KANBAWZA GROUP OF COMPANIES (KBZ)
UN Global Compact
Communication on Progress
May 2019
Contents
1. A Joint Statement form the Chairman, U Aung Ko Win and the Managing Director, U Nyo Myint of KBZ Group of Companies.
2. The KBZ Group Approach to Business
3. Human Rights Issues
4. Labour Rights
5. Environmental Issues
6. Anti-corruption
7. Analysis & Strategy for May 2019 – May 2020
A JOINT STATEMENT FROM THE CHAIRMAN & THE SENIOR MANAGING DIRECTOR
“The last twelve months have proved to be another year of consolidation and further growth. Over this period, we have been delighted to see a continued upward trajectory across the Group following a consistent pattern over what is now approaching three decades.”
“Our Group of companies employ in excess of 80,000 excellent staff. This is a statistic of which we are very proud. Over the last twelve months we have continued to consolidate our position as leading practitioners of international business standards in Myanmar. We continue to benefit both ourselves and our communities through the implementation of policies aligned with the United Nations Global Compact (UNGC) and other bodies such as the Global Reporting Initiative (GRI), Transparency International (TI) and the Myanmar Centre for Responsible Business (MCRB).”
“We are committed as a Group to the UN Global Compact principles encompassing human rights, labour rights, the environment and anti-corruption. We committedly support the 17 Sustainable Development Goals and strive to implement them diligently across our Group. Signing up to the UN Global Compact in May 2015 was a significant demonstration of our intentions as an organization to adhere to these goals. We have steadfastly endeavoured to achieve this and have seen the value this approach is bringing not only to all our stakeholders but also society in general.”
“Before and since we signed up to the UNGC, we have also collaborated with other organisations such as Global Witness, the Extractives Industries Transparencies Initiative (EITI) and multiple local industry initiatives. We have also been active in our support and engagement with the Government’s Myanmar Sustainable Development Plan (MSDP).” http://themimu.info/sites/themimu.info/files/documents/Core_Doc_Myanmar_Sustain able_Development_Plan_2018_-_2030_Aug2018.pdf
“In addition to our strategic plans for responsible business, we continue to be firm believers in philanthropy. Contributing to those in need during a transitional stage in our country is an act we see as an obligation rather than an option. Our philanthropic work is outlined in more detail in our report.”
“With more than 500 branches, KBZ Bank is the leading financial services provider in Myanmar. Our extensive network of branches extends throughout every State and Region in Myanmar. We continue to strongly believe that the provision of widely accessible financial services will provide an on-going major role in our country’s sustainable growth. We are proud of our micro-finance programmes and the positive outcomes we have seen as a result.”
“Our collective Group success has continued to establish us as the country’s highest corporate tax payer for more almost a decade. KBZ Group thereby contributes significantly to Government development projects including education, healthcare and infrastructure for the betterment of society and communities across the country.”
“One of our drives over the last few years has been to push further for ever greater inclusivity within our KBZ Group. At KBZ we are firm believers in embracing diversity and consider the benefits to our organisation are greatly enhanced through a rich blend of staff from all backgrounds. Through this approach, we are able to provide our companies with a wonderful melting pot of talent and ideas. We have paid particular
attention towards providing access to workplaces and appropriate facilities for persons with disabilities to ensure all our staff and customers are treated with respect and dignity. We are similarly supportive of all other aspects of diversity within the workforce.”
“Key to our business philosophy is integrity and transparency. There are multiple policies and strategies we have implemented over a number of years to ensure our companies are acting to the best possible standards in terms of ethics and integrity. All companies within our Group as well as our suppliers and affiliates are expected to meet the standards outlined in our Code of Conduct and align with our other Group policies. These encompass a comprehensive range of values and commitments which are listed on our website for all staff and members of the public to view. These policies have progressively been implemented and monitored over the last five years.”
“We sincerely value our teams and we look to give them the opportunity to flourish through a conducive environment and excellent training and progression opportunities. Our training programmes stretch from the induction of new members of staff right to the Group Board. This is reflected by the staff recruitment and retention figures outlined in our sustainability reporting.”
“Our multiple stakeholders continue to play a vital role in our success and Sustainability as a Responsible Corporate Entity. There are stakeholder mapping and engagement processes in place in addition to risk management controls throughout our organisation. These ensure we are all working together in harmony. As the Chairman and Senior Managing Director of the KBZ Group, we take responsibility to personally oversee these with the support of our Boards of Directors.”
“We are grateful to our Leadership teams for supporting the continued growth of KBZ Group and its companies. They play a vital role in determining our future success. We are truly fortunate to have so many people in the Group that share our vision, mission and core values with a commitment and enthusiasm to support KBZ and our country to excel.”
U Aung Ko Win U Nyo Myint Chairman Managing Director
THE KBZ APPROACH TO BUSINESS
In May 2015, KBZ Group became a signatory of the UN Global Compact. KBZ remains dedicated to its adherence to each and all of the Global Compact core principles. KBZ is fully committed to meeting its obligations towards the requirements of the UN’s Universal Declaration of Human Rights. Similarly it continues to follow the International Labour Organization’s (ILO) core conventions and the International Finance Corporation’s (IFC) Performance standards.
KBZ has implemented social safeguards to ensure all employees and other stakeholders work in a secure environment and that it treats them with respect and dignity. There is significant diversity within the KBZ workforce, which we believe contributes enormously to our Group’s success.
Our core values as an organisation determine the way in which we behave. With that principle in mind, we have implemented a Code of Conduct across the supply chain throughout our Group to which we expect all our staff, suppliers and contractors to comply to.
Our Code of Conduct: https://www.kbzgroup.com.mm/sites/default/files/kbz_coc_eng.pdf
Accountability for the implementation of this Code of Conduct and the more detailed stand-alone policies outlined below is designated to KBZ Managers at all levels in all our companies. It is their responsibility to communicate the importance of the Code and policies to all staff, suppliers, contractors or other engaged parties/stakeholders to ensure the standards expected by KBZ are universally met.
This ongoing process includes regular training and follow up support/engagement. Quarterly reports on issues are sent to the central Group team and promptly responded to after due consideration according to the nature of the issue in case.
KEY PERFORMANCE INDICATORS (KPIS)
Each of our companies is responsible for developing their own KPIs and reporting on results and outcomes. Our KPIs are established and implemented according to a four stage process:
1. Formulation of Strategies (Mission, Values, Goals, Objectives, Incentives, Mapping) 2. Planning (Budgets, Forecasts, Models, Initiatives, Targets) 3. Monitoring/Analysis (Performance Analysis and Reporting) 4. Review/Adjustment (Interpret/Assess success, Change as necessary and Reformulation as required)
We review KPIs annually at Group level at our Annual General Meetings. Our subsidiary companies are required to do the same. Group KPIs are outlined below with our success towards them in the shape of a performance dashboard.
PERFORMANCE DASHBOARD
1. 90% Staff Retention
Target 90%
Progress 80%
2. 50% Staff Training p.a.
Target 50%
Progress 40%
3. 10% Net Profit Growth by 2019
Target 10%
Progress 10%
4. Expand Business Presence by 20% by 2020
Target 20%
Progress 20%
5. Expand Corporate Social Value (CSV) & Philanthropy by 15% by 2019
Target 15%
Progress 20%
6. Universal Disability Access by 2021
Target 100%
Progress 40%
7. UNGC COPs Advanced status by 2020
Target 100%
Progress 60%
8. Employee Annual Surveys in 2019
Target 50%
Progress 8%
9. Inclusive Leadership Programme for Group Directors & Senior Executives by 2020
Target 100%
Progress 30%
Our Performance Dashboard is a reflection of the progress we have made against both our Financial and Non-Financial KPIs. As a mid-year analysis, this is a predicative assessment of our end of year progress against our targets as set out this year. We will re-evaluate these measurements at the end of this financial year and reassess our KPIs Group-wide and formally agree specific KPIs for each of our subsidiary companies.
The Board of Directors consider this to be an essential element in shaping our future direction. Setting out our targets and goals and assessing our progress towards meeting those are fundamental in our Group’s future success.
Staff Retention
Indicators currently suggest our annual staff retention levels across the Group are in the region of 80%, approaching our target of 90%. These figures relate to optional personal decisions on behalf of active workers and do not include retirements or cases of force majeure.
While we appreciate staff may choose to change their career path for personal or aspirational reasons, we are committed to supporting our staff in a thriving dynamic environment and providing all employees with full support in regards to their development and wellbeing.
Staff Training
The professionalism of our teams is key to our companies’ success. Beyond this we believe regular training opportunities boost job satisfaction and the personal progression for our talented workforce. Our target of giving at least 50% of our staff the opportunity to participate in job related training at least once a year is multifaceted.
Training encompasses all levels throughout our Group across all our companies. This includes our most senior management and all other staff. Our current assessment is that we are on track to exceed our goal.
Net Profit Growth
Sustainable Growth is key to the success of our Group’s broadening footprint. In order to meet both our Financial and Non-Financial KPIs and to support our staff, communities and other stakeholders, we need to ensure our Group is successful as a business entity. By doing so, we can ensure a positive impact on society both in Myanmar and further afield.
We believe we are on track to meet our 10% net profit growth by the end of the financial year 2019.
Expand Business Presence
Our goal is to expand our influence and presence in Myanmar and internationally by 20% by the end of the 2020 financial year. We believe we are exceeding expectations in terms of meeting this KPI.
We recently opened our 500th KBZ Bank Branch. We have expanded our range of financial and microfinance services. We offer various online banking and international transfer services. Combined, these all provide an extensive network of opportunities for our country’s population.
At IKBZ we offer reassurance to clients to feel safe in the knowledge that they are covered in times of need. Our airlines continue to support connectivity across the
country and beyond. Our multitude of other companies also play their part in supporting communities through equal opportunity employment and offer competitive remuneration and safe and healthy working environments.
Our good reputation is crucial in our goal to continue our growth in a sustainable way. We believe that by supporting all of our stakeholders within the best of our capacity, we will achieve this and continue to be considered an admirable corporate citizen, welcomed into to communities and by potential partners.
Expand CSV & Philanthropy
We believe that Creating Shared Value (CSV) and Philanthropy projects are two key tenets to our success as a Group. Our CSV projects are those we deem to fundamentally benefit both our business operations as well as the society in which we operate. Our philanthropic programme is more altruistic in nature and is our corporate choice to give back to society where we feel we are in a position to do so. While this work helps to support KBZ’s reputation as a caring corporate citizen, its underlying motivation is not for self-benefit.
We set ourselves a target of increasing our budget for such projects by 15% by the end of the 2019 Financial year and we are already ahead of schedule.
Universal Disability Access
KBZ Group is a strong supporter of inclusivity in the workplace. We see diversity as a great asset to our Group.
