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Social responsibility and corporate sustainability report 2015

Stakeholders and Stakeholder Engagement

Stakeholder Engagement Approach

Stakeholder engagement is one of the strategic areas of ensuring sustainable development of Federal Grid Company. The Company understands that the provision of reliable, uninterrupted and high-quality power supply to consumers across the Russian Federation is possible only in direct cooperation with all its stakeholders.

The Company has a robust system of continuous stakeholder engagement, as a result of which we are aware of views, interests and wishes of stakeholders.

Federal Grid Company strictly complies with principles of its policy in the field of corporate social responsibility. Seeking for a balance between the implementation of its strategic objectives on ensuring quality power supply to consumers across the Russian Federation and of public objectives, the Company identifies persons who are interested in its activities and decisions, to understand its impacts and possible response measures. Such stakeholders include all participants of electricity sector: regulators, equipment suppliers, customers, environment, the State and social environment.

Regular, open communication with stakeholders plays an important role, as it allows us to better understand their expectations and to use a target-oriented approach for shaping the corporate social responsibility agenda. The communication channels we use for the dialogue with stakeholder reference groups include congress and exhibition arrangements, multilateral discussions, raising awareness through mass media. G4-25

Since 2008, the Company has published an annual social responsibility and corporate sustainability report. When preparing social report, Federal Grid is governed by the international standards for non-financial disclosure: GRI Guidelines, GRI Sector Disclosures for Electric Utilities, AA 1000 SES Standard. Starting from 2014, the Company switched to reporting according to the fourth generation of GRI Guidelines (G4).

As part of preparing the Social Report, the Company discusses its key topic with stakeholders and collects disclosure requests. Prior to publication, the text of the Report is discussed publicly in the form of hearings held either in absentia or in person.

Our social responsibility and corporate sustainability reports are included in the National Register of corporate non-financial reports of the Russian Union of Industrialists and Entrepreneurs (RUIE).

List of Stakeholder Groups G4-24

  • Shareholders, investors
  • Customers, consumers
  • Business-partners, suppliers and contractors
  • Company employees1
  • Organisations representing interests of the Company employees, trade unions
  • Government Authorities
  • State Control (Supervisory) Bodies, Regulators
  • Local Authorities
  • Professional Associations and Industry Organisations
  • People in regions where the Company operates, local communities, including indigenous minorities
  • Scientific Community
  • Educational Institutions
  • Environmental NGOs
  • Social and Charitable NGOs
  • Mass Media

When identifying stakeholder groups and selecting the groups with which to engage, the Company relies upon the assessment of their influence on Federal Grid’s current operations and strategic development, as well as the established stakeholder engagement practice and stakeholder dependence on the Company performance. The assessment of stakeholder influence is shown on the following map. In 2015, the relevance of the map was confirmed by the management opinion survey.

