Board sustainability and ethics report

Capricorn Group strives to be a responsible corporate citizen in the territories where we operate. The board sustainability and ethics committee (BSEC) has been mandated to provide oversight and stewardship of this role.

Our commitment to sustainability means taking a long-term, holistic view that considers the perspectives of all stakeholders. Our sustainability framework provides the structure and processes through which we create enterprise-wide awareness and ensure aligned thinking and practices.

The BSEC’s terms of reference are set out in the governance report. Read more about the composition of the committee and the profiles of the committee members.

Milestones for 2019

  • Approval of the group’s new corporate social responsibility (CSR) vision and philosophy
  • Agreement with relevant stakeholders on the establishment of the Capricorn Foundation
  • Approval of a three-year ethics strategy and plan
  • Incorporation of ethical leadership, management and business as a material matter for the group and the tracking of related actions

Committee matters overview

The BSEC was established as a board committee in 2016. To assist the committee in executing its mandate and increasing the committee’s level of independence, a special adviser, Dr Ven Pillay, was appointed as a subject matter expert for one year.

The group social investment policy, which guides corporate social investment activities across the group, was reviewed and revised to reflect the new vision and philosophy of the group on CSR. The policy will be submitted for approval by the board in September 2019. According to the policy, each entity contributes CSR funds as part of its operational budget, with a target 1% of net profit after tax.

Some of the initiatives of the committee included an assessment to determine Namibia’s living wage and whether employees in Namibia were paid according to those levels. The assessment confirmed that certain employees were earning below the living wage and as a result management took a decision to effect adjustments over a period of two financial years, namely 2018 and 2019, in order to bring pay of affected employees in line with the national living wage.

The group explored launching a carbon footprint project in 2018. However, we chose to invest resources in promoting and expanding green lending as set out in Bank Windhoek’s green bond framework, published in December 2018 to maximise our positive impact and align our sustainability efforts closer with our core business. Read more about the green bond in the Group CEO’s report.

The committee also recognised that, although the group is committed to the United Nations’ sustainable development goals (SDGs), further work needs to be done to prioritise and align the group’s efforts with the goals as well as with national priorities.

The committee reviewed key performance indicators related to customers, procurement, society and the environment. Stakeholder engagement reports and forward-looking stakeholder engagement plans were also discussed with an emphasis on promoting collaboration between the different subsidiaries in the group.

Corporate social responsibility vision and philosophy

In the previous financial year, the committee directed that extensive work be done on mapping the journey from corporate social investment (CSI) to CSR. This included a critical review of the internal and external practices, the group’s CSI model and the beneficial impact of CSI programmes.

As a result of this work, a new CSR vision, philosophy and strategy was formulated and approved by the board in November 2018.

Capricorn Group CSR vision

To be an inspiring Connector of Positive Change by creating economic value in a responsible way that creates sustainable opportunities for advancing and improving the economic and social conditions in the communities in which we operate.

Capricorn Group CSR definition

Corporate Social Responsibility (CSR) refers to our sense of responsibility towards the community and the environment in which we operate and commitment to integrate social and environmental concerns into our group operations. This sense of responsibility helps us to be socially accountable to ourselves and our stakeholders and to minimise any negative effects on society so that we make an overall positive impact. For us, Corporate Social Responsibility means: Doing the right thing, for the right reasons.

Capricorn Group CSR philosophy

The group sees itself as an integral part of the broader society in which it operates, affording the organisation a standing in society with rights, responsibilities and obligations to the communities and regions in which it operates.

Essentially, Capricorn Group needs successful communities to create demand for our products and to provide a suitable environment in which we can operate sustainably.

Similarly, communities depend on the Capricorn Group’s success and sustainability, which enables the group to create sustainable value for all its stakeholders. This will enhance the competitiveness of the Capricorn Group while simultaneously advancing and improving the economic and social conditions in the communities in which it operates.

As a group, we would like to make a deep and lasting impact in areas that are aligned with our strengths and competence.

Our philosophy is based on our commitment to creating economic value in a way that, in turn, creates meaningful value for society by addressing its needs and challenges. This shared value requires a deep understanding and appreciation of societal needs and is in line with the group’s brand purpose of being Connectors of Positive Change.

Our approach to being a responsible local, regional and global citizen is built into the DNA of all our businesses in Namibia, Botswana and Zambia and is supported through our aim to be open, transparent and accountable in reporting on our CSR activities and programmes and their impact.

