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SUSTAINABILITY REPORTfirst time that a Russian company has worked on the Baltic shelf.Bureau Veritas Rus has provided an independent assurance of theCompany's non-financial reporting and of its first Sustainability Report.The Assurance Statement is included in the Report.Dialogues withstakeholders werearranged and conductedon a highlyprofessional basis by an independentfacilitator, the Agencyfor Social Information (ASI)REQUESTS FOR INFORMATION: DIALOGUE RESULTSWhile preparing its first Report, the Company engaged in an open dialoguewith legislative and executive authorities. They were chosen followingan analysis of the Company's stakeholder categories and groups(see the diagram on p. 11); of the character of discussions of corporatesocial responsibility; and of the roles of companies and the state. Anotherreason for choosing this group was that it is one of the most importantwith respect to the Company's operation. Participants in the dialoguewere: representatives of the State Duma, the Federation Council, theMinistry of Industry and Energy, the Ministry of Economic Developmentand Trade, the Ministry of Natural Resources, the Ministry of ForeignAffairs, the Ministry of Transportation, and others. The dialogue was heldin an independent setting. The Agency of Social Information acted asa facilitator. Also present were auditors from Bureau Veritas Rus.The following topics were discussed during the dialogue:1. Preparation, content, and distribution of the Report.2. Environmental protection issues.The Assuror wasnot in any wayrestricted byLUKOIL in terms ofits ability to observe the dialogueand confirms that therewas no coercion of stakeholdersduring the dialogue on the partof the Company or the independentfacilitator.3. Charity and social investments.4. Economic input of the Company.A number of proposals were made regarding those topics. All of thoseproposals were considered by the Working Group and the Companyfollowed up by setting forth its position and making commitments forthe next reporting period.The summary of proposals on the first topic is below:12
LUKOIL'S APPROACH TO SUSTAINABILITY REPORTING1. To analyze the Company's socially responsible business in the contextof current social and economic reforms.2. To report on the indicators of social stability, social risks, and the indicatorsof sustainable social development.3. To assess the effectiveness of the Company's socially significantprogrammes.4. To report on the Company's ecological safety policy in detail.5. To inform the international and domestic public through theCompany's reports about major environmental problems successfullyresolved through the cooperation between the state and theCompany.6. To demonstrate in the Report the linkage between the Company'secological and environmental work and its economic component inrelation to the Kyoto Protocol.Information providedto the Assurorfor an analysis ofthe compliance ofthe reporting process with thedialogue stage requirementswas complete and objective.The information is presented ina clear, precise and comprehensibleway. It allows all stakeholdersto see which economic,social and ethical commitmentsLUKOIL has made as a sociallyresponsible company concerningthe interests and expectationsexpressed by stakeholdersand society as a whole duringthe dialogue.7. To engage public and state institutions in analyzing the Company'swork during the social reporting process. To create a SocialReporting Coordinating Council within the company.Some of the proposals (##1–3 and 6) require that a thorough examinationand appropriate methodology be implemented, and for that reasoninformation on those issues is not provided in this Report. TheCompany accepts the proposals and plans to use them during thepreparation of the next report. Information on Proposals 4 and 5 is providedin this Report. Specific suggestions were also made regardingrecipients of the first Report. All these proposals have been taken intoaccount and the recipients have been included in the mailing list.The Assuror was present duringthe dialogue between theCompany and stakeholders onMarch 29, 2005, in Moscow.In accordance with Proposal 7, the Company pledges to continue interactionswith various stakeholders during the reporting process. LUKOILengaged research, public and expert organisations in the preparation ofthe first Report and will be guided by the principle of stakeholderengagement in the future. The Company will further develop variousforms of interaction and will use them flexibly. However, the creation ofa Coordinating Council at this stage does not appear to be practical.13
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Page 38: SUSTAINABILITY REPORTSOCIAL POLICY"
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