SUSTAINABILITY REPORT 2023
Supplement to the integrated annual report for the year ended 30 September 2023
Supplement to the integrated annual report for the year ended 30 September 2023
This year has prompted a strategic refocus. Starting my term as the new CEO and looking forward, I am confident that we will implement the changes necessary to fulfil the ambitions of the Tiger Brands leadership team, enhance the financial performance of the business, and make deliberate progress on sustainability.
The company continues to face a tough operating context, and against this backdrop, lost some momentum in financial performance this year. In response to this loss of momentum, and the need to rebalance strategic efforts, the leadership team has identified five key strategic thrusts for the business looking forward starting 2024. These five key thrusts, which I outline in our integrated report 2023, share strong links with the current strategy reported against this year, and similarly reflect our sustainability strategy, which remains unchanged.
Tiger Brands' sustainability strategy was launched in 2019, and is updated annually, informed by a materiality process undertaken as part of the integrated reporting process.
Three strategic pillars outline the company's key sustainability goals:
The strategic pillars are fortified by a set of seven critical anchors covering core competencies and practices that are crucial for running a responsible food production and processing business. These are: ethical behaviour, food safety and quality; ethical supply chain; safety, health and environment; responsible marketing; partnerships and transparency; and purpose-led culture.
The strategic pillars and critical anchors are further aligned with the United Nations Sustainable Development Goals, prioritising 11 specific goals where the company believes it can make the biggest impact in alignment with the Tiger Brands business model.
The sustainability strategy clearly outlines Tiger Brands' societal value proposition. Although there is room for further refinement, and progress to be made to fully integrate sustainability across the business, we are confident that the strategy provides a focused and well-anchored approach. It aligns with the company's business model, addresses the most material sustainability issues of the business, and serves as a guiding framework for decision-making and action that supports alignment between financial and societal objectives.
Many of the sustainability challenges confronting the business are becoming increasingly apparent in the supply chain. Balancing the demands for social and environmental sustainability, including economic transformation, with the exigencies of cost, quality, efficiency, and compliance across our own operations and supply chain, while fiercely competing to maintain and win market share, is a complex task. We necessarily grapple with this complexity to serve the interests of the business and its stakeholders while striving to find a balanced approach between financial and societal imperatives over short and long-term time horizons.
Over the last year, the company continued to drive its core strategy, focusing on meeting consumer needs, optimising supply chain, and realising cost-savings and efficiencies while building people and culture. Key initiatives included delivering value-for-money products, revising the procurement strategy, transforming logistics, upgrading factories, digitalising management processes, enhancing talent and leadership, and driving employee engagement.
The changes being implemented in procurement will enable more systematic engagement with suppliers on ethical and sustainable practices. Affordability and democratising health and nutrition have both been identified as key future growth platforms. Driving cost efficiencies and enhancing logistics will help us make healthier food more affordable and accessible for economically stressed households. The clean energy plan and water-risk study currently underway will bolster the energy and water security of the company's operations amid unreliable utilities while also meeting climate mitigation and adaptation imperatives. Upholding a strong commitment to black economic empowerment remains essential for inclusive business growth and for a more equitable South African society. People and culture are the crucial elements making all these initiatives possible, and their importance cannot be overstated in these challenging times. This aspect is emphasised in the welcome statement from our SETCO chairman.
Sustainability is no longer optional. I am encouraged by the alignment I see emerging between economic and social imperatives, particularly in the domain of democratising health and nutrition, and by Tiger Brands' steady improvement in setting the groundwork for advancing sustainability integration. In addition to strategic initiatives, ongoing enhancements are being made to strengthen management and leadership capabilities and ensure compliance. Improving performance across the seven critical anchors remains an ongoing priority, particularly with regard to food safety and quality, and safety, security, health and environment (SSHE). Innovative solutions and strategic partnerships are being explored to deepen our approach and amplify our impact, although the primary concern currently remains on establishing strong sustainability foundations. A summary of our progress this year is provided below.
We are enhancing our product portfolio through targeted nutritional improvements and the introduction of healthier options. Looking forward, we see health and nutrition as a key growth area, particularly in making healthy food products both affordable and accessible. We are actively participating in health and nutrition policy discussions, including upcoming regulations on front-of-pack labelling and marketing to children in South Africa, and we have updated our company position in response. Our Eat Well Live Well (EWLW) programme is a cornerstone of these efforts, and we continue to raise consumer awareness through responsible labelling and marketing, supported by our nutrition reports and guidebooks, including "The Family Food Matters Report" released this year.
In 2023, we launched six healthier products and reached 5 million consumers through our EWLW programme. Our total spend on promoting healthier products and nutrition education is R75 million, or 11% of our total marketing budget. Approximately 30% of our product range includes micronutrient enrichment, and 52% meets EWLW nutritional standards, up from 50% in 2022.
We prioritise driving economic transformation, both internally and externally, through our core business activities and socio-economic development expenditure. Over the years, we have successfully elevated our broad-based black economic empowerment (B-BBEE) contribution to an industry-leading level 2 contributor status. We create opportunities for inclusive economic participation mainly through our preferential procurement policy, our enterprise and supplier development (ESD) programme, and our employment equity practices. Disappointingly, this year, economic pressures and environmental variability severely impacted the small farmers in our ESD programme, leading the Dipuno ESD Fund to halt the enrolment of new farmers. Dipuno is actively exploring blended financing solutions to reduce these farmers' sole dependence on loan funding.
