Corporate governance report
The social and ethics committee chairman's report
In accordance with the committee’s mandate as stipulated in the Companies Act 71 of 2008, as amended, the social and ethics committee (SEC) monitors the company’s activities, having regard to any relevant legislation, other legal requirements or prevailing codes of best practice within its sphere of influence, with regard to sustained:
- Social and economic development
- Responsible corporate citizenship
- The environment, health and public safety
- Consumer relationships
- Labour and employment
- Ethical conduct and leadership
- Stakeholder engagement
The SEC met four times to consider matters within the committee mandate. The members comprise three directors, Khanyisile Kweyama, the chairman, Louis Von Zeuner, who is also the chairman of the risk committee, thereby ensuring that matters raised as an ethical risk are brought to the attention of the risk committee, and Navin Kapila. Refer to page 91 for meeting attendance.
The following matters were considered during the reporting period:
The board has a mandate to lead Telkom ethically and effectively. The SEC assists the board in discharging this duty. While we appreciate that ethical values go beyond mere application of policies, implementing policies that govern ethical behaviour and culture ensures that everyone is aware of the standards of behaviour expected from each individual. To this end, the SEC ensures that the company has a code of ethics in place that provides this guidance and direction to govern the ethics of the company.
The committee mandated the review of the Telkom BCoE and supplementary policies to ensure alignment within the group. The committee also reviewed the compliance statistics on the BCoE, the gift register and the conflict of interests declared.
In FY2019, we will be focusing on group-wide alignment of policies and principles that promote an ethical culture. One such policy that we will be looking to align throughout the group is the gift policy.
Further, we will be focusing on monitoring communication, awareness and training initiatives which will be tailored for the various divisions and subsidiaries.
The stakeholder engagement framework and policy were updated, and approved by the exco and the SEC. We developed an effective review process to monitor the implementation of stakeholder management response strategies throughout the group, and we continue to measure the effectiveness of the engagements with our stakeholders.
We will be increasing our focus on customers as our primary stakeholder, as we improve customer experience across the group.
The committee acknowledges the importance of good consumer relationships, and therefore various customer compliance initiatives were introduced. Customers were also accommodated with credit rehabilitation by downgrading their service to a more affordable option so as to adhere to the National Credit Act.
Customer treatment and customer experience include continuous monitoring and evaluation; as well as various initiatives such as education on how to derive more value from projects, to improve processes.
As a company, we strive to reduce the digital divide. The #datamustfall campaign resulted in zero-rated fees for universities and further education and training sites.
From the nature of the complaints received for matters reported to the Consumer Commission in terms of the CPA, as at the date of approval of this report, Telkom was not in breach of the CPA. The bulk of the complaints were attributable to poor internal administrative process and billing systems. This will also form part of our on-going focus areas for improving customer experience.
Good corporate citizenship
This consist of reducing corruption, developing communities and participating in sponsorships as well as donations. In line with our mandate to monitor the initiatives for reducing corruption, the quarterly reports from the forensic department were reviewed. Future focus areas would be to evaluate the impact of the fibre roll out on theft and vandalism statistics.
Amid the triple burden of poverty, unemployment and inequality, the Telkom Foundation has recommitted itself to supporting South Africa’s youth, by reinvesting in improving the quality of learning and teaching. The Foundation spends 70 percent, R41 million of its allocated R58 million, on education. It is the view of the Foundation that investing in education will not only contribute to addressing South Africa’s socio-economic challenges, but also bring about meaningful and impactful change in under privileged communities. The sponsorship properties portfolio was reviewed to determine the value and relevance, in line with the company model. For further details refer to the social and relationship capital on page 77.
Environment, health and safety
The committee reviewed reports provided on the Safety Awareness programme and the “Safety starts with me” awareness campaign that was launched in FY2018. The Employee Wellness programme historically focused mainly on Thuso, which had been successful in implementing HIV interventions and programmes. Future focus will be on absenteeism, injury on duty and the prevention and tracking of the disease. Driver safety was tracked through the vehicle tracking management system in order to analyse driver behavior and to provide advanced driver training where required.
Labour and employment
The company saw a noticeable improvement in the working relationship and a maturing engagement approach between the company and organised labour, which was in line with the collaborative partnership agreement that was signed between the parties.
The company also complied fully with the requirements of the Basic Conditions of Employment Act in relation to all statutory requirements.
A decision was made to manage business units on separate scorecards and initiate periodic assessments, with a review of the scorecards at the end of 2017 to determine which business units would be rated as separate entities and which ones would be rated as part of the Telkom rating. In order to manage this process effectively business unit scorecards have been developed and discussed with the business units to gain buy-in and assign accountabilities. Quarterly performance reviews highlighting gaps against required performance levels were conducted and exco wil agree on interventions to drive the delivery required. A reporting tool was implemented to monitor our performance against our strategy.
Business unit EE plans have been concluded. A forum to monitor the skills development spend gap is being considered for establishment.
The FutureMakers programme was launched in May 2015, aimed at enhancing market access opportunities, driving ICT innovation, and fostering inclusive participation of majority black-owned ICT businesses in Telkom’s supply and value chain. FutureMakers has enabled the development and growth of qualifying black-owned businesses in the ICT sector by providing financial and non-financial support. In turn, these businesses drive job creation. For more detail around the initiatives please refer to the online CSR report.
As at the end of December 2017 the fund had invested in 53 black-owned businesses, of which 67 percent were female-owned and 13 percent youth-owned. A total of 783 jobs were created by invested black-owned businesses.
BCX implemented initiatives such as the managing of three innovation hubs which incubate black-owned technology businesses that develop technology solutions. A subcontractor programme was designed and the on-boarding of 300 black-owned ICT businesses to this programme is in progress. A national innovation programme was developed to assist black-owned technology businesses to establish business solutions in partnership with Microsoft. A technology commercialisation programme called Technvst was piloted. The I’M IN Tech Accelerator programme was launched.
BCX took a more strategic approach to stimulate digital skills in the economy, not only for its own growth, but also for its customers and suppliers. To this end, investments were made towards a portfolio of critical ICT skills which the industry will require over the medium to long term. In particular, the investment focused on coding and data science skills, as well as building new skill streams in the following five technologies; geomatics, artificial intelligence, operations technology, cybersecurity and fintech.
The committee took into consideration the requirements of the FTSE Russell/JSE that measure the environmental, social and governance themes of an organisation. The group publicly discloses its economic, environmental and social impacts and hence its value creation over the short, medium and long-term. Disclosure transparency is done within globally accepted standards. Telkom group aligns measurement of its sustainability impact against the 2016 GRI standards and the UN Sustainable Development Goals. Annual feedback from the FTSE Russell and the carbon disclosure project platforms are used for benchmarking global best practice and ongoing improvement in the manner in which that material topics and impact are managed.
Chairman of the social and ethics committee