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Climate change

While the worldwide credit crunch may have grabbed the headlines, quietly accelerating climate change looms far larger as both a risk and a business opportunity.

Awareness of potential impacts is increasing rapidly. Bidvest now believes the rate of change in behaviour and sentiments will be quicker than previously thought. Over the last year this assessment has resulted in greater internal commitment to understanding the underlying issues, taking action and managing and mitigating risks.

Regulatory risks
Governments continuously continually raise regulatory standards to drastically reduce the carbon footprint of industry activities. Risk committees at Group, divisional and business level are charged with staying abreast of evolving regulations. A central process lists new regulations and businesses are kept up to date on new or pending regulations that may affect them. Bidvest divisions are aware that carbon-intensive operations are a growing business liability and, conversely, that carbon and energy-efficient operations are becoming a value-driver providing competitive advantage.

• raise the cost of fossil fuel-generated energy
• increase water prices (due to scarcity and energy required to supply potable water)
• increase penalties or costs at energy-inefficient operations
• increase penalties for or costs of environmentally unfriendly practices

International targets currently being negotiated are likely to fall below the level required by science for avoidance of runaway climate change. It is anticipated that in subsequent rounds of international negotiation emission-reduction targets will be ratcheted up.

Most Bidvest operations are based in South Africa, a non-annex 1 country that at the moment does not have to meet mandatory emission limits.

Bidvest is aware that this will change dramatically as South Africa commits to national emission reduction targets. Government is beginning to draft a climate change policy. Promulgation may not be imminent, but is inevitable and is expected to have far-reaching impact.

• all businesses where transport constitutes a significant operational cost
• Bidtravel and Bidserv’s aviation-services businesses due to a possible increase in aviation fuel prices or flight taxation aimed at reducing airline industry emissions, which could reduce overall aviation volumes
• Bidfreight, with its dependence on international ocean shipping
• Bid Auto as changes in its motor retail sales mix and volumes may be triggered by future regulation penalising high-emission vehicles
• Bidpaper Plus as paper costs may rise as a result of pressures on the paper and pulp industry to reduce its
  carbon-intensity

• Namibian fishing activities as fish stocks shrink and migrate due to changing ocean conditions. Stricter fishing regulations are likely while a possible increase in storm severity and frequency may impact the fishing fleet
• Bidtravel, foreign exchange services and aviation services due to shifts in tourism and air travel as a result of changing weather patterns, impacts on fauna and flora, extreme weather events and shifts in disease patterns
• foodservices and food processing at Bidvest Europe, Bidvest Asia Pacific and Bidfood as changing weather patterns affect agricultural sectors. Some areas will see improved agricultural yields (the east of South Africa is likely to get wetter) while others will see a decline (as the west of South Africa may get drier)
• Bidfreight operations may be impacted by increased storm activity

General risks
General non-regulatory and non-physical risks are likely to produce the most significant initial risks for Bidvest; particularly in developed world markets with high levels of consumer awareness.

We anticipate competitive advantage from our proactive response to these risks and see opportunity in changing customer preferences.

• Bidtravel, banking services, foreign exchange services and aviation services as regulations and attitudes lead to a possible reduction in inbound and outbound travel
• Bid Auto as its sales mix and volumes are likely to be affected as customers move to more fuel-efficient vehicles, public transport and other modes of travel or reduce their travel
• supply-chain pressures from original equipment manufacturers are likely to grow as they require their distributors to reduce their environmental footprint, affecting Bid Auto and other OEM distributors and businesses such as Bidfreight that deal with energy-intensive industries

Bidvest’s response to the threat of climate changee

Bidvest is positioning itself at the forefront of efforts to reverse the damage to our environment. Companies across Bidvest are rising to the challenge of building environmental excellence into our reputation for quality, service, health and safety.

• provision of goods and services
• selection/on-going evaluation of suppliers, contractors and service providers
• development of new products and services
• new projects
• non-managed operations/licensees/third-party manufacturers/JV partners

In cases where no set policies have yet been developed, our business units and their suppliers are left in no doubt that Bidvest is an innovative leader, not a reluctant follower and will not wait for legal compulsion before taking action on environmental challenges.

Green catalyst
Brand Bidvest will increasingly take the role of catalyst for wider of the supply chain and the industries in which we are active. We will encourage suppliers to join our efforts to instil better environmental practice. Some Bidvest divisions and business units have adopted an environmental policy and will increasingly seek out like-minded suppliers.

Environmental assessment
Environmental and social assessment of suppliers is not yet standard practice across the Group, but is undertaken by some of our international businesses. For example, Bidvest Australia’s supplier questionnaire requests information on the supplier company’s environmental policy, plus supporting documentation and certificates. Details are also requested on local sourcing, local employment and use of local ingredients. Internationally, environmentally and socially aware businesses also expect suppliers to engage in fair employment practices. Our suppliers are being made aware this is the new future and we should move toward it together.