Environmental Policy

1. GENERAL

RusHydro Group is one of the largest energy holdings in Russia and the country’s leading renewable electricity producer. It is a vertically-integrated company that includes power generation assets, research & development, engineering, service and maintenance companies ensuring operational efficiency and construction of hydropower, pumped storage, thermal, solar, wind and geothermal facilities. With operations in most regions of the country, RusHydro Group is one of the largest players in the water management system of the Russian Federation and one of the largest suppliers of electricity and heat.

Environmental responsibility remains a major priority for the Group. RusHydro Group pays particular attention to ensure environmental safety and mitigates possible negative impacts in both operational activity and construction of new facilities. The Group’s Environmental Policy defines the main principles, objectives and priorities in environmental protection and nature preservation and serves as a guideline for making decisions, updating and implementing it.

The Company’s Environmental Policy relies on the following principles:

• United Nations (UN) Sustainable Development Goals approved by the UN General Assembly Resolution A/RES/70/1 on September 25, 2015;
• National goals and strategic development objectives of the Russian Federation through 2024 approved by Decree of the President of the Russian Federation No. 204, May 7, 2018;
• Economic Security Strategy of the Russian Federation through 2030 approved by Decree of the President of the Russian Federation No. 208, May 13, 2017;
• Environmental Safety Strategy of the Russian Federation through 2025 approved by Decree of the President of the Russian Federation No. 176, April 19, 2017, and other national strategic documents in the field of environmental protection and environmental safety;
• Development Strategy of RusHydro Group through 2020 with a perspective through 2025 (Minutes No. 238 of the Board of Directors of June 8, 2016);
• Technical Policy of RusHydro Group^[1];
• Requirements of the current Russian legislation in the field of environmental protection and nature management.

The Environmental Policy is binding for all RusHydro Group’s subsidiaries, as well as for entities that carry out contracted joint activities with the Group’s companies. RusHydro Group's Environmental Policy Implementation Program defines the mechanisms for implementing the Environmental Policy in companies controlled by PJSC RusHydro, the relationship with key business processes, and the individuals responsible for carrying out the Policy and achieving set targets.

2. CHALLENGES

Following detailed analysis of RusHydro's environmental protection activities including comparison with external factors, trends, as well as local and international environmental issues the following environmental challenges were identified:

Global Challenges:

• Climate change and adaptation to the adverse effects pose significant threats to human life and environment leading to changes in traditional hydrological and meteorological parameters that cannot be avoided.
• Efficient use of natural resources requires an improvement in energy efficiency in order to reduce negative consequences.
• Biodiversity depletion requires comprehensive measures to mitigate negative anthropogenic impacts on flora and fauna.
• Increase of production and consumption waste as well as its disposal requires additional measures to reduce waste generation by means of recycling and waste management.

National Challenges:

• Insufficiency of the best available technical and technological solutions aimed at reduction of negative impacts limits the possibilities for improving environmental safety and minimizing environmental risks.
• Severe pollution and poor water quality in the Russian Federation requires the adoption of comprehensive measures to reduce water pollution.
• Insufficient environmental education and poor population’s awareness requires measures aimed at raising the level of people's environmental awareness, responsibility and culture.

Corporate Challenges:

• High depreciation of fixed assets creates risks of reducing environmental safety levels and requires a comprehensive upgrade of RusHydro Group's production facilities.
• The Company’s production facilities’ environmental impact.

3. GOALS AND PRINCIPLES

In light of the circumstances, RusHydro Group sees its goals in improving environmental safety of its energy facilities by minimizing negative impact on the environment and ensuring its preservation for present and future generations.

The outlined challenges have to be overcome including meeting management objectives regarding environment and nature preservation along with compliance of the Company’s regular business activities with the following principles:

• the principle of compliance with mandatory standards establishes the compliance of RusHydro Group's activities with legislative and other mandatory standards and requirements in the field of environmental protection, nature management and environmental safety;
• the precaution in production and/or other activities with a direct or indirect influence on the environment primarily requires consideration of the most environmentally dangerous of possible scenarios;
• the principle of the priority of preventive measures determines the priority of measures aimed at preventing, forestalling and avoiding possible negative environmental impact;
• the principle of scientific basis of decisions made in the field of environmental protection and environmental safety by utilizing accumulated experience of scientific and expert community;
• the principle of compulsory and integrated assessment of the environmental impact of the proposed activity implying mandatory consideration of assessment of the environmental impact of the proposed activity; 
• the principle of technical improvement involves focusing on the application of advanced international and domestic scientific achievements and innovative technical solutions, technologies and practices in the field of environmental protection and environmental safety;
• the principle of voluntary compliance with rules and regulations of international standards and methodologies for the assessment of environmental factors;
• information transparency defines willingness of RusHydro Group to disclose the environmental aspects of its operations.

