A project on ethical issues, social responsibility, corporate governance, leadership & code of conduct

ENGRO CORPORATION

Submitted To: Sir ISRAR KHAN RAJA

Submitted By:
Anwar Ulhaq (2892) Anees Ahmed(2878) Amir Shehzad (2896) Bilal Mehmood (2895)

Acknowledgement
First and Foremost we are thankful to AlMighty Allah and his Beloved Prophet Hazrat Muhammad (P.B.U.H). We are thankful to our teacher Mr. Israr Khan Raja who motivated us to put the theoretical knowledge in a practical way, he briefed us very well about the corporate Culture and their business ethics through practical examples.

INTRODUCTION
Engro Corporation is a public company based in Pakistan. The company has stakes in the fertilizer, food, power generation, petrochemicals, automation and terminal storage industries. Engro corporation is Pakistans one of the largest amass (conglomerate) and its business ranges from fertilizers to power generation. After it, for the overseeing of its business subsidiaries Engro chemical limited converted to a holding company structure. And then two major changes occurred in Engro chemical limited, it was renamed as Engro Corporation limited and transferred its fertilizer business to separate subsidiary, Engro Fertilizers limited .Engro Corporation currently consists of seven businesses that include chemical fertilizers, industrial automation, PVC resin, power generation, foods, commodity trade and a bulk liquid chemical training .Engro Corporation limited provides a long term vision for the company and also overseeing the performance of the its subsidiaries, it is also responsible for leadership development, allocation of capital, human resource guiding, CSR activities, management of talent, control structures, legal & IT support, control structures and leadership roles in public relations. Engro is working continually towards its vision and has come a long way to becoming a premier Pakistani company globally. In the journey of Engro for becoming a profitable company and a growth oriented company, their management structure has played an important role for creating an accessible and more transparent organization.

History
From EXXON TO ENGRO: As the part of International name change program, Esso became Exxon and company was renamed Exxon chemical Pakistan limited. Exxon then decided to differentiate its fertilizer business on global level thats why the company name was changed to Engro chemical Pakistan limited. Engro chemical Pakistan limited then started diversifying its self into other sectors as foods, energy, PVCresin manufacturing and marketing, chemical closure and storage and industrial control and mechanization. In 2009 plans were to demerge fertilizer business into independent operating company. Engro fertilizer business was unified to manage fertilizer business. To reflect the change in the scope of directive and scale of operations, Engro Chemical Pakistan Limited has been renamed as Engro Corporation Limited. Subsidiaries: As a holding company its subsidiaries include: Engro Fertilizers Limited Engro Foods Limited Engro Eximp Private Limited Engro PowerGen Limited Engro Polymers and Chemicals Limited

WHY ENGRO???
Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) has been ranked Pakistans leading company for Corporate Social Responsibility (CSR), in the first Asian Sustainability Rating (ASR). Engro also achieved the distinction of being the only Pakistani company included in ASRs top 50 Asian companies. The rating compared companies for their performance in areas of Governance & Policy, CSR Strategy & Communication, Marketplace & Supply Chain, Workplace & People, Environment, and Community & Development. Engro has the distinction of being in a select group of companies, which are signatories to the UN Global Compact (UNGC), as well as being part of the Global Reporting Initiative (GRI). UNGC is a voluntary, strategic policy initiative encouraging companies to incorporate principles of human & labor rights as well as environmental and anti-corruption practices. GRI is the worlds most widely used sustainability reporting framework for benchmarking organizational performance on economic, environmental, and social dimensions. Engros efforts in building sustainability in Pakistan are demonstrated by its commitment to consistently contribute 1% of profits before tax towards social investments. Engros major social spending is in the areas of skill development, education, health, environment, emergency relief efforts and philanthropy.

