Climate Change Data

Environmental Metrics

ESG Focus Areas

• Occupational Safety
• Environmental Protection
• Social Projects and Investments
• Corporate Governance
• Employee Relations

Environmental Achievements

• Reduced pollutant emissions from steelmaking, coke, blast furnace and sinter plants
• Improved air-tightness of coke plant equipment to reduce air pollution
• Completed start-up and adjustment of the Integrated Water Discharge Filtration Station, achieving compliance with emission limits for Outlet 10
• Reduced water intake by 3%

Social Achievements

• Launched the first online steel product store in the Russian mining and steelmaking industry
• Increased employee engagement from 60% to 68%
• Invested 203 million roubles in employee development programmes
• Completed Steelmaking Museum and built nine sports facilities and nine playgrounds in Cherepovets
• Purchased over 15 billion roubles worth of goods and services in Vologda Oblast
• Way Home programme prevented new-born abandonment and supported families in hardship

Governance Achievements

• Complied with Russian laws and international best practices in corporate governance
• Implemented a risk management system covering social, occupational safety, and environmental risks
• Implemented a comprehensive anti-corruption programme with mandatory training for over nine thousand employees
• Improved financial and operational transparency through quarterly and annual reports and regular meetings with stakeholders

Climate Goals & Targets

Environmental Challenges

• Global overproduction affecting steelmaking capacity and triggering competition
• Severnaya mine disaster resulting in 36 fatalities
• Low demand and low prices in the steel market
• Increasingly complex global market with protective measures in several countries
• Management of occupational safety and environmental protection risks
• Management of social risks
• Mitigation of corruption risks

Mitigation Strategies

• Prudent capital expenditure, cost reduction, and improvement in customer orientation
• Investment in health and safety system upgrades (163 million roubles at Vorkutaugol)
• Increased steel product exports
• Focus on low production costs, diversified sales geography, and increased product and service quality
• Implementation of occupational safety and environmental protection policies and programmes
• Consistent talent management programme focused on supporting productive relationships with employees
• Comprehensive anti-corruption programme, including training and internal controls

Supply Chain Management

Responsible Procurement

• Prioritization of domestic suppliers
• Import replacement initiatives
• Collaboration with regional small and medium businesses

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4, Core option, Mining & Metals Sector Supplement

Certifications: ISO 14001:2004 (4 businesses), OHSAS 18001:2007 (5 businesses)

Awards & Recognition

• Environmental Responsibility nomination, Russian Business Leaders: Agility and Responsibility 2016 Contest
• Most environmentally transparent steelmaker in Russia (Interfax ERA)
• Top three Russian enterprises in investor relations
• Patron Award, Saratov State Radishchev Arts Museum

Environmental Metrics

ESG Focus Areas

• Climate Change
• Occupational Safety
• Environmental Protection
• Social Projects and Investments
• Corporate Governance
• Human Rights

Environmental Achievements

• Reduced atmospheric emissions of pollutants by 9% from 2019.
• Reduced greenhouse gas emissions per tonne of steel by 1.0% to 2.06 tonnes of CO₂ per tonne of steel in 2020.
• Achieved ISO 14001:2015 certification for eight businesses, including Vorkutaugol and Severstal Metiz for the first time.
• Reduced waste disposal by a factor of six from Severstal Russian Steel.

Social Achievements

• Launched a client and partner community – Together.
• Completed ISO 45001 certification of major production facilities.
• Invested approximately five billion roubles in social and charitable projects in 2020.
• Improved MSCI ESG rating from CCC to B.

Governance Achievements

• Received ISO 37001-2016 certification for Anti-Bribery Management Systems.
• Improved SAM S&P rating from 41 to 46 out of 100.
• Sustainalytics reduced risk value from 39.1 points in 2019 to 34.7 points.

Climate Goals & Targets

Environmental Challenges

• Increased LTIFR by 3% in 2020.
• Increased workplace fatalities, mostly in contractor organizations.
• Supply chain disruptions due to the COVID-19 pandemic.
• Lower domestic demand in 2020.

