Enhancing Business-Community Relations
SABMiller Plc Case Study
by Jean Niyonzima1
September 2003
www.new-academy.ac.uk
www.aiccafrica.com
www.unv.org
‘Enhancing Business-Community Relations’ – SABMiller Plc Case Study, South Africa
Contents
1. Introduction....................................................................................................................................2
2. Company Profile ............................................................................................................................3
3. Corporate Citizenship Reporting .................................................................................................3
4. Challenges and Opportunities ......................................................................................................4
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‘Enhancing Business-Community Relations’ – SABMiller Plc Case Study, South Africa
SABMiller: Corporate Citizenship Reporting
Research Project Background
This case study is one of ten that were chosen as part of the ‘Enhancing Business-Community
Relations’ project in India implemented in collaboration with the African Institute of Corporate
Citizenship (AICC). These cases document examples of engagement between businesses and
communities and can be used as learning tools for the promotion of responsible business practice
and sustainable development.
The Enhancing Business-Community Relations project is a joint international initiative between
United Nations Volunteers (UNV) and the New Academy of Business. Implemented in seven
developing countries, the purpose of the initiative was to collect and document information on
business-community practices as perceived by all stakeholders, build partnerships with them and
promote corporate social responsibility practices. It is also intended to enhance international
understanding of business-community relations through information sharing and networking with
other countries especially those participating in the project - Brazil, Ghana, India, Nigeria,
Philippines, South Africa and Lebanon.
The findings and recommendations reflected in the case study are those of the author and do not
necessarily reflect those of UNV, AICC or the New Academy of Business. It is important to note
that these cases were written as examples of business-community initiatives. They do not constitute
a comprehensive assessment of the company’s social responsibility.
1. Introduction
With the rise of corporate citizenship theory and external demands from civil society organisations
and governments for greater corporate responsibility, transparency and accountability, companies
are increasingly under pressure to report on the sustainability of their activities. This demand is
furthermore amplified by the release of the South African King Commission Report II in 2001, the
Promotion of Access to Information Act 2 of 2000, and international initiatives, such as the United
Nations Global Compact and the Global Reporting Initiative’s Sustainability Reporting Guidelines.
Corporations have responded to these external pressures by producing a range of reports from
social to corporate citizenship reports as stand alone reports, and in the case of SABMiller plc, as a
companion document to its Annual Report. Although these reports vary in detail and quality, they
reflect a trend towards greater reporting on corporate social and environmental impacts. According
to a 2001 study by KPMG of sustainability reporting in South Africa, social and environmental
issues are the sustainability issues most often included in the companies’ mission statement (25%
and 22%).2
While some companies are responding primarily due to external factors, others have well thought
policies and strategies that also include their own values and economic purposes. This case study
explores the rationale and reporting mechanisms for SABMiller’s corporate accountability reports.
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‘Enhancing Business-Community Relations’ – SABMiller Plc Case Study, South Africa
2. Company Profile
SABMiller plc is an international brewing company committed to achieving sustained commercial
success, principally in beer and other beverages, but also with strategic investments in hotels and
gaming. South African Breweries (SAB) Ltd, the beer division of SABMiller plc in South Africa, is
the founder component of the group and has been operating since 1895. SABMiller plc has
extensive beverage interests in Africa, Central and Eastern Europe, Asia, North America and
Central America. By March 2002, SABMiller had a total of 108 core operational sites throughout
the world, of which seven are in South Africa.
SABMiller is the largest South African industrial company listed on the Johannesburg Stock
Exchange. However, its primary listing has been on the London Stock Exchange since 1999. It
acquired 100 percent of Miller Brewing Company in the United States and changed its name to
SABMiller plc in July 2002. SABMiller plc provides employment to 72, 835 people – including
employees of the Chinese joint venture (28, 082). In 2002, the total beverage sales volumes grew to
15.5 percent to just under 100 million hectolitres, which contributed to a turnover increase of 4.3
percent to US $ 4.4 billion, excluding figures from the Miller acquisition.
3. Corporate Citizenship Reporting
SABMiller produced its first corporate citizenship report in 1998 as South African Breweries.