Corporate Social Responsibility

Engros community development and uplift programs focus mainly on environment and water conservation related initiatives. The company has various diversified programs in place and is on its way to create visible social impact on communities within which it operates. It invests in programs that address the environmental and social challenges faced by its business, thus mitigating impact of its operations through taking these initiatives it. It also focuses on the element of sustainable business development and that is what is most visible in its key social investments. Flood Relief: Engro Polymer & Chemicals Ltd embarked on flood relief activities in farflung areas that were significantly devastated by the floods in 2010. Special emphasis was laid on maternal health issues that aroused in the absence or total destruction of hospitals and other medical infrastructure in these areas. Expectant mothers suffering from anemia and other severe blood disorders were provided medical attention in the areas of Qabal, the Kohistan border, Utror, Garbral, Mataltan, Minkial, Bashab and interior Swat.

EPCL donated 100 tons of Sodium Hypochlorite one of the most commonly used water disinfectants around the world, which was helpful in treating 350 million gallons of contaminated water. This drive by EPCL provided clear drinking and cooking water for thousands of families in the Khyber Pakhtunkhwa region, and prevented many waterborne diseases. Hypochlorite was also used to treat slush and stagnant water and as a disinfectant spray. Medical relief activities were set up in Nowshera, Charsadda and compounds surrounding Peshawar, some areas of Punjab, Lower Swat and Upper Swat. With a total of 55 medical relief camps set up in these areas, thousands were cured for numerous diseases, such as scabies, asthma, gastro, hypertension, skin allergies, etc. Flood Rehabilitation: EPCL launched agriculture-rehabilitation activities in inaccessible northern KPK province to improve the quality of life of farmers. Seeds of turnip, potato, ladyfinger and cabbage were provided to the local farmers to facilitate farming activities in approx 700 acres of land in numerous regions. Hence, these farmers have gained a chance to earn sums as much as PKR 80,000 to 100,000 per canal, monthly. E PCLs help came just in time to give these poor farmers a second chance to stand on their own feet after the devastating floods. Hydro Power Units: In 2011, Engro Polymer and Chemicals worked with the armed forces to set up mini hydro power units at two different villages located in Kalaam, namely Jalband and Kas Kalaam. The major objective of the initiative was to install small hydro power units as most of the electric power units had been washed out completely during 2010 floods in Pakistan and hence, the electricity supply was cut off. Because of the earlier, the local community had to strive hard for survival in winters as the average snow in winters ranges between 7 to 12 feet in this region and supply of electricity was the need of the hour for the community. The installation of these hydro power plants serves electricity to 350 houses with a population of almost 1800 people. The beneficiaries of this project are those people who were severely affected by the disasters of the 2010 floods. Forest Gradation Program: The Go Green Drive focuses on the conservation of reserve forest lands of Pakistan with special emphasis in Punjab and Khyber Pakhtunkhwa regions. This has led to EPCLs active involvement in protecting and conserving forests in the country, while highlighting their beauty and splendor and increasing public awareness regarding the threats to their existence through its various modes of communication. Water Conservation: Engro Polymer & Chemicals Ltd. takes a holistic approach to addressing the important aspects of water use and conservation not only in agricultural but also in non-agricultural applications. The Company allocates nearly half of its social

