2008 Sustainability Report

Commitment

Aveng is committed to playing a constructive role in contributing to and investing in South Africa’s prosperity, growth and development. The group believes that sustainable development is a sound business imperative that will enable it to sustain and grow its business. By addressing the country’s transformation challenges, behaving responsibly and respectfully towards its present and future stakeholders, embracing social investment and respecting the environment, the group enhances its own long-term commercial success as well as the prosperity of the countries in which it operates. As the country prospers, construction and related industries will flourish, which will in turn strengthen the group’s ability to contribute to the enhancement of society.

To this end, Aveng voluntarily incorporates economic, social and environmental concerns in its business practices and decision making to enable it to make a real difference at every level and in every country in which it operates. The Aveng group sustainability policy incorporates, amongst others, the following principles:

  • Aveng is committed to implementing corporate social responsibility strategies throughout its operations worldwide in line with internationally recognised sustainability guidelines and principles. Aveng recognises that its long-term prosperity and the sustainability of its operations rely on a climate of economic and social prosperity, as well as the integrity of the natural environment.
  • Aveng will strive to be a leading corporate citizen, working with employees, their families, local communities and society at large to improve the overall quality of life and to achieve sustainable economic development at all levels. The group recognises the universal right of present and future generations to a natural environment that is not harmful to human wellbeing, and endeavours to minimise the environmental impacts of its operations.
  • Aveng acknowledges its accountability to its shareowners and its responsibility to its wider stakeholder base, including employees, clients, business partners, contractors, suppliers, communities affected by its operations, Government and regulatory bodies. Aveng seeks to build an atmosphere of openness and trust through regular, timeous and courteous stakeholder engagement. The group will communicate with stakeholders in a transparent and realistic manner to the extent that this is not detrimental to the group. All stakeholder engagement will be balanced with the group’s overall responsibility to the sustainability of its business, employees and investors. The group is committed to closely working with communities in and around its operations.

“In 2004 Aveng was one of the founding constituents of the SRI Index and has maintained its membership since then.”

Reporting framework

The King Code, the Global Reporting Initiative (GRI), the standards set by the JSE Securities Exchange’s Socially Responsible Investment (SRI) Index and the group’s own code of business conduct are the cornerstones of Aveng’s approach to sustainable development. The group’s code of business conduct can be found here.

Aveng endorses the King Code’s recommendations for integrated sustainability reporting and has adopted its triple bottom line approach to reporting to stakeholders, which clearly demarcates non-financial performance reporting into economic, social and environmental impacts.

Given the challenges of differing regulations, laws and standards in its operational areas worldwide the group is also guided by the internationally-recognised sustainability requirements and reporting standards contained in the GRI as a tool in managing sustainability. An index of GRI indicators is included on page 91 of this report, which contains references to sections of this report where the group’s performance in accordance with core indicators is discussed, or alternatively denotes which indicators are not currently assessed by the group. For further information on the GRI visit www.globalreporting.com.

In 2004 Aveng was one of the founding constituents of the SRI Index and has maintained its membership since then, notwithstanding the significantly more challenging standards imposed by the JSE for qualification on the Index year-on-year. The Index serves as an independent measure of the group’s commitment to sustainable development and non-financial performance as well as the socioeconomic transformation of South African society. Aveng uses the SRI Index’s qualifying criteria and questionnaires as a yardstick for its performance and will do its utmost to improve its own standards to remain listed on the Index.

During the previous financial year, the Department of Trade and Industry published draft codes of good practice (the dti code) to accompany the Broad Based Black Economic Empowerment Act No. 53 of 2003. The dti codes use a balanced scorecard approach to measure South African business against a wide range of criteria for broad-based empowerment. In addition, the Construction Charter was finalised during the year under review. Aveng will strive to align the group’s broad based black economic empowerment (BBBEE) credentials to the Construction Charter, which is aligned with the the dti codes and scorecard.

Throughout this report, any reference to black people includes all black, coloured and Indian people.

Scope of this report

The group is a multi-faceted, globally competitive construction and related industries group operating globally in 29 countries with a focus on selected areas of the developing world. Aveng’s seven operating groups and their subsidiaries and associates are involved in the construction, steel and allied and cement industries. This sustainability report covers all the group’s operations including all wholly owned subsidiaries, businesses in which it has a significant interest, managed and controlled entities as well as elements of its supply chain. The interests of the Aveng businesses encompass diverse disciplines including manufacturing and selling, engineering, building, mechanics, roads and earthworks, opencast mining, property development, steel and automotive supplies and quarrying. Accordingly, impacts on the communities and environments in which the Aveng businesses operate are varied, making it impossible to implement a single standard for social responsibility compliance across all business areas.

Nevertheless, Aveng encourages high sustainability standards within all the group’s operations and elsewhere as appropriate – such as ISO and NOSA management systems for all aspects of safety, health, environment and quality (SHEQ). To date, the group’s subsidiaries, and even the different business units within each subsidiary, have not all obtained the same levels of compliance, monitoring, managing and reporting for their economic, environmental and social impacts. However, Aveng encourages its operations to obtain ISO 14 001 certification and to comply with all relevant environmental legislation, regulations, construction industry codes of practice and other best practice environmental standards.