2015 Stakeholder Map

Stakeholder Engagement Mechanisms G4-DMA, former EU19

Stakeholder Group Expectations/Interests Engagement Mechanisms
1. Shareholders, investors
  • Transparency of business processes
  • Growth in shareholder value
  • High level of financial stability
  • General Meeting of Shareholders
  • Meeting of the Company senior executives with analysts of investment banks, investment funds and rating agencies
  • Consultation meetings with minority shareholders – individuals
  • Participation in investment events (forums, conferences)
  • Annual General Meetings of Shareholders and the Company’s statutory reporting with a high level of disclosure and transparency
  • Obtaining and maintaining credit ratings of the leading international and national rating agencies
  • Road Show
  • Conferences for investors
  • Individual meeting with shareholders and via telephone communication
  • Press releases under the required disclosures
  • Presentations for investors and professional communities
2. Customers, consumers
  • Ensuring reliable and uninterrupted electricity supply
  • Openness and flexibility in consumer relations
  • Creating and arranging meetings of Consumer Council
  • Developing the construction of grid facilities based on the principles of co-financing with participation of special purpose vehicles (SPV) to accelerate consumer access to UNEG
  • Interaction within contracts, agreements, cooperation agreements
  • Regular consumer surveys
3. Business-partners, suppliers and contractors
  • Creating transparent competitive environment
  • Using a market based pricing model
  • Signing agreements with Russian and foreign manufacturers
  • Supporting domestic suppliers in access to foreign markets
4. Company employees
  • Obtaining information on the Company’s development prospect
  • Delivering strategic objectives
  • The system of internal and external communication channels
  • Regular surveys that reveal the employee satisfaction level
  • Hot Lines for employees
  • Engagement within the Company core businesses
5. Organisations representing interests of the Company employees, trade unions
  • Stable wages
  • Creating decent working conditions
  • Providing opportunities for professional and personal growth
  • Social guarantees
  • Taking measures for attracting and retaining young specialist
  • Forming corporate housing stock
  • Organising recreation for employees of branches
  • Doors Open Days
  • Holding professional skill competitions
  • Ensuring professional training, including within the ‘Knowledge Days’
6. Government Authorities
  • Taking measures for attracting and retaining young specialist
  • Forming corporate housing stock
  • Organising recreation for employees of branches
  • Doors Open Days
  • Holding professional skill competitions
  • Ensuring professional training, including within the ‘Knowledge Days’
  • Meeting obligations under the investment programme
  • Signing several cooperation agreements with public authorities (Rosreestr, regional agencies)
  • Drafting, approving and implementing the import substitution programme
7. State Control (Supervisory) Bodies, Regulators
  • Compliance with the Russian legislation and requirements
  • Regular inspections
  • Regular meetings
  • Joint work
  • Contracts and cooperation agreements
  • Joint working groups
  • Participation of Company specialists in the work of advisory and expert councils of the government authorities
8. Local Authorities
  • Obtaining information on the Company’s development prospects
  • Infrastructure development
  • Tax liabilities
  • Creating jobs in regions where the Company operates
  • Implementing social programmes
  • Cooperation agreements
  • Social and charity programmes
  • Public consultations, hearings
  • Public reporting
  • Engagement with public and expert organisations
  • Holding conferences, round tables, forums and participation therein
9. Professional Associations and Industry Organisations
  • Obtaining information on the Company’s development prospects
  • Cooperation
  • Regular meetings
  • Disclosure on the corporate website
10. People in regions where the Company operates, local communities, including indigenous minorities
  • Obtaining information on the Company’s development prospects
  • Infrastructure development
  • Creating jobs in regions where the Company operates
  • Implementing social programmes
  • Minimising negative local and environmental impacts
  • Social and charitable programmes
  • Public hearings
11. Scientific Community
  • Promoting industry-specific science and education
  • Applying high performance innovative technologies
  • Engagement with scientific organisations and placing orders for R&D
  • Scientific and technical partnership with the RNC CIGRE
  • Signing agreements with higher education institutions
  • Guest lecturing
  • Giving masterclasses for students
  • Проведение мастер-классов для студентов
  • Organising students’ teams
12. Educational Institutions
  • Promoting industry-specific science and education
  • Personnel training and ensuring generational continuity
  • Using innovative technologies that reduce impact on the environment
  • Signing agreements with higher education institutions, Guest lecturing
  • Organising students’ teams
  • Participation in youth events (forums, conferences, workshops)
  • Cooperation with the Russian Geographical Society under the project “Combined Expedition “Hogland” (within celebration of the 70th Anniversary of Victory in the Great Patriotic War)
  • Cooperation with the Russian Chess Federation
13. Environmental NGOs
  • Reducing negative environmental impact
  • Cooperation with the World Wide Fund for Nature (WWF Russia) concerning conservation of Oriental Storks and prevention of the bird deaths on power transmission lines
  • Cooperation with the All-Russian Research Institute for Environmental Protection of the RF Ministry of Natural Resources
  • Cooperation with the All-Russian public organisation «Russian Birds Conservation Union»
  • Cooperation with the Information Agency «Interfax ERA”
  • Commitment to comply with social and environmental requirements of the European Bank for Reconstruction and Development within the agreement on financing the Company’s projects
14. Social and Charitable NGOs
  • Company’s performance and development prospects
  • Key events
  • Social responsibility
  • The system of external and corporate communication channels
  • Holding conferences, round tables, forums and participation therein
  • Membership in public and expert associations
  • Disclosure on the corporate website
  • Signing cooperation agreements
15. Mass Media
  • Transparency of business processes
  • Providing prompt access to information on the Company’s activities
  • Holding media events (briefings, press-points, and others)
  • Distributing press releases on a timely basis
  • Handling requests for Mass Media

Engagement with Shareholders and Investors

Federal Grid, being a public company, is guided in its relationship with shareholders and investors by the Russian and international corporate governance standards and best international practices of information disclosure. This helps to ensure a high level of transparency and accessibility of Company management for investors. Federal Grid Company strives to maintain close bilateral ties with the investment community, devotes special attention to communication with experts at investment forums and conferences, as well as during other meetings.

