ORLEN ORLEN Group 2017
Integrated Report

Indirect Economic Impacts

GRI INDICATORS:
Capitals:

The ORLEN Group comprises 69 companies, including 59 subsidiaries, located in Poland and in other countries (Germany, the Czech Republic, Lithuania, Malta, Sweden, the Netherlands, Slovakia, Hungary, Estonia, Latvia, the US, and Canada). The headcount at the Group exceeds 20,000. All of the subsidiaries follow the Group's CSR Strategy, which states that value growth should be aligned with the interests of external stakeholders.

69 companies in Poland and abroad
more than 20,000 employees
Local taxes paid by selected ORLEN Group companies in 2017:
 
PLN 233m*
PKN ORLEN (Płock)
 
> PLN 101m**
ANWIL (Włocławek)
 
PLN 11m***
ORLEN Południe (Jedlicze, Trzebinia)
 
> PLN 9m****
Unipetrol Group (Litvínov, Kralupy, Pardubice and Neratovice in the Czech Republic)
 
> PLN 7m*****
ORLEN Paliwa (Płock and other locations)

*Property tax, municipality’s share of corporate income tax, municipality’s share of personal income tax, municipality's share of fees for economic use of the environment, charges for perpetual usufruct of land.
**Property tax, charge for perpetual usufruct of land payable to the Municipal Office of Włocławek, municipality’s share of corporate income tax, municipality’s share of personal income tax .
***Perpetual usufruct right (County Councils of Krosno and Chrzanów, Municipal Offices in Trzebinia and Jedlicze).
****Property tax paid in locations where the ORLEN Group's production assets are located.
*****Excise tax, fuel charge, property tax, vehicle tax, land tax, licence fees, non-deducted VAT, other taxes and charges, contributions to the State Fund for the Disabled (PFRON).

ORLEN Group companies put special focus on their role as socially responsible members of their respective communities. The Group considers both direct and indirect effects of its activities on the  environment it operates in. It is an employer, tax payer, sponsor, charity provider, and partner for a number of suppliers, institutions and organisations.

Workforce

In 2017, the ORLEN Group had a total workforce of 20,262. As an employer it exerts influence not only on the lives of its employees,  but also their close ones. For instance, as at December 31st 2017 PKN ORLEN employed 4,980 staff, while  the headcount at the  Unipetrol Group was 4,720, and at the ORLEN Lietuva Group – 1,612. The number of employees at the ANWIL Group was 1,268. In 2017, the Upstream segment’s (ORLEN Upstream Group) workforce totalled 148. ORLEN Południe and IKS Solino employed, respectively, 716 and 252 people in 2017.

Taxes

In 2017, PKN ORLEN alone paid PLN 33bn in taxes, of which PLN 233m was paid in Płock, home to PKN ORLEN’s production plant. The essence of responsibility in this respect is diligent compliance with the applicable legal requirements.
ANWIL pays taxes to Włocławek, including for real property, perpetual usufruct of land, as well as the corporate and personal income tax. In 2017, those payments exceeded PLN 100m.
In 2017, ORLEN Paliwa and ORLEN Południe paid, respectively, over PLN 7m and a total of almost PLN 11m in taxes to the local towns and municipalities.
Unipetrol paid over PLN 9m in local taxes (Litvínov, Ústí, Naratovice and Most region).

CSR initiatives

The ORLEN Group's corporate social responsibility efforts are governed by its CSR Strategy. One manifestation of the Group companies' involvement in the lives of local communities is extensive social sponsorship and charity activities.
About 30 ORLEN Group companies have declared their involvement in CSR activities.

To improve the quality of life of local populations, programmes dedicated to local communities have been established, such as those in Płock and Włocławek. The Group companies lend a helping hand to solve problems of their local communities, particularly in the areas of healthcare, safety, and education. ORLEN Group companies also support projects promoting arts and culture, amateur and professional sports, and development of urban infrastructure. The underlying principle is that the Group companies should help eliminate the most pressing problems of their respective communities. Inter-sectoral partnerships are one form of such support.

