The Group considers the interests of its main stakeholders when developing the strategy and the processes to improve its operations. We continuously strive to positively contribute to society through the entire scope of our business activities by developing socially-oriented products and services, implementing responsible approaches to our business operations, carrying out sponsorship and charitable activities.
SOCIALLY-ORIENTED PRODUCTS AND SERVICES
The average growth of electricity consumption in Georgia has been 5.7% over the last ten years. The Group is investing in renewable energy to respond the growing demand by developing hydro power plants, wind power plants and solar power plants across Georgia. In addition, the renewable energy business has a pre-construction pipeline of 74MWs of hydro, 210MWs of wind and 30MWs of solar,
out of a targeted 500MWs over the medium term. The Group’s involvement in renewable energy business supports the country’s sustainable growth.
The Georgian tourism sector has demonstrated significant growth in recent years; it has generated CAGR of 15.0% in international visitor numbers during 2011-2018. Georgia has potential to place itself on the world map as a high-quality tourist destination due to its unique nature and cultural heritage, its tradition of hospitality and by focusing on niche areas, for example, wine tourism, medical and wellness tourism. The Georgian Government, with the support of the World Bank, has developed a tourism strategy with target goals for 2025, including preserving cultural heritage, developing air and road infrastructure and attracting higher spending markets.
The Group’s real estate business, m2, has entered the hospitality industry, targeting to reach a total room count of more than 1,000 rooms over the next three years. It has obtained a development agreement with Wyndham to develop Wyndham’s 3-star brand Ramada Encore and 4-star brand Ramada in Georgia. First Ramada Encore (152 rooms) was opened in Tbilisi in March 2018. m2 is also developing a 4-star Ramada hotel in Tbilisi (under construction, 125 rooms) and a 4-star Ramada in Kutaisi (design stage, 121 rooms), where the international airport serves low-cost airlines and makes the city popular with tourists visiting Georgia. Two more hotels are in the pipeline in Tbilisi – a luxury hotel on Gergeti Street (under construction, 100 rooms) and a 4-star business class hotel on Javakhishvili Street (design stage, 120 rooms). Apart from Tbilisi, two hotels are in the design stage in Kakheti (City Telavi and Akhasheni village), which is well-known to tourists as a popular wine destination. One further hotel is under construction in Gudauri (121 rooms), the leading ski resort of the Caucasus region. m2 strives to contribute to the development of all places where it initiates construction through its CSR initiatives.
Education is a key sector to boost long-term potential economic output in the country. Currently 90% of primary and secondary schools are public, making room for private sector development, which is very fragmented and unaffordable for most of the population. The quality of education at public schools is poor due to a low supply of quality education professionals and teachers earning a very low salary. Georgia Capital entered the Education business by investing GEL 6 million in land outside Tbilisi for a high school development in 2018. The Group plans to introduce a chain of affordable private high schools and aims to reach 30,000 pupils by the end of 2025, becoming the largest chain of affordable private schools in Georgia. Georgia Capital plans to develop a training centre for teachers and retrain the recent graduates from the university, motivating the new generation to provide quality education through adequate pay.
Over the last ten years, the Georgian real estate market has experienced a significant increase in demand. The average household size in Georgia has dropped from 3.8 in 2005 to 3.3 in 2016, and as this figure is expected to move closer to the EU average, which was 2.3 in 2016, demand for residential real estate is expected to increase in the long term. Also, around 35% of housing units in Tbilisi were built more than 40 years ago and are reaching the end of their usable lifecycle. At the same time, the Georgian real estate market is vulnerable to various economic and financial uncertainties and numerous construction projects remain unfinished for long periods of time. In response to this social challenge and increasing demand, the Group’s housing development business, m2 was established in order to offer affordable housing to the emerging middle class in Georgia and especially to young families. Nowadays, m2 is a major player in Georgia’s real estate market, offering its customers turnkey apartments with fine-tuned infrastructure. m2 has completed nine projects so far and has delivered them to its customers within, and frequently ahead of, the agreed deadlines. The Company plans the design and construction processes so that each square metre is distributed efficiently. m2 uses energy-efficient construction components, bringing up to 43% energy efficiency of its buildings, which in turn translates into lower utility expenses incurred by the tenants. The level of energy savings in m2’s buildings is significantly above the average residential property in Tbilisi. Starting in 2014, the Company launched another affordable housing product line, Optima, which allows customers to buy a flat of desired size for a lower price, which is achieved by distributing the space more efficiently. As an enhancement of its affordable housing strategy, m2 plans to develop a neighbourhood on Marshal Gelovani Avenue in Tbilisi, Georgia on a 114,513-square metre-plot with approximately 3,000 apartments. In June 2017, m2 acquired BK construction LLC, a real estate construction company, which has reduced m2’s construction costs and improved the design management process through vertical integration, giving m2 the ability to reach the lower-end segment. A large segment of m2’s customers is made up of young Georgian families (more than 50% of customers are 23-43 years old). The Company believes that by continuing to offer affordable housing products, m2 is helping them to significantly enhance the quality of their lives and enjoy modern living standards.
