MTS is distinguished by a long-term strategic approach to the implementation of social and environment-oriented projects, the Company is also mainstreaming responsible business practices into its business processes.

The sustainability¹ of the Company is also reflected in terms of provision of confidentiality and security of clients’ personal data, building a sustainable supply chain, providing social safeguards to employees, controlling the impact on the environment, and the positive impact of MTS Group’s products and services on reducing the carbon footprint, as well as careful consumption of resources, support for volunteer, environmental, educational, inclusive programs and local communities, preservation of cultural heritage and development of areas of presence, etc.

¹ Detailed information on MTS activities in the area of sustainability is published in the annual reports on sustainability of MTS Group

The development of the social and economic sphere of the regions of presence, the improvement of the investment climate and the quality of life of the population by providing a wide range of innovations and digital services and facilities in the field of healthcare, education, ecology, urban infrastructure and others is also one of the priority tasks of the Company within the framework of sustainability.

Moving towards a stronger and higher potential in the area of sustainability and ESG, MTS demonstrates its commitment to achieve the objectives, which are critical for all our stakeholders. The Company timely introduces the relevant principles into the corporate culture and communicates them to stakeholders using accessible and convenient communication channels.

In March 2021, an ESG Committee of the Board of Directors of MTS was set up, which function is to control the introduction and implementation of principles of sustainability, as well as to assist the management bodies of MTS in the development of a common strategy regarding corporate governance, environmental and social responsibility. Independent director Regina von Flemming has been appointed the chair of the ESG Committee.

In 2021, the Company carried out a comprehensive analysis and systematization of ESG initiatives to be implemented and approved, at the meeting of the Board of Directors in December, an integrated ESG strategy of MTS , where it identified focus areas in the context of optimizing the Company’s business processes and launching initiatives which facilitate the Company’s sustainability. The integration of ESG principles into business processes allows not only to successfully complete strategic tasks but also to ensure proper consideration of interests and responsible behavior towards all MTS stakeholders.

The Strategy includes principal provisions, both those developing included in the similar strategy of the previous cycle and those that replaced them. The approaches to be improved until 2025 cover the three areas:

• organize — remove gaps and use “what was underused”;
• multiply — continue what has been started successfully;
• test — check future opportunities.

For the purposes of efficient management of ESG activities, MTS ESG Center was established in February 2022.

The main tasks of which are:

• development of business initiatives taking into account their impact on the Company’s ESG agenda;
• integrated support of current socially-important and environment-oriented projects of MTS Group;
• development and implementation of new ESG initiatives;
• provision of internal consulting services in the area of ESG to business verticals of the MTS ecosystem;
• replication of the best ESG practices in the MTS ecosystem;
• regular assessment of the maturity level of ESG initiatives, monitoring and control, development of remedial measures;
• interaction with external and internal stakeholders within the framework of the ESG agenda, reporting to the ESG Committee and other governing bodies.

The creation of the ESG Center completed the building of an efficient system to manage the implementation of the ESG strategy at MTS under the authority of the ESG Committee of MTS Board of Directors : together with the ESG Center, the Company has also in place a Social and Charity Program Center responsible for the implementation of the charity and social strategies of MTS, and the Center for Social Responsibility, Diversity and Inclusion, which is responsible for the implementation of the Company’s strategy in the field of equality and inclusion.

MTS Annual Conference “Sustainability and ESG. The Social Aspect”

At the end of 2021, MTS annual open online conference “Sustainability and ESG. The Social Aspect” took place with over 1700 participants throughout Russia. The role of the ESG strategy in the activities of companies, new approaches to creating affordable products and services, building efficient communications with all stakeholder groups, building a diverse and inclusive environment was discussed by ESG experts from Russian and international companies.

ESG Results

• In March 2021, MTS placed social impact bonds amounting to RUB 4.5 billion with a coupon rate of 6.5 % per annum fixed for the entire maturity period. Proceeds from the issue will be applied to finance a project for the connection of almost 5,000 socially significant facilities in Russia to the fixed-line Internet.
• The President of MTS Vyacheslav Nikolaev has been elected to the GSMA Board for 2021–2023. The Board of the Association consists of 25 representatives of the largest global operator groups and representatives of regional operators.
• In October 2021, MTS signed the Code of Ethics for Artificial Intelligence. The document confirms the basic AI implementation principles: transparency, truthfulness, responsibility, reliability, inclusion, impartiality, security and confidentiality. The principles are transboundary and supranational.
• In November 2021, MTS joined the international association of telecom operators 5G Future Forum (5GFF), whose task is to develop specifications and introduce advanced solutions on the basis of 5G and edge computing (Multi-access Edge Computing — MEC) technologies. The 5GFF association was established in January 2020 by América Móvil, KT Corporation, Rogers, Telstra, Verizon, and Vodafone to develop common specifications, share best practices, manage intellectual property and participate in R&D projects aimed at implementing and globally scaling commercial solutions based on 5G and MEC technologies.
• In November 2021, MTS joined the Digital Ethics of Childhood Charter. The document was created by the Alliance for the Protection of Children in the Digital Environment, and MTS is one of the founders of the alliance, along with the largest Internet and IT companies in the country. The principles laid down in the Charter will allow to increase the level of digital literacy and protect children from potential threats on the Internet.
• In December 2021, Expert RA rating agency confirmed the credit rating of MTS at ruAAA in the company’s review for 2021. Expert RA noted the high level of predicted liquidity, in particular, that the operating flow, together with cash assets, is sufficient to cover any interest expenses. The Agency also made special mention of the high quality of the organization of risk management, strategic planning and the high level of the Company’s information transparency.
• In December 2021, MTS was awarded the highest category A+ of the Leaders in Corporate Charity rating, which is annually issued by the Association of Grant-Giving Organizations “Forum of Donors” in order to identify the best practices of corporate social investment and charity and promote them in the business environment and society.
• In December 2021, MTS announced it had received a B Management rating from CDP, an international non-profit organization that runs the leading global disclosure platform to manage environmental impacts. The Company started reporting through the CDP platform in 2019 within the GSMA initiative to develop a roadmap for the telecom industry to achieve zero greenhouse gas emissions by 2050. In accordance with the Paris Agreement, MTS discloses a wide range of environmentally important data about its operations, including resource consumption and direct and indirect greenhouse gas emissions.
• In January 2022, the Russian rating agency NCR (National Credit Ratings) confirmed the AAA.ru credit rating of MTS with a stable forecast. In the report, the NCR noted a number of key factors in MTS activities that impacted the rating confirmation: low systematic risk of MTS operations; moderate debt load, high debt service margin, significant operating profitability, as well as a sufficient business liquidity level; positive quality assessment of management and strategic planning.