Barloworld

Sustainable development

Sustainable development

We are committed to building a better world

Overview

“Sustainability” has been included as a fifth value in Barloworld’s revised Worldwide Code of Conduct, further entrenching this aspect within the group.

Aligned to our shared value philosophy, we pursue a balance between economic, environmental and social imperatives. These include leveraging emerging commercial opportunities through the provision of innovative and integrated customer solutions that support their sustainable development objectives, including minimising their environmental impacts. Our innovative solutions incorporate energy and emission-efficient vehicles, plant and equipment, optimal supply-chain management and responsible waste management. While these aspects are covered throughout the report; in this section we focus on our value chain and environmental stewardship.

Internally, we focus on conducting our operations in an environmentally responsible manner and reducing our consumption of non-renewable resources. We have implemented a group aspirational non-renewable energy consumption and greenhouse gas emissions (scope 1 and 2) efficiency improvement target, focus on water conservation and stewardship including recycling and rain-water harvesting, and responsible waste management. These initiatives support organisational resilience in the context of rising costs, regulatory and supply constraints. Extensive component rebuild and remanufacture activities in our Equipment division conserve non-renewable resources and enhance recycling initiatives.

The 100% acquisition of Smart Matta (previously re-, an environmental solutions company) demonstrates our commitment to constantly finding innovative ways to drive economic, environmental and social sustainability. The acquisition supports our internal imperative as well as broadens our capability in assisting customers achieve their own objectives regarding responsible waste management.

Responsible value chain

It is important to align ourselves with a robust supply chain,responsible leading principals and original equipmentmanufacturers (OEMs).

Mutual respect, trust, support and benefit, guided by our governance and ethical frameworks, underpin ourrelationships throughout our supply chain. The group hasdeveloped a set of conduct criteria and standards for suppliers which form part of our supplier due diligence initiative aimed at assessing and limiting any potential risks emanating through our supply chain. Our commitment is also reflected in our Worldwide Code of Conduct.

Integral to our value chain is our commitment to being a leader in sustainable development and identifyingcompetitive advantages through solutions that help customers achieve their sustainability objectives, facilitate a transition to lower carbon economies and expand into related opportunities.

A key socio-economic driver, within the South African context, is integrating previously disadvantaged groups into the economy. Aside from our OEMs, we support and empower a range of small and medium-sized suppliers, contractors and enterprises in our supply chain, through our South African-oriented enterprise development initiatives and preferential procurement programme. We are committed to the localisation and empowerment of our supply chain where practicable, and have completed a number of supplier development interventions and engagements in South Africa over the year.

HR2, HR5 to HR7, PR1 to PR9, EN DMA, EN1 to EN30

Barloworld worldwide code of conduct

Responsible principals

Barloworld represents leading international OEMs and brands such as Caterpillar, Hyster, Avis Budget, Audi, BMW, Ford, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz, Toyota, Volkswagen, Massey Ferguson, Challenger and others. The group is therefore part of supply chains that reflect international best practice in the manufacture, sale, service, support and disposal of products. These standards are complemented by Barloworld’s own ethics, values and standards. We are committed to working with suppliers to ensure our customers’ objectives are met and their competitive position enhanced. We review our principals for sustainability-related risks and a number are included on sustainability-related indices, further supporting their reputation as responsible leading companies.

We are aware of the well-publicised Volkswagen and Audi emission issues affecting customers internationally. We recognise the associated risks and are engaging with our principal. The Volkswagen and Audi vehicles sold by us in our dealership territories meet local emissions compliance standards, and our operations have consequently not been directly impacted. We regret any anxiety or uncertainty our customers, or any other stakeholders, may have experienced because of this matter.

Products and services

Barloworld offers innovative flexible solutions that contribute towards customers achieving their own sustainable development objectives. Divisional offerings enable vehicles, plant and equipment solutions to be sold either new or used or leased on a short or long-term basis.

Aligned with responsible waste management and minimisation, our Equipment division incorporates a significant component rebuild programme. This business model ensures efficiencies and synergies throughout the lifecycle of vehicles, plant and equipment and extended useful lives for these products. In addition, our Equipment division, through its principal Caterpillar, has also expanded its offerings to include Solar Photovoltaic (PV) solutions.

