GOVERNANCE
OUR GOVERNANCE PHILOSOPHY IS TO ENSURE COMPLIANCE TO ACHIEVE
DEVELOPMENT THAT IS SUSTAINABLE, GROWTH THAT IS INCLUSIVE AND PROGRESS THAT IS ACCOUNTABLE.
We are a multi-locational federated Group, where each company is independent for its day-today operations and the comprehensive governance structure acts like a glue to ensure a uniform culture of accountability, fairness and transparency.
At the helm of our governance structure is the Board of Directors, who provide leadership for the Group and strategic direction to the management. It is collectively responsible to shareholders for promoting long-term success of the Group through the creation and delivery of sustainable shareholder value.
COMPOSITION OF THE BOARD
In accordance with the UK Corporate Governance Code, the majority of our Board, excluding the Chairman, comprises independent Non-Executive Directors. As of March 31, 2018, our Board consists of the Executive Chairman, Executive Vice Chairman, and five independent Non-Executive Directors.
| AGE Group |
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The Board has four established committees that help oversee the management of the Group:
| SUSTAINABILITY COMMITTEE | AUDIT COMMITTEE | NOMINATIONS COMMITTEE | REMUNERATION COMMITTEE |
| SUSTAINABILITY COMMITTEE | AUDIT COMMITTEE |
| NOMINATIONS COMMITTEE | REMUNERATION COMMITTEE |
Ably assisting the Board are our 'Code of Business Conduct and Ethics' and the Vedanta Sustainability Framework. While the Code is a guiding set of principles for our employees to conduct themselves impeccably, the Framework is for our businesses to understand and integrate sustainability into their operation and decision-making.
To further ensure the robustness of our structure, we also follow global standards and good practices such as ICMM, IFC and OECD guidelines. International consultants are also engaged to audit and provide feedback on the structure's strengths and weaknesses.
BOARD OF DIRECTORS
For Vedanta, compliance with the local regulations is non-negotiable. Requisite checks and balances are built in the system with a well-defined reporting structure and responsibilities to address local issues equitably. A responsive feedback mechanism and quick redressal system ensure that we are effective and efficient.
See the Annual Report for detailed information on the performance of the Board Committees
CODE OF BUSINESS CONDUCT AND ETHICS
Our Code of Business Conduct and Ethics (CBCE) provides a set of principles, which ensure compliance with the law of the land and sets out expected standards of behaviour. Our reporting requirements in the UK, comprise various governance facets such as:
HUMAN
RIGHTS
RIGHTS
INSIDER
TRADING
TRADING
POLITICAL
CONTRIBUTIONS
CONTRIBUTIONS
CONFLICTS
OF INTEREST
OF INTEREST
CONFIDENTIALITY
FRAUD, BRIBERY
& CORRUPTION
& CORRUPTION
Vedanta will not compromise on ethics and integrity. Fraud, bribery or any form of corruption is non-negotiable, and the Company is committed to their eradication. Each suspected case is thoroughly investigated and concluded. The Audit Committee reviews the actions taken by management in the elimination of fraudulent practices and to promote ethical working practices.
The CBCE:
- Complies with the UK Bribery Act, 2010
- Prohibits payment and receipt of bribes directly or indirectly through associated persons
- Is applicable across the organisational hierarchy
- Is aligned with the UK Modern Slavery Act 2015
- The Insider Trading Prohibition Policy
- The Whistle-blower Policy
- Anti-trust Guidance Notes
- The Supplier Code of Conduct
The CBCE is supported by the following additional policies and guidance notes:
This year, we provided more than 13,000 hours of training on Code of Conduct, including Human Rights aspect, to further reinforce implementation of CBCE.
In order to ensure transparent and easy access to our policies in the public domain, our Insider Trading Prohibition Policy and Anti-trust Guidance Notes relating to Disclosure of Sensitive Information are publicly available on our website and are incorporated into contracts where relevant.
Vedanta's Whistle-blower Policy currently communicates our commitment to a 'policy against
retaliation', and commitment to maintaining confidentiality, in case of a company employee.
| Number of whistle-blower cases opened in 2017-18 | 87 |
| Number of whistle-blower cases upheld and found correct in 2017-18 | 23 |
| Number of whistle-blower cases closed in 2017-18 | 76 |
Appropriate disciplinary actions against erring employees, contract workforce and vendors, including warning, counselling, transfer and separation, were taken.
Awareness of CBCE among the employees is important. To make sure that all our employees are well-versed with our Code, mandatory training is provided for new recruits, and refresher workshops on anti-corruption policies and procedures are conducted for relevant employees. As part of our commitment to continual improvement, and going 'beyond legal compliance', we are currently working on rolling out an e-learning module for the CBCE across the Group and issuance of post-training e-certificates.
