2013 Sustainability Report

Sustainability Report 2013

FORMERLY RAINBOW CHICKEN LIMITED

B // RCL SUSTAINABILITY REPORT 2013

Contents

Introduction 1

Sustainability targets 1

Group profile and leadership 2

Leadership and sustainability 2

Chief Executive’s review 2

Sustainability into strategy 2

Reporting approach 3

Ensuring accuracy and credibility of our results 3

Key issues 3

Stakeholder engagement process 4

Economic sustainability practices 5

Value added statement 5

Broad-based black economic empowerment (B-BBEE) 5

Caring for our environment 6

Environmental sustainability practices 7

Land usage 7

Nature conservation 7

Environmental management system 7

Environmental Impact Assessments (EIA) 7

Environmental risk 8

Energy usage 9

Waste and recycled products 10

Packaging 11

Emissions to air 12

Carbon disclosure 12

Carbon footprint trends 12

Greenhouse gas emission reduction goals and targets 13

Social sustainability practices 14

Employees 14

Group employment equity statistics 16

Employee reconciliation 16

Training information 17

Participation in industry bodies 18

Regulators and compliance 19

Consumers 20

Corporate social investment 22

Assurance 22

Key statistics 23

Conclusion 23

RCL SUSTAINABILITY REPORT 2013 // 1

Introduction

SuStAInABIlIty tARgEtS

Action plans long-term targets 2014 targets

Sustainabilitystructure and systems

Align Group sustainability strategy with national and global best practices and strategic thrusts

Agree and roll out Group structure Agree structure for new acquisitions and align systems for data capture, analysis, and opportunity identification

Develop framework and strategy for Group by consulting with key stakeholders. Establish “sustainability culture/mindset” within the Group

Develop and implement sustainability reporting system

Include new acquisitions in sustainability measurements and agree targets with operational units. Consolidate projects and initiatives and share knowledge and synergies across the Group

Identify sustainability “champion” for each division across the Group and align actions with Group sustainability strategy

Identify and train sustainability champions in operational areas

ISO 14000 and waste management strategy

Ensure sound environmental conformance (with possible cost savings) through all divisions across the Group by engaging in waste reduction initiatives (Reduce, Re-use, Renew, Recycle)

Achieve ISO 14001 at all mills, plants and farms

Have all facilities ISO 140001 certified by 2014 financial year-end

By 2020 reduce:– food waste by 30%– carbon emissions by 5%– waste to landfill by 10%

Engage with all RCL’s strategic packaging suppliers, identify and quantify opportunities and formalise implementation plans

Reduce RCL’s impact on water, air and ground by reducing and eliminating pollution

Brand development Brand RCL’s sustainability progress by being part of a formal programme to enlighten consumers. Align RCL’s sustainability focus with programme guidelines

Live sustainability through brands Evaluate reputable sustainability certification bodies and select the appropriate programme to participate in

Implement sustainable sourcing strategy and policies to ensure suppliers identified as strategic are aligned with RCL’s sustainability strategy with that of suppliers.

Source products, services and ingredients from responsible, sustainable suppliers

Develop a sustainable sourcing policy and initiate rollout to suppliers

RCL foods Limited (“RCL” or “the Group”) recognises that true sustainability cannot succeed in isolation and as such the sustainability strategy has been integrated in the overall business strategy and forms one of the strategic drivers of the business. In line with the company’s “Strategy into Action” (SIA) process, the sustainability strategy has been converted into a number of strategic goals, each with measureable key performance indicators and targets. This integrated management approach ensures strong alignment between the sustainability strategy and the day-to-day business activities. Sustainability action plans and targets can be found in the table below.

The report has drawn on the Sustainability Reporting Guidelines developed by the Global Reporting Initiative (GRI), as well as the criteria of the Sustainability Reporting Index (SRI) of the JSE Limited. The criteria have been used for guidance only, with the reporting predominantly focusing on issues that are specifically material to RCL’s business and stakeholder base.

The target audience for this report is all stakeholders that have an interest in the activities of RCL, with particular emphasis on shareholders, customers, consumers, employees and suppliers.

2 // RCL SUSTAINABILITY REPORT 2013

group profile and leadership

RCL is listed on the JSE Limited and is a subsidiary of Remgro Limited which holds 69,7% of the issued share capital. It has three operating subsidiaries i.e. wholly-owned subsidiaries Rainbow farms Proprietary Limited (Rainbow), Vector Logistics Proprietary Limited (Vector) and with effect from 1 May 2013 foodcorp Proprietary Limited (foodcorp), a 64,18% subsidiary (increased to 88,1% shareholding post year-end).

Rainbow is South Africa’s largest processor and marketer of chicken and operates in the local retail, wholesale and foodservice channels. Its consumer brands are Rainbow and farmer Brown and its business/service brands are Rainbow foodSolutions, Cobb and Epol. In 2005 Rainbow acquired Vector Logistics to gain control of its route to market. Since then Vector has expanded its service offerings and grown significantly to service many more customers outside of Rainbow.

As part of RCL’s strategy to focus on building a diversified food business with compelling consumer brands in sub-Saharan Africa, an interest in foodcorp was acquired with effect from 1 May 2013. foodcorp manufactures, markets and distributes a diversified portfolio of food products ranging from basic essentials to top-end desserts and convenience meals. Many of the products are associated with South African tradition and heritage, and are therefore among the leading and best recognised brands in South Africa.

leadership and sustainability

The Board accepts overall responsibility for the advancement of sustainable development at RCL and as such has included a formal sustainability charter as part of the Risk Committee mandate. The Processing and Milling director is responsible for championing the sustainability initiative. The Risk Committee’s role is to assist the RCL Board in monitoring all aspects of sustainability, including health, safety, economic, environmental and social impacts. The Risk Committee’s oversight of the sustainability initiatives provides the business with the ideal platform to identify both risks and opportunities on an integrated basis. More information on the Rainbow Board and governance structures are available in the corporate governance report included in the 2013 integrated annual report on page 30.

Chief Executive’s review

The Group recognises that there is a need to conduct business in a responsible and ethical way that contributes to the long-term sustainability of the communities and environment in which the business operates. The Group places high priority on sustainability practices ensuring that they are incorporated into the business’s culture, leadership, governance and strategy. The reduction in the consumption of energy and water is integral to our sustainability and carbon footprint reduction strategy.

Sustainability into strategy

Sustainability SIA (consolidate and align)

Departmental SIAs (short-term one year)

LOGISTICS CUSTOMERS BRANDS CONSUMERS

Mission statement (long-term 10 years)

Strategic thrust and work areas (medium to long-term five years)

Risk Committee (Sustainability Charter)

RCl

+=GRAND-PARENT

BREEDER

PARENT BREEDER MILLING BROILER PRO-

CESSING

RAInBOW FARMS VECtOR lOgIStICS

Introduction continued


RCL is committed to sustainability, being one of the drivers underpinning the Group’s vision. To this end, sustainability targets have been established and are monitored by executive management. The Group has aligned its operations to meet government’s target of reducing carbon emissions by 34% by 2020. RCL is focusing on a long-term sustainability strategy as detailed below:

Target Why focus?

Reduce grid generated power by 30%

Ensure stable supply

Reduce power consumption/kg by 15%

Limit effect of price increase

Limit carbon effect of fossil fuelled electricity

Target Why focus?

Reduce food waste by 30%

High environmental and financial cost of product waste

Reduce carbon emissions by 5%

fit-for-purpose packaging and substrates to be selected for CO2e reduction

Reduce waste to landfill by 10%

Landfill costs and capacity constraints will rapidly increase

Target Why focus?

Reduce use of fossil fuel by 10%

Limit effect of cost increase

Reduce vehicle emissions by 20%

Increase vehicle fuel economy by 20%

Limit effect of new standards and carbon taxes

Target Why focus?

