Think Green. Think Natural Gas
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THINK GREEN. THINK NATURAL GAS. Sustainability Report 2020 Sustainability Report 2020 Contents Letter from the Chairman of NOVATEK’s Energy Consumption and Efficiency ......................... 97 Management Board .......................................... 4 Air Emissions .................................................... 99 Waste Generation and Management ...................... 102 Letter from the Deputy Chairman of NOVATEK’s Water Use and Discharge ................................... 104 Management Board .......................................... 6 Biodiversity Conservation and Disturbed Land Remediation ............................................. 107 About the Company ......................................... 8 The Company’s 2020 Achievements About the Company ............................................ 10 in Environmental Protection .................................. 111 Core Assets and Capital Structure .......................... 10 Key 2020 Events ................................................. 12 Procurement ................................................ 112 Business Model .................................................. 14 Procurement and Supply Chain Management. 114 Sustainable Development Highlights ........................ 16 Procurement Performance ................................... 116 Industry-Related and International Activities. 20 Import Substitution ............................................ 116 Innovation ....................................................... 22 Social Investments ........................................ 118 Sustainable Development Strategy ................... 26 Contribution to Russian Regions Development ........... 120 Our Approach to Sustainability .............................. 28 Educational Programs ........................................ 122 Sustainable Development Strategy ........................ 28 Support for Cultural Institutions ............................ 123 Sustainable Development Goals: Prioritization and Promotion of Sports .......................................... 123 Contribution .................................................... 30 Charity and Philanthropy .................................... 123 The COVID-19 Pandemic’s Impact on Strategy ............ 37 Employment Practices .................................... 126 Stakeholder Engagement ................................. 38 Employee Profile ............................................... 128 Stakeholder Engagement Approach ........................ 40 Motivation and KPI System .................................. 128 Stakeholder Engagement in 2020 ........................... 42 Training and Development ................................... 130 Support to Employees ........................................ 132 Business Ethics .............................................. 50 Effective Communication .................................... 132 Approaches to Business Conduct ........................... 52 Anti-Corruption and Prevention Employee Health, of Conflicts of Interest ....................................... 52 Occupational Health and Safety ...................... 134 Human Rights ................................................... 54 Our Approach to Occupational Health and Safety ...... 136 Information Security ........................................... 55 Operational Control .......................................... 137 Occupational Health ......................................... 138 Corporate Governance .................................... 58 Fire Safety, Civil Defense and Emergencies ............... 139 Corporate Governance System .............................. 60 Work-Related Injuries ......................................... 140 Remuneration to Members of the Board Accidents and Incidents ..................................... 141 of Directors and Management Board ....................... 67 OHS Training ................................................... 143 Internal Control and Audit .................................... 68 Risk Management .............................................. 68 APPENDIX 1. About the Report ............................... 144 APPENDIX 2. Personnel Structure ........................... 148 Climate Change .............................................. 74 APPENDIX 3. Key Environmental Climate Change Approaches ................................. 76 Performance Indicators ...................................... 153 Risks and Opportunities ....................................... 78 APPENDIX 4. Report Boundaries ............................. 155 Climate Protection Initiatives ................................ 83 APPENDIX 5. Compliance with the GRI Standards ........ 157 Permafrost ...................................................... 86 APPENDIX 6. Compliance with SASB ......................... 171 APPENDIX 7. TCFD Disclosure Index ......................... 175 Environmental Performance and Protection ........ 90 APPENDIX 8. Independent Auditor’s Assurance ............ 177 Environmental Vision ........................................... 92 NOVATEK’s Strategic Targets in Environmental Social Media and Contact Details .......................... 179 Protection ...................................................... 93 Glossary ........................................................ 180 Environmental Monitoring and Control ...................... 96 3 THINK GREEN. THINK NATURAL GAS. Sustainability Report 2020 102-14 providing stability and reliability to the electricity power Moreover, we are studying the possibilities to expand grids as well as ensuring affordable energy for a growing low-carbon energy by producing ammonia and hydrogen, Letter from the Chairman of NOVATEK’s population. Denying the development of natural gas combined with carbon capture and storage technology. Management Board will negatively impact the 4+ billion people trying to We will also use hydrogen as a fuel mix with natural gas raise their standards of living in the emerging markets. and we are working with our strategic partners to further Fossil fuels has been the foundation for society’s lower our carbon footprint, especially in our strategic LNG “We will address climate actions advancement over the past century, leading to profound business. We signed cooperation agreements with leading on many fronts, including lowering changes in economic growth and the creation of modern global companies aimed at reducing GHG emissions and societies. We should not lose sight of this fact, and increasing our environmental efficiency. our own carbon emissions and instead, be proud of the industry’s contributions to this helping customers reduce their economic reality. In 2020, NOVATEK joined the Methane Guiding Principles CO emissions by expanding Initiative, a voluntary, international multi-stakeholder 2 One of NOVATEK key advantages is in its ability to partnership between industry and non-industry lower-carbon products and control the full LNG value chain, from upstream to end- organizations with a focus on priority areas for action providing cleaner energy”. customer delivery; hence, we are well positioned to along the natural gas value chain. The Company joined monitor, verify and deliver “Green LNG” cargos to the international oil and gas industry leaders and global market. NOVATEK’s core strategy as a natural gas and supporting organizations to achieve a goal to continually LNG producer implies greater involvement in developing reduce methane emissions within business activities, natural gas as a transport fuel both in Russia and abroad. increase transparency and implement regulations on This market segment represents significant incremental methane emissions. growth potential in the context of increasingly stringent LEONID MIKHELSON environmental standards. Today, the oil and gas industry is under severe pressure from many constituent groups, especially regulators with In 2020, we made advancements in both market their latest comments about instituting carbon taxes directions. Last year, our first small-scale LNG plant of 40 or restricting fossil fuel usage. In our opinion, forcing a Dear Stakeholders, correct. The climate change debate is a major global thousand tons per annum was launched in the Chelyabinsk change through the regulatory process will not solve the challenge that require full international cooperation to Region to create incremental, environmentally friendly gas climate change agenda. We must all look seriously at the We are honored to present NOVATEK’s 14th Sustainability address the issue of decarbonizing society. NOVATEK will demand for the transport sector. We also successfully full cause of carbon emissions globally. The consumption Report 2020, providing insights to our non-financial play a major role in reducing the negative impacts caused launched our first carbon-neutral LNG fueling station of carbon intensive goods are one of the leading causes disclosures to help a wide range of stakeholders learn by carbon emissions as our business activities are aligned in Germany. Carbon neutral offsets from a carefully of carbon emissions globally and addressing this question more about the NOVATEK’s sustainable business principles to react dynamically to these changing issues in a socially selected portfolio of emission reduction projects, from only the producers’ side will not abate or mitigate and the Company’s economic, environmental and social and environmentally responsible manner. including wind generation projects in developing countries, the problem. The task of tackling climate change