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INTEGRATED REPORT 2017

Passionate people building great brands

ENVIRONMENTAL MATERIAL MATTERS

OPERATIONAL AND STRATEGIC RESOURCE MANAGEMENT

The effects of global warming are becoming a major concern in the industry as extreme weather events, droughts, degradation of fishing resources and wildfires impact on food production, availability of locally sourced products and increasing costs of manufacture.

Spur Corporation and its brand family would not have been able to grow as it has without a continual supply of inputs, such as meat, vegetables, fish, clean water, energy and building materials.

Within this necessary, yet fragile relationship, the group faces many challenges. Red meat in particular is a significant contributor to global environmental concerns, such as climate change, pressure on water resources and deforestation for feed. Fish resources are under extreme pressure and we are continually challenged by availability of sustainable supply that also supports our financial model. We are faced with the reality of species decline as we witness the reduction of green listed sustainable products.

Water availability is becoming a desperate reality in South Africa, as we face the driest weather conditions recorded in many regions of our country. This ongoing crisis increases production and resource costs and has an impact on franchisees’ profitability, which indirectly affects Spur Corporation’s bottom line.

Spur Corporation’s vision is built around the concept of a sustainable business and we are committed to sustainable environmental practices as a core aspect of our role as a responsible corporate citizen. Although our direct environmental impact is relatively small, the group monitors its use of energy and water and waste produced to reduce these responsibly. The environmental impact of franchisees and of the group’s supply chain is considerably bigger, and Spur Corporation uses its influence as franchisor to promote positive environmental practices.

Being a sustainable business requires full engagement, continuous training and on-going tracking and measurement. We are encouraged to see how resource efficiency promotes cost savings and we continue to engage with franchisees and staff on these issues.

Strategic response

Environmental sustainability is overseen by the environmental sustainability committee (“ESC”), including the implementation of sustainability policies and the tracking, measurement and verification of environmental data streams. Progress is reported to the social, ethics and environmental sustainability committee and to the board.

The green operations assessment measures franchisees’ environmental performance and, together with the eco-checklist, introduces environmental key performance indicators to enable monitoring and improve the understanding of the group’s total environmental impact. Modules covering environmental responsibility and awareness are included in Spur Training Academy courses provided to franchisee management and employees.

Key sustainability highlights for 2017
  • Environmental legislation toolkits were developed to build understanding around certain legislative aspects of environmental sustainability and requirements specific to waste management, extended user responsibility, carbon emission declaration and sustainable procurement best practice.
  • Green operations reports were revised and reformatted into an easy to use digital platform. All operations teams received comprehensive retraining on the updated content and training videos were launched in support of the main sustainability themes impacting the environment and affecting operational performance and profitability. Six of the group’s brands reported on the digital platform from April 2017. Average participation reached 87% and, as we expected, the increased scope and detail required to be reported led to a decline in the average score to 48% (2016: 65%).
  • The ESC engaged with stores in Tanzania, Namibia and Mauritius to provide training and assess sustainability awareness.
  • A Youth Day 2017 initiative with the youth of Ocean View at the environmental centre in Soetwater in the Western Cape, which included eco-aligned activities.
  • An independent party was engaged to perform a carbon footprint assessment across the organisation’s head office, regional offices, production facilities and restaurants in Southern Africa. Inclusion of the Greenhouse Gas (“GHG”) emissions into the ESC’s reporting structure will enable Spur Corporation to analyse results, with the potential to develop an internal GHG emission strategy and a programme to encourage the reduction in GHG emissions.
  • The carbon footprint assessment was based on the Greenhouse Gas Corporate Reporting Protocol as developed by the World Business Council for Sustainable Development and the World Resources Institute.
Energy

While Spur Corporation’s offices do not consume significant amounts of electricity, various energy-saving initiatives have been implemented at group facilities. Energy monitoring systems have been installed at the Durban and Johannesburg regional offices and also at the new Cape Town office building.

Total electricity consumption at corporate sites for the 2017 reporting period was 1 178 053 kWh. A decline was noticed in regional office data year on year (2017: 679 591 kWh; 2016: 705 040 kWh), despite the growth in staff members nationally and the addition of the new Cape Town office building. Regional offices consumed 58% of the total electricity used in the group. There is no comparative data available for the head office for the 2016 period. (2017: 498 462 kWh).

The significant increase in the cost of electricity has sensitised franchisees to the financial benefits of sustainable environmental initiatives. Most stores have converted to LED lighting and many use natural in-store light whenever possible although there is still potential for implementation of these and other energy-efficiency measures to be rolled out, including motion sensors, timers and energy monitoring systems.

Chip fryers at 35 restaurants were retrofitted with energy saving elements at an estimated average saving of over R100 000 per store per year.

