Approach to Determining Material Topics
GRI 3-1, GRI 3-2
Identifying material topics is one of the key stages in preparing the Sustainable Development Report. The Company conducts this process in accordance with the requirements of the GRI Standards, including the GRI Sector Standard 11: Oil and Gas Sector (2021). The applied approach enables the identification and disclosure of topics that have the greatest impact on the Company's operations, stakeholders, and sustainable development overall.
The process of determining material topics is aimed at ensuring transparency, comparability, and completeness of non‑financial disclosures, as well as integrating the results into strategic and operational management.
Stages of the Materiality Assessment Process
1. Identification of Material Topics
At the first stage, a comprehensive analysis of internal and external factors affecting the Company's activities is conducted. The analysis takes into account:
- Regulatory requirements and international standards;
- The Company's strategic priorities and development goals;
- Stakeholder expectations and demands;
- Industry trends and best practices;
- ESG risk and opportunity analysis.
2. Assessment of Topic Significance
The identified topics are evaluated from two complementary perspectives:
- Impact on the economy, environment, and society, including the scale and nature of potential and actual impacts associated with the Company's activities;
- Relevance to stakeholders, including shareholders, employees, partners, local communities, and other groups.
The assessment is carried out using stakeholder engagement tools, including surveys and analytical methods.
3. Prioritization of Topics
Based on the evaluation, a materiality matrix is developed, ranking topics according to their level of importance. Topics identified as most material are included in the Sustainable Development Report and serve as the basis for defining the Company's strategic and operational priorities.
4. Verification and Approval
The results of the analysis and prioritization are reviewed by the Company's management. The final approval of the list of material topics is carried out with the involvement of the Board of Directors, ensuring completeness, objectivity, and reliability of the disclosed information.
Regular Review of the List of Material Topics
The materiality assessment process is dynamic and subject to regular review. This allows KMG to reflect changes in the external environment, Company strategy, and stakeholder expectations. This approach enables the timely identification of emerging and intensifying risks and opportunities, as well as ensuring the relevance, completeness, and comparability of disclosed non‑financial information.
As part of preparing the 2025 Report, a routine review of the list of material topics was conducted, taking into account:
- the results of engagement with stakeholders, including representatives of government bodies, local communities, investors, and employees;
- changes in the regulatory and public agenda regarding environmental protection and social development;
- analysis of the actual and potential impacts of the Company's activities on natural and social systems;
- and the strengthening of requirements in international non-financial reporting standards regarding the disclosure of issues related to impacts on biodiversity and the socio-economic development of the regions where the Company operates.
As a result of this review, the list of material topics was expanded from 12 to 14. Two additional topics were included: GRI 11.4 “Biodiversity” and GRI 11.15 “Local Communities”.
The inclusion of GRI 11.4 “Biodiversity” in the list of material topics is driven by a deeper understanding of the nature and scale of the Company's impacts on natural ecosystems in the regions where it operates. The implementation of oil and gas projects is associated with potential risks to terrestrial and aquatic ecosystems, including land transformation, impacts on flora and fauna, and changes to natural landscapes. Considering the strengthening of global and national agendas on biodiversity conservation, as well as growing expectations from investors and society, the Company deemed it necessary to designate this area as a standalone material topic to ensure a more systematic approach to managing related environmental risks and implementing measures to prevent, minimize, and compensate for negative impacts.
The inclusion of GRI 11.15 “Local Communities” reflects the increasing importance of the social dimension of sustainable development and the need for a more structured approach to managing the socio‑economic aspects of the Company's operations in the regions where it is present. KMG's activities have a multifaceted impact on local communities, influencing employment, infrastructure development, and social stability. Expanding the list of material topics to include this area is driven by the Company's commitment to considering the expectations of residents and authorities, increasing the transparency of social investments, systematically managing social risks and opportunities, and building sustainable, long‑term partnerships.
The inclusion of “Biodiversity” and “Local Communities” as separate material topics reflects the evolution of the Company's approach to sustainable development management and its transition to a more comprehensive and integrated consideration of environmental and social factors. Expanding the list of material topics contributes to improving the quality of management decisions and further developing the sustainability management system in accordance with international best practices.
Key Topics
In the 2025 Report, the list of material topics was updated and expanded to 14, while maintaining comparability with previously disclosed topics.
List of Material Topics
| № | Material |  |
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|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 11.1 Greenhouse Gas Emissions | |||||||||
| 2 | 11.2 Climate adaptation, sustainability and transition | |||||||||
| 3 | 11.3 Air emissions | |||||||||
| 4 | 11.4 Biodiversity | |||||||||
| 5 | 11.5 Waste | |||||||||
| 6 | 11.6 Water and Wastewater | |||||||||
| 7 | 11.7 Closure reclamation | |||||||||
| 8 | 11.8 Asset Integrity and Critical Incident Management | |||||||||
| 9 | 11.9 Occupational Health and Safety | |||||||||
| 10 | 11.10 Employment Practice | |||||||||
| 11 | 11.11 Non‑discrimination and Equal Opportunities | |||||||||
| 12 | 11.14 Economic Impacts | |||||||||
| 13 | 11.15 Local Communities | |||||||||
| 14 | 11.20 Anti‑corruption |