Looking at our...Social and ethics committee report

DEAR STAKEHOLDERS

I am pleased to present the social and ethics committee (SEC) report for the year ended 30 June 2022 outlining how the committee discharged its responsibilities as set out in section 72 of the Companies Act, regulation 43 of the Companies Regulations issued in terms of the Companies Act and its terms of reference.

CLHG is committed to conducting its business:

• ethically; and
• within the framework of applicable laws, regulations, non-binding rules and recognised codes of good practice.

Our commitment to ethics is driven by the board, capably supported by management.

The code of ethics and business conduct (the code), which is made available upon induction and which can be found on the group's website, www.clhg.com applies to all directors and employees and holds them to the highest standards of ethical conduct.

Ongoing awareness around ethics promotes a better understanding on what are considered acceptable values and behaviour, and how they contribute to the group's ethical standing, reputation and integrity.

The group has a zero-tolerance approach to violations of the code and responds to contraventions through various measures including disciplinary, civil and/or criminal action, as well as effecting improvements to the control environment.

In addition to the internal reporting mechanisms that are in place, there are the following facilities:

• a 24 hour toll-free tip-off anonymous alert line, managed by Whistle Blower Proprietary Limited;
• secure email;
• WhatsApp;
• SMS;
• mail; and
• fax

through which stakeholders can anonymously and confidentially report purported unethical or corrupt behaviour. Details of the service are available on the group's website, www.clhg.com.

In total, 17 calls were logged during the year under review, eight of which were duplicates in that they related to the same issue at a specific hotel. All calls were investigated, and the majority were found to be internal grievances which were dealt with in accordance with the group's internal grievance procedure. Of the remaining calls, none indicated a material breach in the required standard of ethical behaviour. However, where the investigations highlighted the need to review and/or revise certain policies and/or procedures this was done and, where appropriate, revisions were implemented.

COMPOSITION

The SEC is constituted as a statutory committee of the board in terms of its responsibilities in terms of s 72(4) of the Companies Act and regulation 44 of the Companies regulations Act and as a committee of the board in respect of its social and ethical responsibilities.

It also performs the requisite statutory functions on behalf of the group subsidiary companies, thus ensuring our ethics practices are aligned and applied consistently.

The committee comprises one independent NED who serves as chairperson and two EDs. Executives whose areas of discipline fall within the remit of the SEC assist the committee in the discharge of its responsibilities, either through attendance at meetings to ensure the appropriate feedback is provided or to allow for debate on matters put forward to the committee or through the provision of the requisite material for consideration at meetings.

While the committee complies with the Companies Act's requirements regarding its constitution, it does not meet the King IV™ recommendation for a majority of the committee members to be non-executive directors. Future committee composition is under review by the remcom. No changes were effected to the SEC's composition during the year under review.

ROLE AND RESPONSIBILITIES

The SEC operates in accordance with a board-approved mandate and its responsibilities include:

• monitoring the group's social, economic, employment and environmental activities and reporting on the progress made in respect thereof to the board and stakeholders;
• assessing aspects of compliance and governance applicable to its function and terms of reference;
• ensuring the company remains a responsible corporate citizen that engages in sustainable business practices; and
• overseeing the group's ethics practices.

Management assists the committee in the discharge of its duties by reporting on the group's:

• corporate citizenship, including the company's promotion of equality, prevention of unfair discrimination and identification and eradication of corrupt activities;
• environmental, health and safety initiatives and their impact on activities and services;
• consumer relationships and sales and marketing initiatives;
• labour and employment activities, including the company's standing in terms of the International Labour Organisations Protocol on decent work and working conditions, employment relationships (fair and transparent labour practices) and our contribution towards the educational development of our employees; and
• compliance with relevant legislation, regulations, prevailing codes and best practice, including the group's standing in terms of:

• the 10 principles set out in the United Nations Global Compact Principles (UNGC);
• the Organisation for Economic Co-operation and Development's (OECD) recommendations regarding corruption;
• Employment Equity Act; and
• Broad-Based Black Economic Empowerment (B-BBEE) Act and B-BBEE Codes of Good Practice.

