ESG in business is a multi-lane road
2024-07-04 16:13
Governance
Report
World
Nornickel's Sustainability Report for 2023 comprises almost 500 pages that are filled with figures. Behind each of them, are actual projects in social policy, the environment, innovations, and improving investment attractiveness. We are telling you about the major milestones.
Nornickel has been preparing non-financial reports since 2005. In 2016, the company joined the UN Global Compact for responsible business and sustainable development and has been an active participant in this since then. Since the 2022 reporting period, additional reports on climate change, human rights, and responsible supply chain have been added to the main ESG report. In May 2024, the company presented its 20th annual sustainability report for 2023.
The company's reporting changes each year. Nornickel polls all stakeholders, including investors, partners, employees, and third-party experts, in advance to find out which topics are of high priority.
The company's reporting changes each year. Nornickel polls all stakeholders, including investors, partners, employees, and third-party experts, in advance to find out which topics are of high priority.
40 awards for ESG reporting
have been received by the company at Russian and international competitions
since 2005.
In 2023, social issues were in the top three, while the environment moved to the seventh place. Vladimir Zhukov, Vice President for Investor Relations and Sustainable Development, explained that the environment had not stopped being a matter of concern for people. The issue has lost its urgency because Nornickel's efforts in this area are visible and efficient. Therefore, every year the report grows in volume and its structure changes.
VLADIMIR ZHUKOV,
Vice President for Investor Relations and Sustainable Development:
" From the investment attractiveness perspective, we remain in the top ten largest companies in terms of market capitalization, which exceeds RUB 2 trillion. Following the withdrawal of foreign investors, our focus shifted to Russian investors. Their equity share has more than doubled in the last 5-6 years and stands at almost 11%. The number of private investors has grown sevenfold, and 414,000 people have already purchased the company's shares.”
At the end of 2023, the company's top managers reported on the key areas of sustainable development work.
How to attract young people
Last year, Nornickel adopted a new strategy for socially sustainable development up to 2030. It has four major priorities. Some of the most important are talent management and corporate culture. Larisa Zelkova, Senior Vice President for HR, Social Policy and Public Relations, explained that there was a complicated situation in the labor market.
In order to remain an attractive employer, the company has identified the following key HR challenges for the next three years:
Last year, over 50,000 employees became Nornickel digital investors: they received tokens that were linked to the value of the company's shares. In the summer, when the ban on the tokens sale expires, an assessment will be made as to how employees will manage their capital and how this tool will affect the improvement of HR metrics.
- establishing a priority development system for employees. Everyone, regardless of age or occupation, should have opportunities for advancement;
- building a new culture of efficiency and readiness for changes. In dealing with employees, best HR practices are applied and an ongoing dialog is maintained;
- social support and incentive fees. Employees are provided with a wide range of social programs, and their living conditions are constantly improving in the cities of the company’s presence.
Last year, over 50,000 employees became Nornickel digital investors: they received tokens that were linked to the value of the company's shares. In the summer, when the ban on the tokens sale expires, an assessment will be made as to how employees will manage their capital and how this tool will affect the improvement of HR metrics.
18 of 19 vacancies in Nornickel's top team
were closed from the internal talent pool in 2023. More than 4,000 employees have moved 1-2 steps up on their career ladder.
Nornickel's experience shows that people are ready to live and work in the harsh Arctic, if comfortable conditions are available in the city and at production facilities. For this reason, the company is investing in the Norilsk Urban Renovation Program and changing the appearance of other settlements.
The Made with Care Program is underway at the company's facilities. In recent years, spending on it has doubled, and a sign reading “Made with Care” has appeared in renovated locker rooms, showers, rest and meal rooms, and gyms for employees. Larisa Zelkova is sure that there are no trifles in creating comfortable working conditions, as they directly affect productivity and staff turnover.
The Made with Care Program is underway at the company's facilities. In recent years, spending on it has doubled, and a sign reading “Made with Care” has appeared in renovated locker rooms, showers, rest and meal rooms, and gyms for employees. Larisa Zelkova is sure that there are no trifles in creating comfortable working conditions, as they directly affect productivity and staff turnover.
A sign reading "Made with Care" appeared in the renovated gym, locker rooms, showers, rest and meal rooms for employees.
