6. Stakeholder engagement management

Engagement Strategy, Principles, Mechanisms and Tools

Assuming that regular and meaningful engagement with and key stakeholders is an important element of successful operations, Sakhalin Energy has been sharing information and consulting with stakeholders since the start of the Sakhalin-2 project.

Stakeholders are organisations, companies, individuals, or groups that have a vested interest in the company or the project, i.e. individuals or entities that are influenced by the company or themselves influence or can potentially influence the company`s operations.

The company has defined the stakeholders to include the following key groups: shareholders, personnel, lenders, government authorities, customers, suppliers and contractors, community, Japanese stakeholders, international organisations, public organisations and other non-governmental and non-profit organisations, mass media, etc.

Company`s Stakeholders

Компания

Sakhalin Energy’s engagement with stakeholders is based on its commitments as set forth in key corporate documents, which include:

  • Code of Conduct, including the Statement of General Business Principles;
  • Sustainable Development Policy;
  • Health, Safety, Environment, and Social Performance Policy and Commitments;
  • Sakhalin Energy Social Performance Standard (Public Consultation and Disclosure section);
  • Public Consultation and Disclosure Plan (updated annually).

These documents define the strategy, principles, process, mechanisms, and tools of stakeholder engagement and are available to the general public.

The selection of the most effective mechanisms and tools is determined by the goals and objectives of engagement, and depends on a particular stakeholder group (see the Public Consultation and Disclosure Plan on the company`s website www.sakhalinenergy.com).

Проведение информационных кампаний и консультаций

 

Stakeholder Engagement Process

Процесс взаимодействия с заинтересованными сторонами

Strategy

  • Regular and constructive engagement

  • Open and wide informing

Key principles

  • To be constructive and target-oriented

  • To be open and transparent

  • To hold positive relationships

  • To apply efficient mechanisms, opinion change regarding Issues and ways for solution

 

Stakeholder Engagement in 2016

Sakhalin Energy continued systematic and consistent engagement with key stakeholders in 2016.

The key activities included the following:

Moreover, to prepare non-financial reports in accordance with international standards, additional opinion surveys and meetings with stakeholders were held to determine the range of topics to be included in the Report (for more details, see Section 2. About the Report).

Key statistics on stakeholder engagement in 2016:

  • 12 public meetings held in communities located near the company's /assets (67 participants from the residents of Sakhalin Oblast);

  • 2,987 visits to the information centres;

  • 16 public meetings in 12 communities of the districts of traditional residence of the Sakhalin Indigenous Minorities (257 participants—representatives of SIM, non-governmental organisations, tribal enterprises and communities, municipal authorities, and other stakeholders);

  • 2 rounds of dialogues with the stakeholders as part of preparation of the Sustainable Development Report.

 

Engagement with Personnel

Engagement with personnel is an important component of strengthening and developing the company`s corporate culture (see Section 5.4. Corporate Culture) and is conducted, among other ways, through the internal communication system, which includes the following:

  • regular staff communication sessions to inform the employees of the results of the meetings of the Committee of Executive Directors, the Board of Directors, and the Supervisory Board, as well as other important events in Sakhalin Energy;
  • opinion surveys. In 2016, a regular survey was conducted to study the opinions of the company's employees. The questions concerned personnel engagement, their attitude towards the company and its senior management, responsibilities, working conditions, teamwork, participation in activities held by the company, and respect for national, cultural, and individual diversity. In addition, quick polls on various subjects were published on the corporate intranet website (to find out if the company`s employees adhere to the principles of environmental protection, to identify staff commitment to work safety in winter conditions, etc.);
  • Vesti monthly corporate newsletter and various informational and reference materials. Vesti is distributed within the company, sent to the information centres, and posted on the website. In addition, in 2016 the company began to publish an English version of the newsletter, ensuring that the information is accessible for foreign employees;
  • news releases distribution through the daily news bulletin and email messages on behalf of the company`s directors;
  • distribution of printed information materials such as posters, leaflets, brochures, etc. to inform employees about various aspects of safety, operational excellence, HR issues, and upcoming events;
  • posting advertisements, posters, and other information on special information boards in the company’s offices;
  • training workshops and information sessions to explain new procedures and programmes of the company;
  • corporate intranet site available to all employees, where they can find information on the company’s activities and documents, including policies, procedures, schedules, etc.