One of our KPIs is to provide universal access to our workplaces to staff and customers wherever practicably possible by the end of the financial year 2021. Our work towards this goal has already been set in place and we are making steady progress. This has included support for those with visual or auditory impairments, those with physical impairments, those with language challenges and others with restrictive challenges that might otherwise preclude them from employment opportunities.
UNGC COPs Advanced status
We are committed to the UN Global Compact’s Communication on Progress (COP) initiative. We have been accredited with an Active status for the Group since 2016 and have set our target to achieve the highest tier of Advanced status by the end of Financial Year 2020. We will continue to work on this as a Group over the interim period.
Annual Employee Surveys
We have implemented Grievance and Whistleblowing polices across the Group for a number of years now. While we see this as an opportunity for staff to express themselves directly to senior managers or to our Board of Directors, KBZ has decided to expand these communication channels. Over the coming 2020 Financial Year we plan to start implementing a Group staff survey to ensure we fully engage and understand our staff sentiments and consider the ways in which we can further improve and grow stronger.
Inclusive Leadership Programme for Group Directors & Senior Executives
In order to implement our Code of Conduct and various policies we ensure our Group Directors and Senior Executives are supported under an on-going Leadership Programme to ensure they implement our core values.
We target inclusivity as one of those core values and are extending our training in this across the Group. We aim to have 100% of our Directors and Senior Executives trained by the end of Financial Year 2020 in order to cascade the principles throughout the organisation. Inclusivity is very much at the forefront of our core values.
SUSTAINABILITY
We introduced our Sustainability Strategy in 2018. It outlines our approach to building a sustainable future by taking action in the areas where we can make the most meaningful economic, social and environmental impact. Our strategy is centred on how we believe we can best support our diverse range of customers, our communities and our people as we navigate the most pressing current and emerging issues. The strategy builds on our long term commitment as a Group to sustainable business practices and is underpinned by the United Nations Sustainable Development Goals (SDGs) that provide a platform for business, government and the broader community to partner and take action.
We believe we can create sustainable, long-term value for all our stakeholders by:
• Contributing towards people and society within our sphere of influence • Protecting the Environment to safeguard future generations • Supporting National and Regional economies through the success of our businesses • Meeting or exceeding the highest international standards of business practice throughout the Group
We believe we have a strong symbiotic relationship with all our stakeholders and communities in which we have a footprint.
In our awarded philanthropic work, we support vulnerable communities in challenging environments. We deem this as a moral obligation to which we are very much committed. We believe in contributing back to the society within which we are fortunate to be in a position to do so.
In tandem with philanthropy, we believe our Creating Shared Value (CSV) approach plays a vital role in our sustainability and future success. He distinction between philanthropy and CSV is sometimes a little blurred and challenging to define. However, our perception is that:
• philanthropy is something that we consider is purely focussed on the wellbeing and benefit of people and communities in desperate need of support.
• CSV we consider is a somewhat distinct way in which we contribute to society through which we endeavour to target ways by which both KBZ Group and all our stakeholders are beneficiaries.
SOME EXAMPLES OF OUR PHILANTHROPIC WORK:
• Helping the ministry in its effort of quick treating and controlling Seasonal Influenza A (H1N1) • Support flood victims in different regions. • Blood Donation by more than 1000 staff at the National Blood Centre Yangon and hospitals in Mandalay, Taunggyi, Naypyitaw and Sittwe. • Water Supply Project Up to 2018, nearly 200 wells could be drilled benefitting 280,513 people from 54,142 households, 185 monasteries, 92 schools, 36 hospitals, and 25 fire services departments. All the ethnic races, such as Bamar, Kayin, Kayah, Dhanu, Taungyoe, Shan, Pa-O, Lahu, Lisu, Paduang and Akha are now receiving freshwater. • Free operations jointly cooperated with Smile Asia to children with cleft palates. A total of 449 persons with cleft lips successfully received surgeries. • Providing winter coats to IDPs of arm-conflict, hard to reach villages and natural disaster victims. • Major contribution in buying K.340 million worth bio foams to extinguish fire in 300 sq-acres landfill in Hteinbin, Yangon. • Literacy Grant to Third Story Project to publish story books on child rights written by teens and to give story writing trainings for teens on child rights in many parts of the country. • Plant trees for a greener environment. • providing microfinance loans and financial literacy programs to 53,484 community members in 14 Townships in the regions of Yangon, Pegu, Mandalay, Mon and Shan states. • Providing financial assistance to women farmers.
SOME EXAMPLES OF OUR CREATING SOCIAL VALUE INITIATIVES:
• KBZ Early Childhood Day Care Centre to look after the children of our employees. • Providing our employees with access to learning opportunities to help build the skills needed for the workforce of the future. • Increasing and maintaining the number of women in leadership positions across our Group. • Fund raising Music Run program held by KBZ in 2014 was given to support writing computer software for the blind and text to speech software. • Inclusion and diversity policies and implementation thereof. • Maternity/Paternity Leave Policy, maternity leave of 14 weeks and paternity leave of 15 days are awarded to all staff. Breast feeding rooms with facilities are implemented. • Established the Corporate Affairs Department and formed Corporate Governance Function under Legal and Compliance Department. This manages our risk analysis, appetite and management across the Group. Moe detail is outlined in the Corporate Governance section of the website.
Our world/Myanmar is changing at an unprecedented rate, affecting how we all live and work. We want to help more people gain the skills that will be needed in the future and accelerate how we identify and solve the biggest issues impacting all our stakeholders.
Doing the right thing - We are committed to building a culture of care, inclusiveness and high integrity – where it’s expected that all our people demonstrate the values of our company and speak up if something isn’t right. We believe in doing the right thing by our customers, communities and people – grounded in transparency and responsiveness to the concerns of all our stakeholders and the wider community.
We are committed to continuing to lead on the fundamentals: the sustainability policies, action plans and frameworks. We are also continuing to report on additional metrics that are expected of our Group in respect to sustainable business practices.
Our commitments are to:
• Ensure new employees read, understand and sign our Code of Conduct and other policies across the Group. • Announce new KBZ sustainable strategy to the management and employees and ensure they are familiar with the Code of Conduct and other policies including Whistleblowing and Grievance channels for reporting. • Strengthen our reporting procedures across the Group. • Further strengthen and broaden our training programmes at all tiers throughout all of our businesses. • Continue to engage actively with all our stakeholders to work for the benefit of all to the best of our capacity.
KBZ Group’s Principles for Doing Business underpin our commitment to sustainable business practices. It sets out the behaviours against which we expect to be judged in pursuit of our vision to be the national, regional and the international success of all our companies, helping our customers, communities and people to prosper and grow. For KBZ Group, sustainability is just a different way of expressing what we have always done as a company – managing risk and opportunity in a way that best balances the long term needs of all our stakeholders – our customers, employees, investors and the community and environment at large. We aim to achieve that – by embedding sustainability throughout our business in the areas of: governance and ethics; customer practices; employee practices; care for the environment and community involvement. Our commitments are aligned with key global initiatives which promote responsible business practices, including the United Nations Global Compact.
ASEAN SCORECARD
Since the inception of MCRB’s Pwint Thit Sa initiative, KBZ Group of companies has greatly appreciated the input of the Myanmar Centre for Responsible Businesses (MCRB) Team’s advice to help us with our goal to meet highest international standards of business ethics and standards.
We appreciate this is a work in progress and the graph below represents the progress we have made and where we envisage being positioned on the scorecard over the next two years. This is an on-going process into which we will continue to dedicate time and resources.
Our Sustainability Policy: https://www.kbzgroup.com/node/84
STAKEHOLDER ENGAGEMENT & MAPPING
KBZ Group’s vision is to be a national, regional and international success through its broad range of diversified companies. In order to achieve this it is essential for all parts of the Group to work in close collaboration with, and in support of, our multiple stakeholders.
Key to our achievement of this vision is the need to engage in an on-going dialogue, to deepen our understanding of what our stakeholders expect of us, and to communicate with them on how we are responding to their priorities, needs and concerns.
The KBZ Group Stakeholder Engagement Framework sets out how we do this – including how we identify and prioritise our stakeholders, the mechanisms we use for engagement, how we ensure that our stakeholders are able to engage with us in a meaningful way, and how we communicate with our stakeholders on a regular basis on our performance in meeting their needs.
Identifying our stakeholders
We carry out a stakeholder mapping process at Senior executive level across the Group on an annual basis or more frequently if deemed necessary. KBZ Group company stakeholders will typically include the following categories:
• Staff • Local Communities • Customers • Local Government • National Government • Regional/Global interests • Shareholders • Partners • Suppliers/Contractors/Consultants • Trade Unions • Ethnic Groups
• Civil Society Groups • Regulators • International institutions • Lobby Groups • Media (local and international)
Methods of engagement
Our methods of engagement with all stakeholders is generally applicable to all. We make proactive contact regularly as appropriate and offer multiple channels by which stakeholders can voice any issues of concern.
The means of communicating with our stakeholders include meetings, telephone calls, emails or other means of social media, written letters, through briefings, questionnaires and surveys and focus groups. We maintain on-going tracking and analysis of feedback and complaints to ensure we continue to maintain and improve our standards of performance. We regularly monitor multiple media outlets to ensure we are aware of issues and can take appropriate action accordingly where necessary.
For our staff, we carry out annual Group Communications Surveys, annual Community Engagement Surveys and other Foundation surveys. We carry out Leadership Summits, and have regular team meetings. We have a collaboration with Switzerland-based EDGE Strategy, a third party company, which recently conducted survey of gender equality inside KBZ Bank. Any issues of concern are raised at our Annual General Meetings or more promptly where necessary.
With all our suppliers, we conduct initial and on-going risk assessments and commit them to abide by our policies and Code of Conduct. We require the completion of commitment to this on signing contracts along with completion of questionnaires (at commencement and on a three yearly basis). We hold supplier forums and meetings with individual suppliers as and when necessary;
With the broader community we engage in a dialogue with community partners, with the Government and regulators. We attend industry forums, arrange senior level meetings, carry out policy trend analysis, send submissions when appropriate, and review reform proposals on a regular basis.
Measuring the success of stakeholder engagement
At a Group-wide level, the success of our stakeholder engagement is monitored based on reputational risk (which arises where there are differences between stakeholders’ current and emerging perceptions, beliefs and expectations relative to our current planned activities, performance and behaviours) using a range of indicators.
Our stakeholders our lifeblood and the purpose of our existence. In previous years we have regularly put efforts into identifying and recognising each and all of our stakeholders. This year, in line with international frameworks and in consultation with the Myanmar Centre for Responsible Business, we have developed a stakeholder matrix that represents our understanding of the interests of our stakeholders alongside their impact on our businesses.
MATERIALITY
To ensure we are identifying and understand the issues that are really of the most significant importance to KBZ Group of Companies and all our diverse stakeholders, we conduct regular stakeholder consultations and assessments to gauge key material areas which we need to prioritise. These assessments feed directly as a precursor into our sustainability strategy, the setting of our KPIs, our Code of Conduct and other various policies. This helps us to ensure we are garnering the respect of both current and potential future stakeholders as well as meeting our corporate values and responsibilities.