Reduce processing water usage to 8ℓ per bird

Risk of poor water quality

Reduce downstream supply chain water by 1ℓ per bird

Risk of water supply interruptions and constraints

Electricity Water

Packaging Fuel

RCL strives to drive sustainability by:

• Continuallyreducingournegativeimpactonourenvironmentbyminimisingouruseofnon-renewableresources

• Strengthening our relationship with society by supporting and enabling the provision of nutrition, health and education in ourcommunities; and

• Inspiredpeopleandgreatbrandsthataredrivingthebusinesstonewheights.

Reporting approach

This report is aligned with the integrated annual report and covers the 12-month reporting period July 2012 to June 2013. The previous report was for the period July 2011 to June 2012. The information reported covers all activities of Rainbow and Vector operations for the periods described and which it considers relevant to its stakeholders.

Foodcorp results relating to environmental, social and governance practices will be included in the sustainability report from the next financial year.

Ensuring accuracy and credibility of our results

Although external assurance has not been obtained in the current year, the Group has implemented management systems, some of which are independently verified, that provide the platform for managing the Group’s economic, social and environmental practices as indicated in the pages that follow.

Key issues

RCL’s issues around sustainability include environmental matters, animal welfare, food safety, nutrition, people and economics. Key priorities for the reporting period were:

• reductionofenergyconsumptionthroughoutthesupplychainwithspecifictargetstoreduceheatandpower

• reductionofpackagingmaterialswithfocusonpackagesizeandrecyclematerials

• afocusedcorporatesocialresponsibilitydrive;and

• creatingvalueforstakeholdersthroughsustainableeconomicgrowthanddevelopment.

Reduction of caRbon emissions

by 34% at 2020


The Group subscribes to a partnership approach in the way business is conducted. It seeks to constructively engage its key stakeholders so as to understand and be able to respond to their needs. Interaction occurs with key stakeholders in the business through a number of formal and informal channels, including participation in industry forums, the investor relations function and consumer care line.

While shareholders are primarily concerned with value creation, government and local communities are looking to the Group to create direct and indirect job opportunities, improve community infrastructures and protect the environment. The Group’s stakeholder process is therefore underpinned by management’s responsibility to remain visible and accessible to all its stakeholders and will continue to emphasise open and transparent dialogue in order to anticipate trends and make changes where possible to the way it currently operates.

The Board accepts its duty to present a balanced and understandable assessment of the Group’s position in reporting to stakeholders and the greater demands for transparency and accountability regarding non-financial matters. The quality of the information is based on the principles of openness and substance over form. The integrated annual report seeks to address matters of significant interest and concern to all stakeholders and to present a comprehensive and objective assessment of the Group, so that all stakeholders with a legitimate interest in the Group’s affairs can obtain a complete, fair and honest account of its performance.

The table below sets out the Group’s key stakeholders and a brief description of the nature of interactions.

Key stakeholders Dialogue channels and forms of engagement

Shareholders and other providers of capital

•Annualgeneralmeeting

•Investorrelations

•Bi-annualresultsannouncements

•Tradingupdates

•SENSannouncements

•Integratedannualreport

•Websites

Business partners and customers •Facetofaceinterventions

•Regularmeetingsandworkshops

•Market,customerandin-storesurveys

Local community •Selectedprojectsaspartofcorporatesocialinvestment

•Regularmeetingswithmunicipalitiesandcivicorganisations

Government and regulators •Corporateaffairs,legalandinvestorrelationsfunctions

Industry •SouthAfricanPoultryAssociation(SAPA)

•ConsumerGoodsCouncilofSouthAfrica(CGCSA)

•AnimalFeedManufacturersAssociation(AFMA)

•SouthAfricanAgriculturalProcessorsAssociation(SAAPA)

Consumers •Consumercareline

•Consumerandproductsurveys

•Advertisingcampaignsinprintandmedia

•Consumerimmersions

Staff and unions •Roadshows

•GoodtoGreatleadershipjourney

•Intranet

•Staffmeetingsandtraining

•Performancereviewsandcareerplanning

•Managementandunionmeetings

•ConfidentialhotlinethroughTip-offsAnonymous

Suppliers •Directrelationshipswithsupplierstoenablepartnerships

•Facetofaceinterventions

•Regularmeetingsandworkshops

Stakeholder engagement process


Creating value for stakeholders through sustainable economic growth and development encompasses a number of elements. In generating economic value for shareholders and other stakeholders, RCL provides a quality and affordable food source to the South African nation and creates jobs both within the business and along the supply chain in the formal and informal sectors. The Group is committed to doing business through fair commercial competitive practices and to trading with customers and suppliers that subscribe to the same high ethical business practices. The Group generated headline earnings from continuing operations of R18,1 million for the year ended 30 June 2013, from which major stakeholders benefited in varying proportions as indicated in the table below. Employees were the main beneficiaries.

2013 2012VAluE ADDED StAtEMEnt % R’000 % R’000

Revenue 10 108 812 7 855 142Paid suppliers (8 055 069) (5 971 078)

Value added by operations 2 053 743 1 884 064finance income 53 874 7 370

Total value added 2 107 617 1 891 434

Applied as follows:To pay employeesSalaries, wages and benefits 74,6 1 572 952 67,1 1 269 554To pay providers of capital 11,8 248 084 13,7 258 604

Interest paid 7,3 153 675 0,6 11 358Dividends paid 4,5 94 409 13,1 247 246

Tax (excluding VAT) 3,6 75 148 7,6 143 469Reinvested in the business 10,0 211 433 11,6 219 807

Depreciation and amortisation 13,2 278 294 10,6 200 286Retained earnings (3,2) (66 861) 1,0 19 521

100,0 2 107 617 100,0 1 891 434

Economic sustainability practices

The current B-BBEE certificate expires in September 2013. Verification for this financial period will be conducted in August 2013. The Group’s aim is to retain a level 4 status, by strategically focusing on three elements, namely Employment Equity, Skills Development (both of which are further detailed in the section on Social Sustainability Practices) and Preferential Procurement. The table below provides a breakdown of 2011 and 2012 BEE scores.

The Group continues to focus on all BEE procurement aspects, while encouraging further Qualifying Small Enterprises (QSE) and Exempted Micro Enterprises (EME) participation, and further leveraging opportunities of sourcing from black and black women owned suppliers.

BEE Scorecard

BEE category ElementMaximum

score

Score

2012 2011

Direct empowerment Ownership 20 13,86 11,04

Management 10 2,68 2,92

HR development Employment equity 15 6,92 5,45

Skills development 15 7,21 4,11

Indirect empowerment Preferential procurement 20 15,39 12,48

Enterprise development 15 15,00 15,00

Socio-economic development 5 5,00 4,85

Total score 66,06 55,85

Recognition status level 4 Level 5100% contributor 80% contributor

Broad-based black economic empowerment (B-BBEE)


RCL takes full responsibility for its environment by charging every RCL person to ensure effective use of resources and limit its impact on the environment. In addition RCL favours suppliers and partners who share the Group’s values with regard to the protection of the environment.

RCL commits to set quantifiable environmental objectives and targets which are implemented and regularly reviewed with the aim of improving environmental performance in the following areas:

• Airemissions

• Waterpollutionandwaterscarcity

• Waste

• Energy;and

• Climatechange.

Through the Group’s Environmental Policy it promotes shared responsibilities and accountability amongst employees, stakeholders, local communities, and other affected parties on environmental matters of mutual concern and requires that the Group’s contractors also follow responsible environmental practices.

As part of RCL’s commitment and responsibility the Group commits to ensure that all employees and those working on behalf of RCL are familiar with this policy.

This policy is applicable in all operations and functions including those situations where employees and contractors are required to work off site and is available to the public. furthermore, the environmental policy has been communicated to all areas of the business through the employee induction process and intranet.

Rainbow’s sustainability, carbon emissions reduction and water reduction targets and performance are monitored monthly and form part of the annual Sustainability Report.

