Leadership in
sustainability
November 2020
DISCLAIMER | 2 | ||
This document is confidential and has been prepared by NLMK (the "Company") solely for use at the presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose.
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- Key highlights
- Corporate governance
- Health & Safety
- Environment
- Tailings dam management
- Social
- ESG Ratings
LEADERSHIP IN SUSTAINABILITY - KEY HIGHLIGHTS | 4 | ||
NLMK's key principles of sustainable
development:
- Creating long-term shareholder value | |
- | Caring about health, wellbeing and |
development of employees | |
- | Treating environment responsibly |
NLMK IS THE UN GLOBAL COMPACT'S PARTICIPANT
ENVIRONMENT | HEALTH & SAFETY |
- Delivering value-added products to our |
customers |
- Adhering to high ethical standards in |
conducting business |
- Developing, supporting and respecting |
the interests of local communities |
- Maintaining transparency & high quality |
information disclosure |
Selected non-financial indicators for 2019 were independently verified
1.91 t/t
97%
4th
53%
92%
NLMK's CO2 specific emissions target by 2023
of water used in production is recycled
Every 4th tonne of steel is made of scrap
Reduction in air emissions intensity (per tonne of steel) 2000-2018
of generated waste is reused
56%
16k
18k
5.6%
Reduction in
LTIFR since 2013
More than 16K employees passed safety trainings in 2019
SOCIAL
In 2019, 18,000 of training sessions were achieved at NLMK's Corporate University
Turnover rate
- Key highlights
- Corporate governance
- Health & Safety
- Environment
- Tailings dam management
- Social
- ESG Ratings
NLMK ADHERES TO HIGH CORPORATE GOVERNANCE STANDARDS | 6 | ||
The Group's governance structure and
practices are aligned with G20/OECD Principles of Corporate Governance, Russia's Corporate governance code
Focus is on superior shareholder returns - dividend policy provides visibility and predictability
Voting rights: "one share/one vote", equitable treatment for all shareholders
The company's Board of Directors:
- Reputable board with superior track record
- Directors are not over-boarded with mandates
- Board performance is evaluated annually
Remuneration system based on clear KPIs, including ESG targets
THE MAJORITY OF THE | THE MAJORITY OF THE COMMITTEES | ||||||||
BOARD IS INDEPENDENT | ARE CHAIRED BY INDEPENDENT DIRECTORS | ||||||||
Independent directors | Independent directors | ||||||||
63% | 44% | 33% | |||||||
67% | |||||||||
? | 67% | ||||||||
38% | 56% | ||||||||
33% | |||||||||
2014 | 2019 | 2014 | 2019 |
COMMITTEES WITH A MAJORITY OF
INDEPENDENT DIRECTORS
Independent directors
33%
67%
67%
33%
20142019
NLMK'S BOARD OVERSIGHT OF KEY SUSTAINABILITY ASPECTS | 7 | ||
NLMK's approach to sustainability management is governed by
Corporate governance | |
BOARD OF DIRECTORS | |
Business ethics & | |
countering corruption |
Sustainable Development Policy (SDP) approved by the Board in October 2019
The Board's activity covers every ESG
aspect
The Board is responsible for the complying with Sustainable Development Policy as well as for defining goals and objectives
STRATEGIC PLANNING
COMMITTEE
Sustainability risks assessment
Environmental targets and respective investment program:
- Emissions, including greenhouse gases
- Discharges and waste
- Resource utilization
AUDIT COMMITTEE
Sustainability performance monitoring and reporting
Audit oversight of non-financial information
HR, REMUNERATION &
SOCIAL POLICIES COMMITTEE
Personnel and social issues:
- Employment and work
- Occupational health and safety
- Training and development
- Social policy
- Diversity and equal opportunities
