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Main page For Investors and Shareholders Rosneft: contributing to implementation of UN Sustainable Development Goals
Rosneft: contributing to implementation of UN Sustainable Development Goals

Rosneft: contributing to implementation of UN Sustainable Development Goals

MESSAGE FROM THE CHAIRMAN
OF THE BOARD OF DIRECTORS
OF ROSNEFT OIL COMPANY

 

Gerhard Schr&ouml
Chairman of the Board of Directors

In the recent years the Company strengthened its role in the global energy market and demonstrated excellent performance of its core operations due to efficient project execution, application of new technical solutions, and continuous efficiency improvements, which had a positive impact on investor perceptions and was reflected in the increased Company value.

However, value for the Company cannot be created without creating value for the society. The theme of sustainable development has up to these days been a consistent theme in my political life. In my younger years, and later on as Chancellor of the Federal Republic of Germany I consistently pushed the agenda of business accountability to society, not only by virtue of value creation, by also by caring for the environment, societal well-being and harmonious development.

As participants of the UN Global Compact, we diligently work for meeting the growing global energy demand which is a prerequisite for harmonious socioeconomic development and improved living standards.

Therefore I am pleased to introduce the vision and guidelines for the Company’s sustainable development, which reflect our responsible approach and contribution to achieving the 17 Sustainable Development Goals of the United Nations that are integrated in strategic and policy documents of the Company.

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER,
CHAIRMAN OF THE MANAGEMENT BOARD
OF ROSNEFT OIL COMPANY

Igor Ivanovich Sechin
Chairman of the Management Board,
Chief Executive Officer

As a responsible producer and a participant of the global energy market, the Company is focused on the rational use of natural resources and implements large-scale upstream projects, refinery upgrades, production of modern environment-friendly fuels and minimization of its environmental footprint.

While executing the Strategy “Rosneft-2022” the Company implements initiatives aimed at entering the first quartile in the area of health, safety and environment, combatting climate change, developing employee potential, and contributes to regional socioeconomic development.

High agility and flexibility of our business model, establishing partnerships in integrated production and marketing businesses on a global, national and regional levels ensure the Company can achieve solid results despite volatility in commodity markets.

This document is another proof that business responsibility is one
of the Company’s core values and it complements the report and policies in the area of sustainable development that we publish regularly for the purpose of informed and sustainable dialogue with our stakeholders.

Rosneft-2022 Strategy contributes to achieving
the Sustainable Development Goals of the United Nations

The Board of Directors of Rosneft Oil Company approves strategic guidelines and Public statement “Rosneft: contributing to implementation of the UN Sustainable Development Goals”

Sustainable Development Goals of Strategic Priority

 

Sustainable Development Goals integrated in current operations

 

Acting within execution of the Rosneft-2022 Strategy, the Company is guided by the principles of responsibility and works for the benefit of its shareholders and other stakeholders. Starting with 2010, Rosneft has participated in the UN Global Compact, that urges its members to contribute to achieving the UN Sustainable Development Goals (SDGs).

The Board of Directors of Rosneft Oil Company has approved the following UN SDGs of strategic priority for its core businesses:

  • Good health and well-being;
  • Affordable and clean energy;
  • Decent work and economic growth;
  • Climate action;
  • Partnerships for the goals.

The Company’s operations directly contribute to achieving the UN goals which is also supported by Rosneft’s participation in various projects and initiatives aimed at improving living standards in the regions of our operations, and developing public health services, science and education, and ecology.

The Company’s mission, values, objectives and strategic guidelines of sustainable development are aligned with the UN Sustainable Development Goals.

Sustainable Development Goals of the United Nations (approved by the UN General Assembly Resolution on 25 September, 2015) aim to achieve significant progress in meeting global economic, social and environmental challenges. 

Sustainable Development Goals of Strategic Priority

 

3.1. Protecting health and ensuring safe working environment. Promoting labour safety of suppliers and contractors

The Company aims at achieving leading results in accident-free operations and ensuring the safety of Rosneft employees and contractors. Before the end of 2022, we intend to enter the first quartile of the international peer group with regard to health, safety and environment performance.

The Company maintains an effective integrated HSE management system which aligns with the OHSAS 18001 international standard, and is externally audited. We use internationally recognized indicators (including LTIF and PSER Tier 1) to measure safety performance. Both employees and contractors are included in these indicators from the start of 2018. Health and safety indicators are included as part of the management KPIs. Company HSE performance is monitored quarterly both at the Board level, and at the management HSE Committee.

Leaders at all levels provide clear HSE direction by following consistent Company Leadership Principles, priority of human life, health and safe working environment. Employees and contractors, wherever they work, must adhere to our Golden Safety Rules, and act to stop the job if it endangers human life or health.

The Company has a Programme for enhancing safety culture and conscious safety leadership. The programme’s main achievement is reduced fatalities frequency among Company employees and contractors.

3.2. Environmental Policy and Commitments

Preserving the environment for future generations is an integral part of Rosneft corporate culture and business principles. The Company aims at becoming the leading performer in minimizing the environmental footprint of its operations and in sustainability of its production facilities. In 2018-2022 our “green” investments will total RUB 300 bln.

The Company’s environmental targets up to 2022 include –

–         Reducing GHG emissions with a view to combatting climate change;

–         Minimizing the environmental footprint through application of best-in-class available environmental technologies, waste recycling, effective waste water treatment, and consistent implementation of environmental investment projects and initiatives;

–         Taking action for ecosystems and biodiversity protection and natural resources recovery, including land remediation.

The Company prioritizes preventive action with regard to emergency situations. The corporate integrated HSE management system is aligned with the ISO 14001 international standard. Environmental risk management is aligned with the Company’s internal control and HSE risk management systems.

In the past five years, the Company’s “green” investments exceeded RUB 230 bln. In 2017, the area of legacy oil contaminated soil reduced by 7% from the previous year, polluted discharge and oil spills dropped by 10% and 11% respectively, and the volume of treated waste exceeded the volume of waste generation by 33%.

3.3. Risk and incident management

The Company aspires to accident-free operations and ensuring the safety of its employees and contractors.

The Company maintains an HSE risk management system which establishes a uniform streamlined framework for identifying hazards and assessing risks that may bring harm to employees and contractors, and actions that eliminate or mitigate the identified risks. The Company draws lessons from each and every incident and accident. Corporate procedures for accident investigation are primarily aimed at identifying the root causes and preventing similar accidents in the future.

