Corporate Citizenship
An organization’s “strategy” is essentially its instrument for achieving its purpose, vision and mission. This strategy, therefore, is an instrument for delivering on Distell’s obligations as a corporate citizen while giving effect to the object of the Distell Development Trust (the Trust) as described below.
In respect of corporate citizenship, it has become imperative for corporate entities to act in a way that enhances and empowers the communities within which they operate. This imperative flows from various good-corporate-governance frameworks that have been developed and implemented both locally and internationally. Corporate entities must be seen, therefore, to adhere to good governance principles that are applicable both locally and internationally.
The Distell Group is a corporate presence both locally and internationally. As a significant corporate presence in the South African economy, its operations have the ability to impact the country in a substantial way. Consequently, it is critical that Distell operate in a way that advances the interests of its stakeholders and the country as a whole.
Distell has the ability to advance good corporate citizenship in two ways. First, it is able to advocate for and implement strategies and policies that have a positive effect within its sphere of operation and influence; and, secondly, it has an obligation to comply with the relevant legal and policy frameworks of the environment within which it operates.
Broad-Based Black Economic Empowerment
The Broad-Based Black Economic Empowerment (B-BBEE) Act and the policy and legislative frameworks flowing from that Act together make up the most significant body of legislation and policy within South Africa post 1994. In essence, the Act, together with its empowerment framework, seeks to address the legacy of economic disempowerment that affected and continues to affect many Black South Africans.
Initially focussed on economic empowerment through changing the ownership patterns within the economy, the empowerment framework now provides for the implementation and assessment of empowerment in its broader sense.
Consequently, B-BBEE encompasses a range of aspects, including the empowerment of Black people through training and through the development of communities in order to provide access to the mainstream economy. Ultimately, the Act may be envisaged as a tool that seeks to provide Black people with the means to enter, influence, and participate in the control of the South African economy. Distell therefore has the ability to play a significant role in the positive implementation of B-BBEE – both through its actual compliance and via the actual empowerment that it is able to bring about through the implementation of its policies.
The Distell Development Trust is a key facet of Distell’s recognition of its obligation to be a good corporate citizen and of its ability to make a positive impact within the South African economy. The stated purpose of the Trust is “to play an empowering role in socio-economic transformation in South Africa”. It is vital, therefore, that the Trust identifies the appropriate beneficiaries and interventions that will enable it to achieve its stated objective. The Trust and its operations also have a significant footprint within Distell’s overall empowerment credentials, because the Trust holds ring-fenced equity within Distell Limited through Distell Beverages (Pty) Ltd, and because the beneficiaries of the Trust are ultimately Black South Africans, particularly black women. This enhances Distell’s overall Black-ownership status.
The Trust came into being as a result of a B-BBEE (broad-based black economic empowerment deal) in 2005 between Distell Limited and Wiphold (Women’s Investment Portfolio Holdings). The deal was aimed specifically at providing economic benefits to women (via Wiphold), to Distell staff who had been in the company’s employ for at least one year, and to communities in which Distell does business.
In order to give effect to the deal, a consortium – Wip Beverages – was formed to acquire 15% of South African Distilleries and Wines (SADW), which held all Distell’s operations. Out of this 15%, Wiphold acquired 40%, the Distell Employee Share Ownership Programme Trust (ESOP) acquired 45%, and the Distell CSI Trust acquired the remaining 15%. At the conclusion of the deal in early 2014, Wiphold had gained around R500 million, the ESOP around R600 million, and the Trust’s 15% gained it 2.651 million Distell shares, which are currently worth around R375 million.
Wip Beverages subsequently became Distell Beverages (RF) (Pty) Ltd, and the Distell CSI Trust became the Distell Development Trust. The Trust’s shares are held by Distell Beverages. The Trust may not sell its shares, but the dividends paid twice annually to the Trust may be disbursed for the benefit of selected communities.
The operations of the Trust are governed by the Trust Deed. One of the salient provisions of the Trust Deed is:
6.1 The principal and sole object of the Trust is to identify opportunities with the general aim of advancing BEE ownership and empowerment in the interest of, and for the benefit of, the Beneficiaries. Such object shall include, but not be limited to, providing a vehicle through which the Beneficiaries acquire economic exposure to investments derived from the acquisition of ownership interests in commercial enterprises, subject to the principles contained in and as contemplated in the Code 100 Series.” (See Annexure F)
In the Definitions section, “Beneficiaries” are described as follows:
2.6 “Beneficiaries” means:
2.6.1 the members of a Community who are Black People;
2.6.2 any Public Benefit Organisation established for the sole benefit of Black People and which also directly or indirectly benefits any person detailed in clause 2.6.1 above and;
2.6.3 any association of persons carrying on one or more Public Benefit Activity in South Africa for the sole benefit of Black People and which also directly or indirectly benefits any person detailed in clause 2.6.1 above;
provided that:
2.6.3.1 at least 85% (eighty five percent) of the value of the benefits allocated by the Trust shall accrue, directly or indirectly, to Black People;
2.6.3.2 at least 50% (fifty percent) of the value of the benefits allocated by the Trust shall accrue, directly or indirectly, to Black People, who are women; ‘
As indicated previously, the Trust is thus an important contributor to Distell’s B-BBEE (Broad-based Black Economic Empowerment) score. Its contribution is to the Ownership element rather than the Socio-economic Development element (see more about the Ownership element in Annexure F). The B-BBEE points are awarded as long as the Trust fulfils its mandate. Fulfilment is assessed by Distell’s B-BBEE advisors, who provide an ICPR (Independent Competent Person’s Report). For the 2016-17 period, the Trust accounts for 17 of the 24 points awarded to Distell for Equity Ownership.
Distell’s stated purpose is to “provide unique moments of social enjoyment through the responsible marketing of well-crafted ciders, wines and spirits.” Its mission, among other things, is to ensure that the value it creates “enriches the lives of our people, shareholders and the communities within which we live and work”. Distell has also selected “Care and Contribute” as one of the Group’s six strategic themes. For Distell this means demonstrating that the company is a “caring, responsible corporate citizen who contributes to the countries and communities in which it invests. . . .”
Apart from the requirements of the Trust Deed, the Trust, as an organisation with a national footprint, also needs to be aligned with challenges and approaches identified and adopted internationally, nationally and by the Distell Group.
Internationally, some of the Sustainable Development Goals (SDGs) are directly relevant, as are some of the objectives of the National Development Plan (NDP). For example:
| SDG number and description | NDP chapter and objective |
|---|
| 1 – No poverty | 11 – Social protection |
| 4 – Quality education | 9 – Improving education, training and innovation |
| 5 – Gender equality | 12 – building safer communities |
| 7 – Decent work and economic growth | 3 – Economy and employment |
| 9 – Industry, innovation and infrastructure | 4 –Economic infrastructure |
| 10 – Reduced inequalities | 15 – Nation building and Social cohesion |
At Distell Group level, a Sustainability Management Framework and Governance Structure commits Distell to a passion for community spirit, which includes such possible outcomes as:
Inspiring and motivating young people to pursue their dreams through a variety of programs including community service;
Seeing social challenges as opportunities for innovation; and working actively with partners to address social challenges.