The KBZ Group Materiality Matrix maps the 13 most significant important topics that we identified through our consultations and assessments. They fall into four categories:
• Workforce • Environment • Societal Impact • Governance & Conduct
Our workforce is our lifeblood. Ensuring we care for our staff means we can recruit and retain the best quality people and help them to develop their skills through training and effective management. As a Group we employ more than 80,000 staff. This is testimony to our Group as an employer of choice.
The effects of environmental challenges is a global challenge and we have seen some of the devastating effect here in Myanmar. Disasters tend to affect the poorest in our society most severely. We believe it is our responsibility to minimise our impact on pollution and climate change, while providing help for those in need across our country.
KBZ Group and its subsidiary companies strive to meet the highest standards of business conduct and governance and has structures in place to maintain our reputation as an exemplary corporate citizen. We believe this is a fundamental obligation all business in a transformational period in our country. It is also essential for an organisation’s international reputation.
We will continue to monitor the above priorities and issues on a regular basis and we welcome input and ideas from all stakeholders. Issues of Materiality are formally reviewed and approved on an annual basis by the Group Board of Directors.
RISK ANALYSIS
Risk Management Policy Key to the sustainable development of each of our companies is risk assessment and management. This process involves the identification, evaluation and prioritisation of risks alongside the maximisation of opportunities.
Each of our companies is asked to assess and be prepared for potential risks to their success on an annual basis or more regularly if necessary. The reputation of the entire Group is potentially damaged if these processes are not followed, reported on and if necessary rectified.
In line with ISO guidelines, we implement a methodology that the Group and each of our companies are required to follow:
1. Identify risks 2. Assess Group/company vulnerability 3. Assess potential impacts of events/scenarios 4. Identify pre-planned ways to reduce risks 5. Formulate action plans for managing problems 6. Urgently report incidents to Group HQ and seek advice as required.
Across the KBZ Group, risks (and opportunities) are multi-fold and include: • Competitor Risk – falling behind the competition • Economic Risks – taxation, market prices, etc. • Operational Risks – failures in processes • Legal Risks – changes in legislation or legal disputes • Strategic Risks – making poor strategic decisions • Reputational Risks – allegations of malpractice (health & safety, corruption, bribery, etc.) • Political Risks – government instability, international perceptions of Myanmar (sanctions, bi-lateral regional and global relations, etc.) • Quality Risks – failing to meet product and service standards • Credit Risks – the failure of debtors to make timely repayments of loans or dues • Exchange Rate Risks – Volatility in exchange rates between the US dollar, Kyats and other foreign currencies • Interest Rate Risks – changes of rates impacting on business models and profitability
• Process Risks – problems arising from underperforming process structures such as training, management, communications, etc. • Resource Risks – insufficient resources in terms of staff or finance • Force Majeure Risks - natural disasters, war, terrorism, robbery, etc. • Infrastructure Risks – power cuts, transport, communications, etc.
Mitigating against these risks plays a vital role in sustaining our businesses as much as taking advantages of new opportunities that open up.
Our Risk Management Policy: https://www.kbzgroup.com/node/83
SUCCESSION PLANNING
At KBZ Group we consider succession planning as an essential component of the human resources planning and a key component of our Group’s sustainable development. For clarification, we have formalised our process for doing this into a five step process. It is designed to provide guidance for Managers and our Boards of Directors by providing an integrated and systematic approach for identifying, developing, and retaining capable and skilled employees in line with current and projected business objectives. The steps are outlined below.
STEP 1: IDENTIFY KEY AREAS & POSITIONS
Identify which positions are those that are critical to the Group’s operational activities and strategic objectives. Key areas are those that are critical to the Group’s operational activities and strategic objectives.
• Identify which positions, if left vacant, would make it very difficult to achieve current and future business goals • Identify which positions, if left vacant, would be detrimental to our stakeholders and the realms in which we operate • Identify which positions, if left vacant, would be detrimental to our commitment to implementing our policies or to our corporate reputation
STEP 2: IDENTIFY CAPABILITIES, KEY AREAS & KEY POSITIONS
To establish selection criteria, focus employee development efforts, and set performance expectations to determine the capabilities required for the key areas identified in Step 1.
• Identify the relevant knowledge, skills, abilities and competencies needed to achieve business goals • Assess performance/experience against key competency profiles • Inform staff about key areas of development for positions and the necessary skill requirements
STEP 3: IDENTIFY STRONG CANDIDATES & ASSESS
To establish selection criteria, focus employee development efforts, and set performance expectations. Determine the capabilities required for the key areas and positions identified in Step 1.
• Discuss career plans and interests with employees • Identify the key areas and positions that are vulnerable and the candidates who are ready to advance or whose skills and competencies could be developed within the required timeframe
• Ensure that an inclusive and sufficient number of candidates are in feeder groups for key areas and positions
STEP 4: DEVELOP AND IMPLEMENT SUCCESSION & KNOWLEDGE TRANSFER PLANS
Incorporation of strategies for learning, training, development, and the transfer of corporate knowledge into our succession planning and management.
• Define the learning, training, development, and the transfer of corporate knowledge into our succession planning and management • Link employees’ learning plans to the knowledge, skills, and abilities required for current and future roles • Discuss with employees how they can pass on their corporate knowledge
STEP 5: EVALUATE EFFECTIVENESS
Evaluate and monitor succession planning and management efforts to ensure the following:
• Succession plans for all key areas across the Group are developed • Key positions across the Group are filled quickly with the right candidates • New employees in key positions are trained and understand our policies and corporate culture in order to perform effectively • Inclusivity policies ensure the diversity of our staff in key areas and positions to bring creativity and ideas from all Myanmar society as well as international perspectives
All KBZ Group Senior and Middle Management staff are expected to understand, or are being trained in the importance and implementation of succession planning. It is a vital process in ensuring the long term success and sustainability of our Group.
OUR GROUP STRUCTURE
The beneficial owners of the KBZ Group are as follows:
1. Aung Ko Win, Chairman, KBZ Group of Companies 2. Nan Than Htwe, Deputy Chairman, KBZ Group of Companies 3. Nang Lang Kham, Director, KBZ Bank 4. Nang Kham Noung (Marlene), Director, KBZ Bank 5. Nang Mo Hom, medical student
Each of the above holds an equal stake (20%) in the KBZ Group of Companies.
KBZ Group Board of Directors
The KBZ Board consists of 7 members from across the Group.
1. Aung Ko Win, Chairman, KBZ Group of Companies 2. Nan Than Htwe, Deputy Chairman, KBZ Group of Companies 3. Nang Lang Kham, Director, KBZ Bank 4. Nang Kham Noung (Marlene), Director, KBZ Bank 5. Nang Mo Hom, Medical student 6. U Nyo Myint, Senior Managing Director 7. U Moe Sann Aung, Managing Director
KBZ Corporate Governance Statement
This Corporate Governance Statement, which has been approved by the Board, describes our corporate governance framework, policies and practices as at 14 February 2019. Our approach to corporate governance is based on a set of values and behaviours that underpin day-to-day activities, provide transparency and fair dealing and seek to protect stakeholder interests.
This approach includes a commitment to excellence in governance standards, which KBZ Group sees as fundamental to the sustainability of our businesses and our performance. It includes monitoring local and global developments in corporate governance and assessing their implications.
KBZ Group’s current governance framework is overseen by the Board of Directors and implemented by subsidiary (company) Boards across its companies. As necessary, the Group Board requests subsidiary Boards to undertake specific extra duties according to operational requirements.
The Company Boards and Executive Teams, sit beneath the CEO and the Group Board to implement Board-approved strategies, policies and management of risk across the Group.
Group Board and Subsidiary Board’s Oversight of Management
The roles, responsibilities and accountabilities of the Group Board and Subsidiary Boards were reviewed at our Group AGM.
The key responsibilities of the Group Board are:
• overseeing the sound and prudent management of the KBZ Group; • approving, and overseeing management’s implementation of the strategic direction of KBZ Group, its business plan and significant corporate strategic initiatives; • evaluating the Group Board performance and determining Board size and composition; • approving the KBZ Group Remuneration Policy; • selecting, appointing and determining the duration, remuneration and other terms of appointment of the CEO and Chief Financial Officer (CFO); • approving individual remuneration levels for Group Executives, other executives who report directly to the CEO and any other accountable persons the Board determines to be considered; • evaluating the performance of the CEO and succession planning for the CEO; • approving the appointment of Group Executives and the General Manager Group Audit and monitoring the performance of Group Executives; • approving the annual targets and financial statements and monitoring performance against forecast and prior periods; • considering and approving our overall risk management framework, approving our Group Risk Management Strategy and Group Risk Appetite Statement and monitoring the effectiveness of risk management by the Group; • forming a view of our risk culture and identifying any desirable changes; • considering the social, ethical and environmental impact of our activities and monitoring compliance with our sustainability policies and practices; • overseeing and monitoring Workplace Health and Safety (WHS) issues in the Group and considering appropriate WHS reports and information; • maintaining an on-going dialogue with KBZ’s stakeholders; • overseeing internal governance, including delegated authorities and approving policies and;
• overseeing and monitoring customer complaints. • Board, Committees and Oversight of Management
The Role of the Chairman
The Chairman’s role includes:
• providing effective leadership to the Board in relation to all Board matters; • guiding the agenda and conducting all Board meetings to facilitate discussions, challenges and opportunities and decision-making; • in conjunction with the Subsidiary Company Representatives, arranging regular Subsidiary Company Board meetings throughout the year, confirming that minutes of meetings accurately record decisions taken and include all the views of those participating; • overseeing the process for appraising Directors and the Board as a whole; • overseeing Board succession; • acting as a conduit between management and the Board, and being the primary point of communication between the Board and CEO; • representing the views of the Board to the public; and • taking a leading role in creating and maintaining an effective corporate governance system.
The Role of the CEO
The CEO’s role includes:
• leadership of the Group and subsidiary companies’ management teams; • developing strategic objectives for the Group and achievement of specified goals; and • the day-to-day management of the KBZ Group’s operations, subject to the specified delegations of authority approved by the Board.
The Group Board of Directors (BOD) holds meetings quarterly or more regularly according to operational needs. It is consistently attended by all BOD members, unless in exceptional circumstances. When unable to attend, a well briefed representative attends on a Directors behalf in absentia.
Directors receive orientation and training programmes in accordance with the requirements of their roles by peers or external consultants. These may run in concordance with AGMs, or on an individual basis as appropriate. It is important that all Directors appreciate our Values and Vision so they can contribute positively to our Mission and Goals.
