IDAVANG Russia REPORT ON SOCIAL RESPONSIBILITY 2013 CONTENTS PROFILE AND STRATEGY 4−7 psl. CORPORATE SOCIAL RESPONSIBILITY POLICY 8−15 psl. SOCIAL RESPONSIBILITY GOALS IN 2014 16−17 psl. 2 3 PROFILE AND STRATEGY ABOUT IDAVANG RUSSIA Background and business development In 2007 Danish farmers who had founded pig Production Company UAB Saerimner in Lithuania in 1999 decided to expand their business to Russia. North-western region was chosen as a strategic point because of its geographical position and undersupplied market. The first project was acquisition of old pig farm built in 1973 (former state farm Vostochny). The farm was purchased in April 2008 and in June first weaners were brought from Lithuania for fattening. In the same year Idavang started developing project in the Pskov region where about 3500 ha of land were rented from Ostrov municipality. We started to plough the land and grow grain which was used to make feed for pigs in Vostochny. The old pig farm Vostochny was renovated in 2009-2010, new closed lagoons for manure were built and later on the whole unit for processing slurry – EPP (Environmental Processing Plant) which separates slurry into manure, ammonia water used as fertilizer and technical water. In 2013 Vostochny farm sold over 180 000 slaughter pigs. In 2011 construction of brand new farm was started in Ostrov. In 2012 silos for 18 000 tons of grain as well as first six barns were commissioned and the first breeding sows were brought from Denmark. Last year we started selling first slaughter pigs in May and by the end of the year we had sold about 50 000 slaughter pigs from the new farm. The total cropped area in the Pskov region reached 4800 ha and the total yield was more than 16 000 tons. In 2012 we started growing grain in Luga district of the Leningrad region were more than 7 000 tons of grain were cropped last year from the area of 2138 ha. Thus there are two main activities in Russian companies of the Idavang group – growing slaughter pigs and grain which is used for feed production. Growing our own grain allows us not only to cut the production costs but also use all slurry as organic fertilizer minimizing negative impact on the environment. Structure In 2013 Idavang Group managed business in Russia through two companies: Rurik Agro (in the Leningrad region) and Idavang (in the Pskov region). Each company besides the pig farm and the fields around it has an independent separate grain growing division – Rurik-Agro in Luga district and Udray in Velikoluksky district. The Company has three sister companies in Lithuania: Saerimner, Kepalių bekonas and Pasodėlė. Saerimner Group also includes construction company Agrostatyba. All companies, Russian and Lithuanian belong to Danish company Idavang whose shareholders are Danish farmers 4 and the International Finance Corporation (IFC), which is a part of the World Bank. The Chairman of the Board: Claus Baltsersen; members: Jytte Rosenmaj, Michael Henriksen. Financial results. As compared with 2012, the Consolidated sales income of Idavang group Russia grew up for 9 %. In 2013, Rurik-Agro and Idavang sold more than 230,000 pigs. Taxes. Both Rurik-Agro and Idavang are one of the biggest tax payers in their respective communities; our taxes constitute considerable part of local budgets thus helping to improve living conditions in rural areas. Market. We sell all our slaughter pigs in Russia, about 90% of all pigs are sold in the North-western region and the rest go to the Central region of the Russian Federation. Customers. Our customers are major meat processing companies and slaughterhouses in the North-western region of Russia such as Vsevolozhsky Myasnoj Dvor, MPK Tosnensky, TD Lesnoe, Velikoluksky Meat Processing Plant, Myasnaya Lavka, Bekon and other small slaughterhouses. Partners. Each year we purchase approximately 50,000 tons of grain from all over Russia (the Kursk region, the Tambov region and Siberia). Employees. Approximately 390 people work in our farms; the majority of them live in rural areas. We also create 1,000 more indirect jobs through our partners. Rurik-Agro and Idavang employ equal number of men and women; the average age of employees is 35-40 years. Membership in organisations. We are members of the Russian Pig Producers Union, the Investors’ Forum in the Pskov region and the Leningrad Region Chamber of Commerce. Reporting. At the end of each year we draw reports on implemented social responsibility initiatives, publish them in our website and share them with our employees. We also use regional mass media to inform local communities about implemented social responsibility initiatives. 