GOVERNANCE
Vedanta is a multi-geographic, multi-stakeholder, federally modelled organisation with a unifying thread across all our Group's activities. Our robust governance structure headed by our Board of Directors serves that purpose of binding all of the Group's activities into a coherent whole. The Board, aided by a strong and well-designed process, policies and Sustainable Development Framework, governs business with strict adherence to ethical conduct and a high degree of transparency.
A WELL-DEFINED REPORTING STRUCTURE WITH CLEARLY ALLOCATED ROLES ENSURES A FAIR RESPONSE TO THE LOCAL ISSUES. A RECEPTIVE FEEDBACK MECHANISM AND SWIFT REDRESSAL SYSTEM ENSURES THAT WE OPERATE EFFECTIVELY AND EFFICIENTLY.
In accordance with the UK Corporate Governance code, majority of our Board, excluding the Chairman, comprises of independent Non-executive Directors. At the date of this Report, our Board consists of the Executive Chairman, Executive Vice Chairman, Chief Executive Officer and five independent Non-executive Directors. The Directors come from diverse international backgrounds and enrich the Board with a wide range of professional and sector-specific experience. The Board is responsible to shareholders for ensuring that the Company is appropriately managed and achieves its objectives to deliver long term success.
COMPOSITION OF THE BOARD
Details of the Board's responsibilities, composition, training and evaluation are available in the Annual Report.
While our 'Code of Business Conduct and Ethics' provides a set of principles to guide our employees, our Sustainable Development Framework outlines best practice standards and policies that encourage consistent improvement across functional areas. Additionally, we also follow internationally accepted standards and good practices such as ICMM, IFC and OECD guidelines.
Our governance philosophy is steered by a 'looking beyond compliance' approach. This helps us plan, design, operate and close operations in a manner that enhances sustainable development. We regularly engage international consultants to audit our sustainability practices and provide feedback on areas where we are performing well, and areas where we need to improve.

