Corporate social responsibility (CSR) is a concept incorporated in the foundations of the work of Farmahem from its beginning and throughout its growth. The main activities of Farmahem are closely related to all aspects of social responsibility. Environmental protection, social responsibility, care for the people’s health, building close relations with suppliers , investing in the satisfaction and motivation of the employees are all part of the long-term goals which have been included in the quality policy and the strategy of the organization.

Farmahem is continuously conducting activities and projects for social responsibility and has won numerous national and international award and tributes in the category of small and middle size enterprises. In 2011, Farmahem won the second place in the category "relationship with the employees ". The awarded project was entitled: "Promoting a healthy lifestyle and love for nature - Following Zhana's footsteps". At the same time, on the occasion of five years of the granting of the national award for CSR, Farmahem was awarded with a special jubilee recognition for its continuous successful implementation of the socially responsible practices from 2007–2011.

Furthermore, to our great satisfaction, in 2012 we joined the initiative of UN Global Compact and with that we acknowledged our dedication to the ten universal principles of the corporate social responsibility. According to the agreement we are obligated each year to Communicate on Progress, and since this is our first report, it will integrally encompass all our activities related to a CSR from our beginnings until today, with particular emphasis on the activities in the 2011 and 2012. Also, we are actively participating in the local network of Macedonian companies which joined the UN Global Compact.

We will continue to follow the concept of CSR as well as share our experience in the field of socially responsible conveying to our business partners and associates. We plan in the upcoming period to implement even greater inclusion and support of the educational process in the Republic of Macedonia.

Marjonka Veljanovska
Executive Manager
FARMAHEM

25th December 2012

Permanent commitment and the key to the success of FARMAHEM are based on several principles and guidelines among which is the principle of respect for human rights and freedoms and non-discrimination on any grounds (sex, age, race, religion, nationality, etc.).

There are many examples showing that Farmahem cares about the welfare of its employees and continually invests in them. Besides meeting all rights provided by law, Farmahem does go a step further and do more to motivate its stuff members. Evidence of this is increased motivation of employees, improved operating results, increased profit for the company, and satisfied employees.

Farmahem on protection of human rights

On September 12, 2012, the Executive Manager of Farmahem, Mrs. Marjonka Veljanovska, was invited and gladly accepted participation on the round table in Brussels in the frameworks of the project "Capacity Building of SMEs in the field of human rights". For this purpose, Farmahem prepared a case study and on the round table the Executive Manager discussed the established practices in Farmahem related to respect of the human rights of employees. By participating in this event, Farmahem has shown understanding and respect of the Guiding principles of the United Nations on business and human rights.

1. Structure of employees

Our commitment for gender equality and non-discrimination on any basis, is the principle that is respected in the hiring process as well. On the leading positions currently we have appointed more women than men. The top management has 3 women (General Manager, Executive and Financial manager) and when it comes to heads of the departments Farmahem has equal gender representation: two women and two men. In this way, Farmahem serves as an example to encourage women entrepreneurs in R. Macedonia. At the same time, we have a handicapped person in our stuff and colleagues from different religions (Catholic, Muslim , Orthodox ) and atheists . In the structure of the employees there are persons from different nationalities (Macedonians, Serbs, Croats and Vlachs). During the employment process, people from the local Municipality have slight advantage, but only when there are two or more candidates with the same qualifications for the opened job position. Currently, we have 6 employees from the municipality Gjorce Petrov where are the headquarters of Farmahem.

2. Remuneration of employees

We are continuously investing in the health of our employees and building team spirit

 Once a week we rent a gym for practicing sports for a period of one hour. This gym provides opportunities for active sports: basketball, volleyball, table tennis, mini football and running;
 Twice a year we organize excursions to various locations in the Rep. of Macedonia but always with conditions for sports, hiking and developing team spirit;
 Periodic informal gatherings outside of working hours (walking, hiking, sports, etc.).

We take care of safety and social security our staff

 All employees have basic social and health insurance which are mandatory by law. However, besides that Farmahem invests in further insurance of its employees and they have collective insurance in case of accidents (injuries) on the workplace;
 Apart from legal obligations for health and safety at work, additionally is invested in video surveillance system and smoke detectors which provide and preserve the health and safety of employees.

