Interview of the Vice President for Strategy
Why sustainable development function is important for KMG?
As a national company, KMG has always been a socially responsible organization. Solving the priority tasks to improve our efficiency, we have always paid great attention to the social aspects of our activities.
The principles of sustainable development are part of our mentality, as we live in the post-Soviet space. Therefore, the theme of sustainable development is not new for us.
In the face of the priority of achieving economic efficiency, KMG has always tried to maintain a balance of interests between financial gain, compliance with environmental legislation and the desire to meet the social needs of both its employees and the population in its regions of presence.
KMG today pays more attention to its stakeholders, providing an opportunity to speak out to all, to listen to all opinions to find the right balance of interests, suiting all parties.
Commitment to the principles of sustainable development advances us on the development of new clean technologies to reduce the negative impact on the environment.
What is the current position of sustainable development in KazMunayGas?
Kazakhstan, along with 169 countries, signed the UN Global Compact (UNGC), thereby reaffirming commitment to global goals and principles of sustainable development. In its new Development Strategy, our shareholder, the Samruk-Kazyna Fund, has determined the sustainable development of one of the three strategic goals. KMG in the Corporate Governance Code identified sustainable development, along with the growth of long-term value, its strategic objective.
As a representative of the corporate sector in 2017, KMG joined UNGC, and the past year was a year of qualitatively new development for the functional of sustainable development of KMG. To ensure the equal development and implementation of values of sustainable development across the entire Group of companies of KMG, a new Department was created by the decision of the Board of Directors, whose list of functions includes a full range of issues on sustainable development.
If previously our main focus was to increase stakeholder awareness of activities through the release of the annual consolidated reporting on sustainable development, today we are focused on the development of a sustainable development management system. The new management system will ensure the coherence of KMG’s economic, environmental and social goals, and consistently and continuously implement the principles of sustainable development in our operational and strategic activities.
Please tell us about the essence of KMG transformation?
KMG is implementing a transformation program that focuses on three components: the transformation of people, the improvement of processes and the use of advanced technologies. At present, a lot of work is under way to achieve the goals set in these areas.
Since this report is devoted to sustainable development, I will focus on some aspects of the transformation process related to changes in management processes of KMG.
In 2017, in order to increase the efficiency of operations and better controllability of processes, a new operational model for managing a group of KMG companies was developed. According to this model, it is supposed to consolidate the main corporate functions at the level of the Corporate Center of KMG, routine processes for the Group of companies transfer the Shared Service Center (SSC), and concentrate only production processes in subsidiary dependent entities (SDEs). Implementation of the new operating model also implies a reduction in management levels, from existing, in some directions, 5 to the target 2 levels. Thus, the main production SDEs will be managed directly by KMG.
As part of this work, last year, KMG-Recycling Marketing was merged. To date (on the date of publication of the report), we can also say that in June 2018 we added another sub-holding – Exploration Production-KMG. Until the end of 2018, it is planned to complete the merger of KazTransGas sub-holding.
As part of the transition to the target operating model for each production and non-productive management function, a Business Process Catalog up to the 3rd level was developed with the distribution of responsibility areas between the Corporate Center, the newly created Business Units in Profile Areas, SSCs and SDEs.
What can you add in conclusion?
Sustainable development for KMG is a format for promoting the principles of social responsibility. In order to balance the interests of stakeholders, it is important for us to regularly interact with stakeholders on issues of sustainable development. In this regard, the Sustainable Development Report for today serves as the central communication channel through which we publicly disclose information about our influence and impact on the economy, the environment and society.
In order to determine the register of significant aspects of sustainable development in 2017, a questionnaire was conducted by key stakeholders of KMG. Along with KMG employees, representatives of state and local executive authorities, NGOs, partners and other categories of stakeholders of KMG participated in the survey for the first time. The analysis of the questionnaires formed the basis for the formation of a matrix of materiality, an understanding of those areas of our activity, on which we need to concentrate our efforts first.