2021 sustainability report

ESG
strategy

Our key ESG achievements and priorities

E
Environment
and climate change

S
Social
responsibility

G
Governance

Key achievements

E
Environment and climate change

  • The lowest СО2 emission metrics per tonne of Ni equivalent in the global nickel industry
  • The lowest СО2 emission (Scope 1, 2 and 3) metrics among global mining peers
  • First producer of carbon-neutral nickel

S
Social responsibility

  • Strong reputation of a socially responsible business
  • Comprehensive support of local communities and national projects
  • Long track record of supporting indigenous peoples; pioneering of the process to obtain their free, prior and informed consent to projects, unprecedented in the Russian mining industry

G
Governance

  • Improved corporate governance and risk management frameworks
  • Including ESG indicators in shortand long-term KPIs
  • Balanced and efficient Board of Directors
Strategic priorities

E
Environment
and climate change

  • Clean-up of accumulated legacy waste and remediation following environmental incidents in Norilsk
  • Significant SO2 emission reduction at two major sites
  • Supporting environmental initiatives across the Company’s geography
  • Further development of a risk management system for physical risks across our footprint
  • Reducing negative impact on biodiversity

S
Social responsibility

  • Zero work-related fatalities
  • Reducing the impact of operations on indigenous peoples in the regions of presence
  • Reconstruction of housing and social infrastructure in Norilsk

G
Governance

  • Fostering a new corporate culture of sustainable development
  • Compliance with core international sustainability initiatives

E — Environmental and Climate Change Strategy

In 2021, Nornickel’s Board of Directors approved the Environmental and Climate Change Strategy through 2031. The strategy will be adopted companywide to boost our environmental performance.

The strategy’s main objectives include:

  • production upgrade and transition to advanced environmental technologies;
  • improving the environmental aspects and risks management system;
  • eliminating the accumulated pollution and full land rehabilitation after man-made incidents;
  • restoring biodiversity across the Company’s footprint.

In total, Nornickel is going to invest over USD 6 bn (RUB 440 bn) in environmental initiatives through 2031, including over USD 4 bn in Sulphur Programme 2.0.

Key areas of the Environmental and Climate Change Strategy

Key areas of the Environmental and Climate Change Strategy

Targets of the Environmental and Climate Change Strategy through 2031

Strategic area
Target indicators
Climate change
  1. Reducing Scope 1+2 GHG emissions by 25% to 7.7 mtpa by 2028 taking into account the expected production growth and Sulphur Programme 2.0.
  2. Reducing carbon intensity from operations* by 37% to 5.0 t of СO2 equivalent per t of Ni equivalent by 2028.
Air
  1. Reducing SO2 emissions by 85% at Kola Division in 2021 and by 90% at Polar Division in 2025 vs the base year 2015.
Water
  1. Reducing pollutant emissions by 25% vs the base year 2019 and achieving the maximum permissible emissions rate of 159 kt by 2031.
  2. Keeping fresh water withdrawal (excluding mining water) for production needs below 120 mcm.
  3. Keeping water recycling and reuse rates above 80%.
  4. Eliminating the HPP-3 fuel spill consequences and clean-up to normalise the water indicators by the end of 2022.
Tailing dams and waste
  1. Disposing of 100% of tailings generated by new projects to environmentally safe facilities featuring best-in-class technologies, starting 2025.
  2. Eliminating (collection and processing) 100% of accumulated waste by 2030.
  3. Increasing/maintaining the share of mineral waste recycling above 15%.
  4. Increasing/maintaining the share of non-mineral waste (other than gypsum) recycling.
  5. Increasing the share of gypsum waste recycling.
Land
  1. Rehabilitation of 117 ha/year of disturbed land.
Biodiversity
  1. Biodiversity impact management.
Stakeholder expectations, engagement and communications*
  1. Compliance with the TCFD principles.
  2. Joining the ICMM.
  3. Joining the IRMA.
  4. Implementing Global Industry Standard on Tailings Management.
  5. Joining the Responsible Minerals Initiative.

S — Nornickel’s social strategy

As the foundation for further advancing its social activities, Nornickel formulated key pillars and goals in the area of social responsibility.

