1.7. Sustainability Management

Sustainability management is integrated into the corporate governance system of PJSC Gazprom. Responsibilities in this area are assigned in accordance with legislation of the Russian Federation and internal documents to governance bodies, structural units of PJSC Gazprom, and its subsidiaries.

⁽¹⁾ Since 2022, the name of the report has been changed to the Gazprom Group’s Social Impact Report.

The Board of Directors of PJSC Gazprom engages in strategic governance and is responsible for considering and approving high-level internal documents on matters that fall within its competence, including sustainability.

The composition of the Board of Directors is well-balanced so as to achieve targets that benefit the shareholders and the Company at large.

The members of the Board of Directors possess a broad range of competencies to fit the scale and nature of the Company’s operations, including corporate governance and sustainable development. Independent directors take an active part in the Board of Directors’ activities and propose for discussion matters related to corporate governance and sustainability.

Two out of 11 members of the Board of Directors are independent. The Chairman of the Board of Directors is not an executive officer at the Company.

The Sustainable Development Committee of the Board of Directors is responsible for preliminary consideration of sustainability matters and develops recommendations for the Board of Directors to adopt resolutions.

The Import Substitution and Technological Development Committee of the Board of Directors prepares recommendations for the Board of Directors to adopt resolutions on import substitution and technological development.

Among other things, the Audit Committee of the Board of Directors monitors the reliability and performance of the risk management and internal control system and compliance with the Code of Corporate Ethics of PJSC Gazprom.

The Nomination and Remuneration Committee of the Board of Directors is in charge of an effective HR management policy, as well as incentive and remuneration system.

PJSC Gazprom also has in place a Coordinating Committee for Rational Use of Natural ResourcesCreated by order of PJSC Gazprom No. 215 dated May 14, 2020.. Its main goal is to coordinate the efforts of PJSC Gazprom’s units and entities in rational use of natural resources, energy efficiency, environmental protection and sustainable development.

To insure a comprehensive approach to environmental and energy management and coordination of relevant efforts of PJSC Gazprom’s structural units, the Company has standing Environmental Management Improvement Task ForceCreated by order of PJSC Gazprom No. 16 dated January 14, 2021. and Energy Efficiency (Energy Management) Improvement Task ForceCreated by order of PJSC Gazprom No. 547 dated December 23, 2022..

The Coordinating Committee for Shareholder and Investor RelationsCreated by order of OJSC Gazprom No. 292 dated November 17, 2008. is tasked with the development and implementation of a unified and consistent shareholder and investor engagement policy.

Overall management of sustainable development aspects is within the remit of PJSC Gazprom’s Management Committee. At PJSC Gazprom, overseeing the implementation of the Sustainable Development Policy of the Gazprom Group is the responsibility of the Chairman of PJSC Gazprom’s Management Committee, while at subsidiaries this is among the duties of their Directors General.

Structural units of PJSC Gazprom and its subsidiaries manage various sustainable development aspects and implement the Sustainable Development Policy of the Gazprom Group.

In accordance with recommendations of the Russian Corporate Governance Code (Clause 2.9), PJSC Gazprom regularly conducts comprehensive independent assessments of corporate governance practices and internal assessments of the activities of the Company’s Board of Directors and its committees.  Assessment findings are taken into account in preparing measures for further development of corporate standards.

In 2021, the Expert RA rating agency assigned the highest governance quality rating to PJSC Gazprom. In 2022 and 2023, the agency reaffirmed this highest score.

Governance quality was assessed by experts in the following key areas:

• positioning (business reputation, development strategy, etc.);
• governance and control bodies;
• transparency of information;
• rights of shareholders and other stakeholders;
• support factors (additional positive changes);
• stress factors (factors that have a significant adverse impact on the rating).

The methodology to assess governance quality has been approved by the Expert RA rating agency’s methodology committee. According to the methodology, corporate governance best practices mean approaches recommended by the World Bank and the Organization for Economic Cooperation and Development. It also factors in guidelines from national market regulators (e.g. Corporate Governance Code of the Bank of Russia) and requirements of stock exchanges where the rated entity’s securities are listed (e.g. requirements for Level 1 and Level 2 issuers established by the Moscow Exchange).

The methodology provides for a systematic application of all the analysis methods and tools, models, key factors, and benchmarks as a unified framework. The methodology is used only systematically. The rating is assigned to PJSC Gazprom based on the analysis of all key indicators used in the methodology.

Expert RA’s methodology for governance quality ratings is available on the agency’s website at www.raexpert.ru.

In late 2022 and early 2023, as part of an independent assessment of corporate governance, the Company’s Board of Directors was again assessed by external experts based on the following criteria: composition and structure, organization of their activities, and key functions.

Apart from that, in 2H 2022, the Board of Directors of PJSC Gazprom, the Audit Committee, the Nomination and Remuneration Committee, and the Sustainable Development CommitteeThe Sustainable Development Committee was set up in 2021 (resolution No. 3627 of the Board of Directors of PJSC Gazprom dated July 13, 2021). conducted a regular self-assessment (through a questionnaire) of the Directors’ performance in the corporate yearCorporate year of 2021–2022 means the period from June 25, 2021 to June 30, 2022. of 2021–2022.

