Corporate Social Responsibility and Sustainability Report 2019

www.rosseti.ru/eng/ TABLE OF CONTENTS

Message from the Director General 4 Key Indicators and Achievements in Sustainable Development 6 About the Report 8 About the Сompany 12 Geography of Operations 14 Business Model 20

Sustainable Development Management 23 Approaches to Sustainable Development Management 24 Corporate Ethics and Anti-corruption 31 1 Sustainability Risk Management 40 Stakeholder Engagement 42 Supply Chain Management 50 Economic Impact Management 53

Sustainable Development Results 55 Our Employees 56 Occupational Health and Safety 70 2 Environmental Protection 78 Sustainable Energy Supply 87 Digital Transformation of the ROSSETI Group 95 Community Engagement 96

Appendices 101 Glossary 102 Regulatory Framework 104 3 Key Quantitative Data 106 GRI Standards Report Compliance Table 108 ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices

We do not stop at the achieved results, striving to reach a new level of efficiency, technological structure, labor productivity, profitability. ROSSETI strives to become a global leader among global power grid companies not only in absolute terms, but also Message from in relative terms. For this purpose, the Strategy of the ROSSETI Group for the period until 2030 was developed and adopted. Its implementation will allow the ROSSETI Group companies to switch to a qualitatively new level of organization of production and business processes, increase the efficiency of decision making and implementation, and dramatically reduce unit costs. Above the Director General all, this will be achieved through the implementation of the “Digital Transformation 2030” Concept, which implies a deep digital transformation of all the processes occurring in the ROSSETI Group companies. Given the international agenda and being aware of the responsibility for the future of next generations, the ROSSETI Group con- tributes to the achievement of the UN sustainable development goals. ROSSETI is directly involved in achieving 8 out of 17 goals. The ROSSETI Group shares the other goals and strives to make a feasible contribution to their achievement. Dear readers! GRI 102-14 Particular attention in the activities of the ROSSETI Group companies is paid to the ESG factors that ensure the long-term competi- The ROSSETI Group is one of the largest employ- tiveness and sustainable development of the Group. Compliance with the most stringent standards, following voluntary initiatives, ers and taxpayers in the country. It occupies a timely disclosure of information in accordance with the internationally recognized standards are all part of the commitments in special place in the Russian economy, ensuring the field of sustainable development undertaken by the ROSSETI Group. reliable transmission and distribution of electric- Occupational Safety and Health ity from generation facilities to consumers and We strive for Vision Zero – zero injury rate for the ROSSETI Group. The life and health of employees is the highest value creating infrastructural conditions for the coun- for the Group. For this, packages of measures are implemented on an ongoing basis within the framework of the labor try’s social and economic development. protection system and industrial safety, significant investments are made, and a work culture at work is formed. As ROSSETI is a high-tech business that constantly a result, the number of industrial accidents does not grow, which, given the scale of the Group, is considered a good improves its own production indicators and im- indicator. proves the energy efficiency of Russian consum- ers through the introduction of advanced tech- Ecology nologies in production processes, which makes Decarbonization, the fight against persistent pollutants, and the reduction of water consumption are topical global an additional contribution to the environmental initiatives that Russian companies are starting to follow. I can safely call the ROSSETI Group being responsible in this protection. regard: waste generation is reduced, water intake is reduced, the number of installed bird protection devices is growing, the amount of land reclamation is in the thousands of hectares. Social Responsibility The ROSSETI Group is a major employer – the total average headcount of electric grid subsidiaries and affiliates amount- ed to 217.5 thsd people. Wages and the social package directly affect employees and members of their families. The ROSSETI Group companies are represented in 80 regions of Russia, where they support local communities and Reliability institutions, carry out procurement activities involving local suppliers, and implement sponsorship and charity support. The ROSSETI Group acts as a reliable social partner, building mutually beneficial cooperation with these groups of According to the World Bank, the ROSSETI Group is one of the leading energy companies in the world in terms of interested parties. reliability of electricity supply, which in recent years have shown a stable trend of reducing the number of accidents and increasing the reliability of electricity supply to consumers. In 2019, the group reached its record levels: SAIDI In the context of the spread of new coronavirus infection COVID-19, the ROSSETI Group continues to deliver on the was 1.8 hours, and SAIFI – 1.2 units per supply point. Even in the most difficult weather conditions, the ROSSETI Group key task of providing uninterrupted power supply to consumers in the regions of presence. Socially significant and promptly restored energy supply interrupted by dangerous meteorological conditions. key infrastructure facilities receive particular attention. At the same time, we strive to ensure the employee protection of the ROSSETI Group companies - we have organized the supply of personal protective equipment, and aim to Connecting New Consumers minimize interactions within working teams. In addition, the ROSSETI Group decided to provide incentives to our employees who have not been transferred to a remote format of work and directly ensure the reliability of power In the reporting year, the ROSSETI Group companies completed 332 thsd contracts for network con- supply to consumers and continuity of the operating activities. nection with a total capacity of about 15 GW. It is important to note their social component – about 98% The ROSSETI Group has shown impressive results in recent years, taken into account the principles of sustainable of applicants under these agreements belong to the preferential category, for which there is a special procedure for determining the connection price. development, and acts as a responsible partner. The changes taking place within the Group related to the digital transformation and the entry into a new cycle of strategic planning are sure to bring benefits to all stakeholders of the ROSSETI Group. Financial Performance P.A. Livinsky Continuous work to improve efficiency of business processes and production Director General of ROSSETI indicators allows the ROSSETI Group not only to steadily increase revenue and EBITDA, but also to form an annually increased dividend base.

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The environmental management system of ROSSETI has been The Environmental Policy of the Electric Grid In order to demonstrate and test equipment used in projects The Board of Directors approved a unified corporate recognized as meeting the requirements of the international standard Sector in the new edition was approved. related to the digital transformation of the industry, as well as identity standard for the ROSSETI Group. ISO 14001:2015 and its national equivalent GOST R ISO 14001-2016. to further strengthen and expand contacts with suppliers of In June, the ROSSETI Group introduced a new unified ROSSETI, the “Partner Days” forum was organized for Russian brand architecture for the energy holding. and foreign manufacturers of electrical products.

August 2019 April 2019 October 2019 December 2019

With the support of the Russia - the Land of Opportunities ANCO, Thanks to the large-scale reforms carried out by the ROSSETI Group in the field of network an “Energy Leaders” competition was organized with the aim of creating connection of consumers, the Russian Federation took 7th place in the published Doing a reserve of senior staff from the most professional and motivated Business rating of the World Bank Group in terms of the indicator “Getting Electricity”. industry experts.

Key Indicators of Sustainable Development The highest rating of the Russian Federation in the World Bank’s “Doing Business - 2019” ranking, for the ROSSETI Group in 2019 “Reliability Index for Electricity Supply (SAIDI, SAIFI)” indicator

217.5 THSD PEOPLE 18 THSD PEOPLE 67% OF EMPLOYEES total average headcount of personnel talent pool retraining and advanced training of power grid subsidiaries and affiliates programs 8 POINTS OUT OF 8 BN The Company has contributed to the country obtaining the 5.7 RUBLES - 15% 0.16 highest score every year since the Russian Federation was labor protection and production decrease in the frequency lost time injury frequency included in the World Bank’s rankings in 2015. safety costs of injuries from exposure rate (LTIFR) 98% to electric current1 OF EXECUTED NETWORK CONNECTION AGREEMENTS INVOLVE PREFERENTIAL CATEGORY APPLICANTS Indices of Reliable and Uninterrupted Power Supply THSD 2.4 (-0.38 p.p.1) 12 STUDENTS - 4.44% 8.57% -25% completed internship at the ROSSETI decrease in domestic energy loss of electrical energy 1.8 Group companies consumption1 -8% 1.3 SAIDI 1.2 SAIFI HA - 46.7% 4,879.2 -15% DECREASE DECREASE BY BY reduction of wastewater discharge volume of land reclamation reduction of waste generated1 25% 8% to surface water bodies1 in 2019

2018 2018 1 Compared to 2018. 2019 2019

6 www.rosseti.ru/eng/ 7 ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Reporting Approach Identification ofM aterial Topics GRI 102–50 The Report on Social Responsibility and Corporate Sustainable ROSSETI strives to improve the non-financial reporting system, GRI 102–51 Development of ROSSETI (hereinafter referred to as the Report) taking into account the best practices and international standards. GRI 102–52 Topic Identification Approach GRI 102–54 provides information on the main non-financial results of the The 2019 report was prepared in accordance with the Global Group’s activities for 2019, as well as the Company’s plans for Sustainability Reporting Initiative Standards (GRI Standards), the GRI 102–46 In 2019, a working group on the preparation of non-financial re- At the second stage, representatives of stakeholders evaluated the short and medium term. The report has been published “Core” disclosure option. In preparing the Report, the Company porting conducted an assessment of the materiality of the topics significance of each of the topics identified at the first stage. For by the Group annually since 2010. The previous report was was guided by the applicable requirements of the GRI Industry that are most significant for the Company and stakeholders. The each topic, respondents were asked to determine the degree of published in 2018. Application for the electric power industry. The Report also dis- identified topics determined the content of the Report. At the first its impact on the sustainable development of the ROSSETI Group closes information on the compliance of the Company’s activities stage, an analysis of open sources and preliminary consultations on the “high / medium / low / zero” scale. The questionnaire in the field of sustainable development with the UN Sustainable with stakeholders were carried out. As a result, a questionnaire was completed by heads of departments and key stakeholders. Development Goals (SDGs). was developed, including a list of 25 topics that are relevant to At the final stage, a final list of significant topics was compiled, In 2019, the indicators given in the previous reports were not GRI 102–48 the Group’s activities, reflecting the significant economic, envi- based on the results of the survey. The answers were given significantly reformulated ronmental and social impact of the enterprises of the ROSSETI points, and for each topic, the average value of materiality for Group, as well as influencing the assessments and decisions sustainable development was obtained. In accordance with of stakeholders. The topics presented in the questionnaire are requirements of the GRI Standards, in this Report, ROSSETI Scope of Reporting grouped into three groups – economic, environmental and social. discloses information on at least one indicator for each ma- Information on sustainable development presented in this Report The strategic development objectives, the target functioning terial topic. relates to the activities of ROSSETI and its subsidiaries and model, development prospects are presented in this report affiliates. During the reporting period, there were no significant from the point of view of ROSSETI, the managing company of the changes in the scope of reporting. country’s electric grid complex. The main indicators are given in consolidated form by subsidiaries and affiliates of ROSSETI, which conducts operations related to the transmission and distribution of electricity and network connection to electric networks.

Stages of Materiality Analysis

→ Industry analysis of trends in assess- Stage 2: ing materiality, social and environ- Questionnaire survey mental risks → Stakeholder engagement analysis in 2019 → Analysis of the questionnaire survey results → Preliminary consultations with Questionnaire survey stakeholder → Drawing up the materiality matrix of stakeholders → Definition of the final list of mate- rial topics Stage 1: Drawing up a preliminary list of Stage 3: material topics Formation of the final list of material topics and Report content

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Materiality Matrix Social Sphere Customer service. Informing and improving consumer literacy on Freedom of association and collective bargaining (including the 15 issues of network connection. 22 2 conclusion of a Collective Agreement between the company and the 16 Emergency preparedness. trade union). Development of local communities (charitable and sponsorship Employment. Company investments in human resources. Decrease projects in education, health, assistance to vulnerable groups, etc.). 17 in staff turnover. The desire of the Company to attract qualified 23 Respect for the rights of indigenous and small peoples in the regions employees in various regions of activity. of activity of the ROSSETI Group. 25 1 Relationship of employees and management. Prompt notification of 17 6 Compliance with the ROSSETI Group companies and human rights 18 employees about significant changes in the activities of the ROSSETI 24 providers (employees' rights to freedom of assembly, decent working 20 18 4 24 19 Group companies. conditions, prohibition of forced and child labor, etc.). 19 Health and safety in the workplace. 3 16 Compliance of the activities of the ROSSETI Group companies with the Training and professional development of employees. Availability of 25 20 requirements of the law relating to social and economic issues. educational programs at the ROSSETI Group companies. 7 15 Equal remuneration for men and women (remuneration, appointment 21 14 5 of women to leadership positions). 21 9 13

11 Reporting Certification 22 GRI 102–56 The report went through a public certification process by the Non-financial Reporting Council of the Russian Union of Industrialists 8 and Entrepreneurs. 12 23 10 The Certificate of Public Endorsement is included in the Report in the Appendix “The Certificate of Public Endorsement”. 2

Materiality of the impact ROSSETI Group on sustainable development topics Report Publication Information Electronic versions of reports are available on the official web- Russian Union of Industrialists and Entrepreneurs (RUIE), as site of the Company: http://www.rosseti.ru/eng/investors/re- well as in the GRI Database. ports/social_report/. Additional information on the results and The process of preparing the non-financial report of ROSSETI activity plans of the ROSSETI Group can be found on the official is coordinated by the Corporate Governance Department. For website of the Company www.rosseti.ru/eng/ and in the Inter- GRI 102–53 more information on non-financial aspects of the Company’s fax information disclosure service https://www.e-disclosure.

low activities, to leave suggestions and feedback on the Report, low Importance for stakeholders high ru. please contact the Corporate Governance Department of ROS- The reports on corporate social responsibility and sustain- SETI at the following address: 4 Belovezhskaya St., Moscow, ability of ROSSETI issued earlier are included in the National or by e-mail: [email protected]. Material Topics of the Report Register of Corporate Non-Financial Reports compiled by the

Economic Sphere Environmental Sphere Disclaimer Economic performance of the ROSSETI Group: ensuring financial Use of natural resources from both renewable and non-renewable 1 82 stability and increasing operational efficiency. sources. The report on corporate social responsibility and sustainability characterizing development of ROSSETI and its subsidiaries and Indirect economic impacts. Pro bono services and infrastructure Energy consumption. The desire of the ROSSETI Group to reduce 2 9 was prepared using the information available to ROSSETI at the affiliates. ROSSETI does not claim or guarantee that the results investments in the regions of activity. energy consumption and efficient use of energy. time of its compilation, including the information received from of operations indicated in the forward looking statements will Transparency of procurement in the ROSSETI Group companies. 102 Water. Improving the efficiency of water use in the ROSSETI Group. 3 Selection of bona fide suppliers, involvement of local suppliers in the Biodiversity. Monitoring the impact of the ROSSETI Group on the third parties. ROSSETI reasonably believes that this information be achieved. ROSSETI does not bear any responsibility for losses regions of activity. 112 biodiversity in the regions of activity (including the installation of bird is complete and accurate at the time of publication of this Report, that may be incurred by individuals or legal entities acting in 4 Anti-corruption. protection devices). but does not claim or guarantee that this information will not be reliance on forward looking statements. Slight deviations in 5 Fighting obstacles to competition and antitrust compliance. Emissions. Reducing emissions of greenhouse gases and pollutants 122 further clarified, revised, or otherwise changed. the calculation of interest, changes in subtotals and totals on 6 Providing reliable and uninterrupted power supply. into the atmosphere. Discharges and waste. Monitoring the volume of discharges. Waste The report on corporate social responsibility and sustainabil- the graphs and tables of this Report on social responsibility and 7 Research and implementation of innovative developments. 13 management from industrial activities. ity contains statements of appraisal or prognosis regarding corporate sustainable development are due to rounding. Compliance of the services of the ROSSETI Group with environmental 14 production, financial, economic, social, and other indicators requirements (including fines and sanctions).

2 Based on the results of the survey, these topics were deemed insignificant, but the Company decided to additionally disclose indicators on the following topics: 10. Water, 11. Biodiversity, and 12. Emissions.

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GRI 102-2 The mission of ROSSETI is to provide reliable, high-quality and affordable energy supply GRI 102-5 Sustainable Development GRI 102-7 to consumers by organizing the most efficient infrastructure and introducing modern GRI EU4 innovative and digital technologies. The company has been included ROSSETI has taken a leading position in the corporate reporting indices “Responsibility in the FTSE4GOOD EMERGING and Openness” and “Vector of Sustainable Development” in the indices of the Russian INDEX since 2017. Union of Industrialists and Entrepreneurs. Our Company → Russia’s leading electric grid company and 80 323,000 RUSSIAN SHAREHOLDERS The social report of ROSSETI for largest Russian companies in one of the world’s largest electric utilities. REGIONS ARE 2018 was recognized as the best accordance with the rating agency → Acts as the Government’s agent for the man- THE TERRITORY among the reports of 99 RAEX Analytics agement of the Russian electric grid sector. OF THE COMPANY’S OPERATIONS → One of the most significant infrastructure The UN Sustainable Development Goals are Integrated companies in Russia. 217,500 into the Business Model of the ROSSETI → Included on the list of strategic joint-stock STAFF ON ELECTRIC

companies. D A AD A DA ARDA AD D R AD GRID SDCS’ PAYROLL 3 WELL-BEING 7 A R 8 M R

DSR A SSAA S RSS AD AD RASRR AD MMS SM Corporate Values 11 12 AD RD 15 → reliability → human resources 802 → efficiency → safety → social responsibility Transmission and Distribution of Electricity 792

BN 763 KWH 517 of electricity was transferred Network Connection to Electric Networks 507

GW GW OF GENERATION FACILITIES 11.9 OF CONSUMERS 3.1 WERE CONNECTED 781 2.37 2.35 Assets 502 BN 279.8 RUBLES 9.36% Market capitalization as of December 31, 2019 2.60% 2.34 Length of power lines, mln km SHARE CAPITAL STRUCTURE AS OF DECEMBER 31, 2019 Number of substations, thsd units Capacity of substations, GVA State property Corporate entities Individuals 88.04% 12 www.rosseti.ru/eng/ 13 ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices

GRI 102-4 GRI 102-6 Areas of Presence of the Grid Companies Urals Federal District ROSSETI Tyumen, ROSSETI Urals, Urals MES, Western Siberia MES

of the ROSSETI Group Region Code Territory/Region Administrative Center Regional Grid Company FGC UES Branch Sverdlovenergo, 66 Sverdlovsk Region Yekaterinburg FEDERAL DISTRICTS Northwestern Federal District Volga Federal District North Caucasian Federal District ENCE (ROSSETI Urals) Sverdlovskoye PMES (Urals MES) OF THE RUSSIAN 45 Kurgan Region Kurgan no presence Central Federal District Urals Federal District Far Eastern Federal District Yuzhno-Uralskoye PMES (Urals FEDERATION, ON WHICH 74 Chelyabinsk Region Chelyabinsk Chelyabenergo (ROSSETI Urals) TERRITORY THE GRID MES) Southern Federal District Siberian Federal No presence Yuzhnoye PMES (Western Siberia COMPANIES OPERATE 72 Tyumen Region Tyumen District MES) Tsentralnoye PMES (Western Khanty-Mansijsk Siberia MES), 86 Khanty-Mansijsk ROSSETI Tyumen FEDERAL DISTRICTS REGIONS Autonomous District Vostochnoye PMES (Western 8 OF THE RUSSIAN 80 OF THE RUSSIAN Siberia MES) Yamalo-Nenets Yamalo-Nenetskoye PMES 89 Salekhard FEDERATION FEDERATION Autonomous District (Western Siberia MES) 87 Southern Federal District 51 South MES, Center MES, Mobile GTPP

39 10 78 Region Administrative Code Territory/Region Center Regional Grid Company FGC UES Branch 60 47 53 01 Republic of Adygeya Maikop ROSSETI Kuban Kubanskoye PMES (South MES) 29 83 49 Kubanskoye PMES (South MES), 69 23 Krasnodar Territory Krasnodar ROSSETI Kuban 67 35 Mobile GTPP 76 32 40 77 11 08 Republic of Kalmykia Elista Kalmenergo (ROSSETI South) 50 37 44 41 Rostovskoye PMES (South MES) 57 71 33 46 14 61 Rostov Region Rostov-on-Don Rostovenergo (ROSSETI South) 62 48 52 43 31 89 30 Astrakhan Region Astrakhan Astrakhanenergo (ROSSETI South) Volgo-Donskoye PMES 91 68 13 21 12 34 Volgograd Region Volgograd Volgogradenergo (ROSSETI South) (Center MES) 36 58 18 59 24 86 92 73 16 91 Republic of Crimea Simferopol 66 No presence 23 61 34 64 63 92 Sevastopol Sevastopol 02 01 72 74 09 26 08 56 45 70 Siberian Federal District 07 30 55 65 15 06 ROSSETI Siberia, ROSSETI Tomsk, Siberia MES 28 20 54 27 38 05 42 Region Administrative 03 Code Territory/Region Center Regional Grid Company FGC UES Branch 19 75 79 22 Gorno-Altaisk Electricity Networks 04 Republic of Altai Gorno-Altaisk no presence North Caucasian Federal District (ROSSETI Siberia) 17 04 25 ROSSETI Northern Caucasus, South MES 17 Republic of Tuva Kyzyl Tyvaenergo (ROSSETI Siberia) Khakasskoye PMES (Siberia 19 Republic of Khakassia Abakan Khakasenergo (ROSSETI Siberia) MES) Region Administrative Zapadno-Sibirskoye PMES Code Territory/Region Center Regional Grid Company FGC UES Branch 22 Altai Territory Barnaul Altaienergo (ROSSETI Siberia) (Siberia MES) 05 Republic of Dagestan Makhachkala Dagestan Grid Company (ROSSETI Northern Caucasus) Zapadno-Sibirskoye PMES 54 Novosibirsk Region Novosibirsk no presence 06 Republic of Ingushetia Nazran Ingushenergo (ROSSETI Northern Caucasus) (Siberia MES) Kabardino-Balkarian Zapadno-Sibirskoye PMES 07 Nalchik Kabbalkenergo (ROSSETI Northern Caucasus) 55 Omsk Region Omsk Omskenergo (ROSSETI Siberia) Republic (Siberia MES) Severo-Kavkazskoye Karachay-Cherkess Krasnoyarskenergo (ROSSETI Krasnoyarskoye PMES (Siberia 09 Cherkessk Karachaevo-Cherkesskenergo (ROSSETI Northern Caucasus) PMES 24 Krasnoyarsk Territory Krasnoyarsk Republic Siberia) MES) (South MES) Republic of North Ossetia- Zabaykalskoye PMES (Siberia 15 Vladikavkaz Sevkavkazenergo (ROSSETI Northern Caucasus) 38 Irkutsk Region Irkutsk no presence Alania MES) 20 Chechen Republic Grozny Chechenenergo (ROSSETI Northern Caucasus) Kuzbassenergo-RES (ROSSETI 42 Kemerovo Region Kemerovo Kuzbasskoye PMES (Siberia MES) Siberia) 26 Stavropol Territory Stavropol Stavropolenergo (ROSSETI Northern Caucasus) 70 Tomsk Region Tomsk ROSSETI Tomsk Kuzbasskoye PMES (Siberia MES)

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Northwestern Federal District Central Federal District ROSSETI Lenenergo, ROSSETI Yantar, ROSSETI North-West, North-West MES, Center MES ROSSETI Moscow Region, ROSSETI Centre, ROSSETI Center and Volga Region, Center MES, North-West MES

Region Administrative Region Administrative Code Territory/Region Center Regional Grid Company FGC UES Branch Code Territory/Region Center Regional Grid Company FGC UES Branch 10 Republic of Karelia Petrozavodsk Karelia Branch (ROSSETI North-West) 77 Moscow Karelskoye PMES (North-West MES) Moscow ROSSETI Moscow Region Moskovskoye PMES (Center MES) 51 Murmansk Region Murmansk Murmansk Branch (ROSSETI North-West) 50 Moscow Region 11 Komi Republic Syktyvkar Komi Branch (ROSSETI North-West) 76 Yaroslavl Region Yaroslavl Yarenergo (ROSSETI Centre) Valdayskoye PMES (Center MES) Arkhangelsk Branch (ROSSETI North- Severnoye PMES (North-West MES) 69 Tver Region Tver Tverenergo (ROSSETI Centre) 29 Arkhangelsk Region Arkhangelsk West) 36 Voronezh Region Voronezh Voronezhenergo (ROSSETI Centre) 35 Vologda Region Vologda Vologda Branch (ROSSETI North-West) Vologodskoye PMES (Center MES) 48 Lipetsk Region Lipetsk Lipetskenergo (ROSSETI Centre) Verkhne-Donskoye PMES (Center MES) 39 Kaliningrad Region Kaliningrad ROSSETI Yantar North-West MES 68 Tambov Region Tambov Tambovenergo (ROSSETI Centre) 47 Leningrad Region Leningradskoye PMES, Saint Petersburg ROSSETI Lenenergo 57 Oryol Region Oryol Oryolenergo (ROSSETI Centre) 78 Saint Petersburg Karelskoye PMES 31 Belgorod Region Belgorod Belgorodenergo (ROSSETI Centre) Chernozyomnoye PMES (Center MES) 53 Novgorod Region Veliky Novgorod Novgorod Branch (ROSSETI North-West) Novgorodskoye PMES (North-West MES) 46 Kursk Region Kursk Kurskenergo (ROSSETI Centre) 60 Pskov Region Pskov Pskov Branch (ROSSETI North-West) 44 Kostroma Region Kostroma Kostromaenergo (ROSSETI Centre) Nenets Autonomous 83 Naryan-Mar Komi Branch (ROSSETI North-West) no presence Vladimirenergo (ROSSETI Center and District 33 Vladimir Region Vladimir Volga Region) Vologodskoye PMES (Center MES) Ivenergo (ROSSETI Center and Volga 37 Ivanovo Region Ivanovo Region) Tulenergo (ROSSETI Center and Volga 71 Tula Region Tula Region) Kalugaenergo (ROSSETI Center and 40 Kaluga Region Kaluga Priokskoye PMES (Center MES) Volga Federal District Volga Region) ROSSETI Volga, ROSSETI Center and Volga Region, ROSSETI Urals, Volga MES, Urals MES Ryazanenergo (ROSSETI Center and 62 Ryazan Region Ryazan Volga Region) Region Administrative 32 Bryansk Region Bryansk Bryanskenergo (ROSSETI Centre) Code Territory/Region Center Regional Grid Company FGC UES Branch Novgorodskoye PMES (North-West MES) 67 Smolensk Region Smolensk Smolenskenergo (ROSSETI Centre) Saratov Distribution Networks (ROSSETI 64 Saratov Region Saratov Nizhne-Volzhskoye PMES (Volga MES) Volga) Ulyanovsk Distribution Networks 73 Ulyanovsk Region Ulyanovsk (ROSSETI Volga) 58 Penza Region Penza Penzaenergo (ROSSETI Volga) 21 Chuvashi Republic Cheboksary Chuvashenergo (ROSSETI Volga) Sredne-Volzhskoye PMES (Volga MES) Far Eastern Federal District 13 Republic of Mordovia Saransk Mordovenergo (ROSSETI Volga) East MES, Siberia MES, ROSSETI Siberia Marienergo (ROSSETI Center and Volga 12 Republic of Marij El Yoshkar-Ola Region) Region Administrative Code Territory/Region Center Regional Grid Company FGC UES Branch Samara Distribution Networks (ROSSETI 63 Samara Region Samara Samarskoye PMES (Volga MES) Volga) 03 Republic of Buryatia Ulan-Ude Buryatenergo (ROSSETI Siberia) Zabaykalskoye PMES (Siberia MES) Nizhnovenergo (ROSSETI Center and 75 Trans-Baikal Territory Chita Chitaenergo (ROSSETI Siberia) 52 Nizhni Novgorod Region Nizhni Novgorod Nizhegorodskoye PMES (Volga MES) Volga Region) 28 Amur Region Blagoveshchensk Amurskoye PMES (East MES) 59 Perm Territory Perm Permenergo (ROSSETI Urals) Republic of Sakha (Yakutia) Yuzhno-Yakutsky RES, 14 Yakutsk Kirovenergo (ROSSETI Center and Volga (southern part) Amurskoye PMES (East MES) 43 Kirov Region Kirov Region) Permskoye PMES (Urals MES) 25 Primorie Territory Vladivostok no presence Primorskoye PMES (East MES) Udmurtenergo (ROSSETI Center and 18 Udmurtian Republic Izhevsk 27 Khabarovsk Territory Khabarovsk Volga Region) Jewish Autonomous Khabarovskoye PMES (East MES) 79 Birobidzhan 56 Orenburg Region Orenburg Orenburgenergo (ROSSETI Volga) Orenburgskoye PMES (Volga MES) Region Permskoye PMES (Urals MES), Samarskoye Petropavlovsk- 41 Kamchatka Territory 16 Republic of Tatarstan Kazan no presence PMES (Volga MES), Orenburgskoye PMES Kamchatsky (Volga MES) 49 Magadan Region Magadan Permskoye PMES (Urals MES), Yuzhno- no presence 02 Republic of Bashkortostan Ufa no presence Uralskoye PMES (Urals MES), Orenburgskoye 65 Sakhalin Region Yuzhno-Sakhalinsk PMES (Volga MES) Chukotka Autonomous 87 Anadyr District

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ROSSETI Group Structure March 31, 20206

ROSSETI

Retail 29 GRIDS 9 Companies FGC UES 80.13% ROSSETI Northern Caucasus 98.61%

Tomsk Backbone Grids 100% Chechenenergo 73.65% Karachaevo-Cherkesskenergo Kuban Backbone Grids 100% 100% Dagestan Grid Company 100%

MOESK 50.90% Kalmenergosbyt 100% IDGC of Siberia 57.84% ROSSETI South 70.65%7 Kabbalkenergo 65.27% VMES 100% Tyvaenergo7 98.96% Kubanenergo 93.44% Sevkavkazenerg 49% TDC 85.77% IDGC of Centre 50.23% Dagestan Energy Supply Company IDGC of Volga 67.97% 51% Yaroslavl Electric Grid Company 51% 5 R&D AND TESTING ROSSETI Tyumen 100% Tyvaenergosbyt 100% TGES 69.99% SERVICE, MAINTENANCE, 27 AND REPAIR VGES 00%8 Yantarenergo 100% Yantarenergosbyt 99.99% CONSTRUCTION 2 AND PROCUREMENT IDGC of Center and Volga Region 50.40% IDGC of North-West 55.38% Pskovenergosbyt 100% 17 OTHER Svet 100% Yekaterinburgenergosbyt IDGC of Urals 51.52% 91.04% LENENERGO 67.48%

Saint Petersburg Power Grid 100% ENCE 91.04%

Tsarskoye Selo Energy Company 96.95% direct shareholdings indirect shareholdings Kurortenergo 98.13% sole executive bodies

6 Information on the structure of the ROSSETI Group on December 31, 2019 see in Appendix 6 of the ROSSETI Annual Report 2019. 7 The stake does not include the actually placed shares of the current securities issue. 8 Controlled through representatives on the Board of Directors.

