ESG

Transneft is fully aware of the importance of consistent work and improving information disclosure in the field of sustainable development.

To mitigate the risks of the Company's activities in the field of environmental, social and corporate governance, the management carries out active work to develop and improve existing sustainability practices and information disclosure.

For quick search for reports, policies and indicators, we recommend using the ESG indicators reference guide with built-in links:

Quick Reference ESG Databook for Transneft Group

Core Areas of Activity:

corporate governance improvement;
energy saving;
environmental impact reduction.

Reducing the Risks of Adverse Climate Change and Environmental Pollution

In the medium term, the main contribution to mitigating the risks of adverse climate change and reducing environmental pollution will be achieved through:

lower specific energy consumption in oil and petroleum products pumping by 0.5% a year within the period of 2021-2026 as a result of energy saving measures,
reduced adverse impact of operational processes on atmospheric air with a planned reduction of specific emissions by 0.7% in 2021 as a result of a set of technical measures;
maintaining the normal quality level of wastewater treatment as a result of implementation of a set of water conservation actions to ensure the technical condition of treatment facilities in full compliance with the requirements of environmental legislation.

ESG Activities in 2020

As part of the ESG risk management and improvement efforts for sustainability information disclosure, the following actions were implemented in 2020:

completion of objects fully eliminating the discharge of polluted waters into surface water bodies at Company’s facilities,
Transneft carried out work on providing technical assistance for third-party organizations to eliminate consequences of the emergency accidents related to the spill of petroleum products, including:
- participation in a third-party clean-up operation to eliminate fuel spill in the Ambarnaya River (Norilsk, Krasnoyarsk Territory),
- assistance with specialised vehicles to Gorky Railroad in the recovery works after the crash of train with petroleum product cargo in Vladimir Region.

At the same time, no incidents that caused significant environmental damage or fatalities were registered at the facilities of Transneft in 2020,

sustainability dialogue was kept on between the Company’s management, investor relations officers and members of the investor community. Key trends in this area and the investors' proposals to improve sustainability information disclosure were discussed with Transneft representatives,
sustainability presentation materials are included in the presentation for investors published on the Company's website.

Dialogue with Specialised ESG Rating Agencies

We maintain a dialogue with agencies specialising in analysis of companies' activities in the field of sustainable development, specifically on the following issues:

disclosure of ESG indicators, answers to analysts’ questions;
discussion of indicators calculation methods;
analysis and comments on agency publications;
comments to agencies on events covered by the media.

In the reporting year, Transneft Group activities were analysed in detail by the largest and most well-known agencies assessing environmental, social and corporate governance (ESG rating agencies).

Transneft Sustainability Ratings

Item No.	Agency	Transneft ESG Rating
1	Sustainalytics	ESG score 53 (raised in 2020) Risk score 26.3 (medium risk) (improved in 2020)
2	ISS	C- (raised in January 2021)
3	SAM	26 (raised in November 2020)
4	FTSE	2.7
5	Bloomberg	42.1
6	Refinitiv	B- (see “ESG score” in terminal)
7	RAEX-Europe	B - rating band (based on methodology newly introduced in 2020)

In recognition of successful application of the best sustainability practices complying with internationally accepted standards, Transneft preferred shares in 2019 were included in the FTSE4Good index, which is calculated by the FTSE agency and which is used as a guide when compiling investment portfolios by ESG investors. Upon 2020 review, Transneft preferred shares remained in the index.

Based on the Company’s performance, in 2020 two ESG agencies (Sustainalytics, ISS and SAM) raised Transneft ratings.

ESG Development Plans

The Company plans to provide and disclose information to ESG agencies considering the current Russian regulation on the disclosure of non-financial indicators amid increasing regulatory authorities’ attention to sustainability information disclosure.

It is planned to state the position and disclose the list of existing measures and plans that contribute to combating climate change, along with continual improvement of the sustainability information disclosure.

The Company plans to provide the investor community and users concerned with detailed information about the results of work in the field of sustainable development, to review the proposals received following the discussion of these issues with the investor community members and stakeholders.

In the area of corporate governance, an external assessment of the Board of Directors will be held in 2021.

Policies for Sustainable Development implemented by Transneft in business operations

Policy Description	Link
Energy Efficiency Policy	+ (reference)
Industrial Waste Reduction Policy	+ (SDR, page 123)
Water Resources Conservation Policy	+ (SDR, pages 122-123)
Biodiversity Conservation Policy	+ (SDR, pages 124-125)
Occupational Health and Safety Policy	+ (reference)
Transneft personnel management policy aimed at training and development	+ (reference)
Equal Opportunities Policy	+ (SDR, page 144)
Anti-Corruption Policy	+ (ru reference)
Code of Ethics, Conflict Resolution Policy	+ (ru reference)
Intellectual Property Protection Policy	+ (SDR, page 88-89)
Note: Transneft declares in its 2019 Sustainable Development Report (page 144) the compliance with the basic sustainable development principles in the field of labor relations, including: promotes equal opportunity in hiring and setting salaries, and seeks to prevent all forms of discrimination and pressure in the workplace regardless of race, gender, nationality, language, origin, age, religion and sexual orientation, as well as property, family and social status and position; prohibits use of child labour; prohibits inhumane treatment of employees, use of forced and compulsory labour, use of violence against employees; ensures compliance with occupational health and industrial safety requirements; guarantees benefits for socially vulnerable groups in accordance with the law; undertakes to comply with labour law in relation to working hours and rest; creates conditions for personal and professional development of employees; undertakes to conclude labour contracts with all employees of the Group, having binding legal force and written in a language the employee in question understands; provides a decent salary level; excludes the occurrence of discrimination in the field of labour remuneration (salary) of the personnel, ensuring compliance with the Labour Code of the Russian Federation; respects the rights of employees to collective bargaining; respects the right to create labour unions and does not prevent employees from entering them; promotes the development of volunteering movement among employees.