Chief executive and management report continued

OUR APPROACH TO OUR BUSINESS


  • Governance and sustainability
    As a responsible corporate citizen, the Group has developed a credible track record that underlies our corporate reputation. Governance and sustainability are fundamental to Sun International’s operations and are interwoven into our strategy and decision-making process, from board and management level to our operations.

Key achievements in 2014

  • Appointed a Latin American non-executive director as the Group’s expansion gains momentum
  • Integrated governance, legal, compliance and socioeconomic development (SED) into one department
  • Re-launched our SED strategy under the banner of Sun Touch
  • Significant improvements made in environmental management with reduced energy and water usage targets achieved
  • Improved engagements with key stakeholders including gaming regulators and certain provincial governments
  • Retained inclusion in the JSE’s 2013 SRI index

Focus for 2015

  • Finalise carbon footprint strategy
  • Improve Group compliance function
  • Build on SED and ENTERPRISE DEVELOPMENT initiatives and ensure real and sustainable value delivery
  • Continue to build relationships with gaming boards

 

Sun International has long been at the forefront of governance, being an early adopter of King III and having well established processes that interweave our governance and sustainability principles into our strategy and decision-making processes. Our credible track record that underlies our corporate reputation protects our current business and supports our expansion into new territories, given the focus of governments and regulators on operators who understand and deliver on their responsibilities as responsible corporate citizens.

Given the strategic importance of attaining a solid corporate reputation, the challenge for the Group this year was to move beyond the realm of just compliance and to build an integrated platform to support the Group’s strategic objectives. The many good initiatives that have previously been undertaken by the Group, were at times driven in isolation and hence we were achieving good but fragmented results in the sustainability domain. We found that as we started to consider the elements of governance and sustainability as one, a process which we reported on last year, the more naturally certain elements and processes lent themselves to a way of integrated thinking and doing.

At the heart of this integrated thinking is the premise that the development, operation and management of our hotels, resorts and gaming operations have ethical, environmental and social implications on the communities within which we operate. Not only do we have a responsibility to these communities, we are also aware that our corporate behaviour within these communities, tells a story that forms the perceptions of our many stakeholders and informs our reputation as we seek to expand into new territories.

Our legal licence to operate is informed by our social licence and hence our approach to governance and sustainability will always remain an imperative to the Group. Evolving our integrated approach has already demonstrated the benefits that make this objective well worth pursuing.

We have commenced by entrenching our governance and sustainability principles within the Group’s corporate sustainability strategy (CSS) which reflects Sun International’s commitment to integrated sustainable development and is underpinned by the following key tenets:

  • Maintaining an ethical climate throughout our operations
  • Engaging with stakeholders at all levels
  • Touching our communities positively by creating shared value for our business and communities
  • Implementing environmental management systems that are aligned with international best practice
  • Promoting environmental and social responsibility among guests, employees, suppliers, contractors and concessionaires
  • Applying social and environmental criteria to the sourcing of goods and services wherever practical
  • Demonstrating environmentally and socially responsible behaviour
  • Practicing good corporate governance

Corporate responsibility

The Group was again included in the JSE’s 2013 SRI Index. Only 73 of the publically listed companies on the JSE qualified for inclusion in 2013. Given that the SRI Index is globally recognised as an indicator of high levels of governance, our continued inclusion in the SRI Index remains a strategic imperative.



Environmental management

While the Group is not the heaviest user of natural resources nor does it have the biggest impact on the environment, we nevertheless believe that we need to play our part in protecting the environment and preserving the natural capital that forms part of the attraction of our unique property destinations. In doing so, we are also able to achieve meaningful financial savings and further reinforce our commitment as a responsible operator to our varied stakeholders. There is a growing market segment that appreciates and supports green companies and we will continue to ensure that these guests have reason to support our properties.

A comprehensive energy management strategy that actively targets certain energy initiatives and savings was approved and rolled out to all South African properties during the year. Properties outside South Africa will be targeted during the next financial year as we learn from our local implementation. The National Business Initiative (NBI), a sustainability partner of Sun International, has in support of our efforts also contributed financially towards conducting energy audits that form part of the Group’s energy strategy.

Over the past year we have improved the accuracy and reliability of our data collection which is key to understanding our energy usage and impact on the environment. We have implemented a monthly monitoring process to ensure data reported is accurate and consistent throughout the Group. This will be augmented by incorporating environmental requirements into the functionality of our ERP system, which will also meet the requirements across all pillars of ISO14001 compliance and data required for GRI and SRI reporting.