18 www.rosseti.ru/eng/ 19 ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Business Model GRI 102-7

STRATEGIC INCREASING CORE BUSINESS ENSURING THE REQUIRED ELECTRICITY SUPPLY DIGITAL BUSINESS KEEPING A BALANCE BETWEEN THE INTERESTS EFFICIENCY RELIABILITY AND QUALITY TRANSFORMATION DIVERSIFICATION OF DIFFERENT STAKEHOLDERS: GOVERNMENT / CUSTOMERS / PRIORITIES: SHAREHOLDERS / INVESTORS

GRID RESOURCES RESULTS VALUE GENERATED COMPANIES 2018 2019 FOR ECONOMIC AND ENERGY SAFETY OF REGIONS AND COUNTRY AS A WHOLE

Electric grid SDCs’ staff Percentage of employees trained on the payroll, thsd people 67% in the year HUMAN HUMAN

217.3 217.5 CAPITAL >12,000 Practical training in the 4.8 bn RUB paid as dividends to the ROSSETI Group, students federal budget (for 1Q2019)

GENERATION Market capitalization increased 5% Water consumption reduction Environmental expenses, to 279.8 bn RUB mn RUB 0.3 p.p. Electricity loss reduction CAPITAL 539 555 NATURAL Transmission 50.8 bn RUB paid Waste generation reduction as taxes to budgets of all levels Thermal power and Distribution 15% plants

Equity, bn RUB ROSSETI GROUP’S paid as contributions to private pension funds and other pension plans ENTITIES: Adjusted EBITDA, bn RUB 1,495 1,584 323.7 Liabilities, bn RUB 1.3 bn RUB CAPITAL

FINANCIAL FINANCIAL • Federal Grid Hydraulic power 105.3 Net profit, bn RUB 1,024 1,065 plants Company 37,000 procurement procedures • Interregional totaling bn RUB

559 distribution grid R&D expenses as a percentage companies of revenue 20 patents and certificates received 30 digital Nuclear power • Regional infrastructure facilities 0.2 0.29 CAPITAL plants distribution grid put into operation INTELLECTUAL INTELLECTUAL companies

ВВВ ВВВ- AAA (ru) AAA (ru) Position in the “Getting Electricity” Renewable energy ranking of World Bank’s 7 D A AD A DA ARDA AD WELL-BEING A R Bа1 Baa3 CAPITAL sources Doing Business 3 7 SOCIAL AND AND SOCIAL REPUTATIONAL Length of power lines, mn km

DSR A SSAA S RSS AD RASRR AD MMS SM AD RD 11 12 2.35 2.37 Electricity delivery to networks, Number of substations, thsd units 834.9 CONSUMPTION bn kWh

507 517 D R AD Connected capacity, GW AD 15 M R Transformer capacity of substations, GVA CAPITAL 8 15 PRODUCTION SAIFI 792 802 INDUSTRIAL INFRASTRUCTURE HOUSEHOLDS 1.8 SAIDI 1.2 COMPANIES FACILITIES

CONTRIBUTION TO THE ACHIEVEMENT OF UN SUSTAINABLE DEVELOPMENT GOALS 20 21 ROSSETI Corporate Social Responsibility and Sustainability Report 2019

SUSTAINABLE DEVELOPMENT 1MANAGEMENT

www.rosseti.ru/eng/ ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Approaches to Sustainable Development Management

Commitment to the principles of sustainable development is part of the corporate culture The Sustainability Management System of the ROSSETI Group includes the Occupational of ROSSETI and is integrated into the corporate values of the ROSSETI Group. The company Safety Management System, the Quality Management System, the Environmental seeks to contribute to the development of society, as well as to take into account the Management System, and is also based on the provisions of the Environmental Policy, interests of stakeholders in decision-making process. ROSSETI develops strategic goals for the Policy for Interaction with the Society, Consumers and Government Agencies, and the priority areas in the field of sustainable development, approves relevant policies, internal Labor Protection Policy procedures and standards, implements principles of sustainable development in business processes, and conducts employee training. Occupational health and safety The Occupational safety management system of ROSSETI (OSMS) complies with the state regulatory requirements for labor protection, as well as with Russian and GRI 102-16 Corporate Values of ROSSETI international standards, recommendations of the International Labor Organization on the health and safety management system.

Quality control Quality management system RELIABILITY that meets the requirements of OCCUPATIONAL international standard ISO 9001:2015 and national standard GOST R HEALTH AND SAFETY ISO 9001-2015.

HUMAN RESOURCE SOCIAL SUSTAINABILITY RESPONSIBILITY ASPECTS CORPORATE VALUES ENVIRONMENTAL QUALITY PROTECTION CONTROL

Environmental protection SAFETY EFFICIENCY The environmental management system of ROSSETI that meets the requirements of international standard ISO 14001:2015 and its national equivalent GOST R ISO 14001-2016. For more information on sustainable development documents, see the “Regulatory Documents” section.

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Sustainable Development Priorities The priority areas for sustainable development include: ROSSETI determines the priority areas The company constantly The ratio of the Group’s priority areas for sustainable development, taking into monitors changes in legis- to the UN SDGs allows the Company • development of employees and society, creation of decent and safe working conditions; account the specifics of the activities of lation and trends that relate to track its contribution to the achieve- • creation of high quality and affordable services for consumers; the ROSSETI Group, the need to provide to aspects of sustainable ment of global goals in the field of • improving operations and value creation. consumers with reliable power supply, development. economic, social and environmental and taking into account the views and aspects. Sustainable Development Priorities interests of interested parties.

DEVELOPMENT OF EMPLOYEES AND THE SOCIETY, CREATION OF DECENT AND SAFE WORKING CONDITIONS UN SDG Tasks Activities Actual progress in 2019

→ Insurance programs cover 100% of the employees of the ROSSETI Group. D A AD PROVIDING EMPLOYEES WITH A COMPETITIVE WELL-BEING SOCIAL PACKAGE → Life and health insurance for employees. 3 (For more details, see “Protecting the health of employees”.) SUPPORTING A HEALTHY LIFESTYLE FOR → Contributing to the development of physical education and mass sports. EMPLOYEES AND LOCAL COMMUNITIES

DEVELOPMENT OF CULTURE AND SCIENCE IN THE → More than 12 thsd students completed internships at the ROSSETI Group. In addition, 2.3 thsd students worked as part of student teams at electric grid facili- A DA ties of the ROSSETI Group companies. REGIONS OF THE COMPANY’S ACTIVITY → Support for projects in the field of education, science, culture, art and enlightenment. IMPROVING THE PROFESSIONAL QUALIFICATIONS → About 300 universities and colleges cooperate with the Company on an ongoing basis. → Organization of retraining and advanced training of employees. OF EMPLOYEES, INCLUDING YOUNG → 67% of employees of the ROSSETI Group underwent full-time training in the reporting year. PROFESSIONALS (For more details, see “Development and training of personnel”; “Youth policy”; “Contribution to regional development”.)

→ In 2019, there was no increase in occupational injuries compared to 2018. D R AD PROVIDING DECENT WORKING CONDITIONS → Decrease in risks of industrial injuries. → Labor protection expenses amounted to 5.7 bn rubles. 8 M R IMPROVEMENT OF LABOR PROTECTION AND → Conclusion of collective agreements. → The average monthly salary of employees of the ROSSETI Group exceeds the average salary in the Russian Federation. PRODUCTION CONTROL ACTIVITIES → Providing employees with compensation, social benefits and guarantees. (For more details, see “Occupational health and safety” and “Motivation and employee engagement)

CREATING QUALITY AND AFFORDABLE SERVICES FOR CONSUMERS UN SDG Tasks Activities Actual progress in 2019 → The time to connect to energy supply decreased from 73 days in 2018 to 41 days in 2019. PROVIDING AFFORDABLE ELECTRIC POWER TO → The cost of network connection decreased from 93% of the per capita income to 5% over the past 5 years. ARDA AD CONSUMERS 7 A R ENSURING LONG-TERM AND TRANSPARENT → Effective and successful interaction with consumers. → On the Svetlaya Strana portal, the time to respond to customer complaints decreased TARIFF REGULATION → Increasing consumer literacy in technology connectivity. from 30 to 8 business days. A SMALL NUMBER OF STAGES WITH NETWORK → The average number of stages of network connection to electric networks in the ROSSETI Group was 3. CONNECTION (For more details, see “Ensuring quality and accessibility of energy infrastructure”) IMPROVING OPERATIONS AND VALUE CREATION UN SDG Tasks Activities Actual progress in 2019 → Changing the business model of the ROSSETI Group, creating a unified digital environment DSR A → Pilot projects were approved by the Board of Directors of ROSSETI and their implementation was launched. AD RASRR for managing the ROSSETI Group on the basis of digital solutions. DIGITAL TRANSFORMATION 2030 → Creation of new business models and services based on new digital technologies. → The program “Digital Transformation of the ROSSETI Group for the Period until 2030” was developed. (For more details, see “Digital transformation of the ROSSETI Group) → Development of infrastructure and platform solutions for electric vehicles.

→ Ensuring safe, reliable and uninterrupted power supply. SSAA S → Electricity losses reduced by 0.38 percentage points to 8.57% year-on-year. AD MMS 11 SUSTAINABLE ENERGY SUPPLY → Improving the quality of energy supply. → SAIDI indicator reduced by 25% to 1.8 hours, SAIFI indicator – by 8% to 1.2 units. → Emergency preparedness. (For more details, see “Ensuring a safe and uninterrupted power supply”.)

ОТВЕТСТВЕННОЕ → Responsible approach to the selection of suppliers, contractors and work performers. → The Unified Procurement Standard of ROSSETI was introduced. ПОТРЕБЛЕНИЕ OPTIMIZATION OF PROCUREMENT 12 И ПРОИЗВОДСТВО RATIONAL USE OF NATURAL RESOURCES → Reducing the consumption of energy resources for the economic demand of buildings for → The share of generated waste sent for disposal and disposal rose to 39%. administrative purposes. (Fore more details, see “Supply chain management” and “Environmental protection”.)

→ Industrial environmental control and monitoring. → 555 mln rubles were allocated for environmental protection; AD → Decommissioning of equipment containing polychlorinated biphenyls. PRESERVING AN ENABLING ENVIRONMENT FOR → 12 thsd units of equipment containing polychlorinated biphenyls were removed and transferred for destruction; 15 → Ensuring ornithological safety of electric grid facilities. PRESENT AND FUTURE GENERATIONS → 150.4 thsd bird protection devices were installed. → Development, implementation and certification of the environmental management system (Fore more details, see “Environmental protection”.) according to ISO 14001:2015 (GOST R ISO 14001-2016).

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GRI 102-18 Corporate Sustainability Management

ROSSETI strives for continuous improvement of the corporate the development strategy, including in the field of sustainable governance system in order to increase transparency and deci- development, the effectiveness of the Company and management sion-making efficiency. The sustainable development manage- control in the implementation of tasks. The committees under the ment system is integrated into the general corporate governance Board of Directors provide a preliminary study and examination system of ROSSETI. of the most significant issues related to the competence of the The General Meeting of Shareholders is the supreme manage- Board of Directors. RSS DSR A SM AD RASRR 12 AD RD ment body of ROSSETI. In connection with the predominant Management of the current activities of the Company is carried participation of the Russian Federation in the authorized capital of out by the collegial and sole executive bodies – the Management D A AD A DA D R AD 3 WELL-BEING 8 M R the Company, the corporate governance system is characterized Board and Director General of ROSSETI. The competence of the AD SSAA S 15 11 AD MMS by the specifics of regulation, and the controlling shareholder executive bodies includes resolution of issues of the current has a significant influence on the activities of the ROSSETI Group. activities of ROSSETI, with the exception of the issues related to The professional Board of Directors is the key link in the effective the competence of the General Meeting of Shareholders and the corporate governance system of the Company; it plays a key Board of Directors in accordance with the Charter of the Company. role in the strategic and business management of the Company. More details on corporate governance can be found in the Annual Report of ROSSETI 2019 IMPLEMENT The Board of Directors is responsible to the shareholders for PROVIDE EMPLOYEES WITH THE DIGITAL COMPETITIVE EMPLOYMENT TRANSFORMATION BENEFITS 2030 CONCEPT Organizational Structure of Sustainability Management

PROMOTE A HEALTHY LIFESTYLE ENSURE SUSTAINABLE POWER AMONG EMPLOYEES AND LOCAL SUPPLY COMMUNITIES AUDIT COMMITEE DEVELOP CULTURE AND SCIENCE IN THE REGIONS OF THE OPTIMIZE PROCUREMENT STRATEGY COMMITEE COMPANY’S OPERATIONS NOMINATION AND REMUNERATION UPGRADE PROFESSIONAL COMMITEE QUALIFICATIONS OF THE STAFF, SUPPORT CONSERVATION OF GENERAL MEETING INCLUDING YOUNG EMPLOYEES OF SHAREHOLDERS COMMITEE OF INVESTMENT, SUPPORT HUMAN RESOURCE IMPROVE OPERATIONS NATURAL RESOURCES TECHNICAL POLICY, RELIABILITY, AND SOCIETY DEVELOPMENT, AND GENERATE VALUE

ENERGY EFFICIENCY LEVEL OF THE BOARD DIRECTORS ENSURE DECENT CONDITIONS OF ENSURE DECENT AND SAFE CONDITIONS OF EMPLOYMENT BOARD OF DIRECTORS AND INNOVATION EMPLOYMENT

ENSURE ENVIRONMENTAL MANAGEMENT BOARD SUSTAINABILITY FOR PRESENT AND IMPROVE OCCUPATIONAL SAFETY CREATE HIGH-QUALITY AND FUTURE GENERATIONS AND INDUSTRIAL SUPERVISION AFFORDABLE SERVICES DIRECTOR GENERAL FOR CUSTOMERS

ENSURE AFFORDABLE ELECTRICITY ETHICS AND CORRUPTION PERSONNEL OCCUPATIONAL ECOLOGY AND ENERGY STAKEHOLDER

SUPPLY CONTROL MANAGEMENT HEALTH AND SAFETY EFFICIENCY ENGAGEMENT EXECUTIVE LEVEL

ENSURE LONG-TERM, TRANSPARENT

TARIFF REGULATION CORPORATE GOVERNANCE DEPARTMENT BRANCH OF ROSSETI OBJECTIVES ARDA AD A R CENTRAL COMISSION FOR MINIMIZE THE NUMBER OF DEPARTMENT OF PUBLIC 7 CORPORATE ETHICS AND BRANCH OF ROSSETI TECHNICAL SUPERVISION RELATIONS AND MEDIA ELECTRICITY CONNECTION SETTLEMENT OF CONFLICTS HR DEPARTMENT TECHNICAL SUPERVISION CENTER DEPARTMENT OF INTEREST DEPARTMENT OF WORK PROCEDURES CENTER OF GREED CONNECTION WITH PUBLIC AUTHORITIES SECURITY DEPARTMENT AND INFRASTRUCTURE DEVELOPMENT INVESTOR RELATIONS SUSTAINABILITY DEPARTMENT PRIORITIES OPERATIONAL LEVEL OPERATIONAL FUNCTIONAL AREAS AND UNITS

Sustainable development management is an integral part of management and is implemented at all levels of the Company’s management: at the level of the Board of Directors of ROSSETI, at the executive and operational levels.

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Management of Sustainable Development Issues at the Level of the Board of Directors GRI 102-16 Corporate Ethics and Anti-corruption The Board of Directors of the Company carries out general Committees under the Board of Directors of the Company take management of sustainable development issues and controls part in managing the sustainable development of the Company Ethical business conduct, honesty and transparency in conducting The Code of Ethics contains corporate rules and standards of activities of executive bodies in the main priority areas of sus- through preliminary study of issues, belonging to their area of operations are an integral part of the corporate governance and conduct for the employees of the Group that are consistent with tainable development. responsibility. culture of the Company. The Code of Corporate Ethics and Official the values and principles of ROSSETI. The provisions of the Code Conduct of the Employees of ROSSETI (hereinafter referred to as of Ethics cover, inter alia, the topics of non-acceptance of cor- the Code of Ethics) is the main document regulating activities ruption, non-discrimination, abuse of authority, labor protection of the Company in this area. The Code of Ethics was approved and the environment. The document applies to all employees of STRATEGY COMMITTEE AUDIT COMMITTEE by a decision of the Board of Directors of the Company and is the ROSSETI Group regardless of their position. updated in a timely manner in accordance with the applicable law. → participation in the development of the strategy, including on → control of the internal audit function, interaction with an ESG aspects; external auditor; → control and monitoring of the implementation of plans, includ- → condition monitoring and evaluation of the effectiveness of the ing in the areas of sustainable development; risk management system and internal control system; → preparation of proposals and recommendations for the de­ → participation in anti-corruption work and analysis of compli- The Principles of Corporate Behavior of the ROSSETI Group velopment of the ROSSETI Group. ance with the code of ethics.

COMMITTEE ON INVESTMENT, TECHNICAL POLICY, NOMINATION AND REMUNERATION COMMITTEE RELIABILITY, ENERGY EFFICIENCY AND INNOVATION

→ preparation of recommendations to the Board of Directors on the implementation of the investment program and the Unified → evaluation of the work of the Management Board and the HONESTY Technical Policy; Director General by analyzing the KPI achievement; AND OPENNESS → preparation of recommendations to the Board of Directors on → assessment of the performance of the Board of Directors and the issues related to the implementation of the Digital Trans- its members; formation of the ROSSETI Group program for the period up to → analysis of compliance of independent directors with indepen- 2030 program, issues of launching pilot projects; dence criteria. → monitoring the implementation of the Energy Saving and Ener- gy Efficiency Program, the Unified Technical Policy. INTERACTION AND COLLABORATION PROFESSIONALISM Management of Sustainable Development Issues at the Executive and Operational Levels PRINCIPLES OF CORPORATE The Management Board and the Director General of ROSSETI are environmental protection, energy conservation and energy ef- BEHAVIOR responsible for the development and implementation of plans ficiency, social support. Heads of subsidiaries and affiliates and for the implementation of the priority areas of the Company. In functional units are responsible for the direct implementation particular, these are programs in certain areas of sustainable of program documents – plans, programs, and packages of development: labor protection and ensuring industrial safety, measures.

Regulatory Documents IMAGE CONFIDENTIALITY The Company has a number of internal documents that regulate → approved the Development Strategy of ROSSETI; AND REPUTATION activities of the ROSSETI Group in relation to economic, envi- → approved a new version of the Unified Technical Policy in the ronmental and social aspects. The main internal documents electric grid complex, which includes provisions on energy on sustainable development are indicated in Appendix No. 2 conservation and improving energy efficiency, as well as to this Report. provisions on managing environmental aspects of activities; In 2019, ROSSETI continued to improve the internal documents → approved a new edition of the Environmental Policy of the The Central Commission for Compliance with Corporate Ethics → settlement of conflicts of interest in relation to employees of the Company in accordance with the selected priority areas Electric Grid Sector; and the Settlement of Conflict of Interest is responsible for of the ROSSETI Group; of development and to meet the most modern requirements: → the Board of Directors of ROSSETI developed and approved a ensuring compliance with the provisions of the Code of Ethics, → consideration of violations of the norms and standards sti­ list of pilot projects as part of implementation of the “Digital the duties whereof include: pulated by the Code of Ethics; Transformation 2030” Concept and launched the implemen- → resolution of the pre-conflict situations reported to the com- → other issues related to compliance with the Code of Ethics. tation thereof. mission;

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ROSSETI pays special attention to compliance with applicable the ROSSETI Group’s employees, as well as members of the laws, including the Anti-Corruption Law. The Company has Boards of Directors of the ROSSETI Group companies, were Anti-corruption established a zero level of tolerance for all manifestations of informed about anti-corruption policies and procedures. The main corruption, work is underway at all levels of management to mechanisms for communicating this information are through the ROSSETI does not accept any forms of corruption and actively prevent cases of corruption. ROSSETI strives to promote dis- document management system, newsletters and publications on works to prevent corruption. semination of successful anti-corruption practices, as well as corporate websites and in corporate publications. All business to adopt the best practices. The company publishes information partners sign anti-corruption obligations and an anti-corruption The main corporate document governing the anti-corruption GRI 103 ROSSETI is a member of the Anti-Corruption Charter of the activities of the ROSSETI Group is the Anti-Corruption Policy Russian Business and is included in the Consolidated Register on anti-corruption measures in the corporate newspaper, as clause with companies of the electric grid complex, in which they GRI 102–12 well as in the media, conducts social campaigns and events confirm that they have read the Anti-Corruption Policy, accept of ROSSETI and of the subsidiaries and affiliates of ROSSETI. of Charter Participants. The provisions of the Anti-Corruption Policy apply to employ- In 2019, the ROSSETI Group evaluated effectiveness of for interested parties. its provisions and bind themselves to ensure compliance with implementation of the Anti-Corruption Policy. All the ees of the ROSSETI Group, business partners and contractors, The ROSSETI Group has adopted a unified Anti-Corruption Policy, its requirements on their part and on the part of the associated subsidiaries and affiliates of ROSSETI (following the example as well as to other interested parties as per anti-corruption of ROSSETI evaluated in 2018) confirmed compliance with the the Regulation on the Prevention and Resolution of Conflicts of individuals and legal entities. obligations and agreements. requirements of the Anti-Corruption Charter of the Russian Interest, the Procedure for the Acceptance, Consideration and In all the divisions of the Company, corruption risk assess- Business. Resolution of Applicants’ Complaints about Possible Corruption ments are carried out as part of declaration campaigns to Factors, the Anti-Corruption Standard and other local regulations prevent conflicts of interest. All the divisions are checked in the field of corruption prevention. within the framework of the procurement procedures they The Company informs employees and other stakeholders of the have organized and as part of the examination of complaints above internal documents and the procedures set forth in them about possible corruption offenses. No risks were identified by posting them on the Company’s website. In 2019, 100% of in the reporting year. Anti-corruption Standard

CORRUPTION RISK MANAGEMENT → corruption risk management processes are organized with the corporate-wide risk ma­nagement system.

External Corruption Prevention Initiatives in 2019.

Representatives of the ROSSETI Group took part in the VIII Eur- Representatives of ROSSETI made a presentation at the “Im- IDENTIFICATION OF OFFICIALS RESPONSIBLE FOR THE PREVENTION OF CORRUPTION OFFENSES asian Anti-Corruption Forum on “The Law Against Corruption: proving Anti-Corruption Measures in Procurement” roundtable AND THE FIGHT AGAINST CORRUPTION Mission and New Trends” – one of the largest international at the Higher School of Economics NRU in the framework of → the Center for Coordinating and Monitoring the Activities of subsidiaries and affiliates anti-corruption forums attended by specialists and experts from the XX April International Scientific Conference on Econom- of ROSSETI in the Field of Prevention and Fighting Corruption is the Security Department 14 countries, representatives of international organizations, in- ic and Social Development. The report discloses the best of ROSSETI. cluding the Council of Europe, UNESCO, UNICEF, the International anti-corruption practices in the procurement procedures Center for the Investigation of Corruption and Asset Recovery used in the energy sector. The main participants of the event (G20), and others. The forum discussed application practices and were representatives of the Presidential Administration, issues raised by studies on anti-corruption legislation. the Investigative Committee of the Russian Federation, the Federal Antimonopoly Service of Russia, the Ministry of The ROSSETI Group held the sixth annual seminar/discussion ORGANIZATION OF THE INTERNAL CONTROL PROCESS IN THE FIELD OF PREVENTING AND FIGHTING on the “Actual Problems of the Prevention and Combating of Labor of Russia, business structures, scientific and public CORRUPTION Corruption in the Electric Grid Complex.” The event was held in organizations. The purpose of the meeting was to share the framework of the execution of instructions of the President successful experience and expert opinions on combating of the Russian Federation under the National Anti-Corruption corruption in procurements. Plan for 2018-2020 to advance training of those responsible A delegation of the ROSSETI Group took part in the Organiza- for anti-corruption measures and initiatives. The seminar was tions in the Fight Against Corruption conference held by the attended by the specialists responsible for the prevention of Prosecutor General’s Office of the Russian Federation and the CORRUPTION MONITORING corruption offenses in the ROSSETI Group, and representatives of Russian Ministry of Labor. Power engineers made a report → anti-corruption monitoring; the St. Petersburg Academy of Security. A discussion of current on preventing conflicts of interest in the ROSSETI Group. The → formation of an anti-corruption corporate consciousness; practices and trends in identifying and combating corruption, as event was organized in preparation for Russia’s participation → outreach activities. well as an exchange of positive experience in the implementation in the G20 meeting in 2020, which Russia will present the of anti-corruption measures took place. Within the framework country’s best practices in preventing corruption in the pri- of the seminar, advanced training in the field of anti-corruption vate sector, including organizations with state participation. IDENTIFICATION, CONSIDERATION, VERIFICATION OF INFORMATION ON POSSIBLE FACTS OF CORRUPTION legislation, workshops, and a business game were organized. → “hot line” (mail, telephone), personal appointments with the management, internal investigations.