“The group makes a concerted effort to communicate in a clear, open, timely and realistic manner with its stakeholders and is committed to transparency.”

The majority of projects undertaken by the group’s operations are not controlled by the business itself or Aveng, but are on a contract basis for a client. In these cases the client assesses the impacts of the project and implements management and monitoring criteria. The business is guided by the policies and requirements as set out by the client. However, Aveng would not knowingly enter into any agreement to supply goods or services to a project that may have detrimental impacts on communities or the environment.

Many projects awarded to group operations, particularly Grinaker-LTA, include aspects of benefit to society and the environment, while some projects purely require the group to find solutions to potential environmental hazards, infrastructure requirements or community needs.

Another challenge is the global spread of the Aveng businesses, which mainly operate within the developing world. Each country has its own laws and regulations governing issues such as the environment, human rights, labour rights, health and safety, which must be complied with taking into account any additional standards required by the client. In addition, resource and energy utilisation, waste generation, air emissions and the nature of environmental and social impacts constantly vary between the types of projects being developed and on circumstances at the time of the assessment.

Despite these hurdles, being a good corporate citizen is an intrinsic part of the way that Aveng conducts its business affairs throughout the world. The group’s code of business conduct is entrenched and implemented across all the Aveng businesses. To this end, Aveng strives both to improve the quality of life in the communities it touches and to achieve sustainable development at all levels. Aveng promotes policies and operating procedures across the group to conserve resources and minimise the environmental impact of its business activities.

It is the intention of the Aveng board to align the standard of the group’s sustainability measures and annual sustainability reporting with internationally accepted standards. This goal, as well as the continually evolving expectations of our stakeholders, means that the development of the group’s sustainability standards and policies is an ongoing and dynamic process.

Aveng’s objective is to be profitable in a manner that acknowledges its accountability to the broader society and communities it serves and respecting the environment. The group makes a concerted effort to communicate in a clear, open, timely and realistic manner with its stakeholders and is committed to transparency to the extent that it is not detrimental to the business of the group and is balanced with the group’s overall responsibility to the sustainability of the group, its employees and investors. Stakeholders are often engaged with or in conjunction with the group’s customers.

The group has defined its stakeholders and determined the most effective and strategic methods of communicating key issues to them as follows:

Stakeholder Form of communication
Investors Annual and interim reports, profit announcements, SENS announcements, annual general meeting, investor relations programme, results presentations, site visits, corporate advertising, Internet, one-on-one meetings or telephone calls
Employees Internal newsletters, Intranet, staff meetings, social gatherings, labour union meetings, employee handbooks, training sessions, performance reviews, e-mail announcements.
Clients Service and supply contracts, meetings, letters, e-mail updates, account statements, formal functions, personal visits, regular phone calls.
Business partners Agreements, meetings, letters, e-mail updates.
Major contractors, suppliers and business partners Contracts and service agreements, meetings, letters, e-mail updates, workshops, industry body meetings, formal functions, personal visits, regular phone calls.
Public and communities in which the group operates Public relations, financial results advertisements, Internet, sponsorships, meetings with community leaders and corporate social investment beneficiaries.
Government local authorities and regulatory bodies Tenders, presentations, formal and informal meetings, consultations, representations, seminars, workshops and other regulated formats.

 

In its communication with stakeholders, particularly the investment community, Aveng aims to present a balanced and understandable assessment of its position, performance and prospects, and to communicate in substance rather than in form. Although Aveng often reports beyond the minimum disclosure required, it is mindful not to contravene the JSE’s regulations on disclosure.

Detailed interim and annual results are issued in the form of written reports, profit announcements in national newspapers, updates on the JSE Limited news service (SENS), formal announcements, media releases, annual general meetings and investor relations presentations. Investors also have access to updated financial information on the investor relations page on the Aveng website – www.aveng.co.za.

“The group’s primary responsibility is to its investors and the board recognises its fiduciary duty to shareowners to maximise the value of the group’s assets over time.”

Aveng acknowledges that it is accountable to a wide group of stakeholders, including its employees, the communities affected by its operations, its consistent “clients” and business partners. For this reason, in the past three years Aveng has placed greater emphasis on non-financial disclosure in its annual financial reports including employment equity, social transformation, social responsibility and environmental issues to address some of the communication requirements of its large stakeholder base.

Investor relations

The group’s annual reports for the past four years have been ranked in the “Excellent” category in the Ernst & Young survey, “Excellence in Corporate Reporting”. This is an external confirmation that the group’s goal of high-quality financial and non- financial reporting is being achieved. The ranking is seen as an acknowledgment of the considerable effort that is put into the group’s reporting and disclosures, and gives reassurance that the current level of voluntary disclosure is acceptable.

