The case for CSR/ Sustainability Reporting Done Responsibly


IDENTIFY - MEASURE - MANAGE - CHANGE

Insights on how you can protect the environment, maintain and increase the value of your company, through a structured process.

Insights on how you can protect the environment, maintain and increase the value of your company, through a structured process.

Home / case studies / Case study: How LUKOIL promotes sustainability across its supply chain

Case study: How LUKOIL promotes sustainability across its supply chain

LUKOIL is one of the world’s largest publicly traded, vertically integrated oil and gas companies, employing more than 100 thousand people across Russia, Europe, Asia, Africa, and the Americas. LUKOIL has a system of requirements to contractors and suppliers regarding their observance of sustainability standards  Tweet This! in place and information on LUKOIL’s relating control mechanisms is provided, so as to promote sustainability principles among all suppliers.

This case study is based on the 2019 Sustainability Report by LUKOIL 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.

Layout 1Abstract

LUKOIL promotes ethical behaviours among its business partners, suppliers and contractors, informing them of its rules, and strongly suggests them to familiarise themselves with the PJSC LUKOIL Code of Business Conduct and Ethics, where all basic principles regarding human rights are stated, before signing any contract. In order to promote sustainability across its supply chain LUKOIL took action to:

  • combat corruption
  • promote occupational safety
  • interact during the implementation of contracts

What are the material issues the company has identified?

In its 2019 Sustainability Report LUKOIL identified a range of material issues, such as sustainable development management, ethics and human rights, climate change, safety, environmental protection. Among these, promoting sustainability across its supply chain stands out as a key material issue for LUKOIL.

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:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

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 LUKOIL engages with:

To identify and prioritise material topics LUKOIL engaged with its stakeholders through the following channels:

Stakeholder Group                Method of engagement (in 2019)
Legislative authorities of the Russian Federation

 

·      LUKOIL reviewed more than 700 draft regulations and submitted proposals on 260 of them to the federal authorities
Regional authorities in the Russian Federation

 

·      44 events with the participation of LUKOIL President Vagit Alekperov were held, resulting in the signing of 41 documents on cooperation
Ministries of the Russian Federation, local authorities, international organisations

 

·      Business trips of PJSC LUKOIL management to production facilities in the regions of operations

·      International Forum devoted to the Year of Indigenous Languages in Russia (2019) (Khanty-Mansiysk, Russia)

·      18th Session of the UN Permanent Forum on Indigenous Issues, Round Table “Preservation and Promotion of the Linguistic Heritage of Indigenous Minorities of the North” (New York, the USA)

·      Extended board meeting of the Federal Agency for Ethnic Affairs (Moscow, Russia)

·      Joint meetings of deputies of the Republic of Kalmykia’s Hural and the Duma of the Khanty-Mansi Autonomous Area – Yugra (Elista and Khanty-Mansiysk, Russia)

Shareholders and investors

 

 

·      More than 200 queries from investors and over one thousand queries from shareholders were handled

·      6 roadshows, 18 major investment conferences, over 180 meetings and 50 calls with investors were organised

·      Quarterly conference calls regarding disclosure of LUKOIL’s financial performance

·      A trip for representatives of the investment community to the Nizhny Novgorod refinery was organised in the run-up to MARPOL-2020

·      Two General Shareholders Meetings were held

International Labor Organization (ILO)

 

 

 

 

·      24-hour online video marathon dedicated to the 100th anniversary of the ILO

·      Roundtable as part of the 74th session of the UN General Assembly (New York, the USA)

·      Exhibition dedicated to the anniversary of the ILO and its operations in Russia (Moscow, Russia)

Public authorities, expert and sectoral organisations, the mass media in Russia ·      National Sustainable Development Forum (Moscow, Russia)

 

Regional governments and industrial enterprises in Russia

 

·      Technology Day in the Republic of Udmurtia (Izhevsk), Samara Region (Samara), Tyumen Region (Tyumen), Voronezh Region (Voronezh)

·      Industrial Ecology-2019 conference (Moscow, Russia)

Non-governmental and environmental organisations ·      Meetings with representatives of the Pechora Rescue Committee, WWF Russia, etc.
Local communities and municipal authorities ·      Roundtable «Sustainable Development of LUKOIL Territories» (Perm, Russia)
State authorities (Rostekhnadzor, Ministry of Emergency Situations), expert community (RSPP, Union of Oil and Gas Producers of Russia), non-governmental and oil and gas organisations ·      Scientific and technology conference “Industrial and Occupational Safety at Oil and Gas Enterprises”

