GUIDELINES FOR GEMOIL’S ESG POLICY
Gemoil is led by a board and management team, headed up by CEO, Jian WANG. Its members are responsible for both the commercial business and core business critical functions. In addition to the business’s financial performance, the board is responsible for setting purpose, ethos and strategy. Major decisions, such as investments or participation in a financing arrangement where Gemoil’s capital is put at risk, are governed by established protocols that assess the financial implications, as well as considering broader issues such as reputational risk and ESG impact.
A number of functions exist in Gemoil to mitigate the risks of the business. These functions report regularly to the board and include specialized and experienced employees. To ensure oversight is in full alignment with Gemoil’s ethos, each of these functions reports directly to a board member. The board is ultimately responsible for ESG risk and approves all material ESG decisions, but day-to-day oversight has been delegated to the ESG committee.
The ESG committee is responsible for reviewing and considering the ESG impacts of the business. The ESG committee meets approximately every six weeks, with quarterly reporting to the board. Two board members are members of the ESG committee. Its members comprise: the Chief Financial Officer (CFO), Head of HSEC (Health, Safety, Environment, Human Rights & Communities), Head of Compliance, and Treasurer.
All employees are expected to consider the ESG implications of the business’s activities and to raise any queries or concerns with the Head of HSEC or the committee.
Enterprise Risk Management
Gemoil has a careful and considered approach to risk. It believes its ownership structure encourages a long-term outlook and that the proprietary systems which underpin the business and are developed and built in its Shanghai hub, enable it to manage enterprise and market risk across its global operations.
Market risk exposure arises from the core business of physical delivery and price arbitrage. Gemoil aims to maintain a conservative approach to market risk, addressing the volatility inherent in the commodity markets with business policies and practices based on sound risk management and capital preservation. This includes the hedging of directional price risk where possible.
The market risk function is independent and reports directly to the board. Its role is to assist the trading desks in analysing and managing their risk to ensure there is an accurate, real-time picture of trading positions.
Gemoil takes an active role in the oversight and, where possible, management of any investment in which Gemoil holds equity, regardless of how small the stake. For material holdings, Gemoil seeks board representation. In terms of physical operations, e.g., shipping, barging, railcar movements and trucking, a risk-based approach to the management of operational risk is adopted.
Trading is conducted on an unsecured basis only with the most reliable counterparties. Counterparty credit lines and country risk are managed by the credit function within the finance team.
Gemoil uses the bank and capital markets for working capital and general corporate requirements, managed from our global treasury headquarters in Shanghai. Gemoil holds a significant shareholders’ equity balance relative to the size of its business and the carrying value of its debt and working capital requirements. For the past 10 years, Gemoil has maintained an investment-grade corporate credit rating due to its highly liquid balance sheet, conservative capital structure, and prudent risk management.
The cyber security programme’s objectives are to protect Gemoil and facilitate new opportunities, while reducing risk of exposure to cyber-attacks or data privacy incidents. The cyber strategy is driven by industry best practice objectives of “Confidentiality, Integrity and Availability”, delivered via the three pillars of governance, technology and employees. Metrics are presented to the board every quarter.
Our management of ESG risks is underpinned by a comprehensive risk register, where ‘license to operate’ ESG matters are managed with the highest priority. The risk register documents current and future risks along-side the related controls and assigns a gross risk rating to each, using a risk matrix. Its owner, in conjunction with the ESG committee, determines whether this risk is acceptable and, if not, what additional controls are required. The residual (mitigated) risk is then quantified and recorded.
The HSEC function is led by the Head of HSEC and is responsible for ensuring processes are in place to manage and mitigate risk. The HSEC Head reports to the board.
Gemoil has implemented policies and procedures that detail the standards expected of all employees in relation to business ethics and conduct, as well as ensuring compliance with all applicable laws, rules and regulations. In some instances, regionally-specific policies will be included.
Our key policies are highlighted below:
Know Your Customer (KYC) Policy
The policy has been designed based on the Joint Money Laundering Steering Group (JMLSG) guidance.
In addition, the policy and related controls use resources and recommendations from international standards such as the OECD and UN Principles, as well as Transparency International’s Corruption Perception Index, Know Your Country Rating and Control Risks Corruption Index. The policy aligns with the highest standards in KYC, requiring the beneficial owners of a company to be disclosed, with no minimum threshold of ownership. It also requires the disclosure of board members and, in certain circumstances, the list of the approved signatories. This enables Gemoil to understand its exposure to sanctions, state ownership and public officials.
Anti-Bribery and Corruption (ABC) Policy
The policy was designed using resources such as the Singapore Ministry of Justice guidelines, as well as international standards published by the OECD and the UN. It was designed following an extensive process to map the ABC risks Gemoil faces globally, and takes into consideration its activities, countries of operation, the way Gemoil transacts (direct or indirect) and its counterparties.
Training is essential to the implementation of the compliance framework. The compliance teams are responsible for developing and implementing a training programme which covers key compliance risks, as well as the technical, complex and ever-changing nature of the laws and regulations that govern our business. Because different roles and jurisdictions have different compliance requirements, training is tailored as required.
Compliance has a mandate to monitor and evaluate the programme. This monitoring aims to identify the effectiveness of controls and reduces the risks of breaches of laws, regulations or procedures. The frequency and extent of the monitoring is risk-based. When monitoring or audits detect weaknesses with the programme, the appropriate corrective action is taken.
Our company’s policies and procedures adhere to all applicable domestics laws, and we commit to core international labor principles, including:
– Freedom of association and collective bargaining.
– Eliminating of forced or compulsory labor.
– Non-discrimination in the workplaces.
We protect our personnel and assets, and provide a secure environment for business operation. We conduct our operation and execute our projects with the Voluntary Principles on Security and Human Rights, which guide engagement with security providers to ensure human rights are respected in the protection of company facilities and premises.
Gemoil’s Environmental Management Committee (EMC) leads the company’s global remediation, reclamation and asset retirement work. The EMC is headed by CEO and comprises of the company’s COO and a selected employee.
The EMC provides a wide range of environmental services, including remediation of legacy and operating sites, development of asset plans for footprint management, and the reduction of operational impacts, all while placing the highest priority on the protection of the people and environment in the communities where we work.
The EMC utilizes a disciplined approach to assess, manage and execute Gemoil’s asset retirement obligations and support impacted areas. It leverages its skills and expertise so that asset retirement, remediation and reclamation are carried out in a disciplined, proactive and consistent manner, with safety as one of our principal concerns.