5 PROFILE AND STRATEGY BUSINESS PHILOSOPHY The clear corporate vision and mission is the foundation of our business philosophy. Our vision is to become a leader of high quality and healthy pig farming in the North-western region of Russia and deliver high quality and healthy pork for Russian consumers. We want to be known among our clients, suppliers and buyers as an important, reliable and stable business partner. Our mission is to efficiently produce high quality products while meeting all ethical and environmental requirements and to sell them in deficient markets. еи ени довер ж а sp e ct a n d tru st Ответст ве Re о сть за кружаю о нн еду ю ср щу озрачность Пр •Respect and trust. Each employee and partner is extremely important to us – we treat them fairly and with respect, and expect the same from them in return. •Quality and ethic. We follow animal welfare principles and produce only high quality products. •Transparency. We always act legally and justly, transparently and fairly. •Responsibility towards environment. We use high-tech and adhere to social responsibility principles. •Constant development. We are open to changes and innovations, and responsible for personal and professional improvement of our employees. ие Ув Our values are the key guidelines of corporate activities that help us purposefully achieve the set goals. Values of Idavang: on sib 6 sta n en t C on t d e velo p m ility to w ard s e n o vir тво и эти чес к а К а вершен е со с о н ние ова тв Постоя н p a re n c y nm e nt R es p Tra ns Qu ality a n d ethic 7 CORPORATE SOCIAL RESPONSIBILITY POLICY Corporate social responsibility (CSR) policy, which is based on the values of Idavang, consists of 8 principles: 1.Human rights. We strictly adhere to the internationally recognised principles of human rights. We do not tolerate forced labour or child labour. 2.Labour policy. We guarantee rational labour, rest and holiday schedule as well as a reasonable remuneration system for our employees. 3. Responsibility to local communities. Local communities are our partners. Our relationship is based on trust, respect and transparency. We support the basic needs of local communities and try to ensure their sustainable development in every possible way. 4.Responsibility to the environment. We are responsible for the environment in which we operate; therefore, we develop environmentally-friendly agriculture. When expanding our business, we always assess environmental, sanitary and technological conditions of the newly acquired farms. We renovate old buildings by applying the best world practices. New farm in Idavang meets all European standards and comply with all environmental and sanitary requirements. 5. Animal welfare. We follow the principles and general requirements of European animal welfare rules. 6.Active leadership. We are one of the market leaders in the North-western region of Russia and we understand our responsibility to the regional economy. By representing the most technologically and environmentally advanced business, we support the domestic market and encourage it to get closer to the latest and most advanced global standards. 7.Customer relations. Our business relations are based on mutual trust. We follow the principles of transparency and fair business practices in our co-operation with all our customers and partners. 8.Anticorruption. We protect our reputation and interests of our shareholders, and we have zero tolerance to corruption in any form. Idavang employees do not take bribes and do not try to bribe customers, agents, contractors, suppliers, employees or representatives of public authorities. Children‘s Playground in Tosno reg. which was sponsored by IDAVANG 8 9 CORPORATE SOCIAL RESPONSIBILITY POLICY Environment protection Being responsible for the environment in which we operate, we tolerate only the environmentally-friendly farming, pursue different environmental initiatives and strictly adhere to Russian, EU and the especially high IFC environmental requirements and standards, animal welfare rules, prevention of pollution and odour control standards. Modern farms In pig farms managed by Rurik-Agro and Idavang we comply with all environmental and sanitary requirements. Rurik-Agro farm continuously undergo renovation in order to be in line with the highest EU standards. The major share of the corporate profit is invested into the renovation of farms; we have already contributed approximately RUB 156 million to the environment-related renovation of EPP, slurry processing unit which considerably diminishes the negative impact to the environment. In previous 2013 year our investment in development to EPP was more than RUB 4 mln. Environmentally-friendly transportation For the transportation of equipment and raw materials from Denmark and Lithuania to Russia we use international logistic companies which try to ensure the most environmental friendly ways of transportation. Most of our cargo from Denmark is transported by sea to the port of St. Petersburg and for the inland routes we try to use cargo carriage only by new EURO4 trucks that use ecological AdBlue fuel additive for towing vehicles. It is a solution, which dissolves nitrogen oxide into two non-hazardous substances, nitrogen and water. It can only be used by towing vehicles equipped with special SCR equipment, which together with AdBlue reduces environmental pollution and thus the fuel consumption. Furthermore, we have selected the method of optimal logistics, which has resulted in the reduced fuel consumption during transportation leading to further reduction of environmental pollution. Environmentally-friendly technologies In Rurik-Agro we switched the boiler house from using diesel to natural gas which is much more environmentally sound heating technology. 