Respect fot stakeholders’ interest
Respect for human rights
Intolerance of corruption
Pursuant to the Company’s Corporate Governance Code, KMG grasps the importance of its influence on the economy, ecology and society, and, striving for growth of its long-term value, ensures its sustainable development taking into account the interests of the stakeholders. We are focused on achieving consistency of our economic, environmental and social goals to ensure long-term sustainable development. Our approach to control of sustainability aspects is based on implementation of sustainability principles. In its Development Strategy 2028, KMG defined sustainable development as one of the strategic objectives aimed at integrating the sustainability principles in the key business processes, operations, and decision-making practices.
Implementation of the strategic objective of sustainable development is expected to result in the creation of a governance system, which ensures better corporate social responsibility and HSE indicators, stronger economic impact in the operating regions, anti-corruption activities, higher quality of stakeholder relations, better corporate governance, corporate culture, ethics and compliance ratings.
Principle 1. Businesses should support and respect the protection of the internationally proclaimed human rights
Principle 2. Businesses should not be complicit in human rights abuses
Principle 4. Businesses should uphold the elimination of all forms of forced and compulsory labour
Principle 6. Businesses should uphold the elimination of discrimination in respect of employment and occupation
Principle 8. Businesses should undertake initiatives to promote greater environmental responsibility
Principle 10. Businesses should work against corruption in all its forms, including extortion and bribery
Engineering a sustainable development system is one of the key SD tasks in the implementation of the Development Strategy.
To develop and implement a sustainable development system, the Sustainability Management Guideline across the KMG Group was prepared in 2019.
In the context of raising the Company’s SD efficiency, a new corporate KPI of improved ESG rating has been approved.
The activities to upgrade the Company’s ESG rating were started in 2019, and a preliminary assessment was made in respect of the three components — environmental, social, and governance. An agreement was entered into with a rating agency. The assessment is made by reference to publicly available materials. The 2019 rating will be available in 2020.
✓ Commitment to the sustainability principles at all the management levels
✓ Analysis of the external and internal situation in terms of the three sustainability aspects — economic, environmental, and social
✓ Definition of SD risks in economic, environmental, and social spheres
✓ Interaction with stakeholders and build-up of a stakeholder map
✓ Definition of goals and KPIs of sustainable development
✓ Realisation of priority areas (initiatives) of sustainable development
✓ Integration of sustainable development into the key business processes
✓ Professional development of the Company’s employees in sustainable development
✓ Organisation of annual sustainability reporting process
✓ Sustainable development efficiency measuring
✓ Upgrading the sustainable development process.
The ESG ratings are used to assess the corporate governance efficiency and to forecast possible corporate, environmental and social risks.
The ESG rating may heighten the interest of investors and clients, who are focused on working with the companies committed to the sustainability principles.
Being guided by the international sustainable development initiatives, the Company is committed to the principles of the UN Global Compact2 , and is integrating the SDGs3 into its operations.
KMG has supported the SDG implementation initiative. It is planned to develop initiatives for implementing SDGs relevant for the Company and for identifying target indicators. SDG integration with the reporting data will enable us to assess the SDG achievement process more effectively, and to make efforts for improvement of the Company’s performance in the implementation of the SD principles.
2UN Global Compact: https://www.unglobalcompact.org/what-is-gc
3More information on SDGs: https://www.un.org/sustainabledevelopment/ru/sustainable-development-goals
The values, principles, standards and norms of conduct represent a code of corporate ethics rules. They are reflected in the KMG Code of Business Ethics (hereinafter — the Code), and define the most important standards of business conduct and stakeholder relations.
KMG accepts and follows the provisions of the Code in its relations with its shareholders, employees, subsidiaries and associated companies, governmental authorities, partners, other stakeholders, when making business decisions and in every-day operations.
The Code is an open document and is freely available to KMG’s business partners and to any other stakeholders. It is also available on the Company’s website in the Corporate Documents section.
To prevent violation of employee rights, confidential and accessible means have been made available for online reporting of any wrongful actions on the part of employees or third parties.
Any employee of the Group, or any other person, who has any doubts regarding the legality of actions taken by other employees, counterparties, or any other persons interacting with KMG and its SACs, may inform their management, supervisor, or the Compliance Function.
Such information can be transmitted by the following confidential channels and means of communication:
The contact details of the Hot Line are available on the KMG corporate website in the national, Russian and English languages. Similar information is available at the websites of the SACs.
