DRIVING SUSTAINABLE GROWTH
SUSTAINABILITy REpORT 2020 I OUR AppROACH Do not delete – required for Contents
Our Approach / II / III / IV 01
AT A GLANCE Fy2020 CONTENTS
SAFETY AND SECURITY REMAIN WE ARE DELIVERING WE ARE WORKING TOWARDS OUR PRIORITY, ALWAYS INNOVATIVE SOLUTIONS A DECARBONISED FUTURE I OurOur Approach FOR OUR CUSTOMERS At a Glance FY2020 IIFCFC A Message from our Chairman & CEO 0022 Who We Are 0033 Where We Operate 04 OurOur Stakeholders 06 29% TheThe Issues that Matter 08 Reduction in Serious Injury Case Rate A YearYear of Challenges 10 21% OurOur Sustainability Approach 11 to 0.16 per 200,000 hours worked Increase in Net Promoter Score OurOur Sustainability Scorecard 12 IIII SafeSafe and Responsible Business Operating with Integrity and Respect for All 15 ZERO Safety,Safety, Health and Security as a Priority, Always 22 11,500+ EthicalEthical and Responsible Supply Chains 28 Key safety controls verified through the FATALITIES 1,000+ IIIIII ClimateClimate Resilient Economic Growth Transitioning to a Low-Carbon Economy 31 Major Hazard Management program For three consecutive years WebGen™ blasts with first 40% StewardingStewarding Natural Resources 46 adopter customers New target to reduce operational SustainableSustainable Commercial Solutions 52 Scope 1 and Scope 2 emissions IVIV EmpoweringEmpowering Social Progress by at least 40% by FY2030, from Diverse, Inclusive Culture and Inspired Workforce 57 WE ARE BUILDING A DIVERSE, FY2019 levels7 Safe,Safe, Resilient and Thriving Communities 61 INCLUSIVE AND INSPIRED TEAM AboutAbout this Report 70 9% AssuranceAssurance Statement 71 Reduction in Scope 1 and Scope 2 25% greenhouse gas emissions Women in senior leadership1, achieving our 2020 target FOUR PROGRESSED AWARDS IMPLEMENTATION EIGHT 8 48% For design and improvements OF OUR TCFD POINT Ethnic and cultural diversity to industry for our FRAGTrack™ Improvement in employee in senior leadership aligned automated rock-sizing ROADMAP health score since 2018 to our revenue profile measurement technology
ENVIRONMENT WE HAVE DELIVERED A STRONG FINANCIAL PERFORMANCE WE ARE DRIVING SOCIAL IMPACT IN A CHALLENGING GLOBAL ENVIRONMENT FOR COMMUNITIES 1 Includes those acting in positions (less than 3 per cent). 2 Includes ammonium nitrate (AN) prill and solution 2 4 as well as emulsion products including bulk emulsion AN VOLUMES GEARING Global community and packaged emulsion, excluding Exsa volumes of investment and COVID-19 98 thousand tonnes. ZERO support package to support 3 Prior corresponding period. 3.83Mt 36.4% 4 Net debt/(net debt + equity), where net debt excludes lease SIGNIFICANT (down 4% on the pcp³) (up 1.5 points on the pcp) the most vulnerable liabilities, as disclosed within Note 3 to the financial statements. in the community 5 Equivalent to profit/(loss) before financing costs and income ENVIRONMENTAL Demonstrating resilience Within debt covenant tax, as disclosed in Note 1(b) to the financial statements, in a challenging year and target range before individually significant items. 6 Dividend amount/net profit after tax, before individually INCIDENTS significant items. UNDERLYING EBIT5 DIVIDEND 7 Applies to existing operations. Base year emissions will be recalculated consistent with emissions accounting protocols if structural changes occur such as acquisitions or divestments. $605M 33.0cps 8 Task Force on Climate-related Financial Disclosures. (down 9% on the pcp) 45% payout ratio⁶ A strong first half result followed by a $3.2M This report is part of our Annual Reporting Suite for focus on controllable factors to mitigate Distributed to communities globally the 2020 financial year (FY2020). You can find more COVID-19 impacts in the second half information about how we performed in our Full Year Results Investor Presentation and Annual Report. 02 ORICA Sustainability Report 2020 Our Approach / II / III / IV 03
A MESSAGE FROM OUR WHO WE ARE CHAIRMAN & CEO
Every day, all around the We are a world leader in blasting and To drive sustainable business growth productivity solutions. From the production and deliver environmental and social world, our people help and reliable supply of explosives and benefits, we look for opportunities to mobilise the vital resources initiation systems, to our suite of digital make a positive impact. Our focus is on that are essential to progress. solutions and blasting services, we help innovation and we continue to invest in extract and monitor resources safely, new digital and automated technologies, efficiently and responsibly. Our people – offering safer solutions to our customers engineers, scientists, technologists, that increase productivity while managing operators, business specialists and social and environment impacts. on-site crew – work together to support Fundamental to everything we do is the customers in open cut mines, underground diversity and expertise of our people. operations, quarrying, construction, and We work as one team and are always oil and gas projects. guided by our values.
