While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: Due to the fact that this is an equity investment in a corporate entity to support its expansion into operating future assets which are yet to be defined, the principal Performance Standards to be applied are: PS 1: Social and Environmental Assessment and Management Systems PS 2: Labor and Working Conditions PS 3: Pollution Prevention and Abatement There are no adverse impacts on community health, safety and security (PS 4); no land acquisition is planned and no impacts related to involuntary resettlement and land acquisition (PS 5) is envisioned; no biodiversity impacts (PS 6) is anticipated; no indigenous peoples (PS 7) are presents in the areas surrounding company’s operations; and no cultural heritage sites (PS 8) are expected to be affected by the operations.

This is a Category B project according to IFC’s Environmental and Social Review procedures because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to performance standards, guidelines and the Environmental and Social Action Plan (ESAP). The company will have positive environmental and social impacts by providing reliable heating services to local community and improving the environmental performance, reducing energy loss and water loss in the currently underinvested public utilities across Eastern Europe and CIS.

Key risks for this corporate investment include: the Company’s management capacity to undertake sustainable heat distribution and combined heat and power generation projects; assessment of environmental and social risks in new project planning, design, construction and operation; air emissions and ambient air quality; construction impacts arising from the expansion of its distribution system; emergency response planning and preparedness; and labor and working conditions, including employee retrenchment and occupational health and safety. Mitigation measures for the potential environmental and social impacts have been identified and are incorporated into the attached Environmental and Social Action Plan (ESAP). The Company has committed the resources to implement comprehensive environmental, health, safety and quality management systems consistent with IFC environmental and social performance standards and demonstrated that with implementation of these measures its activities will meet the requirements of IFC Performance Standards. Social and Environmental Assessment and Management Systems The Company currently has a number of subsidiaries in Estonia, Latvia, Lithuania and Russia. Dalkia’s subsidiaries leases and operates local district heating infrastructure in urban and rural locations. Many district heating assets are in poor condition due to deterioration with age and require rehabilitation and replacement. The Company introduces good practices in operating the assets in order to improve the efficiency of DH generation and delivery, and minimize the use of raw materials, losses of energy and water in district heating networks. Dalkia operations in Estonia are a good example of a fully implemented environmental and social management system adequate for good performance of district heating companies. Tallinna Küte has been ISO 9001 certified since 2004 and obtained ISO 14001 certification in 2009. Eraküte and Tallinna Elektrijaam) plan to obtain ISO 14001 certification in 2010. Tallinna Küte has been covered by a certified Quality Management System (ISO 9001:2000) from Norske Veritas since 2004 as per the Tallinn lease and operation agreement. Tallinna Küte started applying for the certificate of compliance with the requirements of the Environmental Management System Standards ISO 14001:2004 and the occupational health & safety management system Standards OHSAS 18001:2007 as required by local regulations in Estonia. Eraküte plans to achieve such certification within the next two years. Tallina Kute has one specialist responsible for quality and environmental management. The specialist was trained by Dalkia. Dedicated environmental management training programs exist for the staff. They are linked to the Veolia Environment programs. Dalkia in Estonia has gained experience in carrying out the EIA (the latest was carried out for Tallinna Elektrijaam project in 2006), in obtaining environmental permits for modernization of facilities, in implementing the environmental action plans and in environmental reporting. In 2006 the environment management system (EMS) of Vilniaus Energija (VE), Dalkia’s main subsidiary in Lithuania was certified as complying with ISO 14001:2005. The management system ensures continuous improvement of environment protection. Certification of Litesko (LTE), another Dalkia’s subsidiary in Lithuania is scheduled for 2010. Any project, which can have an impact on the environment, must be cleared with Environmental Protection and Quality Division (EQD) reporting to the Project Director of VE. A division with 3 staff is to ensure that emissions and other environmental impacts of proposed projects comply with the present and future legal and regulatory requirements. The subsidiaries perform internal audits to ensure that activity of the audited division complies with the legal and regulatory requirements. According to the Company’s information, there are no instances of non-compliance registered during the site inspections performed by the local regulator during the last few years. Dalkia’s Lithuania subsidiaries use biofuel on some of its energy generating facilities. Biofuel is mainly supplied by Bionovus UAB. In order to strengthen environmental and other general compliance with the requirements of biofuels supply chain management and to ensure sustainable and balanced use of natural resources Bionovus Company has issued several internal procedures. All procedures, including the internal Bionovus declaration on sustainable use of raw materials for biofuels, describe the necessary steps for biofuel preparation and purchases. According to these documents, the company is required to ensure that all biofuels available by it are made from the wood prepared/processed in accordance with the Lithuanian and EU laws and regulations on sustainable use of forests and environmental protection. Thus Bionovus cannot use the wood that comes from protected forests or environmentally vulnerable areas. The same obligations are valid for all suppliers of raw materials for biofuels produced by Bionovus. Bionovus is committed at any time to submit information on the supply of biofuels, including the wood used