SOCIAL REPORT TIME MOVES ON Joint Stock Company Interregional Distribution Grid Company of Center and Volga Region SOCIAL REPORT for 2009-2010 We love You and lighted windows LIABILITY LIMITATION The present Social Report of JSC IDGC of Center and Volga Region for 2009-2010 (hereinafter referred to as the Social Report) has been prepared on the basis of information available to the Company at the moment of its preparation. The Social Report contains information on the results of activities in 2009-2010, as well as forward-looking statements and declarations concerning intentions, opinions and current expectations of the Company in regard of the results of its activities, its financial condition, liquidity, growth prospects, strategy and the development of the industry the Company is engaged in. Due to their nature, such forward-looking statements are characterized by the presence of risks and uncertainty factors, as far as they pertain to the events and depend on the circum- stances which are not necessarily to happen in the future. The words “intends”, “strives”, “expects”, “assesses”, “plans”, “considers”, “assumes”, “can”, “should”, “would”, “will continue” and the like are used, as a rule, to indicate the forward-looking nature of statements and may suggest the risk of non-occurrence of events or actions specified, depending on a variety of factors. The Company warns that the forward-looking statements do not guarantee future results. Actual results of the activity of the Company, its financial condition and liquidity, as well as the development of the industry of which the Company is a member, may differ considerably from those presented in the forward-looking statements herein. Besides, even if said values correspond to the pro-forma statements contained in this Social Report, they are not indicative of similar results and events in the future. The Company does not give any direct or supposed assurances and guarantees and does not bear any responsi- bility in case of losses which can be incurred by natural persons or legal entities as a result of using the forward- looking statements of this Social Report by any reason, directly or indirectly. The specified persons should not rely in full on the forward-looking statements, containing in the Social Report, as they are not the unique pos- sible succession of events. Except in cases stipulated by the law, the Company shall not be obliged to re-consider or confirm its expectations or assessments, or to publish updates and changes of the forward-looking statements contained in the Social Report in connection with subsequent events or the receipt of new data. COMPANY HYMN Words and music by N. Zhukov In the midst of the Volga wilderness, where roads are few Workers stay busy from morning till dusk Laying power lines to lighten the dark In the heart of Russia CHORUS The Company’s Mission will not be forgotten As enthusiastic corporate employees Sing the Company’s praise in the name of Russia In line with hallowed traditions We will expand the horizon with grids To glorify our Motherland We will drive darkness away, and in the cloud-free world Will receive our reward in full CHORUS Open to truth and unified With the unique corporate brand In our thoughts both now and forever Stable we were and stable we will be. CHORUS Ecological Safety The Company Priorities for 2011 11 and Environment Protection 12 and Beyond 109 96 Environment Protection Policy 97 Observance of Environmental Legislation Independent Certifi cation 98 Observance of Environmental Standards 13 of the Social Report 99 Development and Implementation 112 of Special Environmental Programs 102 Quality of Environmental Management (in compliance with ISO 14000) 14 Supplements 102 Production Environmental Control 120 Evaluation Table of GRI G3 Conformance 103 Environment Protection Costs and Payments for Environment Pollution 128 Glossary 105 Consumed Resources 131 Reference Information 106 Implementation of Lean Technologies 134 Feedback Questionnaire 106 Cooperation with Environmental Authorities and Organizations 10 The Company and Public 90 Goals and Parameters of Social Policy in Regions 91 Implementation of Social Programs 92 Volume and Structure of Social Expenses 92 Government and Public Organizations Relations 94 Adherence to the Tax Legislation. Payments to Non-Budget Funds 9 The Company and Consumers 83 Tariff Policy 84 Technological Connection of Consumers The Company and Employees 86 Discounted Categories 7 67 Provisions for the Retired and the Veterans 87 Quality of Services as Assessed by Customers 68 Corporate Culture 69 Support of Mass Physical Culture and Sports 70 Workmanship Competitions 70 Healthcare The Company 71 Healthcare Costs Dynamics 8 and its Business Partners 72 Establishment of Safe Labor Conditions 72 Safety of Production Processes 75 Principles of Cooperation and Mutual Responsibility 73 Establishment of Positive Psychological Climate, 76 Purchasing Operations. Suppliers and Contractors Corporate Involvement and Mutual Responsibility 79 Participation in Non-Commercial Organizations Address of the General About the Company 