The procedure of preparing and holding the general meetings enables all shareholders to familiarise themselves with all the necessary information and to express their opinion.

In 2015, the Company continued a series of meetings with investors. In June, as part of preparations for the Annual General Meeting of Shareholders, Federal Grid Company’s senior executives held a meeting with a number of analysts from investment banks and brokerage companies covering a stock market of the Russian electricity sector.

The meeting was attended by representatives of the investment division of Raiffeisenbank, investment companies: BCS, Aton, RMG.

The representatives of Federal Grid spoke about the Company’s performance in 2014, the work of its management on maintaining financial sustainability and internal efficiency of the Company in a crisis, shared plans to achieve positive financial performance for the current year and the future, answered questions from analysts.

Representatives of the investment community, in their turn, told about the current situation on the market of corporate securities of the electricity sector and made their own recommendations how to improve investment attractiveness and attain a capitalisation growth of the Company.

Following the meeting, the participants agreed to maintain an active dialogue enabling investors to receive all information on the Company’s activities and the Company to get feedback from the industry experts.

In September 2015, the Company’s senior executives held a business breakfast with analysts following the publication of Federal Grid Company’s IFRS results for H1 2015.

In December 2015, the Chairman of the Management Board of Federal Grid Company, Andrey Murov, held a business breakfast with analysts and investment community representatives to discuss the Company’s performance in 2015 and its key objectives for 2016. It was a third meeting in such a format and it has become a tradition.

In addition, Federal Grid Company continues cooperation with the leading international and national rating agencies. In 2015, various activities were organised in the format of meetings with senior management in order to timely inform analytical services of the rating agencies both about the achievement of financial and operational performance indicators as at the reporting dates, and changes in the forecasts of the Company development in the context of high volatility on domestic capital markets, and also in connection with the strategic decisions of the relevant federal executive authorities. Also in 2015, Federal Grid Company has joined the initiative of the Bank of Russia to establish a National Analytical Credit Rating Agency.

For further details about the Federal Grid’s investment policy, see section “Managing Economic Development” of the Report.

Engagements with Customers and Consumers

Customer focus is one of the key principles of the Company. Federal Grid builds long-term mutually beneficial relationships with customers, offering them high quality services.

Customer relations directly affect the financial performance of Federal Grid Company. The search for a balance of interests of the Company and stakeholders in the field of improving the efficiency and reliability of electricity supply is carried out on a continuous basis with the participation of the State, public organisations and other stakeholders.

For further details, see subsection “Customer focus” of section “Managing Economic Development” of the Report.

The Council of Consumers of Federal Grid Services (hereinafter ‘the Consumer Council’)

The Consumer Council is an expert collective body expert collective body that represents the interests of all consumer groups and public associations of business community regarding the delivery of the strategy of the RF electric grid complex, including the improvement of accessibility of energy infrastructure, customer-oriented approach of Federal Grid Company. In addition, the establishment of the Consumer Council serves to create a public control tool.

In 2015, one meeting of the Consumer Council was held, during which the following matters were considered:

1. The main provisions of the Long-Term Development Programme of Federal Grid Company for 2015–2019 with prospects through 2030, which was approved by the RF Government and provides for basic and back-up scenarios aimed at ensuring the Company’s financial stability.

