ACRA CONFIRMS COMPLIANCE OF PROJECTS REFINANCED USING SBERBANK’S GREEN BOND ISSUE WITH INTERNATIONALLY RECOGNIZED PRINCIPLES AND STANDARDS IN THE FIELD OF ECOLOGY AND/OR GREEN FINANCING (GREEN BOND PRINCIPLES)

Compliance of the issue with Regulation of the Bank of Russia dated December 19, 2019 No. 706-P

As part of the green bond issue of Sberbank (hereinafter, the Issuer) ACRA verified the compliance of projects that are planned to be refinanced with the proceeds from the bond issue with the internationally recognized principles and standards in the field of ecology and/or green financing (in accordance with Regulation of the Bank of Russia dated December 19, 2019 No. 706-P). The projects presented by the Issuer — construction of power plants using solar energy as a source of energy — are part of the International Capital Market Association’s (ICMA) Renewable Energy project category (see Appendix 1).

Refinancing such projects through the issuance of green debt instruments is possible both in international and in Russian practice.

The specified projects — the construction of eight solar power plants (SPPs) — were operating as of verification, are included in the list of qualified generating facilities operating on the basis of renewable energy sources (RES), and had started supplying electricity to the wholesale electricity and capacity market (WECM). Total output in monetary terms had not been determined as of verification.

In this case, the Issuer undertakes to replenish, at the expense of the funds received from the issuance of green bonds, previously issued loans worth at least RUB 25 bln for the construction of the following facilities:

• One power plant of the UPS of the Middle Volga with a full planned capacity of 75 MW;

• Five power plants of the UPS of the South with a full planned capacity of 180 MW;

• Two power pants of the UPS of Ural with a full planned capacity of 50 MW.

The implementation of these projects makes it possible to achieve a positive effect from an environmental point of view, as it will result in:

• An increase in the total installed capacity and electricity generation from RES facilities within the framework of the United Power Systems (UPSs) and the Unified Energy System (UES) of Russia as a whole (direct effect);

• An increase in the share of RES in the installed capacity and electricity generation within the UPSs and the UES of Russia as a whole (direct effect);

• Indirect reduction of CO₂ emissions due to the substitution of fossil fuel-fired capacities by the assessed SPPs (indirect effect).

A brief overview of the projects refinanced via green bond issues and their environmental impact can be found in Appendix 1.

ACRA confirms that projects refinanced through the issuance of green bonds comply with all the basic internationally recognized principles and standards in the field of ecology and/or green financing of the ICMA as amended in 2021 (2021 GBP).

Compliance of the issue with the ICMA’s Green Bond Principles

ACRA confirms that the Issuer’s planned bond issue complies with all the basic components of the 2021 Green Bond Principles (2021 GBP) of the ICMA. The area in which proceeds will be used (projects that are refinanced through the issue of bonds to achieve objectives that comply with ICMA project categories and have a positive environmental impact), process of evaluating and selecting projects, management of proceeds and reporting presented in the Green Bond Framework (hereinafter, the Framework) are fully in line with 2021 GBP criteria, and consequently the planned bond issue can be considered as green.

key issue properties

Sources: ACRA, Issuer’s data

Sberbank is the largest bank in Russia in terms of assets. The Issuer is actively involved in the sustainable development agenda, which is evidenced by its recent initiatives, including the following:

• In 2020, the Issuer’s ESG strategy for 2021–2023 was affirmed and integrated into the 2023 corporate development strategy;

• In 2021, the Issuer began participating in a UN global initiative involving an environmental protection program for the financial sector (UNEP FI: Principles for Responsible Banking), as well as the UN Global Compact;

• The Issuer has an Environmental, Social, Governance and Sustainability Policy, as well as a Policy for Managing Social Risks, Environmental Risks, and Corporate Governance;

• An organizational structure for managing ESG and sustainability has been formed, which includes an ESG directorate and an ESG committee;

• The Issuer’s contribution to the achievement of the UN Sustainable Development Goals (SDGs) has been determined;

• Initiatives are being implemented to reduce the Issuer’s impact on the environment, in particular, the Issuer has begun transitioning to the concept of a green office, and the share of green energy purchases is planned to be increased to 30% by 2023. In addition, the Issuer expects to become carbon neutral by 2030;

• As of mid-2021, the Issuer had issued RUB 75 bln worth of green loans (according to the Issuer’s definition), while sustainable lending exceeded RUB 50 bln;

• Primary calculations of СО₂ emissions from direct and indirect sources have been carried out, and work has begun on assessing the carbon footprint of the Bank’s portfolio;

• The Agency notes the Issuer’s experience in financing renewable energy projects; in particular, the construction of a wind farm in the Murmansk Region, a wind power plant in the Rostov Region, and an SPP in the Stavropol Krai, is very important in terms of the assessment of the green bond issue.

