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SUSTAINABLE DEVELOPMENT REPORT |
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| Introduction and overview |
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Sustainable development enables
corporate citizens to prosper in a
responsible manner and within a
framework that safeguards both their and
future generations’ long-term sustainability.
It requires the identification and active
management of those issues that could
materially affect the long-term successful
existence of the Company in the context of
all stakeholders – shareholders, consumers,
employees, customers, suppliers,
government, and local communities.
AVI has a well-run governance framework
that enables it to identify and manage
material and relevant sustainability
issues. AVI also operates in a manner
that endeavours to meet the needs of
the present generation of stakeholders,
without compromising the needs of future
generations. Depending on the matter
at hand, it is monitored and managed,
for example, by the appropriate diversity
committee, health and safety committee,
internal review committee or the audit
committee. Executives within the Group
however remain responsible for specific
matters and are held accountable for
their successful implementation and
management.
Matters that are deemed to be of a
material nature, or that require heightened
focus, are elevated to AVI’s Board of
directors. AVI has also appointed a senior
resource to co-ordinate the Group’s efforts
and to ensure that sufficient focus is given
by the operations to those matters that are
deemed to be of importance.
AVI considers its sustainability
responsibilities under the following three
broad categories: |
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Ethics – ethics are the cornerstone of
an effective and sustainable organisation
that must be able to operate without
censure or compromise in the long term.
Ethics are central to AVI’s culture, the
behaviour of its employees and assist in
establishing a willingness to accept and
embrace broader issues in our society,
forming the basis of AVI’s interactions
with its stakeholders; |
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Scarce resources – in order to ensure
that future generations have access
to the scarce resources on which
AVI is reliant, and AVI’s viability is not
compromised in the long term, the
Group is intent on carefully managing
those scarce resources relevant to its
operation. In addition to managing the
very specific risk relating to its hake
fishing resources, AVI is committed to
the application of sustainable practices
across its operations; and |
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Transformation and good corporate
citizenship – AVI recognises the social
and economic imperative to embrace
and support transformation in South
Africa and to be regarded as a valuable
participant in the South African economy
and society. AVI also recognises the
need to be, and to be seen as, a good
corporate citizen that is desirable to do
business with. |
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| Ethics |
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AVI has a well established Code of Ethics
that applies to all directors and employees
and provides clear guidance on what is considered to be acceptable conduct. This
code requires all directors and employees
to maintain the highest ethical standards
and ensure that AVI’s affairs are conducted
in a manner which is beyond reproach.
The code is rigorously applied, which has
resulted, during the year under review, in
a number of dismissals and prosecutions.
An issue that was given particular
attention during the year was anti-competitive conduct. In addition to previous
interventions, the executives throughout the
Group were given a detailed account of the
relevant legislation and practical guidelines
on conduct. Each executive declared in
writing that, to their knowledge, no anti-competitive behaviour had been conducted.
In order to ensure compliance with the
Code of Ethics, and to promote proper
behaviour in general, AVI has a formal
governance framework. Within the
governance framework material issues are
highlighted in management reports that
are reviewed by the operating executives.
If appropriate, matters are elevated to AVI’s
Board of directors. This formal framework
is supported by the Group’s internal audit
function, which is responsible to investigate
issues of concern established by the
internal auditors or as requested and to
report their findings to the chief financial
officer of the Group. The Group continues
to subscribe to “Tip-offs Anonymous”, an
independent hotline service that facilitates
confidential reporting on fraud and other
unethical conduct.
In addition to the formal framework, it is
imperative to promote a culture that is consistent with the ethical values that
the Group aspires to. This is achieved
through the example set by executive
management, consistent enforcement
of these values and the careful selection
of employees that display the desired
attributes and values. AVI continues to
communicate formally with suppliers and
customers to secure their support for its
ethical standards. |
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| Scarce resources |
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 AVI’s primary exposure to scarce resources
that could materially impact its business is
the performance of its fishing resources in South Africa and Argentina. As previously
reported, long-term hake fishing rights
have been secured in both jurisdictions at
levels that can support economic returns
provided that the resources remain
healthy.
In South Africa access to marine resources
is managed by Marine and Coastal
Management (“MCM”), a division of the
Department of Environmental Affairs and
Tourism. MCM sets an industry-wide annual
quota or “total allowable catch” (“TAC”)
for each species under management.
MCM, in its response to its concern over the viability of the South African hake
resources, decreased the industry-wide
TAC by 5% in 2006 and a further 10% in
2007. During 2007 the South African hake
resource showed an encouraging increase
in total bio-mass and continues to do
so. MCM’s management of the resource
however is appropriately conservative. For
2008 MCM reduced the industry-wide TAC
further by 3,3% which resulted in I&J’s hake
quota for the period being reduced by this
percentage to 36 530 tons.
