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 2016 to 30 June 2017. The audited annual financial statements were approved on 14 August 2017. The integrated report was approved for distribution on 6 October 2017 and includes reference to pertinent events subsequent to year-end, up to the approval date.  All non-financial data is for the full financial year as at
30 June 2017.

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 was a constituent of the JSE Limited’s Socially Responsible Investment (SRI) index, and has achieved inclusion on the FTSE4Good Index (Read more).

It remains part of our journey to fully implement and improve processes of data collection and management throughout the group to provide information that is relevant and material. 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, has been developed 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 management 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 KAP social and ethics committee. Material SEE risks will be reported to and reviewed by the board of KAP.

During the 2016/2017 period no material risks were reported that required additional or specific attention.

Internal reporting structures are focused on improving the quality, timeliness and future assurance of sustainability data.

Social and ethics committee report

Good governance in all aspects of KAP’s businesses is non-negotiable. Systems and structures have been embedded across the group to ensure that the group conducts its operations in an ethical, responsible and sustainable manner.

The long history and recognition of the group’s brands are testament to the high standards set by KAP and its commitment to be, and to be seen as being, a good corporate citizen.

The board is assisted by the social and ethics committee (“the committee”) with its oversight of social and ethical matters across the group. The composition and duties of the committee are detailed in the corporate governance report, which is available on the Company’s website at, and are guided by formal terms of reference, which are aligned with the Companies Act, No. 71 of 2008, and the Companies Regulations 2001 (collectively ‘the Act”), as well as the Listing Requirements of the JSE Limited(“the JSE LRs”) and the recommendations of the King IV Report on Corporate Governance for South Africa 2016 (“King IV”).

The committee enjoys the support and co-operation of the KAP audit and risk committee, the KAP human resources and remuneration committee, the KAP executive committee (“Exco”) and the KAP BEE forum in exercising certain overlapping duties.

The role of the committee is to assist the board with the oversight of social and ethical matters relating to the group.

The overall objectives of the committee include the following:

To monitor KAP’s activities with regard to the duties that are attributed to it by the Act, the JSE LRs and King IV, with a specific focus on those duties stated in regulation 43(5) of the Act
and under King IV.

To draw matters within its mandate to the board as occasion requires.

The role of the board, assisted by the committee, is to ensure that policies, reporting and monitoring systems are in place across the group to allow for the timeous and accurate reporting of environmental, social and ethical concerns and, where required, the appropriate implementation of corrective action; all of such being fundamental to the sustainability of the group.

KAP’s commitment to maintaining its good corporate standing includes the following:

The establishment of dedicated teams at operational levels to ensure compliance with all rules, laws and other requirements relevant to the group’s operations.

The establishment of a code of ethics and supporting policies. The code of ethics can be viewed on the company’s website at

An ethics hotline has been put in place to provide employees and/or suppliers with a protected, anonymous facility to report unlawful or unethical behaviour. KAP follows a consistent approach in actively pursuing and prosecuting perpetrators of fraud or other illegal activities that may occur across its business operations.

A group communications policy prescribes responsible behaviour from employees on all digital platforms. The use of inappropriate language or hate speech will not be tolerated.

The adoption of policies on insider trading, pricesensitive information, the environment, corporate social investment and gender diversity at board level.

The formation of a KAP BEE forum to monitor KAP’s transformation progress.

Particular emphasis on the development of black female employees identified as having potential for progress within the group.

The group supports and implements international best practice from applying the UN Global Compact’s best principles on human rights to managing health and safety aspects.

The initiation of specific projects at operational level to add value to its businesses and stakeholders by working with the community.

In recognition of its approach to corporate governance, KAP has now been included in the FTSE4Good Index. (This index replaces the JSE Socially Responsible Investment (SRI) Index, on which KAP was previously included.) Ratings comprise an overall score based on underlying environmental, social and governance (ESG) exposure measures and performance scores built on individual indicator assessments. Only companies demonstrating good management of ESG issues are eligible for inclusion in the FTSE4Good Index.

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, 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.

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.

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.

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.

Responsibilities framework

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