The Board policy is focused on multiple strands to ensure the long term success and sustainable growth of subsidiary KBZ companies through:
• Managing and monitoring adherence to KBZ’s values and Codes of Conduct across the group • Ensuring the health and safety of staff • Empowering staff through a conducive environment to meet their full potential • Mapping and consulting with all stakeholders in decision making processes in consideration of impacts • Identifying solutions to reduce environmental impact • Assessing the progress of each KBZ company to identify where performance levels are and to identify areas for advancement • Policy reviews
• Strategic planning
The composition of the Group’s Board of Director’s is reviewed on an annual basis to ensure the composition fully represents the diversity of the whole group.
Board meetings
The Board has held regular quarterly scheduled meetings over the past 12 months, with additional meetings held as required. In addition to the Board considering strategic matters at each Board meeting, the Board also discusses our strategic plan and approves our overall strategic direction on an annual basis. The Board also conducts a half year review of this strategy. The Board conducts workshops on specific subjects relevant to our businesses at each meeting or more regularly as necessary. Board meetings are characterised by robust exchanges of views, with Directors bringing their experience and judgement to bear on the issues and decisions at hand.
Nomination and appointment of Board Members
Key responsibilities of the Group Board Nominations Committee are:
• assessing the skills required to discharge competently the relevant Board’s duties having regard to KBZ’s overall Group performance, financial position and strategic direction; • developing, reviewing, and assessing the various Boards’ policies on Director tenure, Board composition and size; • reviewing and making recommendations to the various Boards annually on diversity generally within the Group, measurable objectives for achieving diversity and progress in achieving those objectives; • developing and implementing succession planning in the context of Board membership and Senior Management appointments; • reviewing the process for the orientation and education of new Directors and any ongoing education for existing Directors; • reviewing eligibility criteria for the appointment of Directors; • considering and recommending candidates for appointment as Directors to the various Boards and determining the terms and conditions; • reviewing and where necessary developing the Group’s corporate governance policies to provide reasonable assurance that they meet all internationally recognised standards.
KBZ seeks to maintain Boards of Directors across the Group with a broad range of financial and other skills, experience and knowledge necessary to guide its various business entities. External consultants are used to advise on Board’s appointments.
New Directors receive an induction pack which includes a letter of appointment setting out the expectations of the role, conditions of appointment and remuneration.
The Group Board approves the appointment of any new Director, either to fill a casual vacancy or as an addition to the existing Directors.
Nominating Committee
The Group nominating committee meets annually or more regularly if required. In conjunction with the subsidiary companies, it agrees the make up of the numerous BODs across the Group.
1. Aung Ko Win, Chairman, KBZ Group of Companies 2. Nan Than Htwe, Deputy Chairman, KBZ Group of Companies 3. Nang Lang Kham, Director, KBZ Bank
4. Nang Kham Noung (Marlene), Director, KBZ Bank 5. Nang Mo Hom, Medical student
Board induction and continuing education
All new Board Members and Directors participate in an induction program to familiarise themselves with our businesses and strategy, culture and values and any current issues before the Board. The induction program includes meetings with the Chairman, the CEO, the Board Members and each Senior Group Executive.
The Board expects Directors to undertake continuing education and training to develop and maintain their skills and knowledge needed to perform their role as Directors effectively in line with our Group direction and policies. This includes participation in internal workshops held throughout the year, attending relevant site visits and undertaking relevant external education as deemed appropriate according to their specific role. This process is in place to ensure KBZ Group maintains its professional standards and continues to meet highest international standards. It is in place to ensure it is in a strong place to further enhance its reputation in Myanmar, Regionally and further afield.
Company Secretaries
KBZ has two Company Secretaries:
• The Senior Company Secretary is our Group Executive, Legal & Secretariat. The Senior Company Secretary attends Board and Board Committee meetings and is responsible for providing Directors with advice on legal and corporate governance issues. • The Group Company Secretary also attends Board meetings and is responsible for the operation of the secretariat function, including implementing our governance framework and, in conjunction with management, giving practical effect to the Board’s decisions. The Group Company Secretary is accountable to the Board, through the Chairman, on all matters to do with the proper functioning of the Board.
Operation and reporting
Scheduled meetings of each company’s Boards Directors occur at least quarterly. All Boards are able to meet more frequently as necessary. Each Board is entitled to the resources and information it requires on a Group level and has direct access to Group employees and advisers. Senior executives and other selected employees are invited to attend the Group Board Committee meetings as required. If present or exceptionally in absentia, all Directors whether it be at Group level or that of subsidiary companies within the Group receive all the relevant papers and minutes of the meetings. No Director is precluded from Board meeting, be it at Group or company level, unless exceptionally if there is perceived to be any conflict of interest.
Performance
The Group and subsidiary company Board’s undertake ongoing self-assessment as well as commissioning external consultants for an independent perspective and advice.
A review process conducted over 2018 included an assessment of the performance of the Group Board, each Director and each subsidiary company. Each subsidiary company also made their independent assessments which where presented to the Group Board. The Group Board discussed the results and agreed follow up action on matters relating to various Board compositions, process, priorities and new directions.
The Chairman also regularly discusses the results with individual Directors and subsidiary Board Chairs. The Group Board reviews the results of performance reviews and results which are then privately discussed by the Group Chairman with the Group Board Risk & Compliance Committee.
Management
The Group Board, in conjunction with its Board Remuneration Committee, is responsible for:
• determining the corporate goals and objectives relevant to the remuneration of the CEO, and the performance of the CEO in light of these objectives; and • approving individual remuneration for Group Executives, other executives who report directly to the CEO, any other accountable persons and any other person the Board determines.
The Group Board Risk & Compliance Committee and the Group Board Audit Committee also refer to the Board Remuneration Committee any matters that come to their attention that are relevant, including with respect to risk adjusted remuneration.
Management performance evaluations are conducted at the end of the each financial year.
Advisory Boards
KBZ Group has established an Advisory Board for advising its multiple operations in order to advise management on the strategies and initiatives of those businesses within the overall Group strategy.
Responsibilities of the Group Advisory Board include:
• providing advice to KBZ’s company management executives regarding strategies and initiatives to continue to strengthen the position and identity of the Group of businesses; • providing advice to KBZ’s company management of relevant current priorities so as to promote and preserve its distinct position and identity in alignment with our overarching business values with those of the relevant stakeholders and communities served; • considering and assessing reports provided by management on the health of the relevant business and subsequently giving appropriate feedback and guidance; • acting as ambassadors for the business, including by supporting community and major corporate promotional events to assist in building relationships with stakeholders and advising senior management on relevant local, national, regional and international community matters; and • alerting management to market opportunities and issues of which Advisory Board members are aware that would enhance each business and their stakeholders.
Ethical and responsible decision making
KBZ Group is committed to and has a reputation for ethical and responsible decision making. This is encapsulated in our motto, ‘The Strength of Myanmar’. Our vision, Mission and core values are all outlined in detail on our Group website.
KBZ is also focused on the impact of its organisational culture on the Group’s operations, including its management of risk. We take an integrated approach to sustainably embedding a strong risk culture, including through leadership and communication, risk appetite and governance, risk awareness and transparency, accountability and reinforcement, and behaviours and relationships.
Our Values
Our Values support our stakeholder-focused strategy and are embedded in our culture as outlined in our Code of Conduct and more specific policies detailed on the Group website. Each of companies is obligated to follow these principles and regulations. Simultaneously, the Group Advisory Board works in conjunction with each of the Group companies to ensure sector specific polices are put in place according to best international practice.
Code of Conduct and Principles for Doing Business
The Code provides a set of guiding principles to help us make the right decisions, ensuring we uphold the reputation of the Group. The principles within our Code also the stakeholder’s expectations of us as a Group and as subsidiary companies. The Code has the full support of all the Boards and the Executive Teams across the Group. We take compliance with the Code very seriously.
Our Principles for Doing Business (Principles) underpin the Group’s commitment to sustainable business practice and community involvement. In summary:
• we believe our success depends on the trust and confidence placed in us by all our stakeholders; • we believe in maintaining the highest level of governance and ethical practice; • we believe our staff are a vital element of our businesses whose contributions lead to their success and respected position in society; • we are committed to managing our direct and indirect impacts on the environment; • we believe being actively involved in our community is fundamental to the sustainability of our business; and • we believe our suppliers should be viewed as partners in our sustainability journey.
The Principles align with key global initiatives that promote responsible business practices. The Principles apply to all Directors, employees and contractors.
The Board
All Directors are required to disclose any actual, potential or apparent conflicts of interest upon appointment and are required to keep these disclosures to the Board up to date.
Any Director with a material personal interest in a matter being considered by the Board must declare their interest and, unless the Board resolves otherwise, may not be present during the boardroom discussions or vote on the relevant matter.
Our employees and contractors
We expect our employees and contractors to:
• have in place adequate arrangements for the management of actual, potential or apparent conflicts of interest; • obtain consent from senior management before accepting a directorship on the board of a non-KBZ Group company; • disclose any material interests they have with our customers or suppliers to their manager and not be involved with customer relationships where they have such an interest; • not participate in business activities outside their employment with us (whether as a principal, partner, director, agent, guarantor, investor or employee) without approval or when it could adversely affect their ability to carry out their duties and responsibilities; and
• not solicit, provide facilitation payments, accept or offer money, gifts, favours or entertainment that might influence, or might appear to influence, their business judgement.
Fit and Proper Person assessments
We have a Board-approved KBZ Group Fit and Proper Policy. The Chairman of the Board is responsible for assessing the Directors and Non-executive Directors of the KBZ subsidiary Boards, Group Executives and actuaries. The individual is asked to provide a detailed declaration and background checks are completed.
Concern reporting and whistle blower protection
Under the KBZ Group Whistle Blowing Policy, we encourage our employees, contractors, former employees, service providers (such as auditors, accountants and consultants) and our suppliers to raise any concerns about activities or behaviour that may be unlawful or unethical. Our attitude is ‘when in doubt report’ and our senior management are committed to protecting the dignity, well-being, career and good name of anyone reporting wrongdoing, as well as providing them with the necessary support. KBZ Group does not tolerate retaliation or adverse action related to a whistleblowing disclosure.
We investigate reported concerns in a manner that is confidential, fair and objective. If the investigation shows that wrongdoing has occurred, we are committed to changing our processes and taking action in relation to those parties who have behaved incorrectly. Outcomes may also involve reporting the matter to relevant authorities and regulators.
Anti-Bribery and Corruption
KBZ Group requires compliance with anti-bribery and corruption (AB&C) laws in all markets and jurisdictions in which it operates. These laws include, but are not limited to, the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act 1977.
KBZ Group’s Anti-Bribery and Corruption Compliance Program includes a global Anti- Bribery & Corruption Policy, with Board endorsement and oversight and clear emphasis that KBZ does not tolerate the giving or receiving of bribes, including the making of facilitation payments. KBZ expects that books and records must be fair and accurate and reasonably detailed. We expect all employees to comply with these principles in the performance of their services for or on behalf of any of the KBZ companies. We also require third parties who provide services for or on behalf of KBZ to comply accordingly.