investments funds to various water conservation related projects, most of which are executed in close collaboration with nongovernmental organizations working at the grass root level. Community Development Programs: Engro Polymer & Chemicals Ltds community development and uplift programs focus mainly on environment and water conservation related initiatives. The company has various diversified programs in place and is on its way to create visible social impact on communities within which it operates. It invests in programs that address the environmental and social challenges faced by its business, thus mitigating impact of its operations through taking these initiatives. It also focuses on the element of sustainable business development and that is what is most visible in its key social investments. Education Support Programs: EPCL, playing its role as a socially responsible corporation, has helped communities to grow both socially and economically by developing and supporting educational infrastructure in remote areas of Razakabad and Ghaghar Phatak in Port Qasim, through its Technical Scholarship Program offering technical education and courses in English language and computers. Over the past few years, it has also supported a community school Haji Ganji School. Subsequently, three more schools were added to the list. As improving the quality of education is the prime focus of this initiative, the Company conducted several sessions with teachers and parents to collect input for improving the quality of education in government schools in Razzakabad and Ghaghar Phatak. EPCLs education support initiative also includes Port Qasim Employee Scholarship Program, instituting scholarships for employees children in Port Qasim area, Karachi that has proven to be highly successful over the past five years. Clean Drinking Water Project: EPCL installed water purification units at Mehmood Shah Goth, Razakabad and Haji Ganji Khan School. The purification plant is beneficial for the community in the areas of Razakabad and Ghaghar Phatak. EPCL continues to have frequent dialogue with the community representatives about proper utilization and benefits of the drinking units. Environment & education advocacy program: EPCL strongly believes in the idea Protect Environment, Promote Education. A project initiated for this cause was the Environment & Education Festival at Port Qasim, which drew more than 3500 participants in its opening year, including school students, parents, teachers, and several renowned corporations. It has been an on-going program ever since it started in 2007, regularly taking place each year. Also, from time to time EPCL has celebrated environmental days with students in rural schools to create awareness and a spirit of environmental protection.

Children's - Simply Outstanding Stories: In 2010, in continuation with its support for the Karachi SOS Village, a painting competition was organized by EPCL at SOS Village in Malir, in which 150 children took part. Each painting depicted the child s Simply Outstanding Story, giving an insight into their dreams and aspirations, their situation and how they saw the world around them. After several competitive rounds, 12 paintings were shortlisted for the EPCL calendar. Paintings were photographed and put on auction along with the child-artists interviews. Others: Engro Polymer & Chemicals Limited considers NGOs, hospitals and institutions a vital part of the society, and therefore donates generously to these institutions for the development of the community. In collaboration with Shaukat Khanum Cancer Hospital, EPCL initiated an anti-tobacco session which focused on the risks related to active and passive smoking. In 2010, a companywide Hepatitis B vaccination camp was arranged that vaccinated over 900 employees. Other than that, EPCL also holds a blood donation camp every year in partnership with Fatimid Foundation, which also aims at educating people about medical products related to blood banking.

Corporate Governance of ENGRO Corporation

ENGRO commitment to the highest standards of integrity and transparency shapes our governance framework and processes, which are aligned to the industry's best practices. Every employee at Engro is a part of the governance system and is required to adhere to clearly laid out policies and procedures. The Board of the company The board is primarily responsible for ensuring the appropriate review of future company plans, good governance and effective control systems to protect shareholder value. In essence the Board establishes corporate strategy and the company's business objectives. It also approves Engro financial statements and assesses overall performance against corporate plans and objectives.At present the Board includes four independent non-executive directors, four non-executive directors and five executives of the company. The Board strictly follows the 'Code of Corporate Governance' of the Securities and Exchange Commission of Pakistan (SECP) which serves as a guide for formulating company fundamentals and policy framework. A Board of Directors' meeting calendar is issued annually that schedules matters reserved for discussion and approval. The full Board meets at least four times a year for approval of quarterly accounts and for long term planning.

Committees of Engro Corporation

Audit committee

The Board Audit Committee meets at least once every quarter to endorse the accounts prior to their approval by the Board. The Chief Financial Officer regularly attends the Board Audit Committee meetings by invitation to present the accounts. The Board Audit Committee is responsible for assisting the Board in fulfilling its oversight responsibilities in the following areas: To assess the adequacy and effectiveness of the system for assessment and management of risk in the Company and subsidiaries/joint ventures under its management control To review financial reporting process, system of internal control, audit process, and process for monitoring compliance by the Company with Securities and Exchange Commission of Pakistans Code of Corporate Governance, and other laws and regulations To ensure effectiveness of internal control measures, compliance with policies on Corporate Governance and Business Conduct and applicable laws and regulations by the subsidiaries/ joint ventures under management control of the Company

Board of Investment Committee The primary purpose of the Board Investment Committee of Engro Corporation Limited is to assist the Board in reviewing the Companys investment transactions and performance, and in overseeing the Companys capital and financial resources.The Committee meet s on a need basis but at least three times a year and regualrly reports out to the Board. The following are the goals and responsibilities of the Committee; To oversee the investment programs of the Company and its subsidiaries. To review the investment transactions made by the Company and its subsidiaries. To review the Companys Capital Plan and to review and provide guidance to the Board on significant financial policies and matters of corporate finance, including the Companys dividend policy and the issuance or retirement of debt and other securities. To review and provide guidance to the Board about proposed mergers, acquisitions, divestitures and similar transactions.