2. The results of technological and price audit of the Federal Grid’s investment projects that was conducted in 2014.

3. Focus areas for improving legal regulation of the electricity industry.

The Consumer Council includes representatives of the following organisations: Siberian Generating Company LLC, Energy Development Fund, OJSC ATS, the Non-Profit Partnership of Guarantee Suppliers and Power Supply Companies, PJSC INTER RAO, Melalenergofinance LLC, JSC NLMK, RUSAL, JSC Tyumen Power Supply Company, PJSC IDGC Ural, Technosbyt LLC, Moscow Power Engineering Institute, the Non-Profit Partnership of Housing and Utility Sector Development, Rusenergosbyt LLC, the All-Russian Non-Governmental Organisation “Committee for the Support of Reforms of the Russian President”, OPORA ROSSII, the Non-Profit Partnership “Council of Power Producers”, CJSC Russian Coper Company

Engagement with Business Partners, Suppliers and Contractors

Federal Grid strives to develop long-term mutually beneficial relationships with business partners based on fair, open and ethical practices of cooperation, mutual respect, compliance with commitments and agreements.

  • Counterparties under electricity (capacity) purchase agreements to compensate losses at the wholesale electricity and capacity market:
    — generating companies;
    — retail suppliers;
    — JSC Financial Settlements Centre.
  • A Counterparty of a commercial representation agreement to enter, on behalf of Federal Grid Company, into electricity (capacity) purchase agreements to compensate losses at the wholesale electricity and capacity market):
    — JSC Financial Settlements Centre.
  • Counterparties under service agreements of infrastructure organisations at the wholesale electricity and capacity market:
    — OJSC ATS;
    — JSC Financial Settlements Centre.
  • Counterparties within cross-border relations and customs clearance:
    — JSC Aserenergy (Azerbaijan);
    — State Industrial Association «Belenergo» (Belarus);
    — Elering AS (Estonia);
    — Litgrid AB (Lithuania);
    — JSC Augstsprieguma tikls (Latvia);
    — Georgian State Electrosystem LLC (Georgia);
    — JSC KEGOC (Kazakhstan);
    — North-East Electric Grid Company of the People’s Republic of China (PRC);
    — State Electric Grid Corporation of China (PRC);
    — Trade and Economic Company «Lun Huadian» (PRC);
    — JSC Central Regional Electricity Transmission Grid (Mongolia);
    — State Enterprise «NPC Ukrenergo» (Ukraine);
    — Fingrid Oyj (Finland);
    — CIS Electric Power Council;
    — PJSC Inter RAO.

Federal Grid Company and its counterparties at the wholesale market – JSC Financial Settlements Centre, generating and energy supply companies – have entered into standard electricity (capacity) purchase agreements to compensate losses at WECM; commercial representation agreement on the basis of which JSC Financial Settlements Centre enters into electric power (capacity) purchase agreements on behalf of Federal Grid Company, as well as service agreements of infrastructure organisations at the wholesale electricity and capacity market of OJSC ATS, JSC Financial Settlements Centre.

Engagement with Control (Supervisory) Bodies and Regulators

Federal Grid Company regularly engages with representatives of federal executive authorities:

  • Ministry of Energy of the Russian Federation;
  • Federal Tariff Service of the Russian Federation (terminated in 2015);
  • Federal Anti-Monopoly Service of the Russian Federation;
  • Federal Service for Environmental, Technological and Nuclear Supervision;
  • Federal Service for Supervision of Natural Resources;
  • Central Energy Customs of Federal Customs Service.

Federal Grid Company engages with the Ministry of Energy of the Russian Federation to discuss amendments to the Russian laws and regulations, to address issues not currently covered by legislation, to participate in consensus meetings regarding draft amendments to the Wholesale Electricity (Capacity) Market Accession Agreement and to agree on meeting agenda and to work out a unified position of the Russian Federation when interacting with international organisations, the Supervisory Board of the Market Council, approving a regulatory standard for process losses in UNEG, to provide information under laws and regulations, etc.

Federal Anti-Monopoly Service of the Russian Federation:

  • Regulates the Federal Grid operations in terms of setting tariffs for electricity transmission via UNEG, requirements to the programme for energy saving and improving energy efficiency, etc.
  • Oversees how Federal Grid Company complies with laws and regulations of the Russian Federation when entering and implementing agreements for electricity (capacity) transmission services.

Central Energy Customs of Federal Customs Service performs customs control of electricity transmitted though cross-border transmission lines.