We are proud to present our FY2020 Sustainability Report which details how our teams across OUR VALUES the business continue to make Orica a safe and responsible organisation. The report highlights how we are using innovation and our technology to deliver solutions to complex social and Safety is our priority. Always environmental challenges while supporting our people in an incredibly disruptive year. The most important 2020 has been a particularly challenging are helping our customers achieve better and, where possible, leveraging our existing thing is that we all return year. While the global COVID-19 pandemic blast and fragmentation outcomes. As we technology and capabilities. The power home, safely, every day. disrupted our operations, people and continue to make advances in automation, of this approach has been demonstrated communities in every country where we digitisation, wireless technology and data through our community response to the operate, we maintained our focus on analysis, we expect these products will help COVID-19 pandemic. We also significantly our number one priority – ensuring our deliver sustainable business growth and increased our community spend this year We respect people return home safely every day. environmental and social benefits for to $3.2 million. This includes providing vital and value all Orica and our customers. support to communities affected by natural We are pleased to report that, once again, 146 YEARS OF CUSTOMERS Our care for each disasters – most notably the catastrophic we had no fatalities, while our Serious other, our customers, bushfires in Australia and the destructive EXPERIENCE AND IN MORE THAN Injury Case Rate declined by 29 per cent We understand the benefits communities and the volcano eruption in the Philippines. over the year. This is the lowest level of a truly inclusive and diverse INNOVATION 100 COUNTRIES environment builds achieved in the past four years. workforce. Ethnic and cultural Looking ahead, we are focused on trusted relationships. accelerating our decarbonisation. We have In recognition of the strain on physical and diversity remain strong across set new climate change targets which will mental wellbeing caused by the pandemic the Group and we achieved our Together now be a key consideration in our decision and the lockdown of society, we also target to have one-quarter we succeed making. To underpin this commitment, provided online support seminars and female representation among we have strengthened the links between Collaboration makes programs for our teams around the world. our senior leaders. We have relevant executive remuneration and us better, individually We have made good progress to reduce our renewed our focus in this area climate change performance. and collectively. impact on the environment, having met or with a refreshed strategy and We thank our more than 13,000 employees exceeded several targets. Our operational new targets. LEADING and contractors for their hard work, Scope 1 and Scope 2 greenhouse gas (GHG) resilience and creativity working through ASX INDUSTRIAL 13,000+ emissions are nine per cent lower than last We published our fifth Modern Slavery what has been a uniquely challenging year. We act year, and we have reduced our total waste COMPANY EMPLOYEES Statement which, for the first time, addresses Together, we will build on the learnings of with integrity disposed by 12 per cent. Potable water use Modern Slavery requirements in both the this year, and advance our efforts to meet increased slightly this year due to disruptions We are open and United Kingdom and Australia. This year, the expectations of all our stakeholders to recycled water at Kooragang Island, honest, and we do we established a multi-function working ensuring we make Orica a better business. what is right. our most water intensive site. We are group, tasked with developing and committed to increasing our use of recycled implementing our Modern Slavery approach. water, as reflected in our FY2021 targets. We have identified areas of risk, not just in In addition to improving our own our own operations, but also throughout environmental performance, we are also our supply chain, with our Human Rights at We are committed working with our customers to support Work Policy also applying to all third parties Malcolm Broomhead to excellence their efforts. We do this by supplying we deal with. The team has a number of focus Chairman We take accountability solutions that enable them to work areas for the coming financial year, and we #1 GLOBAL SUPPLIER for our business and for more safely and efficiently. For example, will continue to report on our progress. delivering outstanding ™ OF COMMERCIAL EXPLOSIVES our products such as WebGen and In FY2020, we evolved our approach to results. GroundProbe’s monitoring systems are community engagement and investment delivering step-change improvements in towards more strategic support for the Alberto Calderon safety by keeping people out of harm’s local communities in which we operate Managing Director and CEO way, while BlastIQ™ and FRAGTrack™ 04 ORICA Sustainability Report 2020 Our Approach / II / III / IV 05
WHERE WE OpERATE
We are a diverse company, with operations across the globe. Our major manufacturing, office and customer supply operations where we have a significant workforce presence can be seen below. For a full list of our controlled entities, refer to our 2020 Annual Report.
NORTH AMERICA EUROpE, MIDDLE EAST & AFRICA ENGLAND
UNITED STATES UNITED STATES BULGARIA
x1
CANADA KAZAKHSTAN
x1 x1 x1
MEXICO PORTUGAL
x1 x1
RUSSIA LATIN AMERICA AUSTRALIA pACIFIC & ASIA SINGAPORE x1
SOUTH AFRICA CHILE AUSTRALIA x1 x1 x1 x2 x3 SWEDEN COLOMBIA CHINA x1 x1 x2 UNITED ARAB EMIRATES BRAZIL CHILE INDIA x1 AUSTRALIA x2 x1 ZAMBIA PERU INDONESIA x1 x1 x1
THE PHILIPPINES
x1
Major Operations
Head Office Ammonium Nitrate We also have a network of joint ventures, Regional Head Office Initiating Systems/Packaged Explosives ammonium nitrate emulsion plants and bulk depots strategically located to serve Customer Presence Sodium Cyanide our customers around the world. Technical/Monitoring Centre 06 ORICA Sustainability Report 2020 Our Approach / II / III / IV 07
WE ARE DEDICATED WE DELIVER SAFER SOLUTIONS OUR STAKEHOLDERS TO BUILDING SAFER, THAT ENABLE MORE EFFICIENT MORE RESILIENT AND AND SUSTAINABLE OUTCOMES WE CONTINUOUSLY IMPROVE WE WORK COLLABORATIVELY OUR PEOPLE ARE THRIVING COMMUNITIES FOR OUR CUSTOMERS AND EVOLVE OUR APPROACH WITH OUR SUPPLIERS TO OUR GREATEST ASSET AND PERFORMANCE ON MATERIAL IMPROVE SUSTAINABILITY SUSTAINABILITY ISSUES PERFORMANCE
SHAREHOLDERS SUPPLIERS EMPLOYEES LOCAL COMMUNITIES CUSTOMERS AND INVESTORS We procure goods and services from AND CONTRACTORS We actively engage our communities in our areas of We leverage investment in our core capabilities, We leverage investment in technology suppliers all over the world that support Our people are our greatest asset. operation and provide support through our local economic technology and innovation to deliver safer solutions and innovation to deliver strong our business. We set clear expectations With more than 13,000 employees, we contributions and by investing in community-based initiatives, that enable more efficient and sustainable outcomes economic, social and environmental with our suppliers and undertake due are committed to creating an inspiring, infrastructure and programs to deliver positive outcomes. for our customers. performance and maintain growth. diligence to ensure they meet our safety safe, inclusive and diverse culture that We work to continuously improve and and sustainability expectations. We will enables our people to achieve their full evolve our approach and performance continue to work collaboratively with potential. We create opportunities for on material sustainability issues, our suppliers to improve sustainability our people to learn, develop their skills $1.24B $3.2M $193M $297M including climate change, natural performance as part of our focus on and provide opportunities for reward Payments to Distributed to Dividends paid1 Taxes paid globally resources, community engagement ethical and responsible supply chains. and advancement within our business. employees communities and human rights. 1 Includes dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan (DRP).
