The recently released Sector Code of Good Practice by the Property Sector Charter (PSC) unveils bold new B-BBEE targets for the industry.
The Charter includes the usual 7 B-BBEE components through which companies can earn points towards their B-BBEE compliance. These include Ownership, Management Control, Employment Equity, Preferential Procurement, Skills Development, Enterprise Development and Socio-Economic Development .
The Property Charter, however, includes some key differences to other sector charters. This is particularly true for the Enterprise Development (ED) component of B-BBEE, whereby the Sector seeks to “invest in, support, facilitate and foster new and existing small and micro enterprises” with a Level 1 – 4 B-BBEE status.
“In simple terms, this pillar of the B-BBEE scorecard is about assisting small Black-owned businesses in the property industry to become independent and sustainable,” according to Diane Albertyn from B-BBEE consulting firm, Olive Tree Consulting Services.
Whilst most B-BBEE Charters aim for companies to commit 3% of net profit after tax (NPAT) for Enterprise Development, the Property Charter has set the target at 5% net profit before tax (NPBT).
“The ED targets are perhaps a little ambitious at this stage,” says Albertyn “particularly since it’s based on a before-tax figure. The Construction Charter is significantly lower at 3%, and works on an after-tax figure.”
The Charter applies to all enterprises “engaged in property ownership or provision of property services, including practitioners and companies involved in property development.” It has been released for commentary prior to gazetting, and will be subject to an independent third party analysis, but once gazetted, will share the same status as the B-BBEE Codes of Good Practice. The Charter is aimed at addressing the inequalities of the past, and focuses on empowering Black people, with a particularly strong focus on Black women.
One area of the Charter that Albertyn believes should be applauded is the inclusion of triple bottom line accountability. This is not only mentioned in the Charter but evidenced by a fresh approach to Socio-Economic Development or Corporate Social Investment as it is referred to in the Property Charter.
Property companies are encouraged to consult with CSI beneficiary communities, and must include monitoring and evaluation of the impact of their projects in their B-BBEE initiatives. This points to a very positive end to proverbial “cheque writing” whereby companies merely pay across the required amount to secure their B-BBEE points without knowing if their contribution has any sustainable impact on the community.
CSI targets are set at 1% of NPAT, which is the norm across the various B-BBEE Charters, and can include initiatives ranging from education programs, property education projects, development programs, and initiatives relating to environment, arts, culture, sport, health or job creation.
The remaining B-BBEE pillars are very similar to those in the Generic B-BBEE Codes. The Ownership pillar sets targets in terms of economic interest and voting rights in the hands of Black people. Similarly Management Control sets 5 year targets to have Black people, especially women, represented at board level and in executive management. Employment Equity sets targets for Black people, again specifically Black women, in Junior, Middle and Senior Management positions.
Skills Development specifies that companies should set aside 1.5% of their payroll, over and above the skills development levy, on skills development for Black people. Further points can be earned through learnerships, mentorships and internships.
Finally, Procurement sets a 5 year target of 70% of procurement spend from B-BBEE enterprises, while there is also a strong focus on supporting small and micro enterprises.
“On the whole, we believe that the Charter is well thought-through”, comments Albertyn “however there may be some changes made before it is gazetted. We do believe it provides the industry with a number of ways of becoming B-BBEE compliant, rather than the old narrow-based BEE approach.”
Albertyn heads up Olive Tree Consulting Services, a B-BBEE consulting firm that assists companies in preparing for B-BBEE verification. The firm also helps companies to chart the sometimes complex B-BBEE maze and ensure that a company’s B-BBEE initiatives are strategic, and add value for the enterprise. Olive Tree also specializes in the areas of Enterprise Development, Skills Development and Socio-Economic Development.