Diversity
KBZ Group has an Equality & Diversity Policy that sets out the inclusion and diversity initiatives across the Group. This is coupled with a comprehensive Group-wide strategy to enable execution of key priorities and actions. In this context, diversity covers both the visible and invisible differences that make our employees unique, whether that be gender, gender identity, age, ethnicity, accessibility requirements, cultural background, sexual orientation, religious beliefs, or the differences we have based on our experiences, insights and perspectives.
The objectives of the policy and the 2019-22 Inclusion & Diversity strategy are to ensure that the Group:
• has a workforce profile that delivers competitive advantage through the ability to fully understand stakeholder expectations;
• has a truly inclusive workplace where every individual can shine regardless of gender, cultural identity, age, work style or approach; • leverages the value of diversity for all our stakeholders to enhance our Group’s corporate reputation; and • continues to take a leadership position on inclusion and diversity practices and sets the agenda in the external communities in Myanmar, Regionally and beyond.
To achieve these objectives, the Group:
• has set Board-determined, measurable objectives for achieving gender diversity. The Board assesses annually both the objectives and progress in achieving them; • assesses pay equity on an annual basis; • encourages and supports the application of flexibility policies across the business; • implements our Accessibility Action Plan for employees and customers with accessibility requirements, including ensuring employment opportunities are accessible for people with a disability; and • actively promotes an environment of inclusion for lesbian, gay, bisexual, transgender and intersex (LGBTI) employees.
The implementation of these objectives is overseen by the KBZ Group Inclusion & Diversity Council, which is chaired by the Senior Group Executive and meets bi-annually.
The Boards of KBZ Group companies, or appropriate Board Committees, receive regular updates from the Inclusion & Diversity Council on inclusion and diversity initiatives. The Inclusion & Diversity Governance Framework was implemented in 2018. We will continue to listen to the needs of our employees through our new annual employee survey (which includes questions that constitute an ‘Inclusion Index’). Our Inclusive Leadership programme ensures we are investing in the right capabilities for an inclusive culture. The majority of Group leaders and Group Executives will have already completed the programme .
In addition to the Group’s commitment to achieving its inclusivity targets, in 2019 our Senior Company Secretary signed up as a Pay Equity Ambassador. KBZ offers a range of flexible working options for our people based on their needs, work preferences and the needs of the business. These include:
• flexible work hours; • mobile working; • working part-time; and job sharing.
In addition, KBZ offers a variety of leave options that support flexibility, including parental leave, wellbeing and lifestyle leave and domestic violence support leave.
Sustainability
We view sustainable and responsible business practices vitally important for our business and the benefit of our stakeholders. Sustainability is about managing risks and opportunities in a way that best balances the long term needs of all our stakeholders – our customers, employees, suppliers, investors and community partners – as well as the wider community and the environment at large.
Our management of sustainability aims to address the matters that we believe are the most material for our business and stakeholders, now and in the future. We also understand that this is an evolving agenda and seek to progressively embed the management of sustainability matters into business as usual practice, while also anticipating and shaping emerging social issues where we have the skills and experience to make a meaningful difference and drive business value.
Reporting
We assess and report on the most material sustainability matters in regards to the KBZ Group of Companies as necessary. This incorporates an analysis of how we are managing the identified risks and opportunities associated with our businesses and an assessment of our performance against our sustainability strategy. We are a supporter of the UN Global Compact an annually submit our annual Communication on Progress report in the form of an Annual/Sustainability Report. The next report is due in May and links to our previous reports are available on the Group website.
Financial reporting
Our approach to financial reporting reflects certain core principles which include:
• that our financial reports present a true and fair view of our companies activities; • that our accounting methods comply with applicable accounting standards and policies.
The Group Board, through the Board Audit Committee, monitors Myanmar and international developments relevant to these principles, and reviews our practices accordingly.
The Group Board oversees responsibility for risk management across the Group and delegates responsibility to senior management within subsidiary company Boards for oversight in their particular areas of business. Similarly, the Board delegates oversight responsibility for the preparation of remuneration reports and disclosures to the Board Remuneration Committee.
Group Board Audit Committee
The key responsibilities of the Group Board Audit Committee are:
• overseeing the integrity of the financial statements and financial reporting systems of the KBZ Group of Companies; • overseeing the performance of the audit functions; • overseeing the integrity of the Group’s corporate reporting, including the Group’s compliance with regulatory reporting and professional accounting requirements; and • reviewing and approving policies and procedures for the receipt, retention and treatment of information submitted confidentially by employees and third parties about accounting, internal control, compliance, audit or other matters about which an employee has concerns, and monitoring employee awareness of these policies and procedures.
The Group Board Audit Committee reviews, discusses and assesses:
• any significant financial reporting issues and judgments made in connection with the preparation of the financial reports; • the processes used to monitor and comply with laws and regulations over financial information, reporting and disclosure; and • the process surrounding any disclosures made by KBZ Group or any of its subsidiary companies.
Periodically, the Group Board Audit Committee may consult with external auditors to assess internal controls over financial information, reporting and disclosure.
The Group Board Audit Committee also refers to the Group Board or any other subsidiary company Boards any matters that come to their attention that are relevant for the Group Board or the respective Board Committees.
Financial knowledge
The Group Board receives regular reports from management about the financial condition and operational results of the Group and its subsidiary companies.
Corporate governance
KBZ Group’s internal audit function provides the Group Board and Executive Management with an objective evaluation of the adequacy and effectiveness of management’s control over risk. Group Audit covers the governance, risk management and internal control frameworks of KBZ subsidiary companies. It has access to all of our wholly owned entities and conducts audits and reviews following a risk-based planning approach.
Market disclosure
We maintain a level of disclosure that meets all regulatory requirements within our jurisdictions. Our Group Disclosure Committee is responsible for determining what information should be disclosed publicly. The Disclosure Committee is comprised of the Group CEO and the Executive Team.
Risk management
The Group Board is responsible for approving the KBZ Group Risk Management Strategies and KBZ the general Group Risk Appetite across the Group’s subsidiary companies. A Group Board sub-committee is responsible for monitoring the effectiveness of risk management across the KBZ Group. The Board has delegated to the Group Board Risk & Compliance sub-committee responsibility to:
• review and recommend the KBZ Group Risk Management Strategy and a KBZ Group Risk Appetite Statement to the Board for approval; • establish a view of the Group’s current and future risk position relative to its risk appetite and capital strength; • review and approve frameworks, policies and processes for managing risk; and • review and, where appropriate, approve risks beyond the approval discretion provided to management.
KBZ Group’s Risk Management Strategy and Risk Appetite Statement are reviewed by the Board Risk & Compliance Committee and are approved by the Group Board annually or more regularly if necessary.
The Group Board Risk & Compliance sub-committee reviews and monitors the risk profile and controls of the Group for consistency with the Group Risk Appetite Statement and reviews and monitors capital levels for consistency with the Group’s risk appetite. The Group Board Risk & Compliance sub-committee receives regular reports from senior management across the Group on the effectiveness of our management of material risks.
The CEOs and Executive Teams are responsible for implementing our risk management strategy and frameworks, and for developing policies, controls, processes and procedures for identifying and managing risk in all of KBZ Group’s activities.
Effective risk management enables us to:
• accurately measure our risk profile and balance risk and reward within our risk appetite, optimising financial growth opportunities and mitigating potential loss or damage; • protect KBZ Group’s reputation as a responsible and sustainable Group of companies; • embed equate controls to guard against excessive risk or undue risk concentration; and • meet our regulatory and compliance obligations.
This is a multi-tiered process of risk identification, risk management and self- assessment. Each subsidiary company is responsible for identifying and evaluating the risks that they originate within approved Group Board approved risk appetite policies. They are required to establish and maintain appropriate risk management controls, resources and self-assessment processes.
KBZ Group distinguishes between different types of risk:
• liquidity risk – the risk that the Group will be unable to fund assets and meet obligations as they become due; • market risk – the risk of an adverse impact on earnings resulting from changes in market factors, such as foreign exchange rates, interest rates, commodity prices or equity prices. This includes interest rate risks in the balance book - the risk to interest income from a mismatch between the duration of assets and liabilities that arise in the normal course of business activities; • conduct risk – the risk that our activities result in unsuitable or unfair outcomes for our stakeholders or undermines market integrity; • operational risk – the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, such as financial crime. This definition is aligned to the regulatory (Basel II) definition of operational Risk which includes legal and regulatory risk but excludes strategic risk; • compliance risk – the risk of legal or regulatory sanction, financial or reputational loss, arising from our failure to abide by the compliance obligations required of us; • business risk – the risks arising from the strategic objectives and business plans; • sustainability risk – the risk of reputational or financial loss due to failure to recognise or address material existing or emerging sustainability related environmental, social or governance issues; • equity risk – the potential for financial loss arising from movements in equity holdings and values. Equity risk may be direct, indirect or contingent; • insurance risk – the risk in our insurance entities of claims costs being greater than expected, due to a failure in product design, underwriting, reinsurance arrangements or an increase in severity and frequency of insured events; • related entity (contagion) risk – the risk that problems arising in connection with other KBZ Group affiliated organisations such as suppliers, contractors, customers or any other parties and stakeholders with which we engage in some way compromise the financial or operational position of the KBZ Group; and • reputation risk – the risk of the loss of reputation, stakeholder confidence, or public trust and standing.
KBZ Group’s material exposures to economic, environmental and social sustainability risks are managed in accordance with our risk management strategy and frameworks.
Group Compliance Management Framework
The Compliance Management Framework sets out our approach to managing compliance with our obligations and mitigating compliance risk. It is an integral part of the broader risk management strategy and is regularly assessed and enhanced as appropriate to ensure it responds to the internal and external environment and supports our strategic compliance direction.
To proactively manage our compliance risks, our compliance objective is to:
• comply with our legal obligations, regulatory requirements, voluntary codes of practice to which we subscribe, and Group policies, including the KBZ Group Code of Conduct; • establish frameworks, policies and processes designed to manage, monitor and report compliance and to minimise the potential for breaches, fines or penalties, or loss of regulatory accreditations; and • ensure that appropriate remedial action is taken to address instances of non- compliance.
Remuneration
The Group Board Remuneration Committee assists the Board by ensuring that the KBZ Group has coherent remuneration policies and practices that fairly and responsibly reward individuals having regard to performance and that reflect KBZ Group’s risk management framework, the respective jurisdictions under which our companies operate and the highest standards of governance.