The 100 Workshop

The 8th annual 100 Workshop was held in November 2016. The event is traditionally attended by approximately a hundred employees. In addition to directors, the company’s Leadership Forum members, and heads of business units and representatives of all directorates are also invited to participate in the Workshop. The results of the discussions formed the basis of the Journey Book for 2017–2021, with a focus on objectives for the next year.

Семинар 100

Local Communities Engagement through the Company's Information Centres

The librarians provide consultation to information centre visitors on issues related to the company`s activities during working hours.

In December 2016, the librarians participated in the regular workshop to obtain first-hand knowledge of the company’s activities.

The work of the information centres includes the following:

  • regularly updating materials of the company’s information stands;
  • helping people find information on the company’s website;
  • providing assistance to the community in preparing and submitting complaints in accordance with the Community Grievance Procedure;
  • providing requested company`s information materials.

Statistics of Visits to the Information Centres in 2016, %

 

Статистика обращений в информационные центры в 2016 году, %

Engagement with the Sakhalin Indigenous Minorities (SIM)

Взаимодействие с коренными малочисленными народами Севера (КМНС) Сахалинской области

 

Since its foundation, Sakhalin Energy has continuously interacted with the Sakhalin Indigenous Minorities (SIM). The company considers the SIM to be a special group of stakeholders for which the issues of industrial and environmental safety, as well as of preservation of their culture and economic activity, are of paramount importance. Sakhalin Energy takes this into account in its operations and implementation of social programmes. Since 2006, the company has been implementing the Sakhalin Indigenous Minorities Development Plan (hereinafter—the SIMDP or the Plan; see Section 9.5.8. Sakhalin Indigenous Minorities Development Plan). Following the recommendations of the stakeholders received during the preparation of SIMDP 3 for 2016–2020, in 2016, the partners focused on raising community awareness about the programmes implemented and the new opportunities (see www.simdp.ru).

The SIMDP is the key document that Sakhalin Energy uses as a basis for its work with the SIM. In addition, the company implements other projects related to indigenous ethnic groups. In 2016, it conducted a series of activities aimed at the preservation and promotion of the cultural and linguistic heritage of Sakhalin Nivkhs, in particular:

  • The World of Nivkhs exhibition in Stroganov Palace in St. Petersburg, a joint project of the State Russian Museum and the Sakhalin Regional Art Museum, implemented with the support of Sakhalin Energy. Among the exhibits, there were items from the collections of the regional museums reflecting the unique culture of the Nivkhs. The visitors to the exhibition were offered guided tours, lectures, workshops, and quests (see Section 9.5.7. The World of Nivkhs Exhibition Project);
  • preparation and publication of a 2017 The World of Nivkhs calendar illustrated with reproductions of thematic paintings from the collections of the Sakhalin Regional Art Museum and the Okha Local Lore Museum;
  • issue and presentation of the audio double album with tales written by Vladimir Sangi, the founder of Nivkh literature. The tales in the Nivkh language are told by the author himself, while the Russian versions of the tales are presented by well-known Russian actors. The edition was illustrated by children—the participants of the Tales of the Nivkh Land literary and art contest, dedicated to the writer's anniversary.

The company's project—Preservation and Promotion of Sakhalin Nivkh Cultural and Linguistic Heritage—became the winner of the People Investor: Companies Investing in People, an international contest of corporate projects, in the Development of Local Communities and Volunteering category, took the second prize in the Best Programme to Support Contemporary Art and Culture category in the Leaders of Corporate Philanthropy 2016 contest, and the first prize in the Social Projects category of the KonTEKst contest, which is supported by the Russian Ministry of Energy with a view to identify and promote best communications practices used by energy companies.

