Transformation with BBBEE in South Africa

Where does Sappi stand in terms of the various elements of the scorecard?

Our performance against each scorecard element is set out below.

Ownership

In 2010, Sappi implemented a broad-based empowerment ownership scheme (24.3 million shares), so that today 53.94% of our South African business is black-owned on an equity equivalent basis.

Management control and employment equity

Our employment equity score has been steadily improving since 2015, when we built a stipulation into our management incentive scheme that 80% of management appointments in any one year should be black people.

Skills development

Historically-disadvantaged employees are a major focus of our training support in Southern Africa. Through the equity and learning forums, management and employee representatives agree on training plan requirements and the tracking of training and development progress to equip employees for improved performance in their current roles; recognise competence; and prepare for career mobility. Skills development initiatives, particularly programmes aimed at improving management and leadership skills, are geared to meet our employment equity targets. Read more about our Skills Centres at Ngodwana and Saiccor Mills.

Preferential procurement

We have a preferential BBBEE procurement policy in place which allows for preferential payment terms and the relaxation of commercial/procurement terms and conditions. No allowance is made to relax specifications. Where practical, we purchase goods and services from black-owned businesses and seek opportunities to develop future black vendors.

Enterprise and supplier development

Started in 1983, Sappi Khulisa, our primary enterprise development initiative, aims to include rural individuals and communities in the forestry industry which has high barriers to entry. This initiative is aligned with the South African government’s strategy of promoting forestry as a means of sustainable livelihood in rural areas and involves the transfer of business skills, technical assistance, financial support and preferential payment terms to assist new enterprises to enter the market.

Our dedicated Enterprise and Supplier Development (ESD) department promotes sustainable livelihoods by identifying procurement opportunities for, and overseeing the capacity building of, small and medium-sized enterprises (SMEs) through training and operational support.

We began the process in FY19 by onboarding the operations to the ESD strategy, which was followed by analysing our spend in forestry and mill operations to identify suitable ESD opportunities. We then mapped our local communities and scoped supply chain and community business opportunities. This included the unbundling of contracts and setting-aside of suitable business opportunities. We identified potential SMEs and classified them according to their capacity building needs, with some needing a higher level of intervention than others.

Socio-economic development

Although Sappi is a global company, the bulk of our corporate social responsibility spending focuses onSouth Africa. We prioritise the communities close to our areas of operation. Our objective is to effect meaningful change by providing equitable access to resources and opportunities in response to identified needs. We prioritise education, environment, health and welfare, and community engagement.

How does Sappi deal with land claims?

As a significant landowner in South Africa, we have a role to play in land reform and are working actively with the Department of Land Affairs (DLA) to resolve land claims lodged against our property.

We are currently engaged in a number of land claims in South Africa. In the past 10 years, we have settled claims totalling 40,697 hectares (ha), of which claimants took ownership of 8,151 ha, and claims for 11, 271 ha in which claimants preferred to seek compensation. The balance of the land has been withdrawn from the claim by the Restitution on Land Rights Commission or the claim rejected by the Land Claims Court. For many of the land claims in which we have been involved, and where there has been a change in ownership, we continue to buy the timber and help manage those plantations.

Poor post-settlement support is one of the key reasons cited by experts for the failure of many land reform projects in South Africa. We are working with a large number of land reform beneficiaries to assist with the management of timber on their properties, post-settlement.

To ensure sustainable production from these properties, we have entered into supply agreements with the new beneficiaries and have also provided assistance. This depends on the requirements of the project, but ranges from a pure supply agreement to a comprehensive Forestry Enterprise Development Agreement (FEDA). The latter is a supply agreement but also incorporates development objectives whereby Sappi provides technical and business training, as well as administrative support.