Indigenous Peoples and Industrial Companies: Best Practices of Cooperation in the Russian Federation

INDIGENOUS PEOPLES AND INDUSTRIAL COMPANIES: BEST PRACTICES OF COOPERATION IN THE RUSSIAN FEDERATION

Moscow 2012 2

Content

Introduction by Sergey Kharyuchi ...... 3 Introduction by Evgeniy Velikhov ...... 4 Introduction by Andrei Galaev ...... 5 Irkutsk Oil Company (IOC) ...... 6 Kinross Gold Corporation ...... 12 Polymetal Company ...... 22 Rosneft Oil Company ...... 29 Sakhalin Energy Investment Company Ltd...... 39 Concluding remarks ...... 46 3

Russian Association of Indigenous Peoples of the North, Siberia and the Far East of the Russian Federation (RAIPON) represents and protects interests of indigenous population of the Russian North. Currently the Association faces a multitude of objectives connected with the preservation of health of indigenous peoples, with the resolution of truly complex social and economic problems, with saving traditional culture inherited from ancestors. Meanwhile, the strategic goal is achievement of the sustainable development. In dealing with these tasks the Asso- ciation fruitfully and for a long time cooperates with the United Nations Global Compact Network and with the Public Chamber of the Russian Federation. Primary reasons of modern ill-being of indigenous peoples are that fundamentals of their economic, cultural and spiritual life are undermined, habitat and principles of the traditional economy are broken. Development of the North is inevitable, and we understand the signi�icance and importance of this task. But it should be carried out competently, taking into account ecological requirements, speci�ics and interests of the local population, with legislative registration of issues of assessment and damage compensation. Activities of extracting companies in the territories of ancestral habitat and managing of indigenous peoples can be destructive, but can promote preservation and development of peoples who live on these severe Northern lands from ancient times. Cooperation of indigenous peoples with the state institutions started from the moment of establishment of the Association in 1990. However, there was a longer way to cooperation with the private sector. On this way there were dis- agreements, misunderstanding and con�licts. At �irst the partnership seemed to be an unachievable goal to Russian indigenous peoples. But we worked, stud- ied carefully foreign experience. We held negotiations and looked for common ground in our interests. It is worth noting that social movement of indigenous peoples has suf�icient experience to cooperate with companies on the basis of equality and to achieve results that will improve their situation and will give impulse to further social, economic and cultural development. As a result of joint efforts Russian indigenous peoples and the private sector managed to reach mutual understanding in a number of regions. They were able to expand cooperation framework from agreements on damage prevention and compensation to joint strategic planning of development of settlements, to implementation of programs of support of entrepreneurship. Successful Russian practices have already been created to date, effective mechanisms of partner relations have been set up. This brochure that became the result of joining efforts of the UN Global Compact Network in Russia, the Public Chamber of the Russian Federation and Association of Indigenous Peoples of the North contains the best examples of our cooperation. I hope that distribution of this experience, its use by other companies and communities of indigenous peoples of Russia will help to keep aboriginal forms of management that sustain the whole centuries-old civilization of Northern peoples. Sergey Kharyuchi President of the Russian Association of Indigenous Peoples of the North, Siberia and the Far East 4

The Public Chamber of the Russian Federation is responsible for interaction of the citizens of the country with governmental authorities. Its major objectives are: support of civil society and assistance to formation of its institutes, establishment of effective mechanisms of coordination of interests and cooperation between the state, non- commercial organizations and private sector. The Public Chamber deals with various issues — environmental, social, cultural, but �irst of all those of them which demand priority attention from the state and civil society. One of such problems is dif�icult economic and social state of indigenous peoples of the Russian North, Siberia and the Far East. Efforts of the state and civil society should be directed to health protection of indigenous northerners, to the promotion of social and economic development and preservation of their unique culture that is a major part of culture of the whole country. This task is getting more important due to the intensi�ication of industrial development of the territories of their ancestral residence. Without social responsibility of the business survival and development of indigenous population living on vast territories of the Russian North is almost impossible. It is important to know that in Russia many structures of civil society successfully develop. It is hard to overestimate the role of self-organization of indigenous peoples in formation of civil society. They are particularly socially active. For this reason cooperation with them and their obligatory participation in the decision-making process that covers their interests should become the principal form of support of indigenous peoples by the state and the private sector. Equal in rights partnership of indigenous peoples with the private sector together with involvement of state structures will allow to resolve a number of acute problems and will give an impulse to further development of indigenous peoples and growth of their civil activity. The United Nations Global Compact network in Russia provided opportunity both to indigenous people and companies from different countries to exchange the most successful practices of partnership. Experience of cooperation between Russian companies and indigenous peoples of the North is especially important as it takes into account all the peculiarities of interaction in dif�icult and diverse conditions of the Russian North. In this brochure the best practices and models of partnership between the private sector and Russian indigenous peoples are brought together, their strategic principles, methods and mechanisms of implementation are formulated. We hope that they will give an impulse to constructive interaction to those companies which for any reason have not been involved into it yet, will allow them to �ind their own way of building a partnership. We also hope that the given examples of successful experience will help to improve and to make more effective already existing partnerships.

Evgeniy Velikhov Secretary of the Public Chamber of the Russian Federation 5

The UN Global Compact is a major international initiative focused on the development of corporate citizenship and sustainability. The Global Compact today integrates about 100 local networks. Oper- ating within the framework of the Global Compact principles, local networks establish priority areas of activity in their home countries and their commitment makes it possible to draw on both local and world experience. Naturally, local Global Compact networks put more emphasis on the most sensitive social aspects. In case of the Russian Network, as well as in many other countries, one of such aspects is sustainable development of indigenous peoples and their engagement with industrial companies. The Russian Federation is a home of more than 180 nationalities, 40 of which are indigenous minorities of the North, Sibe- ria and the Russian Far East. Russian law secures a special status for indigenous peoples and advocacy of their rights and interests is regarded by the Russian government to be a priority. Many companies that operate in the areas of traditional residence and economic activities of indigenous minorities consider engagement with the local indigenous communities, support of their development, improvement of health care and education, preservation of cultural identity and traditional way of life to be their paramount task. Many such companies have accumulated vast experience which can rightly be considered the best not only in Russia but also globally. Marking the International Day of the World’s Indigenous People on 9 August 2011, and anticipating the 2014 World Conference on Indigenous Peo- ples, UN Secretary-General Ban Ki-moon called “to take concrete steps to ad- dress the challenges facing indigenous peoples and to work in full partnership with indigenous people to identify practical ideas and proposals for action”. In September 2011, the UN Global Compact Network Russia, together with the RF Public Chamber and Russian Association of Indigenous Peoples of the North (RAIPON) held the international conference UN Global Compact in Russia: Business and Indigenous Peoples. This was the forum where Russian companies demonstrated their achievements which were highly appreciated by the Russian and international experts, as well as by indigenous peoples’ representatives. One of the conference resolutions was to issue this booklet which features speci�ic engagement practices and mechanisms. I hope that our joint effort will be of interest to a wide audience and will be of great bene�it to all stakeholders.

Andrei Galaev Chairman of the Steering Committee of the UN Global Compact Network Russia CEO, Sakhalin Energy Investment Company Ltd. 6

Irkutsk Oil Company (IOC)

Description of the company Irkutsk Oil Company (IOC) includes a group of companies engaged in geological studying, exploration and production of hydrocarbon raw materials on �ields and license sites in Eastern Siberia. The structure of Irkutsk Oil Company Group includes “IOC Capital” closed corporation holding company and Irkutsk Oil Company Ltd. that belongs to the �irst-mentioned. Today Irkutsk Oil Company is one of the largest oil producing companies in Eastern Siberia with the current production rate of more than 160 thou- sand tons of oil and gas condensate per month. At the moment Irkutsk Oil Company through its subsidiaries participates in studying and development of 17 �ields and licensed blocks. The majority of �ields and prospecting sites of the company are situated in the territory of the Irkutsk region. Stable development of Irkutsk Oil Company Ltd. promotes the solution of many social problems in the Irkutsk region. It is not just extracted and, in the short term, processed oil, but also tax contributions to the budgets of all levels, and also new workplaces for inhabitants of the region, care of their social security.

Characteristics of indigenous peoples There are two indigenous peoples living in Irkutsk region: Tofalars (Tofs) in Nizhneudinsky district (about 700 people) and Evenks in Katang- sky and Kachugsky districts (about 1000 people). The name of Evenks was of�icially introduced in 1930s and helped to consolidate numerous Evenk groups previously known as the Tungus. Their own name sounds like “Evenk- il” and means “a human”. In the former Evenki Area and Irkutsk region the ethnonym “ele” is spread, in Buryatia — “murchen” and “orochyon”, in Amur region some decades ago the ethnonym “manegry” could be met. Tofalars and Evenks live the traditional way of life, do hunting, �ishing, reindeer breeding.

Irkutsk Oil Company and indigenous peoples: cooperation continues Irkutsk Oil Company (IOC) operates in northern districts of the Irkutsk region: in Katangsky, Kirensky and Ust-Kutskiy districts.