Governance principle
Board of Directors ensures compliance with the 'Code of Corporate Governance' as issued by the Securities and Exchange Commission of Pakistan. The Code primarily helps in establishing a system whereby a company is directed and controlled by the directors in accordance with the best governance practices to safeguard the interests of the stakeholders. The Code emphasizes upon openness and transparency in corporate affairs and the decision making process. Following policies encompass some of the different aspects of corporate governance at Engro Anti-Restrictive Trade Practices Conflicts of Interest Ethics and Business Practices Health, Safety and Environment Insider Trading Speak Out

Anti-Restrictive Trade Practices Engro Corporation Limited believes in fair trade and competition. Therefore it is the policy of the Company that all of its directors and employees shall, in carrying out their duties to the Company, comply with relevant laws. All employees are responsible for familiarizing themselves with the requirements of these laws as any violation may result in penalties and / or criminal offences. No director or employee should assume that the Companys interest ever requires otherwise. No one in the Company has authority to give any order or direction that would result in a violation of this policy. Conflicts of Interest The policy of Engro Corporation Limited (Company) with respect to conflicts of interest requires that Employees avoid any conflict between their own interest and the interests of the Company, in dealing with suppliers, customers, and all other organizations or individuals doing or seeking to do business with the Company or any affiliate. This policy also requires that employees should avoid any conflict between their own interests and the interests of the Company in the conduct of their personal affairs, including transactions in securities of the Company or any affiliate.

Health, Safety and Environment To be recognized as a world class performer in the field of Health, Safety & Environmental Management Engro will Conduct its business in a manner that protects the health and safety of employees, contractors, others involved in our operations and the community in which we operate. Continuously improve environmental performance to achieve sustainable development. Strengthen its business by making Health, Safety & Environment (HSE) considerations an integral part of all business activities. Comply with all laws & regulations. Practice transparent public reporting of the HSE performance. Ensure that HSE is a major responsibility of appropriately trained, empowered & accountable employees & management. Encourage off the Job HSE awareness among employees and families.

Speak Out As an additional measure a Whistleblower system has also been established. The Corporation expects employees, customers, suppliers and contractors at all affiliated companies to not only abide by our standards of business conduct but also to speak out about any concerns they have regarding business ethics, safety, environmental performance, harassment and other employment related matters or other possible breaches of compliance. Open and candid communication is an important Engro core value. Employees are therefore encouraged to raise their concerns with line managers. However, if they are not comfortable in doing so they should use the independent Speak Out hotline +9221-35296011 or email to speakout@engro.com to raise their concerns. They can also write to P.O. Box 3850, Clifton Post Office, Karachi.

Culture of ENGRO
Engro is about the people who are a part of the company. Engro culture is dynamic and energetic, with emphasis on the core values and loyalty of employees. Engro work environment promotes leadership, integrity, teamwork, diversity and excellence. As the Company grows, we are determined to keep our culture open and transparent, and inclusive for all our employees. Core Values of company The core values form the basis of everything they do at Engro from formal decision making to how they conduct business to spot awards and recognition. Following are core values: Our People Our employees are our biggest asset. We employ more than 2700 employees whose passion and dedication is the driving force behind our success. Engro is an equal opportunity employer and is proud of its diverse workforce. Working Environment Engro, strive to uphold the tradition of excellence and become the employer of choice. Company has a workplace where employees feel confident, valued, and most importantly, inspired.

