CEO's Foreword

Dear friends,

For NIS, sustainable development means progress and responsibility. In the present complex and challenging business environment our commitment to sustainability remains one of the key prerequisites for the long-term development of the company. It shows our accountability for environmental protection and the development of the communities we work with.

In the world that is rapidly changing we always try to find the most efficient solutions to the tasks we face. Like most petroleum companies, NIS is faced with the task of supplying the market with sufficient amounts of fuel at favourable prices to support further economic growth. At the same time, we are aware of the additional challenges related to the energy transition, need for digitalization and the pressure to reduce the carbon footprint to slow down climate change. For us, these challenges are not merly obstacles but also new opportunities. We focus on finding innovative solutions, adopting new technologies and streamlining our processes to minimize the environmental impact. We believe that sustainable practices are crucially important not only for our success in the industry, but for the well-being of future generations. This is why, every year we contribute as much as we can to ensure a sustainable future for our society.

In that sense, the past year has been a true test for our business, as we found ourselves under the influence of multiple economic and geopolitical challenges beyond our control. However, I am pleased to say that we successfully faced that test and with the support of our partners from the Government of Serbia maintained the stability of the Serbian fuel market. Additionaly, we took several important steps towards the further modernization of the company, having invested over RSD 22 billion. It is important to remember that progress in business is impossible without continuous investment. This is why NIS is launching a new investment cycle in 2023, where we will double our investments from last year. Our goal is to support the long-term development and financial feasibility of the company, improve our environmental and HSE performance, and move forward in terms of the energy transition process. This primarly involves reducing our carbon footprint and greenhouse gas emissions, as well as utilizing sources more efficiently. To achieve this, we will focus on better energy efficiency in all areas of business, use of cleaner fuels like natural gas, and projects in renewable energy and CO2 capture and storage. In 2022 alone we invested almost RSD 315 million in environmental projects.

Last year, we made significant progress in terms of the company’s energy transition. We have set up the Energy Block to manage all our activities in thermal and electrical energy industry, which we see as an area for development going forward. This is our response to the deep changes in the energy market and in the regulatory framework. NIS will do its part to help the Government of Serbia meet the obligations set by the new targets and standards.

As for HSE, we are continuing to improve our performance through active cooperation and exchange of best practices with our partners. In 2022, the lost-time injury frequency rate decreased by 15% compared to the previous year YoY. NIS also won first place in the national occupational health and safety competition, for the second time in a row. We hosted the 13th Contractor Forum, where we exchanged experience and best practices in HSE with our partners. We will continue to put forth our best efforts to ensure the safety of our employees, contractors, and all other people on our locations.

I would like to point out, that 2022 was exceptionally important for strengthening our cooperation with the local community. It has been an honour for us to support the state in its goal of increasing the birth rate. In terms of this we created a program under the title Let New Hopes be Born, where we donated state-of-the-art medical equipment to healthcare facilities. NIS team also contributed to the national goal: this year, our employees and their families welcomed 494 new babies.

I believe we can confidently say that in 2022 we successfully overcame all challenges and together contributed to the long-term sustainable development of NIS. Sustainability is achieved through day-to-day work and engagement of our team. This 2022 Sustainable Development Report serves as both an overview of our achievements and a list of priorities we will focus on going forward to achieve our goals and create value for our employees, shareholders, and society. By working towards these goals we also make a strong contribution to the UN Sustainable Development Goals and strive for a better future for all of us.