Sustainability Report 2017 CONTENTS
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Sustainability report 2017 CONTENTS Chairman’s statement 4 ANNEX Key performance indicators 6 Information about the Report 162 Recognition 8 Awards and achievements 171 PROFILE OF SISTEMA Glossary and acronyms 174 Overview 12 Consolidated indicators 179 Mission and values 13 GRI index 183 International cooperation 14 Сompliance with the UN Global 190 Compact Membership in public organisations 16 Contact details 196 RESPONSIBLE INVESTMENT Policy and principles 20 Business model and asset management 26 Sustainable development and corporate 32 responsibility Social investment 37 EFFICIENT MANAGEMENT Economic performance 40 Investment programmes 51 Innovations 54 Risk management 58 Ethics and anti-corruption 62 Procurement and supply chains 68 HR management 76 Environmental impact 88 SUSTAINABLE DEVELOPMENT 98 PRACTICES OF PORTFOLIO COMPANIES Telecoms and digital services 100 High technology Forest industry 116 Healthcare and pharmaceuticals 122 Consumer sector 129 Agriculture 134 Real estate 139 We support Electric power 143 Hospitality business 150 Social Charter of the Russian For more details, see: Banking and finance 154 Business www.sistema.com Profile of Sistema Responsible Efficient Sustainable development CHAIRMAN’S STATEMENT investment management practices of portfolio companies In 2017, the Corporation confirmed its We invest in promising high-tech businesses and other regions. For example, Segezha making it possible to create interactive commitment to the fundamental principles and innovative start-ups both directly and Group's investment in the upgrade exhibitions. Similar technologies are used for of ethical and responsible business through investment funds or partnerships. of the Segezha Pulp and Paper Mill and creating multimedia classes in schools and conduct in the area of human rights, New technologies, innovations, digitalisation construction of the Vyatka Plywood colleges. Every year MTS and MTS Bank take employment relations, environment and of various industries and areas of life Mill helped create about 600 new jobs part in social and educational activities aimed RUB bn prevention of corruption by joining the constitute the main investment focus in Karelia and the Kirov region. Detsky to promote mobile and financial literacy, UN Global Compact Association in Russia of Sistema. We invest in the development Mir's large retail chain operating across forming a new generation of consumers > 100 and becoming a member of the Social and promotion of innovations because 219 Russian cities ensures immediate of digital services and helping elderly people Charter of Russian Business. we understand that new technologies availability of socially important goods to adapt to the new reality. Corporation invests annually drive economic and technological to the people and expands employment in Russian economy Despite the major macroeconomic growth, improve the quality of life and opportunities in retail and logistics. The companies of Sistema Group challenges faced by the company in help build a better future by contributing Our company is keeping pace with are increasing their investments RUB bn 2017, Sistema and all its key assets to the achievement of global Sustainable modern trends and actively developing in environmental projects, thus proving their demonstrated high sustainability and strong Development Goals by 2030. its e-commerce business: the average commitment to the state of environment and >20 financial performance, and maintained revenue growth rate of the online store climate. Development of the "green market" stable levels of social investment. For Sistema's high-tech assets enable the selling goods for children exceeded 120% and forming the culture of responsible in social sphere in form of tax the last several years, Sistema has been company to be at the cutting edge of digital in 2011-2017. consumption, raising people's awareness payments to off-budget social investing over 1 billion roubles annually economy. The companies of the Group are about environmental issues, promoting funds and charity in social development. At the same time, actively participating in the development Development of healthcare is particularly sustainable production models, preservation the scale and scope of our charity and of smart grid infrastructure and a platform important for improving the quality of natural resources and compliance with volunteer projects, as well as the number for industrial Internet of Things, which of people's lives. The Medsi chain of clinics international standards – all these initiatives GRI 102-14 of our beneficiaries and social partners may be used for managing the equipment founded 20 years ago and the effective take Sistema's assets to a new level of Sustainable development keep growing. In 2017, the total number of production facilities, as well as utility, medicines manufactured by Binnopharm environmental performance. of the Corporation's volunteers exceeded development, construction and service help patients receive quality and high-tech is one of the key priorities 10 thousand people, with most of them companies which operate in the housing medical care. In 2017, we established As part of the Year of Ecology the production This year Sistema became the only Russian working at MTS, Detsky Mir and Medsi. and other spheres. The RFID tags a cancer centre on the basis of Medsi assets of the Corporation focused private issuer from the list of the largest of Sistema PJSFC. More manufactured by Mikron are widely used for to provide a full range of medical on implementing internal and external activities public companies Forbes Global 2000 Tax payments to the national budget and automation of processes in retail, logistics, services to cancer patients, including aimed at protection of the environment, that received a maximum reputation score than 15 years ago Sistema social, pension and health insurance healthcare and other segments. The early diagnostics and rehabilitation, and while Sistema Charitable Foundation based on such criteria as reliability and became one of the first funds increased by more than 13%, company develops microchips for transport launched a Medical Academy to enhance organised two large-scale environmental integrity, social responsibility, the quality making Sistema one of the biggest tax and bank cards, systems for wireless the qualifications and competences festivals in the Republics of Altay and Karelia. of products and services, and being a good companies in Russia payers in Russia. We are confident that collection of data from utility meters, etc. of doctors. Medsi's Academic Council has Leader Invest, a real estate developer, employer based on a survey of 15 thousand our success depends on our partners and RTI Concern and Sitronics are conducting for many years been conducting active provides training for its employees in the respondents from 60 countries of the world. to join the UN Global people around us. Therefore, one of our key R&D work to enhance the security of urban R&D and academic work. area of energy efficiency. The company We will do our best to meet the expectations goals is to ensure the welfare and security environment. MTS Bank and Sistema is actively involved in the development of all stakeholders and will continue Compact, and since then of our employees by offering them equal Capital are working to improve financial and The companies of Sistema Group give of "green" construction, the important improving our performance. we have been doing our opportunities and competitive employment investment services via digital and mobile a lot of attention to the matters of quality element of which is implementation conditions in various industries and technologies. As a result, the joint efforts education and implement projects aimed of modern technologies of wooden best to integrate socially regions. Sistema provides employment of Sistema and our portfolio companies at professional development and training multi-storey housing construction to about 0.2% of the entire Russian become a major driver for development of school children and college students, under the leadership of Segezha Group. responsible approaches workforce aged above 18. of smart cities and digitalisation of various especially in the field of engineering and The company takes a responsible approach industries. technologies. For this purpose we created to forest management: almost all the forests into our investment A responsible approach to managing funds a system for finding and preparing future leased by Segezha Group (more than activity to ensure long- and assets, cooperation with employees, For the last few years Sistema has technology leaders as part of our flagship 6m ha) have been certified by the Forest suppliers, local communities is an integral been investing over 100 billion roubles programme "Lift to the Future". However, Stewardship Council (FSC). term value creation for part of our investment process. While annually in Russian economy. This we believe that the objectives of education following the concept of responsible makes it possible to modernise the are much broader and, therefore, invest in I firmly believe that openness and Vladimir Evtushenkov our shareholders and all investment, Sistema determines the key risk manufacturing and agricultural industries, promotion of science and culture by using transparency are key to successful business factors and opportunities of each asset and create new jobs and improve people's new technologies. We adopted this approach and social