Barloworld Logistics offers a range of supply-chain optimisation products, including energy-efficient transport solutions that minimise carbon footprints. SmartMatta, an environmental solutions company, offers waste management solutions that support both customers’ and internal responsible waste management objectives. Barloworld Power provides a range of energy-efficient power generation solutions and has recently installed four Caterpillar generator sets in a biogas power plant in South Africa that converts waste to energy. All businesses are appropriately leveraging technology to optimise their solutions offerings. Online business initiatives and platforms in all business units enhance the coverage, efficiency and effectiveness of our solutions.

Customer health and safety

The health and safety of our customers are critical aspects of all Barloworld products, services and customer solutions. In representing leading global brands, our customer solutions are backed by warranties, guarantees and product responsibility, as well as unique design features that target optimum user safety and productivity.

Customer satisfaction

Central to building customer loyalty and expanding our customer base is our ability to identify and understand customers’ requirements, expectations for product and services and service levels, and our capability to consistently exceed these. All divisions have in place extensive customer engagement initiatives to access customer perspectives and needs.

Initiatives include stringent measurement and survey systems, as well as targets and in some instances, agreed performance measures. Performance against objectives is monitored and reviewed, highlights areas for attention, directs operational activities and informs strategy.

Marketing communications

Group standards ensure that all marketing and advertising conforms to applicable laws and standards. The standards and corporate identities set by principals are adhered to. These are detailed and comprehensively monitored by Barloworld divisional operations and their principals. Any local adaptations require prior consent from principals. We are also guided by the standards set by industry bodies.

Reducing our environmental footprint and managing our impact

Barloworld is committed to responsible environmental stewardship and minimising its environmental footprint. These aspects underpin the group’s response to climate change and are incorporated into sustainable development, one of the group’s six strategic focus areas, and “Sustainability” is one of the group’s five values as contained in our Worldwide Code of Conduct.

We recognise that some of our activities have certain adverse environmental impacts such as those associated with the use of fossil-fuels, and therefore mitigation measures are integrated into our operational management systems and customer offerings. We mainly represent OEMs and recognise the environmental impact from the manufacture and use of our vehicles, plant and equipment. As a responsible corporate citizen, we engage our suppliers and customers and strive to achieve the highest environmental standard

Our approach to identifying material environmental issues

The Barloworld executive and the group’s risk and sustainability committees are involved in the process to identify material environmental issues which are:

• Energy consumption
• Greenhouse gas emissions
• Water stewardship
• Waste management, including recycling and extended lifecycle (rebuild and remanufacture), and responsible waste disposal

The Energy Efficiency Pledge

Barloworld signed the National Business Initiative’s Energy Efficiency Pledge in 2012 together with the South African Department of Energy. Barloworld undertook, through signing the pledge, to work with the Energy Efficiency Leadership Network to drive continual improvement of energy efficiency initiatives across the group.

Policies

Barloworld’s approach to climate change and environmental stewardship is informed by its group-wide:

• Environmental policy
• Energy efficiency policy
• Climate change policy
• Water use and management policy

Overview of environmental risk management and responses

Environmental risks are identified and assessed through:

• A high level risk assessment (HLRA) which takes place twice a year and considers all risk exposures facing the group. HLRAs are held at both divisional and group levels. Material risks and management responses are included in the reported group “Top Risks”
• Focused risk assessments are conducted annually to identify and assess both risks and opportunities around climate change and water. Material aspects are disclosed in Barloworld’s 2015 CDP Climate Change and 2015 CDP Water disclosure responses (available on www.barloworld.com). These risk assessments are aligned to the HLRA approach and the group risk management framework

Key indicators

Data collection is designed to enhance the management and reporting of material environmental aspects using entrenched structures and systems.

Indicators cover identified material issues and other aspects that require management attention.

Monitoring and management

Environmental data reported is used in the daily management of the company. A quarterly safety, health and environment (SHE) report reflecting material and relevant group aspects are reported at board level through the risk and sustainability committee.

Three lines of control exist for data collection and reporting processes, namely management review, internal and external audit.

Barloworld group internal audit services review reporting processes throughout the year and selected key indicators are assured by the group’s external auditors at financial year-end.

Targets

At the end of 2014, we set an interim group aspirational target of a 2% efficiency improvement in non-renewable energy consumption and greenhouse gas emissions (scope 1 and 2) by the end of this financial year off a 2014 baseline. It was set against a business-as-usual scenario that tracks revenue as a proxy for business activity. This one-year target allowed Barloworld to align future targets with its strategic period from October 2015 through September 2020. Although we did not achieve our target in 2015, it played a significant role in focusing attention and prompting relevant initiatives which benefited the group over the past year.

