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Social responsibility and corporate sustainability report 2015
RU

Minutes of Hearings on the Draft Report

MINUTES
of Public Hearings on the 2015 Social Responsibility and Corporate Sustainability Report of Federal Grid Company of the Unified Energy System

Hearings were held in: Moscow, 9/11 Bolshoy Nikolovorobinsky pereulok

Date and time: 22 April 2016, 12:30 – 14:30.

AGENDA:

1. Georgy Reshetnikov on “2015 Social Responsibility and Corporate Sustainability Report of Federal Grid Company: goals, standards, structure, key topics, and major changes.”

2. Natalia Ozhegina on “Federal Grid Company’s personnel management system and social projects in 2015.”

3. Nikolay Shvets on “Environmental acceptability of Federal Grid Company’s operations. Development of import substitution in the context of sustainable development.”

4. Speeches of stakeholders and experts; discussion of the draft report and recommendations about its contents.

PARTICIPANTS:

Federal Grid Company

1. Natalia OZHEGINA – Deputy Chairperson of the Management Board

2. Nikolay SHVETS – Deputy Chairman of the Management Board

3. Dmitry KLOKOV – Director for External Communications

4. Yulia KUZNETSOVA – Director of the Personnel Management and Organisational Planning Department

5. Georgy KOLESNIK – Deputy Director of Department – Head of Import Substitution and Local Content of Electrical Manufacturing

6. Georgy RESHETNIKOV – Deputy Director of Department for External Communications and Government Relations

7. Rustam GADZHIEV – Chief Expert of Industrial and Technical Section at the Physical Assets Management Department

LLC Nexia Pacioli Consulting

8. Yulia YEMELIANOVA – Deputy CEO, Moderator Stakeholders

9. Marina ALEXEEVA – CEO, LLC EcoPromSystemy

10. Irina VOLKOVA – First Deputy Dean of the Management Faculty; Deputy Director, Professor of the Global Economy and Global Politics Faculty, Dr. Sc., senior lecturer at the Institute of Pricing and Regulation of Natural Monopolies

11. Vyacheslav GRECHIKHIN – Deputy Principal, Moscow University of Power Engineering

12. Alexander GUSEV CEO, media holding Ruskabel

13. Damir GUBAEV – Deputy Principal for Integration with Industrial Entities, Kazan State University of Power Engineering

14. Elena DOLGIKH – Member of RUIE Expert Council; CEO of Agency SGM

15. Elena ZUBAKINA – Director for Development, Russian Birds Conservation Union

16. Anton ZUEV – Chief Specialist of the Office of Social and Labour Relations in the Electricity Industry, RaEl Association

17. Alexander IGNATOV – Vice President for Finance, Non- Profit Partnership “Global Energy”

18. Alexey KNIZHNIKOV – Programme Director for Environmental Policy of the Fuel and Energy Complex, World Wide Fund for Nature (WWF Russia)

19. Alexander MARTYNOV – Director, Interfax-ERA

20. Maria RYABOVA – Leading analyst of the Centre for Strategic Studies, International Institute of Energy Policy and Diplomacy of MGIMO University of the Russian Ministry of Foreign Affairs

21. Alexander SLAVINSKY – Chairman of the Board of Directors, Massa LLC – “Isolator” Plant

22. Ekaterina SHERMAZANOVA – Assistant to Executive Director of the Russian Chess Federation

The participants received the agenda, list of attendees and speakers’ presentations before the meeting. One week before the meeting, a draft report in the electronic form was shared with all the participants.

The moderator, Yulia Yemelianova, welcomed the audience and described the objectives and procedure of the meeting.

ITEM 1

Georgy Reshetnikov spoke on “2015 Social Responsibility and Corporate Sustainability Report of Federal Grid Company: goals, standards, structure, key topics, and major changes.”

