Committed to responsible urban development
Sustainability 2015 report EUROCHEM Su s tainability REPOR T 2015 Committed to responsible urban development
EuroChem is one of the world’s leading producers of mineral fertilizers. Our vertically integrated business model is sustained by talented people with the right skills and expertise working across the globe. We offer a safe and progressive working environment. In certain locations we also provide high quality homes, and educational and recreational facilities for our employees. These investments in retaining and attracting talented people are fundamental to our long-term growth strategy.
Contents
Introduction 32 economic sustainability 01 CEO’s introduction 36 H&S and environmental responsibility 02 Social investment map 48 Social responsibility 04 Social program cycle 50 Employees Spotlight: 54 Communities 06 Creating high living standards Additional information 08 Ensuring a healthy environment 56 Key facts 10 Promoting active lifestyles Online 57 Awards 12 investing in education View the Sustainability Report 58 Corporate information 2015 online 14 at a glance www.eurochemgroup.com/reports/SR15 16 Challenges of food security 18 EuroChem’s sustainability strategy 20 Governance and ethics 24 Stakeholder engagement CEO’s introduction
Keeping our focus Introduction
Creating a best-in-class working Economic sustainability environment with opportunities for career development are vital components of our growth strategy.”
Dmitry Strezhnev Chief Executive Officer environmental responsibility and & safety Health
This report summarizes our sustainability business model, combining low-cost To support our future VolgaKaliy potash strategy, approach and performance for the resources and production, supported by operation, we are investing in one of Russia’s 2015 financial year. our own logistics, sales and distribution biggest urban development projects. The operations. new garden city in Kotelnikovo, comprises Social responsibility Our production base is becoming more apartment blocks and homes for more than international, with production assets in Our investment strategy is a key enabler 10,000 people, as well as kindergartens, Russia, Lithuania, Kazakhstan, Belgium of sustainability. For example, our new a school, district hospital, clinic, hotel, sports and China. In 2015, we also added new EuroChem Northwest ammonia plant will center, swimming pools and ice rink. logistics and distribution capacity in the utilize leading technology to limit effluent US to augment our sales network in more discharge. It will be the first plant in Russia Our integrated business model, backed by than 25 countries. to follow the new Best Available Technology these and other investments, means that (BAT) guidelines, in line with EU standards, we can employ and develop highly motivated
Our vision remains to be a top five producer and its CO2 emissions will be lower than and skilled people, keep our employees safe by nutrient capacity. those mandated for such processes in and healthy, enhance community life and the EU. apply the highest international standards This growth will be underpinned by our of environmental management. investments in our vertically integrated Additional information
EuroChem Sustainability Report 2015 1 Social investment map Geography of our social responsibility
Our social investments reflect our growing international footprint across Russia, Lithuania, Kazakhstan, Belgium and China. We have a 4 well developed approach of engagement with local stakeholders that allows all parties to 1 freely exchange ideas and develop a focus for 2 investments. Across our key sites, we have supported a wide range of activities, including 3 the creation of sports and education facilities, promotion of cultural activities, enhanced health care provision and transport infrastructure.
1. Antwerp (Belgium) 2. Mannheim (Germany) 3. Zug (Head office in Switzerland) The ‘Antwerp Phantoms’ team participated The ‘Jungadler Mannheim’ hockey team Members of the New Bolshoi Opera Stars for the third time in the ‘EuroChem Cup’ participated in the ‘EuroChem Cup’ performed in Palais des Nations in Geneva in International Ice Hockey Tournament 2015. International Ice Hockey Tournament 2015. October 2015. This concert, sponsored by EuroChem, was dedicated to the 70-year KU Leuven University (Leuven) DHBW University (Mannheim) anniversary of the United Nations. Ice hockey club Antwerp Phantoms HdWM University (Mannheim) Head office Local NGOs Local NGOs
4. Kedainiai (Lithuania) 5. Kovdor (Russia) 6. Kingisepp (Russia) EuroChem’s Lifosa plant is the center of EuroChem constructed the ‘Vars’ ski center In 2015 Kingisepp celebrated the opening technology transfer and high Health & Safety and ice hockey rink and provides ongoing of EuroChem’s third ice arena which is now and Environmental (HSE) standards; it support to these facilities. a home to a new sport school. represents the best example of community development through sport projects like New town master plan and urban New town master plan revitalization program the new Kedainiai Arena. Joint EuroChem, John Nurminen 4 school chemical laboratories Foundation (Finland) and Atkins 2 chemical laboratories environmental monitoring project Strong local community activities Republican Student Olympiads and and sport 3 school chemical laboratories Open Days Lithuanian Responsible Business Association
Ice arenas Sports centers School classes/laboratories Universities
2 EuroChem Sustainability Report 2015 Introduction
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8 6 Economic sustainability
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10 12 9 environmental responsibility and & safety Health
Social responsibility 7. Novomoskovsk (Russia) 8. Usolye (Russia) 9. Karatau and Zhanatas Annual ‘EuroChem Cup’ International Ice EuroChem plans to develop 32 five-story (Kazakhstan) Hockey Tournament was once again hosted buildings and related infrastructure on a In 2015, EuroChem invested US$10m in the Novomoskovsk ice arena built by 38.5-hectare plot, with co-financing from in social and community facilities, including, EuroChem. regional and municipal authorities. for example, the repair of secondary schools in Karatau and Zhanatas. Urban redevelopment program and Urban development program reconstruction of water supply systems Environmental monitoring program New master plan and urban revitalization Sport-led regeneration program PNRP University 8 school chemical laboratories Local communities Local NGOs
10. Belorechensk (Russia) 11. Kotelnikovo (Russia) 12. Nevinnomyssk (Russia) Additional information Sport-led revitalization based on the Kotelnikovo, one of the largest developments The Culture Center and new ice arena built ‘Khimik’ sports complex. in Russia, continues to grow. In 2015, sewage by EuroChem now host children’s sports treatment and water supply systems and cultural activities. Environmental monitoring program were completed. 4 school chemical laboratories 3 school chemical laboratories Urban development program for more Environmental monitoring program Local NGOs than 10,000 people Strong local community activities and sport Strong local volunteering program Local NGOs
Environmental organizations Local NGOs Urban development program Head office
EuroChem Sustainability Report 2015 3 Social program cycle Integrated approach to sustainable development
Partnership programs with seven universities Page 48
‘Sport Arena’ program, including three ice sport arenas, three sports centers and three sport schools Page 52
EuroChem school labs network: 32 labs in Lithuania, Russia and Kazakhstan Pages 2-3
4 EuroChem Sustainability Report 2015 Introduction Sustainable agriculture based on a network of our own agro-centers in the CIS and EuroChem Agro sales offices in Germany, France, Spain, Italy, Greece, Turkey, Mexico, China and Singapore Pages 16-17; also see map of distribution network on pages 4-5 of the Annual Report Economic sustainability environmental responsibility and & safety Health
E-generation program for recent Social responsibility graduates and young employees Page 50 Additional information
Creating two new urban areas for 15,000 people Page 53
EuroChem Sustainability Report 2015 5 Spotlight Creating high living standards
Building a garden city in Kotelnikovo Our development projects offer a high quality of life To support our future VolgaKaliy potash operations, we will be doubling the size of the existing town of Kotelnikovo. The new garden city will provide homes, schools, and medical and sports facilities for more than 10,000 people and has already received awards for its design.
6 EuroChem Sustainability Report 2015 Introduction Economic sustainability environmental responsibility and & safety Health
Promoting urban regeneration EuroChem supports urban regeneration In 2015 EuroChem supported the development of master plans for Social responsibility Kovdor and Kingisepp in Russia and for Karatau in Kazakhstan. The plans and resulting regeneration projects were developed with local government agencies and the existing communities.
15,000 Additional information Home for 15,000 people (future Kotelnikovo and Usolye development)
Page 53
EuroChem Sustainability Report 2015 7 Spotlight Ensuring a healthy environment
8 EuroChem Sustainability Report 2015 Section header
A focus on clean water
Construction and Introduction modernization of 11 municipal water Environmental centers to collect emissions data and ensure and waste reporting transparency management
Page 41 systems In Novomoskovsk we participated in rebuilding the municipal sewerage system together with
local administration and in Economic sustainability Kotelnikovo we have modernized the town’s water supply infrastructure. environmental responsibility and & safety Health Social responsibility
Bringing green spaces back to life Investing in parks and public spaces Urvansky Forest, near Novomoskovsk has traditionally been a recreational area for city residents. Over the past few years, we have Additional information led a major regeneration project, clearing litter and undergrowth, building cycling, running and skating paths, installing better lighting and improving access. In Kotelnikovo, we worked in partnership with the Russian Ministry of Natural Resources and the regional Botanical Garden, to create Oak Park, a new recreational area for city residents.
EuroChem Sustainability Report 2015 9 Spotlight Promoting active lifestyles
6 Sporting venues built by EuroChem
Page 52
10 EuroChem SustainabilitySustainability ReportReport 20152015 New sports facilities
Our third ice skating arena opened Introduction Our Management at Phosphorit has for many years worked closely with Kingisepp District and the Government of the Leningrad Region on community development projects. A key development in 2015 was the opening of Olymp Ice Arena, part-funded by EuroChem as part of our strategy to promote healthy lifestyles. Economic sustainability environmental responsibility and & safety Health Social responsibility
Sport-led regeneration The wider effects of investing in sport Over the past few years we have built and opened six new sport facilities – three ice arenas, two sports centers and a mountain skiing Additional information center. These have played major roles in revitalizing and regenerating their local communities. Novomoskovsk, in particular, has become a regional sports center while generating significant improvements in health and lifestyle.
EuroChemEuroChem Sustainability Report 2015 11 Spotlight Investing in education
12 EuroChem Sustainability Report 2015 Expanding the horizons of recent graduates Young specialists Introduction E-generation Careers in a global company Placements for the younger generations Our growing international presence and scope of operations means that we can offer a wide array of career opportunities. University For example, while we are recruiting recent graduates from the regions adjacent to our two potash projects at VolgaKaliy and Usolskiy, they will also gain access to the knowledge School and experience of their colleagues across our sites in Russia and internationally. Economic sustainability environmental responsibility and & safety Health Social responsibility
7 Additional information Universities – a network of partnerships to educate engineers
Page 48
EuroChem Sustainability Report 2015 13 At a glance Who we are
We aim to be a top five producer by nutrient capacity
EuroChem, headquartered in Zug, Switzerland, is a leading global agrochemical N Nitrogen company producing primarily nitrogen and Vision phosphate fertilizers, as well as certain organic synthesis products and iron ore. Our three nitrogen plants produce mineral To be a top five global The Group is vertically integrated, with fertilizers including urea, AN, UAN, CAN activities spanning mining, hydrocarbon and a variety of regular and tailored complex producer by nutrient capacity extraction, fertilizer production, logistics NPK grades. We are Russia’s only by 2020. and distribution. EuroChem is currently manufacturer of AdBlue® and melamine and developing two sizeable, greenfield potash also produce nitric acid, methanol and deposits at VolgaKaliy and Usolskiy in Russia. industrial gases including argon, nitrogen, In 2017 we will commence potash operations oxygen, carbon dioxide and solid carbon to further enhance our portfolio of products. dioxide (dry ice). The Group operates production facilities in Belgium, China, Kazakhstan, Lithuania, and Russia and employs more than 23,400 people globally. As one of the growing P Phosphates fertilizer majors, we aim to be a top five Mission producer by nutrient capacity. Our plants in Russia and Lithuania produce To make a significant Vertical integration MAP, DAP, NP and feed phosphates as well contribution to driving Capturing margin and control as a growing number of complex products. throughout the entire value chain All our facilities have sulphuric acid capacity progress in global agriculture. Our access to lower-cost raw materials and phosphoric acid units. Our Lithuanian and our investment in production capacity plant also produces aluminium fluoride, Our mission is to help the and efficiency underpin our global which is used in the manufacture of competitiveness. We also have our own aluminium, glass and optics as well as in world grow the food, feed repair centers, distribution network, rolling the tanning industry. Wherever possible, and fiber needed to sustain stock and rail depots as well as port facilities, our facilities use phosphate rock from our our growing population. transhipment terminals and vessels. Kovdorskiy GOK and Kazakhstan mines.
• Raw materials • Production K Potash • Supply chain Values • Global reach • Responsibility EuroChem has rights to over 10 billion Integrity tonnes of potash reserves and resources in Russia. Our two key assets, EuroChem Openness VolgaKaliy (Gremyachinskoe deposit, Volgograd region) and EuroChem Usolskiy (Verkhnekamskoe deposit, Perm region), Trust are scheduled to commence operations around 2017-2018. They are widely Respect expected to be amongst the lowest cost potash operations globally.
14 EuroChem Sustainability Report 2015 Our divisions Introduction
Natural gas Fertilizers Distribution Natural gas is the primary raw material We manufacture high quality nitrogen We serve our extensive customer used to produce ammonia, the main and phosphate fertilizers. Our range base through an efficient distribution component of nitrogen-based fertilizers. includes standard and commodity platform. With trading arms in the US, Our own oil and gas operations help products as well as a growing Switzerland and Brazil and our reduce natural gas costs, boost our slow-release and specialty offering. EuroChem Agro distribution assets ammonia gas efficiency and strengthen the Group sells to wholesalers, our cost advantages. distributors and cooperatives across Northern, Central and Eastern Europe, South East Asia and the Americas. Primary nutrients Economic sustainability
Phosphate mining N P K From our Kovdorskiy GOK operations in Russia, we mine magnetite-apatite ore, Secondary nutrients from which we extract apatite concentrate as well as baddeleyite concentrate and iron ore concentrate. Micro nutrients We have been moving closer towards self-sufficiency in phosphate rock with the start-up of our mining facility in Kazakhstan.
Essential to the flow of raw materials and environmental responsibility and & safety Health finished goods, our sophisticated and Logistics flexible logistics infrastructure comprises See our business model in our rail rolling stock, rail depots, port Annual report 2015 facilities and wholly-owned transhipment www.eurochemgroup.com/reports/ operations as well as a growing network annual-reports of distribution centers across key markets.
2015 highlights Social responsibility
Total sales (US$) EBITDA (US$) EBITDA increase (vs. 2014) 4.5bn 1. 6 b n 4%
EBITDA margin Lost time injury frequency Total products sold rate (LTIFR) Additional information 35% 1. 0 8 18 MMT
EuroChem Sustainability Report 2015 15 Challenges of food security The global challenge of food security
Feeding the world’s growing population and improving the nutritional quality of diets are long-term challenges, complicated by a decreasing amount of available arable land and the growing frequency and severity of weather shocks across key agricultural areas. EuroChem makes the necessary fertilizer products to ensure soils retain their optimal nutrient balance, allowing farmers to increase their farm yields and provide the world with the food we need.
