Stakeholder engagement


The spectrum of businesses is matched by a range of stakeholders — those persons or groups who can affect or be affected by the Group’s activities. These include employees, trade unions, internal and external auditors, shareholders and fund managers, financiers, customers, suppliers, technology and business partners, local and national government structures in countries where the Group operates, industry bodies, the communities in which the Group operates, special interest groups and the media.

Engagements with certain stakeholders are largely the domain of either AECI or of its businesses, with others being of interest at both levels. The graphic below summarises stakeholder groupings and information flows. The approach to engaging with diverse stakeholder groups and AECI’s efforts in this regard are summarised here.

Engagement flows


Two-way interaction between AECI and its businesses occurs on an ongoing basis, both formally and informally. Formal structures include operating business Board meetings, business reviews, Financial Review and Risk Committee (“FRRC”) and Executive Committee meetings. AECI’s Executive Directors are in attendance at most of these meetings (except where businesses are not based in South Africa) and Non-executive Directors chair the FRRCs.

Other forums, such as cluster-specific or Group-wide conferences and management meetings, also provide opportunities for information sharing and relationship building.

The Group’s strength is enhanced by sharing best practice and experience in all areas of activity. A culture of collaboration across businesses has been developed. The streamlining and harnessing of efficiencies, backed by a common drive for excellence, leads to better results for the businesses individually and for the Group as a collective.



AECI communicates with these stakeholders by way of a number of processes, including announcements released on the JSE’s Stock Exchange News Service (“SENS”), the dissemination of financial results and reports electronically and in print, results presentations, business-specific site visits and meetings.

The Company’s Chief Executive, Chief Financial Officer and members of the Executive Committee conduct timely presentations on the Group’s performance and strategy to institutional investors, financiers, financial analysts and the media in South Africa. The Executive Directors undertake roadshows in Europe and the USA, aimed mostly at potential investors. There are also regular one-on-one meetings with this group of stakeholders.

Presentations, corporate actions and financial results, as well as any other information deemed relevant, are published on the Company’s website. Stakeholders are advised of such newly-published items via SENS. Other information on the Company, such as inter alia its management and history, is also available on the website.

To ensure that shareholders without access to electronic communication are not prejudiced, AECI currently publishes and reports on details of its corporate actions and financial performance in at least one daily national English newspaper as required by the JSE.


As an entity listed in South Africa, AECI is required to comply with the legal framework of the JSE Listings Requirements, the Companies Act and King III. Alignment with King IV, which will apply in financial periods commencing on or after 1 April 2017, has commenced and will be progressed.

Compliance is managed largely through the Company’s Legal and Secretariat and Corporate Communications functions. Interaction with the JSE is via Rand Merchant Bank (a division of FirstRand Bank Limited) as AECI’s corporate sponsor in South Africa, when such sponsor input is required. Further liaison with the JSE, such as work related to assessments for inclusion in specific Indices, is undertaken directly.



The same information that is shared with investors and other financially-based stakeholders is made available to employees Group-wide. This takes place via newsletters and e-mails from the Chief Executive, presentations by him to Group management and similar interactions between Group management teams and the businesses for which they are responsible.

Across all businesses, Human Capital departments and Specialists are primarily responsible for the Group’s policies, procedures and practices in employment, benefits and related human resource matters, and for the communication of these via established structures.


The AECI Group subscribes to the freedom of association principle and recognises the right of all employees to join a trade union of their choice. Representative trade unions, therefore, are recognised as one of the Group’s stakeholders. A list of unions with whom formal recognition agreements are in place is available on AECI’s website. These unions participate in various consultative and negotiation structures such as Management/Shop Stewards Consultative Forums, Employment Equity and Skills Development Steering Committees, Wellness Committees and Safety, Health and Environment Committees that deal with issues that affect employees’ interests.

Group businesses in South Africa are members of the National Bargaining Council for the Chemical Industry (“NBCCI”). Substantive collective agreements for the Bargaining Unit are negotiated on an annual basis with representative trade unions under the auspices of the NBCCI — Industrial Chemical Sector. Senior Industrial Relations Managers from the Group participate in this forum as employer representatives.