Work Balance Engro understand the importance of family and appreciate that employees need to balance their professional and personal responsibilities. It is company intent to make it easier for its employees to manage their work/life balance more effectively. Companies also encourage its employees to take part in numerous programs aimed at strengthening their overall wellbeing.

Employee Friendly Policies Constant pursuit towards the welfare of employees has led to the formulation of many unique policies, to create a more positive work environment, promote greater gender diversity, provide opportunities for training and development and build career opportunities. Such policies include ethics policy, gift policy, non-discrimination and anti-harassment policy, maternity leave policy, part time work policy and off track policy. Engro Women Network Company believes that networking, coaching and mentoring provide opportunities for people to grow personally and professionally throughout their careers at Engro. Engro is known to be an equal opportunity employer. As part of diversity initiatives, WEAVE was formed to facilitate informal networks and relationships among women employees of Engro across functions and affiliates. Volunteerism Engro fully supports employees who wish to positively impact the communities around them. Their volunteering efforts are supported through the company-wide initiative EnVison (Engro Volunteers in Service of the Nation) its mission is to connect employees to important social and public welfare causes.

STATEMENT OF ETHICS AND BUSINESS PRACTICES

We must all recognize that what we do and how we do it affects how our stake holders view our company

The policy of Engro Corporation Limited, as stated over the years by the Board of Directors, is one of strict observance of all laws applicable to its business. Our policy does not stop there. Even where the law is permissive, Engro Corporation chooses the course of highest integrity. Local customs, traditions and mores differ from place to place, and this must be recognized. But honesty is not subject to criticism in any culture. Shades of dishonesty simply invite demoralizing and reprehensible judgments. A well-founded reputation for careful dealing is itself a priceless company asset .An overly-ambitious employee might have the mistaken idea that we do not care how results are obtained, as long as he gets results. He might think it best not to tell higher management all that he is doing, not to record all transactions accurately in his books and records, and to deceive the Companys internal and external auditors. He / she would be wrong on all counts. We do care how we get results. We expect compliance with our standard of integrity throughout the organization. We will not tolerate an employee who achieves results at the cost of violation of laws or unscrupulous dealing. By the same token, we will support and we expect you to support, an employee who passes up an opportunity or advantage which can only be secured at the sacrifice of principle.

Code of Conduct
Empowerment with accountability Engro seeks to empower its employees to facilitate business decision making but hold them accountable for their actions Each Engro employee is responsible for his or her own actions and held accountable for it. While performing your job you must ensure that you conduct yourself in a manner that reflects positively in the company. Every Employee is Responsible for: Complying with all applicable laws, company polices and procedures. Maintaining appropriate ethical behavior in all his external and internal dealings. Reporting any suspected misconduct, illegal activity, fraud ,abuse of company assets or other violation of ethical standards.

Supporting infrastructure to aid in ethical conduct.

1. 2.

Orientation.. Brief to new hires about policies on ethical business conduct. Reinforcement: Annual circulation of business ethics policies to all employees. Written acknowledgement of compliance obtained. Workshops on ethics carried out periodically. All vendors, contractors, and customers are sent the ethics policy statement, which have been translated into Urdu. Clauses related to ethics and conflicts of interest are mandatory in all contracts entered into by the company. Monitoring Of compliances: Voluntary disclosure of actual or suspected non-compliance irregularity reporting system. Irregularity reports are shared with management and board audit committee on quarterly basis. Whistleblower system being implemented. Whistleblower complaints and results of their investigations are reported to board audit committee quarterly. Periodic Business practices review involving all Engro companies and employees to identify questionable business practices. All identified issues are reported directly to BOD.

Stake Holders
The glue that holds all relationships together- including the relationships between the leaders and led is trust, and trust is based on integrity. Engro regards its stake holders as an important element of corporate responsibility. Adherence to the highest ethical standards fosters trust. We want our stakeholders to know that they can depend on us. We are answerable to our shareholders, our families, vendors and suppliers, the communities where we operate and of course to each others.

