2019 CGCSA Summit Eric Leong Son Group Head

2019 CGCSA Summit Eric Leong Son, Group Head Sustainability, Distell “Building business models that deliver value for consumers aligned to Sustainable Development Goals (SDGs)”

TABLE OF CONTENTS 1. Context 2. Call to action 3. SDGs as measurement framework within sustainability 4. SDGs Implementation at a company level 5. Distell: Sustainability and the SDGs 6. Distell: Enablers on our journey 7. Closure

1. Context 3

1. CONTEXT 1. Business “unusual” is now the usual. 2. The old adage of “the business of business is business” seems like a figment of the past. 3. Business and organisations cannot continue to thrive in societies that are not thriving. 4. The lens of scrutiny and integration has become a lens of “…and…” not a lens of “…or…”. Business today needs to embrace: a. profit and planet and people and purpose 5. Consumers looking for brands with a purpose.

1. CONTEXT Red flag id w s i e r Key social trends, trigger points and call outs. the t e y And a e r p es dis l a ob l g d on cti e f f a Key environmental trends e. g. Climate change Extinction of species Biodiversity Governance and ethics failures within business and government as an emerging global challenge. * Slide graphics: Courtesy of Incite, Jonathan Hanks

1. CONTEXT oun c y n a sm g acros Lack clinin e D : l a capit l a i c o of S trie cially e p s e , s SA

1. CONTEXT South Africa is one of the most unequal societies in the world More than half SA population in poverty – increasing since 2015 55% 0. 66 Gini Co-efficient 27% Low rate of economic growth makes it difficult to generate jobs Number of people on social grants in 2018 50% youth unemployed w vie t n e ffer th Sou di a : ca Afri 23% 17. 7 million 237 Source: NBI (National Business Initiative) High unemployment rate remains a key challenge Percentage of SAs over 16 with no formal education Number of service delivery protests in SA in 2018 (up from 173 in 2017)

2. Call to Action 8

2. (C)ALL TO ACTION Why and When ? 1. Organisations, companies, communities and governments have to rise to the challenge of addressing these pressure points now. 2. Embracing sustainability as part of business (“as unusual”) has become good business practice 3. Sustainability: (n) “Sustainability focuses on meeting the needs of the present without compromising the ability of future generations to meet their needs. The concept of sustainability is composed of three pillars: economic, environmental, and social—also known informally as profits, planet, and people. ” What and How ? 1. Does an integrated model for sustainability exist? 2. How do we deliver sustainable value across the three spheres identified above? 3. What programmes, frameworks and approaches will deliver the desired results ?

2. CALL TO ACTION: THE BUSINESS CASE Drive Growth • New Product Development • New markets • Brand with Purpose • Build brand equity • Premiumisation e. g. • Organic • Health focus • Ethical brands • Consumer and retailer loyalty • New business models • Bulk of the pyramid products Address Risk Contain cost • Operational risk e. g. • security of supply • localisation of supply • Market risk • Regulatory risk • Reputational risk • Beyond social compliance License to thrive framework • Resource allocation and efficiency e. g. • energy efficiency, • renewables, • waste to landfill, • plastics minimisation • Process efficiency e. g. • Fleet and transport Attract Capital SROI ESG investment parameters Transformational Partnerships in a shared Eco-system Focus Purpose Employee retention EVP Common purpose “Creating memorable moments, crafting a better future”

2. CALL TO ACTION (example to optimise societal value) An organisation can allocate resources to e. g. four types of initiatives to optimise societal value Corporate social investment (CSI) Four components of an integrated strategic response to societal issues Initiatives respond to societal needs through philanthropic contributions Business risks and challenges Advocacy CSI Environmental, social & governance (ESG) initiatives address business risks by promoting responsible practices on various ESG issues ESG Shared value Corporate assets and expertise Social needs and resource pressures Operating context Source: Incite Social Compliance is of paramount importance in the FMCG and related consumer retail industry space. Shared value initiatives are innovations that address societal challenges at scale as a business growth proposition Advocacy initiatives seek to drive broader system change to address structural challenges impeding sustainability (and potentially realize ‘first mover’ advantage)