in its origin to the interested parties. In Dalkia’s subsidiary in Russia, Neva Energia Slantsy Subsidiary (NESS), all issues relating to environmental management for Dalkia operations in Slantsy are mainly addressed by the General Director. Occupational Health and Safety management is the responsibility of the OHS Engineer. Safety issues and prevention of spills are addressed by mid-managers (managers of boiler houses and service divisions). Environmental protection issues and OHS issues are an integral part of the staff initial training after recruitment and further re-training. All measures included in the NESS Investment Program will contribute to mitigation of risks and negative impacts on the environmental and social conditions in Slantsy and will enhance the positive environmental and social impacts of the present and future NESS operations. The company prepares annual EHS management plans including activities, number of people addressed, costs, deadline, responsible staff and indication of activity completion. Environmental management priorities are an integral part of the Investment Program for 2008-14. A modern automatic control system is introduced for operation of heat transmission networks within about half of Slantsy town area. Quarterly statistical reports are prepared on air emissions (calculated based on fuel consumption), water intake, wastewater discharge and waste generation. The internal audit procedure is under establishment. In accordance with the ESAP, the Company will be required to undertake a detailed environmental, health and safety audits of all potential future asset acquisitions that it will start to operate in the future and implement corrective actions to bring their operations in compliance with the requirements of IFC Performance Standards. It will also develop and implement an annual energy and water efficiency programs on all current and future subsidiaries. Labor and Working Conditions All of the company’s subsidiaries operate in compliance with the labor laws of the countries where they are located and comply with the requirements of IFC Performance Standards, ILO Conventions, the EU Directives (in case of Estonia, Lithuania and Latvia) as well as with Dalkia corporate HR Policy. Human resources process is governed by HR procedures or policies and all workers receive written job descriptions and employment contracts. Provisions for non-discrimination and equal opportunities, as well as a right to collective bargaining are present in the national legislations of all four countries where Dalkia operates. Representatives of various national minorities (in Lithuania - Russian, Byelorussian, Polish; in Estonia – Russian, Byelorussian, Ukrainian etc) are employed by company’s subsidiaries. Both men and women have opportunities for carrier development. Many of the employees, including managers, are women. Labor grievances are considered and labor disputes are resolved by special labor commissions that are comprised of workers’ representatives, HR department and Company’s management. All workers must receive necessary OHS training provided by the Company prior to starting their jobs and refresher courses are periodically undertaken during their careers with the company. Selection of the courses and their timing is governed by the laws of the countries on OHS and varies from one country to another. OHS inspections are undertaken by local regulators in all countries of Dalkia’s operations and OHS reports are provided to establish compliance with the local requirements. Root-cause investigations are undertaken for each accident and corrective measures are implemented with additional training to employees. PPEs are provided to all employees and workplace OHS assessment or certification is undertaken according to the local regulations. Project managers of contractors receive instructions from Dalkia companies regarding the EHS and other procedures. The EHS requirements are present in the company tender announcements and regulations and contracts. The project managers instruct and supervise contractors’ staff. In some Dalkia subsidiaries (in Estonia, Latvia and Lithuania) tender regulations include requirements for ISO 9001, ISO 14001, OHSAS 18001. Standard contracts contain requirements for waste management and work safety. There are no current retrenchment plans in any of the Company’s subsidiaries. If any new assets, which will be operated by the Company in the future, will require reduction of staff, redundancies and retrenchment, the Company, according to the ESAP, will develop retrenchment plans in close consultations with workers’ representatives to ensure the compliance of the retrenchment process with the requirements of IFC Performance Standard 2. Pollution Prevention and Abatement Pollution prevention and abatement measures are addressed in all Dalkia subsidiaries. The Company’s main environmental impacts are air emissions, liquid and solid wastes and some solid wastes and hazardous materials. The Company operates often outdated district heating facilities in the countries of the former Soviet Union, which often suffered from underinvestment, the Company’s goal is to upgrade the existing power producing and delivery infrastructure and reduce the amount of water and energy loss from the HD systems, reduce the raw materials and fuels, and reduce the overall environmental impact of its operations. Emissions to the air from the Company’s power generation facilities (which mainly include CO, NOx, SO2 and dust) are generally in line with the countries’ regulatory requirements and IFC Performance Standards. In some cases (in Lithuania) the company is planning to further upgrade the combustion processes in order to comply with new EU regulations in the coming years. Reporting on ambient air emissions and ambient air concentration to the local regulators is conducted by all of the Company’s subsidiaries reflecting the requirements of the local regulations. At the moment, various primary and secondary emission reduction measures are installed at Dalkia facilities, including electrostatic particulate filter, low-NOx burners, air and fuel graduation, flue gas recirculation and excess air control system, multi-cyclone ash disposal to the water, flue gas recirculation and condensing economizer. The Company replaced old inefficient boilers with more efficient ones in Lithuania and Russia and created a state-of-the art Tallinna Elektrijaam facility in Estonia. In order to reduce further emissions to the atmosphere, Company’s