A sign reading "Made with Care" appeared in the renovated gym, locker rooms, showers, rest and meal rooms for employees.
Safe production for successful business
Nornickel's facilities are hazardous production facilities. This means that the most important thing is to preserve the life and health of employees. Since 2021, significant progress has been made in this area.
Stanislav Seleznev, Vice President for HSE, shared the fatality rate dynamics. In 2022, it was at its lowest rate of 4 people in the company's history. By comparison, there were 11 cases in 2021. In the year under review, the figure had sadly increased to 5.
Stanislav Seleznev, Vice President for HSE, shared the fatality rate dynamics. In 2022, it was at its lowest rate of 4 people in the company's history. By comparison, there were 11 cases in 2021. In the year under review, the figure had sadly increased to 5.
The increase in injuries seen in the report, as Stanislav Seleznev explained, was not because there were more accidents. It's just that they've been identified more frequently. To this end, a program for improving transparency has been launched at the production facilities The goal is to achieve a zero workplace fatality rate.
Advanced monitoring systems have had a great effect, but the material factor has also proved to be important. Once the accident rate was removed from the bonus program for line managers, accidents began to be reported much more frequently. It is very important, because if nothing is known about an incident, it is impossible to investigate it, or to draw conclusions. This means that it is bound to happen again, but with worse consequences.
Advanced monitoring systems have had a great effect, but the material factor has also proved to be important. Once the accident rate was removed from the bonus program for line managers, accidents began to be reported much more frequently. It is very important, because if nothing is known about an incident, it is impossible to investigate it, or to draw conclusions. This means that it is bound to happen again, but with worse consequences.
STANISLAV SELEZNEV,
Vice President for HSE:
“I don't know of any successful facility where industrial safety has been neglected. When employees are protected, the best people come to work for you, and catastrophic emergencies are eliminated.
There have been examples of companies going bankrupt because all their assets were spent on remediation of consequences. Today, it is not enough to spend all the money available, we still need to find the equipment required to restore production. So if you want to be successful, take care of your safety.”
Interacting with Indigenous Peoples through FPIC
Today, Nornickel is a leader in creating a new quality of life for small indigenous peoples, but it was not an easy path. Andrey Grachev, Vice President for Federal and Regional Programs, HR, Social Policy and Public Relations, told about how the company's interaction with indigenous peoples had been changing.
20 years ago, the company's strategy followed the beaten path. Indigenous peoples of the Arctic were given gifts like “cookies and down jackets” and built infrastructure without assessing whether they were needed or not. The company has come to realize that actions should be systemic and in line with the needs of the residents. Thus, the principle of “Nothing for Us without Us” came into being.
The Nornickel team carried out an expert assessment in 39 communities, talked to the executives and found out what kind of assistance they needed. There were helicopters and a lifetime pension of RUB 50 thousand among the things they wanted, but as a result, 40 actual areas were chosen.
Structuring of systemic interaction with indigenous peoples was the next priority.
A five-year budget has been approved, which the company is committed to spend on assisting indigenous peoples.
The indigenous peoples interaction program was developed on the basis of a document articulating the principles and objectives of interaction, as well as a list of assistance areas. This initial document was signed by authorized representatives of all ethnic groups. The program has set a goal of shifting from paternalism to patronage, and from patronage to partnership.
The Nornickel team carried out an expert assessment in 39 communities, talked to the executives and found out what kind of assistance they needed. There were helicopters and a lifetime pension of RUB 50 thousand among the things they wanted, but as a result, 40 actual areas were chosen.
Structuring of systemic interaction with indigenous peoples was the next priority.
A five-year budget has been approved, which the company is committed to spend on assisting indigenous peoples.
The indigenous peoples interaction program was developed on the basis of a document articulating the principles and objectives of interaction, as well as a list of assistance areas. This initial document was signed by authorized representatives of all ethnic groups. The program has set a goal of shifting from paternalism to patronage, and from patronage to partnership.
What Nornickel did for indigenous peoples in 2023
- Seven houses and three paramedic centers were built.
- Five apartments for orphanage graduates were bought out.
- Thanks to the company, 56 young people are now studying free of charge at the Polar University.