3.4. Road safety

The Company participates on an ongoing basis in activities aimed at ensuring road safety and carries out initiatives to prevent road accidents.

Our employees and contractors drive almost 2 billion kilometres annually due to the scale of the Company’s operations and the magnitude of distances. The Company has adopted a framework for its road safety management system which also includes contractors and subcontractors and sets standards for drivers, vehicles, and equipment. At the end of 2017, 85% of vehicles were equipped with in-vehicle monitoring systems and 54% of vehicles were equipped with dash cams.

The Company uses indicators, including SVAR and RTAF, to benchmark transportation safety performance and maintains a road safety communications program which includes regular safety awareness campaigns.

3.5. Developing favourable social environment

Rosneft acts in compliance with the highest standards of social responsibility with a particular focus on health protection and comfortable working conditions, support and promotion of healthy lifestyle, improved housing and living standards for Company employees and their families, and financial support of veterans and retired people. The Company also contributes to developing favourable social environment in the regions of our operations.

The Ministry of Energy of the Russian Federation recognized Rosneft as the company of the highest social responsibility in Russia’s oil and gas industry for two years running (2017 and 2018). Our contribution to development of favourable social environment focuses on:

–       Continuous improvement of social and living conditions at  our production sites, including in remote regions and areas with severe climate conditions;

–       Emergency medical aid at Company facilities;

–       Comprehensive housing programme including corporate mortgage loans;

–       Corporate pension programme and veteran social support project;

–       Insurance programme: 274 thousand people are insured with voluntary health insurance policies, and 295 thousand people are insured with voluntary accident insurance programmes.

The Company applies uniform standards of medical support and emergency care at its production facilities. Starting with 2017, Rosneft has put in place a comprehensive Programme for using ambulance aircraft for employee evacuation from its production facilities and a corporate Plan for on-site emergency medical response. We focus on providing our employees with timely medical treatment of high quality, health resort and preventive treatment. In 2017, over 65 thousand Company employees received treatment at health resorts of the Krasnodar region in the south of Russia.

Rosneft renders significant support to health care services and development of medicine in the regions of its operations.  The Company provided financial support to the following projects:

–       Construction of a unique multifunctional health care centre in Gelenzhik in the south of Russia, equipped with cutting edge facilities (opened in February 2018);

–       Construction of a new building of the children’s regional hospital in the city of Saratov in the Volga-Urals region of Russia;

–       Acquisition of modern medical equipment for the Krasnoyarsk regional hospital, Turukhansk regional hospital, Igarka city hospital, Krasnoyarsk interdistrict hospital №20, Krasnoyarsk children’s antituberculous early treatment centre

–       Establishment of a comprehensive emergency response health care system in the Far North. The system includes medical centres in the Vankor cluster, the Igarka aeroport, the Igarka city hospital and Krasnoyarsk regional hospital  #1.

Following our intent to support sports and promote healthy lifestyle, Rosneft holds Winter and Summer Spartakiada Games on an annual basis. In 2017, 25 thousand employees from 92 Company subsidiaries took part in Spartakiada Games taking into account the preparatory, team selection period.

The Company supports development of professional and amateur sports. Rosneft sponsors the CSKA hockey club (Moscow), the Arsenal football club (Tula) and assists in holding competitions in the art of self-defence.

Please see Section 1.2 for further details.

7.1. Increasing Company energy efficiency in all operating segments

The Company is one of the largest consumers of fuel and energy resources: its share in the country’s energy balance exceeds 4%. Since 2009 Rosneft has been implementing the Energy Saving Programme. The programme aims at reducing energy consumption and improving economic, environmental and operating performance.

The Board of Directors controls achievement of energy efficiency targets in the reporting period which are included in top management KPIs.

Since 2013 the Company has adopted and improves an energy management system which is aligned with the international ISO 50001 standard. The corporate Policy on energy efficiency and energy saving is in place. In 2017, investment in the Energy Saving Programme amounted to RUB 1.6 bln, while energy savings exceeded RUB 9 bln (4.9% of the Company's overall energy costs).

7.2. Taking action conducive to improved energy efficiency when using  Company products

Most greenhouse gas emissions associated with the use of products manufactured by the oil and gas industry relate to the consumer use. In order to minimize the environmental footprint and to combat climate change the Company is consistently:

–         commissioning new and upgraded refinery facilities (over 30 units have been commissioned), expanding tthe list of low-carbon products with improved fuel efficiency metrics;

–         communicating better environmental and operating characteristics of produced fuels and new products release;

–         changing its product mix in favour of environmentally friendly products, increasing natural gas production and its share in the energy mix.

In 2013-2017, Company gas output increased from 38.2 Bcm to 68.4 Bcm per annum– the highest growth rate in absolute terms among the Russian independent producers. Beyond 2020, gas output should exceed 100 Bcm per annum.

The Company is working on increasing the level of the associated petroleum gas (APG) utilization within implementation of the Gas investment programme. In the last 5 years Rosneft invested over RUB 100 bln in APG utilization technologies, which is comparable to “green energy” investments of global majors.

7.3. Ensuring access to energy and reliable energy supplies to consumers, including the emerging markets

The Company is a prominent participant in the global energy market, and acknowledges its role and responsibility for timely, reliable energy supplies to consumers, equally affordable and at competitive prices.

The Company has established a diversified system of energy supplies accessible for consumers with different levels of economic development, in compliance with modern energy security requirements, and offering a wide range of cooperation options, including tender sales and long-term contracts. We focus on increasing hydrocarbon production and improving our incremental product mix. Rosneft’s share in the global crude oil production amounts to 6%.

7.4. Innovation activities

Leadership in innovation and R&D activities is an important growth driver for the Company. Rosneft innovation effort includes development and application of new products and technologies, and business process management know-how.

The Company has adopted and regularly updates the Innovative Development Programme aimed to make the Company one of the industry technology leaders. In 2017, the programme investments amounted to RUB 49.2 bln, including R&D investments of RUB 29.9 bln.Priority activity areas include:

–       elaboration of new technologies, equipment and materials with a view to increasing energy and operating efficiency, and developing new types of reserves;

–       development of new products, improving the Company product mix;

–       process-focused and other innovations aimed at incremental operational safety and improved business efficiency;

–       introduction of smart production processes and development of digital technologies including dedicated software.

