Message from the Chairman of the Board of Directors
Dear readers
It is my pleasure to present 2021 Sustainability Report of JSC NC “KazMunayGas”.
I would like to highlight the key achievements and changes related to the Company’s sustainable development at the end of the reporting period.
KMG’s New Strategy
In 2021, we approved a revised ten-year KMG Development Strategy.
The Company’s Vision and Mission state our commitment to sustainable development principles and caring for future generations, and our four strategic goals are based on sustainable development priorities.
One of our strategic goals, “Sustainable Development and Progressive Reduction of Carbon Intensity of Operations”, includes improving our sustainable development system in order to integrate ESG principles into our key business processes.
Low-Carbon Development
In support of the Company’s Development Strategy, and recognising the importance of the climate agenda, we have developed and approved the KMG’s 2022-2031 Low-Carbon Development Programme. The Company aims to achieve a 15% reduction in carbon dioxide emissions by 2031 versus 2019 by reducing the energy and carbon intensity of operations and developing the renewable energy sources. A Low-Carbon Development Department has been set up in the Company to systematise these efforts.
Year of Ecology
In order to take measures to comply with new environmental requirements and global trends, 2021 was declared the Year of Ecology. A number of measures aimed at ensuring environmental safety have been implemented. In accordance with the new Environmental Code, KMG’s Environmental Policy has been updated and the Company’s commitment to sustainable use of natural resources and compliance with biodiversity conservation measures has been further strengthened. Several large-scale water treatment and desalination projects are underway.
ESG Rating
In 2021, we received a well-deserved evaluation of our sustainable development efforts from Sustainalytics, an international rating agency. The Company’s rating has been improved to 72 points and the risk rating has been reduced from a high of 34.5 to an average of 28.4 points.
The Company is a pioneer among the Fund’s portfolio companies in receiving the ESG rating. Our goal is to maintain this high performance that we achieved.
KMG’s Contribution to Achieving SDGs
We support the international initiative of UN Sustainable Development Goals (SDGs). The Company has integrated six of KMG’s priority SDGs into its business processes. Our initiatives and performance in contributing to SDGs are published on the corporate website.
Corporate Governance
KMG’s corporate governance rating was upgraded from BB to BBB following an independent corporate governance audit. The auditors noted positive changes in the Company in the areas of “Board of Directors and Executive Body Effectiveness”, “Risk Management, Internal Control and Audit”, “Sustainable Development” and “Transparency”.
The Health, Safety, Environment and Sustainability Committee of the Board of Directors held five meetings in 2021 where it reviewed 52 issues related to sustainable development.
Human Capital Development and Social Responsibility
In order to comprehensively improve the Company’s management system in the area of employees’ rights and to strengthen measures to protect their health, we have developed the Human Rights and Public Relations Policy of JSC NC “KazMunayGas”, as well as the Personnel Health Management Programme.
As part of digital transformation, several projects are being successfully implemented to engage KMG Group’s personnel into continuous performance improvement, foster a culture of lean production, and improve digital literacy. For example, Lean 6 Sigma Programme, in addition to certifying the production companies’ employees in project management, encourages them to continually seek out and implement simple, low-cost improvements with economic benefits. 13 LSS projects were implemented in oil production in 2021. LSS methods have previously been successfully implemented at oil refineries. A total of 156 projects under the Programme have been implemented at the refineries since 2016.
The Atyrau Refinery and Pavlodar Refinery, as well as PetroKazakhstan Oil Products are introducing computer-aided simulators (CAS) for refinery operators to practice response to emergency and routine situations in simulated conditions, which will minimise human-factor-caused disruptions in real operations.
Qazaqstan Project Management Awards recognised Lean 6 Sigma Project in the Oil Refining and Petrochemicals business as the best project of 2021 in Kazakhstan, while the CAS project was ranked 3rd.
Project Management
We have initiated important changes in our project management processes in order to integrate the sustainable development principles. We have updated corporate documents to include ESG-based project assessment and trained the employees in using the project and risk assessment tools according to GPM P5 (Green Project Management) standard. By revamping the project assessment process, we seek to make investment project decisions based on all ESG risks.
In conclusion, I would like to thank all our stakeholders, in particular our partners who have worked with us during this difficult period. We highly appreciate that we have like-minded people on the path to sustainable development.