Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Personnel development
• Community programs and charity

Environmental Achievements

• Invested over 224 mln. rubles in environmental protection, occupational and industrial safety, over 87 mln. rubles of which have been allocated for environmental efforts.
• Sold emission reduction units (ERU) of greenhouse gases at OJSC OMK-Steel — Casting and Rolling Complex in line with Article 6 of the Kyoto Protocol.
• Achieved greenhouse gas emission reductions thanks to the use of advanced technologies and equipment at the Casting and Rolling Complex.
• Fully renovated gas-cleaning units of OJSC VSW.
• Continued to build water and wastewater treatment facilities at the 5th discharge outlet.
• Completed the transition to dry shot recuperation at the blast cabinets at OJSC Trubodetal, decreasing waste generation.

Social Achievements

• Implemented a variety of community programs, investing over 330 mln. rubles.
• Increased average wages by 13% year-over-year.
• Implemented live incentive system based on KPI at OJSC VSW, Casting and Rolling Complex, and OJSC Trubodetal.
• Developed and approved housing program to assist employees with mortgage loans.
• Introduced meal allowances for employees.
• Trained 3,000 employees at the Vyksa fabrication yard, 1,455 at OJSC Trubodetal, and 228 at OJSC APP.
• Implemented OMK-Master program, training 803 employees of OJSC VSW.
• Implemented corporate OMK-Campus program to train highly-skilled steelmakers.

Governance Achievements

• Passed a strategic resolution to reshape the management of OMK business assets and launched the switchover to the division-based structure.
• Implemented OMK production system (OMK PS) in partnership with McKinsey & Company.
• Improved security management system in partnership with DuPont.
• Continued development of the IT system for OJSC VSW and its subsidiaries based on SAP ERP solutions.

Climate Goals & Targets

Environmental Challenges

• Key performance and financial indicators were slightly lower than in 2011 due to strategic partners deferring the launch of several large pipe projects.
• Slight decline in demand in the fittings market due to delayed pipeline projects in Russia.

Mitigation Strategies

• Cost cutting programs.
• Production setup and increased sales of high value-added pipes.
• Implementation of high technology and efficiency enhancement.
• Production systems development.
• Plans to purchase 4 machines for mechanical treatment of fittings at OJSC Trubodetal.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Occupational Safety
• Social Programmes
• Responsible Procurement
• Human Rights

Environmental Achievements

• Reduced gross atmospheric pollutant emissions by 22.4%
• Reduced gross pollutant discharges into water bodies by 34.7%
• Reduced generation of production waste by 10.7%
• Increased investment in environmental protection to RUB 126.9 million from RUB 63.7 million

Social Achievements

• Increased expenditure on social programmes for personnel by 8%, to RUB 747 million
• Contributed more than RUB 825 million to charitable and sponsorship projects
• Conducted the first OMK Partnership competition for social and charitable projects, financing 101 initiatives with a budget of RUB 13 million
• OMK was declared the best employer among Russian companies in the mining and metallurgical industry by the Randstad Award 2015

Governance Achievements

• Approved the OMK Declaration of Corporate Ethics in 2015
• Optimized OMK’s management structure to improve efficiency and speed in strategic decision-making
• Introduced a new CRM system to improve interaction with clients

Climate Goals & Targets

Environmental Challenges

• Persistent economic decline and drop in production indicators across numerous industries
• Significant currency volatility in Russia and the impact of sanctions
• Low liquidity in the banking system impacting credit availability and cost
• Falling demand for railway wheels and automotive springs
• Adverse impact of Chinese pipeline valve suppliers on the market

Mitigation Strategies

• Implemented a substantial programme to improve efficiency and cut costs
• Reduced credit portfolio and improved company liquidity
• Focused on key projects in the production of oil and gas line pipes and railway wheels
• Implemented management and production projects to improve efficiency
• Introduced a CRM system to improve client interaction and sales process transparency

Supply Chain Management

Responsible Procurement

• Category management
• New agreements with suppliers including schedules on working conditions, health and safety, child labor, and forced labor

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4 Sustainability Reporting Guidelines

Certifications: OHSAS 18001 (VSW, Trubodetal, CSW), ISO 14001:2004 (various facilities)

Awards & Recognition

• Randstad Award 2015 (Best Employer)
• Leaders of Corporate Charity awards
• Russian Organization with High Social Effectiveness’ competition
• Donors Fund ‘Objective Charity’ competition
• ‘Changing World’ competition
• Russian Government Prize for quality