3.4. Compliance Management at the Gazprom Group

The Corporate Governance Code of PJSC Gazprom is updated if and when necessary, including to reflect relevant changes in the applicable legislation. In 2020, no changes were introduced into the Corporate Governance Code.

The Code of Corporate Ethics of PJSC Gazprom sets forth corporate values and defines the key rules of business conduct regarding prevention of conflicts of interest and corruption, restrictions on joint work of relatives and employee engagement with PJSC Gazprom’s competitors and elected government bodies, gift acceptance, etc.

The provisions of the Code of Corporate Ethics of PJSC Gazprom set out the basic principles for the legal entities controlled by PJSC Gazprom. They use the Code as a basis to develop and approve their own codes of corporate ethics. In 2020, the Group continued its efforts to extend ethics requirements to the directors of the entities controlled by PJSC Gazprom.

Insofar as it does not contradict the existing obligations, the Code of Corporate Ethics of PJSC Gazprom is also recommended for individuals working for the Company under civil law contracts, for contractors and consultantsActing as agents, implementing orders or representing PJSC Gazprom to third parties, if they act on behalf of PJSC Gazprom.

Ensuring the implementation of the Code of Corporate Ethics of PJSC Gazprom is the responsibility of the Corporate Ethics Commission of PJSC Gazprom. Its performance is reported to the Chairman of the Management Committee of PJSC Gazprom on an annual basis. Every year, PJSC Gazprom’s executives make formal written commitments to comply with the Code. In 2020, PJSC Gazprom’s management signed written commitments to comply with the Code and submitted them to the Commission.

Employees are regularly updated on the newly adopted business conduct rules, including the corporate ethics norms related to preventing and combating corruption.

For interpretation of the provisions of the Code of Corporate Ethics of PJSC Gazprom and matters related to its application (including information on violation of the Code’s provisions), employees can contact:

• their immediate supervisor;
• the Corporate Ethics Commission.

In case of a conflict of interest, employees are required to contact their immediate supervisor, unless the Code directly states otherwise. If the immediate supervisor fails to take measures to prevent or eliminate the conflict of interest or the measures taken are insufficient, employees are to inform the Commission thereof.

Being in charge of implementing the Code’s provisions, the Commission oversees systematic and comprehensive efforts taken at PJSC Gazprom to identify any conflicts of interest among the sole executive bodies of the entities controlled by PJSC Gazprom. The identification, which is based on questionnaires, covered 342 entities in 2020.

The Chairman of the Management Committee may, on his/her own nitiative or at the suggestion of the Commission or on the initiative of the immediate supervisor of the employee who violated the Code, apply the sanctions provided for by the Code.

The Commission receives messages by e-mail at ethics.comission@adm.gazprom.ru, by phone at the Hot Line number +7 495 719-11-71 or directly addressed to the Chairman of the Corporate Ethics Commission of PJSC Gazprom. In 2020, the Commission held four meetings and reviewed seven items related to messages submitted by employees of PJSC Gazprom and its subsidiaries.

The performance of the Corporate Ethics Commission is regularly reported to the Board of Directors of PJSC Gazprom and reviewed with other matters related to improving corporate governance and interaction with shareholders and investors.

Gazprom’s corporate values are built on the unconditional respect for human rights.

In the sphere of human rights, Gazprom shares the global vision of fundamental values and complies with the applicable Russian and international laws. The Company is primarily guided by the principles set out in the Constitution of the Russian Federation, the United Nations’ Universal Declaration of Human Rights, and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work.

Key focus areas include:

• rights of employees to labor and education;
• occupational health and safety rights of employees, partners, and contractors;
• rights of indigenous minorities in Gazprom’s regions of operation.

In addition to complying with Russian laws, the suppliers and contractors operating at the Gazprom Group’s facilities in the Russian Federation must conform to the Company’s corporate standards in the sphere of industrial safety.

There is no special procedure in place to assess the degree to which the Gazprom Group entities and their suppliers and contractors respect human rights.

Agreements and contracts signed by the Gazprom Group do not include human rights clauses or undergo human rights screenings.

The Gazprom Group seeks to raise the awareness of its employees about human rights issues. In 2020, these issues were reviewed as part of various educational courses. There were no dedicated training programs on human rights policies or procedures at PJSC Gazprom in 2020.

Gazprom Neft’s corporate training system includes materials on human rights and rules of conduct in heterogeneous groups. In 2020, a total of 1,087 training courses covering matters related to human rights were held.

In 2020, Gazprom Energoholding did not provide mass training with a focus on human rights policies or procedures.

Gazprom Neftekhim Salavat did not conduct training on policies and procedures related to the aspects of human rights relevant to its activities.

Human rights issues are included in mandatory briefings that cover 100% of the Gazprom Group’s personnel.

