28 November 2017

To our stakeholders:

Capricorn Group reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

As a leading Financial Institution in Namibia, with a presence in Botswana and Zambia, we understand that our purpose extends beyond our core business. We believe that through our connection to our customers and stakeholders, we are more than what we do. We believe that real value lies in maintaining the long range view whilst attending to short term needs and through that, we can act as a catalyst of sustainable opportunities for our customers and stakeholders. Our Board, through the Board Sustainability and Ethics Committee provides direction for our sustainability initiatives that allow us to be a connector of positive change in the communities that we serve.

Through our annual Integrated Report, Capricorn Group demonstrates its culture of transparency and accountability to all its stakeholders. Capricorn Group follows international reporting standards such as the Global Reporting Initiative and the International Integrated Reporting Council Framework. In its second year of Integrated Reporting, Capricorn Group was awarded the Regional Company Award at the Annual Integrated Reporting Awards of 2017 hosted by Chartered Secretaries Southern Africa in partnership with the JSE Limited.

In this annual “Communication on Progress” submission, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. Our commitment to the UNGC and its principles is communicated to our stakeholders through our annual Integrated Report, which is available on our website http://www.capricorn.com.na/.

Sincerely yours

Thinus Prinsloo
Group Managing Director

Human Rights are enshrined in Chapter 3: Fundamental Human Rights and Freedoms of the Namibian constitution. The Capricorn Group is committed to uphold Human Rights as enshrined in the constitution and laws of the jurisdictions in which the Group operates. Internal policies and procedures are in place to protect the human rights of employees and to detect and remedy violations of the policies. The Group has a formal compliance programme to ensure that it adheres to laws and regulations.

The Bank Windhoek (Group subsidiary) Environmental and Social Risk Management (ESRM) Policy stipulates that the bank will impose on its own operations and on the activities of borrowers applicable social requirements that include core International Labour Organisation (ILO) conventions. The ESRM policy uses the IFC Performance Standards for high-risk clients, which includes extensive requirements for the protection of human rights.

The Group drives improvement within Key Performance Areas through relevant Key Performance Indicators. The following KPIs support the advancement and protection of human rights: percentage of female permanent employees, woman in middle and senior management, percentage of employees with disabilities in the work force, racially disadvantaged permanent employees and racially disadvantaged persons in middle and senior management.

The Group intends to implement a vendor selection process which will include, as part of a vendor due diligence, the screening of vendors against human rights aspects.

Multiple channels exist for complaints to be lodged including call centers, e-mail, Facebook and twitter.

Employees are familiarised with the content of the Group Code of Ethics and Conduct Policy by providing new employees with the policy. The policy is signed by each employee to acknowledge that it has been read. Awareness of the policy is created annually through a renewal of the confirmation that the policy has been read and understood.

The Grievance Policy and Procedures and the Group Disciplinary Policy and Code provide the internal governance framework and processes for dealing with grievances.

Internal incidents of human rights violations, if they were to occur, will be dealt with in the manner prescribed by the internal policies. Where employees are involved, the process is overseen by the Human Resource department.

The group does not make use of child labour, migrant workers or forced labour. The rights of workers are protected by internal policies and the law and the risk of violating the rights of workers is low in all jurisdictions. Labour laws regulate employment in all jurisdictions. The right of workers to organise themselves through labour unions is protected by law. Internal policies adhere to labour laws and a formal compliance programme ensures that compliance is monitored and that breaches are remediated.

Governance and oversight: The Board HR Committee has oversight of labour related matters including the policy framework. A comprehensive and formal internal policy framework is embedded and governs all elements of labour legislation and people risk within the group. A formal compliance programme ensures compliance with laws in local jurisdictions and ensures that issues are remediated.

Employee rights: New employees are made aware of policies through an induction programme and policy changes are communicated to all staff as and when they occur. Policies are accessible to all employees. A formal grievance procedures exists which protects the rights of workers. Industrial relations matters are dealt with in accordance with local laws and overseen by the HR department.

Remuneration and rewards: An internal remuneration policy outlines the remuneration principles of the group and is the guiding document in terms of fair remuneration.

Freedom of association: The right of workers to organise themselves is protected by law. Where labour is represented by a Union a formal recognition agreement governs the manner, scope and timing of consultations.

Key indicators have been identified to measure performance and risk. The workforce composition is reported in terms of job level, gender and race. In Namibia thresholds and targets have been identified to support local employment equity initiatives.