PKN ORLEN was among the founders of the ‘Grant Fund for Płock’ Foundation, and its representatives are actively involved in the Foundation's activities. The Foundation promotes and provides co-funding for local NGOs' initiatives. Similar objectives are pursued by the Good Neighbourhood Grant Fund for Ostrów Wielkopolski Association, which was established by the Town of Ostrów Wielkopolski, the Municipality and Town of Odolanów, and the Municipality of Ostrów Wielkopolski. The wide array of CSR activities undertaken by ANWIL was extended in 2014, when the ‘ANWIL for Włocławek’ Foundation was established, with a budget to be used for the financing of local initiatives.

The ORLEN – GIFT FROM THE HEART Foundation, established in 2001, fulfils the social responsibility mission of its founder, PKN ORLEN. The Foundation has partnered with more than 350 Family Group Homes which take care of 2,500 children all around Poland, is involved in scholarship programmes, and engages in projects focusing on safety, cultural, and other initiatives. Local communities are important beneficiaries of its activities.

2017 saw the ninth edition of the scholarship programme for children in junior high schools and secondary schools in the city of Płock and the County of Płock. The Foundation's Management Board, acting on recommendations from the Scholarship Committee, awarded 134 scholarships. Students of the Płock Chemistry Technical School could for the first time apply for the ‘Masters of Chemistry’ programme, Targeted at enthusiasts of sciences who would like to expand their knowledge in the field of chemistry. The ‘For Eagles’ scholarship programme is addressed to children of current, former and deceased employees of PKN ORLEN and ORLEN Group companies.

For many years now, the Foundation has provided its support to the Provincial Hospital Complex in Płock. In 2017, it made a donation for the purchase of modern equipment for the hospital’s Anaesthesia and Intensive Care Unit. It also lent its support to two hospices located in Płock (Saint Ursula Ledóchowska’s and the Caritas Diocese of Płock’s), and to a hospice located near Płock, in Kraszewo - Czubaki.

The Foundation teamed up with the Good Energy Factory, that is PKN ORLEN volunteers, to renovate two day-care centres in the children's and pediatric surgery wards of the Provincial Hospital in Płock. The rooms, designed and renovated by volunteers, were transformed into cosy and colourful space which helps the youngest patients recover.
In 2017, it continued its cooperation with the Warsaw University of Technology – Płock Branch, which involved making a donation for the purchase of fume hoods and computers for the Faculty of Chemistry.

The Foundation also joins environmental initiatives. In 2017, the Warsaw Province Agricultural Advisory Centre received a donation to start an apiary consisting of 10 bee families on the premises of its Płock branch. The objective is to raise Płock residents’ awareness of the importance of bees for the environment. The number of bee families will increase in the coming years to reach a total of 70–80 families kept in three places in Płock.
In 2017, the amount spent on the principal activities of the ORLEN GIFT FROM THE HEART Foundation was over PLN 12m.

Under the ‘PKN ORLEN Charitable Giving Policy’, ORLEN Group companies may participate in CSR activities at the corporate level through the Foundation. In 2017, 14 ORLEN Group companies partnered with the Foundation in its charity initiatives.

ANWIL, in keeping with the principles of corporate social responsibility, has since long supported cultural, sports, and educational initiatives, for which it has frequently been awarded and recognised. The establishment of the ‘ANWIL for Włocławek’ Foundation in 2014 brought a new quality to relations with ANWIL’s closest environment. The objective was to clarify and formalise the company's activities in this area, as well as to build a platform that would allow ANWIL to contribute even more effectively to improving the quality of life of Włocławek's residents. In addition to the regularly organised grant contests, the ‘ANWIL for Włocławek’ Foundation supports projects that offer a variety of attractions to those children and youths who do not go on holiday and spend the summer in the city. The Foundation, in recognition of outstanding scholarly achievements as well as the social and artistic involvement of young people from Włocławek, grants scholarships to local junior high school and secondary school students.