 

In 2016, with the support of Sakhalin Energy, SIM representatives took active part in the Russian North Forum of Youth of Indigenous Peoples of the North, Siberia, and the Far East of the Russian Federation, and in the work of the Council of Sakhalin Indigenous Minorities under the Sakhalin Oblast Governor. The company was the title sponsor of the Regional Festival of Sakhalin Indigenous Minorities.

Sakhalin Energy took an active part in the business programme of the Treasures of the North 2016, an international exhibition, where it presented a booth exhibition titled Sakhalin Treasure Trove: Tradition and Innovation, which reflected the company's experience of engagement with indigenous minorities and its initiatives that aim to preserve and develop their culture.

At the end of the exhibition, Sakhalin Energy won awards for the preservation and support of the cultural heritage of Sakhalin Indigenous Minorities and its contribution to the preservation of SIM culture and languages.

Engagement with Non-Governmental and Non-Profit Organisations

Взаимодействие с неправительственными и некоммерческими организациями

In 2016, the company continued to cooperate with local, regional, and international public organisations in various forms, including meetings and correspondence. Among the important areas of engagement are:

  • cooperation with Japanese stakeholders—the authorities of Hokkaido Island, fishermen’s associations and other stakeholder groups in Hokkaido—on issues related to biodiversity conservation and preparedness for oil spill response (see Section 6.7. Engagement with Japanese Stakeholders);
  • collaboration with the Western Gray Whale Advisory Panel (WGWAP) to develop optimal solutions to minimise the impact on whales. Within the framework of the consultations of the Advisory Panel in 2016, there were meetings of Sakhalin Energy`s representatives with scientist members of the Panel, as well as representatives of environmental organisations included in the WGWAP as observers.

Engagement with Japanese Stakeholders

Взаимодействие с заинтересованными сторонами в Японии

Engagement with Japanese stakeholders is of special importance to Sakhalin Energy, considering the geographical proximity of Sakhalin Island to Hokkaido Island. Japanese specialists, businessmen, and representatives of NGOs, fishermen, and other stakeholders are concerned about issues related to environmental aspects of the company’s activities — for example, oil spill response operations and biodiversity preservation.

The company has been successful in establishing a regular, open, and constructive dialogue with Japanese stakeholders. During 2016, Sakhalin Energy held a number of consultations and meetings with the Japanese stakeholders, including:

  • meetings with representatives of the Hokkaido Government (February, Sapporo, Japan);
  • participation in the International Symposium on the Sea of Okhotsk (Oil Spill Response Workshop, February, Mombetsu, Japan);
  • meeting with the Hokkaido Fisheries Environmental Centre (February, Sapporo, Japan);
  • visit of the Hokkaido Fisheries Environmental Centre by representatives to the Prigorodnoye production complex (April, Yuzhno-Sakhalinsk);
  • participation in the meeting of stakeholders on safety and prevention of accidents during the navigation of tankers as part of Sakhalin projects (August, Wakkanai, Japan). The meeting was organised by the Japanese Coast Guard.

Engagement with Customers

Взаимодействие с покупателями

 

Maintaining constructive, respectful relationships with customers helps the company resolve operational challenges that arise in the course of oil and LNG contract execution, and enter into new agreements on the best terms and conditions for both parties. During the reporting year, there were no complaints from the customers about the quality or delivery terms of Sakhalin Energy's products.

In May 2016, Sakhalin Energy held a regular annual customers reception in Tokyo. The event was attended by more than 200 people. Among the guests were the Ambassador Extraordinary and Plenipotentiary of the Russian Federation in Japan, representatives of companies purchasing LNG and oil, international lenders financial institutions, and shareholders of the company. The participants discussed the prospects of cooperation and stressed the importance of the LNG Train 3 project and further development of the Sakhalin-2 project.

The company holds annual forums with customers that help foster constructive relationships. The topics for discussion include issues related to transportation, vessel maintenance, safety, environmental protection, and many others.