3. SDGs as Measurement Framework

3. THE SUSTAINABLE DEVELOPMENT GOALS (SDGs): JOURNEY 2019 2030 2015 2012 2000 The Millennium Development Goals (MDGs), developed in 2000, consisted of eight goals to eradicate extreme poverty primarily in less developed countries. The new SDG goals set targets that call countries to action. The Sustainable Development Goals (SDGs) were born at the United Nations Conference on Sustainable Development in Rio de Janeiro in 2012. The objective was to produce a set of universal goals that meet the urgent environmental, political and economic challenges facing our world. The Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Currently organisations are working together to map their impact as per the world-wide SDG indicators at company, industry and country level. Distell started its SDG journey ~ 2 years ago The division of Sustainable Development Goals (DSDG) plays a key role in the evaluation of the United nations’ systemwide implementation of the 2030 Agenda as well as advocacy and outreach activities relating to the SDGs.

3. 17 Goals and 169 indicators in total

3. SDGs: Survey of 32 JSE listed companies Distell is here Research: Embedding Project

4. SDGs: Implementation at Company Level

4. SDGs for Companies Sustainability practitioners have identified 8 key challenges 1. Number of SDGs and Targets Understanding the SDGs 2. Goals are framed for Sovereigns * 3. Not all the goals may align with the Business Model Making SDGs meaningful for Business * The goals may need to be cascaded for companies. Research: Embedding Project 4. Creating Broader organisational awareness 5. Changing the prevailing business mindset Awareness and focus within the organisation 6. Leveraging support across business functions 7. Requires the development of measures and clear metrics Operationalising the Goals 8. Integrating the SDGs with existing frameworks Integration of SDG Strategy

4. . SDGs for Companies How the SDGs FRAME action Internal External Common Framework for Action Common Language Business Action in Support of Sustainability Financial Legal Ethical Makes Business Sense Achieves Compliance Resolves Moral Obligation Distell has begun SROI, KPI tracking in Qlik. Sense How the SDGs CATALYSE action Research: Embedding Project

5. Distell, Sustainability, the SDGs 19

5. Distell Group Overview Distell is Africa’s leading producer of spirits, wines, ciders and ready-to-drinks (RTDs). The company is also the world's second biggest producer of ciders. Distell’s network across South Africa, Namibia and Botswana -Production, Processing, Packaging and Distribution: Distell by the numbers >5 000 R 24, 2 billion Number of staff Annual turnover (FY 2018) 8 Wineries 6 Distilleries 3 18 8 Offices in Africa (outside of BLSA) International sales offices

5. “CRAFTING A BETTER FUTURE” SOCIETY ENVIRONMENTAL ECONOMY • Good corporate citizenship • Excellence in water stewardship • Market growth • Alcohol harm reduction • Reduce carbon footprint • Robust stakeholder relationships • Resource efficiency • Significant contribution to the fiscus • Socio-economic growth • Sustainable farming programmes • Transformation as a business enabler • Alignment to UN practices • Shareholder value • 4000+ sustainable jobs • Value & supply chain (SME) empowerment & growth

5. DISTELL’S JOURNEY TO DATE INTERNAL JOURNEY • Sustainability was adopted as a key business imperative in 2017. • Multi-functional and multi business unit workshops were held to identify the Distell focus SDGs. (mid to end 2018) • Distell completed an intensive mapping of its relevant activities in relation to the SDGs across its value chain. • Buy-in and commitment of executive management and the board continues to be critical. • The tone from the top is a key enabler. • Each of the Distell focus SDGs has an allocated champion (August 2019) EXTERNAL JOURNEY • Distell moved from being a signatory to a participant of the UN Global Compact. • Partnerships are critical for effective delivery.