Caring for our environment


The management of RCL shall endeavour to conduct all its activities in such a way that the environment is not adversely affected. The Group acknowledges that it has a legal and moral responsibility towards the environment, its employees, its customers, its neighbours, its business and future generations. In addition, the Group favours suppliers and partners who have similar environmental policies.

land usage

The Group strives to use the best environmental practices on all land used for farming, processing, milling and distribution operations, whether it be owned or leased. The table below provides an analysis of the Group’s land usage.

AnAlySIS OF lAnD uSAgE

Hectares

Owned leased Partners Dormant 2013 2012 2011 2010 2009

farming operations 9 013 890 401 10 304 10 225 10 225 9 090 9 132

Processing and milling operations 173 1 174 174 135 57 99

Distribution and administration centres 35 108 143 143 70 36 37

total use 9 221 108 890 402 10 621 10 542 10 430 9 183 9 268

nature conservation

The Group supports nature conservation and views it as an important national heritage. In this regard, Rainbow leases approximately 630 hectares to the North West Parks Board for the enlargement of the Rustenburg Nature Reserve, for one rand per annum. Additionally, at the Group’s 1 547 hectare Roodewaal farm near Koster in the North West province, Rainbow has permission from the Department of Nature Conservation to conserve game. Bordered by three game farms, it actively supports the North West Parks Board and game farming in the area by helping to ensure wildlife and plant conservation.

In KwaZulu-Natal (KZN), 2 000 indigenous trees were planted, acting as natural biosecurity barriers between farms and surrounding areas. This project was undertaken in partnership with the Wildlands Conservation Trust, directly benefiting local communities who grow seedlings in exchange for tuition aids.

Environmental management system

The Group is in the process of implementing an Environmental Management System based on ISO 14001 principles. All mills are fully certified. All other Rainbow sites excluding Agriculture KZN have been through a stage one ISO 14001 certification audit. The sites are assessed for environmental legal compliance once in a three year cycle. Implementation is 76% complete with full completion expected by the end of the 2014 financial year.

Environmental Impact Assessments (EIA)

The Group conducts Environmental Impact Assessments as required by the Department of Agriculture and Environmental Affairs when considering investment in new or upgrading existing facilities.

This process allows for comments and input from all interested stakeholders and affected parties. An Environmental Management Plan (EMP) is established for the construction phase of these projects, to serve as a guide to assist in minimising the potential environmental impact of these business initiatives.

Environmental sustainability practices


Environmental risk

RCL has identified the following potential environmental risks in its operations:

Environmental risks Risks are mitigated by

Natural resource depletion An updated Environmental Policy providing the framework for setting andreviewing environmental objectives and targets

Air pollution Odours from processing plants and mills

Environmental management programmes and key performance indicators that are monitored regularly

Poultry disease outbreaks on farms Effective bio-security and security procedures at all operations

Waste disposal Service level agreements aligned to ISO 14000 standards with waste management service providersforthesafedisposalofdiseasedbirdsandcontaminatedorhazardouswaste

fires fire breaks maintained on all farming operations

Ground and surface water pollution Bundwallsaroundalltanksandstorageareascontaininghazardousliquids

Hazardouschemical,dieseland gas spillage

Chemicalstoreroomsallowingforsegregationofhazardouschemicals

Indirect emissions from high electricity consumption

Smart metering monitoring key electricity consumers, i.e. mills, processing facilities, distribution warehouses and load reduction programmes implemented where applicable

Direct emissions from boiler fuel combustion

Emissions testing of boilers as per Air Quality Act. Key performance indicators driving efficient boiler operation and fuel savings at all sites

Water shortages and water quality Regular water quality assessments and proactive management to ensure sufficient and reliable water supply

Daily operation, and project related activities and related risks

Induction of all new employees and contractors on specific site health andsafety and environmental risks

Effective training programmes focusing on Environmental Policy and practices

Induction of all management staff on environmental and sustainability policies and strategies

Effective, documented health and safety procedures

Environmental sustainability practices continued


Energy usageEnergy consumption is one of the main focus areas in RCL’s strategy to reduce its impact on climate change. RCL therefore follows a structured approach in selecting energy efficiency initiatives by keeping track of projects at the various operations, sharing information on efficiency projects, and cross communicating results and synergies on a Group basis. During the financial period, R24 million was spent on various energy efficiency improvement projects. These projects included power factor correction, variable speed drives on cooling equipment, insulation of steam reticulation, and conversion of poultry house lighting to LED technology.

To drive energy saving and carbon footprint reduction, the Group has set a target reduction of 5% per ton produced on heat and power consumption. The Group’s total electrical energy consumption has decreased by 1,2% year on year across the Group, a satisfying result considering the fact that an additional facility in Limpopo has been included in the results. Savings can be contributed to operational efficiencies, energy savings initiatives and energy awareness. Consumption of coal increased by 75% following a fuel switch on broiler farms from Liquid Petroleum Gas (LPG) while the latter reduced by 37% during the financial period. Diesel consumption has reduced by 1,8% due to route optimisation and driver training.

Category winner at The Green Supply Chain 2012 Awards

– LED Poultry house lighting solution

– Best project between R1 million and R10 million

Poultry house upgrades in KwaZulu-Natal – Application of roof insulation

– Roof insulation resulting in improved temperature control

– Reduced heat loss and improved energy consumption

A number of energy saving initiatives where undertaken during the financial period:

• Poultryhouseupgradesconsistingofventilationcontrolandredesignensuresthatelectricalandheatingrequirementsarereduced.Improved insulation of poultry houses also contributes to energy savings and optimum temperatures inside poultry houses

• Rainbow’s agricultural engineers continued the rollout of the improvedpoultry house lighting systems.Rainbowwas announcedwinner for Best Project between R1 million and R10 million at the Green Supply Chain 2012 Awards. Rainbow implemented a green supply chain solution by converting the incandescent lighting in 36 facilities in three provinces to LED systems with dimming controllers, reducing consumption by 117 000 kWh per month. The aim of the project was to reduce electricity consumption, improve light quality and reduce waste and maintenance costs. Incandescent and compact fluorescent lights were replaced with LED lights to ensure better uniformity — from 50% to 80% — and bulb life was increased from 900 hours to 4 500 hours. This is the first poultry house lighting solution to comply with the International Cobb poultry husbandry standard and with national regulations for electrical installation

• Installationofvariablespeeddrives(VSDs)attheVectorPeninsuladistributionhubresultedinreducedenergyconsumptionbyupto70% and a reduction in noise levels by up to 10% on evaporators

• Desiccantdryeroptimisationatsmallerdistributionfacilitiesrealisedenergysavingsofupto13000kWh;and

• SmartmeteringenablesRainbowtogathercriticallyimportantdataonelectricityconsumptionanddemandpatterns.Itenablesfacilitymanagers and engineers to trend historical consumption patterns and to exercise better control over how operations are managed. Smart metering provides the necessary “baseline” data for feasibility studies on energy conservation, optimisation and co-generation initiatives. It also provides good insight into post-implementation success rates when comparing pre- and post-installation data sets. All milling operations and processing plants have installed smart metering systems.


Coal

Coal use for steam generation at processing plants and feed mills remains a high focus area and good boiler management practices are in place at every operation. Coal-to-steam conversion, condensate return, make-up water, and managed chemical consumption are monitored performance areas. Annual boiler inspections ensure safe, efficient operation of equipment. In this financial period, coal consumption has increased from 0,07 ton of coal per ton of chicken produced to 0,12 due to an increase in coal consumption. The increase follows a fuel switch from LPG heating to coal fired heating in poultry houses. Training of farm managers on operating procedures of newly installed heating equipment continues and efficiencies are improving. Alternative, renewable sources of fuel, such as wood chips – a waste product from the forestry industry – are being used on an increasing basis.

gas

Consumption of LPG has reduced during the last financial period due to switching to coal fired heating systems for poultry houses. Poultry house gas reticulation systems are inspected, upgraded and certified for compliance on a continual basis, eliminating both leaks and inefficiencies.

