.
RESPONSIBLEPROMOTION
This year’s accountability review asked
all group companies to report any
breaches of marketing laws or industry
codes concerning their advertising or
promotional practices: there was no
incidence in any SAB company. It also
asked about complaints made to
standard-setting bodies, not involving
formal breaches. Only two instances
were reported:
● Appletiser’s Valpré radio and print
campaign prompted two complaints
to the Advertising Standards
Authority; as a precaution, the
company modified the materials and
the complaints were not pursued;
● in Zambia, the deputy
minister of religious
affairs complained
about one particular
advertising hoarding,
which was
immediately taken
down.
As a company which
spends some
US$201 million on
advertising, marketing
and other promotions
each year around the
world, we believe this to
be an exemplary record,
demonstrating the
seriousness with which
group companies
address their responsibilities in
marketing.
COMMUNITIES
SAB companies have a long tradition
of contributing to the communities in
which they operate. In addition to
social benefits, the business gains
from improvements to the
macroeconomic environment – more
job opportunities, improved
education, better health and welfare
services. We are committed to
continuing support for a wide range
of corporate social investment (CSI)
programmes run and supported by
our operating units, funded from the
revenues they generate, as they
know best the local needs.
S O C I A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
34
Promoting
responsible
alcohol
consumption in
Poland:
Alcohol consumption in
Poland – previously among
the highest in the world – is
falling, partly helped by a
switch from spirits to beer. In
1992, average per head
consumption was the
equivalent of 10 litres of 100
percent pure alcohol each
year; by 1998, it had
dropped to 6.8 litres. At the
same time, beer is growing
as a share of the total, rising
from 31% in 1995 to reach
42% in 1998.
Despite this positive trend,
Kompania Piwowarska,
SAB’s Polish subsidiary,
recognises some people
remain in danger of abusing
its products. It has adopted
a 14-point voluntary code on
marketing and promotions,
especially to protect minors,
which is more restrictive
than legislative requirements.
With the rest of the industry,
it is funding a TV campaign
‘Drunk drivers cause death’
and another ‘Don’t sell to
underaged’. In addition to
such voluntary initiatives,
1% of excise taxes are paid
to the National Anti-Alcohol
Agency, PARPA, a
government agency with
representatives in local
communities.
A limited number of strategic community
investments are also undertaken by the
group corporate accountability
department on behalf of SAB plc, while
some projects with regional impact will
be undertaken at divisional level.
COMMUNITYENGAGEMENT
Currently our groupwide CSI
programme employs the equivalent of
30 full-time members of staff through-
out the business. Individual employees
in several companies are also directly
involved in supporting our projects. In
Uganda, for example, up to one hour
of working time a month can be set
aside for volunteer projects, while in
Swaziland up to five percent of working
time can be used for volunteering.
This year, SAB contributed
US$9 million worldwide through
CSI projects. This represents 1.4%
of group pre-tax profits, high by
international norms, but slightly down
on last year’s 1.8%. Over half of all our
social investment is directed towards
projects that support either education
or general community welfare.
SAB educational programmes include:
● China, where Shenyang brewery
has donated approximately
US$18,000 to each of four schools,
focused on cities that have limited
access to funds and resources.
● In Kenya, SAB sponsors a trophy for
educational excellence in the Thika
community.
● Extensive improvements, including
the building of new classrooms and
renovation of the water system, have
been made to two schools in
Zambia; the Senanga Primary
School and the Matero High School.
● Beer South Africa has contributed
to the Model United Nations High
School Debate, a debating
competition designed to promote a
cross culture of learning in high
school, stimulate cross cultural
exchange, instil a sense of global
citizenship and help develop
potential future leaders.
● Appletiser has provided
sponsorship to the Community
College in Elgin, which seeks to
develop both adults and children
from disadvantaged communities,
with holiday courses and
leadership programmes. Two
Appletiser employees are
participating in the college’s adult
basic education and training
programme.