In the last three years, confirmed economic benefit from piloting new technologies and introducing results of dedicated innovation projects/technologies exceeded RUB 18.7 bln.

The Corporate R&D and project design complex consists of 28 scientific-research and design institutes, employing over 13 thousand people, including more than 700 employees with Ph.D and doctorate degrees. Institutes of the Corporate R&D and project design complex implement project feasibility studies, engineering design of field development and infrastructure, well engineering and drilling technical support, and elaboration of proprietary digital solutions, including digital field, digital plant, big data and artificial intelligence. Institutes of the Corporate R&D and project design complex have created a number of unique technologies, including an Arctic catalyst enabling fuel to work at temperatures minus 47 degrees Celsius, unique biotechnology for eliminating oil pollution at below-freezing temperatures, polymer proppant for hydraulic fracturing and a range of proprietary high-tech software. 

8.1. Contributing to  sustainable development and diversification of the national economy

The Company contributes to sustainable development and technical progress of the economy, creation  of new industries, highly productive jobs and value-adding products through a transfer to long-term contracts with suppliers and contractors, as well as a system of anchor orders.

The Company's programme of import substitution and localization of equipment manufacturing provides for development of related industries and gradual localization of foreign equipment production (up to 70% by 2025), including partnerships with leading world manufacturers.

8.2. Protecting employee health and safety, contributing to health and safety of contractors and suppliers

Please refer to Section 3.1

8.3. Creation of favourable social environment

Please refer to Section 3.5.

8.4. Supporting family and childhood

The Company ensures social protection for employees and their families. Female employees, following the end of their maternity leave, have a guaranteed work place and smooth integration in the corporate team.

In group subsidiaries payment for the period of temporary disability in connection with pregnancy and childbirth is based on an average salary calculation.

The Company provides assistance for construction of social and health care facilities for children within the framework of its social and economic partnership with the regions.

8.5. Freedom of association and collective bargaining

The Company supports freedom of association, acknowledges the integrity of the employees' right to conclude collective agreements, and the right of every employee to collective representation of his/her interests, including trade unions. These norms are stipulated in Rosneft’s Code of Business and Corporate Ethics.

More than 45% of Company employees are members of trade unions. The Company management maintains engagement with the Interregional trade union of Rosneft, with the Standard collective agreement template in place. 

Representatives of trade unions carry out independent monitoring and assessment of industrial safety and labour protection at the Company's sites through their authorized representatives with regard to health and safety.

8.6. Productivity growth and efficiency improvement

The Company focuses on improving operational efficiency, increasing productivity and creating incremental added value.

A comprehensive set of measures aimed at productivity growth has been elaborated and put in place, which includes steps to raise profitability and cut costs. Efficiency improvement programmes designed for specific business streams are under way. Targets related to productivity growth and cost cuts are included in the key performance indicators for assessing Company top management activities (KPIs).

8.7. Education as a means of  integrating young people into the energy sector

Being a responsible employer and a key industry player, the Company implements a policy focussed on ensuring a steady inflow of professionally trained young specialists from among the best graduates.

The corporate system of continuous education "School - Higher school - Enterprise» is a key element of the corporate youth policy. The Rosneft-classes project of pre-university training and professional orientation is implemented in 25 regions of the Russian Federation. The total number of project participants exceeds 2.6 thousand people in 63 schools, 56 residential areas and 26 regions of Company operations.

Rosneft provides opportunities for young people to get their first professional experience through internship and recruitment programmes as part of the Company’s university engagement. In 2017, the Company provided internship opportunities for over 6.5 thousand students. Every year, more than 1 thousand graduates join the Rosneft team.

8.8. Establishing sustainable procurement system along the entire value chain

The Company aims to cooperate with suppliers and contractors that are interested in sustainable development of their supply chains, and application of new technological and innovative solutions.

The Company expects its suppliers and contractors to adhere to the principles stipulated in the Code of Business and Corporate Ethics of Rosneft which are aimed at observing human rights, health and safety, environmental protection, prevention of corruption, fraud and conflict of interest, statutory compliance and promotion of economic and social development.

8.9. Increasing Company energy efficiency in all operating segments

Please refer to Section 7.1.

8.10. Creating decent living and labour conditions in remote regions

The Company commits to ensuring decent working and leisure conditions when conducting operations in remote regions.

At the end of 2017, 35 thousand Company employees and contractors were living in 97 field and shift camps. The Company has established uniform standards for design, construction, operation and management of field camps and field support bases for crew, team, and shop personnel. Investment in construction and development of field camps amounted to RUB 6.2 bln. The Company carries the costs for comprehensive servicing and maintenance of on-site production and social facilities (RUB 8 bln in 2017).

13.1. Risks and opportunities related to climate change

The Company identifies and assesses risks and opportunities inherent in its business, as well as the activities of its suppliers and contractors. The approach of the Company management and the flexibility of its business model provide high adaptability to possible changes in the energy landscape. Our medium-term goals are in line with the growing society expectations and are aimed at:

–         Increasing the natural gas production, the use of which can significantly reduce greenhouse gas emissions as compared with other fuels;

–         Modernization of refineries, increasing output of products in demand and feedstock for petrochemicals;

–         Reducing emissions and increasing efficiency at the Company's production facilities;

–         Developing and producing new products that allow consumers to reduce emissions and improve energy efficiency.

Rosneft is developing various scenarios of global energy evolution. Our strategic planning and engagement in consideration of industry documents takes into account risks and opportunities for the Company and the energy sector of the Russian Federation associated with climate change and transition to the low-carbon energy.

13.2. Improving Company energy efficiency in all operating segments

Please refer to 7.1

13.3. Taking action conducive to improved energy efficiency when using Company products

Please refer to 7.2

13.4. Environmental policy and commitments

As a participant of the UN Global Compact the Company strives to reduce the impact from its operations on climate change. The Rosneft-2022 Strategy provides for reducing greenhouse gas emissions. The Company implements the Gas investment programme and the Energy efficiency programme which ensure effective reduction of greenhouse gas emissions with the forecast emissions prevention  in the volume of more than 8 mln tonnes of CO2 equivalent by 2022.