Mitigation Strategies

• Invested $42 million in improvements of industrial safety systems and occupational and environmental safety projects in 2021.
• Added a large-scale fatal risk management project.
• Expanded occupational health and industrial safety team.
• Developed a successful “distance” audit process for suppliers.
• Implemented the “Purchasing. Supplier evaluation and development” standard.

Supply Chain Management

Supplier Audits: 7,383 suppliers in 2020; conducted distance audits due to pandemic.

Responsible Procurement

• “Purchasing. Supplier evaluation and development” standard
• Code of Business Partnership
• Environmental assessment of suppliers
• Verification of contractor compliance with environmental laws and regulations

Climate-Related Risks & Opportunities

Physical Risks

• Increased frequency and magnitude of dangerous weather events
• Changing intensity and duration of precipitation events
• Disturbance of permafrost
• Air temperature anomalies

Transition Risks

• Introducing national carbon regulation
• Introducing direct and indirect fees on carbon products
• Climate-related investment, technology and reputation risks

Opportunities

• Reducing costs through climate projects
• Creating new markets for low-carbon products
• Commercialisation of breakthrough low-carbon technologies

Reporting Standards

Frameworks Used: GRI Standards: Comprehensive option, with Mining & Metals Sector Supplement, SASB Standards for Iron & steel producers, Metals & mining, and Coal operations, TCFD

Certifications: ISO 14001:2015, ISO 45001, ISO 37001-2016

Third-party Assurance: Deloitte CIS

UN Sustainable Development Goals

• SDG 4: Quality education
• SDG 8: Decent work and economic growth
• SDG 9: Industry, innovation and infrastructure
• SDG 11: Sustainable cities and communities
• SDG 13: Climate action
• SDG 17: Partnerships for the goals

Severstal's initiatives contribute to these goals through various programs and activities detailed in the report.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• World Steel Association Sustainability Champion
• Top-ranked Russian mining company in the international Corporate Human Rights Benchmark
• Ranked 1st in the Best B2B Customer Experience among Industrial Enterprises
• Ranked in the top three of the Russia Employer Rating 2020
• Winner of the 13th People Investor competition
• Ranked 2nd in the Investment in the Future nomination
• First Prize in the Best Corporate Education Project nomination

Environmental Metrics

ESG Focus Areas

• Air quality
• Climate change mitigation
• Waste management
• Water resources protection
• Working conditions
• Occupational health and safety
• Corporate governance improvement

Environmental Achievements

• Reduced pollutant emissions by [percentage]% compared to 2017 baseline (Air quality)
• Severstal’s CO2 emission intensity is in the first quartile among the world’s steel producers (Climate change mitigation)
• Developed new technology of granulated blast-furnace slag recycling for using in cement manufacturing (Waste management)
• Recycles 100% of waste oils, rolling mills emulsions, cable products, office equipment, chemical waste (Waste management)
• The recycled water share in Severstal is 98.3% (Water resources protection)

Social Achievements

• Launched the Fatal Injury Elimination project, identifying and mitigating fatal risks at 32,000 Company's enterprises and contractors locations (Occupational health and safety)
• Developed a new occupational health and safety strategy (Occupational health and safety)
• By 2021, 84% of the Company's employees are covered by the international standard ISO 45001 and compliance certification ISO 45001 (Occupational health and safety)

Governance Achievements

• Launched a climate memorandum for partners: “Together towards a low-carbon future” (Corporate governance improvement)
• Sustainability management system is fixed in corporate policies (Corporate governance improvement)

Climate Goals & Targets

Environmental Challenges

• Reducing pollutant emissions from Cherepovets Steel Mill, a full-cycle metallurgical plant where more than 75% of emissions are generated in the sinter plants (Air quality)
• Mitigating climate change and achieving carbon neutrality in a sector responsible for more than 7% of global greenhouse gas emissions (Climate change mitigation)
• Responsible waste management and environmental footprint mitigation, considering that more than 97% of generated waste is non-hazardous (Waste management)
• Reducing the pollutants amount discharged into water bodies, exceeding the permissible discharges standards (Water resources protection)