Employees: We believe in treating people with dignity and providing equal opportunities for employment and development without any form of discrimination or harassment. We are committed to managing our employees careers solely on the basis of merit to provide them appropriate opportunities for development. Our compensation and rewards are aligned with the best companies in order to attract and retain top talent. We are committed to providing a safe and healthy working environment and recognize and integrating the unique attributes of a diverse work force enhances innovation and foster efficient problem solving. Share Holders: We seek to maximize return to our shareholders and always act in their best interest. Customers: We strive to deliver quality products and superiors services at competitive prices to our customers. At the same time we believe in fair trade and recognize their right to make informed choices. Families: We recognize the support of our families toward the fulfillment of our roles as employees and therefore strives for a healthy balance between our work and our families lives. We want them to be proud of our jobs we do and the company we work for. Communities: We aim to contribute to the overall quality of life in our host communities and to leave a positive environmental footprint. We strive to address the need of our communities by investing in sustainable initiative in health, education and livelihood generation. Vendors and suppliers: We strive to choose vendors and suppliers objectively and as far as possible through a transparent, competitive process which maximizes values for the company. We deal them fairly and honestly in order to built an abiding trust and respect for our way of doing business. This encourage vendors to adopt these principles in their dealings with the company and ensure quality product, timely, deliveries and optimum prices.

Leadership
Engros leadership comprises of some of the most enterprising leaders of the corporate world in Pakistan. These individuals are responsible for conceptualizing and articulating goals that bring our people together in pursuit of set objectives. They lead the company with a firm commitment to the values and spirit of Engro. In our journey to become a profitable, growth-oriented and sustainable company, our management structure has evolved to create a more transparent and accessible organization. We derive our success from the combined expertise, knowledge and skills of our leadership representing a group of highly successful and dynamic professionals, who bring in a wealth of knowledge and experience and steer the company to great ideas that pave the way for new product innovations - and our continued success.

Ethical issues found in Engro Corporation Recruitment process

Recruitment is very crucial and important for any organization because its very necessary for an organization to select a right person for right job. The employees of the organizations directly effect on the performance of the company. Nepotism is one the problem that exist in engro that lead the company to face the following problems.

Risk Legal Action

Nepotism could result in a lawsuit if an employee or potential employee has proof that a company is using unfair hiring practices. Also, there could be a legal risk if an employer or manager shows favoritism when it comes to salary, benefits and promotions towards their family members and friends, neglecting the needs of their other employees.

Lower Employee Morale

Employee morale decreases, which affect how smoothly the company operates and whether employees are productive. Employees may feel unappreciated, and as a result, they may lose their motivation to achieve their goals and accomplish their day-to-day tasks

Loss of productivity
Nepotism usually leads to an inferior work product. Employees who are rewarded and promoted because of their relationships with management are likely to be under qualified for the positions they are expected to fill. That can lead to an erosion of leadership skills at the senior level of the corporation and also contribute to the demoralization of more deserving candidates.

Existing employees have not first right to progress and fill the opportunities arising due to growth.
Most of the employees complain that in Engro corporation the current employees are not given preference by the higher management for the promotions and progress, they complain that higher management prefer new and outsiders for different posts in company.

Run the departments/divisions as kingdoms.

Higher management and Human resource management run all the departments like they are the owners of the company; they treat employees and their departments like divisions and kingdoms. They give the orders and expect that their orders will be fulfill at a time.

Evaluations process
Yes of course there is a big problem in company in middle management that they dont evaluate the performance of the employees on the basis of their hard work, and honesty, they dont focus on the performance during the evaluation. Incorrectly handled evaluation of personnel performance yields dishonest feedback, which is not beneficial for both employers and employees.

Recommendations
strong check of management systems should be there to avoid degradation Be mindful of internal equity and make it a place where equal opportunities are provided to every one. Give existing employees the first right to progress and fill the opportunities arising due to growth before looking outside. Do not run the departments/divisions as kingdoms. Officers should be supportive. there must be check n balance of all the team Management needs to focus more on merit based evaluations and instill a team spirit. Have a more focus on merit based performance evaluations