The Capricorn Foundation

The board approved the establishment of the Capricorn Foundation in June 2019. It will be established and registered as a Section 21 company in Namibia in the next financial year. The foundation will focus its activities on Namibia and will have two primary areas of investment:

  • Economic advancement
  • Education and training

Three supplementary primary investment focus areas are:

  • Sustainability programmes
  • Vulnerability programmes
  • Health

The Capricorn Foundation will have its own board and will report on its outcomes to the BSEC. The head of the foundation will be supported by a committee, which will consolidate CSR reporting from the different entities and in turn submit reports to the entity boards and the foundation. The head of the foundation will have functional reporting to and support from the group executive: brand and corporate affairs. The intention is not to duplicate the efforts of subsidiary companies. Each subsidiary will still have a portfolio of signature CSR projects that they support within the identified key focus areas, aligned with the group’s CSR vision, definition and philosophy.

The foundation will be funded by contributions from subsidiaries and contributions by partner organisations. The group will carry the employment cost of the head of the foundation and administrative support. The contributions from subsidiaries will thus be 100% available for projects.

Capricorn Foundation outcomes

Capricorn Group ethics strategy

We believe that ethical conduct is the foundation for a sustainable business. The BSEC approved a three-year strategy and plan for the governance of ethics, in part based on the outcome of the ethics risk assessment that was conducted in March/April 2018.

Statement of ethical intent

We believe that good business and ethics go hand in hand. We are committed to doing the right thing. Our Code of Ethics and Conduct outlines how our values and ethics shape our business and the way we work. As a group we have no appetite for unethical conduct of business and we expect the board of directors, all employees and contractors to subscribe and adhere to the Group Code of Ethics and Conduct.

Capricorn Group purpose, vision and values

Vision

To be the most trusted and inspiring Connector of Positive Change through a highly relevant, convenient and responsive omni-channel network that enables opportunities to be created, financed, transacted and secured, wherever we operate.

Values

The following values drive our actions and decisions:

Ethics mandate

The board sustainability and ethics committee (BSEC) is constituted as a committee of the board of directors of Capricorn Group. The duties and responsibilities of the members of the committee are in addition to those as members of the board. The role and purpose of the BSEC is to provide an independent and objective body that will assist the board in ensuring that Capricorn Group and its subsidiaries remain good corporate citizens through the implementation of a sustainability and ethics strategy and reporting framework.

King IV™ recommends that the governing bodies of organisations “should lead ethically and effectively”. The report further states that the “governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture”. The Ethics Institute has developed a framework for the governance of ethics that incorporates the guidance given by King IV™ on ethics programmes, which the BSEC has adopted.

The following diagram gives a schematic overview of the ethics management framework.

Ethics strategy

In accordance with the requirements of King IV™ regarding ethics management and the mandate of the BSEC, a Capricorn Group ethics strategy is imperative to ensure that the BSEC fulfils its mandate and responsibilities, and contributes to the enhancement of the Capricorn Group’s organisational culture. The desired outcome of the ethics strategy is an ethical organisational culture in which employees find it easy to do the right thing when no one is watching and embrace and live the organisational values set out above. Our organisational values inform our ethical vision, mission and management strategy.

Ethics vision

To create an ethical organisation where our stakeholders are motivated to live our values of openness, dedications and inspiration.

Ethics mission

Capricorn Group is dedicated to enhancing and sustaining ethical business practices through leadership commitment to ethical business conduct and by institutionalising ethical behaviour in the organisation.

Ethics management strategy

To give effect to our ethics mission, Capricorn Group has four strategic focus areas, namely:

  • Leadership commitment to ethical behaviour
  • Setting ethical standards
  • Employee ethics awareness
  • Managing ethics risks

Sustainability

The group’s sustainability philosophy is that credibility is key to value creation. We believe that we are part of a bigger, interconnected global system. Our approach to being a responsible local, regional and global citizen is built into the DNA of all our businesses in Namibia, Botswana and Zambia. We aim to be transparent and accountable in our reporting.

Key sustainability challenges that Capricorn Group may potentially face in future include climate change, poverty, health issues and resource shortages, i.e. water, energy and food. In addressing these global, regional and local issues we intend to use all our business lines including banking, investment and asset management, finance and property finance to address the key sustainability challenges. In the period under review, Bank Windhoek was the first bank in the southern African region to issue a green bond.

Our sustainability strategy takes a holistic approach encompassing environmental, social and economic factors.

Bank Windhoek continued to apply its Environmental and Social Management System (ESMS) to assess environmental and social risks as input to the credit process. It assists in identifying and addressing environmental and social gaps, thereby improving the overall sustainability of a client’s business.

Material matters provide the group with a strategic perspective of risks and opportunities and assist the group in anticipating and addressing material risks to the strategy of the group. These matters were affirmed by our board and are set out here.

Internally, environmental sustainability is driven by a desire to implement sound environmental practices as part of The Capricorn Way. The main drive behind this perspective is to shape a connected and “aware” culture and to demonstrate a commitment to the environment (earth) while ensuring that the group is proactive in its response to changes in the availability of natural resources.

