Sakhalin Energy Investment Company Ltd. SUSTAINABLE DEVELOPMENT REPORT SUSTAINABLE DEVELOPMENT REPORTSUSTAINABLE 2012 2012 Sakhalin Energy Investment Company Ltd. SUSTAINABLE DEVELOPMENT REPORT 2012 CONTENT 1 . MESSAGE FROM THE CHIEF EXECUTIVE OFFICER . .4 2 . ABOUT THE REPORT . .6 2.1 GENERAL . .6 2.2 PRINCIPLES OF REPORT CONTENT AND QUALITY DEFINITION . .6 2.3 DEFINITION OF THE REPORT SCOPE . .8 2.4 GRI APPLICATION LEVEL AND PUBLIC ENDORSEMENT . .8 2.5 LIST OF ACRONYMS AND ABBREVIATIONS . .9 3 . CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT . .10 3.1 INTRODUCTION . .10 3.2 SAKHALIN ENERGY’S CSR SYSTEM . .10 3.3 PERFORMANCE STANDARDS . .12 3.4 SUSTAINABLE DEVELOPMENT POLICY . .13 4 . ABOUT THE COMPANY . .15 4.1 SAKHALIN ENERGY, SAKHALIN-2 PROJECT OPERATOR . .15 4.2 MAIN PRODUCTION RESULTS IN 2012 . .15 4.2.1 Assets . .15 4.2.2 Development Projects . .19 4.2.3 Hydrocarbon Production and Export . .19 4.2.4 Sanitary Protection and Safety Zones . .20 4.2.5 Oil Spill Prevention and Response Preparedness . .21 4.3 OPERATIONAL EXCELLENCE PROGRAMME . .23 5 . CORPORATE GOVERNANCE . .24 5.1 COMPANY MISSION, VISION, VALUES, AND PRINCIPLES . .24 5.2 CORPORATE GOVERNANCE SYSTEM AND STRUCTURE . .24 5.3 CORPORATE GOVERNANCE MODEL . .25 5.4 CORPORATE CULTURE . .28 5.5 CODE OF CONDUCT . .29 5.6 RISK MANAGEMENT . .29 5.7 ANTI-BRIBERY AND CORRUPTION . .33 5.8 HSE AND SOCIAL PERFORMANCE MANAGEMENT . .33 5.8.1 HSE and Social Performance Management System . .33 5.8.2 Impact Assessment . .35 5.8.3 Checks and Audits . .35 6 . ECONOMIC IMPACT MANAGEMENT . .36 6.1 IMPORTANCE OF THE SAKHALIN-2 PROJECT FOR THE RUSSIAN FEDERATION AND THE SAKHALIN OBLAST . .36 6.2 THE TAKE OF THE RUSSIAN FEDERATION AND THE SAKHALIN OBLAST . .36 6.3 RUSSIAN CONTENT . .37 6.4 CONTRACTING AND PROCUREMENT MANAGEMENT . .38 6.5 VENDOR DEVELOPMENT PROGRAMME . .39 7 . STAKEHOLDER ENGAGEMENT MANAGEMENT . .40 7.1 STAKEHOLDER ENGAGEMENT: STRATEGY, PRINCIPLES, MECHANISMS AND TOOLS . .40 7.2 STAKEHOLDER ENGAGEMENT PERFORMANCE IN 2012 . .41 7.3 ENGAGEMENT WITH PERSONNEL . .41 7.4 INTERACTION WITH LOCAL COMMUNITIES THROUGH THE COMPANY INFORMATION CENTRES . .42 7.5 COOPERATION WITH SAKHALIN INDIGENOUS MINORITIES . .43 7.6 ENGAGEMENT WITH NON-GOVERNMENT AND NON-PROFIT ORGANISATIONS . .45 7.7 ENGAGEMENT WITH JAPANESE STAKEHOLDERS . .45 7.8 ENGAGEMENT WITH CUSTOMERS . .46 7.9 INTERNATIONAL AND REGIONAL COOPERATION . .46 8 . ENVIRONMENTAL IMPACT MANAGEMENT . .49 8.1 INDUSTRIAL ENVIRONMENTAL CONTROL . .49 8.1.1 Air Emissions Control . .49 8.1.2 Water Use and Discharge Control . .49 2 2012 | Sustainable Development Report 8.1.3 Waste Management Control . .50 8.1.4 Energy Consumption . .51 8.1.5 Greenhouse Gas and Ozone Depleting Substance Emissions . .51 8.1.6 Utilisation of Associated Gas in Production . .51 8.1.7 Environmental Protection Costs and Pollution Payments . .52 8.2 ENVIRONMENTAL MONITORING AND BIODIVERSITY . .53 8.2.1 Environmental Monitoring . .53 8.2.2 Conservation of Biodiversity . .58 8.3 MAINTAINING ONSHORE PIPELINE RIGHT OF WAY . .62 9 . SOCIAL IMPACT MANAGEMENT . .63 9.1 PERSONNEL: MANAGEMENT AND DEVELOPMENT . .63 9.1.1 HR Management and HR Policy . .63 9.1.2 General Information . .64 9.1.3 Personnel Recruitment and Adaptation of New Employees . .65 9.1.4 Remuneration and Bonus System . .66 9.1.5 Social Guarantees, Benefits and Compensations . .66 9.1.6 Company Employees’ Performance Appraisal . .67 9.1.7 Staff Learning and Development . .68 9.2 LABOUR SAFETY AND PROTECTION . .73 9.2.1 Results . ..