Management of sustainable development

Viru Keemia Grupp aims to combine the dynamic growth of the company with reducing the burden on the ecosystem, maintaining the security and safety of production facilities and increasing the efficiency of all types of investments.

VKG’s integral social responsibility and sustainable development policy was first established in 2009. VKG is one of the first promoters and advocates of the concept of social responsibility in Estonia and especially in Virumaa. Read more here

Sustainable development priorities

Increasing the efficiency of the main activities

Production and occupational safety
Minimising the environmental impact
Energy efficiency and saving
Development of employee potential
Supporting regional development

Supporting initiatives and membership in associations

We share the principles of the United Nations Global Compact.
Our sustainable development objectives and areas of activity are related to the UN Sustainable Development Goals.
We support the implementation of the Paris Agreement and the efforts towards achieving climate neutrality in the European Union by 2050.
Participation in associations
- Vastutustundliku Ettevõtluse Foorum (Corporate Social Responsibility Forum)
- Hoolime ja Vastutame (Responsible Care)
- United Nations Global Compact
- Global Reporting Initiative

Our guiding principles

Openness and transparency
Honesty and correctness
Principle of acting responsibly
Compliance with international standards

Organisation culture

We integrate the principles of corporate responsibility into our organisation culture: the prevalence of the safety of people, the environment and the Group’s property, compliance with human rights, equality of opportunities, and compliance with occupational ethics standards.

The Group's values - openness, commitment, development – as an integral part of our business activities and consolidate the interests of the Group and its employees. The values influence the adoption of decisions, shape our reputation and determine our work principles.

Organisation culture values and principles that support sustainable development

1.

Safety of people, the environment, and property

The safety of employees, local residents and the environment always stands above any economic, technical or other considerations. The Group aims to ensure safe working conditions for people, and we demand the same from our partners. The Group has established a clear, understandable and fulfillable system of safety rules. We respect our employees’ right to refrain and/or refuse from performing work tasks which may damage human health or the environment.

2.

Working conditions based on respect

We comply with human rights and ensure equal opportunities for everyone. The Group strives to create a working environment free of bullying and harassment. The arrangement of employment relationships does not depend on nationality, religious beliefs, gender, age, social status or origin, physical limitations, state of health, civil status, sexual self-expression or orientation, or any other attributes. We expect our employees to treat each other with respect and courtesy, together creating an atmosphere of open communication, trust and mutual respect.

3.

Responsible attitude towards assets

We acknowledge that equipment, technology, solutions and inside information are valuable resources for the Group, regardless of whether such assets are tangible or intangible.

The optimal use, preservation and maintenance in a condition fit for work is the basis of achieving our strategic objectives and it is the duty of all of us. We understand that it is important for professional employees today to know and understand the risks of information security and to be able to efficiently combat these.

4.

Attentiveness and respect towards colleagues

We find that the efficient performance of duties and the solution of extensive tasks is not possible without trust, mutual assistance and a constructive discussion of different viewpoints.

We are always ready to help colleagues, regardless of which subunit they work in.

5.

Equal and understandable requirements for all business partners, compliance with business ethics standards

VKG sets equal and clear requirements for all its business partners and holds competitive tenders for selecting the most optimal cooperation partner by price, quality and terms and conditions. In communicating with the representatives of partners as well as in other communication related to the activities of the Group’s partners, our employees have to comply with the generally applicable business ethics standards, avoiding excesses, derisive attitudes and personal opinions. The employees who are responsible for cooperation with partners have to let the partners know which ethical requirements must be complied with and how to respond to such requirements.

6.

No corruption, conflicts of interest and misuse of inside information

The Group does not tolerate any forms of corruption. Bribes, payoff, expensive gifts or other such are categorically forbidden. If a violation of anti-corruption laws is discovered among employees or partners, the Group shall immediately take appropriate measures.

7.

Cooperation with authorities on the basis of long-term systemic partnership

Viru Keemia Grupp builds it relations with state authorities on the principles of long-term systemic partnership, shaping a favourable investment climate.

We earned the Silver Badge!

