The Empowerment Report, produced by Intellidex in partnership with Empowerdex and Independent Media, appeared in Business Report on 1 November. It is the authoritative ranking of all JSE-listed companies according to their black economic empowerment scores.
Every year we recognise those companies that have attained the highest rankings overall and in the various BEE subcategories, while also tracking industries operating under their sector codes. Since the revised 2013 Codes of Good Practice were implemented, we have run two sets of tables to cover companies that have converted as well as those still operating under the 2007 codes.
The BEE landscape has undergone numerous significant changes in the past year, some welcome, some controversial.
The most positive is the gazetting of a Mining Charter that appears to be acceptable to government and business. As with any industry, policy certainty is paramount. Without it, no major investment in the battered industry will take place.
Government has also introduced proposed legislation on a new scheme that is proving rather contentious. It plans to extend the BBBEE exemption that companies with annual turnover of below R50m enjoy to all companies with direct black ownership between 51% and 99%. They would be classified as level two contributors to BEE and would be exonerated from other empowerment requirements. Companies with 100% direct black ownership are automatically granted level one status.
The third initiative has been widely welcomed. The Youth Employment Services (YES) aims to create 1-million paid internships for black youth, with incentives for absorbing interns into full employment. Formulated by business, labour and government, it has the necessary support to be a success.
Another contentious issue has been bubbling quietly under the surface for some time now. The Broad-Based Black Economic Empowerment Commission insists that what should be classified as regular corporate social investment initiatives are being presented as BEE trusts or foundations and are incorrectly claiming BEE socioeconomic development scores for them. The commission argues that the intervention must assist historically disadvantaged people to become economically active. A mobile clinic for HIV treatment, for example, or donating blankets or shoes to schools cannot score a company BEE points because it is not making anyone economically active.
Critics argue that this is a misinterpretation, and that such trusts are recognized by the trade and industry department’s BEE codes and by the Mining Charter.
This could boil over: many companies have invested heavily in trusts that are doing important and good work in uplifting the impoverished and improving the quality of their education and health services, among others.
Click here for the full Empowerment Report, including the rankings.
Intellidex’s The Future of Energy, a 36-page full colour supplement, was distributed in Business Day on 30 October 2018. It assesses SA’s energy sector, focusing on the state of the renewable energy industry. This is the second publication produced by Intellidex on this sector. The first, Five Years of Renewable Energy, came out two years ago when the environment was dramatically different.
Then, excitement was in the air: a new industry was being developed, new businesses were starting up as a result, foreign companies were pouring investment into the country.
Pride was also prevalent. From a base of zero, 6,800MW of energy capacity had been procured through four bid windows, with a third of that already contributing to the grid. For the first time, significant amounts of power were being generated by independent producers. State utility Eskom still holds a strangling grip on SA’s energy sector, but a chink had been cleaved out of its monopoly.
The process had been conducted professionally by the Independent Power Producer (IPP) Office, a unit jointly set up by the energy department and National Treasury. Extremely strict security protocols and levels of efficiency that are not exactly the hallmarks of other governmental departments won the IPP Office high praise.
That, and the falling prices that resulted from the auction process in which IPPs bid for prices at which they will supply electricity to Eskom, produced the sincerest form of flattery: countries across the globe emulated the IPP Office’s processes.
Mike Peo, Nedbank’s infrastructure head, said at the time: “There’s no question about it: at every international conference on energy, SA is being widely acknowledged as having the most successful renewable energy programme ever undertaken.”
That first publication celebrated this success. It remains a remarkable achievement for a country beset by so many socioeconomic problems.
As we were going to print with it, however, there were already rumblings from discontented quarters. Eskom started raising various objections to signing the power purchase agreements with the IPPs from round four, confusing its own financial difficulties with the financing of the IPPs. Its objections, despite contradicting cabinet-level decisions, created serious delays. Compounding the issue was then-president Jacob Zuma’s nuclear ambitions and a belief that the IPPs somehow undermined them, stopped the industry’s development in its tracks.
Today, the renewable energy programme is back on track but the environment is starkly different.
Back then there was perhaps a naivety in the sense of achievement in that there was little understanding of the extent of damage a few corrupt people in powerful positions could cause in pursuing nefarious agendas. Today that awareness is acute, honed by the near death of SA’s renewables industry.
There is now a growing sense of confidence at having overcome those travails. Having been so close to the brink, things are up and running again. But there is cautiousness too; an awareness of how quickly things can change, of how close the industry came to being permanently stunted. The excited teenager has matured into more world-weary adult, albeit one whose confidence in its abilities has been honed by its past successes, both in developing an efficient industry and in overcoming its political struggle for survival.
“When we started with renewables we just jumped in and swam,” says Karén Breytenbach, who as head of the IPP Office has overseen the entire renewable energy process. “Now we know; we have learnt. We need to be ready for what is coming, not just jump in.”
Much of the credit for rejuvenating the renewables programme can go to Energy Minister Jeff Radebe. He wasted little time in getting Eskom to sign the round four procurement agreements with the IPPs, notwithstanding continuing resistance from the utility – which introduced an element of absurd hilarity. Last-minute court applications failed to stop the process but Eskom continued to prevaricate and delay, right up to the signing ceremony. First they said they had no mandate to sign, which was immediately dismissed as nonsense. Then they tried to renegotiate prices and were again rebuffed. Finally, at the signing ceremony, the appointed Eskom official shifted in his seat patting pockets, saying he couldn’t sign as he had no pen. The minister, with alacrity, produced one from his jacket pocket.
