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E X A M I N I N G

MANUFACTURED

CAPITAL

INTHE CONTEXT OF INTEGRATED REPORTING

MAINTAINING OUR

LIQUID ASSETS

HOW COMPANIES ARE HELPING TO MITIGATE SOUTH AFRICA’S LOOMING WATER CRISIS

ONE SIZE DOES NOT FIT ALL CORPORATE SOCIAL RESPONSIBILITY AND ITS RELEVANCE TO SMALL BUSINESS

Issue 17

R29.00 incl VAT 9 772225 597009

UPGRADING TO A GREEN ECONOMY INFLUENCING SUSTAINABILITY IN THE ELECTRONICS SECTOR

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/nampaklimited

/ecological2


NAMPAK’S WASTE MANAGEMENT STORY Nampak,

the

largest

packaging

company

in

Africa,

manufactures glass, metal, paper and plastic packaging and

lighter. The use of cullet will increase with the new furnace that started operating in July 2014.

is the largest manufacturer of plastic milk bottles in the United

PLASTIC

Kingdom.

Nampak Liquid is achieving a closed loop

Packaging protects and prevents spoilage, particularly in terms

system where recycled material is sourced

of food and beverages, and enables goods to be handled

from a local PET recycling company. High-

and moved around easily. It helps identify brands and provides

profile successes are Clover’s Tropika

space to communicate important information, like ingredients

bottle and Unilever’s Sunlight Liquid bottle,

and nutritional data. Without packaging, many products

which contain 25% less PET. Nampak Liquid

wouldn’t be sustainable and more waste would be generated.

developed South Africa’s first multi-layer,

Many people believe packaging is a major contributor of

100% recyclable, plastic bottle for long-

waste-to-landfill. According to the Packaging Council of

life milk. Nampak Closures developed

South Africa (PACSA), packaging accounts for 2% of wasteto-landfill, the average for developing nations is 3%. Thanks to industry initiatives, like Collect-A-Can, PETCO and The Glass Recycling Company, South Africa’s recycling rates are among the best in the world.

Plastic bottle manufactured by NP Liquid containing 25% recycled PET.

the “super shorty” cap for carbonated soft drink bottles that is 25% lighter than its predecessor - using less energy and raw materials.

Nampak Flexible reprocesses waste as

METAL At 72%, cans are the most recycled packaging in South Africa. Light-weighting is a core focus for Nampak’s two can

school furniture and warehouse pallets. Since November 2012, Nampak Flexible and Simba have delivered 700 desks and 1 400 chairs to underprivileged schools around the country. PAPER

businesses: Bevcan and DivFood. Nampak

Cans are the most recycled primary packaging in SA.

Bevcan is busy completing the conversion

Nampak Recycling collects approximately

from steel to aluminium beverage cans.

19% of the total paper recycled in South

Aluminium is 60% lighter than steel and

Africa to use in their paper mills. Nampak

uses 10% less energy in the manufacturing

Sacks 10kg potato bags are 12,5% lighter

process. Aluminium has a higher scrap metal

and cement bags are 100% compostable.

value and can be recycled in perpetuity.

Nampak’s internal initiatives aimed at

Nampak DivFood and Nampak’s worldclass research and development facility have developed a single lacquer system for food cans, meaning less downtime to change lines and less water to wash the lines. GLASS The glass industry recycles one billion bottles a year, 2,8 million a day, surpassing the US, which has a recycling rate of 37%. Nampak Glass operates a cullet facility, which

Nampak Glass uses 55% cullet in their bottle manufacturing processes.

Approximately 38% of PET is

recycled as staple fibres.

Paper collected by Nampak Recycling is used by Nampak’s paper mill in the manufacture of corrugated packaging for Nampak Corrugated.

reducing,

recycling

and

reusing

are

Collect-A-Can and Nampak Recycling. Collect-A-Can is an initiative subsidised by ArcelorMittal and incentivises people to collect cans. Nampak Recycling sources recovered fibre for Nampak’s paper mills and cullet for the Glass division. Nampak are members of The Glass Recycling Company,

the

Paper

Manufacturers

Association of South Africa, the Paper Recycling Association of South Africa, PETCO and Plastics SA.

processes 80 000 tons of waste glass every year. Using waste glass reduces energy and

Nampak is committed to sustainability and a group-wide

greenhouse gas emissions. Currently cullet

environmental

replaces up to 55% of virgin raw material

according to the highest standards ensuring that any potential

requirement in Nampak Glass products,

harmful impacts of their processes and products on the

while 80% of new glass bottle launches are

environment are minimised.

policy

commits

businesses

to

operating


Economy G

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MANAGING EDITOR: Lloyd Macfarlane lloyd@gsacampbell.com LAYOUT AND DESIGN: Nicole Kenny CLIENT LIAISON MANAGER: Eunice Visagie CLIENT LIAISON OFFICER: Lizel Olivier SUB-EDITOR: Sarah Johnston DIRECTORS: Lloyd Macfarlane Gordon Brown Andrew Fehrsen DIVISIONAL SALES MANAGER: Annie Pieters SALES EXECUTIVES: Elna Willemse Glenda Kulp PRINTING: FA Print DISTRIBUTION MANAGER: Edward Macdonald PUBLISHER: Alive2green PHYSICAL ADDRESS: Cape Media House 28 Main Road Rondebosch 7700 Cape Town TEL: 021 447 4733 FAX: 086 694 7443 Websites: www. alive2green.com/publications/ green-economy-journal/ DISTRIBUTION AND COPY SALES ENQUIRIES: distribution@alive2green.com INTERNATIONAL FRANCHISE ENQUIRIES: info@alive2green.com ADVERTISING ENQUIRIES: sales@alive2green.com EDITORIAL PROPOSALS: lloyd@gsacampbell.com Company Registration Number: 2006/206388/23 Vat Number: 4130252432 ISSN No.: 2410-6453 Published: Jan 2015

Economy G

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Editor’s Note

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ONE STEP FORWARD ONE STEP BACK I have recently been involved in an energy efficiency research project which is aimed at reducing the consumption of electricity by public listed companies in South Africa. Researchers were looking for reported information relating to energy consumption and usable space for the top 100 companies in South Africa, in order to establish a ratio which could be used to target efficiency. It was assumed at the outset that this information would be relatively easy to find in the public domain, based on the increasing requirements over the last few years for listed companies to report on sustainability. The project has returned some interesting findings: 1.

2.

As well intentioned as it is, it would seem that the requirement for listed companies to produce an integrated report has resulted in a drop in the number of sustainability reports being produced, with certain sustainability data no longer being reported at all. Integrated reporting should be the next step towards increased transparency, accountability and value creation, and not an opportunity to conveniently avoid reporting on data that is still important to key stakeholders. In this regard companies should be incorporating principles and frameworks that ensure that the reporting process is authentic and integrated: •

journal

E X A M I N I N G

CAPITAL

MANUFACTURED

INTHE CONTEXT OF INTEGRATED REPORTING

MAINTAINING OUR

LIQUID ASSETS

HOW COMPANIES ARE HELPING TO MITIGATE SOUTH AFRICA’S LOOMING WATER CRISIS

ONE SIZE DOES NOT FIT ALL CORPORATE SOCIAL RESPONSIBILITY AND ITS RELEVANCE TO SMALL BUSINESS

Issue 17

R29.00 incl VAT 9 772225 597009

UPGRADING TO A GREEN ECONOMY

Green Economy Journal is audited by ABC

INFLUENCING SUSTAINABILITY IN THE ELECTRONICS SECTOR

There appears to have been an increase in the number of integrated reports published – from 2013 to 2014 – and a (corresponding) decrease in the number of sustainability reports published in the same period. Hardly any integrated reports contained energy consumption data however vitually all the esustainability reports did.

The report should be concise and should focus primarily on issues material to the business and to key stakeholders. The report should place emphasis on the creation of value for key stakeholders. The report should not simply be a combination of the sustainability, financial and CSR reports of the organisation, or summaries thereof. The report should incorporate key principles from the most relevant standards and frameworks (e.g. GRI and <IR> Framework) such as those concerning the 6 capitals, stakeholder engagement, or supply chain sustainability

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All Rights Reserved. No part of this publication may be reproduced or transmitted in any way or in any form without the prior written permission of the Publisher. The opinions expressed herein are not necessarily those of the Publisher or the Editor. All editorial and advertising contributions are accepted on the understanding that the contributor either owns or has obtained all necessary copyrights and permissions. The Publisher does not endorse any claims made in the publication by or on behalf of any organisations or products. Please address any concerns in this regard to the Editor. The Green Economy Journal is printed on Hi-Q Titan plus paper, manufactured by Evergreen Hansol a leading afforestation member acknowledged by FOA. Hi-Q has Chain of Custody certification, is totally chlorine free, and is PEFC, ISO 14001, ISO 9001 accredited. This paper is FSC certified.

In this regard the Green Economy Journal will be profiling each of the six capitals (one in each issue) in the context of integrated reporting. Having published an article on financial capital in our last issue, we now look at manufacturing capital in this issue. We also continue our study of sustainability for SMEs and we take a look at sustainability in the electronics sector. We hope you enjoy the read.