Control over program implementation rests with the Coordination Council under the Polar Division Director. Four years ago, there were representatives from six communities in the Council; now there are 57. The Council monitors the implementation of planned activities and suggests changes to the program to keep the budget intact.
The company's interaction with indigenous peoples is coordinated by a special department of the Polar Division.
The Agreement on Prior and Informed Consent of Indigenous peoples,or FPIC, is a procedure that has been incorporated into the company's policy on relationships with local communities. It is the first in Russia. FPIC implies that people decide on their own how to develop.
The company's interaction with indigenous peoples is coordinated by a special department of the Polar Division.
The Agreement on Prior and Informed Consent of Indigenous peoples,or FPIC, is a procedure that has been incorporated into the company's policy on relationships with local communities. It is the first in Russia. FPIC implies that people decide on their own how to develop.
ANDREY GRACHEV,
Vice President for Federal and Regional Programs, HR and Social Policy and Public Relations:
“In addition to financial assistance, it is important to preserve the culture, and written language of indigenous peoples because the ethnic groups are disappearing without them. We publish anthologies of Saami poets, support artists and, with the assistance of scientists, have helped to restore the Nenets written script.
Nornickel is cooperating closely with the Federal Agency for Ethnic Affairs. Our flagship joint project is the School of People's Diplomacy, where indigenous children learn to advocate for their rights on international platforms.
Interaction with indigenous small-numbered peoples is not an easy, but an essential task. I would like to recall the lines of the Balkar poet Kaisyn Kuliev: “It's easy to love all mankind, but try to love your neighbor!” I consider these words to be our motto.”
Reducing emissions, scavenging, and conserving biodiversity
Launch of the Sulfur Program first phase at the Nadezhda Smalter was the major environmental news of 2023 not only for Norilsk, but for Russia. The Program's contribution to the National Clean Air Project is almost 50%, and it accounts for more than 20%.of the the Clean Country Project
Sulfur Program metrics. In an effort to reduce harmful sulfur dioxide emissions, another plant of almost the same size was built next to the Smelter. The purification level of 99.6% has been confirmed by the regulatory authorities.
In 2024, the first phase of the facility will reach its full capacity, and the second phase will be launched. SO2 emissions will be reduced by at least 20% by the end of 2024.
Sulfur Program metrics. In an effort to reduce harmful sulfur dioxide emissions, another plant of almost the same size was built next to the Smelter. The purification level of 99.6% has been confirmed by the regulatory authorities.
In 2024, the first phase of the facility will reach its full capacity, and the second phase will be launched. SO2 emissions will be reduced by at least 20% by the end of 2024.
Installation of heat exchangers for Nornickel's Sulfur Program at the Nadezhda Smelter site
Kola Division is a leader in reducing emissions. Stanislav Seleznev, Vice President for HSE, shared this good news with the audience. He especially emphasized the achievements of the Kola Division. The sulfur dioxide emissions are decreasing at a more accelerated rate here. From 2015 to 2023, they decreased by 90%.
Kola Division is a leader in reducing emissions. Stanislav Seleznev, Vice President for HSE, shared this good news with the audience. He especially emphasized the achievements of the Kola Division. The sulfur dioxide emissions are decreasing at a more accelerated rate here. From 2015 to 2023, they decreased by 90%.
The carbon footprint of Nornickel’s products is one of the lowest in the industry
due to the power the company receives from hydroelectric power plants The decrease from 236 MMT to 219 MMT was due to reduced consumption of clean water for cooling equipment at the company's CHPP in 2023.
Air quality control In Norilsk Last year, Norilsk launched 16 air quality control stations all over the city. Five emission control systems have also been prepared for operation at the Nadezhda Smelter. Data will be transmitted to controlling authorities every 20 minutes. Services for city residents will also start up shortly. They will be able to check the air quality in Norilsk online.
Clean Norilsk The city's renovation project which includes the decommissioning of dilapidated and old buildings, disposal of waste and scrap metal has been underway since 2021. It's hard to imagine the scale of work.
Results by 2024:
Biodiversity conservation is an ongoing challenge for the company. The Great Scientific Expedition launched by Nornickel in 2022 will proceed.