In line with our Vision 2020 we have set group aspirational targets for each of our identified material issues to 2020.

Addressing our material issues and progress

Energy consumption

Barloworld recognises the economic importance and environmental relevance of non-renewable energy consumption and strives to improve the group’s efficiency and consumption patterns in light of increasing energy costs and the energy supply challenges and have adopted the measure, avoid, reduce, switch and offset (MARSO) approach in pursuit of our energy and emissions efficiency improvement objectives.

Energy consumption (GJ) by energy source

			2015			2014	2013
Diesel			2 496 879			2 314 912	2 149 578
Petrol			326 162			343 612	328 613
Electricity			296 137			291 703	293 762
Other			2 863			2 811	7 617
Barloworld group			3 122 041			2 953 038	2 779 570

Energy consumption was 6% up over 2014.

4.8

Barloworld environmental, energy efficiency, climate change, water use and management policies

Barloworld 2015 CDP climate change and 2015 CDP water disclosure responses

Energy consumption (GJ) by division

			2015			2014	2013
Equipment and Handling			509 530			541 192	560 417
Equipment			455 783			494 657	492 873
Handling			53 747			46 535	67 544
Automotive and Logistics			2 610 151			2 409 240	2 216 420
Automotive			496 134			490 468	458 222
Logistics			2 114 017			1 918 772	1 758 198
Corporate			2 360			2 606	2 733
Barloworld group			3 122 041			2 953 038	2 779 570

Performance against group aspirational nonrenewable energy efficiency target

While some of our operations have reduced their nonrenewable energy intensity against the prior year, our overall group target was not achieved due mainly to growth of operations with relatively high intensity levels as well as base consumption patterns of businesses with decreased activity levels during the period impacting the group’s energy mix and profile, resulting in the group being 5% worse than its 2014 baseline intensity (47.6 GJ/Rm revenue) and 7% above the aspirational 2% efficiency improvement target (46.6 GJ/Rm revenue).

Nonetheless, this target played a major role in focusing our efforts on energy efficiency with significant benefits for the organisation.

Group energy intensity (GJ per R1 million revenue)

			2015			2014	2013
Barloworld group			49.8			47.6	46.7

Greenhouse gas emissions

We are concerned about climate change and appreciate the impact of greenhouse gas emissions on global warming. Restrictions on emissions and proposed carbon taxes pose risks to Barloworld and our value chain, including our customer base. However, these also present opportunities such as increased demand for products and solutions with limited or reduced carbon emissions, and opportunities for internal initiatives to further improve energy and emissions efficiency with related cost savings. The group continues to report greenhouse gas emissions in terms of the GHG Protocol Corporate Standard and in units of tCO₂e, the universal unit measure adjusted for the global warming potential of the six Kyoto Protocol greenhouse gases. Emissions from customer use of our rental fleets are classified as scope 3 emissions.

Emissions (tCO₂e) by energy source (scope 1 and 2)

			2015			2014	2013
Diesel			186 683			173 078	160 717
Petrol			23 057			24 291	23 230
Electricity			77 682			76 445	76 022
Other			175			172	453
Barloworld group			287 597			273 986	260 422

Aligned with the increase in energy consumption, group emissions were 5% up over 2014.

Emissions (scope 1 and 2) by division (tCO₂e)

			2015							2014						2013
Scope			1		2		Total			1		2		Total		1		2		Total
Equipment and Handling			29 550		25 247		54 797			31 937		25 164		57 101		33 044		25 064		58 108
Equipment			25 822		24 433		50 255			28 720		24 441		53 161		28 504		23 945		52 449
Handling			3 728		814		4 542			3 217		723		3 940		4 540		1 119		5 659
Automotive and Logistics			180 315		51 948		232 263			165 590		50 589		216 179		151 341		50 233		201 574
Automotive			25 461		40 242		65 703			25 136		39 777		64 913		22 615		40 534		63 149
Logistics			154 854		11 706		166 560			140 454		10 812		151 266		128 726		9 699		138 425
Corporate			49		488		537			14		692		706		15		725		740
Barloworld group			209 914		77 683		287 597			197 541		76 445		273 986		184 400		76 022		260 422

 

Since our material greenhouse gas emissions are linked to energy consumption (particularly petrol and diesel and, indirectly, electricity principally generated from coal), many of our energy efficiency initiatives have a secondary benefit of reducing greenhouse gas emissions

Performance against group aspirational greenhouse emissions (scope 1 and 2) efficiency target

Our emission patterns follow those of our energy consumption, again reflecting reductions being achieved by our various businesses against the prior year.