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It performs hydrocarbon production and exploration on 17 licensed sites and hydrocarbon deposits. The Katangsky municipal district belongs to the Far North. The majority of lands under its jurisdiction are of�icially turned over for long-term rent to indigenous peoples of the North and local mixed-type communities (Evenks and Yakuts, Evenks and Russians) which run hunting-trade economy. Beginning of production activities of the company in the area was preceded by carrying out ethnosociological researches in all settlements that were to be affected by the projects, namely in Nepa, Ika, Tokma, Er- bogachen villages; public hearings on projects of development of deposit sites, meetings and consultations with the population were organized. The purpose of these actions was to explain to the population the tactics of work of the company aimed at the establishment of the mode of minimization of damage to renewable resources of traditional nature use, at setting up a partnership between the company and local population and at solution of possible con�lict situations. Works performed in 2009–2011 showed that sites of production activity of IOC would affect hunting grounds of three communities of indigenous peoples —”Tokma”, “Ilel”, “Ika”. Together with the department of archeology, ethnology and history of ancient world of the Irkutsk State University the company developed rules of behavior for its employees in case of discovery of memorial objects of material culture in cult places for indigenous peoples. Following these rules oil industry workers are able to maintain and develop good neighborly relations with the local population. On the basis of polling materials and primary cartographical data available from communities mapping has been performed as well as registration of individual areas of hunting and �ishing lands that were to get into the zone of industrial impact. According to the IOC’s program of development of partnership relations with the population of the area, bilateral documents — agreements on cooperation — were signed, and they are annually renewed. Similar agreements were signed with the Evenk cultural center and the Union of Assistance to Indigenous Peoples of the Irkutsk region. Funds and ex- pendable materials annually granted to indigenous peoples are displayed in the “Agreement on Cooperation between the Government of the Irkutsk region and Irkutsk Oil Company Ltd.” that was signed in 2006 and successfully works today. It �ixes mutual obligations in the sphere of property and production, capital construction, energy saving, environmental management, and also in the �ield of tax, price and social policy. During these years of cooperation with the regional government social investments of IOC grew eight times, from 2 800 000 rubles in 2006 to 22 500 000 rubles in 2011. The company pays taxes in due time and in full volume.

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Director General of IOC Marina Sedykh and Chairman of the Union of Assistance to Indigenous Peoples of the Irkutsk Region Nina Veilasova signing agreement on cooperation

Annual IOC’s help to indigenous communities and such northern settlements as the towns of Ust-Kut and Kirensk, Verkhnemarkovo and Erbogachon settlements, villages of Nepskiy municipal area, northern indigenous communities, the Evenk cultural center, the Union of Assist- ance to Indigenous Peoples of the Irkutsk region is directed both at saving national culture and traditions of the representatives of the indigenous peoples of the North — Evenks and the development of social and living infrastructure of the settlements. Within the framework of the agreement IOC supports organization of national holidays, development of traditional crafts, publishes printing products, grants funds for acquisition of hunting licenses to communities “Tokma”, “Ilel”, “Ika” and individual hunters. Signi�icant �inancial and material support of IOC allocated to the Katang- sky district includes repairs and building of institutions of pre-school and school education, acquisition and delivery of the equipment and vehicles for medical institutions, arrangement and maintenance of winter roads of district and interdistrict value. Annually on a gratuitous basis IOC Ltd. allocates high-quality gas condensate to the inhabitants of national settlements that is used as motor fuel for boats, snowmobiles and diesel electrogenerating stations. For example, in March of 2012 124 000 liters of this fuel were granted to three communities of the Katangsky district only. All offers and wishes of

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Meeting with the indigenous population of the Katangsky district inhabitants of the remote villages of the Katangsky district expressed at meetings are put into the minutes and reported to the company management. As a result of such meetings in March, 2012 it was decided over and above the agreement to consider the issue of installation of cellular communication in Nepa village, to allocate funds for treatment of oncological patients in Tokma village, to acquire extra motor-pumps and motor-saws for each village in order to �ight forest �ires. A good annual tradition established for the period when winter road is available — representatives of IOC hold meet with the villagers from Tokma (93 inhabitants), Ika (56 people), Nepa (297 people). The main thought that goes through all these meetings (apart from concerns about possible violations on hunting sites), is a desire to get any kind of work at the company’s objects, needs of allocation of social help, installation of mobile communications, organization of medical care. In fact, these people are left to the mercy of fate, the main income of the population — for few employees of the budgetary sphere — salaries, for pensioners — pen- sions, for the rest — personal auxiliary farm and hunting. Administrations of municipal areas, municipal institutions, indigenous communities and individual hunters are those who traditionally apply for sponsor’s support of the company. Actually each of these groups as a whole and at the level of certain representatives expresses distinct desire to declare the priority rights for allocation of IOC �inancial and material support. It is necessary to emphasize thus that in justi�ication of the claims each of applicants is guided by freely interpreted declara-

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tions re�lected in a series of laws and resolutions on the rights of indigenous peoples of the North to the territories of «traditional nature use». Randomly calculated inquiries and requests to the company, in particular, can be explained by the absence of local permanent administrative bodies (similar to municipal services of the Principal Hunting Service of USSR, Glavokhota), duty of which would include control of economic use of hunting sites and �ishing areas by the population, regulation and resolution of arising disputes arising because of designated in “common law” mode borders of adjacent grounds of individual users. In this situation on the territory of the Katanпsky district the company is compelled to apply a dif�icult scheme of allocation of charitable help, helping at the same time both communities, administrations, municipal authorities and certain hunters, as a matter of fact, scattering means instead of accumulating them for some larger-scale activities. Irkutsk Oil Company widely applies a shift method of the organization of works for the purpose of minimization of negative impact of northern climate on the human organism. One of the displays of personnel policy of the company is its approach to recruitment of shift personnel. It is no secret that many companies select the way of hiring primarily workers from neighboring countries or depressive Russian regions as such workforce is cheaper than the local one. IOC prefers experts and workers from the Irkutsk region. 1500 employees work in the company, more than 1 000 from them live in the Irkutsk region. The majority of them are dwellers of industrial districts — Ust-Kutsky, Bratsky, Angarsky, Usolsky. At the same time there is a program of actions developed in Irkutsk Oil Company for training of specialists of the primary and auxiliary productions from inhabitants of the Far North region and this program already yields the �irst results. 22 inhabitants of the Katangsky area, including those from Ika, Tokma, Nepa, Erbogachen villages and others were offered work at the production sites of IOC. A student from Nepa village studies oil and gas specialty at the expense of IOC in a higher educational institution. The company regularly participates in regional, all-Russian and international events of indigenous peoples. For example, on 12th of September, 2011 a representative of IOC intervened with the report in the Public Chamber of the Russian Federation at the international conference «The United Nations Global Compact in Russia: business and indigenous people». 5 Russian companies, experience of which in interaction with indigenous people had been recognized as successful by the Russian Association of the Indigenous Peoples of the North, Siberia and the Far East of the Russian Federation (RAIPON) were invited to the conference. On 12th of March, 2012 IOC participated in the direct videoconference with the representatives of tribes of Akoma, Navajo, Nunamta (USA) and

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Plant for pumping gas into bed and IOC oil acceptance station at the ESPO oil pipeline indigenous peoples of the Irkutsk region, Buryatiya and Yakutia, organized in the Public Chamber of the Irkutsk region. In the north of Eastern Siberia the taiga is very vulnerable and re- stores very long. Realization of ecological policy of IOC allowed to stabi- lize, and according to some indicators, to reduce technogenic impact on the environment. On the Yaraktinsky �ield pumping of natural and pass- ing oil gas into bed is organized in order to reduce emissions into the atmosphere. In 2011 the company carried out recultivation and refor- estation at the Naryaginsky oil�ield and returned to indigenous peoples lands in their primordial form. For a number of years production activity of the company is carried out without technogenic failures. Thus, developing northern �ields of hydrocarbons, extracting oil, gas and condensate, Irkutsk Oil Company Ltd. develops the economy of the region, renders real social help to the local population. Effective cooperation on the basis of mutual understanding and respect goes on.

Vladimir Elyasov, Aide for Public Relations to the Director General of IOC

Mikhail Tourov, Docent at the department of archeology, ethnology and history of ancient world of the Irkutsk State University

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Kinross Gold Corporation

About Kinross Gold Kinross Gold Corporation is a Canadian-based gold mining company with mines and projects in Brazil, Canada, Chile, Ecuador, Ghana, Mauri- tania, Russia and the United States. Kinross’ strategic focus is to maximize net asset value and pro�it through a four-point plan built on: delivering mine and �inancial performance; attracting and retaining the best people in the industry; achieving operating excellence; and delivering future value through pro�itable growth opportunities. Kinross maintains listings on the Toronto Stock Exchange (symbol: K) and the New York Stock Exchange (symbol: KGC). Kinross Gold has been operating in Russia since 1995. It is the largest foreign investor in the country’s gold mining industry, as well as the largest Canadian investor in the Russian economy and one of the largest taxpay- ers in the Russian Far East. Since entering the Russian market, Kinross has invested some $ 2 billion in the local economy. The company’s main assets in Russia are the Kupol and Dvoinoye gold and silver deposits in the Chukotka autonomous region.

Indigenous peoples of Chukotka The names of virtually all the indigenous peoples of Chukotka have one meaning — “true person”. Over several centuries living together in Chukotka, a number of independent ethnicities have formed: the Chukchi, Chuvans, Es- kimos, Eveni (Lamuts), Kereks, Koryaks, and Yukaghir. Chukotka’s indigenous peoples number some 17, 000 and account for around 35 % of the region’s population. The largest group of indigenous peoples in Chukotka is the Chukchi. The Chukchi are “reindeer people” who roam the vast tundra with their herds of reindeer. Russia’s most eastern people are the Eskimos, a unique sea mam- mal hunting community perfectly adapted for life in the Arctic. The Eveni (Lamuts) and Yukaghir are reindeer herders, hunters and �ishermen native to Chukotka’s tundra forest. Today these pursuits still form the basis of their livelihood. These people who have succeeded in settling one of the most inhos- pitable places on earth value strength of mind, courage, endurance, unsel�ish- ness, generosity and the ability to live in harmony with nature and treat it with respect and care, understanding what it gives to “true people”.