In 2019, Viru Keemia Grupp earned the Silver Badge for the first time! Since 2007, the Forum of Responsible Enterprises (established in 2005) evaluates responsibility on the basis of the Corporate Responsibility Index.

A total of 78 enterprises receives a badge last year and all these enterprises care about the surrounding living environment to a smaller or greater degree and wish to contribute to the society with more than required by law. These 78 enterprises and their leaders have realised that the area of influence of the decisions they adopt may extend considerably farther, spreading outside the enterprise.

Responsibility is not a separate objective or plan for us. Above all, it is natural output of our work and this way of thinking has from year to year been integrated in our strategy and everyday activities. We strive to do and contribute even a little bit more than required of us, because that is how we ensure our sustainability in the constantly developing and changing business environment. For the first time in the history of VKG, our activities were assessed as worthy of the Silver Badge – which means that we are doing something good and it has been noticed

Ahti Asmann
Viru Keemia Grupi juhatuse esimees

Risk management in the area of sustainable development

The Group runs a risk management system which determines a uniform approach to the risk management process and concentrates the standardised tools and methods for analysing risks, including environmental, production safety and social risks.

In the report, the risk management objectives and principles have been specified under risk management.

Risk management has been built on the principle of integrating the risk management tools into all the critical corporate processes, which allows us to define areas of responsibility of risk management and organise risk monitoring at all the levels of management.

The main risks in the area of sustainable development include risks related to environmental and production safety and the availability of qualified labour. We take appropriate preventive measures in order to prevent the risks from materialising and to protect people, the environment, equipment and technological processes.

We manage risks related to human life and health and the environment by taking the precautionary approach.

The precautionary approach has in international documents been formulated as follows:

Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.

Rio Declaration on Environment and Development
14 June 1992

Risk management process

1. Production and environmental safety risks

Since VKG is a representative of the processing industry and a manufacturer of fuel containing carbon, significant environmental risks accompany the activities of VKG, which manifest themselves both in oil shale extraction, boosting its value, and marketing oil shale products. The goal of VKG is to become a pioneer in this branch of industry and set an example of how it is possible to resolve environmental risks within traditional production in a smart and rational way, using modern technologies. Within the past 15 years the Group has made an investment in a total amount of 86 million euros into different environmental projects, aiming at minimising its environmental footprint. Investments have mainly been focused on the efficient use of resources and the minimisation of the entailing environmental effects.

Risk management measures

Regulation monitoring: The Environmental Department performs the internal monitoring of regulations related to the environment – amendments to laws and directives are being monitored on a daily basis.
Keeping up to date with the industry trends; being represented in decision-making processes: VKG participates in all possible workgroups via the Estonian Chemical Industry Association.
Timely investments
Engagement of stakeholders and timely notification and information exchange.

2. Risks related to people

The Group’s activities directly depend on its employees. The lack of a sufficient number of qualified employees, particularly in the area of engineering and technology, may cause risks related to labour deficit. Competition in the Estonian labour market may grow tighter, as there is a shortage of qualified specialists. Inability to attract new qualified employees and/or retain the existing qualified employees may have a negative effect on the attractivity of the Group as an employer. The demand for and the expenses incurred on qualified employees are growing as expected, largely reflecting the interest of other industries and state projects in them.

Risk management measures

The Group offers safe jobs and a competitive salary, participation in large-scale projects and interesting work tasks and trains its employees under special programmes. We take additional measures to reduce labour turnover and encourage employees to engage in self-development.
The enterprise identifies the existing key employees and talents and creates a development programme for them in order to ensure the consistency of knowledge. We participate in the development of the study programmes of areas of specialisation of interest to us at TalTech.
Scholarships for TalTech students in order to motivate them to stay at their homeplace.

3. Risks related to the local community

The risk that the way of thinking in the community becomes increasingly greener and opposes the production of fossil fuels. Social unacceptance may affect the activities and reputation of the enterprise and cause difficulties in implementing investment projects and recruiting employees.