The Group’s key areas of operation in Russia include the cities of Norilsk, Monchegorsk and Dudinka, the Pechengsky District of the Murmansk Region, and the Gazimuro-Zavodsky District of the Trans-Baikal Territory.

We make a sizeable contribution to the social and economic development of our regions of operation by implementing a wide range of social and infrastructure projects.

For more details on our strategic social projects, please see the following sections: Development of Local Communities, Occupational Health and Safety, Human Rights, and Interaction with Indigenous Northern Minorities.

We are one of the leaders among Russian metals and mining companies both in terms of absolute social expenses and their share in revenue. GRI 203-1

3.4%
share of social expenses in 2021 revenue.
44.3
RUB bn — total social infrastructure, social, charity and sponsorship expenses in 2021.*

Social strategy priorities

Social strategy priorities Social infrastructure, social, charity and sponsorship expenses

G — sustainability governance

Sustainability management and ESG implementation are an integral part of Nornickel’s corporate governance system.

In 2020, Nornickel introduced largescale changes to its governance framework to improve the effectiveness of the management actions to ensure industrial safety and reduce environmental risks.

As part of this process and in line with the best global ESG practices, Nornickel established a new role of Senior Vice President for Sustainable Development, to which Andrey Bougrov was appointed.

The Senior Vice President for Sustainable Development also leads the Sustainable Development Department acting as the key driver of integrating sustainability management practices into Nornickel’s day-to-day activities, ensuring compliance with international standards and adopting a new ESG management framework.

Andrey Bougrov

Senior Vice President for Sustainable Development at MMC Norilsk Nickel

  • Member of the non-governmental Council on Foreign and Defence Policy
  • Member of the Business Council at the Russian Ministry of Foreign Affairs
  • Member of the Management Board and Vice President of the Russian Union of Industrialists and Entrepreneurs
  • Member of the Expert Committee of the Russian Presidential Anti-Corruption Directorate

Member of the Management Board since 2013

Born in: 1952

Nationality: Russian Federation

Education: Moscow State Institute of International Relations (MGIMO), PhD in Economics

Employment record for the last five years:

  • 2002–2020 — member of the Board of Directors at MMC Norilsk Nickel PJSC (MMC Norilsk Nickel OJSC until 1 June 2015)
  • 2013–currently — Vice President at Interros Holding Company LLC (Interros Holding Company CJSC until 7 April 2015)
  • 2015–currently — member of Non-Profit Partnership National Council on Corporate Governance
  • 2016–2020 — Senior Vice President at MMC Norilsk Nickel
  • 2016–currently — Chairman of the Issuer Committee at the Moscow Exchange
  • 2018–currently — Chairman of the Council on Non-Financial Reporting at the Russian Union of Industrialists and Entrepreneurs
  • 2018–currently — member of the Advisory Council at the Russo-British Chamber of Commerce
  • 2020–currently — Senior Vice President for Sustainable Development at MMC Norilsk Nickel
  • 2020–currently — member of the Climate Policy and Carbon Regulation Committee at the Russian Union of Industrialists and Entrepreneurs

Transition to divisionbased governance structure

As part of its effort to streamline the governance system, Nornickel migrated to a division-based structure in 2020– 2021. Today, the Group’s core operations are grouped into three geographybased divisions — Norilsk, Kola, and Trans-Baikal. The Company also has a standalone functional unit — the Energy Division consolidating its energy assets. In addition to retaining control over Group-wide business verticals (HR, finances, legal and security), the Head Office continues to oversee logistics, distribution, operational activities and strategic projects. Divisions will bear comprehensive operational responsibility for production, infrastructure, financial performance, and risk management within their remit.

The new divisional structure has enabled the Company to strengthen oversight over auxiliary operations by vesting respective powers with the heads of regional production units while also providing greater investment flexibility with a three-fold increase of CAPEX limits for subsidiaries and divisions. Also, the transition to the new organisational model came as an essential addition to the Company’s plan to improve the efficiency of HSE controls, and will help improve the Board of Directors’ oversight over Nornickel’s ESG performance and ESG strategy implementation.

In 2021, all divisions set up ESG competence centres working in tandem with the Head Office’s Sustainable Development Department and responsible for the ESG agenda and related initiatives on sites and in the regions of operation.