KEY ASSESSMENT FACTORS

The Issuer provided ACRA with documents containing project eligibility criteria that can be included in the green bond issue, project selection process, approaches to managing proceeds, and reporting. ACRA made conclusions on the compliance of the bond issue with the four components of 2021 GBP based on these documents.

Use of proceeds

The objectives of the issuance of green bonds are clearly formulated and comply with 2021 GBP. The proceeds from the issuance of these bonds will be used to replenish the funds previously assigned for the issuance of loans to finance projects that meet the criteria specified in the Framework.

For the purposes of the assessed issue, the Issuer has identified the construction of eight SPPs operating in the following UPSs[1] of the UES of the Russian Federation as projects:

• One power plant of the UPS of the Middle Volga with a full planned capacity of 75 MW;

• Five power plants of the UPS of the South with a full planned capacity of 180 MW;

• Two power pants of the UPS of Ural with a full planned capacity of 50 MW.

Therefore, the proceeds from the bond issuance will be used exclusively for projects that fall under the ICMA project category Renewable Energy as per 2021 GBP.

The Issuer provided the Agency with: (1) a complete list of power plants (projects) and information on their location; (2) data on the commissioning dates and when the projects will reach full planned capacity; (3) data on the total volume of financing for each project; (4) timing of financing; (5) data on the maximum and full planned capacity of the power plants; (6) calculated data on annual electricity generation for each power plant; (7) a calculation of indirect environmental effects in terms of the “non-emitted” amount of CO₂. In addition, the Issuer provided the results of a technical review of the construction project for each SPP, including an analysis of each project’s compliance with environmental protection requirements.

For each of the reviewed projects, a written opinion (as part of reports on the results of a technical examination of the construction project for each SPP) was received from the Issuer which states that:

• The commissioning of the SPP will not lead to the concentration of pollutants exceeding the maximum permissible concentration (MPC) and not have a negative impact on the living conditions of the population in the nearest residential areas or the natural environment;

• Construction work will not have a significant impact on the nearest residential areas or the natural environment, and will also not lead to pollutants exceeding the MPC;

• According to the calculations, the operation of the SPP will not result in a negative noise impact on the nearest residential area;

• The construction site is not located in water protection zones of water bodies. In addition, during the construction period there will not be any direct negative impact on surface and groundwater.

Therefore, the assessed facilities will not produce a significant negative impact on the local environment. In addition, none of the projects are of federal or regional importance, and therefore are not subject to a mandatory state environmental review.

The Issuer determined the planned capacity of the power plant to be commissioned under the project as a positive environmental effect.

The Agency notes that the direct environmental effects from the implementation of the projects are expressed in:

• An increase in the total installed capacity and electricity generation from RES facilities within the UPSs and the UES of Russia as a whole;

• An increase in the share of RES in the installed capacity and electricity generation within the framework of the UPSs and the UES of Russia as a whole.

¹ According to the definition of System Operator of the Unified Energy System JSC, a UPS is a set of several energy systems, united by a common mode of operation, having a common dispatch control as the highest level of control in relation to the dispatch control of the power systems included in it. The list of UPSs is provided on the website of System Operator of the Unified Energy System JSC: https://www.so-ups.ru/functioning/glossary/fops/.

Figure 1. Volume of electricity generation at qualified RES facilities in the retail and wholesale markets, confirmed by certificates, thousand KWh

All of the SPPs are part of the register of qualified RES generation facilities. Among the assessed projects, the first phase introduced to the market began to supply power to the WECM in H2 2018. According to Association NP Market Council, the total volume of electricity generated by qualified RES facilities increased by 4.4 times from 2018 to 2020, and by SPPs — by more than five times (see Fig. 1). The share of SPPs in the total volume of generation by qualified RES facilities increased from 60% to 89% in the period from 2018 to 2020. All the assessed projects contributed to this increase.

Table 2. Share of electricity generation in Russia’s unified energy system by type of power plant, %

According to System Operator of the Unified Energy System JSC, from 2017 to 2020, the share of electricity in the country’s UES generated by SPPs grew from 0.05% to 0.19% (see Table 2). Notably, for the UPS of the Middle Volga this share increased from 0% to 0.14%, and for the UPS of the South the share increased from 0.05% to 0.2%.

