The Board, through its relevant committees, establishes ‘tight’ management principles for the entire Group and provides oversight and strategic guidance for each cluster. The Group maintains, monitors and enforces internal compliance with Sanlam’s Code of Ethical Conduct and external compliance with applicable laws and industry regulations. The Group establishes and enforces its policy for combating financial crime through the Group Forensic Services unit, together with the forensic services departments of the business clusters. Grievance and disciplinary procedures are also maintained at Group level.
At cluster level, a chief executive, supported by an executive committee, is responsible for managing the cluster and executing the strategy approved by the cluster Board and supported by the Sanlam Board. Compliance with the Group-wide ‘tight’ management principles and Sanlam’s Code of Ethical Conduct is monitored by quarterly reporting to the Group on ethics and compliance.
Business units have their own boards and executive committees that structure their activities within appropriately delegated authority levels.
Each cluster is tasked with managing stakeholder engagement in accordance with their business operations. This includes understanding the needs and demands of clients, engaging with the regulatory framework impacting on each business, developing employees and suppliers, as well as responding to the concerns of broader society impacted by the business unit operations.
Following the adoption of a stakeholder communication policy in 2013, we developed a strategy to guide how we engage with stakeholders in line with King III principles. Every quarter, each business cluster is required to report back on all stakeholder engagement activities, noting concerns raised and the current status of issue management. Feedback from all the clusters is consolidated with the most important issues highlighted and reported to the SES committee. Critical concerns requiring resolution at an executive level can then be incorporated within the SES committee feedback to the Board.
Examples of issues that have emerged from our stakeholder engagement process include:
At present the process of gathering and reporting on stakeholder issues is controlled centrally. In future the plan is to contain issues in a stakeholder hub where the status of engagement can be logged and retrieved. The process and protocols for treating confidential information still need to be resolved before the change will be effected.
The Sanlam leadership holds annual forums in each of the nine provinces where Group strategy, economic transformation and financial results are discussed with clients, shareholders and key societal stakeholders in each geographic region. These events are often co-hosted with the local university to reach a wider and more engaging audience.
To ensure that we play a constructive role in the development of national policy and regulation, we engage actively with the government, primarily as a collective through industry associations such as ASISA, the South African Insurance Association (SAIA), Business Unity South Africa (BUSA), Business Leadership South Africa (BLSA), the Black Management Forum (BMF), the National Economic...
Development and Labour Council (Nedlac), the National Business Initiative (NBI) and various business chambers. We have been particularly active in the work of ASISA, with the Sanlam Group Chief Executive being an ASISA board member and other executives and senior managers represented on all the ASISA standing committees and working groups.
Our industry representation also serves to connect us to the views of key stakeholder groups and provides a valuable two-way communication opportunity to share experiences and to influence views, behaviours and actions.
In 2014 we undertook an internal engagement process to confirm the materiality issues which are critical for our business. In this process we called for feedback from management within the Sanlam Personal Finance (SPF) business cluster. This year we extended the engagement by seeking input from management in the Sanlam Investments (SI) and Sanlam Emerging Markets (SEM) business clusters. We also elicited feedback and inputs from a range of identified future leaders within our business.
Management was asked to rate the materiality of issues, in terms of the extent to which the issue could impact Sanlam’s financial performance, regulatory compliance, stakeholder expectations and innovation, growth or competitiveness. Ratings were applied to both medium and longer term scenarios. The responses were then mapped against the level of business response to issues, in order to gain insights into the relationship between management effort and issue materiality.
The outcome of the materiality assessment was used to confirm the inclusion and prioritisation of issues within the Sustainability Management Framework (SMF). Our intentions are to broaden the rating of issues in future years to external stakeholder groups.
Sanlam’s commitment to its sustainability journey and culture is encapsulated in the Wealthsmiths brand and The Sanlam Way. Our Sustainability Management Framework (SMF) provides the structure for identification, management and reporting on issues that collectively support our value system.
The SMF is the outcome of a process designed to prioritise the most material issues that require a strategic response from the Group in order to build sustainable value. This initially served as a reporting framework, but in 2014 it was repositioned as an internal management tool.
The SMF is refined continually, based on input from the business, and subjected to the scrutiny of the SES committee for review and approval. SES committee reports are structured to ensure holistic oversight of the Group’s material issues.
The SMF has thus far provided an effective structure for oversight of and reporting on sustainable practices. However, management of sustainability is necessarily owned and driven by the business functions within the various clusters. We have made good progress in some areas in ensuring alignment between how the business manages and reports internally on issues incorporated within the SMF. For other issues, there is still work to be done in agreeing on common measurement protocols and describing performance consistently across different business clusters.
Through ongoing engagement with issue ‘owners’, we hope to improve the integration between the framework and existing internal structures. In particular we aim to resolve challenges in standardising metrics across business clusters, geographies and peers within the industry.
Since the introduction of the fraud and ethics hotline in 2001, we have logged a total of 275 calls. Of these, less than 10% of all callers felt the need to remain anonymous. No confirmed material breaches of ethics were reported for the Sanlam Group in 2015.
Based on an ethical culture assessment conducted by EthicsSA in 2015, ethics interventions in 2016 will focus on increased interaction between management and staff on the practical aspects of applying Sanlam’s ethical culture in the work context, and further encouraging the reporting of all concerns of perceived misconduct or ethical breaches.
SEM aims to ensure regulatory compliance in emerging market businesses in line with the rest of the Group, which operates under the guidance and authority of King III and South Africa’s Companies Act. When it comes to ethics programmes and training, our level of influence varies depending on the strength and maturity of the target investments in the different emerging markets.
Compliance with the Sanlam Group’s governance framework is compulsory for all our SEM subsidiaries and we expect subsidiary boards to adopt the Sanlam Group Code of Ethical Conduct and establish appropriate channels to raise concerns and to report incidents, which we respond to.
A final draft of the POPI Code of Conduct for the non-banking financial services sector was approved by the Regulatory Affairs Board committee of the Association for Savings and Investments South Africa (ASISA) in November 2014. This draft code will be presented to the regulatory authority (Information Regulator) to be established under the POPI Act for approval as soon as the Information Regulator has been appointed.
In the interim, Sanlam has prepared for implementation of the POPI Act while we wait for the promulgation of the effective date of the Act. Draft versions of relevant documentation were prepared to align with the POPI Act principles and the draft ASISA code. The prepared documents have been discussed with all stakeholders in the Group. The Group Compliance Office has also assisted Sanlam’s business clusters in their response to queries from external stakeholders regarding our approach to meeting the requirements of this legislation.
Once the detailed compliance requirements under the POPI Act are issued, these documents will be finalised and submitted for approval.