All members of PJSC Gazprom’s Board of Directors ranked the current maturity level of PJSC Gazprom’s Board of Directors and its committees as excellent (four points out of four). The results of the self-assessment were presented to the Nomination and Remuneration Committee of the Board of Directors (minutes No. 64 dated October 14, 2022) and were considered at the meeting of the Board of Directors in November 2022 (minutes No. 11472 dated November 17, 2022).

Members of PJSC Gazprom’s Board of Directors who represent the interests of the Russian Federation undergo self-assessment on the Interdepartmental Portal of the Federal Agency for State Property Management at the end of each quarter and corporate year.

PJSC Gazprom has top positions in the most reputable national sustainability ratings and rankings.

The Company was among the finalists of Our Contribution, the National Ranking for Assessing Social Investments by Businesses and NPOs in Achieving National Goals (https://рэнкинг.национальныепроекты.рф) published in 2022.

The Gazprom Group has in place a risk management and internal control system (RMICS), which is a part of PJSC Gazprom’s corporate governance framework and provides reasonable assurance that the Group will achieve its goals. The RMICS covers all activities of both PJSC Gazprom and the Gazprom Group entities, includes all management levels and types of activities and all risks of PJSC Gazprom and the Gazprom Group entities. PJSC Gazprom’s RMICS performance in 2022 was confirmed by the top score from the Expert RA rating agency.

Responsibilities and powers in the area of risk management and internal control are assigned in accordance with legislation of the Russian Federation and internal documents to governance bodies, structural units of PJSC Gazprom, and its subsidiaries and entities. In accordance with Federal Law No. 208-FZ On Joint Stock Companies dated December 26, 1995 and directives No. 3984p-P-13 for representatives of the Russian Federation dated June 24, 2015, a dedicated unit of PJSC Gazprom for risk management and internal control (Directorate of PJSC Gazprom) responsible for implementing the single risk management and internal control policy of PJSC Gazprom and the Gazprom Group entities was established; its activities are coordinated by a Deputy Chairman of the Management Committee.

PJSC Gazprom and the Gazprom Group ensure timely identification of risks and evaluation of potential events, circumstances, and internal and external factors influencing the achievement of PJSC Gazprom’s targets and goals, and develop risk management measures and internal controls. Setting targets for PJSC Gazprom and the Gazprom Group entities is a prerequisite for identifying and assessing risks and subsequently exercising internal controls. When identifying risks, internal and external events that may affect the achievement of targets are detected.

The Code of Ethics contains guidelines for employees on handling conflicts of interest and declares zero tolerance to corruption. Managers and workers must inform the employer of any corruption proposals they receive.

The Code also sets forth the principles of environmental protection and zero discrimination towards employees, and mechanisms for implementing and monitoring the corporate ethics rules.

The Code is mandatory for all of PJSC Gazprom’s employees.

In addition, the Code of Ethics applies to the employees of the entities controlled by PJSC Gazprom, which used it as the basis for developing and adopting approved the own codes of corporate ethics.

Since 2019, the Code of Ethics has also applied to the members of the Board of Directors prohibiting them from taking advantage or allowing others to take advantage of their position or information that comes to their knowledge about the operations of PJSC Gazprom. They are also required to refrain from any actions that will or can result in a conflict of interest.

Every year, the Company's executives, including members of the Management Committee, make formal written commitments to comply with the Code of Ethics.

PJSC Gazprom takes steps to identify and prevent conflicts of interest in the sole executive bodies of its controlled entities. According to an established practice, all sole executive bodies of controlled entities, on a regular basis (at least once every three years), submit information on the presence or absence of signs of a conflict of interest (through questionnaires) for further analysis. For newly appointed investee managers, questionnaires are filled after their appointment to the post.

Employees of PJSC Gazprom’s Administration, as well as its branches and subsidiaries, receive regular training by taking a Corporate Ethics e-learning course with a test-based knowledge assessment.

In 2022, 30,865 employees completed the course.

In 2022, a remote learning course titled Corporate Ethics at PJSC Gazprom for Suppliers was developed for third-party employees. The course will be rolled out in 2023.

PJSC Gazprom's Corporate Ethics Commission

Ensuring the implementation of the Code of Ethics is the responsibility of PJSC Gazprom's standing Corporate Ethics Commission (Ethics Commission). The Commission consists of at least five members appointed by PJSC Gazprom’s order.

The Ethics Commission’s performance is reported to the Chairman of the Management Committee of PJSC Gazprom on an annual basis.

The Anti-Corruption Policy of PJSC Gazprom 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. This document outlines the goals and competencies of governance bodies in preventing and combating corruption, while also introducing comprehensive anti-corruption measures and liability for non-compliance with policy requirements.