This engagement is driven by good governance requirements, through compliance with relevant legislation and standards. This includes the limited assurance of selected non-financial indicators which AECI believes are material in view of the nature of its businesses and the environment in which they operate.

The Directors are required in terms of the Companies Act and the JSE Listings Requirements to prepare annual financial statements which fairly present the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss for that period, in conformity with IFRS. The external auditor is responsible for auditing the financial statements of the Company and its subsidiaries and for expressing its opinion on these statements to shareholders. In addition, the external auditor is responsible for confirming whether the financial statements meet the requirements of the Companies Act and IFRS. In 2016, the external auditor was also engaged to carry out an Agreed Upon Procedures Review in respect of the interim financial results to 30 June.

The Directors must ensure that Group companies maintain adequate accounting records, and that an effective risk management process and internal controls are in place to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. To enable the Directors to meet these responsibilities, management sets standards and implements systems of risk management and internal control aimed at reducing the risk of error or loss in a cost-effective manner. The Group’s Internal Audit function appraises Group companies’ internal controls and submits its assessment of these to the Board on an annual basis.

The management of each operating business also submits an annual self-assessment of internal control (Internal Control Matrix) to the Audit Committee affirming that the systems of internal control, in entities for which they have responsibility, are adequate for their operations and are functioning effectively. Internal Audit assesses the controls opposite this matrix and reports thereon to the Audit Committee.


AECI and its businesses are subject to the laws of the jurisdictions in which they operate. This means governments and regulators are able to have very significant impacts on the Group as a whole or on one or more of its businesses. As a consequence, the management of these impacts through engagement with relevant authorities is a business imperative.

Such engagement may range from advocacy initiatives associated with the development of legislation and standards, to cooperative work with those regulators who have the responsibility of governing the Group’s activities through the application of these laws and standards. To facilitate engagement, AECI and/or its businesses may choose to develop relationships with relevant government and regulatory entities in a proactive manner.




Chairman and Chief Executive, via CAIA and directly




Chief Inspector Health and Safety

Group Transformation Manager and Human Capital Executive

Group Transformation Manager and Human Capital Executive

Group SHE Manager


National – Director



Group SHE Manager, via CAIA

Group SHE Manager

Business Operations Managers


Chief Inspector Explosives

AEL Safety Manager


Large Business Centre


Chief Financial Officer

Group Financial Manager

  TRADE AND INDUSTRY National – Director-General

Chief Executive, via CAIA


National – Director-General

National – Director

Provincial – various


Chief Executive, directly and via CAIA

Group SHE Manager

Group SHE Manager

Business Operations Managers

All government engagement by AECI employees is subject to the Group’s Code of Ethics and Business Conduct (“the Code”) as approved by the AECI Board. The Code “is designed to provide clear guidelines for engaging with all stakeholders” and there is an explicit expectation that employees will have zero-tolerance to bribery and corruption. The statement that “AECI will not condone any violation of the law” is unequivocal. With respect to donations, the Code is clear that “no donations will be made to political parties and political candidates under any circumstances”.

A second policy document of relevance is the Delegation of Authority Framework (“the Framework”), the revision of which was approved by the AECI Board in 2013 and which will be reviewed again in 2017.

This document notes that the AECI Board “is ultimately accountable and responsible for the performance and affairs of the AECI Group of Companies … and derives its authority primarily from the (Company’s) MOI as well as the general regulatory framework and common law”. The Framework stipulates that Subsidiary Boards and Cluster Executive Committees have been set up to, inter alia, ensure “that the business entity is run in accordance with good corporate governance practices”. The Framework is clear that “no delegation of authority may be exercised for any immoral or unlawful purposes”. While naturally silent on the details of government engagement, the document clarifies governance roles and responsibilities in the Group.

AECI’s engagement with government may take place at the level of national, provincial and local or municipal entities. It may also involve a range of regulatory bodies. The majority of AECI’s government engagement activities take place in South Africa. However, the scope of this commentary includes those activities which take place in other jurisdictions in which AECI operates.