In 2023, our Dipuno ESD Fund remained at R104 million, with R54,4 million committed to agri-development projects. We supported nine farmers through the aggregator programme, and generated 44 permanent and 93 seasonal jobs in the small farmer sector, a change from 271 permanent and 628 seasonal jobs last year. Procurement from B-BBEE-verified suppliers increased to R18,3 billion this year compared to R14,1 billion in 2022, with R6,9 billion and R6,0 billion spent on black-owned and black-women-owned enterprises, respectively (2022: R6,6 billion and R5,1 billion).
We continue to invest in reducing our environmental footprint in alignment with our 2030 goals, and recorded improved efficiencies across energy, emissions, water and waste, despite missing our annual reduction targets in all areas except waste.
We are committed to achieving net-zero emissions for scopes 1 and 2 by 2050 and have set an interim science-based target of 45% reduction by 2030 using a 2021 baseline. In 2023, we recorded a 0,6% decrease in total scope 1 and 2 missions, from 439 423 tCO2e in 2022 to 436 647 tCO2e this year. Under our clean energy plan, we have installed on-site solar power at four of our sites, and we are close to completing a water-risk study that considers climate impacts. Our carbon tax obligation is projected to be R7 994 321 compared to R6 026 956 in 2022, and we continue to monitor upcoming legislative changes.
We are committed to sourcing 65% of electricity for our manufacturing sites from sustainable sources by 2030 and reducing electrical energy intensity by 30% from a 2019 baseline by the same year. In 2023, we consumed 2 958 084GJ of energy (2022: 2 967 616GJ), with 30% from grid electricity and 0% from renewables. Renewable energy installations across four of our sites contribute 0,17% to our total electricity usage. Electrical energy intensity declined by 0,9% to 108,5 in 2023, compared to 109,5 in 2022. Similarly, we aim to reduce water intensity by 30% by 2030 using a 2019 baseline. Our total freshwater use in 2023 was 3 474 348kℓ (2022: 3 544 841kℓ), and we reduced water use intensity by 1,9% to 1,53kℓtonne compared to 1,54kℓtonne in 2022.
We are committed to zero waste to landfill by 2030 and aim to reduce waste to landfill by 50% by 2025 using a 2022 baseline. In 2023, our landfill waste intensity was 0,0028 tonne/tonne, a 32,1% decrease from 0,0041 tonne/ tonne in 2022. We comply with the new extended producer responsibility (EPR) regulations, have engaged suitable public responsibility organisations (PROs) for post-consumer packaging waste management, and established tools and processes to calculate our annual levies to these organisations.
We are committed to continually raising the bar on our performance across all our critical anchors, ensuring strong foundations in responsible business practices.
Food safety and quality are non-negotiable aspects of the business, and we are progressing well with the digital enhancement of our management systems and processes. This year, we restructured our Food Safety and Quality Centre of Excellence to enhance oversight and expertise, and we have made significant progress in developing the MECP Quality pillar at our 10 priority sites. To promote continuous improvement, we have refined measurable performance indicators at both operational and group levels. All our food manufacturing operations fully comply with FSSC 22000 standards, we achieved a 17% reduction in overall complaints per million units sold, and experienced no product recalls.
We remain dedicated to reinforcing robust safety management foundations and nurturing a safety-first culture. While noting a general improvement in safety performance this year, we deeply regret the fatality and two serious injuries that occurred at our sites. We mourned the loss of an employee at Chococam due to the collapse of improperly stacked sugar bags. A cleaning contractor at Boksburg lost three fingers, and another contractor at Ashton lost a thumb. All incidents were reported and investigated, with lessons integrated and corrective actions taken. Care was provided for the injured.
This year, we launched behaviour-based safety programmes at key sites and addressed a critical safety issue affecting cleaning staff in manufacturing. This behavioural focus led to a group-wide decrease in incidents and lost-time injuries, with a significant decrease in manufacturing lost-time injuries (LTIs) and Albany route-to-market (RTM) incidents marking a key accomplishment. Our total recordable case frequency rate (TRCFR) improved from 0,62 to 0,28, and our lost-time injury frequency rate (LTIFR) improved from 0,45 to 0,25. We recorded 72 lost-time injuries, signifying a 44% decrease from 128 in 2022. We recorded 77 armed robbery/hijacking RTM incidents in 2023, down from 91 in 2022, with no lives lost in RTM incidents.
A summary of our people's performance and social investment activities is provided by the SETCO chairman.
I would like to take this opportunity to thank the board for their stewardship and leadership of the sustainability and ESG agenda. Under Noel's leadership, the company's sustainability strategy has improved from a basic legal compliance process to a forward-looking strategy that aims to support differentiation and innovation as a solution to societal challenges. As sustainability and ESG become increasingly important for our stakeholders, particularly providers of capital, I know that, with the foundations built over the years, Tiger Brands will grow into a truly purpose-driven company, one that creates waves in championing positive societal impact through business.
Tjaart Kruger
Chief executive officer
30 November 2023