The Board Remuneration Committee:
• reviews and makes recommendations to the Group Board in relation to the KBZ Group Remuneration Policy and assesses the Group Remuneration Policy’s effectiveness and its compliance with laws, regulations and prudential standards; • reviews and makes recommendations to the Group Board in relation to the individual remuneration levels of CEOs, Group Executives, other Executives across the Group who report directly to the CEOs, in addition to any other Accountable Persons or other persons whose activities in the Board Remuneration Committee’s opinion affect the financial soundness of KBZ Group; • reviews and makes recommendations to the Group Board in relation to the remuneration structures for staff across the Group; • reviews and makes recommendations to the Group Board on corporate goals and objectives relevant to the remuneration of the CEOs, and the performance of the CEOs in light of these objectives; • reviews and makes recommendations to the Group Board on the short and long-term variable reward plans for Group Executives and any other Accountable Persons; • oversees general remuneration practices across the Group.
The Group Board Remuneration Committee reviews and recommends to the Group Board as to the size of variable reward pools each year based on consideration of pre- determined business performance indicators and the financial soundness of KBZ Group. The Group Board Remuneration Committee also approves remuneration arrangements outside of the Group Remuneration Policy relating to individuals or groups of individuals which are significant because of their sensitivity, precedent or disclosure implications. In addition, the Group Board Remuneration Committee considers and evaluates the performance of senior executives when making remuneration determinations and otherwise as required.
The Group Board Remuneration Committee also reviews and makes recommendations to the Group Board for the reduction or lapsing of incentive-based equity grants to employees where:
• the Group Board Remuneration Committee determines that an adjustment should be made as a result of risk or compliance failures. • Independent remuneration consultants are engaged by the Group Board Remuneration Committee to provide information across a range of issues, including remuneration benchmarking, market practices and emerging trends and regulatory reforms.
• The Group Board Remuneration Committee refers to the Group Board or any other Board Committees any matters that come to the attention of the Group Board Remuneration Committee that are relevant for the Group Board or the respective Board Committees across the Group.
GROUP COMPANIES
Boards of Directors
All KBZ companies have a separate Board of Directors that consist of 6 to 10 members. The composition of the Boards varies according to each organisation. KBZ aims to ensure there is always a balance of members that include company Senior Executives, external independent industry experts and other stakeholders to provide a balanced and sustainable approach to responsible, profitable growth and the enhancement of livelihoods and communities in which we operate.
Management Committees
Each KBZ company has its own Management Committee that reports to the Group’s BOD on a quarterly basis. The committees are made up of Executive Officers with oversight of their respective subsidiaries’ BOD’s.
Audit Committees
Each KBZ company has an audit committee. They consist of KBZ staff, external consultants and non-Executive members with sectorial expertise. They meet quarterly or more regularly according to needs within the Group. As a Group, we conduct both internal and external audits to ensure we are meeting the standards of best international practice.
Remuneration/Compensation Committees
Under the guidance of KBZ Group, subsidiary companies implement equal and fair remuneration and compensation to all staff, contractors, suppliers and other parties according to Group standards and in accordance with or in excess of legal requirements. Committees meet on a quarterly basis and include a majority of non-Executive Directors.
HUMAN RIGHTS
ASSESSMENT OF POLICY, GOALS
SDG 1: End poverty in all its forms everywhere.
As an employer of more than 80,000 staff across a wide variety of sectors, KBZ is making a significant contribution to the Myanmar economy and the wellbeing of its employees who are all paid in accordance with or in significant excess of the minimum wage requirements.
The Brighter Future Myanmar Foundation (BFM) is an award winning philanthropic foundation founded by KBZ twelve years ago. The mission of the foundation is to uplift the lives of the under-privileged and impoverished at the grass roots level. Its goal is to help alleviate poverty in Myanmar in the long term. Since its inception, BFM has contributed more than Kyats 138 billion towards philanthropic causes (in excess of US$10 million).
Migrant workers account for approximately 10% of the Myanmar population and predominantly stem from minority ethnic groups. They are often exploited and abused because of a lack of proper travel documentation and thus legal protection. Many live in poor conditions, surviving on minimal wages or on charity in refugee camps. KBZ has and continues to work to support and help repatriate such individuals and families to restore them to a dignified life in their homeland.
As part of our youth development and enhancement programme, KBZ partnered with an ASEAN Foundation based in Jarkarta, Indonesia, to support Myanmar University students to attend Model ASEAN meetings every year since 2016. KBZ has provided support through financial contributions for their travel costs and other expenses.
Students are provided with mentoring by the Head of KBZ Corporate Social Responsibility Department. 16 students from the Institute of Medicine I, University of Yangon, the Yangon Technological University, Northern Yangon University, Thanlyin University, Dagon University and Taunggyi University have already attended the Model ASEAN Meetings in both Laos and the Philippines.
SDG 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture.
KBZ has some agricultural interests and continues to ensure these are maintained to international standards of compliance. In conjunction with this work, BFM has provided fresh drinking water through tube wells as well as irrigation to support healthy living in rural areas.
KBZ Bank has also supported the improvement of standards of living for women agricultural producers in the central part of Myanmar by providing access to finance, partnering with Action Aid Myanmar.
During the first year pilot phase in 2017, KBZ invested in the region of Kyats 100 million (approximately US$75,000) to 120 women farmers and traders in Pakokku, Magway region.
Female farmers from five villages within Pakokku township are now eligible to obtain financial access (loans) from KBZ Bank. The aim is to promote sustainable income through improved access to capital and alternative livelihoods with a focus on women’s empowerment. The crops harvested include chillies and peanuts.
The project is key to KBZ Bank’s Creating Shared Value and impact investment agenda. Action Aid and KBZ Bank also provide financial literacy and book-keeping training to the Women Agro Producers Network, and assist access to markets for borrowers through KBZ Bank’s local and national networks.
Both parties will again look at lessons learnt from the phases of the project implemented to date to best assess how to take it further forward. On the back of our analysis and reporting structures, we will continue to formulate and implement plans to provide further access to finance for small-scale farmers more extensively within the country.
KBZ’s emergency disaster relief has impacted on broad tracts of Myanmar’s affected regions and has reinvigorated livelihoods and sustainable agriculture. To date, the KBZ Brighter Future Myanmar Foundation (BFM) has donated approximately US$8 million to support communities seriously affected by the flooding in multiple states and divisions across Myanmar.
BFM spearheaded the flood relief and recovery operations in collaboration with volunteers from KBZ Bank branches countrywide in 2018. On the ground, KBZ Directors and Co-Founders of BFM, Daw Nang Lang Kham and Daw Nang Kham Noung personally worked side by side with other KBZ volunteers, local NGOs and INGOs to deliver relief aid and urgent medical care. Help centres were set up in Yangon, Mandalay and Magwe to handle donations and coordinate distribution to all the affected areas. Aid deliveries were made on a daily basis. They were delivered to stricken areas by various means including a chartered MAI Airbus A320 and Air KBZ ATR 72-600s, which are owned and operated by KBZ Group of Companies. KBZ Bank also paid for MI 17 helicopters, Y8 trucks, cargo ships, boats, and twenty-two-wheeler trucks.
To scale up relief operations in hard-to-reach areas, BFM contributed monetary support ranging from Kyats 10 million (approximately US$850) to Kyats 300 million (approximately US$25,500) to NGOs and INGOs on the ground depending on their size and capacity.
KBZ will continue to provide support for such situations as and when the needs arise.
SDG 3: Ensure healthy lives and promote well-being for all at all ages.
KBZ ensures that all its staff work reasonable daily hours according to legal requirements and have the right to periodic rest and leisure breaks with paid holidays according to or beyond national requirements.
KBZ has a policy of equal pay for equal employment as well as respect for the right for free choice of employment in accordance with Article 23 of the Universal Declaration of Human Rights (UDHR).
KBZ has a strict policy to negate under age employment. In Myanmar where identity documentation is not always reliable, we do our utmost to ensure we are completely compliant with and fully supportive of the eradication of child labour throughout our businesses and work with wider initiatives in the country in general.
SDG 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
We implement regular training courses across the Group to ensure all our staff are both prepared for the work they are carrying out and to support them to strengthen their skills in preparation for moving on to a higher level. For this purpose we use internal trainers, external trainers and consultants to provide the necessary range of knowledge and expertise. We have Bank training centres in Yangon and Mandalay providing residential training for all our staff from across the country.
SDG 5: Achieve gender equality and empower all women and girls.
In addition to KBZ’s work to support women in agriculture, KBZ also supports women living in rural areas of Myanmar who are producing traditional crafts that are sold in local markets. Through the provision of microfinance loans and vocational trainings, they are able to expand their business, generate additional income and develop the necessary skills to become self-sufficient.
The majority of the members of KBZ Brighter Future Myanmar Foundation’s microfinance programme in Hlegu and Tike Kyi are broom producers whose livelihoods utilise local resources available in their villages.
BFM is proud to support these women entrepreneurs in redesigning and repackaging their traditional Myanmar brooms in conjunction with the livelihood development
programme of Action Aid at Mboutik in Nyaung Oo. This improves the quality of the finished product leading to a better return on sales.
To mark the launch of the first ever Women’s Week Myanmar from the 6th-12th March 2017, KBZ and the Ministry of Social Welfare, Relief and Resettlement hosted the Women’s Empowerment Forum in Naypyitaw - a platform to share best practices for Women’s Empowerment strategies in the workplace and in communities. The aim was to inform, discuss and strategise the best approaches to delivering the fifth goal of the UN Sustainable Development Goals- Gender Equality. This is an initiative we continue to support.
SDG 6: Ensure access to affordable, reliable, sustainable management of water and sanitation for all.
KBZ makes significant contributions through its BFM Foundation to provide sanitary water supplies to staff and local communities in the vicinity of its areas of operation and further afield. All of our staff have free access to sanitary drinking water in the workplace. Canteens are managed under hygienic conditions.
Our Water Supply Project continues to be a heartfelt personal mission of U Aung Ko Win, Chairman of the KBZ Group and the Honorary Chairman of the KBZ Brighter Future Myanmar Foundation.
One of KBZ’s primary goals is to help improve the living standards and eradicate poverty in Myanmar’s underdeveloped areas. KBZ has invested in the region of US$7,000,000 to support this Water Supply Initiative and is spearheading the Project in Southern Shan State.
During the summers of 2013-2014, residents in the regions of the Southern Shan State suffered from severe drought. They were entirely relying on rainwater or water from ponds as far as a two hour walk from their homes for both domestic and agricultural use.
The drought was a huge threat to the livelihoods of this crop-producing state and to the nation. The agricultural sector in Myanmar accounts for 60 per cent of the country’s GDP. The majority of the crops such as onions, pulses, tea leaves, fruits and other vegetables for both domestic consumption and export originate from the Southern Shan State.
Before the launch of the water project in March 2014, KBZ through BFM donated 5,000 gallons of drinking water every day to the drought-affected areas. Despite our effort, each household received only five gallons of water a day. These shortages ignited a strong desire in the hearts of the KBZ family to commence the ‘Water Project’ in the hope of making water accessible and sustainable for everyone for generations to come.