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Kinross and indigenous peoples: dialogue, cooperation, responsibility Kinross operates in a wide variety of global settings, from the remote Arctic region of Russia, to the Atacama Desert in Chile, to the out- skirts of the busy municipality of Paracatu in Brazil. Whilst the communities in which we work differ dramatically, our commitment to being a good neighbor, especially to indigenous people, remains the same everywhere. We are convinced that social responsibility is an integral component of any company’s commercial success. Our dialogue with indigenous peoples is based on mutual respect, and careful consideration of their lifestyles. Within that context we recognize the unique consideration of indigenous peoples including: • The unique histories, languages, cultures, knowledge, traditions and values of indigenous peoples and their contribution to the cultural and social diversity of the countries where we have a presence; • The importance of land, water, wildlife, vegetation and other aspects of the natural environment to their cultures and liveli- hoods; • The distinct nature and importance of indigenous institutions in realizing indigenous peoples’ aspirations for their own development. We believe that when undertaken with appropriate safeguards and in consultation, mining can be a strong source of positive bene�its for indigenous communities, provided we conduct regular public hearings and maintain high standards of safety.

Why we do it Kinross Gold’s Corporate Responsibility projects embrace a number of areas. These areas include accident prevention and the prevention of occupational hazards such as illness and injury in the workplace. They also include assessing the environmental impact of the company’s activities, the application of the latest technologies for the preservation of the environment and the post-mining reclamation of land. In addition, our social activities seek to stimulate local employment and respect human rights, as well as establishing responsible labor relations, and transparent cooperation with suppliers and local communities. Kinross’ objective is to maintain solid long-term relationships with local community stakeholders based on trust, respect and partnership. Such relationships are the basis for creating a thoughtful and congruent long-term strategy to help to maximize the long-term community bene�it from the company’s direct investments.

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Diagram 1. Stakeholders

Our experience with Corporate Responsibility projects in the various regions in which we operate shows that success can only be achieved by working closely with and considering the interests of all the parties involved. We maintain ongoing dialogue with stakeholders using a broad range of practical instruments. These instruments include: informal meetings with local communities affected by our production activities, targeted consultations with local communities and the identi�ication of methods to enhance mutually bene�icial cooperation. In addition, we also set up local production facilities and run programs to develop local social and economic infrastructure. There are two major reasons why Corporate Responsibility is important for Kinross. First, it is a matter of ethics. As a company, we want to have a positive net impact on society. As individual employees, we want to be proud of the company we work for. In addition, Corporate Responsibility is a matter of sound business practice. Cooperation with local communities helps Kinross earn their support to carry on its mining activities — often referred to as a “social license to operate”. Intensive social activities allow the company to build effective dialogue with the local authorities, ensure further growth, build con�idence with investors and shareholders and improve Kinross’ access to capital. The Company’s CR efforts continue to receive recognition from international experts. In 2009 and 2010, Kinross Gold Corporation was named one of Canada’s Top 50 Socially Responsible Corporations by the magazine Maclean’s. In 2010 Kinross Gold Corporation was ranked one of the Best 50 Corporate Citizens of Canada by Corporate Knights magazine.

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In 2011 Kinross Gold Corporation was included in the Dow Jones Sustain- ability World Index. At Kinross we constantly seek to improve our work in Corporate Responsibility. In 2010 the Company became a signatory to the UN Global Compact. In our �irst UN Global Compact report, we presented over thir- ty activities in the countries in which we operate thereby benchmarking our results with the principles and standards outlined by the UN Global Compact.

Focus on the Far East Our global experience suggests that there is no single turnkey approach for Corporate Responsibility projects. Prior to implementing a project in any region, Kinross Gold researches the speci�ic aspects of the region — the culture and traditions of its peoples — and assesses its current needs. At present the Kupol mine is the Company’s key Russia-based project, which is managed by its subsidiary the Chukotka Mining and Geological Company (CMGC). The Kupol mine is located in the north east of Rus- sia, in the Chukotka Autonomous Region, 400 km north west of the city of Anadyr. The mine is situated in a permafrost zone with a challenging subarctic climate. Cooperation between Kinross Gold and the local communities and indigenous peoples of the region started with informal meetings at the earliest stages of project development in the pre-project period in 2005. Soon these meetings transformed into public hearings, where the company shared its plans and results with the public, and discussed ways to contribute to local society in the most effective way. These meetings and discussions continue to take place annually in the towns of Bili- bino and Pevek, the village of Illirney, and in the administrative center of the region, Anadyr. These discussions present local people with a chance to express their opinions directly to decision-makers and are therefore highly val- ued. The meetings are usually attended by the general director, the heads of key departments, the local administration and leaders of the Associa- tion of Indigenous Peoples of Chukotka (a regional public organization) and other local public organizations. June 2008 saw the signing of a bilateral cooperation agreement between CMGC and the Association of Indigenous Peoples of Chukotka, which marked the most important step in discussions between Kinross Gold and the local indigenous population. The document paved the way for closer cooperation with local communities, as Kinross Gold consoli-

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Meeting of C. Schimper, General Manager of the Kupol mine, and E. Sayevitch, regional head of the division for corporate responsibility, with “Esperanto” children’s club

dated its relationship with a reliable partner and advisor, which helped to identify the top needs and interests of the local indigenous population. As part of the cooperation agreement, Kinross Gold promoted the creation of a Non-Governmental Organisation (NGO) to manage the local Corporate Responsibility activities of the company; the Kupol Founda- tion. The Foundation is an important element ensuring the sustainable social development of the region and offers tangible support for the indigenous peoples of the Chukotka region. The primary focus of the Kupol Foundation is the �inancing of social projects promoted by the local community. These projects support local traditions and traditional land use, the expansion of local education opportunities, the development of local healthcare and also assist small- and medium-sized businesses, including those in sectors serving the mining industry. As part of the cooperation agreement, the Association of Indigenous Peoples nominates a member to the board of the Kupol Foundation in order to participate in the selection of projects seeking �inancial support. No less than one-third of funding awarded goes to support projects for indigenous people in the regions surrounding Kupol. Additionally, ful�illing its commitment within the agreement, Kin- ross Gold has established a dialogue with the heads of a number of local associations of indigenous peoples, and with regional specialists from the Chukotka Indigenous Peoples’ Affairs Division of the Chukotka Adminis- tration. These local relationships are extremely important, since many re- motely-populated areas are not connected by permanent roads. Well-established relationships with various districts allow us to respond quickly to pressing issues, quickly exchange information and provide the required levels of support. In Chukotka we are fortunate to be dealing with indigenous peoples who are well educated, organized and self-aware. They have been patient with us as we have learned about the region, the issues and challenges, and the strengths and aspirations of its people. Their patience has

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J. Sloan, Ambassador of Canada to Russia, W. Morley-Jepson, regional vice-president for Russian projects of Kinross Gold, and K. Schimper, director of the “Kupol” mine, during their visit to reindeer breeders’ brigade in the Anadyr district of Chukotka helped us avoid the most common challenge — lack of cross-cultural understanding.

Kupol Foundation for indigenous peoples We realize that the implementation of sophisticated projects is impossible without sizable funding. For this reason, the Kupol Foundation was provided with a $1 million start-up grant in 2009. In the subsequent eight years, Kinross will make annual contributions of $250,000. In addition, the Company has provided the Foundation with $750,000 in long- term capital to ensure further operations. The management structure of the Kupol Foundation is designed in such a way as to maintain a balance of key stakeholders — indigenous peoples, the local Government and Kinross Gold (see Diagram 2). All projects submitted to the Foundation undergo a strict selection procedure. The tender committee considers the local impact of the project, including that of the post-�inancing period. Applications can be submitted by both individuals and legal enti- ties. The budget is allocated depending on the project scale, and can range between 50,000 and 1.5 million rubles. Implementation of projects may take from six months to three years. The establishment of the Kupol Foundation generated a positive re- sponse from the local community. Early applications were submitted long before the of�icial registration of the NGO.

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Diagram 2. Structure of the Kupol Foundation

Today the projects embrace a broad number of activities, including setting up mobile workshops for making clothes for people in indigenous occupations as well as the �ilming of a documentary about Chukotka and its population. The Executive Director of the Foundation runs regular seminars in various districts, brie�ing people on how to develop basic business plans and �ill in the application forms. Potential applicants are also free to turn to the Kupol Foundation’s management for personal consultation. Contact information for this appears on the Foundation’s page on Kinross Gold’s Russian website www.kinrossgold.ru. One of the most interesting projects developed with the support of the Foundation was the documentary The Book of the Tundra: The Story of Vukvukai the Small Stone. The producers obtained a grant from the Kupol Foundation in 2009. The Book of the Tundra is the �irst full-length �ilm dedicated to Chukotka reindeer herders. The �ilm follows the story of gen- erational continuity and the vast experience accumulated by generations of deer herders. It raises the issue of preserving indigenous lifestyles.

