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Social responsibility and corporate sustainability report 2015

Understanding of Sustainable Development

Sustainable development priorities and social responsibility principles are integrated in the business strategy of Federal Grid Company. Economic efficiency and customer focus are the key components of the Company’s social responsibility.

Over the years, there has been a traditional understanding of sustainable development of the company business as an activity that not only meets economic and environmental criteria, but also social interests of society and the State.

Owing to its specific role in the energy sector, economy and social development of the country, Federal Grid Company expands and complements the traditional concept of sustainability in its operations.

UNEG is a technological infrastructure that is controlled by the State and has strategic importance for Russia, its economic and social stability, and for maintaining the country’s integrity. Federal Grid Company, as an operator of UNEG, ensures uninterrupted electricity transmission via backbone electric grids and is responsible for the reliable electricity supply to customers in the Russian Federation.

The Company’s responsibility for the efficient administration and development of UNEG is not only to ensure a safe, reliable and uninterrupted electricity supply but also to provide accessibility to customers. Therefore, the key challenge for the Company is to improve efficiency as a balance of the interests of the Company and its stakeholders.

In today’s context, a company’s success depends, among other things, on the success of stakeholder engagement, ability to build a constructive dialogue, to find win-win solutions and implement them effectively.

The Company’s performance analysis is impossible without considering risks that relate to the Company’s social and economic impact on society.

In such a macroeconomic environment, corporate social responsibility (CSR) becomes one of the most important institutions of a civilised market economy.

Federal Grid Company highlights specific activities that are inherent to it as an electric grid company, in addition to core activities that traditionally relate to sustainable development.


Core sustainable development activities Specific sustainable development activities
  • Managing Economic Development
  • Innovative Development
  • Procurement
  • Anti-Corruption Activities
  • Employees and Social Policy
  • Environmental Responsibility
  • Ensuring Reliable and Uninterrupted Operation of UNEG
  • Energy Efficiency and Energy Management
  • Import Substitution
  • Tariff Policy and its Transparency for Consumers

Long-Term Development Programme of Federal Grid Company for 2015–2019 and prospects through 2030

In December 2014, the Board of Directors approved the Federal Grid’s Long-Term Development Programme for 2015–2019 and prospects through 2030 that had been previously approved by the Government of the Russian Federation. In 2015, as part of planned updates, the Program was amended according to the requirements of the directives of the RF Government. The Long-Term Development Programme is consistent with the targets and provisions of the Development Strategy for the Russian Electric Grid Complex, as approved by Resolution No. 511-r of the Government of the Russian Federation, dated 3 April 2013.

The Programme includes strategic goals, objectives, initiatives focused on sustainable development of the Company business.

Relationship between Strategy and Sustainable Development Goals

The main priorities of Federal Grid Company for the development in 2015–2019 are to retain positions in terms of reliability and technological development that have been achieved in the years of the implementation of large-scale investments, as well as to reduce unit operating costs by at least 30% compared to 2012, while avoiding the fall of the level of reliability and higher costs in the future periods (the objective was attained by Federal Grid ahead of schedule – in 2015, we achieved reduction in unit operating costs by 40% against 2012).

The Company also strives to maintain a balance between economic rationality and addressing social and environmental issues. It also strives to focus on those aspects of sustainable development that have paramount importance for stakeholders.

Strategic Priorities in Sustainable Development of Federal Grid Company

  • To build mechanisms and practices for the synchronisation of stakeholder plans that envisage the development and expansion of UNEG
  • To provide import substitution in order to reduce political and financial risks
  • To implement innovations and new technologies and assess their long-term economic efficiency
  • To form a talent pool for the smart energy sector
  • To develop responsible HR management practices
  • To improve labour protection and industrial safety
  • To improve the energy efficiency of electric grid operations
  • To implement environmental protection measures aimed at minimising environmental impacts
  • To ensure a fair distribution of economic value and integrate Corporate Social Responsibility (CSR) strategy in all business processes

Transparency and Accountability

Federal Grid Company is committed to responsible business practices that cover the implementation of core responsibilities and activity arrangement with due account of the interests not only of the State and society but of all stakeholder groups: customers, shareholders, investors, environmental experts, scientists, business partners, employees, expert community.