GLOBAL FORCES SHAPING THE DECADES AHEAD O Our c o ar hap Macroeconomic forces are changing DIGITAL TRANSFORMATION SOCIAL CHANGE AND CHANGING COMMODITY DEMAND ENERGY TRANSITION AND a u r a a individual, national and regional outlooks. Technology is accelerating the pace DEMOGRAPHICS Population growth and urbanisation are CLIMATE CHANGE Geostrategic tensions are rising, as of change. The integration of advanced The world’s population is growing, driving continued demand. Commodities The transformation of the energy sector a c pa o o ha are the underlying risks associated technology and digitalised operations with evolving and rising stakeholder of the future will gain prominence through and low-emissions transition is underway, ah a with socio-political transition, resource is helping the industry to reduce expectations of business to contribute continued decarbonisation and electrification. driven by intensifying climate policy, constraints and climate change. operating costs, increase efficiencies to building a fair society. • The short term is clouded by COVID-19 advances in technology, changing investor Of the key megatrends presenting and remain competitive. Evolving and rising stakeholder but positive demand signals are evident sentiment and fundamental market shifts. major challenges to our sector and • Automation and robotics expectations for business to contribute • The world’s less developed regions, • Climate impacts on business models, government, industry and civil society • Artificial Intelligence (AI) fairly to society. including Africa, Asia and Latin America financial valuation, assets and reputation over the coming decade, four are will grow particularly relevant to Orica’s • Blockchain technology • Wealth and income inequality • Electrification and integration of • Asia continues to be a key driver work within the wider context renewable energy • Drones • Rise of populism and conflict for commodity demand growth of sustainable development. • Extreme weather events • 3D printing • Public sector debt burdens • Increasing demand for battery metals (lithium, cobalt, nickel) • Decentralisation • Intelligent buildings • Uncertain economic outlook • Increased scrutiny on • Increasing demand for copper, supported • Technological breakthroughs social performance by strong power grid investment • Carbon market opportunities • Coal demand to shift east 08 ORICA Sustainability Report 2020 Our Approach / II / III / IV 09
THE ISSUES THAT MATTER
We operate a complex, dynamic, global business with a broad range of stakeholders. More detail on our key stakeholder groups and our work to respond to their RESpONDING MATERIALITy interests is provided in our 2020 Annual Report. TO A yEAR OF ASSESSMENT CHANGE TOpICS Every year we review and revise our In FY2020, we conducted a new materiality materiality assessment to better understand assessment considering rising stakeholder FY2020 has been a year of unprecedented and reflect the topics that are material expectations in a rapidly changing global change and disruption. This has been to our business, proactively manage key context. We undertook primary research reflected in the results of our materiality sustainability risks and issues, and identify for the first time, offering key stakeholder assessment in which we identified new opportunities to create value for our groups, including employees at all levels, topics of importance to our stakeholders stakeholders. The results of our assessment an opportunity to participate in a materiality and placed greater emphasis and inform our strategic priorities, sustainability survey. The outcomes of the survey expectation on topics identified in approach and reporting. supported the assessment of our most previous assessments. This revealed: material sustainability topics. • Safety is and continues to be our priority for our people, customers, those who work across our broader SAFE AND EMPOWERING CLIMATE RESILIENT BUSINESS value chain, and in the communities Identification RESPONSIBLE SOCIAL PROGRESS ECONOMIC GROWTH PERFORMANCE in which we operate. BUSINESS • Review relevance of previous materiality assessments. • Action on climate change remains critical to our business as economies • Safety • Employee health • Climate change • Economic performance • Internal mechanisms (e.g. direct feedback, Group policy, material risks). continue to make progress in the • Product safety and wellbeing • Greenhouse gas • Business resilience transition towards a low-carbon future. • External frameworks (e.g. Global Reporting Initiative). and security • Talent attraction, emissions • Technology investment • Extreme weather events, and the retention and • Global and market trends. • Corporate governance • Environmental risk and innovation resulting impacts on safety, health, development • Ethical business and compliance • Customer experience wellbeing and environment, has put conduct • Diversity and inclusion • Resource efficiency a spotlight on disaster response • Sustainability as a driver • Community and crisis management and • Cyber security • Biodiversity of innovation engagement our preparedness to respond to • Supply chain • Circular economy • Energy affordability Prioritisation challenges and support our sustainability • Community investment customers and communities. • Human rights • Disaster response and • Our sector is under increasing scrutiny crisis management • Assessment of topic importance, frequency of exposure. • Information on our approach to engaging First transparency • Indigenous/First • Prioritised themes identified for validation. Nations Peoples and protecting Peoples engagement cultural heritage, as well as • Tax transparency community engagement more • Executive remuneration broadly, particularly in regional and remote locations.
Validation • Our people are integral to our business. While focus continues to be on employee health, the inclusion of • Internal management review and validate themes. wellbeing reflects the increased strain on mental health due to the • Input from senior leaders and Board Audit and Risk Committee. COVID-19 pandemic and acknowledges the impact of wellbeing on productivity and performance.