In South Africa, the points of contact set out in the table above are seen as priority areas for government engagement at present. This view is informed by AECI’s risk registers. In most cases engagement is directly between Group personnel and the respective government official(s). In certain cases, though, it is deemed more effective and/or more practical for the engagement to take place under the auspices of industry forums. The main such association is the Chemical and Allied Industries’ Association (“CAIA”), of which AECI is a founder member and on whose Board AECI is represented in the person of its Chief Executive.

In jurisdictions other than South Africa, it is not appropriate to tabulate such a set of priorities based on functional areas. These priorities differ from country to country based on the nature of AECI’s operations, country-specific factors and the level of maturity of the business in each country.

Accountability for government engagement in these jurisdictions lies with the in-country Managing Director. The Managing Director must ascertain the priority areas of engagement and needs to form relationships with government officials and regulators accordingly.

Where appropriate, Managing Directors are encouraged to leverage existing relationships already established by their customers’ businesses. Managing Directors may also call on diplomatic staff at South African embassies, including but not limited to Department of Trade and Industry representatives.

Under conditions of uncertainty, and in accordance with the Framework, issues can be escalated to Head Office functions or more senior Executives if required.


AECI has formal structures in place for engaging with its neighbouring communities. In the mid-1990s, the Umbogintwini Industrial Complex (“UIC”) was the first site or business in the Group (and South Africa) to sign a formal charter with its neighbours. The charter sets out principles, responsibilities and procedures to serve as a framework for interaction between the parties.

Communities living within the footprint of influence of manufacturing and storage sites are most often concerned about the potential effects of site incidents and the management of these. Emergency preparedness and emergency response information, therefore, is shared with neighbours using channels such as the distribution of pamphlets, local media articles and advertisements, and invitations to participate in site-based emergency exercises. The latter participation is via representatives mandated by communities to represent them in these matters.

at Modderfontein, AEL oversees the functioning of a Community Awareness and Emergency Response (“CAER”) Committee; and

at the UIC, the CAER Committee was replaced by issue-specific stakeholder and community liaison forums that deal with inter alia water quality (including discharges to sea), air emissions and development plans. Although stakeholder engagements are generally managed by the Umbogintwini Industrial Association, the AECI Group provides assistance with logistical arrangements and, more importantly, through the site’s Community Liaison Officer.

Other interactions include local corporate socio-economic development projects in the areas of education, health, the environment, charitable contributions, and skills and enterprise development. Most often, contributions are not only in cash but also in the form of expertise and guidance. This is also true for a number of businesses beyond South Africa’s borders.

Communities in which the Group operates or has an interest in South Africa are the intended principal beneficiaries of the AECI Community Education and Development Trust, established in 2012 as part of AECI’s Broad-based Black Economic Empowerment transactions.


These stakeholders are often, but not always, aligned with communities in which the Group operates.

Although their engagement requirements often overlap with those of communities, their needs are recognised separately.

Wherever possible, such stakeholders are encouraged to participate in the Group’s affairs via existing structures (liaison forums and the like). Where this is not possible separate arrangements are made to meet the needs of such stakeholders who, as a rule, are concerned mainly with matters broadly classified as being environmentally- and health-based. Arrangements include meetings, site/business visits and participation in/support of interest group initiatives.

Examples of interest groups in South Africa include the Modderfontein Conservation Society and the Wildlife and Environment Society of South Africa.


All issues pertaining to the Group and its stakeholders are of potential interest to the media in its role as a conduit for public information.

AECI’s Corporate Communications function maintains regular contact with the media by disseminating relevant information. Group businesses also interact with the media regarding matters specific to their sites or businesses. Other than in instances where media comment/coverage relates to marketing or product news, businesses are required to keep the AECI Head Office informed of likely media coverage.

This is particularly true in instances where potentially controversial or negative comment is expected, or when it is possible that coverage will impact on/refer to the Group as a whole.

