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Indirect economic impacts: EC8 - EC9


  • EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.

    Integrated Report:

    Barloworld is committed to responsible corporate citizenship, electing to play a role in society beyond profit and compliance, as evidenced by its efforts over several decades to contribute to positive social change, create inclusive opportunities and deliver sustainable value for its key stakeholders.

    The organisation believes that the very fabric of our society depends on maintaining amenable and inclusive social compacts, robust economies and industrial bases from which jobs can be created for economic growth and development, to ensure social and economic equality for all, now and into the future. The group encourages active citizenship in its people working around the world, both leaders and employees; making an effort to inspire in them a sense of responsibility to make a difference in their communities and spheres of influence.

    In the course of its business, through extensive, ongoing interactions, Barloworld engages with a wide range of stakeholders to understand their interests and concerns so as to construct its value propositions. The group seeks to provide leadership in society by encouraging its leaders to contribute to developmental challenges and act as role models, and by helping to create the responsible leaders of the future.

    CSI strategy and spend

    Through its social investments, at a group level Barloworld has over many years sought strategic partnerships, synergies and innovations in public-service delivery that can be taken to scale by the public or business sectors. Through grants, networking, referrals and its insistence on sound management practices, responsible governance and accountability, Barloworld endeavours to build capacity and sustainability in its development partners, where necessary. The group has invested R84 million in such initiatives over the past five years, and R149 million over the past ten years.

    There are many divisional and regional approaches to CSI across the Barloworld Group engaged with a wide range of philanthropic initiatives, adapted to local norms and practices, the Group’s diversification and inclusion objectives and, in South Africa, the imperatives of broad-based black economic empowerment and socio-economic development. The group is committed to spending at least 1% of its worldwide profits after tax on corporate social investment

    In 2015, the group spent R17 million on CSI, with R16 million of that being spent in South Africa.

    The Barloworld Trust, which implements Barloworld's corporate social investment (CSI) programme in South Africa, differentiates itself from its operations' local, product- or cause-related marketing activities through its structural approach to development, finding and supporting promising initiatives that underpin social and economic development, in order to have greatest impact.

    The education challenges in South Africa are immense. As a result, the Barloworld Trust's core focus is on improving the quality of teaching and learning, and providing better access to education. Its strategic approach is to work in long term partnerships with organisations that create sustainable innovations in both public and private education institutions, aiming for early adoption and support of these innovations in education, which can then be taken to scale by the public or private sectors.

    The work of the Barloworld Trust

    The Barloworld Trust manages a central programme that seeks to add value to South African society as a whole as opposed to individuals only. Its board has adopted a structural approach to effect real change and development; opting for a catalytic role through efforts to build capacity in civil society and partnering with projects that employ innovative solutions to existing societal problems, particularly in the field of education. These approaches can be replicated and taken to scale by the public or private sectors.

    Barloworld’s ongoing support for the work of the Bridge organisation is evidence of this approach. Through its management of broad-based communities of practice, the organisation focuses on key leverage points in the education system and shared knowledge. It drives collaboration and co-operation among a broad range of stakeholders to increase the collective impact on the education system and learner performance.

    Addressing education and youth empowerment

    Good practice and plans continue to be shared across areas such as school leadership, maths and science learner support, early childhood development (ECD), the use of information and communication technologies (ICT) in education and through the South African Extraordinary Schools Coalition.

    Most social investment work in which Barloworld is involved is focused on young people, for the common good: they will need both traditional and new skills, capacity and self-confidence to be the difference they would like to see in the world and craft a better future for all.

    In the education sector, the group’s main focus is currently on improving teaching and learning outcomes, particularly in the early childhood development phase and in improving results in mathematics, science and languages. Efforts to facilitate access to tertiary education are aimed at empowering individuals, addressing the skills shortage and contributing to country competiveness, leading ultimately to economic growth and development.

    Barloworld’s partners and beneficiaries

    In early childhood development (ECD):

    • Afrika Tikkun
    • Ikamva Labantu
    • Ntataise

    Long-term partners in improving learner outcomes:

    • PILO (Programme to Improve Learner Outcomes)
    • Penreach Whole School Development Programme
    • Thandulwazi Maths and Science Academy
    • LEAP Science and Maths Intervention Schools
    • Teach South Africa

    The CSI initiatives encompass many other areas, too:

    • The wellbeing and success of many young people is being underwritten through the work of beneficiary organisations such as Girls and Boys Town and the President’s Award for Youth Empowerment
    • To facilitate access to tertiary education, empower young people and break cycles of poverty, Barloworld has supported the work of the Rural Education Access Programme.
    • Literacy is a fundamental pillar of education, but millions of young South Africans do not have access to books or a culture of reading. To address this, Barloworld supports the Fundza Literary Trust which delivers age and culture appropriate material to young black teenagers on innovative IT platforms.
    • To inspire social innovation and responsibility, Barloworld supports Enactus and the Africa Leadership Initiative.
    • A Group legacy project since 2010 has been contributing to the establishment of the Nelson Mandela Children’s Hospital.
    • To complement its internal responsible environmental custodianship initiatives, Barloworld also acts externally on environmental concerns by supporting the Endangered Wildlife Trust; the Worldwide Fund for Nature and is a founding partner of the National Business Initiative.

