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, benchmarking the Russian and foreign companies’ performance and best practices.

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

ESG investors are capital providers paying careful attention to responsible investment (environmental factors, occupational safety, social responsibility, corporate governance).

Main Work Streams

• 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 2019-2024 as a result of energy saving measures,
• reduced adverse impact of operational processes on atmospheric air with a planned annual reduction of specific emissions by 1% in 2019-2020 and by 0.7% in 2021 as a result of a set of technical measures;
• complete elimination of polluted waters discharge into surface water bodies by 2020 as a result of implementation of a set of water conservation actions.

ESG Activities in 2019

As part of the corporate governance and sustainability information disclosure improvement efforts, the following actions were implemented in 2019:

• The number of independent directors represented in the Committee on Strategy, Investments and Innovation increased from 1 to 2,
• On 20 September 2019, the Transneft Board of Directors approved the Corporate Governance Code in accordance with the Corporate Governance Code recommended by the Bank of Russia. The document is published on the Company's website in Russian and English,
• Transneft Anti-Corruption Policy was updated and posted on the website; The Code of Ethics and Conduct for Employees of Transneft and Transneft Subsidiaries was published,
• at the end of 2019, the Transneft Board of Directors approved the Transneft Charity and Sponsorship Policy,
• Sustainability dialogue was organised 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, specifically during a series of meetings in continental Europe attended by an independent director,
• Sustainability presentation materials are included in the presentation for investors published on the Company's website

Dialogue with Specialised ESG Rating Agencies

We have started 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

In recognition of successful application of the best sustainability practices complying with internationally accepted standards, Transneft preferred shares in June 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 December 2019 review, Transneft preferred shares remained in the index.

Based on the Company’s performance, in 2019 two ESG agencies (Sustainalytics and RA Expert) raised Transneft ratings. Furthermore, another ESG agency (ISS) has raised its rating in January 2020.

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 is planned to be held in 2020.