Water

Poor water quality and water shortages are significant potential risks to the business. Rainbow has mitigated the risk of water shortages by building additional reservoirs to hold capacity in times of shortage, and is looking at ways of reducing the demand for water in rearing the parent stock, broiler birds and in the slaughtering process. With significant water usage, water effluent needs to be managed and every effort is made to recycle effluent water. Measuring wastage enables early detection of system defects that can be rectified to minimise potential losses and impact on the environment.

Recycled water from the three major primary processing plants is used as grey water for outside cleaning and transporting production waste, and the balance is discharged to municipal effluent plants for further recycling. Water is only discharged or used as recycled water once the Biological Oxygen Demand (BOD) and Chemical Oxygen Demand (COD) levels are reduced to acceptable standards.

Rainbow has undertaken to improve the quality of effluent at its Bushvalley operation in Limpopo, by investing in an effluent treatment plant whichoperateswithanumberoftreatmentpondswhereinenzymesbreakupproteinsandfatsintheeffluent.Thissystemwilltreatraweffluent with levels of ≥3 000 COD to river discharge limits of 75 COD using no chemicals. The project became fully operational at the end of August 2013.

Waste and recycled products

The Group analyses all types of waste material generated. Options for possible re-use and disposal are assessed to ensure that it is used or disposed of in the most environmentally friendly way.

Rainbow uses the following recycled products from other suppliers in its processes:

• Woodshavingsasbeddingforthechickenhouses

• Recycledpaperisutilisedinthefinishedproductoutercartonpackaging

• Recycledplasticisutilisedinthemanufactureofplasticcatchingcrates;and

• 150tonsofrecycledconstructionrubblewasusedtoimproveaccesstocertainKwaZulu-Natalfarms.


lPg consumption (kℓ/ton chicken produced)

2011 2012 2013 2011 2012 2013 2011 2012 2013

Coal consumption(tons/ton chicken produced)

Electricity consumption (kWh per ton of product sold)

500

400

300

200

100

0

0,14

0,12

0,10

0,08

0,06

0,04

0,02

0,00

0,10

0,08

0,06

0,04

0,02

0,00

422,15

364,21 349,88

0,080,07

0,120,08 0,08

0,05


Packaging

Packaging preserves, protects, contains, transports, informs and sells Rainbow’s products. Reducing the pre- and post-consumer impact of packaging materials is a responsibility the Group takes very seriously. Rainbow has also added the recycling codes and statements such as “care for our environment” and “dispose of packaging responsibly” to all packaging material. Rainbow has also challenged its strategic packaging suppliers to assist with finding ways of implementing the 4Rs to all packaging materials used (i.e. Reduce, Re-use, Recycle, Recover).

The next financial period will see a rollout of the Rainbow Packaging Strategy and its supporting targets. The amount of packaging required to package one ton of chicken has a 69% lower carbon impact on the environment than one ton of chicken returned and dumped. Although packaging has a comparatively small contribution to product related carbon emissions, it plays an extremely important role in protecting the product and ensuring that it reaches the consumer looking and tasting good.

Specific packaging projects will therefore be implemented and contribute directly, alongside electricity, water and fuel projects, to our overall company sustainability target of a 34% reduction in carbon emissions by 2020.

The future focus will be on:

• Reducingfoodwaste

• Reducingcarbonemissions

• Reducingwastetolandfill

Baseline audits conducted on packaging consumption have allowed specific targets to be set towards reducing the impact on waste to landfill despite growing production volumes.

By designing packaging with the environment in mind, Rainbow has reduced indirect CO2 emissions through the following initiatives:

• Eliminating230tons/annumofcartonboard(equivalentto96tonsCO2e/annum) by moving certain products out of carton board and into polypropylene plastic bailer bags

• Withincreasedfocus,improvedprocessesandsuccessfulimplementation,Rainbowcontinuestokeepsplitbagreturnsdownwhichwould have negatively impacted post-consumer waste to landfill with an extra 8 tons of Low Density Polyethylene (LDPE) plastic – together with chicken dumped – equivalent to 8 300 tons CO2e/annum

• Rainbowsuccessfullyconverted100%ofcartonsusedforproductdistributiontorecycledlinersavoidingconsumptionof346tonsofvirgin liner; and

• Cartonboardboxesusedassecondarypackaginghavebeenreplacedwithre-useableplasticcrates.Careistakentoensurethatahigh level of hygiene is maintained at all times. This initiative has already achieved a 51 ton carton board saving since June 2012 with a forecasted 94 tons per annum saving equivalent to 98 tons of CO2e/annum.


Emissions to air

The Group recognises its responsibilities in terms of the Air Quality Act, No 39 of 2004, and as such ensures that Rainbow’s animal matter reduction plants, coal-fired boilers and boiler stacks are well maintained and routinely inspected.

An Environmental Air Quality management procedure has been circulated to and accepted by all areas of the business. The objective of this procedure is to protect the environment by providing reasonable measures for the protection and enhancement of the quality of air, the prevention of air pollution and ecological degradation; and to enhance the quality of ambient air for the sake of securing an environment that is not harmful to the health and wellbeing of people.

Additional management process controls within Rainbow’s rendering plants ensure:

• Capacitiesofallcookersanddriersarenotexceeded

• Alternativedisposalofrawmaterialisavailablethroughregisteredwastecompanies

• Cookingrecipesarebalancedtopreventodours

• Routinescheduledmaintenanceiscarriedoutfortheeffectiverunningofallequipment;and

• Theuseofspecialistconsultantstoinvestigatepossiblefurtherimprovementsinrenderingofprocessingwastematerial.

Rainbow has invested in odour control systems at the Worcester, Rustenburg and Hammarsdale processing plants.

While there is currently no legislation governing vehicle emissions, the Group and especially Vector is conscious of this impact on the environment and as a result all vehicles are maintained and replaced on a regular basis to minimise both emissions and diesel fuel wastage.

Carbon disclosure

In the 2010 Carbon Disclosure Leadership Index, the Group achieved 84% and joint seventh position in the SA top 100 companies. Due to a recent reduction in market capitalisation, the Group was not included in the 2011, 2012 and 2013 samples, however, RCL continues to participate in Remgro’s submission of the Carbon Disclosure Project (CDP) by providing information on its greenhouse gas emissions.

Carbon footprint trends

Carbon footprint trend data illustrates our progress with regard to emissions reduction strategies. The graph below shows the carbon footprint for 2011 to 2013. Scope 1 emissions declined by 6,4% from 2011 to 2012 as a result of a reduction in direct fuel consumption mainly through improved efficiencies in coal boilers. The increase in Scope 1 emissions from 2012 to 2013 by 29% was due to the addition of operational capacity at Bushvalley and a change from LPG to coal heating at a number of broiler farms. Scope 2 emissions increased by 4,9% from 2011 to 2012 as a result of additional cold storage infrastructure constructed and leased as part of the distribution network expansion and declined by 1% in 2013 due to efficiency initiatives. Scope 3 emissions remained fairly constant from 2011 to 2013.

While the absolute carbon footprint increased by 8% from 2011 to 2013, carbon emissions per ton of product sold reduced from 0,68 tCO2

in 2011 to 0,58 tCO2 in 2013. The annual footprints and tCO2/ton processed for sales are summarised in the graph below.

CO2 intensity (tCO2e/ton processed for sales)

2011 2012 2013

Carbon footprint by Scope (tCO2e)

2011 2012 2013

350 000

300 000

250 000

200 000

150 000

100 000

50 000

0

0,80

0,70

0,60

0,50

0,40

0,30

0,20

0,10

0

Scope 1 Scope 2 Scope 3



greenhouse gas emission reduction goals and targets

Emission reduction action plans, goals and targets are valuable as they illustrate RCL’s plans to reduce emissions. Performance tracking highlights progress with regard to targets. The table below shows RCL’s action plans, targets and performance.