Clean Norilsk The city's renovation project which includes the decommissioning of dilapidated and old buildings, disposal of waste and scrap metal has been underway since 2021. It's hard to imagine the scale of work.
Results by 2024:
- 347 dilapidated buildings were decommissioned,
- 4.1 M sq. km of territory were cleaned up, and
- 1 MMT of waste and scrap metal were removed.
Biodiversity conservation is an ongoing challenge for the company. The Great Scientific Expedition launched by Nornickel in 2022 will proceed.
Key results for 2023 :
- establishing an IESI index to assess the state of the environment,
- discovering a new species of weevil beetles,
- developing a website on biodiversity conservation by Nornickel, and
- developing software for a drone that monitors online and can even take water samples from lakes and rivers.
STANISLAV SELEZNEV,
Vice President for HSE:
“Environment as an area of ESG has become free from all superficial, media-driven things. Efforts to conserve nature have become more concrete and practical.
Biodiversity conservation is one of the most interesting areas in the harsh conditions of the Arctic. Returning to the territory of red-listed animals and even more discovering new species, such as a Putoranchik beetle, give us great pleasure.
Key environmental metrics are regulated by laws, by the government, and taking care of biodiversity is purely a matter of goodwill of the company. That's definitely a 100-point plus in karma.”
Palladium-based innovations for the green economySimplicity is the basis
Nornickel spends significant funds on ESG innovations. Among them are digital and technological know-how, and new materials. Vitaly Busko, Vice President for Innovation, described the use of palladium as the most important project. This unique metal surpasses platinum in terms of its catalytic properties.
Currently, the company has more than 20 palladium projects under development. And a substantial number of them are for green energy.
Green energy. Nornickel has used palladium to develop PEM-electrolyzers to produce green hydrogen from water and tubular membranes to produce ultra-pure hydrogen from other fuels. The performance of the prototypes exceeds their commercial counterparts. Industrial trials are planned in China to start production faster
Currently, the company has more than 20 palladium projects under development. And a substantial number of them are for green energy.
Green energy. Nornickel has used palladium to develop PEM-electrolyzers to produce green hydrogen from water and tubular membranes to produce ultra-pure hydrogen from other fuels. The performance of the prototypes exceeds their commercial counterparts. Industrial trials are planned in China to start production faster
Hydrogen activity and output are 3 times higher
when using palladium in the catalyst for PEM electrolyzers, thus enabling us to partially replace the deficient iridium.
Green chemistry: We can use palladium to produce glycolic acid, an important component of biodegradable packaging and many cosmetics. Nowadays, this substance is made from the toxic formaldehyde. Palladium will make production harmless and improve economic efficiency.
Water treatment: Nornickel has developed palladium-based electrodes that can be used to produce 15-20% more sodium hypochlorite at a water disinfection site without harming the environment. For now, traditional methods of treating water with chlorine carry environmental risks during transportation.
Slags instead of cement. Innovative approaches enable metallurgical waste to improve the sustainability of the company. Nornickel used molecular modeling to determine that slags have binding properties and can replace up to 50% of cement, in particular in laying mixtures at mines. Cement is a product with the highest specific formation of carbon dioxide, so its reduced share in backfill blends will simultaneously reduce the company's carbon footprint.
Water treatment: Nornickel has developed palladium-based electrodes that can be used to produce 15-20% more sodium hypochlorite at a water disinfection site without harming the environment. For now, traditional methods of treating water with chlorine carry environmental risks during transportation.
Slags instead of cement. Innovative approaches enable metallurgical waste to improve the sustainability of the company. Nornickel used molecular modeling to determine that slags have binding properties and can replace up to 50% of cement, in particular in laying mixtures at mines. Cement is a product with the highest specific formation of carbon dioxide, so its reduced share in backfill blends will simultaneously reduce the company's carbon footprint.
VITALY BUSKO,
Vice President for Innovations:
“Our development of tailings mineralization was recognized the best ESG project in 2024. Tailings, Nornickel's ore enrichment waste, have a unique property of absorbing CO2 from the air.
Starting from 2022, together with the site specialists, we have carried out a major study of tailings at all company operating tailing dumps (4 tailing dumps) and discovered that the process of tailing stockpiling and dumping resulted in the formation of secondary carbonates. This means that tailing dumps are natural absorbers of 200-400 KMT of carbon dioxide per year.