Sincerely

Lloyd Macfarlane


Contents MARCH / APRIL 2015

6 10 12

12

14

14 18

SUSTAINABILITY SPOTLIGHT BASF

MAINTAINING OUR LIQUID ASSETS How companies are helping mitigate South Africa’s looming water crisis

UPGRADING TO A GREEN ECONOMY Influencing sustainability in one of the world’s most wasteful industries

17

CARBON COLUMN

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AT THE BEGINNING THERE WAS MANUFACTURED CAPITAL

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NEWS AND UPDATES

The national budget

An examination of this aspect of <IR>

WINNING IN GREEN INNOVATION Got what it takes to become a Cleantech entrepreneur?

ONE SIZE DOES NOT FIT

Corporate social responsibility and its relevance to small business

05


NEWS AND UPDATES

THE RISE OF

SUSTAINABLE

BUSINESS TRAVEL IN EUROPE

According to a study done by the Global Business Travel Association (GBTA), 57% of European-based companies have sustainability initiatives written into their company’s travel policy. This is a significant increase from 39% in 2012. The GBTA suggests that this is because of financial benefits, and safety and security enhancements delivered by the sustainable travel programs. Nearly 300 U.S. and European-based Travel Managers were surveyed to better understand how they currently view sustainability initiatives and the role sustainability plays with ground transportation. In addition, the study focused on future intentions regarding incorporating sustainability into programs as well as similarities and differences by regions and across time. Over 40% of the American and European companies surveyed credit a stronger public image, improved employee morale and more efficient business processes as benefits of their sustainability investments. Source: hospitalitynet.org

Grootbos Nominated for Tourism of Tomorrow Awards Grootbos Nature Reserve, near the Western Cape’s Garden Route, has earned international recognition for its efforts in championing sustainable tourism. The reserve is a finalist in the Community Award category of the Tourism of Tomorrow Awards, provided by the World Travel and Tourism Council (WTTC). The hotel and reserve overlooks Walker Bay and comprises 2 500 hectares of very high conservation value land, with 785 indigenous plant species recorded on the reserve, of which 117 are species of conservation concern and seven are endemic to Grootbos. Of the 180 people employed at Grootbos, 95% come from local communities. Its Growing the Future project provides skills development in organic agriculture, sustainable animal husbandry and beekeeping. A GreenBox planting system is also being rolled out to enable 200 households to produce their own food. The winners will be announced at the awards ceremony in Madrid, Spain on 15 April during the 15th WTTC Global Summit. Source: SouthAfrica.info

ALUMINIUM

STEWARDSHIP INITIATIVE

INTRODUCES NEW GLOBAL STANDARD In collaboration with Ball Corporation and other aluminium industry leaders, the Aluminium Stewardship Initiative (ASI) has introduced new, comprehensive criteria for a global standard for sustainable aluminium production that will further improve environmental, social and governance performance throughout the entire aluminium value chain. The ASI Performance Standard addresses issues relevant to the production and sourcing of aluminium – from extraction of bauxite to the producers of commercial and consumer goods and the recycling of pre- and post-consumer aluminium scrap. The Standard focuses on 11 key sustainability aspects: business integrity; policy and management; transparency; material stewardship; greenhouse gas emissions; water; emissions, effluents and waste; biodiversity; human rights; labour rights; and occupational health and safety. The South Africa Cleaner Production Centre was one of the civil society members that participated in the standard setting group. Source: Ball Corporation

NEW GLOBAL WARMING PREDICTIONS HIT AUSTRALIA HARDEST A recent analysis of the impacts of climate change, done by the Commonwealth Scientific and Industrial Research Organisation ( CSIRO) suggests that Australia’s temperature will increase by over 5°C by the end of the century if no actions were taken to reduce green house gas emissions. This is higher than predictions for the rest of the world which average at increases between 2.6°C and 4.8°C. Researchers at CSIRO suggest that Australia’s ocean levels will rise and will become more acidic while snow depths will decrease, as hot days become even hotter in the future. This warning comes after Tony Abbott, Australian Prime Minister and climate change sceptic, scrapped a tax on carbon emissions and abolished the independent Climate Commission. One of the world’s biggest carbon emitters per capita, Australia has also declined to join the US, Japan, France and others in contributing to the United Nations’ Green Climate Fund. Source: mg.co.za

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NEWS AND UPDATES

SUPPLY CHAIN TRANSPARENCY FOR PALM OIL GIANT Wilmar International Ltd., the largest palm oil producer in the world, is the first industry player to make its palm oil supply chain transparent via an online platform. The palm oil producer mapped out its supply chain and listed all of its palm oil mill suppliers in Indonesia and Malaysia on a dashboard website. The dashboard, which went live last week, is a result of collaboration with the Forest Trust. The company’s supply chain map shows where its refineries in Indonesia and Malaysia are located, and includes a traceability summary for each one. Indonesia and Malaysia were the priority because most of the world’s palm oil comes from these two countries. However, Wilmar is also mapping its supply chains in other regions, including Africa, India and China. The dashboard includes a mechanism to report improper activities. All concerns are logged under the Grievances Procedure, and progress and findings will be reported on the dashboard; further increasing transparency. Source: triplepundit.com

COMPRESSED EARTH BLOCKS WIN AT BETTER LIVING CHALLENGE The Better Living Challenge is a design competition showcasing green and affordable solutions to improve the homes of people living in low-income communities. It announced its winners towards the end of last year after a two week public exhibition and a strict voting process. The Structural Home category was won by Chris Whyte and the USE-IT company. They provided a solution in the form of Compressed Earth Blocks (CEBs). CEBs are manufactured through an innovative process that uses a 30% blend of builder’s waste rubble and available clay-bearing soils. Building sustainable homes with the lowest carbon footprint, CEBs are 3-5 times stronger than concrete blocks, cheaper, ten times more thermally efficient and environmentally-friendly. USEIT’s Compressed Earth Blocks were showcased at the V&A Waterfront from October to November, along with 20 other finalists in the competition. Source: Media Release

New Chairman Appointed to SA’s Green Building Council The Green Building Council of South Africa (GBCSA) has appointed Seana Nkhahle from the South African Local Government Association (SALGA) as its new Chairman. Nkhahle, who is also a founding director of the GBCSA, takes over from Chairman Bruce Kerswill, who played a leading role in the formation of the council. The GBCSA was established in 2007 to promote green building development in the country. It is a member of the World Green Building Council (World GBC) and is today one of the most active councils worldwide. Nkhahle aims to ensure that more commercial buildings are supported to achieve good ratings, thus building on the momentum already seen in this category and anticipates supporting government and municipalities in particular to play a bigger role in facilitating sustainability in their respective built environments. Source: worldcement.com

WORLD’S MOST SUSTAINABLE COMPANIES REVEALED Corporate Knights, a Canadian media and research firm with a focus on clean capitalism, recently released its annual report on the top 100 most sustainable corporations, in Davos, Switzerland.The report comes after gauging the performance of 4,609 large companies on a mix of 12 sustainability criteria. Variables considered include revenue generated per unit of energy consumed, water conservation efforts, work time lost to injury and the ratio of CEO pay to that of a company’s average worker. U.S. biotech firm Biogen Idec and pharmaceutical giant Allergan took the top two places. The rest of the top ten included Adidas (Germany), Keppel Land (Singapore), Kesko (Finland), BMW (Germany), Reckitt Benckiser Group (Britain), Centrica (Britain), Schneider Electric (France) and Danske Bank (Denmark). Firms were judged within the context of their industries, meaning that sector-specific challenges, such as worker injuries on the job for manufacturers, were weighted more heavily where applicable. Source: greenbiz.com

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07


ADVERTORIAL

GAUTRAIN MANAGEMENT AGENCY Gautrain contributing towards the socioeconomic development of the province

Gautrain is not only about a train but Government’s commitment to its people. The vast majority of citizens depend on public transport and by providing a safe, convenient, predictable and affordable public transport system in the JohannesburgTshwane corridor, and OR Tambo international Airport, Gautrain is contributing to making this commitment a reality, by playing a role in transforming and improving public transport in Gauteng. Since the commencement of operations of the Gautrain’s airport link in June 2010 and the Johannesburg and Tshwane link in mid-2012, approximately 58 million passengers’ trips have utilised the Gautrain on both the airport and general passenger services. This stands as proof of the Gautrain actively meeting government’s objective which requires the active promotion of public transport while continuously improving its customer service to comfort and convenience and value for money for passengers. Based in the economic heartland of South Africa, Gautrain, is one of several strategically-integrated Gauteng Provincial Government projects aimed not only at meeting future transport demands and improving the image of public transport,


ADVERTORIAL

but also at moving economic development and employment creation upward. A significant number of people have been employed on the Project since its inception. It is estimated that at the end of June 2012, the Gautrain Concessionaire had already created or sustained about 34 800 local direct jobs and an estimated total of 121 800 direct, indirect and induced jobs. The 34 800 local jobs created can be categorised as follows: • Historically Disadvantaged Individuals (HDIs): 86%; • HDIs who are skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents: 11%; • HDIs in Management Positions: 2.2%; • Youth: 59%; • Women: 11%; • Women in Management Positions: 1%; and • People with Disabilities: 0.7%.