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The work on prevention of corruption is systematic in the ROSSETI to which ROSSETI is called upon to coordinate activities of all For two years, the Company conducted an analysis of anti-cor- the Register of potential corruption risks of the ROSSETI Group Group and is formalized by the Strategy for the Development of network organizations in the field of anti-corruption policy. ruption and corporate procedures at ROSSETI and its subsidiaries for taking measures in the following areas: the Electric Grid Complex of the Russian Federation, according and affiliates to organize the process of identifying and analyzing → procurement activities; the corruption risk. All subsidiaries and affiliates were involved → capital construction; Level of Boards of Directors of The Board of Directors of ROSSETI and boards of directors of subsidiaries and affiliates determine the key strategic in this work; a practical risk assessment was carried out on the ROSSETI and its subsidiaries directions for the implementation of the Anti-Corruption Policy, approve the list of anti-corruption risks, and also monitor basis of three of them. This work resulted in the Methodology → investment activities; and affiliates results of application of the Anti-Corruption Policy for the analysis of anti-corruption and corporate procedures 6and → network connection The Director General of the Company and the sole executive bodies of subsidiaries and affiliates are responsible for Executive level organizing all anti-corruption measures, including their implementation and control. Divisions of the Company responsible for the prevention of corruption, as well as structural divisions of anti-corruption compliance procedures in the subsidiaries and affiliates of ROSSETI. These units carry out activities aimed at implementing Anti-corruption Measures Operational level anti-corruption policies, organize an assessment of corruption risks Training and consulting employees of the ROSSETI Group on Management Structure of Anti-corruption Activities of the ROSSETI Group anti-corruption issues is a priority area of the Anti-Corruption Policy. The company organizes training in the form of briefings, trainings, seminars, questionnaires and testing.

GRI 205–2 In 2019, the information in the “Anti-corruption policy” se­parate BOARD OF DIRECTORS OF ROSSETI section on the corporate websites of ROSSETI and all of its subsidiaries and affiliates was updated. Handbooks on anti-cor- The experience of training employees to combat corruption ruption topics were developed, and all the employees of the was highly appreciated by the control and oversight ROSSETI Group familiarized with them. In 2019, 157 publications bodies of the Russian Federation and was presented at the Eastern Economic Forum -2019 at the “Business without DIRECTOR GENERAL on anti-corruption topics were published in the federal and IN TERMS OF ANNUAL REPORTING corruption” session organized by the Office of the Pro­ OF ROSSETI corporate media of the ROSSETI Group companies. secutor General’s Office of the Russian Federation as part In 2019, all security employees of ROSSETI and its subsidiaries of the EEF-2019. DEPUTY DIRECTOR GENERAL FOR and affiliates were trained using an interactive online course SAFETY, ROSSETI - prepared with the support of a number of federal state au- COMPLIANCE-OFFICER SOLE EXECUTIVE BODIES OF SUBSIDIARIES AND AFFILIATES thorities, scientific and educational organizations. The training was conducted in the framework of monitoring awareness of CENTRAL COMMISSION FOR the employees of the ROSSETI Group about provisions of the SAFETY DEPARTMENT CORPORATE ETHICS AND SETTLEMENT OF ROSSETI anti-corruption legislation, studying opinions on the perception of OF CONFLICTS OF INTEREST corruption, active participation of all employees in the formation COMMISSIONS OF SUBSIDIARIES AND and implementation of anti-corruption standards and procedures, UNIT RESPONSIBLE FOR THE AFFILIATES FOR CORPORATE ETHICS PREVENTION OF CORRUPTION AND SETTLEMENT OF CONFLICTS OF improving the work aimed at combating corruption in the Group. OFFENSES AND CORRUPTION CONTROL INTEREST In 2019, 25,854 employees of ROSSETI and its subsidiaries and PERSONS RESPONSIBLE FOR affiliates underwent thematic training. A number of training events CORRUPTION CONTROL AT THE LEVEL were held: Knowledge Day at ROSSETI, training of employees of OF SUBSIDIARIES AND AFFILIATES the executive office and branches in the video conference mode, STRUCTURAL UNITS OF ANTI- lectures on “Corruption, fraud, other abuse and responsibility”, CORRUPTION COMPLIANCE PROCEDURES IN SUBSIDIARIES AND “Administrative liability of legal entities for corruption offenses”, AFFILIATES OF ROSSETI “Anti-corruption in procurement and contract performance.” Corruption Risk Management Furthermore, in the reporting year, 164 employees of the ROSSETI Group whose job responsibilities include direct organization of prevention and combating of corruption took an additional GRI 205–1 ROSSETI strives to minimize the risks of involvement in cor- interested parties. The process of managing corruption risks is 7 ruption activity, both among employees of the ROSSETI Group regulated by the Anti-Corruption Policy of the Group and the professional training program . As part of the development of companies and among contractors, business partners and other Risk Management Policy of ROSSETI. competencies, a number of employees of structural divisions of anti-corruption compliance procedures in subsidiaries and Organization of the Corruption Risk Management Process of ROSSETI affiliates underwent additional professional training and received certificates of the International Compliance Association (ICA).

Development Identification Development Corruption Formation of a set of measures of certificates risk of a map Efficiency assessment (identification and and procedures to and control analysis) of risks and registers of assessment of corruption eliminate and minimize corruption risks risks corruption risks

6 Approved by Order No. 11р on January 19, 2018 “On the approval of a standard methodology for assessing corruption risk in ROSSETI and subsidiaries and affiliates of ROSSETI.”. 7 In accordance with Order No. DM-P17-4575 of the Chairman of the Government of the Russian Federation D.A. Medvedev on July 23, 2018 (subcl. “a”, cl. 18) as part of performance of subcl. “a” of cl. 28 of Decree No. 378 of the President of the Russian Federation on June 29, 2018 “On the National Anti-Corruption Plan for 2018 – 2020.”

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Questioning Employees on Anti-corruption

In 2019, an anonymous electronic survey was conducted in the (76% of respondents), network connection (55% of respondents) Since 2017, ROSSETI and its 20 subsidiaries and affiliates have fill out a declaration of conflict of interest in the form established ROSSETI Group. More than 65% of employees of the ROSSETI and investment activities (44% of respondents)8. been using a system of electronic declaration of conflict of inte­ by the Regulation on the procedure for registering, transferring, rest. When applying for jobs at ROSSETI Group companies, they and dismissing employees of ROSSETI. Group participated in the survey. In addition to theoretical and Questionnaire participants spoke in favor of intensifying an- practical questions, the questionnaire included a section on ti-corruption measures for the legal education of personnel and knowledge testing on anti-corruption policy and the Code of formation of the law-abiding behavior, as well as of introducing Investigation of Conflict of Interests (Family Business) Ethics. changes to organizational and administrative documents in According to the results of the survey, the employees indicated accordance with amendments to the anti-corruption legislation. that the areas of activity of the ROSSETI Group that are most EMPLOYEE ON THE susceptible to corruption risks include procurement (82% of PAYROLL respondents), construction and reconstruction of energy facilities WIFE

mother-son husband-wife CEO

granddaughter-DAUGHTER plant father-daughter grandfather

son-father FATHER EMPLOYEE

son-mother husband-wife

common business, classmates,

common work in the past military service MOTHER

director until 2019

common business director general The ROSSETI Group employs an Automated System for Ana­ disclosure of information by counterparties regarding the entire % until 2019

EMPLOYEE lysis and Collection of Information on Beneficiaries (ASIB AS) chain of their owners (beneficiaries). As a result, 2,063 bidders PSF which allows confirming accuracy of the information provided were rejected due to identified violations. DISTRIBUTION % COMPANY 100% GRID by contractors, identifying signs of affiliation, conflict of interest UNREGULATED ASSETS DEBTS and other abuses. In 2019, nearly half a mln inspections of DISTRIBUTION PROCUREMENT COMPANY 2 counterparties were conducted as part of the unconditional GRID ASSETS POWER TRANSMITTION

DEBT FOR The Number of Counterparties Verified and the ELECTRICITY TRANSMITTION Proportion of Rejected Participants, 2017-2019 SERVICES

0.7 499 0.4 0.5 334 2017 2018 2019 302 Information on anti-corruption control in procurement activities Identified and resolved cases of pre-conflict situations 914 448 372 is disclosed in more detail in the Annual Report of ROSSETI 2019, Conflict of interest cases 10 42 70 “Implementation of the Anti-Corruption Policy” section. including the cases in which disciplinary measures were taken 6 9 55

2017 2018 2019 The increase in the number of cases recognized as a conflict of Detailed information on the declaration of conflict of interest interest is due to the expansion of categories of employees of campaign is disclosed in the Annual Report of ROSSETI 2019, Number of verified counterparties, thsd Share rejected for 2019, % the ROSSETI Group covered by the declaration campaign. “Prevention and Resolution of Conflict of Interest” section

8 Shares are indicated as the percentage of respondents who highlighted these areas.

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Mechanisms Reporting Unethical or Illegal Behavior Hotline

GRI 102–17 The main document regulating the work of the Hotline on Com- In 2019, 1,526 applications from legal entities and individuals Employees, contractors, partners and other interested parties bating Corruption of ROSSETI is the Order on consideration of were received and considered by the ROSSETI Group. This is may receive a confidential consultation or report on non-com- applicants’ complaints about possible facts of corruption. 491 fewer calls than in 2018 owing to the correct organization pliance with ethical and/or legal standards. As a rule, the period of operation of hotlines in all subsidiaries and affiliates. for consideration of applications is 30 consecutive days. The Company takes measures to protect persons who have provided information about possible cases of corruption from any form of discrimination, including dismissal and other forms of pressure. Categories of Calls to the Hotline of the ROSSETI Group in 2019

11% 36%

12% Violations in the field of grid connection Contact Channels in Case of Possible Corruption Abuse of authority by officers / employeesof subsidiaries and affiliates of ROSSETI Violations Facts of neglected and non-contractualconsumption Personnel issues Employees of the ROSSETI Group as well as other interested parties can report possible cases of corruption through the following communication channels Procurement violations 17% 24%

FEEDBACK FORM

located on the internal portal and on the Company’s GRI 205–3 All the reported facts were verified and assessed in terms corruption-related violations were terminated, and no public website in the Anti-Corruption Policy section of signs of corruption offenses in the actions of executive corruption lawsuits were brought against the Company and officers. In 20 cases, validity of the reported information was its employees. In the reporting period, the Company did not fully or partially confirmed; however, no corruption offenses receive a single complaint about violations of the procedure were revealed, no contracts with business partners due to for considering applicants’ appeals. HOTLINE: +7 (495) 664 8494, weekdays, from 9:00 to 18:00

EMAIL ADDRESS OF ROSSETI: PLANS FOR 2020 [email protected]

The Сompany’s plans for corporate ethics and anti-corruption for the coming year include: → the study of the formation of the practice of interaction → training and testing all the employees of executive offices WRITING TO THE FOLLOWING ADDRESS: with the Russian FAS to identify and prevent instances of subsidiaries and affiliates and their branches using the 4 Belovezhskaya St., Moscow, 121353 of unfair competition in relation to the ROSSETI Group online anti-corruption course. companies (including submission of knowingly false information as part of the application with the aim of winning the procurement procedure); IN PERSON BY APPOINTMENT at the Security Department of ROSSETI

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Name of Risk in Sustainable Management Approach Development Risk Description Key Risk Management Measures in 2019

ROSSETI recognizes the importance of the risk management pro- ISO 31000-2010 “Risk management. Principles and guidelines”, The risk is caused by the possibility of reducing Work was carried out to improve accuracy and reliability cess in order to ensure sustainable development of the ROSSETI GOST R ISO 31010-2011 “Risk management. Methods of risk electricity consumption due to macroeconomic changes, of demand planning and correctness of electric energy and Group. The risk management system allows timely identification assessment”, as well as the recommendations of international a decrease in business activity, fluctuations in demand power accounting. for products of consumers of electricity, as well as The implementation of the Program of measures to reduce and assessment of risks, taking measures to manage them professional organizations in the field of risk management and optimization of external power supply structures by electricity losses in electric networks continued. and minimize negative consequences if they are implement- internal control, including the Committee of Sponsoring Orga- large consumers. ed. ROSSETI approved and implements the Risk Management nizations of the Treadway Commission (COSO). RISK OF DECREASE IN THE Policy of ROSSETI, policies for managing risks of subsidiaries The key role in the risk management system belongs to the Board VOLUME OF ELECTRIC ENERGY TRANSMISSION SERVICES and affiliates and risk registers of subsidiaries and affiliates, of Directors of ROSSETI and the Audit Committee under the Board including risk management plans that determine the timing of of Directors of ROSSETI. They are responsible for approving Risks associated with climate factors, physical Measures were taken to increase the level of observability their implementation and the responsible parties. In accordance risk management policies, evaluate effectiveness of the risk deterioration, violation of operating conditions and a and controllability of the electric grid complex, as well as to with the Unified Technical Policy of the ROSSETI Group, manage- management system, and approve action plans to improve the critical change in the operating parameters of power reduce the time for emergency response. Targeted programs ment and investment decisions are made taking into account grid equipment, which can lead to failure (accidents) to reduce the accident rate continue to be implemented. The risk management system. The executive bodies of the Company of electrical equipment and reduce reliability of power Company organizes planned training and advanced training the analysis and assessment of environmental consequences. are directly responsible for the creation and operation of an supply. and monitors activities of the production personnel. Risk management is considered by ROSSETI as an integral part of effective risk management system. The Department of Internal strategic and operational management and business planning and Control and Risk Management is responsible for coordination FAILURE TO ACHIEVE is a set of measures implemented at all levels of management. and methodological support of risk management. RELIABILITY OF ELECTRICITY The risk management system was developed and implemented TRANSMISSION SERVICES More detailed information on the Group’s risk management system and internal control in the activities of the Company taking into account the basic system is disclosed in the Annual Report of ROSSETI 2019. Risks are caused by inadvertent neglect of labor In order to improve the safety culture of the personnel, the standards of risk management of organizations as per GOST R protection requirements by employees in the production Company organizes training to prevent injuries and to safely process. perform work. Examination of workplaces and maintenance of equipment that may pose danger to employees are also carried out, technologies for the safe performance of work are introduced.

OCCUPATIONAL RISKS

The ROSSETI Group pays special attention to observing The Company adopted local regulations aimed at preventing requirements of the legislation in the field of combating illegal actions; the Code of Corporate Ethics and Official corruption, to taking measures to comply with the Conduct and the Anti-Corruption Policy are in force. The requirements of antitrust laws, as well as to combating Company counteracts the misuse of insider information and the unlawful use of insider information and market market manipulation. manipulation.

COMPLIANCE RISKS

The activities of the ROSSETI Group are regulated and The policymaking activity plan is annually developed and controlled by federal executive bodies, including the implemented. Federal Antimonopoly Service of Russia, the Federal Tax Monthly monitoring of changes in legislation. Service of Russia, the Ministry of Energy of Russia, and An intragroup law enforcement practice on the functioning of Rostekhnadzor. the electric grid complex is formed. The ROSSETI Group implements a number of orders In 2019, local regulations were actively updated. and instructions of the Government of the Russian Federation, is controlled by the Accounts Chamber of the RISKS ASSOCIATED WITH Russian Federation, and the Federal Treasury in terms CHANGES IN LEGISLATION, of the targeted use of the budget funds allocated for JUDICIAL PRACTICE significant investment projects.

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The Consumer Council operates at ROSSETI. The Council is a ROSSETI Group. Increasing customer focus and information Stakeholder Engagement collegial body representing interests of consumers, public as- openness of the ROSSETI Group is among the key areas of activity sociations and business associations regarding implementation of the Consumer Council. ROSSETI strives to build honest and transparent relationships with its key stakeholders of the development strategy for the electric grid complex by the through continuous interaction, consideration of interests and timely reporting on the plans and results of the activities of the ROSSETI Group. Channels of Communication with Stakeholders

GRI 102-40 The main stakeholders impacting the ROSSETI Group The policy of interaction with the company, consumers and ROSSETI uses various communication channels to receive feedback as well as to exchange GRI 102-42 or which the ROSSETI Group impacts are as follows: government bodies of ROSSETI is the main corporate document information with the interested parties. → shareholders and investors; regulating the procedure for the interaction of the Company with external interested parties. This document includes the principles → federal and regional authorities; and the main objectives of interacting with external stakeholders. Types of Communication Channels of ROSSETI → Group’s employees; Control over the implementation of the Policy is carried out by → consumers of services; the relevant specialized structural units of the Group. Personnel Internal Communication Channels: External Communication Channels: → local grid companies; and social policies and the Code of Ethics regulate interaction → hotline of ROSSETI on corruption and fraud; → official website of the Company; → manufacturers of electrical equipment; with internal stakeholders, including employees of the ROSSETI Group companies. → regular meetings of employees with management; → mass media; → international partners and organizations; Identification and assessment of the interests of stakeholders is → corporate newspaper “ROSSETI”; → social media; → public organizations and the media. carried out in the Company on a regular basis, including as part → employee satisfaction monitoring. → Портал-ТП.рф portal; For more information on stakeholder engagement in 2019, see “About the report: iden- of the preparation of the annual statements of the Company. tifying significant topics”. → Svetlaya Strana portal; → hotline of ROSSETI on corruption and fraud; In 2019, the number of media publications → hotline of ROSSETI for shareholders; about the Company and its subsidiaries → unified hotline of ROSSETI for consumers; increased by more than a quarter. → dispatching services; COMPLIANCE WITH LEGAL → personal communication of the Company’s management REQUIREMENTS AND OTHER with representatives of external stakeholders. OBLIGATIONS UNDERTAKEN BY THE GROUP Company Website Traffic, mln users Media Publications about the Company and its Subsidiaries and Affiliates, thsd pcs. 7.0 287.9 EFFICIENCY AND 4.2 226.6 PERFORMANCE OPENNESS AND OF ACTIVITIES TRANSPARENCY OF INFORMATION +67% +27% PRINCIPLES OF INTERACTION WITH 2018 2019 2018 2019 STAKEHOLDERS OF THE The corporate newspaper of the Company, “ROSSETI”, is an The official website of the Company (www.rosseti.ru/eng/) plays ROSSETI GROUP authoritative trade paper published since 2013. The newspaper the key role in the development of external communications and is published on a monthly basis and is an important commu- features the influx of new users every year. In 2019, the Com- nication channel for the Company’s management and ordinary pany posted about 680 informational materials on the website, employees on the key decisions and events of the ROSSETI including press releases, photo and video materials. Group. In addition, it serves as an indicator of a professional community, which makes employees feel part of the Company. The company also covers its activities and interacts with stake- The newspaper is available in electronic form at Газетароссети. holders through the most popular social networks. In total, more than 39.3 thsd people signed up for information channels REGULAR AND CONSTRUCTIVE рф and in print (more than 40 thsd copies). COMPLIANCE WITH THE in social networks in 2019, and the total audience reach was RELATIONSHIPS WITH ALL STAKEHOLDER BALANCE STAKEHOLDER GROUPS more than 4.4 mln users. For more information about the channels of interaction with consumers, see the “Cus- tomer orientation” section.

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Mechanisms and Results of Interaction with Stakeholders

GRI 102-43 Stakeholder group Interests Interaction Mechanisms Responsible Department Highlights of 2019 → general meetings of shareholders; → disclosure of information on the website of ROSSETI and → improving the investment attractiveness of the Company; in the media; → the annual general meeting of shareholders; → capitalization growth; SHAREHOLDERS AND → conference calls; Corporate Governance Department → participation in the XI All-Russian Forum on Corporate Governance. INVESTORS → timely disclosure of objective, reliable and consistent information; Investor Relations Department → yotline; → transparency and corporate governance. (For details, see Annual Report of ROSSETI for 2019 and the Company's website, the Investor Calendar section). → individual meetings; → participation in investment forums and conferences.

→ discussion and examination of government projects and decisions → expert discussions in the framework of roundtables of related to the industry regulation; the State Duma (Russian Parliament), parliamentary FEDERAL AND → cooperation on the planning and implementation of regional pro- hearings, conferences, forums; Government Relations Department (For more details, see the "Contribution to regional development" section). REGIONAL AUTHORITIES grams for the territorial development of regions; → policymaking (the functioning of the Policymaking Com- → maintaining social stability; mission aimed at initiating changes and adopting new → budget efficiency. statutory instruments).

→ meetings with the personnel; → organized an “Energy Leaders” competition, III hockey tournament of the ROSSETI Group companies; → social and health care. → collective bargaining agreements; → all-Russian professional skills competitions for the personnel engaged in repairs and maintenance of dis- tribution networks; COMPANY EMPLOYEES → opportunity for professional growth and development; → professional training and staff development; HR Department → 146.5 thsd employees completed training, retraining and advanced training programs. → job creation and decent pay. → mandatory medical examinations; → sports and cultural events. (For more information see the "Our employees" section).

→ improving the reliability and quality of power supply with transition → consulting at customer service centers and the call cen- to the global standards; ter’s hotline; → improved reliability indicators for power supply; → efficiency of emergency recovery; → disclosure of information on the website of ROSSETI and Situational and analytical center; → reduced response time to consumer complaints on the Svetlaya Strana portal; → timely and affordable network connection; in the media; SERVICE CONSUMERS Department of Network connection → the average number of stages of network connection to electric networks in the ROSSETI Group was 3. → local availability of services and convenient service conditions; → interactive services of the ROSSETI Group: and Infrastructure Development → improving the regulatory framework; Портал-ТП.рф, Svetlaya Strana Portal; (For more details, see the "Customer orientation" and "Sustainable energy saving" sections). → consumer appeal performance. → consumer council. → creation of a unified information space on key problems of market functioning; → joint activities within the framework of the LGC Non- commercial Partnership; LOCAL GRID COMPANIES → improving the legislation regarding the relationship of grid organi- → a seminar/discussion on the implementation of Federal Law No. 522-FZ on the development of intelligent Property Management Department (LGC) zations and the state; → expert discussions at the roundtables of “Accessible electricity metering systems. networks”, the annual All-Russian forum on network → optimal distribution of resources associated with the operation and connection. development of the electric grid complex. → reliability and predictability of partnerships; → organization of the Partner Days Forum; → support for domestic manufacturers; → negotiations, meetings; ELECTRICAL EQUIPMENT → participation in the international Electric Networks – 2019 Forum → mutually beneficial cooperation; → bidding; Procurement Department MANUFACTURERS → participation in the organization of the V All-Russian Scientific and Technical Conference “Development and → fair competition; → participation in conferences, forums. Improvement of Reliability of Operation of Power Distribution Networks”. → exact fulfillment and transparency of contractual obligations. → negotiations, meetings; → agreement with Rosatom GC on joint promotion of technologies in foreign markets; → effective interaction with foreign partners; → publications on the Company’s website and in the media; INTERNATIONAL → 9 cooperation agreements (memorandums of understanding) with foreign countries and companies (Repub- → technology transfer of innovative development and non-resource → bidding;; Department of International PARTNERS AND lic of Serbia, EDF, Enel, NARI Group, China Energy Engineering Corporation, Erdenes Mongol, Electricidade export; Cooperation ORGANIZATIONS → participation in conferences, forums; de Mocambique, Union Electrica, Prime Alliance). → development of own lines of business in other countries. → development of joint projects; (For more information, see the “Membership in organizations and associations” section). → conclusion of cooperation agreements. → information on the websites of the Company and of its subsidiaries and affiliates; → 287,876 references to ROSSETI and its subsidiaries in the media in 2019; → reliability, relevance and completeness of the information → publications in the media and social networks; → total audience reach in social networks – more than 4.4 mln users. PUBLIC ORGANIZATIONS provided; Department of Public Relations and AND MASS MEDIA → advisory work as part of the press service; Media → support for socially significant initiatives. (For more details, see the "Interaction with the local community" section). → opinion exchange; → meetings, forums, business breakfasts.

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Channels of Communication with Consumers Used by ROSSETI

Customer Focus Portal of Electric Grid Services “Портал-ТП.рф” Svetlaya Strana Portal → personal Account service with the implementation of elec- → service for receiving online feedback on services. ROSSETI uses a customer-oriented approach to create and provide affordable and tronic signatures; high-quality services for all end users regardless of the service network company of the → internet reception service for feedback from applicants ROSSETI Group. The company complies with the international standards of reliability and Full-time Service quality of services and implements a number of initiatives to improve customer loyalty. The → service for grid connection of consumers; development of customer services for the coming years will occur primarily in the frame- → single load map of power centers from 35 kV. → receiving calls through the Group’s service offices. work of the digital transformation of the ROSSETI Group.

Telephone Service GRI 102-6 Electricity Consumers of ROSSETI (Network Connection, Energy Transmission) → service through single numbers of contact centers of subsid- Thematic Structure of Consumer Appeals in 2019 iaries and affiliates → service through operational dispatch services → yotline phone service. 5% 34% 11%

5% Grid connection Electricity transmission 6% Outage 2% Grid maintenance Electricity accounting Additional services Supplier of last resort Territorial network organizations, 2% outside of the ROSSETI Group Sales activities The main beneficiary of digital transformation is Other the consumer, who already requires greater ac- 36% cessibility, a new quality and range of services. The ROSSETI Group is ready to provide not only the existing, but the prospective requests of any client.

P.A. Livinsky Portal of Electric Grid Services Портал-ТП.рф Director General, ROSSETI Direct consumers Foreign power systems Interactive services of the ROSSETI Group operate on the basis of a single Internet portal for electric grid services (Портал- ТП. рф) and electronic services on websites of the subsidiaries and affiliates. The portal is integrated with the USIA Federal State System in order to ensure online security and simplify authorization and user identification. Currently, the Portal pro- In 2019, 6.5 mln messages were received through all channels of interaction with consumers. The contact vides electronic services to consumers of the ROSSETI Group centers of the ROSSETI Group remains the most popular communication channel among consumers – 65% companies. Also, 68 LGCs from 26 constituent entities of the Портал-ТП.рф of the calls were received over the phone at contact centers and hotlines. In recent years, there has been Russian Federation are connected to the services of the Portal. a positive trend in the use of interactive services; in 2019, the increase in Internet calls amounted to 70%, In 2019, the Concept of creating a unified portal of electric grid which contributes to an increase in the efficiency of work with consumer calls. For the reporting year, the services of the ROSSET9 Group was approved, which deter- response time to consumer appeals on the Svetlaya Strana portal decreased from 30 to 8 business days. mines the direction of development of Internet resources for interacting with customers of the ROSSETI Group. As part of the implementation of the Concept, a draft mobile application, Portal of Electric Grid Services, of the ROSSETI BUSINESS Group was presented at the International Electric Networks TO 8 DAYS Forum in December 2019. THE RESPONSE TIME TO CONSUMER APPEALS ON THE SVETLAYA 9 Decision of the Management Board of ROSSETI, Minutes on November­ 22, 2019 STRANA PORTAL DECREASED No. 943pr.

