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Social cook book: the CSR recipes of agroholdings

26 June 2018 - Large agricultural companies interact with tens of thousands of stakeholders as their operations are located in hundreds of communities. How do these companies address their stakeholders? An example from Ukraine, published on, provides some answers to this question.

The CSR budget is about $ 1.5 million

Astarta-Kyiv, an agroholding that operates in 8 regions and 365 settlements of Ukraine, views both business and social issues as strategically important. Following its CSR strategy, the company annually allocates significant budgets for social and environmental purposes. For example, over the past three years, Astarta-Kyiv spent UAH 105 million (about $ 4 million) for social initiatives. Last year about UAH 40 million (about $ 1.5 million) were allocated for the company’s social projects in rural communities.

"We felt that we cannot move forward without investments in communities and joined the UN Global Compact network in 2007.Thisoffers a structured approach to corporate social responsibility based on ten principles of sustainable development. Since then, we have been reporting annually on the progress of our company's CSR," says Svitlana Mozgova, Astarta-Kyiv’s director for the development of corporate partnership. According to her, three things are of the main concern for the company’s social projects in communities – education, medicine and improvement of housing. In Astarta-Kyiv, there is a separate department for the development of corporate partnership through its representatives on each of the company’s farms and sugar factories. As Mozgova stated, this year the company released its first integrated annual report that includes both financial and non-financial parts in accordance with the reporting standards of Global Reporting Initiative(GRI).

The goal of socially responsible action is a high standard of living

"A stable and successful village is key to the development of a stable  and prosperous country. But, unfortunately, many Ukrainian villages are now de facto abandoned. In response, we are trying to improve the lives of rural residents. To improve the quality of life in villages to the highest possible level is exactly the goal of our social activities," - says Ksenia Prozhogina, the director for personnel and communications of the MHP agroholding. In 2017, MHP invested over UAH 110 million (over $4.2 million) into the social activities; in the first quarter of 2018, this figure so far exceeded UAH 6 million (about $ 230,000). The company allocates funds for the development of physical infrastructure, education, medicine and sports in rural areas. Besides, MHP supports non-governmental organizations. According to Ksenia Prozhogina, the company's CSR initiatives are implemented in accordance with the MHP's Corporate Social Responsibility Policy.

"CSR activities are part of everyday work of each enterprise of the MHP group, including the group level. The scale of the projects differs, but all of them are "in right places" as important problems are being solved and the needs of rural residents are known. At the national level, we are involved in projects that concern different categories of the population. A few examples to name are the “MHP Accelerator”, an all-Ukrainian program that aims to support prospective start-ups; and the grant competition "Village: Steps to Development" that provides support to business projects of rural entrepreneurs," - says Prozhogina.

Data and reporting on social activities from all enterprises of the MHP group are collected in the personnel and communication department that manages CSR projects of the group. This information is further processed and converted into an annual sustainability report. It can be viewed at any time on the official website of the company.

Continuous effort and responsibility

For each territorial unit of LNZ Group, a person is assigned who is in charge of the CSR activities. Internal CSR programs of the group target five main areas – employees, shareholders, community development, environmental safety and volunteering. In the last two years, LNZ Group spent more than UAH 40 million (about $ 1.5 million) for these programs.

The financial director of LNZ Group Serhiy Shcherbyna says his company exercises charitable giving to educational and medical institutions for many years. The biggest investment of this kind was a new ambulance for the Shpola central regional hospital last year. The largest infrastructural facility sponsored by the group is a modern stadium in the village of Lebedyn, built according to UEFA standards. Several social programs of the LNZ Group are designed to support the company's employees and shareholders.

"Among the latest initiatives is  medical insurance for the company's employees that provides reimbursement of the costs of medical treatment to our employees," adds Shcherbyna.
He also notes that the company is responsible for every step and every action not only in front of the community, but also in front of the environment. The company thus involves in cleaning of public areas and investing in equipment to reduce harmful gas emissions as well as in energy saving and processing technologies.

Contributing to common cause

Since 2016, the HarvEast agroholding has been implementing a large scale social partnership program in the villages and towns of the Donetsk region - the area where the holding operates. In 2017,HarvEast implemented about 50 projects on the development of rural areas with a total budget of over UAH 10 million (about $ 380,000). Among them were reconstruction of water pipes, provision of street lighting, reconstruction of educational institutions, construction of children's and sports grounds, and planting of trees in parks.