CARBOn EMISSIOn, WAtER REDuCtIOn AnD PACKAgIng tARgEtS

Action planslong-term reduction targets 2013 targets

Performance (2012 versus 2011) 2014 targets

CA

RB

On

EM

ISS

IOn

S

Manage Group sustainability report and carbon disclosure project

Measurement systems to be in place measuring at least Scope 1 and Scope 2 carbon emissions in all areas of the Group

Participate in CDP Participated in CDP as part of Remgro submission

Participate in CDP

Add specific carbon reduction targets to Group divisional SIA’s and monitor monthly

As of 2010, reduce carbon emissions by 34% by 2020

Reduce emissions by 5%

Compared to the 2010 base year RCL has: •Reducedemissions

by 0,4% in 2011 •Increasedemissions

by 1,5% in 2012

Reduce emissions intensity per ton produced by 5%

Improve monitoring and management

Undergo energy efficiency assessments

Consider energy efficient equipment upgrades

Co-ordinate and manageenergy consumption reduction projects

As of 2010, reduce grid generated electricity by 30% by 2020

Reduce electricity by 5%

kWh consumption (includes Vector) increased by 3% due to operational growth

Reduce electricity per ton produced by 5%

Compared to the 2010 base year, by 2020 we aim to reduce use of fossil fuels by 10%

Reduce gas and coal use per ton produced by 5%

Coal consumption increased by 3%

Reduce coal consumption per ton produced by 5%

LPG consumption increased by 3%

Reduce LPG consumption per ton delivered by 5%

Compared to the 2010 base year, by 2020 we aim to reduce vehicle emissions by 20% and increase vehicle fuel economy by 20%

Reduce diesel consumption per ton delivered by 5%

Tracking of diesel consumption started in 2012

Reduce diesel consumption per ton delivered by 3%

Study feasibility of co-generation projects (Waste-To Energy, PV Solar and Wind) and re-define payback model

As of 2010, reduce grid generated electricity by 30% by 2020

Identify feasible renewable energy sources

A number of technologies considered

Roll out one renewable energy pilot project

WA

tE

R u

SA

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Add specific water reduction targets to Group divisional SIAs and monitor monthly

Reduce processing water usage to 8ℓ per bird

Reduce ℓ/bird for entire supply chain by 1ℓ

Water consumption increased by 4%

Reduce ℓ/bird by 5% in each area of Rainbow’s business

Co-ordinate and manage water consumption reduction projectsImplement water-efficiency projects where feasible

PAC

KA

gIn

g

Automate packaging baseline calculations

Consider sustainable packaging alternatives for new product development using a scorecard

Co-ordinate, manage and implement fit-for-purpose packaging with less negative impact on the environment

As of 2013, reduce food waste by 30%

As of 2013, reduce packaging related carbon emissions by 5%

As of 2013, reduce waste to landfill by 10%

Obtain Board approval for the packaging sustainability strategy and targets

formalised performance measure commenced in 2013

Set plant based targets to reduceindividualquickfrozen(IQf) split bag returns by 15%

Audit vienna packaging to reduce related returns by 25%Implement packaging projects to affect and absolute reduction in packaging weight within our system

Through the achievement of the above targets, affect in overall product and packaging waste to landfill


Employees

The Group recognises the importance of its people in attaining sustained business performance. Human resource policies and operational strategies, which include an understanding of national imperatives and relevant legislation, have been implemented across the Group. This provides a platform for building a community of inspirational people who have a common purpose. Specific focus areas include:

Key area Business response

Human capital •TheGroupfirmlybelievesthatsustainabilityissynonymouswithachievinglong-termhumancapitaldevelopment and corporate social responsibility objectives. The “Good to Great” journey process has again been effective in developing the business leadership and achieving alignment with the respective strategies

Talent •Attractingandretainingtalent,supportedbyleadershipandtalentmanagementprogrammes,iskeytotransforming the organisation from “Good to Great”

•Underpinningthisareindividualdevelopmentplansandsoundsuccessionplanswhichensurethathighpotential employees are recognised and prepared for the future

•Aspartofthetalentmanagementprocess,peopledevelopmentsystemsandprocesseshavebeenenhanced with greater emphasis on the integration of the 2015 Employment Equity objectives. The Leadership Standards and Behaviours have been rolled out across the business, promoting behaviours that ensure every manager is accountable for sustainable delivery. Employees are also able to access specific training within defined learning pathways, such as leadership and professional skills

Employee relations •TheGroupacknowledgestherightofallitsemployeestofreedomofassociation,andactivelydrivesbestmanagement practices in all its operations in order to create a work environment conducive to productivity, participation and organisational stability

•Throughconstructiverecognitionagreements,theGrouphasasignificantbargainingunit,with74%ofits employees within the bargaining unit, and for whom the recognised trade unions negotiate annually their salaries and conditions of employment. To ensure proper communication and engagement with the recognised trade unions, our social partners and various trade union regional and site based employee representative forums are in place to facilitate information sharing and consultation

•Inordertoensureequitableandfairworkingconditions,theGrouphaswelldevelopeddisciplinaryandgrievance policies and procedures. These policies and procedures are communicated to all employees during their induction, through training, on the intranet and through ongoing communication of the Group’s standards policies and procedures

Remuneration •TheGroup’sphilosophyistorewardforperformancethatachievestheorganisation’sobjectives.Competitive remuneration packages are structured in order to attract, reward and retain the talent needed to achieve the strategic goals. Salaries are reviewed annually

•TheGroupcontinuallyreviewsitsrewardandremunerationpoliciesandstrategyinlinewithindustrybest practice. By doing this, an effective and equitable compensation practice across the organisation is maintained

Resourcing Resourcing scarce and critical skills has continued to prove challenging, especially within specific geographies.

The Group has focused on improving resourcing strategy and practices by:

•Enhancingtheuseofpsychometrictoolsinaidingtherecruitmentdecision

•ImprovingtheuseofresourcingperformanceindicatorsaspartofanintegratedHRdashboard

•Leveragingtechnologyandmaximisinguseofane-recruitmentportal

•Effectivemanagementofresourcingserviceprovidersandservicelevelagreements

•Maximisingtheeffectivenessofmediaadvertisingchannelsforresourcing

•Growingthebursaryandgraduateentrychannels;and

•Emphasisonemploymentequity(EE)appointments

By acknowledging that no resourcing strategy operates in isolation, but rather is integrated into the overall HR strategy and policy framework, the following key activities have been implemented:

•CentralisationofmanagementrecruitmentacrosstheGroup,streamliningtheprocess,creatingconsistencyin regard to best practices, creating a positive experience for applicants

•ContinuedfocusonAfrican,ColouredandIndian(ACI)recruitsatmanagementlevel

•Developmentofprofessionalrecruitmentskillsamongsthumanresourcesandlinemanagementteams

•GloballyrecognisedbehaviouraleventinterviewingprocesseshavebeenrolledouttomanagerswithintheGroup to equip them with the skills they need to deliver the resourcing strategy and partner with recruitment to find the best talent for their teams; and

•BuildarecruitmentnetworktoenhanceRCL’semployerbrandinthemarketplace

Social sustainability practices


Key area Business response

Employment equity •RCLisanequalopportunityemployercommittedtoapolicyofemploymentequity.Progresstowardsachieving the Group’s workforce diversity objectives is measured through Group targets and monthly progress reporting

•Thereisaprocessofiterativeconsultationandengagementwiththebusiness’semploymentequitycommittees to ensure that the Group delivers against its employment equity plan for 2015

•Continuousengagementandconsultationwiththeregionalemploymentequitycommitteesforallissuesrelating to workplace diversity

•Theintegratedbusinesstransformationor“journey”processpreviouslyrolledouttomanagementwithinthebusiness has been further rolled down to all employees at all levels within the organisation. This provides the opportunity for all employees to connect with and relate to fellow employees from many different cultures, backgrounds and genders, and encourages employees to view each other as unique individuals

Staff healthand safety

•AnationalhealthandsafetypolicyhasbeenadoptedbytheBoardwhichcommitsalloperationsandfacilities to the provision and maintenance of a working environment that is healthy and safe