1 Director 3 11 Operations Geography Corporate Social Responsibility 12 The Company Structure (CSR) and Sustainable 13 Scope of Operations 2 Development 15 Strategic Goals and Tasks 3 The Key CSR Principles 4 Stakeholders Relations 8 Public Recognition 4 Performance Indicators 17 Key Performance Indicators 18 Key Financial and Economic Indicators 19 Quality Management System 22 Cost Management Program 22 Program for Decrease of Losses Provisions for Reliability, 5 Safety and Continuity of Power Supply 26 Implementation of Advanced Technologies 32 Investment Activity 35 Investment Projects 37 Repair Activities 38 Fire Safety 40 Prevention of Thefts of Energy, Electric Equipment, Components of Power Transmission Lines and other Material Assets 41 Measures on Improvement of Facilities Security 42 Prevention of Children’s Injuries Resulting from Electroshock. Educational Activities 7 The Company and Employees 6 The Company and Shareholders 57 HR Management Policy 44 Corporate Governance 58 Human Rights and Equal Opportunities 46 Shareholder’s Capital Structure 58 Labor Compensation and Motivation 47 Protection of the Shareholders Rights 60 Analysis of the Employee Social Benefits Package 48 Dividend Policy 61 Programs of Social Support 49 Capitalization Management 63 Organization of Training, Re-Training and Advanced 50 Information Policy Training of Personnel 52 Property Management 65 Trade Unions Relations 54 Consolidation of Power Grid Assets 65 Youth Policy 54 Internal Control 66 Practical Methods of Attracting Young Specialists 55 Risk Management Address of the General Director Social Report / Address of the General Director 1 The occupational skills and experience of our work- force is the Company’s most valuable asset, as the high efficiency of operations for the entire grid complex of Russia’s Center and Volga Regions depends on these factors. We are fully aware that our employees service electric installations under high voltage at consider- able heights on a daily basis and we value the human capital we have. The Company pays significant atten- tion to labor protection and industrial safety. To upgrade them, in 2010, JSC IDGC of Center and Vol- Dear Friends! ga Region invested RUR 287 million. We are aware of the environmental impact produced You are about to begin reading the first Social Report by the operations of the Company and other indus- of JSC IDGC of Center and Volga Region. Our Company try players. Environmental impact implies the impact is committed to making its operations transparent and on the lives of people living in regions in which the easily understandable for the general public. That is Company operates. Therefore, we are interested in why you are invited to read the document below. the environmental safety of the Company’s business. JSC IDGC of Center and Volga Region has implemented This Report is drafted in accordance with GRI recom- an environmental monitoring system, which complies mendations for reporting in the sphere of steady de- with ISO 14001 international requirements and func- velopment with the level of GRI application “B+”. tions successfully. For attestation of the Report the Company brought in In 2010, the total amount invested by the Company in an independent audit company. environmental safety was RUR 14.9 million. С С+ B B+ A A+ As a socially responsible organization, we contribute to Self-declaration V the development of nine Russian regions, which form Independent V attestation the sphere of the Company’s responsibility. JSC IDGC of Center and Volga Region is a responsible taxpayer. Since its founding, the Company has implemented an active social policy. In 2010, the Company carried out its tax obliga- tions in full, paying RUR 5.4 billion to different In April, 2011, at an industry competition organized level budgets. by the All-Russian Power Industry Trade Union and the RaEl Association, the Company received the title Best The Company is committed to continue operating in Grid Organization for High Social Efficiency in the In- compliance with social responsibility principles, which dustry for the third time. is, in my opinion, a key to upgrading competitiveness in our business. The title was granted not by chance, as a decent salary and personnel motivation are set by the Collective Bar- Sincerely, gaining Agreement adopted by the Company in 2008. Evgeny Ushakov, General Director of JSC IDGC The Agreement stipulates a quarterly indexation of of Center and Volga Region salaries in accordance with the consumer price index, as well as the provision of a range of additional benefits and guarantees for the Company’s workforce. time moves on 2 Social Report / Corporate Social Responsibility (CSR) and Sustainable Development Corporate Social Responsibility (CSR) and Sustainable Development 3 The Key CSR Principles 4 Stakeholders Relations 8 Public Recognition Social Report / Corporate Social Responsibility (CSR) and Sustainable Development 3 THE KEY CSR PRINCIPLES The corporate social responsibility and sustainable development constitute the vital principles of operations of JSC IDGC of Center and Volga Region.