On 7 February 2001, a BRELL Agreement on parallel operation was signed between Federal Grid Company and the energy companies of Belarus (SIA Belenergo), Estonia (ELERING AS), Latvia (JSC Augstsprieguma tikls) and Lithuania (LITGRID AB).

Once a year, the parties of the Agreement hold top-level meetings to coordinate their cooperative work, and interact on a regular basis at the BRELL Committee of the energy systems.

To provide reliable electricity supply to Russian customers in Bryansk, Pskov and Kaliningrad oblasts, the Company entered into contracts with the relevant organisations of Latvia, Lithuania, Estonia and the Republic of Belarus to pay for electricity transit services through the electric grids of these countries. G4-6

Pursuant to an agreement dated 20 November 2009 and signed by the governments of the Russian Federation and the Republic of Kazakhstan about measures to ensure parallel operation of the unified energy systems of Kazakhstan and Russia, the Company entered into a contract for electricity transit. Subject to the above contract, Federal Grid has paid for the electricity transit through the territory of Kazakhstan since May 2010.

Federal Grid Company is involved in activities of the Executive Committee of CIS Electric Power Council whose tasks are as follows:

  • to draft documents that support operation of the CIS Electric Power Council;
  • to ensure preparation of standards, guidelines, manuals and other relevant documentation in the field of electric power industry;
  • to coordinate activities of permanent and ad hoc bodies of the CIS Council.

In order to ensure the observance of rights and responsibilities of the parties to service agreements for electricity transmission through UNEG, Federal Grid conducts a regular monitoring of amendments to the Wholesale Market Accession Agreement initiated by members of the Supervisory Board of the Market Council Association, organisations of commercial and technology infrastructure, and other members of the Market Council. Discussions of issues relating to the principles of commercial electricity metering, improvement of the procedures for compliance assessment of automated electricity metering systems, as well as the procedure for establishing and distributing load losses in the UNEG grids are regularly organised by the Market Council and the RF Ministry of Energy. Federal Grid participates in the above discussions and stands for the necessity to simplify and speed up the wholesale market procedures in order to minimise potential costs of customers of electricity transmission services when entering the wholesale market and to ensure transparency of settlements under contracts for electricity transmission.

Amendments were approved by the Resolution of the RF Government No. 458 dated 11 May 2015, “On Approval of Amendments to Certain Acts of the Government of the Russian Federation Aimed at Improving the Procedure for Determination of an Amount of Capacity Purchased at the Wholesale Market to Supply to Members of the Public and Equated Consumers, and of an Amount of Capacity Purchased by the Organisation that Manages the Unified (All-Russian) National Electric Grid” and into effect on 01 July 2015.

The RF Ministry of Energy, with the participation of Federal Grid Company, drafted amendments to the Resolution of the RF Government, which allow for payment of losses in the wholesale electricity (capacity) market by Federal Grid’s counterparties, and for payment of actual capacity at the wholesale market.

The RF Ministry of Energy, with the participation of Federal Grid Company, also drafted amendments to the Federal Law “On Electric Energy Industry” No. 35-FZ dated 26 March 2003 that establish an obligation of Federal Grid Company to buy full actual losses at the wholesale market, to call for payment of normative losses without deduction of load losses under electricity transmission contracts, and introduce such comprehensive solutions aimed at reducing non-payments for transmission services as setting a statutory penalty for untimely and(or) partial payment for services rendered, including its differentiation depending on the actual period of non-payment, implementing a procedure for providing financial guarantees for certain groups of consumers, as well as amend the procedure for cutting off for nonpayment or partial payment of electricity transmission services or non-contractual (off-the-meter) electricity consumption.

Amendments have been approved by the Federal Law No. 307-FZ dated 03 November 2015 “On Amending Certain Legal Acts of the Russian Federation in Connection with Strengthening Payment Discipline of Electricity Consumers”. Part of the above amendments may be implemented after the approval of procedures and mechanisms for implementing the said comprehensive solutions by relevant Resolutions of the RF Government and other regulatory acts, which are currently under development.

The principles for determination of committed capacity of grid organisations and the procedure for calculation of reserved capacity and its payment by the ultimate consumers are among the topics regularly raised by the Russian Ministry of Energy and FAS (former FTS) of Russia. Federal Grid is fully engaged in discussions and submits its proposals regarding the above issues to stakeholders.