The Gas investment programme focuses on achieving the reduction of associated petroleum gas flaring to less than 5%, in line with the Russian Government target. We will reach this target by applying a comprehensive approach to field development and establishing infrastructure for gas gathering, utilization and transportation to consumers, as well as constructing gas re-injection facilities.

13.5. Innovative activities

The Company implements innovative projects focused on developing technologies aimed at using renewable energy for power supply of oil and gas producing enterprises, as well as technologies and equipment for treating and using natural gas and associated petroleum gas, including for power generation. The Company specialists have received a number of patents in that respect.

17.1. Participation in global initiatives

The Company is a participant of the UN Global Compact, shares the principles of the Social Charter of Russian Business and supports the Anti-Corruption Charter of Russian Business. The Company is also supportive of general principles and values of the Universal Declaration of Human Rights, and the Declaration of the International Labour Organization on Fundamental Principles and Rights at Work. We support initiatives aimed at sustainable development, higher transparency, combating corruption, respecting the fundamental human rights, closing the inequality gap, and protecting the environment.

17.2. Participating in sustainable energy development

The Company acknowledges the importance of sustainable development of the global energy sector and responsible behavior of key producers. This includes sufficient investment needed for the resource base renewal, timely and efficient reserve development, and reliable supplies to consumers in developed and developing countries. Given modern challenges, creating obstacles to producers’ participation in the global energy market, as well as building barriers barring investment in effective energy projects is unacceptable.

The Russian oil and gas sector on the whole and the Company in particular continue to increase supplies to the global market responding to the growing demand from the global economy. The Company takes part in building dialogue aimed  at sustainable development of the energy sector, in particular, through:

–       changes in the regulatory environment, elaboration of fiscal initiatives with a view to improving the efficiency of resource base development, crude oil refining, and petrochemicals;

–       creation of integrated supply chains, new capacities and technological solutions;

–       enhanced partnerships with domestic and international industry participants, including cooperation in the area of health, safety and environment (with BP, Equinor, and ExxonMobil).

17.3. Effective partnership with state organizations, businesses and society

The Company is committed to an open, constructive dialogue and responsible cooperation with state organizations, businesses and society. In this dialogue we comply with the applicable legislation and high standards of the corporate and business ethics. This helps to enhance the Company's opportunities  and promotes creation of favourable conditions for developing its business. Key areas of engagement include development of the federal and regional laws and the industry normative base, promotion of key initiatives for sustainable development of the industry and the regions.

Since 2007 the Company has been conducting annual round-table workshops in core regions of its operations. The workshops centre on priorities in the development of the Group's subsidiaries, environmental protection, industrial safety and labour protection, the Company's contribution to developing the regional economy and infrastructure, social and charity matters, and support for science and education.

Sustainable Development Goals integrated in current operations 

1.1. Contributing to regional socioeconomic development and better well-being

Rosneft is the largest public oil and gas company in terms of crude oil reserves and production and plays a strategic role in the Russian energy industry and the national economy. The Company accounts for 4.7% of Russia’s GDP, 7.5% of the country’s investments and 14.4% of revenues to the federal budget.

Company operations contribute to sustainable development of regions and related industries, creation of added value and workplaces across the entire value chain, better well-being and sustainable social development.

Rosneft is one of the largest employers in Russia. In 2017, our average headcount amounted to 302.1 thousand people.

1.2. Social responsibility and social investments

The Company is committed to the principles of high social responsibility, and takes a comprehensive approach to social investments. We support programmes focused on promoting health care, education, fitness and sports, science and technology, and social equality. The Company establishes partnership relations with the regions of its operations by concluding agreements with regional authorities and participating in charity projects.

The Company is consistently increasing its social investment. In 2017, our investments in the social sphere increased almost by 30% and amounted to RUB 37.4 bln. In 2017, 78 agreements with authorities in the regions of Company operations were in force. The overall financing amounted to RUB 6.7 bln, including investments in developing health care, infrastructure and sports. In 2017, our contribution to charity projects amounted to RUB 2.7 bln, while sponsorship support equaled RUB 1.2 bln.

2.1. Meeting energy demand

Responsible business conduct is one of the Company's priorities, including equal access to products of guaranteed quality and offered at a fair market price.

The Company’s infrastructure, a well-developed network of retail stations and oil depots, participation in exchange-based trading system provide consumers with equal access to our products of guaranteed quality at a fair price that is necessary for smooth operation and balanced development of industry and agriculture, particularly during peak demand in planting and harvesting seasons. The Company's retail business is present in 66 regions of Russia, and includes almost 3 thousand petrol stations and over 140 oil depots. Rosneft also owns 13 refineries in Russia, as well as stakes in 5 refineries abroad (3 refineries in Germany, the Mozyr refinery in Belarus and a refinery in India’s Vadinar). The Company and its partners are working on projects for constructing new refineries in China and Indonesia.

2.2. Supplying remote regions and promoting shared use of infrastructure

Infrastructure, created by the Company in the course of its operations, contributes to better living standards and socioeconomic development which is particularly important for Russia’s remote regions.

When realizing projects in Siberia and the Far East, the Company implements construction of road infrastructure, including winter roads and water crossings which are used both for shipment of equipment and personnel to Company sites, and by local dwellers aiming to ensure uninterrupted delivery of food, consumer goods, and fuels to remote regions. The Company's subsidiaries contribute to oil product deliveries to Russia’s northern areas in order to ensure ample energy supplies for the winter period.

2.3. Supporting indigenous people of the North and local communities

The Company respects the cultural heritage, traditions, and rights of people. We support projects which contribute to sustainable development of indigenous people of the North and local communities. These projects are aimed at preserving unique ethnic culture, traditional lifestyle and economic activities of indigenous people, and providing proper education and health care services.

Our philosophy is embedded in the Rosneft Code of Business Conduct and Ethics. The Company provides support for various sports and ethno-cultural activities, and allocates funds for acquiring equipment needed for hunting and fishing activities, construction and repair of residential properties, social and infrastructure facilities. 

4.1. Corporate system of continuous learning and employee education

Competent highly qualified employees are the main asset of the Company and a prerequisite for its sustainable development. The Company has established a uniform corporate system of continuous learning and education that reaches out to all business segments, staff categories and is accessible to more than 300 thousand of Company employees.