Twitter - @TheGautrain Facebook – www.facebook.com/gautrain Website – www.gautrain.co.za Call Centre – 0800 42887246 SMS alert line – 32693

These Socio Economic Development achievements showcase Gautrain as more than just a train but a sustainable project that continues to contribute to the economy and the people of Gauteng throughout its operational phase. Gautrain is not competing with other modes of public transport, such as taxis and buses, which all have an important role to play in the total transport system. The service comprises of a fleet of modern low-entrance and low-emission buses with comfortable seating, providing feeder and distribution services to and from the Gautrain stations. The municipal Bus Rapid Transport (BRT) services are also integrated with Gautrain at some of the Gautrain stations. Commuters, therefore, does not have to experience the same frustrations and delays as motorists associated with escalating traffic congestion. Travel patterns and demand levels on the Gautrain are closely and continuously monitored and

a number of system capacity enhancements have been implemented to the system. The these enhancements includes the addition of eight-car trains during peak times, the introduction of slightly earlier and later trains between Sandton and the Airport; and introduction of innovative fare products designed to promote off-peak and counter-flow ridership and amending bus routes to suit passengers better. A detailed assessment and analyses of the current transport network in Gauteng was done as part of the Province’s approved proposed 25 year Integrated Transport Master Plan (ITMP25). The plan aims to deliver a world class and sustainable transport system that supports Gauteng’s economic, social and cultural and environmental goals. This plan contains the proposed route extensions for the Gauteng rapid rail network. The Gautrain Management Agency was given the greenlight by the Gauteng MEC for Roads and Transport, Dr Ismail Vadi to start the process to commence with the feasibility study. The appointment of a consortium of Transaction Advisors to conduct the feasibility study was announced by the MEC in October 2014. The study is currently underway and its purpose is to inform the decision to proceed with the proposed Gauteng rapid rail extensions and the preferred routes that should be developed. This will be based on a number of benefits such as the transformational impact on the Gauteng economy; the modernisation of public transport; passenger access and mobility; improved spatial development; environmental impact, and other benefits such as job creation and poverty alleviation. The proposed Gauteng rail extensions will ensure continued transformation of the economic and social development and empowerment for the people of Gauteng.


SUSTAINABILITY

Sustainability Spotlight BASF â&#x20AC;&#x201C; A LOCAL AND GLOBAL VIEW

T

he chemical industry manufactures commodity and speciality chemicals from raw, organic and inorganic materials. As one of the largest consumers of natural gas, much of the industryâ&#x20AC;&#x2122;s environmental impact occurs from the energy required to process chemicals. Common air pollutants resulting from industry processes are carbon monoxide, sulphur dioxide and nitrogen oxide. Innovations in

energy efficiency in production and creating products that reduce contribution to global warming are the main methods that the chemical industry is using to address the threat of climate change. BASF, a leading chemical company, views sustainability as its growth driver. Their acute awareness of the impact of their industry on people and the planet has driven a number of corporate and environmental

sustainability initiatives both locally and abroad. In this feature, we examine how BASF has identified the business case for sustainability and the opportunities to establish reputational advantage in the sector by decreasing and managing environmental and societal impacts. BASF has been operating in South Africa since 1966. Headquartered in Midrand, Johannesburg, the BASF Group in South Africa consists of five companies with locations in Johannesburg, Port Elizabeth and Cape Town. BASF has six manufacturing sites providing products and services into various industry sectors, including an automotive emission catalysts production site in Port Elizabeth, and a dispersions production plant in Durban which is producing acrylic dispersions. Sustainability For BASF, sustainable development means the combination of long-term oriented economic success with environmental protection and social responsibility. Strategic and organizational implementation of sustainability is helping the company to identify risks in an early stage while simultaneously opening up new business areas for BASF. This requires a continuous dialog with numerous stakeholders. BASF also takes part in the Responsible Care initiative. This global, voluntary initiative involves companies in 52 countries working together, through their national associations, to continuously improve their health, safety and environmental performance, and to communicate with stakeholders about their products and processes. Climate protection BASF believes that climate change is one of the main challenges faced by society today and is, therefore, committed to economically efficient and ecologically effective global climate protection. A full lifecycle analysis of the companyâ&#x20AC;&#x2122;s activities revealed that the vast majority of CO2 emissions come from raw material supply and use of their products by the customer.

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SUSTAINABILITY

Climate protection products The global chemical leader’s goal is to continually increase the contribution of their current products for climate protection, as well as of new products and solutions. They spend around one third of their annual expenditures for research and development (R&D) on product and process innovations where the R&D target is related to resource efficiency and climate protection. Products such as Neopor®, Basotect® and polyurethane provide innovative insulation to prevent heat and cold loss in buildings and solar systems. Improvements in insulation can increase energy efficiency by dramatically reducing the energy requirements for heating and cooling. In the automotive industry, BASF produces light-weight plastics. Lighter vehicles have reduced fuel consumption and therefore fewer emissions. According to BASF, if 100 kg of plastic parts replace double the weight of metal parts, the fuel requirement of a vehicle falls by around 0.4 litre of fuel per 100 kilometres. BASF also produces Keropur® fuel additives that decrease wear on the engine, thereby reducing the output of pollutants and CO2. In the agricultural sector, BASF produces a fertilizer containing a nitrification inhibitor that slows down the metabolising, by bacteria, of ammonia in the soil which reduces the amount of nitrous oxide, a greenhouse gas, into the atmosphere. The fertilizer also provides nutrients to the crops more efficiently so it can be used less frequently, reducing its impact on the ground water. Climate protection at the operational level BASF’s aim is to continuously reduce the greenhouse gas emissions resulting from the generation of energy in power plants and from the production processes. Their experts are constantly working on further improving the processes and setup of their installations. As a result, the company has already achieved a great deal on the way towards its goal of greater climate protection. Absolute emissions in the chemical business have been reduced by 48 percent, compared with 1990, with the reduction per metric ton of sales product being 74 percent. BASF aims to maintain this success in the future. The installation of nitrous oxide (N2O) decomposition catalysts, in all plants where N2O is created as a by-product, enabled the company to prevent emissions of around 21 million metric tons of CO2 equivalents

in 2013. Chemical production requires a large amount of energy. In an effort to increase energy efficiency, BASF invested in combined heat and power (CHP) gas turbine plants which generate power and steam at the same time. This achieves up to 90 percent efficiency and enables the company to cover more than 70 percent of their power requirement. The company has set their own target to improve the energy efficiency of their production processes by 35 percent until 2020, compared to 2002. BASF is also implementing an integrated energy supply (“Verbund”) concept at all their major sites. Verbund means combine, cooperate or network in German. At BASF globally this is known as “connectedness”. By linking their production and energy demand, waste heat from production processes is captured to be used as energy in other production plants. In 2013, the energy Verbund concept saved BASF around 17 million MWh per year, equal to an annual reduction in CO2 emissions of 3.5 million metric tons. BASF sees the Verbund as one of their prime strengths in ensuring the efficient use of its resources; offering a competitive advantage while also having a positive impact on the environment. The Verbund principle extends beyond production and technology to include employees; combining and interlinking the experience of their workforce to form the best team. Corporate Social Responsibility in South Africa Recognizing the need to contribute to the communities in which it operates, BASF in South Africa supports various Corporate Social Investment and Corporate Social Responsibility projects that deal with access to education is science and maths, child abuse prevention, child support, feeding programmes, HIV/Aids support, encouraging the study of science and technology and career development. The company also focuses on environmental challenges and supports especially water conservation BASF has published information and opportunities and risks for the company due to climate change since 2004, using the Climate Disclosure Project (CDP). In 2014, BASF achieved the maximum disclosure score of 100 points and came out as leader of the Energy & Materials sector of the Carbon Disclosure Leadership Index (CDLI). The performance score evaluates the level of company action to prevent climate change. It is the tenth time that BASF has qualified for the index.

Are you leveraging your sustainability profile for competitive advantage? Supply chain forces are providing a platform for differentiation in the value chain, as companies look to appoint suppliers with sustainability credentials.

Are you packaging and presenting sustainability data credibly and effectively? Has your business embraced the benefits of a holistic approach to reporting and marketing? GSA Campbell specialises in strategic sustainability and marketing services and is able to provide large companies and SMEs with a simple framework that looks beyond compliance towards the realm of opportunity in a fast changing procurement landscape.