CODE OF BUSINESS CONDUCT & ETHICS

Our code of business conduct and ethics (hereafter, CBEC) complies with the law of the land and even goes beyond (legal) compliance, where relevant. Our listing and reporting Requirements in the uk raises the bar on various governance aspects such as:
HUMAN
RIGHTS
INSIDER
TRADING
POLITICAL
CONTRIBUTIONS
CONFLICTS
OF INTEREST
CONFIDENTIALITY
FRAUD, BRIBERY
& CORRUPTION
ETHICS AND INTEGRITY ARE DEEMED ABSOLUTELY ESSENTIAL BY OUR MANAGEMENT TEAM AS WELL AS THE GROUP'S INTERNAL AND EXTERNAL STAKEHOLDERS. WE ARE COMMITTED TO A ZERO-TOLERANCE APPROACH TOWARDS FRAUD, BRIBERY AND ANY FORM OF CORRUPTION.
We are aligned with the UN Sustainable Development Goals and the UK Modern Slavery Act 2015 and are rolling out a uniform framework for their implementation. In order to ensure transparent and easy access to our policies in the public domain, our Insider Trading Prohibition Policy and Antitrust Guidance Notes relating to Disclosure of Sensitive Information etc., are publicly available on our website and are incorporated into contracts where relevant.
Our CBCE, updated to comply with the UK Bribery Act 2010, expressly prohibits payment and receipt of bribes directly or indirectly through associated persons. All employees across the organisational hierarchy adhere to the CBCE; in letter and in spirit. Employees are expected to adhere to the highest standards of integrity and report even minute violations, which are then addressed and resolved promptly after an impartial external investigation.
The Audit Committee, comprising four Non-executive Directors, assists the Board in maintaining and monitoring the integrity of the Group's financial statements, assessing the effectiveness of the Group's risk management system and internal controls, and the independence and objectivity of the external auditor. To carry out its duties effectively, the Audit Committee receives a detailed information from management. The information is reviewed and presented to Audit Committee by management along with the internal and external auditors, as required.
All business units are periodically reviewed for risks related to corruption and bribery.
Our Whistleblower Policy currently communicates our commitment to a “policy against retaliation”, and commitment to maintaining confidentiality, in case of a company employee. That commitment does not currently extend to third parties, including contractors. A review of the existing policy document and whistleblower mechanism is planned, in order to ensure that the good practice provisions are extended to third parties, including contractors.
129 whistleblower cases reported & resolved
Under our Whistleblower Policy, employees and external stakeholders are provided a mechanism (toll free number, email id and a reporting portal) to report inappropriate behaviour. We maintain strict confidentiality with the employee and ensure a free and fair investigation, without any fear of repercussion.
Between January and December 2016, 129 whistleblower cases were reported and resolved, of which 33 were upheld and found correct, resulting in appropriate disciplinary actions against those employees, contract workforce and vendors including warning, counselling, transfer and separation.
To ensure that all employees are well-versed with our Code, mandatory training is provided for new recruits and refresher workshops on anticorruption policies and procedures are conducted for relevant employees.
This year, we provided more than
375,573
hours of training on Code of Conduct including Human Rights aspects.
AS PART OF OUR COMMITMENT TO CONTINUAL IMPROVEMENT, AND GOING 'BEYOND LEGAL COMPLIANCE', WE ARE CURRENTLY WORKING ON ROLLING OUT AN E-LEARNING MODULE FOR THE CBCE ACROSS THE GROUP AND ISSUANCE OF POST-TRAINING E-CERTIFICATES.
The supply chain is a significant contributor to our performance footprint and so we have institutionalised a dedicated accountability mechanism for suppliers and contractors.
Our Suppliers' Code of Conduct communicates our requirement for our suppliers to operate in compliance with all relevant legislation, align to our policies while executing work for, or on behalf of Vedanta or on our sites, and adopt ethical good practices.
VEDANTA ENCOURAGES SUPPLIERS TO ADOPT PRINCIPLES AND PRACTICES COMPARABLE TO OUR OWN, INCLUDING THE SUPPLIER CODE OF CONDUCT, SUPPLIER AND CONTRACTOR MANAGEMENT POLICIES AND SUPPLIER SCREENING CHECKLIST.

FRAMEWORK & IMPLEMENTATION

