2012–2013 Sustainability Report by Generating Companies of Gazprom Energoholding 2012–2013 Sustainability Report by Generating Companies of Gazprom Energoholding Table of Contents Table of Contents Report Profile . 3 Water management . 53 CEO Statement . 4 Industrial waste generation . 57 About Our Companies . 8 Fines and non-financial penalties imposed on the Company for violation of environmental laws . 59 Business map . 8 Environmental costs and investments . 60 Company overview . 12 Environmental complaints received by the companies in 2012–2013 . 61 Corporate supply chain . 15 Environmental awards . 61 Business units included in the consolidated financial statements . 17 Labour Sustainability . 62 Corporate governance structure . 17 Management's approach to HR policy and occupational health and safety . 62 Corporate values, principles, standards and rules of conduct . 19 Corporate human resources . 62 Membership in organisations . 19 Staff remuneration . 64 Material changes in the organisation during the reporting period . 21 Protection of employees' interests and rights; collective bargaining . 67 Stakeholder Relations . 23 Occupational health and safety at workplace . 68 Key stakeholder groups . 23 Raising the quality of human resources . 71 Ways of stakeholder interaction . 24 Preventing corruption among the Company's employees . 73 Organisation’s approach to risk management . 28 Social sustainability . 74 Economic Sustainability . 32 Management's approach to corporate projects that have an impact on society; availability of grievance Management's approach to ensure economic sustainability within the organisation and investment decision- mechanisms . 74 making . 32 Ensuring reliable energy supply in the short and longer terms . 74 Financial and economic performance . 33 Cooperation with local communities on safety . 76 Increased demand from private, commercial, institutional, and industrial consumers . 34 Cooperation with local communities on energy saving . 78 Decommissioning of inefficient facilities . 35 Cooperation with local communities on the environment . 79 Infrastructure investment projects . 36 Not-for-profit infrastructure projects run by the Company on a pro bono basis . 80 R&D for more reliable energy supply and sustainable business growth . 39 Cooperation with local communities on culture and sports . 81 Government support received by the Company over the reporting period . 41 Contacts . 83 Environmental Sustainability . 42 GRI Content Index . 84 Management’s approach to environmental aspects of the Company’s activities . 42 Fuel use and energy efficiency . 44 Pollutant and GHG emissions . 49 Climate change . 52 2 2012–2013 Sustainability Report by Generating Companies of Gazprom Energoholding Report Profile Report Profile This represents the first sustainability report of Gazprom Group’s Generating Companies (the “generating companies”) for the calendar years 2012–2013. G4-18 G4-20 How did we prepare this sustainability re- What scope and boundaries have we cho- What were the sources of information for G4-21 port? sen for this sustainability report? this sustainability report? This sustainability report has been pre- We have chosen a biennial reporting cy- We used management reports and most G4-22 pared in reference with the principles and cle, in line with the existing corporate prac- recent audited IFRS financial statements as G4-23 guidance in the Global Reporting Initiative tices of OAO Gazprom, our parent company . of the date of this report as the key source G4-28 Guidelines (GRI 4), including the Electric This report focuses mostly on the data for the of information on performance by the gen- G4-29 Utility Sector Supplement, and is “in accor- last two calendar years (2012 and 2013) . But erating companies . The data reflecting the G4-30 dance” with the Core option in terms of dis- since this is our first sustainability report, it performance of our generating companies G4-32 closure . also discloses our previous achievements on aspects not covered by management re- Going forward, we plan to gradually ex- that are most relevant to our stakeholders ports or financial statements were obtained G4-33 pand the amount of information to be dis- and to further sustainable development of by sending information requests to relevant closed in our sustainability reports and move our generating companies . units of the companies in reference with G4 to the Comprehensive level . For this reason, This report discusses the sustainable Sustainability Reporting Guidelines . this report provides wider disclosure on cer- development of Gazprom Energoholding’s Unless indicated otherwise, data for Gaz- tain aspects than is required by the Core op- three generating companies: OAO Mosener- prom Energoholding