•Seniormanagersinvestigatelosttimeinjuriesanddetermineactionstopreventarecurrenceofincidents

•Riskmanagementaudits(bothinternalandexternal)andhealthandsafetykeyperformanceindicatorsarekey elements in evaluating performance

•Healthandsafetyregistersarespecificallydesignedtohighlightandaddressanylegalissues

•Occupationalhealthcareinfrastructurewithaccreditedserviceproviderstoprovidebestpractice

•Healthandsafetyrisksaremitigatedbyhaving:

– Dedicated risk control personnel in each operation

– Health and Safety Committees in each operation consisting of elected health and safety representatives, workers’ union representatives and management, who meet on a monthly basis to address risks

– Occupational health and safety risk identification and assessment

– Policies and procedures on how to mitigate each of the risks, in addition to ensuring compliance with all legislation

– Centralised reporting and monitoring of all issues and incidents; and

– Training programmes for all employees in all aspects of health and safety, ensuring appropriate understanding, accountability and responsibility for health and safety

•DisablingIncidentFrequencyRate(DIFR)relatestothenumberofdisablingincidentsper200000man-hours worked. A disabling incident is defined as any incident in which an employee is booked off work for more than a shift following the incident. The DIfR for 2013 was 1,7

Employee wellnessand HIV/AIDS

•TheGroupiscommittedtoprovideemployeewellnessprogrammesthatensurethatitsemployeeshaveaccess to support initiatives that focus on health and wellness, alcohol and substance abuse and HIV/AIDS. The Group’s HIV/AIDS policy guides the business in the management of HIV/AIDS, placing emphasis on education and peer education, prevention, voluntary counselling and testing

•AspartofHumanResourcesstrategytodelivervitalityandemployeewellness,aNationalWellnessDaywasheld on 30 November with specific emphasis on providing assessment facilities in order to create awareness around various health and wellness issues and to empower employees to take responsibility for their health status

•TheGroupengagestheservicesofCarewaysandpartnerswithLifeOccupationalHealthandOccuwelltoensure that the Group delivers professional onsite service in many of the operations


group employment equity statistics (excludes Foodcorp)

As described above the Group is committed to employment equity. The employment equity statistics of the Group are illustrated below.

Employment equity statistics

Employees African Indian Coloured White totalas at 30 June 2013 M F M F M F M F M F total

Executive directors 1 0 1 0 0 0 14 1 16 1 17Senior managers 9 3 6 3 0 0 52 8 67 14 81Middle managers 23 7 28 7 10 7 89 46 150 67 217

Total management (number) 33 10 35 10 10 7 155 55 233 82 315Total management (%) 10 3 11 3 3 2 49 17 74 26 100Senior supervisory staff 256 110 120 67 116 48 174 138 666 363 1 029Other 2 974 1 819 117 64 764 637 37 84 3 892 2 604 6 496

Total (number) 3 263 1 939 272 141 890 692 366 277 4 791 3 049 7 840

Total (%) 42 25 3 2 11 9 5 4 61 39 100

Employees African Indian Coloured White Totalas at 30 June 2012 M f M f M f M f M f Total


Total management (number) 26 12 27 10 11 4 163 54 227 80 307Total management (%) 8 4 9 3 4 1 53 18 74 26 100Senior supervisory staff 241 95 112 62 112 46 174 138 639 341 980Other 2 987 1 904 110 53 772 710 28 91 3 897 2 758 6 655

Total (number) 3 254 2 011 249 125 895 760 365 283 4 763 3 179 7 942

Total (%) 41 24 3 2 11 10 5 4 60 40 100

Employee reconciliationEmployees as at 30 June 2013 2012

Employees at the beginning of the year 7 942 8 008Add:Recruitment 696 837Less:Deaths (56) (54)Discharges (372) (442)Disabilities (7) (9)Resignations (280) (298)Retirements (83) (100)

Employees at the end of the year 7 840 7 942

Social sustainability practices continued


group employment equity statistics (excludes Foodcorp)

As described above the Group is committed to employment equity. The employment equity statistics of the Group are illustrated below.

Employment equity statistics

Employees African Indian Coloured White totalas at 30 June 2013 M F M F M F M F M F total


Total management (number) 33 10 35 10 10 7 155 55 233 82 315Total management (%) 10 3 11 3 3 2 49 17 74 26 100Senior supervisory staff 256 110 120 67 116 48 174 138 666 363 1 029Other 2 974 1 819 117 64 764 637 37 84 3 892 2 604 6 496

Total (number) 3 263 1 939 272 141 890 692 366 277 4 791 3 049 7 840

Total (%) 42 25 3 2 11 9 5 4 61 39 100

Employees African Indian Coloured White Totalas at 30 June 2012 M f M f M f M f M f Total


Total management (number) 26 12 27 10 11 4 163 54 227 80 307Total management (%) 8 4 9 3 4 1 53 18 74 26 100Senior supervisory staff 241 95 112 62 112 46 174 138 639 341 980Other 2 987 1 904 110 53 772 710 28 91 3 897 2 758 6 655

Total (number) 3 254 2 011 249 125 895 760 365 283 4 763 3 179 7 942

Total (%) 41 24 3 2 11 10 5 4 60 40 100

Employee reconciliationEmployees as at 30 June 2013 2012

Employees at the beginning of the year 7 942 8 008Add:Recruitment 696 837Less:Deaths (56) (54)Discharges (372) (442)Disabilities (7) (9)Resignations (280) (298)Retirements (83) (100)

Employees at the end of the year 7 840 7 942

training information (excludes Foodcorp)The Group’s employee training and skills development spend was as follows:

training period African Indian Coloured White total1 July 2012 to 30 June 2013 M F M F M F M F M F total

training courses completedABET 15 1 1 0 8 1 0 0 24 2 26Specific skills 2 934 1 684 298 179 906 495 599 418 4 737 2 776 7 513SHEQ 3 293 1 855 186 84 1 047 1 330 234 86 4 760 3 355 8 115Other 275 107 22 11 224 118 47 37 568 273 841

Total courses completed 6 517 3 647 507 274 2 185 1 944 880 541 10 089 6 406 16 495

Total spend (Rm) excluding skills levy 14

training period African Indian Coloured White Total1 July 2011 to 30 June 2012 M f M f M f M f M f Total

training courses completedABET 4 0 1 0 23 2 0 0 28 2 30Specific skills 2 934 1 684 298 179 906 495 599 418 4 737 2 776 7 513SHEQ 3 293 1 855 186 84 1 047 1 330 234 86 4 760 3 355 8 115Other 275 107 22 11 224 118 47 37 568 273 841

Total courses completed 6 506 3 646 507 274 2 200 1 945 880 541 10 093 6 406 16 499

Total spend (Rm) excluding skills levy 15


Rainbow has active representation on or interaction with the following industry bodies:

Animal Feed Manufacturers Association (AFMA)

Rainbow is involved in AfMA with representatives serving on the AfMA Board of Directors. Quarterly board meetings are held with the intention on improving the quality and impact of feed manufacturing companies in South Africa and handling any issues that affect or may affect the industry and its associated members. There is special focus on food and feed safety. The Board is made up of senior members from the feed milling industry and includes the major players as well as some of the smaller companies. Various sub-committees have been set up to proactively handle various issues and topics with regards to technical, trade, training and other issues. Representatives from Rainbow serve on these committees and meet on a regular basis to debate and give recommendations on various topics.

the South African Poultry Association (SAPA)

Animal Welfare Sub-committeeA Rainbow representative sits on the Animal Welfare Committee and has drafted a document on “Culling of adult breeders on a farm during the grow-out period” and “Action to take in the event of emergency during transportation of chickens”.

SAPA Food Safety CommitteeRainbow is represented on this sub-committee where issues with regards to food safety where discussed during the year. formulation of industry regulation of independent meat inspection and flavour enhancement is in progress. furthermore, the SAPA code of practice, auditing system/body for industry, and cold chain code of practice were contributed to.