- Non-discrimination
- Local communities
Integration of sustainability KPIs within the remuneration system
- Key highlights
- Corporate governance
- Health & Safety
- Environment
- Tailings dam management
- Social
- ESG Ratings
SAFETY IS A TOP PRIORITY FOR THE GROUP | 9 | ||
NLMK's governing document: Integrated Management System Policy in Quality, Environmental Protection, Energy Efficiency, Occupational Health and Safety
OHSAS 18001:2077 certified; ISO 45001:2018 is in process
In 2019, about $100 m was invested in safety systems and equipment
"No blame" policy for incidents reporting The company is signatory of "Vision Zero"*
Safety development programs
- Safety culture programs and communications
- Contractors management
- Safety risk management
Targets:
- Zero fatalities
- LTIFR of 0.5 (vs. 0.84 in 2018 as per WSA)
LOST TIME INJURY FREQUENCY RATE (LTIFR*)
1.60 | NLMK Group | |||||
World** | ||||||
1.17 | 1.01 | 1.12 | ||||
1.39 | ||||||
0.84 | 0.86 | |||||
1.15 | ||||||
0.97 | ||||||
0.85 | 0.5 | |||||
0.77 | ||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2023 |
Target |
- LTIFR refers to Lost Time Injury Frequency Rate, the number of lost time injuries? occurring in a workplace per 1 million
man-hours worked, employees and contractors - Worldsteel data
* http://visionzero.global
- Key highlights
- Corporate governance
- Health & Safety
- Environment
- Tailings dam management
- Social
- ESG Ratings
REDUCING CARBON FOOTPRINT - 2023 TARGET | 11 | ||
Measurable target to reduce CO2 emissions by 2023
NLMK's (Lipetsk site) CO2 intensity will be close to 30% of the most efficient mills in the world by 2023
NLMK joined Worldsteel's Step Up program to search ideas for further improvement in CO2 efficiency
Portfolio of projects for future footprint reduction
NLMK is a strategic partner for Russia's first green startup accelerator
DIRECT & INDIRECT CO2 EMISSIONS DYNAMICS
t/t NLMK Group (Scope 1+2)
2.04
1.98
1.91
2015 | 2019* | 2023 target |
*Adjusted for temporary production decrease at the Lipetsk site, based on 2018 Group's steel output
CO2 EMISSIONS INTENSITY TARGET
t/t NLMK Group, (Scope 1+2)
0.03 | -0.04 | |||||||
1.98 | -0.04 | |||||||
-0.02 | ||||||||
1.91 | ||||||||
2019* | Output growth | Captive energy | Fe content | Other projects | 2023 target | |||
(integrated) | generation | increase |
IMPROVING AIR QUALITY
NLMK has reduced air emissions intensity by more than two times since 2000
The Group operates more than 500 modern dust and gas purifying facilities
ISO 14001:2015 standard implemented at 14 of the Group's facilities
Targets:
- Reaching the EU BAT level for air emissions intensity
12
AIR EMISSIONS INTENSITY
kg/t, NLMK Group
20.1 | 20.0 | 20.2 |
19.5 | 18.9*? | |
18.9 |
18
2015 | 2016 | 2017 | 2018 | 2019 | 2023 |
Target |
INCREASING ENERGY EFFICIENCY
ISO 50001:2011 certified (recertification under ISO 50001:2018 is underway)
Improved energy intensity was achieved via equipment upgrade and better processes
Higher share of captive electricity generation contributes to lower CO2 emissions
Targets:
- Attaining a minimum level of economically and technologically feasible level
- Increasing electricity self-sufficiency to 94%
In 2019, the use of electrical power generated from renewables accounted for 5.1% of total power consumption*
*The share of renewables in the total volume of electrical power generation is shown without transit flows; NLMK Group companies made no direct purchases from renewable energy suppliers
13
ENERGY INTENSITY
GCAL/t, NLMK Lipetsk
-0.4%
5.7 | 5.6 | 5.5 | 5.5 | 5.6 |
BAT
5.1
2015 | 2016 | 2017 | 2018 | 2019 |
GROSS ENERGY CONSUMPTION
PJ, NLMK Group
?