According to the Chief Executive, EAG Mackay, the report was designed and continues to
supplement the standard annual report information and provide an account of the implementation
and development of SABMiller’s values. For the first time, the company’s social, economic and
environmental performances were reported to shareholders and other stakeholders. Since then, the
report has been produced annually and circulated to some 37, 000 stakeholders, including the
public.3
The reports vary in depth and scope. Each report reflects the thinking and performance of the
company at the time of its publication and is informed by the company’s values and guiding
principles. Prior to 1997, the company’s social investment aspects were done on an ad hoc basis
even though there were policies and management criteria in place. Since then, the company
undertook a review of its social responsibility programmes, which led to a complete redesign and
implementation of the systems and processes used and, subsequently the production of its first
accountability report. The process of integrating social and environmental performance entailed
further research into broader accountability and corporate social responsibility, a review of
company’s mission, values and principles, the establishment of a corporate accountability
department, formalising a new Board Committee responsible for overseeing Corporate
Accountability, a review of key performance indicators and finally the formulation of the new
Sustainable Development vision and strategy for the company.
It took a full five-year period before the company finalised systems to strengthen integration of
accountability into its various business agendas. Each year yielded a net improvement in the
previous year’s approach and progress was again communicated to stakeholders through a corporate
citizenship report.
The process of integrating accountability into SABMiller’s broader business agenda is managed by
the corporate accountability department, under the guidance of the Corporate Accountability and
Risk Assurance Committee (CARAC) – a sub-committee of the SABMiller plc Board. The
department was established in 1999 following the review of its first corporate citizenship report.
The first task for the department was to establish a framework and scope for reporting on a valuesbased system. The framework was approved in 2000, which paved the way for accountability
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‘Enhancing Business-Community Relations’ – SABMiller Plc Case Study, South Africa
implementation. To operationalise the new
values, the CARAC was established to
communicate the vision at all levels of the
company. This resulted in the revision and
formulation of new vision, mission, values
and guiding principles noted above. From
1998, the existing company values and code
of conduct were streamlined to a solid eightpoint value set and supporting guiding
principles. Initially, the company values were
split into five sections: SAB code of conduct,
personal code, equity, and competition and
core values. However, as the company grew
internationally, there was a need to review
these values and align them with the overall
business strategy and growth of the company,
taking into account issues of international
expansion and globalisation.
Attestation Statement
‘We have been asked to provide an external
commentary on SAB's 2002 Corporate
Accountability Report. Our remit is as
specialist advisers to international
corporations that seek to improve their
economic, social and environmental
performance as good corporate citizens. We
have acted as consultants to SAB since 1999.
We have checked that the contents of this
report are consistent with data supplied by
operating companies or obtained from
audited financial statements. We have
assessed and received satisfactory
explanations about the appropriateness of
data trends, but we have not sought to verify
otherwise unaudited data.
With the framework in place and clear
In our opinion, the report presents a fair
targets and benchmarks established, the
account of progress being made to develop
company produced its fourth corporate
SAB's accountability systems and to live out
citizenship report in 2001 in the triple bottom
its Mission, Values and Guiding Principles.’
line format, based upon the Global Reporting
The Corporate Citizenship Company
Initiative Guidelines. The report also used
London, 21 June 2002
some elements of AA1000 and other
www.corporate-citizenship.co.uk
voluntary standards such as the UN Global
Compact, Commonwealth initiatives and the
Association of British Insurers. In March 2002, the company produced its fourth CSR report,
renamed as the Corporate Accountability Report. The report represents the company’s commitment
to seek best practice standards in social, environmental and economic reporting. According to
Graham Mackay, Chief Executive,
“This year, we’ve devoted great effort to a complete review of our business principles
and how they can be assessed though sustainability indicators.”
The company is known for that and is ranked number one in South Africa on sustainability
reporting.4 The sixth report will be available publicly at the end of June 2003. SABMiller’s reports
are of international standards and compare well with other international companies’ reports.
In a first ever survey of global sustainability reporting by a joint UNEP/SustainAbility project in
2001, SABMiller (then SAB) was ranked 20th in the world. The detailed rating was applied to 50
leading reports, selected from 200 reviewed. Based on the 2001 report, the company is now ranked
9th in the world. SABMiller received top scores in economic, social and ethical and was a leader in
the industry in management quality, including governance. The 2002 report was also verified by the
Corporate Citizenship Company (UK) who also provided an attestation statement to the report. See
the statement by Michael Tuffrey5 in the adjacent text box.