Population growth Soil productivity Food price volatility
As the world’s population continues to Soils are the basis for more than 90% After a steady decline up to 2000, food grow over the current century, there will of worldwide food production, yet prices have since been more volatile. be an increasing demand for food. agriculturally usable soil accounts for The Food and Agricultural Organization only 12% of the Earth’s surface. of the United Nations (FAO) expects New independent research, published Soils are being degraded by erosion food prices to generally rise over the in 2015, shows that there is a 70% and desertification and, in Africa alone, next ten years thanks to continued chance that the world’s population will degradation is reducing crop yields population and economic growth. rise continuously from 7 billion today to by 8%. Fertilizers are important for Energy price volatility and natural 11 billion in 2100. Over this time the countering soil nutrient losses resource constraints will also challenge required rate of growth in food associated with intensive agriculture and food producers. Despite this, the production is expected to exceed the shorter fallow periods. However, to potential exists to raise crop productivity actual rate of growth by 3-4%. This gap increase yields further, there is through new materials and can only be closed through improved widespread recognition that improved technologies. trade, increased yields and more management practices, advanced efficient food systems, with less waste. fertilizers and more precise application will be required.
16 EuroChem Sustainability Report 2015 Introduction Economic sustainability environmental responsibility and & safety Health Social responsibility
Weather shocks Changing diets Crop substitution
Between 1964 and 2007, droughts Growing prosperity is leading to a The COP21 climate talks in Paris in and extreme heat significantly reduced demand for protein-rich foods such December 2015 supported the drive national cereal production by 9-10% as red meat, poultry and dairy products towards renewable energy, including globally*. Production losses due to which are more resource intensive to wind, solar, hydro and biomass as a key droughts were associated with a produce. At the same time, the overall way to reduce GHG emissions. At the reduction in both harvested area and amount of food consumed and wasted EU level, 2020 renewable energy targets yields, whereas extreme heat mainly has also increased in the developed mandate the use of biomass as a decreased cereal yields, with 8-11% world. source of electricity and heat. This is more damage in developed countries prompting changes in land use trends Additional information than in developing ones. This, and the and patterns of fertilizer demand. effects of other extreme weather events, have contributed to a general rise and volatility in crop prices. Any growth in the frequency and intensity of such shocks will have an impact on agricultural productivity and associated techniques.
* Cory Lesk, Pedram Rowhani and Navin Ramankutty, Influence of extreme weather disasters on global crop production, Nature, 259, 7 January 2016
EuroChem Sustainability Report 2015 17 Our sustainability strategy Sustainable, integrated business
We have a long-term growth strategy that To meet and exceed our customers’ We continue to strengthen our safety culture requires us to sustain and develop our expectations and redesign our health, safety and vertically integrated business, from raw Our agro-centers offer customers advice environmental management systems and materials to production and distribution. on the use and application of our products. their effectiveness will be closely monitored While economic success is a key measure, The centers provide first-hand knowledge and improved over the next four years. In for growth to be sustainable we must of quality, quantity and timing requirements. 2015, we completed employee workplace maintain the highest levels of employee Their comments and feedback help us to hazard assessments (WPHAs) at all of our relations, safety, environmental stewardship refine our offer and product range. sites in Russia (encompassing more than and community engagement. 8,000 individual workplaces and about To maintain excellent working 20,000 employees). Economic sustainability relationships with all of our suppliers To promote and support While we are a demanding customer, our To maintain excellent working sustainable agriculture suppliers know exactly what is expected of relationships with government There needs to be a balance between them and what they can expect from us. Our agencies and local authorities meeting the nutritional needs of a rapidly relationships are built on clear and relevant As a growing international business, growing global population and maintaining contracts, compliance and transparency. EuroChem engages with central and the long-term viability of soils and local government agencies and officials groundwater. This is a key challenge for Environmental stewardship in many countries and at many levels. EuroChem, one which we address through To reduce our environmental footprint We are also working very closely with the production and guidance on use of the We aim to minimize our impact on the government agencies in Russia and most environmentally efficient fertilizers. environment through the operation of Kazakhstan, as we develop our potash effective management systems and and phosphate rock projects, along with To invest in new technologies, processes that are aligned with leading their community infrastructure. value-added products international standards. and vertical integration To support and invest in local We continually invest in research and Social responsibility communities production innovation. This enables us to Our human resources strategy focuses on We make a significant contribution to the meet market demand for highly effective personal and professional development. economic development of many communities and environmentally efficient products. A key example is our program of education through our tax payments, employment Our investments also mean that we minimize for young professionals – ‘E-generation: opportunities, social investments the environmental impact of production. leaders of the new industrialization of Russia.’ and infrastructure. To further improve our sustainability model, We invested US$0.7m in the program we are investing downstream and upstream in 2015. to create an effective, vertically integrated business with global reach. To ensure that employees operate in the safest and healthiest working To ensure financial stability environment and shareholder returns Our success is measured by the levels of The fertilizer market can be volatile due to accidents and incidents, effective safety variations in raw material availability, prices behavior and the health and well-being of and customer requirements. Our vertically employees. Regrettably, we still have integrated structure helps us to manage accidents. These are thoroughly investigated this volatility, supported by our strong and corrective actions are implemented management and financial systems. based upon root-cause analysis. These A key measure of success is our sales incidents drive us to integrate QHSE performance and growth, as well as our management systems, compliant with ability to invest in production, distribution international standards, across the Group. and sales capacity.
18 EuroChem Sustainability Report 2015 Introduction
Strategic goals 2015 outcomes Economic sustainability Economic
Promote and support • We actively participate in agrochemical conferences and events across Europe and Russia, and we play sustainable agriculture an active role in creating the agrochemical industry’s agenda • We worked closely with other companies and the Russian Association of Mineral Fertilizer Producers to define the Best Available Technology standard
Invest in new • US$1bn investment in EuroChem Northwest ammonia plant technologies, products • Strategic agreement with Agrinos AS (Agrinos), a global leader in biological crop nutrition products and vertical integration • Completed first intra-group shipment of ground phosphate rock from Kazakhstan (January 2016)
Ensure financial • Increased EBITDA by 4% stability and • Signed a US$750m pre-export finance facility with a club of leading international banks shareholder returns • Secured project finance for the new EuroChem Northwest ammonia project environmental responsibility and & safety Health Meet and exceed • Increased our distribution and advisory footprint, for example through the acquisition of Bentrei Fertilizer customer expectations Company, a US-based distributor
Maintain excellent • We select suppliers based on criteria including compliance with high international quality, H&S and responsible working relationships production standards with suppliers
Environmental
Reduce our • Continued to invest in air and water emissions reduction environmental footprint • Continued to improve waste management systems • Led on the implementation of new environmental regulations, for example, BAT for fertilizer production
Social Social responsibility Recruit and retain • Increased the number of permanent employees by 2% (compared to 2014) motivated employees
Create a safe and • Undertook Workplace Hazard Assessments at all of our Russian operations healthy working • Piloted new working at height procedures environment • Organized the first EuroChem International Information Forum at Lifosa, with a focus on safety and HR
Maintain excellent • Opened a new sports arena at Kingisepp working relationships • Liaised with the Russian government over measurement of GHG emissions with government
Support and invest in • Invested US$12m in community development in Russia, Lithuania, Belgium, Germany, Switzerland local communities and Kazakhstan, including the ice skating arena in Kingisepp Additional information
EuroChem Sustainability Report 2015 19 Governance and ethics Responsible decision making
01 Alexander Landia 02 Dmitry Strezhnev 03 Andrey Melnichenko Chairman and Non-Executive Director Chief Executive Officer Non-Executive Director
04 Jürg Seiler 05 Nicholas Page 06 Kent Potter Independent Director Non-Executive Director Independent Director
07 Garth Moore 08 Manfred Wennemer 09 Nikolay Pilipenko Independent Director Independent Director Non-Executive Director
After more than 8 years on the EuroChem Board Composition of EuroChem of Directors, Mr Vladimir Stolin stepped down in Group AG Committees February 2016. The Board wishes to expresses its most profound gratitude to Mr Stolin for Audit 04 06 10 having contributed to the Company’s development, primarily as Chair of the Corporate Strategy 01 03 07 Governance and Personnel Committee. Vladimir was a key driving force in our efforts to renew the Nomination and Remuneration 08 09 10 Board structure and attract Directors with the competence and experience required to steer the Group as it enters a phase of active growth. 10 Vladimir Stolin Independent Director
20 EuroChem Sustainability Report 2015 We have a range of experience on the Board that supports our ambitious investment and Introduction international growth strategy.” Board of Directors
EuroChem Group AG corporate When a significant event occurs, Board Chairman’s statement governance structure members are the first to obtain status Economic sustainability The Group has been re-structured to EuroChem Group AG is based in Zug, reports from the management team. support its global growth ambitions. At the Switzerland. This provides a strong base This communication process is defined same time, it has ensured that its business to support our investment strategy and in a policy and associated procedures. in Russia – perhaps the largest industrial international growth. The content of this investment program in the country, outside report is overseen by the Board of EuroChem To facilitate the understanding of our of oil and gas – remains sustainable in the Group AG and covers the year 2015. operations, Board members undertake long term. yearly site visits to our facilities. The Board of Directors of EuroChem Group The Group’s growing, international AG devises and oversees strategy and Board agendas are defined twelve months workforce now comprises over 23,400 ensures that proper checks and balances are in advance, in line with the cycle for setting people, with 1,600 working within the EU. in place and that the needs of stakeholders budgets, financial reporting and strategy. At the same time, it is proud of its origins are met. It focuses on building corporate The timing, expectations and goals of Board and the significant positive economic and value, while maintaining management meetings are accepted by individual social importance of its activities in Russia. accountability and monitoring the members and the management team and This is particularly so in towns and cities implementation of strategic investment include operational updates, investment environmental responsibility and & safety Health that have grown alongside the Group’s projects. projects and strategy. assets, acquired over the years. In these cities and regions, EuroChem is a major The Board’s role Each Board member is subject to an annual economic force for good, from employing The Board’s key role is to oversee how the review, involving a self-assessment and input generations of families to directly and Group goes about achieving its aim of being from their fellow Directors. In recent years, indirectly maintaining the social fabric. a world leader in the agrochemical sector. assessment of the Board has taken the form It ensures that the Group has a robust, of a questionnaire completed by Board EuroChem’s global aspirations are responsible and consistent strategy, achieves members, followed by a discussion. underpinned by its continued growth, its business goals and delivers value in the an ambitious strategy and a corporate long term. The Board also ensures that In 2015, the Directors were asked about the center in Switzerland. As the Group we adopt international standards and best three Committees’ areas of responsibility, internationalizes, its need to attract and practice and monitors our finance processes, their satisfaction with the Board’s overall retain top talent also increases, as does its risk assessments, internal controls and performance and which matters they ability to offer a wider range of opportunities governance framework. deemed most essential. for building a career globally. This is reflected in the fact that the employee base All Board Directors have a clear Matters discussed included the Company’s Social responsibility now represents more than 50 nationalities. understanding of the business and our strategy, human resources, management industry at an international level. They have tasks, corporate governance, the timely EuroChem has always placed a high priority excellent relationships with the management preparation of quality material, the nature on ‘responsibility’. This is exemplified in team, and access to information on strategy of discussions at Board and Committee recent years through the creation and implementation, risk monitoring and meetings and the Directors’ satisfaction maintenance of high-quality urban assessment of key material issues. The with the Board’s performance and their environments for the benefit of its Group maximizes each Board member’s key own contribution. employees and all those living in skills and experience and ensures that they neighboring communities. In 2015, can express their opinions and contribute Several priorities for the Board’s attention the Group has been instrumental in to discussions. were identified: management structure/ transforming the water supply and business; process re-engineering; financial treatment systems in two cities. Its ongoing Taking informed decisions monitoring; potash projects; reputation commitment to education and career The Board has access to papers prepared and communication management; further development, working with universities, for regular in-person meetings, as well development of IT structure and automation Additional information has empowered many young engineers. as periodic updates. These include of business processes. Its investments in sporting facilities and management accounts, flash reports, status skills have enriched the lives of many updates on industrial health and safety, communities, not least through updates on the Group’s legal proceedings, improvements to children’s health and media overviews, information on corporate well-being. Despite the more challenging events and reviews of strategic projects. economic backdrop, the company maintained its investments in social programs, contributing more than US$30m.
EuroChem Sustainability Report 2015 21 Governance and ethics
Responsible decision making continued
Understanding the business Leading by example Improving diversity Every new Director is given a thorough The Chairman is responsible for Board We aim to attract the best people with introduction to the Group and its operations. effectiveness, ensuring a culture of mutual the right talent to complement our skills, This induction process includes an overview respect and constructive debate. irrespective of gender or ethnicity. of Board procedures and regulations, standing agenda items and face to face The Board sets company strategy and The Group Board of Directors demonstrates meetings with the management team. They monitors its progress. The strategy is diversity of experience, opinion, and also visit a selection of our plants to see them implemented by the CEO and members of nationality. We accept however that gender operating and meet key members of the the Management Board, who are responsible equality is a key issue for the Board and site team. for company performance. The Management across Group companies, as it is for many Board is comprised of key managers with other businesses in the science, mining and Our aim is to provide support and generate responsibility for finance, fertilizer production, engineering sectors. Nevertheless, we are opportunities for our Board Directors to mining, sales, logistics, marketing finding ways to redress the gender imbalance develop professionally and acquire in-depth and administration. in our business. For example, our knowledge of the Group’s business. E-generation program has encouraged more The Board of Directors appoints the CEO women into management roles across the Independent scrutiny and the members of the Management Board Group and we expect to see some of these The Group has adopted the definition of and determines the length of their terms. talented individuals taking on more senior ‘independent’ Director as defined by the roles in the coming years. UK Corporate Governance Code. There are three committees chaired by Board members – the Strategy Committee, the Sustainability governance A key criterion is that the individual is free Audit Committee and the Nomination and The Management Board and the CEO are from any conflicts of interest. If such actual Remuneration Committee. responsible for the sustainability strategy. or potential conflicts arise, the Director is It is enacted through the Board committees, officially notified and is required to act The Strategy Committee reviews and the CFO and other management. Economic, appropriately. New Directors are required approves divisional and departmental environmental and social performance is to declare conflicts of interest and sign up strategy, development projects, acquisitions communicated to the Board through to Board Regulations. These require that they and significant investment decisions. This scheduled meetings and periodic updates avoid making decisions that could create a requires an understanding of environmental on health and safety performance, legal conflict of interest and that they inform the and social impact, as our investment activity processes, corporate events and Chairman as soon as possible if such a can impact on the local environment while strategic projects. conflict may arise. Within the Annual Report creating community infrastructure and and corporate website we disclose opportunities for local employment. In the case of a significant event or cross-Board memberships, as well as the emergency, Board members are kept existence of controlling shareholders and The Audit Committee’s primary function informed by the management team. The related parties. is to oversee the quality of financial and Board also has access to media overviews, sustainability reporting and the integrity of market analyses, peer and competitor At the end of 2015, six of the Board’s ten disclosure. The CFO and Head of Internal reviews, and updates on new legislation. Directors were fully independent of the Audit attend all meetings, with input from Company’s executives, affiliates and major external auditors and the Corporate counterparties.1 Their independent status Secretary. is confirmed by the Board of Directors after each election or re-election using a standard The Nomination and Remuneration set of questions that asks for declarations Committee focuses on remuneration of interest. All Directors are required to inform and incentives. It also reviews staffing the Company of any circumstance that could requirements for investment projects; health compromise their independent status. and safety performance indicators within the management incentive program; and 1 Following Alexander Landia’s loss of independent status the EuroChem Code of Conduct. in January 2016 and departure of Mr Stolin from the Board of Directors in February 2016, as of today four out of nine Directors are independent.