South African Breweries Corporate Citizenship Review
35
Education 26%
Welfare 33%
Health 13%
Environment 3%
Arts, culture and recreation 4%
Other 21%
COMMUNITY SPENDBY FOCAL AREA
% spend on community contributionsby subject
S O C I A L continued
Sout
h Af
rican
Bre
werie
s Cor
pora
te C
itize
nshi
p Re
view
36
Zanzibar Malaria
Eradication
Project, Tanzania:
Malaria is the biggest singlekiller in Tanzania. Any effortto check the spread andincidence of the diseasemakes a significantcontribution to theimprovement of people’slives. Zanzibar is an islandoff the coast of Tanzania, notpreviously a strong marketfor beer.
During the year, TanzaniaBreweries donated Tsh10million (US$11,000) to the Zanzibar MalariaEradication Project, whichsupplies malaria treatmentand preventive drugstogether with pesticide tospray mosquito breedinggrounds. This has broughtclear benefits to thecommunity and helped thecompany’s presence andawareness of its products inZanzibar. Involvement in theproject, and ourcommitment to improvingthe standard of life, has alsoforged closer links with localand central governmentagencies and other keystakeholders.
Kwase Kwaza
Women’s Group,
South Africa:
Southern Sun is working with awomen’s group aligned to theAlexandra Chamber ofCommerce to set up arestaurant in a township nearJohannesburg. The aim is to filla ‘niche’ in quality traditionalcooking and to createemployment in the region, boththrough its direct operationand by re-investing revenue insimilar roll-out projects.Women taking part gaintraining and experience as wellas employment opportunities.
Southern Sun has contributedexecutive time, training andtrading equipment to theproject. Employees helping inthe project gain a broaderunderstanding and experienceof community life, useful intheir day-to-day work.
An equally wide range of welfare
projects took place during the year,
including:
● In Zambia, several feeding
schemes, including food to
Fountain of Hope, Mother Teresa
Hospice and Kasisi Orphanage;
● In Swaziland, Christmas hampers
provided to local hospices;
● In the Canary Islands, professional
and social assistance for
disadvantaged people through the
Tenique Foundation; and
● Beer South Africa continues its
support of Women in Rural Areas
(WIRA), a rural women’s group to
empower villagers and promote
vibrant socio-economic centres.
Since inception, WIRA has
established successful enterprises
ranging from poultry farming, brick-
making, jam and juice-making,
mohair jerseys for export markets,
bakeries and embroidery.
Our Polish breweries support a wide range of cultural events in the community
Among other schemes receiving
support were:
● Environment: Southern Sun’s
R100,000 (US$13,633) to the Save
Chapman’s Peak Campaign – an
important attraction for the tourism
industry – following devastating
fires and rock falls in the Cape
Peninsula.
● Health: restoring Mawenzi Hospital
Outpatient Department in Tanzania,
at a cost of US$52,000, which had
become almost non-operational.
● Arts and culture: Our Polish
breweries support a range of
projects, including the Summer
Polish Film Festival, the
International Music Festival, and
the International Film Festival in
Poznan.
These and the many other schemes
supported by SAB companies bring
genuine benefits to their local
communities and support the
commercial success of the company.
Most are chosen in response to
appeals, rather than as part of a
planned strategy following community
consultation and evaluation of the
business case. We intend to develop
our approach, encouraging a larger
proportion of CSI spend into long-
term projects that benefit both local
communities and the business. We
also intend to adopt benchmarking
techniques, learning from the best
international practices.
South African Breweries Corporate Citizenship Review
37
What you think
matters
SAB companies regularlyconsult with stakeholders intheir local communities aboutspecific aspects of day-to-dayoperations and overallperceptions of the company.Some of the larger businessesalso undertake formal attitudesurveys. For example, BeerSouth Africa was consideredthe corporate citizen in SouthAfrica as stated in theBusiness Social Monitor 2000,which researches theperceptions and attitudes ofkey role players on corporatesocial investment issues.
This Corporate CitizenshipReview aims to explain ourapproach to a wider audience,demonstrating the socialimpact of our operationsaround the world. Please let us have your comments to:[email protected], or fax +27 11 339 2389
Chapman’s Peak
Web site references:
American Society for Training and Development www.astd.org
International Center for Alcohol Policies www.icap.org
Industry Association for Responsible Alcohol Use www.ara.co.za
National Occupational Safety Association www.nosa.co.za
South African Breweries plc www.sabplc.com