2. About the report

General Information

Sakhalin Energy treats sustainable development reporting as a corporate governance tool that systematises its non-financial efforts (environmental, social and other programmes and initiatives) and improves the quality of corporate governance, which increases the overall sustainability of the company. An open reporting culture demonstrates the company’s commitment to corporate social responsibility (CSR) and sustainable development (SD) principles and concepts and provides publicly meaningful information about the economic, environmental, social and ethical aspects of the company’s activities.

CSR and SD reporting benefits the company in a number of ways, including opportunities to:

  • identify the stakeholders’ opinions and expectations of the company’s activities and clarify the company’s CSR and SD strategy;
  • demonstrate that the company is aware of and takes into account the stakeholders’ opinions, creating long-term trust as well as transparent and constructive cooperation;
  • serve as an effective tool for identifying, preventing, and mitigating non-financial risks, creating a sustainable reputation (as a responsible employer, partner, etc.);
  • create new opportunities and areas of involvement for the company in production, environmental, and social spheres;
  • identify CSR and SD performance indicators, evaluate and apply them to enhance the quality of managerial decisions at all levels;
  • help to comply with the principle of continuous improvement and stimulate the subsequent improvement of internal and external processes in the company;
  • increase the company’s competitiveness.

The Report describes the company’s SD performance in 2016 and presents material topics, issues, and indicators of the company’s economic, environmental, and social performance, including executives’ appraisals of the company’s performance in the period under review as well as the stakeholders’ areas of attention.

Each of the two recent Sakhalin Energy’s Sustainable Development Reports is devoted to a specific theme. In the 2016 Report, the company covers the issues of environmental protection in great detail. Sakhalin Energy's stakeholders pay special attention to the company's practices in this field, in particular industrial environmental monitoring, local environmental monitoring, and biodiversity conservation programmes, planning and organisation of production with minimal impact on the environment, measures to minimise or eliminate adverse environmental impacts, etc. (see Section 2.3. Defining Material and Priority Topics to Be Included in the Report). The Report addresses issues of environmental responsibility in all areas of the company’s activities, including governance systems, production and commercial activities, environmental monitoring and control, work with contractors, staff training, social investment, etc. (see Sections 3–9). Materials covering these topics are presented in this Report more comprehensively and in greater detail than in the reports of previous years.

The target audience of the Report is both internal and external stakeholders listed in Section 6.2. Stakeholder Engagement in 2016.

The Report is prepared in accordance with the procedures and schedule approved by the Committee of Executive Directors. The procedures provide for the establishment of a dedicated working group to prepare the Report. This group includes managers and specialists from a majority of the company’s divisions, responsible for particular aspects of corporate governance and production activities, as well as for economic, social, and environmental impacts. The Report is approved by the Committee of Executive Directors.

This Report has been prepared in accordance with the GRI G4 Sustainability Reporting Guidelines (Core).

The Report is posted on the company website and distributed in Sakhalin communities (through the company’s information centres and district libraries), and among key stakeholders.

The company values opinions, suggestions and comments from all stakeholders on this Report. To share your opinion, you may:

Principles of the Report Content and Quality Definition

The company acknowledges and uses the following SD reporting principles presented in the Principles of Report Content and Quality Definition chart.

Principles of Report Content and Quality Definition

Defining Material and Priority Topics to Be Included in the Report

Material topics of the company’s activities, which are reflected in the 2016 Report, and their priority were identified in close cooperation with all key stakeholders of the company, including:

  • shareholders;
  • lenders;
  • government authorities;
  • customers;
  • personnel;
  • contractors;
  • community;
  • Japanese stakeholders;
  • international organisations;
  • NGOs and other non-profit organisations;
  • mass media;
  • other stakeholders.

The Report pays particular attention to safety as a key priority of the company’s production, economic, environmental activities and social performance.

The company used the most preferred engagement mechanisms and information exchange channels for interacting with each group of stakeholders, taking into account the practice of relationships (see Section 6. Stakeholder Engagement Management). Representatives of stakeholders were involved in defining the Report content by means of:

  • electronic surveys and surveys at various events;
  • interviews during personal meetings;
  • dialogue meetings with external stakeholders;
  • discussions with the company personnel.

