“The Board is committed to the highest standards of business integrity, ethical values and governance; it recognises the responsibility of Sanlam to conduct its affairs with prudence, transparency, accountability, fairness and social responsibility, thereby safeguarding the interests of all its stakeholders.”
Group Company Secretary
Sanlam’s Code of Ethical Conduct applies to all Sanlam businesses and employees and serves as a guide to ensure that all businesses and employees uphold the highest level of integrity and ethical conduct. This in turn embodies the Group’s core values. The Sanlam Way defines the values and behaviours for the Group whereas the Sanlam Business Philosophy sets out the most appropriate approach for how the Board, executives and other employees conduct themselves in implementing the Group strategy.
Combined, these set the standards for effective, ethical leadership and compliance.
Sanlam’s Code of Ethical Conduct is binding on all directors, managers, employees, independent contractors, agents, service providers and business partners irrespective of their status as natural person, legal person or other entity.
The Group is committed to ensuring that the Code remains relevant to all environments in which Sanlam operates, to ensure consistent delivery on the promise of the Sanlam Way.
Sanlam was an active participant in the formulation and development of King IV™. Full implementation of the new principles will commence in the South African subsidiaries, joint ventures and associated companies in 2017 while continuing to entrench similar practices outside South Africa. According to the Group’s decentralised business approach, each of the business clusters operates in concert with its underlying business units. All the business and governance structures in the Group are supported by clear approval frameworks and agreed business principles aligned to the King code, ensuring a coherent and consistent governance approach throughout the Group.
The Group continuously assesses its compliance to the King code to ensure that areas of improvement are identified and addressed.
Sanlam’s governance framework aligns all business units and geographies towards the following:
The South African regulator (Financial Services Board) takes the lead in arranging an annual supervisory council with regulators from all the markets in which the Group operates. The consistent application of the governance framework is confirmed annually at these meetings. This provides them with a clear view on Sanlam’s governance approach, and the support provided to subsidiaries to ensure compliance in each territory.
The Sanlam Board consists of 18 directors, including four executive directors. All the directors of the Sanlam Board also serve on the Board of Sanlam Life. The two boards function as an integrated unit with the same Chairman and Chief Executive.
The Sanlam and Sanlam Life Board meetings are combined meetings and are held concurrently, thereby removing one layer of discussions in the decision-making process. This enhances productivity and efficiency of the two boards, prevents duplication of effort and optimises the flow of information.
The agenda of the Sanlam Board focuses largely on Group strategy, execution of capital management, accounting policies, financial results and dividend policy, human resource development, client issues, JSE requirements and corporate governance. It is also responsible for overseeing stakeholder relationships.
The Sanlam Life Board is responsible for statutory matters across all Group businesses, monitoring operational efficiency and risk, and compliance with applicable regulatory requirements. The responsibility to manage Sanlam’s direct subsidiaries has been formally delegated to the Sanlam Life Board.
Johan van Zyl has been appointed Chairman elect to take over from Desmond Smith who retires in June 2017. Given Johan van Zyl’s status as non-independent in terms of King IVTM, the Sanlam Board also appointed a lead independent director and has established an independent committee to uphold and safeguard adherence to good governance at all times.
The Group follows a decentralised management structure, with all operations conducted through five clusters. Each business cluster is managed by a chief executive, supported by an executive committee and support functions that are appropriate to their particular operational needs. These chief executives form part of the Group Executive committee and are the designated prescribed officers of the Group.
The clusters are directed by the Group strategy as approved by the Sanlam Board and according to a set of tight management principles established by the Group Office for the Group. Cluster boards all have committees (or forums) with specific responsibilities for the operation of that particular business cluster. Each of the cluster boards has its own Financial and Risk, as well as Human Resources and Remuneration committees or forums.
The cluster Boards consist of non-executive and executive directors. Non-executive directors include members of the Sanlam Life Board and, where appropriate, expert external appointees. The majority of the operating business decisions are made by these boards and committees working together with the relevant cluster management.
These structures are also responsible for the generation of memoranda and issues for consideration by the Sanlam Life Board. Individual business units have their own boards and executive committees that structure their activities within appropriate delegated authority levels. Where required, the various business unit boards will also act as the statutory boards of subsidiary, joint venture and associated companies.
The Group Chief Executive is supported by a Group Executive committee and a small centralised Group Office, mainly performing the following functions: strategic directing (tight issues); coordinating; synergy seeking; performance monitoring; assurance provision; allocation of capital; and support functions.
The Group operates in a highly regulated environment due to the nature of its financial services operations. Long-term sustainability and resilience are inextricably linked to compliance with all applicable regulations and maintaining a productive relationship with regulators who grant operating licences to the Group’s businesses. Therefore, regulatory compliance is a particularly important operational governance focus area:
The insurance industry is in the midst of major regulatory changes, which currently require more diligent attention.
Risk management is another important component of operational governance due to the risks that the Group is exposed to through its business model. The Sanlam Board adopted the three lines of defence model for managing these risks. This model defines the roles, responsibilities and accountabilities for managing, reporting and escalating risks and other matters throughout the Group. The model incorporates the oversight, management and assurance of risk management, essentially giving three independent views of risk. This approach ensures that risk management is embedded in the culture and daily activities of business units and provides assurance to the Board and Executive committee that risks are managed effectively.
Read more about governance in the Corporate Governance Report and in the supplement report on Sound governance online.
Read more about the key strategic risks in the Strategic review by the Group Chief Executive and about other risks and how they are managed in the Capital and Risk Management report on page 24 of the Annual Financial Statements.
The Board, through the Human Resources and Remuneration committee, is responsible for approving and monitoring the Group’s total rewards approach, strategy and policy. Rewards create value by ensuring a fair and contracted exchange between Sanlam and its employees in all territories. This provides employees with financial security and the potential to be rewarded for exceptional performance, while the Board and shareholders are guaranteed a specific level of output to implement the strategy and grow the business’ performance over time.
Remuneration is also one of the key elements in attracting and retaining critical talent.
Sanlam’s total reward offering comprises remuneration (which includes cash remuneration, short-term incentives and long-term incentives), benefits (retirement funds, group life, etc.), learning and development, an attractive working environment and a range of lifestyle benefits.
Rewards are aligned with the applicable regulatory and governance requirements in each of the countries in which the Group operates. While compliance with the Sanlam Group remuneration strategy and policy is primarily targeted at Group companies or Group operating subsidiaries, Sanlam encourages the application of sound remuneration practices in those businesses where it does not hold a controlling interest.
The Sanlam WealthsmithsTM brand is the Group’s most valuable intangible asset.
In 2014 the logo was updated and a new positioning and brand architecture was developed. In 2015 the first rebranding of Sanlam partner businesses in Mozambique, Uganda and Tanzania was initiated, with the roll-out extending to Zambia and Kenya in 2016.
As the brand is being rolled out, Sanlam is faced with increased reputational risk and the challenge of ensuring consistency in application and execution while recognising that marketing resources differ between territories and that market development is at
varying levels of maturity.
In 2016, the brand office adopted the concept of a virtual marketing team and was the first corporate in South Africa to introduce a globally recognised marketing management system – the leader in social and content marketing software. The system creates a governance structure for all brand related activities and material. It facilitates complete visibility, centralised sign-off and the availability of a virtual library of collateral.
The new system will ensure consistency in all jurisdictions, drive innovation and implement best practice. It will ensure that all Sanlam brand operations are true to the brand, the Sanlam Way and reflect the essence of what the business is, what Sanlam does and what it believes in.