INDEPENDENT PRACTITIONER’S ASSURANCE REPORT
To the management of MOL Hungarian Oil and Gas Plc:
This report is intended solely for the management of MOL Hungarian Oil and Gas Plc. (hereinafter ‘the Company’, ’MOL Group‘ or ‘MOL’) for the purpose of reporting on Sustainability Information Chapter in MOL Group’s Annual report (‘the Sustainability Report’), prepared by the Company for the year ended 31 December 2017 in accordance with Global Reporting Initiative Standards (‘GRI Standards’).
Underlying Subject Matter and Applicable Criteria
The assurance engagement relates to the following subject matters on which the following applicable criteria are applied:
The subject-matter of our work is to express assurance on the Sustainability Report prepared by the Company for the year ended 31 December 2017, including
- limited assurance that the Sustainability Report is prepared in accordance with GRI Standards
- reasonable assurance on two specific indicators included in the Sustainability Report whether those are in line with the requirements of GRI Standards:
- CO2 emission under the EU Emissions Trading Scheme (ETS) and
- Total Recordable Injury Rate (TRIR) for own employees.
This report is intended solely for the purposes specified in the first paragraph above and for your information and must not be used for other needs. The report refers exclusively to the Sustainability Report and must not be associated with any Company’s financial statements as a whole.
Responsible Party’s Responsibilities
The Company’s management is responsible for the preparation of the Sustainability Report in accordance with the GRI Standards. In particular, the Company’s management is responsible for internal controls being designed and implemented to prevent the Sustainability Report from being materially misstated.
In addition, the Company’s management is responsible for ensuring that the documentation provided to the practitioner is complete and accurate. The Company’s management is also responsible for maintaining the internal control system that reasonably ensures that the Sustainability Report described above is free from material misstatements, whether due to fraud or error.
We conducted our assurance engagement in accordance with the International Standard for Assurance Engagements (ISAE) 3000 Revised, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. These regulations require that we comply with ethical standards and plan and perform our assurance engagement to obtain limited assurance about the Sustainability Report and reasonable assurance over the two selected indicators as stipulated above (CO2 under ETS and TRIR).
We apply International Standard on Quality Control 1 (ISQC 1), and accordingly, we maintain a robust system of quality control, including policies and procedures documenting compliance with relevant ethical and professional standards and requirements in law or regulation.
We comply with the independence and other ethical requirements of the IESBA Code of Ethics for Professional Accountants, which establishes the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.
The procedures selected depend on the practitioner’s judgment. The procedures include, in particular, inquiry of the personnel responsible for reporting and risk management and additional procedures aimed at obtaining evidence about the Sustainability Report. The assurance engagement performed represents a limited assurance engagement, except for the two specific indicators (CO2 emission under ETS and TRIR) where reasonable assurance is provided. The nature, timing and extent of procedures performed in a limited assurance engagement is limited compared with that necessary in a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is lower.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
In respect of the subject matter mentioned above we have performed mainly the following procedures:
- Understanding and review of the Company’s internal controls, processes and systems set up for the preparation of the Sustainability Report.
- Interviewed a selection of MOL executives and senior managers to understand the current status of Sustainable Development activities and progress made during the reporting period of 1st January to 31st December 2017.
- Reviewed selected documents relating to Sustainable Development aspects of MOL’s performance, to understand progress made across the organisation and to test the coverage of required indicators as defined by GRI Standards within the Sustainability Report.
- Reviewed MOL’s processes for determining material issues to be included in the Sustainability Report.
- Reviewed the consolidation of the selected data at Group level by:
- Holding interviews with specialists responsible for managing, collating, and reviewing data at corporate level.
- Conducting data walk-throughs of reporting systems to assess the accuracy of calculations and assumptions, including an assessment of the effectiveness of MOL’s internal review procedures.
- Performing additional testing procedures in relation to the CO2 emission under ETS (review of third-party verification reports) and own staff TRIR indicators (verification of data to source documents on a sample basis both at Group and site level, recalculation of the indicator) at both site and corporate level to gain reasonable assurance over these indicators.
- The coverage of issues in the Sustainability Report is consistent with the outputs of MOL’s materiality process, and that the descriptions of MOL’s approaches to materiality are consistent with our observations.
- The selected data presented in the Sustainability Report corresponds with the information we have reviewed during the course of our work.
- The Report is consistent with the requirements for ‘Comprehensive’ reporting according to the GRI Standards.
- There is supporting evidence for 25 qualitative statements, selected on a risk basis, within the Sustainability Report.
Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the Sustainability Report was not prepared, in all material respects, in accordance with the GRI Standards.
In our opinion, the CO2 emission under the EU Emissions Trading Scheme (ETS) and the Total Recordable Injury Rate for (TRIR) own employees of the Group within the Sustainability Report for the year ended 31 December 2017 has been prepared, in all material respects, in accordance with the GRI Standards.
Observations and areas for improvement
Our observations and areas for improvement will be raised in a report to MOL management. Selected observations are provided below. These observations do not affect our conclusions on the Sustainability Report set out in this statement.
- MOL introduced a new data collection and reporting system, MARK HSE in 2015. Whilst our reviews suggest that there has been a continuous and general improvement in data quality since the transition, there were still misstatements due to the misunderstanding of reporting definitions, mainly related to environment indicators. We therefore recommend that MOL continues to work with local colleagues across the business, and refine its reporting guidance, to improve the understanding of the system and reporting requirements.
- While performing our procedures, we noticed that, in some cases, the descriptions of injuries are not clear enough to determine their category. As a result, we identified a number of items to be reclassified either due to incorrect injury type or incorrect categorization of work-relatedness. Although this did not affect the TRIR indicator in a material level, we recommend MOL to use clear descriptions.
Ernst & Young Kft.
Budapest, 6 April, 2018