4. Challenges and Opportunities
Traditionally, SABMiller plc has been known for its social investment expenditure. The company
spent spend: US$ 14.9 million in 1998, US$ 13 million in 1999, US$ 12 million in 2000, US$ 9
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‘Enhancing Business-Community Relations’ – SABMiller Plc Case Study, South Africa
million in 2001, US$ 7 million in 2002 and US$13 million for the financial year 2003. However,
with the company‘s global expansion in USA, Europe, Asia and African markets, things are
changing rapidly and SABMiller has had to examine its corporate culture and ability to work in a
multi-cultural environment.
Differences in international policy regulations, global issues and the need to comply, constitute a
recipe and motivation for SABMiller to stay ahead of the race in social reporting. For example,
listing on the London Stock Exchange implies compliance with different regulatory and legislative
requirements including UK Company Law, which is currently under review and may lead to
mandatory social and environmental reporting. As such, it is not surprising that the first Corporate
Citizenship Report was published in 1998, a year before the listing on London Stock Exchange
(LSE). Although this might be seen as mere compliance with the LSE listing regulations, it provides
the South African public with a better picture of the company’s social performance and generates
internal pressure for SABMiller to deliver on its promise.
On the whole, there is a visible change from the quality, content and approaches to corporate
citizenship throughout the process. However, this needs to be translated into action. With a strong
process, the challenge for SABMiller is to set clear targets to drive up performance, especially for
social impact. The company has made considerable progress in environmental performance and is
doing well economically, but this did not yield any increase in social investments. The company’s
net social investment appears to be declining considering the inflation rate. However, it should be
noted that these amounts are reported in US dollars and not South African Rand, and the exchange
rates have been unstable in the last two years. The company’s corporate governance and
accountability process is inclusive and transparent. Internal reports are collated quarterly and
presented to the board half yearly, and external reports are produced annually and distributed to a
wide range of stakeholders (employees, shareholders and the public, among others). The reports
contain an attestation statement and since 2001, SABMiller reports received endorsements from
rating agencies.
This is encouraging, especially that one of the main conclusion from the KPMG sustainability
report survey is that sustainability disclosure in annual reports tends to be superficial, while those
that produce separate reports still need to find the balance on reporting economic, social and
environmental performance. The other challenge to SABMiller is to ensure compliance along the
supply chain and among subsidiaries. While the Headquarters has got systems and strategies in
place, different companies have different programs and culture depending on where they are. There
is a need to increase the capacity of the headquarters’ staff to promote the corporate citizenship
concept and practices among subsidiaries and to ensure consistency in approaches. The Corporate
Accountability Department has three members of staff at present. “SAB’s record is already a strong
one. Meeting the social challenge will make it stronger”- Michael Tuffrey of the Corporate
Citizenship Company commenting on the Accountability Report.
Finally, although accountability reporting is only one element of good sustainability performance,
experience shows that putting in place such a robust internal system necessary for producing
externally verifiable reports can serve as a significant catalyst for overall improved management of
non-financial issues. In general, sustainability reporting in South Africa is much less prevalent
when compared to trends in many Northern countries. Only 10% of top 100 companies in South
Africa issue social and environmental reports while reporting in developed countries ranges from
25% to 75%. However, this will change very soon as there are plans to introduce a Social
Responsible Investment Index on the Johannesburg Stock Exchange – of which SABMiller plc is a
member of its control group. It is therefore recommended that companies should (if they have not
yet done so) initiate such mechanisms internally. The lessons from SABMiller indicate that it
involves a long consultation process and companies should prepare themselves accordingly.
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‘Enhancing Business-Community Relations’ – SABMiller Plc Case Study, South Africa
References
SABMiller plc Corporate Accountability Report 2003 (Final Draft 11 June 2003.)
SAB plc, Corporate Accountability Report, 31 March 2002.
SAB plc, Corporate Citizenship Report, 31 March 2001.
SAB plc, Corporate Citizenship Report, 31 March 2000.
SAB plc, Annual Report 2002 and 2001.
KPMG Sustainability Services; KPMG Survey of Sustainability Reporting in South Africa, 2001.
www.sabmiller.com
Endnotes
1
The views expressed in this case study are those of the author and do not necessarily reflect those of the New
Academy of Business, UNV or AICC.
2
KPMG - Sustainability Reporting Survey in South Africa, 2001.
3
SABMiller is a Publicly Listed Company and therefore obliged in terms of the company law.
4
KPMG Sustainability Reporting Surveys, 2001.
5
Michael Tuffrey co-founded The Corporate Citizenship Company in 1997, having worked with business on its social
responsibility practices for a decade. A chartered accountant by profession, he also edits the international journal,
Corporate Citizenship Briefing.
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