Business Ethics and Human Rights
The Company adheres to high standards and principles of business ethics.
NOVATEK’s corporate culture is based on international and Russian best practices and aims to maintain trust and mutual respect, both in the communication process within the Company and in relationships with business partners.
NOVATEK is guided by the sustainability principles of the UN Global Compact, G20/OECD Principles of Corporate Governance, rules of the International Financial Corporation, the European Bank for Reconstruction and Development, the Paris Memorandum of Understanding on Port State Control, the Corporate Governance Code recommended by the Central Bank of the Russian Federation.
NOVATEK’s zero tolerance for any form of human rights violation, prohibition of political involvement of any kind on the Company’s behalf, corruption, or fraud is essential for the long-term success of its business and for society as a whole.
Ethics matters are regulated at all levels of the Company’s organizational structure. The Board of Directors approves the Code of Business Conduct and Ethics, Supplier Code of Conduct, Human Rights Policy, Anti-Corruption Policy, and other Company policies. It also monitors the legal compliance of these documents.
Respecting human rights
Ethical business conduct entails ensuring and respecting the rights of all stakeholders the Company engages with, including employees, contractors, and local community members.
NOVATEK seeks to eliminate any potential negative impacts of its operations on human rights. For this purpose, the Company applies due diligence procedures: it regularly assesses the impact of its operations on human rights and relevant risks, monitors possible violations, and establishes procedures for their prevention.
Conflicts of interest
NOVATEK considers conflicts of interest as the main driver of corrupt behavior. Therefore, Company employees must avoid situations that lead or could potentially lead to a conflict of interest. This requirement is set forth in the Code of Business Conduct and Ethics, the Regulations on the Management of Conflicts of Interest, and the Anti-Corruption Policy. In addition, the Anti-Corruption Policy regulates the principles of managing conflicts of interest.
To control risks associated with conflicts of interest, the Company has implemented a routine of regular employee disclosure by asking them to complete the relevant declaration forms on conflicts of interest. In addition, during the job application process, candidates for vacant positions fill out a special questionnaire where they indicate information related to conflicts of interest.
Anti-corruption
In matters of anti-corruption, which are an integral part of ethical business culture and behavior, the Company strictly abides by international laws and applicable national laws. NOVATEK has zero tolerance to dishonest and illegal business practices and voluntarily implements additional measures to prevent corruption.
The Company’s Board of Directors approved a revised version of the Anti-Corruption Policy that takes into account the latest applicable laws, international practices, and the Company’s commitments. In particular, the document requires that progress on the Policy implementation be annually reported at a meeting of the Audit Committee of the Board of Directors. All employees acknowledged receipt of, and signed, the new version of the Policy, which was made available on both the Company website and its intranet portal.
Training in the basics of anti-corruption behavior, principles of business ethics, and respect for human rights
Education and training are a tool used for enhancing a corporate culture of ethical behavior and mitigating anti-corruption risks at NOVATEK. The Company ensures the Anti-Corruption Policy, Code of Business Conduct and Ethics, and Human Rights Policy are communicated to all employees and other stakeholders as a matter of course via online channels. On top of this, mandatory in-person briefing on the Anti-Corruption Policy, business ethics, and human rights was introduced for all new employees.
Training and counseling of NOVATEK employees and members of governance bodies serve as a separate measure to prevent corruption in the Company. An online course themed The Basics of the Company’s Anti-Corruption Policy and Employee Anti-Corruption Conduct has been developed and made available to all employees through the intranet portal. The course covers various aspects of human rights protection and business ethics principles. It is compulsory for all new hires.
The Company also provides in-person training on pressing matters related to the Anti-Corruption Policy, business ethics, and human rights for various categories of employees.
The Company launched a new online course on business ethics and human rights, covering various aspects of human rights protection and business ethics principles. The course is designed for educating all employee categories.
The Company also conducts training on the NOVATEK Group’s supplier (contractor) behavior standards for contractor and subcontractor employees. This course covers various aspects of ethical business conduct and respect for human rights.
Regular advanced trainings are provided to Company officials and employees responsible for anti-corruption management, with relevant supporting documents issued upon completion.
Grievance mechanisms
In order to maintain a high level of trust in PAO NOVATEK, develop high ethical standards, prevent human rights violations, fraud, corruption, and conflicts of interest and to strengthen business reputation, the Company has in place the Ethics and Human Rights Hotline.
Information about incidents of violations in the field of business ethics and human rights, which have been identified, including through the grievance mechanisms, is submitted to the Audit Committee of the Board of Directors on a regular basis.
In addition, local query and grievance channels have been set up in NOVATEK’s regions of operation. The Yamal LNG and Arctic LNG 2 projects have implemented additional channels for submitting complaints, queries, requests, and suggestions across various domains. These channels also welcome feedback regarding the operation of the grievance mechanisms themselves. The procedures for receiving and processing queries and complaints, including turnaround times and the sequence of actions, are established in the applicable local regulations. Queries can be made in person, by phone, or via e-mail.
Supply chain
To exclude conduct risks from its relations with third parties, the Company holds tenders to select counterparties and has a well established internal control and audit system. The Company adopted the Supplier Code of Conduct, which contains recommendations and principles related to business ethics and human rights that NOVATEK expects its suppliers to follow.
Anti-trust measures
NOVATEK strictly abides by anti-trust laws applicable in the countries where it operates and supports competitive behavior and mutual respect among market participants. The Company regularly assesses the risks of violating applicable laws to prevent monopolistic and anti-competitive business practices and develops relevant risk management activities.
Approach to taxation
As one of the largest taxpayers in its regions of operation, NOVATEK strictly abides by Russian tax laws and does not take any measures to facilitate tax base erosion or profit shifting. The Company does not tolerate tax minimization schemes using offshore entities and other methods and considers the Company’s tax payments to local budgets as a factor contributing to sustainable social and economic development of its regions of operation.
Compliance with tax obligations, in particular tax payments, is monitored by the Audit Committee of the Board of Directors as part of regular monitoring of the Company’s financial performance.
To ensure compliance with its tax obligations, NOVATEK assesses tax risks as part of the Company’s overall risk management process. NOVATEK’s internal audit function assesses the Company’s performance in terms of tax liabilities as part of its audit engagements.
Transfer pricing
The Company’s transfer pricing activities are fully compliant with the Action Plan on Base Erosion and Profit Shifting (BEPS) of the Organization for Economic Co-operation and Development. In addition, NOVATEK strictly abides by local laws of the jurisdictions in which the Company operates.
As an international group of companies, NOVATEK submits annual three-tier reporting (global and national documentation as well as a country-by-country report) to tax authorities as required by BEPS 13. The Company also prepares reports in accordance with local laws of the jurisdictions in which it operates, disclosing information about its operations, in particular its profits and accrued and paid taxes, in each of the jurisdictions in which it operates.