Over the same period, the share of SPPs in the structure of installed capacity of power plants in the UPSs and UES of Russia increased from 0.22% to 0.70% (see Table 3). Notably, for the UPS of the Middle Volga this share increased from 0.07% to 0.53%, and for the UPS of the South the share increased from 0.25% to 0.75%.

Table 3. Structure of installed capacity of power plants in the UPSs and UES of Russia, %

Source: System Operator of the Unified Energy System JSC

Indirect environmental effects include lower CO₂ emissions due to the decommissioning of fossil fuel-powered generating capacities, as well as thanks to the replacement of these volumes of electricity with volumes generated by the assessed RES facilities.

The issuer presented the calculation of indirectly avoided CO₂ emissions due to the generation of electricity at the assessed SPPs, taking into account key assumptions, including data on the planned power generation of the SPPs broken down into years and for the entire operation period; data on the projected emission factor per unit of generated electricity in grams of CO₂ per KWh for each UPS based on the electricity generation forecast for each UPS for 2022–2027; and data on TPPs’ need for fossil fuel by UPS in the period for 2022–2027 as per the Map and Program for the Development of Russia’s UES for 2021–2027 (see Key Assumptions on page 9).

According to the Issuer’s data, prevented carbon dioxide emissions for the entire forecast period of operation of the eight SPPs amounts to 2,887.690 thousand tons of CO₂.

The Agency considers the Issuer’s calculations and the key assumptions made by the Issuer to calculate the expected environmental effect from the implementation of projects to be acceptable. At the same time, the Agency expects that when calculating the actual environmental effect, data on actual electricity generation at the SPPs will be used; as well as data on changes in the structure of electricity production for each UPS, broken down by types of power plants and types of fuel used, taking into account the withdrawal of fossil fuel capacities from the market.

A complete list of green projects refinanced through this green bond issue, with environmental impact assessments and an indication of their compliance with internationally recognized principles and standards in the field of ecology and/or green financing (2021 GBP) is provided in Appendix 1 to this press release.

Figure 2. Forecasted volume of potentially “non-emitted” greenhouse gases during electricity generation at the assessed SPPs, t CO₂

Source: ACRA based on the Issuer’s data

Process of evaluating and selecting projects

The Issuer has adopted a transparent and logical procedure for assessing and selecting projects, which is described in the Framework. All projects that are planned to be refinanced using funds from the issuance of the Issuer’s green bonds must meet two basic criteria:

• Have a level of risk that is not substantial or material in accordance with the Issuer’s internal documents for managing social risks, environmental risks, and corporate governance at Sberbank Group;

• Meet the criteria for green projects established by the Framework.

If a loan allows for subsequent issue of green bonds for financing/refinancing purposes, then the potential borrower for green lending is asked to provide information about the goals and target results of activities for which it needs the loan. The issuer recognizes a loan as green if:

• The loan meets the criteria for green loans stipulated by the Framework;

• The internal structural unit of the Issuer (ESG Directorate) recognizes the loan as green.

After a loan is recognized as green, it can act as a loan selected for the placement of green bonds in order to replenish the Issuer’s funds aimed at financing the corresponding green projects. Taking into account the fact that the Issuer has set very clear criteria for the use of funds (to issue green bonds using a loan, only a loan containing a requirement in its structure (in the form of variable rate parameters and (or) covenants) can be replenished by proceeds from the issuance of green bonds) for commissioning an energy facility, the source of electricity production of which is renewable energy sources (wind and solar energy)), and also taking into account the fact that the Issuer has developed the Environmental, Social, Governance and Sustainability Policy (public document), as well as the Policy for Managing Social Risks, Environmental Risks, and Corporate Governance (internal regulatory document), the Agency believes that the process of evaluating and selecting the Issuer’s projects fully complies with 2021 GBP and best market practices.

All projects selected by the Issuer for the assessed issue (see Appendix 1) are categorized as Renewable Energy according to 2021 GBP and relate to the following UN SDGs:

• SDG 7: Ensure access to affordable, reliable, sustainable and modern energy for all.

In ACRA’s opinion, the described algorithm is evidence of an efficient process of project appraisal and selection and corresponds to the best market practices.