Bank Gaborone will adopt a formal sustainability strategy by 31 December 2019. The bank’s sustainability philosophy aims to ensure that it positively impacts the environment within which it operates, including interaction with customers, regulators, the natural environment and stakeholders. Based on this philosophy, Bank Gaborone adopted initiatives focusing on, among others, managing the sustainable use of natural resources. This is achieved by measuring paper, electricity and fuel usage with savings targets. Bank Gaborone also relocated to a new head office building, which is in the process of achieving a green-star rating.

Our asset management company, Capricorn Asset Management (CAM), also supports the group’s sustainability initiatives. CAM’s primary focus in the past year was to drive the reduction of paper usage by promoting the online platform for instructions and by encouraging customers to receive their statements electronically. To date 69% of customers have been converted to electronic statements with 8.39% of transactions fully executed electronically.

Major social investment initiatives

Capricorn Group and its subsidiaries in Namibia, Botswana and Zambia invested more than N$25 million in internal and external social responsibility programmes and initiatives during the past year:

A key focus of the group was to promote employee volunteerism among employees. A total of five #Changemaker initiatives were organised, giving the employees in the group an opportunity to volunteer their time and personal resources to projects supported by the group in vulnerable communities.

Bank Windhoek’s flagship project, the Bank Windhoek Cancer Apple Project, was named as one of the “global innovative projects of hope” by the 2018 World Cancer Congress. It was also showcased as an innovative fundraising model.

The project is in its 28th year and has raised more than N$20 million in aid of cancer patients. It is a multi-stakeholder effort between Bank Windhoek, the Namibia National Cancer Outreach Programme and a number of other partners.

From 2019 onwards, the project will focus on access to palliative care, pain management and the home-based care of palliative patients as key elements on the cancer journey. As part of the Bank Windhoek Cancer Apple Project a national cancer outreach programme was launched in May 2019 in the Zambezi region. The project runs until October 2019 and will conclude with a visit to the Karas region.

Bank Windhoek’s successful Empathy Project involved all its employees throughout Namibia to the benefit of more than 50 welfare and community projects. The Empathy Project strengthens the group’s position as Connectors of Positive Change. Bank Windhoek continues to support a number of signature projects including the MSR Project that connects the unemployed with employment opportunities and Women@Work that trains and develops women in various skills including cooking, cleaning and frail care. In response to the call for aid to the farmers in Namibia, Bank Windhoek donated N$500,000 to the Dare to Care Fund that was established to help farmers affected by the persistent drought.

Through an adopt-a-school programme, Bank Gaborone’s employees assisted schools with books, school uniforms, sanitary products and repainting of school premises. Bank Gaborone also runs a daily show called “The Wiz Kid Show” on one of the country’s main stream radio stations. The show targets primary school children with an emphasis on financial education from a young age.

The Bank Gaborone Diabetes Apple Project and Journey of Hope raise diabetes and breast cancer awareness. Read more about Bank Gaborone’s Diabetes Apple Project in the Group CEO’s report.

Stakeholder engagement

The group matured its strategic stakeholder engagement plan to align with the material matters of the group. A key focus for the group was to promote collaboration between its subsidiary companies in hosting stakeholder events. The group believes that effective stakeholder engagement will lead to sustainable businesses and communities as reflected in the graph:

The ultimate objective of the group’s stakeholder engagement initiatives is to build strong relationships that create trust between the group and its key stakeholders:

The group prioritises its stakeholder engagements by plotting stakeholders on an “influence and interest” grid. This helps us to identify the key stakeholders that have high influence and high interest in the group and to develop appropriate engagements with these stakeholder groups.

Capricorn Group’s signature “Inspire” stakeholder events assemble over 250 guests per session and have gained popularity among employees, clients and stakeholders of the group subsidiaries. Four successful events were hosted under themes based on identified material matters and triggered conversations with stakeholders on current global and regional topics:

  • “Transhumanism” explored the effects that blurred boundaries between man and machine will have on the workplace of the future
  • “Overcoming obstacles” looked at navigating the responsibilities of everyday life to achieve our goals
  • “Cybercrime and digital security” alerted stakeholders to the protection of their employees and companies against cyberbullies
  • “Good governance” considered the regional fight against corruption – a current social ill

We also created a unique platform to engage with the Namibian government through scheduled minister lunches, where we engage with selected ministers on matters of shared interest.

Capricorn Group hosted five Namibian journalists who attended and covered the opening of the new Bank Gaborone head office, thereby supporting awareness of the group’s regional footprint.

Capricorn Group’s commitment to the UNGC principles

Capricorn Group reaffirmed its support of the 10 principles of the United Nations Global Compact (UNGC) in the areas of human rights, labour, environment and anti-corruption.