In 2017, the Foundation also selected the winners of the second edition of the ‘I Learn with ANWIL’ grant contest, which promotes learning science among children and youngsters. As part of the contest, non-governmental organisations active in Włocławek and its vicinity as well as primary, junior high and secondary schools may apply for the co-financing of initiatives which can demonstrate a practical application of knowledge in the field of chemistry, mathematics, physics, and information technology in a creative way. The Foundation, which works towards improving the quality of life in Włocławek, decided to employ the potential of its residents and to encourage them to join initiatives designed to help underprivileged children and youths.

Under the ‘Streetworking in Włocławek’ project, initiated in autumn 2016, the street workers who were selected in a contest organised by the Foundation work with children in their natural social environment, showing them through animation, preventive, and educational activities that there exists a world other than the street and the backyard. ANWIL employees volunteer in organising gift-in-kind collections for education and care centres as well as animal shelters, recreational activities for children who spend their time at day care centres, and also repair and refurbishment work for the beneficiaries of the company’s support.

Care for the environment, including protection of natural resources, is a fixed element of the company's growth strategy. Given the nature of chemical production, which requires drawing large amounts of water from the Vistula river, in 2015 ANWIL decided to add an initiative related to the river’s ecosystem to its environmental activities. Thus, cooperation with the Fish Promotion Association began. The ‘Mr Carp Restocks the Vistula’ competition is a joint project of the Fish Promotion Association and ANWIL, started with the aim of educating children aged 6–13 on the importance of fish to the ecosystem and promoting ichthyology.

Support to hospices, initiated in 2016 by the ORLEN – GIFT FROM THE HEART Foundation, is a project designed to help institutions which, despite playing a vital social role, i.e. caring for persons with chronic diseases, often struggle with financial difficulties. It also aims to promote the idea of volunteering among the Group employees and draws their attention to the needs of local organisations: it is the employees of PKN ORLEN and four ORLEN Group companies (including ANWIL) that decide which organisations should receive aid. In 2017, the financial support was provided to two centres – the Włocławek branch of the Polish Palliative Care Association and St. Elisabeth’s Hospice Association of Złotów. In 2017, ANWIL made charitable contributions to 15 volunteer firefighting units, which may use the funds to purchase any additional equipment they need, thus improving their fire fighting ability.

ORLEN Upstream is deeply committed to supporting its stakeholders. For six years now, it  has been working towards improving regional safety by co-financing purchases of equipment for local firefighting units. In 2017, support was provided to 35 fire brigades from the Provinces of Rzeszów, Poznań, Kraków, Warsaw, Lublin, Bydgoszcz, and Gdańsk. In connection with drilling work performed in 2017, the ORLEN Upstream Group co-financed repairs of municipal and county roads (repair of the Pagorzyna – Bednarskie section of the 1479 K road near the Pasieki-OU1 well, and repair of the Rozdziele - Lipinki – Kobylanka section of he 1480 K road near the Lipinki-OU1 well).  Financial assistance was also given to the Miasto Szkła Krosno Basketball Club, which comes from a region with rich oil industry traditions, related to ORLEN Upstream’s business. The company engaged in employee volunteering campaigns to support orphanages located in ORLEN Upstream licence areas.

Operating in the upstream business, ORLEN Upstream strives to foster friendly and lasting relations with the local communities (i.e. authorities, residents, businesses). Work is planned and performed in such a manner as to take into account the needs and problems voiced by residents. All contractors engaged by ORLEN Upstream in exploration, appraisal and production projects are required to pay heed to the needs of the social environment, following the generally accepted principles of corporate social responsibility. When carrying out its projects, ORLEN Upstream relies on local services and suppliers (municipal services, grocery stores, catering outlets, hotels, rental of construction equipment, etc.) to the largest extent possible. In 2017, the company used services provided by 45 companies located within the licence areas where PKN ORLEN’s exploration and production segment conducts its operations. In addition, the contractors employ local residents to help carry out geophysical surveys, perform work on the drilling site while drilling, and to supervise the facilities.

