Приложения Корпоративное управление Устойчивое развитие Обзор результатов Стратегический отчет

May 2021

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INTRUDUDCTION

Table of contents

Introduction .................................................................................................................................... 3

About the Company ...................................................................................................................... 3

About this Report .......................................................................................................................... 4

Sustainable Development ............................................................................................................. 5

The United Nations Sustainable Development Goals relevance .................................................. 5

ESG Targets ................................................................................................................................. 6

ESG Performance ......................................................................................................................... 7

Eligible Green Project .................................................................................................................... 8

Green Finance Framework Summary ........................................................................................... 8

“Lastochka” trains purchase project .............................................................................................. 9

Passenger transportation by “Lastochka” trains ......................................................................... 10

2020 CHF Green Bond Overview ................................................................................................ 12

CHF 250mn 0.84% due March 2026, CH0522690715 ............................................................... 12

External review and certification ................................................................................................. 13

Allocation Report ........................................................................................................................ 14

Impact Report ............................................................................................................................. 15

2020 CHF GREEN BOND OVERVIEW SUSTAINABLE DEVELOPMENT

ELIGIBLE GREEN PROJECT INTRODUCTION

Introduction

About the Company

No. 5 In passenger turnover globally

No. 1 In safety globally

Joint Stock Company Russian Railways (the “Company”, “Russian Railways” or “RZD”), and its subsidiaries (the “Group”) is Russia’s largest

railway transportation services provider, and one of the largest transportation companies in the world. The rail system has the world’s

longest electrified railway. As at 31 December 2020, approximately 44,255 kilometers (or 53% of the rail system) was electrified track. The

Company enables the transportation of vital goods to the most remote sites of the country and provides the most accessible transport for

millions of citizens. The founder and sole shareholder of Russian Railways is the Russian Federation. On behalf of the Russian Federation,

the rights of the shareholder are exercised by the Government of the Russian Federation.

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INTRODUCTION SUSTAINABLE DEVELOPMENT ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND OVERVIEW

About this Report

This is the Company`s second annual Green Financing Report (the “Report”) which aims to provide an overview of the Russian Railways

green bond issued in March 2020 in accordance with the Russian Railways Green Finance Framework, dated May 2019, that was updated

in March 2021 (the “Green Finance Framework”)1.

The Green Finance Framework was designed to demonstrate alignment with the Green Bond Principles 20182, as published by the

International Capital Market Association (ICMA), the Climate Bonds Initiative (CBI) Low Carbon Transport Criteria of Climate Bonds

Standard3, the Loan Market Association (LMA) Green Loan Principles4 and the coherence with the European Union (EU) Taxonomy5.

As at the date of this report, the Company has issued the following green labeled bonds:

Bond Name Issuance parameters Listing Second Party Opinion1 Reporting

2019 EUR Green

Bond

EUR 500,000,000, 2.2%,

due 2027, XS1843437036 Euronext Dublin

Sustainalytics 2019

(in English)

Green Bond Report

(May 2020)6

2020 CHF Green

Bond

CHF 250,000,000, 0.84%,

due 2026, CH0522690715 SIX Swiss Exchange Current Report

2020 RUB Green

Perpetual Bond

RUB 100,000,000,000,

perpetual, RU000A102564 Moscow Exchange

Expert RA 2020

(in Russian)

(separate report will be

issued during 2021)

2021 CHF Green

Perpetual Bond

CHF 250,000,000,

perpetual, CH1100259816 SIX Swiss Exchange

Sustainalytics 2021

(in English)

(separate report will be

issued during 2022)

This report focuses on the overview of the Company`s second green bonds (and the first green bonds in CHF) issued in March 2020 (CHF

250mn, 0.84%, due 2026, CH0522690715 - the “2020 CHF Green Bond”). The Report contains details of the performance of the related

green project, the issuance proceeds allocation and the quantitative environmental impact assessment.

