To recognise the work of companies dedicated to creating shared value, This is Africa has launched its inaugural sustainable business awards
The mood surrounding African development has brightened. After two 'lost' decades, Africa's economies have registered healthy and sustained growth over the last 10 years, owing much to the businesses - international and local - which have poured money into the continent, well beyond natural resource sectors.
However, the sustainability of that growth, and of the practices of some of those businesses, has raised important questions. Business and development have not always been easy bed-fellows. From accusations of land grabs turning local farmers off their property to criticisms of Chinese resource plundering, investors in Africa have not always had an easy ride.
Businesses - accused of short-term focus on financial performance - have been viewed increasingly as a cause of social, environmental and economic problems; their perceived failure to take into account the broader influences on long-term success leading to the depletion of natural resources, and to economic and environmental distress.
The global financial crisis caused a shift in thinking. At Harvard Business School, strategy guru Michael Porter pioneered the concept of "shared value" as a way of "fixing capitalism". The idea was an antidote to the perceived failure of simple corporate social responsibility (CSR), stating that the creation of economic value would also require value creation for society. To sustain financial performance and social progress, businesses would be required to rethink the way in which they operate.
More and more companies - including some of the world's biggest - have already made important efforts to re-conceive the way they operate with the aim of meeting those criteria for sustainability. But that change is still very much in its nascence, and will require companies to rethink how they operate at their core, as well as the development of new sets of managerial skills.
In response to these developments, This is Africa has launched the Beyond Business Awards, recognising the companies best developing sustainable practices, both in core areas of business - or shared value, and in peripheral areas such as CSR and philanthropy. Entrants were separated by business size, and assessed and scored by a panel of independent judges across a number of categories. Each of these winners moves beyond the experimental, to fundamentally change the way they operate their business.
Overall Winner: Diageo
This is Africa's first Beyond Business winner is the world's biggest distiller Diageo, recognised for its work in improving both core and peripheral business practices. In 2007, the group set itself a series of targets demanding that absolute environmental impacts would be reduced regardless of growth. Those focused on the main impact areas of its operations: water, carbon and waste to landfill.
In water-stressed sites, Diageo aims to reduce water wasted by 50 percent by 2015, compared to a 2007 baseline. This year the group has reduced wastage 8.6 percent, contributing to a 14.5 percent cut since 2007. Outside its core practice, the company's 'Water of Life' programme has provided 4.8 million people with clean drinking water - a figure that is set to rise to 8 million by 2015.
Diageo is on target to halve carbon emissions by 2015 despite production volume increases, making 22 percent cuts since 2007. It aims to eliminate waste to landfill by 2015, by reducing materials, finding agricultural uses for waste, recycling and recovering waste for energy. It has made cuts of over 20 percent this year, and an overall reduction of 56.8 percent since 2007.
The group also invests in agricultural development as part of its procurement strategy, providing education and technology to local farmers. At its new Meta Abo Brewery in Ethiopia, a memorandum of understanding has been signed with local partners to develop a scalable contract farming model to connect smallholders with large commercial markets.
"Our stewardship of the environment is not only the right thing to do, it is essential for the future of our business," says Louise Jones, communications manager at Diageo. "At every link in our long value chain, there is an impact on the environment and we believe it is our responsibility to ... work actively to protect the resources that our business and our communities need."
Environment & Resource Management: Standard Bank
South Africa-headquartered Standard Bank has pioneered climate finance and carbon trading since 2002, three years prior to the start of the first carbon trading scheme in the EU. Last year, it was involved in around 50 Clean Development Mechanism projects in progress, of which around 20 were in Africa. Standard Bank also finances renewable energy projects, in support of the South African government's programme to secure 17,800MW of renewable energy by 2030. The bank has set aside a total financing requirement of ZAR8.2bn ($938m) towards wind and solar energy generation.