ORLEN Południe was engaged in pro-environmental campaigns. For instance, in the Jedlicze municipality it carried out the 'Tree for a Bottle' project organised under the Responsible Care Programme.
Meetings with pre-schoolers and primary school pupils were held, during which the children received diplomas and took part in (mainly) chemistry-focused games and competitions. The children were also given trees that could be planted near their schools and kindergartens. The best and most active schools received funds to purchase additional educational aids.

Another notable example is the ‘Tree for Waste Paper’ campaign, a recurring environmental event organised by ORLEN Południe, which has become a fixture in the programme of the Christmas Eve celebrations at the Trzebinia Market Square. The purpose of the project is to exchange waste paper for rooted Christmas trees.

IKS Solino, like other ORLEN Group companies, is partner in charitable activities of the ORLEN – GIFT FROM THE HEART Foundation: it supports local institutions (schools, kindergartens, parishes, sports clubs) as well as individuals (the sick, persons with disabilities). The company also engages in volunteering projects.

In its relations with stakeholders, the Czech subsidiary Unipetrol adheres to principles of corporate social responsibility. It lends support to initiatives designed to improve the quality of life in the areas where it operates  and cares for the natural environment. Moreover, the company supports and promotes young chemistry talents. The pillars of Unipetrol's social commitment are education, volunteering, charity and environmental protection.

In late 2016, the company established the Unipetrol Foundation, whose goal is to support students of natural science- and technology-oriented faculties by organising internship and work placement programmes as well as grant programmes for secondary school students. Unipetrol is a supporter of science, scientific research and education, with a particular focus on popularising chemistry. It is a long-standing partner of the University of Chemistry and Technology of Prague. A branch of the university is located within the industrial park in Litvinov, which gives the students an opportunity to cooperate with the unique UNICre research centre operated by the Unipetrol Group, a one-of-a-kind project in the Czech Republic.

What is more, Unipetrol actively supports the ‘Zlatý Amos’ project, which seeks to recognise the best chemistry teachers in the Czech Republic. The company also carries out programmes such as the ‘Lesson of Modern Chemistry’ in the Ústí region and is a partner of the Chemistry Olympics.
Since 2012, Unipetrol employees have been involved in volunteering initiatives for the benefit of the company's immediate environment. The company supports the community of the Ústí region on a regular basis. Its employees organise an annual charity drive as part of the 'We Make Dreams Come True' project, with the proceeds going to local charities. Their efforts complement the charitable activities pursued by the company, whose programmes contribute to rebuilding the local infrastructure, organising cultural events, supporting local tourism and sporting activities for children and teenagers.

In 2017, Unipetrol employees joined in the ‘Donate Fuel for Life’ blood donor campaign (Daruj palivo pro život in the Czech language). Benzina, a Unipetrol Group company, initiated a long-term CSR project called ‘Benzina Helps’, pursued in partnership with the Federation of Children's Homes in the Czech Republic.

Another pillar of Unipetrol's CSR agenda is environmental protection. The company is a partner of the Czech Fishery Union and is actively involved in restocking fish into the Bilina river.
Unipetrol is a sponsor of sports, including hockey and motor sports, and engages in initiatives addressed to children and young athletes.

ORLEN Lietuva, with its registered office in Mažeikiai, Lithuania, implements social-, cultural-, educational-, sports-, and charity-oriented initiatives for the benefit of the local community. For many years now, the company has partnered with the local division of the Red Cross, supporting the elderly, large families, or rehabilitation of former prisoners. The Lithuanian subsidiary is involved in educational projects focused primarily on supporting schools in the purchase of specialist equipment (computers, interactive tools for learning biology, chemistry and mathematics). ORLEN Lietuva cooperates with the Kaunas University of Technology, the Klaipėda University, and the Vilnius Gediminas Technical University. The company is also the main sponsor of the local basketball team and the Mažeikiai International Art Festival, which has been held for over 10 years.

Responsible supply chain

ORLEN Group companies are major partners for all their suppliers, including local ones. In 2017, the ORLEN GROUP worked with more than 17,000 suppliers.

In 2017, the ‘Supplier Code of Conduct’ was implemented at ORLEN Group companies. The suppliers are selected based on the ORLEN Group’s standardised and uniform social, environmental, legal, and ethical criteria.