Additionally, it is confirmed that that the 2019 EUR Green Bond remains in conformance with the Certification requirements of the relevant

Climate Bonds Standard. The May 2020 Green Bond Report remains accurate, no significant amendments are required. 1 Published on the company`s website https://eng.rzd.ru/en/9653

2 https://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp/

3 https://www.climatebonds.net/standard/transport

4 Loan Market Association - https://www.lma.eu.com/

5 https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance_en

6 https://eng.rzd.ru/api/media/resources/1596699?action=download

2020 CHF GREEN BOND OVERVIEW SUSTAINABLE DEVELOPMENT ELIGIBLE GREEN PROJECT INTRODUCTION

Sustainable Development

The United Nations Sustainable Development Goals relevance

The strategic priorities of activities carried out by Russian Railways in the field of

sustainable development are to reach the United Nations Sustainable Development

Goals (UN SDGs)7. The UN SDGs aim to take measures to ensure the optimal utilization

of limited resources, apply environmentally efficient as well as energy and material-

saving technologies, maintain the stability of social and cultural systems and ensure the

integrity of biological and physical natural systems.

Green Finance Framework Relevant the UN SDGs Targets8:

11.2: By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all […]9

9.1: Develop quality, reliable, sustainable and resilient infrastructure […]

9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable […]10

7 https://www.un.org/sustainabledevelopment/

8 The Green Finance Framework is published on the Company`s website at https://eng.rzd.ru/en/9653

9 https://sdgs.un.org/goals/goal11

10 https://sdgs.un.org/goals/goal9

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INTRODUCTION SUSTAINABLE DEVELOPMENT ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND OVERVIEW

ESG Targets

Russian Railways Environmental Targets according to the Long-Term Development Programme up to 2025 (vs 2018)

by 18% decrease in emission of pollutants into

atmospheric air from stationary sources

by 4.5% decrease in greenhouse gas emissions

into atmospheric air

by 20% decrease in utilization of water

resources

by 18% decrease in discharge of

wastewaters to surface water and land

The environmental activities of Russian Railways are carried out in accordance with the following documents:

The policy of the Russian Railways’ Holding on labour and environmental protection and industrial and fire safety;

The Environmental Strategy of Russian Railways for the Period up to 2020 and the Outlook until 2030;

The Strategy for the Development of Rail Transport in the Russian Federation until 2030;

Declaration on the integrated environmental protection of Lake Baikal when implementing investment projects to develop Eastern Russia;

Environmental corporate standards developed by Russian Railways in accordance with Russian legislation.

Russian Railways has fulfilled the goals set in the Long-Term Development Programme up to 2025 and the Environmental Strategy for the

Period up to 2020 and the Outlook until 2030. The Company is now approving a new version of the Environmental Strategy up to 2030 and

setting more ambitious goals, including achieving carbon neutrality and improving energy efficiency by:

introducing environmentally friendly and resource-saving technologies,

improving the technology for managing the transportation process,

improving the technical condition of the rolling stock,

development of gas engine locomotives operation.

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INTRODUCTION SUSTAINABLE DEVELOPMENT ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND OVERVIEW

ESG Performance

2020 Green Bond Award

Russian Railways is the winner of the New Market Green Pioneer nomination as the first Russian

company to enter the green finance market, as announced by Climate Bonds Initiative in June 2020.

Maintain leadership in energy efficiency and environmental performance among global freight and passenger railway companies

Russian Railways saved 6,566 TJ (RUB 5.32 bn) on energy efficiency measures in 2020

Enhanced Environmental Responsibility Programme measures helped reduce emissions by 13% y-o-y in 2020, water use reduced by

2.3% y-o-y and polluted waste water discharge reduced by 4.5% y-o-y

In 2020, taking into account the use of indirect emissions from the use of heat and electric energy in the balance sheet, Russian

Railways achieved a reduction of 48% to 36 million tons of CO2 of greenhouse gas emissions compared to 1990 levels with comparable

volumes of traffic

Focus on electrification of the passenger transportation rolling stock and green technologies in order to limit the environmental impact of

railway transport – in 2020, the Group acquired 48 “Lastochka” trains and 328 electric locomotives

Maintain well functioning safety management system

Russian Railways achieved reduction in number of injured employees by 78% from 2010 to 2020

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SUSTAINABLE

DEVELOPMENT

INTRODUCTION ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND

OVERVIEW

Eligible Green Project

Green Finance Framework Summary Section Summary

Use of

Proceeds

The Green Financing Instruments net proceeds will be used to finance and / or refinance Russian Railways’ expenditures relating to the Eligible Green Project Categories