Our code of business conduct and ethics (hereafter, cbce) complies with the law of the Land and even goes beyond (legal) compliance, where relevant. Our listing and reporting requirements in the UK raises the bar on various governance aspects such as:
Sustainable
Development Framework
Our Sustainable Development Model is underpinned by a Sustainable Development Framework that helps each business put the Model into practice. The Framework, rolled out in FY 2012-13, comprises several policies, standards and guidance notes that were developed in line with ICMM, IFC, OECD, UNGC and SDGs guidelines.
Our efforts to establish and implement a robust Sustainable Development Model and Framework that is aligned with all international best practices, is illustrated in the following chart:
Over the years, the Framework has served as an effective tool to unify Vedanta's sustainability approach across diverse geographies and businesses. Today, it is an integral part of our business strategy and helps us and our subsidiary businesses to conduct business in line with our core values of trust, entrepreneurship, innovation, excellence, integrity, respect and care.
Each of our subsidiary businesses have carried out a gap analysis to identify any lacunae between their existing management systems and processes, and the Sustainable Development Model and Framework.
ALL OUR DECISIONS ARE SIEVED THROUGH THE INDICATORS OF THE SUSTAINABLE DEVELOPMENT FRAMEWORK TO ENSURE THAT WE REMAIN SAFE, ETHICAL AND TRANSPARENT AT ALL TIMES.
The identified gaps have been discussed and reviewed by the leadership teams, and action plans are in place to ensure compliance within a specified period of time.
The Vedanta Sustainability Assurance Programme (VSAP) - our internal risk management tool run by the Group's Management Assurance System, is in place to ensure compliance with the Framework. This ascertains that all our businesses are monitoring and reviewing their sustainability objectives and implementing the same at regular intervals.
The
Implementation
The Sustainable Development Framework is deeply embedded in the ethos of Vedanta. The Board of Directors provides leadership and guides the businesses towards fulfillment of the commitment to various stakeholders. The Sustainability Committee led by Independent Director and supported by business CEO's, corporate sustainability team reviews and monitors progress against the framework and sustainability objectives and targets during the year. The Executive Committee is supported by the Corporate Sustainability Team.
Our Board comprises eight Directors, and more than 50% of them are independent.
As part of the implementation process, we provided training to relevant management teams to ensure a solid understanding of the Framework's requirements. We cascaded information to our subsidiary businesses, providing on-location training to managers, to ensure that they could drive compliance within their teams. Large-scale posters and other support materials were provided to reinforce key messages. This is as an ongoing process, and is part of the training calendars for each business.
In order to further embed our Framework, we also delivered additional topic-specific training across the Group, addressing areas such as health and safety management, environmental incidents, international standards such as the Global Reporting Initiative (GRI), and reporting best practice and assurance. The importance of the Framework is reinforced by measures like linking management remuneration to key sustainability targets, communication and celebration of success in meetings, and monitoring of progress against established targets. Framework documentation is made available to all employees through the company's website, on individual company portals, and through awareness training, which is attended by staff at all levels.
Ensuring sustainable development is a key business responsibility at Vedanta and specific resources have been dedicated at each of the Group's businesses towards this purpose. The expected outcomes are clearly defined at the beginning of a financial year.
Monitoring and management mechanisms ensure continuous improvement. Continual internal auditing offers a quantitative view of achievements against objectives and keeps our sustainability development programmes on track.
Last year, we provided
1,115,562
man-hours
of HSE training
171,566
man-hours were slotted for employees
    
