Scope 1 Emissions
2022 Communication on Progress
NLMK Group
Published date
June 30, 2022
No. of questions
70
Supplemental files
NLMK_Group_Human_Rights_Policy_Eng (4).pdfAnti_Corruption-Policy (2).pdfPOLITIKA-ISM-GRUPPY-NLMK_eng_27_03_2020_CEO (1).PDFNLMK_AR2021_ENG.pdfENG-_-kodeks_korporativnoy_etiki_gruppy_nlmk.pdfENG-_-LG_162_0009_2022-Partner-Code-of-Business-Conduct (1).pdfNLMK Group Human Rights Policy.pdfNLMK Group IMS Policy.pdfNLMK Group IMS Policy.pdfNLMK Group Anti-Corruption Policy.pdfCEO Statement
Signed
Governance
Policies and Responsibilities
1. Does the Board / highest governance body or most senior executive of the company:
Optional commentNLMK Group prepares its Annual Report on a yearly basis. The Report includes CEO's statement which stresses the relevance of sustainable development to NLMK Group, information about the company’s sustainability activities and targets and its impact on people and the environment. The Report also includes a separate section on combating corruption. The Report also gives an overview of the company's approach to managing ESG issues and delegating authority. A dedicated section gives an overview of the Group's risk management and control system, with a special emphasis on salient risks.2. Does the company have a publicly stated commitment regarding the following sustainability topics?
Optional commentAs a socially responsible company NLMK Group does not tolerate any violation of human rights. To this end, the Group has adopted a Human Rights Policy which applies to and is communicated to all stakeholders of the company. The Human Rights Policy was developed in accordance with the guidelines set out, among other, in the main conventions of the ILO. Employees' labour rights and right for decent work are also protected by the Labour Code of the Russian Federation. Another guiding document is NLMK Group's Integrated Management System for Quality, Environmental Protection, Energy Efficiency, and Occupational Health and Safety, which defines relevant principles and strategic priorities and also extends to all stakeholders of the company. The Anti-Corruption Policy of NLMK Group applies to its own operations and the value chain (counterparties and business partners).3. Does the company have in place a code of conduct regarding each of the following sustainability topics?
Optional commentNLMK Group has adopted Code of Corporate Ethics along with Partner Code of Conduct. Both of these documents cover these sustainability topics4. Has the company appointed an individual or group responsible for each of the following sustainability topics?
Optional commentNLMK's Vice President for HR and Management System, who is member of the Management Board, is reponsible for supervizing the execution of the Human Rights Policy and compliance with labour laws. NLMK's Vice President for Energy and Environment, who is also a member of the Management Board, supervizes environmental efforts. The Audit Committee of the Board of Directors, the CEO (Chairman of the Management Board) and the Risk Management Committee of the Management Board (RMC) all play a key role in establishing an anticorruption system that functions efficiently.5. Does the company have a formal structure(s) (such as a cross-functional committee) to address each of the following sustainability topics?
Optional commentSustainability management is integrated into NLMK Group’s corporate governance system on the highest level. The Human Resources, Remuneration and Social Policy Committee is responsible for managing human rights and labour rights issues. The Strategic Planning Committee is responsible for sustainability risk assessment and environmental issues. The Audit Committee is responsible for performance monitoring, compliance and sustainability reporting.Prevention
6. Does the company have a process or processes to assess risk?
Optional commentThe Internal Control and Risk Management System employed by NLMK is designed to ensure sustainable development by rapidly identifying, assessing, and effectively managing risks and opportunities.6.1. During the assessment of risk, which business relationships are reviewed?
Optional commentStarting from 2007, all suppliers of NLMK Group have been subjected to audits, which cover compliance with environmental standards. Since 2015 all providers of raw materials, supplies, and equipment to NLMK Group as well as suppliers of services (contractors), undergo a qualification procedure, which also includes assessments for compliance with environmental requirements. 100% new suppliers and contractors were screened for environmental critera in 2018–2021. In order to work with NLMK Group, it is imperative that suppliers and contractors operate ethically and conscientiously. In this regard, all potential counterparties are invited to familiarize themselves with the Supplier Code of Conduct at the screening stage and to confirm that they agree with its provisions. In addition, the Group requires its business partners to sign the anti-corruption provisions adopted in the company.7. Does the company have a due diligence process through which it identifies, prevents, mitigates, and accounts for actual and potential negative impacts on sustainability topics?
