Environmental Protection

THE ENVIRONMENTAL POLICY OF THE COMPANY’S POWER GRID COMPLEX SETS GOALS FOR REDUCING THE NEGATIVE IMPACT ON THE NATURAL ENVIRONMENT AND ENSURING ENVIRONMENTAL SAFETY AT FACILITIES, AS WELL AS FOR THE RATIONAL USE OF NATURAL RESOURCES. IN ADDITION, THE COMPANY PLANS TO MODERNISE EQUIPMENT AND APPLY INNOVATIVE AND ENVIRONMENTALLY FRIENDLY TECHNOLOGIES IN THE RETROFITTING, RENOVATION AND CONSTRUCTION OF POWER GRIDS.

When transferring the most efficient type of energy to consumers — electric energy, Rosseti Kuban adversely affects the natural environment components.

The Company carries out an annual update of significant environmental aspects. Key aspects of the Company's environmental impact include:

• Generation, disposal and transfer of waste to third parties
• Arrangement of oil-filled equipment
• Storage of materials and equipment
• Operation of vehicles, machines (cutting, drilling, woodworking, turning and sharpening), welding and painting works, chemical analysis of transformer oils, transformer oil storage.

Since 2009, the Company has had an environmental management system in place that enables it to effectively manage environmental risks, prevent and reduce its negative impact on the environment and improve its image.

Environmental Activities in 2021

All of the scheduled environmental policy activities were implemented in the reporting year, including the following:

• Implementation of the requirements of the Stockholm Convention on Persistent Organic Pollutants. The Environmental Policy of the power grid complex sets out a goal for 100% phasing-out of equipment that contains polychlorinated biphenyls (PCBs) with its further disposal by 2025. Such equipment is phased out under the Plan for the Decommissioning of Equipment that Contains PCBs for 2018–2023 approved by the resolution of Kubanenergo Board of Directors (Minutes No. 296/2018 dated 23 January 2018)
• The Company adhered to the requirements of the Russian Environmental Laws:
  1. Industrial environmental monitoring at pollutant sources, sanitary protection zone boundaries, pollutant water discharge points to check the compliance with the set standards for acceptable environmental impact
  2. Sanitary protection zone projects were developed and approved by controlling bodies for 42 power facilities of all the Company’s branches and its executive office, to designate special areas acting as buffers and providing the protection for the residents during the operation of the facilities
• The following technical actions were taken to reduce the adverse impact on the environment:
  1. Replacement of 112 oil-filled bushings with solid-insulation bushings
  2. Repair (renovation) of emergency oil discharge systems and transformer oil receivers at 21 substations to prevent potential environmental contamination
  3. Construction/renovation of a 570-km long high voltage line using self-supporting insulated wires, including for the purposes of biodiversity preservation
  4. Installation of a total of 4,217 bird diverters to preserve the biodiversity and prevent depth of animals and birds in the course of production processes
  5. Recycling/recovery of up to 22.9 tonnes of transformer oil (~10% of the oil purchased per year) to reduce the amount of natural resources consumed
  6. Voluntary environmental responsibility mechanisms are maintained in operating conditions

BIOLOGICAL DIVERSITY PRESERVATION:

Environmental Performance in 2021

The gross air emissions increased by 3% year-on-year (to 64.67 tonnes).

In 2021, the Company achieved a reduction in the generation of waste of hazard classes II and IV. This decreased the volume of waste sent for recycling and disposal by 4.2% (to 532 tonnes).

Indicator	2019	2020	2021	Δ 2020/2021 (%)
Gross air emissions, total (t)	71.44	62.73	64.67	3.1
Volume of waste transferred for disposal and treatment, t	605.75	555.08	531.57	–4.2
Environmental impact fee (RUB '000)	211.49	226.59	170.77	-24.6
Installation of bird diverters at power grid facilities	2,304	4,978	4,217	–15.3