Case study: How NOVATEK creates economic value for its stakeholders
NOVATEK is Russia’s largest independent natural gas producer, ranked 3rd globally among publicly traded companies in proven natural gas reserves (SEC) and ranked among the top-10 companies globally in natural gas production. NOVATEK firmly believes that its low-carbon strategy offers it a strong competitive advantage relative to its peers, as well as creates economic and societal value for all its stakeholders.
This case study is based on the 2020 Sustainability Report by NOVATEK, prepared in accordance with the GRI Standards, 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
NOVATEK’s corporate purpose is to create sustainable value for all its stakeholders, along its entire value chain. Tweet This! In order to create economic value for its stakeholders NOVATEK took action to:
- create economic value for employees
- create economic value for providers of capital
- create economic value for the government
- create economic value for communities
Subscribe for free and read the rest of this case study
Please subscribe to the SustainCase Newsletter to keep up to date with the latest sustainability news and gain access to over 2000 case studies. These case studies demonstrate how companies are dealing responsibly with their most important impacts, building trust with their stakeholders (Identify > Measure > Manage > Change).
With this case study you will see:
- Which are the most important impacts (material issues) NOVATEK has identified;
- How NOVATEK proceeded with stakeholder engagement, and
- What actions were taken by NOVATEK to create economic value for its stakeholders
Already Subscribed? Type your email below and click submit
What are the material issues the company has identified?
In its 2020 Sustainability Report NOVATEK identified a range of material issues, such as energy consumption and efficiency, climate change, air emissions, accidents and incidents, emergency preparedness. Among these, creating economic value for its stakeholders stands out as a key material issue for NOVATEK.
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 NOVATEK engages with:
| Stakeholder Group | Method of engagement |
| Shareholders | · Shareholder meetings · Press releases and material fact notifications · Shareholder queries (via phone and mail) · Financial disclosures · Annual and sustainability reports · Corporate Secretary · Information updates on the corporate website |
| Investors and analysts
| · Press releases and material fact notifications · Financial disclosures and conference calls · Annual and sustainability reports · Inclusion in leading sustainability rankings for investors · One-on-one and group meetings, conference calls, presentations · Investor requests · Participation in CDP and CDP Water Disclosure · Site visits · Information updates on the corporate website · Participation in conferences and summits |
| Employees
| · In-person meetings between management and employees · Corporate social programmes · Collective bargaining agreement · Corporate media · Educational and advanced training programmes · Steps in Discovering Talents programme for young specialists · Developing and improving the Corporate Technical Competency Assessment System programme for various lines of business · Sustainability reports · Security Hotline · Cultural and sports events |
| Trade unions
| · Discussion and signing of the collective bargaining agreement · Discussion and signing of addenda to the collective bargaining agreement · Participation of the Company’s management in the meetings of trade union committees · Attendance of trade union conferences by the Company’s management · Participation in joint occupational health and safety committees · Joint efforts as regards recreational, sports and cultural events · Sustainability reports |
| Government authorities
| Federal · Contribution to law-making · Participation in working groups, joint meetings, round-table discussions, conferences, and forums Local · Interactions under cooperation agreements on the social and economic development of local communities · Participation in meetings, round-table discussions, conferences, forums, etc. · Disclosure of information on the Company’s activities in local media |
| Local communities
| · Cooperation agreements on social and economic development of local communities · Interaction with associations of indigenous peoples of the Far North · Targeted support to people in need · Letters to public authorities · Public consultations · Advisory board in the Yamal District · Round tables in the Purovsky and Tazovsky Districts · Disclosure of information on the Company’s activities in local media · Population surveys · Sustainability reports · Security Hotline |
| Partners under joint initiatives
| · Cooperation agreements · Joint initiatives · Shareholder meetings · Management meetings · Working group meetings · Security Hotline · Briefings · Participation in exhibitions and conferences |
| Suppliers and contractors | · Supplier selection process · Participation in trade shows, forums, and other events · Responding to queries received via the website (Sales and Tenders page) · Qualification procedures for suppliers (including facility audits) · Security Hotline |
| Customers | · Telephone inquiry service · Customer Account service on the website · Contact Information · Security Hotline · Counterparty Account service for business customers on the website · Meetings on payment discipline · Publication of information in the media · Mobile application |
| Civil society organisations | · Membership and cooperation · Participation in conferences, forums and other events · Sustainability reports |
| Society | · Interaction with leading sports and cultural institutions · Interaction with non-profit organisations · Philanthropic efforts · Volunteer movements |
| Media | · Press releases · Press tours · Interviews with, and comments from, top executives and directors · Briefings, press conferences · Comments and replies to media requests · Drafting articles and information materials for the media |
| Industrial community, including academic and research community | · Participation in conferences, forums, round-table discussions, etc. · Participation in joint sessions · Partnerships · Cooperation with leading oil and gas universities · Participation in industry organisations |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics NOVATEK engaged with its stakeholders through a survey.
What actions were taken by NOVATEK to create economic value for its stakeholders?
In its 2020 Sustainability Report NOVATEK reports that it took the following actions for creating economic value for its stakeholders:
- Creating economic value for employees
- In 2020, NOVATEK paid 31,876 RR mln for employee wages and benefits.
- Creating economic value for providers of capital
- In 2020, NOVATEK paid 99,908 RR mln to providers of capital (dividends paid plus interest paid).
- Creating economic value for the government
- In 2020, NOVATEK paid 106,517 RR mln in current income tax plus taxes other than income tax.
- Creating economic value for communities
- In 2020, NOVATEK spent 4,128 RR mln in community investments (funds voluntarily directed by NOVATEK to charity, sponsorship, support of local communities and not directly related to the activities of NOVATEK or its employees).
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
78% 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.
7 GRI sustainability disclosures get you started
Any size business can start taking sustainability action
GRI, ISEP, CPD Certified Sustainability courses (2-5 days): Live Online or Classroom (venue: London School of Economics)
- Exclusive FBRH template to begin reporting from day one
- Identify your most important impacts on the Environment, Economy and People
- Formulate in group exercises your plan for action. Begin taking solid, focused, all-round sustainability action ASAP.
- Benchmarking methodology to set you on a path of continuous improvement
See upcoming training dates.
References:
This case study is based on published information by NOVATEK, 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 following link:
https://www.novatek.ru/common/upload/doc/NOVATEK_SR_2020_ENG.pdf
Note to NOVATEK: 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.