South African Veterinary Council (SAVC)

Rainbow’s national veterinarian is actively involved with setting board examination question papers (Poultry Diseases and Management) for veterinarians who qualified outside South Africa and wish to register with the SAVC in order to practise in South Africa.

Institute of Packaging South Africa (IPSA)

IPSA is a non-profit organisation dedicated to the development of the art and science of packaging in South Africa. It represents the interests of its members in this country. IPSA is a full member of the World Packaging Organisation (WPO). Rainbow’s Packaging Development Manager is a full IPSA member and attends speaker evenings, workshops, seminars, conferences, and annual general meetings. Membership provides access to information from WPO and global best practices.

Packaging Council of South Africa (PACSA)

This voluntary industry body has members in three broad categories: converters; who are the revenue generators in the industry, associates or raw material suppliers and affiliates; being customers and major recyclers. PACSA represents views of its members on national issues with particular focus on environmental matters.

Plastics Federation of South Africa (PFSA)

The federation members represent all sectors of the SA plastics industry including polymer producers and importers, converters, machine suppliers and recyclers. The federation provides industry training and drives the Plastics Industry Environmental initiative. Membership of PfSA ensures alignment of Rainbow’s Packaging research and development focus with that of the industry. for example, PfSA put out a formal statement supporting recycling and discouraging biodegradable packaging solutions which Rainbow has followed. In addition, Rainbow is keeping a close eye on the developments around the topical PVC debates in the industry.

Polystyrene Packaging Council of South Africa (PSPC)

PSPC focuses their priorities on promoting the sustainable development of their products. Their activities are intended to assist the producers, customer and ultimate users. They educate and communicate whilst supporting activities that improve the industry in a generic manner (such as recycling, waste to energy, marine research, etc.). Being a PSPC associate member, Rainbow’s Packaging Development Manager attends AGMs, is included in their electronic newsletter, is able to network with other industry players and is able to be part of maximising the recycling of polystyrene in SA as part of Rainbow’s extended producer responsibility.

Consumer goods Council of South Africa (CgCSA)

CGCSA is a member organisation that acts as the representative body of the entire consumer goods industry. Established in 2002, RCL is one of 12 000 member companies, large and small, across the consumer goods value chain – including the retail, wholesale and manufacturing sectors. The CGCSA facilitates engagement between stakeholders in the industry, and they represent the interests of the industry to the government and other relevant parties.

Durban Business Sustainability Forum (DBSF)

RCL’s Sustainability Manager and Rainbow’s Packaging Development Manager regularly join this group of Sustainability Professionals to discuss current issues of corporate sustainability and to learn how changes made now will determine how well social, environmental and economic issues are balanced in the future.

Cambridge Sustainablity network (CSn)

RCL joined an international network of sustainability leaders formed by Cambridge Programme for Sustainable Leadership (CPSL) from across the world from all sectors and regions, representing business, the public sector and civil society to share knowledge, foster co-operation and to achieve real change by a range of means.

Participation in Industry bodies


Business partners

Our customers are managed by multi-disciplinary teams of staff, from sales and marketing; new product development; safety, health, environment and quality (SHEQ); engineering and finance, who ensure that our relationships with these parties are managed in the most efficient, professional and ethical manner. Rainbow is committed to ethical and non-collusive business practices.

Independent accredited auditors conduct customer announced and unannounced audits at all processing facilities to verify compliance to food safety, product specifications and quality. Customer audits include, but are not limited to compliance to the following customers’ requirements:

• KFC

• Nando’s

• Steers

• Wimpy

• PicknPay

• Woolworths

• SPAR

Animal welfare audits are conducted by independent accredited auditors throughout our agriculture discipline to verify compliance to animal welfare requirements.

Regulators and compliance As a participant in the food industry, Rainbow complies with the strictest standards and continuous monitoring by internal and external parties ensures that these standards are adhered to. There were no incidents of non-compliance, prosecution or fines during the review period.

Key area What do we do?

Total Integrated Management System (TIMS) manages risks associated with feed safety, flock health and flock welfare, food safety, product quality, consumer safety and adherence to specifications, service delivery, effect on the environment, and occupational health and safety

•InternationalStandardsOrganisation(ISO)principlesareembeddedintheTIMSacross the supply chain (from “farm to fork”) to exceed customer satisfaction, to build customer trust, to reap commercial benefits and to drive sustainability in a changing environment

•ReviewedbyExecutiveManagementannuallytodeterminesuitabilityandeffectiveness

•Variousskillsdevelopmentandcommunicationstrategiestoensureemployeeawareness

•Internalandexternalauditsbyindependentauditbodiesverifycompliancetofeedsafety, quality and legal requirements

•Contingencyprogrammes,plannedpreventativemaintenanceprogrammesanddisaster recovery programmes are maintained and tested across the supply chain

•Maintenanceofintegrityofthecoldchainismanagedbydistributioncentreswithsatellite hubs, as well as primary and secondary distribution fleets

•Anyproductthatisidentifiedasbeingchallengedwithinthecoldchainisisolated,tested and destroyed if necessary

Regulatory bodies •StateVeterinariansandHealthInspectorsconcernedwithconsumerprotectionhave 24 hours a day, 7 days a week access to our processing plants to verify legal compliance against the Meat Safety Act No 40 of 2000, and the Agricultural Product Standards Act

Management systems •SucceededintheimplementationandcertificationofspecificISOManagementSystems as planned (refer to table on page 21)

•Externalauditsareperformedtoverifycompliance


Consumers are becoming increasingly proactive with regard to issues such as health and safety, farming practices, animal welfare, product safety, product labelling and evironmentally responsible products. The Group regards these issues as critical to its business and addresses them in a variety of ways.

Stake-holder concerns Business response

Product qualityand safety

The Group demonstrates its commitment to product quality and safety through:•Appointingcertifiedmeatinspectors,processingandengineeringpersonneltoensuresafeproductswhichcomplywith

defined specifications•AppointingSafetyHealthEnvironmentQuality(SHEQ)teamstoverifyprocessing,foodsafety,legalandquality

compliance by conducting audits•AdoptingTotalIntegratedManagementSystem(TIMS)toolswhichareusedtomonitor,trend,verify,validateandreport

facility standards, equipment standards, processes and activities that impact on processing performance, food safety and product quality

•Coldchainmaintenanceduringprocessing,warehousingandtransport•Ensuringthatrawmaterials,ingredientsandpackagingmaterialsaretraceablewithmockrecallsbeingconducted•CompliancewithISO22000

Labelling •TheGroupiscommittedtoadheringtolabellingregulations•ConformstotheregulationsintheFoodstuffs,CosmeticsandDisinfectantsAct,No154of1972,andcompliancewith

regulation R146 was completed in March 2012•SupportstheConsumerGoodsCouncilofSouthAfrica(CGCSA)andGlobalStandards(GS1)inlistingofallproducts

with GS1•LabellingofallsaleableunitswithEAN-13barcodesandcartonswithITF-14barcodes•Cartonlabelsreflectproductionbatchnumber,casenumber,productiondateandsell-bydate•Suppliersofpackagingmaterialwithpre-printedbarcodesareobligedtocomplywithGS1standards

farming practices

The Group subscribes to the British Poultry Council’s Assured Chicken Production Programme that sets the highest standards for the nutrition and welfare of poultry

Animal welfare

Animal welfare audits are conducted by independent accredited auditors throughout our agriculture discipline to verify compliance to animal welfare requirements

Bird housing

•Birdsarerearedinenvironmentallycontrolledhousesortemperaturecontrolledandventilatedopen-sidedhouses•Birdsareabletoroamaroundwithfreeaccesstofeedandwaterwithinthehouses•ByhousingthebirdstheGroupmitigatestheriskofthebirdscomingintocontactwithanywildbirdsandtheirfaeces,

both of which could be carriers of disease•Stockingdensityofeachhouseonafarmisdeterminedbythefloorspaceofthehouseandtheequipmentwithinthehouse•Accesstoallfarmsandhousesareregulatedbystrictbio-securitymeasuresthatinclude: – Use of security personnel to control access to farms – fences around all farms and chicken houses – Personnel shower on entry and exit and wear company garments and gumboots – footbaths are present at all doors to houses