Management of proceeds

The procedure for managing proceeds from the issuance of green bonds is outlined in the Framework. In order to keep record of the spent proceeds, the Issuer will create a register of green bonds. The Issuer indicated that it intends to maintain the aggregate amount of projects financed/refinanced by the proceeds from the green bond issuance at a level not less than the aggregate par value of outstanding green bonds. The green bond register will contain data sufficient to identify each green bond issue. The Framework also states that at times when the par value of outstanding green bonds exceeds the value of projects financed through green bond offerings, the excess amount will be invested in the Bank’s liquidity management instruments.

In addition, the Issuer indicated that its relevant divisions would confirm the intended use of borrowed funds for projects financed/refinanced by loans included in the register of green projects. In case of any non-compliance by the borrower with the covenants, which is an event of default on loans included in the register of green projects, and the Issuer decides to enforce such event of default, the loan will be excluded from the register of green projects. The Issuer has also established a procedure for substituting repaid loans in order to maintain the total amount of loans included in the register of green projects at a level not less than the total par value of outstanding green bonds.

In ACRA’s opinion, the procedure for managing proceeds fully comply with 2021 GBP and the best market practices among banks who are green bond issuers.

Reporting

The Issuer is required to publish a report on the target use of proceeds received from the issuance of the Exchange-traded Bonds as part of the report on the placement of funds raised from the issues of green bonds (hereinafter and earlier, the Report) on its corporate website, the webpage provided to the Issuer by an accredited agency (http://www.e-disclosure.ru/portal/company.aspx?id=3043), as well as on the website of Moscow Exchange.

The report will contain the following information:

• Name of projects;

• A brief description of the projects (within the framework of existing confidentiality obligations);

• The approved volume of refinancing of projects using bonds;

• The share of refinancing of projects from other sources;

• Information on spending (distribution) of funds raised through the bond issue;

• Information on spending (distribution) of funds raised through the bond issue in the reporting period;

• Information about the management of unallocated funds;

• Information on the achievement of qualitative and quantitative indicators of the implementation of the projects, including:

(1)     Data on electricity generated by RES in the reporting period (qualitative criterion);

(2)     Data on the maximum capacity of power plants (MW) in the reporting period (quantitative criterion); the current status of projects.

(3)     Information on the estimated volume of avoided carbon dioxide emissions for the reporting period due to electricity generation from RES;

(4)     Information confirming the implementation of the projects and their status.

• Information confirming the implementation of the projects, and the actual use of all funds received from the placement of bonds;

• Information about the status of the projects as of the end date of the reporting period.

The Issuer will publish the report annually.

ACRA notes that the Issuer publishes its non-financial statements annually as part of its annual reports and will publish also within the framework of the issuer’s report for 12 months. These statements disclose information about green projects, the funds for which are replenished through green bond issues (report on the placement of funds raised through green bond issues). This was positively assessed by the Agency as part of the Reporting and Transparency factor.

In the Agency’s opinion, the above procedure fully complies with 2021 GBP.

Additional assessment factors

Organizational structure and strategy

According to the Issuer, green loans will be approved by its Key Clients Lending Department and Key Clients Department in accordance with standard lending procedures.

Moreover, in accordance with its current Environmental, Social, Governance and Sustainability Policy, the Issuer has established the ESG Directorate, which is the main coordinating unit that (1) implements a systemic approach to ESG and the sustainable development agenda, (2) manages implementation of the action plan based on corporate standards, (3) provides ESG expert support to other units, and (4) is responsible for the monitoring and submission of reporting in this line of work. ESG risks are also within the scope of responsibility of the Issuer’s risk management service, and ESG subdivisions within the Issuer’s business units are in charge of business areas that carry out thematic ESG initiatives.

As part of the assessed green bond issue, the Issuer has set the goal of financing the construction of power generating facilities based on renewable energy sources, including solar and/or wind. According to the Framework presented to the Agency, a loan replenished by proceeds from the issuance of green bonds may only be a loan containing a provision (in the form of variable rate terms and/or covenants) for putting into operation a power plant that uses a source of renewable energy (wind and/or solar energy).

The Issuer has established the source of electricity (solar and/or wind) as a qualitative criterion for projects. The quantitative criterion is the total planned capacity of a power plant put into operation as part of a project.

For the purposes of verifying this issue, the Issuer provided the Agency with complete information on all projects, including reports from technical consultants, as well as detailed information on capacity and planned electricity output, taking into account acceptable assumptions.

The Agency assesses the level of integration of the Sustainable Development Principles into the Issuer’s policies and procedures (including as part of ESG risk assessment) and strategy as high. In 2020, the Issuer’s ESG strategy for 2021–2023 was approved, which in turn is integrated into the general corporate development strategy until 2023. The ESG strategy formulates key areas and goals, including those expressed in quantitative parameters. In addition, the Issuer clearly formulates its contribution to achieve the UN SDGs.