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Membership in Organizations and Associations, Awards

GRI 102-13 Membership in National Advocacy Organizations Awards 2019

Organizer/Rating Recognition of ROSSETI Organization Company Contribution

ROSSETI has taken a leading position in the corporate reporting indices RUIE Corporate Reporting Index Association of the Fuel and “Responsibility and Openness” and “Vector of Sustainable Development”. Energy Complex “Russian National Committee of the World Energy Council” (WEC RNC) Joint sessions, participation in Summits of energy leaders. → Diploma for the best implementation of corporate socially-oriented personnel Competition of the Ministry of Energy of Russia for the policy; best socially oriented company in the electric power industry → The ROSSETI Group companies became winners and prize-winners in 6 nomina- tions of the Competition. World Energy Council (WEC)

All-Russian contest MediaTEK-2019 ROSSETI Group Companies – winners and prizewinners in 12 nominations. Global Energy Association Development and Cooperation Participation in specialized conferences. Organization (GEIDCO) The social report of ROSSETI 2018 was recognized as the best among reports of Rating agency “RAEX-Analytics” the 99 largest Russian companies. Eurasian Economic Commission Work on the formation of a common EAEU electricity market. (ECE)

American League of Communications Professionals The annual reports of the ROSSETI Group companies took the first places in the (LACP 2018 Vision Awards) nominations of LACP contest. BRELL Energy Systems Coordination of issues regarding the separation of energy systems in Latvia, Committee Lithuania, Estonia.

The ROSSETI Group was once again awarded the highest Guaranteed Transparency National Procurement Transparency Rating 2019 Executive Committee of the CIS Award. Participation in events. Electric Power Council

The rating of ROSSETI, RKZ 10 “The highest quality of procurement management”, Expert RA Rating Agency International Electrotechnical was confirmed. Participation in committee meetings. Commission (IEC)

Thanks to the large-scale reforms carried out by the ROSSETI Group in the field of Participation in meetings of the Electricity Commission, the Corporate Doing Business ranking of the World Bank Group network connection of consumers, the Russian Federation took the 7th place in Russian Union of Industrialists Governance Committee, the Digital Economy Committee of the RUIE Fieldwork “Getting Electricity”. and Entrepreneurs Division in order to develop the Union’s position on the key legislative initiatives (RUIE Fieldwork Division) and areas of development of relevant areas of activity.

The ROSSETI Group took the first place in the media presence rating of energy SCAN-Interfax companies. Assistance in the implementation of the main goal of the partnership aimed at conducting international research in the Russian Federation, including Non-profit partnership“ Russian integration processes, improving the training of specialists in the field of foreign Council on International Affairs” energy policy, as well as at organizing the interaction of Russian scientific (NP “RSMD”) organizations with foreign expert and analytical centers on international Competition of the Youth All-Russian Public relations. Organization “Russian Student Squads” and the → Winner in the “Best employer in the electric power industry” nomination; Chamber of Commerce and Industry of the Russian → Winner in the “Best employer to start a career and further permanent employ- Federation among employer organizations hosting ment” nomination. student squads

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Supply Chain Management Selection and Evaluation of Suppliers ROSSETI selects and evaluates suppliers using the criteria of the Requirements and criteria for evaluating applications of partici- GRI 103 The company pays particular attention to the Formation and implementation of a unified procurement policy is Unified Procurement Standard. It includes the Anti-corruption pants are approved by the procurement commission depending GRI 102-9 selection of suppliers and contractors, being carried out by the Central Procurement Commission of ROSSETI. standard of procurement, and the requirements apply to all on the method, type of procurement and subject of the contract The companies of the ROSSETI Group have structural divisions procurement participants. The company checks counterparties concluded on the basis of the procurement results. guided by the principles of procurement responsible for organizing and conducting procurement. for affiliation, conflict of interest and other abuses. Read more about anti-corruption control in procurement in the Annual Report of ROSSETI Information on all the planned and ongoing procurement procedures is mandatorily post- 2019, Implementation of the Anti-Corruption Policy. activities stipulated by the Unified ed on the official website of the Unified Information System (www.zakupki.gov.ru), the Corporate rules and norms stipulated by the Code of Ethics Company’s website (www.rosseti.ru/eng/) and electronic trading floors of the ROSSETI are advisory in nature for contractors and persons having a Procurement Standard of ROSSETI. Group. contractual relationship with the Company.

In the reporting year, significant changes were made to the pro- Supplier Selection Criteria curement process in connection with the amendments to the Criteria Definition procurement law that came into force: Federal Laws Nos. 470- Participant’s compliance with the application filing procedure and rules, submission deadlines, composition and order 2019 RESULTS FORMAL FZ (on December 29, 2017), 481-FZ (on December 31, 2017), of application documents 496-FZ (on December 31, 2017), as well as 505-FZ (on Decem- FINANCIAL Assessment of the financial condition of the Participant ber 31, 2017); significant changes were made to the norms of THE VOLUME OF PURCHASES OF ROSSETI LEGAL Legal capacity, contract terms Federal Law No. 223-FZ “On Procurement of Goods, Works, AND ITS SUBSIDIARIES AND AFFILIATES COMMERCIAL Commercial application conditions Services by Certain Types of Legal Entities”. In addition, in 2019 AMOUNTED TO TECHNICAL Compliance with the technical proposal the ROSSETI Group changed its approach to procurement using Experience in the implementation of similar agreements, reliability and business reputation, human and material and the “price comparison”­ method. QUALIFICATION THSD PROCUREMENT technical resources PROCEDURES Procurement activities in the ROSSETI Group are governed by the 39 following internal corporate documents: Procurement Classification TOTALING → Unified Procurement Standard of ROSSETI; → Purchasing policy of ROSSETI; GRI 204-1 The company classifies purchases by type of activity and pro- Due to the specifics of purchases in distribution networks, cedures for their implementation. In 2019, the largest share of purchases of the ROSSETI Group are carried out at the level → Partnership program between ROSSETI and small and me- BN RUBLES purchases came from the reconstruction and technical re-equip- of subsidiaries and affiliates, rather than branches, and then dium-sized enterprises; (INCLUDING VAT) ment of electric grid facilities.. the equipment is used in specific regions depending on the → Regulation on the Central Procurement Commission of 559 To date, the ROSSETI Group has more than 24,000 suppliers of need. Due to the fact that the majority of suppliers are small ROSSETI. electric grid equipment and contractors represented in 82 of 85 and medium-sized businesses and do not have wide logistics constituent entities of the Russian Federation. There are no sup- networks, as a rule, local suppliers participate in procurement pliers and contractors registered outside the Russian Federation. at the IDGC level, the production base of which meets the pur- chasing criteria of network companies. Thus, most purchases of subsidiaries and affiliates are from local suppliers – small Supply Chain of ROSSETI and medium-sized enterprises.

CUSTOMERS PRINCIPLES OF THE UNIFIED PROCUREMENT POLICY ROSSETI AND ITS SUBSIDIARIES Cost Structure by Type of Activity, bn RUB INFORMATIONAL OPENNESS

CPO OF ROSSETI CPO OF THE CUSTOMER NO VENDOR DISCRIMINATION PROCUREMENT MANAGEMENT PROCUREMENT MANAGEMENT EFFICIENT SPENDING OPEN ACCESS TO PARTICIPATION 38% SUBDIVISION OF ROSSETI TRANSPARENCY AND AUDIT 210.3 22% PROCUREMENT ORGANIZATION PERSONAL RESPONSIBILITY OF EMPLOYEES 126.3 LEGAL COMPLIANCE PROCUREMENT COMMISSION IDENTIFICATION OF SUPPLIERS AND PROCUREMENT 3% New construction and expansion of electric grid facilities Reconstruction and retrofitting of electric grid facilities 19.0 29% Power repair (repair), maintenance TYPES OF PURCHASES CHARACTERISTICS OF PROCUREMENTS ACTIVITIES 8% 161.6 IT procurement CENTRALISED JOINT UNIFIED INFORMATION SYSTEM (UIS) — PROCUREMENT INFORMATION 42.7 Other purchases SUPPORT IS CARRIED OUT THROUGH THE UIS WEBSITE

• SEVERAL SUBSIDIARES ROSSETI PJSC AND SME PARTNERSHIP PROGRAM — SUPPORT FOR SMALL AND MEDIUM- OF ROSSETI SUBSIDIARES OF ROSSETI, SIZED ENTERPRISES • SUBSIDIARIES OF ROSSETI pays great attention to increasing the information form. In 2019, the share of competitive procurement using ETP OTHER CUSTOMERS ROSSETI + ROSSETI EVALUATION OF PROCUREMENT RESULT — transparency and access of participants to the procurements was 99%. The priority method of procurement was an open IN ACCORDANCE WITH 7 CRITERIA AND THEIR RATIOS of all the companies belonging to the ROSSETI Group, including­ tender – 60%. through the conduct of procurement primarily in electronic

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The Structure of Regulated Procurement Share of Competitive Procurement Using ETP Procedures by the Methods of their Implementation Open Day for the ROSSETI Group Partners in 2019 98.8% 99.0% 99.0% In 2019, as part of the “Partnership Days”, an open day was organized for Russian and foreign manufacturers of electrical 8% products. Company representatives answered manufacturers’ questions and tested the equipment used for projects. The 60% event was attended by more than 40 partner companies. 9% 2017 2018 2019

Tender 13% Request for quotes Request for proposals Auction 10% Procurement from a single supplier

Procurement from Local Suppliers and Small and Medium-sized Enterprises

At the end of 2019, Decree of the Government of the Russian The total volume of purchases from SMEs amounted to about Federation on December 11, 2014 No. 1352 regarding achieve- 235 bn rubles (about 65%), while the volume of purchases Economic Impact ment of the established indicators for the share of purchases where only SMEs can bid was about 103 bn rubles (about 29%). from small and medium-sized enterprises was fully executed. Management

The economic value created as part of the activities of the ROSSETI Group is distributed among the interested parties, as well as reinvested in the development of the ROSSETI Group.

10 GRI 102-7 Created and Distributed Direct Economic Value of the ROSSETI Group, mln rubles Data on the ROSSETI Group Actual data for 2019 Mandatory shares of procurement GRI 201-1 from SMEs for 2019 established Index 2019 2018 2017 by the Government Decree Direct Economic Value created

Revenue 1,029,654 1,021,602 948,344 70% 65% Financial income 21,741 17,617 16,319 52% Share of profit of associates and joint ventures (net of income tax) 192 337 2

29% 30% 29% Net other income 27,106 23,355 21,677 18% 10% Direct economic value generated, total 1,078,693 1,062,911 986,342

2017 2018 2019 2019 Distributed Economic Value Operating expenses (not including expenses on employee benefits, taxes and fees 629,932 646,748 587,707 The share of direct procurements from the SMEs via the tenders open only for the SME’s participation (other than income tax), charity expenses, maintenance of social facilities) General share of procurements from the SMEs, including subcontracting Salaries and other payments and benefits to employees 201,274 187,386 181,530

Financial expenses 31,696 27,517 30,034

Payments to the state 63,512 73,215 62,356

Together with SME Corporation, JSC, ROSSETI implements a Suppliers and contractors have the opportunity to gain access to Investments in communities (expenses for charity, maintenance of social facilities) 3,765 3,367 3,556 number of initiatives aimed at simplifying access for small and the current procurement plan, which is published on the website Distributed economic value, total 930,179 938,233 865,183 medium-sized enterprises (SMEs) to purchases of the ROSSETI http://www.rosseti.ru/eng/ in the Procurement section. The com- Group. The company holds conferences and seminars, advances pany holds annual meetings with partners to improve interaction. Retained economic value 148,514 124,678 121,159 payments to counterparties and introduces a Unified Partnership For more information on procurement from SMEs, see the ROSSETI Annual Report 2019, Program for SMEs. Procurement and Relations with Suppliers. For more information on economic value created and mechanisms of its distribution, see the ROSSETI Annual Report 2019.

10 The calculation was carried out according to IFRS and in accordance with the calculation method of GRI 201-1 indicator of the GRI Standards standard.

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SUSTAINABLE DEVELOPMENT 2RESULTS

www.rosseti.ru/eng/ ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Our Employees Headcount of Subsidiaries and Affiliates, thsd people11 29.4

22.4 22.0 The employees of the ROSSETI Group companies are the most valuable asset of the 21.2 20.7 16.8 Company, since achievement of the operational efficiency and strategic goals of the Company 14.6 14.4 14.4 14.3

depends on them in the first place. 8.6 7.7 7.3 The ROSSETI Group creates safe working conditions and contrib- management is provided by departments of organizational design 2.2 1.5 ute to the professional and personal growth of employees. The and personnel management.

company guarantees protection of employees’ rights, complies When forming personnel and social policies, the Company com- TDC with the principles of equality and non-discrimination. The ROS- FGC UES MOESK plies with the requirements of the law. The main corporate IDGC of Urals Kubanenergo LENENERGO Yantarenergo IDGC of Centre IDGC of Volga IDGC of Siberia ROSSETI South SETI Group strives to attract the most talented and competent ROSSETI Tyumen documents regulating personnel management processes are IDGC of North-West specialists, implement personnel motivation programs, social the Personnel and Social Policy of ROSSETI and the Code of ROSSETI Northern Caucasus programs, youth policy projects, and develop a corporate training Ethics. The provisions of the Personnel and Social Policy regulate IDGC of Center and Volga Region system. issues of organizational design, headcount management, staff The main unit responsible for personnel management in the development, motivation, social support, and safety culture and Employed in 2019, thsd people 3.8 ROSSETI Group, including assessment, personnel development, apply to all employees of the ROSSETI Group. 3.3

and social support for employees, is the Human Resources De- 2.4 2.6 2.1 2.3 partment of the Company. At the level of subsidiaries, personnel 1.8 1.5 1.5 1.5 1.1 0.8 0.8 0.6 0.4 0.2

TDC MOESK FGC UES Yantarenergo LENENERGO Kubanenergo IDGC of Volga IDGC of Urals Chechenenergo ROSSETI South IDGC of Centre IDGC of Siberia ROSSETI Tyumen 2019 RESULTS IDGC of North-West

ROSSETI Northern Caucasus IDGC of Center and Volga Region THE TOTAL AVERAGE HEADCOUNT PERSONNEL RESERVE

THSD THSD PEOPLE PEOPLE Staff Structure of the ROSSETI Group by Employee Share of Women by Employee Category of the ROSSETI 217.5 18 Category in 2019, % Group in 2019,% STAFF TURNOVER RATE THE LEVEL OF STAFFING

16% 52% workers 9% 91%

specialists 4.8% 97% 48% 52% executives 13% 87%

StaffC omposition % Females 32 Males GRI 102–8 The total average headcount in 2019 amounted to 217.5 thsd Company’s employees have higher education, and the share of GRI 401–1 employees. The staff structure of the Company by employee such employees is growing. In the ROSSETI Group, the share of Workers category did not change in the reporting year; more than half women is 23% of the total number of employees. Executives Specialists of the employees are blue collars. There also was no significant change in the structure of headcount by age. Almost half of the

11 Taking into account the electric grid subsidiaries and affiliates and their affiliates.

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Staff Turnover in 2019 7.7% 7.9% Staff Development and Training 6.7% 6.0% 6.1% Over the years, the share of personnel without professional Taking into account the educational activities implemented in 5.6% 5.6% GRI 103 5.1% 5.1% 5.3% 4.8% 4.4% education has been steadily dwindling, and this is not only the the field, the coverage of employees reaches 100%. The share 4.1% 4.1% 3.9% result of efforts to attract qualified personnel in the company, but of production personnel among the employees who completed also the result of measures to develop expertise of employees full-time training is about 90%. Up to 60% of the total number of

1.1% of the ROSSETI Group. employees who completed full-time training were trained at the The personnel development system is a basic element of the corporate training centers. The 30 corporate training centers of personnel and social policy of the Company and is based on the the Group of Companies remain the main platform for training TDC production personnel, developing new training formats using FGC UES MOESK principles of continuity, expediency and justification. The ROS- IDGC of Urals LENENERGO Yantarenergo Kubanenergo IDGC of Siberia ROSSETI South IDGC of Volga IDGC of Centre VR technologies and distance formats. ROSSETI Tyumen SETI Group uses all available formats of full-time and distance IDGC of North-West learning, as well as their combinations. The main emphasis in the planning and implementation of ed- ROSSETI Northern Caucasus The ROSSETI Group average ucational programs is on compulsory training, development of IDGC of Center and Volga Region The planning of training, retraining and advanced training pro- grams in the ROSSETI Group is carried out in accordance with reg- qualifications in accordance with the requirements of profes- ulatory requirements, including in accordance with the Rules of sional standards, training aimed at developing professional and Human Resources Activities at Electric Power Enterprises of the managerial skills within the talent pipeline. Russian Federation and the requirements of the Rostekhnadzor. In order to increase efficiency of activities and develop profession- The Staff Structure of the ROSSETI Group by age,% Goals for the ROSSETI Group are covered by the Personnel and al expertise and skills of employees, the Company implements the corporate educational project “Knowledge Days”, the events 8% 34% 29% 29% Social Policy: of which are held in the following formats: 2019 → achievement of the share of trained employees of 30% of the total headcount by the end of the year; → lectures/presentations conducted by experts, employees 8% 33% 28% 31% Aged under 35 of ROSSETI and its subsidiaries and affiliates, in order to 2018 → the cost of training personnel of at least 1.5% of the payroll. Aged from 35 to 45 inform the employees about the effective legal acts, industry The ROSSETI Group companies use all available formats of From 45 until retirement age and corporate regulations and rules, as well as to exchange 8% 34% 27% 31% full-time and distance learning, as well as their combinations. 2017 Working retirees experience and knowledge and disseminate information In total, 146.5 thsd employees of the ROSSETI Group took part in about the best practices; the training, retraining and advanced training programs in 2019, → workshops conducted by invited experts in order to develop which is 67% of the total number (in 2018, the share was 61%). expertise and skills of the Company’s employees. THE AVERAGE AGE OF EMPLOYEES OF THE ROSSETI GROUP ABOUT A THIRD OF EMPLOYEES COMPANIES IS ARE YOUNG PEOPLE YEARS UNDER YEARS 42 OLD 35 OLD

In the Reporting Year, Educational

The Staff Structure of the ROSSETI Group by Educational Level Activities Focused on the Topic of Digital Transformation 13.4% 38.9% 47.7% 2019 In particular, the experts of ROSSETI held thematic lectures. The “New Technologies and New Challenges in Modern Energy” 13.7% 38.7% 47.6% seminar was organized by professors at the Skolkovo Institute 2018 Higher education of Science and Technology for participants in the All-Russian Vocational education Congress “Energy Leaders”. In addition, training in the “Strategy 14.9% 38.4% 46.8% 2017 Basic/secondary education and Tactics in the Digital Age in the Field of the Electric Power Industry” was held for the heads of the ROSSETI Group at the Innopolis University.

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To ensure the functioning of the corporate qualification manage- → development and implementation of programs for the devel- Average Monthly Salary in the Electric Grid Complex and in the Russain Federation in Whole, thsd rubles ment system in a new format, measures are taken to develop opment of digital skills among the employees. the electronic educational resource education.ROSSETI.ru, cor- 55.0 56.9 Being a member of the WorldSkills movement since 2015, the The ROSSETI Group porate online courses are developed for mass training programs, 52,0 ROSSETI Group actively implements international standards for Russian Federation 49.4 access to a corporate electronic library with business literature 46.2 assessing qualifications of production personnel. Open corporate 43.2 is organized and grouped into sections corresponding to the key championships on skills developed by experts of the ROSSETI 40.0 corporate competencies of the ROSSETI Group. 47.5 Group companies according to the WorldSkills methodology 34.8 43.4 The development of online formats increasing accessibility of are held annually. In 2019, the open corporate championship 32.1 29.0 39.1 36.8 the educational environment allows increasing the volume of of ROSSETI according to the WorldSkills standards was held 43.0 32.5 training by reducing unit costs for training. for three professional skills, operation of cable power lines, 30.0 maintenance and repair of relay protection and automation 26.6 Since 2019, ROSSETI implements a comprehensive project 23.4 for the development of a corporate training system in order to equipment, and an intelligent electricity metering system, at 21.0 comply with the staffing requirement of the Digital Transfor- three regional sites – Tervolovo, Gatchinsky municipal district 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 mation 2030 Concept. of the Leningrad region, the City of Yekaterinburg, and the City of Rostov-on-Don. In order to ensure compliance of the personnel development Personnel salary expenses in 2019 amounted to 151.4 bn rubles, Voluntary medical and accident and sickness insurance programs system with the Digital Transformation 2030 Concept, an audit In addition to the teams representing the ROSSETI Group, the which is 4.1% more than last year. cover 100% of the employees of ROSSETI and its subsidiaries and of the current system of advanced training was conducted in the championship was attended by employees of the leading com- ROSSETI provides employees with a high level of social guar- affiliates working on a full-time basis, with the exception of part- reporting year. Based on its results, the development directions panies of Rosneft, Gazpromneft-Nefteservis LLC, SUENKO JSC, antees by providing social protection and corporate support time and probationary employees. Insurance programs include for the near future were identified: Bashkirenergo LLC. programs for full-time employees. a wide range of medical services provided in the best state and commercial medical institutions in Russia. The employees are → increasing the volume of online training, increasing the ac- The winners of the Open Corporate Championship of Professional The components of these programs are: insured in accordance with the Regulation on the Provision of cessibility of the educational environment for all categories Excellence represented the ROSSETI Group at the WorldSkills → voluntary health insurance (VHI) and accident and illness in- Insurance Coverage of ROSSETI and its subsidiaries and affiliates. of employees; Hi-Tech 2019 National Championship for Cross-Industry Em- surance for employees. VHI for family members of employees ployees in High-Tech Industries (October 28 – November 01, The ROSSETI Group is implementing a Non-State Pension Pro- → integration of personnel assessment, development and career is provided on preferential corporate terms; Yekaterinburg). gram, which creates the conditions for effective resolution of planning procedures based on digital platforms; → assistance to employees in improving housing conditions, pro- personnel issues related to personnel attraction, retention and vision of official housing for employees of the key categories; motivation. The program is aimed at promoting financial stability → assistance in the provision of places in preschool and educa- of the employees upon them qualifying for pension and termi- Employee Motivation and Engagement tional institutions for children of the employees, organization nating their employment contract upon retirement. of the children’s leisure; An additional tool for staff motivation is the system of corporate RI 401–2 General principles of material compensation of employees are: The ROSSETI Group provides a competitive → provision of targeted financial assistance; awards. ROSSETI regularly holds “Best in Profession”, “Best Di- → time-bonus system of remuneration; level of remuneration for their employees. → provision of special offers for financial services of insurance vision”, “Best Company” contests for the electric grid complex. In → remuneration for increasing labor productivity; The main provisions of the remuneration system as well as the companies and partner banks; 2019 3,768 employees of the ROSSETI Group were awarded with → surcharges and bonuses for achieving corporate goals and conditions for the provision of social benefits and guarantees are → private pension provision, support of former employees of state awards, incentives from the President and the Government key performance indicators. covered by the Sectoral Tariff Agreement in the Electric Power electric grid companies. of the Russian Federation, departmental, industry and corporate awards for their exceptional service and special contribution to Industry for 2019-2021, in the Regulation on Remuneration, as For more information on the remuneration of members of the Board of Directors and se- The main document regulating the social policy of the Company nior management, see the Annual Report of ROSSETI 2019, Remuneration and Motivation. GRI 102–41 the development of the Russian electric grid complex. well as in collective agreements. is the Sectoral Tariff Agreement in the Electric Power Industry for In 2019, the average level of staff salaries increased by 3% 2019-2021, which defines the general principles for regulating compared to 2018. The average monthly salary of employees social and labor conditions, as well as the related economic of the ROSSETI Group amounted to 56.9 thsd rubles, which is relations. The STA applies to the ROSSETI Group companies of 20% more than the average salary in Russia. the core business. The STA is the basis of collective bargaining agreements for energy companies.

Awards and Achievements of Employees of the ROSSETI Group in 2019

Type of awards Number of Employees Awarded Russian Federation state awards 133 Departmental awards of the Ministry of Energy of Russia 928 Awards of the All-Russian Industrial Association of Electric Power Employers 862 Corporate Awards of ROSSETI 1,845

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Employee Engagement

Social Programs of ROSSETI The company adheres to the principles ERA of Russia Association: all electric grid of social partnership and constructive subsidiaries and affiliates participate in this SOCIAL professional association of employers of the electric cooperation in its interaction with personnel PARTNERSHIP power industry IMPLEMENTATION Primary trade unions of the All-Russian Electric and trade union organizations. Labor Cultural Charity Sports projects Trade Union Public Association: interaction with the dynasty Creative management bodies of the subsidiaries and affiliates events events and contests support contests

All electric grid subsidiaries and affiliates are involved in the conditions, level of remuneration, benefits and other compensa- professional association of electric power employers. At the local tions. The process of personal communication with employees is Creating comfortable work and rest conditions for employees and In 2020, the employees of the ROSSETI Group are to partici- level, there is interaction between the primary trade unions of carried out by Director Generals of the subsidiaries and affiliates, promoting a healthy lifestyle consitute an important area of the pate in 4 corporate, 13 industry-wide and 4 All-Russian sports the All-Russian Electric Trade Union Public Association and the heads of branches and production departments. social policy of the ROSSETI Group. Every year, the Company’s competitions. management bodies of the subsidiaries and affiliates of ROSSETI. The company seeks to maintain a high level of staff involvement employees participate in corporate sports tournaments, as well ROSSETI ensures regular meetings of employees with the ma­ and develop the corporate culture of the ROSSETI Group through as in industry-wide and All-Russian sports events. nagement, monitoring of employee satisfaction with working social programs.

Personnel Assessment and Talent Pool Sports Events of the Ministry of Energy of Russia for Energy Companies The ROSSETI Group has a multi-stage assessment system, sidiaries and affiliates and as part of regular confirmation of the set of tools of which depends on the stage of the emplo­ qualifications of the current employees (once every five years). The team of ROSSETI took the 1st place in futsal, hockey, swim- yee’s life cycle in the company of the ROSSETI Group (initial At present, the following qualification assessment centers have ming and chess and outranked all the fuel and energy complex assessment at admission, assessment of skills for inclusion been created and operate on the basis of the ROSSETI Group: teams in the team competition, including Inter RAO, Gazprom in the talent pool / appointment to a position, confirmation of Ural Interregional Energy Qualification Center (Ural IREQC), the Energoholding, Gazprom Neft, SUEK and others. Russian Energy qualification at a professional examination at hiring, periodic “South MCC” ANCO with examination sites in Yekaterinburg and Minister Alexander Novak awarded the best athletes and event assessment/confirmation of qualifications, etc.), as well as Rostov-on-Don, Qualification Assessment Center of NTC FSK EES organizers. the job category (specialist/manager, categories of mainte- JSC with 9 examination sites, from Khabarovsk to St. Petersburg. nance and operation production personnel of power facilities). In 2019, almost 1.7 thsd professional examinations­ were con- Large-scale assessment activities are carried out in connection ducted at electric grid qualification assessment centers, mostly with the implementation of system projects and programs, one at the examination sites of the Qualification Assessment Center of which is implementation of the professional standards in the of NTC FSK EES JSC, which was recognized as one of the top ROSSETI Group. three in Russia according to the judges of the “Best Qualification The Company is in the process of creating a network of the Assessment Center” contest conducted by the National Agency companies of centers for assessing electric grid qualifications for the Development of Qualifications under the auspices of the on the basis of the companies of the ROSSETI Group to conduct National Council under the President of the Russian Federation professional examinations for candidates for admission to sub- on the basis of the center’s results.

