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Sustainable De V Elopmen T R Ep Ort 2016 Sustainable Development ReportSustainable Development 2016 Sakhalin Energy Investment Company Ltd. Head Office: 35 Dzerzhinskogo St., Yuzhno-Sakhalinsk, 693020, Russia Tel.: +7 4242 66 2000; Fax: +7 4242 66 2801 SUSTAINABLE DEVELOPMENT Moscow Office: 31 Novinskiy Blvd, Moscow, 123242, Russia REPORT Tel.: +7 495 956 1750; Fax: +7 495 956 1760 WWW.SAKHALINENERGY.COM TO BE THE PREMIER ENERGY SOURCE FOR ASIA-PACIFIC 2 3 Content 1. Message from the Chief Executive Officer 5 8. Environmental Impact Management 65 9.5.6. Sakhalin Road Safety Council 120 8.1. Industrial Environmental Control 67 9.5.7. The World of Nivkhi Exhibition Project 120 2. About the Report 9 8.1.1. Impact to the Atmospheric Air 67 9.5.8. Sakhalin Indigenous Minorities Development Plan 121 2.1. General Information 10 8.1.2. Impact on Water Bodies 68 2.2. Principles of the Report Content and Quality Definition 11 8.1.3. Waste Management 69 10. 2017 Plans and Development Strategy up to 2021 125 2.3. Defining Material and Priority Topics 8.1.4. Energy 70 to Be Included in the Report 12 8.1.5. Greenhouse Gas and Ozone-Depleting Substance Appendices 129 2.4. Definition of the Report Scope 16 Emissions 72 Appendix 1. GRI Guidelines 2.5. Public Endorsement of the Report 16 8.1.6. Utilisation of Associated Gas in Production 73 Compliance Table (rev. 4.0) 130 8.1.7. Environmental Costs and Payments Appendix 2. Comments and Suggestions 3. Corporate Social Responsibility for the Adverse Impact 74 of Stakeholders on Individual Aspects, and Sustainable Development 17 8.2. Environmental Monitoring and Biodiversity Conservation 75 Indicators and/ or Programmes 3.1. Introduction 18 8.2.1. Soil Monitoring 76 and Company's Response and Commitments 139 3.2. Sakhalin Energy's CSR System 19 8.2.2. River Ecosystems Monitoring 76 Appendix 3. The List of Participants 3.3. Performance Standards 21 8.2.3. Flora and Vegetation Monitoring 78 of Dialogues with Stakeholders 3.4. Sustainable Development Policy 22 8.2.4. Wetlands Monitoring 78 for Preparation of the 2016 3.5. HSE and Social Performance Management 23 8.2.5. Monitoring of Protected Bird Species 79 Sustainable Development Report 150 3.5.1. HSE and Social Performance Management System 23 8.2.6. Steller's Sea Eagle Monitoring 80 Appendix 4. Useful Links 152 3.5.2. Impact Assessment 25 8.2.7. Marine Environment and Biota Monitoring 81 Appendix 5. Company's Information Centres List 154 3.5.3. Inspection and Audit 26 8.2.8. Ballast Water Control 82 Appendix 6. Feedback Form 155 8.2.9. Gray Whale Monitoring 82 Appendix 7. Certificate of Public Endorsement 156 4. About the Company 27 8.2.10. Small Mammal Monitoring 83 Appendix 8. Conclusion on the Results of the Review 4.1. Sakhalin Energy 28 8.3. Pipeline Right-of-Way Maintenance 84 of Sakhalin Energy 2016 Sustainable Development 4.2. Main Production Results in 2016 29 8.4. Oil Spill Prevention and Response Preparedness 84 Report by the RUIE Non-Financial Reporting Council 4.2.1. Assets 29 8.4.1. General Information 84 for the Purpose of Public Endorsement 157 4.2.2. Development Projects 34 8.4.2. Oiled Wildlife Rehabilitation 85 Appendix 9. Abbreviations 160 4.2.3. Hydrocarbon Production and Export 35 8.5. Sanitary Protection and Safety Zones 86 4.3. Continuous Improvement Programme 36 9. Social Impact Management 87 5. Corporate Governance 37 9.1. Personnel: Management and Development 88 5.1. Company's Mission, Vision, Values and Principles 38 9.1.1. Approaches to HR Management and HR Policy 88 5.2. Corporate Governance System and Structure 38 9.1.2. General Information 89 5.3. Corporate Governance Model 40 9.1.3. Recruiting Personnel and Onboarding New Employees 91 5.4. Corporate Culture 43 9.1.4. Remuneration and Bonus System 92 5.5. Code of Conduct 44 9.1.5. Social Guarantees, Benefits and Compensations 93 5.6. Risk Management 44 9.1.6. Individual Performance Review of the Employees 95 5.7. Anti-Bribery and Corruption 48 9.1.7. Learning and Development 95 9.2. Labour Safety and Protection 105 6. Stakeholder Engagement Management 49 9.2.1. General Information 105 6.1. Engagement Strategy, Principles, Mechanisms and Tools 50 9.2.2. Industrial Safety 106 6.2. Stakeholder Engagement in 2016 51 9.2.3. Safety Culture 107 6.3. Engagement with Personnel 52 9.2.4. Road Safety 108 6.4. Local Communities Engagement through the Company's 9.3. Occupational Health 109 Information Centres 53 9.4. Human Rights 111 6.5. Engagement with the Sakhalin Indigenous Minorities (SIM) 54 9.4.1. Human Rights: Principles and Management System 111 6.6. Engagement with Non-Governmental 9.4.2. Grievance Mechanisms 112 and Non-Profit Organisations 55 9.4.3. Grievance Handling in 2016 112 6.7. Engagement with Japanese Stakeholders 55 9.4.4. Human Rights Training 113 6.8. Engagement with Customers 56 9.4.5. Monitoring Human Rights 114 6.9. Engagement with State and Local Government