10 Preservation of resources In order to preserve the environment and contribute to the welfare of the future generations, we pay much attention to the efficient and economical use of energy and material resources. Therefore, in 2013, we regularly drafted information articles for employees on the benefits of saving, thus encouraging employees to implement saving not only at work but at home as well. We have attached guides on preservation of resources on all our information boards. In 2012 we established permanent working group on energy saving, the goal of the group being to find the ways to decrease our electricity consumption minimum 5% per year. The group analyses the existing situations and works out measures and procedures to reduce the energy consumption. In 2013 in the frames of the energy saving program several items of the equipment with high energy consumption (pumps and air compressor) were replaced with more modern ones with lower energy consumption, up to 20% of all electric lamps were replaced with energy saving ones. Environmental activities We try to contribute to the maintenance and improvement of the environment at our local communities. In 2013 Rurik-Agro helped to clean the drainage and fire protection channels in the forest located next to the farm thus preventing possible forest fire. Co-operation with neighboring farmers Every year we sell manure to the local farmers and we deliver manure to their fields ourselves. Thus local farmers can save money on chemical fertilizers and produce organic food using only natural organic fertilizer. We also help local famers to cut grass in the season when we are cutting grass on our fields situated next to them. In 2013 we invested over RUB 70 million in order to meet environmental requirements: • Water supply in Rurik-Agro farm was renovated and the new automatic chlorine dosage system was installed reducing the amount of chlorine used for water preparation; • New pumps and air compressor were installed at the water cleaning station in Rurik-Agro reducing the energy consumption by 5%; • Old fuel oil storage facilities were cleaned in Rurik-Agro; • In Idavang closed lagoons for liquid manure were constructed, commissioned and put into operation; •We developed the users’ manuals for waste sorting and continued educating our employees about their responsibility to perform proper and environmentally-friendly waste management. RELATIONSHIP WITH COMMUNITIES From the very start of our activities we willingly contribute to the improvement of the living conditions of local communities: support the environment in which they live and contribute to the meaningful leisure and all rounded improvement of these communities. In 2013, in order to establish close relationship with potential employees and to contribute to the quality of studies in the field of agriculture, we signed a cooperation agreement with Agricultural Academy in Velikie Luki and enlarged our co-operation agreements with the Veterinary Academy in St. Petersburg and Agricultural University in Pushkin. We allocate to local communities: we help to repair kindergartens, schools, art schools, community centers and libraries, support excursions and trips for local school children, sponsor local festivals. We allocate support after discussing it with community leaders and with due consideration to the most important needs of the community. We never refuse the demands for help, we always discuss the possibility to help in some way with local community boards and find the solutions to help in the most efficient way. Helping does not always mean straight money donations, we often help to find relevant information and partners, organize the work and prepare application for various state programs. it out free of charge to all people who attended the festival. Our team was working for more than four hours and we gave out more than 1000 portions! For educational establishments and their initiatives: in 2013 we helped to repair heating system in our local kindergarten in Nurma, we also helped local art school to install new doors in order to comply with fire safety regulations, we donated new computer for the local library and district municipality provided free Internet access for schoolchildren and local people. Every year we sponsor summer camp for teenagers and we did the same in 2013 and we also helped local children jazz orchestra to take part in Jazz Parnas Festival in St. Petersburg where they got the first diploma. In Ostrov municipality: In 2013 we allocated more than RUB 1.5 million for the principal areas supported by Idavang group Russia: We helped local war veterans organization, local kindergarten and schools, we bought materials (cloth, threads and buttons) for local workshop for handicapped people. We continued helping local school for children with development problems buying them books, educational toys and special equipment In Nurma municipality (Tosno district): For sports organizations and events: in 2013 our local village of Nurma celebrated its 200 anniversary. We took active part in the preparation for the event and in the festival itself. We installed new children playground in the village and during the festival we made shashlyk from our pork and gave we supported biathlon European Cup