Engagement with the State Duma of the RF Federal Assembly

In December 2015, Federal Grid Company, together with the expert panel of the State Duma energy Committee “Import Substitution in the Fuel and Energy Sector”, held a round table «Import Substitution: the borders of energy security» in the framework of the business program of the exhibition «Electric Grids of Russia – 2015».

During the round table, issues were discussed about shaping and implementing an import substitution policy in the energy sector, its role in ensuring energy security of the country, and as well as issues of the development of corresponding regulatory and methodological framework. 20 reports of representatives of Federal authorities, public and scientific organisations, manufacturers of electrical equipment were presented. The event was attended by more than 250 people, it also received coverage in industry media.

According to the results of the round table, recommendations for implementing the import substitution policy and contributing to the development of domestic electrical industry were formulated and forwarded to the Federal authorities.

Representatives of Federal Grid Company took part in parliamentary hearings on the issue «On priority measures of the Federal Assembly of the Russian Federation, the Government of the Russian Federation and Bank of Russia to ensure economic growth.» According to the results of the parliamentary hearings, recommendations to stimulate the development of domestic electrical industry and ensure the energy security of the country were prepared and forwarded to the relevant Committee of the State Duma.

Engagement with Local Authorities

Federal Grid engages in a constructive way with local administrations and the general public in addressing pressing social, economic and environmental issues, cooperates with non-profit organisations and expert community at the regional level.

Engagement with Professional Associations and Industry Organisations

For details, see section “Our Role within the Industry”.

The Company recognises the rights of indigenous peoples living in the territories where the Company operates for the identity and supports initiatives aimed at preserving and developing culture of native peoples of the Far North.

Engagement with Scientific Community

Federal Grid Company engages with stakeholders with respect to the development of technologies for electrical equipment manufacturing using the following instruments:

  • support of R&D projects and engineering, the creation of industrial infrastructure and other necessary activities on the side of domestic manufacturers with the aim of improving the existing and creating new types of equipment, technologies and materials, including market assurance, support in receiving easy-term loans, funding from the Russian institutes of innovative development, participation in providing loan guarantees, etc.;
  • interaction with Federal, regional and local authorities, professional communities, higher education institutions, scientific-research and design organisations, industrial and business associations with regard to the development of regulatory framework in the field of stimulating and supporting the development of electrical equipment manufacturing by domestic companies.

Engagement with Higher Education Institutions

In 2015, the key topics in the relationship with stakeholders were the development of industry-specific education and creating opportunities for participation of industry-specific higher education institutions in scientific and innovative activities of Federal Grid Company. As part of the above cooperation with higher education institutions, the following measures were implemented:

  • a list of topics on current technical problems for thesis works, research papers and dissertations of undergraduate and graduate students was made jointly by specialists of Federal Grid and lecturers of field-specific departments of the Electric Energy Institute of the National Research University Moscow Power Engineering Institute;
    — the above topics were discussed with lecturers and students of field-specific departments of Moscow Power Engineering Institute;
    — the above list of 105 topics that reflect the current needs of the electric grid complex was sent to industry-specific higher education institutions across the territory of Federal Grid’s operations;
  • education institutions were involved in implementing R&D and innovative development programmes of Federal Grid Company;
  • work of student construction teams was organised at the Company facilities

    Engagement with Environmental NGOs

    The Company engages with various Russian and international organisations on issues of environmental protection, environmental safety and rational utilisation of natural resources, such as: All-Russian public organisation «Russian Birds Conservation Union», information agency «Interfax-ERA», non-governmental organisation «World Wide Fund for Nature» (WWF Russia).

    In 2015, in cooperation with the WWF Russia, a joint pilot project «Monitoring the effectiveness of measures implemented by the MES East branch to prevent death of Oriental white storks on power transmission lines» was launched. According to the results of the above monitoring, the effectiveness was noted of the efforts of the MES East branch aimed at protecting Oriental white storks, and the necessity to implement the following measures with the involvement of the Russian Birds Conservation Union was determined:

    • to assess the effectiveness of bird protection measures to prevent outages of transmission lines caused by birds;
    • to erect nesting platforms taking into account the bird population growth;
    • to equip power transmission lines with bird protection devices taking into account the recommendations of specialists on their types and installation methods.