A project was launched in 2010 with the Nelson Mandela Metropolitan Municipality, International Carbon, Industrial Development Corporation and the Solar Academy of sub-Saharan Africa, which has equipped 80,000 low-income houses in the Eastern Cape with solar heaters.
As part of the Green Building Council of South Africa, the group runs its business from energy efficient building and uses low-energy light bulbs, as well as a hybrid thermal solar water heating system at the Standard Bank Centre, Johannesburg. Since November 2010, that system has realised savings of around 433,000KW hours, and emissions reductions of 429 tonnes of carbon dioxide a year. During 2011, it initiated an energy efficient lighting programme in South Africa to reduce the use of some 40m inefficient lamps in office buildings across the country.
Employee & Supply Chain Management: Nestlé
Nestlé, the world's biggest consumer goods group by sales, is being recognised for its focus on three areas central to its supply chain: nutrition, water and rural development. In the past five years, it has invested $1.2bn in Africa to develop local manufacturing, distribution networks and locally-tailored products. It now has 29 local factories and works at farm and community levels to improve yields and safeguard incomes.
The company employs 15,000 people directly in Africa. In Accra, it works in partnership with local universities to recruit young talent; while in Nigeria it supports future engineers to study for a vocational qualification. Street-selling programmes like Nestlé Professional's 'My Own Business' in Central and West Africa help reach consumers in cities' most congested areas as well as providing training.
CSR & Developmental Impact: GlaxoSmithKline
Pharmaceuticals giant GSK has an R&D programme for HIV/Aids, malaria and TB. It has invested $777m in developing a malaria vaccine, which is currently under trial in seven sub-Saharan countries. Last year, results showed that it could significantly reduce the impact of the disease.
In developing nations GSK caps the prices of patented medicines and vaccines at no more than 25 percent of developed world prices and re-invests 20 percent of profits into projects to strengthen healthcare infrastructure. In 2011, it invested $96m in training for 10,000 health workers across the developing world.
The group also donates billions of doses of medicines to treat conditions including rotavirus (the most common cause of severe diarrhoea among children), and neglected tropical diseases. Through ViiV Healthcare, it makes its anti-retroviral portfolio available at not-for profit prices and grants royalty-free voluntary licenses to generics companies.
Corporate Policy & Innovation: Olam International
Singapore-listed Olam, which has developed from a company sourcing Nigerian cashew nuts into one of Africa's leading agribusinesses, is recognised for strengthening corporate policy. Measures have included the 2011 launch of a 'livelihood charter' aimed to improve the wellbeing of 600,000 African farmers by 2020, through better environmental stewardship, increased productivity and reduced deforestation. Last year Olam and Rainforest Alliance also teamed up to produce the world's first 'climate-friendly' cocoa in Ghana, in a project that is informing the country's emerging national REDD+ strategy. The UN's programme uses market and financial incentives to reduce the greenhouse gas emissions from deforestation.
Olam is also developing a 'sustainability standard', or end-to-end sustainable supply chain. By 2020, it will link four million farmers to its supply chain, and reach full product traceability. It has two tiers of governance for its CSR strategy: an executive committee and a board committee.
Philanthropy: Huawei Technologies
As well as creating hybrid power solutions to allow customers, including the likes of Safaricom and MTN, to reduce their energy consumption, Huawei's philanthropic portfolio is impressive. The Chinese telecoms equipment group is building communications networks in underdeveloped regions and providing training for local talent.
In Africa, Huawei has established one R&D centre and seven training centres to "help bridge [the] ICT industry and academia gap in Africa". In Kenya, it partners with local universities, the government, and telecom operators to improve ICT education. In Uganda, it has an MoU with Makerere University to spend $100,000 annually on scholarships and training. In Angola, Huawei has contributed $700m to Angola's telecoms ministry to build a training centre, as well as an additional $90,000 worth of teaching facilities. It donates computers and other equipment across the continent.