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A shot from the �ilm “The Book of the Tundra: The Story of Vukvukai the Small Stone”

During �ilming, the crew visited remote locations in Chukotka and stayed with the family of the head of one of the farms to �ilm the daily routine of a large family. The �ilm was well received by both professional critics and local residents. The Book of the Tundra shortlisted as one of �ive �ilms nominat- ed for the Golden Eagle award for Best Documentary. It received a grant from the Russian State Documentary Archive as a �ilm worthy of a place in the national archives and the Russian Cinematographic Art Academy “Nika” award for Best Documentary in April 2012. The �ilm is just one of the many projects supported by the Kupol Foundation. Starting from 2009, the Kupol Foundation tender committee approved �inancing for 32 socially signi�icant projects in the areas of education, healthcare, small- and medium-sized business and indigenous community support. Media in the Chukotka Region provides extensive coverage of the projects’ progress. The Kupol Foundation is the most important but not the only tool Kinross Gold employs to implement its social policy in the region. The Corporation supports indigenous communities by providing education, creating jobs, buying goods and services from local producers, supplying transport for medical needs and other urgent services. For instance, under licensed education programs, all Company employees, including representatives of indigenous communities, receive relevant training. Additionally, the launch of a new education program for employees from indigenous communities is scheduled to take place in 2012, which will help them enhance their skills and acquire new profes-

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Celebration of the International Day of Indigenous Peoples in Kupol

sional competences at educational institutions of the Chukotka Autono- mous Region that could assist them to pursue successful careers at Kinross. Also, in March 2012, the Foundation launched the “Start Your Business” education project in the Chaun District. This initiative is designed to help indigenous peoples enhance their computer skills, master new programs, learn business planning principles, taxation fundamentals and identify the most suitable business models for their future endeavors.

Results and outlook Evaluating corporate social responsibility programs is always dif�i- cult. For us the most important benchmark of success is the appreciation of those whom we support. In that respect one of Kinross Gold’s most important achievements is the International Vitus Bering Award which was presented to CMGC in 2009. The award to CMGC was made in recognition of its contribution to the social, economic, cultural and institutional development of the indigenous peoples in Russia’s Far East region. These awards are founded and approved by indigenous people. The Kupol Foundationprovides assistance to virtually all population groups in the region, and we are grateful for theexpressions of appreciation and gratitude that we receive. Nevertheless, the Company keeps mov- ing forward — we regularly review the results of our social activities and plans for the future with local communities. Regular feedback helps us enhance the effectiveness of our programs andseek out new opportunities. In October 2011, with support from the Association of Indigenous Peoples of Chukotka, the Company convened a panel discussion to identify ways to enhance further the effectiveness of the Foundation’s activities in the region. Representatives of indigenous peoples and public organizations, as well as local government and administration heads were

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Children drawing contest in Kupol

invited to take part in the round table were. Participants recommended that the Foundation consider launching its programs in areas such as publishing, stipends/scholarships for talented youngsters and projects to promote business and legal education. These proposals are very important for the Foundation as we are better able to identify and plan for the needsand preferences of those for whom we work. Kinross Gold also engages independent experts to evaluate its social programs in Chukotka. In November 2011, the Det Norske Veritas agency undertook just such an assessment. A survey carried out by the agency showed that most local residents are quite happy with the company’s social activities. The independent experts also prepared a number of recommendations for Kinross, including stepping up the promotion of the company’s activities in the region, extending additional support to reindeer herders, contributing to the development of local entertainment infrastructure and increasing the number of public discussions. The company is working on these recommendations, some of which have already been implemented. For instance, as part of a public information program, the Russian language www.kinrossgold.ru website was launched. It provides information about the company’s activities in Rus- sia, including those of the Kupol Foundation. The website contains information on the grant competitions in progress, the application form and a description of all the projects that have already secured �inancing. The website is yet another tool for maintaining and enhancing dialogue with local communities. Dialogue, соoperation and responsibility are the core values on which our social activities are based. It is also the formula for our business success and a guarantee of achieving the most important goal Kinross has set for itself — to lead the industry in responsible mining amongst global mining companies.

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Polymetal Company

Company overview Polymetal mines gold and silver and conducts exploration in four of Russia’s regions — Magadan Region, Khabarovsk Territory, Sverdlovsk Re- gion and Chukotka, as well as in the Republic of Kazakhstan. The company independently performs the entire range of activities associated with mine- ral mining projects — from exploration to construction and operations. The company ranks �irst in silver mining in Russia, is one of the top three in primary silver production and is one of Russia’s top �ive gold mining companies.

Characteristics of indigenous peoples In Far East Polymetal operates in the Omsukchan, Srednekansk and Severo-Evensk districts of Magadan Region, in Chaunsky district of Chuko- tka Autonomous District; in Okhotsky, Amursky, Ayano-Maysky districts and the Polina Osipenko district in Khabarovsk Territory. Such indigenous Minorities of the North as the Chukchi, Kereks, Eski- mos, Evens, Koryaks, Chuvans reside in Chukotka Autonomous District. Peo- ple of the three latter nationalities also live in Magadan region, together with the Itelmen and Yukaghirs. The Nanais, Nivkhs, Udegheis, Ewenkis, and Evens inhabit Khabarovsk Territory which is also the only place of residence of such indigenous minorities as the Negitdals, Orochis and Ulchis.

Sustainable development principles As a large production holding company, and a conscientious subsoil user, Polymetal operates based on principles of corporate social responsibility in the areas where it carries out its operations. Polymetal cooperates with local communities wherever it does business on a long-term and stable basis. The company’s fundamental sustainable development principles are as follows: • Openness and transparency; • Ef�iciency of social programs for personnel and local communities; • A target-oriented social welfare system; • Social partnership with the employees and the public; • Constructive cooperation with all interested stakeholders.

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The company provides jobs, pays taxes and makes social payments, and is a considerable contributor to local and regional budgets, imple- ments projects to promote economic and social development in the territories where it operates, strictly adheres to environmental standards at operation sites, participates in projects to preserve cultural and national heritage, and also provides targeted charitable donations to individuals in need of social support. Polymetal performs its social responsibility to local communities based on public interests, within the framework of long-term social programs that have been formalized in economic and social agreements with local, municipal and regional authorities in areas where the company operates, and in agreements with northern indigenous minority associations and also in accordance with social charitable programs, which are focused on developing the local community’s creative potential and support indindigenous Minorities in the North. In its social activity Polymetal has speci�ied a number of basic priorities when determining areas of investment: support for education and public health, development of local infrastructure, support for sports and the promotion of a healthy life style, development of public cultural and creative potential, and support for the indigenous Minorities of the North. These social programs have been developed as a result of close cooperation with the communities, and have been prepared based on careful monitoring of the current social situation, public surveys, and also taking into account the opinions of regional and local authorities and non-governmental organizations. Polymetal has established a feedback system for the public in order to make its social dialogue as meaningful as possible, to provide timely and comprehensive information on its activities to the local population and to implement the most ef�icient social policy possible in the territories where is operates. Meetings between the company’s representatives and people from the regional communities, �ield questionnaires and meetings with representatives from the indigenous Minorities of the North (including those in remote areas), and hotlines for the public in the mass media with the participation of company’s chief executives are arranged on an on-going basis.

Polymetal and indigenous minorities of the North The history of Polymetal’s interaction with the indigenous Minorities of the North extends back almost 10 years to the moment when the company acquired its �irst Far Eastern asset in Magadan Region. The geogra- phy of this cooperation was extended as the company’s production ac-

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tivity expanded, when operations in Khabarovsk Territory and Chukotka were acquired or built from scratch. Currently, the company operates in the Omsukchan, Srednekansk and North-Evensk districts of Magadan Re- gion, in the Chaunsky district of Chukotka Autonomous District; and in the Okhotsky, Amursky, Ayano-Maysky districts and the Polina Osipenko district in Khabarovsk Territory. In all these districts the company cooperates with representatives from tribal communities and branches of the regional associations of indigenous Minorities of the North. Continu- ous dialogue allows not only better understanding of common values but also ensures that coexistence and cooperation is as smooth as possible. Aid and support for the Indigenous Minorities of the North has always been apriority of Polymetal’s social program. From 2008 to 2011 the company invested around RUR 20 million in programs to support the Indigenous Minorities of the North in the Far East. The company provides assistance to indigenous peoples of Chukotka Autonomous District, Magadan Region and Khabarovsk Territory, where it conducts its business operations. This support is focused on investing in the development and preservation of traditional economic practices and the cultures of the indigenous Minorities of the North (IMN). Aid includes supplying essential materials to communities and nomadic reindeer groups (including fuel and lubricants and food), provision of quality medical aid to representatives from IMN in remote locations, and support for indigenous heritage projects. The promotion of native history and languages, culture and lifestyle, and ethnic traditions and sports among the young people of IMN has always been one of the company’s most important objectives. The company organizes ethnic festivals, supports music groups and arts and crafts producers and sets up ethnographic museums and exhibitions. It also provides targeted aid to vulnerable indigenous populations in the North — people on low-incomes, seniors, multi-child families, and families with disabled children. Using its own resources, the company helps resolve current social and infrastructural problems in remote settlements, such as the repair of pre-school build- ings and the furnishing and equipping of social facilities.