Review ALIGNING WITH GLOBAL GOALS • Direct stakeholder feedback on report. We are committed to playing our part in We seek to address the goals which are • Findings presented to functional business areas achieving the United Nations Sustainable most relevant to our business and where (e.g. Risk, Human Resources, Corporate Affairs). Development Goals (SDGs), a set of goals we believe we can make the most impact. adopted by the United Nations Member We have mapped out the SDGs that align States to support a better future for with our sustainability approach, goals Detailed information on these topics, as well as how we are managing them, can be found people and planet. and activities throughout this report. throughout this report. For our material topics and their boundaries please see our GRI Index. 10 ORICA Sustainability Report 2020 Our Approach / II / III / IV 11
A yEAR OF CHALLENGES OUR SUSTAINABILITy AppROACH
Throughout FY2020 we have faced unprecedented events that affected communities globally. By supporting the safe We are in a unique position to leverage on key sustainability topics also continue our expertise in technology and digital to evolve. The devastating impacts of COVID-19 continue to be felt around the world, and like many production of resources solutions to create safer and more To meet these changing expectations, businesses, we continue to navigate these challenges and are working to support our people that lift standards of living responsible solutions for our customers in FY2020 we developed a sustainability and deliver positive economic, social and and communities where we operate. and drive economic growth framework to drive deeper sustainability environmental contributions through engagement and outcomes across the around the world, we are our business activities. It was also a year of natural disasters as key controls across our sites that store with an Australian Parliamentary Inquiry helping ignite opportunities company. This focuses on areas that bushfires devastated parts of Australia ammonium nitrate. No material gaps were ongoing into the destruction of the matter most to Orica and our stakeholders and the Taal volcano erupted in the identified, and we provided assurance Juukan Gorge caves in Western Australia. for our customers, our people OUR SUSTAINABILITy FRAMEWORK where we have the expertise to make the Philippines. To support affected to stakeholders that we continue to In response, we are reviewing our global and our local communities. biggest impact. communities, we provided financial manage this risk. approach to First Nations/Indigenous Our operating context has changed aid and on-ground support. stakeholder engagement, with a focus considerably over the last year. Stakeholder Our sustainability framework reflects Our industry continues to face issues on our governance structure and culture, expectations for our business to our focus and ambitions covering nine Following the explosion at Lebanon’s surrounding cultural heritage management policies, processes and practices. meaningfully address and make progress topics under three key themes. Beirut Port in August 2020, we verified and First Nations/Indigenous engagement,
SAFETy AND WELLBEING OF OUR pEOpLE THROUGH THE pANDEMIC Safe and responsible business Climate resilient economic growth Empowering social progress As always, the safety and wellbeing of our on wellbeing, and colleagues were also people has been our number one priority encouraged to check in with each other, We pride ourselves on conducting We have an important role to We actively seek opportunities to throughout the pandemic. We moved ensuring everyone felt supported and our business safely and responsibly, play in protecting the environment collaborate and contribute to social quickly to bring our remote workers home connected. Recognising the strain on from how we work with our suppliers and addressing climate change progress, by building diversity, wherever possible, enabled those who physical and mental wellbeing, we also and manufacture our products to by minimising our environmental capability and leadership within our could work from home to do so, and provided online support seminars how we deliver for our customers. footprint and delivering commercially workforce and driving social and introduced new working arrangements and programs. We always aim to minimise beneficial solutions for our customers economic impact in the regions and hygiene protocols for teams in critical negative impacts. that enable them to minimise their in which we operate. Before teams returned to their frontline and manufacturing roles. environmental impact. workplace, we introduced COVID-safe As more teams began working from plans that went beyond minimum home, we increased our communications, health requirements. including bespoke campaigns focused Safety, health and security as a priority, always
Ethical and Operating responsible with integrity supply and respect chains for all
SAFE AND RESPONSIBLE BUSINESS Stewarding Diverse, natural inclusive culture resources and inspired workforce
CLIMATE EMPOWERING RESILIENT SOCIAL ECONOMIC SUppORTING COMMUNITIES We also leveraged our skills and resources, involved in bushfire response, both PROGRESS GROWTH WHERE WE WORK lending manufacturing and digital expertise short and long term. Following the Sustainable Safe, resilient commercial and thriving to produce hand sanitiser for community Taal Volcano eruption in the Philippines, As the devastating impact of COVID-19 solutions communities organisations and to digitise school programs we matched employee donations, and continues to be felt around the world, our for remote learning. contributed an additional corporate people came together to support their local donation to the Philippines Red Cross. communities. Our community initiatives Throughout and following the Australian On the ground we launched an employee are providing much needed protective bushfires, we donated a total of $1 million Transitioning Partnerships donation drive, collecting water, clothing, equipment and food supplies, support and to support the fire-fighting effort and the to a low-carbon for positive blankets and other essentials for those funds to first response teams and those who ongoing bushfire recovery, $200,000 of economy impact affected in the community. are most vulnerable within the communities which matched dollar-for-dollar donations where we operate. made by our employees to charities 12 ORICA Sustainability Report 2020 Our Approach / II / III / IV 13
OUR SUSTAINABILITy SCORECARD
Safe and Responsible Business
Key performance Indicator Unit of Measure FY2020 Target FY2020 Performance FY2021 Target Reference Safety, Health and security Workplace Fatalities Number Zero fatalities Zero Continued focus and improvements in the Major Hazard Zero Fatalities – Employee s Pg. 22-23 as a priority, always Safety fatalities Management (MHM) program contributed to a fatality free year. Zero Fatalities – Contractors Our number one commitment is to protect the safety Serious Injury Case Rate Per 200,000 hrs worked 0.18 0.16 Targeted prevention programs rolled out through our MHM program 0.14 Pg. 23 and health of our people and security of our products. contributed to the reduction in our Serious Injury Case Rate. We look for ways to enhance safety and security through improved process and smart technology Serious Life Changing Injury Case Rate Per 200,000 hrs worked New metric for FY2021 0.044 0.040 Pg. 23 creating safer environments for our customers, business partners, and those who live and work All Worker Recordable Case Rate Per 200,000 hrs worked 0.57 0.66 Our All Worker Recordable Case Rate was above target, 0.57 Pg. 23 in our communities of operation. however the injury severity significantly reduced. High Potential Injury (HPI) ratio Number of HPIs/ New metric for FY2021 19.6 New metric for FY2021 25.4 Pg. 23 number of HPIs resulting in injury
Product Security Product security incidents (≥ severity 3) Number of events 0 0 0 Pg. 26 Climate Resilient Economic Growth
Key performance Indicator Unit of Measure FY2020 Target FY2020 Performance FY2021 Target Reference
Transitioning to a low-carbon economy Total greenhouse gas (GHG) emissions intensity tCO2-e/t AN sold 1.8 1.64 We achieved a 6.5 per cent reduction in total greenhouse gas ≤ 1.7 by FY2022 Pg. 40 We address the challenge of climate change through (Scope 1, 2 and 3) emissions intensity primarily through replacement and improved continuing to reduce our greenhouse gas emissions. performance of selective catalyst abatement in our nitric acid plants. We also work to future proof our business and maintain growth by managing and adapting to disruptions arising Reduction in total operational Scope 1 and Scope 2 Percentage N/A 9.5 We reduced Scope 1 and Scope 2 emissions by 9.5 per cent At least 40 per cent Pg. 40 from physical and transition climate impacts. GHG emissions from FY2019 levels. Bontang, Indonesia recorded a 43 per cent reduction from FY2019 reduction in net emissions and Kooragang Island Nitrates Plant, levels by FY20301 Australia achieved a 6.3 per cent reduction due to replacement and improved performance of selective catalyst abatement in our nitric acid plants. Stewarding natural resources Environmental events (≥ severity 3) Number of events 0 0 0 Pg. 47 We take account of our impacts on natural ecosystems and resources, actively improving our responsible and Loss of containment with water or soil impact (≥ severity 1) Number of events New metric for FY2021 67 New metric for FY2021 65 Pg. 46-47 efficient management of land, water and energy. Total waste disposed kT ≥ 20.0 18.2 We achieved a 12 per cent reduction on FY2019 performance, ≤ 19.0 Pg. 48 2 per cent reduction due to improved site awareness, waste management, against FY2019 levels and reduced production volumes due to COVID-19.