The supply chain is a significant contributor to our performance and we have institutionalised a dedicated accountability mechanism for suppliers and contractors. Our Suppliers' Code of Conduct communicates our requirement for our suppliers to operate in compliance with all relevant legislation, align to our policies while executing work for, or on behalf of Vedanta or on our sites, and adopt ethical practices. Vedanta encourages suppliers to adopt principles and practices comparable to our own, including the Supplier Code of Conduct, supplier and
contractor management policies and supplier screening checklist.
A FRAMEWORK FOR SUSTAINABILITY
Our Sustainable Development Model is reinforced by a Vedanta Sustainability Framework (VSF), which assists each business in the implementation of the Model. Developed in line with ICMM, IFC, OECD, UNGC and SDGs guidelines, the Framework comprises several policies, standards and guidance notes which help us in its execution.
The chart below illustrates the implementation of our comprehensive Sustainability Framework aligned to global standards and practices.
The Framework is an effective tool to unify Vedanta's sustainability approach across locations and businesses. It is an integral part of our business strategy and helps us to conduct business in line with our core values of trust, entrepreneurship, innovation, excellence, integrity, respect and care. It is a great sieve to check all our decisions, which ensures that we remain safe, ethical, transparent and responsible all the time.
It is also a tool to help strengthen our commitment to conduct our business in an ethical and responsible manner. Every year, a gap analysis to identify any lacunae between the existing management systems and the requirements of the Framework is conducted at each business. The identified gaps are discussed and reviewed by the leadership teams, and action plans are put in place to ensure compliance within a specified period.
VEDANTA SUSTAINABILITY ASSURANCE PROGRAMME (VSAP), OUR INTERNAL RISK MANAGEMENT TOOL RUN BY THE GROUP'S MANAGEMENT ASSURANCE SYSTEM, ASSURES THAT ALL BUSINESSES ARE IMPLEMENTING THE FRAMEWORK CONSISTENTLY. SUSTAINABILITY OBJECTIVES ARE MONITORED AND REVIEWED IN COMPLIANCE WITH THE FRAMEWORK.
THE SUSTAINABILITY COMMITTEE REPORT
The Sustainability Committee has been established at Vedanta to assist the Board in meeting its responsibilities in relation to matters of sustainable development arising out of the activities and operations of the Company and its subsidiaries.
The top priority for the Committee is to ensure robust implementation of Vedanta Sustainability Framework (VSF).
ADDRESSING SAFETY
Our focus remains on our philosophy of 'Zero Harm, Zero Waste and Zero Discharge'. While we have achieved a lot in strengthening safety, we also had disappointments. Nine deaths occurred across our businesses in the financial year. This led to much soul-searching by our senior leadership, by the Sustainability Committee (including an extraordinary meeting) and the Board. Our Executive Committee (ExCo) has taken the role of directly monitoring implementation of safety standards and risk management plus other issues, which directly affect safety
performance. These are discussed at the monthly ExCo meetings with all businesses present, performance is compared and pro-active interventions encouraged.
As a result of the fatal accidents, we also introduced three new safety performance standards - Machine Guarding, Molten Materials, and Pits, Stockpiles and Waste Dump Stability.
We will continue to increase our efforts next year with a particular emphasis on leadership's role and capability in managing safety in work teams and on task hazard assessment. A strong part of this focus will be on the engagement and management of business partners (or contractors) who have a majority representation in our safety statistics.
IMPROVING HSE PERFORMANCE
To boost our HSE performance and capability, we have inducted 11 global experts into our operating businesses with three further appointments on the anvil. These experts have been brought on board to design and implement programmes needed at the business level to address high potential incidents and eliminate fatalities, in addition to improving our overall HSE performance.
KEEPING THE DOOR OPEN FOR DIALOGUE
We have continued to improve our social performance and this has been seen positively in several areas. Despite this, we did have an unfortunate incident at our Tuticorin smelter that started due to dissatisfaction with the contracting arrangements with local providers and then escalated to a more significant social and environmental concern. We continue to engage with the community and regulatory authorities to resolve the matter.
ASSESSING TAILINGS DAMS
During the year, we undertook third-party assessments of all our tailings dams and ash dykes following an ash dyke breach at our aluminium business in India. Further, we have engaged reputed consultants to provide engineering advice in developing and implementing effective tailings management systems at all businesses.
Our operations focused on air, water, waste and energy management to minimise our environmental impact and we achieved our annual target on resource conservation.
This year the Company also conducted a Group-wide water risk assessment exercise to identify potential water-related business risks.