The group’s primary responsibility is to its investors and the board recognises its fiduciary duty to shareowners to maximise the value of the group’s assets over time. Aveng uses the services of an independent external firm of consultants to run a formal investor relations programme throughout the year. The investor relations programme aims to proactively build strong relationships with the investment community as well as the financial media. The programme is used to disseminate information as well as assimilate information from the investment community to ensure an accurate understanding of the operations of the group and its future plans, and thus an accurate valuation of the group’s shares.

The group meets regularly with its shareowners and the investment community and biannually makes presentations to both local and institutional investors after the release of its financial results, as well as quarterly updates and site visits where relevant. Shareowners or their appointed representatives are encouraged to attend the company’s annual general meeting, to vote on resolutions of the company and where relevant, enter into discussions with the directors.

Shareowners who are unable to attend investor presentations, including a significant group of international shareowners, can access a webcast of the presentation as well as other investor information on the Aveng website. As there is substantial interest in the Aveng share from international investors, senior executives also participate in investment conferences in the United Kingdom and the United States of America.

In addition, the chief executive and financial director endeavour to make themselves accessible to shareowners, the media and other stakeholders, and encourage direct discussions with the board and management, except during closed periods.

Shareowner information is available here.

Environmental stakeholder engagement

Stakeholder engagement is a key activity during the development of major operational projects that will have significant environmental impacts. Stakeholder engagement is initiated during the engagement process and continues throughout the operational phases of the project.

In conjunction with its clients, Aveng aims to develop a positive working relationship with the key government departments tasked with implementing environmental laws. Similarly, stakeholder interaction is achieved through consultation and communication with employees, constructors, clients and communities through various forums and training sessions.

For projects requiring EIA’s, scoping assures that concerns from stakeholders are identified. Where required these are assessed by appointed recognised subject specialists. Reports are included in the EIA documentation and required submissions to authorities, and are made available to interested and affected parties. Aveng operations worldwide conduct environmental forums and workshops predominantly for employees, contractors and members of the community to address the possible impacts of its operations on the environment in which it is operating and explain programmes in place to minimise impacts.

“The group is dedicated to building and maintaining a robust, enduring business for the benefit of all its stakeholders, the South African economy and society.”

Examples of significant stakeholder engagements during the year include:

  • Investor relations presentations for both the interim and year-end results, as well as two site visits for groups of fund managers and analysts, both of which were accompanied by a quarterly update.
  • Grinaker-LTA has engaged with its major suppliers to assist them in obtaining a satisfactory BBBEE status in order to receive accreditation through their website portal which rates all Grinaker-LTA’s suppliers and service providers.
  • Holcim (South Africa) held public forums with local communities and meetings with various government departments concerning the use of alternate waste-derived fuels at the Ulco cement kiln in Kimberly, as well as the expansion of its milling and blending plant in Roodepoort. In conducting its environmental impact assessment for alternative fuel sources, Holcim (South Africa) held workshops on the use of alternative fuels and resources, and representatives of NGOs, communities, industry and government representatives were invited to participate.
  • In Namibia, Holcim (South Africa) engaged extensively with the Namibian government, clients and the media to rebuild its reputation and goodwill when it was unable to deliver on its promise to build a cement plant in Namibia.
  • Grinaker-LTA was awarded an Urban Renewal Development project in Kalk Bay, which is taking place on an extremely sensitive site. As the site is an urban conservation area with historical significance, intensive consultation with communities and local authorities has been necessary.
  • During the construction of the Berg River Dam project near Franschoek in the Western Cape, Grinaker-LTA, in joint venture with the other construction companies working on the site, took part in regular monthly meetings between the client and local residents to keep affected communities abreast of operations and progress.
  • As the community begins to encroach on what was once industrial land set away from residential neighbourhoods, some of Grinaker-LTA and Trident Steel’s operations continually engage with neighbouring communities on issues such as noise and dust pollution. Industry recognition Aveng and its subsidiaries are members of an extensive list of industry bodies and participate in a number of industry associations worldwide. During the year under review, Grinaker-LTA won a number of industry and customer awards for outstanding performance, the most significant of which are as follows:
  • The Oil and Gas operation in Nigeria recently completed its East Africa project for Technip and ExxonMobil to build offshore pipe bridges. This project was awarded the Exxon Mobil “Excellence in Construction” Award.
  • Building Inland won the highest recognition in the USA’s Tilt-Up Construction Annual Achievement Awards for the Award for Freedom Towers at Walter Sisulu Square of Dedication in Soweto.
  • Grinaker-LTA Civil Engineering was awarded third place in “Construction World’s” Best Projects and issued with a highly commended certificate for the Toyota Paint Plant at Prospecton Durban.
  • Grinaker-LTA was presented with a number of PMR Awards. The Earthworks SA division in KwaZulu- Natal was rated first overall in the roads and maintenance category and received a diamond award. Building East received a golden arrow award for coming first overall in the construction companies section and Building Inland was awarded a bronze arrow award.