The corporate Standard “On employee assessment and professional skills development” is in place. The Company has developed over 1300 professional and technical skills sets, as well as procedures for skills assessment for core business processes. Within the framework of the corporate continuous learning and employee education:

–       The Company incorporates more than 60 corporate learning centres and develops successful cooperation with leading domestic and international educational institutions;

–       On an annual basis, the Company conducts more than 500 thousand man-hours of mandatory professional, technical and management training, as well as secondment and knowledge-sharing programmes with international partner companies;

–       The Company develops management expertise with the help of MBA programmes and promotes professional skills with more than 200 specialized programs of the corporate professional and technical training.

4.2. Supporting secondary and higher professional education

The Company cooperates with Russian and international educational institutions with a view to creating new programmes, modern educational facilities and training centres of excellence.

Our support of secondary and higher professional education includes the following:

–       Rosneft has established partnerships with 58 Russian and international universities and institutes, and 24 organizations of vocational education;

–       The Company supports 20 proprietary academic departments;

–       Projects are under way aimed at the development of scientific and educational university infrastructure; staff training programs are enhanced and upgraded;

–       The Company supports efforts to obtain higher education, including scholarship programmes for foreign students.

4.3. Education as a means of integrating young people into the energy sector

Please refer to Section 8.7.

5.1. Increasing employee capabilities and equal opportunities for professional growth and development

The Company creates comfortable working conditions aiming to unlock the potential of each employee and operates in compliance with the Social Charter of Russian Business and the Universal Declaration of Human Rights. Every individual is guaranteed the rights and freedoms proclaimed in these two documents.

We apply a uniform transparent approach to employee remuneration, assessment, motivation and career development.

The Company provides equal opportunities for professional growth and employee development. In 2017, the share of women among employees amounted to 32.2%, including 22.9% among senior officers and 13.6% among top management of group subsidiaries, and 18.2% in the Company’s Management Board.

The Company implements programmes for developing the succession pool and employee professional skills. Since 2005 we have been holding an annual corporate contest “Best in profession”, with over 20 thousand employees taking part every year. Young specialists participate in a comprehensive corporate programme, including orientation classes, development of engineering thinking, professional and leadership skills. Every year more than 55% of young specialists take part in corporate scientific and technical conferences which have become platforms for career growth.

5.2. Supporting family and childhood

Please refer to Section 8.4.

6.1. Water management

Access to water resources and prudent management of fresh water ecosystems are critically important  for people’s health, environment preservation and sustainable development. The Company is committed to ensuring the rational use of water resources within its operations and taking action to protect and replenish them.

Rosneft is committed to complying with the water management legislation. This is achieved by carrying out timely repair and upgrading activities where necessary, and introducing best available technologies where appropriate. The Company monitors the state of environment on an ongoing basis, which allows us to take timely action for minimizing our environmental footprint. In three years, water management expenses (waste water collection, treatment, transportation and discharge) more than doubled. In 2017, the share of recycled and reused water amounted to 93% of the total water consumption in our operations.

6.2. Water treatment and recycling programmes

Implementation of large corporate environmental projects improves water management efficiency at Rosneft production facilities and water quality in the water supply facilities of cities and residential areas in the regions of Company operations. Construction and upgrades of water treatment facilities are an integral part of the large-scale corporate refinery maintenance programme.

The Company implements 8 priority environmental projects within the framework of the Cooperation Agreement with the Russian Ministry of Natural Resources and Environment and the Federal Agency for Natural Resources Supervision. Six of them are related to the improvement of water quality and higher efficiency of water use.

The following projects have already been executed in that respect:

–       In 2018, the Company commissioned a new biological treatment unit at Bashneft-Ufaneftekhim, a unique project for Russia and Eurasia, which is designed to treat all industrial, rain and utility waste water from the Bashneft refineries, and 66 local businesses. As a result, by using purified waste water, we reduce fresh water consumption by 2.5 times.

–       The Company commissioned an advanced water treatment facility incorporating a membrane bioreactor at the Novokuibyshevsky Refinery with a view to increasing water treatment efficiency and reducing fresh water use consumption by using treated waste water, and ensuring complete automation of the process.

In the Company’s upstream operations, we are increasing water management efficiency by incorporating water re-injection technology to maintain formation pressure and enhance oil recovery, resulting in minimal fresh water take-off from surface water bodies.

6.3. Minimizing oil spill footprint and managing risks

The Company strives to prevent, reduce and minimize the footprint of oil spills.

The Company has established and improves an Emergency Oil Spill Response System which ensures prompt response to crude oil and oil product spills, their localization and elimination with a view to minimizing the environmental footprint, including the impact on water resources. The Company is implementing the Programme “On improving pipeline integrity in 2015-2019” which is aimed at reducing the level of pipeline failures and minimizing the probability of oil and product spills. Based on the 2017 results, the crude oil and product spills indicator reduced 11% year on year.

6.4. Innovative activities

The Company implements innovative projects aimed at developing technologies for drilling waste and oil sludge treatment, emergency oil spill response, oil decontamination of northern seas and land remediation.

The Company owns licences for strains of pure growth bacteria and microbial species which are designed for decontaminating sea areas and coastlines of northern seas.

9.1. Promoting development of infrastructure, related sectors and industrial complexes

The Company Investment programme and anchor orders provide powerful stimulus for development of related sectors and the national economy as a whole, ensuring higher level of industrialization and application of new technologies. Implementation of our oil and gas projects leads to creation of new oil producing provinces and promotes regional development, particularly due to infrastructure construction which is important for the oil industry and its oilfield services segment.

The Company invested over RUB 3.3 trln in its business development over the last 5 years, including the launch of oil and gas greenfield projects, modernization of existing facilities, and establishing resilient modern infrastructure for conducting business in the regions of Company operations. The Company's investment portfolio and anchor orders create foundation for new, improved and expanding activities in various industries. For example, an anchor order for marine equipment (178 vessels and marine equipment units to 2035) is promoting development of the industry and shipbuilding cluster in the Far East.

Rosneft coordinates activities related to creating the industry and shipbuilding cluster in the Far East which will center on the new Zvezda shipyard, with the Company providing pilot orders. The shipyard has already received an anchor order for vessel and marine equipment (178 units till 2035). Project execution promotes development of related industries, including metals industry, chemicals, engineering and electronics.