Potable water consumption intensity at Orica’s material kL/tonne 0.71 0.77 In Q4, external supply of recycled water was interrupted at ≤ 0.67 Pg. 47 consumption sites Kooragang Island, our most water intensive site. Prior to this, we were on track to achieve target, with potable water intensity measuring 0.67 kL/tonne at the end of Q3.
Empowering Social Progress
Key performance Indicator Unit of Measure FY2020 Target FY2020 Performance FY2021 Target Reference Diverse, inclusive culture Our People Women in senior leadership2 Percentage 25 25 We continued to make progress on gender representation, 35 per cent by Pg. 57-58 and inspired workforce achieving our target of 25 per cent women in senior leadership roles. end of 2024 Our people are our greatest asset. We work to develop This included those acting in positions (less than three per cent). talented, capable individuals who are inspired to create and deliver innovative and sustainable outcomes in a Retention of key people2 Percentage >90 94 >90 Pg. 57-58 culture that values diversity and inclusion. Ethnic and cultural diversity2 Percentage Aligned to geographic 48 Aligned to geographic Pg. 57-58 revenue profile outside revenue profile outside of Aus/NZ of Aus/NZ
Board gender diversity Percentage ≥30 37.5 ≥30 Pg. 57-58
Safe, resilient and thriving communities Community Stakeholder and community engagement Percentage New metric for FY2021 – New metric for FY2021 100 Pg. 61 We build meaningful relationships with stakeholders Engagement plans current in our community to make informed and impactful Community Total community investment A$ million No target set for 3.2 This year, almost half of our community investment was Invest ≥15 million Pg. 63 investments. Through our business activities, we deliver Investment FY2020. Historical directed to emergency services/disaster relief, including by FY2025 economic and social benefits, contributing to the baseline from COVID-19 support, bushfire relief efforts in Australia, development of long-term resilience in our FY2017-19 of 1.8 p.a. and Taal Volcano relief efforts in the Philippines. communities of operation.
1 Applies to existing operations. Base year emissions will be recalculated consistent with emissions accounting protocols if structural changes occur such as acquisitions or divestments. 2 FY2020 target defined as senior leaders at job bands A-C. FY2021 target defined as CEO-2 (includes the CEO, Executive Committee and their direct reports, excluding Executive Assistants). 14 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 15
OpERATING WITH INTEGRITy AND RESpECT FOR ALL
Integrity and respect are core to how we operate. We strive to perform our work ethically and responsibly, ensuring compliance, minimising negative social and environmental impacts, and respecting and advancing human rights. Our governance structure, group policies, standards and processes provide guidance for upholding our values and we continuously SAFE AND look for ways to improve. RESpONSIBLE BUSINESS We pride ourselves on conducting our business FY2020 PERFORMANCE safely and responsibly, from how we work with our suppliers and manufacture our products to how we deliver for our customers. We always aim to minimise negative environmental and social impacts.
ETHICS AND COMPLIANCE 2020 MODERN SLAVERY STRATEGY REFRESHED STATEMENT DISCLOSED $114M PAID IN INCOME TAX
STRONG GOVERNANCE
OUR AppROACH At management level, the Executive pROGRESS IN Fy2020 Committee are our most senior executives. Strong governance is fundamental We recognise strong corporate governance The Delegations of Authority framework to growing a resilient organisation is critical for all our stakeholders to promote sets out those matters reserved for the and creating enduring value for our their interests and deliver our business Board and those delegated to the CEO and stakeholders. The way we operate strategy in a sustainable way. other members of senior management. is aligned with and supports good Our leaders are committed to ensuring governance practices, with our tone Our operating model defines the parameters we conduct our business ethically and set from the top. for our performance at Group level. to the highest standards of corporate Four regional management teams have Our Board of Directors is responsible governance. To align our approach with accountability for end-to-end customer for oversight, sound management and best practice corporate governance and service delivery and on-the-ground strategic direction, with specific duties set regulatory developments, we periodically operational and financial performance. out in its Charter. Further detail on our review and update our corporate governance framework is available on Supporting the four regions are a small governance documents and practices. our website. number of Group functions which maintain Further details of our corporate functional excellence. Each function’s role Five standing committees assist the governance practices can be found in our is articulated in a Group function mandate. Board in the effective discharge of their 2020 Corporate Governance Statement. responsibilities: Audit and Risk Committee; The functions are responsible for the Human Resources and Compensation Group strategy and policies, standards and Committee; Nominations Committee; procedures that govern Orica. These documents Safety, Health, Environment, Community provide the foundation for the Group and Security Committee; and the operating as one organisation across our Innovation and Technology Committee. global network, with common processes and Each committee operates under Terms systems. The operating model is designed of Reference approved by the Board. to provide balance between empowering teams with the freedom to deliver on their accountabilities, while providing the framework to drive consistency and simplicity. 16 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 17
OpERATING WITH INTEGRITy AND RESpECT FOR ALL (Continued)
Material strategic risks are reported to the Corrective and protective actions • maintaining pathways for reporting, • expanding internal capabilities Board and Board Audit and Risk Committee ETHICS AND identified were implemented. A review investigation and remediation to enable greater assessment and OUR CODE OF (BARC) bi-annually, with deep dives into COMpLIANCE of a further 10 high risk countries was to ensure issues are identified and benchmarking of our program BUSINESS CONDUCT specific material risks occurring quarterly conducted in FY2020. Identified actions investigated swiftly, and remedy • conducting an internal audit of our by the relevant committee. This includes will be implemented in FY2021. provided where required. OUR AppROACH compliance against our Ethics and material strategic and operational risks that • A new, dedicated trade sanctions role Compliance Group Standard Our Code of Business Conduct may affect our future financial performance Our Ethics and Compliance program (Code) applies to anyone who works was established within the Ethics and including workplace safety, ethical conduct establishes clear requirements and controls pRIORITIES AND FOCUS • reviewing the systems and for or on behalf of Orica and sets out Compliance team. The addition of a and climate change. to support compliance with key risks, FOR Fy2021 processes for managing gifts, our expectations for the way we work. new resource will enable the team to including anti-corruption, trade sanctions Based on our refreshed approach, key benefits and donations This includes our values, compliance Our approach to managing the better monitor compliance and improve and competition (anti-trust) laws. actions