Sustainability and Integrated reporting services (GRI and <IR>) Stakeholder marketing services Social media Specialised SME reporting and marketing The Good Business Framework

www.gsacampbell.com info@gsacampbell.com 0861 777 669

STRATEGY | SUSTAINABILITY | MARKETING

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WATER

Maintaining Our Liquid Assets COMPANIES ARE ANALYSING WATER CONSUMPTION AND FINDING INNOVATIVE SOLUTIONS THAT WILL MITIGATE SOUTH AFRICA’S LOOMING WATER CRISIS Christine King

C

limate change is setting a serious global challenge to water sustainability. Rainfall patterns are predicted to change rather drastically. Some areas will experience more rainfall, potentially causing flooding, while others will experience less and potentially have droughts. This will cause a serious problem for water management across the globe and, already water-scarce, South Africa may feel this challenge more than most, but we are facing it with innovation. In South Africa, according to the World Wildlife Fund (WWF), fresh water is predicted to become the determining constraint on development. There has always been very little water to go around and South Africa is rapidly running out of surface water and suitable dam sites. Due to increasing population, increased pollution and inadequate investment in water-related infrastructure, the quality of South African water is also in decline. The solution does not lie in simply building more dams, but rather in rehabilitation, maintenance and conservation of existing water catchment areas. With the majority of the county’s water being mismanaged and wasted in the agricultural sector (about 65% of our fresh water goes to irrigation), corporate innovation is becoming increasingly important in creating sustainable water solutions.

WATER WASTED EVERY YEAR IN SOUTH AFRICA COULD FILL 600 000 OLYMPIC SWIMMING POOLS.

– WWF

One local corporation stepping up to the challenge is Woolworths. At a KPMG-hosted event in October 2014, Justin Smith, head of sustainability for Woolworths Holdings, spoke about Woolworth’s Green Business Journey and what the South African retailer had planned to increase sustainability in the water sector. Smith highlighted that, in the dairy industry, 98-99% of water was

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WATER

used at the farm level before even getting to processing, packaging, distribution, and retail. Woolworth’s analysis of the Western Cape fruit industry also revealed that it took 33 litres of water to produce one peach. As Smith suggested, there was clearly room for innovation in the agricultural sector. To this end, Woolworths has partnered with the WWF in its Water Balance Programme. The programme requires corporates to commit to the three steps: review, reduce, and replenish. • Review: Participants are required to accurately measure their operational water usage. • Reduce: Participants are required to develop and implement a water reduction and efficiency strategy. • Replenish: Participants are required to invest in projects that will make available ‘new’ water into freshwater ecosystems in relation to their operational water use. Currently, the Water Balance Programme focuses on replenishing water through alien clearing projects. According to Smith, Woolworth’s operational water use translates to 313 hectares of alien vegetation. Through the Water Balance Programme they will clear 160 hectares in the Berg River and Palmiet River catchment areas in the Western Cape by 2015. At the time of Smith’s presentation, Woolworths had already cleared 50 hectares of alien vegetation and, by doing so, replenished 130 788kl of water. “One of the things we’ve learnt since we launched our Good Business Journey in 2007 is that, together with customers, suppliers and business partners, we can deliver greater sustainability, to benefit both the environment and the people we support through our business. Partnerships have helped us achieve 80% of the 5 year targets we set in 2007,” says Smith. Woolworths is also reducing water usage at an operational level. Each new store is designed to make efficient use of water resources. As much water as possible is kept on site to be recycled and irrigation for plants is minimised by planting indigenous, water-wise shrubs and ground cover.

The use of pulse meters to improve water measurement and monitoring has seen a 1% decrease in water usage by their stores since 2008. After consulting with the municipality and a range of experts, Woolworth’s head office in Cape Town has also tapped in to an underground water supply that runs about 20 metres under the building. The company has installed a water treatment system in order to use some of this underground water, that would be otherwise unused, to flush toilets, run the building’s car wash and, run the outdoor fountain and cooling towers for the air conditioning units. According to Woolworths, their efforts will save the Cape Town municipality an estimated 27 375 000 litres of water per year, which equates to 75 000 litres of water per day. The Cape Town municipality has been quite successful at managing its water requirements. Due to cooperation from the residents of Cape Town and the successful

implementation of a water demand strategy, the city used less water in 2014 than it did in 2000. This is according to Peter Flower, the City of Cape Town’s Director of Water and Sanitation. This reduction comes despite a significant population increase over that period of time. The city is also looking at new technologies to supply water such as large scale groundwater abstraction, water reclamation for non-potable and potable use, and the desalination of sea water. It will take the cooperation of corporate entities, municipalities and the public to successfully face the challenges climate change is posing to water quality and security. The corporate sector has a responsibility to ensure it is doing all it can to use this scare resource sustainably. Fortunately, there are a number of businesses willing to use their resources to invest in innovative ways to preserve our water sources for generations to come.

Von Bormann, T. and Gulati, M. 2014. The Food Energy Water Nexus: Understanding South Africa’s most urgent sustainability challenge. WWF-SA, South Africa. Retrieved from: http://awsassets.wwf.org.za/downloads/wwf_few_report_3.pdf Blaine, S. 2013. Agriculture is putting SA in deep water. Business Day Live. Retrieved from: http://www.bdlive.co.za/business/agriculture/2013/04/17/ agriculture-is-putting-sa-in-deep-water Woolworths. 2014. Water: what are we doing? Retrieved from: http://www.woolworths.co.za/store/fragments/corporate/corporate-index.jsp?content=../article/ article&contentId=cmp100395 WWF. 2012. WWF and Woolworths announce targeted sustainability partnership. Retrieved from: http://www.wwf.org.za/?7340/ WWF-and-Woolworths-announce-targeted-sustainability-partnership Creamer Media Reporter. May 02 2014. Cape Town explores sustainable energy, water solutions at African Utility Week, Clean Power Africa in May. Retrieved from: http://www.engineeringnews.co.za/article/city-of-cape-town-explores-sustainable-energy-and-water-solutions-at-african-utility-week-clean-power-africa-in-may-2014-05-02

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MANUFACTURING

Upgrading to a Green Economy INFLUENCING SUSTAINABILITY IN THE ELECTRONICS INDUSTRY Lloyd Macfarlane

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he electronics industry is fairly new, only having emerged in the 20th century, and has become most prolific in the consumer electronics sector with the development of personal electronics such as desktop computers, laptops, music players, televisions and gaming devices. Our society’s consumer fervour for these products has created an industry that is struggling to balance sustainability with the highly competitive demands of the market. The need for sustainable electronic products is being driven by government procurement policies and corporate policy initiatives, as well as increased efforts by companies and consumers to reduce their environmental impact. Buyers aren’t just looking for what’s better for them, but what’s better for the environment too. This article seeks to inform electronics manufacturers and their customers about the material issues in sustainability of the electronics industry. It aims to help the reader make informed sustainability decisions about electronics at the manufacturing and consumption level for the development of a greener economy. Better choices by everyone are needed Electronic devices, much like any technology-heavy manufactured product,

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have an environmental and/or health and safety impact at every stage of their product lifecycle. Manufacturing The manufacturing of electronics devices is a resource-heavy activity. From the water needed in mining and component production to the high levels of energy needed to produce the extreme heat required for smelting metals. The many different processes, chemicals and by-products used, to get the raw materials into a usable form, add up to a significant environmental and health and safety impact. Typical raw materials used in the electronics industry: • Metals: Copper, nickel, chromium, lead, aluminium, silver and tin. • Non-metals and Minerals: Silicon, antimony, bismuth, cobalt, fluorite, garnet, magnesium and talc. • Plastics: Polystyrene, polyethylene terephthalate (PET) and polyvinylchlorate (PVC). • Other raw materials: Clay, glass, calcium, gold and carbon. About 65% of the copper produced in the world is used in the electronics industry due

to the fact that it has the highest electrical conductivity of any metal. The method through which copper is mined uses a lot of water and energy in order to separate the metal from the ore. Copper mining is also usually done by blasting holes in the ground, which has an impact on biodiversity and land quality. Fortunately, copper, like steel and aluminium, has near limitless recyclability; about 35% of the world’s copper currently comes from recycling. Water recycling and more energy efficient smelting processes are also helping to reduce the impact of copper mining. The Restriction of Hazardous Substances (RoHS) directive was adopted by the European Union in 2003 and aims to restrict the use of six hazardous materials in the manufacturing of electronic products. The six materials are: • Lead – long-term occupational exposure to this highly poisonous metal can cause damage to the nervous system and death • Mercury – inhalation of vapour due to occupational exposure can cause tremors, hallucinations, depression and insomnia • Cadmium – inhalation of dust due to occupational exposure and can cause respiratory distress, cardiac arrest and death • Hexavalent chromium – inhalation due to occupational exposure can cause lung cancer • Polybrominated biphenyls – flame retardant that is possibly carcinogenic to humans • Polybrominated diphenyl ether – flame retardant that can accumulate in the environment and in human tissue These substances are of particular danger to people working in electronics manufacturing and recycling plants. Energy The majority of the energy used in the lifecycle of an electronic device is used at the manufacturing stage; around 81%. This means more energy is used to make the device than is used in its entire life with the person that purchases it. It is often difficult for manufacturers to provide the numbers for the embodied energy (energy used in making a product) of their products due to the many different components, materials and processes that go into the manufacture of electronic devices. Proper product lifecycle assessments can take years to put together and the nature of the industry’s rapid innovation means research can quickly become outdated and useless. Technologies are being replaced at a phenomenal rate and this can pose a problem for the collection of relevant sustainability reporting data. Energy Star is an international standard for energy efficient consumer products that