provided in this report tion . go, OAO TGC-11, and OAO OGK-2 [all listed are consolidated data for the three com- For a full list of aspects covered by this on the Moscow Exchange] . The report does panies, OAO Mosenergo, OAO TGC-1 and report and the relevant page number in the not disclose sustainability-related informa- OAO OGK-2 . report, please see the GRI Content Index sec- tion about OAO MOEK’s performance as the The report contains mid-term and long- tion . company only joined Gazprom Energohold- term plans of Gazprom Energoholding’s This sustainability report has undergone ing in late 2013 . We intend to expand the generating companies . Their implementa- a “Materiality Matters” check by GRI experts . scope of our next sustainability report by tion is subject to inherent risks and uncer- In preparing this report, we did not hold any adding information on OAO MOEK’s perfor- tainties including factors beyond the control public hearings involving representatives of mance . of Gazprom Energoholding’s generating relevant stakeholders, but we plan to con- companies . sider this going forward . Fig. 1. OOO Gazprom Energoholding, OAO Mosenergo, OAO OGK-2 headquarters, Moscow 3 1 Including OAO Murmanskaya CHP 2012–2013 Sustainability Report by Generating Companies of Gazprom Energoholding CEO Statement CEO Statement Dear colleagues and partners, G4-1 Thank you for reading this first sustainability report by Gazprom Energoholding’s generating companies . Why are sustainability issues important ing them with new capacity . Many of our in- improving ROE, optimising the fuel mix and pacity supply agreements (CSA) . CSA terms companies in our efforts to make operations to our companies today? vestment projects feature unique know-how achieving synergies through combining gas provide for investment in the construction more competitive . First of all, because uninterrupted electric- solutions . business and power generation as a key goal of new generation facilities with guaranteed Today, our key strategic sustainability pri- ity and heat supply to industrial consumers We are committed to the openness and in developing the company’s power genera- cost reimbursement as costs are reflected in orities include: and households in many Russian regions, transparency of our business and maintain tion business . To develop Gazprom Group’s the final price of capacity, resulting in an IRR 1) Ensuring reliable, safe and efficient op- including such key cities as Moscow, Saint an open dialogue with all stakeholders, be- power generation business the Strategy rate of at least 14% . The heat supply segment eration of power plants and heat supply net- Petersburg and Sochi, relies on generating lieving that the disclosure of non-financial in- provided for the acquisition of interests in is still regulated, although a phased reform works; capacities of our companies . This means formation about our performance in the form generating companies, construction of new process is underway . Power generation has 2) Increasing the operating efficiency and everyday responsibility for the quality and of a sustainability report will become a good capacities and the establishment of a holding become a rapidly growing, promising line of market capitalisation of Gazprom Energo- safety of lives and jobs of tens of millions of starting point for such dialogue . company to consolidate Gazprom Group’s business for Gazprom Group . holding’s assets; people! One of our objectives consists in increas- power generation assets . OOO Gazprom 3) Improving our competitive edge in the Given the high technological complexity ing the shareholder value of our generating Energoholding [100% subsidiary of OAO What are our strategic sustainability utility market by unlocking our potential in and the scale of our operations, we have to companies . Sustainability performance is an Gazprom] became such a company, which goals and priorities? operations and technology; look beyond simple economic efficiency . The increasingly important driver of a business' started developing and introducing common As reform continues in the Russian en- 4) Building an optimal capacity mix by unique character of our equipment requires market value, one that is considered by most corporate standards for management of the ergy sector, with the initial goal of creating a completing the implementation of CSA pro- us to continuously improve the safety of op- major players in the stock market . generating companies, OAO Mosenergo, competitive environment in the industry, we grammes, upgrading fixed assets and de- erations and provide continuous training and OAO TGC-1 and OAO OGK-2 . are encouraged to focus on improvements commissioning inefficient facilities; education to our employees . How was