The goal of the Environmental Policy in compliance with the announced principles is to be achieved with the help of the following objectives:

• Low-carbon development of RusHydro Group. Addressing this objective involves implementation of a set of measures aimed at increasing the share of environmentally friendly generation in the structure of the Group’s energy production.
• Adaptation of best available technologies principles in the field of environmental protection, ensuring environmental and energy safety, and increasing the energy efficiency of RusHydro Group. Addressing this objective involves implementation of a set of measures, such as sourcing and utilizing the best available technical solutions and technologies reducing the negative impact on environment, minimizing environmental risks, designing new environmentally efficient facilities and implementing energy efficiency programs, including ones employing innovative energy efficient technologies/solutions.
• Development of renewable energy to ensure sustainable development of RusHydro Group and reduction of possible negative environmental impacts. Addressing this objective involves the implementation of a program for the development of renewable energy by RusHydro Group, as well as adoption of measures to stimulate development of renewable energy sources (RES) in the energy balance of RusHydro Group;
• Rehabilitation and modernization of the Group’s existing facilities to reduce the negative environmental impact. Addressing this objective involves introduction and application of environmental-friendly technologies in the framework of rehabilitation and modernization of the Groups’ facilities.
• Comprehensive environmental research during initiation and design of energy facilities. Addressing this objective involves a comprehensive assessment of environmental impact factors of the proposed activities, including biodiversity and proposals for alternative solutions to the set objectives along with measures to reduce possible negative impacts. In addition, this objective includes possible participation of RusHydro Group in the development and implementation of the Strategic Environmental Assessment (SEA) system in the regions of presence.
• Implementation of an integrated approach to prevent, minimize, restore and compensate for possible negative impacts on RusHydro Group's construction sites. Addressing this objective involves the focus of RusHydro Group on the implementation of the Mitigation Measures Hierarchy, including consistent and comprehensive implementation of measures to prevent and avoid possible negative impacts; minimization of negative impacts in the event when they cannot be prevented; rehabilitation of disturbed territories; and compensation of possible residual negative effects.
• Protection of biodiversity. Addressing this objective involves implementation of activities aimed at protection of rare and endangered species and their habitats in the area of possible negative impact of RusHydro Group's facilities, as well as participation in programs for protection and restoration of rare species and maintenance of protected natural areas in Group’s regions of presence along with other stakeholders.
• Organization and implementation of scientific, research and development measures in the field of environmental protection, nature management and environmental safety. Addressing this objective involves scientific and technical cooperation with leading scientific, educational and research institutions and implementation of scientific, research and development projects in the field of environmental protection, nature management and environmental safety.
• Improvement of industrial environmental control and environmental monitoring system. Addressing this objective involves improvement of industrial environmental control system including reduction of emissions and solid municipal waste accumulation, improvement of wastewater treatment at all of the Group’s facilities, improvement of environmental efficiency from burning solid fuels along with utilization of solid fuel burning products at generating facilities. New environmental monitoring methods have to be introduced to provide the Company’s management accurate and timely information on environmental status and impact in the areas near production facilities.
• Participation in improvement of regulatory, legal, and local regulatory framework in the field of environmental protection and environmental safety. Addressing this objective involves regular monitoring of regulatory framework by RusHydro Group, organization of internal activities to develop proposals for improving existing legal and regulatory documents and development and implementation of national and corporate standards in the field of environmental protection and environmental safety.
• Improvement of the Group’s management system in the field of environmental protection and nature management. Addressing this objective involves implementation of measures to improve and optimize environmental protection management, develop and implement programs, methodological documents and environmental auditing of RusHydro Group facilities.
• Educating RusHydro Group’s employees in the field of environmental protection and environmental safety. Addressing this objective involves organizing regular training events in the field of environmental protection, safety, sustainable development and protection of biological diversity.
• Development of international cooperation in the field of environmental protection. Addressing this objective involves participation of the Group’s representatives in environmental activities held by international organizations and exchange of experience with foreign energy companies on environmental issues and environmental safety.
• Environmental education of population and business community in the field of environmental aspects of energy production, environmental protection, sustainable development and protection of biological diversity. Addressing this objective involves participation in implementation of eco-education projects, public events (seminars, conferences, round tables, etc.) and participation in similar events held by other organizations and departments, updating the public and business community on environmental aspects of the Company's activities as well as carrying out activities to improve t the population’s environmental literacy.

Increasing transparency of RusHydro Group's activities in the field of environmental protection and nature management. Addressing this objective involves disclosing information on the Group’s activities and their impact on the environment in the media (and at www.rushydro.ru). This includes presenting plans and results, publishing social responsibility and sustainable development reports, disclosing basic environmental indicators on the company’s corporate website, improving system of response to feedback from all stakeholders, involving parties interested in discussion of issues, and implementing the Company’s environmental activities.

5. RUSHYDRO GROUP TARGETS BY 2025

To ensure implementation of the Environmental Policy, RusHydro Group expects to achieve the following indicators by 2025 (compared to 2015):

* - indicator can be modified based on the results of the adjustment of the PJSC RusHydro Investment Program

** - indicators were approved by Order of PJSC RusHydro No. 116-r dd. April 16, 2018

*** - indicator is calculated based on the number of oil (low-oil) switches in operation and the oil content in them

[1] Currently in development through consolidation of the Technical Policy of PJSC RusHydro and the Technical Policy of PJSC RAO ES East.