subsidiaries in Lithuania are currently implementing a number of projects, such as modernization of regional boiler houses and combined heat and power plants, investments related to accident prevention and other activities. In the Company’s most recently acquired (as well as previously most underinvested) assets in Russia, the Company is working on reducing the unnecessary inflated capacity of the units in order to produce sufficient and efficient district heating in the town of Slantsy. The Company’s general strategy to the switch from heavy fuel oil (mazut) to lighter oils (Lithuania), biomass (Lithuania and Estonia) and natural gas (Lithuania and Russia) is underway and will further reduce emissions to the air. Water is used in DH networks for feeding heat supply network and steam generation. Water loss in DH systems is mostly due to wearing of the connecting pipelines and inefficiency of connections to residential distribution systems. In order to reduce water loss, the company’s subsidiaries undertake maintenance programs and replacement of pipelines and residential connections Some solid waste is generated as a result of maintenance of equipment, pipelines, cleaning of containers, boilers and other devices. All produced waste is sorted and placed in specially marked containers before it is removed and disposed of by the licensed third party contractors. The Company’s employees are responsible for proper waste management and sorting of all generated waste. According to the site management plans, the contractors must follow the requirements of waste management system. Prior to signing a contract, contractors have to provide a plan on waste management that identifies all produced waste during their activity. The Company’s subsidiaries use some chemicals mainly for water treatment (demineralization). All chemicals are kept in containers, which are marked in accordance with the respective legislations. All persons whose work concerns chemicals are familiar with the Material Safety Data Sheets. In case of emergency, hazardous substances are kept in bundles helping to avoid leaks and pollution of the surrounding environment. Safety of fuel storage facilities is generally ensured by regular inspections and maintenance of storage tanks and secondary containment. Preparation of site-specific oil spill contingency plans by a specialist company is generally a requirement by the local authorities’. Preparation of the plans is included in the environmental action plan of the Company. Secondary containment and sand barriers are installed for the fuel storage tanks. The Company implements the due measures to avoid contamination of soil and groundwater. Requirements for contamination prevention are included in requirements for the contractors. Availability of site-specific spill contingency plans is a regulatory compliance requirement for fuel oil storage sites. Asbestos is present in some of Company’s networks and an asbestos management plan is in place in such cases In accordance with the ESAP, the Company will develop or update comprehensive environmental monitoring programs for each subsidiary for ambient air, soil, surface and ground water taking in consideration the requirements of IFC Performance Standards and local regulatory requirements of the country where subsidiary is located. It will also develop and implement an annual energy and water efficiency plan for all subsidiaries that include annual benchmarks and provide annual reporting on implementation of the plans. In addition to Company will develop or update site-specific Emergency Response Plans or Procedures for all its subsidiaries. .

The Company’s stakeholders include a wide range of parties, such as direct consumers of district heating supplied by the Company; communities that might be affected by closure and reconstruction of boiler plants, replacement of pipes; NGOs and local environmental and OHS regulators as well as the local authorities and state bodies responsible for provision of public utilities services. The Company’s subsidiaries implement a variety of community engagement activities in all countries of their operations. Few examples of such activities include web-sites, printed materials, 24/7 telephone hot lines, public hearings, newsletters, meetings with local officials, direct mail to customers, public consultations for renovation projects and door-to-door visits by Company’s community liaisons. The Company’s subsidiaries have accumulated significant experience in communication program development and implementation for the internal and external stakeholders in the respective countries. They will further develop their stakeholder engagement programs of the companies will need to ensure that there is an ongoing communication to members of public on environmental, social, health and safety issues that might affect them. In order to systematize community engagement by company’s subsidiaries, the Company, in accordance with the ESAP, will develop and implement a corporate Stakeholder Engagement Plans (SEP) for all its subsidiaries. SEP will describe procedures for informing the nearby communities about the company’s operations, delivery of services, the impacts of the current and potential future activities and consultation process on the project development plans and impact mitigation measures

DALKIA PLEASE PROVIDE Locations, contact people and contact information and name of contact people in France, Lithuania, Estonia and Russia (Slantsy and Moscow). Lithuania: Tadas Janušauskas UAB “Vilniaus energija” Project director UAB “Litesko” Operation director Address: Jocioniu Street 13, LT - 02300 Vilnius Phone: +370 5 2667501 Fax: +370 5 2667349 E-mail: tjanusauskas@dalkia.lt Also please provide Company’s web-site for subsidiaries (if available) www.vilniaus-energija.lt’ www.litesko.lt Estonia AS Tallinna Küte Punane 36, 13619 Tallinn Tel: +372 610 7100, Fax +372 610 7101 Kristjan Rahu – Member of Board Daniel Melin – Member of Board Priidu Nõmm – Member of Board (Commercial Director) Janek Trumsi – Technical Director Ene Olle – HR manager Erik Kaldas – Quality and Environmental Manager Also please provide Company’s web-site for subsidiaries (if available) www.soojus.ee Russia Dalkia Vostok, Serpukhovsky pereulok dom 5, str.3, 115093 Moscow - David Staechele, technical director. Neva Energia, Zelenkov pereulok 7A, 194044 St Petersburg – Alexandr Sedakov, vice- general director. Also please provide Company’s web-site for subsidiaries (if available): No web-site