The speaker described the context / background of the Report preparation process and the 2015 results, spoke about the updated matrix of key topics / aspects, and offered arguments in favour of the priority topic for the Report, “Improvement of efficiency is the mutual interest of the Company and its stakeholders.” Mr. Reshetnikov also described the structure of the 2015 Report and how comments of the participants in the earlier dialogues were taken into account.

ITEM 2

Natalia Ozhegina spoke on “Federal Grid Company’s personnel management system and social projects in 2015.”

The speaker described the strategic goals and priority areas in HR management, key HR management objectives that were achieved in 2015, the Company’s staff composition, events and outcomes of the personnel training and development, the Company’s participation in evaluation and testing of professional standards, youth policy, and retirees and veterans support policy. She also spoke about the social package, including the corporate housing programme that demonstrated good results.

The audience asked questions to confirm understanding and clarify issues.

ITEM 3

Nikolay Shvets spoke on “Environmental acceptability of Federal Grid Company’s operations. Development of import substitution in the context of sustainable development.”

Nikolay Shvets’ presentation covered the following issues: key areas in the implementation of the corporate environmental policy; key results of actions targeted at environmental safety of the Company’s operations; implementation of the environmental management system; progress in utilisation of trichlordiphenyl-containing equipment; the results of R&D in the development of a fire protection system for oil transformers (the use of water mist technology); bird protection; recognition by independent experts; awards for implementation of environmental policy; and environmental protection plans for 2016.

While speaking about import substitution, Mr. Shvets covered the following issues: threats to the development of the Russian electrical manufacturing industry; tools for support of this industry that Federal Grid Company used in 2015; methodology for assessing the level of localisation of domestic electric engineering products; incentives for an increase of output by the electrical manufacturing industry via using components; development of export-oriented manufacture of electrical products, and problematic issues related to implementation of the import substitution programme.

The audience asked questions to confirm understanding and clarify issues.

ITEM 4

Speeches of stakeholders (recommendations/ proposals/inquiries).

Elena Dolgikh suggested that 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. Ms. Dolgikh recommended paying more attention to the description of non-financial risks. She also recommended analysing the terminology used by the Company, i.e. she asked why it is a “social responsibility and corporate sustainability report” and not a “social report,” “sustainable development report” or “corporate social responsibility report.”

Alexander Martynov pointed out that the Report should disclose the total size of land under electricity transmission lines instead of the size of land only under OTL supports.

Marina Alexeeva said the Report should disclose information about work with contractor organisations in terms of the Company’s requirements for them to manage environmental risks and labour protection risks. She recommended disclosing information about staff turnover and explaining what categories of employees (industrial, administrative, managerial) are underlying this turnover, and why.

Damir Gubaev recommended disclosing the number of employees who have taken professional re-training courses by location, i.e. at the tertiary institutions and in the corporate training centres. He noted the importance of disclosing information about cooperation with the institutions of higher education in conducting cultural and sports events. He also said the Company should explain the reasons of such a significant reduction of the accident rate (by 22%).

Anton Zuev focused on the need to remove discrepancies: 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. The Report should 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). He noted the importance of making 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 here.

Elena Zubakina said 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.

Alexey Knizhnikov noted the progress in the preparation of the Company’s public non-financial statements. He recommended that 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.

Alexander Slavinsky pointed to the need to draw up a methodology for certification of the manufacturing process (i.e., move from certification of products to certification of manufacturing process). He also said it is important to disclose information about the average length of employees’ service in the Company.

Moderator Yulia Yemelianova thanked the participants for their active contribution to the dialogue and expressed hope that the Company would review all the proposals and take them into account wherever possible.

Head of the working team for preparation of the 2015 Social Responsibility and Corporate Sustainability Report of Federal Grid Company,
Deputy Director of the Department for External Communications and Government Relations

Georgy Reshetnikov

Moderator, Deputy CEO of Nexia Pacioli Consulting, Partner

Yulia Yemelianova

My Report

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