As chairperson, I report back at board meetings regarding the committee's activities and I am available to provide feedback to the shareholders at the annual general meeting.

MEETINGS AND ACTIVITIES

The SEC met twice during the year to address the following matters:

• the group's standing and progress in respect of the 10 principles of the UNGC, which the group has adopted on a voluntary basis, as well as the OECD recommendations regarding anti-corruption and is of the view that the group has substantially complied with the requirements of the UNGC principles and that there were no material areas of concern;
• the group's labour and employment practices, including its standing in terms of the International Labour Organization Protocol on decent work and working conditions, and its employment relationships and contribution toward employee educational development;
• progress made with regard to transformation, taking the Employment Equity and B-BBEE Acts into account. The company was externally rated and achieved a level 5 B-BBEE verification in accordance with the Tourism Sector Codes. However, due to the impact of Covid-19 on our operations, our B-BBEE scores under the skills and development and enterprise development pillars dropped as a result of lack of spend, resulting in an overall B-BBEE ratings level drop from level 4;
• the group's compliance with applicable legislation, regulation and codes of good practice;
• environmental sustainability practices, in particular three of the UN Global Compact Principles relating to supporting a precautionary approach to environmental challenges and supporting greater environmentally friendly technologies;
• consumer relations, including advertising and public relations, stakeholder engagement and service excellence, through the WOW service excellence and employee recognition and Rate-Us guest feedback programmes; and
• ethics.

It is to be noted regarding the above that:

• there were no known instances of material non-compliance with legislation or regulations, or non-adherence with codes of best practice in terms of the areas within the committee's mandate;
• no material or repeated regulatory penalties, sanctions, fines, censures or compliance orders were imposed on the company or its directors;
• no incidents or acts indicating a material breach in the required standard of ethical behaviour were reported to the committee;
• no compliance inspections were carried out by environmental regulators nor were any findings of non-compliance with environmental laws or criminal sanctions for non-compliance imposed on the company;
• no complaints were lodged with the Consumer Tribunal or the Advertising Standards Authority during the year;
• no political donations were made;
• no requests for information under the Promotion of Access to Information Act were received;
• the company was compliant in all material respects, save where highlighted in this IR, with the Companies Act, Companies Regulations, the JSE Listings Requirements, King IV™ and its memorandum of incorporation.

The reports providing further detail on the group's labour and employment practices, transformation, socio-economic development, consumer relations and sustainability appear on pages 64 and 89 and are highlighted as items of interest to our stakeholders.

In light of the aforegoing, the SEC is satisfied that the group has operated as a socially responsible corporate citizen demonstrating an ongoing commitment to sustainable development and that it has fulfilled its mandate.

Going forward, the SEC will focus on:

• overseeing the group's corporate citizenship and ensuring it continues to carry out its operations responsibly and as an ethical corporate citizen that positively impacts the communities in which it operates;
• monitoring legislative and regulatory developments, specifically with regards the proposed changes set out in the Companies Amendment Bill, 2021 and JSE Listings Requirements, as they pertain to the SEC;
• reviewing its terms of reference to ensure they remain aligned with King IV™, legislation and best practice, including whether there is any material non-compliance that requires disclosure;
• ensuring that the group continues to pay its employees fairly, ethically and responsibly in accordance with the equal pay for work of equal value principle;
• ongoing training and communication with employees through various platforms;
• ongoing engagement with employees in terms of their financial, physical and emotional wellbeing through the employee wellness programmes;
• roll-out of the remote hybrid work policy;
• prioritising ESG, commencing with formalising our ESG strategy, including identification of the most relevant sustainable development goals, setting objectives aimed at delivering sustainable value and monitoring and evaluating of our performance in respect thereof; and
• as part of its ongoing ethics initiatives, identify the 20 SME's to participate in the Ethically Aware Supplier induction programme through the Ethics Institute which will see SMEs in the company's supply chain being trained in ethical business practices with a view to receiving "Ethically Aware" accreditation.

Dr Sizakele Marutlulle
Chairperson of the social and ethics committee

31 October 2022