Those 27 round four projects, Radebe announced at the signing, will inject R56m of new investment into the economy, put downward pressure on the end price of electricity and provide 61,600 full-time jobs of which 95% are for South African citizens, mostly during the construction phase. The local community equity shareholding in the 27 projects amounts to 7.1% or R1.6bn-worth, and those shareholders are likely to receive R5.9bn in dividends over the 20-year lifespan of the projects. Another R9,8bn will be spent on socioeconomic development initiatives and R3.4bn on enterprise development over the 20-year contract periods.
Radebe’s next big achievement has been the publishing of the draft Integrated Resource Plan (IRP) 2018, again in the face of resistance, this time spearheaded by the National Union of Mineworkers. That maps a path for South Africa’s energy future and instils a sense of certainty in the industry. Investment decisions can be made accordingly.
The main focus of this publication is on the future of energy in SA. It’s an exciting time: the IRP opens the way for independent power producers within coal and gas, introducing new elements of competition for Eskom. Indeed, the future structure of Eskom is pivotal to the future shape of the industry, and we explore options that might improve operational efficiency and financial sustainability. And the renewables industry itself is ever-evolving, with technological advancements and falling costs making it a compelling solution to the ever-increasing urgency with which planet Earth has to address the consequences of global warming.
Click here for the full publication.
By Heidi Dietzsch
Unethical conduct in market research can have devastating consequences for research houses. Not only can it affect future business negatively, it can also destroy a good and carefully nurtured reputation. To say that ethics should be considered in every research project is a massive understatement.
Principles such as honesty, professionalism, fairness and confidentiality should be considered when market research is conducted. Ethically sound research considers the interests of the public, the respondents, the clients, the market research profession and those of the researcher.
Everybody involved in a research study needs to act in an ethical manner – from the researchers to the data processors and fieldworkers – and eventually also the clients and how they treat the data they receive. Ethical questions range from practical, narrowly defined issues such as researchers’ obligation to be honest with their clients; to broader social and philosophical questions, such as a company’s responsibility to preserve the environment and protect employee rights.
Researchers have two very important responsibilities when conducting a market research study. The first is to treat respondents fairly and the second is to deliver accurate and reliable data to clients.
Another important responsibility is to consider whether any type of harm could occur as part of a study. Researchers need to ensure that mechanisms are instituted to remove any potential harm.
Unfortunately, it is often far too easy for researchers to land themselves in ethical conundrums for which there are certainly no easy answers or solutions. Imagine the following scenario: You have been commissioned by a large bank to conduct a study on how people are handling their personal finances. One of the questions you need to ask is how people are supplementing their income. When you are asking this question during an in-depth interview, the respondent casually mentions that he is selling illegal drugs.
You now finding yourself in an uncomfortable and possibly illegal position of knowing far more than you want to know. Morally and legally you might need to report this crime, but simultaneously you have promised your respondent confidentiality in return for sharing sensitive information. What do you do?
The Protection of Personal Information Act (Popi) can also have far-reaching consequences for market researchers if they don’t comply to its regulations. This act aims to ensure that all South African institutions conduct themselves in a responsible manner when collecting, processing, storing and sharing another entity’s personal information. It generally seeks to protect people’s privacy, which is considered a fundamental human right.
Although Popi was signed into law on 26 November 2013, it is not yet effective as a commencement date has not been established. Once the date is confirmed, companies will have 12 months to comply.
Once respondents have given explicit consent that they will take part in a study, they must be informed on how their information will be used and whether it will be provided or sold to any third parties.
It is not acceptable under any circumstances to misrepresent or exaggerate market research results to support a marketing claim, company target or an executive’s view. Market researchers shouldn’t have a vested self-interest in the results and the results should be objective and driven by the data.
The term “sugging” stands for “selling under the guise of research”. This is an unethical practice that can seriously damage the validity of the market research industry. Information provided by respondents should never be used for lead generation, sales prospecting or any other direct sales effort. In the US there have been cases where complaints have been filed with the Federal Trade Commission against research companies that practiced sugging.
Similarly harmful is fugging – that’s “fundraising under the guise of research”. This unscrupulous practice occurs frequently in politics. For instance, respondents are called thinking they are participating in a political survey. Once they’ve answered some questions, they are confronted with a fund-raising pitch. Fugging is devious since the collected data are not used at all – the only objective is fundraising. This practice also makes it difficult for valid market researchers when they need to take the pulse of voters.
Another particularly sleazy method that sometimes masquerades as market research is push polling. Once again, respondents are under the impression that they are taking part in a political poll. The questions they are asked are skewed to one side of an issue or candidate, with the goal being to sway large numbers of voters. Push polling is so incompatible with authentic polling that the American Association for Public Opinion Research and the American Association of Political Consultants have denounced the practice.
There is a big responsibility on the shoulders of researchers to act ethically – they have a moral obligation to treat respondents respectfully and not to engage in deceiving or damaging practices. Respondents are the lifeblood of market research and if they are treated unjustly the industry will deteriorate. The public also depend on market research for information on products and services and when this information is skewed, a disservice is done to the public. Market research is a vital business solution – but it has repercussions – therefore, ethical standards are critical.