Support for reindeer breeding One of the company’s aid priorities is to support reindeer breeding, which is a traditional national industry. Our investment in the on-going stable development of IMN has contributed to the revival and development of a traditional basis for the socio-economic life of indigenous communities. Reindeer breeding is a traditional business for the indigenous inhabitants of the Okhotsk Sea Region, namely, the Evenki living in Khabarovsk

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Territory. Currently, reindeer breeding is in decline. The reindeer population exceeded 35 000 in Soviet times but it has been drastically reduced since the disintegration of the USSR and now nomadic reindeer herders have only 8 000 grazing animals. This is a situation, where the survival of an entire ethnic group and its culture directly de- pends on the saving of a traditional industry. Polymetal allocated funds for a long-term program to support reindeer breeding in 2001 as part of an agreement with the Association of Indige- nous Minorities of the North, operating in the Okhotsk District of Khabarovsk Territory. The company bought materials to repair facilities located in reindeer grazing areas, veterinary drugs to treat reindeer diseases and vehicles for the local reindeer herding community. This program also envisages the purchase of reindeer in other regions to replenish and upgrade the Evenki reindeer herd, as well as the allocation of grant funds to reward reindeer herders for the replenishment and viability of their herds. Ethnic communities in Magadan Region are also experiencing economic dif�iculties. They face problems with everything from delivering food and fuel to remote communities (from the district centre) to a short- age of young people and new equipment. Polymetal provides aid to �ive tribal communities in the Srednekansky District to resolve problems, primarily associated with the purchase of vehicles to herd reindeer. Over the past �ive years the company has helped to purchase Buran snowmobiles, spare parts and fuel and lubricants for indigenous inhabitants under an Agreement on Socio-Economic Cooperation. Polymetal provides regular support to Reindeer-Breeding Group No 9 in the Rytkuchi Rural Settlement and Reindeer-Breeding Group No 5 in the Billings Rural Settlement, located in the Chaunsky District of Chukotka Autonomous District, in areas where the company operates. The company’s representatives deliver provisions, �irewood and fuel and lubricants to the reindeer-breeding groups several times a year. The company provides access to its facilities for the repair and maintenance of reindeer headers’ vehicles. It also provides transport to get children to boarding-schools and back to their parents in the tundra for vacations. In 2011, Polymetal actively participated in the construction and equip-

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ping of a halting/resting site for reindeer herders. In addition to our planned long-term support program, we always provide help in emergen- cies, which are frequent in the harsh environment of the Far North.

Aid to preserve the traditions and promote the historical and cultural heritage of indigenous minorities of the North bIn addition to social and economic aid for the indigenous Minori- ties living in regions where the company operates, Polymetal also deals with issues such as the cultural and creative development of the indigenous population, the preservation of customs and traditions of native ethnic groups and the revival of applied arts and traditional crafts. The company actively supports programs aimed at recording ethnic/indigenous history and studying native languages. In particular, a school ethnographic museum was opened in the indigenous village of Dzhuen, Khabarovsk Territory, with the company’s direct involvement, in order to preserve the history and traditions of the Nanai people, as 97 % of the village population are Nanai. A signi�icant contribution by Polymetal to the support of the traditional culture of IMN was the publication of “The Negidal People” by Val- entina Lebedeva, a book devoted to the smallest ethnic group of the Amur River Region, belonging to the Tungusic peoples.Over 600 representatives of this ethnic group currently live in Russia, predominantly in Khabarovsk Territory. For almost 15 years the author regularly visited the Negidal village of Vladimirovka, located in the Polina Osipenko district of Khabarovsk Territory. She collected information on ethnic artists/craftsmen, traditions, ornaments and the lifestyle of this small ethnic group, which has a long history. The book tells the village’s history, discusses local artists and craftsmen, and describes the distinctive features of their creative work. It gathers together rich archival data, beginning with the second half of the 18th century, and contains a large collection of photos from famous museums in Saint-Petersburg, Khabarovsk and Nikolayevsk- on-Amur. Many projects supported by the company are aimed at the young- er generation in the indigenous communities, who represent the future of these communities. Polymetal annually participates in organizing the “Djuasak” nomadic summer camp for children from the Okhotsk Boarding School for the Peoples of the North. As a result of this support, children learn about the traditional way of life of their ancestors and Evenki culture. The company purchases travelling out�its, sleeping bags, rubber boats, a diesel generator, and many other things that are essential for the nomads.

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The �irst ever Youth Forum for representatives of the indigenous Mi- norities of the North from the Amur and Khabarovsk regions took place in December, 2011, with the active support of Polymetal. The company supports the idea of holding this forum to bring together active young people from different indigenous settlements to jointly participate in social and political life, as well as to develop entrepreneurial initiative and folk crafts, resolve current problems and create a Youth Council under the aus- pices of the Association of Indigenous Minorities of the North (non-commercial), which is an important long-term objective from the company’s point of view. The company places a lot of signi�icance on projects aimed at re- viving lost traditions. Polymetal supported an initiative by the custodi- ans of Evenki culture and language and revived the Northern Festival in the Khabarovsk Territory a few years ago. This important traditional festival for reindeer breeders is held annually in the village of Arka, which is the northernmost ethnic locality of Khabarovsk Territory. The company provides aid to creative folk collectives in all the regions where it conducts its industrial activity — from making costumes and traditional musical instruments to sponsoring participation in festivals held in other parts of the country, making it possible to spread ethnic culture and customs and to exchange experience with representatives from IMN living in other regions. The “Youth” Okhotsk Children’s Folk Dance Musical Group, which has existed over 30 years, got a rare chance to take part in the Dalian International Fes- tival (China) in 2011, thanks to the company’s help. For two years straight, Polymet- al has provided support for a project to manufacture ethnic musical instruments, initiated by the Department of Social Policy of the Chaun- sky District (Chukotka). This project operates based on a batch production system,

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i. e. an annual batch of musical instruments (tambourines) is produced for Chukotka’s ethnic rural collectives. Polymetal sponsors large-scale cultural events, such as the “Tambourine of Friendship” Regional Festi- val of Ethnic Creative Collec- tives, held in Achan Village in Khabarovsk Territory, and the “Miss Duran” Kolyma beauty pageant in Magadan. It also helps organize the annual cel-ebration of the Inter- national Day of the World’s Indigenous People, seasonal ceremonial festivals and ethnic sports competitions in the areas where it operates. The company participated in events to celebrate the 360th anniversary of Achan Village (summer, 2011), which is one of the oldest indigenous localities in Khabarovsk Territory. Polymetal’s social activity is highly appreciated by the indigenous peoples. The company’s employees receive letters of gratitude from locals, as well as certi�icates of merit from community-based non-pro�it organizations and invitations to attend festive celebrations and performances by creative collectives. Polymetal was awarded the title of “the company that has done the most to promote the preservation and development of ethnic cultures” at the second “Living Thread of Time” international festival in 2010.

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Rosneft Oil Company

Description of the company Rosneft is the leader of Russia’s petroleum industry, and ranks among the world’s top publicly traded oil and gas companies. The Company is primarily engaged in exploration and production of hydrocarbons, production of petroleum products and petrochemicals, and marketing of outputs. Rosneft is widely engaged in exploration and production across all key hydrocarbon regions of Russia: Western Siberia, Southern and Central Russia, Timan-Pechora, Eastern Siberia and the Far East, shelf of the Arctic seas. In addition, the Company participates in several exploration projects in Kazakhstan, Venezuela, Algeria and the United Arab Emirates. Rosneft’s seven major re�ineries have convenient locations throughout the country, from the Black Sea coast to the Far East, and the Company’s retail network covers 41 regions of the Russian Federation. Almost all indigenous peoples of the Russian Federation live on this territory.

Rosneft at a glance Rosneft is the leader of Russia’s petroleum industry, and ranks among the world’s top publicly traded oil and gas companies. The Com- pany is primarily engaged in exploration and production of hydrocarbons, production of petroleum products and petrochemicals, and marketing of outputs. Rosneft is widely engaged in exploration and production across all key hydrocarbon regions of Russia: Western Siberia, Southern and Central Russia, Timan-Pechora, Eastern Siberia and the Far East, shelf of the Arctic seas. In addition, the Company participates in several exploration projects in Kazakhstan,Venezuela, Algeria and the United Arab Emirates. Rosneft’s seven major re�ineries have convenient locations throughout the country, from the Black Sea coast to the Far East, and the Company’s retail network covers 41 regions of the Russian Federation. JSC “Rosneft Oil Company” being one of the largest Russian companies, aspires to reach not only high operational and �inancial performance, but also to make a contribution to the development and prosperity of the country, to the improvement of living conditions of its citizens.

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The company shares the provisions of the Social Charter of the Rus- sian business and considers that: • achievement of high economic and social results in a long-term prospect is possible only on the basis of observance of reasonable balance of interests between shareholders, the state, employees, suppliers and consumers, public institutes and other parties involved; • the most important condition of economic and social wellbeing of the country is formation of the joint liability of the state, the private sector and citizen, in the basis of which should lie the observance of civil rights and freedoms, equal opportunities, respect of human dignity and supremacy of law; • thanks to the balanced and productive social policy business risks decrease, competitiveness of companies becomes stronger, personnel ef�iciency and loyalty of consumers increase, general reputation of the business community grows. Position of Rosneft towards the organization of work, ecological and industrial safety and support of local communities in the regions where it operates is an integral part of the corporate strategy aimed at creation of the whole complex of conditions for sustainable development of the company in a long-term prospect. There is a Comprehensive Policy developed in the company that covers all the aspects of sustainable development of the territories where the company operates, as well as corporate social responsibility. This policy is based on unconditional compliance with the internationally recognized norms relating to human rights: prevention of any forms of discrimination, freedom of association and collective negotiations, exception of child and forced labor, and also compliance with the standards of the Russian legislation on labor relations and human rights. The company builds its activities in the �ield of interaction with indigenous peoples on the basis of the following principles: • development of social and economic conditions of life and activities of indigenous peoples; • mutually bene�icial cooperation of the company with tribal communities; • preservation and development of traditional types of economic activity, national way of life and traditional crafts; • respect for national traditions and preservation of identity of the people. The company is present in the regions inhabited by representatives of indigenous peoples through its subsidiaries: “RN-Yuganskneftegaz” Ltd. (Khanty-Mansi Autonomous Okrug), “RN-Purneftegaz” Ltd. (Yamalo- Nenets Autonomous Okrug), “Vankorneft” Closed Corporation (Krasno-

Rosneft Oil Company 31 yarsk Krai), “Eastern Siberian Oil and Gas Company” (Evenkia), “RN-Sa- khalinmorneftegaz” Ltd. (Sakhalin region).