    Basic kinds of engagement with educational institutions

    Facilitating teaching and learning (on-the-job and pre-graduation practical training, teacher internships, study tours, meetings with Company specialists, consulting students by the Company specialists in preparing qualifying papers, payment of individual scholarships, the target contractual training, etc.) During the year
    Improving a system of specialist training (updating training programmes, topics of qualifying papers, involvement of the Company specialists in the teaching and learning process) During the year
    Involvement of educational institutions in the Company R&D projects During the year
    Organising student construction teams of Federal Grid During summer vacation

    Measures that are implemented annually by Federal Grid Company to prevent bird death and bird-caused outages at electric grids include the following:

    • erecting nesting platforms and equipping transmission lines with bird protection devices of various types and designs in mass nesting places;
    • installation of electronic bird repellent devices in the territories of substations;
    • OHL inspections at the beginning of bird nesting with fixation of their habitats.

    In 2015, 500,220 and110 kV OHLs at the Federal Grid branches – MES East, MES Siberia, MES South, MES Centre and MES North-West were equipped with 10,739 bird protection and bird repellent devices designed to prevent and eliminate cases of bird destruction by electric shock and to reduce bird-caused outages at electric grid facilities. Costs amounted to RUB13.26 million.

    The result: Over the past three years, only isolated cases were recorded of bird death on the Company transmission lines.

    See further details in section Core Sustainable Development Activities Environmental Responsibility Environmental Impact Management System.

    Engagement with Social and Charitable NGOs

    Federal Grid Company places a great focus on charity and sponsorship activities. The Company supports charitable initiatives in the following areas:

    • creation of favorable social environment and addressing actual social issues;
    • development of cultural and spiritual heritage;
    • support of sports and promotion of healthy lifestyle;
    • preservation and enhancement of the intellectual potential, support of initiatives in science, education and enlightenment;
    • targeted support of citizens in difficult life situations.

    Federal Grid Company continuously engages with the Council of War and Labour Veterans of the Electric Power Industry. Federal Grid provides an ongoing support to participants of the Great Patriotic War and workers of labour fronts. Veterans receive monthly pension supplements, subsidies for medical treatment and medicine, as well as lump sum payments for national holidays, including the Victory Day. Every year the Company organises celebrations dedicated to the Victory Day and Power Engineers’ Day.

    For further details about engagement with social and charitable NGOs, see section Core Sustainable Development Activities Employees and Social Policy Social and Youth Policy and Taking Care of Veterans.

    Details on engagement with trade unions are available in section Core Sustainable Development Activities Employees and Social Policy Social and Youth Policy.

    Stakeholder Engagement as Part of the Report Preparation G4-26

    To improve transparency, Federal Grid Company involves representatives of major stakeholders in the report preparation through their participation in discussions on socially significant aspects of Federal Grid activities and the reflection of these activities in the upcoming report, as well as participation in the public assurance of the report. The above procedures are regulated by international standards: AA1000ЅЕЅ Institute of Social and Ethical Accountability, the Global Reporting Initiative (GRI, version G4).

    In the preparation of the previous report, the Company made a number of commitments, most of which were taken into account in the report for 2014, part of the commitments was made for 2015.

    When preparing this Report, the Company held public hearing on its draft on 22 April 2016. The following table includes an overview of concerns and proposals to the draft Report for 2015.

    The public hearings of Federal Grid Company were attended by Vice Chairmen of the Management Board, area directors, heads of departments, subject matter specialists. The participants from stakeholders were representatives of public and non-profit organisations, educational institutions, environmental and research organisations, business associations and the corporate governance expert community.

    During the discussion, the representatives of stakeholders expressed their specific concerns and recommendations regarding the disclosure of certain topics in the Report.

