Indirect Economic Impacts: 203-1 to 203-2
Indicators addressed under Indirect economic impacts are covered by our responsible citizenship programme, and the Financial, Social and Human capitals.
Indirect economic impacts include: employee spending, the provision of products and services, community development, skills development and job creation that reduces demand on the national and local governments and enables resources to be redirected elsewhere.
The group’s corporate social investment initiatives contribute to the social wage, with its enterprise and socio-economic development investments creating employment opportunities and increasing overall economic output. Barloworld has a number of initiatives designed to bring previously disadvantaged people into the formal South African economy and, through its Siyakhula fund, supports emerging black-owned enterprises by nurturing them into fully fledged businesses.
203-1: Infrastructure investments and services supportedIntegrated Report:
Barloworld is committed to responsible corporate citizenship, electing to play a role in society beyond profit and compliance, as evidenced by its efforts over several decades to contribute to positive social change, create inclusive opportunities and deliver sustainable value for its key stakeholders.
The organisation believes that the very fabric of our society depends on maintaining amenable and inclusive social compacts, robust economies and industrial bases from which jobs can be created for economic growth and development, to ensure social and economic equality for all, now and into the future. The group encourages active citizenship in its people working around the world, both leaders and employees; making an effort to inspire in them a sense of responsibility to make a difference in their communities and spheres of influence.
In the course of its business, through extensive, ongoing interactions, Barloworld engages with a wide range of stakeholders to understand their interests and concerns so as to construct its value propositions. The group seeks to provide leadership in society by encouraging its leaders to contribute to developmental challenges and act as role models, and by helping to create the responsible leaders of the future.
CSI strategy and spend
Through its social investments, at a group level Barloworld has over the years sought strategic partnerships, synergies and innovations in public-service delivery that can be taken to scale by the public or business sectors. Through working with reputable non-government organisations, grant funding, and insistence on sound management practices, responsible governance and accountability, Barloworld endeavours to build capacity and sustainability in its development partners, where necessary. The group has invested R84 million in such initiatives over the past five years, and R149 million over the past ten years.
There is an alignment in divisional and regional approaches to CSI across the Barloworld Group engaged with a wide range of philanthropic initiatives, adapted to local norms and practices, the Group’s diversification and inclusion objectives and, in South Africa, the imperatives of broad-based black economic empowerment and socio-economic development. The group is committed to spending at least 1% of its worldwide profits after tax on corporate social investment.
In 2018, the group spent R16 million on CSI, with R15.2 million of that being spent in South Africa.
The Barloworld Trust, which implements Barloworld's corporate social investment (CSI) programme in South Africa, differentiates itself from its operations' local, product- or cause-related marketing activities through its structural approach to development, funding and supporting promising initiatives that underpin social and economic development, in order to have greatest impact.
The education challenges in South Africa are immense. As a result, the Barloworld Trust's core focus is on improving the quality of teaching and learning, providing better access to quality education and creating access for youth development programmes. Its strategic approach is to work in long term partnerships with organisations that create sustainable innovations in both public and private education institutions, aiming for early adoption and support of these innovations in education, which can then be taken to scale by the public or private sectors. Spend in accordance with identified priorities are reflected in the group 2018 CSI spend.
The work of the Barloworld Trust
The Barloworld Trust manages a central programme that seeks to add value to South African society as a whole as opposed to individuals only. Its board has adopted a structural approach to effect real change and development; opting for a catalytic role through efforts to build capacity in civil society and partnering with projects that employ innovative solutions to existing societal problems, particularly in the field of education and youth development. These approaches can be replicated and taken to scale by the public or private sectors.
Barloworld’s ongoing support for the work of the Bridge organisation is evidence of this approach. Through its management of broad-based communities of practice, the organisation focuses on key leverage points in the education system and shared knowledge. It drives collaboration and co-operation among a broad range of stakeholders to increase the collective impact on the education system and learner performance.