have been identified for each with relevant laws and regulations, sustainability aspects of our business-wide controls to address this key risk. • enhancing ethics and compliance focus area: requirements specific to Orica and strategic risks and our operational-level Our management approach is based on our training and guidance in line with our additional company policies, material sustainability risks are detailed in values, which guide the way we operate. • ongoing assessment of the effectiveness new framework and evolving approach REFRESHING OUR ETHICS AND standards and procedures. this report and our 2020 Annual Report. Our Ethics and Compliance program has of our Ethics and Compliance program, COMpLIANCE FRAMEWORK • focusing on the ‘tone at the oversight from the BARC while our Chief enhancing controls where gaps are All employees and contractors who middle’, enabling us to create deeper Compliance Officer reports to the CEO and To assess the appropriateness and identified or as required to meet emerging are subject to the requirements of pROGRESS IN Fy2020 awareness and understanding of the the BARC on topical ethics and compliance effectiveness of our Ethics and Compliance risks and changing requirements our Code must complete mandatory program, risks and controls across The risks we face have the potential to issues and trends. program we conducted an in-depth internal training on joining Orica and undertake the organisation. impact our business, brand and reputation, review, benchmarking against regulator refresher training every two years. At an operational level, regional ethics customer base, our people, assets, guidance and global practice. This ensures they are equipped with and compliance managers work closely profitability, liquidity and the environment. the knowledge and tools they need with stakeholders within the business on With a view to continuous improvement Our assessment and response to key risks to act ethically and responsibly. individual matters as they arise. Employees and an enhanced focus on material risks, and opportunities during FY2020 included: can also access a multi-lingual online we refreshed our already robust Ethics and We encourage everyone • Operational explosion risk: our compliance tool which records incidents and Compliance program, developing a new Compliance Framework provides notifications and controls approval to speak up and report Major Hazard Management control framework and three-year strategy for workflows as required by our Ethics and behaviours or actions verification process provides us with FY2021-23. assurance over the safe storage of Compliance Group Standard. Higher risk that do not reflect our Our refreshed strategy comprises six ammonium nitrate (AN). Following activities are subject to review and approval PORATE CULTU areas of focus within an iterative process, OR RE Code. We are committed the tragic explosion at Lebanon’s Beirut by the Ethics and Compliance team. C to ensuring everyone can creating a feedback loop to ensure Port on 4 August 2020, key control Specific ethics and compliance training is raise concerns freely, continuous improvement. D verifications were performed across CE ES provided to employees using a risk-based N IG without fear of reprisal A N all Orica sites that store AN. No material The key areas of focus are: H , approach. A range of resources, training, N ng To A E ti nd ne N or intimidation, and that or significant findings were raised or n a t a D risk assessments and other controls are D p io he t D • establishing a strong culture of ethical N e t n t any concerns are dealt through the verification process. R ga tio op E provided as part of our compliance A ti ia V behaviour by setting the ‘tone at T s d E I e e with fairly, thoroughly, L framework reflecting global practice D v m • Macroeconomic and climate the top’, led by our Board, Executive In e O U R confidentially and in a and regulator guidance. P change: new macroeconomic scenarios Committee and senior leadership teams A 5 1 timely manner. were used to analyse commodity demand outlooks and inform an • ensuring the expectations of our people pROGRESS IN Fy2020 and business partners are clearly enterprise-wide assessment of climate e SAFETY RESPECT t c n P articulated and documented in current and P n In FY2020, we undertook several activities as e risks and opportunities. o r e
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OUR AppROACH a stakeholder expectations regarding Group standards assurance program. through effective and regular communication and training Managing financial and non-financial risks our licence to operate, were evaluated. Instances of partial or non-compliance M INTEGRITY O is fundamental to informing our strategic Response planning was presented as part with the standard were reviewed and • providing robust governance E N T I direction and priorities and ensuring we of the Board’s strategy and planning. action plans developed to address these. and oversight to ensure ongoing T n U O G 3 io C continue to operate a safe, responsible R o t E effectiveness of the program , a v ca g X • Human rights: the effectiveness of our • We continued the Monitoring and A n e i n E and sustainable business. S d rn un i S O an m in D governance framework and processes Assurance program established in • undertaking comprehensive risk E ve ce om ra N S rs C T A Our Group Risk function is responsible S ig nd T in identifying and addressing human FY2019, which involved assessing assessment and due diligence A ht a N N E for the design of our risk management the effectiveness of our ethics and D M rights issues was reviewed. While there activities to ensure key risks are L E EA PL framework, supporting its implementation is more to do in this area, a range of compliance controls in 10 high risk identified and managed RN IM and coordinating and aligning risk improvement actions will be implemented countries. The countries were identified management activities across Orica. in FY2021 covering governance, risk by applying a risk-based approach that Our risk management framework is aligned assessment and due diligence practices. considers various external and internal to the International Organization for criteria, including corruption ratings Standardization’s Risk Management For more information on our risk and commentary by regulators and Guideline, 31000:2018 and facilitates the management progress, refer to our organisations and an internal assessment ongoing identification, assessment and 2020 Annual Report and 2020 Corporate of ethics and compliance risk. communication of risks across our business. Governance Statement. 18 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 19
OpERATING WITH INTEGRITy AND RESpECT FOR ALL (Continued)
