PJSC “LUKOIL” (hereinafter PJSC LUKOIL) is pleased to present the tenth Sustainability Report of the LUKOIL Group (hereinafter the LUKOIL Group is referred to as LUKOIL Group) (the “Report”) summarizing performance for the period from 1 January 2019 to 31 December 2019. The previous report was published in July 2019 (for the reporting period from 1 January 2018 to 31 December 2018).

Since 2014, LUKOIL Group has been consistently ranked among the top ten companies in the Responsibility and Transparency and the Sustainable Development Vector Indices compiled by the Russian Union of Industrialists and Entrepreneurs (RSPP) based on the analysis of public reporting of Russia’s 100 largest companies and stock market indices (the MOEX — RSPP Responsibility and Transparency Index and MOEX — RSPP Sustainable Development Vector Index).

We have been publishing sustainability reports since 2005. They are addressed to a wide range of stakeholders and seek to provide balanced information relevant to the interests of each stakeholder group. The Company pays significant attention to corporate governance of sustainability issues and continuously strives to improve the quality of reported information. We believe that independent audits of disclosed information and external assurance of the Report contribute to these objectives. The audit firm’s opinion is published in Appendix 8. The conclusion of the RSPP Council on Non-Financial Reporting concerning the external assurance of the Report is published in Appendix 9.

In preparing this Report, we used the following non-financial reporting standards and guidelines:
  • Business Reporting on the Sustainable Development Goals (SDGs)
  • Global Reporting Initiative (GRI) Sustainability Reporting Standards (“Core” option). The table of standard general and specific GRI disclosures and individual GRI indicators are provided in Appendices 3 and 4 respectively
  • The United Nations Global Compact
  • The Basic Performance Indicators and the Responsibility and Transparency and the Sustainable Development Vector Indices of the Russian Union of Industrialists and Entrepreneurs (RSPP)
We also used the following reporting platforms:
  • Guidance on Core Indicators for Entity Reporting on Contribution Towards Implementation of the Sustainable Development Goals, UNCTAD, 2019
  • SASB (Sustainability Accounting Standards Board) reporting standards — material topics and individual indicators
  • IPIECA (International Petroleum Industry Environmental Conservation Association) Oil and Gas Industry Guidance on Voluntary Sustainability Reporting, 2019

Throughout this document, the words “LUKOIL Group”, “LUKOIL”, “the Company”, “the Group”, the pronoun “we” and its various related forms refer to PJSC LUKOIL and LUKOIL Group entities, unless specified otherwise.
The list of abbreviations, formulas for calculating a number of indicators, and definitions of terms are given in Appendix 7.

At the same time, the reports highlight areas in 2019 where no significant improvements have been made and that require special attention in order to take more dynamic action. Four out of 17 SDGs are considered to be the most important areas of focus: combating climate change (SDG 13 “Climate Action”), reducing inequalities (SDG 10 “Reduced Inequalities”), protecting biodiversity (SDG 15 “Life on Land”), and solving the problem of waste (SDG 12 “Responsible Consumption and Production”).

According to the 2019 reports, climate change has a cumulative effect that poses risks for countries, companies, and people.

Inequality continues to exist in many ways, including uneven distribution of value added among different factors of production, which leads to a lower share of the national product attributable to labor.

So, too, the rate of biodiversity loss has increased significantly, including land degradation, forest loss, and loss of unique ecosystems.

Global consumption of resources is growing faster than population and global production, which means that the efficiency of their use is consistently low. This is also evidenced by a significant increase in waste generation. Much of this waste appears as a result of irreversible removal of natural wealth from the environment.

A group of independent scientistsSource: The Future is Now. Science for Achieving Sustainable Development. Global Sustainable Development Report 2019. UN Department of Economic and Social Affairs, 2019. warns that the overlapping of negative trends would lead to irreversible changes in the Earth’s conditions. Experts expect that investment analysis methodologies used by investors and professional investment managers will include not only ESG indicators that are already widely used, but also data on companies’ contribution to implementation of the SDGs.