GES Newsletter
June 29, 2012

Russia’s largest power-generating company, RusHydro, has proven very responsive to international investors’ concerns regarding a 2009 Siberian power plant accident that killed 75 people. After nearly three years of constructive engagement, an on-site visit by GES provided the final proof to resolve the case. RusHydro acknowledges the value of the dialogue with GES in this process.

In August 2009, a failed turbine at RusHydro’s hydro-electric plant Sayano-Shushenskaya in southern Siberia, brought down the ceiling of the turbine hall, which then flooded and drowned 75 workers. A parliamentary report held the directors of the plant and RusHydro’s management responsible for the accident, due to the lack of permanent monitoring and control over the power plant safety.

After further research, GES concluded that the reported practices could be associated to a violation of the UN Global Compact Principle 1, addressing safe and healthy working conditions, and the corresponding Guideline V of the OECD Guidelines for Multinational Enterprises. Consequently, GES intensified its engagement with RusHydro and various sources in order to ensure that the company addressed the root causes of the accident and improved management of the safety risks.

In early June 2012, the engagement process reached its final stage when GES’ Senior Engagement Manager Flemming Hedén and Russian-speaking Research Analyst Paulina Kurkiewicz went to the hydro-electric power plant in Siberia.

“In GES’ engagement, we always undertake far-reaching efforts to achieve results. Although we have had an excellent communication with the company and they have responded quickly and thoroughly, we needed to get verification from another party that the relevant measures had been taken. As the Russian authorities reporting on the incident did not respond to our repeated requests, we decided to check it ourselves,” said Flemming Hedén.

GES’ inspection showed that RusHydro has acted responsibly, firstly by taking full responsibility for remediating and compensating the effects of the accident. Secondly, the company has – both at its own initiative and following recommendations of Rostekhnadzor, the Federal Service on Ecological, Technological and Nuclear Supervision – improved health and safety management so that it is now systematically managing the risks related to its operations in order to ensure its safety. Therefore GES concludes that RusHydro has fulfilled the revision criteria and that the case is resolved.

RusHydro’s deputy CEO George Rizhinashvili commented: “Socially responsible investors are very important to us. Their presence in our shareholder base highlights the sustainability of the company’s core business – hydro generation. We appreciate the positive outcome of the dialogue with GES, as its report, which is based on solid methodology, is an important third-party acknowledgement of our progress with regard to environmental, social and governance issues.”

RusHydro is the world’s second-largest hydroelectric power producer and Russia’s largest generating company by installed capacity and a leader in renewable energy.

For more information, please contact:
Flemming Hedén, Senior Engagement Manager and Product Manager