-10%
590.3 587.9 590.5 579.6
532.8
2015 | 2016 | 2017 | 2018 | 2019 |
CASE STUDY: INTEGRATED PRODUCTION CHAIN - ENERGY SELF - SUFFICIENCY | 14 | ||
Strategy 2022 envisages construction of the 3rd captive power plant at NLMK Lipetsk:
- The power plant will run on by - product fuel gases
- Leveraging successful experience of by-product gases reuse
- Unique technology for Russia of utilizing basic oxygen furnace gas
- Positive environmental impact
In 2019, NLMK Group signed the contracts for the supply of the main equipment, and design of the plant is in progress
ENERGY SELF-SUFFICIENCY TARGETS, NLMK LIPETSK
Captive energy generation | Secondary fuel gas recovery |
94% | 89% | 100% | |
65% | |||
2019 | 2023 | 2019 | 2023 |
Target | Target |
ADDITIONAL PROJECT INDICATORS
Power plant capacity | 300 MW |
Reduction in CO2 emissions per annum | 650k t |
Investments | $420 M |
CASE STUDY: ELECTRICAL STEEL FOR LOW CARBON FUTURE | 15 | ||
NLMK targets to increase production of electrical steel (GO and NGO) at its Russian facilities for global markets to benefit from growing energy demand and shift to low carbon economies:
- +0.1 m t of high grade GO for more efficient power and distribution transformers
- +0.1 m t of premium grade NGO for electric vehicles and energy-efficient motors
TARGET ELECTRICAL STEELS SALES, m t
+35% | ||
0.8 | ||
0.6 | 0.5 | |
2018 | 2019 | 2023 |
Target |
Photo source: World Economic Forum
CASE STUDY: PREMIUM PLATES FOR LOW CARBON FUTURE | 16 | ||
NLMK's Dansteel (Denmark) is a leading producer of steel plates used for wind energy equipment in Northern Europe
The wind energy market trends in the EU:
- Steel consumption by the wind energy sector is expected to rise significantly in the EU driven by the Clean Energy for All Europeans legislative package
NLMK's targets:
- +0.2 m t production growth
TARGET PREMIUM PLATES SALES BY DANSTEEL, m t
3.6x
0.3
0.10.1
2018 | 2019 | 2023 |
Target |
Photo source: World Steel Association
MINIMIZING THE USE OF WATER RESOURCES | 17 | ||
NLMK has substantially reduced water consumption in relative (per tonne of steel produced) and absolute terms
The Group doesn't operate in water- stressed areas
All of NLMK's production facilities are equipped either with closed loop water systems (no waste water discharge) or water recycling solutions
Target:
- Minimizing water consumption
WATER CONSUMPTION & USE INTENSITY
Water сonsumption, m m3 | Specific consumptive water use, m3/t of steel | ||||||
5.7 | 5.5 | 4.9 | 4.7 | 5.3 | |||
4.7 * | |||||||
91 | 91 | 84 | 81 | 82 | |||
2015 | 2016 | 2017 | 2018 | 2019 | |||
WATER REUSE IN TOTAL WATER CONSUMPTION | |||||||
% of water reuse | 96.6% |
96.5%
96.4%
96.3% 96.3%
2015 | 2016 | 2017 | 2018 | 2019 |
*Adjusted for temporary production decrease at the Lipetsk site, based on 2018 Group's steel output
MINIMIZING WASTE GENERATION AND REUSING BY-PRODUCTS | 18 | ||
NLMK targets lower waste generation and higher share of
WASTE RECYCLING
%, NLMK Russia, excl. mineral waste
waste reuse in its operations to 96% by 2023
Briquetting plant launched in May 2019:
96%
94%
92%
89%
- All newly accumulated Fe |
containing waste will be reused for |
briquettes production at NLMK |
Lipetsk as feedstock in BOFs |
- This project will help to achieve the |
Group's Environmental Programme |
2022 target of increasing waste |
87%
?
2015 | 2016 | 2017 | 2018 | 2019 |
WASTE GENERATION INTENSITY
t/t, NLMK Group
utilization to 96% |
4.0
3.63.43.6
2.9
2015 | 2016 | 2017 | 2018 | 2019 |
- Key highlights
- Corporate governance
- Health & Safety
- Environment
- Tailings dam management
- Social
- ESG Ratings
NLMK'S TAILINGS DAM - SAFETY IS NUMBER ONE PRIORITY | 20 | ||
NLMK's tailings dam was put into operation in 1984
Tailings dam development plan was independently audited
Emergency preparedness is regularly assessed and response procedures are developed
Safety drills are regularly performed with the participation
of Russia's Ministry of Emergency Situations
Water recycling system is in place
NLMK responded to the Church of England Pensions Board request
- Key highlights
- Corporate governance
- Health & Safety
- Environment
- Tailings dam management
- Social
- ESG Ratings
DEVELOPING OUR TEAM | 22 | ||
NLMK Group employs 52.8 thousand people
Employee turnover rate increased in 2019 due the implementation of the program to increase labor productivity
Regular staff satisfaction surveys are conducted
Feedback channels were developed and launched
Group employees completed 52.9 training sessions in 2019
NLMK GROUP'S EMPLOYEE TURNOVER RATE | |||
8.8% | |||
4.7% | 4.4% | 4.7% | 5.6% |
? | ||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | ||||||
STAFF BREAKDOWN BY GENDER & CATEGORY | NO. OF TRAININGS COMPLETED BY EMPLOYEES | |||||||||
NLMK Group, % | NLMK Group, thousand trainings | |||||||||
15 | 22 | 25 | ||||||||
47 | 58 | |||||||||
85 | 78 | 75 | 53.4 | 55.4 | 52.5 | 52.9 | ||||
53 | 42 | 47.7 | ||||||||
Managers Specialists | Office | Shop floor Total NLMK | ||||||||
2015 | 2016 | 2017 | 2018 | 2019 | ||||||
employees | employees | Group |
Men Women
DEVELOPING LOCAL COMMUNITIES & SUPPORTING EMPLOYEES | 23 |
Tools for community engagement:
INVESTMENTS IN SOCIAL PROGRAMMES IN 2019
- Assessment of existing social programmes
- Direct engagement via dedicated channels
- Public hearings
- Cooperation with regional governments
- "Steel tree" project - a grant competition for social and environmental public initiatives
3% | 10% |
6% | 25% |
10% | $88.2 m |
7%
39%
Monetary support and benefits
Medicine and health improvement
Transport to/from work
Local communities development?
