Structure of sustainability management system

In 2017 a more clearly structured hierarchy was created to manage issues related to sustainability, from the Board of Directors to LUKOIL Group subsidiary level.

Structure of sustainability management system at PJSC LUKOIL
Management level Functions
PJSC LUKOIL Board of Directors
  • Determines the Company’s business priorities.
  • Aligns and approves the LUKOIL Group’s long- and medium-term strategic development plans and programs.
  • Monitors the attainment of strategic goals and the implementation of the group’s plans and targeted programs.
  • Determines the general corporate principles and approaches to risk management and the organization of internal control systems that are then formalized in the Company’s local regulatory documents.

    • When drawing up and approving plans, budgets, and investment programs the Board of Directors takes into account the need to achieve the goals defined in the Environmental Safety Program, the Human Resources Management Program and Functional Strategy, and charity and sponsorship programs.

PJSC LUKOIL Management Committee

  • Elaborates targeted, medium-term, and annual programs and development plans.
  • Develops and approves budgets and investment programs.
  • Exercises operational control over the implementation of targeted development programs and plans, and approves their results.
  • Establishes procedures and norms related to the functioning of the risk management and internal control systems, as formalized in the internal regulations of the Company.
  • Adopts decisions with respect to the risk management and internal control system.

Strategy and Investment Committee of the PJSC LUKOIL Board of Directors
  • Performs the preliminary consideration and elaboration of recommendations to the Board to determine business priorities for the LUKOIL Group and to develop strategies for their long-term implementation.
  • Elaborates recommendations for the Board to determine priority areas within the Company’s operations.

    • In 2018 we plan to amend the Regulations on the Strategy and Investment Committee of the PJSC LUKOIL Board of Directors, with the goal of strengthening the functions related to sustainability.

HR and Compensation Committee of the PJSC LUKOIL Board of Directors
  • Prepares proposals for the Board of Directors on developing a corporate HR policy.
  • Conducts annual performance assessments of the work of the Board and its members.
  • Develops and from time to time reviews the Compensation Policy for members of the Board of Directors, the Management Committee, and the President of the Company; monitors its introduction and implementation.
Health, Safety, and Environment (HSE) Committee of PJSC LUKOIL
  • Develops the HSE Policy and approves objectives, targets, and KPIs for LUKOIL Group subsidiaries.
  • Analyses the effect of HSE initiatives.
  • Assesses whether LUKOIL Group operations comply with applicable legislative and other HSE requirements.
  • Prepares proposals to improve the HSE Management System of LUKOIL Group.
Risk Committee
  • Coordinates risk management work at the Company.
  • Designates those responsible for the Company’s material cross-functional risks.
  • Elaborates recommendations on issues related to implementing the Risk Management and Internal Control Policy at LUKOIL Group.
Working Group on preparing the Sustainability Report
  • Organizes and monitors the writing of the Sustainability Report.
  • Assesses other sustainability-related issues.

Monitoring and assessing operations

Monitoring the attainment of sustainability goals and targets on a day-to-day level is performed in the Head Office of PJSC LUKOIL by the directors of structural divisions; in LUKOIL Group subsidiaries, the heads of each Group subsidiary are responsible for sustainability performance.

Mrs. Toby T. Gati, member of the PJSC LUKOIL Board of Directors and Strategy and Investment Committee of the PJSC LUKOIL Board of Directors, is consulted on issues related to information disclosure about the Company’s sustainability efforts and how the Report is received by foreign audiences (including UN organizations, the investment and financial community, and other stakeholders).

Evgeniy Khavkin, Member of the Management Committee of PJSC LUKOIL, Vice President and Chief of Staff of PJSC LUKOIL, became Head of the Working Group on preparing the Sustainability Report in October 2017 and oversees related business processes.

Natalia Podolskaya, Corporate Secretary of PJSC LUKOIL, and the Office of the Corporate Secretary, participates in coordinating the preparation of the Report and responds to questions from shareholders and investors about the Company’s performance related to sustainability.

Working Group on preparing the Sustainability Report

In October 2017 a Working Group on preparing the Sustainability Report was created (the “Working Group”) with the aim of enhancing the system for collecting, preparing, and disclosing reporting information. The Group includes the heads of PJSC LUKOIL divisions. Issues related to improving the sustainability activity of the LUKOIL Group as a whole can also be considered by the Working Group.