22 EuroChem Sustainability Report 2015 Our commitment to driving sustainable value creation is at the heart of everything we do.” Introduction Dmitry Strezhnev Chief Executive Officer Economic sustainability environmental responsibility and & safety Health
To ensure EuroChem Directors have a first-hand understanding of the business and its operations, regular visits to Group sites are organized. In 2015, the Board visited the Usolskiy potash project in Berezniki, the heart of Russia’s traditional potash region.
2015 Board agenda Management structure Ethics and corporate behavior Key agenda items discussed by the Group EuroChem operates certified management EuroChem operates a formal Code of Board in the year 2015 included: systems covering quality, environment, Conduct. • Strategic development health and safety. Our financial and human • Reorganization of the Company’s legal resources systems also impact on
structure and management system sustainability. In line with the development Social responsibility (Quality Management Project) of the associated international standards, • Financial stability and investment control we are increasingly integrating these systems, • HSE culture, compliance and as we have done at Usolskiy. These systems managements systems all have objectives and targets and require • Risks and internal control that we maintain records of procedures, • Appointments and incentives actions and responsibilities.
Production safety performance is a priority All managers, whose activities enable our issue and the Board is promptly informed of sustainability strategy, are subject to annual any significant incident affecting employees, performance reviews. They also access best contractors and the environment. in class training and professional guidance, Unfortunately, in 2015 the Group witnessed ensuring that we remain a leader in employee 47 accidents, 40 of which were with development within our sector. employees and 7 with contractors. These Additional information accidents included three fatalities.
Robust corrective and preventive measures were taken in order to avoid accidents.
EuroChem Sustainability Report 2015 23 Stakeholder engagement Responding to our stakeholders
Defining material issues The process for defining material issues Case study draws on the following: • Group business strategy and planning Stakeholder dialogue (as described in this document and the Our stakeholders and the key issues Annual Report) of concern in 2015 are summarized in • Group risk assessment and definition the table on pages 28-29. The relationship (as described in the Governance sections that we have with all stakeholders is driven of this document and the Annual Report) by a regulatory need or as part of ongoing • Objectives and targets as defined in operations. It may be planned or ad the safety, environmental and quality hoc. For example, each of our sites has management systems (as described a community investment committee in this document) (involving EuroChem managers and local • Community investment strategy and local representatives) that identifies projects plans (as described in this document) in local towns and surrounding regions. • Ongoing dialogue with internal and external The committees meet regularly and the stakeholders (see pages 28-29) individuals involved also have frequent and informal dialogue as projects progress.
All engagement is recorded, along with the views of stakeholders and action taken where required. We have provided a snapshot of the engagement at some of our sites in 2015 below. The issues raised have guided us in defining the material issues that we have addressed in this report.
01 Customers
Managed by: Engagement in 2015: • Head of Marketing and Sales Division Grew our customer base, e.g. • Sales teams and agricultural advisers partnership with Agrinos AS and acquisition of Bentrei Fertilizer Company Channels: • Meetings Issues: • Exhibitions • Price • Site visits • Product quality and safety • Trade associations • Delivery
24 EuroChem Sustainability Report 2015 02 Employees Introduction Managed by: • Digital media • Administrative Director • E-generation program • Plant management • HR teams Engagement in 2015: Grew our employee base, Workplace Channels: Hazard Assessments completed at all • Training Russian plants • Recruitment • Orientation Issues: • Team meetings • Health and safety • Corporate newspaper • Career pathways • Events • Salaries/benefits • Working conditions Economic sustainability
03 Federal authorities
Managed by: Engagement in 2015: • Government Relations Director Continued to work with government on • Head of Communications implementing environmental regulations, e.g. BAT and GHG, and promoting Channels: community and social facilities, • Public-private partnerships e.g. Kotelnikovo garden city, sport • Meetings program in collaboration with the • Conferences Russian Ministry of Sports • Launches Issues: • Economic development environmental responsibility and & safety Health • Partnerships, e.g. ice sports • Legal compliance
04 Young people
Managed by: Engagement in 2015: • Head of HR&MSD Expansion of E-generation with more • Head of Communication pupils, students and teachers; student and associated teams visits to EuroChem plants; opened ice sports stadium in Kingisepp Channels: • E-generation program with schools Issues: and universities • Skills development • Family days • Access to employment Social responsibility • Sports events • Personal and professional development • Career pathways
05 Shareholders and investors
Managed by: Engagement in 2015: • Chief Financial Officer Secured project finance for the new • Head of Investor Relations EuroChem Northwest ammonia plant • Communications teams near Phosphorit; new pre-export finance facility; attended several Channels: investor conferences. Additional information • Investor meetings • Roadshows Issues: • Trading updates • Strategy • Annual reports • Governance • Risk management • Financial performance
EuroChem Sustainability Report 2015 25 Stakeholder engagement
Responding to our stakeholders continued
06 Local communities
Managed by: Engagement in 2015: • Administrative Director Investments in communities, • Head of Communications e.g. education and environmental • Plant management infrastructure in Nevinnomyssk and the new ice sports stadium in Kingisepp Channels: • Joint working groups Issues: • Liaison offices • Employment • Public and one-to-one meetings • Environment • Site visits • Security • Volunteering • Development • Media
07 Professional bodies and universities
Managed by: Engagement in 2015: • Head of HR&MSD Engagement with universities and • HR teams schools, E-generation program, • Specialists Chemistry Olympiad
Channels: Issues: • Joint projects/sponsorships • Skills and knowledge enhancement • Meetings • Career development • Site visits • Opportunity for students
08 Media
Managed by: • Digital media • Head of Communications • E-generation program • Head of Investor Relations Engagement in 2015: Channels: Media releases, website, press briefings, • Media releases site visits to describe, for example, • Interviews funding, investments, partnerships, • Press calls financial results or environmental • Launches performance and CSR • Website • Social media Issues: • Trust • Access
09 Non-profit organizations
Managed by: Engagement in 2015: • Head of Communications We engaged with more than 70 NGOs • Plant management in our countries of operation
Channels: Issues: • Meetings • Trust • Conferences • Cooperation • Joint projects • Mutual benefit • Volunteering
26 EuroChem Sustainability Report 2015 Introduction
10 Trade unions
Managed by: Engagement in 2015: • Administrative Director Maintained constructive dialogue, • HR teams considered recommendations and maintained all collective agreements in Channels: place across all of our sites. Ongoing • Meetings liaison and special meetings, e.g. the • Conferences EuroChem International Information Forum at Lifosa
Issues: • Workplace safety • Salaries/benefits Economic sustainability
11 Partners and suppliers
Managed by: Engagement in 2015: • Procurement Director Expanded our distribution network, • Heads of all operational divisions particularly in the USA and developed and their teams new assets, including the ammonia plant • Plant management near Phosphorit, all of which require partnerships working with new and Channels: existing contractors and suppliers • Meetings • Conferences Issues: environmental responsibility and & safety Health • Contract delivery • Trust • Mutual alignment of aims • Price • Fairness
12 Regional and local authorities
Managed by: Engagement in 2015: • Administrative Director Site visits, liaison meetings, partnerships • Plant management and events to review new sports clubs, • Head of Communications arenas, schools, kindergartens, and housing projects
Channels: Social responsibility • Public-private partnerships Issues: • Meetings • Social development and environment • Conferences • Legal compliance • Launches • Investment
13 Environmental organizations
Managed by: Engagement in 2015: • Head of HSE Public hearings and site visits in
• Plant management Kingisepp, Karatau and Zhanatas, Additional information • Head of Communications Usolye and Kotelnikovo; ongoing liaison with reputable environmental NGOs Channels: and specialists • Working groups • Meetings Issues: • Conferences • Planning • Site visits • Monitoring • Reporting
EuroChem Sustainability Report 2015 27 Stakeholder engagement Stakeholder dialogue snapshot – 2015
EuroChem team Stakeholder Nature of the dialogue
Group Finance, IR and International lenders Agreement on project finance for Communications further development of Usolskiy and the new EuroChem Northwest ammonia plant near Phosphorit. This also involved the development of a detailed Environmental Impact Assessment (EIA) to satisfy Equator Principles requirements.
Group HSE and Communication International Fertilizer Association (IFA), Assist IFA in organizing the first customers, industry as a whole annual IFA Conference to be held in Russia (Moscow, May 2016) and attend IFA HSE meeting in India (March 2016).
Group HSE Russian Association of Mineral Fertilizer Led the development of the Russian Producers and Russian Federal Best Available Technology (BAT) Government documentation for controlling the environmental impact of ammonia and fertilizer production.
Group functions and Lifosa Employees, local government and trade Hosted the first EuroChem unions International Information Forum – discussing HR, HSE and other key business areas (May 2015).
Group functions and Phosphorit NGOs, government agencies, independent Working with the John Nurminem experts Foundation to independently audit the effectiveness of new water management systems at Phosphorit.
Group functions and VolgaKaliy Employees, contractors, local/national Further development of the Kotelnikovo government garden city.
28 EuroChem Sustainability Report 2015 Introduction
EuroChem team Stakeholder Nature of the dialogue Economic sustainability
EuroChem BMU Education providers, NGOs, young Organized a site visit for students people at Belorechensk Industrial Process College to study energy systems on site. Participated in the ‘Be a Young Environmentalist! Save the Environment!’ conference within the 2015 International Investment Forum (Sochi).
Group functions and Government agencies and NGOs Worked with the Design Office of Kovdorskiy GOK High-Rise and Underground Structures of St. Petersburg and the
Institute of Spatial Planning ‘Urbanika’ environmental responsibility and & safety Health on a master plan for developing the city of Kovdor.
Nevinnomysskiy Azot City government Provided the city government of Nevinnomyssk with financial support and expertise. Key projects included an upgrade of the water and sewerage system and reconstruction of the ‘Palace of Culture of Chemists’, an important meeting place for city residents.
Novomoskovskiy Azot Young people, national and regional Hosted ‘EuroChem Cup’ International government, sports federations, media Ice Hockey Tournament, with teams Social responsibility from six countries.
Tuapse Bulk Terminal Employees, national government Took first place in the municipal round of the ‘All-Russian Competition for the Best Organization of Work in the Field of Environment and Safety.’
In 2015, we worked closely with other companies and the Russian Association of Mineral Fertilizer Producers and the Federal Agency on Technical Regulating and Metrology to define Additional information the Best Available Technology (BAT) reference documents for our industry.
EuroChem Sustainability Report 2015 29 Stakeholder engagement Defining what’s important
In 2015, we have chosen to report under the Core criteria of GRI G4. The process Step 3 Prioritization and review the categories of Economic sustainability, is divided into three main steps, as • The reporting group discusses all topics, Health and Safety, Environmental define below: consults further with stakeholders and responsibility and Social responsibility. finalizes key material aspects and We have described our approach and Step 1 Reporting group review associated indicators in line with GRI G4 performance against material sustainability • Records of stakeholder engagement – issues within these categories, based on from CEO level to department heads and As a reporting principle the Group has looked how they impact the business and their operational managers at our main sites at interactions with internal and external importance to our stakeholders. As in • Key business decisions, investments and stakeholders during the reporting period, previous years, we have highlighted health announcements made during the year which is the calendar year 2015. This process and safety performance because of its • Data and performance records from our covered all operational sites, including the new importance to our employees and information and management systems extraction operation in Kazakhstan. Those contractors and our self-defined focus on topics chosen for this report are deemed to becoming an industry leader in this area. Step 2 Reporting group analysis be material across our whole business and and comparison in varying degrees at all operating sites. Process for defining report content • Identify and prioritize the topics that are Our reporting group consists of the Heads of most importance to stakeholders Issues of interest for our stakeholders of Social Responsibility, Environment, Health • Map stakeholder interests to strategic The following tables identify the aspects and Safety and Communications. They take business and management priorities and indicators on which we are reporting. responsibility for compiling relevant data • Compare the topics identified with those More detail on management approach and contextual information, as well as highlighted as material in the previous and resulting performance is provided in defining report content. In 2015, the Group sustainability report the relevant section of this report. has chosen to continue to report in line with
Economic sustainability Aspect Who has a stake Indicator
Economic performance • The Board • Annual sales • Employees • EBITDA It is a fundamental measure of • Investors • Net debt/EBITDA ratio business health and supports • Credit ratings our growth and investment plans
Indirect economic impact • The Board • Level of investment • Employees • Feedback from It relates to our market presence • Suppliers government and and the way we engage with • National government communities local stakeholders where • Local government we operate • Local communities
Health and safety
Health and safety • Employees • Lost Time Injury • National government Frequency Rate We operate hazardous facilities • Local government which pose health and safety • Trade unions risks • Suppliers • Management • The Board
30 EuroChem Sustainability Report 2015 Introduction
Environmental responsibility Aspect Who has a stake Indicator
Water • Communities • Water consumption, m3 Economic sustainability • Utilities per tonne of production Some of our operations require • Suppliers large volumes of water for • Local government production • National government
Air • Employees • Air emissions, kg per • Communities tonne of production We operate complex processes • NGOs that emit a range of gases which • Local government can be harmful to humans and • National government the environment
Waste and effluent • Employees • Effluent, m3 per tonne • Communities of production We produce and manage • NGOs significant volumes of solid • Local government waste and effluent, • National government environmental responsibility and & safety Health e.g. phosphogypsum
Social responsibility
Training and education • The Board • Investment in training • Employees centers The sustainable growth of our • Educational institutions • Training partnerships business is predicated on our • Teaching standards ability to attract and retain talent, particularly our cohort of young professionals
Employee relations • The Board • Management to • Employees employee ratio Employee relations are crucial • Investors • Employee turnover as we have more than 23,400 • Suppliers • Sales per employee
employees and continue to • National government • Production per person Social responsibility grow our business • Local government • Personnel costs internationally • Utilities • Communities
Diversity and equality • The Board • Level of investment • Employees • Employee numbers We employ more than 23,400 • National government • Percentage of women in people, representing 55 • Local government management positions different nationalities, working • Communities in 21 countries. The work • Educational institutions is demanding and requires a high level of cooperation and communication
Remuneration • The Board • Variable remuneration • Employees • Fixed remuneration In order to attract and retain • Average full-time Additional information the best people, we aim to pay equivalent wage wages that are above average • Changes in average for the sector in each monthly wage operational territory
Local communities • Employees • Levels of community EuroChem is a significant • Communities investment employer and its operations • Local government • Feedback from local can have a significant impact • National government government officials and on local environments and • Educational and social community leaders local economies • Institutions • Local suppliers • NGOs
EuroChem Sustainability Report 2015 31 Economic sustainability Economic sustainability
We continued to invest in our mining, manufacturing and distribution operations, all of which contribute to the strengthening of our vertically integrated business model. Our strategy for growth is based on this flexible and efficient model. With secured access to low-cost natural resources and production bases, supported by wholly-owned logistics and distribution assets, we maintain tight control of our costs and respond quickly to market variations.