which took place in Ostrov and bought 10 pairs of skis for local school children so they could take part in youth competitions. Anniversary in Nurma Leningrad district Biathlon competition in Ostrov Pskov district - Idavang supported young sportsmen 11 CORPORATE SOCIAL RESPONSIBILITY POLICY RESPONSIBILITY FOR EMPLOYEES ANIMAL WELFARE We unconditionally take care of the animal welfare in our farms. In order to ensure the highest level of animal welfare and the efficiency of production, we regularly review and assess our activities. Safe environment in line with the principals of ethics. We renovated the farm in Rurik-Agro in compliance with all laws and regulations that concern animal welfare. The new farm in Idavang was built according to animal welfare principals strictly following Russian and European norms and requirements. We always consider the principal interests of animals; therefore, the level of health and performance in our farms is higher. Hygiene. In our farms we guarantee high standards of hygiene and sanitation, and we regularly inspect animal welfare conditions. As all animals have different needs, we ensure regulated air temperature and proper lighting. In 2013 our new farm in Idavang was awarded 4th (highest) compartment regarding bio safety which means that we comply with all norms and rules of animal welfare. In Rurik-Agro we renovated the roofs and installed the new heating system in the finisher stables thus considerably improving conditions for the animals. Balanced nutrition. Feed is the main factor deciding the animal health and welfare and determining the quality of meat. We ensure balanced nutrition only by top quality grain, such as wheat, barley, soy. We have instrument for humidity analysis of the grain and we pay great attention to quality control of all incoming grain. Qualified monitoring. Our company employs only highly qualified specialists. Employees of Rurik-Agro and Idavang participate in international fairs, trainings and continuously improve and develop their knowledge and skills. Transportation. In order to ensure the safety of transported animals, we provide special training to all drivers who transport animals. Persons who handle animals during transportation have to attend training and be familiar with standards of performance. In 2013 we made sure all our farms meet EU animal welfare requirements, which came into force on 1 January 2013, so in our farms you will find “toys” for pigs, enlarged pens, reduced gaps of pen gratings. People working in Rurik-Agro and Idavang are our greatest treasure and potential. We wish that every employee, whatever his/her position, seeks to be a highly qualified specialist capable of contributing his/her knowledge and initiatives to good relations between the company and neighboring communities, customers and partners. When implementing our aspirations we especially focus on ensuring the best possible working conditions. Equal opportunities We are always fair and open with our employees and potential candidates: we offer equal employment, improvement and career opportunities irrespective of the gender, age or nationality. We apply fair remuneration system. We show zero tolerance to discrimination and disrespectful behavior among employees. Our relationship with employees is based on respect, we seek openness and transparency in our cooperation. We provide all social guarantees. Provision of good working condition We guarantee safe and convenient workplaces that meet safety requirements. We regularly inspect the workplace conditions and resolve issues related to occupational safety and health at work, ensure periodical medical examination of employees. Field department team has special medical check to ensure they can work with agricultural chemical substances; we also provide special training for them and control their use of individual protection means (gloves, glasses, respirators, etc.). In 2013 we arranged external and internal training on occupational safety issues in order to avoid any accidents or incidents at work, and performed their prevention. We provide employees with free working clothes and all required individual protection means in order to ensure occupational safety. Compliance with labor laws We operate according to the laws that regulate the hiring and dismissal processes, work and rest schedules. Persons engaged in personnel management regularly refresh their knowledge by attending various seminars and trainings. Reconciliation of work and private life By fostering the loyalty of our employees and their satisfaction at work and by increasing their efficiency we ensure the balance between their professional and private lives. We encourage our employees to get involved in socially responsible activities in their community, to pursue their favorite hobbies, e.g. we organize corporate competitions, various contests related to leisure activities of employees. In 2013 we held contest of children drawing for the children of our employees during which children had to draw their mom or dad working place. All participants got souvenirs from our company and the authors of the best drawings got substantial rewards. Remuneration In 2013 we carried out a study of labor remuneration