We motivate our employees

 Awards (bonuses) for sales representatives according to achieved profit as well as for all the other employees for successfully completed tasks;
 Also, Farmahem awards prizes to employees for ten, fifteen and twenty years of working in Farmahem. The gift amount is the same for all employees regardless their status in the company;
 We provide compensation for a newborn, wedding and death in the family of our employees;
 We have a tradition of giving a present to each employee for his / her birthday and organize a small celebration with all colleagues at the end of the working hours. All employees are buying gift of choice, but in the same value;
 In addition, Farmahem invests in modern infrastructure and cares that every employee feels comfortable on the workplace and provides equal and pleasant working conditions. The offices are spacious and pleasant to work with modern designs, paintings and pastel colors;
 Each year we organize a Christmas celebration for employees and another celebration for children of employees (0-12 years old) when we give them Christmas presents and books;
 We grant additional time off in the case of employees working during the weekend or after working hours;
 Regular reports are sent to all employees on cultural events in the city and in the region and we periodically organize collective visits to cultural events.

We are building a system in which all our employees are involved in the decision-making process:

 During the regular meetings on Mondays, every employee has the opportunity to be heard and to give suggestions for resolving possible issues and ideas for the development of its programs and improving of the overall performance of the company. Thus, we all together as a team take part in this decision-making process and promote transparent governance. After each meeting we prepare minutes from the meeting a distribute it to every employee.

Project: "Farmahem juniors visiting Farmahem "

Objective: Farmahem involves children of their employees in its CSR activities. The goal of this project is for children of employees to get the opportunity to become better acquainted with the company where their parents work.

Activities: Employees presented the work of their departments in a manner suited to the age and knowledge of the children, through exercises and experiments in which the children themselves had the opportunity to actively participate and ask questions. This visit took place on 27 October 2012 and was attended by 11 children.
During the visit, the children made a tour of all the Farmahem 's Departments, Environmental Laboratory and biochemical laboratory.

Results: The children through games, experiments and education at the end of the visit made drawings. Creative workshop consisted of drawing on the following topic: "What made the biggest impression on you from the visit to Farmahem?" Drawings were used to illustrate the calendar, notebook and New Years' card for Farmahem 2013.
Long-term objective is for this project to become a tradition and to organize visits of children from the elementary schools in the local community.

1. Stuff attending trainings, seminars, Congresses etc.

Training of our employees in the country and abroad is being performed according to the annual plans which are prepared at the level of Departments and approved by the Farmahems’ CEO at the beginning of each year. When planning trainings we always take into consideration that all departments and all employees receive equal opportunities for professional and vocational advancement.

Overview of training by Departments in 2012:

Diagnostics and Pharmaceuticals - 6 trainings abroad, 1 Congress aborad
Instruments and equipment, section laboratory equipment - 4 trainings abroad
Instruments and equipment, section measuring instruments - 4 trainings abroad
Reagents and additives - 2 trainings abroad
Environmental consultancy and Environmental Laboratory - 1 training in the country

2. Investing in new personnel

More than 15 years in during the summer we accept interns from Europe through the student exchange organization IAESTE (International Organization for the Exchange of Students from Technical Sciences). Their internship lasts month and a half and at the end the intern is required to prepare a report from his/her experience and obtained knowledge and skills from visiting our company. Past 5 years, from 2008 to 2012, we had internships in our Environmental Laboratory and before that in our biochemical laboratory "Farmahem Diagnostics".

Since 2012, we have had two internships in the finance department from the Faculty of Economics in Skopje and in the Dept. for Environmental Consultancy form the Faculty of Mechanical Engineering - Skopje, Division Environment and Energy.
At the same time, we support and assist the future masters and PhDs in R. Macedonia through providing them with free importing of chemicals needed for their researches and scholarships.

Our activities in the following period will include more support of the educational process and educating young people in the country because we believe that in that way we invest in future highly professional and skilled personnel.

3. CSR awards and acknowledgments in 2011 and 2012 regarding respect of human rights

In 2011, Farmahem won the second place in the category "relationship with the employees". The awarded project was entitled: "Promoting a healthy lifestyle and love for nature - Following Zhana's footsteps".

At the same time, on the occasion of five years of the granting of the national award for CSR, Farmahem was awarded with a special jubilee plaque for its continuous successful implementation of the socially responsible practices from 2007–2011.

In 2011, Farmahem also received recognition from the Center for Institutional Development (CIRa) for prominent relations towards employees.

In 2012, Farmahem was again awarded with the second place from the National Coordination Body for CSR in R. Macedonia, Ministry of Economy of R. Macedonia and the initiative “European CSR Award Scheme” for the project “Farmahem juniors visting Farmahem”.

Farmahem and the market

Farmahem is a company which is aware of the importance of fostering appropriate relationships with clients / customers and suppliers.