• Anti-Corruption Policy of PJSC GazpromApproved by resolution of the Board of Directors of PJSC Gazprom No. 2846 dated November 15, 2016;
• Risk Management and Internal Control Policy of PJSC GazpromApproved by resolution of the Board of Directors of PJSC Gazprom No. 3195 dated December 25, 2018;
• Code of Corporate Ethics of PJSC GazpromApproved by resolution of the Board of Directors of OJSC Gazprom No. 2309 dated February 25, 2014;
• Regulation on the Corporate Ethics Commission of PJSC GazpromApproved by order of OJSC Gazprom No. 59 dated February 11, 2014 (as amended by order of OJSC Gazprom No. 34 dated January 30, 2015, and orders of PJSC Gazprom No. 445 dated June 27, 2017, No. 604 dated October 18, 2018, and No. 391 dated September 5, 2019);
• Regulation on Hot Line for fighting fraud, corruption, and embezzlement at the Gazprom GroupApproved by order of OJSC Gazprom No. 423 dated September 4, 2014;
• The procedure for reporting and regulating conflicts of interestApproved by decree of PJSC Gazprom No. 368 dated November 25, 2016;
• The procedure for employees to report violations with signs of corruption committed by other employees, counterparties or other persons, and the procedure for reviewing such reportsApproved by decree of PJSC Gazprom No. 2 dated January 12, 2017;
• The procedure for reporting attempts to influence an employee to engage in corruption and the procedure for reviewing such reportsApproved by decree of PJSC Gazprom No. 3 dated January 12, 2017;
• The procedure for protecting employees who report corruption violations committed as part of the Company’s operationsApproved by decree of PJSC Gazprom No. 4 dated January 12, 2017.

TheAnti-Corruption Policy of PJSC Gazprom is the fundamental document for corruption prevention and countering, which reflects the commitment of the Company’s management and employees to the ethical standards of conducting legal, open and honest business, improving the corporate culture, following the best corporate governance practices and maintaining a good business reputation. In 2020, no changes were introduced into the Anti-Corruption Policy of PJSC Gazprom.

To improve the mechanism for preventing and detecting corruption and in accordance with the National Anti-Corruption Plan for 2018–2020 and PJSC Gazprom’s Anti-Corruption Plan for 2018–2020, the Company continued to improve the efficiency of measures aimed at shaping anti-corruption behavior among employees, promoting anti-corruption standards and raising awareness in 2020.

In 2020, PJSC Gazprom updated the lists of administrative positions requiring anti-corruption training if the employee is appointed for the first time or if the position involves anti-corruption responsibilities.

Gazprom monitors business processes with the greatest exposure to corruption risks, including, in particular, procurement and contracting. To identify a potential conflict of interest in procurement activities, contracts concluded with the Company’s counterparties require that the counterparties disclose their ultimate beneficiaries.

PJSC Gazprom ensures compliance with the basic principles of combating corruption and fraud and avoiding conflicts of interest in procurement. A collegial body, i.e. a procurement committee, is set up to approve the results of bidding and marketing research. The committee’s membership is strictly controlled by the Gazprom Group to avoid conflicts of interest. The committee selects the supplier based on the bidding results following the principles of fair, equal and objective treatment of the bidders, and takes into account the criteria for evaluating and comparing bids specified in the procurement documentation (notice of request for proposal).

As part of its procurement activities, the Company has a list of entities interdependent with PJSC Gazprom and applies the Regulation on Procurement of Goods, Works, and Services by PJSC Gazprom and Gazprom Group Companies. Interdependent entities include the Gazprom Group companies, including subsidiaries of PJSC Gazprom.

The Group has contracts for the purchase of goods, works and services with 232 interdependent entities, which is 1% of the total number of Gazprom’s counterparties. Procurement from these suppliers was compliant with Section 22 of the Regulation on Procurement of Goods, Works, and Services by PJSC Gazprom and Gazprom Group Companies.

Gazprom Neft has a corporate risk management and internal control framework in place that covers all business units and operations of the company. Risk assessments are performed regularly.

No significant risks of corruption were identified at Gazprom Energoholding in 2020. The risks of corruption are assessed as part of risk management and internal control.

At Gazprom Neftekhim Salavat, the risks of corruption were not assessed.

No incidents of corruption were identified at PJSC Gazprom, the Gazprom Neft Group, Gazprom Energoholding, and Gazprom Neftekhim Salavat in the reporting period.

Since 2019, the Gazprom Group entities have been annually conducting skills upgrading in corruption prevention and countering at Gazprom Corporate Institute, the Center for Entrepreneurial Risks, the Russian Presidential Academy of National Economy and Public Administration, and other institutions. In 2020, 3,870 employees of the Gazprom Group underwent in-person and distance anti-corruption training.

Gazprom Neft’s corporate training system has the following courses available: Preventing and Countering Corporate Corruption; Corruption Prevention; and Countering Corruption and Fraud. These courses are mandatory for all new hires of Gazprom Neft.

At Gazprom Energoholding entities, the training on anti-corruption policies and guidelines was conducted for workers, managers, and specialists in 2020.

Since 2016, the employees of Gazprom Neftekhim Salavat have been sent to St. Petersburg for external anti-corruption training. In 2020, there was no anti-corruption training due to the pandemic.

Since 2014, PJSC Gazprom has had a Hot Line for fighting fraud, corruption and embezzlement at the Gazprom Group (tel. +7 812 613-11-88)Set up by order of OJSC Gazprom No. 423 dated September 4, 2014. The Hot Line details are available on the Company’s corporate website. Hot Lines have also been set up and operate in a number of core subsidiaries. Information received via electronic means, telephone, post, or in person, including anonymous messages, is analyzed by PJSC Gazprom’s Corporate Security Service and corporate security units of subsidiaries to identify potential or actual corruption at the Gazprom Group. During 2020, the Hot Line received more than 600 calls, most of which were related to the Company’s activities rather than the Hot Line’s dedicated purpose.

The messages relevant to the Hot Line’s purpose were reviewed. No corrupt activities were identified as a result of the review.