Managing sustainability

From left: Yvonne Muthien, Yegs Ramiah, Themba Gamedze and Dawn Marole.

Santam's approach to doing business is about doing sustainable business. We have served the short-term insurance market since 1918. Our ability to adapt to financial and non-financial change for almost a century shows that we understand what it takes to do business sustainably.

Our long-term strategy includes a thorough analysis of the full spectrum of risks we are faced with and a commitment to respond to the concerns of those stakeholders involved in, or affected by, our business. Our approach to environmental, social and governance (ESG) risks and opportunities comes from an appreciation of systemic risk and the way this impacts Santam as a company, our communities, the country and the world we live in. ESG issues and their opportunities form part of our overall systemic risk and enterprise risk management processes. The investment we make in understanding the long-term significance of each risk and our commitment to be responsive to stakeholder concerns have kept our business sustainable - and will continue doing so into the future.

HOW WE MANAGE SUSTAINABILITY
The board has delegated responsibility for the implementation of our sustain-ability strategy to a four-member sustainability committee. This committee meets quarterly to discuss progress on the material issues identified in our sustainability risk log. Issues are discussed according to an annual schedule of report submissions. The chairman of the sustainability committee then reports on these issues to the board of directors.

Our sustainability charter (page 100) outlines our intention and approach to sustainability. Various standards, legislation and guidelines were used as inputs in identifying our material sustainability issues and in developing our strategy and the sustainability charter. These include:

• The King II and King III reports on governance for South Africa
• The Financial Sector Charter and the Department of Trade and Industry's Codes of Good Practice for BBBEE
• The Global Reporting Initiative sustainability reporting guidelines
• The JSE's SRI index

Sustainability is driven at implementation level by its own business unit whose head reports to the executive head of market development to ensure direct access to the executive committee. Senior line managers in each business operation monitor sustainability components in their functional areas. This is complemented by functions dedicated to enterprise development, environmental management and stakeholder relations.

The sustainability business unit works closely with the enterprise risk management and strategy units to integrate sustainability practices into Santam's operations.

We invest in strategic projects on an ongoing basis to enhance our operations and contribute to the long-term sustainability of the company. One percent of gross premium income is allocated to strategic projects which include environmental, social, technological and cost-efficiency improvement projects.

Santam is also subject to a broad range of legislation. Our approach to complying with our legal obligations is discussed in the Corporate Governance report of our Integrated Report. Specific information on how recent and anticipated changes to legislation and the ways these developments impact our business can be found in the Financial Director's Report in the same report.

OUR MATERIAL SUSTAINABILITY ISSUES
We have identified ten sustainability components which are material to Santam. Each of these covers a number of sub-issues - 24 areas in total. These areas are allocated a focus ranking, monitored in the sustainability material issue log, and progress is reported on these components at the quarterly sustainability committee meetings. The table below links these ten components to the promises we make in our brand strategy and indicates how they align with our overall business strategy.

Insurance is a business built on integrity - we sell a promise to be there when things go wrong. Our policyholders must be able to trust that we will honour our commitments. So it is not surprising that more than half of the issues link to our goal of insuring with integrity within our brand promise to deliver insurance, good and proper.

INTEGRATION OF SUSTAINABILITY
The insurance industry offers one of the clearest examples that non-financial sustainability issues do not stand apart from business issues. Weather volatility due to climate change affects the claims farmers make on our agricultural policies. Therefore, it makes business sense to do what we can to make leading agricultural research available to our clients while we "do our bit" to reduce our impact on the environment. We work with local municipalities to assist them with capacity building in risk and disaster management planning to help mitigate the risks of floods, fire and storm-water damage; where these result in less damage to property, claims will be lower. Business efficiency enhancements improve turnaround times in claims handling. This results in happier policyholders who are more likely to recommend our services which, in turn, grows our business. It also means shorter periods of replacement car hire, which saves costs while reducing carbon emissions.

The financial aspects of the business are covered in the 2011 integrated report which contains a summary of the sustainability issues. This sustainability report expands on each of the sustainability components and highlights their financial connections.

STAKEHOLDER ENGAGEMENT
Component 7 relates to stakeholder engagement and covers our high-level strategic engagements in detail. Our approach to stakeholder engagement is linked to each of the sustainability components. Stakeholders were identified in 2009 through dedicated workshops and categorised according to importance and concerns that were identified through an interactive process. However, stakeholder engagement is not a separate process that operates outside our business functions - we engage with operational stakeholders through our day-to-day business processes.

We interact with stakeholders in a number of ways: relationship managers and intermediary contact centres interact with intermediaries, quality assurance personnel visit our motor body repair partners, and client needs surveys and intermediary feedback inform product development. The overall stakeholder engagement process aligns with our commitment to the AA1000 AccountAbility Principles of:

• Inclusivity - we consider the relevant concerns of key stakeholders in our strategic planning and risk management processes.
• Materiality - our sustainability committee and our risk management processes determine the materiality of issues that affect us and impact our stakeholders.
• Responsiveness - our dedicated stakeholder engagement function ensures that we monitor stakeholder issues and adjust our approach where required. We communicate our performance through channels such as our integrated reporting processes, the media, in internal publications and on our website.

AWARDS 2011

• ACCA South Africa Awards for Sustainability Reporting 2010
  Best Sustainability Report for the financial sector
• Johannesburg Stock Exchange: SRI Index
  Listed as one of six best performers in the low environmental impact category. Scored 100% in environmental indicators, 87 out of a possible 88 in social and 65 out of 65 for governance.
• Climate Change Leadership Award (CCLA)
  A winner of the CCLA
• South African Motor Body Repairers Association (SAMBRA)
  Insurer of the Year
• Financial Intermediary Association (FIA) Awards 2011
  Commercial lines and corporate winner
• Sunday Times Top Brands
  Business Category Award
  Financial Mail/Empowerdex Top Empowerment Companies 2011
• Silver Loerie Award
  Television and Cinema Short Format Category for Best TV Advertisement

A SUMMARY OF OUR PRIORITIES FOR 2012

• Continue to take the insights from the Eden Project and implement practical applications.
• We will increase our engagement with key stakeholders, such as local governments, to promote collaborative risk management on the ground. Our overall preferential procurement strategy is to source mainly from level 4 BBBEE and higher suppliers. Our current focus is on increasing the proportion of black-owned businesses and especially black women-owned businesses we source from.
• Continue to embed SBIDI (Santam black intermediary development initiative) with the aim to improve our black intermediary representation.
• Retain our top rating in the FIA Broker survey in Commercial and Corporate lines and regain our top rating in the Personal lines category.
• Improve our employment equity score by increasing black employees to 59% of total employee complement. 

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