All communications, including anonymous, will be received and processed by the operators of the external independent company and forwarded to the KMG Compliance Function, which is in charge of professional and confidential review thereof.
The Compliance Function will bring the information about the results of such review to the attention of the Board of Directors on a quarterly basis. 42 communications were received at the Hot Line in 2019 (vs 24 in 2018).
It should be noted that all communications received by different channels are subject to recording and statistical analysis. In 2019, the Group’s trust information system alone received 185 applications (67 in 2018, 60 in 2017), of which more than 10% dealt with the employee rights related to the remuneration level, occupational safety, etc. 48 communications were received by way of personal reception by the KMG management and by mail. 38 more communications from individuals and legal entities were received by mail or personally, of which 13% reported violation of the employee rights. All the received communications were reviewed in accordance with the established time frames and procedures, relevant measures were taken, and the submitters were duly informed.
KMG guarantees proper and timely review of all the received communications.
If any violations of the approved business ethics standards, legal rules or KMG internal regulations are discovered, the Ombudsman will prepare materials to be channelled for review and resolution to the KMG authorised bodies and business units responsible for the matters in question. The Ombudsman guarantees confidential, unbiased and unprejudiced review of any information regarding violations of the Code of Business Ethics, the RoK laws, and the internal regulations. The rights of the applicant must not be prejudiced either during the review of their information or after the decision is made.
Activities of the Ombudsman Function in 2019
The KMG Ombudsman Function acts in accordance with the approved principles of sustainable development. In the reporting period, meetings were organised in 22 subsidiaries and associated companies with the management, representatives of trade unions and conciliation commissions, business unit managers in charge of HR and social matters, employees of the legal functions, engineers and technicians of SACs in order to promote and explain the provisions of the Code of Business Ethics, the functions and tasks of the Ombudsman, and to analyse the communications received from the employees.
All necessary measures were taken in respect of all received communications in order to resolve the problems, including advisory measures and actions aimed at restoration of violated rights and legal interests. The Ombudsman reviewed 18 communications in 2019. Satisfaction with the Ombudsman’s activities is measured on the basis of assessments and comments by the parties to disputes and conflicts. The positive results for the current period reflect the Ombudsman’s role in problem resolution. Payment of the year-end bonuses to the KMG employees was decided together with the KMG management.
Since the Ombudsman’s principal task is to contribute to improvement of KMG’s rating and image by early prevention and settlement of disputes, conflicts and problems, the Ombudsman Function promptly responds to the communications (warnings) received. In 2019, the Ombudsman Function submitted two performance reports to the KMG Board of Directors. The KMG Board of Directors pays due attention to the performance reports.
The KMG Ombudsman is actively involved in the sustainability management standing task group, which defines responsibilities for integration of SD and ESG rating matters in all spheres of business.
This matrix is divided into 4 conditional zones (quadrants) according to the level of importance of the topics as presented below.
Quadrant 4 — most important topics (assessment by external and internal stakeholders > 2.5);
Quadrant 3 — topics important for external stakeholders, but less important for internal stakeholders (assessment by external stakeholders > 2.5, and assessment by internal stakeholders < 2.5);
Quadrant 2 — topics important for internal stakeholders, but less important for external stakeholders (assessment by external stakeholders < 2.5, and assessment by internal stakeholders > 2.5);
Quadrant 1 — least important topics (assessment by external and internal stakeholders < 2.5).
CDP Climate Programme
In 2019, KMG published its first verified Greenhouse Gas Emission Report 2018 as part of the CDP Climate Programme (Carbon Disclosure Project), which includes information about direct and indirect greenhouse gas emissions for all KMG’s assets, including its subsidiaries in Romania and Georgia.
On 13 December 2019, the ceremony of awarding laureates and nominees of the Annual Report Competition organised by QRA was held. At the 2019 competition, 111 annual reports of the Kazakh companies were assessed including 35 financial, and 69 non-financial organisations.
The annual reports issued in Kazakhstan were analysed to form the long list in the Best Annual Report category. The main emphasis was made on the content, therefore, documents that provided the most complete qualitative disclosure were selected. The short-list of ten reports compiled based on the preliminary analysis was put to the vote of the Expert Commission, which included corporate governance and reporting professionals.
The KMG Sustainability Report was rated first among Kazakh companies as “Best Annual Report” (Annual Report + Sustainability Report), “Best ESG Disclosure in Annual Reporting” (Sustainability Report).