Economic performance Policies and guidelines Overall management responsibility is in • National and regional regulations Aspect the hands of the Management Board. • Business strategy • Financial regulators Economic performance Our financial performance is predicated • Federal Law on Natural Monopolies on the continued consumption of fertilizers and Electric Power Industry (Russia) Why it is important at a sustained price, which in turn is driven • Code of Conduct It is a fundamental measure of business by growing population, changing diets and • Code of Ethics health and supports our growth and land use shifts. In order to make the most investment plans of this market opportunity while preparing Our business supports employment, provides for potential challenges and volatility our community services and pays taxes in its Who has a stake business aims to have the main areas of operation. following attributes: • The Board • Employees • Exploiting potash reserves – making us Vertical integration • Investors one of only four companies to operate • 75% self-sufficiency in phosphate rock across the three main fertilizer segments from Kovdorskiy GOK, with output growing • Broadening the product mix (more from Kazakhstan Indicator advanced, high-value products) • Iron ore and organic-synthesis product • Annual sales • Continued investment in research and sales • EBITDA • Net debt/EBITDA ratio innovation • Wholly-owned natural gas supplies offer • Credit ratings • Strengthening our distribution and advisory 25% self-sufficiency in energy capacity at the farm level • Top tier positions on global Nitrogen and • Investment portfolio with strong returns Phosphates cost curves and future cost • Vertical integration leadership in potash • Effective, owned distribution network, including port terminals and rolling stock
32 EuroChem Sustainability Report 2015 Economic performance highlights 2015 Introduction
Total CAPEX (US$) Total sales (US$) EBITDA (US$) 969m 4.5bn 1. 6 b n
Potash CAPEX (US$) EBITDA margin EBITDA increase (vs. 2014) Economic sustainability 446m 35% 4%
Global scale and market position Diversified and balanced market Strong corporate governance • Growing production footprint including position • Experienced Board of Directors Russia, Belgium, Lithuania, Kazakhstan • Positioned to withstand pricing pressures • Strong management team and China and demand volatility with varied and • Solid control and delivery of • Potash on track to come on-stream in 2017 increasingly advanced product mix investment projects • Significant and growing international • Reduced dependence on seasonality • Commitment to best practice
distribution and advisory revenues • Further diversification when potash comes and transparency environmental responsibility and & safety Health • Global product footprint – used in more on-stream with capacity of 8 million tonnes than 100 countries per annum • Focused on production and logistics efficiencies • Mining and agrochemical products have different sales cycles Social responsibility Additional information
VolgaKaliy potash project
EuroChem Sustainability Report 2015 33 Economic sustainability
Economic sustainability continued
Investing in our future We operate in areas where our plants are The highlights of our strategic investment amongst the most significant employers. Aspect and M&A program in 2015 included: While drawing on energy and natural • Continued development of the Usolskiy resources we also generate significant Indirect economic impacts and VolgaKaliy potash projects in Russia economic opportunities. • First deliveries of phosphate rock from our Why it is important Kazakhstan project to EuroChem BMU How we manage indirect economic It relates to our market presence • Commenced construction of EuroChem impacts and the way we engage with local Northwest ammonia project at Kingisepp Our social and community investments are stakeholders where we operate (completion expected in 2018) made in full cooperation with national and • Acquired fertilizer distributor in USA local governments, NGO and community Who has a stake • Reconstruction of water and effluent plants representatives. We focus on sport, at Novomoskovskiy Azot and Phosphorit environment, health, education and charities, • The Board • Employees • In December 2015 we announced our therefore the projects in which we invest vary, • Suppliers intention to enter into multi-year marketing, depending on local needs. We are responsive • National governments distribution and sales, R&D and equity and sensitive to these needs, because our • Local governments agreements with Agrinos AS, a global plants have long-standing links with many • Local communities leader in biological crop nutrition products communities. For example, the work that • Acquired Berezniki Mechanical Plant, a we are currently doing in Novomoskovsk Indicator company specializing in auxiliary mining builds on an almost 80-year relationship • Level of investment equipment, including conveyors, shaft between Novomoskovskiy Azot and the • Feedback from governments support and components, plus installation city authorities. and communities and repair services • Start of apatite-staffelite ore processing We have direct operations in 21 countries, at Kovdorskiy GOK. Once fully operational meaning that we work with national and local in 2017, the new processing plant will governments, regulatory agencies and increase Kovdorskiy GOK’s output by communities. For example, the Group has 948 KMT of apatite concentrate and worked closely with state and local authorities 130 KMT of iron ore concentrate per year to identify a site that is suitable for a fertilizer plant in Louisiana. Indirect economic impacts Policies and guidelines Our community investment strategy is • National and regional regulations defined and monitored at Board level. It • Business strategy is overseen by the Head of HR, HSE • Financial regulators and Business Support and Head of • Federal Law on Natural Monopolies Communications, along with the Managing and Electric Power Industry (Russia) Directors and counterparts in the operating • Code of Conduct companies. More details are provided in the • Code of Ethics community and environment sections of this report.
34 EuroChem Sustainability Report 2015 Introduction
Case study Economic sustainability Expanding our international footprint
In October 2015, our Group subsidiary St Paul EuroChem Trading USA acquired the Bentrei Fertilizer Company, a leading US distributor based in Tulsa, Oklahoma. Founded in 1987, Bentrei has built up a strong market for fertilizers in key agricultural areas including Texas, the Louisiana Delta, the Corn Belt in the Henry Midwest and west to California. The Hastings company distributes dry fertilizer and environmental responsibility and & safety Health feed products via road and rail networks and, in fiscal-year 2015, supplied more than 1 million short tons of product to more than 530 customers. Kansas City Granite City
Charlie Bendana, President of Bentrei Fertilizer, said: ‘This deal will highlight Springfield the synergy between EuroChem’s international production assets and Bentrei’s service-oriented US domestic Inola distribution.’ Fort Smith
Dmitry Strezhnev, our CEO, said: ‘As well Pine Bluff as its great network, Bentrei offers valuable market intelligence and a strong Social responsibility team to support our US business. This acquisition will enable us to better service the important US market and introduce our full range of products.’
EuroChem has operated in the USA since 2006, an important market that accounted for 12% of Group sales in 2015. As well as this deal, the Group has also announced its intention to build a natural gas-based fertilizer plant in Louisiana. Additional information
EuroChem Sustainability Report 2015 35 Health & safety and environmental responsibility Health and safety
Because of the nature of our operations certain workplaces are potentially hazardous, in particular primary extraction, fertilizer production and construction. We therefore continue to strengthen our HSE culture, improve management systems and promote HSE awareness and competencies.
How we manage All employees and all on-site contractors Health and safety are required to: Aspect In 2013, we devised and published a new • Understand and comply with health Health, Safety and Environment (HSE) policy. and safety requirements Health and safety It remains our intention to be a health and • Ensure colleagues are safe safety exemplar by 2018, following best • Act according to guidelines Why is it important? international practice. To this end, we are • Know how to use all relevant equipment We operate hazardous facilities which working to integrate safety, environment and • Communicate with managers and pose health and safety risks quality management systems, which we colleagues believe offer a greater potential for control and improvement. Policies and guidelines Who has a stake? • Business strategy • Employees • Management The HSE policy and framework applies to • HSE Policy and Framework all of our operational sites, employees and • The Board • H&S Management System (compliant • Suppliers on-site contractors. Implementation is with OHSAS 18001) monitored by the HSE Department and • H&S laws and regulations in Indicator performance is monitored by the Board countries of operation of Directors at every Board meeting, as • Equator Principles • Lost-Time Injury Frequency Rate described in the ‘Environmental responsibility’ • Industry best practice section. Operational managers lead on health and safety at each site. Their key responsibilities include: • Defining and monitoring health and safety behavior • Identifying health and safety champions • Securing resources • Initiating and maintaining systems and processes • Achieving targets • Cooperating with other operational units
36 EuroChem Sustainability Report 2015 HSE performance in 2015 Health and safety priorities for 2016 In 2015, EuroChem had 47 lost-time injuries • Continue to integrate health, safety Lost-Time Injury Frequency Rate Introduction (LTIs) (2014: 48), 40 of which were employees and environmental management system EuroChem Group 1.08 (2014: 32) and 7 contractors (2014: 16). • Continue to run Workplace Hazard Fertilizers Division 0.95 In 2015, we experienced three work-related Assessments (WPHA) and roll out an online fatalities, involving one employee at database of hazard assessments available Mining Division 1.15 Kovdorskiy GOK and two contractors at to all employees EuroChem Fertilizers Kazakhstan and • Improve contractor management, EuroChem Northwest. These regrettable awareness and training incidents further drive us to integrate health, • Contribute to International Fertilizer safety and environmental management Association meetings in Russia and India, systems across the Group. the latter focused on health and safety (March 2016)
LTIFR per 1 million man-hours Lost-time injuries (employees) Economic sustainability
2.0 42.0 44.0 38.0 40.0 38.0 36.0 1.5 32.0 1.11 1.17 1.14 1.05 1.00 1.08 0.88 22.5 22.6 1.0 21.3 24.6 20.3 23.1 0.5 19.2 ■ Total headcount (000’s) 0 Total injuries ■ 2009 2010 2011 2012 2013 2014 2015 2009 2010 2011 2012 2013 2014 2015 environmental responsibility and & safety Health Social responsibility Additional information
We are working to integrate QHSE management systems, which we believe offers a greater potential for control and improvement.
EuroChem Sustainability Report 2015 37 Health & safety and environmental responsibility
Health and safety continued
Case study Safety forum This was especially significant given the management representatives to discuss unprecedented scale of the Company’s uniform approaches to personnel issues In 2014-2015, at the initiative of the Head investment projects connected with the and working with labor collectives, as well of the Fertilizer Division, several meetings construction of the two new potash as wider issues of health and safety and with the heads of industrial safety and production sites and the ammonia plant, interaction with labor unions. repair and constructions services were along with the reconstruction of existing organized in EuroChem Antwerpen industrial plants. These forums are designed to create a as part of a series of safety leadership new corporate culture across the meetings across the Group. The main We also organized a special forum between Company’s international operations in the objective of these meetings was to representatives of the Company’s field of production safety and to facilitate discuss the development of security European enterprises – HR managers, the application of the best European systems and safety in the repair and HSE managers and heads of trade union standards and technologies in this area. construction of industrial facilities. committees – and Russian colleagues and
38 EuroChem Sustainability Report 2015 Safety remains a strategic priority for which we set and work towards Group-wide targets. Given our Introduction experience in 2015, we are re-doubling our efforts to eliminate work-place injuries and further improve our safety culture. Alexander Tugolukov Head of the Fertilizer Division
Case study Economic sustainability A new approach to safety The approach states that work can only proceed once the scaffolding has been • Piloted a new approach to working passed as 100% safe by our internal repair at height and maintenance team. This improvement • Rolled out across all Russian sites in 2016 program supported by the Head of our Fertilizer Division and is currently being In 2015, we piloted an improved approach extended to Novomoskovsk. It will then be to working at height, as this had historically implemented across all of our sites. been a cause of safety incidents. The pilot, at Nevinnomyssk, involved a revised approach to assessing the risk of working at height, primarily a check in the quality of scaffolding. environmental responsibility and & safety Health
Case study Industry leading workplace The assessments focused on ways safety of reducing exposure to noise, vibration and hazardous materials; offered • 8,000 Employee Workplace Hazard in collaboration with labor union Assessment (WPHA) with 20,000 representatives. The assessments were employees mandated by Russian regulations in 2015 and EuroChem has taken an industry In 2015, we completed WPHAs in more leading position on their implementation. than 8,000 individual workplaces in our Russian operations, involving approximately Social responsibility 20,000 employees. Additional information
EuroChem Sustainability Report 2015 39 Health & safety and environmental responsibility Environmental responsibility
Our environmental management strategy and approach is built around international standards and best practice.