Nornickel’s ESG model

Mission of the ESG management model

Making ESG part of our corporate life by integrating the principles into day-to-day management, developing new competencies, processes and tools and changing the mindset of employees and managers to transform Nornickel into a global leader in sustainability.

Our ESG vision

What kind of business does Nornickel strive to become?
All our people know, share and observe corporate ESG priorities in their day-to-day activities to enable Nornickel’s transformation into a recognised global leader in sustainability.

ESG management principles

Hands-on teamwork: creating an environment for robust teamwork, solving specific ESG-related cases, encouraging cooperation.

Integrated management perimeter: the Company defined 21 ESG areas, consolidated them into a single list of tasks with owners and a team action plan for each area, and created a transparent updating procedure in case of environment changes.

Flexibility, speed and self-regulation: team coordination and supervision based on the contractual mechanism and a mechanism for interaction within the team.

Clear responsibilities and incentives: currently formalised in approved documents, including organisational regulations, approved plans and Management Board resolutions, and to be included in KPIs going forward.

Involving the top management in decision-making: meetings with the President semi-annually or as needed, making ESG part of the agenda of dedicated strategy, risk management and HSE committees. Divisions: meetings led by the division head and dedicated committee meetings.

Single ESG hub: Senior Vice President for Sustainable Development and division heads supported by the Sustainable Development Department.

Action plan to implement an ESG agenda in 2021–2023

2021 objectives
Status
Drafting sustainability strategies at the division level and decomposing strategic KPIs to various management levels
Done
Approval and adoption of 12 new ESG policies and position statements on human rights, responsible sourcing, tailing dump and water management, biodiversity, etc.
Done
Drafting and independent verification of the methodology to calculate GHG emissions from key metals production
Done
First disclosure on forest protection under CDP
Done
Drafting a roadmap to ensure compliance with TCFD standards
Done
Promoting decarbonisation initiatives
Done
2022 targets
  1. Preparation and opportunity analysis for attracting green financing
  2. Introducing matrix ESG management
  3. Improving internal risk management procedures, systems and mechanisms in accordance with ICMM, IRMA and international waste disposal standards
  4. Scenario analysis of physical risks and transition risks associated with climate change
  5. Integration of climate change risks into corporate business processes
  6. Certification of mines for compliance with IRMA requirements*
  7. RMI certification of Norilsk Division
2023 targets
  1. Preparing a separate climate change report
  2. Compliance with the global standard for tailing dumps
  3. Filing an application to ICMM*
  4. Launch of anchor Sulphur Programme 2.0 project at Nadezhda Metallurgical Plant to capture furnace gases

Responsibilities for the achievement of the Company’s sustainability goals and targets are distributed among the governance bodies and divisions of MMC Norilsk Nickel and its subsidiaries in accordance with the applicable laws and internal regulations and within the scope of their functions.

Environmental performance management

To create a full-fledged environmental monitoring system and ensure independent internal control over environmental protection issues, the Company set up an Environmental Department and an Inspection for Monitoring Technical, Production and Environmental Risks as part of the Internal Control and Risk Management Unit. The Environmental Department interacts with all units of the Company and is responsible for developing a policy to minimise the environmental impact and restore ecosystems in Nornickel’s regions of operation.

Its key functions include effective management of environmental risks, expert review of investment projects, coordination of environmental regulation, control, and management systems, and obtaining authorisations and permits.

On top of that, Nornickel introduced the position of Deputy CEO for Industrial Safety and Environmental Protection at Polar Branch of Norilsk Division, its major production business unit, to strengthen control over its environmental performance.

Environmental Monitoring Centre

In late 2020, to ensure environmental monitoring across the regions of its operation, the Company also set up an Environmental Monitoring Centre reporting to the Senior Vice President and Chief Operating Officer.

The centre has the power to issue and serve the statements of deficiencies to heads of Nornickel’s production enterprises. In case of identifying material breaches of environmental safety, it may temporary shut down production facilities until such deficiencies are eliminated.

To improve response preparedness with regard to accidents and emergencies with environmental consequences, the centre organised and conducted on-site training at production facilities. In 2021, it conducted 30 scheduled, ad hoc and follow-up audits and held 12 drills to check emergency preparedness.

