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JSC “Latvia’s State Forests” has Joined the European Corporate Governance Family

On 29 November this year, representatives of the Board and Supervisory Board of JSC “Latvia's State Forests” (LVM) participated in the international European corporate governance conference “European Corporate Governance Conference 2022”. Within the framework of the conference, special attention was paid to the best practices of European companies, integrating environmental, social and management issues in company management and setting them as a priority at the level of strategic development.

The conference was held within the framework of the Czech presidency in the Council of the European Union in cooperation with the leading organizations uniting European companies and their management.

The promotion of good corporate governance is important in public administration, the private sector, as well as in the work of non-governmental organizations, since it ensures the transparency of the decisions made, sustainable development, listening to the opinions of all interested parties and their balanced observance, respecting the rule of law.

One of the operational priorities of LVM is to constantly ensure a high standard of corporate governance in the company. To strengthen corporate governance by implementing the experience of Europe's strongest companies in its operations, LVM is strategically moving towards full integration into the European and international corporate governance family to ensure the adoption of best practices by harmonizing corporate standards and the application of the OECD guidelines.

Toms Reiziņš, LVM Board Member: “Starting from 2026, LVM will have to publish a Sustainability Report for the calendar year 2025, which will fully comply with the newly developed European Sustainability Reporting Standard (ESRS). This requires that the report should include not only a report on the compliance of LVM's strategy and operational results with aspects of business sustainability, but also that significant attention should also be paid to environmental, social responsibility and management issues or ESG factors. Having familiarized ourselves with the results of a recent study conducted by PricewaterhouseCoopers (PwC) on the degree of maturity of sustainability reports of large capital companies, we gained confidence that the direction of development approved by the LVM Supervisory Board, the set strategic goals and the principles of their cascading in daily tasks give us faith in the company's readiness for new challenges. After listening to the participants of the discussion panels of the conference, we have gained the confidence that LVM must become the leader of the forestry industry in Latvia in matters of sustainable business development. It forces us to 'look in the mirror' and answer whether we can be even more responsible for the impact of our business on the environment, whether we can improve every aspect of our actions towards every member of society, whether we can be even more transparent in any aspect of corporate governance.”

To constantly improve company's operations, an evaluation of LVM's corporate management system was carried out this year, engaging an independent expert company. The assessment received confirmed that LVM's corporate governance system meets the standard of good governance – 17 principles and criteria of the Corporate Governance Code. Immediately after the evaluation, LVM Supervisory Board organized its analysis and, together with the Board and the company's employees, identified new, more ambitious improvement measures for the future.

At the beginning of November, LVM joined the European Corporate Governance Institute, becoming part of the European Corporate Governance family.

Edmunds Belskis, Chairman of the LVM Supervisory Board: “Joining the European Corporate Governance Institute is an important step to bring the experience of Europe's strongest companies in corporate governance into the company's operations. To improve Supervisory Board areas of activity, we engage independent experts who evaluate and recommend areas that could be improved in the company's corporate governance system at all levels of management. It is essential to ensure the independent work of any supervisory board, categorically not allowing to influence its activity.”

Confirming compliance with corporate governance standards, the LVM Supervisory Board invited an independent expert – the law firms EY LAW SIA – to evaluate the progress of the Board nomination process. The evaluation analysed the activities performed by the LVM Supervisory Board in ensuring the nomination process of the company’s Board and the compliance of these activities with the requirements of external regulatory acts and good corporate governance practices. The expert concluded that the process was in accordance with the requirements of the regulatory acts, while pointing to areas where it would be possible to increase transparency in the future without increasing excessive bureaucracy.