GOVERNANCE AND REMUNERATION

Social, ethics and transformation committee report
for the year ended 30 September 2018

I am pleased to present the social and ethics report on behalf of the social, ethics and transformation committee and confirm that the committee discharged all its responsibilities and carried out all the functions assigned to it in terms of regulation 43 made under the Companies Act, and as contained in the committee's charter.

Responsibilities

In executing its social and ethics responsibilities, the committee considered and monitored Nampak's activities, having regard to human rights, relevant legislation and prevailing best practice, in matters relating to:

  • good corporate citizenship, with a focus on corporate social investment and enterprise development
  • consumer and customer relationships
  • health and safety
  • the environment, with the assistance of the risk and sustainability committee
  • socio-economic development, ethics and transformation

Report on Responsibilities

Good corporate citizenship – focusing on corporate social investment and enterprise development

The main focus of Nampak's corporate social investment for many years has been education and the partnership we have with seven carefully selected schools, is now in its sixteenth year. These schools have produced a number of outstanding students, many of whom have gone on to obtain Nampak bursaries and subsequently were employed within the group.

As the largest packaging company in Africa, we acknowledge the important role we have to play in environmental education and we continue to sponsor the Eco Schools programme, which has been in operation for many years.

Enterprise development is important in assisting small and medium size businesses to play a meaningful role in the economy.

We continued our support of a number of enterprise development initiatives during 2018, including Tin Pac packaging, Last Drop Juice and Vukani MaNtuli.

Consumer and customer relationships

The committee reviewed performance against customer and consumer legislation and regulations and recorded that there were no material breaches. We are pleased to note that the majority of our manufacturing sites continued to hold quality certifications, including those relating to food safety standards. Many of our operations are subject to regular audits by our customers.

Health, safety and the environment

The committee acknowledges the importance of health and safety in the workplace and monitors performance against safety tolerance levels. We are pleased that the lost-time injury frequency rate (LTIFR) continued to improve and was 0.27 in 2018 compared to 0.41 in 2017, 0.48 in 2016 and 0.89 in 2015. Individual incentive bonus payments are linked to safety targets. OHSAS 18000 certification or other safety standards have been achieved by 18 sites in the group.

Refer to the full sustainability report on our website, www.nampak.com , for more details of activities with an impact on the environment, which were considered by the risk and sustainability committee.

Ethics

The committee ensures oversight of employment relationships, organised labour and the International Labour Organisation Protocol on decent work and working conditions.

Nampak is committed to promoting equal opportunities and fair employment practices across its business.

Our code of conduct and business ethics was recently revised to meet current conditions and forms the basis of ethical behaviour in the group and sets the minimum standards expected of all directors and employees, regardless of the country in which they are employed. These individuals are obligated under the code to act with honesty and integrity and to maintain the highest ethical standards. Tip-Offs Anonymous, which is independently administered, allows callers to confidentially report any violations of Nampak's policies and procedures. The committee exercises ongoing oversight over the management of calls received. A total of 45 (29 in 2017) reports were received in 2018, which resulted in 15 (12 in 2017) disciplinary hearings and five (four in 2017) dismissals.

As a result of these reports 38 (41 in 2017) forensic reviews were conducted in addition to investigations. The reviews resulted in 23 (10 in 2017) disciplinary hearings which led to 12 (six in 2017) dismissals. The remaining reviews did not reveal substantiated evidence of misconduct or irregularities.

No human rights violations were reported during the year, nor were any material incidents of corruption detected or reported.

The committee considered and is satisfied with the progress in monitoring Nampak's compliance with its code of conduct and business ethics, the 10 principles of the United Nations Global Compact as well as the Organisation for Economic Co-operation and Development's recommendations regarding corruption. The committee also considered local jurisdictional issues and is satisfied that there was compliance in all respects. The committee is pleased to report that there were no reportable offences during the year.

Transformation

Nampak is fully committed to transformation. The committee monitors the company's performance against its broad-based black economic empowerment (B-BBEE) targets in each category on the scorecard. We retained our level 6 contributor status in 2018 and we continue to focus on improving our contribution towards B-BBEE.

Although recruitment has generally been in the right direction it has not been possible to advance employment equity as fast as we would have preferred. This remains a key focus area.

The full sustainability report is available on our website, www.nampak.com.

PM Madi

Chairman of the social, ethics and transformation committee

16 November 2018