As part of the centre’s activities in 2021, 124 initiatives were developed and implemented to improve environmental safety across the Company and its Russian business units

The Environmental Monitoring Centre is creating an automated monitoring system to identify safety problems and conditions that could lead to incidents, accidents and emergencies with environmental consequences. The Company started to develop the relevant software in 2021, with the launch expected in 2024.

Compliance with international standards and best practices in ESG and quality management

Nornickel’s management systems are aligned with best international practices and standards. The Company’s production assets are subject to regular certification and surveillance audits for compliance with international standards related to quality management, environmental management, labour protection, and information security.

Certification of our key production and transportation assets

Production asset
Standard
Audit frequency
Auditor

Production asset

Head Office, Polar Division, Polar Transport Division, Murmansk Transport Division

Standard

ISO9001:2015
 

ISO14001:2015
 

ISO 45001:2018
 

Audit frequency

Surveillance audits — annually

Recertification audits — every three years

Auditor

BUREAU VERITAS
Certification

BUREAU VERITAS
Certification

BUREAU VERITAS
Certification

Production asset

Murmansk Transport Division, Nadezhda Metallurgical Plant, Copper Plant, Talnakh Concentrator

Standard

ISO/IEC 27001:2013
 

Audit frequency

Surveillance audits — annually, twice a year

Recertification audits — every three years

Auditor

British Standards
Institution

Production asset

JSC Kola MMC

Standard

ISO 9001:2015
 

ISO14001:2015
 

ISO 45001:2018
 

Audit frequency

Surveillance audits — annually

Recertification audits — every three years

Auditor

BUREAU VERITAS
Certification

BUREAU VERITAS
Certification

BUREAU VERITAS
Certification

Production asset

Norilsk Nickel Harjavalta

Standard

ISO 9001:2015
 

ISO 14001:2015
 

ISO 45001:2018
 

Audit frequency

Surveillance audits — annually

Recertification audits — every three years

Auditor

BUREAU VERITAS
Certification

BUREAU VERITAS
Certification

BUREAU VERITAS
Certification

Sustainability management framework*

GRI 102-18 GRI 102-20

Sustainability management framework

Support of Russian and international sustainability standards and initiatives

GRI 102-12 GRI 102-13

We support leading global and national initiatives in sustainable development often pioneering integration of their requirements into our corporate practices.

Back in 2005, Nornickel was among the first Russian companies to join the Social Charter of the Russian Business adopted by the RSPP. In 2018, the Company was Russia’s first business taking part in the project of reporting on contribution towards the implementation of the UN Sustainable Development Goals (UNCTAD).

On top of that, the Company contributes substantially to the country’s National Projects in healthcare, environmental protection, housing and urban environment, productivity, employment, science, and digital economy.

Nornickel in ESG ratings

Description
Rating as at 31 December 2021
After joining the UN Global Compact in 2016, the Company has continuously demonstrated its commitment to sustainability principles
The agency confirmed the inclusion of Nornickel’s shares in the FTSE4Good Emerging Index, with a score of 4.3 out of 5
ISS Quality Score: environment — 2, social — 3, corporate governance — 6 on a scale from 1 (low risk) to 10 (high risk)
ISS ESG rating — C+
Score — 43 (out of 100)
ESG Risk Score: 36.9 out of 100 on a scale from 1 (low risk) to 100 (high risk)
ESG rating — “BB”, score of 3.4 (out of 10)
Ratings — “D” (Climate Change), “C” (Water Security)

Compliance with the leading global ESG and sustainability standards and initiatives

Standard/initiative
Compliance (certification) status
Global initiatives with certification
EcoVadis ESG rating
Together for Sustainability (TFS) initiative
Responsible Sourcing Blockchain Network (RSBN)
Own initiatives with certification
Drafting the methodology and carbon footprint measurement for key metals (auditor — EY, independent verification — Sphera Solutions GmbH)
Producing a batch of carbon-neutral nickel (auditor — EY)
Compliance with global industry standards and initiatives with certification
Global Reporting Initiative (GRI) (comprehensive option)
Global industry standard on tailings management
Scheduled for 2023