Contribution to achieving UN Sustainable Development Goals [GRI 102-15]

PJSC Inter RAO is actively involved in finding solutions to current global problems and carries out its activities in accordance with the UN Sustainable Development Goals (SDGs).

The Company is committed to all 17 SDGs and has identified four priority SDGs which will contribute to implementing its core business if achieved. The strategic priority goals were determined taking into account the nature of the Company’s operations, the regions where it has a presence, the scale of its activities, and also taking into account its ability to effectively contribute to building a society that meets the needs of the present and does not jeopardize the ability of future generations to satisfy their needs.

The Company’s strategic priority goals include:

Goals and programs for achieving SDGs Projects and measures implemented in 2019

SDG No. 7. Ensure access to affordable, reliable, sustainable and modern energy for all

Inter RAO Group is a diversified energy holding that manages electric power assets in Russia as well as in Europe and the CIS. The Company provides the population in the regions where it operates with a reliable and affordable source of energy.

Access to affordable, reliable, and modern energy

The goal of providing access to affordable, reliable, and modern power supplies is part of the Company’s mission along with promoting sustainable economic development and improving people’s quality of life. Given the planet’s ever-growing population and, consequently, the ever-growing demand for electricity, Inter RAO is committed to becoming a leader in providing organizations and households with affordable and reliable energy.

Inter RAO’s participation in 2019 in the competitive selection of a program to modernize generating facilities, which will be implemented in Russia in 2022-2025, will significantly increase the efficiency and reliability of thermal power plants with installed capacity of 6.7 GW and ensure the stability of heat supply to consumers for many years to come.

Use of renewable energy sources

The Company is already working to develop the use of renewable energy sources (RES) in electricity production and is also committed to further increasing the capacity of renewable energy sources.

Inter RAO operates the largest wind farm in the Baltic states, Vydmantai, with installed capacity of 30 MW, which helps the Company build unique expertise in the management and development of wind-based renewable energy.

In Georgia, Inter RAO operates Khrami HPP-I (113 MW) and Khrami HPP-II (114 MW).

LLC BGC (Bashkortostan) uses RES to produce energy for internal needs and sale to third-party consumers.

  • Hydroelectric power plants (Pavlovskaya HPP with 166.4 MW and Yumaguzinskaya HPP with 45 MW)
  • Small and micro hydroelectric power plants (Mechetlinskaya and Slakskaya MHPPs with 0.55 MW and the Avzyanskaya, Uzyanskaya, and Kaginskaya micro HPPs with 0.2 MW)
  • Wind power plant (Tyupkildy WPP with 1.65 MW)

In the Rostov Region, LLC Inter RAO – Engineering is building a wind farm with capacity of 98.8 MW. The customer is a company that was established on a parity basis by PJSC Fortum and JSC RUSNANO.

Increased energy efficiency

The Company is implementing a large-scale Energy Conservation and Energy Efficiency Improvement Program for the Russian generating assets of the Inter RAO Group. The Company plans to consistently reduce specific fuel consumption at generating facilities.

In 2019, specific fuel consumption used to generate electricity for Inter RAO’s Russian assets amounted to 295 g of fuel equivalent/kWh, or 2 g of fuel equivalent/kWh less than in 2018, due to an increase in the share of the load borne by more efficient equipment, a higher proportion of co-generation as well as the implementation of measures to improve energy efficiency.

SDG No. 8. Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all The Company recognizes its important role in creating safe jobs and ensuring inclusive economic growth.

Economic growth and increased productivity in the economy

The Company continuously improves its economic and production efficiency and also makes a significant contribution to GRP growth in the regions where it operates. In an effort to boost productivity and the efficient use of resources, Inter RAO devotes much attention to modernizing its business units and introducing innovations, thereby optimizing the capacity of its power plants. The main objectives of the Inter RAO strategy are sustainable economic growth and increased operational efficiency.

In 2019, the Inter RAO Group had capital expenditures of RUB 24.5 bln (according to the Group’s consolidated statement of cash flows). In 2019, the Group’s IFRS revenue grew by 7.2%, EBITDA increased by 16.7%, and the EBITDA margin topped 13%.

Full and productive employment and decent work for all women and men as well as equal pay for work of equal value

The Company makes a significant contribution to providing the regions with decent jobs, including for people with average incomes.

Inter RAO is a major regional employer. The Group’s average headcount is 48,500 peopleAverage staff numbers taking into account jointly controlled companies (including JSC Ekibastuzskaya TPP- 2)..

Measures to increase labor productivity enable Inter RAO to pay entry-level workers salaries that usually exceed the minimum wage by about 2.3 times on average depending on the region of operation.

In 2019, Inter RAO commenced the process of drafting a corporate policy on HR management, a policy to diversify staff, a human rights policy, a policy for interaction with local communities, and a code of conduct for suppliers. These activities help ensure equal rights for all employees regardless of gender, age, and physical ability and prevent forced and child labor, slavery, and human trafficking.

