2020 Sappi Southern Africa Corporate Citizenship Report

Reconstruct

The world can only thrive if we work together to eradicate poverty and build back better.

What is this about?

Eradicating poverty is not a task of charity, it's an act of justice and the key to unlocking human potential. Nearly half of the world's population lives in poverty, and lack of food and clean water is killing thousands every day. Working together, we can help feed the hungry, eradicate disease and give everyone in the world a chance to prosper and live a productive and rich life.

Why is this a priority goal and why does it matter?

For South Africa: Approximately half (49.2%) of South Africa's adult population live below the poverty line1. Furthermore, 26% of urban and 36% of rural households experience hunger2. As human beings, our well-being is inextricably linked to each other. Increased inequality is detrimental to economic growth, and undermines social cohesion while increasing political and social tensions and, in some cases, driving instability and conflict.

For Sappi: When our neighbouring communities are prosperous and have opportunities to move out of poverty, it enhances our own licence to trade. In addition, poverty is a business issue as well as a social one – when people do not have sustainable livelihoods, they are unable to pay for our products.

We use the Poverty Stoplight tool to measure the impact of our programmes on communities.

"My advice to other Khulisa suppliers is to love your work and to treat your plots as a fixed deposit – that will bear interest when you harvest. Make full use of the land you have, and you will gain success!"

Doris Mdladla,
Khulisa participant since the early 1990s

What is Sappi doing about it?

We believe we can act as an engine of economic growth by stimulating inclusive growth and opening up opportunities, thereby contributing to poverty reduction. We do so in the following ways:

Ensuring minimum wages

In South Africa, as in the other regions where we operate, we pay market-related wages in line with or above local legislation. In 2013, SSA made it a contractual obligation for our forestry contractors to pay their workers in accordance with the minimum wage stipulated by government for the agricultural sector. We regularly check compliance with this stipulation.

Building local SME capacity

Our dedicated Enterprise and Supplier Development (ESD) department promotes sustainable livelihoods by identifying procurement opportunities for and overseeing the capacity building of small and medium-sized enterprises (SMEs) through training and operational support.

We began the process in FY19 by onboarding the operations to the ESD strategy, which was followed by analysing our spend in forestry and mill operations to identify suitable ESD opportunities. We then mapped our local communities and scoped supply chain and community business opportunities. This included the unbundling of contracts and setting-aside of suitable business opportunities. We identified potential SMEs and classified them according to their capacity building needs, with some needing a higher level of intervention than others. The most commonly identified development gaps relate to safety, technical skills and general business management. To address these gaps, we appointed third-party service providers and are also working with partners to act as technical mentors to provide the necessary capacity building.

Our progress is highlighted by the fact that we have onboarded almost 100 new active vendors across the business who are engaged on both an ad hoc and contract basis, and have signed more than 15 procurement agreements with contractual periods ranging between three and five years. We also set five-year ESD procurement spend targets totalling over ZAR500 million across our operations. The annual ESD spend target is reviewed and confirmed at the beginning of each new financial year.

The alien plant removal programmes at our mills, initially conducted in partnership with the Wildlife and Environment Society of South Africa (WESSA) since 2017, have now matured into formalised standalone businesses, employing approximately 59 people in total. The SMEs are now vendors to Sappi mills with three-year contracts.

With the intention of maximising the impact of our ESD programme and leveraging the capacity of our external partners, we signed Memoranda of Understanding (MoUs) with the National Youth Development Agency (NYDA), the Small Enterprise Development Agency (SEDA) and the Department of Trade Industry and Competition (dtic).

Promoting sustainable livelihoods

Our Sappi Khulisa enterprise development programme, which encompasses individual and community tree farming, plays an important role in alleviating poverty in rural areas. This is important in light of the World Bank's finding that rural areas have the highest levels of poverty concentration in South Africa.

The total area managed currently is 32,660 hectares. In 2020, under this programme, 284,038 tons of timber (2019: 425,001 tons) worth approximately ZAR232 million (2019: ZAR382 million) was delivered to our operations. The year-on-year drop in volumes was due to the impact of Covid-19 on Sappi's markets, which resulted in a lower demand for fibre. Since 1995, a total volume of 4,505,979 tons to the value of ZAR2.7 billion has been purchased from small growers under this programme.

Currently, the programme involves over 3,644 growers and approximately 103 small, medium and micro enterprises (SMMEs) who are involved in silviculture, harvesting, loading, short and long-haul activities.

What began as a corporate social investment (CSI) project is now part of our core business and is a replicable framework for creating economic value and social impact. It meets our need for volumes of good quality timber and, equally important, to help transform small-scale growers and their contractors into self-reliant, sustainable timber businesses.

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Recognising that long-lasting change comes from individuals and communities, our Abashintshi ('Changers' in isiZulu) programme plants seeds of opportunity by training youth to mobilise their communities to develop themselves in line with the Asset-Based Community Development (ABCD) model.

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"Recycling is not a one-man show; hence we want to employ more community members and empower them with recycling skills so that they can open up their own businesses. We once spent three months without any salaries, but our workforce was paid in time, because we are looking into the future of our business and we will not stop until we realise our full potential."

Nompilo Nxumalo, co-owner of recycling company Ku Green Hands with Nokubonga Mnyango. They approached Sappi for assistance under the ESD programme, following which they received a baler.

Expanding skills

We established three Khulisa Ulwazi ('Growing knowledge') training centres to ensure that plantations and contracting businesses are managed sustainably.

Expanding avenues of income and entrepreneurship

While advances are paid to Khulisa growers, the time it takes before being able to harvest – which enables them to realise the true financial benefits of the programme – is a challenge. One way this is being overcome is through a community honey project, which provides interim income while expanding avenues of income and entrepreneurship. Our involvement is twofold: we make certain plantations available for beekeeping and we sponsor training and equipment.

Sappi ReFibre sources used paper products from an extensive network of agents across Southern Africa, as well as from waste producers. This recovered board and paper supplements virgin fibre in the papermaking process, used in several paper grades such as packaging papers, linerboard and corrugated board at Tugela and Ngodwana Mills.

In FY20, Sappi ReFibre purchased approximately 102,525 tons of recovered paper and board at a cost of approximately ZAR166 million, with approximately ZAR31.5 million of this amount going to ESD suppliers.

How can I support this goal?

At birthday parties or other celebrations, offer the option to donate money to your chosen charity instead of receiving gifts

Buy local – produce, clothing and household goods. Support the local farmers' market or small, locally owned shops. That way, you're helping to keep fellow citizens employed and stimulating the South African economy

Start a drive at work to collect food and donate it to a local orphanage or shelter

Share the facts about poverty with family and friends as motivation to take action