Authorities 57 9.5. Social Investments and Contributions to Sustainable 6.10. International and Regional Cooperation 58 Development of the Host Region 115 9.5.1. Social Investments and Sustainable Development: 7. Economic Impact Management 59 Sakhalin Energy’s Principles and Approaches 115 7.1. Importance of the Sakhalin-2 Project for 9.5.2. The Energy Social Initiatives Fund 117 the Russian Federation and the Sakhalin Oblast 60 9.5.3. Hurry up for Good Deeds Programme (Support 7.2. Financial Benefits to the Russian Federation for Charity Initiatives of Employees) 118 and the Sakhalin Oblast 60 9.5.4. Korsakov Partnership Council 7.3. Russian Content 62 for Sustainable Development 119 7.4. Supply Chain Management 62 9.5.5. What to Do in Emergency Situations 7.5. Vendor Development Programme 64 Partnership Safety Programme 119 3 The design of this Report is based on four elements colours: air, earth, fire and water. MESSAGE FROM THE CHIEF EXECUTIVE OFFICER 5 MESSAGE FROM THE CHIEF EXECUTIVE OFFICER Dear readers! In general, in 2016 Sakhalin Energy achieved excellent performance in This publication is the Sakhalin Energy’s 2016 Sustainable Development all areas and fulfilled its obligations to shareholders, the Russian party, Report. employees, contractors and the community. The Sakhalin Oblast budget revenues from Sakhalin Energy remained high, accounting for more than As with previous reports, this document was prepared in compliance with 60%, just like in the previous few years. the Global Reporting Initiative (GRI) international standards. It is the second time that the Report is written in the GRI G4 format. While working on it, we Sakhalin Energy attaches great importance to the protection of the took into account, to the fullest extent, the opinions of all our stakeholders. environment and biodiversity when implementing its social programmes. By investing in social projects, we encourage the development of social This Report is devoted to environmental protection which Sakhalin Energy initiatives and responsibility, contributing to the solution of the region's has always paid special attention to. Being the operator of a global-scale oil social and environmental issues. and gas project, the company realises how important it is to monitor any impact on the environment. In 2016, the UN General Assembly adopted a new global agenda dedicated to the Sustainable Development Goals (SDGs) and the way In order to assess the state of the environment, to identify the impact of the their achievement will affect the transformation of the world. Many company's production assets and to develop elimination and mitigation of Sakhalin Energy's operating principles correspond to these goals measures, Sakhalin Energy carries out regular industrial environmental and the Sustainable Development Report presents information about control and implements a number of local environmental monitoring the company's contribution to their implementation over the past year. and biodiversity conservation programmes. The Gray Whale Monitoring Programme is one of the most successful among them. The company's work on biodiversity conservation and environmental safety in 2016 yet again received recognition at the highest level. Sakhalin Energy The company strives to achieve high performance while taking care of the won the national contest of the Russian Union of Industrialists and environment. We use innovative technology and advanced expertise of our Entrepreneurs (RUIE) — Russian Business Leaders: Dynamics and shareholders and apply best practices in environmental protection. Responsibility in the Environmental Responsibility category and became the first in the environmental responsibility ranking among the country's oil Since the Sakhalin-2 project reached its full capacity, there has not been and gas companies conducted by the World Wildlife Fund (WWF) of Russia. a single occurrence of an oil spill that could be classified as an emergency. Sakhalin Energy showed excellent performance: the company exceeded This is especially significant for Sakhalin Energy, since the year of 2017 has the 2016 production targets, having produced 61 cargoes of oil and 168 been announced the Year of the Ecology in the Russian Federation. We are cargoes of LNG (against the planned 57 and 166 cargoes, respectively). determined to continue operations and maintain the company's reputation as a reliable supplier of energy resources in the Asia-Pacific region, By supplying gas to the Russian party in accordance with the terms and responsibly addressing environmental issues. conditions of the Production Sharing Agreement, Sakhalin Energy promotes the transition of the Sakhalin Oblast heating systems from coal to gas, a more environmentally friendly fuel type. In 2011–2016, about 2.8 bln m3 of natural gas was delivered to the Yuzhno-Sakhalinsk Heat and Power Plant 1 and other facilities on Sakhalin.
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