Percentage of the Personel Assessed by Employee Category and Share of Women in the ROSSETI Group III Hockey Tournament among the Companies for 2019 of the ROSSETI Group THE SHARE OF STAFF FROM THE Since 2017, the company has been holding a hockey tournament TOTAL AVERAGE HEADCOUNT WHO for the companies of the Group. In 2019, more than 130 power WENT THROUGH THE PERSONNEL ASSESSMENT PROCESS engineers (8 teams) took part in it. The ROSSETI Center team won the competition, becoming the three-times winner of the 23% 20% 58% 9% ROSSETI Cup. EXECUTIVES SPECIALISTS BLUE SHARE OF WOMEN AMONG COLLARS THE STAFF WHO WENT THROUGH 20% THE ASSESSMENT PROCESS

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Talent pools are the basic element of career planning THE TOTAL NUMBER OF in the ROSSETI Group. They are formed at all EMPLOYEES IN TALENT POOLS THE FIRST “ENERGY LEADERS” COMPETITION management levels and cover the range of positions WAS HELD IN 2019 from line managers to heads of subsidiaries. The total THSD number of employees in talent pools is more than 18 >18 PEOPLE thsd people.

In relation to the managers of the technical unit as the main resource providing reliable and uninterrupted power supply to consumers, targeted projects are implemented to assess and develop human resources. An example of such a project is the All-Russian FINALISTS AND WINNERS OF THE CONTEST contest “Energy Leaders”. ARE THE REAL TALENT POOL OF THE ROSSETI GROUP

The project is implemented by the ROSSETI On August 30, 2019, the contest’s final was held in Chelyabinsk. Along with professional appraisers, representatives of the Rus- The idea of ​​holding the “Energy Leaders” THE SHARE OF APPOINTMENTS Group in partnership with the “Russia – the sian Ministry of Energy, the Government of the Chelyabinsk OF INTERNAL CANDIDATES FOR Land of Opportunities” ANCO and is the first Region and the management of the ROSSETI Group worked as contest was supported at the industry level SENIOR POSITIONS IN 2019 AMOUNTED TO 75% sectoral projection of the “Leaders of Russia” experts on the site. 102 technical managers won the contest; and received wide public response. 18 of them were representatives of local grid. The winners The Minister of Energy noted: “I am very pleased that ROSSE- Finalists and winners of the contest are the real talent pool of contest. were awarded memorable steles, education grants for 500 thsd TI considers development of human resources their priority. the ROSSETI Group. The first appointments to key positions in The purpose of the competition is to form a pool of senior staff rubles, certificates of annual access to the corporate library of The “Energy Leaders” contest brought together about two thsd the technical unit of the ROSSETI Group and in other participat- from the most professional and motivated industry experts, put the ROSSETI Group. The award ceremony was held by Minister participants from all over the country – these are represen- ing companies have already been made, for example, the chief into practice the principles of the “social elevator”, and ensure of Energy of the Russian Federation A.V. Novak, Acting Gover- tatives of all of our backbone power grid companies. Holding engineer of the Permyenergo branch, the chief engineer of the readiness of the country’s electric grid complex to carry out large- nor of the Chelyabinsk Region A.L. Texler, Director General of such competitions makes it possible to realize one’s potential, Dagenergo branch, the head of the Crimean generating systems scale infrastructure tasks. The competition is held according to ROSSETI P.A. Livinsky. exchange experience, communicate with experts and company (State Unitary Enterprise of the Republic of Crimea “Crimean the methodology and rules of the “Leaders of Russia” contest management.” Generating Systems”). taking into account the industry’s specifics. In relation to the winners and finalists, a comprehensive work When selecting personnel for vacant managerial positions, the The first “Energy Leaders” competition was held in 2019. The plan is implemented to provide them with mentors and consul- first priority is given to the current employees and their develop- target audience is comprised of technical managers of the middle tants, design individual development plans and career paths, ment in accordance with qualification requirements. The share level of the ROSSETI Group and the largest local grid companies as well as to implement educational programs – management of appointments of internal candidates for senior positions in that are not part of the holding as the main resource providing workshops are conducted to develop key skills. A two-year mo­ 2019 amounted to 75%. reliable and uninterrupted power supply to consumers (heads of dular educational program for professional retraining in the field electric grid areas, chief engineers of production departments). of technological management is scheduled for implementation. Competition events in 2019 were held in the Chelyabinsk region as part of assessment of readiness of the region’s electric grid complex for the SCO and BRICS summits in 2020. 1,885 partici- REGISTERED FOR THE CONTEST pants registered for the Contest, including 350 representatives of large local grid companies that are not part of the ROSSETI Group PARTICIPANTS­ (with higher specialized education, under the age of 55 years). 1,885

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Youth Policy The Company sees the solution to the problem of meeting the Prize-winners of the Olympics are provided: future demand of the digital energy industry in active work with → the right to take part in the Energy Design Shift of the ROSSETI­­­ The ROSSETI Group implements a systematic youth policy through the early vocational schoolchildren. The All-Russian Olympiad for schoolchildren held Group held at the All-Russian Orlenok Children’s Center by the ROSSETI Group is aimed at identifying gifted high school guidance of schoolchildren, practical training of students, adaptation and development of where they can try their hand at creating true prototypes of students capable of technical creativity and innovative thinking. In new technologies for the Russian and the world’s electric young professionals – employees of the ROSSETI Group. 2018, 3.5 thsd students from all over the country participated in power industry; the Olympiad, in 2019 – more than 5 thsd students. The Olympiad → expert support of work on the projects initiated at the project is one of the stages in the selection and training of professional shift, assistance in preparing for participation in project con- personnel for the digital energy industry, a unique opportunity tests, including the All-Russian contest in the field of high- for children to test themselves and get acquainted with the tech innovative projects and developments, “Energoproryv”; current problems and areas of energy industry development, 2019 RESULTS solve current and interesting problems. → the priority right to sponsored education at the partner uni- versities in the specialized areas of training. The Olympiad is held in conjunction with the key partner uni- versities in the field of personnel training, such as MPEI, ISEU, The award ceremony for the winners of the All-Russian Olympiad THSD THSD THSD UrFU, in two stages: at the first stage, participants solve physics, for schoolchildren organized by the ROSSETI Group with the SCHOOLCHILDREN STUDENTS STUDENTS mathematics and computer science tests. The second stage presentation of valuable gifts is held in Moscow, at the office 5 2.3 12 involves fulfillment of cases aimed at testing creative abilities of ROSSETI. TOOK PART IN THE ALL-RUSSIAN OLYMPIAD PARTICIPATED IN STUDENT TEAMS TO COMPLETED INTERNSHIPS FOR SCHOOLCHILDREN HELD BY THE ROSSETI FAMILIARIZE THEMSELVES WITH TECHNICAL AT THE ROSSETI GROUP and the ability to use knowledge in the course of solving applied The Energy Project Shift of the ROSSETI Group is organized for GROUP. SPECIALITIES, AS WELL AS WITH LABOR AND problems in the electric power industry. To inform pupils about schoolchildren who have shown the best results at the Olympiad SOCIAL ADAPTATION the rules, stages and results of the Olympiad, a website was and other partnership projects for schoolchildren. created – http://olimpiadaROSSETI.ru/. The project shift is carried out on the basis of the Orlenok Cen- The Main Directions of Youth Policy of the ROSSETI Group Prize-winners of the first stage of the Olympiad are given the ter with expert, financial and organizational support from the right to participate in the final stage of the “Hope of Energy” ROSSETI Group. In addition to encouraging finalists with three Olympiad for pupils organized by the Moscow, Ivanovo, Kazan weeks of rest by the sea, the Company solves the problem of Energy and Siberian Federal Universities. involving children in project activities, immersion in energy issues, which should become an important factor in choosing the area of training and profession in future.

Career guidance activities for Programs for interaction with Initiatives to develop professional schoolchildren higher and secondary professional competencies among young educational institutions professionals → Holding the All-Russian Olympiad for Schoolchildren of the ROSSETI → 8 industry-university chairs were → Advice from young specialists of the Group; established with the support of the Group companies, participation → Organization of the Energy project ROSSETI Group in partner univer- in the Youth Council of the Electric shift of the ROSSETI Group in the sities; Power Industry under the Ministry All-Russian Children’s Center → Organization of student practice; of Energy of Russia; “Orlyonok”; → Organization of the All-Russian → Implementation of general educa- → Opening energy classes in the competition of graduate qualification tional and research projects; regions; works of bachelors and masters → Holding the International Youth → Participation in the All-Russian of technical universities on electric Energy Forum in the framework Forum of Professional Navigation power and electrotechnical topics; of the SPIEF; “ProeKTOriA”; → Participation in the student work → Participation in the organization → Participation in the All-Russian competition of the project “Profes- of the All-Russian contest in the Forum of Scientific Youth of the Rus- sional training 2.0”; field of high-tech innovative projects sian Scientific and Social Program → Conducting a lecture course “Digital “Energy Breakthrough”; for Youth and Schoolchildren “Step Transformation in the Electric Grid → Participation in the youth day of the into the Future”; Complex” at universities in 20 “Russian Energy Week” (REN); → Organization of the work of energy regions of Russia; → Participation in the IV Forum clubs and energy classes in the → Organization of work of student of working youth. regions of activity of the ROSSETI groups. Group.

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At partner universities, there are 8 industry-university chairs An important tool for practice-oriented training is the organization After the end of the Energy Project Shift, the work on projects were established with the assistance of the ROSSETI Group. The of internships for students. In 2019, more than 12 thsd students continues, expert support to teams is provided remotely and in participation of companies in the formation and development underwent training, production and pre-degree internships in the face-to-face sessions organized at corporate, industry-wide, of the vocational education system is also ensured through the companies of the Group, of which 10%—on the reimbursable national and international events with the participation of the development and adaptation of basic and additional vocational basis. Nearly 6 thsd trainees are students undergoing training ROSSETI Group. The results of work on the winning projects education programs (currently, 49 programs are in place, finalized in higher education programs. are presented in the framework of competitions of innovative or created with the participation of the ROSSETI Group), direct projects, including the All-Russian contest in the field of high- In order to popularize technical specialities, to promote the participation of educational practitioners in the educational tech innovative projects and developments, “Energoproryv”, processes of labor and social adaptation of the youth, to attract process, representative offices of the Group’s companies in the and the All-Russian forum of career guidance, “PROJECTORIA”. young qualified specialists to enterprises, since 2010, the Group management bodies of educational organizations. has been organizing work of student teams at the facilities of The traditional mechanism for attracting young specialists to the the electric grid complex. More than 13 thsd students have ROSSETI Group is the conclusion of sponsored training agree- passed through the Company’s student teams over these ten ments. In 2019, 1.1 thsd students underwent sponsored training years. In the 10th anniversary season, 2,300 students worked at educational organizations, of which more than 900 students at the facilities of the ROSSETI Group as part of student teams. underwent higher education programs.

Consistency is the Key Principle in Working The Number of Student Teams Working at the Facilities The activities of the ROSSETI Group companies in the devel- of the ROSSETI Group, people opment of student team movement were awarded with the with Students. 2,274 “Best Employer in Career Starts and Further Permanent Em- Implementation of projects at the federal level, organization 2,118 ployment” and the “Best Employer in the Energy Sector” nom- of the work of electric power clubs and energy classes for high 1,886 inations following results of the 2019 labor semester of the school students help to identify children with the ability to do Competition of the All-Russian Public Organization “Russian exact sciences and the potential for project activities, arouse Student Groups” and the Chamber of Commerce and Industry interest in the profession and support it through acquaintance of the Russian Federation for the employers hosting student with new technological solutions. Pupils participating in the teams. projects of the ROSSETI Group companies are closely moni- 2017 2018 2019 tored until they enter university, and as students, they become The main objectives of the youth policy in relation to young spe- members of the teams working on the urgent problems of the cialists, employees of the Group’s companies, are professional electric grid complex and act as experts on projects for school- adaptation and development. The institution of mentoring, the children. work on the formation and development of the talent pool of The Company’s partners in the field of human resources de- PLANS FOR 2020 young specialists, the involvement of young people in solving velopment are educational institutions of higher and second- the urgent problems of the electric grid complex through proj- PROJECTORIA ary professional education, the key areas of cooperation with ect activities, corporate social, sports and cultural events, par- which are: → development of a network of qualification assess- ticipation in the councils of young specialists created in all the companies of the Group serve these tasks. Work with young For several years, the ROSSETI Group has been a part- → training for employees of the ROSSETI Group; ment centers with the participation of the ROSSETI ner of the All-Russian Forum of Professional Navigation → provision of practice-oriented training, including develop- Group; people in the ROSSETI Group received high marks at the in- dustry level (the companies of the Group are winners of the “PROJECTORIA”, inviting pupils to solve problems that ment of dual education systems, organization of sponsored → finalization, update of the professional standards are relevant for the modern electric power industry. Competition of the Ministry of Energy of Russia “For the Best training for students, students’ practices, work of student for the key activities for the electric grid complex So, in 2019, in the framework of the Habitat thematic Socially-Oriented Company in the Electric Power Industry”); groups; including digital skills; zone, the Company presented cases on digital ener- the Company’s representative heads the Youth Council of the gy – three practical cases were offered for pupils to → career guidance activities; → development of distance learning formats in the develop: “V2G as an energy source”, “Electric Facebook”, Electric Power Industry under the Ministry of Energy of Russia. → human resources for the educational process; ROSSETI Group “Net work Services”. In solving purely practical cases, the pupils were assisted by practical experts – employ- → development and modernization of training facilities; ees of the technical unit of the ROSSETI Group. → innovation activities.

68 www.rosseti.ru/eng/ 69 ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Occupational Health and Safety Electric power industry is one of the traumatizing sectors of Occupational health and safety goals are set by the management Elements of the Occupational Safety Management System in the ROSSETI Group economy. That is why the issues of preservation of life and of ROSSETI and are based on the following: health of the employees and contractors performing works at → requirements of regulatory legal acts; Continuous improvement of the OSS is achieved through the . the objects of the power grid complex, are the priority of the → management decisions; development and implementation of preventive and corrective sustainable development of the ROSSETI Group. measures, as well as through regular assessment of the need → results of occupational risk assessment; The strategic goals of ROSSETI in the field health and safety are for changes in the functioning of the system determined by the Occupational Safety Policy of the ROSSETI → opinions of employees and their representatives. Category Key performance and effectiveness indicators of OSS procedures Group. The main strategic goal is to achieve zero injuries in the The functions of industrial supervision and occupational safety ROSSETI Group. are performed by the Department of Labor Protection and In- Reduction in the number of accidents and injuries among employees. INJURIES dustrial Safety of ROSSETI of a Branch of ROSSETI - the Unit Reduction in the number of accidents and injuries among contractors. for Occupational and Industrial Safety of Technical Supervision Center, and departments for Industrial Safety and Supervision Amount of money paid for damages from the consequences of accidents and injuries. at SDCs’ level. Decrease in cases of occupational diseases. EMPLOYEE HEALTH ROSSETI has established and operates an Occupational Health Increase in the share of employees who have undergone a medical examination and have no contraindications and Safety Commission. The Commission systematically reviews based on its results. health and safety issues in the ROSSETI Group and makes de- Reduction in the number of jobs with harmful and dangerous working conditions. cisions in order to prevent occupational injuries. SAFE WORKING CONDITIONS Reduction in the number of jobs with high and medium levels of occupational risk. Occupational Safety Management System Amount of money for benefits and compensations allocated to the hazardous production employees. Number of meetings and consultations on occupational safety and health conducted with employees and their GRI 403–1 In 2018, the Regulation for the Occupational Safety Management The Occupational safety management system (OSS) applies to GRI 403–8 SAFETY CULTURE AND COMMITMENT representatives. System of the ROSSETI Group was approved. This standard was all employees of ROSSETI and its subsidiaries and affiliates, as Number of top management solutions introduced and implemented after analysis of OSS functioning. developed in accordance with the state regulatory requirements well as to the contractors and suppliers working at the facili- Reduction in the number of violations of the health and safety requirements by employees and contractors. for labor protection and the recommendations of the Interna- ties of the ROSSETI Group companies. The OSS consists of the tional Labor Organization on the health and safety management following structural elements: policy, organization, planning Reduction in the number of violations of the health and safety requirements during state inspections. COMPLIANCE system. In 2019, ROSSETI continued to develop standards to and implementation, improvement actions. Each element of Number of measures taken upon results of state inspections. ensure functioning and improvement of the Occupational safety the OSS includes a set of interrelated and interacting measures Reduction in the amount of fines for violating the health and safety requirements. management system. and procedures aimed at achieving health and safety goals12. GENERAL INDICATORS Amount of financing of occupational health and safety measures. Regulatory Requirements. Occupational Safety Policy of the ROSSETI Group. The ROSSETI Group annually allocates significant funds to ROSSETI Group sees them as an investment in the preservation Strategic Goals achieve high performance indicators of its occupational health of personnel health. In 2019 health and safety expenses for the and safety system and to prevent injuries. The management of the ROSSETI Group amounted to 5.7 bn rubles. → Duty and responsibility → Source analysis → Competence and training → Planning, development and appli- Health and Safety Protection Expenses in the ROSSETI Group, mln rubles → OSS documentation cation of OSS → Information transfer and → Occupational safety goals 2017 2018* 2019 PLANNING AND exchange ORGANIZATION Total for subsidiaries and affiliates 5,013.3 5,233.6 5.676,1 IMPLEMENTATION → Hazard and risk prevention ROSSETI 3.7 3.1 3.2 SAFETY Total 5,017.0 5,236.7 5.679,4 MANAGEMENT SYSTEM * - the data is given with the actual cost adjustment. In 2019, the following main production control measures were → introduction of video fixation of the crews’ access to the IMPROVEMENT ОХРАНА ОКРУЖАЮЩЕЙASSESSMENT implemented: electrical installations; ACTIONS → Monitoring and assessment → Preventive and corrective СРЕДЫ → systematic control over the organization of work in the existing → control (audit) over compliance with occupational safety actions → Checks electrical installations; requirements in the course of production activities as part → Continuous improvement → Incident investigation → monthly Health and Safety Days in each structural production of the internal technical control system; → Analysis of the effectiveness subdivision of subsidiaries and affiliates; → organization of systematic work of the Occupational Health of OSS → maintenance of the System of response to the failure of and Safety Commission of ROSSETI with hearing of the heads ROSSETI SDCs’ employees to comply with occupational safety of SDCs and branches where serious and fatal accidents have requirements (coupon system); been committed; based on the hearings’ results measures 12 By Order of ROSSETI on February 7, 2020 No. 54, 15 Organization Standards (OS) were approved as documented procedures for the Occupational safety management system in the for prevention of injuries and improvement of the functioning ROSSETI Group. of the OSS in SDCs are defined.

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Occupational Health and Safety Training Safety Culture Development

GRI 403–5 The availability of competent and professional employees is The briefings on health and safety, training, testing and intern- GRI 403–4 Safety culture development is one of the most important mea- → involvement of employees and their representatives in the the main resource for creating an effective Occupational safety ships at the workplace are mandatory for all employees of the sures to prevent accidents. The company seeks to develop com- consideration of health and safety management issues; management system. The ROSSETI Group continuously train ROSSETI Group. If an employee fails to attend/pass any one of mitment of managers at all levels, as well as of employees, to → development of an effective motivation system for safe work; employees in labor protection and occupational safety issues. them, he/she is suspended from work. occupational safety issues. The management of the ROSSETI → encouraging employees’ initiatives related to improving the Testing of personnel knowledge is organized and carried out Group is committed to the principles of the concept of “zero Employees of contracting organizations undergo a mandatory work conditions and occupational safety; in accordance with the requirements of the Rules for working induction training in labor protection and familiarization with injuries”, or Vision Zero. → conducting professional skills competitions with the develop­ with personnel in electric power organizations of the Russian hazardous production factors before starting work. The ROSSETI Group is constantly implementing a number of ac- 13 ment of practical skills for safe work; Federation . tivities aimed at developing the safety culture among employees, Training activities include: the most significant of which are the following: → publication of materials in the corporate newspaper on oc- cupational health and safety. → briefings on occupational safety during admission and em- → development and adjustment of OSS procedures, including ployment; leadership and commitment to the principles of “zero injuries” Conditions for the participation of employees and their repre- sentatives in the management of occupational health and safety → organization of internships at the workplace; for managers of the ROSSETI Group at all the levels; issues are covered by the collective bargaining agreements. → compilation and implementation of training programs and testing of knowledge on health and safety; → training in practical methods of helping to relieve the injured of electric current and first aid techniques; → emergency and fire drills, etc. All-Russian Competitions of Professional Skills for the Repairs and Maintenance Personnel of Distribution Networks

The All-Russian competitions of professional skills of the repairs technical documents, equipment inspection, relieving the injured and maintenance personnel of 0.4-10 kV distribution networks of electric current, first aid, faulty equipment replacement. Creating an Electric Shock Demonstration were held at the educational building of Lenenergo; 14 teams The All-Russian professional skills competition is an annual event Ground from different regions of Russia took part in the competition. The held by ROSSETI to improve the skills of safe work of electrical teams demonstrated their knowledge and skills at seven stages personnel, increase productivity and exchange the best practices In 2019, as part of an R&D program, the MPEI National Re- of the competition: checkup of the knowledge of regulatory and among employees of the ROSSETI Group. search University created a training ground for demonstra­ ting electric shock at the Gorenki training center. The use of the training ground by specialists of the ROSSETI Group will reduce electrical injuries during the operation of electric grid facilities. Andrey Lisin, dispatcher at the Nezya- Alexander Bykov, electrician for the petrovsk, PDZ of the Central Electric operation of the Bagdanovich PDZ of the Networks of the branch of the IDGC of Eastern electric networks of the branch Urals, Chelyabenergo: of IDGC of Ural, Sverdlovenergo:

All-Russian Professional Competition of the “In no case one should transfer the responsibility to the “Mutual control in the team helps me. But still, the main per- Ministry of Energy of the Russian Federation foreman, supervisor or other official. Taking responsibility for son responsible for my life is myself. Therefore, I make sure one’s life is a sign of an established adult, independent and that the clothes correspond to the work being done, I check A representative of a company of the ROSSETI Group was de- responsible person.” the rigging, tools and protective equipment for integrity and clared winner of the All-Russian contest “The Best Specialist in labeling. I know how to use them correctly. At the workplace, Health and Safety – 2019”. In addition, the top ten list included I listen carefully to the briefing, ask questions if something is six more ROSSETI Group’s employees. The selection stages unclear, and, of course, do the work in accordance with labor included testing of theoretical and practical skills, including protection rules.” first aid skills, identifying violations of health and safety rules, conducting an accident investigation, etc.

13 Approved by Order of the Ministry of Fuel and Energy of the Russian Federation on February 19, 2000 №49.

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Injury Risk Reduction Program Injuries

GRI 403–2 Identification and management of key health and safety risks cupational safety management system of the ROSSETI Group. for employees is a key component of the Occupational safety Heads of structural divisions regularly hold discussions with management system of ROSSETI. The components of the risk employees and their representatives on the measures to reduce 2019 RESULTS management system are covered by the Regulation on the Oc- the risk of injuries.

→ As a result of the work performed last year, there was no increase in occupational injuries, and the number of emplo­ Injury Risk Management System of ROSSETI yees injured during work at electrical installations was reduced. → The number of recorded cases of occupational diseases – 1 case. → The Lost Time Injury Frequency Rate (LTIFR) was 0.161.

Development of a set Efficiency Hazard Assessment Results of measures and of professional analysis assessment and identification procedures to eliminate control risk levels and minimize risks

GRI 403–9 Reducing the number of accidents and injuries is the strategic been observed since 2014. In 2019, the number of accidents goal of the ROSSETI Group. As a result of OSS functioning and remained at the same level – 34 incidents, and the number of improvement of practices and control in the field of occupational fatalities increased from 13 to 15. safety, a steady decrease in the occupational injury rate has IN 2018, THE COMPREHENSIVE INJURY RISK In 2018, the comprehensive injury risk mitigation program was MITIGATION PROGRAM WAS DEVELOPED AND developed and implemented at all SDCs and third parties, which IMPLEMENTED AT ALL SDCS AND THIRD PARTIES, operate at the SDCs’ facilities of ROSSETI for the period 2018- The Dynamics of Industrial Injuries in 2017-2019 15 WHICH OPERATE AT THE SDCS’ FACILITIES OF 202014. The program includes a number of measures, includ- ROSSETI FOR THE PERIOD ing the Program (schedule) to replace injury-risk equipment 2018-2020 and eliminate injury-risk sites, the Program to provide modern 38 38 37 safeguards for special-purpose equipment and vehicles, etc. Employees of the ROSSETI Group whose activities involve a 35 34 34 high risk of injury include persons who organize and carry out work at electrical installations, as well as perform such types of work as driving vehicles, loading and unloading, metalwork, work at heights, etc. 19 In case of danger, employees may stop work 15 13 Injured and turn off the equipment. Accidents 2017 2018 2019 Fatalities

The investigation of injuries and occupational diseases is car- GRI 403–7 ried out in the companies of the ROSSETI Group on an ongoing basis in order to improve the Occupational safety management Number of Injured Employees of ROSSETI Group system and prevent injuries. The ROSSETI Group companies by Type of Accident in 2019, pers. have developed a system for reporting accident and occupa- tional diseases. The identified risks of occupational injuries are 2 11 reflected in the occupational health and safety instructions and in the documents reflecting results of investigation of accidents. 5 Information on risks is communicated to employees when they Exposure to electric current receive instructions on occupational safety, special training or Traffic accident in other forms. 3 Fall from a height (equal to the fallen person’s height or higher) External mechanical stress Falling objects 5 8 Other

14 Order of ROSSETI on March 29, 2018 No. 55. 15 Data for 2018 has been adjusted as per the decision of the State Labor Inspectorate.