Sakhalin: sustainable development for the beneﬁt of future generations Financial support of the Rosneft Company of indigenous peoples of Sakhalin has long-term traditions. And if previously such help had been allocated for solution of problems of separate patrimonial farms, public organizations and representatives of northern peoples, today this �inancing is a target program: in 2008 a joint program “Assistance to preservation and development of the Nivkhsky ethnos of northern Sakhalin” started in the company subsidiary “RN-Sakhalinmorneftegaz”. New stage of relationships of the oil industry with primordial owners of northern territories began. The important direction of charitable programs of oil industry workers is providing charitable help to tribal communities of small- numbered peoples. “Our company realizes children’s summer health program, �inances their participation in exhibitions, competitions and other events, — director general of “RN-Sakhalinmorneftegaz” Sergey Dryablov says. — Rosneft Company traditionally pays much attention to the development of sports and promotion of healthy lifestyle. Considerable �inancial means are allocated to the Sakhalin natives for support of the Nivkhsky en- semble ‘Peela Ken’, to the organization and holding of regional championship in national sports”.

In July, 2011 more than 90 athletes from seven districts of Sakhalin participated in the competitions organized by regional administration on the basis of the boarding school in Nekrasovka village of the Okhinsky

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city district. For the �irst time 16–17-year-old children from Yuzhno-Sa- khalinsk participated in the competitions. All winners and participants of the championship were awarded with wonderful gifts and prizes from the general sponsor of the competitions — “RN-Sakhalinmorneftegaz”. Children were glad to get modern digital equipment, TVs, cell phones, tents, �ishing rods. In 2011 with the �inancial support of the Sakhalin oil industry regional festival of art crafts of indigenous peoples took place within the framework of the Sakhalin festival of cultures. The event took place in the museum of local lore of Yuzhno-Sakhalinsk. Here for the �irst time fashion shows of traditional and modern national costumes were organized. The best Sakhalin masters of applied arts exchanged experience with each other and presented master classes on national embroidery, panel manufacturing, �ish skin workmanship. According to Feodor Mygun, chairman of the board of the Okhinsky organization “Kykh-Kykh” (“The Swan”), sports and national creativity are the main components of the culture of northern peoples. Only this way today it is possible to revive traditions of small-numbered peoples. “Thanks to �inancial support of the oil industry enterprise ‘RN-Sakha- linmorneftegaz’ we managed to raise the organizational level of competitions on national sports, — Feodor Mygun says, — and, thus, to involve more children and youngsters. But it is too early to expect good results and to make conclusions, as in such matter as revival of culture of indigenous peoples the main thing is systematic approach and long-term prospects. We feel that oil industry workers are engaged into this in a serious and systematic way and it allows us to assume that our projects will be implemented in a proper way. Today we work on organization of new national hobby groups and circles, on the development of school programs for training in national sports and applied arts in places of traditional residence of Nivkhs”.

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At the international congress that took place in 2011 and was dedicated to activization of the youth movement of indigenous peoples, representatives of Sakhalin were speci�ically mentioned — they were the most prepared ones. And there are �irst Nivkh athletes already who are willing to connect their life with sports. For example, Evgeny Tetkun, the champion in his age group, plans upon graduation from the school to enter the Yakut higher education institution to study at the section of physical training and national sports. And it is just the beginning.

Evenkia: mutually beneﬁcial cooperation Evenkia is the territory with a special status. Representatives of indigenous peoples of the North live here — Evenks, Ketos, Dolgans, Evens. More than a half of indigenous people of Evenkia are engaged in hunting, �ishery and reindeer breeding in the Baykitsky district which includes the territory of the Yurubcheno-Tokhomsky �ield, license for the development of which belongs to the Rosneft Company. Its subsidiary — “Eastern Sibe- rian Oil and Gas Company” (VSNK) — pays particular attention to the issues of social partnership with small-numbered peoples who live there. Within the framework of the social and economic Agreement between the Rosneft Company and administration of the Krasnoyarsk Krai projects on support of tribal communities that do traditional activity near the �ield are realized on the annual basis. Their main goal is not only to keep the tradition of local population, but also to help in the development of national crafts and cultures. At �irst the help of oil industry workers was just the supply of equipment, acquisition of necessary goods, products. During the recent years relationships of oil industry workers with indigenous dwellers have changed radically. The social and economic Agreement signed with the Rosneft Company gives chance to consider and satisfy needs and requirements of each family in a more complex way. Experts of VSNK quarterly visit nomad camps to meet local people. The company �inances work of children’s ethnic camps where young Evenks learn traditions of their people in the summer, it helps to hold con- gresses of public organizations of indigenous peoples, to publish books and albums dedicated to their history and culture. However the main contribution within the program of social and economic partnership with the regional authorities is support of economic activity of communities and municipal organizations — schools and hospitals. Unfortunately, northern territories of the country constantly lack �inancing and thus, are in need of such kind of help most of all. For example in 2009 oil industry workers granted money for major repair

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of the Baykitsky regional hospital, helped communities to perform pre- paratory hunting activities and to carry out accounting of wild animals, acquired modern equipment to do traditional activities — hunting and �ishery — more effectively. Since 2010 the list of social programs extended even more. A signi�icant example of social partnership — establishment of a timber-processing cooperative by tribal communities that was equipped with the necessary mobile equipment for processing of the round wood thanks to the charitable funds from the company. Oil industry workers took care of the most necessary things that help indigenous peoples to conduct independently traditional managing in their territory. Having bought equipment, communities received from the Krai’s Agency of Wood Sector additional plots of land and produce sawn timber, a considerable portion of which is acquired by the Company for production needs. Other portion of production is used for construction of houses for members of tribal communities. Such partnership gives a chance to create workplaces for locals, to provide them with inexpensive sawn timber, to some extent to help in production tasks of oil industry workers — to organize the delivery of board and bar in close proximity to the �ield. Oil industry workers respond to any request for help, they are always ready to assist in the solution of arising problems. Collaboration of oil industry workers and administrations of municipalities in respect to the support to indigenous peoples brings real advantage to all inhabitants of the territory. “Authorities of the Evenk district are grateful to the Rosneft Company for its help in preserving the way of life, cultural, historical and other traditions of indigenous peoples of the North who live in our territory, — head of the Evenk municipal district Peter Suvorov noted, — All of us live on the same land, all are equally responsible for its health and wellbeing, for preservation of riches of the nature and centuries-old traditions, culture of people who live on it”.

Yamal: bright holiday of Kharampur Kharampur means “a larch on the noisy river” in the Nenets language. The village started to revive as a result of implementation of the Agreement between the Purovsky district and the Rosneft Company. Today it is a modern compact settlement of wood Nenets constructed by oil industry workers of the subsidiary of “RN-Purneftegaz” according to the European standards and taking into account national features of life and economy of aboriginals. Two-storeyed octagonal brick cottages 145 square meters in total square each, stylized as the national dwelling of the Nenets — traditional tent. A house is built for one family, supplied

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The Kharampur village with furniture and necessary household appliances. There is a road with hard surface built in Kharampur as well as a boarding school, a Recrea- tion center, a �ish processing shop, a hotel for young specialists and other important objects. Today all bene�its of civilization are present in the tundra, its inhabitants cannot imagine their lives without light, cellular communication, snowmobiles, power generator. A TV set occupies an honor- able place in the tent. 16th of March is an especially joyful day for inhabitants of the Khar- ampur village of Yamalo-Nenets Autonomous Okrug. It is a traditionally celebrated the most favorite holiday of the Yamal Nenets — the Day of the Reindeer Breeder. Warm and kind words and congratulations are being exchanched, prizes to the winners of national competitions and con- tests are handed over. Thanks to reindeer breeding for decades way of life of all indigenous population — the Yamal Nenets — is preserved, therefore preparations for the Day of the Reindeer Breeder are always launched in good time and the holiday itself is celebrated largely. It provides an opportunity to join traditions, customs and rich culture of the wood Nenets. They possess a special gift to live a full life in severe conditions of the Far North. Many people come to the Kharampur village on the Day of the Rein- deer Breeder: reindeer breeders come from the tundra, friends ar- rive from the neighboring settlements not just to socialize and discuss

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the current issues but also to take part in exciting competitions — to show agility and skills, to compete for prizes and show the beauty of national dresses. And young people have a possibility to meet and choose a companion of life. Northern people celebrate this major holiday in spring following the centuries-old tradition when driving of reindeer herds to summer pastures situated in the north of the region starts. Day of the Reindeer Breeder is the most spectacular and picturesque holiday in the North, that it is why it attracts a lot of people annually. It is remarkable that it is the village of Kharampur, territory of traditional residence of indigenous northerners, where it has been managed to save the native language and original culture. “RN-Purneftegaz” treats problems of indigenous peoples with special attention. At the same time with the development of oil industry its workers try to make a signi�icant contribution to the preservation of unique culture. Maria Klimova, vice-president of the regional Association “Yamal — to descendants!”, chairman of the Purovsk Public Association “Yamal — to descendants!”, head of the municipal institution of Kharam- pur notes with pride: “Thanks to ‘RN-Purneftegaz’ Kharampur changed so much that it is hard to recognize it now. A lot of things are done for indigenous inhabitants who live on the licensed blocks. Support for traditional crafts of indigenous peoples is of particular importance today. Considerable means are stipulated in the annual social and economic Agreement for sub- sidizing agricultural community ‘Kharampurovskaya’ and other directions of development of agro-industrial complex. Oil industry workers always help us, and we are deeply grateful for that”.