The risk that the local community does not support the new development projects of the enterprise and the expansion of the industry. In order to hedge this risk, we communicate openly with the local residents and hold regular meetings with initiative groups, in the course of which we describe the directions of development and discuss environmental matters. We make extensive investments into the improvement of the living environment, e.g. into the improvement of ambient air quality in the city of Kohtla-Järve. At the same time, it is important to note that the integration of the oil shale industry in socio-economic development and their mutual effect are characteristic features of the Ida-Viru region. The oil shale industry is one of the largest employers in the region – approximately 7,300 people are directly employed in the sector, but many times more are indirectly involved. The sector also offers a salary that is above the average in the region. For the people living here, the presence and development of the sector therefore mean a confidence in their future and a stable income which ensures everyday subsistence and a sense of security.

4. Risks arising from damage to reputation

Damage to reputation may occur in connection with environmental pollution, low salaries, or the establishment of new plants/mines, etc. The activities of the enterprise may cause damage to reputation or, in a worse case, some kind of social action against the enterprise.

Mapped hedging measures

The activities of the enterprise must meet all the applicable legal acts;
Regular publication of a sustainable development and social responsibility report in accordance with the GRI standard;
Compliance with the disclosure requirements in developing our activities and processing spatial plans by involving various stakeholders (the state, the city, the community);
Compliance with the principles of corporate responsibility;
Contributing to the development of the local community.

Internal audit

Internal audit ensures the identification and assessment of risks, the development and implementation of control procedures, the notification of the governing bodies of the discovered deficiencies together with proposals for improvement measures, the timely adaptation to changes in the internal and external environment, the implementation of a control system in the IT area, and the prompt solution of conflicts of interest.

Internal audit plays a crucial role in enhancing the efficiency of the manageability of the Group and in connection with financial activities.

The company has an internal control system which ensures:

risk minimisation;
development, deployment, correct compliance, supervision and improvement of control procedures on all levels of business activity and management;
continuity of operations of the company, highest possible efficiency and sustainability and opportunities for development, including adjusting the operation of the company in due course according to changes in the internal and external environment;
a uniform and systematic methodological approach and high-quality information and analytical support to management decision-making;
resolving conflicts of interests emerging during the operation of the enterprise in due course.

Combating corruption

Viru Keemia Grupp manages all of its business processes in an ethical and responsible manner. The Group does not tolerate any corruption, including giving and accepting bribes.

. VKG has developed and approved the Procedure for Avoiding Conflicts of Interest which is mandatory for all the employees of the Group and its subsidiaries, regardless of their position.

The Procedure determines the definition of a conflict of interest and other terms and definitions related to the fight against fraud and tasks the senior management with developing a uniform ethical standard on the unacceptability of any forms and manifestations of corruption. The Procedure lists the methods and procedures used in combating fraud and corruption in the Group – including a hotline, the organisation of investigations, and a call to act responsibly, reporting violations. The document also contains the principles of cooperation with officials, accepting and making gifts, representation expenses, and financial relations with third persons.

Upon checking the notices received via the hotline, it was determined that no verified cases of corruption occurred in 2019.

Three major corruption risks identified by VKG, together with the measures used for hedging the risks:

Giving bribes to ensure the interests of the Group – VKG is a responsible and transparent enterprise which has established full unacceptance or zero tolerance towards corruption and bribery.
Accepting bribes in choosing suppliers and cooperation partners – the Group has established a procurement policy the aim of which is to avoid swayed procurements and always choose the most favourable cooperation partner for the Group. Compliance with the procurement policy is supervised by the internal audit function via regular monitoring.
Conflicts of interest of executive employees in representing the interests of the enterprise – The Group has developed a procedure for the submission of reports of economic interests, pursuant to which executive employees have to report their holdings in and connections to companies outside the Group. It is forbidden for Management Board members to provide competition in any area of activity of VKG, unless the Supervisory Board has granted its prior written consent to that.

The Group has a special confidential channel (vihje@vkg.ee) through which any employee or third person can report violations related to the activities of the Group, let it be issues related to corporate management and corporate ethics, compliance with human rights, work organisation, safety, protection at the workplace, quality of goods and services, or any other matters of corruptive nature.

vihje@vkg.ee

Report processing

Cooperation with stakeholders takes place via feedback channels which allow stakeholders to express their opinion or file complaints. One such channel is the hotline for reporting corruption, fraud and violations of law. The hotline is a tool for exchanging information in the Group and receiving feedback from stakeholders.