The supply chain is one of the key factors in market success. However, its role is far greater than simply ensuring a constant reduction of costs of purchasing raw materials or services. The transparency of supply chain processes is one of the elements building a company’s image, which is influenced by the information about who with and how that company cooperates.

Since 2007, ANWIL has participated in the ‘Product Stewardship’ programme in Poland, which requires mineral fertilizer manufacturers to take a number of measures to ensure that their products and the raw materials used in their manufacture are processed, transported, stored, distributed and used in a manner that is safe to human health and the environment. The scope of the programme, implemented since 2003 by members of Fertilizers Europe (an association of European fertilizer producers), extends far beyond the applicable legal requirements, and its guidelines refer to the entire production and supply chain, extending to farmers as end users.

Companies that have decided to implement the programme are audited every three years to check whether they comply with the programme’s stringent standards. The certification audit carried out at ANWIL in April 2017 by an independent certification body DNV GL (Det Norske Veritas) was the fourth audit successfully completed by the Wrocław-based company, and covered a whole range of products for farmers, i.e. ammonia, ammonia water, nitric acid, ammonium nitrate, and calcium ammonium nitrate (CANWIL). The auditors assigned the highest score to the following activities undertaken by ANWIL: product development, marketing activities and sales.

In 2017, ANWIL signed the ‘Declaration on Promoting the Culture of Safety in the Railway Industry’, an initiative of the Polish Office of Rail Transport. Thus, ANWIL committed to apply a proactive approach to the issue of safety in rail transport, which is to be based primarily on appropriate risk management, including the use of knowledge and competencies to identify risks, and the implementation of adequate controls.

Biofuels and biocomponents at ORLEN Południe are manufactured in compliance with the sustainability criteria set out in the requirements of Directive 2009/28/EC and Directive 2009/30/EC, requirements of the ISCC (International Sustainability & Carbon Certification) system, as well as requirements of the KZR INiG System (a system of certification of biofuels relating to the sustainability criteria, developed by the Polish Oil and Gas Institute). Fulfilment of those criteria includes issues related to the purchase of raw materials for the manufacture of biofuels and biocomponents, technological production process, sale of finished products, calculations of greenhouse gas emissions, mass balance, and data reporting.

The ORLEN Group companies perform audits at their key suppliers, with safety, including environmental safety, playing a crucial role in their selection and then evaluation.

Membership of organisations and trade associations

The ORLEN Group perceives membership of organisations and associations as a vital component of its presence on the Polish and European economic arena.

PKN ORLEN, ANWIL, IKS Solino, and ORLEN Południe are involved in the Responsible Care Programme. ORLEN Eko runs the Programme's Secretarial Office. This international initiative of the chemical industry seeks to consistently introduce improvements related to health, safety and the environment (the so called HSE triad), and openness in communication.

The companies' memberships in organisations and trade associations, as well as their participation in efforts to develop their respective industrial sectors, are a key element of their social activity.

For instance, ANWIL is a member of such organisations as Polish Chamber of Chemical Industry, Fertilizers Europe, Polish ISO 9000 Forum, Polish Chamber of Industrial Power and Energy Consumers, and Euro Chlor.

ORLEN Upstream is a member of the Chamber of the Natural Gas Industry and the Polish Association of Oil and Gas Industry Engineers and Technicians.

ORLEN Południe is an active member of the Polish National Chamber of Biofuels, Polish Association of Oil and Gas Industry Engineers and Technicians, and the Association of European Candle Makers. All of those are organisations gathering entities from the respective segments of the chemical industry.

In 2017, IKS Solino was involved in the work of the Polish Salt Foundation and the Solution Mining Research Institute.

Unipetrol holds memberships of numerous organisations and associations, including  the Association of the Chemical Industry in the Czech Republic. Furthermore, Unipetrol's representatives sit on the boards of key trade organisations, including the Czech Association of Oil Industry and Trade (ČAPPO) and the Industry and Transport Association.



Up