The Company contributes to creating infrastructure for new projects (in East Siberia and other remote areas), offshore development, LNG projects (on the basis of the 82nd Repair Shipyard in Murmansk), and oilfield equipment manufacturing.

9.2. Creating economic value

The Company has a sustainable value-adding integrated business model aimed at using the opportunities which result from changes in the global energy mix, structural changes in commodities markets, and technological advancement. This approach, along with efficient investment portfolio management, corporate governance system, and effective stakeholder partnerships promote incremental profitability, creation of added value across the entire value chain, and unlocking the full resource potential. The Company takes into account global energy trends, including the growing role of natural gas, development of new types of reserves and new production regions.

9.3. Innovative activities

Please refer to Section 7.4.

9.4. Ensuring sustainable infrastructure

Cybersecurity is one of the key factors ensuring sustainability of Company infrastructure in the context of digitalization and provides for safe sustainable operations of corporate business and management systems, as well as industrial automation.

Cybersecurity is based on the risk-oriented approach, with consideration of legislative requirements and international best practice. Information security management processes are integrated in the corporate governance system.

10.1. Partnerships and social investments in the regions of operations

Please see Section 1.2.

10.2. Fiscal stability and budget revenues assurance

As the largest taxpayer, the Company supports the fiscal stability of Russia and its regions, contributing to creating conditions for a balanced social and economic state policy.

In 2017, the Company's share in the federal budget revenues exceeded 14.4% while a total of RUB 2.6 trln in taxes, duties and levies was paid to budgets of all levels and off-budget funds. In key oil producing regions where we operate, Rosneft is a significant-taxpayer, with RUB 325 bln of taxes paid to the regional budgets.

10.3. Developing human talent and providing equal opportunities for professional growth and development

Please see Section 5.1.

10.4. Social policy

Rosneft adheres to the principles of high social responsibility, and ensuring decent living standards for its employees (please refer to Section 3.5). The Company is striving to maintain the labour remuneration at a level which exceeds an average salary in the regions of its operations, conducting an annual salary indexation.

The Company has a collective agreement template that contains a list of benefits, guarantees and compensations providing additional social protection for employees. In 2017, social payments amounted to RUB 15.5 bln.

10.5. Supporting indigenous people of the North and local communities

Please refer to Section 2.3. 

10.6. Compliance and combating corruption 

The Company adheres to the principle of zero tolerance of corruption in any form and manifestation. Any manifestations of fraud are unacceptable. The Company takes active measures aimed at combating fraud. In 2009-2010, the Company joined the UN Global Compact and the Social Charter of Russian Business, and has been providing support for the Anti-Corruption Charter of Russian Business since 2013.

The Company's principles and approach are stipulated in its local normative acts: the Policy for Combating Corporate Fraud and Involvement in Corrupt Activities, the Code of Business and Corporate Ethics of Rosneft, the Regulation on Insider Information, and the Procedure for Managing Conflict of Interest at Rosneft and the Group's subsidiaries.

Management bodies and the Board of Directors regularly assess corruption risks incidental to sectors and jurisdictions in which the Company operates, review facts revealed in conjunction with the conflict of interest. The Company undertakes activities under a Comprehensive Programme for Preventing Fraud and Corruption on an annual basis.

When working with suppliers and contractors, Rosneft consistently controls contracting procedures, pricing and discounting mechanisms which allow the Company to effectively discover symptoms and actual cases of affiliation, selfish interest and potential fraud. In 2017, the Company checked over 117 thousand enterprises willing to participate in tender procedures. 

10.7. Creating favourable social environment 

Please refer to Section 3.5. 

 11.1. Meeting the growing demand for energy resources

The Company acknowledges that in the long-term crude oil and natural gas will retain an important role in the energy mix, with a growing share of gas as a clean fuel. As a responsible producer, the Company steadily increases the volumes and efficiency of hydrocarbon production, and grows natural gas supplies to end consumers. The Company is interested in developing an integrated gas supply chain and supports exchange-based gas trading. The Company has built a portfolio of long-term gas contracts allowing us to reach a 20% share on the Russian natural gas market.

Currently, the Company supplies gas to almost 40 regions of the Russian Federation, acting as the main supplier in a number of them.

 

11.2. Improving living standards in cities and other residential areas 

The Company's activities contribute to higher living standards, ensuring environmental sustainability and reducing the environmental footprint of the automobile transport.

Rosneft is constantly improving characteristics of its motor fuels, expands the geography of its supplies, and a range of available products and additional services at petrol stations (including non-fuel business).

The Company promotes development of social infrastructure in the areas of its operations, especially when conducting operations in remote areas, and provides financial support for local priority projects in the social and cultural spheres.

The Company also plans to expand its retail network of natural gas motor fuels (10 facilities currently in operation in 4 regions, over 1 thousand vehicles filled daily). 

11.3. Environmental policy and commitments 

In accordance with its Policy on Environmental Safety, the Company, wherever possible, tries to avoid operations within residential areas.

In case a Company asset is located inside the city of community, all the regulatory and technical requirements are fully respected and appropriate actions are developed to mitigate environmental impact. Besides, environmental control and monitoring are implemented. The Company regularly conducts voluntary Saturday clean-up activities and other initiatives in the areas of its operations. Through agreements on social and economic cooperation local authorities receive additional investment for regional development and environmental campaigns (please refer to 1.2).

In 2017, the volume of the Company’s investment in environmental initiatives increased by almost 40% and amounted to RUB 102 bln.   

11.4. Supporting indigenous people of the North and local communities

Please refer to Section 2.3.

11.5. Culture and heritage 

The Company respects the cultural heritage, traditions, and rights of people and supports cultural heritage projects.

We support the following projects:

–       Financial support for the academic symphonic orchestra of the St. Petersburg Philharmonic named after Shostakovich which is internationally recognized as one of Russia’s symbols; support for the State Academic Mariinsky theatre and the Music Centre in St. Petersburg;

–       Holding unique cultural projects in the Pushkin State Museum of Fine Arts and  the State Hermitage;

–       Support for annual on-stage appearances of the Choir of the Sretensky Monastery in the regions of Company operations (22 cities) with various programmes (since 2015), tours of Boris Eifman’s St. Petersburg State Academic Ballet Theatre in the cities of Russia;

–       Conducting the annual corporate festival "Rosneft finds talent (the Star is born)" (since 2011), unlocking creative potential of  Company employees and their family members;

–       Reconstruction and restoration of cultural and historical heritage sites, including a complex of the Konev Monastery of the Nativity of the Virgin and the cathedral of the Nativity of the Christ in Yuzhno-Sakhalinsk. In 2010-2017, Rosneft provided support for restoration of more than 170 Russian orthodox churches in Russia. 

