1. Inter Rao Ues Group: Key Facts______7 4.3
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1 1 0 2 international standards rational use of natural resources charity 2011 environment employee development efficiency SUSTAINABILITY AND motivation social programmes principles risk management performance staff training strategy OHS ENVIRONMENTAL safety responsibility sustainability anti-corruption RESPONSIBILITY corporate standards corporate investment management information transparency reliability corporate ethics corporate REPORT SUSTAINABILITY AND ENVIRONMENTAL RESPONSIBILITY REPORT AND ENVIRONMENTAL SUSTAINABILITY energy efficiency JSC INTER RAO UES regional development consistency commitment benefits openness support JSC INTER RAO UES WWW.INTERRAO.RU TABLE OF CONTENTS MESSAGE FROM BORIS KOVALCHUK, CHAIRMAN OF THE MANAGEMENT BOARD 4. RELIABILITY, SECURITY AND EFFICIENCY ________________________________________51 OF JSC INTER RAO UES ______________________________________________________5 4.1. ENSURING RELIABLE AND SECURE ENERGY SUPPLIES ___________________________51 4.2. OCCUPATIONAL HEALTH AND SAFETY ________________________________________62 1. INTER RAO UES GROUP: KEY FACTS _____________________________________________7 4.3. ENSURING ASSET SECURITY ______________________________________________64 1.1. HISTORY _____________________________________________________________7 4.4. ENVIRONMENTAL PERFORMANCE ___________________________________________64 1.2. PROFILE _____________________________________________________________8 4.5. INNOVATIVE DEVELOPMENT _______________________________________________71 1.3. DEVELOPMENT STRATEGY ________________________________________________12 4.6. IMPROVING ENERGY EFFICIENCY ___________________________________________74 1.4. BUSINESS MANAGEMENT MODEL ___________________________________________13 4.7. INTERNATIONAL ENERGY ALLIANCES AND INITIATIVES ____________________________78 1.5. FINANCIAL PERFORMANCE _______________________________________________14 1.6. AWARDS ____________________________________________________________15 5. REGIONAL SOCIO-ECONOMIC DEVELOPMENT ______________________________________81 5.1. PRINCIPLES AND APPROACHES ____________________________________________81 2. SUSTAINABILITY __________________________________________________________17 5.2. RUSSIA _____________________________________________________________84 2.1. APPROACH TO SUSTAINABILITY ____________________________________________17 5.3. GEORGIA ____________________________________________________________85 2.2. STAKEHOLDER ENGAGEMENT _____________________________________________18 5.4. ARMENIA ____________________________________________________________86 2.3. CORPORATE GOVERNANCE ________________________________________________22 5.5. KAZAKHSTAN _________________________________________________________87 2.4. RISK MANAGEMENT ____________________________________________________27 2.5. PREVENTING CORRUPTION AND OTHER ILLEGITIMATE PRACTICES ____________________28 6. ABOUT THIS REPORT _______________________________________________________89 2.6. PROCUREMENT MANAGEMENT _____________________________________________29 CONCLUSION ON PUBLIC ASSURANCE OF THE REPORT ________________________________90 3. HUMAN RESOURCES _______________________________________________________33 PUBLIC ASSURANCE OF THE REPORT BY INTERNAL STAKEHOLDERS ____________________90 3.1. PRINCIPLES AND APPROACHES ____________________________________________33 PUBLIC ASSURANCE OF THE REPORT BY EXTERNAL STAKEHOLDERS ____________________92 3.2. STAFF PROFILE ________________________________________________________34 3.3. SOCIAL PROGRAMMES __________________________________________________39 GRI CONTENT INDEX _________________________________________________________94 3.4. EMPLOYEE TRAINING AND DEVELOPMENT _____________________________________47 3.5. REMUNERATION AND MOTIVATION __________________________________________49 LIST OF ABBREVIATIONS _____________________________________________________105 MESSAGE FROM BORIS KOVALCHUK, CHAIRMAN OF THE MANAGEMENT BOARD OF JSC INTER RAO UES 5 MESSAGE FROM BORIS KOVALCHUK, CHAIRMAN OF THE MANAGEMENT BOARD OF JSC INTER RAO UES The INTER RAO UES Group made considerable progress in 2011 and Remuneration Committee, the Strategy and Investment The larger a company is, the greater its impact and influence towards its strategic goal of becoming a top ten global power Committee and the Audit Committee. In 2011, the Board in its regions of operation. We see this influence primarily company by installed capacity. We operated 25 thermal power of Directors approved our Declaration of Environmental lying in our considerable responsibility to society. INTER stations, 3 hydropower plants and one wind farm with a total Responsibility, which defines the Group’s