Russian Railways will allocate the proceeds from Green Financing Instrument

issuance for financing and / or refinancing of loans relating to acquisition of electric

locomotives or trains for passenger transportation

Project

Evaluation

and Selection

Russian Railways’ Corporate Finance Department, in coordination with the Accounting, the Investments, the Passenger Transportation and the Environment and Sustainable Development Departments, will evaluate and select Projects for eligibility, subject to the relevance of the outstanding or new Green Financing Instrument

Eligible Projects will be recorded in a Green Financing Register and tracked for the

purposes of allocation of proceeds from the Green Financing Instrument

Management

of Proceeds

Russian Railways will track investments in selected projects recorded in the Green Financing Register

An amount equal to the net proceeds will be used to finance and refinance Eligible Green Projects (where expenditures relating to the Projects have been incurred during a three year period prior to the date of issuance of a relevant Green Financing Instrument)

Pending allocation or reallocation to Eligible Projects, an amount equal to the net proceeds of the Green Financing Instrument will be held in bank deposits in cash or invested in liquid securities, and/or used for the repayment of short term indebtedness, where such holdings, investments and/or repayments are not directly linked to the financing of activities which may conflict with the environmental objectives of the Russian Railways Green Financing Instrument.

Both, principal and accrued interest under the Green Financing Instrument will be paid

from Russian Railways’ general funds and will not be directly linked to the performance

of the Eligible Green Projects.

Reporting

As long as the Green Financing Instruments are outstanding (until being

repurchased/called back by the Company at some point in future), and in accordance

with Climate Bonds Initiative (CBI) Certification requirements, Russian Railways will

publish annual Green Financing Reports on the Company’s website. These reports will

include:

Allocations by Eligible Project category including example case studies, and details

of Eligible Green Projects

Relevant outcomes / impacts (e.g. passenger-kilometers, CO2 emissions reduced)

Amount of cash or cash equivalents remaining to be allocated

Share of new financing compared to refinancing

Confirmation by the Company’s management that an amount equal to the net

proceeds was allocated to Eligible Projects

Details of Post-Issuance Certification procedures performed by an accredited

External Reviewer in accordance with the CBI Certification requirements

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SUSTAINABLE DEVELOPMENT INTRODUCTION ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND OVERVIEW

“Lastochka” trains purchase project “Lastochka”11 is a modern high-speed electric train based on the Siemens Desiro platform with an

improved security system, special body equipment, and increased comfort for passengers. This is a train

for suburban passenger transportation on the railways of the Russian Federation, equipped with high and

low platforms. The electric train can reach speeds of up to 160 km / h. It is designed by taking into account

the specific features of the Russian climate. Acquisition of electric trains “Lastochka” is selected as

an Eligible green project for the purposes of the Russian Railways 2020 CHF Green Bond.

“Lastochka” trains purchases since 2015-2019 (period of allocation)

The main goal of the project is to service the rising passenger volume as well as to provide

passenger services with new improved quality on the current and new routes and switching from

automobile and bus transport to train transport

In comparison with car and airline transport, transportation by “Lastochka” trains is associated with

lower environmental impacts12

Electric trains “Lastochka” are adapted for people with limited mobility and passengers with children,

convenient for carrying bicycles, strollers. Trains are equipped with toilets, climate control systems

and Wi-Fi

“Lastochka” trains fall within the Eligible Green Project Category of Clean Transportation as recognized

by the Green Bond Principles

Russian Railways intends to refinance “Lastochka” trains purchases with the proceeds from Green

Financing Instrument issuances

11

In translation from Russian means “Swallow” 12

http://ecopassenger.org Values are given for the route Moscow – Nizhny Novgorod

Year 2015 2016 2017 2018 2019

Number of trains 23 30 31 35 33

Invested amount, RUB bn 10.5 12.8 15.1 18.7 21.4

2019 EUR Green Bond allocation

2020 CHF Green Bond allocation

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INTRODUCTION SUSTAINABLE DEVELOPMENT ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND OVERVIEW

0 10 20 30 40

South

Kaliningrad

St. Petersburg Transport Hub

Central Transport Hub

Ural Landfill

The Moscow Central Ring

mn passengers

2019

2018

2017

Passenger transportation by “Lastochka” trains

Passenger transportation volumes by region13

The majority of “Lastochka” trains’ passengers from

2017 to 2019 were transported through the Moscow

Central Ring, the share of this route reached 74% in

2019. The second route with the largest “Lastochka”

trains passenger transportation volumes from 2017 to

2019 was the St. Petersburg Transport Hub. In 2019,

17% of all passengers of “Lastochka” trains were

transported through this hub.