11.6. Creating favourable social environment 

Please refer to Section 3.5. 

12.1. Environmental policy and commitments

Environmental responsibility is an integral part of the Company’s culture ensuring its sustainable development.

In order to prevent potential environmental footprint the Company is committed and takes the necessary action with a view to protecting the environment, preserving and recovering natural resources. The Company’s commitment is supported by continuous improvement of our products, as well as processes and working environment for the Company employees and partners.

12.2. Sustainable development and efficient use of natural resources

The Company follows the principles of sustainable development and efficient use of natural resources, while implementing the following initiatives:

–         extending the life of field development and increasing the oil recovery factor, in particular, by introducing modern enhanced oil recovery techniques, implementing well Intervention programmes and increasing the share of highly productive horizontal and multilateral wells (up to 40% by 2022);

–         shared use of infrastructure within cluster field development ensuring lower environmental footprint;

–         effective utilization of associated petroleum gas and other byproducts of crude oil and gas production;

–         transitioning to more sustainable production by improving refinery yields, undertaking refinery upgrades, and changing the product mix as a result of incremental environmental requirements;

–         applying new technologies and technological solutions in order to expand sustainable production methods and reduce the level of losses along the entire value chain.

12.3. Effective procurement system

The Company is developing an effective procurement system based on fair selection of contractors and suppliers of goods and services on conditions of openness, transparency, and competition.

Important selection criteria for contractors and suppliers include commitment to the values and norms adopted by the Company in the area of industrial safety, labour protection, and minimization of the environmental footprint, as well as prevention of corruption, fraud, and conflict of interest. Those principles are stipulated in the Company's local normative documents, regulating its procurement activities. The Company Regulation "On procurement of goods, works, and services" governs activities of the Company and group subsidiaries. In 2017, more than 7 thousand suppliers of goods, works, and services, 72% of which belong to the small and medium enterprises (SMEs), have been accredited for participation in the Company's procurement procedures. 

14.1. Biodiversity of marine ecosystems 

The Company follows the principle of maintaining favourable environment and biological diversity in all regions where we operate. Preservation of the marine ecosystems of the Arctic zone is in the focus of our attention.

The Company has approved and implements the Programme for the Conservation of the Biological Diversity of Marine Ecosystems at the licensed sites of Rosneft located in the Arctic zone of the Russian Federation.

Since 2012, and on a regular basis, the Company conducts complex research expeditions aimed at studying marine Arctic ecosystems, with particular attention paid to marine mammals (walruses and seals), and the polar bear population. The Company also conducts ongoing environmental monitoring at its marine licence areas. Since 2017, Rosneft has been providing financial support to the study of the Black Sea dolphin carried out by the Institute of Oceanology of the Russian Academy of Sciences. Fist studies took place in September, 2018.  We analyze and publish the obtained results so that the Company can improve its approach to minimizing the environmental footprint from its operations on marine bioresources.

Offshore projects are executed upon receipt of all required approvals and permissions from the competent public authorities and positive findings of the state ecological appraisal, and positive outcomes of public hearings. In 2017, the Company held 32 meetings with local communities (23 public hearings and 9 public polls) related to offshore development and biodiversity preservation.

All vessels contracted for offshore operations are audited (technical audit) for compliance with Company requirements. 

14.2. Environmental policy and commitments

The Company ensures that action plans are in place to protect ecosystems and biodiversity at all stages of project development.

The Company Environmental Impact Assessment process is the key element in project planning. When carrying out work in offshore areas, the Company follows the provisions of international conventions such as the “Convention on the Prevention of Sea Pollution by Dumping of Wastes and Other Materials”, and the “Convention on the Protection of the Black Sea Against Pollution”. The Company is also governed by the requirements of the national legislation on the continental shelf of the Russian Federation; on the exceptional economic zone of the Russian Federation; and on inland waters, the territorial seat of the adjacent zone of the Russian Federation. Projects are implemented only after compliance with environmental requirements is established. Ships used by the Company comply with the provisions of the International Convention for the Prevention of Pollution from vessels.

14.3. Innovative activities

Within its Innovation programme, the Company continues to identify and implement solutions to protect marine ecosystems, including development of a list of species that are bio-indicators of sustainable marine ecosystems in the Company's license areas in the Arctic seas, and creation of a new biological product based on psychrophilic microorganisms to effectively clean the water and coastline of high-latitude seas of pollution.

During 2017, the Company received 19 biotechnology patents, including 14 patents for pure growth bacteria and 5 patents for integrated microbial drugs for cleaning water areas of pollution.

15.1. Biodiversity of terrestrial ecosystems

The Company is committed to ensuring actions are in place to protect ecosystems and biodiversity, paying particular attention to protected environmentally sensitive areas. Our strategic goal is to continually reduce legacy remediation.

With a view to achieving this objective, Rosneft has introduced a new Standard for reclamation of disturbed lands. The Company constructs and renovates industrial waste utilization sites and provides its production units with modern machinery and equipment for oil sludge processing. 

A key element in the evaluation of future projects is the Company Environmental Impact Assessment process. Decisions are made based on the analysis of background environmental conditions, including the condition of valuable and specially protected flora and fauna. Projects are implemented only after compliance with environmental requirements is established.

The Company has established the Register of protected environmentally sensitive areas in the regions of its operations and undertakes further steps to minimize its environmental footprint on the basis of results obtained from environmental monitoring.

15.2. Sustainable management of natural resources and minimized environmental footprint

We are committed to the prudent use of the natural resources (including increased recycling) and give consideration to the environmental impact of our operations.

