Corporate Social Responsibility Report 2008 Contents 02 Message from the Chairman Message from the CEO of the Ko Group 04 06 Scope of the Report Values of the Ko Group 07 08 Creating Value at Ko R&D and Innovation at Ko 10 18 Social Responsibility at Ko Group Respect for Human Rights at Ko Group 32 38 Working Environment at Ko Group Environmentally-Friendly Practices of Ko Group 50 66 Ethical Values at Ko The Global Compact 69 THE KO GROUP 01 CORPORATE SOCIAL RESPONSIBILITY REPORT 2008 We, Ko Group, with all our people, aspire to ensure customer satisfaction and sound growth by providing products and services of universal quality and standards. We are committed to being a symbol of trust, continuity and esteem for our country, customers, shareholders, dealers, and suppliers. Message from the Chairman We regard corporate social responsibility as an indispensible part of our business approach, in line with the conscience transmitted to us by the late Vehbi Ko. Distinguished Shareholders, In the era of globalization, even though there are still humanity, the coming generations, and for ourselves as geographic boundaries, economic boundaries no longer well. exist. Developments in one country affect another country on the other side of the world with unprecedented speed. During this difficult crisis period that, we, the Ko Group, The latest example is the financial crisis originating in the continue to be a driving force forwards economic U.S.A. and causing turbulence in all economies around development with domestic investments, steps towards the world in a very short time. developing new sectors of production, and our globally known brands. In 2008, with our consolidated revenues The global crisis is affecting the entire world economically, of USD 43 billion, we became the 186th largest company politically and socially. The crisis causes people to shy in the world. With our exports worth USD 14.2 billion and away from expenditures for consumer goods. The situation investments of USD 1.6 billion, we continue, as in the triggers a vicious cycle. However, ending the crisis is past, to be a locomotive of economic development in our dependent on the psychological factor of restoring a country. sense of trust and security. With more than 70,000 employees, we are trying to For companies developing a plan to deal with the crisis, develop the best solutions and bring the best results for the first step is to take measures towards a more efficient our shareholders without losing our belief in the growth use of resources. Speaking about a better use of potential of our country, and our focus on the future. resources, of course, first brings to mind cutting expenses. But, it is necessary to approach the issue from a broader On the other hand, in all of our fields of activity, we act perspective, thinking about our activities with a view to in accordance with a consciousness of responsible improve and transform operations aiming for sustainability. citizenship, as framed by the UN Global Compact This may lead us out of the global economic crisis as principles, which we signed in 2006, and continue to well as out of the global climate crisis. uphold. We are aware that education plays a very important role in developing social consciousness. Ko University Making better use of resources is not only a duty of signed the principles on November 12, 2007. We are responsible management: It is also a duty of reasonable also very pleased that the Faculty of Economics and citizenship. We believe that being more careful while Administrative Sciences signed the Principles for using resources that the world is offering us is a reflection Responsible Management Education on December 3, of the respect we hold for our world, the environment, 2008. Ko University has thus hereby pledged that the education will be delivered in line with the principles of Anniversary has made it possible for us to put into practice sustainability and corporate citizenship. a synergy among all of our employees. This synergy turned into a giant step last year when we decided to We, as the Ko Group, with awareness for social concentrate all efforts on the environment by creating 02 responsibility as taught us by Vehbi Ko, regard corporate seven forests across the country. 03 social responsibility as an indispensible element of our business strategies. With our investments in the fields of Environmental challenges require a coherent approach education, health care, culture and arts, and ecology, we ranging from the protection of natural resources to the are taking care to contribute to the development of our minimization or elimination of waste at its source. country. We, the Ko Group, continuously improve environmental In the field of education, our project ÒVocational Education: standards, not only through our social responsibility A Crucial Matter for the NationÓ, which is supported by projects, but in all of our fields of activity. 21 of our companies, the Ko University and the Vehbi Ko Foundation, has been going on for two full years While signing the Global Compact Principles, we aimed now, and already entered its third year. We understand to share this new culture of both doing business and the relevance of the financial support we provide our furthering social responsibility awareness- not only within students from 81 cities through the feedback we our own corporation, but also our surroundings and constantly receive, and we are excited to see them as among our shareholders. Today, we are proud and happy young participants in the working world, professionals to set an example of corporate citizenship by acting producing surplus value. together with our distributors, suppliers and all the employees of our Group, for the benefit of our country We, the Ko Group, know that we can only proceed and and our world. improve as far as we contribute to the progress part of our community. This is why we are striving to share our Respectfully yours, understanding of social responsibility with our business partners and shareholders, and within our sphere of influence. Mustafa V. Ko The project ÒFor My CountryÓ that we started on our 80th Chairman, Board of Directors Message from the CEO of the Ko Group Our long standing focus on both high quality in business operations and projects is reflected in our corporate citizenship approach and in matters of social responsibility. We produce added value for the world and our country in the social field as well. Distinguished Shareholders, As globalization brings to the fore increased competition, as he did, in our business processes as well as with our we continue to rank as our first priority the sustainability support for social life. of our social and economic leadership. It is inevitable for corporations to go through change if they want to survive We are constantly improving our corporate structure, in the global system. Change is not only about redefining our activities and our understanding of social existing rules; it is also about making new rules. This is responsibility as reflected in our projects. We have the only way for corporations and even for countries to also reflected in our operations the approach of the remain ahead of the times and survive, thus contributing UN Global Compact, which we signed in 2006. Within further value creation. this context, we created a portal where we can carefully observe data on the application of these principles In 2008, we, the Ko Group, expressed our core goal of worldwide and to improve our operations constantly. leading in all fields under the concept of ÒChangeÓ. In accordance with our strategy of focusing, we departed In the 21st century, societies and populations face ways with several of our companies. We invested in new more complicated problems than in the past. The projects which increased our profits and efficiency. During global crisis we are going through clearly shows us 2008, the deep impact of the economic crisis made itself that a problem occurring somewhere else affects not felt in all fields. By implementing far-sighted institutional only the region where it emerges, but with a domino approaches, we have improved managerial quality and effect, impacts the entire world. Solving those problems risk management. As a result, we have sustained our requires an outlook that is not only broad, but also strong financial stance as well as the trust and credibility creative. we earned in the financial markets during 2008 when the crisis deepened. As major drivers of competitive edge and instruments of change that drive societies forward, R&D and In 2009, we are celebrating the 40th Anniversary of the innovation are of utmost importance for Ko Group Vehbi Ko Foundation, one of the first of its kind founded with its determination to remain a leading force. by the founding father of our corporation, the late Vehbi Ko, with an aim to institutionalize social support and The investments of our companies in research, product welfare projects. Looking at 2008 from the perspective development and new product and service innovations of these 40 years, we were proud to see that we still apply and solutions are of great significance. Developments the principle we inherited from Vehbi Ko, ÒI live and achieved as a result of these serve to increase the prosper with my countryÓ, with the same accountability competiveness of our country. The Ko Group aims to increase the added-value it citizenship. In cooperation with the Environment and provides to the country's economy and contributes a total Forestry Ministry and the TEMA Foundation, we created of almost 20% of the spending by the private sector on resources for the planting of 700,000 saplings, covering research and product development.