TAX COMpLIANCE TAX CONTRIBUTION SUMMARy TRANSpARENCy We are committed to complying with In FY2020, we paid $114 million (FY2019 all relevant revenue laws in a responsible $107 million) globally in corporate income REpORTING manner, with all taxes properly due, taxes and $61 million (FY2019 $60 million) We believe enhanced tax transparency accounted for and paid. A tax standard globally in payroll taxes. We collected and is a critical element of ethical and relevant procedures are in place remitted $122 million (FY2019 $109 million) business behaviour. to ensure tax compliance obligations globally in GST / VAT. are managed. The charts show FY2020 corporate income Our in-house global tax team manages our tax paid in each region (including withholding TAX pOLICy – OUR tax affairs, supplemented with external tax and trade taxes), and an analysis of total AppROACH TO TAX compliance support where required. tax paid by type. Our Tax Policy and approach to tax is published on our website, however, FY2020 global corporate tax some important aspects of that policy STRUCTURE and withholding tax on income are set out in this report. We do not support the use of artificial by region ($m) As an Australian mining services company structures established to avoid paying tax with global operations, we generate a and have no commercial purpose. We will not enter into any tax avoidance activities. Australia, diligence processes, and grievance and substantial amount and variety of taxes Pacific and Asia REpORTING ISSUES HUMAN RIGHTS reporting mechanisms to benchmark our across jurisdictions including income taxes, $66 AND GRIEVANCES current approach to managing human stamp duties, employment taxes and other RELATIONSHIpS WITH Europe, taxes. We also collect and remit a number Middle East OUR AppROACH rights and modern slavery risk. A range TAX AUTHORITIES and Africa Incidents or concerns involving a breach of improvement actions were identified of taxes on trust including employment $114 Our approach to respecting human We aim for open, transparent and $19 of our Code or work-related grievances and will be implemented in FY2021. taxes and indirect taxes such as GST/VAT. can be reported by all stakeholders to an rights is aligned to internationally respectful relationships with the Australian Latin America independent, confidential Speak-up service. recognised human rights principles, We continue to meet our obligations The taxes we pay and collect form a Taxation Office and other tax authorities $16 Reports can be made at any time and in including the United Nations Universal under the Modern Slavery Act 2015 significant part of the economic contribution globally. We seek advance rulings North America multiple languages using the hotline via Declaration of Human Rights, the United (United Kingdom) and the Modern to the countries of operation. from taxation authorities on transactions $13 the Speak-up service. Reporters have the Nations Guiding Principles on Business Slavery Act 2018 (Commonwealth) where appropriate. and Human Rights, and the International with the publication of our fifth Modern option to remain anonymous. TAX STRATEGy AND Labour Organisation’s Declaration of Slavery Statement which is available GOVERNANCE Our Whistleblower Policy outlines our Fundamental Principles and Rights at Work. on our website. USE OF TAX HAVENS commitment to ensuring the identity of FY2020 global tax paid by type ($m) Our tax strategy is reviewed by our Board Tax havens are not used for tax planning reporters remains confidential and they are Our expectations of people within our of Directors annually, is aligned with the purposes. Where we have operations not subject to detrimental conduct as a business and our business partners are pRIORITIES AND FOCUS FOR Fy2021 overall corporate strategy and supplements in countries that are ‘low tax’ jurisdictions, result of making a report. This provides outlined in our Human Rights at Work Our human rights review identified our Risk Management Policy. there is genuine operational substance Corporate Tax protection for reporters and creates an Policy and our Code of Business Conduct. several priority actions including: in these locations, or the entities $114 environment where people feel safe and In summary, we: Our Chief Financial Officer has oversight and responsibility for our are dormant. encouraged to report breaches of our Code, • oppose any form of slavery, forced • undertaking a detailed review of tax risk management framework. GST/VAT including unethical, illegal or improper labour, human trafficking and child existing human rights policies and Our overseas companies are subject $297 $122 Operational and governance responsibility behaviour. Those considering reporting labour and are committed to taking processes against global best practice to Australia’s international tax rules for the execution of the Group’s tax can also discuss confidentiality and legal action to reduce the risk of this occurring (Controlled Foreign Corporation rules). Employee • maturing our modern slavery and strategy rests with the Vice President protections with our Whistleblower in our operations and supply chain payroll taxes Protection Advisor. human rights risk assessment and Taxation, supported by a team of tax $61 • are committed to looking after the due diligence processes, including a professionals. External tax expertise is TRANSpARENCy In addition to the Speak-up service, review on our approach to ensuring health, safety and wellbeing of our used where required. We support the ongoing global development individuals within Orica who are authorised employees, contractors and visitors, the rights of Indigenous Peoples and (as outlined in our Whistleblower Policy) management of cultural heritage Our Vice President Taxation reports on of improved tax transparency to increase and ensuring our workplace is free understanding of tax systems and build can also accept a report. tax matters bi-annually to the BARC. In FY2020, in Australia, we paid corporate from discrimination • undertaking a training needs public trust. Our approach to tax is applicable across income tax of $33 million (FY2019 tax refund In FY2020, 75 per cent of all grievances • comply with all employment laws and analysis for our organisation the Orica Group and is reviewed and We have signed the Corporate Tax $10 million comprising a tax refund on the raised were closed or resolved, with the obligations, and ensuring appropriate and supply chain partners remaining pending or under review. updated annually. Transparency Code Register developed resolution of a thin capitalisation dispute with pay and working hours for our people • identifying opportunities to work by the Board of Taxation in Australia and the Australian Taxation Office of $23 million Everyone is encouraged to speak up and • promote freedom of association and collaboratively with peers, business are committed to applying the principles and tax payments of $13 million). We also report behaviours or actions that don’t the right to collective bargaining. partners and customers to address and the details of the Code. paid $16 million (FY2019 $19 million) in reflect our Code. We are committed to risks where possible and learn from payroll tax and $1 million (FY2019 $2 million) ensuring everyone can raise concerns freely, best practice. in fringe benefits tax. We collected and without fear of reprisal or intimidation, pROGRESS IN Fy2020 remitted $50 million (FY2019 $47 million) in and that any concerns are dealt with Further detail on our FY2021 actions to To assess the effectiveness of our processes GST and $118 million (FY2019 $106 million) fairly, thoroughly, confidentially and in address modern slavery in our operations in identifying and addressing human rights in ‘pay as you go’ withholding taxes. a timely manner. and supply chain can be found in our issues, we conducted a high level review 2020 Modern Slavery Statement. of our policies, risk assessment and due 20 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 21
OpERATING WITH INTEGRITy AND RESpECT FOR ALL (Continued)
