April the 8th, 2021
To our stakeholders

Statement of continued support

I am pleased to confirm that SVEZA Company (SVEZA-Les LLC) 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 sharing this information with our stakeholders using our primary channels of communication.

Sincerely yours,

Mr. Anatoliy Frishman
Chief Executive Officer

An open and honest dialogue with employees is the basis of Сompany HR policy.
There are no age restrictions for either professional growth or for employment in the Company.
When hiring, HR departments of enterprises first of all evaluate experience, professionalism and development potential.
Sveza does not discriminate on national, religious or gender grounds when applying for employment or promotion not only at the Group mills, but also requires respect for human rights from suppliers of wood raw materials, which is regulated by the due diligence system adopted by all the Company enterprises.

In addition, Sveza strives to create a safe and comfortable workplace, to create an environment in which our employees grow and develop as professionals every day.

Sveza also strives to develop integrity in terms of interaction with society. The Company businesses are open to journalists and representatives of other interested parties.

A single hotline is designed to help employees get an answer to their question as quickly as possible, respond to a complaint or problem, and record important information or suggestions. Requests are accepted by phone, email, or through the corporate portal. The service is available 24/7 and has options either to specifying the working place and department or to remain anonymous. All hotline calls are registered in a single database, and a responsible person is assigned for each of the
requests, along with the time frame for solving the problem.

Any employee who faces violations of Corporate Behaviour rules and who failed to resolve the issue through their direct supervisor can contact the Ethics Committee. The request can be sent to the Committee email address. The Ethics Committee guarantees confidentiality and objectivity of the investigation. The Committee is headed by the CEO. Members of the Committee discuss each concern separately and make a collective decision. Each situation is reviewed during one month to thoroughly analyze all aspects of the problem. The Committee also provides guidance on the provisions of the Code of Conduct and deals with issues towards its improvement.

- A total of 983 people were employed in 2019. The total real turnover of staff (all except transfers) decreased compared to the previous period and amounted
to 14.29% (16.07% in 2018), undesirable turnover (voluntary dismissal) — 6.58% (5.75% in 2018).
- In 2019, the hotline received 186 calls. All requests were processed, and all employees who requested for help received the necessary assistance.
- In 2019, the Ethics Committee handled five requests from employees. One of the requests was partially confirmed, and administrative response measures were taken.

The key aspects of the Personnel Policy that regulate work with personnel are recorded in a number of internal documents:
• Internal labor regulations
• Regulations on employee compensation
• Code of Conduct for Sveza Group employees
• Regulations on bonuses for employees
• Regulations on business trips
• Regulations on entertainment allowance
• Regulations on conditions for admission and transfer of employees to work in another locality
• Regulations on provision of voluntary medical insurance and insurance under NS
• Regulations on conducting “Dialogue on Goals” for managers, specialists and workers
• Regulations on rules for setting, revising and summing up key performance indicators for the annual horizon
• Procedures for dealing with violators of labor protection requirements
• Regulations on social guarantees and benefits.

The Company respects the right of employees to freedom of associations and collective bargaining.

Primary trade union organizations of Professional union of forest industry workers of Russian Federation (Roslesprofsoyuz) operate at Sveza enterprises in Kostroma,
Manturovo, Novator and Uralskiy.
As a member of all-Russian industry Association of employers “Union of Timber Producers and Timber Exporters of Russia”, the Company participated in the
work of Commission on collective bargaining and preparation of the draft Industry agreement on the timber industry of Russian Federation for 2018–2020.
The following issues are discussed during meetings with trade union leaders:
• Implementation of enterprises collective agreements;
• Interaction with administration to improve labor protection and industrial safety;
• Events planned in cooperation with administration;
• Work of trade union representatives in commissions and committees, etc.;
• Children recreation activities, health resort treatment of employees (distribution of vacation packages).

Almost two thirds of employees are in the 30–50 age group, which combines advanced professional skills and good physical shape.

The share of women in the total number of employees is 42%, which is four percentage points higher than the same indicator for the manufacturing industry in the country.

42 new managers were appointed from the personnel reserve in 2019.

At the end of 2019, Sveza Group showed the best result among timber companies in the “Russian Employers Rating”, which is compiled by Headhunter according to market participants, employees and job seekers, and took 36th place in the overall list.