Reports may be sent to the hotline by e-mail or phone or via the webpage. The confidentiality of the person making the report is guaranteed in the use of any of these communication methods.

Anyone can use the hotline, anonymously, if wished. All the reports are handled individually and after an objective and comprehensive review a decision is made and feedback is given.

In reviewing issues sent by you, the reports are checked by the representatives of our subunits – personnel specialists, lawyers and production safety employees. We are interested in our employees/partners actively using the hotline and being aware of its possibilities.

Compliance with human rights

VKG builds its activities on compliance with human rights and ensuring equal opportunities and labour law. We strive to create a working environment free of bullying and do not allow discrimination on the basis of nationality, gender, age or any other reason. We expect our employees to treat each other with courtesy and respect. We do not use child labour or forced labour. The Group respects the employees’ right to form voluntary associations to protect their rights and interests, including the right to form trade unions, and to join such associations. In the area of human rights, we responsibly comply with legal requirements and the standards of international law.

The Group’s human rights positions are established in the following documents:

Personnel Policy;
Procedure for Combating Conflicts of Interest;
Industrial and Environmental Safety and Work Protection Policy.

Disclosure of information

An important part of the management system of Viru Keemia Grupp is transparency and the disclosure of information, which is at the same time in balance with the protection of the Group’s trade secrets and other confidential information.

Our objective is to present timely and regular information about our activities to all the persons interested in receiving it.

The main principles of information concerning our activities include openness, reliability, operativity, timeliness and accessibility.

The main means of transmitting information include the Group’s official webpage and the webpages of the subsidiaries as well as social networks such as Facebook, Instagram and LinkedIn.

The main information channels that have found a wide audience include the Group’s official page on the Internet, the annual report and the social responsibility and sustainable development report. The homepage and the reports provide news and information about important events as well as financial and production indicators.

In order to make information equally accessible to all the stakeholders, we publish information on the Group’s homepage in Estonian, English and Russian (the annual report is available in Estonian and English, while the social responsibility and sustainable development report is available in three languages).

Cooperation with the media

Viru Keemia Grupp supports active cooperation with the representatives of the media. Cooperation with the media is regulated by the Procedure for Media Relations.

The main objectives of the disclosure of information are:

to provide high-quality and fact-based information about the Group’s activities;
to shape and support the Group’s reputation;
to build an equal and partner-based dialogue with the representatives of mass media, the authorities and the social organisations related to the Group’s area of activity

VKG’s Public Relations Division operatively responds to enquiries from the representatives of the media, providing thorough and accurate information about the Group’s projects and commenting on important cross-sectoral topics.

International management systems

The enterprises undergo regular monitoring of the fulfilment of the objectives of the quality management system, hold internal audits and external audits by an independent certification body. In the framework of implementing the best practices, new solutions and best practices are also sought in quality management.

International management systems like ISO and OHSAS are in use also in VKG. The table below lists the management systems in use in the Group’s subsidiaries.

	ISO certificates (environmental and quality management systems)	OHSAS certificate (occupational health and safety management system)
VKG	ISO9001, ISO14001	-
VKG Oil	ISO9001, ISO14001, ISO50001	OHSAS 18001
VKG Kaevandused	ISO9001, ISO14001	OHSAS 18001
VKG Energia	ISO9001, ISO14001, ISO 50001	OHSAS 18001
Viru RMT	ISO9001
VKG Soojus	ISO9001, ISO14001	OHSAS 18001
VKG Elektrivõrgud	ISO9001	OHSAS 18001

Certifications in the Group enterprises in 2019:

VKG Oil

certification of the energy management system in accordance with standard ISO 50001:2018 (initial certification);
regular external audits of the quality management system and the occupational health and safety management systems (in accordance with standards ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007);
transition audit of the chemistry laboratory upon transition from standard EVS-EN ISO/IEC 17025:2006 to standard EVS-EN ISO/IEC 17025:2017 and the accreditation of the chemistry laboratory of VKG Oil in accordance with standard EVS-EN ISO/IEC 17025:2017.