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Employee Health Psychophysiological Testing

GRI 403–3 In addition to integrated health and safety activities, the ROSSETI Employees of the ROSSETI Group engaged in heavy work and In all the subsidiaries and affiliates of the ROSSETI Group, there diagnostic tools. The key selection factors are as follows: resis- GRI 403–6 Group also implements responsibility for the health of employees work with harmful/hazardous working conditions undergo man- are psychophysiological testing offices for the employees work- tance to stress, ability to work as part of a team, elimination of through other mechanisms. The ROSSETI Group performs asses­ datory preliminary and periodic medical examinations. The need ing at electrical installations. Practicing psychologists conduct conflicts, speed of making the right decisions when technological sment of jobs for compliance with working conditions, systematic to pass them is determined individually for each workplace based tests of both current and newly hired employees using modern violations occur, and others. medical examinations of emplyees, provides insurance coverage on the results of a special assessment of working conditions. under the Voluntary health insurance (VHI) programs, insurance Employees with medical contraindications are subject to exa­ against accidents and occupational diseases, and employees’ mination of professional suitability and, if necessary, measures life insurance for full-time employees. for rational employment are taken. Based on the recommen- dations of a medical institution, employees can referred for PLANS FOR 2020 VHI corporate programs contain a wide range in-depth examinations, outpatient, inpatient, and spa treatment.

of medical services, the provision of which is All the ROSSETI Group companies conducted a special asses­ GRI 403–7 sment of working conditions16. The main reasons for non-com- organized in the best state, departmental and Taking into account the analysis of the state of health and → audit of the current OSS system and its improvement in pliance of workplaces with labor protection requirements are commercial medical and preventive institutions safety in SDCs of ROSSETI and the proposals of the Power accordance with the results; the following: noise; general vibration; infrasound; intensity Industry Leaders, it is planned to carry out the following throughout the Russian Federation. and severity of the labor process, etc. Employees who perform → update of the comprehensive programs to reduce the main activities in 2020: their duties at workplaces that do not meet state regulato- risks of industrial injuries and injuries to third parties; The list of medical institutions is constantly expanding and ry requirements for occupational health and safety are paid → development of an effective motivation system for safe → focus on the organization of safe work at heights and supplemented by new ones. The VHI program meets the high compensation for working in hazardous working conditions, work; road safety; standards of ROSSETI and includes the following services for additional holidays are provided, and milk or other equivalent → organization of accounting for all violations and mi- → reporting optimization and automation of report for- various categories of employees: products are dispensed. crotraumas detected in the process of supervision and mation. → outpatient care (incl. domiciliary care); control, its automation; In 2019, 1 case of an occupational disease was registered that GRI 403–10 → dental care; occurred in IDGC of Siberia. The commission investigated the case17 → development and adjustment of OSS and documentation → emergency and scheduled hospital care; and established that the cause of the occupational disease was procedures, including those stipulating adherence to the → commercial ambulance; work in contact with harmful factors in the working environment. principles of “zero injuries” by the heads of ROSSETI and SDCs of all management levels; → office physicians (on-site medical services); In the view of investigation, the ROSSETI Group is improving its procedures and production conditions. → vaccination (including vaccination against influenza, tick- borne encephalitis); The key measures to prevent occupational diseases are the fol- lowing: → diagnosis and treatment at the leading research institutes; → elimination of harmful factors affecting employees; → rehabilitation treatment; → improvement of the technological processes and equipment → emergency medical care in the Russian Federation; used; → diagnostics and treatment of oncological diseases, etc. → use of personal and collective protective equipment; The voluntary employee accident and illness insurance program → continuous production control of harmful and hazardous provides insurance benefits to employees (relatives) in the event factors affecting health of employees. of death, illness, injury, disability or diagnosis of occupational diseases. Insurance coverage for employees of the ROSSETI Group is available 24 hours a day, 7 days a week and all over the world.

16 In accordance with Federal Law “On the Special Assessment of Working Conditions” on December 28, 2013 No. 426-FZ. 17 Order of the branch of IDGC of Siberia – Altayenergo on December 30, 2019 No. 1031.

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Organization, coordination and control of the environmental ac- The company seeks to ensure the effective functioning of the Environmental Protection tivities of the Company are entrusted to the Unit for Occupational Environmental Management System of ROSSETI and to implement and Industrial Safety of Technical Supervision Center, a branch programs and initiatives for its continuous improvement. The GRI 103 In the course of their activities, electric grid companies negatively → measures to fulfill the goal of the Environmental Policy of the of ROSSETI, the Technical Supervision Center. company implements the following activities: impact the environment. Such effects include the impact of indus- Electric Grid Sector to decommission 100% of the equipment As a voluntary environmental responsibility mechanism im- → development of plans to achieve the targets of the ROSSETI trial activities on biodiversity (especially birds), electromagnetic containing polychlorinated biphenyls20; plemented by ROSSETI, the Environmental Management Sys- Group in the field of environmental protection; and noise effects of substations on residential and recreational → guidelines for the environmental management system of tem is certified for compliance with the requirements of the → implementation of the system of environmental control and areas, changes in the natural and urban landscape due to the 21 ROSSETI . international standard ISO 14001:2015. In December 2019, the construction of electric grid facilities, hazardous industrial wastes accounting for environmental impact, environmental audits; Environmental Policy of the Electric Grid Sector is approved by Russian Register Certification Association confirmed compliance that contain trichlorodiphenyls, lead and other dangerous sub- → systematic training of personnel in order to increase their the Board of Directors of the Company22 and complies with the of the Environmental Management System of ROSSETI with the stances. ROSSETI strives to reduce its negative impact on the expertise in environmental protection issues and environ- Russian regulatory requirements and the international obligations requirements of the international standard ISO 14001:2015 and environment and ensure the minimum consumption of various mental safety; of the Russian Federation in the field of environmental protection. its national equivalent GOST R ISO 14001-2016. In addition, in physical resources, including raw materials, by developing and The Environmental Policy was updated in 2019 and applies to all the reporting period, IDGC of the North-West, IDGC of Volga, → provision of access for stakeholders to information related to improving the Environmental Management System of ROSSETI. the ROSSETI Group companies and is also recommended for use and MOESK also received certificates for compliance of the environmental protection activities of power grid companies. The main regulatory documents in the field of environmental to local grid companies. The Innovative Development Program Environmental Management System with the requirements of As part of the Environmental Policy of the ROSSETI Group, targets protection of the ROSSETI Group are as follows: of ROSSETI for 2016–2020 covers the main organizational and the international standard ISO 14001:2015. are being developed in line with the strategic objectives of the → еnvironmental Policy of the Electric Grid Sector18; technical measures in the field of environmental protection. In Technical Policy of ROSSETI on environmental protection. 2019, a new version of the Uniform Technical Policy in the Electric → program of the Implementation of the Environmental Policy The Strategic Goals of the Environmental Policy of the ROSSETI Group and the Key Performance Indicators of the Electric Grid Sector for 2018–201919; Grid Complex Regulation of ROSSETI was approved; it covers the objectives of the technical policy in the field of ecology. Environmental Policy Objectives Environmental Policy Implementation Targets

Decommissioning of the equipment containing polychlorinated biphenyls before the end of 2024 followed by its transfer to specialized licensed organizations for destruction. RESPONSIBLE WASTE MANAGEMENT Ensuring the secondary use of transformer oil (regeneration) in the amount of at least 10% of the purchased oil per year. LEGAL Reduction of the consumption of energy resources for the economic demand of administrative buildings by 3% RATIONAL USE OF NATURAL RESOURCES COMPLIANCE per year until 2020.

Bringing the share of motor vehicles operating on the ecologically clean fuel to 10% of the total fleet (2020). RESPONSIBLE ENSURING Achieving the full payback of the road vehicles running on the ecologically clean fuel in comparison with the PRODUCTION WASTE USING THE BEST AVAILABLE ENVIRONMENTAL ICE fuels (petrol, gas, diesel) within 7 years. MANAGEMENT TECHNOLOGY SAFETY Ensuring the implementation of self-supporting insulated wires of at least 15,000 km per year throughout the entire ROSSETI Group.

Certification and continuous improvement of the Environmental Management System in order to improve the environmental performance of the ROSSETI Group.

ENVIRONMENTAL SAFETY Preservation of biodiversity, including measures to prevent a reduction in the number of birds listed in the Red ENVIRONMENTAL Book of Russia: installation of at least 15 thsd bird protection devices throughout the entire ROSSETI Group POLICY annually. OBJECTIVES USING THE BEST RATIONAL USE GRI 307–1 Environmental protection expenses in 2019 amounted to 555 ENVIRONMENTAL PROTECTION AVAILABLE OF NATURAL mln rubles, which is 16 mln rubles higher than in 2018. The EXPENSES IN 2019 TECHNOLOGY RESOURCES amount of penalties for violation of environmental requirements of ROSSETI in 2019 amounted to 730 thsd rubles. In the reporting BN year, environmental control and supervision bodies conducted 555 RUB 13 inspections in relation to the ROSSETI Group. There were no environmental accidents at the facilities of the ROSSETI Group MAKING MANAGEMENT AND in 2019. INVESTMENT DECISIONS BASED RESTRICTION ON ANALYSIS AND ASSESSMENT OF ACTIVITIES OF ENVIRONMENTAL IMPACT IN PROTECTED AREAS

18 Decision of the Board of Directors on December 23, 2019 (Minutes of the Meeting on December 25, 2019 No. 386). 19 Decision of the Board of Directors on February 12, 2018 (Minutes of the Meeting on December 15, 2019 No. 293). 20 Decision of the Management Board of ROSSETI on August 23, 2017 No. 635pr. 21 Order of ROSSETI on October 15, 2019 No. 214. 22 Decision of the Board of Directors on March 01, 2017 (Minutes of the Meeting on March 03, 2017 №254).

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Environmental Protection Expenses of the ROSSETI Volume of Water Disposal in Surface Water Bodies, In order to improve water management in 2019, the fol- 3 Group, mln rubles thsd m lowing technical measures were implemented: → the reconstruction of the water disposal system was 118.9 116.1 commenced with the installation of local treatment 318 335 facilities under the project of “Reconstruction of the 246 household waste water treatment unit at the industri- Land conservation costs al site of the Obninsk Electric Networks of the Kalu- (including production and consumption waste management) 61.9 gaenergo branch of IDGC of Center and Volga Region” 52 62 65 Air protection costs → effective work was ensured and sanitation facilities for 153 159 155 Water protection and conservation cost car washes and storm sewers were rehabilitated.

2017 2018 2019

2017 2018 2019 Fees for Negative Environmental Impact of the ROSSETI Group, thsd rubles

2017 2018 2019 Land Protection Waste disposal fee 27,044 19,522 13,145 Fee for discharge of pollutants into water bodies 277 52 15 One of the results of the ROSSETI Group activities is the change The main objectives in the reproduction of natural resources in in the natural and urban landscape due to the construction of the construction and operation of electric networks are: Fee for emissions of pollutants into the atmosphere 453 391 185 electric grid facilities. The Group takes a responsible approach Total: 27,774 19,965 13,345 → recreation of the natural resources used for the reconstruc- to land exploitation and restoration. In accordance with the tion and construction of electric grid facilities (landscaping); Uniform Technical Policy in the Electric Grid Complex Regulation → land reclamation; of ROSSETI, the Group carries out an environmental assessment of projects. → biodiversity preservation activities. Water Management The ROSSETI Group implements technical solutions to reduce the size of the area occupied by power grid facilities, and also uses GRI 303–1 The protection and rational use of water resources in the design, period. The decrease in water consumption is associated with high-rise supports and self-supporting wires to reduce the area GRI 306–1 construction, reconstruction, operation and liquidation of electric the timely implementation of measures for the maintenance and of deforestation​​ during the construction of power grid facilities. grid facilities is an important component of the Environmen- repair of water supply networks, as well as increased discipline In order to minimize the negative impact on the soil during the tal Management System of the ROSSETI Group. The company regarding the rational use of water resources. work performed, sorbents are used to clean the places of soil implements a number of initiatives aimed at reducing the use Volume of Reclamation of Disturbed Lands The volume of water disposal to surface water bodies in 2019 contamination with oil products of water resources, increasing the efficiency of wastewater amounted to 61.9 thsd m3. A decrease in the volume of waste- for 2017-2019, ha treatment and minimizing the impact on surface water bodies. water discharge to surface water bodies by 46.7% compared The main sources of water withdrawal for the ROSSETI Group are to the previous year is due to the decrease in the volume of 6,485 centralized networks and surface water bodies. The total volume surface wastewater delivered to local treatment facilities and of water withdrawal in 2019 amounted to 2,312 thsd m3, which the decrease in water consumption. 4,879 is 5% lower than the water consumption of the previous reporting

Water Intake by Source, thsd m3

87 635 1,572 18 2019 From underground sources 64 85 627 1,711 16 From surface sources 2018 2017 2018 2019 From centrаlized sources From other sources 118 694 1,780 18 2017 THE VOLUME OF RECLAMATION OF DISTURBED LANDS IN 2019 4,879.16HA

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Waste Management Reduction of Air Emissions

GRI 306–2 ROSSETI strives to reduce the amount of waste generated and The strategic goals of the ROSSETI Group in the field of waste increase the share of waste transferred for recycling to spe- management are: GRI 103 In 2019, the ROSSETI Group’s gross air pollutant emissions amounted to 1,522 tons. Since GRI 305–7 cialized enterprises. → reuse of at least 10% of the purchased transformer oil; 2017, emissions have decreased by 6%. The total amount of waste generated by the ROSSETI Group in → withdrawal and disposal of the equipment containing poly- 2019 amounted to 87 thsd tons, which is 15% lower than the chlorinated biphenyls. During the reporting period, the following activities were car- volume of waste generated in 2018. 39% of the generated waste ried out in the field of air protection: was forwarded to neutralization and disposal. → laboratory and analytical control at sources of emissions of Gross Air Pollutant Emissions in the ROSSETI Group, t air pollutants; → description of the sources of emissions and of the emis- Waste by Hazard Class in 2019, thsd t Production and Consumption Waste Treatment sions of air pollutants; in 2017 - 2019, thsd t → checkup of the efficiency of gas treatment plants; 1,621 31 27 → control of vehicles for compliance with toxicity and smoke 34 43.61 1,519 1,522 standards.. 41.22 75 72 In order to reduce nitrogen oxide emissions in 2020, it is 53 planned to implement the investment project “Retrofitting of the Mezen DPP in Mezen, Arkhangelsk Region, to replace die- sel generators (2 units)”. As part of the project, the existing 0.3 0.18 1.54 diesel generator sets (DGU) will be replaced by DGUs with im- proved environmental performance. Class I Class II Class III Class IV Class V 2017 2018 2019

Placement 2017 2018 2019 Decontamination, disposal

As part of implementation of the Environmental Policy of the Polychlorinated biphenyls (PCBs) are hazard class I or extremely Electric Grid Sector, the following activities are carried out in hazardous substances. In accordance with the Stockholm Con- Energy Saving and Energy Efficiency the field of waste management: vention on Persistent Organic Pollutants ratified by Russia, by → arrangement of waste storage sites for the separate stor- 2028, it is necessary to completely destroy the waste containing GRI 103 age of waste of different hazard classes in the territory of PCBs. The ROSSETI Group has set a strategic goal for itself – to The ROSSETI Group implements an Innovative Development, GRI 302–1 Energy Conservation, and Energy Efficiency Enhancement Policy. production facilities, including the purchase of containers decommission the PCB-containing equipment with its transfer GRI 302–4 and demercurization kits, as well as labeling of containers; to certified enterprises for destruction before 2025. To achieve As part of the implementation of this Policy, energy saving and 2019 RESULTS this goal, the ROSSETI Group companies annually decommission energy efficiency programs for SDCs of ROSSETI are developed. → acquisition and use of absorbents and environmental neu- and dispose of thsd of units of the PCB-containing equipment tralizers for petroleum products; The priority areas of the energy efficiency policy are: and replace them with the environmentally friendly equipment. → design, development, and application of new technologies; → delivery of production and consumption waste to specialized In 2019, 12,033 units of the PCB-containing equipment were → The consumption of fuel and energy resources for → development and improvement of electricity metering sys- organizations for subsequent disposal, neutralization and withdrawn. the business needs of administrative buildings de- burial; tems; creased by 4.4%. The volume of transformer oil to be recycled in 2019 amounted → development of energy service activities; → keeping records of waste generation and movement. to 4,213 tons, which is 70% of the purchased volume of oil. → The proportion of lighting devices using LEDs → optimization of the business process management system. reached 54.3%. In 2019, a package of documents was developed by the executive Volume of PCB-containing Equipment Transferred office of ROSSETI in accordance with the requirements of the for Disposal, psc new edition of ISO 50001:2018 published in June 2018 to prepare 20,220 implementation of the energy management system with the aim of further development of the energy management systems implemented in the ROSSETI Group. 14,277 12,033

2017 2018 2019

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The target for 2019 was a reduction of energy resources for Consumption of Energy Resources for the Business business needs of administrative buildings by 3% per year until Needs of Administrative and Industrial Buildings in the 2020. In the reporting year, that figure decreased by 8.81 thsd ROSSETI Group, thsd t of reference fuel tons of reference fuel (4.4%) relative to the actual consumption 226 in 2018. Number of Installed Bird Protective Devices, thsd units In 2019, the planned values ​​in the field of biodiversity were achieved. The Company installed 150 thsd bird protection One of the target indicators of the Programs of Subsidiaries devices, which exceeds the planned value (43 thsd units). and Dependent Companies of ROSSETI23 is the share of lighting Thus, the ROSSETI Group installed 359 thsd bird protection devices using LEDs in the total volume of the used lighting de- 150.4 198 devices in 2017–2019. Furthermore, during the reporting vices. According to the results of the Energy Conservation and 110.7 period, 15 thsd km of self-supporting insulated wires were Energy Efficiency Enhancement Programs of Subsidiaries and 190 98.1 installed throughout the ROSSETI Group, which corresponds Dependent Companies of ROSSETI in the distribution complex, to the planned value. In the period 2017–2019, the amount the share of lighting devices using LEDs in the total volume of of installed self-supporting insulated wire throughout the the used lighting devices is 54.3%, which exceeds the planned ROSSETI Group amounted to 46.0 thsd km. value by 4.3 percentage points. 2017 2018 2019

2017 2018 2019

Biodiversity Protection

Preservation of biological diversity in the territories of activity of enterprises of the electric grid complex is one of the priority areas of the Environmental Policy of the ROSSETI Group. To this end, it is practiced to limit production and construction activities in the specially protected natural areas. In order to unify requirements in the field of ensuring or- nithological safety of electric grid facilities of ROSSETI, Key Public Events with the Participation of the ROSSETI Group a number of organization standards were approved and put into effect. All-Russian Contest of the Best Regional Environmental Practices “Reliable Partner – Ecology” The ROSSETI Group carries out activities in the field of ornithological safety of power grid In the reporting period, 5 SDCs of ROSSETI took part in the first The project of Ural IDGC in the field of ornithological safety of facilities, including the use of self-sup- All-Russian contest of the best regional environmental practices overhead lines located in the Chelyabinsk region and the project porting insulated wires, which can also “Reliable partner – Ecology.” The competition was held by the of Kaliningrad Generating Company (subsidiary of Yantarenergo), significantly reduce the volume of tree Reliable Partner Association in conjunction with the Russian the Ushakov Wind Farm, won the “Best project in the field of and shrub felling. Ecological Society with the support of the Committee of the preservation of biological diversity” and the “Best project in the Council of the Russian Federation on the Agrarian and Food field of development of generation based on renewable energy Policy and Environmental Management. sources” awards.

Roundtable Dedicated to the 100th Anniversary of the Astrakhan State Natural Biosphere Reserve

In 2019, representatives of the branch of ROSSETI, the Technical protected areas of the Lower Volga and North Caspian. This event Supervision Center, and ROSSETI South took part in a roundtable was interconnected with the goals and objectives of the federal dedicated to the 100th anniversary of the Astrakhan State Nat- project “Preservation of biological diversity and the development ural Biosphere Reserve on the “Protected areas and business of ecological tourism” of the “Ecology” national project. During cooperation in the interests of preservation of biodiversity” topic. the meeting, a repressentative of ROSSETI presented a report The purpose of the roundtable is to organize cooperation between on the implementation of measures to ensure ornithological government authorities, scientific and public organizations, as safety of power grid facilities located in the Astrakhan and Vol- well as industrial companies for the protection of biodiversity in gograd regions.

23 According to Decree of the Government of the Russian Federation on September 27, 2016 No. 971.

84 www.rosseti.ru/eng/ 85 ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Crane Homeland Sustainable Energy Supply By 2020, the World Crane Year, MOESK had completed a two- In order to reproduce the aquatic biological resources, FSK stage set of measures to increase bird safety and reliable power UES released 81,444 sturgeon fry into the basin of the Sea of The mission of the ROSSETI Group is to provide reliable, → unified rules for the prevention and elimination of the con- supply. The high-voltage lines located in the territory of the Crane Azov (Kuban river). high-quality and affordable energy supply to consumers by sequences of technological violations (accidents) at electric Homeland Wildlife Sanctuary (the largest pre-flight cluster of Kubanenergo carried out the agrotechnical care of the forest 24 organizing the most efficient infrastructure and introducing grid facilities of subsidiaries and affiliates of ROSSETI; gray cranes in Russia) and its adjacent territories . At the first planted in 2017 in the amount of 4,615 trees (walnuts, seed modern innovative and digital technologies. → the procedure for the transfer of operational information stage, in the period 2015-2018, MOESK installed BPD at 2,653 chestnuts, Caucasian pears, oriental apple trees, Pitsunda pines, The ROSSETI Group adopted a number of internal documents in the ROSSETI Group; 6-10 kV power transmission poles. At the second stage, in white maples, etc.) on the land covering an area of 9.04 hectares regulating provision of safe and uninterrupted power supply: 2018-2019, in the territories adjacent to the reserve, power of the Sochi National Park as part of compensatory measures → order “On the Organization of Activities of Headquarters in the engineers replaced 45 kilometers of uninsulated wires with for the construction of overhead power lines. Electric Grid Complex”. self-supporting insulated wires (SIP-3). In 2020, the ROSSETI Group will continue working on biodiversity preservation. In 2020, together with ROSSETI South, it is planned Ensuring Quality and Accessibility of Energy Infrastructure to develop a Corporate Program to ensure ornithological safety of high-voltage lines located in the territory of the Astrakhan Region. Electric power transmission services Indicators of Electricity Transmission Services constitute the main activity of the ROSSETI Group. 9.22 762 763 748 8.95 OF THE ELECTRICITY 78% GENERATED IN RUSSIA IS TRANSMITTED THROUGH THE NETWORKS PLANS FOR 2020 OF THE ROSSETI GROUP 8.57

Environmental protection plans of the ROSSETI Group: BN KWH 2017 2018 2019 → transfer for destruction of at least 12% of the total volume of PCB-containing equipment located at the OF ELECTRICITY 763 Transmitted electric energy, bn kWh facilities of the ROSSETI Group as of December 31, 2019; WAS TRANSFERRED Level of electricity loss, % → maintaining the level of electric energy losses at the achieved levels; IN THE REPORTING PERIOD → certification of compliance of the Environmental Management System of IDGC of Center and Yantarenergo with the requirements of ISO ELECTRIC POWER LOSS 14001:2015; Electricity Metering REDUCTION TO → preservation of biodiversity, including measures to prevent reduction in the number of birds listed in The main way to reduce losses, in particular, the Red Book of Russia. the commercial ones, is to automate electric 8.6% energy metering. Equipped with Smart Metering Devices Intelligent metering systems allow to collect data to identify in the ROSSETI Group, % unconventional and unaccounted for consumption in a timely manner and take timely corrective action. The main expected 20.1 16.8 effect of the transition to digital networks is a 30% reduction in 13.1 electricity network losses. In 2019, more than 687 thsd accounting points were modern- ized, and remote data collection was organized at more than 601 thsd accounting points. At the end of 2019, 20.1% of the 2017 2018 2019 facilities of the ROSSETI Group are equipped with metering de- vices, which is 3.3 percentage points higher than the previous 24 The International Crane Protection Fund and the Eurasia year. In 2019, the volume of electricity supplied to the network the Crane Specialists Group announced 2020 the World Crne Year at the initiative of the Amur branch of WWF Russia. The Rus- ROSSETI group decreased by 0.17% compared to 2018. The sian Bird Safety Union selected crane as the bird of the year level of electricity losses was reduced by 0.38 p.p. to 8.57%. 2020 in Russia.

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Network Connection Ensuring Safe, Reliable and Uninterrupted Power Supply The number of procedures required to connect to the GRI EU23 Network connection is the actual connection of customers’ power grids of the ROSSETI Group in the capital re- The ROSSETI Group monitors provision of safe, reliable and Target programs have been approved to improve reliability and power-receiving equipment, power generation facilities, and gions has decreased from 3 to 2 over the past 5 years, uninterrupted power supply to its consumers and carries out reduce the level of accidents at the facilities of the ROSSETI electric grid facilities to electricity networks. Network connec- and the connection period decreased from 162 to 41 regular work to reduce the number of emergencies, reduce Group: tion services for new customers allow to meet the growing days. The cost of network connection for this period the time to eliminate the interruption in power transmission, → elimination of traumatic equipment; needs of the economy in electricity, creating conditions for and minimize possible risks associated with power outages. decreased from the level of 93% of the per capita in- → bringing glades for overhead power lines to the required state; sustainable socio-economic development in the regions of come to 5% in 2019. In the reporting year, the volume The company sets the following as its goals in the area of en- → improving reliability of the distribution network; presence of the ROSSETI Group. of network connections of individual consumers and suring reliable and uninterrupted power supply: → increasing lightning resistance; power generation facilities decreased by 9% in terms → achievement of uninterrupted power supply to consumers; of the number of contracts executed and by 21% in → replacing expired circuit breakers, and short-circuit sep- → reduction of electricity losses; terms of connected capacity compared to 2018. arators; → achievement of the performance indicators corresponding → replacing oil-filled bushings with bushings with solid in- to the industry average values. sulation; → replacing porcelain and polymer terminal insulation on over- Changes in Network Connections Provided for Individual Customers and Power Generation Facilities in head power lines; 2019 Compared to 2018 → replacing the support-core insulation; → modernizing devices and complexes of relay protection and automation. The main volume of executed contracts on network connec- tion (about 98%) falls on applicants of privileged category with RECEIVED APPLICATIONS power receiving devices with capacity up to 150 kW inclusive. 431,158 (–11%) 43,807 MW (–11%) CONTRACTS CONCLUDED GRI EU28 In 2019, the ROSSETI Group did not exceed the limit values of In the reporting period, the average duration of interruptions in 342,929 (–10%) 13,732 MW (–18%) GRI EU29 the reliability level of the services provided by the relevant tariff power transmission (SAIDI) decreased to 1.8 hours (by 25% as CONTRACTS EXECUTED regulation bodies. In 2019, 9,600 technological failures were compared to 2018), and the average frequency of termination recorded in the ≥ 110 kV network, which is 12% fewer than the of power transmission to a supply point (SAIFI) decreased to 1.2 331,712 (–9%) 15,066 MW(–21%) previous year. units (by 8% as compared to 2018).

Doing Business 2020 Rating Energy Supply Reliability Indicators Recorded Technological Violation

In the Doing Business 2020, the World Bank’s Ease of Doing 2.4 Business report in the category “Getting Electricity”, the Russian -25% Federation climbed to the 7th place and received 97.5 points out 1.8 of 100 possible. Once again, success and effectiveness of all the -8% 11,663 1.3 10,871 declared reforms aimed at simplifying the process of network 1.2 connection to electric networks were confirmed. The Russian 9,600 Doing Federation also received the maximum rating, 8 out of 8 points, 5,815 Business 5,790 5,180 2020 for “Reliability Index of Electricity Supply (SAIDI, SAIFI)” and “Transparency of Tariffs.”