In early 2021, the Issuer joined two global ESG initiatives: the Principles for Responsible Banking and the UN Global Compact. According to the Agency’s methodology, participation in these international initiatives has an additional positive impact on the qualitative assessment of the Issuer’s organizational structure and strategy.

The Agency’s opinion on the overall quality of the Issuer’s corporate governance and strategic planning is also high.

Financial feasibility of projects

At the time of the bond offering, all eight power plants had been put into operation (all project stages) and began to supply power to the WECM. Taking into account the existence of long-term capacity sales agreements for these power plants, the Agency estimates the economic viability of the projects as high.

KEY ASSUMPTIONS

• Targeted use of proceeds from the issuance of green bonds;

• The maximum capacity (MW) of power plants corresponds to the design documentation for each project;

• The planned annual power output (aggregate and for each power plant) was calculated as a product of installed capacity of each power plant, capacity factor (for each power plant), 24 (hours per day), and 365 (days per year).

KEY ASSUMPTIONS FOR ESTIMATING ENVIRONMENTAL EFFECTS

• To determine the amount of prevented greenhouse gas emissions, it was assumed that greenhouse gas emissions are zero at solar power plants.

• To calculate CO₂ emissions from electricity generation under the alternative scenario (use of non-renewable energy sources), the calculated factors of carbon dioxide emissions from electricity generation for the relevant UPS were used in t CO₂/kWh.

• The projected emission factor per unit of generated electricity in grams of CO₂ per kWh was based on the data from the Order on Approval of the Map and Program for the Development of the UES for 2021–2027 (Order of the Ministry of Energy of Russia No. 88 dated February 26, 2021): data on the target structure of electricity generation by UPS for 2021–2027 and data on the TPPs’ demand for fossil fuel by UPS for 2021–2027.

• The calculations took into account varying service lives of different solar power plants and the predicted values of factors.

• A regional method for quantifying greenhouse gas emissions was used.

assessment components

Compliance of the issue with GBP: yes.

Assessment score: GR1.

ADDITIONAL INFORMATION

The assessment of the projects refinanced as part of the green bond issue of Sberbank of Russia for compliance with internationally recognized principles and standards in the field of ecology and/or green financing, as well as of the bonds themselves — for compliance with 2021 GBP — have been performed based on the Methodology for Green Debt Obligation Assessment with regard to green bond assessment.

ACRA has published its opinion on the compliance of the projects refinanced by Sberbank of Russia with internationally recognized principles and standards in the field of ecology and/or green financing, and on the compliance of the bonds of Sberbank of Russia with 2021 GBP for the first time. The compliance assessment may be revised within one year following the publication date of this press release.

ACRA’s opinion on the compliance of the projects refinanced by Sberbank of Russia with internationally recognized principles and standards in the field of ecology and/or green financing, and also on the compliance of the bonds of Sberbank of Russia with 2021 GBP is based on data provided by Sberbank of Russia, information from publicly available sources, and ACRA’s own databases. The assessment of compliance of the projects refinanced by the issuer with internationally recognized principles and standards in the field of ecology and/or green financing, and of the compliance of the bonds of Sberbank of Russia with 2021 GBP was solicited, and Sberbank of Russia participated in the assessment process.

In assigning the assessment, ACRA used only information, the quality and reliability of which was, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.

The assigned assessment is not a credit rating.

Appendix 1. Projects refinanced by proceeds from the green bond issue that comply with internationally recognized principles and standards in the field of ecology and/or green financing (2021 GBP)

Sources: Sberbank of Russia, System Operator of the Unified Energy System JSC
* See key assumptions and description of environmental effects.

Appendix 2. Compliance of the assessed bond issue with the criteria for compliance of a financial instrument with the requirements stipulated by decree of the Government of the Russian Federation dated September 21, 2021 No. 1587 “On approval of criteria for sustainable (including green) development projects in the Russian Federation and requirements for the verification system for sustainable (including green) development projects in the Russian Federation”.

ACRA also verified the compliance of the issue and projects planned for refinancing using the proceeds raised from this issue for compliance with the criteria stipulated by Decree of the Government of the Russian Federation dated September 21, 2021 No. 1587, and the criteria for green projects (Green Project Taxonomy).

Opinion on compliance:

The assessed financial instrument (bonds) complies with the criteria.