Federal Grid understands its corporate social responsibility as a set of commitments to stakeholders. These commitments are:

  • undertaken on a voluntary basis (beyond those established by law);
  • implemented publicly and in coordination with stakeholders;
  • focused on ensuring the Company’s sustainability and feasibility of its strategy.

Thus, the Company regularly reports to its stakeholders on the implementation of its commitments. Being a socially responsible company, Federal Grid every year since 2008, issues reports on social responsibility and corporate sustainability. The main objective of the reports is to inform stakeholders about the results of projects completed, their impact on social life and economy of the regions where the Company operates. To this end, the Company holds regular dialogues with stakeholders, during which the Company receives various requests and proposals from stakeholders. The Company’s efficiency and its customer focus involves identifying stakeholder expectations, defining a response position of the Company to these requests and their further consideration, if deemed appropriate, in corporate policies, development strategy and current operations.

The history of CSR practices and sustainable development in the Company, and public position on CSR

Systemic interaction with stakeholders requires the Company to have a public position on CSR issues, i.e. to outline the principles of decision-making and implement actions that guide the Company in its communication with stakeholders.

The Company’s public position on CSR is a tool for the Company to develop and coordinate with stakeholders its voluntary commitments in the strategic perspective, and the basis for maintaining a dialogue and factoring in the stakeholders’ recommendations about the contents of its non-financial report.

In 2007, Federal Grid Company wrote a chapter «Corporate and Social Responsibility” and included it in its 2006 Annual Report. This chapter declared its commitment to CSR principles in the electric power industry and stated the commitment to make a fullfledged non-financial (social) report in 2008.

Since 2008, Federal Grid Company has published annual reports on social responsibility and corporate sustainability (Social Report). These reports describe corporate mechanisms that support the quality of the Company’s performance and management of its impact on the economy, environment and social sphere in the regions where it has presence.

Reports are prepared in accordance with international standards for non-financial statement disclosure: Sustainability Reporting Guidelines (v. G3; since 2013 – v. G4) of the Global Reporting Initiative (GRI) and the GRI energy protocol. In its communication with stakeholders the Company is guided by AA 1000 SES standard.

The Company defined the correlation of CSR and SD in the following way: CSR is a practice of responsible conduct of business and a form of organisation of the Company’s operations in response to the public agenda in SD. In turn, the SD agenda is understood as a list of problematic situations, contexts and topics that are recognised both by the Company and its stakeholders as important in the long term. Besides, this agenda states that the Company and stakeholders are ready to invest in the solution of these problems.

The 2007 report is based on the understanding of corporate responsibility by Federal Grid Company as a public infrastructure entity. The report discloses information about the Company’s strategy and investment programme and describes certain strategic (non-financial) risks. Much attention is paid to the corporate plans of developing relations with the investor community and communication with the regional authorities. The Company’s public position on CSR issues had been drafted in the 2007 Report as a CSR management tool, i.e. it formulated principles of solutions and the Company’s actions in stakeholder engagement. This position specified the Company’s responsibility to stakeholder groups.

The subsequent fine-tuning and clarification of the public position in the 2008 Report reaffirmed the importance and relevance of this tool of responsible business. The Company continued to master the standards of SD reporting and establishment of fullfledged CSR management practices.

The 2008 report highlighted corporate social responsibility at a new stage of the Company’s operations and demonstrated the development and achievement of its voluntary commitments to regularly disclose information in the non-financial reports. In the reporting period, the Company effectively co-operated with a coalition of non-governmental environmental organisations that took part in a dialogue on implementation of the corporate Environmental Policy held on 28 May 2009. The summary of this dialogue was included in the Report as a separate chapter.