in the Leningrad and the Pskov regions in order to analyze the labor remuneration market in the North-western region of Russia and to assess our position in the labor market. The study proved once again that we offer a competitive remuneration in the agricultural sector, which corresponds to the general dynamics in the remuneration market. The average unskilled labor remuneration in the agricultural sector of the North-western region is approximately RUB 18,300 (before taxes); meanwhile, the average remuneration of unskilled employees in pig production is RUB 27,600 (before taxes). In addition to the reasonable remuneration, we offer bonuses and other payments for the achieved results. We provide frees meals for all workers in the production (lunch, coffee, tea, etc.), which amount around RUB 30,000 per person per year, and work clothes, which cost around RUB 3,500 per person per year. Office employees can get lunch with 50% discount. In 2013 we bought additional medical insurance for all our employees which gives them access to medical service of higher standard. We spent RUB 1.2 million for additional medical insurance and it is free for all employees who have worked in our company for more than one year. Incentives Awarding employees, who were working for 5 years in company 12 We provide our employees with support in the case of a loss of their immediate family members. Not only do we work together, but we also enjoy our leisure time together: each year we organize corporate events (e.g. summer and Christmas festivities, trips to concerts, theatres, water parks, etc.). We celebrate birthdays of our employees. In 2013, in order to strengthen the loyalty of employees, we rewarded our employees who have been with us the longest, i.e. more than 5 years. 13 CORPORATE SOCIAL RESPONSIBILITY POLICY Performance appreciation In 2013 we introduced the official performance appreciation system. During our annual interviews we single out the objectives set by employees and by the company, and discuss the motivation and perspectives of employees in the company. During interviews we provide the employee with his/her performance appreciation, based on which we then discuss his/her career opportunities. In 2013 we performed an employee opinion poll for the purpose of finding out how satisfied employees were with their work, working conditions and internal communication. An action plan has been developed on the basis of employee responses. Employees are able to freely communicate with the management and to state their opinion, which is then being considered during meetings. In 2013 we introduced the “worker of the month” award. Each month the section leaders choose the best worker of the month and he or she gets a reward from the company – a family trip to aqua park, new TV set, etc. Training and improvement of qualifications We take care of the continuous professional and personal improvement of our employees and the application of their experience at work. We encourage them to submit their proposals and ideas of how to improve our activities and working conditions. In 2013 we introduced ‘Proposal Box’ in Idavang into which employees can place messages with their comments and proposals. We develop personal training programs for employees, improve their foreign language skills. In 2013 each employee had the average of 8 hours of training. We provide additional support to employees who undergo studies closely related to their work. In 2013 all our managers of middle and top level attended training courses for personal development and efficiency. We spent more than RUB 600 000 for trainings and seminars of different level. Customer relations We continuously develop business relations based on mutual trust. Consideration of the needs and expectations, competence and professional standard, flexibility and transparency, politeness and friendliness as well as regular communication – these are the principles on which the relations of the company with each customer and business partner are based. Quality products We supply only the top quality products to our customers. Top quality is guaranteed by the demanding and well-organized production based on the best practices, careful selection, balanced animal nutrition, and strict adherence to animal welfare policy principles and veterinary standards. The quality Rurik-Agro and Idavang pigs complies with all EU requirements and standards applicable to the top quality products. Responsible choice of business partners As we strive to exceed the expectation of our customers, we are especially careful in choosing our business partners. Good reputation, high quality of products and services, efficiency and strict compliance with laws, veterinary standards and animal welfare provisions – such are the requirements applicable not only to the suppliers and carriers of products, but also to companies to which the production of our farms is supplied. Before we start cooperation, our representatives visit the partner’s company and our principles of transparency and anti-corruption. We check our main partners to make sure they are diligent tax payers and comply with fair business practice. 