The primary objective of the Financial Mail Top Empowerment Companies (TEC) survey is to rank the top 200 JSE-listed companies in terms of their progress in broad-based black economic empowerment (BEE) in 2006.
This is the fourth TEC survey, with each edition reflecting the empowerment contributions of the previous year.
The focus of the survey remains companies on the JSE. However, all entities listed under the development and venture capital sectors and the AltX are excluded from the survey.
The basis of the survey is the department of trade & industry's (DTI) broad-based BEE Codes of Good Practice. In tandem with the continuing development of the codes, the methodology of the survey has also evolved to reflect the latest version of the codes.
The process of developing the codes dates back to 2003 when the DTI released its empowerment strategy. This laid out the elements and weightings that now comprise the scorecard. The process was entrenched in the SA business environment by the promulgation of the Broad-based BEE Act in 2004, which set in motion the drafting of the codes.
The first phase of the codes was released in December 2004 for public comment. These referred only to the ownership and management control elements of the scorecard.
In the second phase other elements of the generic scorecard were introduced - namely, employment equity, skills development, preferential procurement, enterprise development and corporate social investment (CSI), which is now referred to as socioeconomic development (SED).
On December 14 2006, the DTI released the final version of the generic scorecard as stipulated in the codes. This was gazetted on February 9 2007, providing clarity, finally, on how the DTI expected companies to go about the transformation process.
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The final scorecard is simpler in composition than the initial draft scorecard. However, the reporting requirements for firms under the new dispensation are more stringent.
For example, under skills development, firms that don't report the gender of the black employees who have undergone training in learnership programmes are effectively penalised for a lack of specifics.
In addition, reporting in respect of the participation of black disabled people in the workforce and in learning programmes is required if firms want the full number of points allocated to employment equity and skills development.
In order to ascertain the contributions of each company to broad-based empowerment, an invitation to participate in the survey was extended to the companies and they were required to complete a questionnaire designed to determine their contributions.
In this year's survey, firms were scored out of a total of 95, as opposed to 100 in previous years. This is due to the exclusion of five points in the preferential procurement element that are allocated to an indicator dealing with procurement from 50% black-owned firms or 30% black-women-owned firms.
In the questionnaire, information on this indicator was not requested as the procurement element was adjusted to accommodate this indicator while the survey was under way.
In addition to the submitted information, the TEC reviews publicly available information in the form of annual reports - including financial statements, sustainability reports and public announcements on Sens and company websites that refer to empowerment-related matters. The information is collated from all sources and the methods and calculations stipulated in the codes are applied to it in order to derive a final broad-based BEE score per company by summing up the individual scores for each of the seven elements.
Each element is weighted according to the generic scorecard, which gives ownership and preferential procurement the highest weighting of 20 points each. (In this survey, however, preferential procurement was scored out of 15). Employment equity, skills development and enterprise development each have a 15-point weighting; management control carries 10 points and socioeconomic development five points.
A number of companies have taken a more proactive approach to reporting on empowerment-related matters, resulting in a broader spectrum of publicly available information. Many, however, refrain from divulging actual rand values or percentages that would fulfil the detailed requirements of the generic scorecard.
For example, to gain maximum points for ownership, management control, employment equity and skills development, companies must report on their contributions relating specifically to black women.
If that information is not readily available or is insufficient for the survey, an effective zero score is allocated to the relevant indicator and is denoted by the abbreviation N/A (not available).
TEC 2007 is ultimately a ranking of the top 200 JSE-listed companies based on disclosed information and does not constitute a list of verified broad-based BEE scores. Verification of these scores can be obtained only after a company undergoes a detailed and independent verification process by an accredited verification company.
Scores are therefore largely dependent on the level of public disclosure of a company's contribution towards broad-based BEE.