13

Data for the Central Transport Hub excluding the Moscow Central Ring

171 201

986 996

1,157 1,197

2018 2019

mn

pas

se

ng

ers

Passenger transportation volumes

by other trains

by "Lastochka" trains

The share of passengers transported by

“Lastochka” trains in the overall passengers

transported volume was about 17% in 2019,

compared to the 15% in 2018.

Between 2018 and 2019, the number of passengers

transported by “Lastochka” trains increased by 1.2

times.

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INTRODUCTION SUSTAINABLE DEVELOPMENT ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND OVERVIEW

Operational network of the “Lastochka” high-speed trains is wide. From 2013 to 2020, “Lastochka” electric trains have been successfully

operated at more than 6 ranges of Russian railways and on more than 40 routes. From 2017 to 2020, 19 new routes were launched.

The Central Transport Hub is the largest passenger transportation hub in the Russian rail system, and is responsible for about 71.8% of

suburban transportation and 13.9% of long-haul passenger rail journeys in the country. One of the key parts of the Central Transport Hub has

been the construction of the Moscow Central Ring, a 54-km-long light overland railway network opened in December 2016 which connects the

Moscow metro with the suburban railway. In 2019, approximately 147.5 million passengers travelled on the Moscow Central Ring, an increase

of approximately 13.8% in comparison with 2018. In 2020, approximately 115.3 million passengers travelled on the Moscow Central Ring, a

decrease of approximately 21.9% in comparison with 2019. All passengers of the Moscow Central Ring are served by the “Lastochka” high-

speed trains.

SUSTAINABLE

DEVELOPMENT INTRODUCTION ELIGIBLE GREEN PROJECT SUSTAINABLE DEVELOPMENT

SUSTAINABLE DEVELOPMENT

2020 CHF GREEN BOND

OVERVIEW

2020 CHF Green Bond Overview

CHF 250mn 0.84% due March 2026, CH0522690715 Transaction details

Issuer / Borrower /

Issuance structure

RZD Capital P.L.C.,

JSC Russian Railways,

Loan Participation Notes

Bond rating at issuance Baa2 (Moody’s) / BBB (Fitch)

Second Party Opinion / Verification Report Sustainalytics

Certification CBI

Placement date 12 March 2020

Maturity 12 March 2026 (6 years)

Issuance size CHF 250 000 000

Coupon 0.84% Fixed, Annual

Format / Listing / Law Reg S, SIX Swiss Exchange,

English Law

Joint Lead Managers and Bookrunners J.P. Morgan, UBS and

VTB Capital

Transaction highlights

The first-ever Green Eurobond issuance in CHF out of Russia and CIS and the second-

ever Green Eurobond issuance out of Russia and CIS

The issuance was priced at a yield of 0.84%, the lowest-ever CHF yield for Eurobond

achieved by any issuer out of Russia and CIS, as well as the lowest-ever coupon rate in

the history of Russian Railways Eurobonds issuances in various currencies

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INTRODUCTION SUSTAINABLE

DEVELOPMENT ELIGIBLE GREEN PROJECT SUSTAINABLE DEVELOPMENT 2020 CHF GREEN BOND

OVERVIEW

External review and certification

Compliance with green standards

Russian Railways developed the Green Finance Framework14 aligned with the ICMA Green Bond Principles 2018, the CBI Low Carbon Transport Criteria of Climate Bonds Standard and LMA Green Loan Principles 202115 which aims to demonstrate the environmental benefits of passenger transport via implementation of electric locomotives and trains.

Second-Party Opinion16

Evaluation date May 201917

Climate Bonds Standard Certification

The 2020 CHF Green Bond was certified by CBI in accordance with the Programmatic Certification.

Coherence18 with EU Taxonomy

Russian Railways believes that the activity supported under the current Russian Railways Green Finance Framework is coherent with the latest version of the EU Taxonomy19, which includes the following specified activities:

Passenger Rail Transport (NACE code H49.1.0) - Zero Direct Emissions trains (including electric),

Public Transport (NACE code H49.3.1) - Zero direct emissions land transport activities (e.g. light rail transit, metro, tram, trolleybus, bus and rail)

Russian Railways acknowledges the ongoing EU-level efforts to establish an EU Green Bond Standard20 and intends to keep the development under review, to determine the extent of alignment.