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Yugra: here live the Khanty “RN-Yuganskneftegaz” subsidiary is located in Khanty-Mansi Okrug and conducts development of oil �ields and gas on more than 30 licensed blocks, ten of which are situated on the territories of nature use of indigenous peoples. About 300 people belonging to Khanty and Mansi nationalities live on licensed areas in Nefteyugansk, Khanty-Mansiysk and Surgut districts. Traditionally social and economic Agreements are con- cluded between the enterprise and owners of tribal lands. At �irst help of oil industry workers was just the supply of equipment, acquisition of necessary appliances, products. During the recent years relationships between oil industry workers and indigenous locals have changed signi�i- cantly. Now the Agreement is struck for one year only and that provides opportunity to consider and satisfy needs of each family in a more comprehensive way. Names of the objects planned for siting should be speci�ied in the document so that the owner of land could make amendments at the initial stage of building. Owners of tribal lands get material compensation in a form of goods and services required from oilmen. E. g., every four years oil industry workers buy new snowmobiles, once in ten years motor boat park is renewed. For permanent connection oilmen provided nomad camps with handheld radio transmitters, helped with the solution of housing prob- lem: it is being solved by the delivery of blockhouses completed with saw timber, woodwork, slate, �irebrick. And the construction of the house itself is up to the owner: there is national experience of construction applied — a special culture. Oilmen took care of the most necessary things that help the Khanty and the Mansi to conduct traditional managing on their territory. Delivery of fuels and lubricants for motors, household equipment and machinery, industrial goods and stocks of products, payment for training of children, expenses on healthcare — all these things are provided by the framework of the social and economic Agreement. Annually tens of children from indigenous families from national settlements, from Seliyarovo village go on vacation to Artek children’s health resorts. Specialists of “RN-Yugan- skneftegaz” responsible for interaction with indigenous peoples quarterly (and if required — even more frequently) come to nomad camps to meet with families of tribal lands. Together with the representative of the enterprise an employee of municipality in charge of indigenous affairs goes there: common tasks can be solved only by applying joint efforts. In each of such trips the order of implementation of contractual obligations is checked, terms of delivery of these or those materials are adjusted. Winter trip, the last of the year, is the most pleasant one: apart

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from collecting data for annual report it is connected with holiday congratulations, Christmas gifts. As for the reports — 3 of them should be prepared: for municipal districts, for each oil�ield and for speci�ic families. However the work with indigenous nationalities of the North is not limited by the framework of the of�icial agreement alone. Life of taiga people separated from the bene�its of civilization by tens of kilometers is as diverse as the life of each of us. If someone, for example, gets to hospital who would visit him or her, who would transfer a parcel? And here the oilmen hurry to help. Such level of relationships between production workers — subsoil users and the natives surprised a lot guests from Canada who visited the region not that long time ago. They shared experience with Russians in organization of work with indigenous peoples. After trips to Khanty families guests came to the conclusion — there are things to learn from Siberians!

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Sakhalin Energy Investment Company Ltd.

Description of the company Sakhalin Energy Investment Company Ltd. (Sakhalin Energy) is an international company that operates one of the world’s biggest integrated oil and gas projects — the Sakhalin-2 project (Sakhalin Island, Russian Far East), with customers in Japan, Korea, China and other countries of the Asia- Paci�ic. Sakhalin Energy shareholders are Gazprom (Russia), Shell (UK- Netherlands), Mitsui and Mitsubishi (Japan). Since 1999, the company had been seasonally producing oil from Molikpaq — Russia’s �irst offshore ice-class platform, as a part of Phase 1 of the Project. Two more offshore platforms were built and commissioned during Phase 2, which also included some 300 km of offshore pipelines to connect the three platforms to the shore, onshore oil and gas pipelines making altogether 1,600 km in length, onshore processing facility, oil export terminal, and Russia’s �irst lique�ied natural gas (LNG) plant inaugurated in 2009. Being the Russia’s most innovative and technologically advanced project, Sakhalin-2 plays its part in overall development of the Russian oil and gas industry.

Characteristics of indigenous peoples The indigenous peoples in Sakhalin count nearly 4,000 and consti- tute 0.7 % of the total Sakhalin population. They belong to four main ethnic groups: the Nivkh, the Nanai, the Uilta (Orok), and the Evenki. • The Nivkh. The Nivkh are the most numerous of Sakhalin’s indigenous population (at present numbering 3,024 people and representing three- quarters of the Island’s total indigenous population) and are native to the Island. Fishing, seal �isheries, hunting and dog breeding are the main traditional occupations of the Nivkh. • The Uilta. Prior to the Soviet period, the Uilta (also known as the Orok or Orochen) had a varied subsistence economy of hunting, �ishing and reindeer herding. Now one of the smallest groups of indigenous peoples in the Russian Federation, the Uilta currently number 396. • The Evenki. The Evenki of Sakhalin are a small branch (numbering 295) of the Evenki (also known as Tungus) who also live in Siberia, Mongolia and China. They arrived to Sakhalin at the end of the 19th century and

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have been closely associated with the Uilta, with many engaged in reindeer herding. • The Nanai. The Nanai of Sakhalin (numbering 203), like the Evenki, are a small offshoot of mainland Nanai population, some families having migrated to Sakhalin after the World War II.

Sakhalin indigenous minorities development plan: a path to consent “Partnerships are easy to talk about but hard to do successfully” (“The Guiding Hand”, Ros Tennyson and Luke Wilde)

Corporate social responsibility — norm of doing business Sakhalin Energy conducts its business in an ethically, socially and environmentally responsible manner. This responsibility is translated into strategy of sustainable development, on which we base all our activities from the Day One of the Project. It means that we achieve our business goals while taking into consideration potential environmental and social impacts. The company’s corporate social responsibility strategy is based on impact assessment, mitigation, monitoring, corrective and preventing actions. Proper transparent co-operation and two-way communication with all groups of stakeholders is the backbone of success. Indigenous peoples is a special group of stakeholders. Sakhalin En- ergy has had an ongoing dialog with Sakhalin’s indigenous minorities directly affected by the project since the company was founded in 1994. Since its inception, the company has supported a wide range of social projects for indigenous minorities in the areas of culture, sports, and education. But in 2005, indigenous minorities staged a protest against all the oil and gas companies operating on Sakhalin Island. They demand- ed a more regular and transparent dialog and greater recognition of the needs of the indigenous peo-

Sakhalin Energy 41 ples. The protest was supported by national and international NGOs. Doing “a lot” turned out to be not enough. Responding to the requirements of modern reality the company elaborated a new mechanism of engagement, involving all groups of the Sakhalin indigenous minorities — the Sakhalin Indigenous Minorities Development Plan (SIMDP).

SIMDP 1 — an essential �irst step In 2005–2006, Sakhalin Energy held large-scale consultations with all stakeholders, including in areas, densely populated by the indigenous minorities. Based on a strategy developed by the indigenous minorities and suggestions on how to implement it, the �irst �ive-year Sakhalin Indig- enous Minorities Development Plan (SIMDP 1) was created and signed in May 2006. SIMDP 1 was prepared by the company in close cooperation with the Sakhalin Oblast Government and the Regional Council of the Authorized Representatives of Indigenous Minorities of Sakhalin Ob- last. It incorporated measures to mitigate potential negative impacts from the project on the Sakhalin indigenous minorities, as well as activities to improve the living standards of the indigenous peoples, provide access to the project bene�its, and help the 4,000 indigenous Sakhalin inhabitants in capacity-building. In order to ensure the Plan’s effectiveness in meeting its key objectives, an External Monitor worked during the entire period of SIMDP 1 implementation, visiting all the indigenous communities and meeting key stakeholders and public representatives. In the last year of implementation, a plan completion evaluation (PCE) was performed. The PCE Team interviewed people and “The Sakhalin Indigenous Mi- conducted a survey of indigenous norities Development Plan has be- opinion. The Team included the come the place where Sakhalin En- Head of Sociological Laboratory ergy, the Government of Sakhalin of the Sakhalin State University, Oblast and indigenous peoples come and independent indigenous together to foster responsible busi- representative not previously ness practices, responsible govern- involved in SIMDP activities, and ment policy and where indigenous was headed by the international peoples can learn self reliance.” External Monitor. The Team found the Plan Sergey Kurmanguzhinov, to be a success in terms of both Chairman, Regional Council the very positive material ben- of Authorised Representatives e�its received and the strong ca- of Indigenous Minorities pacity-building accomplished. of Sakhalin Oblast

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Some dif�iculties were inevitable and indeed occurred, but they did not detract signi�icantly from the Plan’s overall success as a bene�its-providing mechanism, a capacity-building exercise, and as a quali�ied model for similar projects. PCE performed by three independent experts is a good practice model that shows accurate results of Plan implementation and, by itself, contributes to building and maintaining trust between the partners.

