Johannesburg, 10 January 2023 – No business can afford to ignore Environmental, Social and Governance (ESG).
As much as financial factors drive value, for companies to succeed today they also need to create value for stakeholders and broader society. Particularly with most countries taking up the fight against climate change and inequality, businesses that fail to employ sound ESG practices will quickly be left behind.
Increasingly accessing finance, capital and insurance cover is dependent on how effectively a company implements ESG strategies, not to mention the fact that those that don’t emphasise their ESG offering can suffer reputational damage.
For emerging economies like South Africa, beset with challenges that include having the largest carbon output in Africa and 13th in the world, ESG plays an even more critical role because millions of rand are at stake.
In an effort to decarbonise the continent and speed up the transition to clean energy, the African Development Bank (AfDB) and the bank’s Sustainable Energy Fund for Africa (SEFA) have approved a combined-equity investment of $20-million (R344-million) in the AfricaGoGreen Fund, a debt fund that promotes private investments in energy-efficient technologies and business models.
This comes on top of an $11.5-million pledge from the Nordic Development Fund to help Africa mitigate the effects of climate change.
Simply put, if South African businesses hope to access a share of this funding, they will need to embrace and display excellent ESG practices.
Lawrence Aldworth, National Compliance and Risk Manager at Bidvest International Logistics (BIL), says there are a number of requirements businesses should meet in terms of their ESG offering.
“You need to identify material risks and mitigate them to ensure you protect and enhance the
livelihoods and well-being of employees. You must also seek to reduce the emissions intensity of operations, a big part of which involves sourcing products from supply chain partners who are responsible in their dealings, thereby contributing to the circular economy,” he says.
“We obviously also have to comply with legislation and manage IT security risks, and provide assurance
through independent oversight. One of the most important factors is conducting business with uncompromising integrity.”
Given that the ESG targets BIL has set are aligned to the United Nations’ Sustainable Development Goals (SDGs), not being able achieve its objectives would negatively affect South Africa’s ability to meet its commitments as a signatory to the UN.
“Ultimately, this compromises the long-term sustainability of our company, the country, and the planet as a whole,” Aldworth says.
The Bidvest Group has identified a number UN SDGs that it considers most relevant to the company, namely:
Good health and wellbeing; Gender equality; Decent work and economic growth; Industry, innovation and infrastructure; and Responsible consumption and production.
One of the key ways BIL has ensured its ESG remains world-class is through the implementation of ESG scorecards. These are analysed by the company’s ESG committee on a quarterly basis and, where necessary, additional control measures are implemented to ensure the achievement of objectives.
In the 2021 financial year, the group also established an ESG Framework, which is a culmination of its sustainability ambitions, focused on the areas where it can make the biggest difference with specified targets and metrics.
These medium-term targets were used to determine specific ESG performance hurdles in the incentive scorecards. The consistent, focused attention on key metrics yielded great momentum and results during the 2022 financial year.
Today, the Bidvest board is 73% female and 83% black, while the company’s executive committee is 42% female and 50% black. Furthermore, R545-million was spent on skills development and bursaries in the 2022 financial year.
Local employment spend also increased from 68% to 74%, with suppliers ranked B-BBEE Level 4 or better.
In another notable ESG undertaking, Bidvest injected R149-million into employee and community support programmes, including those that assisted people in the wake of the country’s riots and floods.
In terms of its efforts to improve the planet, the group reduced emissions by 30% and water intensity by 26%.
BIL is one of South Africa’s largest logistics businesses, owned by services, trading and distribution powerhouse Bidvest. BIL provides an end-to-end supply-chain solution across a number of different industries. It offers international import and export services, using road, sea and air. When products arrive in South Africa, BIL is able to clear, warehouse, fulfil and distribute through final mile distributing services. The company has massive coverage throughout the country and access to worldwide forwarding network. And its leading technological capability gives customers full visibility of their orders 24/7, whether they’re single items or bulk, express or deferred.