Now, we are developing a technology for accelerated mineralization using reagents. It will significantly increase the absorption capacity of the tailings, which will bring us even closer to achieving product carbon neutrality and meeting the international standards for greenhouse gas control.”
An outsider's view: opinions of external experts
Nornickel invited external experts to attend its sustainability report presentation. The expert community opinion is important for assessing the efficiency of the company's ESG projects.
Managing Director for Corporate Responsibility, Sustainable Development and Social Entrepreneurship at RSPP (Russian Union of Industrialists and Entrepreneurs) Elena Feoktistova was quick to describe Nornickel as the main driver of ESG in our country. Each non-financial report is assessed by auditing organizations and publicly certified. Nornickel has been subjected to this procedure at the RSPP 15 times, and has invariably complied with the recommendations received.
Managing Director for Corporate Responsibility, Sustainable Development and Social Entrepreneurship at RSPP (Russian Union of Industrialists and Entrepreneurs) Elena Feoktistova was quick to describe Nornickel as the main driver of ESG in our country. Each non-financial report is assessed by auditing organizations and publicly certified. Nornickel has been subjected to this procedure at the RSPP 15 times, and has invariably complied with the recommendations received.
Nornickel ranks among the top 5
out of 120 companies listed in the Sustainability Index, which has been produced by RSPP 10 years.
Executive Director of the UN Global Compact National Association in Russia Natalia Dorpeko noted that Nornickel was one of the few companies that retained its active membership status after February 2022 and actually helped keep our country on track with ESG.
At the time of the crisis, RSPP established a focus group with Nornickel as a member to substantiate its position. The company's case became the most convincing one for foreign partners. Human rights, supply chains, environment and climate agendas, biodiversity, and interaction with indigenous peoples convinced the UN staff that Russia's extractive business was on a clear ESG path.
Director of the Norilsk Development Agency Maxim Mironov said that Nornickel's advanced approaches in production, environment, and social policy affected the entire management team of the city. For example, Norilsk leaders are thinking about opening a technology park for garbage sorting and recycling instead of building another landfill. This is not just an infrastructure project, but the implementation of a culture of conscious consumption.
Head of Akra's sustainability risk assessment team Vladimir Gorchakov admitted that it was pleasant but difficult to work with Nornickel. More than 80% of the information that is required for Akra ratings is in the public domain. This means that the employees of the rating company have to process it on their own. Of course, it's a joke. It is true that Nornickel's high ESG score is a result of its openness. There are deeds, not words, behind every figure.
At the time of the crisis, RSPP established a focus group with Nornickel as a member to substantiate its position. The company's case became the most convincing one for foreign partners. Human rights, supply chains, environment and climate agendas, biodiversity, and interaction with indigenous peoples convinced the UN staff that Russia's extractive business was on a clear ESG path.
Director of the Norilsk Development Agency Maxim Mironov said that Nornickel's advanced approaches in production, environment, and social policy affected the entire management team of the city. For example, Norilsk leaders are thinking about opening a technology park for garbage sorting and recycling instead of building another landfill. This is not just an infrastructure project, but the implementation of a culture of conscious consumption.
Head of Akra's sustainability risk assessment team Vladimir Gorchakov admitted that it was pleasant but difficult to work with Nornickel. More than 80% of the information that is required for Akra ratings is in the public domain. This means that the employees of the rating company have to process it on their own. Of course, it's a joke. It is true that Nornickel's high ESG score is a result of its openness. There are deeds, not words, behind every figure.
ANDREI BOUGROV,
Chairman of the Board of Directors:
“Nornickel won the Responsible Business Award, which more than 60 companies applied for. This is an objective and independent assessment of our team's merits in sustainable development. Over 20 years, ESG values have deeply penetrated into Nornickel's corporate culture.
There was a lot of skepticism at first, including from the staff. Now, they are spearheading the call. Everyone wants to be associated with a company that cares about the environment, takes responsibility for territorial development, and introduces innovations.
ESG is a wide road with multi-lane traffic. It benefits business, society, and the authorities. We will continue to follow this path.”
Photos by Nornickel
June, 2024
June, 2024