Optional commentThird-party anti-corruption due diligence is part of the contractor and supplier qualification procedure. The Group also expects its suppliers and contractors to comply strictly with all applicable legal requirements, including environmental protection and occupational health and safety regulations. The check-list developed by the Group for assessing potential contractors reflects state requirements for occupational safety and environmental protection, and suppliers and contractors operating at the Group’s sites must meet these requirements.7.1. During the due diligence process, which business relationships are reviewed?
Concerns and grievance mechanisms
8. Are there any processes through which members of the company’s workforce can raise concerns about the company’s conduct related to human rights, labour rights, environment, or anti-corruption?
Optional commentNLMK Group’s compliance system places particular importance on measures for developing a corporate culture of strong business ethics, both within the company and in relations with other stakeholders. As part of these efforts in 2021, an array of previous whistleblower channels merged into NLMK Group’s independent compliance hotline.8.1. Please provide additional detail regarding the process(es) the company has through which members of the company’s workforce can raise concerns about the company’s conduct.
Optional commentNLMK’s compliance hotline accepts reports of not only corruption or fraud, but also potential violations of the antitrust and insider trading legislation, other legal or corporate requirements, and the company’s business ethics norms. All reports are accepted and processed by the Compliance Unit, which ensures whistleblower confidentiality and non-retaliation. In 2021, as an additional effort to ensure independence and confidentiality, Ernst & Young was engaged as the independent operator of the compliance hotline. The number of whistleblower channels increased and they are now accessible by third parties.9. Does the company provide or enable access to effective remedy to right holders / stakeholders where it has caused or contributed to the adverse impact?
Optional commentThe Compliance Unit monitors the implementation of corrective measures, where applicableLessons
10. How does the company capture lessons regarding each of the following sustainability topics?
Optional commentNLMK Group regularly reviews its policies, processes and practices to implement the best practices and lessons learned. The latest example is the updated NLMK Group's Partner's Code of Business Conduct. Experts of NLMK Group regularly participate in external conferences and round tables where they share their lessons learned and best practices with the community.Executive Pay
11. Is executive pay linked to performance on one or more of the following sustainability topics?
Board Composition
12. Percentage of individuals within the company’s Board / highest governance body by:
13. Do you produce sustainability reporting according to:
Data Assurance
14. Is the information disclosed in this questionnaire assured by a third-party?
Human Rights
Materiality / Saliency
1. Which of the following has the company identified as material human rights issues connected with its operations and/or value chain, whether based on their salience (i.e., the most severe potential negative impacts on people) or another basis?
Optional commentThe salient human rights risks associated with the operations of NLMK Group companies relate to non-discrimination based on gender, age, disabilities and other criteria, the right to safe working conditions, freedom of association and collective bargaining, as well as the right of local communities to a clean environment. The Group also pays special attention to rights of women.Commitment
2. Does the company have a policy commitment in relation to the following human rights issues?
Prevention
3. In the course of the reporting period, has the company engaged with affected stakeholders or their legitimate representatives in relation to the following human rights issues?
Optional commentIn 2021 NLMK Group conducted an in-depth survey on staff satisfaction with social programmes (the survey takes place every three years). In 2021, the survey included questions on diversity, equality and inclusion for the first time helping the company experts to better understand the risks.4. What type of action has the company taken in the reporting period with the aim of preventing/mitigating the risks/impacts associated with this human rights issue?
Optional commentIn 2021, a Working Group on Diversity and Inclusion was created under the leadership of the Vice President for Human Resources and Management System. The company actively promotes the principles of diversity and inclusion among employees under the #NotDifferent heading on the corporate portal. In 2021, the company's employees took part in the UN GC Target Gender Equality accelerator. The Group also took WEP’s gender gap survey, which uses the UNGC methodology. The results of the assessment confirm that the company is aware of the importance of gender equality issues and is taking positive steps to improve it.5. Who receives training for the following human rights issues?
