Scope and boundary

The sustainability report forms part of the group’s integrated report.

The scope of the report includes all operating divisions and covers the reporting period 1 July 2015 to 30 June 2016. The audited annual financial statements were approved on 15 August 2016. The integrated report was approved for distribution on 7 October 2016 and includes reference to pertinent events subsequent to year-end, up to the approval date. The effective date of incorporation of the Steinhoff industrial assets was 2 April 2012. All non-financial data is for the full financial year as at
30 June 2016.

With the incorporation of the Steinhoff industrial assets into the group in
April 2012 it added a substantial number of businesses to the group that were previously governed by the policies and procedures of Steinhoff International Holdings Limited.

As part of the group’s sustainability strategy KAP is a participant and was a constituent of the JSE Limited’s Socially Responsible Investment (SRI) index.

Due to the scale and nature of the Steinhoff industrial assets that were incorporated into the group, the process of aligning the collection and reporting of sustainability data is well under way. It remains part of our journey to fully implement and improve processes of data collection and management throughout the group to provide information relevant and material to the group. Internal reporting structures will continuously be reviewed to support a structure that would best address the group’s strategy.

All references to KAP, the group, the company, the business, “our” and “we” refer to KAP Industrial Holdings Limited and its operating divisions.


The principle of materiality has been applied in determining the extent of disclosure with regard to reporting on sustainability aspects. The diversity of the group’s businesses influence how the materiality of sustainability aspects is determined and how such issues are addressed, with varying levels of materiality applicable at group level and at divisional level.

Decisions around materiality take into account the potential impact of risks and opportunities and the effect thereof on the divisions and stakeholders. This has resulted in more prominence of certain matters over others.


The board, assisted by the audit and risk committee, is ultimately responsible for overseeing the integrity of the integrated report. This is achieved through appropriate teams and structures that manage the reporting process.

A combined assurance approach, with Steinhoff International, will be developed in future to ensure the appropriate application of integrated reporting principles and the integrity of data contained in the report.

In certain divisions independent external assurance for specific application purposes is done to comply with, or retain certain levels of compliance, with regard to quality systems like ISO, etc.

Sustainability approach and strategy

Management and reporting

The group requires high standards of corporate responsibility at divisional and corporate level. Reporting lines are defined from divisional level to the board of KAP Industrial, ensuring that the divisional operations’ approach to sustainability and corporate governance is in line with group policies. However, the ultimate responsibility for retaining full and effective control rests with the KAP Industrial board of directors. Day-to-day management responsibility is placed with divisional management, their individual boards of directors and/or their executive teams. This allows these teams the freedom to manage their businesses to best align with group strategy and to implement and act with urgency.

Each division is responsible for developing its own sustainability strategy within the framework set by the group, while considering stakeholder needs and social and environmental obligations within their sphere of business. Group committees support the divisions with regard to risk management, environmental, social and ethical aspects. Facilities (mostly the operational sites of the divisions) must develop management systems that proactively and systematically address safety, health, environment and quality (SHEQ) risks, and strive to attain and maintain internationally recognised certification standards for these management systems.

Divisional management is charged with the responsibility of reporting on risks and opportunities and on social, ethical and environmental concerns. Risk reports are reviewed by the divisional boards/management boards/executive committees, and major risks identified are brought to the attention of the board. Any significant social, ethical or environmental (SEE) concerns will be brought to the attention of the Steinhoff International social and ethics committee. Material SEE risks will be reported to and reviewed by the board of KAP.

During the 2015/2016 period no material risks were reported that required additional or specific attention.

Internal reporting structures (taking into account the incorporation of the Steinhoff Industrial assets and all the KAP manufacturing businesses
pre-April 2012), have been fully aligned and will assist with improving the quality, timeliness and future assurance of sustainability data. Although it was believed that the 2012 data would be predominantly used for baseline purposes for the newly constituted group, to understand the group’s position and to put appropriate targets in place where applicable and material, this process is still ongoing.

As required by the Companies Act 71 of 2008, (the act), the group has constituted a social and ethics committee, which will report to the board of directors on all aspects as listed and described in the Act. The committee was formally constituted in November 2014 and is chaired by Ms Ipeleng Mkhari (independent non-executive director of KAP).

The constituted Steinhoff committee will focus on social and ethical concerns and will, as mandated:

  • address issues of sustainability for the group
  • provide strategic direction to the group on corporate
    responsibility matters with input from the divisional management teams; and
  • report to the board of directors on matters of sustainability

Policies, targets and performance

Responsibility for the implementation and compliance with policies lies with the chief executive officer or managing director of each division. Key policies, set by KAP Industrial, as well as Steinhoff International, that cover important social, environmental and business aspects, are in place. These are either addressed or used to guide divisional management with establishing their own policies. Policies are communicated periodically, as part of induction processes, are available on divisional intranets and are available on request.

At a minimum, compliance with the legislation of each country where the group is represented, need to be respected and adhered to. Additional industry-specific policies further direct divisional behaviour and management towards social and environmental issues where these are relevant.

Directives to set and achieve targets are endorsed at group level and mostly form part of management’s key performance areas (KPAs). These are managed within each division.

Great strides have been made within divisions and specifically within certain areas, where achieving and maintaining targets are a business imperative and not only
a reporting requirement.

Due to the diversity of the group and the specific challenges of each division, the group cannot establish specific group targets but will assist and guide the divisions with regard to their specific sustainability targets. Targets are set and managed at divisional level where applicable.

Management and reporting structure

Each division is encouraged to innovate and function in a way that is responsive, responsible and within the group’s centralised governance structures. The empowerment of divisional management and employees enhances and sustains the entrepreneurial culture that ultimately adds value to the group.

Decentralised management  structure

A decentralised structure supports the development and retention of expertise in a diversified group. Each division has specialised industry and market experience that enhances its ability to grow sustainable earnings.

Management teams have the autonomy to employ the appropriate people to implement group strategy in a way that best aligns with their businesses. Management teams are supported by human resources, risk, health and safety, corporate social investment and information technology committees that ensure legal, regulatory and best practice compliance across all operations.

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