Integrated Annual Report
2020

Social and ethics committee letter

SOCIAL AND ETHICS COMMITTEE LETTER

PHUMZILE LANGENI Social and ethics committee chair

In the most challenging year in the group’s history, I have been privileged to see our board and executive management teams lead ethically, without exception, despite the financial, economic and personal pressures of COVID-19. The group ethics charter, operationalised through an ethics function and ethics officers at both group and divisional levels, has been the foundation of this exemplary display of ethical leadership.

Over the course of the pandemic, the social and ethics committee provided heightened scrutiny of the group’s decisions and actions to ensure our commitment to ethical business practice was maintained. The committee reviewed and approved an updated whistleblowing policy in July 2020 and closely monitored whistleblowing reports and related investigations and resolutions. The requirements of the ethics matrix (introduced last year) and ongoing consultation between myself and the group ethics executive guided this process.

The operational impact precipitated by COVID-19 and the resulting national lockdown required great agility and care in the group’s response. COVID-19 committees were set up at executive committee and divisional management levels to assess the impact and develop business-specific protocols for each lockdown level. This included a swiftly implemented work-from-home strategy for all non-essential teams and the phased return-to-work plan that followed.
All initiatives were considered and implemented with reference to guidelines set by South African authorities.

The wellbeing of our employees is a critical priority. Comprehensive safety protocols to protect employees, including providing personal protective equipment, daily health checks, hygiene and social distancing measures, as well as ongoing communication, remain in place. This includes specific procedures to protect high-risk employees, including those with comorbidities. The group has also updated leave policies to align with COVID-19 regulations in the event that an employee tests positive or needs to self-isolate or quarantine after potential exposure. Employee assistance programmes to provide counselling and support to employees are available as a matter of course in all our businesses.

Notwithstanding the resilience our businesses have demonstrated, we are not immune to the severe socioeconomic impact of COVID-19. The board and management have had to make difficult decisions and choices to ensure the long-term sustainability of the group while preserving as many jobs as possible.

SA Taxi was able to avoid retrenchments and employees received full pay for the duration of the hard lockdown. Prior to the pandemic, TCRS was building capacity for the anticipated growth in the collections market, including ramping up human capital requirements, and had budgeted accordingly. However, collections from April to September 2020 decreased between 15% to 30% on aggregate below pre-COVID-19 levels and expected remaining collections are now expected to remain at approximately 4% below prior estimates. The division deployed its work-from-home capability rapidly and with great success, thus enabling continued collections, and protection of the business.

TCRS has had to adjust to the lower expected collections levels by cutting costs and raising efficiencies. The business has had no option but to reassess its organisational structure, including reducing the number of employees within the business. This required a Section 189 process (which deals with large-scale retrenchments) that affected 544 employees by the close of our financial year.

The social and ethics committee has stayed close to these developments to ensure management follows due process and provides the appropriate support to all employees through this difficult time. This included oversight of regulated consultations, mitigating strategies such as voluntary retrenchments, and detailed reporting on the impact of headcount reductions on diversity, employment equity, talent management and succession planning.

The assessment of ESG performance has correctly become an imperative to investors as ‘stakeholder capitalism’ has taken root and the threat of global issues such as climate change, inequality and poverty has escalated. The committee is pleased with the progress made in embedding social relevance in the culture of the business. The importance of mitigating ESE risk and delivering measurable positive impact – beyond reporting obligations – is key to us as an organisation. The group’s progress in this regard is therefore increasingly significant to society, our investors and clients, and in our employee value propositions, and will ensure that our businesses remain relevant to all their stakeholders over the long term. ESE performance is a very important topic for us, given our businesses' impact on and relevance to society.

During the year, the group adopted an ESE framework developed in consultation with a leading economics-based consulting firm, various development finance institutions and investors, and the management teams of SA Taxi and TCRS. The framework embeds ESE principles and associated measures and will help the board to ensure that the group’s impacts are appropriately managed to enhance value creation for Transaction Capital and its stakeholders. Progress against relevant metrics in relation to set targets will be reported to the committee on a biannual basis, at minimum. The framework will also enhance group reporting by providing an objective and balanced view of the group’s impact.

As an important component of the economic and social impact of the group and its divisions, transformation remains a high priority and focus for the committee. Associated targets remain in place as a component of executive management’s short-term incentive scheme.

For the year ahead, the social and ethics committee will focus on:

  • Continuing to build and grow a values-based management style underpinned by accountability.
  • Transformation, with a particular focus on improvements to the group and SA Taxi B-BBEE ratings, and employment equity profiles and diversity.
  • Embedding the ESE framework across the group.