Management approach Use of water, gaseous emissions, waste and In line with our materiality assessment, we We are committed to continuous effluent are targeted within the environmental are reporting on water, emissions and waste improvement of the HSE culture, compliance management systems operating at our and effluent. and management systems. plants. The water used at each plant is extracted from sources not owned or Water This approach, applied to solid waste, effluent controlled by the company. Where it is heated Water is used in production and energy and emissions generated across the business, or cooled, the sources of energy may be generation at our plants. It is sourced from a as well as the way we promote resource internal or external. While effluent, waste mixture of surface and groundwater sources, efficiency, protect ecosystems and manage and gaseous emissions are all generated depending on the location and needs of each health and safety, is the responsibility of the internally, through production processes, they plant. In all cases, water use is governed by Group Management. Our corporate HSE have an impact beyond plant boundaries. national regulations, as well as our own (Health Safety and Environment) Department management system targets. To support this, (based in Moscow) leads on support and Targets and objectives usage patterns are monitored and managed implementation. This Department reports Our strategic objective is to continually by the HSE teams at each plant, reporting directly to the Group’s Administrative Director reduce our environmental footprint. In relation back to the Corporate HSE Department. and manages Divisional HSE groups and to our key indicators we have the more than 120 professionals. following objectives: In 2015, our estimated consumption of • Reduce atmospheric emissions and waste non-recycled water per tonne of production Policies and guidelines water year-on-year was 2.58 m3/t (2014: 2.87 m3/t). This • Business strategy • Reduce volumes of solid waste and significant reduction stems from the • HSE Policy and Framework increase recycling year-on-year investments made in water and sewage • Environmental Management System • Continuously improve environmental systems at our production operations, in (compliant with ISO14001) management systems and compliance particular Kovdorskiy GOK and Phosphorit. • Environmental protection and natural resources laws and regulations in In 2015 we focused on environmental impact Air emissions countries of operation assessments (EIA) and action plans for major The profile of our air emissions in 2015 • Equator Principles investment projects. These included the was very similar to previous years, with the • REACH Northwest ammonia project in Kingisepp and main outputs being sulphur oxides, carbon • Responsible Care the Usolskiy potash project, both of which monoxide, nitrogen oxides, sulphuric acid, required a detailed social and environmental ammonia, particulates and hydrocarbons. The HSE Policy defines our commitment impact assessment in order to meet the to legal compliance and continuous requirements of lenders, in accordance improvement. The OHSAS 18001 and with the Equator Principles. ISO 14001 management systems are subject to internal audit and annual verification by an independent certification company. Group HSE management is structured as follows Corporate • Board of Directors, CEO HSE is always the first agenda item on and Management Board the weekly Management Board and EuroChem’s Environmental • Head of HSE quarterly Board of Directors meetings. HSE is identified and managed as a core policy complies with the business process international standard Divisions • Group Divisions Directors HSE function, along with financial control • Divisional HSE Managers and HR, is embedded in each Division
Plants • Plant Managing Directors Plant HSE programs are aligned with the • Plant HSE groups Group’s HSE Policy and Framework ISO14001 (managers)
40 EuroChem Sustainability Report 2015 Aspect Aspect Aspect Introduction
Water Air Waste and effluent
Why is it important? Why is it important? Why is it important? Some of our operations require large We operate complex processes that emit a We produce and manage significant volumes of water for production range of gases which can be harmful to volumes of solid waste and effluent, humans and the environment e.g. phosphogypsum
Who has a stake? Who has a stake? Who has a stake? • Communities • Employees • Employees • Utilities • Communities • Communities • Suppliers • NGOs • NGOs
Indicator Indicator Indicator Economic sustainability Water consumption, m3 per tonne Air emissions, kg per tonne of production Effluent, m3 per tonne of production of production
Emissions levels and controls are governed by national regulations, as well as our own management system targets. In 2015 we were working on implementation of the new Russian BAT in fertilizer production. Key stakeholders Our environmental management systems apply to all of our production and logistics Our monitoring capacity is traditionally operations, therefore we engage with many different stakeholders. strong, both on site and around our production operations. For example, we Regional administrators Employees environmental responsibility and & safety Health operate a network of air quality monitoring stations at Belorechensk, Nevinnomyssk, Cooperation agreements signed with All employees are trained and certified Tuapse, Kotelnikovo, Novomoskovsk, regional government cover environmental according to their environmental Kingisepp and Usolye. The resulting data is and social responsibility. responsibilities and specific management fed to regional hydro-meteorological centers, routines. from where it is made available to government authorities, communities and Customers Trade unions the media. Our sales and agricultural teams advise Collective bargaining agreements are in our retail and wholesale customers on safe place at all of our operating companies, Data on air emission levels is monitored and appropriate use of our fertilizer and including commitments to provide and managed by the HSE teams at each chemical products. All of our products employees with necessary guidance and plant, reporting back to the Plant Managers carry the relevant safety and usage equipment enabling them to comply with and Corporate HSE Department. information as guided by international laws environmental management targets. Social responsibility and best practice. Air emissions are measured per tonne of production (kg/t). In 2015, estimated Group-wide emissions were 0.92 kg/t, Government authorities Suppliers/contractors compared to 1.02 kg/t in 2014. This reflected Our production facilities are regulated and We expect our suppliers to demonstrate the ongoing investment in emissions monitored by more than 20 government best practice in relation to their own reduction, as described in this section. agencies in Russia, Kazakhstan and EU environmental management. We also member countries (Belgium, Lithuania, ensure that all equipment supplied to Greenhouse gas emissions etc.). We work closely with these agencies EuroChem carries appropriate safety and GHG emissions are a function of many to improve our compliance with statutory usage permits. Our contractors are also processes, including the use of energy. While requirements. instructed in and are expected to comply we have not formally reported here on these with the requirements of our management emissions, we measure the energy that we systems. use per tonne (kWh/t) of production. The resulting data shows that, in 2015, we used Shareholders Local communities Additional information an estimated 118.40 kWh/t of energy compared to 126.60 kWh/t in 2014. This Shareholders are updated on our Our community liaison team organizes further supports our strategy of investment in environmental management indicators, regular site visits for local communities the latest production and logistics chiefly investment, energy use, to view environmental management technologies and management systems that atmospheric emissions, fresh water use processes. The data from our air quality promote energy efficiency. and effluent discharge. monitoring stations is also made available via government agencies and local media.
EuroChem Sustainability Report 2015 41 Health & safety and environmental responsibility
Environmental responsibility continued
Waste and effluent Air emissions per tonne of production Non-recycled water consumption The main solid waste streams from our (kg/t) per tonne of production (m3/t) plants are phosphogypsum (from phosphate fertilizer production), overburden and 2.0 4.0 3.20 3.30 3.30 3.10 concentration tailings (from mining operations). 2.91 2.87 1.5 3.0 2.58 Waste water from our plants contains, 1.15 1.16 1.09 1.04 1.04 1.02 0.92 in varying degrees, levels of petroleum 1.0 2.0 products, suspended matter, ammonium, nitrates, sulphates, chlorides, fluorine and 0.5 1.0 phosphorous. 0 0 2009 2010 2011 2012 2013 2014 2015 2009 2010 2011 2012 2013 2014 2015 In 2015, the Group’s estimated effluent discharge per tonne of production was Effluent discharges per tonne Energy consumption per tonne 3 2.5 m3/t (2014: 2.9 m3/t). This reduction of production (m /t) of production (kWh/t) reflects the investments made in water and 4.0 200 effluent management infrastructure across the 3.30 3.20 3.26 3.12 2.93 2.90 Group, but in particular at Phosphorit, 132.90 3.0 2.50 150 128.30 125.10 118.40 Kovdorskiy GOK and Novomoskovskiy Azot. 2.0 100 129.60 129.50 126.60
Waste and emissions levels are governed by 1.0 50 national regulations, as well as our own management targets. These are monitored 0 0 2009 2010 2011 2012 2013 2014 2015 2009 2010 2011 2012 2013 2014 2015 and managed by the HSE teams at each plant, reporting back to the Plant Managers and Corporate HSE Department.
Project Progress
Kovdorskiy GOK • Major investment in a water pumping and recirculation system, negating the need for further withdrawals from Kovdor Lake
Phosphorit • Independent international consultant confirmed that the new surface water treatment system is contributing to the low phosphorous levels recorded in the Luga River • Installed new efficient boiler to power sulphuric acid production
Lifosa • Completed the new emissions reduction system in the sulphuric acid unit, reducing sulphurous anhydride emissions by 15%
Novomoskovskiy Azot • Upgrading of demineralization technology in the ammonia unit increasing the quality of wastewater • Upgraded the urea unit to reduce ammonia emissions • Sponsored the ‘Eco Generation’ schools environmental competition and hosted site visits organized by local NGOs
Nevinnomysskiy Azot • New waste treatment system diverting 1,500 tonnes of magnesium/magnesian from landfill • Contributed to the ‘Ecological Safety of Nevinnomyssk’ conference with local government agencies, companies and community groups
EuroChem-VolgaKaliy • Ongoing investment in sewerage, storm water and energy infrastructure • Ongoing investment in environmental monitoring
EuroChem-Usolskiy • Audits confirmed that the project continued to comply with the Equator Principles Potash • Continued to protect aquatic resources, for example, release of young starlet fish into the Kamskoye reservoir
EuroChem Antwerpen • Reduced CO2 emissions (in the form of N2O) from the nitric acid plants by 17%
EuroChem-BMU • Investments in independent monitoring, waste disposal and hazardous waste classification
Tuapse Bulk Terminal • Ongoing sampling of air and water quality published on the Tuapse website • Ongoing cooperation with Krasnodar Region authorities and agencies
42 EuroChem Sustainability Report 2015 Introduction
Case study Economic sustainability EuroChem Northwest – Maire Tecnimont, a leading global reducing emissions through engineering contractor. the latest technology The latest control and process • Most advanced European ammonia plant technologies will be deployed, in particular, • Full environmental impact assessment on environmental and safety features. The complied with Equator Principles project has secured financing from a club • EIA covered air emissions, waste, of banks, which meant the provision of resource use, effluent, biodiversity, a full Environmental Impact Assessment and safety (EIA), in order to comply with the Equator Principles (EPs). In September 2015, we started building a new state of the art ammonia plant in The latter is a risk management framework
Kingisepp – the most advanced of its which enables financial institutions to environmental responsibility and & safety Health kind in Europe. It has a design capacity assess and manage environmental and of 1 million tonnes per annum and the social risks in projects. Its primary purpose US$1bn investment will also support is to provide a minimum standard for due the creation of utility and warehouse diligence and support decision making. infrastructure. All of the Engineering, Procurement and Construction (EPC) work The plant will also recycle up to 75% of the is expected to be completed in late 2018 effluent generated on Phosphorit plant, and will be completed by subsidiaries of further improving resource efficiency and the quality of waste water.
Case study International cooperation EuroChem has always contributed to conference to Moscow in May 2016. debates and policy development in the The conference brings together industry Social responsibility • Contributing to global fertilizer industry agrochemical industry. leaders, senior executives, production agenda directors and process engineers to debate We work closely with various committees critical issues such as operating costs, of the International Fertilizer Industry improved efficiency and reducing the Association’s (IFA). EuroChem has been environmental footprint. instrumental in bringing the IFA annual Additional information
EuroChem Sustainability Report 2015 43 SectionHealth & header safety and environmental responsibility Corporate ‘Clean water’ program
Our plant modernization program has included water saving technologies, in cooperation with public authorities and local government.
Fresh water consumption reduced by (m3/year) 11m Zug HQ Effluent discharges reduced by (m3/year) 12.5m
1. Kovdorskiy GOK 2. Nevinnomysskiy Azot 3. Novomoskovskiy Azot
We are upgrading the water management We continue to improve water processing ‘Clean Water for Novomoskovsk’ project – system. systems. We are upgrading the water and sewerage system in Novomoskovsk, in partnership with the Tula Region council and Novomoskovsk municipal administration.
Mining N Nitrogen N Nitrogen
Fresh water Effluent Fresh water consumption discharge consumption reduction reduction reduction 3 6.5m 3 0.75m 3 2.2m (m /year) (m /year) (m /year)
Effluent Effluent discharge discharge reduction reduction 3 4.7m 3 0.9m (m /year) (m /year)
44 EuroChem SustainabilitySustainability ReportReport 20152015 Section header Introduction
1
4 Economic sustainability 3
5
6 2 environmental responsibility and & safety Health
4. EuroChem Northwest 5. EuroChem VolgaKaliy 6. EuroChem-Belorechenskie Minudobrenia (EuroChem BMU)
Construction of new ammonia production Completed modernization of domestic water A new effluent discharge system has Social responsibility unit. The project is being completed using supply system for Kotelnikovo. improved environmental quality at the plant best available technologies (BAT) and in and surrounding water courses. This project compliance with the Equator principle. has completely eliminated effluent discharges Design insures recycling up to 75% of the into the Pshekha River. effluent water generated at Phosphorit.
N Nitrogen K Potash P Phosphates
Effluent Water supply for 20,000 people Fresh water discharge in Kotelnikovo consumption reduction reduction 3 3m 3 2.2m (m / year) (m / year) Additional information
20,000 Effluent discharge reduced to 3 3.2m zero (m /year)
EuroChem Sustainability Report 2015 45 Social responsibility Social responsibility
While economic success is a key measure, we also recognize that to maintain this in the long term we must maintain the highest levels of employee relations and community engagement. Our large-scale investment projects and growing international presence mean that we need more qualified and experienced people who match our requirements for technical and managerial expertise.
Our approach to human resources Key focus areas EuroChem is an international business with • Ensuring the staff development, Aspect a growing geographic footprint. Our mining technological processes, organizational and operational assets are located in Russia, structure, corporate culture and service Training and education Kazakhstan, Ukraine, Belarus, Lithuania, levels are effective and best in class Belgium and China. Our primary markets • Refine annual performance reviews and Why is it important? include Russia and other CIS countries, introduce clear key performance indicators The sustainable growth of our business Europe, the USA, Mexico, and Central and • Elevate HR to the role of a ‘business is predicated on our ability to attract and Southeast Asia. Our logistics and sales partner’ through a new HR strategy that retain talent, particularly our cohort of network serves over 6,000 clients in more promotes professionalism and addresses young professionals. than 100 countries. all current and emerging HR issues • Review employment systems and Who has a stake? The Group Human Resources policy is processes with the aim of making them • Employees designed to support the business strategy. clear, transparent, understandable, • The Board It defines key indicators and priorities and effective and results-oriented • Educational institutions sets quantitative and qualitative targets. • Development of a corporate culture that The policy applies across all of our operating promotes and embraces a global outlook Indicator companies and focuses on recruitment, and ambitions rewards, training, development and social • Investment in training centers • Training partnerships support. Our Head of Human Resources Policies and guidelines • Teaching standards oversees the work of Human Resources • Human Resources Policy Managers in all of our subsidiary companies. • E-generation program • Employment laws in countries of operation As the Group continues to globalize, we • Industry best practice require more professional and qualified managers to oversee all business functions, We are working with external educational including world-class HR management institutions to enhance opportunities for processes. This, in turn, will support the potential recruits and our employees. achievement of corporate goals and targets. A key challenge is the need to attract and retain highly-skilled and motivated professionals to support our international growth.
46 EuroChem Sustainability Report 2015 Case study Introduction Redefining our As we internationalize, so our standards of English-language training that is corporate culture of corporate governance and corporate available to all employees. This is culture need to evolve. A key element is improving communication across our the need to ensure that multinational international operations and is helping teams are able to work effectively together. employees to move between different Consequently, over the past few years we parts of the business. have rolled out a Group-wide program Economic sustainability environmental responsibility and & safety Health
Social investments in 2015 (US$) Key stakeholders Employees, including Local community 12m young professionals representatives All employees are given access to Informal and formal meetings, including management and technical courses site visits, reviewing investment projects based on the highest environmental and HSE systems. and professional standards. Social responsibility Environmental Universities and education organizations institutions
Ongoing consultation and site visits to E-generation program provides chemistry review operations and data from and engineering tuition for school pupils, environmental monitoring stations. students and teachers. Local authorities Non-profit organizations
Partnerships to develop sports arenas, Working closely with local partners to support health and education institutions provide financial and volunteering support. and report on environmental monitoring activities.
Media Additional information
Providing access to company personnel to review community investments and environmental monitoring activity.
EuroChem Sustainability Report 2015 47 Social responsibility
Employees
Employee relations, diversity, All training and professional development In 2015, we supported 346 students, with a equality and remuneration programs are managed by our Heads of further 128 receiving EuroChem scholarships. In 2015 we employed over 23,400 people of Human Resources, HSE, Business Support 55 nationalities that worked in 21 countries and Communications. The Human Recruiting motivated graduates and at 71 enterprises (including 47 in Russia). Resources Departments in the operating developing employee capabilities In 2015 we started extraction operations in companies, in turn, have responsibility for All of the students that we support through Kazakhstan, continued to develop our potash delivery and monitoring the success of university subsequently join our three-year projects and expanded our distribution these programs. ‘Young Employee’ scheme. This offers them network. access to mentors from the business, a fast We have long standing relationships with track to careers in the Group and the chance We comply with all relevant labor laws and many educational institutions. They assist to network with their peers. codes upholding the rights of employees, us in delivering continuing professional including international labor conventions. development and working with students to In 2014, we created a professional We do not use forced, compulsory, child or encourage them to take science, technology, development scheme for mentors, which will agency labor and respect all human rights engineering and mathematics (STEM) enhance their capabilities and effectiveness. under the laws and conventions of the subjects. countries where we operate. We operate seven professional training We also retain good relationships with centers which engaged with 60% of our Policies and guidelines national and regional media, through which employees in 2015. Our succession planning • Human Resource Policy we promote programs and competitions to program includes skills development for • Employment laws in countries of operation students and their parents in key regions. employees prior to promotions. • Industry best practice Working with schools and universities Gender diversity (%) Employee relations, diversity and equality In Russia, we fund a network of laboratories and remuneration are important measures in schools and technical colleges which of management competence and success. teach chemistry, natural sciences and environmental studies. These offer a EuroChem is committed to diversity across scholarship pathway to a chemistry degree 70 71 71 its international business. Through our and subsequent career with EuroChem. E-generation and internal development Our scholarships and engineering training programs we continually try to bring more programs encourage young people to pursue ■ Male women into the business. While the technical and scientific subjects. These 30 29 29 ■ Female proportion of men to women has remained programs operate in Russia, Belgium and static over the past few years, we are starting Germany, working with: 2013 2014 2015 to see more of our young women recruits • Baden-Württemberg Cooperative moving into senior management roles. This State University (Germany) should have a positive impact on others • KU Leuven (Belgium) joining the business and have a positive • National University of Science impact on the gender balance over the next and Technology (Russia) few years. • Moscow State University of Mechanical Engineering (Russia) Training and education • South-Russian State Polytechnic The sustainable growth of our business is University (Russia) predicated on our ability to attract and retain • Ivanovo State University of Chemistry talent, particularly our cohort of young Technology (Russia) professionals. Our growing geographic reach • Perm National Research Polytechnic and continued need for skilled people means University (Russia) that we need to create an excellent working environment for our employees.