In August 2016, the company held the 7th Annual Oil Buyers Forum, which attracted more participants than in previous years. Among the participants were representatives of the companies purchasing Sakhalin Blend oil grade, namely Tonen General, GS Caltex, JX Nippon Oil, Fuji Oil, Cosmo Oil, Showa Shell, Sinochem, SIETCo, Taiyo Oil, GMT, Petro Diamond, Unipec, Seibu Oil, as well as representatives of Mitsui and Mitsubishi. It was the first time that a representative of Seibu Oil visited Sakhalin.

In August 2016, Yuzhno-Sakhalinsk hosted the 11th Annual Conference on Maritime Hydrocarbon Transportation, which focused on the commercial transportation of oil and gas under the Sakhalin-2 project. The Conference discussed challenges related to the prospects and opportunities of the maritime transportation market, shipbuilding development, and shipping management. The Conference participants analysed issues associated with the improvement and optimisation of marine navigation operational processes, the organisation and performance of vessel-to-vessel cargo operations, modern systems for ballast water management, etc. The conference was attended by 28 representatives of shipowners providing vessels to Sakhalin Energy for short- and long-term charter.

In October 2016, Yuzhno-Sakhalinsk hosted the Annual LNG Buyers Forum for entities that charter vessels for delivering LNG from Prigorodnoye port. The Forum was attended by 25 representatives of ten LNG-buying companies from Japan and South Korea.

Such forums allow participants to strengthen business relations and share the unique experience gained during the implementation of the Sakhalin-2 project.

Engagement with State and local Government Authorities

Взаимодействие с органами государственной власти и местного самоуправления

 

Sakhalin Energy actively cooperates with state authorities of the Russian Federation, including legislative and executive bodies of the federal, regional, and local levels.

In 2016, as in the previous years, engagement with state authorities was carried out in various ways, the most significant of which was the work of the Sakhalin-2 project official management bodies provided for by the PSA, such as the Supervisory Board (SB) and the SB Working Group.

In addition, the company interacted with state authorities on various aspects of the project implementation at the working level. The Coordinating Council for cooperation between the Administration of Yuzhno-Sakhalinsk and Sakhalin Energy, established in 2015, continued its work. It comprises several working groups carrying out activities in various areas.

Representatives of state authorities regularly participate in dialogues with stakeholders conducted by the company during the preparation of the Report. The results of the 2016 dialogues are presented in Appendix 2. Comments and Suggestions of Stakeholders on Individual Aspects, Indicators and/or Programmes and the Company’s Response and Commitments.

International and Regional Cooperation

In 2016, Sakhalin Energy continued to vigorously promote its business reputation and image as a socially responsible company both within and outside of the Russian Federation. Sakhalin Energy attended a number of important international and regional events, including:

LNG Congress of Russia 2016, 16–18 March, Moscow

This is an international event focusing on the issues related to liquefied natural gas. The Congress was attended by representatives of more than 250 Russian and foreign companies. Project operators shared key information on the implementation and various construction stages of large-, medium- and small-capacity LNG plants.

International Conference and Exhibition on Liquefied Natural Gas, 11–15 April, Perth, Australia

This is the largest conference and exhibition dedicated to LNG issues. The programme provides its participants with an opportunity to communicate and interact with industry leaders on development issues, and to discuss technological, commercial, social, and environmental problems associated with LNG production.

All-Russian OSH Week 2016, 18–22 April, Sochi

Held as part of the World Day for Safety and Health at Work, All-Russian OSH Week is the main event of the year in the field of occupational safety and the central discussion platform, where participants share best international and domestic practices in occupational safety and health management systems, analyse measures to prevent injuries and occupational diseases, discuss and specify areas of the state policy in the field of occupational safety, and improve the regulatory framework. Sakhalin Energy representatives informed the event participants about the company's HSE experience.