Mitigation Strategies

• Reconstruction of blast furnace No. 3, coke-oven battery No. 11 with modern gas filtering systems (Air quality)
• Modernization of coke-oven batteries, sintering machines and blast furnaces with the introduction of BAT, increasing heat generation from certified sustainable biofuels (Climate change mitigation)
• Developing solutions for waste utilization, including granulated blast-furnace slag and zinc-containing blast-furnace sludge (Waste management)
• Innovative solutions for wastewater post-treatment using shellfish, biological purification technology for quarry waters (Water resources protection)

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol (GHG Protocol)

Certifications: ISO 45001

Environmental Metrics

ESG Focus Areas

• Climate change
• Energy efficiency
• Air quality
• Waste management
• Water conservation
• Working conditions
• Occupational health and industrial safety
• Enhancing the corporate governance system

Environmental Achievements

• Reduced air emissions by more than 15% compared to 2017 (Clean Air federal project)
• 98.4% share of water recycling
• 99.1% share of waste recycling
• 45.2 thousand tonnes (15.2%) reduction in pollutant emissions at Cherepovets Steel Mill under the Clean Air federal project at year-end 2022 compared to 2017 baseline

Social Achievements

• Indexation of salaries by an average of 9% but no less than RUB 10,000 from 1 April 2022
• Allocated RUB 15 billion for salary increases and additional financial aid to employees
• Decreased LTIFR down to 0.68 and reduced the number of injuries
• RUB 3 billion social investments in the regions of presence
• 89% overall customer satisfaction

Governance Achievements

• Adoption of the Sustainability Strategy up to 2030
• Successfully passed the second annual inspection audit for compliance of its anti-corruption management system with the ISO 37001–2016 international standard
• Granted the top A1 grade based on the results of the Third National Russian Business Anti-Corruption Rating

Climate Goals & Targets

Environmental Challenges

• Global challenges driven by restricted exports to Western markets, a slowdown in economic growth of the sector, disrupted supply chains, and a highly volatile national currency
• Difficulties with exports, supply chain disruption, growing competition on local markets, global economic slowdown, falling steel prices, and rouble volatility
• Sub-optimal capacity utilisation and inadequate access to imports of environmentally friendly equipment and technologies

Mitigation Strategies

• Import substitution (about 97% of critical items were replaced with equivalents)
• Refocusing exports to the domestic market and CIS countries
• Cost-cutting
• Focus on excellent customer experience
• Further enhancement of corporate culture

Supply Chain Management

Responsible Procurement

• PAO Severstal’s Code of Business Conduct
• Supplier Book
• Quality Manual
• Procurement Arrangements
• Standard contract with anti-corruption clause
• Climate Memorandum

Climate-Related Risks & Opportunities

Physical Risks

• Storms and strong winds
• Continuous heavy rains
• Strong rime ice depositions
• Rise in average annual temperatures and precipitation

Transition Risks

• Introduction and further reinforcement of carbon governance in the Russian Federation
• Introduction of charges towards exported carbon-intensive products
• A need to implement low-carbon technologies
• Negative perception of the Company by investors
• Loss of markets for carbon-intensive products

Opportunities

• Creation of new markets for green products
• Equipment upgrade and deployment of advanced decarbonisation technologies
• Commercialisation of breakthrough low-carbon technologies
• Savings from implementing energy efficiency initiatives
• Increase in investment appeal
• Access to green finance tools

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, UNGC

Certifications: ISO 14001, ISO 45001, ISO 50001, ISO 37001

UN Sustainable Development Goals

• 3.4
• 3.6
• 4.3
• 4.4
• 8.2
• 8.3
• 8.4
• 8.8
• 8.9
• 9.3
• 11.4
• 11.6
• 12.5
• 13.1
• 17.17

Severstal implements projects in all ESG areas, advancing the achievement of most of the UN SDGs. Eight focus goals are formalized in its Sustainability Strategy.

Sustainable Products & Innovation

• Cryogenic steel for LNG projects
• High-strength bars and rolled steel
• Weather-resistant steel
• Steel with antibacterial properties

Awards & Recognition

• Numerous sustainability ratings and awards (see Sustainability Ratings and Awards section)