Transnet Online Integrated Report 2018

Market Demand Strategy (MDS) themes
  • Financial sustainability
  • Capacity creation and maintenance
  • Market segment competitiveness
  • Operational excellence
  • Human capital
  • Organisational readiness
  • Sound governance and ethics
  • Constructive stakeholder relations
  • Sustainable developmental outcomes
Sustainable Developmental Outcomes (SDOs)
  • Employment
  • Skills development
  • Industrial capability building
  • Investment leveraged
  • Regional integration
  • Transformation
  • Health and safety
  • Community development
  • Environmental stewardship
The Capitals
  • Financial Capital
  • Manufactured Capital
  • Intellectual Capital
  • Human Capital
  • Social and Relationship Capital

Creating value through the capitals

Social and relationship capital

Through our social and relationship capital (e.g. relationships with commercial and academic partners, regulators, suppliers, customers, communities, labour unions, the media and more), we build both tangible and intangible value expressed through mutual trust, collaborative ventures, new innovations and value-added products and services. Positive stakeholder relations contribute to commercial stability (e.g. through strong customer and supplier relationships, and a social licence to operate) and organisational stability (e.g. healthy employee morale).

Social and relationship capital

1. Inputs
  • Transaction relationships with customers and suppliers – Transaction relationships
  • Constructive and equitable engagements with Government and regulators – Engagements
  • A positive relationship with employees and organised labour – Employee relationships
  • Proactive interaction with communities, citizens, institutions, media and pensioners – Corporate citizenship
  • Collaborative relationships with the Shareholder and funders – Collaboration
2. Approaches to managing social and relationship capital outcomes
  • Reputational value and market visibility > attract vital competencies at all levels of operations
  • CSI programmes > provide support for communities within and around operations
  • Transnet’s supply chain > support manufacturing and services sectors of South Africa > quality of supplier relationships impact customer service
  • Overall responsibility for stakeholder engagement rests with the Board > delegates authority to the Group Chief Executive
  • Enterprise and Supplier Development > support SMMEs
  • Consistent and transparent investor engagements >
    align collective understanding of value creation and expectations around long-term targets
  • Forge and strengthen partnerships with OEMs >
    enhance skills and create new market opportunities
  • Partner with private-sector logistics partners >
    create end-to-end solutions for clients
  • Streamline contract management activities across the Company > ensure compliance with legal and contractual terms, while maximising value
3. Key factors impacting social and relationship capital
  • Our large infrastructure development projects pose a risk in terms of ethical and transparent procurement practices and ‘rent-seeking’ behaviour
  • Transnet relies heavily on foreign investment, and perceptions of anti-competitive behaviour and corruption negatively impact international foreign direct investment
  • Sound and ethical corporate governance can attract local and foreign investment and deter unethical business practices that hamper the image of SOCs
Sound and ethical corporate governance can attract local and foreign investment
4. Social and relationship value created
  • Private-sector participation > provide investment into South Africa’s freight logistics system beyond levels already committed by Transnet
  • Integrated Supply Chain Management (iSCM) > support much-needed national ED
  • Transnet Foundation’s* socio-economic programmes > empower South Africa’s rural communities
  • CSI initiatives from Operating Divisions > respond proactively to the needs of vulnerable communities surrounding our operations
5. Trade-offs – Social and relationship capital impacts on other capitals

Partner with private-sector logistics partners > creates end-to-end infrastructure logistics solutions for customers and new revenue streams

  • Social
  • develop new private-sector partnerships
    shared skills and competencies
    new shared commercial opportunities + new revenue streams

Community investment

  • Social
  • goodwill created through sound community relationships + responsible corporate citizenship
    Decreased Increased

Supplier and enterprise development

  • Social
  • develop new entrepreneurs in the wider economy
    develop new supplier skills to apply to Transnet business

Transparent and ethical reporting

  • Social
  • good corporate citizen + sound reputation management
6. Key outputs
  • Total CSI spend R219 million (2017: R234 million)
  • Committed Supplier Development R63,4 billion (2017: R62,6 billion)
  • Enterprise Development spend R41 million (2017: R38,6 million)
  • 50 black-owned SMMEs incubated and provided with entrepreneurial skills over a three-year period
  • Patients treated at the health, dental, eye, psychology and pharmacy clinics 157 418 (2017: 173 016)
  • Individuals who benefited from community outreach services 435 332 (2017: 438 807)
  • Health and hygiene workshops implemented in seven provinces (2017: nine provinces)
  • Ongoing academic support was provided for 52 vulnerable youth (2017: 52 enrolled in our programmes)