Regular audits of VKG Kaevandused:

ISO 9001 Quality management systems,
ISO 14001 Environmental management systems,
OHSAS 18001 Occupational health and safety management systems

Regular external audits of VKG Energia:

ISO 9001 – Quality management systems,
ISO 14001 Environmental management systems,
ISO 50001 Energy management systems,
OHSAS 18001 Occupational health and safety management systems.

Regular audits of Viru RMT:

ISO9001:2018 – Quality management systems, recertification audit in 2020;
EN ISO 3834-2:2006 Quality requirements for fusion welding, recertification;
EN 1090-2:2018 Execution of steel structures and aluminium structures - Part 2: Technical requirements for steel structures, recertification;
EN ISO/IEC 17011:2017 supervision of the accreditation of the calibration laboratory, supervisory assessment and transition to the new version of the standard in 2020.

Regular audits of VKG Elektrivõrgud:

ISO 9001:2015 – Quality management systems,
OHSAS 18001:2007 Occupational health and safety management systems.

Interim audits of VKG Soojus:

ISO 9001:2015 – Quality management systems,
ISO 14001:2015 - Environmental management systems,
OHSAS 18001:2007 - Occupational health and safety management systems.
• Recertification audits of the said management systems in 2020.

Supply chain management

VThe priorities in VKG’s purchasing activities include the openness of information, the absence of discrimination and unjustified competition restrictions with regard to the parties in the purchasing process, and the creation of long-term relationships with suppliers.

The Group’s principles in communicating with suppliers:

transparency,
competition,
equality,
mutual securities,
confidentiality,
openness of information.

In purchasing works, services, materials and equipment, the Group uses competition between suppliers. The Procedure for Purchasing Goods, Works and Services applies on the Group level. It is the basic document in planning and performing purchase procedures and selecting suppliers.

The selection of and cooperation with suppliers is based on an integrated management system which is in conformity with standard ISO 9001:2017.

The Purchase Division is responsible for all the purchases made by the Group and its subsidiaries. In order to achieve the necessary level of competition, the Purchase Division may conduct a public pre-qualification procedure to create a database of potential purchase participants which would include companies that are capable of performing works, providing services and supplying goods in accordance with the requirements established for production processes, quality and safety and the results of work and services. Potential participants, whose qualification meets the required level, may be invited to participate in future purchase tenders.

Main requirements for participants in procurement competitions:

conformity with the main requirements for participants, which are specified in the Procedure for Purchasing Goods, Works and Services;
experience, production capacity and the availability of qualified labour for the production (supply) of predefined types of goods, the performance of predefined types of work and the provision of predefined types of services at the necessary quality level;
solvency;
positive corporate financial and reputation value.

2019 in figures

566

competitions held

2299

tenders received

64.5

million euros worth of purchases

Cooperation with stakeholders

Cooperation with stakeholders is aimed at achieving the goals of sustainable development and mapping the expectation and common interests of the parties. We have selected a number of target groups whose interests are notably related to our activities and may have a significant effect on the achievement of our strategic objectives. We also take into account the obligations established by law and other normative acts.

Stakeholders are organisations and individuals for whom the Group’s activities, products or services may have a considerable effect or whose activities may have an effect on the achievement of strategic objectives.

Principles of cooperation with stakeholders

respect for the interests of the parties;
constructive cooperation;
transparency of information concerning the Group’s activities;
regularity of joint activities;
fulfilment of obligations.

Viru Keemia Grupp constantly cooperates with stakeholders, holding dialogues for the purpose of analysing the internal and external social environment and taking into account the Group’s strategic objectives and the priorities of the stakeholders.

Main mechanisms of cooperation with stakeholders:

business contacts, cooperation contracts, and agreements;
work-related meetings and presentations;
the Group’s communication system;
public hearings;
joint workgroups;
surveying and studying the opinions of employees and clients;
membership in social and expert associations;
conferences and roundtables;
reporting.

Main stakeholder groups:

shareholders;
employees;
clients;
suppliers and partners;
state and local government institutions;
the local community;
NGOs and civic associations;
professional unions.