According to Vasyl Berkov, the deputy director of HarvEast's social development department,  the company signed memorandums on socio-economic partnership with regional state administrations and territorial communities in the spring of 2016. In early 2017, HarvEast signed similar memorandums with a number of district councils, settlements and state administrations of the Donetsk region for a period of seven years.

"The important task of HarvEast is to create new jobs through the development of communal enterprises in cooperation with village councils, agricultural cooperatives, and other organizations. An excellent example is the agricultural cooperative Pavlopolye. Last year, HarvEast donated this cooperative a Massey Ferguson MF-240 harvester. Now the cooperative is able to increase its production capacities and provide its members with more returns," Berkov says.

In 2017, five village councils became participants of the HarvEast program for the development of communal enterprises. Seven “social teams” of the company are working in the Donetsk region.
Local residents are welcome to participate in HarvEast’s social initiatives such as the grant competition "My village – let's make the best together". In 2017, the Youth Innovation Center "Oriana" was launched by HarvEast in the village of Solnechnoye of the Donetsk region. The company also supports sports clubs in villages by providing them with equipment.

A special feature of the communication of the agroholding with its shareholders is the project "Expert groups", which allows that everyone can get acquainted with the production process of the company and learn more about new technologies of agriculture.

"We pay special attention to communication with our land lessors. Since 2017, we have assigned special administrators responsible for each village in our operation area. Chosen from local residents, they are trusted and accepted by their fellow villagers. It is our administrators who ensure a quick two-way communication with our stakeholders about their social needs," Berkov says.

Focus on social assistance

In 2012, the IMC agroholding launched its CSR program called "IMC. Aid to People". The company has a social service with representatives in each regional cluster and each village where the business activities of the company are carried out. In 2017, IMC spent more than UAH 16 million (about $ 600,000) for social assistance. Most of the company’s social assistance activities target its land lessors, that is, rural individuals.

Decision-making at the local level

In 2017, the Rostok Holding group's investments in social projects amounted to UAH 5 million (about $ 190,000 or about $ 4 per hectare of the farmland leased by the company). According to its general director Valery Laskov, Rostok Holding actively assists local communities in solving social problems. "We allocate funding for the reconstruction of churches, we support local schools, kindergartens and hospitals. College and university students are invited to do internships at the group's enterprises with the possibility of further employment," says Laskov.

"Our head office does not impose any restrictions on decision making of our regional cluster managers. They are free to choose appropriate technologies, innovations, as well as CSR projects. At the end of each year, each of our clusters applies for a budget that includes also social expenses and, within a year, the clusters are free to use the allocated funds," says Laskov.

Leadership in the nomination "Social responsibility"

In late April, AgroGeneration was awarded in the nomination "Social Responsibility" from the Agrarian Elite of Ukraine national awards and entered the rating of ”top-100 best agricultural enterprises of Ukraine”.

"Over the past three years our company has implemented more than 4,000 social and charitable projects. Our goal is to improve the social situation in the regions of our operations. In order to achieve it, we invest a substantial part of our revenues in the social sphere and infrastructure of rural areas," says the PR director of AgroGeneration Irina Nakonechna. "One of our highest priorities is rural children: we care about schools, kindergartens, playgrounds and leisure infrastructure," adds Nakonechna.

The company does not have a separate department for the CSR activities in its structure. The company’s regional managers are in charge of CSR. AgroGeneration actively cooperates with charity organizations. A vivid example of such cooperation last year was the donation of four ambulances to local hospitals in the regions where the company operates.

Responsibility is grounded in technology

Agricom Group performs its CSR activities based on the three components of sustainable development: economic, social and environmental. "We consider all three components in operations of our spatially dispersed farm subdivisions. We are in a permanent contact with communities where we interact with nature," explains Konstantin Ilchenko, the communications director of Agricom Group. He believes that responsibility at the local level involves not only financial or organizational support to the community, but also the use of conservation and high-performance technologies to reduce the negative impact on the soil and  minimize the use of non-renewable resources. For example, the company’s processing capacities are equipped with a dust-collecting line and a solid fuel boiler plant that allow refraining from the use of natural gas and making the enterprise waste-free.

Lyudmila Lebed