SAIDI25 SAIFI26 2017 2018 2019

2018 Number of recorded technological violations, including the number 2019 of technological violations with successful reclosure, pcs. Doing Business POSITION, 184 141 143 29 30 10 12 7 TOP 10 Number of technological failures with successful reclosure, pcs. “Grid connection”

YEAR of publication of rating results 2012 2013 2014 2015 2016 2017 2018 2019 2020 25 SAIDI — an indicator of the average duration of interruptions in the power transmission to a supply point, hours. 26 SAIFI — an indicator of the average frequency of interruptions in the power transmission to a supply point, units.

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The Main Causes of Technological Violations that Occurred at the Facilities of the Electric Grid Complex Staff Training

in 2019 Type of Training Description Frequency Members Headquarters training Annually Categories of employees are TRAINING ACCORDING TO THE established by the Director PLAN OF THE COMPANY The Main Causes of Technological Violations in 2019 Headquarters exercises Once every three years General Employees of the Office of TRAINING ACCORDING TO THE Training and exercises 2-3 times a year the Chief Engineer and the PLAN OF EMERCOM OF RUSSIA Department of MT and CD According to the plan of the 9% 34% Employees of the duty Ministry of Energy of Russia - TRAINING FOR SAC’S DUTY service, Department of MT Alert reception/transmission training 1 time per month OFFICERS OF THE COMPANY and CD, head, deputy head of According to the plan of the the Company Natural impacts Company - once a quarter Bad technical condition of the equipment Trainings on the line of the communications External influences Company Management and ON-LINE TRAINING liaison officer of the Company on notification Weekends, holidays and holidays Headquarters Other causes and accessibility checks 36% 21% FIRE SAFETY TRAINING Evacuation from an office building Once a quarter All categories of employees CLASSES ON THE SUBJECT OF Civil Defense and Emergency Protection Monthly All categories of employees EMERCOM OF RUSSIA Classes Civil Defense and Emergency Protection INDUCTION TRAINING Newly appointed employees Instruction HOUSAND TRAINING ON VERIFICATION Verification measures from the commissions of All categories of employees ACTIVITIES EMERCOM of Russia and the Ministry of Energy As a result of effective production activities of the subsidiaries TECHNOLOGICAL and affiliates of ROSSETI in 2019, the number of technological 9.6 VIOLATIONS violations associated with adverse weather events decreased IN THE ≥ 110 KV NETWORK WERE RECORDED During 2019, the ROSSETI Group companies conducted 169 joint of Russia, executive authorities and local self-government, by 20%. The number of violations due to poor quality equip- AND INVESTIGATED IN THE SDCS OF ROSSETI exercises with the participation of headquarters/commissions for other local grid companies, housing and communal services ment maintenance decreased by 13%. ensuring the security of power supply of the constituent entities enterprises, and contracting organizations. A DECREASE OF 12% ( AS COMPARED TO 2018 ) of the Russian Federation, territorial authorities of EMERCOM

Emergency Preparedness The readiness to carry out restoration work during the autumn-winter period 2018-2019 ensured by:

GRI EU21 The prevention of emergencies, as well as the development of For the flood period, there are specialists on duty at all the pro- THSD THSD UNITS OF SPECIAL THSD RESERVE SOURCES measures for their localization and liquidation, are an important duction departments, a stock of materials necessary to prevent 9.9 UNITS 49.4 PEOPLE 23,073 EQUIPMENT 5,566 OF SUPPLY aspect of activities of the ROSSETI Group. To prevent incidents, and eliminate possible flooding, for repairs and restoration of work is performed to identify potential emergencies. The Com- power grid facilities is created. All-terrain vehicles and watercraft pany regularly carries out training of personnel in the conditions are in full readiness. The company monitors the flood situation Mobilization of Additional Forces and Means to Eliminate Technological Violations close to real accidents. In the reporting year, all production and exchanges information with hydrometeorological centers personnel received training. and regional departments of the Russian Emergencies Ministry. Elimination of mass blackouts of Elimination of emergency shutdowns power grid facilities in the North- In the spring, due to the large amount of snow, the power grid In order to effectively respond to emergencies, the ROSSETI Group Liquidation of mass blackouts of pow- of 110 kV overhead lines of the ROS- West, Central, Volga, Ural and Siberian infrastructure is at risk of flooding. Therefore, during the spring holds annual events with the participation of EMERCOM of Russia. er grid facilities of Lenenergo SETI South - Rostovenergo Federal Districts flood, the ROSSETI Group implement measures to ensure reliable and trouble-free operation of electric grid facilities. Special flood → As a result of adverse winter weather → In February, severe icy-hoarfrost → In October, the passage of a powerful commissions have been set up and are in operation, instructions conditions, it was disconnected/de-­ deposits occurred on wires and light- cyclone provoked an extensive forma- energized: ning cables. 38 shutdowns of 110 kV tion of ice deposits on the territory of 10 and emergency drills are being conducted, places of overhead 1 power transmission line 110 kV, overhead lines were detected. constituent entities of Russia. power line crossings through water bodies are being checked, 1 power transmission line 35 kV, 25 and the condition of shore protection facilities is being assessed. → 43 brigades, 232 people, 67 units of → 1,000 brigades with a total number of power transmission line 6-10 kV, 220 special equipment were involved. 3,174 people, 1,123 units of special TP, 5 MW. A power outage was recorded → 20 EPSs applied with a total capacity equipment were involved. in 5 thsd people. of 2.15 MW → 222 EPSs applied with a total capacity → 232 brigades of 755 people and 240 of 15 MW. units of special equipment were involved. → 30 EPSs applied with a total capacity of 5.7 MW.

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Aapeli Storm Relief January 2019 Innovation In early 2019, the territories of the Kaliningrad and Leningrad GRI EU8 The ROSSETI Group aims to move to a new technological level, sector as a whole. Key performance indicators of the Innovative regions, as well as Finland and Sweden, were hit by a powerful increase labor productivity, and, ultimately, ensure shareholder Development Program are aimed at improving energy efficiency storm. About 24 thsd people remained without electricity in value growth. A key factor in achieving the set guidelines is the and environmental production. The costs of implementing the Russia, 282 thsd people in Finland, and about 300 thsd people introduction of advanced innovative technologies, including in Innovative Development Program in 2019 amounted to 13.5 in Sweden. Thanks to the coordinated and professional work the field of digital transformation. The process of innovation in bn rubles. of the repair crews, the recovery period of the main network in the ROSSETI Group is regulated by the Innovative Development Research and development is the foundation for development Russia was less than 3 hours. In the countries of Scandinavia, “Thanks to the fundamentally new approaches to Program of ROSSETI for 2016–2020 with Long-Term Plans in the field of ensuring reliable energy supply and supporting the time for restoration of energy supply was 6 hours. the preparation of infrastructure and personnel for Until 2025. sustainable development. The Company approved the Digital the autumn-winter period, ROSSETI managed to The key goal of innovation in the ROSSETI Group is the transition Transformation 2030 Concept, the implementation of which will avoid mass blackouts and eliminate most techno- to the electric grid of a new technological structure with qualita- lead to the transformation of the organization of R&D. Within logical violations in the first hours after the storm.” tively new characteristics of reliability, efficiency, accessibility, the framework of R&D in the concept of digital transformation, Pavel Livinsky, controllability and customer focus of the Russian electric grid it is planned to implement the following areas: Director General, ROSSETI R&D Directions for Digital Transformation R&D Results Potential Russian Contractors DEVELOPMENT OF MATHEMATICAL MODELS AND CONTROL ALGORITHMS FOR GRID Software and hardware systems for operational process control. NETWORKS Development of automated predictive forecasting systems and Number of Outaged Consumers, pers. PREDICTIVE ANALYSIS METHODS evaluation of the effectiveness of their implementation. Hardware and software systems and new methods of protecting Finland 282,000 INFORMATION SECURITY / CYBERSECURITY information technology systems, operational technology and Leningrad commercial information. Region 20,589 DESIGN HIGH-SPEED, HIGH-RELIABILITY, AND Systems of supervisory control and data collection, software systems Kaliningrad HIGHCAPACITY DMS (distribution management systems), OMS (network management 3,228 MSU, St. Petersburg State Region COMMUNICATION SYSTEMS in emergency mode). University, Skolkovo, NRU TECHNOLOGIES OF VIRTUAL AND AUGMENTED HSE, MPEI, FITS JSC, STC FGC Average and Total Time of Recovery of Power Supply Creation of virtual training simulators for personnel on maintenance REALITY (VR/AR) IN THE POWER GRID UES JSC, ENIN JSC, Kurchatov and repair of electrical equipment (electrical installations). to Consumers, hours COMPLEX Institute, Rostec, Rosatom, 6 50 Schooltech, MIPT, ITMO, NSTU, Finland Management of load profiles (profile database, typing, network SMART ENERGY METERING INFRASTRUCTURE UFD. connection by profile, development of typical graphs of capacity set Leningrad 3 39 TECHNOLOGIES Region up, etc.). Kaliningrad 2.5 21 INTEGRATION OF DISTRIBUTED AND Devices for controlling the delivery of power to power distribution Region MICROGENERATION networks from micro-generation facilities. DIAGNOSTICS AND MONITORING OF THE STATE Development of methods for evaluating the effectiveness of UAV use Full recovery time in Russian Federation OF ELECTRICAL EQUIPMENT for the maintenance and repair of power grid facilities. Full recovery time in Finland Communication protocols for Smart Grid substations, technical CREATION OF THE IEC-61850 RUSSIAN Average recovery time in the Russian Federation requirements for Smart Grid equipment and systems, new algorithms PROFILE, NEW RELAY PROTECTION AND Average recovery time in Finland for adaptive system relay protection and automaticemergency control AUTOMATION ALGORITHMS27. systems.

More details on innovative development and R&D in the Annual Report of ROSSETI 2019.

→ 9 mln rubles of licence fees; Conducting Exercises 2019 RESULTS → 14 R&D results transferred to pilot operation; In 2018-2019 Group companies conducted drills for emergen- → 18 R&D results implemented at the facilities of the cy response specialists who helped power companies deal → 20 documents of protection for R&D results; ROSSETI Group. quickly and professionally with the incident. More than 190 → 9 license agreements; thsd emergency drills were conducted.

27 IEC-61850 is the standard “Networks and Communication Systems in Substations” that describes data stream formats, types of information, rules for describing elements of an energy facility, and a set of rules for organizing an event data transfer protocol.

92 www.rosseti.ru/eng/ 93 ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Charging Stations for Electric Vehicles Digital Transformation of the ROSSETI The expansion of the network of charging stations is one of CURRENTLY, THE ROSSETI GROUP HAS the priority areas for the ROSSETI Group. Initiatives are being implemented in accordance with the All-Russian Program for the CHARGING Group Development of Charging Infrastructure for Electric Transport, the STATIONS purpose of which is the introduction of all types of autonomous 236 As part of the implementation of the Digital Transformation 2030 Concept, a methodological electric transport in Russia. basis for the digital transformation of the ROSSETI Group was prepared, digital transformation Until 2024, the ROSSETI Group plans to implement the 30/30 Program, according to which a network of more than 770 charging programs for the SDCs of ROSSETI were approved, pilot projects were launched and the first stations will cover more than 30 major cities of Russia and over results of their implementation were obtained. 30 highways. In addition, projects will be implemented for the development of both land and water electric vehicles. From April 2020, it is planned to open charging stations in Yekaterinburg, The Most Significant of the Ongoing Pilot Projects: Nizhny Novgorod, Chelyabinsk, Omsk, Samara, Rostov- on-Don, Krasnoyarsk, Perm, Voronezh and Volgograd.

The implementation of the charging infrastructure Blockchain platform for calculating energy consumption. It is a single information space between development program will contribute to improving the a consumer, a network, distribution company and a financial organization for the automatic ex- environmental situation and improving the quality of change of information between all participants on the amount of energy consumed and payment life in large cities of Russia, as well as stimulating for them. This platform’s goal is to increase transparency and streamline settlements, as well as the innovation activity of the electric grid complex. reduce transaction costs.

Digital electrician. The project allows you to optimize the processes associated with the organiza- tion and execution of work by mobile crews. The technology was tested by employees of a number of mobile teams and proved its effectiveness. The exclusion of paperwork, optimization of logis- tics procedures and increased control over the movement of vehicles and personnel increased the efficiency of mobile crews. Within the framework of the project, the technology of electronic signature and dress-approval in electronic format have been tested and are planned for further implementation. As a result, the time to eliminate technological violations decreased by 10%, and labor productivity increased by 20% due to the reduction of non-production costs.

Project to increase the availability of electric grid infrastructure. A mobile application for PLANS FOR 2020 consumers is being developed, with the help of which consumers can quickly get answers to all questions of interest related to power supply. Also, the application will allow for the filing of ap- plications and receipt of information on various issues - network connection, reliability, power supply. This will further increase the customer focus of the ROSSETI Group. In the field of energy saving optimization, the ROSSETI Group plans to implement the following measures: 1. Implementation of energy saving and energy efficiency 2. Development of an energy management system in the programs of ROSSETI Group, including: ROSSETI Group. → organization of raids to identify non-contractual and Creation of charging infrastructure for electric vehicles. Until 2024, the ROSSETI Group plans unaccounted consumption; to implement the 30/30 Program, according to which a network of more than 770 petrol stations → the introduction of energy-efficient projects aimed will cover more than 30 major Russian cities and over 30 highways. In addition, projects will be at improving the energy efficiency of the SDCs of implemented for the development of both land and water electric vehicles. In 2020, it is planned ROSSETI, including the introduction of lighting de- to open charging stations in Yekaterinburg, Nizhny Novgorod, Chelyabinsk, Omsk, Samara, Ros- vices using LEDs; tov-on-Don, Krasnoyarsk, Perm, Voronezh and Volgograd. The implementation of the charging → implementation of measures to reduce motor fuel infrastructure development program will contribute to improving the environmental situation and consumption by vehicles and special equipment. improving the quality of life in large cities of Russia, as well as stimulating the innovation activity of the electric grid complex.

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Power Supply for the XXIX World Winter Universiade 2019 PLANS FOR 2020 More than 1,500 specialists of the ROSSETI Group took part in responsibility of which were 43 sports and infrastructure facilities. the preparation of the Krasnoyarsk energy system for the Uni- The implemented measures allowed the Universiade 2019 to be versiade 2019. They carried out the preparation and organization held without a single technical violation or incident in external In 2020, as part of the digital transformation process, the results, and, if necessary, adjust the further course for of power supply, constructed new substations, and created power supply networks. The costs of the ROSSETI Group for the ROSSETI Group plans to: the implementation of pilot projects; temporary power supply schemes. The city was provided with preparation of Universiade 2019 power facilities amounted to more → to approve on the Board of Directors of ROSSETI the → form and launch new digital transformation projects; diesel generator sets. To manage and provide power supply, than 5.5 bn rubles. consolidated Digital Transformation Program of the → implement activities in accordance with the approved ROSSETI Group organized corresponding centers, in the area of ROSSETI Group for the Period until 2030 and to begin digital transformation programs of the SDCs; its implementation; → scale successful digital technologies in the ROSSETI → continue the implementation of the initiated pilot proj- Group. ects of digital transformation, evaluate the intermediate >1 500 SPECIALISTS 11 110 AND 220 KV TOOK PART IN THE SUPPLY CENTERS Community Engagement PREPARATION OF THE RECONSTRUCTED KRASNOYARSK ENERGY 1 25 SYSTEM FOR THE A NEW 110 KV SUBTATION UNIVERSIADE 2019 OZERNAYA BUILD SS: RELAY PROTECTION The ROSSETI Group is represented in SYSTEMS REPLACED 80 regions of the Russian Federation and is committed to effective interaction with regional and local authorities, local > community, general public and consumers. 320 68 КM 11- KV SUBSTATION: HIGH VOLTAGE EQUIPMENT SIW INSTALLES Policy on Society, Customer, and Government Relations REPLACED of ROSSETI is the main document that sets the goals, objectives, principles and priority areas for interac- tion of the ROSSETI Group with external stake- holders. 145 75 TSS AND DPS: КМ Contribution to ELECTRICAL EQUIPMENT COMPLETELY WIRES REPLACED Regional Development REPLACED 115

0.4-10 KV CABLE LINES For the regions and local government, RECONSTRUCTED ROSSETI Group meets the economy’s needs for transmission capacities. The Group is a reliable partner of the execu- Pilot Project for the Integration of Road, Street Lighting tive authorities of the constituent entities and Architectural and Artistic Coloring in Izhevsk of the Russian Federation in planning and implementing regional territorial develop- The implementation of the project on the integration of urban lighting ment programs. In addition, ROSSETI Group will allow Izhevsk to reduce the cost of maintaining street lighting by is a conscientious taxpayer and an attractive 30%. The proceeds from the sale of electric grids, about 3.3 bn rubles, employer in the regions of presence. will be used to repair and reconstruct social facilities within the frame- work of the Big Repair regional project: more than 500 pre-school and More about the implementation of infrastructure development projects in the regions of activity in the Annual Report of ROSSETI 2019. school education institutions, more than 250 medical institutions and cul- tural facilities will receive funds for repair and reconstruction.

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The Volume of Social Investments of ROSSETI Sponsorship and Charity for 2017 - 2019, mln rubles Implementation of social and environmental The Regulation on the formation and use of the sponsorship and charity fund of ROSSETI28 defines the goals, objectives and 376 projects aimed at solving socially significant procedure for providing charitable assistance. ROSSETI and 401 193 its SDCs submit reports on a quarterly basis on the use of the 3,388 problems of local communities is one of 3,155 3,173 the main forms of manifestation of social sponsorship fund through the Interdepartmental Portal on State Property Management. responsibility of the ROSSETI Group. Charity amount Human resources structural unit is responsible for work in the Sponsorship amount field of charity. Information policy structural unit of the ROSSETI 2017 2018 2019 Group is accountable for sponsorship area.

Electrical Injury Prevention in 2019 Participation of Employees of the ROSSETI Areas of Social Investment of ROSSETI 1 Group in the All-Russian Ecological Action One of the important components of preventive work to pre- “Save the Forest” vent electric shocks is electric safety classes, which was held throughout the year in schools and senior groups in kinder- SUPPORT FOR PROJECTS IN For several years, employees of the IDGC of Center and Volga THE FIELD OF EDUCATION, gardens. Employees of the ROSSETI Group presented the ba- SCIENCE, CULTURE, ART AND Region and IDGC of Volga branches have been participating in ENLIGHTENMENT sic rules of electrical safety on the street and at home to the reforestation and landscaping activities. Volunteers from more participants, explained to them the meaning of warning signs, than 70 regions of the country took part in the action “Save the demonstrated the rules for first aid for injured with electric Forest”, planting more than 30 mln trees. 2 current, and introduced them to the objects of electric networks. Participation in environmental and social events has a positive Also, new training formats were actively used. Employees of the 5 impact both on the environmental safety of the regions and on ASSISTING IN THE IDGC of Centre Kostromaenergo affiliate organized the Electrical SOCIAL REHABILITATION OF DEVELOPMENT OF PHYSICAL the level of employee involvement within the ROSSETI Group. ORPHANS, STREET CHILDREN, EDUCATION AND MASS SPORTS Safety Week, during which thematic cartoons were shown in CHILDREN IN DIFFICULT LIFE SITUATIONS cinemas and cultural centers. And employees of the Yaroslavl branch organized a “Lesson on Wheels” in a thematic trolleybus.

SPONSORSHIP AND CHARITY Help Children AREAS SDCs of ROSSETI annually participate in various projects of targeted assistance to children: 4 3 → Nizhnovenergo employees of the IDGC of Center and Volga PLANS FOR 2020 Region branch rendered assistance to the Children’s Special- ized Hospital for Medical Rehabilitation for neuropsychiatric PROTECTION AND PROPER SOCIAL SUPPORT AND PROTECTION OF MAINTENANCE OF OBJECTS AND CITIZENS, INCLUDING ASSISTANCE TO LOW- children in Dzerzhinsk; TERRITORIES OF CULTURAL AND INCOME PEOPLE AND REHABILITATION OF THE ENVIRONMENTAL IMPORTANCE UNEMPLOYED AND DISABLED PERSONS → the Kubanenergo branch overhauled and procured equipment → In the coming year, the ROSSETI Group plans to and school uniforms for the Adyghe Republican boarding continue the implementation of social projects school for children with hearing and visual impairments; and programs launched earlier. Key areas of → IDGC of Siberia assisted Krasnoyarsk children in difficult sponsorship and charity will remain unchanged as situations by participating in the Good Car Race charity event; continuity and consistency in this area allow more The largest social cooperation projects: → since 2013, the ROSSETI Group has been contributing to → employees of the Kaluga branch of IDGC of Center and Volga targeted work with recipients of charity and spon- → ROSSETI and its subsidiaries and affiliates interact with the the preservation and increase of the Amur tiger population Region purchased energy-saving equipment and lighting for sorship assistance, and increase the effectiveness Deafblind Persons Support Foundation “Soedinenie”, parti­ through the support of the Amur Tiger Center ANCO. a boarding school for children with disabilities. of programs. cipating in rehabilitation programs and promoting a volunteer In 2019, the amount of charitable donations increased by 7% movement in support of the Deafblind Family Community; compared to 2018 and reached 3,388 mln rubles, and the amount → the ROSSETI Group companies support the Russian Orthodox of sponsorship amounted to 376 mln rubles. Church in the reconstruction and implementation of socially significant projects. SDCs provide assistance to various or- ganizations and temple complexes of the Russian Orthodox Church;

28 Approved by the decision of the Board of Directors of ROSSETI (Minutes of the Meeting on February 24, 2016 No. 221).

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3APPENDICES

www.rosseti.ru/eng/ ROSSETI Corporate Social Responsibility and Sustainability Report 2019 About the Report About the Сompany Sustainable Development Management Sustainable Development Results Appendices Glossary

Abbreviation Decryption Abbreviation Decryption Abbreviation Decryption Abbreviation Meaning AR Augmented Reality MSU Moscow State University Federal Service for Ecological, Technological and Federal Rostekhnazdor Nuclear Supervision Technical Federal Service for Environmental, Technological and Earnings before interest, taxes, depreciation and Ministry of Energy Ministry of Energy of the Russian Federation Supervision Nuclear Supervision of the Russian Federation EBITDA amortization, an analytical indicator equal to the DP Distribution Points MT and CD Mobilization Training and Civil Defense Service amount of profit before interest, taxes, depreciation RUIE Russian Union of Industrialists and Entrepreneurs and accrued depreciation IDGC Interregional Distribution Grid Company DS Distribution substation REN Regional Electric Networks ESG Environmental, Social, Governance SME Small and Medium Enterprises RAS Russian Accounting Standards SAC Situation and Analytical Center EV Enterprise value IFRS International Financial Reporting Standards DGC Distribution grid company BD Board of Directors Created by FTSE Russell, the FTSE4Good MIPT Moscow Institute of Physics and Technology REG Regional electric grid international emerging market index created by IEC International Electrotechnical Commission International Council on Large High Voltage Electrical FTSE4GOOD FTSE Index Developer, it is designed to measure the CIGRE Systems (SIGRE RNC - Russian National Committee ICS Internal control system MPN Main Power Networks EMERGING INDEX performance of companies that are committed to of SIGRE) BoD Board of directors best practices in environmental protection, social NSTU Novosibirsk State Technical University SPbSU Saint Petersburg State University responsibility and corporate governance (ESG). GC Grid company VAT Value Added Tax SSEI Secondary Specialized Educational Institution The Big Twenty - a club of governments and heads of SO UPS System Operator of the United Power System R&D Research and Development OS Organization Standard G20 central banks of states with the most developed and SPbU Saint Petersburg State University developing economies. NRU National Research University OSMS Occupational safety management system SSR Soviet Socialist Republic GRI Global Reporting Initiative National Research University Higher School of NRU HSE TS Transformer Substation Economics SSEI Specialized secondary education institution ICA International Compliance Association LGC Local grid companies MPEI Moscow Power Engineering Institute OS Organization standard ISO International Organization for Standardization UFD Ural Federal District OJSC Open Joint-Stock Company RMS Risk management system LTIFR Lost Time Injury Frequency Rate SDG United Nations Sustainable Development Goals UN United Nations RM&ICS Risk management and internal control system P/E Price/earnings multiplier (price/value) ETP Electronic Trading Platform OED Organizational and Executive Documentation TGC Territorial generation company VR Virtual Reality United Nations Educational, Scientific and Cultural WWF World Wildlife Fund Health and Safety Occupational Health and Safety UNESCO Organization (UNESCO - United Nations Educational, TS Transformer substation Scientific and Cultural Organization) ANCO Autonomous Noncommercial Organization STA Sectoral Tariff Agreement TGO Territorial grid organization UN Children's Fund (UNICEF - United Nations SAIDI System Average Interruption Duration Index UNICEF FES Fuel and energy sector Joint Stock Company "Scientific and Technical Center Children's Fund) STC FGC UES JSC of the Federal Network Company of the Unified SAIFI System Average Interruption Frequency Index SPD Surge protection device Energy System" Prevention automation - a set of devices that MC Management company FITS JSC Joint Stock Company "Federal Testing Center" provides measurement and processing of parameters SC Share capital EMERCOM of Ministry of the Russian Federation for Civil Defense, of the electric power regime of the power system, the transfer of information and control commands Russia Emergencies and Disaster Management PA Federal and the implementation of control actions in Antimonopoly Federal Antimonopoly Service of the Russian Federation Joint Stock Company "Energy Institute named after G. ENIN JSC accordance with the specified algorithms and settings Service M. Krzhizhanovsky for detection, preventing the development and Federal State ACR Automatic Circuit Recloser elimination of emergency mode of the power system Property Federal Agency for State Property Management of the Management Russian Federation Automated system for analyzing and collecting PJSC Public Joint-Stock Company Units Decryption ASIB AS Agency information about beneficiaries BPD Bird Protective Devices GVA Gigavolt-ampere FSBI Federal state budgetary institution Electricity ring of Belarus, Russia, Estonia, Latvia and BRELL SPIEF St. Petersburg International Economic Forum GW Gigawatt Federal Taxation Lithuania Federal Taxation Service of the Russian Federation RP Electricity Receiving Point PCS. Piece Service FPCL-OPL Fiber optic communication lines, overhead power line FD Federal district PCB Polychlorinated Biphenyls KV Kilovolt EEF Eastern Economic Forum FOREM Federal Wholesale Electricity (Capacity) Market Relay protection and automation - a set of devices KWH Kilowatt hour GC Group of Companies designed to quickly, automatically (in case of FEA Financial and economic activities KM kilometer Bank of Russia Central Bank of the Russian Federation AR Annual Report damage) identify and separate from the electric RPA power system the damaged elements of this MVA Megavolt-ampere EN Electricity network GOST State standard electric power system in emergency situations in MW Megawatt ETF Electronic trading floor ICE Internal Combustion Engine order to ensure the normal operation of the entire system Rostekhnadzor of Russia Federal Service for MLN Million SDCs Subsidiaries and dependent companies Ecological, Technological and Nuclear Supervision BN Billion VHI Voluntary Health Insurance Relay protection and automation and preventive RPA and PA P.P. Subclause, percentage point DPP Diesel Power Plant automation RUB. Ruble UIS Unified Information System EPS Emergency Power Supply T Ton USIA Unified System of Identification and Authentication Rosatom State Atomic Energy Corporation TRF Ton of reference fuel WAD of Moscow Western Administrative District of Moscow State Corporation for the Development, Production Rostec and Export of High-Tech Industrial Products for Civil TRILLION Trillion Saint-Petersburg National Research University of ITMO and Military Purpose Information Technologies, Mechanics and Optics PC. Piece

