Motor and controls manufacturer WEG subsidiary Zest WEG Group has taken steps to create a broader-based and more sustainable ownership foundation to ensure its compliance with the new Broad-Based Black Economic Empowerment (BBBEE) Codes of Good Practice, which has seen the group achieve a Level 2 status.
Zest WEG was awarded the certificate by a South African National Accreditation System-accredited black-owned verification agency last month.
Zest WEG Group CEO Louis Meiring tells Engineering News that the group introduced a structure that includes a new ownership portfolio. This was done by facilitating ownership of its shares by two black-owned nonprofit organisations (NPOs) that directly benefit communities in need.
The two NPOs, together with the company’s employee trust, now hold 51.6% of Zest WEG Electric, the South African arm of Zest WEG Group. One of the NPOs is in the education sector and the other in the microenterprise support sector.
Significantly, the shareholding comprises 31.68% black female beneficiaries. Not only are most of the beneficiaries of the NPOs black women, but the arrangement will also sustain the good work of these NPOs into the future, Meiring says, highlighting the initiative as “a good match for Zest”.
“Significantly, the achievement of our Level 2 BBBEE status, effective as of August, is certainly one of the best, if not the only such one, in our market sector, and we believe this initiative breaks new ground for empowerment in South Africa. It provides a model for sustainable collaboration between business and civil society, while forging a more effective implementation of the original intentions of the country’s BBBEE philosophy,” he says.
Meiring says the business has always been proactive about transformation and builds the BBBEE compliance goals into its business culture.
“We previously readily achieved our Level 4 status, based on our shareholding, skills development, supplier support and community investment, and this is simply the next step in our transformation journey,” he notes.
Meiring adds that the ownership-related initiative progresses the group on its path as a responsible corporate citizen that promotes sustainability.
“Sustainability has always been a very important aspect . . . in terms of black empowerment,” Meiring says.
He further notes that, as a result of its new BBBEE status, certain gatekeepers, which previously prevented the group from accessing certain parts of industry, have been removed. This allows for continuation of business and “opens the doors” to additional opportunities.
While the ownership element in terms of the Codes of Good Practice is a critical component, Zest WEG’s score in the skills development element was another key achievement.
Meiring explains that the group scored bonus points in the weighing of this element, which added to the group’s overall score.
The group pursues proactive value addition in terms of social economic development, providing a range of skills development resources to schools, universities and the broader community including teaching, equipment, financial aid and infrastructure. This is aimed at developing local talent and capacity, bringing young learners into the business and industry.
Zest WEG Group logistics and operations director Juliano Vargas adds that the organisation’s close relationships with communities allows for the identification and nurturing of talent from an early stage.
“With our double-digit growth, even through the recent downturn, our business is creating opportunities for job seekers, and we prepare them well to replenish the positions that our expansion requires,” he says.
The group develops skills internally through apprenticeships, internships and mentoring in various disciplines. The development is also sometimes supported with study bursaries.
“We adopt and evolve leading edge manufacturing technologies, so we need to upgrade our skill levels among all employees on an ongoing basis,” Vargas says. “WEG in Brazil shares its technology and skills with us; visiting WEG factory experts conduct training for our teams regularly.”
These processes, in turn, promote employment equity as potential managers and leaders can be identified and developed.
The company also works hard to bring small, local suppliers into the Zest WEG Group’s value chain, by developing their capacity to deliver and to become sustainable.
“Through our involvement with small business incubators, we even select and support small enterprises before they are in a position to become our suppliers,” he says.
Vargas adds that those who progress well may earn contracts from group companies. The group reviews and tracks their performance to ensure they deliver good value in their services and products.
While Meiring acknowledges the challenges the industry faces in terms of meeting the empowerment regulatory requirements, he, nevertheless, suggests that key steps to ensure success are decision-making and implementation.
He adds that while there is no perfect formula for implementation, companies could predefine their philosophy and goals in terms of sustainability and then determine the implementation process.
Meiring concludes that benefits, from a business and organisational perspective, could be derived from a correct approach.