Creating decent and safe jobs

Inter RAO recognizes its important role in creating safe jobs.

One of the Company’s top priorities enshrined in the KPI of management is to reduce the rate of occupational injuries and ensure decent working conditions for the Group’s employees.

Inter RAO met its KPI ‘Injury Frequency Ratio’ for 2019 with a rate of 0.1031, which is 61% lower than in 2018.

In 2019, all employees of the Inter RAO Group, with its average headcount of 48,500 people, were covered by the occupational health and safety system, which provides for an internal audit of the occupational safety system.

In 2019, 45% of the Group’s staff (21,7000 people) underwent free occupational safety training and a test of their knowledge of occupational safety requirements. All the Group’s employees underwent initial training on occupational safety.

Youth engagement

Inter RAO devotes much attention to supporting young staff, including cooperation with universities, providing training for young professionals and attracting qualified personnel. The main goals of having young people as an asset are to promote the professional growth and development of young professionals, involve employees in sports, maintain a healthy lifestyle, create an active lifestyle among the young generation, and solve social, economic, and cultural issues in the interests of the energy industry.

Inter RAO management is interested in attracting young specialists and thus pays significant attention to the advanced training and professional development of young workers and the development of production initiatives. The Group’s enterprises have a mentoring system and special adaptation programs.

A total of 2,405 employees under the age of 30 were hired in 2019.

SDG No. 9. Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation

Inter RAO’s activities, specifically providing the public with affordable and stable electricity supplies, would not be possible without sustainable infrastructure and the introduction of the latest technological solutions.

Development of infrastructure

Given the specifics of its activities, the Company’s primary goal in this regard is to develop energy infrastructure. Inter RAO collaborates with various stakeholders to implement energy conservation and energy efficiency projects for enterprises, publicly funded institutions, and housing and utility services.

Inter RAO has concluded cooperation agreements on the development of energy infrastructure with the governments of the Kaliningrad, Yaroslavl, Sverdlovsk, and Tomsk Regions as well as the Altai and Khabarovsk Territories in the Russian Federation.

In 2019, the length of power lines in Georgia increased by 250 km as a result of the construction of lines for new consumers in Tbilisi and new cable lines for network redundancy.

Representatives of Inter RAO also took part in working groups to increase the availability of energy infrastructure in the regions by organizing and conducting practical classes on the basics of energy conservation for students at schools and universities as well as employees of enterprises.

Through innovation and the use of the latest technology the Inter RAO Group strives to achieve scientific and technological leadership in the industry by implementing an R&D program that aims to develop and introduce innovative solutions and advanced technologies. Achieving the integral innovation indicator is one of the priority KPIs of Inter RAO management.

In 2019, Inter RAO managed to exceed its intellectual deliverables indicator by registering 10 patents for inventions and 6 patents for a utility model, having received 15 certificates for the state registration of computer programs.

The indicator for the share of capacity of new advanced technologies in the Group’s total TPP capacity increased by 9% compared with 2018 to 21.3%.

SDG No. 13. Take urgent action to combat climate change and its impacts

Inter RAO recognizes the seriousness of the problem of climate change, its consequences, and is ready to take serious measures to reduce its impact on the climate. Inter RAO plans to develop measures to prevent, adapt, and mitigate the impact of the climate crisis in order to promote international efforts to combat global climate hazards and natural disasters.

Greenhouse gas emission reduction

As an energy company, Inter RAO recognizes its responsibility to combat climate change.

Risks associated with climate change are one of the top priorities for the Inter RAO Group when preparing its plans and development strategies.

Reducing specific CO2 costs through the commissioning of new highly efficient equipment and the decommissioning of obsolete equipment is one of the KPIs of Inter RAO’s Innovative Development Program.

The Company plans to further develop the practice of accounting for direct and indirect greenhouse gas emissions in order to obtain reliable and timely data on its climate impact.

Inter RAO’s Energy Conservation and Energy Efficiency Improvement Program also aims to limit greenhouse gas emissions by improving fuel efficiency and reducing nitric oxide emissions.

Thanks to a wide range of measures taken, Inter RAO reduced direct greenhouse gas emissions by 15.3% and 2.9% compared with the 2014 level (adopted as the baseline) and the 2018 level, respectively. The Group’s gross greenhouse gas emissions amounted to 78.9 mln tons in 2019.

Specific greenhouse gas emissions amounted to 446 g of CO2/kWh in 2019, down by 0.67% compared with 2018.

The Group verified information on direct greenhouse gas emissions contained in the annual report for 2018 for the first time in 2019 and plans to do this annually.

Transition to less carbon-intensive energy sources

In 2019, Inter RAO sold a 50% stake in Ekibastuzskaya TPP2 (1 GW), which primarily runs on coal. Selling a key coal consumption asset will not only change the balance of fuel consumed by the Company, but will also help to concentrate on upgrading equipment on the Russian market and introduce less carbon-intensive technical and technological solutions.