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MANUFACTURING

was developed in, 1992, in the United States by the Environmental Protection Agency and the Department of Energy. Currently, Australia, Canada, Japan, New Zealand, Taiwan and the European Union make use of the program. The Energy Star label is an easy way for consumers to identify products that will contribute to lowering their personal energy consumption. Energy Star ratings can also be given to buildings and industrial facilities. This is done by benchmarking the building or industrial facility’s energy consumption against the national average on a scale of 1-100. Facilities that score over 75 may qualify for an Energy Star rating. According to research, the typical re-purchase timescale of electronic devices is four years. This is usually before mechanical failure forces the purchase of a new device, meaning consumers are choosing to buy new devices that offer increased functionality before their current device becomes unusable. The performance energy savings of buying a new, energy star rated, electronic device is enough to negate the energy used in its manufacture compared with buying or re-using an older model. It is, therefore, more sustainable to upgrade to newer, more energy-efficient technology while properly recycling the older version. E-waste E-waste is generally defined as anything that has been discarded that runs on electricity. According to the Environmental Protection Agency (EPA), 20 to 50 million metric tons of e-waste are generated worldwide every year, making up more than five percent of all solid municipal waste. The speed at which technology is moving, coupled with encouragement from company marketing to upgrade to newer devices, has created a boom in e-waste. Electronic devices are made from a number of hazardous substances that make them both valuable and dangerous sources of recycled raw materials. When e-waste is not disposed of correctly it has the potential to leak hazardous chemicals into the soil and ground water and overheating or incorrect disassembly can cause explosions and fires. Besides the physical threat of injury, people working with e-waste can also be exposed to a number of toxic substances; some of which are known carcinogens (known to directly cause cancer) in humans. The more modern a technology, the more difficult it tends to be to recycle. Compact, slim-form, shock resistant and weather resistant devices are a lot harder for recyclers to pull apart because of the excessive use of glues, in the case of slim devices, non-standard fasteners and compressed layers of materials. Recycling is only possible when an item can be broken

down and separated into its raw materials, but the desire for thinner, lighter technology that is also resistant to everyday hazards like water and dust makes this task much harder to achieve. The e-Waste Association of South Africa was established in 2008 to deal with the increase of e-waste in the country. The non-profit organisation works with manufactures, vendors and distributors of electronic and electrical goods and e-waste handlers (including re-furbishers, dismantlers and recyclers) to manage e-waste effectively. The Universal Recycling Company specialises in processing “complex scrap” such as electronic waste. Recycling is done using sophisticated technology on “disassembly” lines. According to the U.S. Environmental Protection Agency (EPA), “Experts estimate that recycling 1 million cell phones can recover about 24 kg of gold, 250 kg of silver, 9 kg of palladium, and more than 9,000 kg of copper.” As part of their product responsibility or stewardship initiatives, many electronics companies have product take-back policies to help ensure the proper recycling and disposal of their products. Some companies refurbish and donate equipment to charities and others offer credits for savings on your next purchase from them by way of incentive. Many companies, such as Apple, will send a free prepaid shipping label to the customer so that items can be posted to them. This makes it easy for the customer to make a sustainable choice when considering disposing of their outdated devices. Certain manufacturers, such as Dell, HP and Sony, even take in products from brands other than their own. Product take-back programs help companies build a reputation for proactive sustainability that is becoming increasingly important to customers and investors. Sustainability interventions As with most industries, there are a number of ways for electronics manufacturers to address the issue of sustainability throughout the lifecycle of their products. Product attributes — Product attributes are those directly related to the nature of the materials used in making a product or its packaging. These can include the energy used by the product, whether the material comes from a renewable resource, or if it includes recycled content. Other product attributes might indicate the durability of a material or its chemical content. Process-specific attributes — Process-specific attributes focus on the environmental impact resulting from how the product is produced and distributed. This can relate to the energy source used

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in manufacturing and greenhouse gas emissions. Still other process attributes might be related to the storage and transportation of finished goods. Life-cycle attributes — These attributes are related to initial product design and material sourcing, product manufacturer, product packaging, warehousing and distribution, product use and maintenance issues, and end-of-life considerations including recycling, recovery and waste management. Corporate-specific attributes — Corporate-specific attributes broaden the sustainability scope beyond the product itself to include a manufacturer’s values, policies and actions in support of a genuine corporate sustainability mission. Corporate attributes include ongoing commitments to environmental sustainability and mechanisms for engaging stakeholders in environmental stewardship issues. Verifying compliance Sustainability initiatives are worth more if they can be verified by a third party. For the electronics industry there are a number of certification options that allow companies to easily demonstrate their environmental awareness to their stakeholders. Eco-product labelling There are an estimated 440 different eco labels currently in use worldwide, but not all are created equal due to the number of standards available, differing review processes for those standards and differing processes for verifying compliance. For a label to provide the most assurance to the buyer it should be based on a standard that addresses multiple sustainability issues over the lifecycle of the product, should be based on standards that are regularly reviewed and updated through an open process and compliance with those standards should be verified through a third party. This way the buyer can be sure the eco-label’s declaration is based on sound, scientific and up-to-date information that has been objectively verified. Environmental Product Declarations An Environmental Product Declaration (EPD) is a comprehensive report on the environmental impact of a company’s product over its entire lifecycle that has usually been validated by a third party. An EPD would include information on the product’s carbon footprint, impact on global warming, emissions data, impact on land and water and any other health-related impacts that might be relevant to stakeholders. According to the ISO 14025, these documents should be succinct, fact-based and provide specific information by category. An EPD should make

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MANUFACTURING

THE CARBON COLUMN

it easy for buyers to compare different products in terms of their environmental impact. Environmental Claims Validation Sometimes, when a specific sustainability claim isn’t covered by the eco-labels already in use, a manufacturer may be required to provide independent verification. This can also be a condition of procurement for certain buyers or serve as a proactive response to charges of misleading or vague sustainability claims. Validation is typically based on product testing and periodic performance audits by a qualified third party. This can be measuring content-related claims, product performance claims such as resistance to mildew or manufacturing performance such as product take-back schemes. This means that non-standard or innovative sustainability claims can be verified and become a unique selling-point for your product. There are also a number of lifecycle assessment tools available to help manufacturers assess and evaluate the sustainability of their product over its entire lifecycle. These are usually aligned to specific environmental standards and conducted by qualified product registration entities. Sustainability in the electronics industry is relevant at every stage of the product lifecycle. Meeting regulations and complying with standards is just the beginning. Considering sustainability on a more holistic level can help manufacturers drive innovation both internally and externally, improve production workflow efficiencies and better engage employees. It is also a way to improve reputation, gain trust and demonstrate the company’s commitment to improving its sustainability standing with stakeholders and potential investors. For consumers, it is worth their while to investigate the energy ratings of the devices they intend to buy or replace. Consumers have no real control over the sustainability of electronics besides through the choices they make. Better choices by everyone will lead to a greater impact on the development of a truly sustainable, green economy.

NATIONAL BUDGET— STICKS AND CARROTS Franz Rentel

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SCRC Team 7, 18 June 2012, Key Sustainability Issues in the Electronics Industry: Sustainability Industry Report. Retrieved from: http://scm.ncsu.edu/scm-articles/article/key-sustainability-issues-in-the-electronics-industry-sustainability-indust UL White Paper, 2014, Verifying Environmental Sustainability in the Electronics Marketplace Electronics Takeback Coalition, 25 June 2014, E-Waste Facts and Figures. Retrieved from: http://www.electronicstakeback. com/wp content/uploads/Facts_and_Figures_on_EWaste_and_ Recycling.pdf Cato, J. Raw materials used in the manufacture of electronics components. Retrieved from: http://www.ehow.com/ info_8053265_raw-used-manufacture-electronic-components.html Sahni, S. Boustani, A. Gutowski, T. Graves, S. 28 January 2010, Personal Computing Remanufacturing and Energy Savings. Retrieved from: http://web.mit.edu/ebm/www/Publications/MITEI1-f-2010.pdf Northwest Product Stewardship Council, Manufacturer and Retail Take Back Programs for Electronics. Retrieved from: http://productstewardship.net/products/electronics/resources/ programs/business www.ewasa.org www.ewasteguide.info

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inance Minister Nene delivered his annual budget speech to the National Assembly on 25 February 2015. In terms of green taxes there are some sticks, but also some carrots. The “sticks” • The carbon tax will be introduced in 2016 with a draft carbon tax bill published later in 2015. • The electricity levy will increase temporarily from 3.5c/kWh to 5.5c/ kWh until the electricity shortage is over and/or until the carbon tax is implemented. The “carrots” • The energy efficiency tax deduction for companies will be increased from 45c/kWh to 95c/kWh for energy saved and will be extended to cogeneration projects; • Renewable energy projects that generate electricity could benefit from accelerated depreciation deductions; • The carbon tax will include measures that will reduce a company’s tax liability. What does this mean for your company? • Legislation will be passed to implement the carbon tax in 2016. Legislation could be passed sometime before mid-2015; • All companies will be affected; • If your company owns or controls facilities that emit greenhouse gases resulting from industrial processes you may be subject to the carbon tax; • If you do not, you may pay higher prices to your (carbon tax liable) suppliers. What should your company do now? • Perform a carbon footprint. • Calculate your possible tax liability. • Analyse your supply chain.