6. How does the company assess progress in preventing/mitigating the risks/impacts associated with the following human rights issues?
Response
7. During the reporting period, has the company been involved in providing or enabling remedy where it has caused or contributed to adverse impact associated with the following human rights issue(s)?
8. Briefly describe practical actions the company has taken during the reporting period and/or plans to take to implement the human rights principles, including any challenges faced and actions taken towards prevention and/or remediation.
Provision of safe working conditions >> In organizing production, the company prioritizes the health and safety of its employees above all. The company’s management monitors and reduces risks associated with hazardous working conditions, increasing safety levels at the sites of every NLMK company year to year. The company is continuously improving its approaches to environmental policy and energy management with a view to reducing the negative impacts of production on the environment and on the health of stakeholders. Respect for the right to a minimum wage >> Ensuring decent working conditions, including competitive salaries and providing both employees and retirees with a social benefits package are key priorities for NLMK Group Prohibition of discrimination >> NLMK Group does not tolerate discrimination based on gender, religion, and other grounds in its staff management activities, including hiring, and adheres to the same principles when determining wages Support for freedom of association and collective bargaining >> NLMK Group fulfils all of the requirements set forth in collective bargaining agreements, and regularly engages with trade unions. The company also ensures that conditions are in place to facilitate the creation of associations by making corporate communications tools available and by supporting employee volunteering initiatives Prohibition of forced labour and child labour >> NLMK Group only signs employment contracts with individuals that meet the minimum age requirements stipulated by the legislation. The company does not make use of child labour. The company forbids the use of forced labour, penal and military labour, slavery, and human trafficking. All employment at the company is exclusively voluntary in nature Respect for the rights of indigenous peoples >> NLMK Group estimates that there are no indigenous peoples present in the regions where the Group companies operate In future reporting periods, we plan to engage the сompany's stakeholders in the human rights agenda by holding joint events and inviting experts to work out joint actions on this issue. Another task will be to develop methodological approaches to assessing how well activities comply with the principles set out in NLMK’s Human Rights Policy. Company representatives will also continue to play an active role in important events dedicated to protecting human rightsLabour
Commitment
1. Does the company have a policy commitment in relation to the following labour rights principles?
1.1. For each labour rights policy, is it:
Prevention
2. In the course of the reporting period, has the company engaged with affected stakeholders or their legitimate representatives in relation to the following labour rights issues?
Optional commentForced and child labour are strictly prohibited by the Russian Labour Code, by which the company strictly abides, therefore any violation of these labour rights issues would be illegal. As for non-discrimination, in 2021, a detailed survey on staff satisfaction was conducted, which included questions on diversity, equality and inclusion for the first time. The results of the survey helped company experts to better understand the risks and impacts in question. Occupational health and safety is a top priority for NLMK Group. Striving for a zero injury rate at all its operations, the company is continuously stepping up its OHS efforts. Since 2018, the company's main focus has been on developing a culture of safety at NLMK. Particular attention has been paid to improving the level of safe behaviour through regular engagement with employees and other workers.3. What type of action has the company taken in the reporting period with the aim of preventing/mitigating the risks/impacts associated with this labour rights issue?
Optional commentRepresentatives of NLMK Group regularly participate in the activities of working groups and commissions in the Association of Metallurgists of Russia, an all-Russian industry association of employers, to improve the Industry Tariff Agreement and negotiate with the Mining and Metallurgical Trade Union of Russia. Forced and child labour are strictly prohibited by the Russian Labour Code, by which the company strictly abides, therefore any violation of these labour rights issues would be illegal. As for non-discrimination, In 2021, a Working Group on Diversity and Inclusion was created under the leadership of the Vice President for Human Resources and Management System. The company actively promotes the principles of diversity and inclusion among employees under the #NotDifferent heading on the corporate portal. In 2021, the company's employees took part in the UN GC Target Gender Equality accelerator. The Group also took WEP’s gender gap survey. In 2021, the company established a system for automatically assigning safety culture courses in line with corporate requirements. Over 85% of employees were trained in OHS tools. In-house trainers play a key role in building a culture of safe behaviour in the Group: in 2021, over 150 line managers and OHS employees underwent training and became in-house trainers on OHS tools. Employee engagement in managing unsafe events through the Hazard Reporting IT service was 43% (+91% vs. 2020). Group leadership pays particular attention to creating an efficient OHS management system for working with contractors and the strategic development of the company’s partners. With this goal in mind, the Regulations on Contractor Management were adopted in early 2021. The document introduced the risk-oriented approach to every stage of a contract’s life cycle for investment projects, capital repairs, and outsourcing.4. Who receives training for the following labour rights issues?