SIMDP 2 — complying with and setting the best international standards Simultaneously with the PCE process, a Working Group prepared SIMDP 2. The Working Group was established on the principle of equal partnership and comprised the representatives of the Regional Council of the Authorized Representatives of Indigenous Minorities of Sakhalin Oblast, Sakhalin Energy, the Sakhalin Oblast Government, the Sakhalin Oblast Duma (elected legislative assembly), and the Russian Association of Indigenous Peoples of the North, Siberia, and the Far East (RAIPON). Six of eight Working Group members were indigenous. The goal of the Working Group was to elaborate recommendations for the development of SIMDP 2 on the basis of experiences with the �irst Plan and lessons learned, as well as the results of the two rounds of consultations, held in all seven Sakhalin districts of traditional living of the Sakhalin indigenous minorities. The consultations were followed by a special indigenous peoples’ conference, where they discussed the prospects for further development under the SIMDP 2. Delegates from seven districts traditionally inhabited by indigenous peoples of Sakhalin examined the draft of SIMDP 2.

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The indigenous delegates “SIMDP has deepened our en- agreed that consultations were gagement with Sakhalin indigenous carried out without coercion, minorities, and has brought the dia- were held early enough for the log to a whole other level. Implement- community to discuss the issues ing this plan promotes the sustaina- at length, and that they had been ble development of these indigenous provided all information regard- communities, other Sakhalin resi- ing the �irst and second Plans dents, and the Island itself, which is that was necessary for them to also home to Sakhalin Energy.” formulate their own independent assessments of the Plans. Andrei Galaev, The delegates also declared that CEO, Sakhalin Energy they gave their consent to the Plan and authorized their representatives to sign a new Tripartite Agreement to implement the Plan. As far as we know, it was the �irst time an industrial company successfully implemented the principle of free, prior and informed consent (FPIC) for public engagement. In December 2010, a new Tripartite Agreement on implementation of SIMDP 2 was signed by the three parties in Moscow, Russia. SIMDP 2 is carried out with even more active participation by the indigenous population. The Governing Board is the highest management body; its work is supplemented by an Executive Committee, a Traditional Economic Activities Support Program Committee, and a Social Develop- ment Fund Council. The two latter bodies are now completely managed

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and monitored by the elected representatives of indigenous peoples from seven districts where the indigenous population traditionally lives and works. In 2006–2011 over 340 projects were implemented under SIMDP umbrella.

Transparency — key to success During consultations under the SIMDP preparation indigenous stakeholders made a point of timely provision of information and transparency. The partners developed and implemented series of measures to ensure that this demand is appropriately addressed: a special SIMDP website (www.simdp.ru) was launched and is currently available in Russian and English, public meetings are arranged in all indigenous communities during biannual consultation tours, information boards are installed in indigenous communities and complement work of the company’s information centers that are currently opened in 23 Sakhalin communities. One of the important tools to build trust-based relationships with indigenous minorities and ensure transparency is the implementation of grievance procedure, which “There is a tremendous spirit of effectively regulates the proc- cooperation in the partnership, beca- ess of receipt, registration, and use everyone adheres to the principl- resolving grievances related es of equality, openness, transparen- to the implementation of the cy, and information sharing.” �irst and second SIMDPs. This procedure was developed in Alexander Khoroshavin, accordance with the general Governor, Sakhalin Oblast principles and approaches of

Sakhalin Energy 45 the Community Grievance Procedure of Sakhalin Energy and with involvement of indigenous peoples’ communities. Having proven its effectiveness over the years, it was called “a best practice” by UN experts in the process of testing the “Guiding Principles on Business and Human Rights: Im- plementing the United Nations ‘Protect, Respect and Remedy’ Framework” proposed by UN Special Representative John Ruggie*. The “Guiding Prin- ciples” were endorsed by UN Human Rights Council in its Seventeenth session (18 June 2011).

True indigenous peoples — business — government partnership: IT WORKS! The development and implementation of SIMDP caused a break- through in the relationship between the oil and gas company and the indigenous inhabitants of the island. Indigenous peoples are directly involved in management, fund allocation, and control. The Plan is renewed every �ive years and will last for the entire duration of the Sakhalin-2 project. SIMDP has emerged as a good practice model on both the international and national levels, but what is most important is that the Plan is highly appreciated and trusted by the indigenous peoples.

* Prof. John Ruggie, Special Representative of the UN Secretary General for Business and Human Rights, developed this set of practical principles, which constitutes a new standard for business in relation to human rights issues, including the complaints review process for businesses worldwide.

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Concluding remarks

The companies formulated their experience in a brief and clear way pointing out primary components of the partnership models created by them together with indigenous peoples. There are six models only, however they represent options for solving a wide range of problems in the �ield of interaction between the private sector and indigenous northerners, including ways to overcome mistrust from locals, resolve con- �lict situations, methods of damage minimization and compensation, etc. The general idea about the nature of these problems is provided in the information on indigenous peoples with which these companies cooperate in various regions; it is presented in each of the six examples of the partnership. Enterprises of the leading oil company “Rosneft” are located in vast petroliferous territories of the North, Western and Eastern Siberia and the Far East. They cooperate practically with all indigenous peoples of Russia. The international company “Sakhalin Energy” operates at the Sa- khalin shelf. Ecosystems of this area are extremely vulnerable, and people who live on the coast completely depend on their condition. Evenks and became partners of the Irkutsk Oil Company in remote settlements of Irkutsk region, in harsh conditions of continental Siberia. Kinross Gold and JSC “Polymetal” extract gold and silver in Chuko- tka and in the Magadan region, their production is connected with high ecological risk, in particular for fragile nature of the tundra, thus, for people whose life it sustains. For distribution of experience both the history of interaction of the business with local population and partnership institutions (councils, funds, non-governmental organizations, programs of grants and credits, etc.) developed as the result of it are equally important. They provide opportunity to other companies to use practices or partnership schemes presented in the Guidelines adapting them to their own situations. Principles that served as a basis for successful cooperation are particularly important. They allow to build con�idential relationship and to construct mutually advantageous system of cooperation with people, whose way of life is in any case getting broken once the industrial civilization step on their lands. First of all, it is worth mentioning that successful practices of the companies clearly demonstrated possibilities and high potential 47 of application of international principles of cooperation under the Rus- sian conditions. The companies established interaction with indigenous peoples on the basis of equal partnership, mutual trust and transparency, and that became their key to success. Dialogue turned out to be much more productive than imposing one’s ideas of the bene�it for people living in the territories of oil, gold and other minerals production. Their direct participation in the de�inition of the purposes, ways and forms of strategy of assistance has proved to be much more effective than paternalistic support. In Russia business managed to apply together with indigenous communities the principle of free, prior and informed consent. There were preliminary negotiations and hearings held that allowed to discuss possible problems and consequences of the activities of the companies, ways of minimization of damage. Respect for culture, for traditions of local population as the ethical component of social responsibility of the companies allowed to win trust from indigenous peoples. Experience of the companies shows that an important condition of effective partnership is also a historically proven principle of trilateral participation in coordination of interests. Representatives of socially responsible business, the state and indigenous peoples became in all cases participants of the partnership in this or that form. It allows not just to minimize and compensate damage, not just to support certain communities or settlements, but also to stimulate social and economic development of areas of residence and management of indigenous peoples. Examples put by the companies allow to formulate three additional conditions of successful cooperation with indigenous peoples of the North. 1. Planned strategy and extra help. What is required is a combina- tion of strategic planning that de�ines directions of investments, and help that cannot be planned ahead due to complexity of conditions in which indigenous peoples live, remoteness of their settlements, their social vul- nerability, speci�ic risks of running traditional economy. Quite often situations occur when emergency help is needed, for example, purchase of drugs, delivery of injured to hospital, granting transport, gasoline or diesel fuel etc. There are many variants and it is impossible to foresee them in advance. 2. Support of traditions and introduction of innovations. The most optimal strategies of the partnership are those that combine support for traditional economy with assistance to the development of related businesses such as ecotourism and ethnotourism, and with involvement of indigenous peoples into modern sectors of economy including granting opportunity to work in the company itself, training specialties 48 that are required at its enterprises, etc. This principle will enable to ensure really sustainable and balanced development of indigenous communities. 3. Universal principles and unique approaches to the partnership. Russian companies demonstrated understanding of the fact there are no universal technologies of social responsibility. The companies managed to constructively apply models of cooperation that already exist in other countries to build up their own strategies of assistance. For such strategy to be successful it is necessary to form it according to the speci�ic character of concrete region in each case, in other cases — of a district, in accordance with the culture and traditions of peoples who live on the competing territories, with their needs. There are strong reasons to express con�idence that the success achieved is only the beginning of cooperation between the private sector and indigenous peoples of Russia. I hope that this cooperation will help not just to prevent negative consequences of industrial exploration of the North, Siberia and the Far East for nature and people who live in harmony with it but will also resolve burning social issues, and as a result of that — will ensure sustainable development of these regions.

Pavel Sulyandziga Member of the Public Chamber of the Russian Federation, Member of the UN Working Group on the issue of human rights and transnational corporations and other business enterprises