The Water Project continues to operate throughout the country via three methods:
- drilling tube wells - reconstructing lakes - distributing water by water bowsers in remote areas
Despite problematic geophysical conditions, the Water Supply Project is now successfully operating in the neighbourhoods of Kalaw, Bawsine, Heho, Pindaya, Taungyi, Hopone and Nansan City through BFM water distribution and management systems such as water pumps, water taps, water tanks and tube wells. Clean drinking water is now easily and widely available at schools, hospitals, monasteries, and communal bathing areas.
The Water Project is on-going and will continue until there is no shortage of potable water, water fit for sanitation purposes and water for agricultural use.
Impact Index as of Feb 2018
In addition to 6 drilling machines borrowed from the Water Resources Utilisation Department (WRUD), KBZ Bank purchased a new drilling machine from the UK in 2017 in an effort to achieve even more positive outcomes. Drilling tube wells in Shan State is extremely challenging as water sources are hidden under layers of impenetrable lines of rocks, limestone, silt, clay, minerals and caves. Finding sources depends on the use of expertise and high quality equipment.
In order to optimise the water distribution project and to alleviate the overdue need for water in Nyaung Oo District and Mandalay Division, BFM has made reparations to the Ma Gyee Shwe Guu Lake. Following completion, the lake was made able to store 14 million gallons of water and supply water to 5 villages nearby. BFM has previously repaired 5 other lakes and 2 dams in total.
The drought season came early to Myanmar in 2016. Prompted by the high demands for water in Central Myanmar, KBZ Group via BFM distributed drinking water via 43 brand new water bowsers throughout the affected areas. Each water bowser has the capacity to carry up to 3000 gallons of water, sufficient to supply approximately 300 households. KBZ Group staff monitor the logistics and distribution plans for the bowsers in their respective project areas. These initiatives by KBZ continue and will continue to be carried out as necessary.
KBZ’s CSV/Philanthropic initiatives are formulated with achievable objectives in mind to support communities and other stakeholders on a long-term basis.
KBZ Brighter Future Myanmar Foundation received the Euromoney Achievement Award for Corporate Social Responsibility in 2015 for its life-changing Water Project and its broader commitments.
Daw Nang Lang Kham, Co-Founder and Chairperson of Brighter Future Myanmar Foundation received the Presidential State Excellence Award for FY 2013-2014 conferred by the President of the Republic of the Union of Myanmar, U Thein Sein, for leading the Best Philanthropic Organisation in Myanmar, which contributed the largest charitable donations towards the development of the people and society in the country.
SDG 7: Ensure access to affordable, reliable, sustainable and modern energy for all.
As the Nation’s leading tax payer for the seventh year running, KBZ contributes significantly towards the Government to support implementation of state supported health & welfare, education and other projects such as access to energy.
In 2015, KBZ teamed together with the World Bank to implement a solar energy project. The collaboration has supported participating energy companies installing solar panels. The World Bank has guaranteed 50% matching fund while KBZ provides credit for the remaining 50%. This forms part of the National Electrification Process. Effectively this affords companies the opportunity to carry out implementation of solar power systems at half price with extremely favourable credit conditions. The project is currently scheduled to run until 2021.
Through KBZ’s extensive employment and fair remuneration packages, its staff and extended family continue to benefit from access to affordable, reliable and modern energy in the Myanmar context.
KBZ Group has made sustainability and equality its two most important missions in its drive to improve and support the development of the country, its communities and its own companies along with other institutions focused on supporting the betterment of the nation.
IMPLEMENTATION
Our training is not restricted to our own staff, but extends to our stakeholders. An example is KBZ’s Women’s Empowerment project which has included financial literacy, computer training, leadership skills and basic healthcare knowledge.
At last year’s annual KBZ Leadership Summit, KBZ’s Chairpersons focused on our Visions and Missions. Our ambition was to seek avenues whereby we could improve the quality of life for people in Myanmar through our banking services and other areas of activity. We also made a roadmap to outline our ambitions under the direction of our bank’s CEO, Mike DeNoma. The participants at the summit all pledged their commitment to our values with their signatures, and engaged in activities that embody each of our corporate values. This is a process that is on-going and we have continued to implement it over the last twelve months and will review progress and reassess direction again at our next AGM. BFM’s social initiative projects primarily focus on five important sectors; Disaster Relief and Recovery, Women’s Empowerment and Health, the Environment, Youth Development and Education and Community Engagement.
BFM has donated in excess of Kyats 3 billion towards the Myanmar peace process (more than US$2.2 million) via the National Reconciliation and Peace fund. KBZ believes a peaceful and prosperous Myanmar is beneficial for our people, the country’s stability and the strengthening of its economic environment.
BFM has worked together with the Ministry of Health & Sports and Smile Asia to support treatment for patients to receive evaluation for cleft palettes at the Yangon General Hospital and in Taunggyi in Shan State. As a local partner, KBZ Group volunteers committed a significant amount of time to provide expertise in logistics, administration, customs clearance, management & recruitment to ensure the success of the ongoing project.
The number of KBZ disabled employees has more than trebled over the past 2 years and the necessary facilities to support both staff and customers in our work and public areas has been and continues to be methodically implemented.
Our Human Rights Policy: https://www.kbzgroup.com.mm/node/60
Our HSE Policy: https://www.kbzgroup.com.mm/node/70
Our Land Acquisition Policy: https://www.kbzgroup.com.mm/node/69
Our CSR Policy: https://www.kbzgroup.com/node/82
When undertaking any new projects, KBZ is committed to carrying out Environmental and Social Impact Assessments (ESIAs) to ensure land acquisition, environmental
considerations and social impacts are in accordance with local law and international standards, while taking in to consideration the interests of all stakeholders.
MEASUREMENT OF OUTCOMES
Since KBZ partnered with Smile Asia in 2016 in Shan State it has collaboratively provided free cleft lip and palette operations to 362 children and held two missions in both Yangon and Taunggyi. We are currently carrying out our next mission which will be our fifth in the central part of Myanmar. For these children, this is a place where they can discover their smiles and their quality of life and emotional confidence is markedly improved. We are grateful to the Ministry of Health and Sports, Regional Governments, the Yangon General Hospital and the Taungyi Women’s and Children’s Hospital working for working together with us as a team to transform young people’s lives.
Over the last three years, in partnership with the International Organization for Migration (IOM), KBZ has led several rescue missions for more than half a thousand Myanmar fishermen who were enslaved in Indonesia. It has also helped to repatriate more than 3,000 migrant workers from Malaysia and hundreds of fishery workers from India who were in desperate need to return home due to ill-treatment or for family reasons. They were provided with free Myanmar Airways International flights chartered by KBZ Bank.
KBZ has successfully built more than 200 wells and safe water facilities across the country. This has a dramatic impact on an estimated quarter of a million people in Myanmar with hugely positive health implications.
Repeatedly recognised as the biggest tax payer in Myanmar, KBZ makes an enormous contribution to support those in need in one of the poorest countries in the region. Staff retention and recruitment at KBZ is emblematic of its reputation as an employer of choice and an organisation for whom its staff is proud to represent.
KBZ Bank opened new one-stop services centres last year to help small and medium- sized enterprises (SMEs) to secure better access to finance. The One-Stop SME Banking Centres (OSBC) offers a range of services to meet the needs of growing businesses, such as enhancing access to finance and improving financial literacy. This service has helped the development and success dozens of SMEs.
By launching the centres, Myanmar’s largest private bank seeks to facilitate the expansion of enterprises in multiple sectors and regions throughout the country. The centres will operate as information hubs as well, with a team of banking professionals who are well-placed to advise SMEs on managing their growth plans, cash-flow projection, financing issues and other challenges.
LABOUR RIGHTS
ASSESSMENT OF POLICY, GOALS
SDG 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
Dynamic business models and sage leadership has led KBZ to being the leading Myanmar conglomerate. Voluntarily choosing to meet the highest international business standards has played a major role in our success. Although the process is challenging across such a large organisation in a developing country, the implementation has moved with impressive speed. All senior management is committed and signed up to Group Policies and have cascaded these principles across their specific areas of influence.
Included in our Code of Conduct and Stand-alone policies we state our commitment to collective bargaining and freedom of association. KBZ is an equal opportunities employer, regardless of gender, age, disability, religion, sexuality, nationality, ethnicity or any other distinguishing factors. It does not tolerate discrimination of any nature. No form of harassment is accepted either within or outside the workplace.
This applies to our processes of hiring staff, evaluation of staff performance, promotions, training & development, disciplinary processes, compensation and termination of contracts. We strive to ensure any of these issues are dealt with in a professional way in a spirit of mutual respect and trust.
We abhor any form of forced, compulsory, bonded or child labour in our country or elsewhere and will work to support ways to eliminate any such practices. Human Resources (HR) Department is very attentive to these issues and if they arise, HR actively look for ways to support families and individuals that find themselves in vulnerable situations within our Group. We work together with a range of local, national and international organizations to provide us with input and from whom we can take advice.
SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation.
KBZ Bank has introduced IT innovations in the banking sector including mobile banking, e-commerce and online banking through KBZ Gateway. It has also established the broadest network of ATMs and branches across the country. KBZ Bank branches now exceed 500 across all Myanmar States and Regions. KBZ has partnered with Visa, MasterCard, Union Pay International and JCV to facilitate international payments.
KBZ Gateway has worked in conjunction with Asia Satellite Communications (AsiaSat) and satellite service provider Hughes Network Systems to provide people and businesses with telecoms and internet connectivity stretching even to the more remote parts of the country. Access to such life-changing services has brought significant development in both urban and, perhaps more importantly, rural areas.
KBZ members of staff are made aware of both their rights and obligations in the workplace through induction training programs and subsequent training or provision of updates through various means. This may be via email or our Group website, in addition to workplace notices and management engagement.
These make clear appropriate avenues to express concerns through our Grievance and Whistle-blowing mechanisms, which are multi-fold according to the nature of the concern. These are outlined in the relevant policies below which are accessible on our Group website. The first port of call is generally through a line Manager. However our Group HR Department is also on hand to give support in providing advice and guidance regarding career issues.
Every member of staff has an annual review to assess performance and to consider training requirements to support career development in line with their particular strengths and each individual’s potential directions of progression.
We have an active inclusion process to support people with disabilities and have ensured facilities are in place wherever practicable to support their requirements. KBZ has been recognised by the Government for its activities in this respect. KBZ prides itself on inclusion and equal opportunities.
Through our banking services and extensive branch outreach, we offer banking services including personal service, cashpoints, insurance and mortgages. As the largest bank in the country, we provide a vital stability that supports sustainable development and growth in the country as well as giving confidence to investors.
Our investment into the airline sector has provided connectivity to both nationals and foreign visitors through our multiple routes internally and internationally. Our two airlines are proud to have achieved international accreditation and look forward to continuing to care for our customers.
SDG 10: Reduce inequality within and among countries.