While drawing up its 2009 and 2010 Reports, the Company began moving from the principle-based generalised management of its responsibility to the management of specific aspects that have the highest importance for stakeholders. In 2009–2010, after several major accidents in the energy sector (particularly at the Sayano-Shushenskaya HPP), management of UNEG reliability and safety became the top priority. In 2010– 2011, the most important and publicly relevant issues were management of innovations and development of UNEG, as well as matters pertaining to the development of the entire energy sector. In fact, these two topics were the basis of Federal Grid Company’s public agenda on sustainable development. This is why the 2009 Report and 2010 Report focused on them.

In 2011, the Report on Social Responsibility and Corporate Sustainability of Federal Grid Company for 2010 was for the first time approved by the Council of Russian Union of Industrialists and Entrepreneurs. The Council pointed out that the 2010 Report of Federal Grid Company contains generally relevant information and covers the key areas of responsible business practice in accordance with the principles that are stated in the Social Charter of the Russian Business. The Report discloses sufficiently complete information about the Company’s efforts to ensure reliability and innovative development of the Unified National Electric Grid as priority aspects of the corporate social responsibility.”

Issues of reliability and innovative development did not lessen in importance in 2011. Yet, the energy sector and the Company became increasingly more aware of the fundamental importance to bring young people to the Company because the future of the national electric grid infrastructure will depend on their professionalism. This is why year 2011 was declared to be the “Year of Young Specialists of Federal Grid Company,” in order to highlight the Company’s key priority in CSR and sustainable development for 2011 and beyond.

On the other hand, the Russian Federation is the Company’s main shareholder, and the Company cannot ignore its position in identifying the key issues of its agenda for sustainable development. Leaders of the country view corruption as one of the most important challenges and a threat to sustainable development of the Russian Federation.

This is why management of Federal Grid Company took a decision to describe in detail issues of youth policy and anti-corruption policy in the 2011 Report.

In response to numerous requests of stakeholders, the Company took efforts to reduce the time for preparation of the Corporate Social Responsibility and Sustainable Development Report and publish it together with the 2011 Annual Report. This helped to improve the relevance of disclosed information and made it possible for all stakeholders to learn about the Company’s performance fully and in a timely way.

Federal Grid Company’s 2011 Corporate Social Responsibility and Sustainable Development Report was the winner of the 15th annual federal competition of annual reports in the nomination of the Russian Union of Industrialists and Entrepreneurs (RUIE) as “The Best Corporate Social Responsibility and Sustainable Development Report.”

Year 2012 was special for the Federal Grid Company because it was its tenth anniversary. This is why the Report presented a retrospective overview of Federal Grid Company’s efforts in building a sociallyoriented company. The priority topic in the 2012 report was “Management of Human Capital in Federal Grid Company.” This topic is highly important because employees are one of the utmost values for the Company, and its future depends on their professionalism. This is why the executives pay much attention to hiring of young talents, co-operation with institutes of higher education, development of effective personnel training and development programmes, assistance to employees’ professional and career growth, and employee evaluation and motivation.

Preparation for the 22nd Winter Olympic Games and 11th Paralympic Games in Sochi was one of the main events in 2014. This is why the priority topic in the 2013 Report was “Energy Supply to the 22nd Winter Olympic Games and 11th Paralympic Games in Sochi.” Federal Grid Company recognises its responsibility when it participates in such large-scale projects, and takes efforts to perform its obligations. This infrastructure will help the Sochi region to develop as a world-level mountain climate resort.

The Company’s 2014 Report focused on three priority topics: reliability and sustainable operation of UNEG; energy efficiency and energy management; and import substitution policy. The importance of these priority topics is to demonstrate how the Company maintains the sustainability of the energy sector to external and internal economic, industrial and natural threats, and to other destabilising factors (including geopolitical ones).

The main objective for the 2015 Report was to build the image of Federal Grid Company as an effective customer-oriented entity operating in the Russian power industry. The priority topic of the 2015 Report is “Raising of Efficiency is a Mutual Interest of the Company and Its Stakeholders.” Based on a review made by the Annual Report working team, the Company refined the descriptions of its core and specific activity areas in the field of sustainable development.

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