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2017 Sustainable Development Report Contents 2 About the Report 64 Human Resource Development

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2017 SUSTAINABLE DEVELOPMENT REPORT CONTENTS 2 ABOUT THE REPORT 64 HUMAN RESOURCE DEVELOPMENT 6 MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD 66 APPROACHES TO MANAGEMENT 68 STAFF PROFILE 69 FULFILMENT OF 2017 GOALS AND OBJECTIVES 8 ABOUT THE COMPANY 70 RECRUITING AND RETAINING STAFF 71 REMUNERATION AND SOCIAL SUPPORT FOR STAFF 10 GAZPROM NEFT TODAY 74 COOPERATION WITH TRADE UNIONS 12 STRATEGY IN ACTION 75 STAFF TRAINING AND DEVELOPMENT 23 INNOVATIVE ACTIVITIES 81 DEVELOPMENT OF THE TALENT POOL 28 PRODUCT QUALITY CONTROL AND IMPROVEMENT 83 GOALS AND OBJECTIVES FOR 2018 31 ENGAGEMENT WITH CUSTOMERS 33 SUPPLY CHAIN 34 IMPORT SUBSTITUTION 35 GOALS AND OBJECTIVES FOR 2018 SAFE DEVELOPMENT: INDUSTRIAL AND ENVIRONMENTAL SAFETY, OCCUPATIONAL HEALTH AND SAFETY, 36 SUSTAINABLE DEVELOPMENT STRATEGY 84 ENERGY EFFICIENCY, AND ENERGY CONSERVATION 38 MANAGEMENT APPROACH 86 APPROACHES TO MANAGEMENT 40 SUSTAINABLE DEVELOPMENT PRIORITIES 88 SAFETY CULTURE 89 SUPPLY CHAIN RESPONSIBILITY 90 STAKEHOLDER ENGAGEMENT 91 INDUSTRIAL SAFETY MITIGATING NEGATIVE ENVIRONMENTAL IMPACTS 96 AND THE EFFECTIVE USE OF RESOURCES 106 ENERGY CONSUMPTION AND ENERGY EFFICIENCY 112 GOALS AND OBJECTIVES FOR 2018 SUSTAINABILITY MANAGEMENT REGIONAL POLICY AND DEVELOPMENT 44 AND STAKEHOLDER ENGAGEMENT 114 OF LOCAL COMMUNITIES 46 CORPORATE GOVERNANCE 116 MANAGEMENT APPROACHES 50 INFORMATION DISCLOSURE 120 STRATEGY FOR SOCIAL ACTIVITIES 51 OBSERVANCE OF HUMAN RIGHTS 124 FULFILMENT OF 2017 GOALS AND OBJECTIVES 52 ETHICS AND ANTI-CORRUPTION ACTIVITIES 125 RESULTS OF SOCIAL ACTIVITIES IN 2017 53 INTERNAL CONTROL AND RISK MANAGEMENT 136 SOCIAL ACTIVITIES ABROAD 56 STAKEHOLDER ENGAGEMENT 137 GOALS AND OBJECTIVES FOR 2018 61 CORPORATE CULTURE 62 CORPORATE COMMUNICATIONS SYSTEM 138 APPENDICES APPENDIX 1. INDICATORS OF THE COMPANY’S 138 SUSTAINABLE DEVELOPMENT ACTIVITIES 142 APPENDIX 2. PUBLIC HEARINGS IN REGIONS WHERE THE COMPANY OPERATES APPENDIX 3. CERTIFICATION OF THE REPORT BY THE NON-FINANCIAL THE ONLINE VERSION OF THE COMPANY’S REPORTING BOARD OF THE RUSSIAN UNION OF INDUSTRIALISTS SUSTAINABLE DEVELOPMENT REPORT 144 AND ENTREPRENEURS FOR 2017 IS AVAILABLE AT: 145 APPENDIX 4. INDEX OF STANDARD DISCLOSURES csr2017.gazprom-neft.com 154 APPENDIX 5. DEFINITION OF KEY TERMS AND ACRONYMS 157 CONTACT INFORMATION AND FEEDBACK ABOUT THE REPORT GAZPROM NEFT І SUSTAINABLE DEVELOPMENT REPORT І 2017 2 // 3 ABOUT THE REPORT WE ARE PLEASED TO PRESENT YOU WITH THE COMPANY’S REPORT SIGNIFICANT THEMES OF THE REPORT ABOUT ITS SUSTAINABLE DEVELOPMENT ACTIVITIES1 FOR 2017. THE REPORT HIGHLIGHTS THE COMPANY’S APPROACHES TO MEETING CHALLENGES RELATED TO SUSTAINABLE DEVELOPMENT AND CORPORATE SOCIAL RESPONSIBILITY When determining the significant themes to be covered in the Report, Gazprom The analysis of the Company’s AS WELL AS THE MAIN FOCUSES AND RESULTS OF THIS WORK. Neft analyses their relevance for both the Company's development as well engagement with stakeholders as its stakeholders. We constantly monitor the scale and nature of the impact and the identificationof significant of the Company's activities on the economy, social and natural environment as well themes focused on the following: as information requests from stakeholders. We also consider the importance materials from a survey The key sections of the Report are devoted to the effectiveness of economic of the themes of the Report in terms of the public context and the obligations of managers and specialists as part activities, ensuring industrial safety, supporting and developing staff, of business, including those enshrined in Russian and international documents. of the preparation of this Report The Report highlights and promoting socioeconomic development in the regions where Gazprom Neft When determining significant themes and related indicators, the Company took into the results of employee feedback operates. The Company believes it is essential to regularly provide stakeholders the Company’s approaches account: the results of an annual with comprehensive information about aspects of its activities that are significant to meeting challenges the provisions of the UN Global Compact and the Social Charter of Russian study of the Company’s social for them and obtain feedback about the Report. related to sustainable Business and psychological climate, minutes international and Russian standards in corporate social responsibility of meetings between employees development and corporate The Report is prepared using the basic version of GRI Reporting Standards taking and sustainable development as well as the non-financial Report standards and management, and team into account the provisions of ISO 26000:2010 (Guidance on Social Responsibility). social responsibility as well ISO 26000 and GRI meetings The Report underwent independent public assurance with the Non-Financial as the main focuses and results studies on the industry-wide practice for the management of sustainable materials from Gazprom Neft’s Reporting Board of the Russian Union of Industrialists and Entrepreneurs (RUIE). of this work. development and Reporting in this regard regular interaction with investors, an analysis of the scope of the Company’s stakeholder engagement the federal and regional authorities, The Report presents information about Gazprom Neft PJSC and its subsidiaries business partners, non-profit and affiliates (hereinafter referredto as Gazprom Neft or the Company) and public organizations, experts, for the 2017 calendar year. The Company’s financial positionand operating and local communities results are presented using consolidated data from Gazprom Neft PJSC. Unless materials from roundtables otherwise indicated in the text, data on the Company’s social and labour relations MATRIX PRIORITIZING THE SIGNIFICANT THEMES OF THE REPORT and public hearings in the regions and its environmental performance include figures for Gazprom Neft PJSC and its (the participants and content subsidiaries and affiliates based in the Russian Federation and the Commonwealth 4.0 of dialogues are presented of Independent States (CIS). in Appendix 2 to this Report) recommendations and comments 7 The Report details the Company's medium- and long-term plans. This information 14 received by the Company is forward-looking in nature. The feasibility of the declared intentions depends 3.5 as part of the public assurance 13 8 on factors (economic, social, and legal) that are beyond the Company’s control of its 2017 Sustainability Report or influence.The actual results may therefore differ from those indicated by the Non-Financial Reporting 10 1 in the plans. Board of the RUIE 3.0 2 12 The Report is published in Russian and in English in hard copy and electronic form. The topics identified are relevant for all 20 of the Company’s subsidiaries. 16 23 3 2.5 15 5 22 The document as well as previous 24 sustainable development Reports may 11 be viewed on the Company’s website 2.0 4 17 9 25 18 21 6 1.5 Assessment of the materiality of themes by stakeholders of the materiality Assessment 19 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Significance of the Company’s impact on aspects of sustainable development 1 — Hereinafter the Sustainable Development Report or the Report. ABOUT THE REPORT GAZPROM NEFT І SUSTAINABLE DEVELOPMENT REPORT І 2017 4 // 5 Borders of significant themes Borders of significant themes Priorities Priorities Chapter of the report Priorities Priorities Chapter of the report of internal of external Exploration in which the theme of internal of external Exploration in which the theme Themes and aspects stakeholders stakeholders and production Oil Refining Sales is covered Themes and aspects stakeholders stakeholders and production Oil Refining Sales is covered ECONOMIC PERFORMANCE HUMAN CAPITAL 1 Company’s strategy About the Company 19 Equitable remuneration HR potential and social support for staff development 2 Investment programme About the Company 20 Employee training HR potential 3 Financial stability About the Company and development development 4 Production efficiency About the Company 21 Labour relations HR potential 5 Product quality About the Company and employment development 6 Innovative activities About the Company COMPANY’S IMPACT ON ITS REGIONS OF OPERATION INDUSTRIAL SAFETY 22 Local community development Regional policy programmes and the development 7 Safety of production processes Safe development of local communities and emergency preparedness 23 Import substitution programme Regional policy 8 Occupational health and care Safe development and the development for employee health of local communities 9 Industrial environmental Safe development 24 Local supplier development Regional policy monitoring programme and the development 10 Compliance with environmental Safe development of local communities legislation requirements About the Company 11 Environmental impact Safe development of the Company’s activities 25 Rights of indigenous peoples Regional policy at Arctic fields and the development of local communities 12 Utilizing energy and energy Safe development efficiency 13 Pollutant emissions Safe development 14 Greenhouse gas emissions Safe development 15 Use of water resources Safe development 16 Waste management Safe development 17 Protection of land resources Safe development and vegetation 18 Environmental performance Safe development of products About the Company MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD GAZPROM NEFT І SUSTAINABLE DEVELOPMENT REPORT
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