5. How does the company assess progress in preventing/mitigating the risks/impacts associated with the following labour rights issues?
Performance
6. What is the percentage of employees covered under collective bargaining agreements?
Optional commentCollective bargaining agreements are concluded both at Russian and foreign companies of the Group. They apply to all employees, regardless of their membership in a trade union7. What is the percentage of employees in a trade union or other workers' organization?
Optional commentIn % of the actual headcount. In accordance with national legislation, some categories of employees do not have the right to be members of a trade union, the coverage of other categories is 100%8. In the course of the reporting period, what was the percentage of women in:
Optional commentSenior leadership level positions include positions two levels below the CEO.9. What was the average ratio of the basic salary and remuneration of women to men (comparing jobs of equal value) during the reporting period?
Optional commentThe сompany does not tolerate any form of discrimination on grounds of gender or other factors when implementing or further developing its remuneration system. The company adheres to the equal pay for equal work principle and complies with legislative labour requirements. The difference in the salaries of men and women is due to higher pay for those employed in difficult and hazardous working conditions, in which the share of women is traditionally lower.10. In the course of the reporting period, how frequently were workers injured (injuries per hour worked)?
Optional commentDuring the reporting period, LTIFR (employees and contractors) stood at 1.0111. In the course of the reporting period, what was the company’s incident rate?
Optional commentIn 2021, TRIFR (employees and contractors) stood at 3.23Response and Reporting
12. In the course of the reporting period, has the company been involved in providing or enabling remedy where it has caused or contributed to the adverse impact associated with the following labour rights issues?
13. Briefly describe practical actions the company has taken during the reporting period and/or plans to take to implement the labour rights principles, including any challenges faced and actions taken towards prevention and/or remediation.
In 2021, the NLMK Pulse corporate survey covered more than 38,000 employees, or 80% of the average headcount at the Group’s Russian sites. Participation in the survey gives each employee an opportunity to directly impact changes in the company. Following the 2021 survey: More than 400 meetings were organized to improve the efficiency of communication between managers of different levels and employees; Over 1,000 jobs became safer and more environmentally friendly thanks to measures to minimize the impact of harmful operational factors; RUB 125 million was invested in improving working conditions: repair canteens, dining rooms, and gyms; Close to RUB 300 million was invested in the renovation of sanitary facilities In 2021, with the participation of representatives of the company, an agreement was signed amending the Industry Tariff Agreement for the metals and mining industry of Russia for 2020–2022 The company actively promotes the principles of diversity and inclusion among employees under the #NotDifferent heading on the corporate portal In 2021, the company continued to implement its anti-concealment programme for incident registration at all levels that was introduced in late 2019. NLMK Group strives to determine the systemic causes, develop corrective measures, and prevent incidents from happening againEnvironment
Commitment
1. Does the company have a formal policy on the following environmental topics?
1.1. For each environmental policy, is it:
Optional commentNLMK Group’s IMS policy defines the relevant principles and strategic priorities and fosters a common understanding of these principles and priorities among stakeholders, including NLMK Group’s management, shareholders and investors, rating agencies, employees, contractors, local communities, suppliers, and customersPrevention
2. In the course of the reporting period, has the company engaged with affected stakeholders or their legitimate representatives in relation to the following environmental issues?
Optional commentClimate action is discussed by the company as part of the working group on the regional level3. What type of action has the company taken in the reporting period with the aim of preventing/mitigating the risks/impacts associated with these environmental topics?