SPONSORSHIP AND CHARITY
As part of our sponsorship and charitable activities, the Group continues to focus on promoting and enhancing access to education, conserving nature, supporting people with disabilities and special needs, and facilitating innovative projects that focus on social good. The Group’s sponsorship and charity activities encourage partnerships with various foundations and Non-Governmental Organisations (NGOs) to deliver sustainable results and bring positive change. In doing so, we follow our undertakings in respect of social and community matters set out in our Environmental and Social Policy. In 2018, the Group spent a total of GEL 3.8 million to finance different sponsorship and charitable activities, some of which are listed below.
Georgia Capital employees participated in Wings for Life World Run in 2018. The Wings for Life World Run is a running competition held worldwide to collect funds for Wings for Life Spinal Cord Research Foundation. The entry fee and all donations raised through fundraising campaigns go directly to life-changing spinal cord research projects and clinical trials at renowned universities and institutes worldwide. With the support of the Caucasus Nature Fund (CNF), we are involved in the Project of Maintenance of Caucasus Natural and Cultural Heritage. The fund is meant for effective long-term management of the protected territories of Armenia, Azerbaijan and Georgia. In 2018, CNF announced a fundraising campaign in connection with its tenth anniversary to support the region’s magnificent nature. Georgia Capital and GHG donated US$10,000 and GEL 60,700 to the project, respectively.
Our water utility business managed by GGU regularly runs charitable activities for the social service agency, Child and Environment, and international humanitarian network, Catharsis, in Tbilisi. The water utility business covers the annual water supply expenses for Child and Environment, the agency that cares for homeless children and children with disabilities. Twice a year, GGU sponsors the project “Dinner for Everyone”, which is organised by Catharsis for approximately 3,000 people.
In 2018, the renewable energy business, managed by GGU, implemented several social projects supporting education, tourism and sports in Mestia, Svaneti region. Tourism is the most important source of income for the local population in Mestia. For the purposes of tourism development in the region, our renewable energy business is arranging training for family-owned hotels to assist the
owners and managers in improving their services and attracting more visitors.
The Group’s Property and Casualty (P&C) Insurance business, managed by Aldagi, supports many socially vulnerable people by providing one-time help upon special request. Aldagi traditionally provides a home for at least one family every Christmas. Aldagi’s employees are engaged in various programmes that supply socially vulnerable people with food and first aid kits.
As part of its sponsorship activities, the beverage business seeks to promote a healthy and active lifestyle. As the sponsors of the Georgian Rugby Union and National Olympic Committee, the Company aims to attract more youngsters to healthy activities.
The healthcare services business of GHG provides free regular medical examinations in its facilities throughout the country. In 2018, GHG carried out 23 different free screening programmes in total, benefiting up to 73,000 patients. Such free-of-charge medical check-up and screening programmes
include managing tuberculosis, breast cancer screenings, prostate cancer screenings, c-hepatitis screenings and diabetes programmes. In addition, GHG’s specialists deliver free medical services, including examinations and treatments for socially and economically disadvantaged groups of the population. In cooperation with other healthcare institutions, the Group arranges free blood donations for its patients.
GHG traditionally participates in the Government-subsidised Children’s Oncology Programme, under which the Company offers cancer treatment to children with different oncology disorders (leukaemia, tumours and lymphomas) in GHG’s Iashvili Pediatric Tertiary Referral Hospital, a multi-profile pediatric medical establishment, that is the sole provider of pediatric oncology services in Georgia. In 2018, more than 600 patients with different types of cancer received treatment at Iashvili onco-haematological department.
Promoting and Enhancing Access to Education
In November 2018, m2, opened a college for vocational education in the Zestaponi Municipality (Western Georgia). The college was built and developed as part of a memorandum of cooperation with the Ministry of Education and Science of Georgia, which was signed in 2017. The college, with a total project cost of GEL 3 million, offers 11 short-term vocational courses to more than 600 construction specialists/workers annually. m2 expects to employ most of the college graduates within its construction arm.
GGU has been involved in a dual education system for the first time in 2018. Students engaged in the dual educational programme simultaneously get theoretical knowledge and practical experience in specific professions. Through this programme GGU is able to train future employees with relevant knowledge of water supply and sewerage systems. Together with local and international partners, GGU has successfully implemented several dual educational programmes, among which were the programmes for welders and locksmiths and plumbers.
The water utility business has opened the Training Centre in 2017, aiming to prepare the professional, highly-qualified technical staff. Training Centre programmes and teaching modules are based on the best practice of the world’s leading training centres and retraining programmes. Local and international experts have created academic projects that help the Company to develop engineering and other technical qualifications. By this time up to 1,600 employees of the Company have been trained/retrained in their Training Centre.