    Response to key topics and concerns raised at the Public Hearing of the 2014 CSR G4-27

    Stakeholder concerns/proposals Report section where the concern/proposal is responded
    To disclose the corporate governance system in terms of CSR issues. Corporate Governance
    To provide information how the Company is going to engage with bachelors graduated in 2015, including which positions they may expect to occupy. Employees and Social Policy
    To disclose clearly defined qualification requirements to all job levels, and to describe a career development mechanism Employees and Social Policy
    To give details on air emissions with a breakdown by source of emissions in order to record maximum emissions and to strive to reduce them Not responded. Given the insignificance of air pollutants emitted as a result of operating activities, there is no need for Federal Grid Company to shape measures to reduce air emissions and make a breakdown of emissions by source to record maximum emissions.
    To start consultations with environmental organisations and to include biodiversity indicators and indicators related the specially protected areas into performance indicators Responded with respect to consulting with environmental organisations: in 2015, an environmental monitoring was performed in the territory of the National Park Smolny during operation of 500 kV OHL that passes through the above territory (page 165). Biodiversity indicators will be introduces in the next reporting cycle.
    To separate “indigenous minorities” as a stakeholder category It was decided to separate a subcategory in a stakeholder category.
    To inform stakeholders on public hearings in advance, approximately in 2–3 weeks. Partially responded. Notifications were sent in 1.5 weeks.
    To update an Appendix with a list of IUCN Red List species Responded. Appendix 3 to the Report. Total Number of IUCN Red List Species and National Conservation List Species.
    To disclose information on engagement with employee representatives, in particular, on the regulation of social and labour relations in the Company branches based on collective bargaining agreements Employees and Social Policy
    To disclose information about wage and salary indexation by employee category Employees and Social Policy
    To provide data on energy consumption and environmental impacts broken down by regions Partially responded. Data on environmental impacts are broken down by MES

    Response to Stakeholder Recommendations at the Public Hearings on the 2015 Report (22.04.2016) G4-27

    Stakeholder concerns/proposals Response to stakeholder concerns/ proposals
    The CSR section of the corporate governance report should contain more references to the Annual Report. This will help to make the Report shorter and avoid duplication of information. Responded in the 2015 Report
    Closer attention should be paid to the description of non-financial risks Will be responded in the 2016 Report
    Analyse the terminology which the Company uses, i.e. why it is a “social responsibility and corporate sustainability report” and not a “social report,” “sustainable development report” or “corporate social responsibility report” Will be responded in the 2016 Report
    Disclose the total size of land under electricity transmission lines instead of the size of land only under OHL towers Will be reviewed in the preparation of the 2016 Report
    Disclose information about work with contractor organisations in terms of the Company’s requirements for them to manage environmental risks and health and safety risks Will be reviewed in the preparation of the 2016 Report
    Include information about staff turnover by categories of employees (industrial, administrative, managerial) Will be reviewed in the preparation of the 2016 Report
    Disclose the number of employees who have taken professional re-training courses by training place, i.e. at higher education institutions and in corporate training centres Will be reviewed in the preparation of the 2016 Report
    Disclose information about co-operation with the institutions of higher education in conducting cultural and sports events Will be reviewed in the preparation of the 2016 Report
    Explain the reasons of such a significant reduction of the accident rate (by 22%) Responded in the 2015 Report
    Discrepancies should be removed from the text: on the one hand, the Report says that 2.1% employees are covered by collective agreements; on the other hand, it says that there is no collective agreement in the Company Responded in the 2015 Report
    Clarify what industry tariff agreement regulates the Company’s transition to the semi-annual indexation of wages because two agreements were signed in 2014 (about amendments and about extension) Responded in the 2015 Report
    Make amendments to the text of the Report: the Council for Professional Qualifications in the Electric Power Industry was established by the National Presidential Council for Professional Qualifications (NCPC), and it would be wrong to refer to the Ministry of Energy in the Report Responded in the 2015 Report
    Reference to the Russian Birds Conservation Union as a participant of the oriental stork conservation project should be removed from the Report because the Union did not take part in this project in 2015 Responded in the 2015 Report
    Future reports should disclose not only information about obtaining the certificates for the environmental management system (EMS) but changes in the indicators that reflect the EMS improvements, changes in the number of auditors’ critical comments, and the like Will be reviewed in the preparation of the 2016 Report
    Draw up a methodology for certification of the manufacturing process (i.e., move from certification of products to certification of manufacturing process) Will be reviewed in the preparation of the 2016 Report
    Disclose information about the average length of employees’ service in the Company Will be taken into account in the 2016 Report

My Report

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