Under the system of quality management ISO 9001:2008, we have implemented a procedure for managing complaints, objections and reclamations. According to this procedure, all complaints are recorded and processed by the quality manager and then the management provides appropriate corrective and preventive measures for their resolution. These measures are further monitored and controlled according to a predetermined timetable and the final effect is to improve the operation of the company through the reduction of errors to a minimum.

1. Free education of customers

Farmahem organizes free training for its customers. In 2009, a workshop was organized for white brined cheese to train Macedonian dairies, our long-term and future customers, as on how to improve quality and to avoid gaps in the white cheese, and thus how to get a standardized product and training for staff in the National Agency for Food and other stakeholders in accordance with the requirements of the HACCP system. The effect of these activities has motivated us to continue with organizing similar activities for our customers.

2. Project "Using natural colors in confectionery products consumed by the young population"

Objective: Even before the adoption of the Directive on harmful dyes in food, Farmahem started informing its customers by educating them and raising awareness of manufacturers of sweets, food and beverages in R. Macedonia on eviction from the use of artificial "azo" colors and application of natural colors or "food that colors" (vegetables, fruits, spices concentrates) in their products.

Activities: A team of experts from Farmahem organized visits where through several educational presentations and meetings on natural colors or "food that colors," they discussed the importance of using natural colors and the harmful effects of artificial colors ("azo" colors) in confectionery products. Meetings were held between managerial staff and experts from companies, manufacturers of food and beverages in the R. Macedonia. Besides professional team from Farmahem, there was also a renowned lecturer from the Danish company "Chr. Hansen" - producer of natural colors.

Results: This action had drastically positive impact on the society by creating healthy population and promotion of the benefits of healthy food. This is particularly important for children, since they are the biggest consumers of sweets.

Environmental protection in is a major principle incorporated in each segment of the work of Farmahem.

Our services protect the environment

Immediately after the establishment of a company whose core business is trading, we established a separate department for consultancy in the field of environment. Services offered by this Department are fully geared towards environmental protection in accordance with the requirements of current legislation in the R. Macedonia and the requirements of international conventions and directives. When it comes to environmental protection, Farmahem despite its commercial services which directly influence the environment, often gives free advice to its clients. Thus, Farmahem uses the opportunity to further influence and enhance the environmental practices of clients. Using Farmahems’ services, clients/companies change their business processes in order to have a negative impact on the environment and thus have a long term impact.

1. Farmahems' participation in the adjustment of legislation

Farmahem team constantly participates in adjusting of the legislation related to the environment and nature. At the time when the Republic of Macedonia began to adapt its legislation with the EU, initiated by Farmahem a group of companies was established in order to work on environmental consulting within the Economic Chamber of R. Macedonia. The need for such group, at the time of adoption of new laws and regulations, has proved to be very significant. Experts were actively involved in making the laws in this area and helped by giving suggestions and comments directly in the making of the legislation by delegating a member of the Supervisory Board CARDS Programme (Programme for the harmonization of national legislation with the EU directives). Farmahem team was constantly invited to give their comments in amendments to the legal documents that are continuously being brought in the country.

2. Aware of our impact on the nature

The main task of a part of the team is the Farmahem is implementation of projects related to the conservation of nature in the R. Macedonia. The team consists of professionals with appropriate education and experience in this area. Their knowledge of the importance of nature and biodiversity, and the importance of its preservation, the team closely transferred to colleagues and associates and customers through presentations, walks in the nature, discussions etc. In this way, we create a corporate culture and awareness of the impact that each of us, but also the company, has on the environment.

As for the direct impact of Farmahem on the environment, it should be noted that we:

 select waste (paper, toners and batteries);
 paper re-use or multiple-use of used paper;
 properly treat medical waste in accordance with the legislation;
 transport of imported hazardous chemicals, biochemical reagents and radioactive materials is conducted according to the requirements of domestic and European legislation;
 chemicals and reagents are stored properly in order to prevent environmental impact.

The Department for Environmental Consultancy entirely implements at the company all its knowledge of environmental protection and nature conservation which it has to offer as a service to customers.