48 EuroChem Sustainability Report 2015 Introduction
Aspect Aspect Aspect Economic sustainability Employee relations Diversity and equality Remuneration
Why is it important? Why is it important? Why is it important? Maintaining harmonious and positive Diversity and equality are key In order to attract and retain the best relationships between more than 23,400 characteristics of a progressive, people, we have an attractive reward employees is a key challenge as we international business. system. continue to grow the business internationally.
Who has a stake? Who has a stake? Who has a stake? • Employees • Employees • Employees • The Board • The Board • The Board • Utilities • Communities • Suppliers • Educational institutions • Communities • Local government • Investors • National government environmental responsibility and & safety Health • National government • Local government
Indicator Indicator Indicator • Management to employee ratio • Level of investment • Variable remuneration • Employee turnover • Employee numbers • Fixed remuneration • Sales per employee • Percentage of women • Average full-time equivalent wage • Production per person in management positions • Changes in average monthly wage • Personnel costs
Case study Developing an incentive program Our continued growth will be supported by Our employees may be local or international Previously, this system could be organized our ability to attract and retain high-quality and the latter may be stationed for fixed and enacted locally. That is increasingly Social responsibility candidates in a competitive labor market. periods in particular operations. This ability not the case, as it needs to accommodate Consequently, we focus on building to identify and fill opportunities for people with the growing number of globally mobile professional and managerial competence, particular skill sets, from within the business, employees. while ensuring that our policies and is increasingly important. These changing standards align with international best patterns of employment have to be matched Specifically, in 2015, the HR Department practice and are innovative. by our incentives structures. Consequently, started a review of the short-term incentive we have recently launched a long-term system, to bring it in line with our international Understanding and accommodating a project to redesign the employee motivation ambitions. The system will be more closely growing international and mobile workforce and incentives system. matched to performance in order to motivate is crucial to our business. and engender positive competition. Additional information
EuroChem Sustainability Report 2015 49 Social responsibility
Employees continued
Case study Developing talent and but we still have a significant requirement The program is called ‘E-generation: enhancing skills for engineering and technical talent. For leaders of the new industrialization’. example, our two potash projects will The program operates through schools Our segment and geographic footprint need 6,000 employees, including 2,000 and universities in Russia, Belgium and is growing, as is our demand for talent. chemical and mining engineers. We invest Germany. It augments Government Our growth and the integrated nature in the employee ‘value chain’ from early programs or fills a gap where there are no of the Group offers employees careers intervention in schools through to university incentives for students to study chemistry in different divisions of the business and in education, enhancing teachers’ capabilities or other technical/engineering subjects. different countries. These careers can be and developing the skills of our recruits and in management, marketing, distribution, employees. finance, HR, and environmental control,
Case study Preparing a new EuroChem Engineering Case Solving knowledge and skills required to solve competence team: Championship established in 2014 is gaining production problems specific to EuroChem. EuroChem Annual momentum. In 2015 it was expanded to two The expert judging panel assesses the leagues: Mining and Fertilizers. 286 knowledge and skills of participants, and Engineering Case Solving participants (82 teams) from ten leading students gain a better understanding of Championship technical universities participated in the Company and are then able to make preliminary rounds. The main objective of informed career choices. the Championship is to develop
50 EuroChem Sustainability Report 2015 Introduction
We use key performance indicators (KPI) to track our progress in achieving our business objectives. These indicators provide some valuable metrics which allow us to evaluate whether the Group’s strategy is being executed effectively. Economic sustainability
The table above represents some of the KPIs which we measure and record to better understand our progression and benchmark our performance. These indicators can be influenced by business transformations (M&A activity), currency movements, inflation and product prices.
Key HR indicators* 2008 2009 2010 2011 2012 2013 2014 2015
Full-time equivalent employee numbers 21,585 20,102 19,671 20,843 22,119 22,327 22,468 23,459 (people)**
Management to staff ratio (%) 13.4 13.5 12.7 12.3 12.6 12.9 12.9 13.1
Staff turnover at production facilities (%) 5.7 2.6 3.4 4.1 5.0 4.6 4.0 3.6
Group sales per employee 209,084 115,380 163,691 214,357 242,063 248,831 226,433 193,544 environmental responsibility and & safety Health (US$/person)
Productivity per main type of product 1,051 1,173 1,360 1,358 1,471 1 ,603 2,148 2,193 per person, average (tonnes)
Personnel costs (US$m) 387.4 296.4 393.2 448.3 530.6 597.1 564.3 443.7
Changes in personnel costs 35.9 (23.5) 32.6 14.0 18.4 12.5 (5.5) (21.4) (% year-on-year)
Fixed remuneration (US$m) 263.4 234.0 301.1 333.3 416.0 446.5 410.5 276.5
Variable remuneration (US$m) 124.0 62.4 92.1 115.0 114.6 150.6 153.8 167.3
Average full-time equivalent wage 1,015 939 1,044 1,195 1,321 1,516 1,400 1,034
(US$/month) Social responsibility
Changes in average monthly wage (%) 27.8 (7.5 ) 11.2 14.5 10.5 14.8 (7.7) ( 26.1)
* HR indicators were calculated according to PwC Saratoga methodology; financial indicators were prepared in accordance with IFRS. ** Including temporary employees; all related indicators are calculated based on this figure.
While the Group is international, the majority While the Group increased rouble- Currency dynamics of its production assets and over 85% of denominated salaries by an average of its employees are located in the Russian 10% in 2015, the Group’s wage and salary Federation. The 2015 KPIs presented indicators largely declined on the back of 250 above were heavily influenced by currency the appreciation of the US dollar. fluctuations, with the depreciation of both 200 the RUB and EUR and the appreciation of The Group’s remuneration policy includes 150 the US$, as well as the lower commodity regular increases in employee salaries in Additional information price environment. accordance with international practices, and 100
is based on general salary conditions in the 50 Despite an increase in sales volumes, countries where we operate. 01.01.2013 01.01.2014 01.01.2015 01.01.2016 highlighted by the higher productivity KPI, ■ RUB/US$ ■ EUR/US$ sales per employee (US$/tonne) decreased The Group regularly analyzes its 15% as a result of the lower prices for our key compensation data to provide maximum Note: All exchange rates are re-based to products, including fertilizers and iron ore. support to its employees through competitive 100 at January 2013. remuneration for their work.
EuroChem Sustainability Report 2015 51 Social responsibility
Communities
Our approach to working with Some of our investments, particularly those communities in recreation, sports and rehabilitation Aspect For the past 15 years, EuroChem has facilities for our employees, are also open focused on developing sustainable, to local residents. Our third ice arena, opened Local communities long-term benefits for the communities in Kingisepp in 2015, exemplifies this neighboring and supporting its operations. approach. In addition, our energy generation, Why is it important? This focus is exemplified by high-quality transport infrastructure and environmental EuroChem is a significant employer and its urban environments and ‘garden cities’, monitoring systems also serve to assist operations can have a significant impact modern water supply and treatment and protect local communities. on local environments and local infrastructure, working with universities economies. to deliver training programs for young Policies and guidelines engineers from Russia’s regions and • Human Resource Policy Who has a stake? significant investments in sports arenas • Employment laws in countries of operation • Employees and children’s ice hockey programs. • Industry best practice • Communities • Local government In 2014-2015, we invested over US$30m The relationship with communities and • National government in community infrastructure, services and development of local infrastructure and • Educational and social organizations. In Russia, a new emphasis services is a strategic issue for EuroChem. • Institutions on austerity has made our investments in • Local suppliers • NGOs social and environmental services even more Sport-led regeneration important. This is exemplified by our work Our widely acclaimed sports investment in Novomoskovsk, where we have worked program has had a significant, positive Indicator closely with the city authorities to improve impact across Russia and internationally. • Levels of community investment water and sewerage systems, and sport The program has three main components – • Feedback from local government facilities, and renovate an iconic meeting construction of ice arenas and sports officials and community leaders place for city residents. centers, support for youth sports at all levels of ability, locally and internationally, and The community investment program is linking regional sporting activity with overseen by our Group Board of Directors. international and professional programs. Specifically, our Administrative Director works closely with corporate and plant We have built three ice sport arenas in management teams to engage with the cities of Novomoskovsk (Tula Region), community representatives and define Nevinnomyssk (Stavropol Territory) and investment priorities. These investments are Kingisepp (Leningrad Region). This enabled made on a co-financing basis (public-private us to provide hockey and figure skating and private-NGO) and projects are ongoing tuition for 1,300 children. Sports centers have in all of our operating regions. also been built in Kovdor (Murmansk Region), Belorechensk (Krasnodar Region) and The commitment that we give local Kedainiai (Lithuania). communities is that we will provide stable employment, meet all local tax and These venues together with the more than environmental obligations and pay industry 60 smaller facilities built and reconstructed leading salaries. These decisions are open (sports grounds, gyms, soccer fields) have to scrutiny from within and outside the radically improved levels of access to sport Group, including from local stakeholders, for young people in these communities. international experts, academics and all We are currently planning to build facilities relevant government authorities. in other locations over the next few years.
52 EuroChem Sustainability Report 2015 Introduction
As well as the infrastructure, we have In Berezniki, the heart of Russia’s traditional provided a pathway for those taking part potash region, our Usolskiy operations will Case study Economic sustainability in regional sport to transition to international create up to 3,000 new jobs in the region. In and elite level. For example, the ‘EuroChem total, the scope of the company’s corporate Cup’ International Ice Hockey Tournament responsibility includes two corporate towns has been held for four years in for 14,000-15,000 people. Novomoskovsk. In 2015, 10 teams from Russia, Finland, Lithuania, Switzerland, Both projects will have a major positive effect Belgium and Germany took part. on the local economies. They will provide high quality employment and living conditions We have also supported the construction for local communities and bring motivated of ‘SKA St. Petersburg’, a specialist school and educated people, such as engineers for children and young people that nurtures and mining specialists into these regions. Olympic hopefuls. This provides professional coaching and training for our network of In 2015, EuroChem supported the regional hockey schools. development of master plans for Kovdor environmental responsibility and & safety Health and Kingisepp in Russia and for Karatau in Revitalizing the water These investments have had a significant Kazakhstan. The plans and resulting and sewerage system and positive impact on communities and regeneration projects were developed with young people – creating new hockey local government agencies and the existing in Novomoskovsk champions and hockey ‘capitals’. We have communities. In particular, the master plan also seen improvements in child well-being for Kingisepp, near our Phosphorit plant, Our Novomoskovskiy Azot plant in Novomoskovsk that have been registered will identify investment and development manufactures and distributes ammonia, by the Ministry of Health. priorities. Other partners include the urea, and mineral fertilizers. It is one of Urbanika Institute of Territorial Planning and Russia’s largest chemical plants and Committed to responsible urban the St. Petersburg Construction Bureau, has had a close relationship with the development responsible for renovating famous buildings city of Novomoskovsk since opening In 2015, our ‘Comfortable Urban Environment such as the Naval Cathedral in Kronstadt, in 1933. The city itself has a population for Living’ project, won the ‘Best program and the Mariinsky Theatre and Zenit Stadium of 130,000 and is home to many of the promoting corporate charity policy and social in St. Petersburg. The master planning group plant’s employees. The company has investments’ award. This was part of has welcomed comments and ideas from invested in leisure, education, transport Social responsibility ‘Corporate Charity Leaders 2015’, organized local residents. and healthcare facilities over the years, by the Russian business paper, Vedomosti, however, recently, it has been PricewaterhouseCoopers and Donors Forum. instrumental in averting a major environmental incident. To support our VolgaKaliy potash operation, we are doubling the size of the existing town The city’s water and sewerage of Kotelnikovo. The new garden city provides treatment system was constructed in homes, schools, and medical and sports the 1930s and was gradually developed facilities for more than 10,000 people and has as the city grew. In the early 1990s received awards for its design. sub-standard concrete pipes were installed that rapidly deteriorated, leading to leaks and soil subsidence. This could potentially have escalated
into a major environmental hazard, Additional information however in 2010, EuroChem teamed up with the city authorities to invest in a major upgrade of the pipework and water management systems. This project continued in 2015, with further expansion of the pipe, pumping and treatment network.