As part of the development of educational facilities in Svaneti, mountain region in the North-Western Georgia, the Group’s renewable energy business modernised a community centre and a public school library in Mestia. The Group believes that educating young people is extremely important for the development of the community as a whole.
As a leader in the industry, our P&C insurance business, managed through Aldagi, is responsible for insurance education, not only in terms of professional development, but also informing the younger generation about insurance and its role in society. Aldagi employees frequently attend university events
delivering information about insurance in general, insurance products and principles. Aldagi has developed a unique professional development programme to give various stakeholders and interested employees a deeper understanding of the industry.
The healthcare services business partnered with Educare Georgia to support their initiative and sponsored the translation of Khan Academy’s, a well-known international learning platform, full biology course into Georgian.
GHG management believes that professional medical education is the cornerstone of healthcare quality in Georgia. For this reason, GHG tries to develop a healthy learning environment by financing international and local medical conferences. In 2018, GHG sponsored seven medical conferences and two workshops, which brought together medical scholars and healthcare practitioners from Europe, Asia, the USA and Georgia to share knowledge and experience that influence and shape healthcare delivery. Total financing to support the conferences amounted to GEL 191,544.
Promoting and Enhancing Healthy Lifestyle
Our beverages business produces and sells Georgian wine locally and exports to 17 countries. The Company actively promotes responsible drinking and have developed a special campaign “DON’T DRINK AND DRIVE”.
As part of its initiative to promote a healthy lifestyle, m2 became the general sponsor of FC Kakheti Telavi. Telavi is the largest city in Eastern Georgia and a major tourist destination, known as a major wine region in Georgia. Through this sponsorship, m2 supports local sports establishments which
bring a great benefit to the local area. In 2018 FC Kakheti Telavi and m2 jointly organised a children’s football tournament in the Kakheti region. In 2018 m2 organised the children’s rugby festival with eight teams and it intends to turn the tournament into an annual event.
GHG is sponsoring a medical TV programme reaching out to a wide range of the Georgian population to raise health awareness and promote healthcare practices. GHG has three TV shows, each dedicated to a relevant health expertise, discussing various health and wellness issues, such as screening programmes, allergies, cardiovascular disease, oncology, arthritis and others, in a simple and clear manner. The shows often include celebrity interviews, healthcare news, healthy recipes and helpful tips. In 2018, GEL 120,300 was spent on financing these TV programmes.
Supporting People with Disabilities
In 2017, m2, together with Kutaisi City Hall, took the initiative to finance the rehabilitation course for children with autistic spectrum disorders in Kutaisi. A rehabilitation course for 40 children will be fully funded during 2018-2019 period (GEL 125,000 from Kutaisi City municipality and GEL 100,000 from m2).
In 2017 m2 began construction of a specialised family-type home for children with severe disabilities in Tbilisi. The construction works were implemented as part of the project with the framework of Protection of Children with Disabilities – a project carried out by the Ministry of Labour, Health and Social Affairs, USAID and United Nations Children’s Fund (UNICEF). The project aims to create specialised family-type services for children with severe disabilities where they will receive care in a family environment and will be provided with all services necessary for their adequate growth, individual development and smooth integration into the society. After completion of the construction and renovation works, seven children with severe forms of disability were moved to live in the house in 2018. All m2 buildings are accessible to people with disabilities.
In 2017, m2 committed to restore around 26,000 square metres of burnt territory on Tbilisi’s Mtatsminda slope. The works are conducted jointly with Tbilisi City Hall, Caucasus Environmental NGO Network (CENN), Regional Environmental Centre for the Caucasus (REC), the Green Movement of Georgia (GMG), botanical institute of Ilia State University, the Ministry of Environment and Natural Resources Protection of Georgia. After finalising the reforestation plan with specialists from the National Botanical garden of Tbilisi, the first stage of the rehabilitation process was completed successfully in 1H18: building terraces and tracks, planting 3,000 units of eight varieties of plants and installation of irrigation systems. The next stage includes care and protection of the territory for a period of three years. This project received the CSR prize in the Successful Partnership for Sustainable Development category on the event initiated by the CSR club and UN Global Compact Georgia.
Air quality is an immediate and acute problem in Georgian cities. To increase awareness of climate change and lead to a better living, m2 promotes the use of electric vehicles: 45 new customers were gifted electric scooters in 2017. Moreover, m2 is the general partner of the start-up company E-space and funds the establishment of infrastructure for electric vehicles across the country (Tbilisi, Batumi, Kutaisi, Rustavi, Kvareli and Telavi) through the “More Oxygen for the City” campaign aiming to install 100 EV (electric vehicle) chargers in Georgia – m2 has already installed 50 charging stations during 2017 and 2018.