4. How does the company assess progress in preventing/mitigating the risks/impacts associated with the following environmental topics?
Optional commentIn 2021 NLMK Group approved the Climate Programme to reduce specific emissions to 1.69 t CO2/t Fe or 1.72 t CO2/t of steel by 2030. Improving the energy efficiency of production is a key goal of Strategy 2022. In 2021, the Strategic Planning Committee of the Board of Directors adopted NLMK Group’s Environmental Programme until 2027. The key long-term goal for reducing environmental impact is to reduce total air emissions by 16% compared to 2023, while dust emissions to be reduced by 16% and sulfur dioxide emissions – by 6%. The programme also targets cessation of industrial run-off at the Group's Russian facilities and household run-off at the Lipetsk site5. In the course of the reporting period, has the company been involved in providing or enabling remedy for any actual impacts associated with the following environmental issue(s)?
Optional commentIn the course of the reporting period, the company has not received any significant finesClimate Action
6. What were the company’s gross global greenhouse gas emissions for the reporting period?
Scope 2 Emissions
Scope 3 Emissions
Optional commentScope 1 and Scope 2 emissions are reported in full. Scope 3 emissions include only upstream. For Scope 2 emissions the market-based method is used. Location-based Scope 2 emissions total 2,697,983 tCO27. What percentage of the company's revenue was invested in R&D of low-carbon products/services during this reporting period?
8. Has the organization acted to support climate change adaptation and resilience?
Optional commentIn 2021, NLMK Group approved the Climate Programme to reduce specific emissions to 1.69 t CO2/t Fe or 1.72 t CO2/t of steel by 2030. The key project of the Programme is the new metals and mining facility at Stoilensky, Green Horizon. The project provides a foundation for major company transformation and paves the way for transition to an electric arc method of steel production based on DRI/HBI (coke-free iron ore with a high iron content) as feedstockEnergy / Resource Use
9. Please report the company's renewable energy consumption as a percentage of total energy consumption in the reporting period.
Technology
10. What percent of the company's revenue came from environmentally friendly products / services during this reporting period?
Sector-specific Questions
11. Which sector(s) does the company operate in? If diversified, choose top 3 by revenue.
Sector-specific: Water
12. Please provide details regarding the company's water withdrawal and consumption (own operations) during the reporting period.
Water withdrawal (volume of water in megaliters):
Water consumption (volume of water in megaliters):
Optional comment80979 megaliters is water consumption as defined by GRI, for which NLMK Group does not provide breakdown by source. 57085 megaliters is the amount of water used for production needs13. Please provide details about the company’s water intensity of products in regions with high or extremely high water stress.
Sector-specific: Forest, biodiversity, and land use
14. Please report the number and area (in hectares) of sites owned, leased, or managed by the company in or adjacent to protected areas and/or key biodiversity areas (KBA).
15. What area (in hectares) of natural ecosystems was converted during the reporting period in areas owned, leased, or managed by the company?
16. Is the company supporting or implementing project(s) focused on ecosystem restoration and protection?
Sector-specific: Air pollution
17. Where applicable, please report the company's emissions of the following pollutants during the reporting period.
Optional commentHazardous air pollutants (HAP) include hazard class I and hazard class II substances. These substances are also included in the VOC calculationSector-specific: Waste
18. Please report the company's total weight of waste generated in metric tonnes during the reporting period.
Optional commentExcluding secondary raw materials recovered in-house, overburden and tailings19. Please report the percentage of the company's waste that was hazardous waste (i.e., hazardous waste ratio) during the reporting period.
Optional commentClass I-III waste, without secondary raw materials, mining waste and tailings, processed by the company20. Please report the company's estimated metric tonnes of single-use plastic consumed wherever material along the value chain during the reporting period.
Overall Environment
21. Briefly describe practical actions the company has taken during the reporting period and/or plans to take to implement the environment principles, including any challenges faced and actions taken towards prevention and/or remediation.