Incorporated Business Practice: SAB Miller
When it comes to selecting specific, exposed areas of the value chain and developing sustainable practice through them, SABMiller stands out. The brewer focuses its sustainability work on water and enterprise development. It aims to become 25 percent more water-efficient by 2015 and 50 percent more carbon-efficient by 2020, over a 2008 base. Water efficiency has improved by 13 percent already and carbon efficiency by 10 percent.
Core Business Practice: Sénégalaise Des Eaux
Sénégalaise Des Eaux is among the most efficient water utilities companies in West Africa, where resource scarcity means drinking water is often not readily available. In the country's capital Dakar, water shortages have been chronic and leaks persistent. In 1995, before water reforms were introduced, only 58 percent of the population had access to safe, piped water. Today, SDE provides safe water to about five million out of Senegal's 12 million population, 1.5 million of whom are poor urban dwellers who lacked connections before 1996.
SDE's water network yields are around 80 percent, an impressive performance in an emerging market. The group monitors pump energy consumption and has installed energy saving meters, resulting in a drop in energy bills by $1.5m over a four year period despite a rise in national electricity tariffs. It operates state-of-the-art electronic leak detection technologies, which minimise losses and increase the efficiency of remote delivery lines.
SDE has also worked to increase network efficiency (or the ratio of water sold to water produced) which has already grown from 68 to 80 percent between 1996 and 2011. That is 12m cubic metres of water saved on average per year.
Small and Medium Enterprises
Cafédirect, a social enterprise, is recognised for the sustainability initiatives core to its practice. The group works with 38 grower partner organisations across 13 countries, six of which are in Africa. All of its growers are members of cooperatives, and fair-trade certified, meaning that they are guaranteed a minimum price for their produce. Cafédirect also works with farmer communities to help them achieve Fairtrade status, providing them with training on governance and support to be able to meet necessary standards.
Under its 'Producer Partnership Programme', the group has reinvested 50 percent of profits over the last five years into projects carried out with grower partners, meaning that - unlike Fairtrade - it does not only guarantee a price for the raw product, but allows farmers to benefit from the profits too. Last year, 37 percent of that funding went into environmental projects, according to the demands made by producers.
Environment & Resource Management: CleanStar Mozambique
CleanStar Mozambique produces affordable ethanol-based cooking hobs for urban households. It focuses on reversing the destructive cycle of charcoal production - which last year accounted for the loss of around 5m acres of African forests, resulting in degraded soil and low productivity - by shifting consumer demand to sustainably-produced ethanol.
The company invests across the entire cooking fuel value chain, from sustainable feedstock production, to fuel production. By replacing the current deforestation and slash-and-burn system with sustainable agroforestry practices, CSM increases both soil life and above-ground biodiversity on land owned by smallholder farmers to approximately 40 percent of the original levels.
Employee & Supply Chain Management: Chayton Africa
Chayton Africa, an agriculture investor in Zambia, is introducing modern farming methods like zero tillage (in which fields are left unploughed, reducing soil degradation) and crop rotation. These are simple but potentially transformational techniques, which can promote soil conservation and improve the nutrient content of soil, but are not widely adopted in the country.
The group is also working with local small-scale farmers to encourage the rotation of maize crops with soya - a legume with a natural nitrogen-fixing effect on soil. It is introducing new routes to market for soya surpluses, incentivising production and allowing farmers to improve their incomes. The group has formed relationships with the University of Zambia and local agricultural colleges to assist in the introduction of zero tillage and double-cropping locally.
CSR & Development: Association la Voûte Nubienne
CSR sits at the core of Association la Voûte Nubienne, a social enterprise working to create an independent market in the construction of sustainable housing. The group uses masons trained in the nubian vault technique (an affordable, sustainable, African building style) to build housing and train local apprentices.
Since the programme started, more than 1,000 buildings have been built for 533 clients in five countries. Ten thousand people use, live in, or sleep in the buildings, and more than 200 masons have been trained, with 296 apprentices in training, engendering a new market: more than one-third of NV construction is now autonomous and self-sustaining.