As part of our focus on environmental management, we have appointed a Group Environmental Manager who is making great progress in taking Sun International forward on these initiatives.

Socioeconomic development (SED)

In the year under review, the Group’s total SED spend amounted to R21.3 million with the funds spent as follows:



Further to our aim to integrate our governance and sustainability platforms, SED has been moved to corporate services as part of an overall sustainability offering. A comprehensive review of the Group’s SED initiatives and spend has since been undertaken and we have appointed a Group SED Manager to focus our various SED initiatives and assist in implementing a revised SED strategy.

Our revised SED strategy is housed under the banner of “Sun Touch” and is underpinned by the concept of shared value creation, which we have customised according to Sun International’s environment. To create shared value, we start with considering the business need and then find a societal concern that addresses the business need thereby creating value for both business and our stakeholders.

An example in brief:

  • The business need: a shortage of qualified and experienced chefs in the Group (indeed in South Africa)
  • The societal need: education and employment
  • Creating shared value: Sun International has launched the hospitality and cooking school classroom project across eight provinces and will provide the facilities for high school learners to go through an approved curriculum that involves learning culinary skills. We will also train the relevant educators by giving them exposure to our kitchens. The top graduating learners will be offered bursaries with tertiary hospitality institutions and will serve their internships with the Group which in turn will lead to employment within the Group.

Both the community and our business would have benefitted from the creation of shared value.

Leading the creation of our shared value principles, is the Group’s newly appointed SED Manager, Ms Nancy Ncube.

Enterprise development (ED)

With the changes to the B-BBEE codes, we are making a significant shift in direction and effort. The Chief Financial Officer, Commercial Manager and procurement team have been tasked to reformulate the Group’s strategy for ED and supplier development, which will give intent to the spirit of the new B-BBEE codes. While the Group has already been active in the ED space and facilitated the creation of new, albeit smaller businesses, we are ambitiously targeting bigger projects in the year ahead.

As one example, we are supporting the development of local manufacture and assembly of slot machines in South Africa by encouraging international machine suppliers to support our supplier development initiatives. Our intention is to drive local skills development and create much-needed employment in South Africa.

Developing and influencing our supply chain will be an area of focus in the new financial year.

Stakeholder engagement

We have made good progress in advancing our stakeholder engagement strategy, most notably with the following key stakeholders:

Unions: Relationships have evolved with the Chief Executive and Chief Financial Officer having met with the South African Commercial, Catering and Allied Workers Union (SACCAWU) national executives on a number of occasions. The Group has stayed true to its commitment to interact only with SACCAWU, our official union, unless they request the involvement of Congress of South African Trade Unions (COSATU).

While the restructuring process has at times been stressful, we are pleased that discussions have been robust and we thank SACCAWU for the constructive engagement and spirit throughout the consultation process. There is evidence of a growing level of understanding of the business as we engage with this important stakeholder. We will continue building productive relationships that are in the best interests of the business and unionised employees.

National and provincial gambling boards and government: A Group Compliance Manager has been appointed within the corporate services department. Together with the executive team, in particular Khati Mokhobo (Director: Special Projects), management have been tasked to build relationships with each of the relevant provincial gambling boards and to significantly improve compliance throughout the Group. The Chief Executive is also focused on building these relationships on a strategic level.

We have had constructive and robust engagement with the gaming boards during the restructure. It required great effort on their part with helping to refine the structure, ensure compliance and arrive at a satisfactory result.

We have also engaged with government at national and provincial level who played their part during industrial action, to ensure that engagements with unions and staff were conducted appropriately and fairly.

It is evident that building good stakeholder relationships across the Group is imperative. We have found in the year under review that our regulators appreciate the management time, effort and energy in engaging proactively on matters of substance.

Analysts and shareholders: The executive team has focused on engaging with analysts and shareholders to ensure that strategy is understood and regular updates are provided. Key relationships have been developed and the feedback and responses from these stakeholders has been positive in terms of openness and transparency. The Group’s results presentations have evolved in terms of content and detail and we are seeing support for the clear strategic objectives that we have set for the Group.


QA: Mandy Clifton-Smith
GROUP ENVIRONMENTAL MANAGER
QA: Nancy Ncube
GROUP socioeconomic development manager