Key indicators are reported monthly to executive management committees and quarterly to the Board HR Committee. People risks are reported monthly to management Risk Committees and quarterly to Board Risk Committees.

As a financial services provider, our own operations have limited direct environmental impact (compared to mining for example), however, through lending activities the Group has an indirect impact on society and the environment.

The Group strives to improve its environmental performance both directly and indirectly. The indirect environmental impact is managed through a formal Environmental and Social Management System (ESMS) implemented at Bank Windhoek. A formal Group Sustainability Framework and Social Risk Management (ESRM) Policy exists.

The ESMS ensures that clients are compliant with all National environmental laws and regulations and that their activities are not on our exclusion list. We also conduct environmental and social due diligence of proposed loans and apply the IFC Performance Standards where necessary.

The group is targeting the reduction of its carbon footprint and aims to extend its ESMS to vendor selection.

Bank Windhoek implemented an ESMS to all branches. Classroom-based training was provided to relevant staff.

Paper use was reduced through internal electronic reporting to committees and the introduction of electronic statements to clients.

Responsibilities are allocated as follows: The credit, retail and corporate executives are responsible for implementing the ESMS, the ESMS officer is responsible for the oversight of the ESMS process and provides assistance and advice to credit staff on environmental risks when necessary. The Chief Operating Officer is responsible for implementing environmental initiatives.

Capricorn Group has never received a fine or been subject to legal action regarding environmental transgressions.

The progress made in the last reporting year was the successful implementation of the ESMS risk assessment process used to assess the environmental and social risk of clients who apply for loans.

The ESMS was assessed as ‘emerging’ by the IFC in an audit conducted during the reporting period. Recommendations from the review are being remediated.

As stated in the Bank Windhoek (subsidiary of Capricorn Group) Forensic Policy “The company is determined to maintain a culture of high ethical and moral standards, honesty and opposition to fraud and corruption.” The Capricorn Group is a listed entity on the Namibian Stock Exchange (NSX) and in terms of the NSX Listing Requirements is required to comply with the Namcode on Corporate Governance (based on the King Code on Governance for South Africa, 2009 [King III]).

All listed entities on the NSX are required by way of explanation to make a positive statement about how the principles have been applied or have not been applied. Chapter 6 of the Namcode specifically provides that the board should ensure that the company complies with all applicable laws which would include the Namibian Anti-Corruption Act 8 of 2003. The Namibian Anti - Corruption Act criminalises corrupt conduct and practices.

The Group has various policies in place in order to prevent corruption internally and externally from its operations. The policies are adopted Group wide and within the different subsidiaries and departments, and include the following: Group Code of Ethics and Conduct Policy; Group Procurement Policy; Group Whistleblower Policy; the Bank Windhoek Forensic Policy and the Group Financial Crime Risk Framework.

The group aims to implement a vendor screening process that will include measures in support of anti-corruption. A refresh of the ethics risk assessment is planned for the first quarter of 2018 and includes anti-corruption.

The Group offers a 24hr anonymous whistle blower hotline and an email address where all complaints can be reported including fraudulent/corrupt behaviour of employees. The Group has controls in place that ensure employees read and know the contents of the policies related to anti-corruption. Awareness on anti-corruption is created through induction training, internal communication and annual conferences held for branch administrators that cover issues on anti-corruption.

Staff are made aware of the different lines of communication they can use to report any form unethical behavior including corruption during induction training.

The Board is accountable for anti-corruption measures. The Board Risk Committees have oversight of ethics and compliance reporting. The following departments have responsibilities towards anti-corruption: Human Resources (ethics), Compliance (regulation), Anti-money Laundering (AML, Sanctions and CFT), Procurement (ethics) and Forensics (investigations).

Bank Windhoek currently chairs the Anti-corruption and Fraud Subcommittee of the Banking Association of Namibia.

Cases of corruption are investigated by the Forensic department and dealt with in accordance with the Disciplinary Policy. Corruption is considered as serious misconduct and will always involve a disciplinary hearing.

Bank Windhoek business units are required to conduct a fraud risk self-assessment (the definition of fraud includes anti-corruption) and the results are reviewed by the Head: Forensics. The Management Assurance department ensures that all policies and procedures are followed correctly within branches.

No cases of corruption or bribery were reported or investigated in the reporting year, within the Group or against the Group.

An external audit of the Bank Windhoek ethics risk procedures (some anti-corruption factors fall within ethics) were done in 2015, the recommendations were developed into an ethics risk register where aspects related to anti-corruption measures are monitored.