Transnet Online Integrated Report 2017
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 six capitals

Social and Relationship Capital
The quality of our stakeholder relationships has renewed significance in the context of the global and domestic macroeconomic strain on the economy and our customers – especially commodity customers. Collaborative work practices, customer-centricity and the trust built up with our customers, employees, suppliers and communities in and around our operations over many years will go a long way to ensure mutual sustainability in the medium to long term. It is incumbent on Transnet to be responsive to the needs and interests of all stakeholders and to build social trust through authentic corporate citizenship.
Creating social and relationship capital value

South Africa’s freight logistics system requires investment beyond levels already committed to by Transnet. The DPE has mandated that Private Sector Participation (PSP) be included in the broader delivery of the MDS to support the country’s socio-economic imperatives.

As procurement practices have matured in Transnet, our focus on integrated Supply Chain Management (iSCM) has increased with our influence extending to much-needed national Enterprise Development (ED).

Our commitment to developing mutually beneficial relationships with communities in and around our operations is expressed through the Transnet Foundation’s socioeconomic programmes, which empower South Africa’s rural communities. Our Operating Divisions respond proactively to the needs of vulnerable communities surrounding our operations.

Key social and relationship capital inputs at 1 April 2016
  • 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
Approaches to managing social and relationship capital outcomes

Transnet builds reputational value and market visibility to attract vital competencies at all levels of the organisation.

Transnet’s CSI programmes focus on health, socioeconomic infrastructure and education in rural communities situated along the rail network and projects with a strong community impact near ports and pipelines.

Transnet’s supply chain has an extensive reach into the manufacturing and services sectors of South Africa and draws upon international sources where required. Our service to customers is linked to the quality of these supplier relationships.

The Board of Directors holds overall responsibility for decentralised stakeholder engagement, delegating authority to the Group Chief Executive, who reports to them on material stakeholder issues and takes responsibility for incorporating these into strategy and risk management.

Our Enterprise and Supplier Development increasingly supports small, medium and micro-enterprises through nurturing industrialisation and entrepreneurship.

Maintaining consistent and transparent engagements with investors helps to align our collective understanding of value creation and future expectations around long-term targets.

Continuing to forge and strengthen partnerships with OEMs to enhance skills and create new market opportunities.

Partnering with private-sector logistics partners to create solutions for our clients.

Streamlining and effective contract management activities across the Company that ensure compliance with legal and contractual terms, while maximising value.

Key factors impacting social and relationship capital
Ethical stakeholder relationships

Our large infrastructure development projects pose a risk in terms of ethical and transparent procurement practices and ‘rent-seeking’ behaviour. Transnet’s ambitious MDS 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 blight the image of SOCs. We undertake to intensify our commitment to the following principles:

  • Equitable treatment of all stakeholders: We continue to work towards transparency regarding business issues of material interest to stakeholders; enhancing our reporting on stakeholder relationships; and refining our Code of Ethics to ensure the protection of stakeholder rights.
  • Ethical relationships with all stakeholders: Refining our corporate governance framework towards a methodology that accurately tracks corporate governance transgressions.
Key social and relationship capital outputs at 31 March 2017
  • Total CSI spend R234 million
  • Committed Supplier Development (SD) spend R62,6 billion
  • Enterprise Development (ED) spend R38,6 million
  • Entrepreneurial support showcased 20 entrepreneurs from the Transnet Design, Research and Innovation Centre, who invented ‘life changing ideas’ that would address challenges in SA Incorporated
  • Patients treated at the health, dental, eye, psychology and pharmacy clinics 173 016
  • Individuals who benefited from community outreach services 438 807
  • Health and hygiene workshops implemented nine provinces
  • Transnet employees volunteering for community services during the year 3 216
  • Ongoing academic support was provided for orphaned youth 52 youth enrolled in our programmes
  • Donations R250 000 paid to Batswana High School as part of the R750 000 donation towards building classrooms
Key social and relationship capital impacts on the other capitals

Partnering with private sector logistics partners creates end-to-end infrastructure logistics solutions for customers, including technology solutions and specialised services. Private-sector partnerships

Transnet pursues new revenue streams through private-sector collaboration and complementary investment by private companies. This further accelerates Transnet’s commercial impact on economic growth and job creation in South Africa and the region. New revenue streams

Transnet’s Procurement strategy is integral to the growth of a ‘green economy’ whereby efficient and resilient technologies, along with increasing use of rail for freight transport, lower business costs and stimulate economic activity in environmentally responsible ways. Procurement strategy

Trade-offs in our use of social and relationship capital

Our keystone expansion projects – such as our large-scale port infrastructure improvement project at the Port of Durban – need to balance the economic benefits of the country with the social and environmental concerns raised by surrounding communities. The investment aims to sustain the current container capacity at South Africa’s premier multi-cargo port. However, adverse impacts on local communities include the possibility of social and small business displacement, extensive waste generation during the construction phase and pressure on shared resources, such as water and electricity.

Our developmental spend, both from ED and CSI perspectives, must always be balanced against our financial sustainability.