Environmental and business footprint

OUR MANAGEMENT APPROACH

The group has a large number of operational sites, both in South Africa and internationally. These operations consume water, electricity and other natural resources and generate waste products, all of which require pro-active management to conserve resources and reduce costs and waste.

There is a strong focus on this area across the group. Investments were made during the year at many operational sites to reduce the consumption of natural resources such as water and electricity, including a number of innovative methods of reducing water usage and thereby cost. Examples of these initiatives are provided in the case studies included in this section.

Some of our operations by their nature carry the risk of environmental contamination from spillages of oil, fuel or other substances. During 2014, 104 environmental incidents occurred, the majority of which were small spillages of chemicals, fuel or oil. Environmental incidents are defined as those incidents having an impact on the environment, including spills of chemicals, oils and fuels.

No fines in relation to environmental issues were incurred by the group during the year. Quality systems and environmental management procedures are in place at the relevant operations to manage this potential impact.

Due to the nature of our business, oil is a significant waste stream and its release into the environment is strictly controlled. Waste oil is generated in the servicing of vehicles in the logistics businesses, which is undertaken in-house, as well as in the servicing of client vehicles in dealerships.

Measures have been taken to ensure Imperial group businesses dispose responsibly of oil and to increase the proportion of oil recycled. A group-level agreement is in place for the resale of used oil with a specialised company which enables waste oil to be cleaned and re-used.

During 2014, over three million litres of oil was recycled, approximately 65% of the group’s oil purchases.

OPERATIONAL STRATEGIES AND INITIATIVES

In the Vehicles businesses, the washing of motor vehicles in dealerships constitutes a significant portion of water usage and many of the group’s dealerships have put in place water saving projects to reduce the volume of water consumed and the resultant cost to the business. In many cases, water saving initiatives have also involved changes to the cleaning fluids used, such as a transition to biodegradable soaps, to ensure that the impact of the operations on the environment is minimised.

In June 2013, the Vehicle Retail, Rental and Aftermarket Parts division has embarked on a ‘greening’ action plan to minimise resource utilisation and wastage. This includes:

Currently, there are no set guidelines or targets guiding actions in this area. However, the impact of initiatives by retail branches will be measured annually from 2014 and we expect that as they go through this process, we will see a reduction in waste and consumption figures.

The Vehicle Import, Distribution and Dealerships division has put in place water recycling initiatives at its operations and has started using Eco Mobile car wash dispensing units at dealerships.

These units enable each car to be washed using only one litre of water.

A subsidiary company, Pandae Green Solutions, was established in 2014 to manage some of the company’s waste and recycling processes. The company will measure its performance in terms of the amount of waste salvaged or recycled. Performance targets will be set and more detailed reporting will be undertaken in future periods when this business is fully established.

In the Car Rental business, water use and the recycling of waste oil, windscreens, client in-car waste, paper, tyres and batteries are closely managed.

The following actions have been taken to reduce the environmental impact of operations in this area:

Oil is drained and collected weekly by a specialist contractor, who recycles and re-sells waste oil

> Water recycling facilities have been installed at all major vehicle turnaround facilities > Windscreens are recycled responsibly through the supplier and the number of windscreens being replaced has been reduced > Oil is recycled responsibly through an approved vendor > Tyres and batteries are responsibly recycled through suppliers The impact of these measures is calculated by monitoring: > Water savings achieved through the recycling of water > Windscreen glass measured in tonnes recycled and units replaced In 2014, water recycling savings achieved were 10,5 million litres and total savings since 2011 have been 35 million litres. Further reductions in usage will only be possible through investment in greenfield recycling wash bay facilities. The optimisation of operations is ongoing and new opportunities are continuously assessed for implementation of initiatives to reduce the environmental footprint of the business.

In Logistics Africa there is significant emphasis on reducing environmental impacts and implementing good environmental management practices. Environmental performance is one of the aspects against which operating companies are evaluated during the tender process and in ongoing performance monitoring with clients. It is therefore a key factor in winning and retaining contracts. There are two major workstreams underway in the logistics business in this area: > Water management to conserve water at facilities that have washbays, by implementing water recycling plants and installing rainwater harvesting systems where there is sufficient roof space. Logistics Africa currently accounts for over 50% of water usage in the group. Water is used primarily for the washing of vehicles, particularly in heavy industries such as mining where vehicles require washing after transporting products such as coal, and also in the transportation of more sensitive cargoes such as foodstuffs and petroleum products, where attention needs to be given to the cleanliness of the vehicle used for transportation > Energy management is undertaken to minimise energy usage by retrofitting owned buildings with energy-efficient lighting. Logistics Africa accounts for just over 30% of the group’s electricity purchases as it runs a large number of warehouses and depots throughout the region Achievements during 2014 include: > The retrofitting of modern lighting technology at seven logistics buildings in Gauteng, South Africa > The installation of water recycling plants and rainwater harvesting systems at sites in Gauteng. At full production, the recycling plants are designed to achieve an average of 85% water saving A major challenge in undertaking such initiatives is the geographic spread of operations In Logistics Africa. During 2014 the division focused on the implementation of projects in Gauteng.

In the forthcoming year, effort will be focused on rolling out both water and energy reduction projects to other South African facilities which are high electricity consumers. Performance metrics are still to be developed. Performance targets for electricity use and air business travel are currently under review.

During 2014, Logistics International continued implementing measures for the monitoring of greenhouse gas emissions and waste streams across the business. The objective is to form a more detailed picture of the main contributions to the footprint of the business. Once this information is collected, a strategy can be developed detailing how emissions can be reduced and thereby costs, for example by using new environmentally-friendly technologies, operating recyclable equipment, developing reduction initiatives for consumption of raw materials, water and energy and reducing and avoiding waste.