Growth of operations with relatively high intensity levels as well as base consumption patterns of businesses with decreased activity levels during the period have resulted in the group being 5% above its 2014 baseline intensity (4.4 tCO₂e/Rm revenue) and 7% worse than the aspirational 2% efficiency improvement target (4.3 tCO₂e/Rm revenue).

Group emissions (scope 1 and 2) intensity (tCO₂e per R1 million revenue)

			2015			2014	2013
Barloworld group			4.6			4.4	4.4

Scope 3 emissions

Recognising our broader activities and the nature of our products and solutions, we report certain scope 3 emissions. These cover business air travel and, since 2010, we have reported the emissions from Avis Budget Rent a Car’s South African rental fleet.

Car rental operations in South Africa produced 99 162 tCO₂e (2014: 93 676 tCO₂e), an increase of 6% from 2014, resulting in a static emission intensity per rental day.

Since the 2013 financial year we initiated processes to report emissions from other significant rental fleets. These processes are being refined and disclosure will be considered in due course.

Water consumption

Although a limited consumer of water, Barloworld recognises the general scarcity of the resource and strives to use water efficiently and responsibly. Water stewardship initiatives within the group include increased recycling, rain-water harvesting and efficiency of use. These initiatives have resulted in a 5% decrease in consumption of withdrawn water in 2015.

Water consumption (ML) by division

			2015			2014	2013
Equipment and Handling			247			275	293
Equipment			240			269	286
Handling			7			6	7
Automotive and Logistics			496			508	536
Automotive			397			413	488
Logistics			99			95	48
Corporate			2			2	3
Barloworld group			745			785	832

Most water is sourced from municipal and local government supply systems and used to wash vehicles, plant or equipment. After passing through filtration and separation processes, effectively all water used is legally discharged back into municipal and local government systems.

Overall, 20.2% (2014: 16.7%) of water was recycled in the group, with Automotive recycling 38% and Equipment operations in Iberia recycling 5% of their reported consumption of withdrawn water.

No protected areas were affected by water discharges from the group, nor were any water sources affected by our withdrawal of water in the past year.

Waste management

Given the nature of our business, the group does not generate significant volumes of waste. That which is generated is monitored by type, volume, disposal method and destination. These systems are evolving and improving.

Most waste is disposed of through certified contractors and no waste was shipped internationally. Difficulty has been experienced in obtaining appropriately certified waste-disposal companies in certain developing territories and solutions are being sought to address this aspect. Our intention is to dispose all our waste responsibly and our aspirational targets are to have all waste managed by formal waste management providers by 2020.

Paper, tyres and oil filters constitute most of our solid waste and lubricants make up most of our liquid waste.

Most waste generated within the group is recycled.

An important aspect of our waste management and product lifecycle stewardship is extending product use or life. We make the most significant contribution through the rebuilding and remanufacturing of machines and components. In Caterpillar operations, these processes require some 50% to 60% less energy by reusing approximately 85% to 95% by weight of materials from the original product. Overall, some 70% of Caterpillar components are rebuilt.

Waste by category

			2015			2014	2013
Non-hazardous
Paper (kg)			163 397			217 529	322 458
Tyres (kg)			148 916			274 917	311 553
Hazardous
Solvents (ℓ)			27 572			41 564	64 375
Lubricants (grease and oil) (ℓ)			2 592 334			2 416 961	2 550 978
Oil filters (kg)			568 659			176 247	287 065
Batteries (kg)			60 300			45 626	39 444
Computers/laptops (kg)			8 298			15 621	11 775

Spills

While there were no significant spills during the period, there were a number of minor spills which were properly attended to and, in all instances, our internal response mechanisms and processes functioned as intended.

Outlook

Aspirational group targets have been set for identified material aspects as part of setting our vision for 2020.

We will continue our initiatives to improve energy, emissions and water efficiencies and responsible waste management and report progress against our 2020 group aspirational targets. We will progress synergies and opportunities presented through SmartMatta, our environmental solutions company, and also incorporate their offerings into our customer solutions where appropriate.