As one of the poorest countries in South East Asia, we endeavor to primarily raise standards at home in order to restore our country’s parity with our neighbours. However our longer term perspective continues to be that we should have a more significant presence regionally and thereafter expand beyond Asia. As a Group that respects and supports international laws and regulations, as well as any legislation and accepted norms within each country within which we have a presence we strive to be a responsible global entity.
IMPLEMENTATION
Aside from our policies and training courses to help the development of Myanmar in its efforts to match regional and international standards, we are supporting a broad range of social initiatives to enhance livelihoods and education.
We stand in support of MCRB’s Human Rights Impact Assessment (HRIA) initiative to ensure the operations of KBZ have no negative impact on stakeholders human rights. We also subscribe to the Government’s Myanmar Sustainable Development Plan (MSDP) which spans from 2018 - 2030. The MSDP plans are inclusive of the business sector and move to harmoniously and coherently deliver a framework for coordination and cooperation across Government Ministries and business for the sustainable development of our nation.
According to the Singapore Management University Business Families Institute, 82% of family owned businesses surveyed indicated that non-family advisors are valuable in developing and mentoring their next generation for critical roles in the future growth of the business. While we remain predominantly a family owned Group, we embrace this concept and have engaged the best quality international and national advisors to support us in our decision making as we move forward.
We are also looking to nurture new talent in Myanmar which inspired us to sponsor the KBZ Myanmar Entrepreneur of the Year Awards 2017. This award is for outstanding individuals who demonstrate passion, dedication and excellence in their business endeavours and an awareness of the needs and importance of their customers and stakeholders.
KBZ Brighter Future Myanmar Foundation has taken pride in sending outstanding matriculation students to Japan on exchange visits on an annual basis in collaboration with the Myanmar-Japan Association. The aim for the exchange programme is to promote relations between our two countries, while at the same time rewarding the outstanding Myanmar matriculation students.
In partnership with the ASEAN Foundation, KBZ also sends eight students from universities from all over Myanmar to attend Model ASEAN meetings. KBZ has sent two cohorts of students to Vietnam and the Philippines in 2016 and 2018. In gratitude, these students have all voluntarily given their time to work with various KBZ led community engagement projects. Last year, a community talk was orchestrated for Myanmar domestic helpers in Singapore. It was organised by the Humanitarian Organisation for Migration Economics (HOME) and Helping Hands, an organisation that provides aid to Myanmar domestic helpers. With KBZ/BFM’s sponsorship, the event was attended by more than 100 domestic workers with a focus on rights and health.
For reference visit: www.bfi.smu.edu.sg
KBZ Group has undergone a further period of significant change and transformation over the last year. We have reviewed our corporate structures to identify areas in need of strengthening and instigated systems to facilitate the development of our burgeoning companies. We have also transformed and re-engineered our business processes. We very much understand that political changes, economic changes and foreign policies necessitate that we need to adapt accordingly in a changing environment. We are identifying and developing our next generation of leaders and trusted advisors to support our passage to ever stronger business practices.
KBZ strongly values the support of its stakeholders through which it retains and strengthens its social license to operate. Stakeholder mapping has identified that the following constituents represent the primary constituents for KBZ:
Our Grievance Policy: https://www.kbzgroup.com.mm/node/58
Our Employment Policy: https://www.kbzgroup.com.mm/node/59
Our Equality and Diversity Policy https://www.kbzgroup.com/node/81
Our Social Media Policy: https://www.kbzgroup.com.mm/node/61
ENVIRONMENTAL ISSUES
ASSESSMENT OF POLICY, GOALS
SDG 11: Make cities and human settlements inclusive, safe, resilient and sustainable.
A key element of our approach to environmental issues is stakeholder engagement. We consider this to be a vital part of our Environmental Management. This necessitates implementation of due diligence processes in consideration of potential new projects with support of the necessary internal or external expertise. This includes carrying out ESIAs on new projects of a significant scale. We also have internal processes in place within our businesses to minimise waste and recycle with a particular focus on plastics and paper.
SDG 12: Ensure sustainable consumption and production patterns.
Our Procurement Policy reflects our commitment to ensure all our sourced materials are in line with our environmental and ethical standards. Our Environmental Policy reinforces the concept of sustainable business practice within our Group, which in combination with our auditing processes and our work alongside outside organisations help to us ensure we meet the levels to which we aspire.
SDG 13: Take urgent action to combat climate change and its impacts.
Our Airline MAI is still unique in Myanmar as the only airline to be IATA compliant and is progressing towards achieving a zero carbon footprint.
KBZ’s primarily office based industries such as the bank have policies implemented and adhered to for recycling paper, for not printing documents unless necessary and to minimise use of electricity as far as is practicable.
For many of our employees we provide shuttle bus services to and from work both for their benefit and for the associated environmental benefits. Our vehicles are regularly serviced with a low carbon footprint, especially in comparison with local transport facilities. It is also more convenient and environmentally protective than staff driving their own cars to work.
SDG 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development.
This is not a sphere of business in which KBZ is directly active, having no fisheries or marine interests. However KBZ has provided extensive support to disaster affected areas in the Delta region of Myanmar in the aftermath of devastating floods and storms in recent years.
SDG 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.
Our agricultural operations are managed in accordance with our environment policy respecting the local communities in the areas in which we are active. We support these communities with our water supply efforts and school provisions. We ensure all agricultural activities are carried out responsibly and do not have negative impacts on the environment. We make sure all our agricultural land is unencumbered with any relocation issues or ‘land grabs’. We regularly monitor the social impact of our operations.
IMPLEMENTATION
In our mining operations, we have taken precautions to ensure our activities protect both our mine workers and local communities. We have recently engaged external auditors to ensure to help us to meet the relevant international standards of compliance to which we aspire and implement any new measures accordingly.
Last year a Landfill fire in Hlaingtharyar Township, Yangon’s largest rubbish dump of approximately 300 acres caused major air pollution problems in several townships on the city’s outskirts. Fire-fighters were working around the clock to extinguish the blaze. The Yangon Regional Government and Yangon City Development Committee (YCDC) made arrangements to obtain bio-foam to put the fire under control and to control the smoke from the fire. Our Foundation, BFM, and associated companies donated Kyats 340 Million (more than US$250,000) to the Yangon Regional Government and YCDC to support their efforts. We believe such actions are one of our fundamental civic duties to not only support our communities, but also to highlight the importance of reducing non-biodegradable waste.
Our environment policy: https://www.kbzgroup.com.mm/node/68
Our Sustainability Policy: https://www.kbzgroup.com/node/84
MEASUREMENT OF OUTCOMES
Our operations have successfully reduced their carbon footprints again by approximately 5% over the last 12 months and our airlines are making steady progress towards the goal of having a zero carbon footprint.
The Group consistently carries out ESIAs on all new projects of significant scale.
All KBZ suppliers are required to sign up to our relevant policies as part of our working collaboration.
Tens of thousands of people in Yangon’s outskirts were relieved of toxic emissions emanating from the rubbish dump fire in Hlaingtharyar.
ANTI-CORRUPTION
ASSESSMENT OF POLICY, GOALS
SDG 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.
We have a policy of zero tolerance towards any forms of corruption, bribery or collusion therewith or any failure to report cases thereof. In the case of gifts or entertainment we have a strict threshold as outlined in our anti-corruption policy.
This policy applies to all staff regardless of seniority and also includes our contractual agreements with suppliers and other contractors, consultants, etc. Our reporting mechanisms are included in both the Code of Conduct and our Grievance and Whistle- blowing policies. Appropriate channels, according to the nature of the situation or case are clearly outlined there within. KBZ rigorously examines cases whenever they are raised or identified under the terms within these policies.
KBZ Group is committed to being a leader in exemplary business practice by demonstrating internal accountability values and matching or exceeding highest international ethical standards.
BFM continues to carry out significant development work in regions across the country in areas of conflict or poverty and those affected by natural disaster. KBZ works in association with local organisations to enhance sustainable development for the future prosperity of Myanmar.
SDG 17: Strengthen the means of implementation and revitalize the global partnership for sustainable development.
KBZ Group is dedicated to engagement with local, regional and international think-tanks and other influential institutions to improve its own performance as a corporate citizen and build itself as a leader of sustainable development both in Myanmar and internationally.
IMPLEMENTATION
KBZ’s policies have been implemented with considerable vigilance to ensure the Group retains its reputation as a responsible corporate citizen. This is considered extremely important for the Group as a whole.
We have continued to rigorously ensure these standards have been maintained and have acted accordingly should they have been breached. We train and expect employees at all levels to understand and respect our policies as an obligation of their
terms of work. All new employees are trained to understand and commit to these policies as a part of their induction programme.
Our Anti-corruption Policy: https://www.kbzgroup.com.mm/node/57
Our legal and Compliance Policy: https://www.kbzgroup.com.mm/node/62
Our Whistle-blowing Policy: https://www.kbzgroup.com.mm/node/63
Our Procurement Policy: https://www.kbzgroup.com.mm/node/64
MEASUREMENT OF OUTCOMES
KBZ ranked No1 in the terms of transparency in the 2014 Myanmar Centre for Responsible Business’ Pwint Thit Sa Report. It has continued to rank amongst the top organisations in Myanmar ever since. Civic mindedness is a value that is included in Metta, the employee-elected principle that guides KBZ's policies. It means we are aware of our responsibility to serve as an example of a committed corporate citizen, and that includes paying the taxes due to the government for the development of our country.
Last year we received a Presidential Award for paying the highest tax in Myanmar for the sixth consecutive year. KBZ was accorded with the honour of being the Financial Times Bank of the Year in Myanmar 2017 for the 5th consecutive year.
ANALYSIS & STRATEGY FOR MAY 2018 - MAY 2019
We have carried out further training over the last year initially through Board Members, Managing Directors and line Managers across our subsidiaries to cascade knowledge throughout our organisation. This process has been supported by external consultants. We continue to evaluate and implement the most effective mechanisms to improve our performance as an Group.
All of our staff are now signed up to our Code of Conduct and other policies which firmly reflects our Vision and Mission for business operations to be sustainable and responsible in our practices. This is now firmly ingrained within our organisational DNA.
Over the next 12 months, we will also strive to further strengthen our reporting processes to reflect our determination to demonstrate our Group ethos and transparency. We will continue to engage with stakeholders and organisations with an interest in our operations.
BFM has been established for more than a decade now and has donated significantly more than US$100 million for the benefit of Myanmar society. Business Integration of KBZ’s Creating Social Value (CSV) and philanthropic activities and initiatives are deemed as a fundamental part of organisation’s philosophy. We believe that our commitments as leading corporate citizens not only benefits ourselves, but all of our stakeholders for the betterment of all concerned. It not only helps the communities in which we work, the reputation of our businesses, the morale of our staff, but also the welfare of Myanmar as a whole. We see it as an important booster to perform as well as a driver to ensure we continue to ensure our brand is well perceived as a champion of responsible business. Incorporating these measures is key to our long term sustainability and the contributions we can make to our society.
Our Group website: www.kbzgroup.com.mm