During the year, various parts of the business started implementing some reduction initiatives to manage their environmental and business footprint.

The Imperial Shipping group took measures to optimise fuel oil consumption and improve fuel efficiency by implementing a fuel monitoring system on vessels. This allows the vessels to control fuel consumption and therefore to navigate in a way which is more environmentally friendly and cost-efficient

In the forthcoming year, particular focus will be placed on raising awareness of sustainability issues, to support the development of sustainability practices across the business. Systems for the reporting of non-financial data still have to be optimised so that data can be used to set performance targets for electricity, fuel and water usage. New opportunities for reduction initiatives are continuously under investigation.

CASE STUDY

VEHICLE DEALERSHIPS REDUCE THEIR ENVIRONMENTAL FOOTPRINT

VEHICLE DEALERSHIPS REDUCE THEIR ENVIRONMENTAL FOOTPRINT

As noted in the quote above, the challenge to reduce the total environmental footprint of our business can only be addressed on the ground, in the way we do business every day. During the year under review, we encouraged all our business units to identify opportunities for savings and efficiencies. Dealerships in the Vehicles businesses found a number of smart and innovative ways to reduce their environmental footprint.

SPOTLIGHT 1:

HYUNDAI INVESTS IN LOCAL TECHNOLOGY TO SAVE WATER AND COSTS

Hyundai dealerships across South Africa took up the challenge of reducing their water consumption and cutting costs, while simultaneously supporting local technology and innovation. During the year, all Hyundai dealerships introduced the Eco Mobile Car Wash Dispensing Units (also known as MDUs) into their daily processes.

Managing our business and environmental footprint – particularly waste and water management – is a priority for Imperial, and the introduction of this new technology was identified by Hyundai as a way to make an immediate difference in day-to-day operations.

The MDU is a mobile machine that is used to clean the exterior of cars. The machine uses a specially-developed cleansing formula and microfibre cloths to ensure a high quality car wash. The only water used by an MDU is the water to rinse the dirt off the microfibre cloths – usually about one litre per vehicle. The Eco Wash machines use less than 300ml of cleansing product, and cleaning agents are water based, instead of oil or kerosene based, which means they are biodegradable. The MDU was developed by local South African company, Eco Wash, together with the University of Stellenbosch, in an effort to minimise the use of water, energy and space.

A traditional high-pressure car washing machine at a dealership might use between 18 and 38 litres of water per minute, with a wash taking 12 minutes on average. This adds up to between 200 and 420 litres of water per high-pressure wash, meaning the process is both water intensive and costly.

Building dedicated car wash facilities in our car dealership workshops and showrooms is expensive, both in terms of construction and in terms of the costs of extra space. The introduction of the MDUs eliminates the need for car wash facilities in new dealerships. Waste traps also do not have to be installed or serviced monthly if the MDUs are being used by a dealership. In fact, the MDUs do not even need to be connected to a water or electricity supply to be used because they are entirely manual, meaning a vehicle can be washed wherever it is parked, and the units consume very little energy. The frequency of damage to vehicles is also reduced because cars do not have to be moved for cleaning.

At these three dealerships alone, over 3 000kL of water has been saved since the introduction of the Eco Wash machines.

In total, the Hyundai group has received almost R1 million in rebates from the Water Board since the introduction of the Eco Wash cleaning system.

SPOTLIGHT 2:

HULL DEALERSHIP (UK) INTRODUCES LIGHTING CHANGES TO REDUCE ENERGY USAGE

Imperial’s commercial dealership in the Hull region in the UK decided to address its carbon footprint in 2013. By evaluating and implementing a new lighting solution it was able to reduce operating costs and also to improve the work environment for employees.

Prior to the implementation of the change in the dealership’s lighting, energy usage was high, efficiency was not optimal and there was poor lighting in the workshop and parts warehouse. The team started to investigate a number of options to identify the best possible solution to these challenges.

Firstly, it was agreed to replace the standard fluorescent tubes and sodium halide bulbs used in the dealership with more efficient, longer-lasting LED equivalents to reduce energy consumption.

Secondly, the dealership explored the possibility of introducing more natural light into the parts area. This simple but effective fix was achieved by reducing the size of the workshop’s roller shutter door by 50%, and installing a large window above it. The introduction of natural light has reduced the demand for artificial lighting significantly, particularly during the hours where there is full daylight. It has also significantly reduced heat loss due to the new and smaller roller door.

The project has resulted an overall energy reduction of 59 663 kWh. This represents a reduction of approximately 30% in both the energy consumed at the Hull branch and in the carbon emissions produced. The annual savings made as a result of the change have already paid back the investment cost of the LED bulbs. The business can now enjoy the savings over the next five years – the balance of the typical life of these bulbs.

SPOTLIGHT 3:

WATER RECYCLING REDUCES VAALRIDGE AUTO'S WATER USAGE

Management at the Vaalridge Auto BMW Dealership in Gauteng, South Africa, have a track record of implementing initiatives to reduce the business’ footprint.

Having implemented a full electrical retrofit to save energy in the previous financial year, their next project was to address water usage at the dealership to evaluate where savings could be made.

In March 2014 an “E-washa” water recycling plant was installed in the dealership’s wash bay. A significant reduction in usage and costs could be seen immediately.

As a result of the recycling plant’s introduction, Vaalridge Auto reduced their water usage by 69%, from an average of 386 kilolitres a month (measured between November 2013 and February 2014) to 164 kilolitres for the month of April 2014. Costs also reduced by 67% as a result, from an average of R5 622 per month (November 2013 to February 2014) to R1 872 in April 2014.