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Management Approach

Integrating sustainability principles into all levels of NOVATEK’s corporate governance is strategically important to the Company.

The Company ensures effective oversight of its approach to and performance on sustainability through dedicated Board of Directors committees, with top management’s motivation system containing relevant sustainability-linked key performance indicators.

The Company implements advanced international and national management system standards and takes an integrated approach to sustainability management. Sustainability management is seamlessly integrated into the corporate governance system, ensuring comprehensive attention is paid to these matters across different levels, from the Board of Directors — the highest strategic management body — to the executive bodies and heads of specific business units.

Within the executive bodies, responsibility for each sustainability dimension is assigned to the respective Deputy Chairman of the Management Board.

To drive the implementation of management decisions, corporate documents have been developed to regulate internal sustainability and related risk management practices.

Sustainability Corporate Governance System

Risk Management and Internal Control System

NOVATEK has in place a multitier risk management and internal control system (RMICS), which is subject to continuous improvement. The RMICS is structured in accordance with international and Russian best practices, incorporating concepts from organizations such as the Committee of Sponsoring Organizations of the Treadway Commission (COSO), The Institute of Internal Auditors, recommendations from the Bank of Russia, etc.

The main principles, approaches, goals, objectives, participants and their obligations and interaction procedures of the RMICS are governed by PAO NOVATEK’s Regulations on Risk Management and Internal Control System, approved by the Board of Directors.

NOVATEK regularly identifies and assesses risks and defines actions to manage risks at all levels of corporate governance.

The Company uses a Risk Map to categorize all risks (including sustainability risks) that may threaten the achievement of the Company’s targets on a planning horizon from one to three years. The Company’s Risk Map undergoes annual updates and is subject to review by both the Management Board and the Audit Committee of the Board of Directors.

Along with measures developed for each identified risk from the Risk Map, the Company performs stress testing, develops business continuity plans, and maintains insurance based on a systematic approach to mitigating the impact of risks on its business activities.

Along with risk management, the Company carries out systematic activities to identify and assess sustainability opportunities as well as implement measures to gain additional economic benefits from these opportunities.

An annually updated Opportunities Map is used to streamline opportunities.

Most of the Company’s opportunities are related to climate change and address both its physical impacts and urgent issues concerning the global climate agenda.

The list of key sustainability risks and opportunities is given the Company’s 2024 Sustainability Report.

The General Meeting of Shareholders	NOVATEK’s highest governance body — pays particular attention to the effectiveness of interaction with its shareholders and strives to maximize the transparency and completeness of the information provided to them.
Board of Directors	Function: defining the Company’s sustainability agenda and strategy
Remuneration and Nomination Committee	Functions: establishing effective and transparent remuneration of members of the Company’s governance bodies and building up their expertise; planning HR management activities; and reviewing reports on industrial safety, environmental protection, climate impact, corporate governance, and social activities, as well as the Company’s sustainability reports on an annual basis.
Strategy Committee	Functions: defining strategic goals and overseeing the implementation of the sustainability strategy; making recommendations on the dividend policy; and evaluating the long-term effectiveness of the Company’s operations.
Audit Committee	Functions: overseeing the internal and external audit functions; and supervising the performance of the risk management, internal control, and corporate governance systems.
Subcommittee on Climate and Alternative Energy under the Strategy Committee	Function: providing recommendations to the Board of Directors on matters related to NOVATEK’s climate and decarbonization strategy, renewable development, and low-carbon fuel production.