To our stakeholders:

I am pleased to confirm that PIK Group reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Sincerely yours,
Yury Ilin
Vice president for corporate markets and corporate finance
PIK Group

The PIK Group complies with international norms in human rights protection, as well as the provisions of the Code of Ethics. This is one of the underlying principles of the Group’s Sustainability Policy. Issues of protecting employees’ interests and rights are managed by the HR department and the Personnel Evaluation, Training and Development Department, and are also monitored by the trade union organizations.

The principles of labour rights are stated in the Group’s Sustainability Policy

In relations with employees, the PIK Group adheres to the following ethical principles enshrined in the Code of Ethics:
• compliance with all requirements of labor legislation and the terms of the employment agreement;
• respect for personal freedom and human rights;
• support and respect for the protection of internationally declared human rights;
• provision of equal opportunities to all and inadmissibility of discrimination in labor and hiring;
• standing for the elimination of all forms of forced and compulsory labor;
• creation of conditions for employees’ professional development;
• rejection of child labor in operations;
• preservation of confidentiality and guarantees of the integrity of employees’ personal data.

In 2019 the number of men was greater in the structure of workers and managers (89.5% and 75.4% of the number of employees, respectively), whereas women predominated in the positions of specialists and office workers (54.4% and 80.2%, respectively)

One of the priority areas of the Group’s operations is personnel training and development. Total investments in training employees in the reporting year were RUB 27.2 million.

In order to make the management of human resources more effective, employees’ performance is evaluated to determine their need for training and further career opportunities. The evaluation is conducted once per year, and includes employees’ professional competencies and their personal, business, and managerial qualities.

The following projects were performed in 2019:
• reducing the boundaries of the sanitary protection zone of OZ ZhBK;
• reducing the use of natural gas and emission of greenhouse gases at OZ ZhBK;
• minimization of waste formation;
• processing of recyclable materials;
• beautification of the site perimeter of OZ ZhBK together with the Municipal Property Department of the City of Moscow.

the Company is taking measures to reduce the impact on the environment. In particular, the following were achieved in the reporting period:
• a reduction in reinforced concrete waste by implementing an automatic process improvement system and increasing the quality of products;
• modernization of the concrete mixing plants under the Environmental Program, making it possible to minimize concrete waste;
• a change in production technology, which enabled the Company to reduce the amount of wastes and to launch recycling of wastes (for example, the replacement of single-use attachments with permanent metal products);
• the planned replacement of lamps containing mercury with LED lamps at core production facilities and for outdoor lighting under the Environmental Program. This allowed a 36% reduction in 1st hazard class wastes compared to 2018. The replacement of all lamps containing mercury is expected to be completed in 2020-2021;
• the development and implementation of a project for processing and recycling of materials.
Processing and recycling of materials
PIK-Industry is trying to increase the share of materials that are processed and recycled. To do so, the Company created a Waste Management Department that has organized centralized collection of all wastes to be sent for processing.
Wastes are separated into the following categories at the construction sites of PIK-Industry:
• wood;
• plastics and plastic films;
• Styrofoam (polystyrene foam);
• porcelain tiles (mineral wool).
The wastes are then sent to OZ ZhBK, where they are processed: cardboard and polyethylene are pressed, porcelain tiles are cleaned of cement residue, pallets are gathered into complete sets, and styrofoam is broken down into granules. The prepared recyclable materials are sent to contractors, where they undergo further processing. For example, waste wood is sent to sawmills, where new wood containers are made and the remainder is turned into wood shavings that are then used in agriculture.
Most of the recycled materials are used by PIK-Industry. For example, the polystyrene foam granules are used in the manufacture of self-supporting wall panels, which are then supplied to the Company.
As a result, these categories of wastes are processed and recycled and are no longer sent to the landfill. This project will continue in 2020.

ISO 14001:2015 certification of the environmental management system of all PIK-Industry plants was completed in March 2019.

Company enterprises performed a stocktake in 2018, during which the sources of emissions were reduced by modernizing workshops and eliminating moving sources of emissions. Due to these measures, the amount of pollutants emitted into the air by Company enterprises was reduced during the reporting period to 163.9 metric tons, 73.7 metric tons (31%) less than in 2018
The Company’s production process does not release ozone-depleting substances

The Group has an Economic Security Department, the structure of which reflects the main areas of security work:
• combating corruption, monitoring of compliance with the norms of business ethics and legislative requirements;
• protection of the Group’s IT structure from external and internal threats, protection of confidential data;
• ensuring physical security at all the Group’s real estate objects, technical security, security of top management;
• due diligence background check of all potential counterparties and potential hires.

Anti-corruption activity is performed at the systemic level, through regular detection of incidents of corruption, the collection and verification of messages, and reaction to confirmed incidents through the adoption of corrective measures and provision of feedback. There are many means of communication that can be used to send a message on a violation: an around-the-clock hotline, a form on the website, the e-mail address security@pik.ru, and regular mail. Each employee must notify the ethics officer (the Corporate Secretary of the Group) or their immediate supervisor of any violations of the requirements of the Code of Ethics and illegal actions known thereto and on the appearance of signs of corrupt activity.