Impact matters - Serious Social Investing 2013

FirstRand Limited

SSI 2013

Sizwe Nxasana

Agenda

1. Structural Challenges

2. Corporate Governance

3. Business and Community Development

4. Partnership and Collaboration

5. Conclusion

South Africa's structural challenges

SA is still one of the world’s most unequal middle income countries

one of the world’s highest gini coefficients

POVERTY

EDUCATION

UNEMPLOYMENT

Source: Development Indicators, SA Govt.


POVERTY

EDUCATION

UNEMPLOYMENT

• Unemployment rate in Q4 2012 was 24.9% (35.9% expanded)

• Approx 61% of job seekers do not have matric

• SA's labour force participation rate is 54.6%

• World average ~ 64.1%.

• Youth unemployment rate ~ 48%

• Brazil ~ 18%%

• Sub-Saharan Africa ~ 12%

• World average ~ 13%

• By 2015 more than half of the working age adults will still be

out of work

Source: StatsSA ; ILO


EDUCATION

UNEMPLOYMENT

POVERTY

The rate of unemployment is

worse in Free State, Mpumalanga and

Eastern Cape

Lower unemployment

rates associated with higher

levels of education

Source: Stats SA, Q1 2012 Survey


EDUCATION

UNEMPLOYMENT

Source : StatsSA

POVERTY

% CSI SpendGP 23.3%WC 11.4%EC 7.6%KZN 6.4%MP 4.2%NW 4.2%LP 4.1%FS 2.3%NC 2.0%National 34.6%

Source: JET

30 37 15


EDUCATION

UNEMPLOYMENT

• Adult literacy rate ~ 89%

• While 76% of whites over 20 years old and 62% of Indians have a high school or higher qualification, this figure is only 35% among blacks and 33% among the coloured population

• Student participation rate is almost 20% (proportion of 18- to 24-year olds in higher education• Whites 59%• Indians 46%• Coloureds 15%• Blacks 14%

Source : StatsSA

POVERTY

Agenda





5. Conclusion

• Impact of the global financial meltdown

• Increased social isolation

• Civic alienation

• Flaw of “Everyman for himself” mindset exposed

• Image of business fraternity damaged

• Investors

• Customers

• Government

• General public

Future of Capitalism

• Desperate need for business community to

• Repair image

• Re-examine value system

• Give a “human face” to capitalism

Significant shift in relationship between private enterprise and society

Financial Performance

Environmental Performance

Social Performance

Ethical imperative

towards investors only

• New Companies Act 71 of 2008

• Came into force May 2011

• Approach sourced from King III Report on Corporate Governance

• Shift from ‘shareowner compact’ to ‘stakeholder compact’

• States that reputation is a company’s most significant asset

• Management and effective stakeholder engagement crucial

Proper governance and management focus on social and ethical matters

Financial Performance

Environmental Performance

Social Performance

Responsible business

conduct and good

corporate citizenship

• Company acting in a responsible and ethical manner leads to

• Good financial performance in long run

• Maintaining productive relationships with government and regulators

• Requirement to establish

• Social and Ethics Committee

• Social and Advisory Panel to assist committee

• Ensures proper governance and management focus on social and ethical matters

Agenda





5. Conclusion

Why get involved in community development

Customer Employees

ShareholdersSociety

Profit / People / Planet (Triple bottom line view)

What is good for one is good for the others

Profit

People

Planet


• Meet customer needs

• Establish strong customer relationship

• Maintain strong consumer value

• SustainabilityCustomer Employees

ShareholdersSociety




• Working conditions• Employee

engagement• Reciprocity

• Volunteerism

Customer Employees

ShareholdersSociety




• Sustainability• Corporate

Citizenship• Brand image

Customer Employees

ShareholdersSociety




• Accountability• CSI / Partnerships

• Private• NGOs• Government• Society

Customer Employees

ShareholdersSociety



Agenda





5. Conclusion

• Responding to national need to address structural challenges

• Taking advantage of the national plans and commitments by key stakeholders i.e. NDP Vision 2030• Fresh vision for SA future

• Useful beacons for guidance

• Active Citizenry

• Importance of stakeholder consensus and willingness to work together

Rationale for collaborationProfit

People

Planet

• Working on increasing value for money• Increasing focus of interventions on priority areas

• Eliminate duplication of activities

• Increasing collaboration between non-governmental and government interventions

• Jobs fund

• Education spend

• Improving sustainability of the interventions

• Promoting integration between reform, transformation and improvement initiatives

• Capitalising on the gains of the past 18 years

• Addressing systemic challenges in the country

Rationale for collaborationProfit

People

Planet

• Corporate-to-Corporate level

• Not much has happened

• CSI viewed as competitive

• Failure to distinguish between

• sponsorship to benefit business

• “right thing to do”

• Corporate-to-Government level

• Trust, a major factor

• Foundation to build trust

• Value importance of relationship

• Develop shared and common vision together

• Invest in relationship and nurture it

• Honesty is vital

• Differences must be understood

• Focus on commonalities

Partnership and Collaboration

Profit

People

Planet

• Consultative manner

• Greater involvement from company

• More sustainable solutions for beneficiaries

• Need to talk and listen to communities

• Understand intricacies of initiatives

• Design solutions for the communities

• Avoid imposing company/NGO-created solutions

• Takes more time to set up, implement and follow through

• Benefits of approach

• Ensures beneficiaries receive most suitable and sustainable benefits

• Easier to gain deeper understanding of involvement areas

• Focus through fewer areas of specialisation

Partnership with Communities

Profit

People

Planet

Agenda





5. Conclusion

• Perception of CSI

• Hard-earned reputation for flakiness

• Today’s leadership has evolved past this perception

• Difficulty linking to concrete tangible outcome

• Measurement is key

• Measure to understand

• Understand to control / monitor

• Control / monitor to improve

• Impact of CSI

• Social value is inseparable from its business value

• Business value of initiatives need to be rigorously quantified

• Partnership and collaboration on initiatives

• Collaboration framework

Conclusion

FirstRand Limited

SSI 2013

Sizwe Nxasana

Impact matters - Serious Social Investing 2013

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