Many years prior to the introduction of the concept of CSR in R. Macedonia, Farmahem actively invested and promoted the CSR concept and sustainable development of enterprises. The founder of Farmahem, Josif Tanevski, PhD (1945-2010) has won several awards and recognitions for his achievements in the field of environmental protection, caring for the local community, a sense of social processes and active contribution in many association, as well as the management of the company based on the concept of social responsibility and corporate governance. In 2000, from the Macedonian Center for International Coorporation, Tanevski won the award for sustainable development “Hert Jan Van Apeldorn” for successful introduction of the concept of sustainable development and long-lasting accomplishments in capacity building of sustainable development in the Republic of Macedonia, through strengthening the Ecologists’ Movement of Macedonia and other environmental organizations, promotion of sustainable development through lobbying and information in the political, economic and scientific circles and through issuing publications.

Awards and acknowledgments for CSR 2007-2010

As a result of constant efforts for socially responsible management, Farmahem has so far won numerous awards and acknowledgments for social responsibility. In 2007, Farmahem won its first prize for social responsibility (CSR) for the project "Establishment of Association for environmental consultancy within the Economic Chamber of Macedonia". We have won this award by the German government for selfless contribution in the field of environmental protection.

In 2008 Farmahem was proclaimed for "The most environmentally friendly company" by the City of Skopje.

In 2009, Farmahem received acknowledgments in the categories: environmental protection and improvement with the project "Waste Management Plan for the Municipality of Gjorce Petrov" and contribution to the community for the project "Establishment of Environmental Laboratory."

Ethical Management

Farmahem respects the International Declaration of Human Rights by striving for transparency in governance, involvement of employees in the decision-making process and recognizing the importance of the integrity of the enterprise.

The company actively participates in national and international forums concerning ethical management. Furthermore, Farmahems’ management strongly advocates for promotion of ethical standards in the business and believes that each individual is responsible and can positively affect the wider community to achieve the common goal which is to eliminate restrictions that are a result of corruption in the society.

The management has signed a Statement of Business Ethics Code on a national level in November 2012.

Transparency and involvement of all employees in the decision-making process

Farmahem fully encourages employees involvement in the decision -making process in the company and thus increases the confidence and loyalty of employees to the company. This is implemented through:

• Regular staff meetings once a week where ongoing and future projects and activities are being discussed. Also, on these meeting we analyze successes, problems, coordinate the work of all departments are prepare weekly plans for field trips and other activities, and discuss the reports from the work done during the previous week. These meeting are attended by the employees in Farmahem, and the meeting is headed by the Executive Manager;

• Regular and transparent information flow between all levels of employees via e-mail regarding any changes in the weekly plans, sending minutes from the weekly meetings to all employees and sharing information on the latest developments of the company. This activity enables regular communication between company employees and Departments. We have made an electronic group (Ethernet) where all employees have access and information provided there are public to all employees in the company;

• Maintenance of monthly meetings between different Departments and the management of the company. Within this activity, the current activities of the Department are being discussed as well as specific activities of each employee in the Department. They agree upon the following activities and discuss current issues and requirements of the Department;

• The Executive Manager holds an annual presentation in front of all employees Farmahem for the annual results of the company. Traditionally, the end of December, the company's management, represented by the CEO organizes a presentation of the achievements of the company in the current year for all the employees in the company. On this occasion, presented are successes, revenues, investments as well as public praise of employees or departments.

• Presentation of the latest activities in the printed edition of Farmahems’ newsletter “Info” which is prepared once a year and is delivered to all Farmahems’ customers. This printed edition is used as a medium for presenting the latest achievements of the company to the customers, clients aiming for them to get acquainted with the possibilities offered by Farmahem to improve their work.

• In case if staff or stakeholders have objection or complaint, it is taken into account and we apply certain corrective measures for improvement.

As a result of this kind of leadership, the company achieved the following benefits:

• Increased trust among the company employees (increased trust among employees, cross-Department cooperation and consequently increased number of joint multiple Departments business actions with one client);

• Increased transparency of the company to employees and to customers (on annual level, more than 800 e-mails have been sent, 24 Department meetings, 50 weekly meetings and one final presentation);

• Increased motivation of employees (employees are motivated to work harder, improve and to build successful careers which is evident in the increased number of trainings Farmahem has delivered to customers);

• Increased profits for the company (although it was a crisis in the whole economy, just transparent management of the company and its activities in 2010, 2011 finished as one of the most successful years ever).

The major benefit of ethical management is strengthen relationship between employees and management or setting up an open relationship for the flow of information that lead to greater success of the company. Satisfied, motivated and highly skilled employees and citizens are the main benefits for the company by which we can achieve a greater accessibility to the company's employees as well as to citizens and customers.

In 2010, Farmahem continues with the trend of winning awards for CSR in the category of small and medium size companies and wins the award in the category of ethical management for the project "Transparent work of the management and involving employees in the decision making process in the company".