In 2021 NLMK Group completed two large-scale overhauls of NLMK's dedusting systems. The project will reduce dust emissions by more than 300 tonnes per year. NLMK Kaluga eliminated industrial runoff in 2021 with a closed-loop water system. The HSM effluent tank was upgraded at NLMK Lipetsk eliminating 400 m2 dam and land contamination with petroleum products. NLMK Group developed a Climate Programme providing for a reduction in specific emissions to 1.69 t CO2/t Fe by 2030 (–10% vs. 2023) and a scenario for achieving carbon neutrality by 2050. The company filled out the CDP Climate Change questionnaire for the first time and received a B- rating, which is above the industry average. NLMK implemented a number of investment projects aimed at reducing the carbon intensity of its operations (achieving higher iron content in raw materials, reducing coke consumption, and improving energy efficiency). The full effect of the above projects will manifest itself in 2022. Deloitte verified CO2 emission benchmarks for NLMK Lipetsk blast furnaces calculated according to the EU Emissions Trading System methodology, and confirmed that NLMK is among the 10–15% companies with the best performance in the EU. An in-depth assessment of the most significant climate risks and opportunities for the company was carried out. NLMK Group took part in the 26th UN Climate Change Conference (COP26) in Glasgow. In 2021, the Strategic Planning Committee of the Board of Directors adopted NLMK Group’s Environmental Programme until 2027. The key long-term goal for reducing environmental impact is to reduce total air emissions by 16% compared to 2023, while dust emissions to be reduced by 16% and sulfur dioxide emissions – by 6%. The programme also targets cessation of industrial run-off at the Group's Russian facilities and household run-off at the Lipetsk site.Anti-corruption
Commitment
1. Does the company have an anti-corruption compliance programme?
Optional commentThe Board of Directors approved the updated Anti-Corruption Policy on March 22, 2021 (publicly available on https://nlmk.com/upload/iblock/fe2/Anti_Corruption-Policy.pdf )2. Does your company have policies and recommendations for employees on how to act in case of doubt and/or in situations that may represent a conflict of interest, e.g. with regard to gifts and hospitality, donations, sponsorship, or interactions with public officials?
Optional commentAnti-Corruption Policy contains provisions on these areas of higher corruption risk and stipulates that in case of doubts each employee should seek consultation via suggested channels, including compliance “hotline” operated by independent provider (Ernst & Young). Also, we have stand-alone policies on conflict of interest (Regulation on conflict of interest prevention and resolution updated in 2021), gifts and hospitality (Regulation on corporate gifts and hospitality updated in 2022).Prevention
3. Who receives training on anti-corruption and integrity?
3.1. How often is such training provided?
4. Does the company monitor its anti-corruption compliance programme?
Response and Reporting
5. Please report the company's total number and nature of incidents of corruption during the reporting year.
Optional commentFor all detected violations, settlement measures have been taken, including contracts with two individual contractors were terminated, five employees were brought to disciplinary responsibility, penalties were imposed on one contractor, and one incident was transferred to law enforcement agencies6. Within the reporting period, what measures has the company taken to address suspected incidents of corruption independently or in response to a dispute or investigation by a government regulator?
7. Does your company engage in Collective Action against corruption?
8. Briefly describe practical actions the company has taken during the reporting period and/or plans to take to implement the anti-corruption principle, including any challenges faced and actions taken towards prevention and/or remediation.
In 2021, NLMK Group developed an online course on the Code and the Anti-Corruption Policy, which was taken by over 10,000 company employees. Over 2,800 company employees underwent in-person training dedicated to the Code’s requirements. Knowing and complying with the requirements of the Code is an obligation for all company employees, which is included into all job descriptions as a standard requirement. Additionally, in 2021, questions assessing knowledge of the Code were included in the evaluation of employees’ professional competencies, which is conducted once every three years. In 2021, the company held a forum for basic contractors, where 30 representatives of 17 basic contractors underwent in-person training dedicated to the company’s anti-corruption requirements. At the strategic supplier conference organized by the Procurement function, 200 supplier representatives underwent training in two languages, English and Russian. In 2021, the NLMK Board of Directors approved the new version of the Anti-Corruption Policy. It includes a ban on political spending and any other participation of the company in political activities. In 2021, the Risk Management Committee approved the overall development strategy of the NLMK Group compliance system, including anticorruption compliance.