Corporate meals
Mass sports and cultural events Pensions co-financing
RESPECTING HUMAN RIGHTS | 24 | ||
Adhering to UN Global Compact principles on human rights and labor
- Human Rights Policy and Corporate Ethics Code are in place to reflect issues around respect of human rights
Key developments 2019:
- NLMK Group joined the UN Global Compact
- Participated in the BHR Peer Learning Series hosted by the Office of the UN High Commissioner for Human Rights and the UN Working Group on Business and Human Rights
- Member of the Committee on Corporate Social Responsibility and Demographic Policies of the Russian Union of Industrialists and Entrepreneurs (RSPP)
FUNDAMENTAL HUMAN RIGHTS PRINCIPLES AT NLMK
Fundamental principles | Areas of activity |
Prohibition of forced and | NLMK only signs employment contracts with individuals that meet the minimum age |
child labor | requirements stipulated by prevailing legislation. The Company does not make use of |
child labor. The Company also forbids the use of forced labor, penal and military labor, | |
slavery, and human trafficking. All employment at the Company is exclusively | |
voluntary in nature. | |
Prohibition of discrimination | NLMK does not tolerate discrimination based on sex, religion, or any other grounds in |
its staff management activities, including hiring, and adheres to the same principles | |
when determining wages. | |
Respect for the right to a | Ensuring decent working conditions, including competitive salaries, and providing |
minimum wage | both employees and retirees with a social benefits package are key priorities for |
the Group. | |
Support for freedom of | NLMK fulfils all of the requirements set forth in collective agreements, and regularly |
association and collective | engages with trade unions. The Company also ensures that conditions are in place to |
bargaining | facilitate the creation of associations to represent NLMK employee interests by |
making corporate communications tools available and by supporting employee | |
volunteering initiatives. | |
Providing safe working | The health and safety of employees is a priority for NLMK. The Company's |
conditions | management monitors and reduces risks associated with working conditions, |
increasing safety levels at the production sites of every operating unit of the Group. | |
- Key highlights
- Corporate governance
- Health & Safety
- Environment
- Tailings dam management
- Social
- ESG Ratings
RECOGNITION OF NLMK'S RESULTS IN THE AREA OF SUSTAINABILITY | 26 | ||
Continuous improvements across the board resulted in NLMK's ESG ratings upgrades by the leading research agencies in the area of sustainability
Sustainalytics revised NLMK's ESG rating score from the 31.5 in 2019 to 28 this year: the lower the number - the stronger management of ESG issues by a company
NLMK is currently ranked among top-3 steel companies analyzed by Sustainalytics
NLMK remained a constituent of the FTSE4Good Index following June 2020 review
Out of 100
33 | 45 | 36 |
22 |
NLMK NLMK NLMK Industry
2018 2019 2020 average score
FTSE RUSSELL ESG RATING
Max 5
3.4 | ||
2.2 | 2.1 | |
NLMK | Industry | Subsector |
average | average |
Out of 100 | 83 | |
77 | ||
53 | ||
NLMK | NLMK | NLMK |
2018 | 2019 | 2020 |
Max AAA
BВB | BВB | |
BB | ||
NLMK | NLMK | Industry |
2018 | 2019/2020 | relative score |
THE COMPANY'S IR CONTACTS
Dmitriy Kolomytsyn, CFA
Director, IR, Capital Markets
Address
40, Bolshaya Ordynka Str., Bldg. 3
Moscow, 119017, Russia
IR E-mail Address
ir@nlmk.com
Phone Number
Office: +7 495 504 05 04
nlmkonair | nlmk_group | nlmk group | |
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OAO NLMK - Novolipetskiy Metallurgicheskiy Kombinat published this content on 17 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 November 2020 19:32:04 UTC