ECOTECH International Exhibition and Forum, 26–29 April, Moscow

The event was attended by representatives of the Russian government, federal and regional authorities, executives and specialists of Russian and international companies, experts of the global environmental community, leading researchers and developers from 20 countries. The exhibition presented the latest developments and solutions that aim to reduce emissions and discharges of pollutants, to minimise waste, and to reduce resource consumption in various sectors of the economy. Representatives of Sakhalin Energy talked about the technology of injecting drilling wastes into deep subsurface horizons, which the company applies in the fields of the Sakhalin-2 project.

Annual General Meeting of the International Business Congress, 25–27 May, St. Petersburg

The Congress deals with practical issues of economic cooperation, and the development of proposals to remove obstacles and create favourable conditions for an effective and safe business environment.

Eastern Economic Forum, 5–7 September, Vladivostok

The main objectives of the Eastern Economic Forum are to strengthen ties between the international investment community, Russian entrepreneurs, and federal, regional and local authorities, to make a comprehensive expert assessment of the economic potential of the Far East, and to present a new environment for investment and business in the region. In their reports, Sakhalin Energy representatives told the Forum participants about the implementation of the Sakhalin-2 project, and the measures the company takes to minimise the environmental impact. During the Forum, Sakhalin Energy and Schneider Electric signed a Memorandum of Cooperation, which provides, among other things, for cooperation in the creation of the Sakhalin Industrial Park.

Federal IT Forum, 21–22 September, St. Petersburg

This is a business event where IT directors of major oil and gas companies discuss common tasks and challenges, exchange best practices, and propose ideas for industry initiatives.

Sakhalin Oil and Gas 2016 International Conference, 28–30 September, Yuzhno-Sakhalinsk

At the anniversary event dedicated to the oil and gas projects of Sakhalin and the Far East, conference participants discussed the most important challenges currently faced by the industry, such as the decline in oil prices, the reduction of investment in oil and gas companies, sanctions, access to financing, business process optimisation, technological problems and their solution, as well as the strategies of further development of projects in the Far East. Sakhalin Energy presented several reports on the Sakhalin-2 project implementation, LNG production, industrial safety and environmental responsibility, import substitution, marine transportation, etc.

St. Petersburg International Gas Forum, 4–7 October, St. Petersburg

This is the leading platform for discussing current problems faced by the industry. Decisions adopted by industry leaders based on the results of discussions directly impact the global gas market. The interaction between representatives of state authorities, key players in the international and Russian business communities, and representatives of research institutions and design institutes makes it possible to discuss global trends and the state policy in the gas industry, the priority industry projects, and many other relevant topics.

Annual Conference of the Donors Forum—Charity Management: Traditions, Challenges, Innovation, 20 October, Moscow

The company shared its experience in social investment management.

PEOPLE INVESTOR 2016: New Risks and New Standards of Sustainable Development, International Forum, 17 November, Moscow

Sakhalin Energy presented its project titled Preservation and Promotion of Cultural and Linguistic Heritage of Sakhalin Nivkhs.

World LNG Summit, 12–15 December, Barcelona, Spain

This is one of the key events in the global LNG industry. The conference is a great opportunity for Russian and foreign operators involved in the production of liquefied natural gas to exchange their experience. During the event, participants discussed current issues and future development prospects of the world's LNG industry.

Offshore Oil and Gas Contracts: NEFTEGAZSHELF 2016, Annual Conference, 8 December, Moscow

The participation of Russian companies in the development of oil and gas offshore fields is paid increasingly more attention. At the conference, Sakhalin Energy representatives spoke about the company's achievements in the development of Russia's content, and opportunities for its further participation in the project.

Moscow Forum Corporate Volunteering: Business and Society, 8 December, Moscow

The company shared its experience during the work of the Corporate Volunteering in the Information Society section of the Forum.

The participation in prestigious Russian and international forums enables the company to determine and put into practice the most advanced Russian and international experience and best practices in sustainable development and corporate social responsibility, which is necessary for the company to maintain its leading position in this area.