main commitments, RAO UES Group companies are often some of the largest installed capacity of over 28 GW. Our operations generated 117 objectives and areas of activity with regard to the environment. electricity producers and suppliers and the largest employers billion kilowatt-hours of electricity and 20 million gigacalories of It covers the management of the environmental aspects and and taxpayers in the regions in which they are based. Every heat. The Group’s total staff count numbered more than 47,000. risks of operations, environmental protection, efficient use of citizen in communities located close to the Group’s operations All of this together makes INTER RAO UES one of Russia’s natural resources and safeguarding employee and public health is a customer of electricity supply services provided by our largest power companies. in the Group’s regions of operation. We continuously improve companies. This means that ensuring reliable and secure the quality of our work, following international best practices energy supplies, fair pricing and investing in developing regional We are proud of what we have achieved but always remember and trends in the field of corporate governance, corporate social infrastructure and energy efficient technologies are important that the larger the scale of our operations, the greater our responsibility, openness and transparency. areas in the Group’s strategic development and worthy of responsibility. To us, this responsibility means not just special attention. ensuring reliable and secure supplies to our customers but also The second strategic component of our sustainability practices guaranteeing safe working conditions and the wellbeing of our is a balanced approach towards human resource management. This is the INTER RAO UES Group’s first ever sustainability employees and their families. It also means contributing to the We understand that outstanding employee performance and environmental responsibility report. In compiling it, we development of local communities and supporting the regions depends directly on how we treat our people. It also depends strictly followed international non-financial reporting guidelines in which we operate. Being a responsible company means on incentives and intangible motivators, fostering a favourable developed by the Global Reporting Initiative (GRI). Within this caring for the environment and ensuring environmental safety corporate culture and ensuring comfortable and safe working report we detail our development approach and corporate for the community. This is why sustainability is an integral part conditions. We strive to be an employer of choice. Corporate responsibility philosophy, as well as the social, environmental, of the INTER RAO UES Group’s strategy. As we move forward, training and skills enhancement programmes are offered both occupational safety and personnel management projects we we have set ourselves three main goals: that our activities at Group level and within individual companies. Our corporate implemented in 2011. We strive to become one of the world’s should be economically profitable, environmentally responsible knowledge management system allows employees to complete largest energy companies. To us, this means not only becoming and socially oriented. both in-person and remote training and choose from dozens of the largest or the most efficient, but also setting an example for courses and workshops without interrupting their normal work others to follow and constantly adopting the highest corporate To successfully pursue these goals, we seek to effectively activities. We are developing integrated employee motivation responsibility standards. combine several components. systems to retain highly skilled specialists and expanding our cooperation with universities and attracting promising young The first is the corporate governance system the Group is specialists. Another important aspect of our HR policies is building in line with best international standards and practices. our corporate social programmes aimed at supporting young INTER RAO UES has adopted a Corporate Governance Code families and parents, as well as retired workers and pensioners. Chairman of the Management Board of JSC INTER RAO UES compliant with the requirements of Russian legislation and Boris Kovalchuk aligned with recognised Russian and international standards. The third priority component in our sustainability model is Furthermore, we have developed and approved a Corporate operational and occupational safety. To keep pace with the Ethics Code Code of Corporate Ethics reflects the most Group’s rapid development, we focused our efforts in 2011 on important principles and values of the JSC INTER RAO UES. developing and gradually introducing unified standards in the The compliance with principles and values