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→ Occupational Safety Policy of the ROSSETI Group Regulatory Framework → Standard “Regulations for the Occupational Safety Management System of the ROSSETI Group” → Personnel and Social Policy of ROSSETI → Order of ROSSETI on February 7, 2020 No. 54 on the approval of documented procedures for the health and occupational safety management system in the ROSSETI Group 15 Organization Standards (OS). Sustainable Development Areas Key Internal Regulatory Documents → Rules of staff management in electric power organizations of the Russian Federation → The program to reduce the risk of injury to personnel of SDCs and third parties at the facilities of SDCs of ROS- SUSTAINABLE DEVELOPMENT MANAGEMENT SETI for the period 2018-2020. → Development Strategy of ROSSETI → Regulations for the Internal Technical Control System of the Electric Grids of ROSSETI with the Subsequent APPROACHES TO SUSTAINABLE → Unified electric grid complex technical policy Measures to Organize the Corresponding Operation of the Internal Technical Control Systems of Subsidiaries and DEVELOPMENT MANAGEMENT → Electric Grid Complex Environmental Policy OCCUPATIONAL HEALTH AND SAFETY Dependent Companies of ROSSETI. → Digital Transformation 2030 Documents governing the procedure and area of responsibility in case of emergency: → ROSSETI Action Plan for the Prevention and Response of Emergencies → Code of corporate ethics and official conduct for the employees of ROSSETI → Order of the Company “On the object link of ROSSETI of the functional subsystem for the prevention and liquida- → Anti-corruption policy of ROSSETI tion of emergency situations” on February 20, 2019 No. 39 → Regulations on the Central Commission for corporate ethics compliance and conflict of interest resolution CORPORATE ETHICS AND ANTI- → Order of the Company “On the organization of training for employees of the ROSSETI Group in the field of civil CORRUPTION → Methodology for the analysis of anti-corruption and corporate procedures defense and emergency protection in 2020” on December 30, 2019 No. 390 → Register of potential corruption risks of ROSSETI, its subsidiaries and affiliates → The order of the Company “On the organization of an introductory briefing on civil defense and protection against → Order on the review of complaints on possible corruption manifestations emergency situations” on June 13, 2017 No. 301r → Risk management policy of ROSSETI → Regulation on the Commission for the Prevention of Emergencies and Fire Safety (CoES and HSE) of the Com- → Risk management policy of Subsidiaries and Affiliates pany SUSTAINABILITY RISK MANAGEMENT → Risk register of subsidiaries and affiliates of ROSSETI ENVIRONMENTAL IMPACT → Unified technical policy of the ROSSETI Group → Environmental Policy of the Electric Grid Sector → Program of the Implementation of the Environmental Policy of the Electric Grid Sector for 2018–2019 → Measures to fulfill the task of the Environmental Policy of the Electric Grid Sector to decommission 100% equip- → The policy of interaction with society, consumers and government bodies of ROSSETI; ment containing polychlorinated biphenyls → Personnel and social policy of ROSSETI → Guidelines for the environmental management system of ROSSETI → Code of Ethics of ROSSETI → Regulation of ROSSETI “Uniform Technical Policy in the Electric Grid Complex Regulation of ROSSETI” → Innovative Development, Energy Conservation, and Energy Efficiency Enhancement Policy of ROSSETI → The concept of creating a single portal of electric grid services for the ROSSETI Group ENVIRONMENTAL PROTECTION → Uniform consumer service quality standards for the network organizations; → Regulations for the Formation of Energy Conservation and Energy Efficiency Enhancement Programs of Subsid- STAKEHOLDER ENGAGEMENT, INCL. → Guidelines for calculating the level of reliability and quality of the delivered goods and services provided for the iaries and Dependent Companies of ROSSETI CUSTOMER FOCUS organization managing the unified national (all-Russian) electric grid and territorial grid organizations; → Bird protective devices for overhead power lines and outdoor switchgears of substations. General technical → Information disclosure standards for wholesale and retail electric energy market entities; requirements OS → The basics of pricing in the field of regulated prices (tariffs) in the electric power industry and the Rules of state → Bird protective devices for overhead power lines and outdoor switchgears of substations. Acceptance rules and regulation (revision, application) of prices (tariffs) in the electric power industry; test methods OS → Rules for network connection of consumer power receivers, objects for the electric energy production, as well as → Bird protective devices for overhead power lines and outdoor switchgears of substations. Guidelines for use OS objects of electric grid facilities belonging to the network organizations and other persons to electric networks. → Order of ROSSETI “On the approval of the Unified Rules for the Prevention and Elimination­ of the Consequences of Technological Violations (Accidents) at the electric grid facilities of subsidiaries and affiliates of ROSSETI” on December 30, 2019 No. 395 → Order of ROSSETI “On the approval of the Procedure for the operational information transfer in the ROSSETI Group” on December 18, 2018 No. 218 → Unified Procurement Standard of ROSSETI (Procurement Regulation) → Order of ROSSETI “On the Organization of Activities of Headquarters in the Electric Grid Complex” on December → Procurement Policy of ROSSETI 30, 2019 No. 390 SUPPLY CHAIN MANAGEMENT → ROSSETI Regulation on the Central Procurement Commission of ROSSETI Corporate Plan for Import Substitution SUSTAINABLE ENERGY SUPPLY → Regulation on the Quality Management System of ROSSETI Partnership Program between ROSSETI and small and medium enterprises → Innovative Development Program of ROSSETI for 2016–2020 with Long-Term Plans Until 2025 → Digital Transformation 2030 Concept → Development Strategy for the Electric Grid Complex of the Russian Federation → Long-term development program for the period 2015-2019 → “On a unified technical policy in the electric grid complex” Regulation → Policy on innovative development, energy conservation and energy efficiency of ROSSETI → A program to increase operational efficiency and reduce costs for the ROSSETI Group for 2019-2023 → Energy Saving and Energy Efficiency Improvement Program for subsidiaries and affiliates ECONOMIC IMPACT MANAGEMENT → An action plan to optimize the costs of ROSSETI (with account to the subsidiaries) based on an independent audit.

→ Policy on Society, Customer, and Government Relations of ROSSETI COMMUNITY ENGAGEMENT → Regulations on the procedure for the formation and use of the sponsorship and charity fund of ROSSETI

SUSTAINABLE DEVELOPMENT RESULTS → Personnel and social policy of ROSSETI → Code of Ethics of ROSSETI → Wages & Salary Regulation OUR EMPLOYEES → Regulation on insurance coverage of ROSSETI and its subsidiaries and affiliates → Sectoral tariff agreement in the electric power industry for 2019 - 2021 → Collective agreement of employees of the ROSSETI Group → Private Pension Program

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2019 on 2018 Difference in Key Quantitative Data Index Units 2017 2018 2019 absolute value % ENVIRONMENTAL PROTECTION EXPENSES GRI 305–7 2019 on 2018 Water protection and conservation mln rubles 152.8 158.7 155.0 -3.7 (2.3) Difference in Air protection mln rubles 51.5 61.0 65.5 +4.5 7.4 Index Units 2017 2018 2019 absolute value % Land protection (including land restoration production mln rubles 246 318.4 334.5 +16.1 5.1 EMISSIONS tons 1,621.2 1,519.1 1,522.3 +3.2 0.2 and consumption waste management) including: Total mln rubles 450.6 538.7 555.0 +16.3 3 Solid substances tons 172.7 167.0 160.8 -6.2 (3.7) Of them: LABOR PROTECTION AND INDUSTRIAL SAFETY29 solid fuel ash tons 8.62 44.9 22.2 -22.7 (50.6) Total accidents pcs. 35 34 34 0 - Gaseous and liquid substances tons 1448.5 1352.1 1361.5 +9.4 0.7 Of them: GRI 403–9 pcs. 18 12 15 +3 25.00 Of them: Fatal accidents sulfur dioxide (SO2) tons 75.7 56.5 57.5 +1 1.8 Severe injuries pcs. 10 13 9 -4 (30.77) carbon monoxide (CO) tons 621.1 606.0 588.0 -18 (3.0) Mild injuries pcs. 7 9 10 +1 11.11 nitrogen oxides (rebased to NO2) tons 220.3 208.6 261.8 +53.2 25.5 Lost Time Injury Frequency Rate (LTIFR) rate 0.167 0.160 0.161 +0.001 0.6 hydrocarbons (without volatile organic compounds) tons 50.3 42.6 23.0 -19.6 (46.0) Occupational diseases pcs. 1 1 1 0 0 volatile organic compounds tons 430.5 411.6 397.5 -14.1 (3.4) Exposure to electric current pcs. 19 13 11 -2 (15.38) other tons 50.6 26.8 33.7 +6.9 25.7 Traffic accident pcs. 9 10 8 -2 (20.00) WATER MANAGEMENT Fall from height (including own growth) pcs. 3 6 5 -1 (16.67) Water intake External mechanical stress pcs. 2 3 3 - - Total fresh water intake thsd m3 2,610.2 2,438.4 2,312.0 -126.4 (5.2) Insect and animal bites pcs. 1 1 0 -1 (100) Of them: Falling objects pcs. 0 1 5 +4 400 thsd m3 118.0 84.8 86.6 +1.8 2.1 Surface water Exposure to smoke and fire pcs. 1 0 0 - - Ground water thsd m3 694.2 626.7 635.0 +8.3 1.3 Other pcs. 0 0 2 +2 200 Public network thsd m3 1,780.3 1,711.2 1,572.0 -139.2 (8.1) LABOR PROTECTION COSTS (BY ROSSETI, SUBSIDIARIES AND AFFILIATES) Other sources thsd m3 17.7 15.7 18.4 +2.7 17.2 Total for SDCs with the major type of activity mln rubles 5,013.3 5,233.6 5,676.1 +442.6 8.5 Water disposal ROSSETI mln rubles 3.7 3.1 3.2 +0.1 3.5 The volume of drainage to surface water bodies thsd m3 118.9 116.1 61.9 -54.2 (46.7) LAND PROTECTION STAFF STRUCTURE Land reclamation volume Ha 63.6 6,484.6 4,879.16 -1,605.44 (24.8) General indicators for staff structure WASTE MANAGEMENT Total headcount as of December 31 pers. 221,026 221,987 220,031 -1,956 (0.88) Waste distribution by hazard classes Average headcount pers. 215,149 217,283 217,499 216 0.1 Class I thsd tons 0.38 0.57 0.3 -0.27 (47.4) Staff turnover rate % 4.5 4.5 4.8 0,3 p.p. Class II thsd tons 0.19 0.2 0.18 -0.02 (10) Personnel structure by gender and employee category Class III thsd tons 1.85 1.85 1.54 -0.31 (16.8) Share of women in the total number of staff % 23 22.6 22.6 - Class IV thsd tons 33.78 34.66 41.22 +6.56 18.9 Share of managers in the total number of employees % 16.0 16.0 16.1 0,1 p.p. Class V thsd tons 67.43 65.36 43.61 -21.75 (33.3) Of them: % 14 13.7 13.3 (0.4) p.p. Total thsd tons 103.6 102.6 86.85 -15.75 (15.4) Share of women executives Production and Consumption Waste Management Share of specialists in the total number of employees % 32.2 32.5 32.6 0,1 p.p. Accommodation thsd tons 72.1 75.1 53.1 -22.0 (29.3) Of them: % 48 47.5 48.1 0,6 p.p. Disposal, neutralization thsd tons 31.3 27.2 33.5 +6.3 23.2 Share of women professionals The proportion of workers in the total number of Total thsd tons 103.4 102.3 86.6 -15.7 (15.3) % 51.8 51.5 51.3 (0.2) p.p. employees BIODIVERSITY PROTECTION Of them: Bird protective devices installed pc. 98,081 110,697 150,445 +39,748 35.9 % 10 9.5 9.3 (0.2) p.p. The proportion of women workers NEGATIVE ENVIRONMENTAL IMPACT PAYMENTS Share of staff by age group as of December 31 For atmosphere emissions of pollutants mln rubles 0.45 0.39 0.18 -0.21 (53.8) Under 35 years old % 31.2 30.9 29.4 (1.5) p.p. Of them: mln rubles 0.19 0.11 0.12 +0.01 9.1 35 - 45 years old % 26.9 28.1 28.7 0,6 p.p. Allowable from 45 to retirement age % 33.7 32.9 33.7 0,8 p.p. Excessive mln rubles 0.26 0.28 0.06 -0.22 (78.6) Working pensioners % 8.2 8.0 8.2 0,2 p.p. For pollutants discharges into waters mln rubles 0.28 0.05 0.015 -0.035 (70) TRAINING AND DEVELOPMENT OF EMPLOYEES Of them: mln rubles 0.22 0.03 0.002 -0.028 (93.3) Percentage of employees who completed corporate Allowable % 100 100 100 - - training Excessive mln rubles 0.06 0.02 0.013 -0.007 (35) Percentage of staff trained externally % 59 61 67 6 p.p. For waste disposal mln rubles 27.0 19.5 13.1 -6.4 (32.8) Of them: mln rubles 18.3 13.3 11.5 -1.8 (13.5) Allowable Excessive mln rubles 8.7 6.2 1.6 -4.6 (74.2) Total mln rubles 27.7 19.9 13.3 -6.6 (33.2) Of them: mln rubles 18.7 13.4 11.6 -1.8 (13.4) Allowable 29 Reports for 2017 and 2018 quoted the data on the number of injured. This Report indicates the number of accidents. Excessive mln rubles 9.0 6.5 1.7 -4.8 (73.8)

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GRI Indicator Section Page Comment GRI Standards Report Compliance Table The list of material topics has undergone significant changes due to the updating of material topics as part GRI Indicator Section Page Comment of the Report preparation process. The significant topics of this Report are General Indicators 102-49. Changes in reporting reflected in the materiality matrix in Organization Profile the "Identification of material topics" Public Joint Stock Company "Russian section, the significant topics of the 102-1. Name of the organization - 115 Networks" (ROSSETI) 2018 Report are disclosed on page 9 of 102-2. Activities, brands, products, and services About the Сompany 12 the 2018 Report. 4 Belovezhskaya st., Moscow, Russian 102-50. Reporting period About the Report 8 January 01, 2019 - December 31, 2019 102-3. Location of headquarters - Federation 102-51. Date of most recent report About the Report 8 102-4. Location of operations Geography of activity 14 102-52. Reporting cycle About the Report 11 102-5. Ownership and legal form About the Сompany 12 102-53. Contact point for questions regarding the About the Report 8 report Geography of activity 102-6. Markets served 12, 46 102-54. Claims of reporting in accordance with the Customer focus About the Report GRI Standards About the Сompany 102-7. Scale of the organization 12,53 Management of economic impact 102-55. GRI content index - Professional audit certification was 102-8. Information on employees and other workers Staff composition 56 102-56. External assurance - not conducted. During the reported period, there were Essential Topics no significant changes 102-9. Supply Chain Supply Chain Management 50 in the structure of the Group’s supply Economic chain 1. Economic performance of ROSSETI: ensuring financial stability and increasing operational efficiency. 2. Indirect economic impacts. Services pro bono and infrastructure investments in the regions of activity. 102-10 Significant changes to the organization and its - supply chain GRI 201. Economic Performance 2016 In the reported period, the Company Management approaches in the field of did not apply the precautionary economic performance management 102-11. Precautionary principle or approach - Identification of significant topics, (implementation of the strategy, principle to identify and monitor 103 Management Approach 9, 53 risks and manage them. Management of economic impact performance evaluation using the KPI system, etc.) are described in detail in 102-12. External initiatives Corporate ethics and anti-corruption 33 the Annual Report of ROSSETI 2019. Membership in organizations and 201-1 Direct economic value generated and 102-13. Membership of associations 48 Economic impact management 53 associations, awards distributed Strategy 3. Procurement transparency in ROSSETI. Selection of bona fide suppliers, involvement of local suppliers in the regions of Company's activity. 102-14. Statement from senior decision-maker Address of the Director General 4 GRI 204. Procurement Practices 2016 Ethics and Integrity Identification of significant topics 103 Management Approach 9,50 102-16. Values, principles, standards and norms of Sustainability Management Approach, Supply Chain Management 24 behavior Corporate Ethics and Anti-Corruption Statistics on local suppliers by 102-17. Mechanisms for advice and concerns about 204-1 Proportion of spending on local suppliers Procurement Classification 51 subsidiaries and affiliates are not kept Hotline 39 ethics by the Company. Corporate governance 4. Anti-corruption 102-18. Governance structure Corporate Sustainability Management 29 GRI 205. Anti-corruption 2016 Identification of significant topics Stakeholder Engagement 103 Management Approach 9, 33 Anti-corruption 102-40. List of stakeholder groups Stakeholder Engagement 42 205-1 Operations assessed for risks related to Corporate ethics and anti-corruption 34 102-41. Collective bargaining agreements Employee Motivation and Engagement 61 corruption 102-42. Identifying and selecting stakeholders Stakeholder Engagement 42 205-2. Communication and training about anti- Anti-corruption measures 35 Stakeholder Engagement corruption policies and procedures 102-43. Approach to stakeholder engagement 42, 44 Engagement Mechanisms and Results Anti-corruption measures, Mechanisms for 205-3 Confirmed incidents of corruption and actions reporting unethical or illegal behavior 39 102-44. Key topics and concerns raised Stakeholder Engagement 42 taken Report Summary Environmental The main subsidiaries of ROSSETI, included in the perimeter of the 9. Power consumption. The desire of ROSSETI to reduce energy consumption and efficient use of energy. 102-45. Entities included in the consolidated financial formation of consolidated financial GRI 302. Energy 2016 - statements statements prepared in accordance Identification of significant topics 103 Management Approach with IFRS, are listed on the Company's Energy Saving and Energy Efficiency website www.rosseti.ru/eng/ The regulatory documents and SDCs’ 102-46. Defining report content and topic boundaries About the Report 9 Energy saving programs do not 102-47. List of material topics About the Report 10 302-1 Energy consumption within the organization Energy Saving and Energy Efficiency 83 provide for the measurement of fuel and energy resources consumption 102-48. Restatements of indicators About the Report 8 in Joules. 302-4 Reduction of energy consumption Energy Saving and Energy Efficiency 83

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GRI Indicator Section Page Comment GRI Indicator Section Page Comment 10. Water. Improving the efficiency of water use in the Company. GRI 402. Labor / Management Relations 2016 GRI 303. Water and effluents 2016 In accordance with Art. 74 of the Identification of significant topics Labor Code of the Russian Federation 103 Management Approach Environmental protection 9, 78, 80 (Labor Code of the Russian Federation) Water management on changes in working conditions, as well as with Art. 75 of the Labor Water Management 402-1. Minimum notice periods regarding operational Code of the Russian Federation, 303-1 Water withdrawal by source 80, 106 - Key Quantitative Data changes when changing the ownership of an 12. Emissions. Reducing emissions of greenhouse gases and pollutants into the atmosphere. organization, the minimum period GRI 305: Emissions 2016 for notifying employees and their elected representatives of changes in Identification of significant topics economic activity that may affect them 103 Management Approach Environmental protection 9, 78, 83 in a significant way is 2 months. Reduction of air emissions 19. Health and safety in the workplace GRI 305-7. Nitrogen oxides (NOX), sulfur oxides Emission Reduction 83, 106 GRI 403. Occupational Health and Safety 2018 (SOX), and other significant air emissions Key Quantitative Data Identification of significant topics, 13. Discharges and waste. Monitoring the volume of discharges. Waste management from industrial activities. 103 Management Approach 9, 70 Occupational health and safety GRI 306. Effluents and Waste 2016 403-1 Occupational safety management system Occupational safety management system 70 Identification of significant topics 403-2 Hazard identification, risk assessment and 103 Management Approach Environmental protection 9, 78, 80 Injury Risk Reduction Program 74 Water management accident investigation The company does not keep relief 403-3 Occupational health Services Worker Health 76 statistics, because in accordance 403-4 Worker participation, consultation, and Safety Culture Development 73 with the norms of the current communication on occupational health and safety environmental legislation, relief to 403-5 Worker training on occupational health and Occupational health and safety training for 72 terrain is not standardized. In addition, safety employees the procedure for establishing standards for pollutants discharged VHI applies only to employees of the with wastewater for category 3 403-6 Promotion of worker health Worker Health 76 Group of Companies working on a Water Management 306-1. Water discharge by quality and destination facilities (these include power grid permanent basis. Key Quantitative Data facilities) is currently not regulated by 403-7 Prevention and mitigation of occupational Injury Risk Reduction Program, Worker law. Information about sanitation in health and safety impacts directly linked by business 74, 76 Health centralized networks is not disclosed, relationships because such wastewater is disposed 403-8 Workers covered by the Occupational safety OSS covers 100% of the employees of of within the framework of the Occupational safety management system 70 management system the ROSSETI Group concluded agreements and does not fit in the environmental activities of the 403-9 Work-related injuries Injury Cases, Key Quantitative Data 75, 106 Company. 403-10 Work-related ill health Worker Health 76 306-2. The total mass of waste by type and method Waste Management 82, 106 20. Training and professional development of employees. The availability of educational programs at ROSSETI. of treatment Basic Quantitative Data GRI 404. Training and Education 2016 14. Compliance of the services of ROSSETI with environmental requirements (including fines and sanctions). Identification of significant topics 103 Management Approach 9, 59 GRI 307. Environmental Compliance Development and training Identification of significant topics 404-3 Percentage of employees receiving regular Personnel assessment and personnel 103 Management Approach 9, 78 63, 106 Environmental protection performance and career development reviews reserve, Basic quantitative data GRI 307-1. Non-compliance with environmental laws Environmental protection 78 21. Equal remuneration for men and women (remuneration, the appointment of women in leadership positions). and regulations GRI 405. Diversity and Equal Opportunity Social 103 Management Approach Identification of significant topics by our staff 9, 56 17. Employment. Company investments in human resources. Decrease in staff turnover. The desire of the Company to attract qualified employees in various regions of activity. The structure of the Board of Directors GRI 401. Employment 2016 by gender: men - 100%, women - 0%, 103 Management Approach Identification of significant topics by our staff 9, 56 Personnel Composition, Key Quantitative The age of the members of the Board 405-1 Diversity of governance bodies and employees 56, 106 Personnel Composition Data of Directors can be found in the 401-1. New employee hires and employee turnover 56, 106 Partially disclosed Key Quantitative Data Corporate Governance Report within 401-2 Benefits provided to full-time employees the framework of the Annual Report of that are not provided to temporary or part-time Employee Motivation and Engagement 60 ROSSETI 2019. employees 23. Development of local communities (charitable and sponsorship projects in the fields of education, health, assistance to vulnerable groups, etc.). Respect of 18. The relationship between employees and management. Prompt notification of employees about significant changes in the activities of ROSSETI. rights of indigenous and small peoples in the regions of the Company's activity. GRI 413. Local communities Identification of significant topics, Interaction 103 Management Approach 9, 96 with local communities Community development programs are 413-1 Operations with local community engagement, Community engagement 96 implemented as part of the Company's impact assessments, and development pr ograms charity and sponsorship activities. 24. Observance by the Company and suppliers of human rights (workers' rights to freedom of assembly, decent working conditions, prohibition of forced and child labor, etc.).

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GRI Indicator Section Page Comment Naming of ROSSETI Group companies Identification of significant topics 103 Management Approach Corporate ethics and anti-corruption Short corporate names Naming in the Report Naming after rebranding The Group of Companies does not 412-2 Employee training on human rights policies or JSC ENCE ENCE - conduct trainings on human rights procedures among employees PJSC Kubanenergo Kubanenergo ROSSETI Kuban 25. Compliance of the Company with legal requirements relating to social and economic issues. JSC Kurortenergo Kurortenergo GRI 419. Socioeconomic Compliance 2016 PJSC LENENERGO LENENERGO ROSSETI Lenenergo 103 Management Approach Identification of significant topics 9 PJSC MOESK MOESK ROSSETI Moscow Region 419-1. Non-compliance with laws and regulations in Penalties for violations in the social and The ROSSETI Group did not receive PJSC IDGC of Volga IDGC of Volga ROSSETI Volga the social and economic area economic spheres significant fines in the reporting year. PJSC IDGC of Siberia IDGC of Siberia ROSSETI Siberia Industry Application Indicators Organization Profile 12 JSC IDGC of Urals IDGC of Urals ROSSETI Urals EU4. The length of the power grid by type About the Сompany 9 PJSC IDGC of Centre IDGC of Centre ROSSETI Center Essential topics and other aspects 87 PJSC IDGC of Center and Volga Region IDGC of Center and Volga Region ROSSETI Center and Volga Region 6. Ensuring reliable and uninterrupted power supply. PJSC IDGC of North-West IDGC of North-West ROSSETI North-West 15. Customer service. Informing and improving consumer literacy on issues of JSC Petrodvorets Electric Company Petrodvorets Electric Company network connection. PJSC ROSSETI ROSSETI ROSSETI Identification of significant topics Ensuring safe, reliable and uninterrupted PJSC ROSSETI South (Prior to February 103 Management Approach 9, 89, 88 ROSSETI South ROSSETI South power supply, 17, 2020 – PJSC IDGC of South) Network connection PJSC ROSSETI Northern Caucasus (Prior to EU23 Programs, including those implemented in March 24, 2020 – PJSC IDGC of Northern ROSSETI Northern Caucasus ROSSETI Northern Caucasus partnership with the state, to improve and support Network connection 88 Caucasus) access to electric energy and consumer services JSC ROSSETI Tyumen ROSSETI Tyumen ROSSETI Tyumen Ensuring safe, reliable and uninterrupted EU28. Power outages 89 power supply ЗАО Svet Svet Ensuring safe, reliable and uninterrupted JSC Saint Petersburg Power Grid Saint Petersburg Power Grid EU29. The average duration of power outages 89 power supply PJSC TDC TDC ROSSETI Tomsk 16. Emergency preparedness. PJSC Tyvaenergo Tyvaenergo Identification of significant topics 103 Management Approach 9, 90 PJSC FGC UES FGC UES ROSSETI FGC UES Emergency preparedness PJSC Chechenenergo Chechenenergo EU21 Emergency Planning, Disaster/Emergency Action Plan and Training Programs, and Recovery Emergency preparedness 90 JSC Tsarskoye Selo Energy Company Tsarskoye Selo Energy Company Plans JSC Yantarenergo Yantarenergo ROSSETI Yantar 7. Research and implementation of innovative developments. Identification of significant topics 103 Management Approach 9, 93 Innovation EU8 Research, development and costs aimed at ensuring a reliable energy supply and supporting Innovation 93 sustainable development

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The Certificate of Public Endorsement

Contacts

By publishing the Report on Social Responsibility and Corporate Sustainable Development for 2019, ROSSETI hopes to receive feedback. Stakeholders’ suggestions on the disclosure of non-fi- nancial information help the Company to constantly improve quality of reporting and the effectiveness of activities in the field of sustainable development in general.

Full name: Public Joint Stock Company ROSSETI Address: 4 Belovezhskaya st., Moscow, Russia, 121353 Tel.: +7 (495) 995 5333 Email: [email protected]

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