Case study: How KMG creates economic value for its stakeholders
KMG (KazMunayGas) is the Kazakhstan operator for exploration, production, refining and transportation of hydrocarbons, representing the state interests in the oil and gas industry of Kazakhstan. In the course of its operating activities, KMG makes annual substantial contributions to improve the social and economic potential of the country and develop locations within the company footprint, creating economic value for a wide range of stakeholders.
This case study is based on the 2019 Sustainability Report by KMG published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
KMG is firmly committed to contributing to Kazakhstan’s economy and to generating sustainable economic value for all its stakeholders Tweet This!, through a number of ways. In order to create economic value for its stakeholders KMG took action to:
- contribute to the national budget
- create economic value for employees
- support Kazakh companies
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With this case study you will see:
- Which are the most important impacts (material issues) KMG has identified;
- How KMG proceeded with stakeholder engagement, and
- What actions were taken by KMG to create economic value for its stakeholders
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What are the material issues the company has identified?
In its 2019 Sustainability Report KMG identified a range of material issues, such as employee-management relations, counteracting corruption, occupational health and safety, effluents and waste, non-discrimination. Among these, creating economic value for its stakeholders stands out as a key material issue for KMG.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups KMG engages with:
| Stakeholder Group |
| KMG employees |
| Shareholders |
| Investment community |
| KMG’s subsidiaries and associated companies |
| Local communities, public organisations |
| Partners, other organisations |
| Government, local authorities |
| Suppliers/providers/vendors |
| Trade unions |
| Customers |
| Associations |
| Mass media |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics KMG engaged with its stakeholders through an online stakeholder survey prepared on the basis of the SurveyMonkey platform.
What actions were taken by KMG to create economic value for its stakeholders?
In its 2019 Sustainability Report KMG reports that it took the following actions for creating economic value for its stakeholders:
- Contributing to the national budget
- As one of the largest taxpayers in the covered geography, KMG makes its contribution to the national budget in the form of taxes and other payments. In 2019, KMG paid taxes and made other obligatory payments to the state revenue for the amount of KZT 1,522 billion (USD 4 billion).
- Creating economic value for employees
- KMG employs over 70 thousand people in Kazakhstan, providing them with a steady paycheck along with social assistance for them and their families. In 2019, KMG paid KZT 52 billion worth of social and pension contributions for its employees.
- Supporting Kazakh companies
- Participation in domestic manufacturer support programmes and increased local content in procurement remain among KMG’s top priorities. In 2019, the KMG Group procured KZT 2,004.7 billion worth of goods, work and services from Kazakh companies, or 94% of the total procurement. The local content in procurement was 81%.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standard addressed in this case is: Disclosure 201-1 Direct economic value generated and distributed
Disclosure 201-1 Direct economic value generated and distributed corresponds to:
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.1, 8.2
- Sustainable Development Goal (SDG) 9: Industry, Innovation and Infrastructure
- Targets: 9.1, 9.4, 9.5
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References:
1) This case study is based on published information by KMG, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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