Highlights
Introduction
Over the past decade the group has maintained an unwavering commitment to supporting a sustainable future through the application of environmental, social and governance (ESG) principles. Responsible practices are integrated throughout the business, delivering positive impact for stakeholders, protecting the environment, fostering inclusive growth and upholding the highest standards of corporate governance.
As part of its commitment to sustainability the group has enhanced outcomes across several key ESG measures over the past year and adjusted to the changes in the local, national and global environment. The group is committed to maintaining high standards of ESG performance and this is reflected in the group being included in the FTSE4Good Index for the past eight years.
The group improved its BBBEE rating, advancing to level 3 (2023: BBBEE level 4), primarily driven by improvements in enterprise, supplier and socio-economic development (SED) as well as preferential procurement. In South Africa, limited access to healthcare and rising inequality, load shedding and the tough economic climate have necessitated the acceleration of innovative solutions by the group. Engaging with stakeholders remains a critical aspect of the sustainability programme, ensuring that the needs and expectations of stakeholders inform our strategies and initiatives.
Sustainability strategy
The group aims to create meaningful social and environmental impact through the provision of healthcare products and services, improving access to reliable and affordable healthcare, minimising its environmental footprint, sourcing products that uphold the integrity of the brand and empowering motivated, passionate people.
The strategy prioritises sustainability-related issues that impact the group’s ability to create, preserve and enable value for stakeholder groups. The strategic sustainability framework (alongside) guides decision-making related to current and emerging social and environmental challenges. Importantly, the framework is aligned with the United Nations Sustainable Development Goals (UN SDGs) and the JSE Sustainability Disclosure Guidance.
Our sustainability strategy
Management approach
The group’s management approach to sustainability is integrated into its overall business strategy. The group aligns its initiatives with the SDGs and the JSE Sustainability Disclosure Guidance, ensuring that its operations contribute to national and global sustainability efforts.
Robust governance structures under the oversight of the board ensure accountability and transparency for the group’s sustainability programme. The social and ethics committee has oversight for ESG compliance while also monitoring stakeholder engagement. The oversight mandate of the audit and risk committee includes climate change risk and sustainability issues. The internal sustainability forum manages environmental sustainability risks and opportunities. Sustainability disclosure is informed by the following standards and guidelines:
- JSE Sustainability Disclosure Guidance
- JSE Climate Change Disclosure Guidance
- King IV Report on Corporate Governance (King lV)
- Global Reporting Initiative (GRI)
- Sustainable Development Goals (SDGs)
- United Nations Global Compact Principles
- Carbon Disclosure Project (CDP)
- Task Force on Climate-related Financial Disclosures (TCFD)
Sustainability governanceBoard of directors
Group executive committee
Sustainability forum Third-party verification Sustainability-related policies |
The group regards active stakeholder engagement as an important enabler of its strategic objectives. To this end, it constantly reviews and maps its operating environment for risks and opportunities that may impact its relationships with its identified stakeholders. The stakeholders identified as essential remain consistent with previous years, namely: customers, employees, banks and institutional investors, suppliers and communities in which we operate. Management provides feedback on its stakeholder engagement activities to the board for review and effects active risk mitigation where required. This proactive engagement ensures that the group remains responsive to the evolving needs and concerns of its valued stakeholders.
The group embarks on rigorous and regular risk assessments to identify and mitigate potential sustainability-related matters in conformance
with its governance frameworks. This includes a focused approach to business continuity across its value chain.
Sustainability performance
Independent verification of BBBEE status
The group engaged Empowerlogic, an independent accredited rating agency, to conduct a review of the group’s BBBEE status for the 2024 financial year. The group improved its rating to level 3.
Analysis of BBBEE scorecard elements
Aligning remuneration with ESG performance
The short-term and long-term incentive schemes are aligned with ESG goals, incorporating targets to ensure that executive leadership is held accountable for achieving sustainability targets. Incentive payments can be modified downwards by a maximum of 15% if ESG performance metrics are not achieved.
Policy changesThe STI scheme rules for the period commencing 1 September 2022 were amended to incorporate ESG modifiers. The amount of a qualifying employee’s incentive payment is subject to downward adjustment by up to 15% of the total benefit if any of the following ESG performance modifier metrics are not achieved:
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Risk assessments and materiality
Regular risk assessments and materiality analyses are conducted to identify and address potential risks to the group’s sustainability efforts. This proactive approach enables management to mitigate risks and capitalise on opportunities to drive sustainable growth. Following the adoption of the JSE Sustainability Disclosure Guidance, which incorporates the principle of double materiality, the group outlines the connection between financial and impact materiality in its 2024 reporting suite.
Climate risks and opportunities
The group faces significant climate-related risks, including extreme weather events, supply chain vulnerabilities, both locally and through imported products, and seasonal product sales impacts.
In alignment with the TCFD and JSE Sustainability and Climate Disclosure Guidance, these risks could lead to operational disruptions, increased costs and potential revenue losses. Employee health and community well-being are also at risk due to rising temperatures and poor air quality. Reputational risks are significant if the group fails to address climate change effectively, potentially losing consumer trust and investor confidence.
To mitigate these risks, the group is rolling out electric vehicles through its owner driver scheme, and keeps improving on optimising its fleet route. Furthermore, the group continues to replace its refrigeration and cooling gases with low global warming potential gas modules. Through the continued installation of LED lights and battery storage the group further enhanced its carbon emission reduction pathways. The emission reduction initiatives are reported in the CDP submission, aligning with carbon neutrality requirements. Updates on these initiatives and revised targets will be communicated in the sustainability report for the 2025 financial year.
Expanding the range of environmentally friendly and sustainable products can attract environmentally conscious consumers, leading to increased market share and enhanced brand reputation. Implementing green logistics and supply chain practices designed to reduce carbon footprint will ensure that the group achieves cost savings from increased efficiency. This will improve supply chain resilience and a positive reputational brand image. The implementation of energy-efficient technologies and practices in stores and DCs resulted in lower operational costs and ensured regulatory compliance. The group believes that upgrading infrastructure will make it more resilient to extreme weather events, which can reduce operational disruptions while building long-term sustainability.