• Perform an energy audit. • Develop and implement a carbon offset purchase strategy; this could reduce your annual carbon tax bill by up to 25%. Once the carbon tax bill is passed, South African offsets prices are expected to rise sharply and trade in the region of R80/t – R100/t. We also expect a significant shortage of eligible carbon credits. • Develop carbon projects by implementing activities that reduce your own carbon emissions. Sell resulting carbon credits to carbon tax liable companies. By next year, every company in South Africa will have to manage its carbon impact. Your company will report on it to the government, your shareholders, your employees and your customers. Companies managing their climate impact today are better equipped to deal with the risks and opportunities in an increasingly complex carbon, energy and water regulatory environment.

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Manufacturing Capital THE STUFF THAT MAKES THE STUFF WE USE... Alistair Schorn

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n traditional economic theory, inputs to manufacturing or production processes were broadly defined as one of three elements – ‘capital’, ‘labour’ or ‘raw materials’. Capital was for the most part defined as financial capital (as discussed in issue 16 of the Green Economy Journal), or in other words the financial resources needed to invest in productive capacity, and specifically in the space, buildings equipment and machinery needed to manufacture a particular product. The measure of success in the use of this capital was in turn defined as the financial returns earned by the sale of the manufactured products, as measured against the initial investment. The emergence of corporate sustainability as both an objective and a measure of performance for business has however extended the definition of ‘capital’ far beyond the financial realm, and has brought about an increasing awareness on the part of businesses of various forms of capital employed in their core activities. In some instances, the manner in which companies make use of these use of capitals are merely a revised expression of the production or manufacturing inputs described above, for example in reframing labour inputs as ‘human capital’. In truth, however, the definitions of these capitals are far more comprehensive than they might initially appear, and their effective application can prove to be of tremendous value to companies in understanding and addressing the impacts, risks and opportunities that they face in their respective industries. One of the first discussions around the different forms of capital employed in business activities (and arguably still one of the most respected), was contained in Natural Capitalism, published in 1999 and co-authored by Paul Hawken, Amory Lovins and Hunter Lovins.1 This book contains one of the earliest distinctions between financial capital, as in the funds available to a business entity, and manufacturing capital, or the physical space, structures and equipment required to engage in production or manufacturing activities. Manufacturing (or manufactured) capital has been defined as ‘material goods and infrastructure owned,

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leased or controlled by an organisation, that contribute to production or service provision, but do not become embodied in its output’.2 Examples might include property, buildings, machinery, tools, technology or any other forms of infrastructure. From a corporate sustainability perspective, the importance of manufacturing capital to any company or organisation lies in a number of areas. Firstly, the efficient use of its manufacturing capital enables a company to be flexible and innovative, to respond to changing market conditions and to be faster in getting its products to market. Secondly, investment in manufacturing capital (or manufacturing technology) can reduce the inputs of natural resources in the form of raw materials, or in other words, allow a company to make more with less. Both of these outcomes also seem to have a mutually reinforcing relationship with human creativity and innovation – the fewer resources of time, finance and raw materials a company needs to apply directly to its manufacturing activities, the more opportunities exist for activities such as research and development or product innovation. Some of the most innovative developments in the area of corporate sustainability, particularly in an industrial context, appear to have significantly increased the relevance of manufacturing capital. The growth in the application of concepts of industrial ecology, biomimicry and cradle-to-cradle design and production processes all point to an increased emphasis on waste reduction, reusability, recyclability and improved efficiency in virtually all manufacturing environments. Industrial ecology views industry as a human-designed ecosystem, that operates in a similar manner to natural ecosystems, where waste or byproducts of one process are used as inputs into another process. It attempts to shift manufacturing process from linear to cyclical or ‘closed-loop’ systems.3 Like natural ecosystems, industrial ecology is in a continual state of flux. Biomimcry (literally ‘imitating life’) is defined as the practice of learning from and emulating natural designs to solve human problems and

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enhance the sustainability of manufactured products.4 Similar to the above concepts, cradle-to-cradle design (or regenerative design) is a design philosophy that seeks to model industry on natural processes, viewing materials inputs as ‘nutrients circulating in healthy, safe metabolisms’5 and seeking to create systems that are both efficient and essentially waste-free. In the South African context, a relatively established precursor to these developments has arisen in the form of cleaner production. This concept was initially developed by the United Nations Industrial Development Organisation (UNIDO) and the United Nations Environment Programme (UNEP), and is implemented in South Africa by the National Cleaner Production Centre-South Africa (NCPC-SA). The Centre is hosted by the CSIR on behalf of the national Department of Trade and Industry (the dti). The principal objective of the cleaner production concept is to promote the implementation by industry of resource efficiency and cleaner production (RECP) methodologies, aimed at lowering production costs through reduced energy, water and materials usage, and waste management.6 In general terms, each of these concepts aims to increase the efficiency returns that can be achieved by companies in the application of manufactured capital, and thereby to increase the financial returns that accrue to these companies in the execution of their core manufacturing activities. In terms of the adoption and application of these concepts, one of the principal drivers over the past several years, has been the growth of integrated thinking and integrated reporting, which aim to assist companies in evaluating and reporting on the impacts (positive and/or negative, as may be the case) of their activities across multiple dimensions, rather than limiting them to the traditional confines of financial reporting. Specifically, such integrated thinking and reporting processes seek to evaluate the impact of companies in the environmental, social and governance (ESG) spheres, and to wherever possible express these impacts in financial terms. In South Africa, a major driver of integrated reporting has of course been the adoption of the recommendations of the Third Report of the King Committee on Corporate Governance in

South Africa, commonly referred to as King III. Of specific relevance to the distinction between various capitals, however, is the Integrated Reporting Framework, or <IR> Framework, which was released in December 2013 by the International Integrated Reporting Council (IIRC). This Framework makes use of a Six Capitals Model, which seeks to determine the value added by a company through its activities to each of six forms of capital, namely financial, manufactured, human, intellectual, natural and social capital. With regard to manufactured capital, the <IR> Framework defines this as ‘manufactured physical objects (as distinct from natural physical objects) that are available for use in the production of goods or the provision of services’.7 These might include buildings, equipment or infrastructure such as roads, ports, bridges, and waste and water treatment plants. Manufactured capital is often created by other organisations, but can include assets manufactured by the reporting organisation, where these are retained for use in other manufacturing processes. A significant driver for the adoption of integrated reporting principles and accounting according to different forms of capital, and in this instance, a driver for investment in manufacturing capital, comes in the form of supply chain pressure from key customers. Increasingly, through the adoption of integrated thinking and integrated reporting practices, companies are becoming aware of the full extent of their impacts across the economic, social and environmental spheres. Those companies that actively attempt to reduce these impacts, and that wish to position themselves as playing a leading role in the sustainability arena, are also increasingly transferring pressure in this regard to their supply chains. The ongoing development of the various concepts related to manufacturing capital as described above, as well as a growing level of understanding within companies of the relevance of the various forms of capital to their core activities, would certainly appear to provide a significant level of motivation for companies to both analyse and report on the impacts of their activities in terms of the various capitals, and to invest in improving the levels of manufacturing capital available within their organisations.

Hawken, P., Lovins, A., Lovins, L.H. (1999).Natural Capitalism. New York, NY: Little, Brown and Company The Sigma Project. (2006). Manufactured Capital. Retrieved from http://www.projectsigma.co.uk/Guidelines/Principles/Capitals/ ManufacturedCapital.asp 3. Global Development Research Centre. (2014). Sustainability Concepts: Industrial Ecology. Retrieved from http://www.gdrc.org/ sustdev/concepts/16-l-eco.html 4. Biomimicry South Africa. (2015). What is Biomimicry. Retrieved from http://biomimicrysa.co.za/about/about 5. McDonough, W. & Braungart, M. (2002). Cradle to Cradle: Remaking the Way We Make Things. New York, NY. North Point Press 6. National Cleaner Production Centre of South Africa. (2014). Welcome to the NCPC. Retrieved from http://ncpc.co.za/ 7. International Integrated Reporting Council. (2015). The International <IR> Framework. Retrieved from http://www.theiirc.org/ wp-content/uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf 1.