We appreciate the importance and responsibilities relating to our supply chain and will continue our initiatives to better understand, assess and respond to any identified risks and opportunities within our supply chain.

Consistent with our stakeholder engagement activities, we will continue to engage with our OEMs and customers to identify and provide solutions that assist our customers in achieving their sustainable development objectives.

We will continue to explore commercial opportunities which address our sustainable development objectives and shared value vision.

Compliance requirements, our Worldwide Code of Conduct, national objectives and our 2020 aspirations will inform our activities going forward.

Our pillars of delivering social value

Inspired to contribute to our communities

Over many years Barloworld has elected to play a role in society beyond profit and compliance, evidenced by its efforts to contribute to positive social change, create inclusive opportunities and deliver sustainable value for its key stakeholders.

Society is intrinsic to Barloworld’s operations since local communities are who we are, where we live and where we do business. As such we share a future, locally, nationally and globally, the quality of which depends on courageous, responsible and informed choices by leaders and citizens across all sectors of society. The 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 in the future.

Barloworld encourages its people working around the world to make a difference in their communities and spheres of influence.

Corporate social investment (CSI)

There are many divisional and regional approaches to CSI across Barloworld engaged with a wide range of philanthropic initiatives adapted to local norms and practices and the group’s diversity and inclusion objectives and, in South Africa, the imperatives of Broad-Based Black Economic Empowerment and socio-economic development.

2015 group CSI spend R16.6 million (2014: R16.8 million), 2011 to 2015: R84 million

The Barloworld Trust

Through the Barloworld Trust we manage a central programme which seeks to add value to South African society as a whole. The trust aims to build capacity in civil society and partner in projects that employ innovative solutions to societal problems, particularly in the field of education.

SO1 to SO10, EC1, EC8, EC9

Barloworld corporate social investment policy

Inspiring social innovation: a step change

We need to equip our future leaders with the perspectives, motivation and skills to pursue new approaches to challenges and opportunities.

Enactus is a global community of students on tertiary education campuses who are committed to entrepreneurship to shape a more sustainable world. Student teams are mentored to apply business concepts to community development projects, which are then internationally showcased.

In 2015 Barloworld co-sponsored both the Enactus South African National Competition and the World Competition, hosted in South Africa for the first time. Enactus operates in 36 countries and involves around 70 500 students in more than 1 700 projects which impact nearly two million people.

The Africa Leadership Initiative (ALI) is a fellowship established to build social consciousness and strong networks in next generations of top leaders from business, government and civil society. Fellows reflect on the philosophies of leadership and each is charged with developing a community project with a social dividend. Barloworld has supported the work of ALI since inception and a number of Barloworld executives, past and present, are ALI fellows.

Group legacy project: the Nelson Mandela Children’s Hospital

Our involvement in Nelson Mandela’s last signature project and his legacy to Africa, a new 200-bed learning hospital in Parktown, Johannesburg, spans a number of years. It was selected as the group’s 110 year anniversary project in 2012 and we have subsequently made cash grants and provided access to earthmoving hire equipment for site development, use of a motor vehicle for fundraising and generator sets to ensure a continuous power supply to the hospital, which plans to open its doors in the last quarter of 2016.

Acting externally on our environmental concerns

Barloworld is committed to taking a leading role in environmental stewardship. The group strives to limit its direct environmental impacts through management programmes across its operations and to assist its customers and other stakeholders to achieve their own environmental objectives.

Externally we are involved in the work of several environmental organisations and have supported the work of three in particular over decades.

• The Endangered Wildlife Trust conserves threatened wildlife species and habitats in southern Africa by initiating and co-funding research and conservation projects, preventing species extinctions and protecting biodiversity, supporting sustainable natural resource management and promoting sustainable living through education and awareness programmes.
• Barloworld was a founding partner of the National Business Initiative (NBI), a business coalition to facilitate the role of business in society through strategic policy interventions and catalytic development projects. A current focus is on assisting companies to achieve energy efficiencies, manage emissions and climate change impacts, realise water savings and progress green economy programmes.
• The Worldwide Fund for Nature (WWF) is the world’s largest conservation organisation and works internationally in partnerships with governments, corporates and other NGOs to stop degradation of the earth’s natural environment and to build a future in which humans live in harmony with nature.