The Committee regularly reviewed and will continue to evaluate progress on significant sustainability issues for the Group such as safety performance at BALCO mines, KCM water and emission management projects, and the outcomes of social measures following the BALCO chimney incident.
During the year, we welcomed Mr. Kuldip Kaura as a member of the Committee following his appointment as Interim Group Chief Executive Officer. Mr. Sunil Duggal, CEO-Base Metals and Zinc India and Deshnee Naidoo, CEO - Africa Base Metals, also joined the Committee. We look forward to their contributions in strengthening our performance. Mr. Tom Albanese and Mr. Kishore Kumar also made valuable contributions to the Committee.
MEMBERSHIP AND ATTENDANCE
The Sustainability Committee comprises five Directors and it met on five occasions (including one extraordinary meeting) during the year.
| Katya Zotova*# | 5/5 | 100% |
| Ravi Rajagopal*# | 5/5 | 100% |
| Kuldip Kaura* | 2/2 | 100% |
| Deshnee Naidoo* | New Appointees | |
| Sunil Duggal* | New Appointees | |
| Tom Albanese | 2/2 | 100% |
| Kishore Kumar | 3/3 | 100% |
*Current Members #Board Members
| The Vedanta Sustainability Framework guides us to ensure a long-term, sustainable future for our business operations, meeting our growth aspirations, and creating long-term value for all our stakeholders. |
SUSTAINABILITY COMMITTEE ACTIVITIES DURING THE YEAR
Area of Responsibility
 |
SUSTAINABILITY FRAMEWORK |
Description
 |
Review of the Sustainability Committee performance and Terms of Reference |
|
Oversee development and roll out three new safety performance standards |
|
Review and approve annual HSE & sustainability targets |
|
Periodic review of HSE programmes and performance |
|
Review VSAP score and VSF implementation for the Group |
|
Review sustainability issues significant to the Group and stakeholders |
Area of Responsibility
 |
HEALTH & SAFETY |
Description
|
Review the Group's safety incidents and performance |
|
Oversee the implementation of corrective actions for fatal incidents |
|
Review progress on implementation of the Safety Performance Standards |
|
Review progress on the safety improvements at BALCO mines |
Area of Responsibility
 |
Enviroment |
Description
|
Review outcomes of the third-party tailings dam assessments, corrective actions and implementation plans |
|
Review the Group's resource conservation targets and achievements |
|
Review progress on KCM's environmental projects |
Area of Responsibility
 |
Community Relations and Stakeholder Engagement |
Description
|
Engage with stakeholders at the Sustainable Development Day in London |
|
Review outcomes of the BALCO chimney social remedial measure |
|
Review Vedanta's stakeholder engagement strategy |
MANAGING OUR RISKS
Risks are inherent in a business opportunity. We recognise that identifying and actively managing them leads to sustainable growth for all stakeholders. A robust risk governance framework and a risk management framework are in place to identify, assess and respond to the principal and emerging risks facing the Group's businesses.
RISK GOVERNANCE
The Board has the ultimate responsibility for management of risks and for ensuring the effectiveness of internal control systems. The Audit Committee's report on the risk matrix and significant risks, and actions put in place to mitigate these risks, helps the Board gain a detailed understanding of the risks.
The Audit Committee is in turn supported by the Group-level Risk Management Committee (GRMC), which assists them in evaluating the design and operating effectiveness of the risk mitigation programme and the control systems. The Group has a consistently applied methodology for identifying risks at the individual business level for existing operations and for ongoing projects.
RISK GOVERNANCE FRAMEWORK
Our management systems, organisational structures, processes, standards, and Code of Conduct and Ethics together form the system of internal control that governs how the Group conducts its business and manages associated risks.
The effective management of risk is critical to support the delivery of the Group's strategic objectives. Risk management is, therefore, embedded in critical business activities, functions and processes. The risk management framework is designed to manage rather than eliminate the risk of failure.
GROUP RISK MANAGEMENT FRAMEWORK
Each business has developed its own risk matrix of top twenty risks, which is reviewed by their respective Management Committee/ Executive Committee, chaired by their respective Chief Executive Officers. In addition, each business has developed its own risk register depending on the size of its operation and number of SBUs/locations. Risks across these risk registers are aggregated and evaluated, and the Group's principal risks are identified based on the frequency, potential magnitude and potential impact of the risks identified.
Key sustainability risks that are part of the corporate risk register:
HealthSafetyEnvironmentClimate ChangeManaging Relationship with StakeholdersTailings Dam StabilityFor more information about our Risk Management mechanism, please refer to the Vedanta Annual Report.