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ADVERTORIAL

AMATHOLE DISTRICT MUNICIPALITY

Amathole District Municipality (ADM) maintains unqualified audit outcome fourth time running

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hile majority of municipalities are still currently struggling with running of their finances, Amathole District Municipality has been steadily maintaining its unqualified status for the fourth fiscal running. The report comprises of the consolidated and separate statement of financial position ·as at 30 June 2014, the consolidated and separate statement of financial performance, statement of changes in net assets, budget statement and the cash flow statement for the year. “Today is an important milestone that began years ago, as just an ideology, and it is such a remarkable experience to realize that we are now on the verge of having a clean audit in our life time. This is why as the ADM, we have set ourselves and are abiding by the standards of high values,” said the clearly pleased ADM Executive Mayor Nomasikizi Konza. Under its jurisdiction, ADM has seven local municipalities, some of which are still struggling with sound financial management. Against this factor, a clearly concerned Konza

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said it was critical that “as the Amathole District Municipality improves, so too should its seven local Municipalities”. “The principles of oversight and anti-corruption are also at our core. You cannot talk clean governance whilst tolerating corruption at the same time. It is with this in mind, that the political and administration leadership of the ADM has maintained an open door relationship with the Auditor General so that they constantly have a say in the manner in which we handle our books,” she said. Konza also passed words of appreciation to both the executive management for steering the ADM ship steadily in the sometimes turbulent conditions as well as the ADM Council and all its councillors and committees for their valued support. “Without this support, oversight and cooperation, we would not be in the position that we are today,” she gratefully said. One of the key pillars of ADM is ensuring free basic service delivery to its communities which one of many reasons that a resolve was taken to allow the Municipal Manager to

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ADVERTORIAL

investigate alternative potential funding sources. The result is MIG funding amounting to over R631 million from the Development Bank South Africa (DBSA) to be used towards infrastructure development. “We are heeding the call to go back to the basics. Our budgeting framework is set on principles of good governance in accordance with the mandate of the ruling government so we can ensure that we effectively and socially intervene on the high levels of poverty, inequality and unemployment; maintain and improve ageing infrastructure as well as prioritise rural development and agriculture,” she said. “[The DBSA grant thus], will enable us to accelerate sanitation projects for the benefit of nearly 70 000 households. Furthermore, it will enable us to fast-track service delivery over

Chief Financial Officer Mr Nkosinathi Soga, Executive Mayor Nomasikizi Konza, Portfolio Head of Finance Cllr Laverne Jacobs and Municipal Manager Mr Chris Magwangqana.

the next period of nine months,” said Konza. Vision Commitment towards selfless, excellent and sustainable service to all our communities. Mission The Amathole District Municipality, in its developmental mandate, is dedicated in contributing to: • Ensuring access to socioeconomic opportunities. • Building the capacity of local municipalities within ADM’s area of jurisdiction. • Ascribe to a culture of accountability and clean governance. • Sound financial management. • Political and administrative interface to enhance good service delivery. • Contributing to the betterment of our communities through a participatory development process.

President Jacob Zuma, ADM Executive Mayor Cllr Nomasikizi Konza and ADM Municipal Manager Chris Magwangqana during the official launch of the ADM Sanitation Project.

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Values • Selflessness : We will commit and dedicate ourselves to the provision of services to our community.

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From left: Municipal Manager Mr Chris Magwangqana, Executive Mayor Nomasikizi Konza and Chief Financial Officer Mr Nkosinathi Soga Below: Municipal Directors and Managers with members of the Hebehebe community in Ngqamakwe, Mnquma LM. • Pro-poor: The poorest of the poor will be the main focal point for ADM’s business and service delivery. • Responsiveness : We will continue to strive for improved turnaround time in the delivery of services and in dealing with our valuable customers. • Transformative : We will make considerable strides to ensure sufficient institutional capacity (skills and human capital) to effect transformation. • Inclusivity: We will include all our stakeholders in our planning, implementation, monitoring, evaluation and reporting in ensuring an integrated effort towards service delivery. • Dignity and respect: We will ensure that our service delivery restores human dignity and respect. • Good work ethics : We will be professional in our conduct and ascribe to the Batho Pele principles. • Transparency: Throughout our business operations we will ensure access to information and fairness to our stakeholders. • Integrity : We will constantly conduct ourselves with utmost integrity as councillors and officials of ADM. • Accountability • We are committed to being held to account by our stakeholders.

For more information, contact: Siyabulela Makunga Senior Manager: Communications & Customer Care; Communications and Customer Care Unit; Department of Strategic Planning & Management Waverly Office Park, No. 3-33 Phillip Frame Road, Chiselhurst 5247 Tel: +27(0) 43 783 2305 • Cell: +27 (0) 72 768 0238 or +27 (0) 71 642 8471 • Fax: +27 (0) 86 642 1991 Email: siyabulelam@amathole.gov.za Website: www.amathole.gov.za

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ENERGY

Winning in green innovation BECOMING A CLEANTECH ENTREPRENEUR Lulama Afrika

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uccessful entrepreneurs can see the big picture and believe that their personal strengths and passion can make a difference to the world. The more help you can get when starting out in this daunting task, the better. In the green innovation arena, the Global Cleantech Innovation Programme (GCIP) fosters small and medium sized enterprises that are trying to address sustainability issues in energy efficiency, renewable energy, waste to energy and water efficiency. This United Nations Industrial Development Organisation (UNIDO) and Global Environment Facility (GEF) initiative is hosted in South Africa by the Technology Innovation Agency (TIA). Dave Pons, creator of a simple, affordable do-it-yourself ceiling insulation kit called Ceiling in a Can, won at 2014’s GCIP South Africa Awards in the Innovation for Social Impact section of the Special Awards category.

INNOVATION AND ENTREPRENEURSHIP IS SUCH AN EXCITING SPACE TO BE IN AT THE MOMENT: EVERYTHING SEEMS SO POSITIVE SO IT WAS NOT SURPRISING TO WORK WITH 20 EXTREMELY TALENTED SEMI-FINALISTS WHO HAD THESE AMAZING BUSINESSES TO SAVE ENERGY, - Dave.Pons

“GCIP gets innovators together at meetings and Innovation summits and conducts workshops that challenge your conventional business ideas. Local mentors are then appointed and they give of their own time

to develop your innovation. All semi-finalists used up hundreds of hours of their time (willingly) and the fantastic co-ordinators of the programme (TIA and UNIDO) paid all travel and accommodation costs.” Dave suggests that green technology is “the only way to let us last longer on this earth.” According to Dave, the GCIP “is no easy ride.” He says “a lot of commitment is required by the semi-finalists. The twice weekly webinars are hosted by international experts and one actually becomes excited to listen to them as they impart their experience. GCIP puts together this group of innovators that are passionate about saving energy and they become close friends who share knowledge and experience.” He says that the GCIP “was a launch pad for my Cleantech business; besides the training, it brought in great exposure, good credibility as well as financial rewards via contacts gained. You are the only one that can promote your own business, but this programme can steer you in the right direction and link you with relevant contacts.” Dave says that he received great exposure from the Cleantech programme for his Ceiling in a Can innovation; especially at the Innovation Summit. “At the event I was introduced to SA Breweries staff who are now fully sponsoring the Ceiling in a Can team to the Global Social Innovation Awards at London Business School. GCIP helped this simple innovation to get noticed on the global stage.” “[The GCIP] turned out to be this amazing brotherhood/sisterhood journey with this large family of similar minded people that helped each other to overcome hurdles.” – Dave Pons, Ceiling in a Can Hollo Matlala, 21 year old founder of 4th Element Group, won Best Youth Led Business in 2014, in the Special Awards category for his innovative water security

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system that incorporates GPS detectors to monitor pipe leaks live via the internet. Hollo says that “being an entrepreneur in the Cleantech sector in South Africa comes with its challenges. You have to be able to convince stakeholders and clients to take a risk in investing in your solution to solve their energy problem and it’s even worse when you’re coming with a new innovation.” He has some suggestions for those starting entrepreneurial projects: “Firstly innovate, sit around with your technical team and find a clever solution to the client’s problem. Secondly, involve the client during this R&D phase to better understand exactly where the money is being lost due to this problem. Lastly, the hardest part, is to try sourcing money for prototyping and testing. South Africa is not known for having funds available to test new technology, so try getting money from different avenues, and even your clients, to get your solution market-ready.” Hollo says that “the biggest lesson I learnt was that the client doesn’t always want what I have to offer, I first have to understand their problem and try to develop my product according to what the clients require. Unless they haven’t yet noticed they have a problem which your product solves.” According to Hollo, the GCIP definitely helped him in his entrepreneurial journey. “We were stuck in the R&D phase in terms of funds and, from the competition, we managed to engage and network with multiple stakeholders from the Director of Green Industries from DTI to even getting Investments from other avenues due to the recognition we received from the programme.” “Basically our project was focused on creating a system that provides a “Free” water solution utilizing solar energy and an economic fault detecting pipeline

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27 Kingfisher Park Nobel Street Somerset West 7130

