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Corporate Social Investment

1. Background

BMG, as Africa's leading distributor of dynamic engineering consumable products, believes that it has a fundamental responsibility to assist in improving the lives of disadvantaged individuals in South Africa by providing access to education and enterprise and skills development opportunities within the engineering industry. Bearing Man has therefore developed a Corporate Social Investment (CSI) policy which is aligned to the company’s strategy and which contributes to the company’s overall mission and vision. BMG’s Corporate Social Investment (CSI) Programme is a deliberate, focused, coherent and progressive programme that is:

  • Well co-ordinated
  • Guided by a common policy framework
  • Has clear focus areas
  • Is mutually beneficial
  • Is seen as a strategic business function
  • Is aligned to the core business

 

2. Objectives of the BMG CSI Programme

The following are commonly shared objectives of BMG’s CSI programme:

  • Make a measurable, positive impact on the communities in which BMG operates through investing in the development of disadvantaged communities
  • Increase BMG’S involvement in employees’ communities
  • Enhance the company image and reputation of BMG both internally and externally
  • Attract quality socially responsible staff to the company as well as retain and enhance the loyalty and pride in the company of existing staff
  • To increase customer goodwill and loyalty through the strategic positioning of BMG as a caring and responsible corporate citizen within the engineering industry

 

3. CSI Policy

Policy Statement

BMG believes that being a responsible and contributing corporate citizen is a key component of the company’s business strategy. Through its community investment strategy, the company is committed to the empowerment and upliftment of disadvantaged communities.

 

PURPOSE OF THE CSI POLICY

The purpose of this CSI Policy is to:

  • outline the company’s CSI strategy and therefore its involvement in community development and upliftment;
  • set out the processes and procedures by which the company will identify, manage, and support its corporate social investment activities.

 

BMG’S CSI “FOOTPRINT”

Investments will be made throughout South Africa, particularly focusing on the communities in which we operate and in which staff live.

 

4. CSI Focus Areas

The focus areas outlined in this policy indicate areas in which BMG shall direct their corporate social investment spend. In allocating resources to the outlined focus areas, BMG shall be guided by the need to:

  • focus on communities in which the company operates.
  • focus/emphasize investments in disadvantaged communities
  • support programmes that engender development

 

PROGRAMME FOCUS AREAS

Three focus areas have been identified, namely:

  • Technical Skills Training and Education
  • Enterprise Development
  • Community Development

 

TECHNICAL SKILLS TRAINING AND EDUCATION

The educational inequalities fostered during Apartheid, combined with the growing pressures of globalization have led to an increased mismatch of skills within the labour market and a shortfall of skilled labour in many sectors. The South African Department of Labour has identified skills shortfalls as being particularly high in terms of required management skills, technicians, artisans and skilled labourers. The skills shortage in many of these sectors has been exacerbated by the extensive loss of life and human capital within South Africa as a

result of HIV/AIDS.

 

BMG’s social investment programme attempts to address these needs through supporting projects providing:

  • Education and training in the under-resourced areas of maths, science and technology for both educators and learners at secondary school level
  • Technical skills training at school leaver level, particularly programmes focused on training in the mechanical engineering field

 

ENTERPRISE DEVELOPMENT

With the unemployment rate in South Africa at between 30 and 40 percent the accelerated creation of sustainable small and micro enterprises is essential to the growth of South Africa's economy and to future sociopolitical

stability.

 

BMG social investment programme aims to address the need to accelerate the development of sustainable enterprises in so doing providing employment opportunities and generating economic growth by improving the broad conditions for small business.

 

  • BMG social investment in Enterprise Development will focus on supporting projects that assist potential entrepreneurs in developing their businesses particularly in the technical field BMG will select one enterprise development project as its flagship project. This project will be reviewed on an annual basis.

 

COMMUNITY DEVELOPMENT

BMG’s social investment in community development will be focused on supporting staff nominated projects which empower and uplift disadvantaged groups within the staff’s communities.

 

FLAGSHIP PROJECT

BMG will select a flagship project within its enterprise development focus area, and will allocate approximately 60% of the CSI budget to such projects. The balance of CSI funding will be made available for grants for other smaller selected projects which fall into the CSI key focus areas.

 

In its endeavour to identify an appropriate flagship project, BMG will undertake to ensure that the project issustainable in the long term, and achieves real and measurable developmental impacts.

 

CRITERIA FOR SELECTING PROJECTS

All organisations and projects identified for financial support from BMG must:

  • serve disadvantaged communities within South Africa
  • focus on the communities within which BMG operates
  • demonstrate the possibility for sustainability
  • be implemented by organizations that are registered as Non Profit Organisations with the Department of Social Development’s NPO Directorate and have Section 18(A) tax exemption status
  • prove that more than 75% of the beneficiaries are black in accordance with the requirements of the scorecard of the Broad Based Black Economic Empowerment (BBBEE) Charter Funding agreements for all selected projects should be drawn up.

