Artel pioneers ESG in Uzbekistan
February, 
2023
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Artel pioneers ESG in Uzbekistan

As the leading privately owned company in the country and a large employer, Artel is trying to lead by example and promote best and responsible ESG business practices in Uzbekistan, the company said in its recently released progress report for 2022.

Unheard of only a few years ago, Uzbekistan’s leading companies are working to bring the most populous country in Central Asia up to international standards as the economy flourishes on the back of a successful reform programme.

As one of the most successful private enterprises, Artel says it intends to lead by example and has specifically worked environmental, social and corporate governances (ESG) goals into its long-term strategic development plans.

In product development, Artel continued to introduce technology that increases efficiency and reduces consumption of electricity, gas and water – also a leading direction in the company’s R&D strategy, Artel says.

“Furthermore, the company is working to calculate Stage 1, 2 and 3 emissions throughout all areas of operations and is preparing the first sustainability report for 2021,” the company said in its ESG report.

Artel has actively reached out to international partners and championed the UNFPA’s “tracking gender-based violence” programme as well as supporting a number of environment-friendly projects such as the provision of water to the Jizzakh village, energy and water saving technology and a mentoring system for school children and university students where top management provide career advice.

“In 2021/2022, Artel Electronics LLC has continued to make significant progress in its promotion of the Sustainable Development Goals (SDGs) and 10 Principles of the UN Global Compact,” the company said in a report on its ESG efforts. “The company …is going above and beyond through implementing projects that positively contribute to the sustainable development of Uzbekistan.”

Uzbekistan has been transformed since Uzbek President Shavkat Mirziyoyev took over in 2016. The new administration has begun to open up what was once a pariah state under the former president Islam Karimov, who had a poor record for human rights protection and an authoritarian ruling style. While the transformation is still a work in progress, Artel has, along with other leading corporates, committed itself to defending the principles of human rights both internally and externally, the company said.

As part of the company’s drive to improve its ESG score, the number of women working for Artel increased 5% year on year, while turnover of staff fell 10%. An anonymous “whistle blower” function was also introduced to encourage the staff to self-police infractions of things like safety rules. The company also sponsored the first “Championing Sustainability” conference in co-operation with the UN.

“Artel has introduced an internal legal clinic, providing information about a citizen’s legal rights and recourses. Other large campaigns champion gender equality and female empowerment,” the company said in its ESG report. “The proportion of women employed has risen by 5% in the last year. Other social projects include providing urgent medical care to children, water provision to rural areas and aid in response to natural disasters.”

Respecting labour rights is another important aspect of the “S” in ESG for Artel. Under Karimov, Uzbekistan was notorious for using child labour to bring in the cotton harvest, but has since been given a clean bill of health after this practice was eradicated by Mirziyoyev. The workers' right to strike was among the many labour issues that were ignored by the previous administration.

In 2022 Artel hosted a delegation of staffers from US Congress to its manufacturing facility in Rohat, to showcase sustainable development in the private sector in Uzbekistan. Artel has made a U-turn on these social issues and accepted the need for liberal relations with its work force as a core value. The company says it “respects all legislation related to labour rights” and has launched several programmes that give its workforce a voice. In particular, the management has accepted the International Labour Organisation (ILO) “Core Conventions on Freedom of Association and Collective Bargaining” and “Core Conventions on the Prohibition of Discrimination” that are the international gold standard of labour rights.

In the last year, the company has introduced induction courses and safety training, and internal communications tools and protocols, in order to better protect workers in the workplace and ensure the health and safety standards it has adopted are adhered to by making managers more accountable. This includes an “anonymous whistleblowing function” for all employees, and regular “Meet the Management” sessions where employees are encouraged to express their concerns and gripes with management.

At a more material level, the company adheres to the country’s minimum wage rules and legislation ensuring maternity leave or disability. Artel also adheres to the international health and safety norms.

These changes also make good business sense, as they help stamp out corruption. The company says it has radically overhauled its corporate governance in line with international standards, including the introduction of a supervisory board, specific committees covering areas of responsibility, and an independent director, who was a former vice-president of Samsung. An anti-corruption policy has been introduced that is overseen by a new full-time compliance officer.

“These ESG changes are not just for show. They make solid business sense too,” an Artel spokesperson told bne IntelliNews. “Things like improved transparency and mechanisms that improve the accountability of management also make the company easier to manage and more efficient.”

More generally, Artel says it supports and promotes the UN’s Universal Declaration of Human Rights and is committed to preventing human trafficking and other human rights abuses. Living in a corner of the world that has the Taliban and Uighurs living across the border, human rights abuse is more of a present issue in Central Asia than it is on the streets of London or New York. Artel has adopted a code of conduct and screens all its suppliers and partners for possible problems.