E: equire@delphiseco.co.za T: 021 801 2493 C: 082 962 9539

Manufactured in South Africa


ENERGY

management system for rural water schemes to avoid unnecessary visits to systems. But the municipalities dismissed the idea due to the potential risk of theft to the system being a major concern. As such, we developed a highly efficient Energy Security system for protection which now Vodacom is looking into purchasing for protection of their cell sites. The Water boards requested we upscale the solar system to supply Kilowatts of energy to help reduce their dependency on Eskom and to upscale the Leak Detection system to help solve the 7.2 Billion Rand non-revenue water problem in South Africa. We are now developing, together with 4th Element Groups CFO Ms Benzi Kuzwayo, innovative business models to help the system break even in less than two years of operations. “How it all begun was with grandma running out of water in her community five years back and her telling me: ‘My child, you want to be an engineer one day, solve my water problem first’.” – Hollo Matlala, 4th Element Group Jeanne Rose, CEO of Eco2 Partnership South Africa, won in the Breakthrough Innovation category at the 2011 GCIP South Africa Awards for finding an environmentally friendly solution to the waste tyre problem in South Africa. Jeanne says that “winning the Breakthrough Innovation award at SA’s 1st Cleantech was an early step in our journey to bring a world-first technology to market.” One of the major obstacles faced early on was the realisation that the UNFCCC did not have a reference methodology in place to enable a project like theirs to claim carbon credits despite the clear indication that their projects would be eligible. This meant breaking new ground with the development of a bespoke methodology describing their continuous reduction and distillation (CRD) technology. After nearly 24 months of active effort, and the completion of a rigorous validation and verification process, the methodology was approved in September 2013 at the 75th meeting of the Executive Board of the Clean Development Mechanism (CDM) of the United Nations in Bonn, Germany. “Our plants in South Africa will be the first waste to energy projects in the world that will be eligible for carbon credits under this approved methodology”, says Jeanne. “Our decision to pursue an onerous and costly route to register a new methodology has resulted in an internationally recognised validation and endorsement of the carbon reduction capabilities of our technology.” Jeanne suggests that “too many fledgling enterprises fail because of lack of business development support.” Her advice

to any start-up is to “take advantage of programmes like Cleantech to assist with refining and honing your business model.” Going through the GCIP provided Jeanne’s business with access to resources and valuable networking opportunities and they “will continue to be able to draw on the expanded Cleantech network as our business evolves and develops,” she says. Since their win in 2011, Eco2 Partnership SA has: • successfully tendered and been awarded processor status in the REDISA waste tyre management initiative • achieved UNFCCC approval for their carbon methodology • entered into significant and credible partnerships with suppliers including AKER ENGINEERING (Performance guarantee on the plant) and SIEMENS (monitoring technology and sensors) • achieved full funding for their first plant to be operational in the third quarter of 2015 Their advice for future Cleantech Entrepreneurs: • Customers are becoming more aware of alternative sustainable products – previously a huge challenge for green entrepreneurs. • It can take a while to find the right funding and forge sustainable partnerships. It is wise to be circumspect and not to rush in. • Cleantech businesses need to be flexible and customer-centric. The GCIP for small and medium-size enterprises (SMEs) started in honour of the COP17 in 2011 as a competition to promote clean energy innovation. Entrepreneurs compete to bring out their skills and identify the most promising clean tech innovations in the country. The GCIP is a United Nations Industrial Development Organization (UNIDO) and the Global Environment Facility (GEF) initiative hosted and jointly implemented in South Africa by the Technology Innovation Agency (TIA). Based on the successful Cleantech Open Accelerator, the GCIP initiative aims to spur local innovations in energy efficiency, renewable energy, waste to energy, and water efficiency; maximizing every participant’s chances of being successful in the programme and raising their probability of achieving sustainable commercial success. The GCIP combines a competition and a business accelerator programme to offer participants progressing through the programme extensive mentoring, training, access to investors and opportunities to showcase their innovations to the media and the public.

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Above: Hollo Matlala, founder of 4th Element Group; Jeanne Rose, CEO of Eco2 Partnership South Africa; Dave Pons, Ceiling in a Can

Feel like you have what it takes to be South Africa’s next Cleantech Entrepreneur? If you have a project that may qualify for the 2015 round of awards, planned by TIA and UNIDO, applications open 16 March 2015. Semi-finalists, those that have passed the screening process and first round of judging, will be announced just before Sustainability Week 2015 in June.

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MINING

One Size Does Not Fit All CORPORATE SOCIAL RESPONSIBILITY AND ITS RELEVANCE TO SMALL BUSINESS

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MMEs are not merely small versions of big business and corporate social responsibility models, tools and frameworks developed for large corporates, although relevant to, cannot simply be applied to small business with the same result. Small businesses make up the bulk of businesses worldwide; their sheer numbers render them a significant sector and their resultant cumulative economic and social impact make them important contributors to sustainable development. It is troubling then, that corporate social responsibility (CSR) studies, tools and frameworks tend to focus on large business. The role of CSR amongst small business, particularly in relation to environmental responsibility, has been relatively unexplored and only recently, have studies started to emerge that consider the relevance of CSR for small business. Every business has an impact on the economy, society and the environment, both positive and negative. Similarly, every business has stakeholders, societal obligations and is susceptible to risk. It is arguable then, that CSR is therefore equally valid for all businesses, irrespective of their size. In the case of larger corporations that actively practice CSR, there is an obligation to assume responsibility for the environmental and social performance of their suppliers and partners, businesses of varying sizes. It seems appropriate then, that CSR can be practiced by any business and the size of the business is less of an issue than the motivation to apply CSR. Small businesses are not simply small versions of large business; they are different from large corporations in terms of resource availability and allocation, managerial strategy and approach, and the level of involvement and stakeholder prioritization, for example. Large and small business differs notably when it comes to stakeholders and stakeholder pressure to practice CSR. Small business tends to be family or privately owned, with a single or a very small number of shareholders, making them less inclined to shareholder pressures. Further, unlike large corporations, small business tend to lack a brand or image that requires

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protecting or enhancement as they often do not sell directly to the public, their customers generally being other companies. This results in these businesses being less prone to consumer pressure and damage to public reputation, and accountability is limited to the customer requirements and personal preference of a limited scope. Small business also exhibit distinct characteristics, such as informal or â&#x20AC;&#x2DC;flatâ&#x20AC;&#x2122; management structures and are often owner-managed; where ownership and control lie with the same person. Other shareholders are typically limited to family member and/or business partners. This means that small business characteristics vary widely depending on individual personalities and differing ownership structures. Another feature of small business is that they tend to be resource constrained and are inclined to prioritise economic survival. They may not have the means to carrying out risk reporting or develop specialist expertise within their staff compliment resulting in limited, and a lack of specialised competencies within the business. These unique characteristics of small business have implications for the way that small business perceive, practice and approach CSR. A lack of internal capacity means that a small business is unlikely to use CSR terminology, implement CSR policies or establish CSR committees. They may be engaging in a range of socially and environmentally responsible business practices, but do not have formal measuring and reporting systems to quantify or communicate their CSR efforts, or may not even have the aptitude to recognize they are doing so. That being said, a common CSR practice of small business is the giving of charitable donations. Being owner managed (or having limited shareholders), charitable donations are motivated by personal values and on an ad hoc basis, and in the absence of shareholders and shareholder accountability, small business are able to spend company money as they see fit. They are also unlikely to focus on leveraging marketing or public relations opportunities that may result from such activities.

Carla Higgs Employees, customers and local communities are the primary stakeholders in, and greatly influence CSR in small business. A key characteristic of small business CSR is responding to the preferences of employees in terms of charitable giving for example, and focusing efforts on ensuring the maintenance of the livelihoods of those within the business. Relationships with customers are often critical to the success of small business. This is closely linked to their reputation at a personal level and tied to a need to protect the reputation of the firm in the eyes of the customer. In the same way, being embedded in local communities, small firms lack anonymity and questionable actions end with the owner-manager. This moral proximity with community and customers can result in the business being very mindful of socially responsible behaviour, in relation to these stakeholders. Given the unique characteristics of small business, and that they differ considerably from large corporations, one cannot expect to transfer CSR practices developed by, and for, large corporations to small business and expect the same results. Small business requires specific CSR solutions; and studies have shown that this is especially true in the environmental paradigm. It may be that small business, due to their unique attributes, are well positioned to take advantage of CSR programs. Indeed their personalised style may better position them benefit from improved employee motivation and retention, the attraction of customers, cost savings and improved risk management; just some of the documented benefits that large corporation gain from CSR programmes. However, documented cases of CSR in small business are scarce and such benefits and theories have yet to be developed into a coherent theory. Unfortunately, there is even less to be reported on small business in developing countries. Given their significance as a sector and their aggregate impacts, the importance of small business for the development of a corporate social responsibility is an imperative topic, one that warrants particular attention.

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SUSTAINABILITY

WEEK IT STARTS HERE! 23 African Capital Cities Sustainability Forum Sustainability in Mining

24 Green Building Conference Day 1 Sustainable Energy Seminar Day 1 Food Security Seminar Transport and Mobility Seminar Green Manufacturing and Supply Chain Seminar

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Sustainable Energy Seminar Day 2 Sustainable Infrastructure Seminar Vision Zero Waste Seminar Water Resource Seminar Responsible Tourism Dialogue Green Business Seminar

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Youth and the Green Economy Seminar

27-28

Green Home Fair

CSIR INTERNATIONAL CONVENTION CENTRE

23-28 JUNE 2015 www.sustainabilityweek.co.za

021 447 4733

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