Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced specific air emissions to a record low of 20.5 kg per tonne of steel (6% reduction since 2016)
• Reduced specific water consumption by 16% since 2013
• Reduced waste production by 15% since 2013 while increasing steel output by 11%
• Increased waste recycling rate to 86.9% (excluding low-hazard mining waste)
• Increased share of in-house energy generation using secondary fuel gases to 84%

Social Achievements

• Launched 'Steel Tree' initiative engaging local communities in environmental projects, involving 4,000 volunteers
• Awarded multiple awards for environmental achievements and responsible practices (e.g., gold medal in '100 Best Companies in Russia. Ecology and Environmental Management')

Governance Achievements

• Continued to actively improve corporate governance practices
• Environmental Management System certified to ISO 14001 since 2002

Climate Goals & Targets

Environmental Challenges

• Managing mining waste which cannot be marketed and can only be used on-site
• Compliance with environmental regulations and potential penalties

Mitigation Strategies

• Reclassification of some waste types as products, reducing waste generation
• Investment in environmental projects (RUB 5.7 billion in 2017), including upgrading dedusting systems
• Implementation of an Environmental Risk Management System
• Regular audits and compliance with ISO 14001 standards

Supply Chain Management

Supplier Audits: 36 audits in 2017

Responsible Procurement

• Qualification procedure for all suppliers, including environmental compliance with Russian legislation

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI (GRI 303, GRI 304, GRI 305, GRI 306, GRI 307, GRI 308)

Certifications: ISO 14001

Awards & Recognition

• Development Award 2017 (noise pollution reduction)
• Gold medal in '100 Best Companies in Russia. Ecology and Environmental Management'
• Environmentalist of the Year 2017 (Viktor Togobetsky)
• Gold medal at Metal-Expo 2017 (dust emission control project)
• Certificate for active environmental policy during the 'Year of the Environment'
• Diploma for environmental projects from Lipetsk Rosprirodnadzor
• ENES-2017 nationwide competition (electricity generation without fuel combustion)

Environmental Metrics

ESG Focus Areas

• Operational efficiency
• Sustainability and safety
• Environmental footprint reduction
• Injury rate reduction
• Social protection and employee engagement
• Human rights
• Local community development

Environmental Achievements

• Launched a briquetting plant with a capacity of 700,000 t of briquettes per year, substituting primary iron ore and coal raw materials.
• Launched a green coke and chemical by-product recovery complex, halving shop air emissions.
• Relaunched Blast Furnace No. 6 with an 8% capacity increase and a new air treatment system capturing 99.9% of dust particles.
• Relaunched Basic Oxygen Furnace No. 2 with a new dust and gas collection unit, increasing gas purification efficiency 2.5-fold.
• Started commercial deliveries of high-strength HRC to the Russian market.
• Commissioned an accelerated cooling system at NLMK DanSteel, boosting niche premium plate production.

Social Achievements

• Implemented a major project to switch to performance-based compensation management for over 90% of employees.
• Approved NLMK Group’s Social Strategy through 2022.
• Developed an employee relocation policy.
• Expanded the geographical scope of its ‘Steel Tree’ grant competition.
• Introduced a new accident and critical illness insurance benefit.
• Launched the Healthy Choice project to promote a healthy lifestyle among employees.

Governance Achievements

• Joined the United Nations Global Compact.
• Approved the Company’s Sustainable Development Policy.
• Approved revised Regulations on Board committees.
• Approved a new Dividend Policy.
• Improved corporate governance system to ensure compliance with international standards.
• Increased the number of NLMK shareholders by 2.5 times.

Climate Goals & Targets

Environmental Challenges

• Specific emissions increased in 2019 due to the lowest steel output in five years during major overhauls.
• Group’s LTIFR index increased to 0.86 due to improved incident registration among contractors and an increase in the number of higher-risk contractors.
• EBITDA decreased due to narrowing price spreads.
• NLMK USA EBITDA was -$37m due to narrowing slab/rolled steel spreads and import tariffs.

Mitigation Strategies

• Implemented emission reduction measures.
• Prioritized personnel injury risk management, implementing a safety culture, and developing an OHS role model.
• Implemented operational efficiency projects and vertical integration in raw materials to reduce slab cash cost.
• Stopped purchasing Lipetsk slabs in Q2 2019 (NLMK USA).

Supply Chain Management

Supplier Audits: 58 audits

Responsible Procurement

• Supplier Code of Conduct
• Transparent competitive procurement procedures
• Electronic document management
• Real-time supplier reliability verification

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards (Core option), UN Global Compact

Certifications: ISO 45001 (NLMK DanSteel, NLMK Lipetsk, VIZ-Steel)

Third-party Assurance: AO PricewaterhouseCoopers Audit

UN Sustainable Development Goals

• Goal 3
• Goal 4
• Goal 6
• Goal 7
• Goal 8
• Goal 12
• Goal 16
• Goal 17

NLMK's contribution to achieving UN Sustainable Development Goals is described in the report.

Sustainable Products & Innovation

• High-strength HRC
• Niche premium plate

Awards & Recognition

• 'Leader in Competitive Procurement 2019' Grand Prix award
• Common Cause award at the Lipetsk Region’s competition Volunteer of the Year 2019