14

https://eng.rzd.ru/en/9653/page/103290?id=17738#main-header 15

Loan Market Association - https://www.lma.eu.com/ 16

https://eng.rzd.ru/en/9653/page/103290?id=17738#main-header 17

This document is an update of a Second-Party Opinion, originally published in May 2019, to which Sustainalytics has made minor revisions. In February 2021, JSC Russian Railways made changes to their Framework, relating primarily to the inclusion of green hybrid/perpetual bonds and loans as an eligible instrument which can be issued under the Framework. The changes have no bearing on the Framework’s compliance with the four core components of the GBP. 18

Use of term ‘coherence’ to reflect the fact that the technology underlying the projects supported by the Russian Railways Green Bond (electric rail transportation) is reflected in the current version of the EU Taxonomy, however no assertions are made regarding the extent of any alignment with the ‘Do No Significant Harm’ components of the Taxonomy. 19

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en 20

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-green-bond-standard_en

Sustainalytics is of the opinion that the JSC Russian Railways

Green Finance Framework is credible and impactful and aligns

with the four core components of the Green Bond Principles

2018 and the Green Loan Principles 2021.

INTRODUCTION SUSTAINABLE DEVELOPMENT ELIGIBLE GREEN PROJECT 2020 CHF GREEN BOND OVERVIEW

12 6

13 9

98 120

117

141

2018 2019

bn

RU

B

2020 CHF Green Bond proceeds share of the entire rolling stock renovation program

Other sources of financing "Lastochka" trains purchases

"Lastochka" trains refinanced with 2020 CHF Green Bond

"Lastochka" trains refinanced with 2019 EUR Green Bond

Allocation Report

The total net proceeds from the Russian Railways 2020 CHF Green Bond issuance were allocated towards refinancing the “Lastochka”

passenger electric trains purchase during the period from 2018 to 2019. The proceeds from the 2020 CHF Green Bond have now

been fully allocated in alignment with the Green Finance Framework.

Allocation towards “Lastochka” trains purchase

Number of trains Allocated Proceeds

purchased in total during the year refinanced with the 2020 CHF Green Bond CHF mn RUB bn21

2018 35 11 83 6.4

2019 33 22 167 12.7

Total 68 33 250 19.1

The role of the 2020 CHF Green Bond in financing the investment program

Total investment expenditure for the

renovation of locomotive fleet and rolling

stock was RUB 116.7 bn in 2018 and RUB

141.0 bn in 2019.

Funds raised from the 2020 CHF Green

Bond issuance covered financing of

about 48% of all “Lastochka” trains

purchases during the 2018-2019 years.

21

CHF/RUB exchange rate - 76.4570 as at 12.03.2020, in accordance with the Central Bank of Russia exchange rates

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INTRODUCTION SUSTAINABLE DEVELOPMENT 2020 CHF GREEN BOND OVERVIEW ELIGIBLE GREEN PROJECT

Impact Report

CO2 emissions calculation methodology

2018 2019

192 191

879

1,110

tho

usa

nd

to

ns

CO2 emissions

"Lastochka" trains

Automobiles

2018 2019

688

919

tho

usa

nd

to

ns

CO2 savings CO2 emissions from the use of “Lastochka” trains are on average

6 times less than that from the use of cars.

Based on the selected emissions factors, during the period from

2018 to 2019 the use of “Lastochka” trains generated CO2

emissions of app. 382 thousand tons in total, compared to app.

1,989 thousand tons from the potential use of cars.

1. Considering the amount of Electricity consumption,

consumed by the Directorates that operate the high speed

electric trains, in kWh

2. Considering the composition of Electricity consumption,

generated by different electricity source (type of energy) in

%

3. CO2 emissions of “Lastochka” trains (tons / year) =

∑Electricity consumption * Share of certain type of

electricity * CO2 coefficient attributable to this type of

electricity (according to the Ministry of Natural Resources

and Environment of the Russian Federation)

1,607 thousand tons of CO2 for 2018-2019 savings in total.

SUSTAINABLE DEVELOPMENT