The past year ushered in a series of challenges for the companies in the fuel sector. The decisions made by us have demonstrated that we are able to take rapid steps to adapt to a demanding environment and ensure the desired profitability for our projects.
The segmental management model we have implemented enhances management efficiency, delivering cost and revenue synergies across the organization.
Letter from the Vice-President of the Board
2014 ushered in a series of challenges for the companies in the fuel sector. The decisions made by the LOTOS Group have demonstrated that we are able to take rapid steps to adapt to a demanding environment and ensure the desired profitability for our projects.
The key factor that had a strong impact on both the global and Polish petroleum markets in 2014, with significant consequences for the LOTOS Group’s performance, was the price of crude oil, which also determined the price of petroleum products.
The LOTOS Group’s Strategy is designed to strengthen our position as a strong, innovative and efficient business which plays a major role in ensuring national energy security.
Our operations consist in crude oil production and processing, as well as wholesale and retail sale of petroleum products, among which are: fuels (unleaded gasoline, diesel oil and light fuel oil), heavy fuel oil, bitumens, aviation fuel, naphtha, propane-butane LPG and base oils.
Risk and opportunities
At the LOTOS Group, we identify a range of diverse risks, which may affect all areas of our business. The key risks in terms of their impact on our operations are the financial risks as well as risks affecting the exploration and production area. In the analysis of the risks, we also factor in issues related to sustainable development.
Key data 2014
With revenue of ca. PLN 28.5bn in 2014, we rank fourth in the group of 500 largest businesses in Poland.
Integrated Annual Report 2014
The concept of corporate social responsibility is a part of the vision of the LOTOS Group’s operations, and is reflected in both the business strategy and the corporate social responsibility strategy. In 2012, the Board of Grupa LOTOS approved the revised corporate social responsibility strategy for the LOTOS Group, effective – just like the business strategy – until 2015.
The primary goal of the LOTOS Group’s CSR strategy is to support the organization in meeting the objectives provided for in its business strategy by optimum use of the organization’s resources and capabilities to generate economic and social value for the benefit of the LOTOS Group and its environment.
To ensure successful delivery of that goal, the social, environmental, ethical and human rights concerns included in the CSR strategy were incorporated into the LOTOS Group’s core operations and business strategy. In this way, we have created a mechanism to:
- Maximise the building of shared value for the shareholders, our other stakeholders and society as a whole,
- Identify, prevent and mitigate the possible negative effects of our operations.
The efforts undertaken by the LOTOS Group in the social and business spheres, in our relations with key stakeholders and in corporate governance are aimed principally to:
- Ensure compliance with the law and ethical standards,
- Increase our positive contribution to social development,
- Mitigate possible adverse impacts of our operations and the associated risks,
- Maximise our chances for sustainable development over the long term.
The LOTOS Group’s CSR strategy until 2015 defined the key objectives to be achieved in individual areas of activity. For each of these objectives, a set of targets and action plans has been developed to support the achievement of the results envisaged in the strategy.
- In the area of investment in human resources our objective is to ensure the availability of highly qualified staff required to successfully implement the business strategy and enhance the corporate culture based on adopted values.
- As regards health and safety improvement, our priority is to increase the awareness and involvement in work safety improvement among the management staff, employees and contractors.
- As regards integration with the local community, our principal goal is to undertake initiatives that help to ensure lasting solutions to social and environmental issues vital to our local communities.
- In the area of management of natural resources in the production process, we seek to reduce environmental risk and continually minimise the environmental impact of the LOTOS Group’s operations.
- In terms of ethics and the prevention of misconduct, we seek to improve our management by ensuring ethical conduct and the transparency of business processes, as well as by protecting the organization against misconduct.
- Our strategic goal with respect to partnership relations with the market environment is to build lasting customer relationships by focusing on understanding customers’ needs and ensuring expected product quality and safety.
- As regards energy sector security, our objective is to support initiatives designed to enhance energy sector security in a socially and environmentally responsible manner.
- As regards communication, we aim to ensure that communication with employees is timely and appropriate to their various needs. We also seek to build organizational culture based on multi-directional, open communication, including through the development of a system of public consultations within the LOTOS Group.
2014 was the third full year of implementation of the LOTOS Group’s corporate social responsibility strategy, which, just like our business strategy, spans the period to 2015.
Communication and CSR Director, Grupa LOTOS
Therefore, we are about to update our objectives concerning social and environmental impacts, corporate governance and human rights protection. This will be an excellent opportunity for us to review our more than eight-year performance, since analyses underlying the development of our first CSR strategy were started in early 2007, as part of a series of important changes driven by the growth of the LOTOS Group as an integrated oil corporation.
Our approach to CSR is long-term and comprehensive, since it has become an element of the management process. The synergy of its business and social aspects has been ensured through the development of detailed operational plans and measures of the CSR strategy performance against targets in all of its key areas. Performance against targets is supervised by leaders of particular areas, reporting to the Board. For the purpose of performance reporting, we have developed a method to monitor the implementation of the CSR strategy, similar to that used for analysing the effects of our business strategy. Our CSR practices, similarly to practices in other key management areas, are additionally assessed for maturity, and evaluated by the management on a regular basis during our yearly ‘CSR Day’. Recent analyses show a high level of achievement of the CSR targets, in excess of 90%.
Our approach consistently strengthens the LOTOS Group’s reputation as a desirable employer, trading partner of choice, and trusted capital market participant, as well as a responsible neighbour, a business in symbiosis with its environment, committed to improving the well-being of its neighbourhood, resolving issues and responding to the challenges that emerge in the vicinity of its plants.
We strongly support the approach set out in the PN-ISO 26000 standard, where corporate social responsibility is defined as an element of the management process which takes into consideration a company’s responsibility for the environment in which it operates. We identify, assess, measure and mitigate our social and environmental impacts. It is worth noting here that the precautionary measures we take depend on the results of analyses of how particular risks affect the functioning of the organization and its surroundings. Therefore, we measure not only our impacts, but also the impacts of external factors on the operation and effectiveness of the LOTOS Group.
We perceive our involvement with the affairs of the environment in which we operate as our duty and commitment towards the stakeholders. We believe in building the LOTOS Group value while catering to the needs and expectations of local communities. In fact, one of the eight pillars of the LOTOS Group’s CSR strategy is integration with local communities. We understand it as contribution to ensuring lasting solutions to social and environmental issues vital to our local communities.
To translate this approach into effective action, we need to identify actual needs and expectations of our key stakeholders. And this is how the LOTOS Group works − we consult our decisions and priorities with local communities. A case in point is the consultation of our CSR strategy with the stakeholders. Also, everyone can share their views on our integrated annual reports or report an incident that involves a potential violation of our Code of Ethics.
Transparent ongoing communication, being open to public dialogue and transparent reporting on the implementation of the CSR strategy are also vital to creating lasting relations with the stakeholders.
LOTOS’ sound financial and market position proves that we successfully bring benefits to the organization and simultaneously build value for our environment.