5. DISTELL’S CREDENTIALS IN THIS SPACE • • The Distell Agri-Transformation programme for apples and grapes was selected as a Presidential Jobs Summit Programme. Distell was selected as one of 10 private sector case studies for the country Voluntary National Review to the UN in July 2019 The Company was the ABSA-Business Day ESD winner for 2019. Distell launched the SDG innovators with our top talent under 35. A Distell employee was recognised as 2 nd runner-up for SA, as SDG Pioneer. A Distell distillery has been awarded the “Green Distillery of the year”. The company is pioneering a supplier and own focused social compliance programme. UNGC: VOLUNTARY NATIONAL REVIEW ABSA ESD RSA AWARD WINNER 2019 UNGC: SDG INNOVATORS UNGC: DISTELL EMPLOYEE 2 ND RUNNER UP IN SA

5. DISTELL SDGS: Foundational, Primary and Secondary FOUNDATIONAL SDGs PRIMARY SDGs What does this mean for Distell? Distell’s sustainability programmes aim to affect progress in the SDG target areas and partnering will unlock value for all stakeholders. Gender is a focus and lens across all sustainability projects. More on our online Sustainability report https: //www. distell. co. za/corporate-responsibility/

5. A SNAPSHOT OF OUR SUSTAINABILITY PROGRAMME 1. Entrepreneurship and SME development. 2. Social Compliance (agri-sector focus) 3. Arts and Culture as a societal integrator and enabler 1. BBBEE (level 3) 2. Apples and Grapes transformation (hectares, off-take agreements and business support) 3. LED (rest of Africa) Empowering Communities Achieving Transformation Promoting Responsible Drinking Managing our Supply Chain 1. FASD 2. Responsible drinking and Responsible advertising 3. Aware. org 1. Responsible consumption (e. g. water, Gh. G, CO 2, fossil fuel, electricity, effluent, waste management) 2. Water Stewardship: Co-Go 3. Circular economy, Plastic Pact 4. Social compliance on farms

5. DATA MANAGEMENT: Tracking the SDGs performance in Qlik sense Qlik Sense system have been socialised with e. g. IT, Finance, HR, Supply Chain, SA BU, Internal Audit, Procurement, and Corporate Affairs Beneficiaries per KPI # of Projects per Primary SDG

5. DISTELL CASE STUDY SDG 6; Integrated value chain approach, water focus 1. SDG 6 is a primary SDG for Distell. 2. The Day –Zero crisis was defined as a new normal for Distell. 3. Some of our on-going efforts are listed below: • efficient use of water on our farms • using less water in our operations to produce our brands • Implement water reduction program on all our office sites in the Cape • looking at being less dependent of municipal water ( e. g. ground water) Achievements: 1. Target 6. 3 : volume of waste water and effluent from our sites down 33% 2. Target 6. 4 : waste water treatment and water reclamation facilities at 3 3. 4. 5. 6. sites; Yo. Y Target reduced water by 15% (l/l), achieved reduction 19. 3% Target 6. 6: founding member of Co-Go, “Where there is a dragon fly there is hope and harmony”; Co Go selected as a UN Africa presentation on Water Stewardship (Mauritius) International recognition from Nordea bank for our water conservation efforts.

6. Distell: Enablers on our Journey (internal) 28

6. DISTELL’S THEORY OF CHANGE

6. SUSTAINABILITY: GOVERNANCE UNGC, NDP & Companies Act Internal team agreement Functional Business Alignment External Delivery Partner engagement Quantification of Theory of Change linked to Performance Management Sustainability Council Exco Social and Ethics Committee (SEC) Internal Audit verification Sustainability Report sign-off by SEC Sustainability Report in Public Domain PR campaign: Internal and External advocacy

7. Key Takeouts Business Action for Sustainable Growth

7. THE BUSINESS CALL FOR ACTION Right “Tone from the Top”… Resourcing for Success: Inputs Governance Ways of Working Monitoring & Evaluation Comms and awareness campaign 1. Identify and Commit 2. Develop Targets and KPIs Some required C’s for success Creativity and Curiosity Clarity and Cohesion Critical mass Commitment Communication Connect and Collaborate 3. Align Sustainability and Corporate strategy towards targets 4. Create Business Opportunities Bottom up validation … 5. Collaborate, Working group 5. Measure, Assess, Report and Communicate

THANK YOU INTERIM FINANCIAL RESULTS AS AT 31 DECEMBER 2018 Creating memorable moments. Crafting a better future.

TWITTER DETAILS: @CGCSA 1 #CGCSASummit 2019