    The group’s messaging campaigns and communications to a wide range of stakeholders align CSI objectives with key group values, and endeavour to draw attention to important social issues and the interventions of its NGO development partners in order to increase awareness and create a greater impact.

    To empower people living with disabilities:

    National Council for Persons with Physical Disabilities in SA (NCPPSA) coordinates the work of national umbrella disability service organisations and a forum to promote the maximum level of independence and integration of people with physical disabilities into society, as well as the prevention of the occurrence of physical disablement. NCPPSA has also created a corps of people with disabilities who have the potential to serve on various public and private sector structures to raise awareness of and facilitate achievement of initiatives addressing disability issues.

    For more information, see www.ncppdsa.org.za

    Barloworld Siyakhula, the group's enterprise development vehicle in South Africa, promotes black economic empowerment by providing financial and non-financial support to small and medium-sized suppliers, contractors and enterprises in its value chain. Approximately R187 million in accumulated funds are currently committed.

    Over the past five years the group has invested R84 million through group corporate social investment programmes, R44 million of which was verified SED in terms of the BBBEE Codes in South Africa. R16.6 million (2014 R16.8 million) was invested in 2015, R11 million of which was verified SED in South Africa.

    Group CSI spend

    2015 Group CSI Spend R16.6m (2014 R16.8m)
  • EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts.

    Integrated Report:

    Given the nature of our operations and locations, major indirect impacts result from employee spending and local sourcing. The number of people by region who benefit from employment is reflected below. The overwhelming majority of employees are local.

    Workforce by Region 2015 2014 2013
    RSA 15 095 14 619 13 877
    Rest of Africa 2 354 2 357 2 418
    UK & Europe & Russia 2 145 2 472 2 632
    Middle East & Asia 146 161 242
    North America 5 7 13
    Total 19 745 19 616 19 182

    Indirect economic impacts include: employee spending, providing products and services, enhancing the image and reputation of areas, and job creation that reduces demand on the fiscus and enables resources to be redirected elsewhere. Improving skills is also a benefit.

    Indirect impacts also include providing services and customer solutions that address customer needs and enable them to operate. The group's products and services contribute to the establishing, developing and maintaining of communities, particularly in mining, agriculture, infra-structure, transport and logistical support. Examples include equipment operations in remote mining locations which enable these to continue with benefits for regions and communities.

    Similarly, providing power solutions, such as the Anixas power station in Namibia, provides electricity for local consumption aiding development of communities and industry. On a lesser scale, other power solutions supply power to customers enabling their operations to continue in the event of power supply interruptions. Handling's supply of agriculture equipment, services and solutions, often in remote regions, enable farming activities to continue with consequent indirect benefits.

    Equipment South Africa's Technical Training Academy is an accredited Caterpillar Regional Centre which means it can conduct various technical training courses on behalf of Caterpillar primarily for sub-Sahara Africa dealers including Mauritius, Reunion and Madagascar. As an established mining dealer, mining training will probably also be conducted for Africa, Europe and Middle East Caterpillar dealers.

    More directly, by operating in communities Barloworld creates significant value for local suppliers which include OEMs and sub-contractors. This is reduced where plant and equipment can only be sourced by offshore principals, in which case the commitment is to spend the balance locally. In the Automotive division some 99% of spend is local (including salaries and wages).

    In South Africa, Equipment divisions' products are sourced from overseas principals resulting in some 25% local spend (as at 30 September 2015), while Automotive and Logistics division sources vehicles through local OEMs resulting in 99% (including salaries and wages) of its spend being locally based. Sourcing varies by regions of activity and division. Handling South Africa sources some 37% from local suppliers, given most of its purchases are sourced from its overseas principals. In Russia, given the nature of the Equipment business and sourcing Caterpillar product, some 40% of total spend is on local suppliers.

    Logistics business sub-contracts a large portion of its business to local contractors. Its freight management services' spend is with international airlines and shipping companies as well as international customs clearing agents and accordingly is weighted towards international suppliers.

    Indirect value for communities also includes the group's support for enterprise development initiatives under the Barloworld Siyakhula umbrella. This principally benefits communities in South Africa, as do the group's preferential procurement initiatives under the B-BBEE umbrella which amounted to some R24.8 billion for the year.

    Barloworld Siyakhula, the group's enterprise development vehicle in South Africa, promotes Broad-Based Black Economic Empowerment through providing financial and non-financial support to small and medium-sized suppliers, contractors and enterprises in its supply chain. Some R187 million in accumulated funds are currently committed.

    Over the past five years R84 million has been invested through the group's corporate social investment programmes with R16.6 million being invested in 2015 (2014: R16.8 million).