939,874
man-hours were dedicated for contract workforce
Number of people with Sustainability Responsibilities across the Group 520
Community Relations 155
Occupational Health 45
Environment 123
Safety 197

THE SUSTAINABILITY COMMITTEE REPORT

Delivering operational excellence and setting the highest benchmarks in governance, safety, environment and social responsibility across the locations of the Group's operations and projects has always been a part of the business model at Vedanta. The Vedanta Sustainability Framework guides us towards a long-term, sustainable future for our business operations, meeting our growth aspirations, and creating long-term value for all our stakeholders.
The robust implementation of the Vedanta Sustainability Framework (VSF) has been a top priority for the Committee. We have made significant improvements in the way we do our business since VSF's launch in 2012. One of the significant sustainability risks for our business has been our Group's safety performance. Considerable efforts have been made in this sphere with involvement at all levels.
The loss of seven lives at our operations during the financial year under review is not only saddening, but also an issue of grave concern that needs to be addressed with immediate effect. We had an unfortunate tragic incident at the HZL project site in Rajasthan, wherein we lost four invaluable lives. The event amplified the vulnerability of our contractor safety management systems even while dealing with reputed contractors known for their expertise and practices. It has taught us important lessons and raised an alarm to implement systemic changes. Our operations are strengthening implementation of safety performance standards to avoid such unfortunate incidents in future. We have also developed and rolled out Crane and Lifting Performance Standards.
Another important aspect is ensuring that lessons from incidents are institutionalised across the businesses and repeat incidents are eliminated. To this effect, we ensure that each subsidiary company's Chief Executive presents a detailed appraisal of critical incidents along with root causes and mitigative action plans to the Sustainability Committee. Through Corporate HSE, we have started tracking 'sign off' from Chief Operating Officers on lessons learnt from High Potential Incidents (HIPOs).
We maintained our focus on containing impacts on air, water, waste and tailing related risks, to achieve our targets on saving water, energy, and recycling waste during the year. Our businesses have met many of their goals, but few remain unconquered, where we missed the targets. Our focus is to boost those businesses, by actively working on the root causes of their failure.
We are using the Vedanta Sustainability Assurance Programme (VSAP) as our internal tool to monitor implementation of the Vedanta Sustainability Framework. The follow-up audit processes, include the review and implementation of action plans for each of the businesses, operational sites and mines have put in place, evaluation of objectives and programmes in line with our framework requirements and monitoring performance at regular intervals, with emphasis on close out actions from past audits.
Contribution of our businesses to Sustainable Development Goals (SDGs) is another important dimension which calls for immediate deliberation and action. The Committee reviewed preliminary assessment of priority Sustainable Development Goals and has advised detailed interventions with appropriate action plan/roadmap for the priority SDGs at Group level.
We are using the Vedanta Sustainability Assurance Programme (VSAP) as our internal tool to monitor implementation of the Vedanta Sustainability Framework. The follow up audit processes, include the review and implementation of action plans for each of the businesses, operational sites and mines have been put in place.
Sustainability Committee Activities during the Year
Area of Responsibility
SUSTAINABILITY
FRAMEWORK
Description
Review progress made on the development of the sustainability model and framework
Review the implementation of action plans emerging from the Vedanta Sustainability Assurance Programme (VSAP)
Review & approve sustainable development objectives and targets
Review & approve sustainable development initiatives, charters and partnerships
Review progress on Sustainability Issues raised during AGM 2016
Area of Responsibility
HEALTH &
SAFETY
Description
Review of Group safety incidents and performance
Overseeing the implementation of action plans with respect to fatal accidents
Review of Occupational Health & Safety interventions
Area of Responsibility
ENVIRONMENT
Description
Review the Group's initiatives for reduction in specific water and energy consumption
Review progress on development of Carbon Policy, Strategy and Action plan under the aegis of the 'Carbon Forum'
Review of action plans for improvement of KCM's environmental performance
Area of Responsibility
SYSTEM DEVELOPMENT &
PERFORMANCE REPORTING
Description
Review of performance evaluation of the Sustainability Committee and review of terms of reference
Area of Responsibility
COMMUNITY RELATION &
ENGAGEMENT
Description
Update on Sustainable Development Goals and UK Modern Slavery Act
Review of important stakeholder engagements
The Sustainability Committee is determined in the journey of achieving 'Zero Harm'. We have progressed over the years and will continue to make ourselves a safer and a better company.
KATYA ZOTOVA
Chairperson, Sustainability Committee

RISK MANAGEMENT

Managing
our Risks
As a global natural resources organisation, our businesses are exposed to a variety of risks. It is therefore essential to have in place the necessary systems to manage these risks, while balancing the relative risk reward equation demanded by our stakeholders.
Our risk management framework serves to identify, assess and respond to the principal risks facing our business and is designed to be simple and consistent and provide clarity on managing and reporting risks to the board. Our management systems, organisational structures, processes, standards and code of conduct together form the system of internal control that governs how we conduct the Group's business and manage the associated risks.
Risk management is embedded in our critical business activities, functions and processes. It helps Vedanta meet its objectives through aligning operating controls with mission and vision. The effective management of risk is critical to support the delivery of the Group's strategic objectives. The framework helps the organisation meet its objectives through alignment of operating controls to the mission and vision of the group.
Governance
The Group recognises the importance of identifying and actively managing the risks facing the business. We want our employees to feel empowered to take advantage of smart opportunities and we want them to do so within the risk appetite set by the Board. It is therefore important that we have a robust governance framework in place to facilitate this.
We use this framework to identify and assess emerging risks at all levels in the organisation so that we can take action to effectively manage these risks. Materiality and risk tolerance are key considerations in our decision-making. The responsibility for identifying and managing risk lies with all the managers and business leaders of the group.
The Board of Directors has the ultimate responsibility for management of risks and for ensuring the effectiveness of internal control systems. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and provides reasonable and not absolute assurance against material misstatement or loss.
OUR APPROACH IS INTENDED TO PROVIDE THE STRUCTURAL MEANS TO IDENTIFY, PRIORITISE AND MANAGE THE RISKS INVOLVED IN OUR ACTIVITIES IN ORDER TO SUPPORT OUR VALUE CREATION OBJECTIVES.