MEGAFON Annual Report 2016
BRINGING THE FUTURE CLOSER

Our Approach to Sustainability

Sustainable development is an integral part of MegaFon’s business strategy. The Company sees sustainable development as growth that ensures a positive impact from its operations on the quality of life for people. We seek to make a meaningful contribution to the social and economic development of society. Our sustainability goals complement our social mission to overcome communication barriers, unite people across Russia, and provide quick access to information in any situation.

OUR APPROACH TO SUSTAINABILITY

MegaFon’s sustainable development policy

Sustainable development is underpinned by our commitment to the principles of integrity in business operations and responsible behaviour in relationships with all stakeholders. MegaFon acknowledges the supremacy of law and complies with all Russian and applicable foreign legal requirements, at the same time taking into account the expectations of all its stakeholders. Being a responsible business means for MegaFon harmonising commercial, social and environmental interests. This principle shapes our approach to innovation, development and launch of new products. MegaFon’s Chief Executive Officer, Board of Directors and Management Board collectively provide and shape the strategic leadership behind our approach to sustainability.

We adhere to generally accepted moral and ethical standards, endorse business transparency, respect human rights and support environmental initiatives. Our sustainability activities are guided by international regulations and standards, including the United Nations Global Compact and the Social Charter of Russian Business. Our reporting on sustainability is part of the Company’s annual report and takes into account international standards: the Guidelines on Social Responsibility (ISO 26000) and the Global Reporting Initiative (GRI) Guidelines for sustainability reporting.

STAKEHOLDER ENGAGEMENT

Maintaining ongoing dialogues with all external and internal audiences is essential to ensuring the Company’s sustainable growth. Our stakeholder engagement is based on the principles of partnership, equality and respect.

ETHICS AND COMPLIANCE

MegaFon is governed by the principles of business ethics and legal compliance, and fairness and integrity in its business operations.

Since 2013, MegaFon has followed the Code of Business Conduct and Ethics approved by the Board of Directors and articulating the Company’s principles, standards and rules of business conduct for our employees and members of the Board of Directors. The Code of Business Conduct and Ethics also applies to all subsidiaries in which MegaFon has a 100% interest. The Code details the general principles of interaction with key stakeholders and specific requirements for employees. The Code determines the Company’s position in countering corruption, discrimination and improper behaviour, and sets requirements to ensure legal compliance, integrity, equal rights and informational transparency.

COMPLIANCE FRAMEWORK

COMPLIANCE FRAMEWORK

We have in place a “Direct Line” through which MegaFon’s employees and other stakeholders can receive guidance on compliance with the Code of Business Conduct and Ethics (in particular, as to whether a particular action is deemed corrupt), or can discreetly (and, if required, anonymously) report violations. The “Direct Line” usage statistics and information on the most important issues which have arisen are communicated to the Audit Committee. The “Direct Line” is available 24/7.

DEVELOPMENT OF THE COMPANY’S COMPLIANCE FRAMEWORK IN 2016

  • Carried out analysis of the compliance framework
  • Adopted the Company’s Compliance Policy
  • Established the Compliance Committee
  • Introduced the role of Compliance coordinator
  • Developed action plan to further improve the compliance framework

In 2016, MegaFon increased its focus on improving the Company’s compliance framework to further strengthen the culture of integrity and ensure that all employees observe the principles of business ethics as well as requirements of external and internal regulations in everything they do.

We define compliance as employees’ acting in accordance with the Company’s principles and standards of business ethics and integrity to protect the interests of the Company and all parties impacted by its activities or decisions, thus enabling observance of applicable Russian and foreign laws, the Code of Business Conduct and Ethics, and other internal regulations, and maintenance of its business reputation.

In 2016, the Company analysed its compliance framework, which resulted in a number of changes to improve it based on best practices, standards and regulators’ recommendations, including bringing it in line with the international standard ISO 19600:2014 – Compliance management systems.

To improve the effectiveness of its compliance framework, in 2016 MegaFon adopted a Compliance Policy, which sets out guidelines for building a compliance framework, describes its mandatory elements, and defines its scope.

The Company also established a dedicated Compliance Committee, responsible for ensuring the implementation of the Compliance Policy and setting the development strategy for MegaFon’s compliance framework. The Company’s CEO and functional directors comprise the membership of the Committee.

We introduced the role of Compliance coordinator to coordinate compliance activities in line with the Compliance Policy and oversee the implementation of the Committee’s decisions.

Compliance is also ensured at the business unit level, with dedicated employees assigned responsibilities for the implementation of specific compliance programmes.

The Company manages all areas of compliance risk, identifies risks and updates its risk register. Every area of compliance risk is regulated by individual policies and procedures. The Compliance Committee prioritises focus areas for compliance activities and approves an action plan based on the analysis of compliance risk factors affecting the achievement of the Company’s goals and objectives.

The Company has developed a comprehensive action plan to further improve its compliance framework, including enhancement of compliance controls and introduction of risk assessments. In 2017, we will place particular emphasis on fostering a compliance culture, focusing specifically on active promotion of “Tone at the Top” role-modelling, training activities and communications.

ANTI-CORRUPTION PRINCIPLES

Today, the world’s leading companies view their anti-corruption commitment as an integral part of compliance with the principles of corporate social responsibility rather than just adherence to legal requirements in this area.

The Company highly values its reputation and does not tolerate any form of corruption or bribery. MegaFon strictly adheres to Russian anti-corruption regulations, such as the Federal Law On Countering Corruption and the Methodical Recommendations of the Ministry of Labour and Social Protection adopted in 2013, as well as the UK Bribery Act. In 2014, MegaFon became the first among Russian mobile operators to join the Russian Anti-Corruption Charter for Business.

MegaFon has in place an Anti-Corruption Policy and an Anti-Bribery and Anti- Corruption Declaration, which guide our policy on corruption risks. They provide, inter alia, guidance to be followed by all the Company’s employees and third parties engaged by the Company. More detailed control measures are specified in other internal regulations, such as the Gifts and Hospitality Policy, Procurement Procedures, Know Your Counterparty Procedure, Charity Policy, etc.

ВThe Company provides mandatory employee training – new hires now take an anticorruption online training course as part of their induction process.