I&J remains at the forefront of initiatives
to limit fishing effort and protect breeding
areas off the South African coast. During
2008 effort control measures were
introduced which limit the number of days
that a vessel may be permitted to fish in
accordance with the quota available to
that particular vessel. I&J is monitoring
the effectiveness of the effort control
measures and is committed to assist MCM
to ensure compliance and enforcement
thereof.
The Argentinean hake resource is
managed in a similar way to the South
African resource. Research during the
year however indicated poor juvenile
recruitment and possible over fishing.
The Argentinean industry-wide TAC which
had been reduced by 10,5% in 2007
was reduced a further 20,6% in 2008.
In addition, the access to some fishing
grounds has been reduced and the
number of prescribed non-fishing days
increased. This has materially affected the
performance of I&J’s Alpesca operation. |
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| Transformation and
good corporate citizenship |
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Transformation |
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AVI recognises the social and economic
imperative to embrace and support
transformation in South Africa and to be
a valuable participant in the South African
economy and society. A transformed
company in the South African context is
not only one that has a workforce that
is representative of the country’s racial
and gender demographics and that
operates with a bias towards broad-based
empowerment opportunities, but one that
also embraces diversity.
AVI is progressing its transformation and
is intent on providing a workplace that
encourages diversity. Its transformation
is considered in the context of broadbased
black economic empowerment
(“BBBEE”) and is measured against the
generic BBBEE scorecard. A central senior
manager actively coordinates the Group’s
efforts and ensures that the subsidiaries
are well educated on the various facets of
transformation. The subsidiaries’ progress
is monitored and they are centrally
assisted in the implementation of various
initiatives. During the year under review
the Group markedly improved its activity
around those transformation initiatives
that had been identified during the rating
exercise undertaken during the 2007
financial year. Significant time and funds
were invested in developing transformation
plans within the operations for the year.
These plans were reviewed at half year and
revised activities were agreed upon, where necessary. The Group’s transformation
efforts and achievements were made more
visible across the Group by engaging more
actively with the operations and maturing
communication across the Group. For
example, a portal on AVI’s intranet site
was created that updates the Group’s
employees on material transformation
developments and provides a forum for
feedback.
As a result of the Group’s collective efforts
AVI’s consolidated BBBEE rating has
improved markedly to level 7 (at 40.13
points at June 2008). The most significant
contributions to this improvement
came from progress in the preferential
procurement, skills development and
employment equity areas. At a subsidiary
level I&J made the most significant
improvement and has been rated as a level
5 contributor with a score of 61.19. |
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Ownership |
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The AVI Black Staff Empowerment Share
Scheme (“the Scheme”), which was
launched during January 2007, has placed
7,7% of AVI’s total issued share capital
or 26,5 million ordinary AVI shares in a
trust for the benefit of its eligible black
employees. They will benefit from growth
in the share price over a seven year period.
To date approximately 5 800 employees
have benefited as participants.
The immediate challenge for the Scheme is
to ensure that it remains meaningful in light
of the current economic environment that
has resulted in AVI’s share price declining
with the rest of the South African equity market. There is on-going communication
to the Scheme’s participants regarding
the Scheme’s mechanisms and the equity
market.
As previously reported, AVI unfortunately
does not get recognition for the Scheme
in its BBBEE scorecard calculation due
to the manner in which the Scheme has
been constructed. It is not deemed to
be a share ownership scheme as it is
share option-based and does therefore
not give immediate ownership rights to
the participants. The Scheme however
promotes real broad-based black
empowerment as each participant receives
a material allocation of share options that
is determined as a proportion of his or
her annual cost of employment. As this
lack of recognition for the Scheme seems
unreasonable, during the year ahead AVI
intends to review the structure of the
Scheme and, if appropriate, engage with
the Department of Trade and Industry in the
hope that it may be properly recognised in
the Group’s BBBEE scorecard. |
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Management control and
employment equity |
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 During the year under review AVI has
accelerated its efforts to appoint,
develop and retain black employees,
especially where under-represented in the
management and executive bands. The
Group has had some notable successes in
key functions during the year under review,
but has also had its progress hampered by
losing some of its senior black staff.
AVI’s employment equity efforts, that are
expected to show success in the medium
term, remain behind training, developing
and mentoring black employees with
the objective of preparing them for
more senior roles. While demographic
compositions seem similar year-year on-year,
key senior roles were populated with
talented black candidates. This remains an
area of focus in the year ahead.
The Group’s employment
equity demographics are
reflected in the graph below: |
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