GOVERNANCE AND SUSTAINABILITY

FirstRand views sustainable development and sustainable profit growth as complementary objectives. Excellent corporate governance, effective management of risks and opportunities, robust debate of the business case and a culture of “traditional values, innovative ideas” are the gatekeepers for ensuring that the relationship between sustainable profitability and the welfare of stakeholders remains positive over time.

FirstRand’s financial and non financial performance objectives are overseen by the Board of directors and its committees.

GOVERNANCE STRUCTURE AND PERFORMANCE DISCLOSURE

In addition to FirstRand’s subsidiary boards, reference guide for the disclosures addressed in this report from the chairman of each committee.

CORPORATE GOVERNANCE ETHOS

Corporate governance is overseen by the Directors’ affairs and governance committee and plays an integral role in FirstRand’s business philosophy. FirstRand’s philosophy upholds the values of ethical behaviour, participative decision making, win-win relationships with all stakeholders and the desire to be a world class company. The Directors’ affairs and governance committee ensures that this philosophy is incorporated into the practice of corporate governance at FirstRand.

Corporate governance is standardised across the Group to ensure that FirstRand’s high standards for corporate governance are implemented and monitored at all operations. The same high standards are exported when conducting business internationally.

FirstRand’s non executive directors acknowledge the need for their independence, while recognising the importance of good communication and close cooperation with executive management. FirstRand’s annual strategy conference is attended by senior management and all of the Group’s directors, including directors of the subsidiary companies and divisional boards.

The directors of FirstRand and the Group’s divisional boards endorse the Code of Corporate Practices and Conduct contained within the King Report on Corporate Governance for South Africa 2002 (“King II Code”). The directors are satisfied that the Group has complied with the provisions and the spirit of the King II Code.

FirstRand’s directors have reviewed the King Committee’s Code on Governance 2009 (“King III Code”) and are satisfied that the Group’s governance structures will accommodate any new recommendations.

STAKEHOLDER COMMUNICATION

FirstRand has defined its stakeholders as entities and individuals that are significantly affected by its activities and those which have the ability to significantly impact FirstRand’s ability to implement strategies and achieve objectives. FirstRand has identified its stakeholders as government and regulators, shareholders, employees, customers, suppliers, communities and the natural environment.

At holding company level FirstRand has stakeholder interfaces with government and regulators, shareholders and investment analysts. FirstRand’s stakeholder engagement mechanisms are addressed by the Board committee dealing most directly with the stakeholder group.

Operating divisions are empowered to manage stakeholder interfaces in accordance with the particular needs of their businesses and their stakeholders. Divisional sustainability performance and stakeholder engagement information is available in the sustainability reports of the Group’s major operating divisions. These reports are available online: www.firstrandsustain.co.za.

The Group does not make all stakeholder policies available on the internet.

Government and Regulators

Certain companies within the Group are subject to the oversight of the Registrar of Banks or the Financial Services Board. Compliance with the relevant regulations affecting financial services is regarded as being of the utmost importance.

FirstRand works closely with law makers and regulators to protect its stakeholders’ interests, avoid reputational damage and prevent or mitigate the potential negative impact of either new, or changes to existing, statutes or regulations.

Shareholders and Investment Analysts

FirstRand actively distributes information to shareholders and investment analysts through the Stock Exchange News Service (“SENS”), the print media and the company website (www.firstrand.co.za.). Disclosures are based on the principles of openness and substance over form. Following the publication of interim and year end financial results FirstRand presents results to local and international shareholders and the investment community and answers questions in respect thereof. These occasions also provide an opportunity for shareholders and the investment community to interact directly with the chief executives of FirstRand’s major operating divisions. The presentations of both the interim and final results can be viewed live via satellite television and are available on the company website.

Shareholders are notified timeously of the annual general meeting and its agenda where all voting takes place by way of a ballot. Results of the voting are published immediately after the meeting through a SENS announcement. Proceedings of the meeting are not broadcast via satellite television. For this reason electronic voting is not available to shareholders.

The investor relations department is headed by the director of investor relations. Her duties include oversight of all corporate communications.

MEMBERSHIPS AND ASSOCIATIONS

FirstRand is a signatory of the United Nations Global Compact (“UNGC”), the Carbon Disclosure Project (“CDP”) and has adopted the Equator Principles (“EP”) for the 2010 financial year starting 1 July 2009. The Group is actively involved in Black Economic Empowerment (BEE) through the application of the South African Financial Sector Charter (“FSC”) and the Department of Trade and Industry’s (“dti”) Codes of Good Practice (“CoGP”) and participates in the determination of regulatory requirements in respect of BEE through membership of the South African Banking Association.

FirstRand is represented at the National Business Initiative (“NBI”), the Centre for Development and Enterprise, and participates in the UNGC South African Advisory committee. In addition FirstRand supports the South African Institute for Race Relations, the Free Market Foundation, the Business Trust and Business Against Crime. Representation at these bodies is seen as being strategically important for reinforcing ethical and sustainable business practice and responding to changes to local and international best practice.

FirstRand’s non financial performance is evaluated independently on an annual basis by the JSE Socially Responsible Investment (“SRI”) index. In 2008 FirstRand was listed on the JSE SRI index as a low environmental impact organisation, meeting the SRI requirements for social, environmental, governance and sustainability performance.

 

ECONOMIC VALUE ADDED

FirstRand’s activities generate economic value for the socio economic contexts in which the Group operates. In 2009 the Group generated R49 671 million for society through value accruing directly to its stakeholders.

The creation of economic value is accompanied by quantitative and qualitative impacts which form part of the Group’s broader socio economic impact and extended value add to society. These impacts are described in more detail throughout this report and in the sustainability reports of FirstRand’s major operating divisions.

The table below summarises the economic value added by the Group over the last 5 years.

5 Year value added statement