 

GENERAL EXCLUSIONS

BMG will not offer financial support to:

  • Profit-making organisations and companies
  • Individuals in their personal capacity
  • Religious organizations for sectarian activities
  • Political parties or groups with partisan political affiliations
  • Labour unions
  • Organisations that are not registered as Non Profit Organisations with the Department of Social Development’s NPO Directorate
  • Organisations that do not have Section 18(A) tax exemption status

 

5. CSI Budget

BMG’s CSI expenditure will be calculated according to a specific formula of 1% net profit after tax. The budget will run from the 1 April to the end of March each year. The majority of the budget will be allocated to the selected flagship project with the balance allocated to non-flagship projects and a discretionary fund. The following split is proposed for the BMG annual CSI budget:

Flagship Project = 60%

Non-flagship Projects = 35%

Discretionary = 5%

 

The discretionary fund will be for the use of the CEO in the promotion of strategic partnerships that will benefit the company. Criteria for funding will be at the total discretion of the CEO and will not be restricted to the focus areas and funding criteria as set out in this CSI Policy.

 

6. Employee Involvement

BMG realizes the value of involving employees in its CSI activities and as such will endeavour to develop and implement an employee participation programme that will address the needs of the employees in a holistic manner whilst also achieving its corporate objectives.

Employees will be encouraged to get involved in projects that the company’s CSI programme supports. This support can include volunteer time, financial contributions and donations in kind.

The volunteer needs of projects that the company is supporting will be identified and communicated to employees to ensure that employees are aware of the opportunities available.

Employees will be given the opportunity to nominate their own projects for consideration for funding under BMG’s Community Development key focus area. Nominated projects will be screened according to the criteria of the Community Development focus area.

 

7. Decision-making Structure & Roles and Responsibilities

The CSI programme will be managed on a day to day basis by the CSI Co-ordinator who will report informally on all CSI activities on a regular basis to the Chief Operations Officer and report on a formal basis to the Executive Committee at their meetings.

Responsibilities of the CSI Co-ordinator will include:

  • Controlling the CSI expenditure
  • Identifying and proposing flagship projects to the Executive Committee for consideration
  • Identifying and selecting non-flagship projects
  • Drawing up contracts/grant agreements with the selected projects
  • Determining budget allocation for projects under R30 000
  • Managing the implementation of the flagship project
  • Monitoring the effectiveness of funded projects and reporting to the Executive Committee
  • External and internal CSI reporting
  • Co-ordinating the implementation of an effective CSI communication programme

 

The Executive Committee decision-making roles will include:

  • Approval of the CSI policy and strategy
  • Approval of the annual CSI budget
  • Approval of flagship project
  • Determining budget allocation for projects over R30 000

 

8. Reporting Structure

  • Exact reporting formats and dates for report submission shall be set out in the grant agreements to be signed by each of the projects funded.
  • Regular project progress reports shall be prepared by the CSI Co-ordinator for presentation to the Executive Committee
  • An annual CSI report will be prepared by the CSI Co-ordinator for inclusion in Invicta’s annual report.

 

9. Communication

The CSI communication plan will communicate information on BMG’s CSI activities and successes both internally and externally. The aim of the communication plan is to enhance the company’s reputation for good corporate citizenship and ensure that staff, customers, potential partners and all relevant stakeholders are kept informed. The development and impelementation of the external and internal communciation plan will be the responsibility of the CSI co-ordinator.

 

INTERNAL COMMUNICATION

The internal communication plan will provide feedback to staff and management on the CSI policy and strategy, projects selected, project achievements, project volunteer opportunities and the process to follow for requesting financial assistance for staff nominated projects. This will be done through:

  • Employee newsletters
  • Intranet
  • Email
  • Notice boards
  • Kiosks
  • CEO cascade sessions
  • Regional meetings
  • Management conferences
  •  

EXTERNAL COMMUNICATION

The external communication plan will create public awareness for the company’s CSI programme and their role in community upliftment through:

  • Corporate presentations
  • The company’s website
  • Investors relations publications
  • Company brochures
  • Public Relations programme including press releases and publicity
  • CSI report in Invicta’s annual report

 

10. Evaluation and Feedback

An effective evaluation and impact analysis process will be developed and implemented and will apply to all selected projects. The measurement and evaluation of the projects will be defined within the grant agreements which set the framework for periodic evaluation.

For flagship projects, a pre-funding evaluation and annual evaluation will be conducted in addition to end of contract evaluations where a full impact analysis will be undertaken.

The extent of this evaluation on non-flagship projects will be determined according to the size of grant – those flagship projects with substantial budgets shall go through an evaluation process which will involve application forms, site visits and a formal contract, while smaller projects will only be required to sign informal contracts and provide proof of being a bona fide non-profit organization

 

Full disclosure of grantees and the amount of grants made are in the best interest of BMG in terms of good Corporate Governance practices.