The following examples provide a summary of the group’s communication on progress and describe the group’s actions to continually improve the integration of the UNGC and its principles into business strategy, culture and daily operations.

Human rights

Human rights are enshrined in the Namibian constitution. Capricorn Group is committed to upholding human rights and the laws of the jurisdictions in which the group operates. Internal policies and procedures are in place to protect the human rights of employees and to detect and remedy violations of the policies. Key performance indicators that are tracked through the sustainability dashboard to support the advancement and protection of human rights include the percentage of female permanent employees, women in middle and senior management, the percentage of employees with disabilities in the workforce, racially disadvantaged permanent employees and racially disadvantaged persons in middle and senior management.

Read more about these aspects in the section on our material matters.

Labour

The group does not make use of child labour, migrant workers or forced labour. The rights of workers are protected by internal policies and labour laws, which regulate employment in all jurisdictions. The risk of violating the rights of workers is low. The right of workers to organise themselves through labour unions is also protected by law.

The human resource committee has oversight of labour-related matters, including the policy framework. New employees are made aware of policies through an induction programme, and policy changes are communicated to all staff as and when they occur.

A formal grievance procedure protects the rights of employees. The remuneration policy outlines the remuneration principles of the group and is the guiding document in terms of fair and equitable remuneration.

Read more about these aspects in the section on material matters and the remuneration report.

Environment

The group’s operations have limited direct environmental impact as a financial services provider. However, through lending activities, the group has an indirect impact on society and the environment. The impact on the environment is managed through the Environmental and Social Management System (ESMS) at Bank Windhoek, the Group Sustainability Framework and the Environmental and Social Risk Management (ESRM) Policy. The ESMS requires that loans are assessed for social and environmental impact, and due diligence must be performed on all loan applications with significant risk. Action plans are required where gaps have been identified in the environmental and social performance of a business. The ESMS ensures that clients are compliant with all national environmental laws and regulations. An exclusion list was compiled for activities that are not permitted due to unacceptable social and environmental impacts.

Read more about environmental aspects in the section on material matters and the Group CEO’s report.

Anti-corruption

Capricorn Group is determined to maintain a culture of high ethical and moral standards, honesty and opposition to fraud and corruption. As a listed entity, Capricorn Group complies with King IV™ and the NamCode on Corporate Governance, which requires a statement by the board confirming compliance with all applicable laws. This includes the Namibian Anti-Corruption Act, 8 of 2003, which criminalises corrupt conduct and practices.

The board audit, risk and compliance committee (BARC) has oversight of ethics and compliance reporting. The group has various policies in place to prevent corruption internally and externally, including the Group Code of Ethics and Conduct Policy, Group Procurement Policy, Group Whistleblower Policy, the Bank Windhoek Forensic Policy and the Group Financial Crime Risk Framework. The Procurement Policy includes a suppliers’ code of conduct, which requires suppliers to adhere to standards of good conduct towards employees and the environment and in relation to anti-bribery, corruption, reporting and disclosure.

Awareness of anti-corruption is created through induction training, internal communication and annual conferences held for branch administrators that cover issues on anti-corruption.

No cases of corruption or bribery were reported or investigated within the group or against the group.

Read more about ethics in the group chairman’s message, in the section on material matters and in the governance report.

Future focus areas

  • The establishment of the Capricorn Foundation
  • Implementation of a new reporting template for subsidiaries to report on their CSR and stakeholder engagement initiatives with a focus on the impact that these initiatives have made
  • Development of a reporting template for all subsidiaries on sustainability and ethics indicators
  • Expanding the group’s understanding of ethics and doing the right things in practice
  • Tracking the appropriate actions to support ethical leadership, management and business as a material matter for the group

Reporting oversight

Members of the committee were involved in the development and approval of the Capricorn Group material matters. The committee had oversight of the non-financial key performance indicators that are linked to the material matters and was involved in the process of reviewing and recommending the integrated annual report for approval to the board. The committee recommended the inclusion of the 2018 integrated report in annual feedback to the UNGC.

Compliance statement

There were no substantive areas of non-compliance with legislation and regulation, nor was any non-adherence with codes of best practice applicable to the areas within the committee’s mandate brought to the committee’s attention. The committee has no reason to believe that any such non-compliance or non-adherence has occurred.

The committee is satisfied that it fulfilled its responsibilities in accordance with its terms of reference.

Gida Nakazibwe-Sekandi
Chairperson: Board sustainability and ethics committee

11 September 2019

“We are improving our ability to predict customer needs, to anticipate their behaviour and to use our strong personal relationships to enhance their experiences.” – Johan Swanepoel, Group chairman