Feed •FeedrawmaterialsarecontrolledbytheFertilizers,FarmFeeds,AgriculturalRemediesandStockRemediesAct, No 36 of 1947

•Feedrawmaterialsaremainlymaizeandsoyabasedingredientswithvitaminsandproteinsaddedtoensurethedevelopment of healthy flocks

•Feedformulationsarespecifiedbyinternalnutritionists•Rawmaterialsforfeedaresuppliedbyreputableaccreditedsuppliersonly.Newmaterialsarefullytestedpriorto

being approved for use. Internal raw material analysis verifies the Certification of Analysis (COAs) or Certification of Conformance (COCs) submitted by suppliers with each batch of raw materials delivered to the feed mills. Raw material microbial status is verified for each batch and salmonella-free feed is supplied. Raw material traceability is tested by conducting mock recalls

Animal health and safety

•FlocktreatmentiscontrolledbytheMedicinesandRelatedSubstancesControlAct,No101of1965•Medication,dosagesandmethodofapplicationmayonlybeprescribedbyGroupveterinariansandwithdrawalperiods

are strictly monitored•TheGroupmaintainsa“humanlist”ofmedicinestoeliminateuseofhumanmedicinesforflockhealthtoprotect

consumer health•Notifiablediseasemanagementteamsensuremaintenanceandverificationofthenotifiablediseasepreventionand

action programme•Animalwelfareauditsareconducted•SPCAregularlyinspectstheprocessingplantstoensurethattheprocessesandpracticesarehumane

Halaal status

•ChickensareslaughteredbyHalaalslaughterersandallingredientsusedforRainbowbrandshaveHalaalstatus•InspectorsfromtheSouthAfricanNationalHalaalAuthority(SANHA)andfromtheMuslimJudicialCouncil(MJC)ensure

that all practices are in accordance with Halaal standards

Consumer insight

•MarketingandproductdevelopmentteamsensurethattheGroupdevelopsandmarketscompetitivebrandsatcompetitive prices

•TheGroupkeepsabreastofnationalandinternationaltrends,throughresearchandconsumerinteractionswithinavariety of target markets

Consumers


Consumer complaints

The Group continuously engages with consumers through the following:

• Nationalcomplaintssystem

• TheRainbowwebsite

• Consumerimmersions

• Consumercareline

• Advertisingcampaignsintheprintandmedia;and

• Consumerproductsurveys.

The national complaint system provides a care line for all Rainbow products. All details are centrally logged and emails are forwarded daily to the national complaints department where dedicated personnel manage all complaints. Personal contact with customers and consumers, response time and actions taken to prevent the same problems from occurring again, are key to the success achieved thus far with the care line. The information is communicated to all relevant teams for action and presented to executive management at the national management review. In 2013, the Group responded to 99% of complaints within 48 hours.

Through these avenues the Group receives feedback from consumers and customers, covering complaints, queries and compliments.

ISO management systems

As a participant in the food industry, the Group complies with the strictest standards and continuous monitoring by internal and external parties ensures that these standards are adhered to. International Standards Organisation (ISO) principles are therefore embedded in the TIMS across the supply chain to ensure customer satisfaction, to build customer trust, to reap commercial benefits and to drive sustainability in a changing environment

The Group has implemented the following ISO Management Systems:

ISO Operation

ISO 22000 National Office, further processing plants, Hammarsdale, Rustenburg and Worcester primary processing plants, agricultural operations, feed mills and distribution centres

ISO 9001 feed mills

ISO 14001 feed mills

ISO 14001* Agricultural operations, further processing plants, primary processing plants and distribution hubs

OHSAS 18001 Hammarsdale primary processing plant and feed mills

OHSAS 18001* Rustenburg and Worcester primary processing plants, further processing plants, distribution hubs and agricultural operations

ISO 17025 Laboratories

* In process of being implemented.


RCL, as a large food producer in South Africa, plays an important role in providing food to a large number of South Africans, thus playing an important role in feeding the nation. The Group believes it has a responsibility to assist in improving the lives of disadvantaged communities in the areas in which its businesses operate. RCL has therefore developed a Corporate Social Investment (CSI) policy which seeks to make a significant impact in the communities within which it operates. The focus areas of the Group CSI strategy includes:

• Education projects: Partnering with a non-profit organisation RCL is able to assist 350 underprivileged high school learners in grades 10 to 12 giving them access to extra tuition in Maths, Science and English. The Group has an established bursary programme aimed at the children of its employees and is able to provide a bursary to children with good academic results and potential, but without the financial means to achieve a tertiary qualification – the bursary programme has also been extended to the learners on the education project.

• Arts: RCL supports a developmental theatre as well as an annual musical production, giving high school learners the opportunity to experience working with professional directors and musicians.

• Feeding schemes: Across the Group companies focus on assisting homes, institutions and organisations with food.

• the youth: The Group, has projects (such as foodcorp’s involvement with the Soweto Canoe and Recreation Club and Rainbow’s support of the AmaZulu football Trust) which uses sport to uplift the youth.

• Employee involvement: RCL realises the value of involving employees in its CSI activities and as such has developed and implemented an employee participation programme that will address the needs of the employees in a holistic manner whilst also achieving its corporate objectives. The programme includes employee volunteering support, financial contributions to organisations and donations.

RCL can proudly say that, through its CSI endeavours, it is positively impacting the communities around which it operates and changing the lives of many South Africans.

AssuranceSustainability performance and reporting has not been independently assured for the year. The Board has relied on internal assurance providers with regard to the reliability of sustainability issues in the integrated report. Independent assurance will be included on the Board’s agenda for the 2014 financial year.

Corporate social investment


2013 2012Rm Rm

ECOnOMIC PERFORMAnCE InDICAtORSImpact on suppliersTotal paid to suppliers 8 057 5 971Total contracted spend# 1 935 1 659Major sources of suppliers#:– transport 436 460– total contract growers 166 173– BEE contract growers 59 45– electricity 285 233Impact on employeesTotal payroll and benefits 1 571 1 270Impact on providers of capitalTotal interest paid to funders 154 11Total dividends to ordinary shareholders 94 247Reserves (67) 20Impact on public sectorTax (excluding VAT) 75 143Impact on communitySocial responsibility expenditure# 4 4

EnVIROnMEntAl PERFORMAnCE InDICAtORS#

Water consumption (kℓ) 8 225 608 7 795 275Energy consumption– coal (tons) 47 860 25 789– gas (kℓ) 18 608 30 571– diesel (kℓ) 5 885 5 916Recycled waste products– cardboard waste (tons) 352 327– poultry litter (m3) 402 214 393 924– plastic waste (tons) 455 439– scrap metal and timber (tons) 654 546– treated water for recycling (kℓ) 2 340 960 2 368 833– treated water as a percentage of total water consumption (%) 29 30Non-compliance, prosecution and fines nil nil

SOCIAl PERFORMAnCE InDICAtORSfull-time employees 13 308 7 942Net full-time employment reduction# 102 66Bargaining unit employees# (%) 74 74Training expenditure# (Rm) 14 15Disabling incident frequency rate# 1,7 1,6

# Excludes Foodcorp.

Key statistics

Due to the nature of its activities, RCL has the potential to make a valuable contribution to sustainability through the management of direct and indirect impacts arising from the influence the business has on consumers and suppliers. Consumers and investors are increasingly expecting companies to demonstrate concern for their employees, to minimise the negative environmental impacts of their products, to acquire ethical performance of suppliers and to support communities in which they operate. RCL believes it makes sound business sense to embrace sustainability as a strategic issue and to proactively manage and report on our sustainability performance.

Conclusion

www.rainbowchicken.co.za

Documents

2013 Sustainability Report