We continuously improve our corporate structure in line with the universally recognized corporate governance principles of "fairness, transparency, accountability and responsibility".

Our values and priorities, processes and procedures, the powers and responsibilities of the management team, the rights of all our stakeholders including our employees are regulated through our Corporate Governance Principles. In 2015, we established the Corporate Governance Committee, consisting of three members and chaired by an Independent member of the Board of Directors to ensure the development, adoption and implementation of the Corporate Governance Principles across the company.

As a result of continuous improvement, we increased our Corporate Governance Rating Score from 94.2 in 2016 to 95.1 in 2017. The Ethics Committee, Audit and Risk Committee, Corporate Governance Committee and Sustainability Committee exist and report to the Board of Directors.

 

AUDIT AND RISK MANAGEMENT

The "Audit and Risk Committee", established by the Company's Board of Directors is responsible for setting up the systems required for the accounting, internal audit and financial planning units of the company, and the works conducted for ensuring the continuity of the operation, the compliance and adequacy of the systems and the identification of intra-company powers and responsibilities two out of three members of the Audit and Risk Committee are Independent Board Members. The committee is chaired by an Independent Board Member.

The Audit Department regularly reviews the company's risk management and internal control systems according to the annual audit plan prepared based on the risks and directly reports the results of the review to the Audit and Risk Committee in order to:

  • Ensure the accuracy and reliability of the financial and operational information
  • Ensure the efficiency and effectiveness of the company operations
  • Protect the company's assets
  • Ensure compliance with the laws, regulations and agreements

The company's audit function determines the operational health of the internal control systems and offers recommendations on improving existing systems and establishment of new systems where necessary.

Risks to the Industry

According to the United Nations Food and Agriculture Organization (FAO), issues such as loss of agricultural fields, soil degradation due to climate change, the changes in the climate conditions necessary for plant cultivation are among the important issues that affect the dairy industry. Climate change causes also many social problems such as immigration from rural areas to cities, lack of local development, agricultural unemployment and unplanned urbanization. When we add poor practices in livestock farming to the equation, we perceive this as a serious risk to our industry.

Whether the agriculture and food systems will meet the needs of the rapidly increasing world population is the key question for the future of food and agriculture.

We believe that local development and local investments are important in avoiding these risks and continue our activities in this area. We also arrange training activities to increase the awareness of our farmers about these subjects.

On the other hand, informal production is one of the most important problems of the dairy industry in Turkey. According to the data from TUIK (Turkish Statistical Institute), 44% of the milk produced in Turkey goes to the dairy industry. A portion of the remaining milk is directly consumed in households, while a significant part of it is subject to informal production and loose milk selling. Milk and dairy products quality and hygiene conditions of which are unknown, pose risks to public health and reduce the effect of food safety audits carried out by public authorities.

Informal production and sales cause tax losses for the government, as well as unfair competition for the industrial businesses that carry out their production in a formal manner.

 

ETHICS MANAGEMENT

Our sustainable success is based on the fact that all individuals within the Sütas Family embrace and live up to our corporate culture.

Our values have always been guided us to identify the good and bad. Adherence to these values enables us to be consistent in our decisions and behavior. Through this consistency that we developed our business conduct and code of ethics made of both traditional and contemporary values.

Sütas Code of Ethics

Our code of ethics outlines our internal and external responsibilities in our relationships with our stakeholders and in our activities. Therefore, we offer in-class and online training to our partners, in particular our employees, to make sure that they understand and embrace our ethical principles. During the training, we give information about our Ethical Principles, Ethics Committee, how the Ethics Committee operates, Methods of Application and the Processes Applied in case of a Violation of the Code of Ethics.

Our code of ethics requires our employees to be familiar with competition laws and manage relationships with our competitors accordingly. In this context, at the time of this report, there was not any ongoing or settled case associated with acting in violation of competition and antitrust laws.

Sütas Ethics Committee

Sütaş Ethics Committee is responsible for the announcement, adoption and implementation of the code of ethics. The Committee consists of the Chief Audit Officer and two members of the Sütaş Group Board of Directors. Our Ethics Committee guarantees to keep all questions and concerns as well as the identities of those who contact the Committee confidential. Our Ethics Committee does not allow any employee who reports an issue to suffer harm due to such reporting.

Channels of Access

We have three separate channels, i.e. a dedicated phone line, a dedicated e-mail address and a website, only accessible by the members of the Ethics Committee. Intentional false reporting, misleading or refusing to help the Ethics Committee during the investigation process is a violation of the Sütaş's Code of Ethics.

Applications

The Committee convenes every week and examines all the applications submitted and provides feedback. Should a claim is about a code violation as corruption or bribery, the committee conducts an investigation and refers the issue to the Disciplinary Committee. The Ethics Committee received 158 applications in 2016 and 152 applications in 2017.

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LEAN MANAGEMENT

We perceive lean management as a strategic approach for a sustainable business conduct.

We initiated the "Lean Management Project" in 2014 to manage the value chain in an efficient and safe way, and to obtain the most efficient output with the least amount of resources.

In 2016 and 2017, we carried out a variety of activities to expand Lean Management to the production processes. In 2016, 833 people attended the Lean Manufacturing training that we provided with our internal trainers.

We started Lean Management practices at Tire Integrated Facilities in 2017. At Aksaray and Karacabey Integrated Facilities, in addition to the ongoing Kaizen practices, we started the pilot implementation of autonomous maintenance in ayran packaging areas.

We set up performance indicators and actions under the scope of SQCDMN (Safety, Quality, Cost, Delivery, Motivation and Nature) themes at Aksaray, Karacabey and Tire Plants. We initiated field management practices by monitoring them through line, department and plant panel meetings.

As a result of these efforts, the number of employees participating in Lean Management practices increased from 323 in 2015 to 710 in 2017 and the number of improvement actions taken increased from 183 to 1,111. Thanks to the lean management practices, we achieved improvements worth TRY 8,012,097 in 2017.

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