14 Presentation of products When transporting pigs, our specialists take care of the compliance with animal welfare and veterinary conditions. The strict planning of transportation ensures that pigs reach the customer by the agreed deadline. We implement the strict accident prevention. While performing carriage, drivers follow safety standards and regular rest periods. Anticorruption We value our image as a fair company, and we are opposed to any form of corruption that may cause distrust in the management, employees or partners. In 2013 in order to prevent bribery or any other form of seeking person profit, we developed and adopted the Corruption Prevention Program of Idavang Group, and made sure that all our employees are familiar with it. ACTIVE LEADERSHIP Being a modern pig production company, we actively share our knowledge, experience and visions with other players in this market (partners, customers, organizations, decision makers). In this way we make sure that pig production in Russia develops in accordance with the best practices in the field of pig production, environment protection, animal welfare, etc. Rurik-Agro takes an active part in the activities of the Russian Pig Breeders Union, the Investors’ Forum in the Pskov region and the Leningrad region Chamber of Commerce. We always prepare our proposals on various issues concerning regulation of pig production and land processing, participate in various meetings and conferences and share our opinion and experience. 15 CORPORATE SOCIAL RESPONSIBILITY GOALS IN 2014 Environment protection • We will continue improving our EPP unit for slurry handling. In 2014 we plan to finish all necessary technical documentation for ammonia water and get technical production regulations approved and confirmed by the relevant authorities. • In 2014 we will elaborate detailed fertilizer plan for Rurik-Agro to make sure that manure and ammonia water are used in best possible way to provide necessary nutrition for the fields and avoid negative impact for the environment. • In 2014 after we come into full production cycle we will develop the new waste handling system for Idavang and get it confirmed and approved by the relevant authorities. • We plan to drill new water well in Idavang in order to provide uninterrupted water supply for the new farm and make it possible to do maintenance and repair works at the existing water well. • We will improve and enlarge our video surveillance system in both farms in order to make our working environment more safe and better controlled. •We shall continue to educate employees about their responsibility to perform proper and environmentally-friendly waste management. Human resources • We will continue to provide personnel management training to the managers of all level in our company and make sure that internal communication is being developed within departments, between departments, between our two Russian companies and also our sister companies in Lithuania. We plan a number of experience exchange visits to the farms. • By encouraging employees to be more active in submitting proposals and getting involved into the improvement of the company, we shall continue to use special ‘Proposal Boxes’ in all divisions into which all employees of the company can place their proposals. Proposals are reviewed and assessed on a daily basis; the best 16 proposals are implemented, and from now on the authors of such proposals shall be awarded prizes. • In 2014 much attention will be paid to increasing the motivation of employees, and to the appreciation and recognition of employees. We will continue with annual appreciation interviews during which the employee and his/her direct supervisor will discuss the employee’s performance over the past period as well as plans and goals for the future, the employee’s competences, the development plan, the current motivation, expectations of the employee and his/her perspectives in the company. • We will pay more attention to attracting new employees, in order to do it we will visit schools and invite students to visit us in order to provide them with as much knowledge about the specific character of our activities as possible. • We will continue the project of implementing anticorruption actions in the company, which will help ensure the transparency of our activities and the fair treatment of employees, customers, agents, contractors, suppliers and representatives of public authorities. • We will prolong our cooperation agreement with the Veterinary Academy in St. Petersburg, Agricultural University in Pushkin and Agricultural Academy in Velikie Luki. In this way we shall promote the cooperation of business and science: we will be actively involved in the practical dissemination of professional knowledge and will try to attract the students to come to our farms for practical education and further on for permanent employment. Community support We will continue our support to local communities based on their needs and requests trying to ensure active communication and participation of both parts. 17 Contact us Idavang Russia 187029 Russia Leningrad district Tosno region village Nurma Tel. +7 812 960 03 20 Fax +7 812 960 03 24 Email: [email protected] www.idavang.ru 18 19 20
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