 

Indigenous minorities of the North, authorities and non-governmental organisations of indigenous minorities of the North in Russia

 

·      Meeting «Approval of the Procedure for Compensation of Damages Caused to Indigenous Minorities of the Russian Federation, Their Associations and Persons Belonging to Indigenous Minorities of the Russian Federation» (Kogalym, Russia)

·      Awards to the winners of the “Talents of the Arctic. Children” project (Moscow, Russia)

International organisations

 

·      Official launch event of the International Year of Indigenous Languages (2019) at UNESCO Headquarters (Paris, France)
Regional and local authorities, non-governmental organisations in foreign countries ·      Public dialogue opened by the Romanian refinery (Ploesti and Bucharest, Romania)

 

Authorities and non-governmental organisations in foreign countries ·      RusPrix Award 2019 (Noordwijk, Netherlands)

·      International Folklore Festival Burgas-2019 (Burgas, Bulgaria)

Media ·      Press releases, press conferences
Scientific community

 

·      Support for environmental and biodiversity projects and research in Russian regions

What actions were taken by LUKOIL to promote sustainability across its supply chain?

In its 2019 Sustainability Report LUKOIL reports that it took the following actions for promoting sustainability across its supply chain:

  • Combating corruption
  • Under the Regulations on Holding Tenders to Select Suppliers and Contractors of LUKOIL Group Entities, potential tender participants who, directly or indirectly, offer, have given, or agree to give compensation in any form to an employee of PJSC LUKOIL or LUKOIL Group entities cannot be admitted to tenders. If any such facts are identified, potential tender participants can be classified as bad-faith suppliers of goods, works, and services. The decision to classify a potential tender participant in this category and disqualify them from a tender is made by the Tender Committee or the Procurement Committee of PJSC LUKOIL.
  • Promoting occupational safety
  • If the subject of a tender requires the need to verify the state of the HSE (health, safety and environment) system of a potential tender participant, experts from PJSC LUKOIL and LUKOIL Group entities perform a comprehensive assessment based on a corporate document. The assessment procedure includes:
    • checking for compliance with the international standards OHSAS 18001 and ISO 14001, Russian laws and internal regulations of PJSC LUKOIL;
    • ascertaining whether potential tender participants possess necessary licenses, adequately qualified staff, personal protective equipment, and technical capability and technology.
  • During the assessment, the following indicators are taken into account: the occurrence of accidents and fatal accidents; the number of breakdowns and incidents over the past three years; confirmations that trainings have been completed; knowledge testing. Potential tender participants also provide social information, in particular related to observing the working hours of their employees. That information is included in a candidate’s questionnaire evaluating their compliance with the HSE requirements. Based on the questionnaire, experts from LUKOIL perform the assessment of the HSE level of the candidates. In the event of poor score in the assessment, the candidates are not admitted to tender.
  • Interacting during the implementation of contracts
  • Under the terms and conditions of contracts to supply goods/works/ services, all LUKOIL suppliers and contractors undertake to adhere to the requirements of current laws, as well as those of LUKOIL Group’s Health, Safety and Environment Policy in the 21st Century. The following requirements are an integral part of the contracts:
    • undergoing introductory / initial workplace briefings before contractors begin the performance of works / provide services at LUKOIL Group entity’s facilities, the availability of personal protective equipment in accordance with the nature of the work being performed, confirming that suppliers / contractors have appropriate first-aid skills
    • immediately notifying the customer of all accidents that have taken place during the performance of works
    • prohibition on the unauthorised accumulation and placement of waste, the discharge of wastewater (liquid waste) and chemicals, the discharge of pollutants into the air, or the contamination of soil with chemicals while performing works at LUKOIL Group entity’s facilities.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standard addressed in this case is: Disclosure 308-1 New suppliers that were screened using environmental criteria

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



FBRH GRI Standards Certified & IEMA recognised Sustainability Course | Venue: London LSE

By registering for the next 2-day FBRH GRI Standards Certified & IEMA recognised course you will be taking the first step in gaining the many benefits of sustainability reporting.

Most importantly, you will gain the knowledge to use the GRI Standards, project manage your own first-class sustainability report and:

  • Identify your most important impacts on the Environment, Economy and Society
  • Begin taking solid, focused, all-round sustainability action ASAP

 

References:

1) This case study is based on published information by LUKOIL, 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/

Note to LUKOIL: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.