EuroChem Sustainability Report 2015 53 Additional information Independent judgement on assurance
To: stakeholders at EuroChem (2) attest the Report against the Global • Took into consideration positive audit results Reporting Initiative Sustainability Reporting for the quality management systems, Objectives Guidelines (GRI, version G4-2013, option environmental and energy management Bureau Veritas Certification Rus on demand of ‘core’) for sustainable development reporting systems, professional health and safety MCC EuroChem (hereinafter the ‘EuroChem’, as well as run a spot check of completeness management systems, certified in accordance ‘Company’) performed an independent and authenticity of indexes in accordance with the ISO 9001, ISO 14001 and OHSAS verification of its report on sustainability and with the GRI requirements; 18001:2007 international standards. social responsibility based on the AA1000 • Checked the processes of collecting, Assurance Standard 2008 and AA1000 (3) evaluate stage and quality of involvement processing, documenting, transferring, Accountability Principles Standard 2008 of the stakeholders in the report preparation analyzing, selecting and consolidating as well as on the GRI G4 Global Reporting in accordance with the AA1000SES:2011 Report data, existing in EuroChem. Initiative Sustainability Reporting Guidelines (Stakeholder Engagement Standard) of the • Verified validity of statements, claims and from May 21, 2013. Institute of Social and Ethical Accountability; information presented in the Report by visiting EuroChem social, operational and This independent assurance refers to (4) provide advice on developing corporate innovation facilities as well as by the EuroChem Sustainability Report 2015 social reporting management. interviewing representatives of the ‘Creating quality environment for life. Kingisepp city authorities and the Director Sustainability Report. 2015’ (hereinafter the Assurance Methods of the Ice Palace sports center. ‘Report’). Information and its presentation and Executed Services • Analyzed mass media data selection and are an exclusive liability of the EuroChem Bureau Veritas Corporation Rus performed third parties’ released statements that management. Bureau Veritas Certification the following actions as a part of the illustrate commitment of EuroChem to its Rus was not involved in the preparation of independent verification: mission and values in terms of sustainable the report and is responsible for the work • Interviewed P.I. Kravtsov, Administrative growth, as references for the Report’s undertaken to provide assurance for this director of IG Phosphorit LLC; conclusions validity. Report only to the EuroChem to the extent V.V. Kuznetsov, Chief specialist of • Analyzed the Report and information of the approved work specification. Bureau EuroChem, as well as heads of various from the corporate website against the Veritas Certification Rus holds no responsibility Company divisions, to form a clear view AA1000AS Standard, GRI G4 guidelines for any other judgement and before any party of essential socioeconomic, ecological (principles of inclusiveness and materiality for decisions taken, postponed or canceled andinnovative aspects of the Company’s as well as principles of the report quality basing on this assurance. operations, intents, commitments, priorities assurance: balance, comparability, in the field of sustainable growth, methods accuracy, timeliness, clarity, reliability Assurance Scope and rates of reaching these goals. and truthfulness). Work frame and methods were defined after • Interviewed Ye.G. Antonova, the First • Checked availability of the Report to all discussing then with EuroChem and are as Deputy Head of the Kingisepp Municipal stakeholders and the feedback mechanism follows: District Administration for local self- efficiency. (1) attest accuracy and authenticity of data administration and safety. and information included in the report, • Analyzed the EuroChem approach to The work was carried out in accordance with underlying systems and processes of engaging and considering opinions and the Bureau Veritas guidelines and procedures gathering, analyzing and reviewing expectations of the stakeholders by for external assurance of Sustainability information of the year 2015 in accordance interviewing persons responsible for the Reports based on the existing best practices with the AA1000AS standard and utilizing dialog with such parties, holding meetings in the field of independent assurance. main principles set forth in the with representatives of some stakeholders, AA1000APS standard: studying selected documents that confirm The work was planned and executed in the • INCLUSIVITY (involvement of stakeholders), such interaction in 2015. way to provide sufficient but not absolute • MATERIALITY of information provided on • Studied selection of documents and data assurance level, that provides a reasonable the sustainability index, that reflects efficiency of socioeconomic, basis for future conclusions. • RESPONSIVENESS to the stakeholders’ environmental and innovative management requests and comments; systems existing in EuroChem.
54 EuroChem Sustainability Report 2015 Introduction
Assurance Level and content, proposals and guidelines, personnel; Basis of our Opinion amendments and additions included in the • a meeting with the First Deputy Head Economic sustainability Account must be taken that the performed Report as a result of interaction). of Kingisepp Administration about the spot check of the Report information provides • We assessed internal and external audit Company’s participation in the social lower level of assurance than a full data undertaken in respect of the Company’s programs of the operation area; check. Limited assurance level is specified certified management systems. • a visit to the community liaison office for in the ISAE-3000 International Standard for • We reviewed the draft version of the ammonium production, the construction assurance performance. Report to identify potential inaccuracies, site of the EuroChem-Northwest, the Ice inconsistencies and unsubstantiated Palace sports center and an interview Assurance type and level statements. with its management. This assurance is based in the following • We reviewed a selection of media and online provisions of the AA1000AS (2008) standard: data referring to the Company’s assurance In the preparation of our assurance, in • Attestation type - 2 (‘Type 2 - activities, and third-party statements addition to the information contained in the Accountability Principles and Performance describing the Company’s commitment to Report, we also relied on the information Information’), requires estimation of the its corporate social responsibility values, as published on the Company’s corporate reporting principles observance combined evidence to verify validity of the statements website at http://www.eurochem.ru/, in the with estimation of the Report performance made in the Report. federal, regional and local press (Argumenty i environmental responsibility and & safety Health indicators (data, claims) accountability; • We requested the Company for clarification Facty, Moscovskij Komsomolets, EuroChem • Assurance level - ‘moderate’. of certain clauses of the Report. corporate newspaper, local newspaper • We performed selective evaluation and Vremya), on TV, on official web sites of Data gathered in the course of work give recalculation of certain data indicators that municipal administrations in the regions of the a rather high level of confidence to draw disclose identified key aspects in order to Company’s operations (http://www.nevinsk. conclusions on the ‘moderate’ assurance confirm sources, accountability and ru/, http://www.nmosk.ru/ and http://www. level, type 2, in accordance with the completeness of reported information. kingisepp-mo.ru/). definitions from the clauses 2.1-2.2 of the • We verified information published on the AA1000AS Standard regarding each of the Company’s corporate website and other We began our assurance procedures before AA1000APS principles (Inclusiveness, online sources against the AA1000SES the full version of the Report was officially Materiality, Responsiveness). (2011) and the GRI recommendations. published on the corporate website of the • We evaluated availability of the Report to Company. Assurance Methodology all stakeholders, and effectiveness of the and Coverage existing feedback mechanisms. Our Observations. Assurer’s Opinion Social responsibility • We interviewed the Company’s executives Following the adopted methodology and and employees to identify how the Company This work is based on the information taking into account the scope of our work accounts for key aspects of its corporate provided by the EuroChem executives and mentioned above, we are in a position to social responsibility when building a a range of stakeholders, on the open source express our general opinion: long-term business strategy, and how data and analytical validation procedure. • information and data included in the scope these aspects are integrated into the of our assurance are correct, reliable and Company’s business processes. We verified adequacy of a number of free of substantial errors or false statements; • We confirmed the achievement of the representations, statements and data included • information is presented in a clear, 2015 objectives, including the objectives in the Report by applying social reporting comprehensible and accessible form; in corporate social responsibility set by assurance procedures and guidelines of • the Report provides fair representation the Company. Bureau Veritas Certification Rus, including: of the EuroChem’s activity for 2015; • We assessed the Company’s internal • a visit made in June 2015 to review the • information mentioned in the Report allows regulatory documents (corporate production and social infrastructure readers to form a balanced opinion on the
procedures, standards, regulations, facilities of Phosphorit Industrial Group performance and results for the reporting Additional information guidelines, etc.) and data arrays (including LLC, a subsidiary of the Company located period; primary information sources) defining in Kingisepp, Leningrad Region; • EuroChem has installed corresponding effectiveness of the Company’s business • meetings and interview with the systems for data collection, accumulation practices in corporate social responsibility. Administrative director of the enterprise, and analysis; • We assessed effectiveness of the Head of the OHS Department, Head of • the Report in general provides adequate Company’s management approach with the Public Relations Department, HR scope on the performance indicators of regard to economic, environmental and and Operations management; the Company from the perspective of the social performance. • a visit to the Production Departments, corporate social responsibility and • We studied documents of the Company’s observation of industrial processes and sustainability. interaction with its stakeholders (information on-site conversation with the production
EuroChem Sustainability Report 2015 55 Additional information
Independent judgement on assurance continued
• EuroChem has adopted effective Principle 2. Materiality infrastructure development that influences management systems that enable it of provided information living standards for employees and their to identify key economic, social and • The Report offers a balanced and well- families as well as for all population from environmental aspects of operations; grounded presentation of key economic, the region of operations. to plan, manage and improve related social and environmental aspects of the • The Company takes into accounts the processes; to identify stakeholder Company’s operations that determine interests of society, takes responsibility expectations in respect of these aspects sustainability index of EuroChem. for influencing consumers, suppliers, and promptly respond to them. • All significant information, including employees, shareholders, local • social reporting management systems are statements about substantial facts, the communities and other public fully supported by the Company’s executives, Company’s major transactions among stakeholders. This activity exceeds its mission, policies and resources. others, is published in the official corporate legislation requirements and asserts that web portal as well as in the Company’s EuroChem voluntarily takes extra measures Report Compliance with three Annual Report ‘Providing sustainable to improve living standards of its employees principles of AA1000 APS growth’ (Annual report and financial and their families, as well as of local Principle 1. Inclusivity statement. 2015). community and community in general. • EuroChem interacts with an extremely wide • The Report discloses significant information • Adjusted quality control system, high range of stakeholders. The most prominent about maintaining economic stability and level of service, increased contact with are employees and their families, stock developing investment programs, develops consumers as well as reaction to their holders and investors, business partners auto-evaluation on gaining the perspective requests play increasing role in creating (clients, suppliers, subcontractors), trade sustainability objectives and social the Company’s competitive strength. union, consumers of products and services, commitment for 2015, evaluates social • People’s right for positive environment state authorities, mass media, civil society and regional importance of investments, is ensured by the Company’s planned organizations, local government authorities, sets objectives for public reporting environmental compliance. local citizens, federal, regional and system optimization. • Employees’ interests and expectations are international stakeholders. • The information provided on the key taken into account by implementing the CEA • The information presented in the Report aspects of the Company’s sustainable between EuroChem and the trade union. and the direct and indirect data we development in 2015 can be easily traced • Social programs resulted in employees’ obtained demonstrate that the interests of back to the processes of data selection, increased education level, decreased stakeholders for the Company’s operations processing, transmission, and presentation. prevalence and industrial accidents, are taken into account at all stages of the • The Report covers many GRI performance improved social climate in the regions social process. indicators related to the aspects set as of operations. • Main methods of information distribution substantial by the Company, and explains and interaction with stakeholders are absence of information on certain GRI Bureau Veritas Certification press releases, press conferences, media performance indicators, non-applicable Rus is pleased to note that: publications, info messaging, corporate web to the Company’s operations. • The management system of EuroChem portal, consultations, negotiations, surveys, • The information presented in the Report includes resources and instruments that work groups, ongoing committees etc. and on the corporate website is relevant allow to identify key socioeconomic, • In 2015 EuroChem kept implementing for stakeholders as it can influence their environmental and innovative aspects, to strategic growth programs focused on future decisions and behavior towards plan, manage and improve related entering Top-5 worldwide leading companies the Company. processes, to determine and respond to in industry of fertilizer manufacturing. • The Report provides sufficient information stakeholders’ expectations for such • The Company performs social programs about the Company’s compliance to the aspects. to improve employees’ living standards, Russian legislation, international standards, • The information on material sustainability creates favorable environment for business regulatory acts and industry standards for aspects is presented in a sufficient level for sustainability. the agrochemical sector. key reporting lines. The Company’s Sustainability Report is an efficient Principle 3. Responsiveness to instrument for enhancing the management the stakeholders’ expectations quality. • The Company showed its ability to react • EuroChem attends to create efficient and to any stakeholders’ justified requests. safe workspace, professional growth and • Reaction to the region’s demands is social assistance for its employees, effected through funding and effecting environmental protection, supports various social projects. EuroChem education, culture and sports. implements sports, educational, • All sustainability actions are based on cultural programs, invests in the social continuous interaction with stakeholders
56 EuroChem Sustainability Report 2015 Introduction
and are designed to create and maintain Compliance with the GRI G4 • As of now, we are not aware of any matters long-term trust relationships. The Company Principles for Defining Report that remained undisclosed or any information Economic sustainability considers corporate governance Content and Principles for sources where the Company leaves relevant arrangements as an instrument to increase Defining Report Quality stakeholder inquiries unaddressed. transparency of management processes, Stakeholder Inclusiveness as a means to balance all stakeholders’ • The information provided in the Report and Sustainability context interests in order to provide continuous the data we sourced, directly or indirectly, EuroChem demonstrates its understanding of growth and sustainability. prove that, when drafting the Report, the corporate social responsibility and sustainability • In the reporting year EuroChem performed Company was effectively responding to the by providing unbiased information on a wide a large amount of work to implement interests of its key stakeholders. range of economic, environmental and social innovative technological, managerial and • The Company identified key stakeholder matters in its Report. The Report reasonably engineering solutions. groups and determined regular interaction covers key sustainability topics, including • Obtained results allow EuroChem to fulfill methods. It seeks to engage stakeholders supply chains, associated targets and its strategic objectives in maintaining in developing and implementing the criteria indicators, and their impact on the Company’s financial and socioeconomic stability, high to determine the relevance and significance long-term development, risks, opportunities, level of social protection in accordance with of all material aspects. The Company strategic and operational decision-making. the corporate social standards. hasadopted a consistent and coherent environmental responsibility and & safety Health • The Company’s social responsibility activities approach to address all material Materiality are systematic and targeted to create stakeholder engagement issues • The Company maintains consistency of efficient and safe workspace, social and work out solutions thereto. the methodology and procedures used for assistance for its employees and their • The selection of topics the Company determining material sustainability aspects families, maintain positive social environment. chooses to respond to following a related to its operations, products and • The Company consistently evaluates stakeholder engagement exercise is geographical footprint. Over the reporting qualitative and quantitative aspects of its well-reasoned. period, the material aspects were updated social programs. Such evaluation is held in • The Report highlights the allocation of on an ongoing basis. cooperation with concerned municipal resources to deliver on the Company’s • The Report offers a well-balanced authorities, organizations and community obligations and respond to the material presentation of relevant economic, groups. interests (issues) of stakeholders. social and environmental aspects • The Company discloses information in • The means of stakeholder engagement deemed material by the stakeholders. accordance with the current legislation. and communication have been determined • The aspects are prioritized based on external
Information is disclosed via the EuroChem and incorporated in the Report. They and internal business environments, risks, Social responsibility official web site, digital and printed media, include reports (including this Report), key success drivers, stakeholder interests, top management’s public interviews and newsletters, press releases, interviews, applicable laws and other regulations that press conferences. negotiations, exhibitions and conferences, may be of strategic importance to the bilateral visits, meetings, liaison offices, the Company and its stakeholders. Report Compliance to the Global corporate newspaper and website, audits • The emphasis laid on specific topics within Reporting Initiative ‘Sustainability and inspections, and other PR frameworks. the Report is in direct proportion to their Reporting Guidelines’ (GRI – G4) • EuroChem has an established track record relative significance (materiality). The Report The Report takes into account the of engaging its stakeholders in the outlines key 2015 developments that might recommendations of the GRI Sustainability preparation of corporate social affect the decision-making process and Reporting Guidelines, AA1000 Stakeholder responsibility reports, thereby ensuring stakeholder behavior towards the Company, Engagement Standard, Russian Business reporting continuity. or constitute material economic, Social Charter and covers the most key GRI • Stakeholder engagement processes used environmental and social impacts. elements and performance indicators. The as a basis for decision-making while
Report was created in accordance with the drafting the Report comply with the Completeness Additional information GRI G4 Guidelines, CORE option. requirements for the Report’s scope and The Report discloses material information for boundary. The Company reaffirmed its the respective reporting period in compliance Information on the Company’s operations is commitment to information transparency with the principles of materiality, sustainability reinforced with all applicable data. Certain by publishing a draft Report on its website, context and stakeholder inclusiveness. examples and numbers are cross-referenced so that the stakeholders could provide their It covers all business units meeting the with available sources. The operational level feedback on the disclosure of key Company’s direct control or significant of attestation was supported by analysis of corporate social responsibility aspects. influence criteria. The data that might provided documents as well as by visits to influence the stakeholders’ assessments the Company’s various departments and or decisions are duly included in the Report. subsidiaries, a range of social facilities.