Water

Water use is tracked at the Cape Town and Johannesburg offices as well as at the Baker Street premises in Cape Town (décor manufacture, training centre and call centre) and the sauce manufacturing facility. The sauce manufacturing facility uses most (2017: 59%) of the water consumed by the group. Despite a 20% increase in water use at the sauce manufacturing facility, total water use across these premises increased by only 9.8% year on year to 10 401 kℓ.

While 68% of franchisee stores report having staff awareness programmes in place to encourage water conservation, there is still considerable opportunity for franchisees to install water savings devices such as self-closing taps, aerators and water-efficient dishwashers. A water saving training video was developed to support in-store communication to drive the water savings message.

Waste management

Formal waste reduction and recycling programmes have been implemented at the group’s corporate offices in Cape Town and Johannesburg, and at the Baker Street premises in Cape Town. The Cape Town offices currently divert 94% of their waste from landfill, with 45% recycled and 49% composted. In total, 12 850 kg (2016: 11 210 kg) of waste was diverted from landfill and recycled during the year. It is proposed that going forward a new baseline is established to include all regional offices, as well as other group facilities (décor and sauce manufacturing facilities) into the reporting structure. Current available data reflects that overall 71% (57 754 kg) of waste (excluding the sauce manufacturing facility) was diverted to landfill.

The green operations reports show that most restaurants have recycling initiatives in place, although there is an opportunity to improve waste management. Detailed information on waste management has been included in the 2017 eco toolkit update, as well as in the digital green operations report and training videos. A recycling trial was conducted at six Western Cape freestanding stores but unfortunately proved to be unviable. Waste management projects such as this one are often complicated by challenging operational logistics around waste collection at store level.

Used cooking oil that is not disposed of in a responsible manner can clog drains, contaminate groundwater and affect plants and animals. The group pro-actively reports on oil usage and disposal and used oil collection data is included in the green operations report. 97% of stores participate in the spent oil collection programme, in which stores sell their spent oil to reputable oil recycling companies to ensure that it is removed from the food chain. Across the group, 32% of the spent palm oil blend used during 2017 was recycled, mostly through conversion to bio-diesel.

Travel

Total flights, car hire and accommodation bookings decreased by approximately 25% year on year. The group procured a fleet of vehicles for operations managers across all brands during the latter half of the 2016 calendar year. Diesel consumption will be monitored and reported on in future periods.

In 2018, our focus will be on raising the profile of environmental sustainability to a strategic and future-proofing level, delivering training, ensuring the effective roll-out of the environmental policy, and developing programmes and training that can assist franchisees to reduce resource consumption and minimise waste.

The activities of the environmental sustainability team aim to identify risk and drive innovation that supports shared value and generates opportunities that could lead to total value creation through natural capital, human capital and financial capital. These activities can help to build processes and policies that support continued availability of and access to sustainable natural resources that feed into our day-to-day operations, ensuring the continued success and profitability
of our business.

PROCUREMENT

Franchised restaurants in the Spur Corporation group purchase significant quantities of raw materials and we aim to ensure that our suppliers share our commitment to sustainable practices. Sustainable supply is an important consideration given that changing weather patterns from climate change are projected to negatively affect food production over the medium term as global population growth increases demand.

Strategic response

Supplier assessments include green procurement and ethical sourcing considerations. Our outsourced logistics partner has an ISO 14001-aligned environmental management programme, and all three distribution hubs are fully ISO 14001 accredited.

The ESC developed an electronic supplier questionnaire in 2017 to assist the procurement team with data collection. The feedback highlights the environmental commitment of various suppliers and how they produce various products supplied to the group. The results demonstrated that basic compliance is being met although there are some challenges that require further engagement.

Sustainable seafood

The group, and particularly John Dory’s, faces a significant challenge in securing a reliable supply of seafood from sustainable sources. John Dory’s is committed to demonstrating the brand’s commitment to sustainability leadership with a specific focus on preservation of our oceans and the natural seafood resources, while proactively managing unexpected cost implications. John Dory’s set a commitment to source 100% of its seafood from Aquaculture Stewardship Council or Marine Stewardship Council certified suppliers or from within a fishing improvement project by the end of 2015, but was unable to achieve this for the reasons discussed below.

For commercial reasons, the group procures certain seafood products from Namibia. The Namibian fishing industry no longer adheres to sustainable fishing practices. Spur Corporation’s procurement team is currently working with the World Wide Fund for Nature, the South African Sustainable Seafood Initiative (“SASSI”), and Namibian authorities to ensure that seafood sourced from that country, particularly hake, complies with SASSI requirements.

The group remains committed to the SASSI “Seafood Promise” and anticipates that full compliance will be attained in 2018. The group does not procure or sell any species that are on the SASSI red list.

The ESC is initiating a supplier mapping exercise to build knowledge about the group’s supply chain and potential for circular opportunities. The first priorities will be around raw material supply with specific drivers being seafood and beef. The purpose is to evaluate risks and opportunities by mapping out our supply chain. This will help us to develop a greater understanding of second and third tier suppliers, potential collaborations and procurement themes to underpin our environmental strategies.