Verification methodology:

The assessment of projects refinanced as part of the issuance of Sberbank’s green bonds for compliance with internationally recognized principles and standards in the field of ecology and/or green financing, as well as the bonds themselves was carried out on the basis of the Methodology for Green Debt Obligation Assessment in terms of the assessment of green bonds.

Activities performed:

As part of the assessment, the Verifier (ACRA) requested and analyzed the following materials provided by the Initiator (Issuer):

1)      Public policies of the Issuer in the field of sustainable development;

2)      Internal policies and procedures of the Issuer in the field of sustainable development and risk management;

3)      The Agency’s questionnaire completed by the Initiator;

4)      Description of projects;

5)      Reports on the results of technical expertise of projects;

6)      Models and assumptions on environmental effects provided by the Initiator.

A series of interviews was held with the Initiator.

Confirmation of independence of judgment and absence of conflicts of interest or other circumstances that impede proper, objective and impartial analysis and judgment:

See page 10 of this press release.

Confirmation of the type of sustainable development financial instrument declared by the Initiator:

Green financial instrument (green bonds).

Responsibility of the Initiator for non-compliance of the sustainable development financial instrument with the requirements:

See page 8 of this press release.

Compliance of the sustainable development project with one or more areas stipulated by the criteria for sustainable development projects:

Creation and modernization of generating facilities and supporting infrastructure for the generation of energy from renewable energy sources and low-carbon fuels (solar energy) (par. 2.1.1 of the Green Project Taxonomy).

Information about the Initiator and the sustainable development projects:

The bond issuer is Sberbank of Russia, the largest commercial bank in the Russian Federation in terms of assets. In the context of this issue, green projects mean the construction of eight SPPs.

Objectives of refinancing the selected portfolio of green projects:

The Issuer selected the construction and upgrade of generating facilities and supporting infrastructure for generating energy from renewable energy sources, namely, generating facilities using solar energy (par. 2.1.1 of the Green Project Taxonomy), as the objectives of financing. A detailed description of the projects is presented on pages 3–6 of this press release and in Appendix 1.

Compliance of the bonds with the requirements established by the Bank of Russia in accordance with Russian legislation on the issue of securities for bonds, the issue or program of which contains additional identification using the words “green bonds”:

Yes (extended confirmation is provided on page 1 of this press release).

Assessment of the compliance of the financed sustainable development project with the criteria for sustainable development projects:

Complies (see pages 3–8 of this press release).

Analysis of the purposes for which the attracted funds are used and the procedures for providing recommendations on the use and management of funds:

Complies (see pages 3–8 of this press release).

Analysis of procedures for selection and approval of sustainable development projects:

Complies (see pages 6–7 of this press release).

Analysis of control over the implementation of sustainable development projects:

Complies (see pages 7–8 of this press release).

Value of indicators and independent confirmation of the expected environmental effect from the implementation of the sustainable development project:

The Issuer presented detailed calculations of the environmental effects from the implementation of projects. Environmental effects are understood as:

• Increase in the aggregate installed capacity and power output from RES facilities comprising certain UPSs and the entire UES of Russia;

• Increase of the RES share in the installed capacity and power output of certain UPSs and the entire UES of Russia.

Indirect environmental effects are the reduction of CO₂ emissions through the withdrawal from the market of generating facilities that use fossil fuels as a source of energy, as well as the substitution of the lost volumes of electricity with volumes generated by the RES facilities.

The Issuer presented the calculations of CO₂ emissions prevented indirectly due to the generation of electricity at the assessed SPPs, taking into account the key assumptions, including data on the planned output of SPPs broken down by year and for the entire period of planned operation; projected emission factor per unit of generated electricity in grams of CO₂ per kWh for each UPS, based on the forecasted electricity output in each UPS for 2022–2027, and the TPPs demand for fossil fuel in each UPS for 2022–2027 as determined in the Map and Program for the Development of the Unified Energy System of Russia for 2021–2027 (see Key Assumptions on page 9).

According to the Issuer, the amount of prevented CO₂ emissions for the entire expected period of operation of the eight SPPs is 2,887,690 t СО₂.

The power plants will not cause significant harm to the environment at their locations, which is confirmed by the environmental impact assessment. In addition, none of the power have any federal and regional significance and are not subject to mandatory state environmental expertise (see page 4 of this press release).

Expected environmental effects of green projects:

Provided in Appendix 1 to this press release.

Information about the presence (absence) of conflicts of interest, independence of judgment.

No conflicts of interest were identified as part of the assessment process (see page 10 of this press release).