Addressing education and youth empowerment
Good practice and plans continue to be shared across areas such as school leadership, mathematics and science learner support, youth development and empowerment through the use of information and communication technologies (ICT) in education and through the South African Extraordinary Schools Coalition.
Most social investment work in which Barloworld is involved is focused on young people, for the common good: they will need both traditional and new skills, capacity and self-confidence to be the difference they would like to see in the world and craft a better future for all.
Efforts to facilitate access to tertiary education are aimed at empowering individuals, addressing the skills shortage and contributing to country competiveness, leading ultimately to economic growth and development.
Barloworld’s partners and beneficiaries
Long-term partners in improving learner outcomes:
- Penreach Whole School Development Programme
- Thandulwazi Maths and Science Academy
- LEAP Science and Maths Intervention Schools
- Teach South Africa
The CSI initiatives encompass many other areas, too:
- The wellbeing and success of many young people is being underwritten through the work of beneficiary organisations such as the President’s Award for Youth Empowerment.
- To facilitate access to tertiary education, empower young people and break cycles of poverty, Barloworld has supported the work of the Rural Education Access Programme.
- To inspire social innovation and responsibility, Barloworld supports Enactus;
- A Group legacy project since 2010 has been contributing to the establishment of the Nelson Mandela Children’s Hospital.
- To complement its internal responsible environmental custodianship initiatives, Barloworld also acts externally on environmental concerns by supporting the Endangered Wildlife Trust; the Worldwide Fund for Nature and is a founding partner of the National Business Initiative.
The group’s messaging campaigns and communications to a wide range of stakeholders align CSI objectives with key group values, and endeavour to draw attention to important social issues and the interventions of its NGO development partners in order to increase awareness and create a greater impact.
Founded in 2007, Siyakhula is Barloworld’s enterprise and supplier development arm, driving black economic empowerment and transformation in our South African business.
In 2018, Barloworld intensified activities to transform the group’s supply chain and enterprise development within our broader stakeholder environment. These efforts were in line with the dti’s Amended Codes of Good Practice, which position supplier diversity, localisation and small business support as essential prerequisites for corporate competitiveness.
Barloworld Siyakhula has championed this process, guided by criteria set in the dti’s B-BBEE scorecard. Through a blend of financial and non-financial support, Siyakhula provides small, micro and medium-sized enterprises (SMMEs) with the assistance they need to be competitive – within Barloworld’s value chain as well as the larger marketplace.
Since inception Siyakhula has invested an accumulative spend of over R250m on enterprise and supplier development, indirectly sustaining over 700 jobs.
Siyakhula implemented and partnered with various partners, including our principals, financiers and our internal stakeholders on a number of initiatives in 2018 to further develop Barloworld’s competitive edge within an evolving socio-economic environment; with particular emphasis on two main drivers of value creation in the supply chain; namely localisation and supplier development.
Over the past five years the group has invested R84 million through group corporate social investment programmes, R16 million (2017: R18 million) was invested in 2018, R15,2 million of which was verified SED in South Africa.
Social Economic Development
Overall CSI investment R15.6 million (2017: R18million)
Area Education Youth development
Environment, Health and welfare % of expenditure 56% 14% 30% Description Programmes focusing on access to quality basic education with emphasis on improving science, technology, engineering and mathematics (STEM) subjects at high school level, as well as teacher development programmes. We believe in enabling access to higher education. Programmes that focus on youth leadership skills development, as well as social entrepreneurship programmes that resolve local community challenges. This includes initiatives that focus access to basic health care services as well as improved life expectancy. Beneficiaries
- Teach SA
- Leap Science and Maths Schools
- Thandulwazi Trust
- Enactus SA
- President’s Award for Youth Empowerment
- Rural Education Access Programme
- Nelson Mandela Children’s Hospital
- Stop Hunger Now (employee volunteer programme)
- National Business Initiative (NBI)
- Habitat for Humanity
- Endangered Wildlife Trust
- WWF South Africa
203-2: Significant indirect economic impactsIntegrated Report:Structured for value creation - Performance per region Structured for value creation - Business Model - Impact on capitals Managing for value - Equipment - Divisional key performance indicators Managing for value - Automotive - Divisional key performance indicators Managing for value - Logistics - Divisional key performance indicators Managing for value - Corporate centre - Divisional key performance indicators Managing for value - Value added highlights Managing for value - Value added statement Licence to operate - Transformation - Enterprise development Licence to operate - Communities Summarised consolidated income statementConsolidated Annual Financial Statements:
Given the nature of our operations and locations, major indirect impacts result from employee spending and local sourcing. The number of people by region who benefit from employment is reflected below. The overwhelming majority of employees are local.