We focus on preserving environmental integrity and project execution in environmentally sensitive areas. Preventive action and other environmental initiatives aimed at minimizing our environmental impact constitute a distinctive area of the Company’s activities, including forest recovery, land management and landscape monitoring in oil and gas provinces. The Company is executing a number of programmes and projects, which minimize our environmental footprint, including

–       The Gas investment gas programme with a view to increasing the beneficial use of the associated petroleum gas (APG) at both existing and new fields (see Section 13.4);

–       A wide range of environment protection projects with the goal of reducing the consumption of fresh water (see Section 6.2);

–       The processing and safe disposal of waste, such as drilling waste re-injection;

–       The Energy efficiency programme aimed at improving the efficient use of fuel and energy resources while maintaining the target production level, and refining and sales volumes of hydrocarbons (the expected energy saving between 2018 and 2022 is 5.8 mln toe).

15.3. Promoting ecosystems sustainability in the regions of Company operations

The Company recognizes the need to support sustainable ecosystems in the regions of its operations and commits to protecting ecosystems and biodiversity. 

The Company, wherever possible, avoids activities in protected environmentally sensitive areas, in compliance with the corporate policy. In the case when our operations may impact protected environmentally sensitive areas, the Company takes action to reduce the impact, and carries out environmental control and monitoring.

The Company implements projects on preserving biodiversity in the regions of our operations, including the Evenkiysky Reindeer project in the Krasnoyarsk region, the repopulating of fish (12 million of young prime fish) into rivers and water reservoirs in the Arkhangelsk, Vologda, Novosibirsk, and Tyumen regions, the Yamalo-Nenets autonomous okrug, Republic of Karelia, Republic of Sakha (Yakutiya), and bird population monitoring in the swamp areas of Upper Dvuobiye in the Khany-Mansiysk autonomous okrug.

16.1. Human rights and freedoms

The Company operates in strict compliance with the Social Charter of Russian Business and the Universal Declaration of Human Rights. We acknowledge the importance and value of fundamental human rights and freedoms proclaimed by the United Nations, including the freedom of association, the right to conclude collective agreements, labour rights, the right to favourable environment and health protection, and the rights of indigenous people.

Rosneft is a participant of the UN Global Compact. The Company's commitment to human rights is reflected in the Rosneft Code of Business and Corporate Ethics, internal policies and local normative acts. The Code of Business and Corporate Ethics applies to all subsidiaries, in which the Company possesses a majority of votes. Main mechanisms for monitoring and assessing activities in the area of human rights are in place.

16.2. Establishing sustainable procurement system along the entire value chain 

Please refer to Section 8.8. 

16.3. Developing stakeholder engagement 

The Company is focused on developing stakeholder engagement based on partnership and long-term, fruitful, trustworthy and mutually beneficial relations with its stakeholders, including shareholders, investors, consumers, authorities, general public and business community.

Effective communications based on principles of openness, mutual respect and responsibility contribute to our sustainable development. 

16.4. Compliance and combating corruption

Please refer to Section 10.6

Rosneft: strategic guidelines for sustainable development

Reference list for compliance with themes aligned with Sustainable Development Goals of the United Nations

Strategic guidelines

 

Approach and implementation mechanism

Indexes

LEADING WITH AGILITY IN THE AGE OF ENERGY TRANSITION

 

Flexible business model
Balanced investment portfolio
Robustness across the cycle and value creation
Energy security and energy access

2.1, 3.2, 7.1, 7.2, 7.3, 7.4, 8.6, 8.8, 8.9, 9.1, 9.2, 9.3, 11.1, 12.2, 13.1, 13.2, 13.3, 13.4, 16.2, 17.2

SECURING PEOPLE, ENVIRONMENT AND VALUES

 

– Safety culture and performance
– Working environment and benefits for employees
– Security for people, business and assets

3.1, 3.3, 3.4, 3.5, 8.2, 8.3, 9.4, 10.4, 10.6, 10.7,   11.6, 12.3, 16.2, 16.4, 17.2, 17.3

DOING BUSINESS THE RIGHT AND RESPONSIBLE WAY

 

– Integrity across all business units and operations
– Transparency and reporting
– Respect of human rights
– Ethics, compliance and anti-corruption
– Risk management

2.1, 3.1, 3.2, 3.3, 3.5, 4.1, 4.3, 5.1, 5.2, 7.3, 8.2, 8.3, 8.4,  8.5, 8.7, 8.10, 9.4, 10.2, 10.3, 10.4, 10.6, 10.7, 11.6, 12.3, 13.1, 16.1, 16.3, 16.4, 17.1, 17.2, 17.3

ENHANCING ECONOMIC AND SOCIAL DEVELOPMENT

 

– Direct and indirect economic contribution
– Supply chain and related industries development
– Employment and workforce training
– Industrial and social infrastructure
– Energy access, new products and solutions

1.1, 1.2, 2.1, 2.2,   2.3, 3.5, 4.1, 4.2, 4.3, 5.1, 5.2, 7.4, 8.1, 8.3, 8.4, 8.7, 8.8, 8.10, 9.1,   9.2, 9.3, 10.1, 10.2, 10.3, 10.4, 10.5, 10.7, 11.1, 11.2, 11.4, 11.5, 11.6,   12.3, 16.2

ADDRESSING THREATS OF CLIMATE CHANGE

 

– Climate-related governance
– Emissions reductions
– Energy intensity of our industrial operations
– Use of our products

3.2, 6.1, 6.2, 7.1, 7.2, 8.9, 11.2, 12.1, 12.2, 13.1, 13.2, 13.3, 13.4, 13.5, 14.1, 14.2, 14.3, 15.1, 15.2

EFFICIENTLY MANAGING OUR ENVIRONMENTAL IMPACT

 

– Environmental stewardship
– Water management
– Ecosystems and biodiversity

3.2, 6.1, 6.2, 6.3, 6.4, 11.3, 12.1, 12.2, 12.3, 13.1, 13.4, 14.1, 14.2, 14.3, 15.1, 15.2, 15.3

PARTNERING WITH OUR STAKEHOLDERS

 

– Efficient partnerships
– Respect of human rights
– Labour rights, comfortable working conditions and social protection for our employees
– Company’s values across our supply chain

1.2, 3.5, 4.1, 4.2,   5.1, 5.2, 6.2, 8.1, 8.3, 8.4, 8.5, 8.8, 9.2, 10.1, 10.3, 10.4, 10.7, 11.5, 11.6, 16.1, 16.2, 16.3, 17.1, 17.2, 17.3