EuroChem Sustainability Report 2015 57 Additional information
Independent judgement on assurance continued
Balance Reliability General Opinion on the Report The Report reflects both positive aspects The Company’s procedures to gather, Following the adopted assurance of the Company’s performance in the process, compile, analyze and record methodology and taking into account the reporting period and unresolved issues, information used to draft the Report ensure scope of our work, we are in a position to providing a well-grounded and the required quality of disclosure of the express our general opinion on the Report: comprehensive assessment of the Company’s material sustainability aspects • The Report was drafted in accordance Company’s sustainability achievements. and performance indicators. The information with the Global Reporting Initiative’s in the Report can be traced back easily Sustainability Reporting Guidelines GRI Comparability enough to the original source or EuroChem’s G4 and corresponds the Core information The data and indicators featured in the internal reports. We are not aware neither of disclosure option. Report were sourced in accordance with any unsubstantiated performance data in the • The Report accurately reflects the reporting the universal GRI methodology. The material Report, nor of any facts that could challenge period’s key developments, performance changes (aspect boundaries, scope) are the reliability of the data and indicators indicators and development trends properly outlined. The Report’s structure provided in the Report. regarding corporate social responsibility. displays continuity. It allows the stakeholders • The Report reveals the links between the to compare the Company’s sustainability Completeness and accuracy of Company’s strategy, corporate governance achievements against its own historical the disclosed information as per and performance, as well as the prevailing performance and against other national the GRI Guidelines. social, environmental and economic and international companies. • The Report provides information on all conditions. Standard Disclosures (both General and • The Company strives to enhance information Accuracy Specific), including Disclosures on transparency concerning corporate social The Report features data that were calculated Management Approach and Indicators responsibility. Qualitative affirmations are in or have been consistently measured. The (as per the selected Core option). line with the Report’s quantitative information methods employed by the Company to • The Company identified performance and other public data. gather, compile and analyze information indicators linked to the material aspects. • The Company continued to improve and generally ensure the required accuracy. It disclosed the identified indicators as streamline its corporate social responsibility The qualitative information is clear and prescribed by the second part of the GRI strategy in the reporting period, seeing it as detailed enough. The margin of error for G4 Guidelines (Implementation Manual). a tool to deliver on its sustainability strategy. input data is within the acceptable limits. • The Company has efficient management Extent and Quality of Stakeholder systems in place, enabling it to identify Timeliness Engagement as per the AA1000 material economic, social and environmental The Report was drafted as per the corporate Stakeholder Engagement sustainability aspects with a view to planning, annual reporting schedule, leaving sufficient Standard 2011 managing and improving relevant processes time for stakeholders to make informed The Company’s public reporting meets and to determine stakeholder expectations decisions. The information in the Report the requirements of AA1000SES(2011). in respect of the material aspects to quickly clearly indicates the time period it covers. The Company continues to use the respond to them in the course of business. stakeholder identification methodology • The management systems designed to Clarity based on a multi-criteria approach, including organize, manage and control corporate The Report contains the level of information dependence, responsibility, influence, etc. social reporting on the part of the required by the stakeholders, but avoids Engagement of stakeholders in corporate Company’s executives are complemented excessive detail. It is comprehensible, reporting procedures is planned well in by corporate policies and procedures, sufficiently unbiased, informative and advance. Stakeholder engagement powers as well as allocated resources. well-balanced in terms of content. The and responsibilities of the Company’s • With their commitment to the principles information and data are presented in executives and employees are clearly of corporate social responsibility, the the Report in such a manner as to enable defined, and the required resources are Company’s management are directly the stakeholders to identify trends in the allocated. The Company monitors and involved in the preparation of the Report. Company’s sustainability performance, and updates the key interests, needs and • Minor inaccuracies and quantitative analyze the achievements and unresolved expectations of its stakeholders on a regular discrepancies randomly identified in issues through the lens of economic, basis to identify priorities and the best the draft Report were not critical and did environmental and social sustainability aspects. approaches to stakeholder engagement, not distort the information provided in the while also assessing stakeholder Report at large. They had no material impact engagement efficiency. on stakeholders’ ability to assess the Company’s performance. All of the above inaccuracies and discrepancies were duly rectified in the final version of the Report.
58 EuroChem Sustainability Report 2015 Introduction
Recommendations for Corporate Statement by Bureau Veritas Public Social Reporting Certification Rus on independence, Economic sustainability Based on the work conducted, we impartiality and competence recommend EuroChem to assess the Independent international company Bureau following lines of action with regards to Veritas Group implemented the Ethics Code in improve social reporting quality: all business areas with the regard to maintain • Design unbiased efficiency assessment high ethical standards in day-to-day operation criteria for the Company’s various social of all its employees including employees of the programs and development projects. Bureau Veritas Certification Rus JSC. • Share sustainability and social responsibility experience with designers of Bureau Veritas Certification Rus is an the Industry addendum to the GRI independent professional services company Guidelines for agrochemical industry. that specializes in providing services on • Switch to the EXTENDED reporting option accredited certification of various in accordance with the GRI G4 Guidelines. management systems.
Assurance Limitations The company holds special responsibility in environmental responsibility and & safety Health • Assurance didn’t take into consideration regards of preventing conflicts of interests. any functional event indicators that are None of the assurance team members has beyond the time frame of the current 2015 business relations with EuroChem, its reporting cycle. Executives and Managers, except for • Any statements that expressed the contractual relationship. Company’s opinions, convictions or intents for any actions in the future were not taken Current assurance was conducted into account for this assurance. independently; the parties were not • No financial indicators verified by other engaged in the conflict of interests. independent auditors were taken into account for this assurance. Bureau Veritas Certification Rus officially declares that this Assurance is an independent assessment of a third-party
auditor. Bureau Veritas Certification Rus has Social responsibility no commercial interest in the business of EuroChem, except for the assurance services provided.
Assurer: Bureau Veritas Certification Rus JSC
Saint-Petersburg, November 02, 2016
Leading Auditor
Georgiy Klyonov, Additional information Prof. Doctor of Engineering Science
EuroChem Sustainability Report 2015 59 Additional information GRI disclosure tables
Summary table of standard disclosures under GRI G4 reporting The Global Reporting initiative (GRI) is a global, multi-stakeholder organization that has developed guidelines for sustainability reporting. Known as the G4 Guidelines, these include a list of indicators that companies should consider reporting against. The index below lists each of the GRI G4 indicators and whether we report against them.
Indicator Response Indicator Response Indicator Response Strategy and analysis Report profile Ethics and integrity G4-1 ✓ G4-28 ✓ G4-56 ✓ G4-2 ✓ G4-29 ✓ G4-57 ✓ Organizational profile G4-30 ✓ G4-58 ✓
G4-3 ✓ G4-31 ✓ Disclosures on G4-4 ✓ G4-32 ✓ management approach G4-5 ✓ G4-33 ✓ G4-DMA ✓ G4-6 ✓ Governance Indicators by aspects G4-7 ✓ G4-34 ✓ Category: Economic G4-8 ✓ G4-35 ✓ Economic performance G4-9 ✓ G4-36 ✓ G4-EC1 ✓ G4-10 ✓ G4-37 ✓ G4-EC2 ✓ G4-11 ✓ G4-38 ✓ G4-EC3 ✓ G4-12 ✓ G4-39 ✓ G4-EC4 ✓ G4-13 ✓ G4-40 ✓ Market presence G4-14 ✓ G4-41 ✓ G4-EC5 ✓ G4-15 ✓ G4-42 ✓ G4-EC6 ✓ G4-16 ✓ G4-43 ✓ Indirect economic impacts
Identified material aspects G4-44 ✓ G4-EC7 ✓ and boundaries G4-45 ✓ G4-EC8 ✓ G4-17 ✓ G4-46 ✓ Procurement practices G4-18 ✓ G4-47 ✓ G4-EC9 ✓ G4-19 ✓ G4-48 ✓ Category: Environmental G4-20 ✓ G4-49 ✓ Materials G4-21 ✓ G4-50 ✓ G4-EN1 ✓ G4-22 ✓ G4-51 ✓ G4-EN2 ✓ G4-23 ✓ G4-52 ✓ Energy Stakeholder engagement G4-53 ✓ G4-EN3 ✓ G4-24 ✓ G4-54 ✓ G4-EN4 ✓ G4-25 ✓ G4-55 ✓ G4-EN5 ✓ G4-26 ✓ G4-EN6 ✓ G4-27 ✓ G4-EN7 ✓
60 EuroChem Sustainability Report 2015 Indicator Response Indicator Response Indicator Response Introduction Water Labor/Management relations Human rights grievance G4-EN8 ✓ G4-LA4 ✓ mechanisms G4-EN9 ✓ Occupational health and safety G4-HR12 ✓ G4-EN10 ✓ G4-LA5 ✓ Society Biodiversity G4-LA6 ✓ Local communities G4-EN11 ✓ G4-LA7 ✓ G4-SO1 ✓ G4-EN12 ✓ G4-LA8 ✓ G4-SO2 ✓ G4-EN13 ✓ Training and education Anti-corruption G4-EN14 ✓ G4-LA9 ✓ G4-SO3 ✓ Emissions G4-LA10 ✓ G4-SO4 ✓ G4-EN15 ✓ G4-L A11 ✓ G4-SO5 ✓ Economic sustainability G4-EN16 ✓ Diversity and equal opportunity Public policy G4-EN17 ✓ G4-LA12 ✓ G4-SO6 ✓
G4-EN18 ✓ Equal remuneration for Anti-competitive behavior G4-EN19 ✓ women and men G4-SO7 ✓ G4-EN20 ✓ G4-LA13 ✓ Compliance
G4-EN21 ✓ Supplier assessment G4-SO8 ✓ for labor practices Effluents and waste Supplier assessment for G4-EN22 ✓ G4-LA14 ✓ impacts on society G4-EN23 ✓ G4-LA15 ✓ G4-SO9 ✓ G4-EN24 ✓ Labor practices grievance G4-SO10 ✓ environmental responsibility and & safety Health mechanisms G4-EN25 ✓ Grievance mechanisms for G4-LA16 ✓ G4-EN26 ✓ impacts on society Human rights Products and services G4-SO11 ✓ Investment G4-EN27 ✓ Product responsibility G4-HR1 ✓ G4-EN28 ✓ Customer health and safety G4-HR2 ✓ Compliance G4-PR1 ✓ Non-discrimination G4-EN29 ✓ G4-PR2 ✓ G4-HR3 ✓ Transport Product and service labeling G4-EN30 ✓ Freedom of association and G4-PR3 ✓ collective bargaining Overall G4-PR4 ✓ Social responsibility G4-HR4 ✓ G4-EN31 ✓ G4-PR5 ✓ Child labor Supplier environmental Marketing communications G4-HR5 ✓ assessment G4-PR6 ✓ Forced or compulsory labor G4-EN32 ✓ G4-PR7 ✓ G4-HR6 ✓ G4-EN33 ✓ Customer privacy Security practices Environmental grievance G4-PR8 ✓ G4-HR7 ✓ mechanisms Compliance Indigenous rights G4-EN34 ✓ G4-PR9 ✓ G4-HR8 ✓ Category: Social Assessment Labor practices and Additional information decent work G4-HR9 ✓
Employment Supplier human rights Response key G4-LA1 ✓ assessment Fully reported ✓ G4-LA2 ✓ G4-HR10 ✓ Partially reported ✓ G4-LA3 ✓ G4-HR11 ✓ Information not reported* ✓
*Not considered material to business operation
EuroChem Sustainability Report 2015 61 Additional information Key facts
Health, safety EuroChem’s global Economic sustainability and environment ranking
Non-recycled Customers EBITDA (US$) water -10 % globally >6,000 (+4%) 1.6bn consumption (per tonne of production)
Air emissions (per tonne of -10 % production) Number of Total sales countries >100 (US$) 4.5bn consuming EuroChem products Lost-time injury +23% frequency rate (per 1 million % of world’s Total products man-hours) production 2.2% sold 18 MMT of fertilizers ISO used in (since 2009) agriculture 9001 (in nutrient content)
ISO (since 2009) 14001 Globally EBITDA in potash Top 5 margin 35% reserves
OHSAS (since 2009) 18001
Social responsibility
Employees Investment (+4%) 23,459 in our 12m communities and charities (US$)
62 EuroChem Sustainability Report 2015 Awards Introduction Economic sustainability
EuroChem’s CSR program EuroChem’s Sustainability Report recognized as best in Russia recognized as best in Russia
The ‘Comfortable Urban Environment for Living’ program won EuroChem’s Sustainability Report was recognized as the best the all-Russian ‘Corporate Charity Leaders 2015’ contest, social report in Russia at the XII Open competition of joint-stock organized by Vedomosti, the Russian business daily, PwC companies within the International investment forum and Donors Forum. ‘Sochi-2015’. environmental responsibility and & safety Health
Recognition for ‘high quality Association of Directors for of sustainability reporting’ Communications and Corporate Media of Russia (AKMR) awards EuroChem was recognized in the ‘High Quality of Sustainability
Reporting’ category in Russia by the Russian Union of EuroChem’s corporate newspaper and video received awards Social responsibility Industrialists and Entrepreneurs. from the Association of Directors for Communications and Corporate Media of Russia (AKMR).
This report has been reviewed and certified by the Russian Union of Industrialists and
Entrepreneurs. Additional information
EuroChem Sustainability Report 2015 63 Corporate information
This document covers the calendar year The performance data relates to all sites Contacts 2015. The content and data continues on operating in 2015, excluding our joint-venture from that provided in the 2014 report. This in China, our planned site in the US and the Vladimir Torin document covers all current operating sites. activities of our new US distribution business. Head of Communications, Russia and CIS It also refers to the activities of employees In most cases the data is linked to tonnes of and contractors at these sites as well as production, a EuroChem KPI. This allows us Vladimir Kuznetsov interactions with local communities, to maintain continuity with previous reports, Social Responsibility government agencies, customers, suppliers particularly as the business has grown and and other key stakeholders. we have added new production and Tel.: +7 (495) 795 2527 distribution capacity. [email protected] Since 2013, we have reported in accordance with the ‘core’ requirement of the GRI G4 The data used in the report is derived from Guidelines. The latter requires us to identify our management information system. Where and disclose aspects of sustainability that conversion factors have been used, these are we assess to be of material importance to stated within the document or the data book the business. This report also follows the GRI published separately. G4 ‘core’ and its conventions. It describes how we decide on material issues, There has been no restatement of information incorporating the views of our stakeholders, contained in previous reports. key changes in the business and the territories in which we operate, as well as a review of the wider business and regulatory environment for the agrochemical industry.
64 EuroChem Sustainability Report 2015
EUROCHEM Su s tainability REPOR T 2015
www.eurochemgroup.com