Economic Sustainability

This focus area – as part of the sustainability framework – covers those topics which are considered to be important factors for the long-term economic success of the company. Other ‘Business-as-usual’ economic performance is detailed in different chapters of this annual report.
 

HIGHLIGHTS

  • New version of Code of Ethics issued with practical explanatory examples
  • High level of customer satisfaction maintained

Ethics and Compliance

 
In 2011, through the ethics management system, we laid special emphasis on communicating the modified Code of Ethics:
A new, more user-friendly design was employed;
Every employee of the MOL Group received the modified Code of Ethics electronically and was provided with information about the main modifications of the Code;
Several articles were written explaining the key modifications to the code in MOL’s internal magazine ‘Panorama’;
The Code was uploaded and made accessible through the intranet and on the website of the MOL Group;
Furthermore, the updating of the suppliers’ version of the code and the drawing up of a risk assessment methodology commenced.

Ethical cases
 
The ethical cases reported to the Ethics Council of MOL Group and INA are summarized below. The task of the Council is to ensure that all MOL Group employees comply with the Code. Among its other work, therefore, the Council replies to questions that are raised and conducts investigations. In 2011 the main topic of the questions were ethical notification opportunities and job contracts.
In 2011 the Ethics Council received 38 notifications altogether. The Ethics Council performed investigations in 20 cases out of the 38. In five cases (out of the 20) MOL’s Corporate Security department was asked to conduct investigations. Ethical misconduct was proven in two out of the 20 cases.
Besides this, we strive to make Code of Ethics a component of all contracts. In 2011 3 contractual relationships were discontinued due to the unethical behaviour of the supplier and 1 company was ejected from a tendering process.
The increase in the number of notifications shows that the ethical awareness of our employees has risen across the MOL Group. The same tendency can be recognized with our external stakeholders.
 
 
 
In order to promote ethical awareness the Ethics Council made public some cases where ethical misconduct was proven in 2011. The published cases are as follows:
 
Preparation of a derogatory document -One of the managers from MOL Groupprepared some educational material which contained humorous pictures and text in order to raise awareness. However, the document was found insulting by many. The investigation found evidence to substantiate the following breach of the Code of Ethics: 'It is a requirement imposed on MOL Group employees not to publish or disseminate materials or jokes which might offend people.' The Ethics Council did not propose a penalty for breaching the Code of Ethics, but reminded all the parties concerned that they should be more careful when using humorous statements as they may be considered insulting to others.
 
Conflict of interest - One of the managers from the MOL Group, as a private person, started to use the services of a company with whom he had previously established a relationship as part of his job at the company. The investigation found evidence to substantiate the following breach of the Code of Ethics: “As a MOL Group employee you must obtain written authorisation from the relevant manager exercising employer's rights in advance regarding any relationships established with competitors, customers or suppliers where conflicts of interest can be assumed to exist”. As a consequence of the case, the manager concerned received a verbal warning, and ceased the use of the service as a private person. The manager was then excluded from the tendering process for the service.
The Ethics Council regularly report all ethical issues to the Executive Board and take measures to raise employee awareness of issues of concern.

Click here to read a relevant article from the MOL Scientific Magazine.

Compliance Team

MOL Group is dedicated to fair marketing behaviour and the improvement of the culture of competition and awareness of the need for regulatory compliance. In 2010 MOL started a Compliance Programme and established a Compliance Team (CT) which is responsible for the execution of the programme at a group level.
In 2011, CT conducted several competition law compliance inspections. The inspections involved a review of 104 employees. As a result, awareness about specific topics increased and suitable recommendations were made.
More than 4,800 employees were trained at a basic level via e-Learning tools and almost 1,000 employees at an advanced level through personal presentations. These training events strongly support the improvement of awareness of the need for compliance and promote a culture of competition throughout the MOL Group.
In 2011, MOL Romania was fined EUR 18.5 Million because of alleged violations of anti-trust regulations. For more information, please go to page 151.

Transparency

 
Following our commitment to transparency and accountability and as a complement to our financial flash report, in 2011 MOL Group published its “2011 Half Year Report” informing our stakeholders about the steps we have taken in environmental and social areas.
In addition to the MOL Group integrated annual report and half year flash reports, all major companies of MOL group have also made disclosures about their sustainability performance in annual or sustainability reports or on the company website (Slovnaft, TVK, INA, and MOL Pakistan). Moreover, INA’s and TVK’s reports meet the requirements of the GRI (Global Reporting Initiative) reporting guideline at the highest (‘A’) level.
In order to systematically receive feedback from our stakeholders, we continued our stakeholder dialogue program about our SD performance in 2011. Namely:
  • the executive management of the European Workers' Council (EWC) – together with MOL experts – analysed workforce-related information published in the MOL Group Annual Report and web page;
  • a roundtable discussion on the topic of the environment with relevant stakeholders (e.g. environmental authorities, national parks and green NGOs) was organised;
  • Sustainability professionals who represent external stakeholders (such as universities, NGOs, businesses and consultancies) had the chance to analyze and provide feedback on MOL Group’s sustainability performance and reporting practices.
MOL Group also responded to questions from the Carbon Disclosure Project which aims to make transparent to investors efforts made to manage the risks and opportunities related to climate change.
 

Economic sustainability

 
Data presented here have been collected from financial reports and notes about the MOL Group annual report and are presented according to GRI definitions concerning economic sustainability.
 
 
MOL Group revenues increased by 25.3% in 2011 compared to revenues in 2010, primarily reflecting higher commodity prices, resulting in higher average sales prices. Operating costs increased by 30%, mainly as a result of increasing raw material costs due to a higher crude oil purchase price. Company cash added value increased by 9.5%, mainly as a result of the increase in economic value retained (i.e. an increase in profit and depreciation). Employee wages and benefits decreased by almost 6% in spite of a salary increase due to the lower average headcount (MOL Group average headcount was 31,638 employees in 2011 vs. 33,414 in 2010) and a change in managerial incentives. Capital investors: dividends to non-controlling interests and interest on borrowings increased by HUF 20 Bn while the foreign exchange losses on borrowings decreased by HUF 42 Bn due to the fact that from Q3 2011 foreign exchange losses have been recognized as equity due to the implementation of net investment hedge accounting methods. Payments to governments exceeded the base level due to an increase in the group-level corporate tax and crisis tax imposed by the Hungarian state on the domestic energy sector.

 

 
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