The development strategy of Sveza Group is aimed at taking a leading position in terms of business efficiency among international woodworking companies.
This implies a responsible attitude towards preserving a healthy environment for present and future generations.

The environmental protection policy of Sveza Group is aimed at minimizing the negative impact of production activities on the environment and provides for this
a number of processes:
• Reducing the concentration of pollutants in discharges;
• Reducing the concentration of pollutants in emissions;
• Ensuring proper management of waste generated in the course of the Сompany’s business activities, optimization of their collection and disposal, in the future, the transition to wastefree production;
• Implementation of energy saving programs to reduce the consumption of energy and non‑renewable natural resources, as well as water;
• Reducing the consumption of raw materials per unit of output, harvesting wood raw materials in accordance with the requirements of sustainable forest management.

The Company is responsible for the origin of wood raw materials and uses timber from proven legal sources in production. All products manufactured under the Sveza brand meet the requirements of Forest Stewardship Council™ (FSC™), (license code FSC™-C107425), a non-governmental non-profit organization that develops
the world largest voluntary forest certification system.

Our сontribution to сlimate сhange mitigation:
- Development of production of bioproducts from wood waste
- Implementation of sustainable forest management practices
- Implementation of innovative products
- Reduce the use of fossil fuels and use carbon neutral biofuels as an alternative

Our contribution to improve water quility:
• Modernization and construction of treatment facilities
• Construction of local treatment facilities to ensure water circulation in a closed cycle
• Renovation of swimming pools for hydrothermal treatment of raw materials
• Participation of the Company and employees in riverbank cleaning and improvement activities initiated by local communities

>240 million rubles are aimed at the implementation of environmental projects from 2016 to 2019
230 million rubles the total expected economic effect of environmental projects aimed at energy saving by 2025
>1 million trees trees planted by the Company in 2019
39 million rubles invested in forest fire prevention
All mills of Sveza Group, as well as the management company, are certified according to FSC standards of the supply chain (Chain of Custody, CoC) and Controlled Wood (CW). Some branches also have forest management certificates for leased forest plots (Forest Management, FM). Thus, FSC certification confirms that
all products produced at the Company enterprises are the result of processing legally procured wood obtained from controlled or certified sources.

The Сompany attaches great importance to conducting business in accordance with generally recognized ethical standards, rejects unfair competition and considers any cases of bribery and corruption on the part of employees or business partners unacceptable.

Since 2014, the Сompany has been implementing the Anti-Corruption Policy of SVEZA-Les LLC and related legal entities.
In the first place, the policy regulates employee behavior in areas such as gifts and representation expenses, hiring officials, and interaction with third parties. The policy also regulates the procedure for evaluating organizations, individual entrepreneurs and individuals who are planning to provide sponsorship or charitable assistance.

In addition to the policy, anticorruption articles contain the Code of Conduct for Sveza Employees, as well as the Code of Business Partnership that is
currently being developed.

Employees of the Company are required to report any known cases of bribery and corruption, as well as violations of the policy, to the immediate supervisor, to
the ethics Committee or to the Business Support Service (BSS), which assesses risks and monitors compliance with the policy. Employees who inform BSS about
a corruption violation committed against them may be rewarded.

The main corruption risks are related to committing illegal actions to the detriment of the Company’s interests and in the interests of third-party legal entities and
individuals in exchange for illegal remuneration (effecting the results of the tender, granting preferences in the form of more favorable prices compared to competitors,
additional volumes, concealment of poorly performed work, failure to submit penalties, etc.).

The following preventive measures are used:
• inclusion of an anti-corruption clause in contracts with contractors that provides for penalties for unfriendly influence;
• periodic audit of contracts in which the initiators omitted the inclusion of an anti-corruption clause;
• signing non-disclosure agreements for confidential information;
• BSS participation in tender procedures;
• sending letters to contractors about the need to comply with the requirements of anti-corruption policy and legislation;
• BSS meetings with contractors on the subject of violations and abuses;
• random checks of employees, candidates and contractors;
• entrance control during employment and periodic psychophysiological examinations.

In 2019, according to the materials of the BSS inspections, two criminal cases were initiated.