In addition, in defining the Report content, the company took into account the following:

  • systematic media monitoring;
  • annual public opinion surveys and analysis of the subjects of the grievances submitted to the company (see Section 6. Stakeholder Engagement Management);
  • recommendations and comments regarding the 2015 Sustainable Development Report and recommendations of the RUIE Non-Financial Reporting Council that conducted the public endorsement of the 2015 Report.

The company has also analysed the materiality of the topics presented in the non-financial reports prepared by Russian and foreign companies in accordance with best international practices. Detailed information on the results of engaging stakeholders while preparing the Report, including meetings and consultations, surveys, etc., is presented in the Material Topics to Be Included in the 2016 Report Based on Stakeholders’ Opinions and Most Priority Topics to Be Included in the 2016 Report Based on Stakeholders’ Opinions tables.

Two rounds of dialogue meetings were traditionally held while preparing the Report. The stakeholder representatives had an opportunity to put questions to the company`s representatives and to receive answers, as well as to express their opinions on the materiality of any aspect of Sakhalin Energy’s activities (see Appendix 2. Comments and Suggestions of Stakeholders on Individual Aspects, Indicators and/or Programmes and Company’s Response and Commitments).

Most Priority Topics to Be Included in the 2016 Report Based on Stakeholders’ Opinions

Topics Number of answers Included in the Report (sections of the Report)
Main production results and development projects 124 4.2
Stakeholder engagement performance in 2016 115 6.2–6.10
Financial benefits to the Russian Federation and the Sakhalin Oblast budgets 105 7.2
Health, safety, environmental and social performance management system 101 3.5.1
Environmental, health, and social impact assessment of the Sakhalin-2 project 101 3.5.2
Importance of the Sakhalin-2 project for the Russian Federation and the Sakhalin Oblast 100 7.1
Mission, vision, values and principles of the company 91 5.1
Engagement of the Russian party, contracting and procurement management, vendor development programme 89 7.37.5
General information about Sakhalin Energy and the Sakhalin-2 project 87 4.1
Industrial environmental control 86 8.1
Labour safety and protection 86 9.2
Social investments and contributions to sustainable development of the host region 86 9.5
Risk management system 84 5.6
Environmental monitoring and preserving biodiversity 84 8.2
Anti-bribery and corruption 82 5.7
Strategy, principles, and mechanisms of stakeholder engagement 82 6.1
Sakhalin Energy's CSR system, Sustainable Development Policy, and performance standards 81 3.23.4
Oil spill prevention and response preparedness 80 8.4

Comments and suggestions of the stakeholders concerning specific aspects, indicators, and/or programmes of the company to be included in the 2016 Report as well as corresponding response and commitments of Sakhalin Energy are listed in Appendix 2. Comments and Suggestions of Stakeholders on Individual Aspects, Indicators and/or Programmes and Company Response and Commitments.

Material Topics to Be Included in the 2016 Report Based on Stakeholders` Opinions

Definition of the Report Scope

The Report contains information on the activities of all structural units and assets of the company in all areas related to sustainable development, including economic, environmental, and social impacts that occur both within (internal boundaries) and outside (external boundaries) the company. See Material Topics to Be Included in the 2016 Report Based on Stakeholders’ Opinions table above.

Public Endorsement of the Report

The primary focus of public endorsement is the materiality and completeness of the information on the company’s performance disclosed in the non-financial report according to the best practices of conducting business.

The RUIE Non-Financial Reporting Council was engaged to provide external public endorsement of Sakhalin Energy’s non-financial report. This Council issues independent expert evaluations at the highest professional level in the Russian Federation. The result was the Public Endorsement Certificate and Conclusion of the RUIE Non-Financial Reporting Council on the Review of the Sakhalin Energy Investment Company Ltd. 2016 Sustainable Development Report for the Purpose of Public Endorsement (See Appendix 7. Certificate of Public Endorsement and Appendix 8. Conclusion on the Review of Sakhalin Energy 2016 Sustainable Development Report by the RUIE Non-Financial Reporting Council for the Purpose of Public Endorsement).