Employee breakdown by region 2018 2017 2016 South Africa 14 230 14 981 16 372 Rest of Africa 2 053 2 053 2 176 Europe and Russia 1 044 942 859 Middle East 90 109 140 North America 0 0 0 Total 17 417 18 085 19 547
Indirect economic impacts include: employee spending, providing products and services, enhancing the image and reputation of areas, and job creation that reduces demand on the fiscus and enables resources to be redirected elsewhere. Improving local skills through skills transfer and knowledge sharing is also beneficial to the local communities.
Indirect impacts also include providing services and customer solutions that address customer needs and enable them to operate. The group's products and services contribute to the establishing, developing and maintaining of communities, particularly in mining, agriculture, infra-structure, transport and logistical support. Examples include equipment operations in remote mining locations which enable these to continue with benefits for regions and communities.
Similarly, providing power solutions, such as the Anixas power station in Namibia, provides electricity for local consumption aiding development of communities and industry. On a lesser scale, other power solutions supply power to customers enabling their operations to continue in the event of power supply interruptions.
Equipment South Africa's Technical Training Academy is an accredited Caterpillar Regional Centre which means it can conduct various technical training courses on behalf of Caterpillar primarily for sub-Sahara Africa dealers including Mauritius, Reunion and Madagascar. As an established mining dealer, mining training will probably also be conducted for Africa, Europe and Middle East Caterpillar dealers.
In August 2017, Equipment southern Africa celebrated its 90th anniversary as a Caterpillar dealer. This coincided with the official opening of the new Caterpillar/ Barloworld parts facility at Kempton Park which will further improve parts availability to our customers.
More directly, by operating in communities Barloworld creates significant value for local suppliers which include OEMs and sub-contractors. This is reduced where plant and equipment can only be sourced by offshore principals, in which case the commitment is to spend the balance locally.
In South Africa, Equipment divisions' products are sourced from overseas principals resulting in some 50% local spend, while Automotive division sources vehicles through local OEMs resulting in some 99% (including salaries and wages) of its spend being locally based. Sourcing varies by regions of activity and division. In Russia, given the nature of the Equipment business and sourcing Caterpillar products, some 40% of total spend is on local suppliers.
Logistics business sub-contracts a large portion of its business to local contractors resulting in some 92% of its spend being locally based. Its freight management services' spend is with international airlines and shipping companies as well as international customs clearing agents and accordingly is weighted towards international suppliers.
Indirect value for communities also includes the group's support for enterprise development initiatives under the Barloworld Siyakhula umbrella. This principally benefits communities in South Africa, as do the group's preferential procurement initiatives under the B-BBEE umbrella.
Barloworld Siyakhula, the group's enterprise development vehicle in South Africa, promotes Broad-Based Black Economic Empowerment through providing financial and non-financial support to small and medium-sized suppliers, contractors and enterprises in its supply chain. In excess of some R250 million in accumulated funds are currently committed.
Over the past five years R84 million has been invested through the group's corporate social investment programmes with R15.6 million being invested in 2018 (2017: R18 million).
See also 2018 Integrated Report: Value Added Statement.