Where businesses do not have the necessary resources to deal with media requests or enquiries on their own, AECI’s Corporate Communications function provides guidance or responds on that business’ behalf after having confirmed the content of the response with management.

For communication in any situation which can be defined as a crisis or potential crisis (operational, industrial action, legal issues etc.), the preparedness of each business for such an eventuality is confirmed by annual Letters of Assurance submitted by Managing Directors to the Chief Executive.

Depending on the type and scale of an emergency, AECI Head Office resources are made available to assist the affected site or business. The hierarchy for escalating notifications of incidents, and subsequent progress reports, is clearly defined and has been communicated to all businesses.


In addition to its involvement in CAIA, AECI and its businesses participate in a number of initiatives and associations pertinent to all or some of their business activities. In this way, issues relevant to the sustainability of the Company or that of one or more of its businesses are addressed.

Initiatives include:

longstanding membership of and involvement in SAFEX International, which aims to protect people and property against dangers and damage by sharing experiences in the global explosives industry. An AEL representative serves on the organisation’s Board of Governors;

active membership of the Process Safety Forum for South Africa’s chemical industry;

the Chemicals Handling and Environmental Forum is tasked with promoting the responsible handling of chemicals throughout their lifecycle by providing a forum for stakeholders to discuss critical issues pertaining to the handling, storage, transport and distribution of hazardous chemicals. The Forum comprises representatives of CAIA member companies, government departments, other allied industry associations and various industry experts. AECI is represented at this Forum;

Responsible Care is the global chemical industry’s voluntary initiative for the continual improvement of performance in safety, health and environmental practices. It is a public commitment to the responsible management and stewardship of products and services through their lifecycle. It is also the vehicle used by the industry in its pursuit of improved product stewardship. Responsible Care was launched by the Canadian Chemical Producers’ Association in 1984 and has since been adopted in more than 60 countries. CAIA is the custodian of Responsible Care in South Africa, with 161 South African businesses being signatories. AECI is a signatory to Responsible Care, as is AEL in South Africa. All companies in the Specialty Chemicals cluster which are based in South Africa are also signatories in their own right. Signatories have their compliance with the Management Practice Standards verified by independent assurance providers. The majority of signatory companies in the Group have been audited successfully against these standards;

participation in the Carbon Disclosure Project (“CDP”) Climate Change and the CDP Water Programs. The CDP is a global initiative administered locally by the National Business Initiative, of which AECI is a member. The CDP is an international voluntary disclosure programme. Data on greenhouse gas emissions and climate change response actions by business are collated on behalf of global investors managing assets of US$100 trillion in 2016. The CDP Water Program is a more recent global programme, aimed at catalysing sustainable corporate water management;

the Group is well represented in legislative forums in structures of the Chemical Industries Education and Training Authority. Subject matter experts represent AECI at employer organisations including the National Association of Speciality Chemicals Employers Association, the National Institute of Explosives Technology and the National Artisan Training Committee. These relationships optimise the Group’s ability to make contributions that are suitable and beneficial to the sectors in which it operates.



Customer service and engagement is at the heart of the daily business of AECI’s operating entities. It is fundamental to the value-add business model and, as such, it embraces the spectrum of business-related issues that could affect performance and also addresses external considerations such as labour relations and socio-political stability.

Each Group business has a robust system in place to ensure that any changes in customers’ needs are met quickly and efficiently. Equally, relationships with suppliers are monitored continually and are modified as required. Terms of engagement with customers and suppliers are clearly defined and, where appropriate, Group-wide policies and procedures guide the businesses to ensure that customer- or supplier-related risks are properly understood and managed in line with AECI’s risk appetite.


Long-term technology and other agreements, as well as strategically advantageous partnerships, are one of the bases for the AECI Group’s growth. Individual businesses engage with their principals and partners as a matter of course. Major changes, developments or opportunities are escalated to the Executive Committee and then to the Board, depending on the significance of the real or proposed change, development or opportunity.

This ensures that issues such as competitor and customer trends, economic conditions and industry trends, and the appropriateness of technologies, products and services are addressed.


All rights Reserved.