A reconciliation of accounting profit to income tax payable INTERNATIONAL RELATED soda, gas, bulk explosives, initiating Our treasury function, based in Melbourne Consolidated Consolidated pARTy DEALINGS systems and other explosive materials. which engages in financing transactions (predominantly providing loans and FY2020 FY2019 We price our international related party • The sale of raw materials and finished accepting deposits) with over 80 group A$M A$M dealings to reflect the substance in products (including bulk explosives, companies (resident in more than our operations in accordance with the packaged explosives and initiating Before individually material items: 40 countries) at market interest rates. ‘arm’s length principle’ as defined in the systems) to related parties in Peru, The significant loan balances are with Accounting profit/(loss) before tax 455.0 555.0 Organisation for Economic Co-operation Singapore, Ghana, South Africa, Russia, related parties in Singapore, Indonesia, and Development (OECD) guidelines and Chile, Panama, Indonesia and Papua Prima facie income tax expense/(benefit) calculated at 30% on accounting profit 136.5 166.5 Germany, Russia, the United States, in accordance with the laws in all the New Guinea. and the United Kingdom. We also have Material non-temporary differences countries in which we operate. • The provision and receipt of services a subsidiary in Singapore which acts variation in tax rates of foreign controlled entities (12.6) (23.4) We have transfer pricing procedures from entities resident in Singapore, as the Group’s captive insurer. which govern the pricing of all international the United States, Germany, Canada, tax under provided in prior years 1.5 9.7 In addition, in FY2019 we entered into related party dealings. These procedures Chile, South Africa, Brazil, Indonesia certain arrangements with related parties recognition of previously unbooked temporary differences (16.6) – require all international related party and the United Kingdom. The nature involving the transfer of shares, with dealings to be priced in accordance with of the services includes general non creditable withholding taxes 12.3 10.2 the most significant transactions being the arm’s length standard. We maintain management, information technology, with related parties in the United States, non allowable interest deductions 21.9 14.6 contemporaneous records to support the sales and marketing, logistics and China and Argentina. pricing of our international related party reimbursement of third party expenses. non allowable share based payments 1.6 3.7 dealings and benchmarks and document Refer to our website for publication of the • The use of intellectual property held by recognition of tax losses (3.5) (10.5) the outcomes of our material dealings on country-by-country reporting for FY2019. a related party in Singapore. The nature an annual basis. sundry items 5.3 6.9 of the intellectual property includes The significant international related party technical knowhow related to the Income tax expense/(benefit) before individually material items 146.4 177.70 dealings impacting our Australian taxable manufacture of Orica’s products and income in FY2019 is summarised as follows: the Orica name and trademarks.
Individually material items: • The purchase of raw materials and • The provision of contract research and finished products from related parties development activities for a related Individually material items before tax (170.4) (195.9) in Singapore and Indonesia including party in Singapore. Prima facie income tax expense/(benefit) calculated at 30% on individually material items (51.1) (58.8) ammonia, ammonium nitrate, caustic
Material non-temporary differences
variation in tax rates of foreign controlled entities 2.6 0.3
non allowable initiating systems optimisation expense 8.1 – Australian Tax Return Data FY2019 FY2018 non allowable operating model restructuring expense 1.0 – Notes A$M A$M non taxable gain on formation China joint venture – (10.6) Total income 1 2,174 2,534 Income tax expense/(benefit) on individually material items (39.4) (69.1) Taxable income 2 202 61 Income tax expense/(benefit) 107.0 108.6 @ Tax Rate 3 30% 30% Material temporary differences Tax liability 61 18 deferred tax 7.0 (0.5) Offset reductions 4 (40) (18) Tax payments more/(less) than tax charges 0.4 22.5 Tax payable 21 – Tax refunds on matters in dispute with tax authorities – (23.1)
Income tax paid per the statement of cash flows 114.4 107.5 1 Total Australian income (includes sales, dividends, interest income etc.) before all expenses (for example, interest, employee costs, depreciation etc.). 2 Taxable income after allowing for all deductible expenses and tax exempt income. 3 Australian Statutory tax rate. 4 Offset reductions of $40 million (FY2018 $18 million) relating to franking credits, foreign income tax and research and development. Effective tax rate for Australian and global operations
Consolidated Consolidated Notes FY2020 FY2019
Before individually material items
Australia 1 39.7% 36.9%
Global operations (including Australia) 32.2% 32.0%
1 The tax rate is the percentage of income tax expense to accounting profit/loss before tax (before individually material items) adjusted to exclude exempt dividend income. 22 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 23
SAFETy, HEALTH AND SECURITy AS A pRIORITy, ALWAyS
Our commitment to the safety and health of our people and the security of our products and Safety performance operations is our priority, always. By operating in accordance with legislation and regulations, Preventing fatalities and serious injuries our Group standards and policies, continuously improving our practices and leveraging smart continues to be our key priority. In FY2020, for the third consecutive year, we recorded technology, we are enabling safer environments for our people, customers, business partners, no fatalities. During the year, we undertook and those who live and work in our communities of operation. a detailed review of all serious injuries sustained in previous years, enabling us to better understand and prioritise actions to address causes of serious injuries. The subsequent rollout of targeted prevention programs, through our Major Hazard Management (MHM) program, FY2020 PERFORMANCE resulted in a significant reduction in the number of serious injuries sustained and the severity. As a result, our Serious Injury Case Rate (SICR) reduced by 29 per cent since FY2019 to 0.16 serious injuries per 200,000 hours worked, achieving our FY2020 target of 0.18 serious injuries per 200,000 hours worked. Our All Worker Recordable Case Rate (AWRCR) remains above target however ZERO 29% 11,500+ 8 injury severity was reduced as our primary FATALITIES IN IMPROVEMENT IN SERIOUS SAFETY CONTROLS DISTRIBUTION focus has remained on serious injury and OPERATIONS FOR 3 INJURY CASE RATE VERIFIED EVENTS RECORDED fatality prevention. At sites with high CONSECUTIVE YEARS compared to FY2019 AWRCR rates, local interventions have been applied. WIRELESS DETONATORS SUppORTING CUSTOMER We continue to promote and enhance SAFETy pERFORMANCE safety leadership behaviour within our WORKpLACE SAFETy workforce, with our leaders completing over 50,000 safety interactions, an Safety is at the heart of our innovation process. This year we continued increase of over 10 per cent from FY2019. to see our products contribute to enhanced safety outcomes at our These interactions are a practical way to OUR AppROACH Our CEO and Executive Committee are Health and safety protocols, supporting customer operations. accountable for performance against SHES COVID-19 controls, have been introduced live and demonstrate our values. Our commitment to safety is embedded In FY2020, Nexa Resources deployed our WebGen™ 100 wireless detonators targets. The Orica Board Safety, Health, to all our manufacturing sites and office in our core values. Safety is our priority, at the Vazante zinc and lead mine in Brazil to overcome a common problem. Environment, Community and Security locations. Wherever possible, we enabled Serious Injury Case Rate always, and nothing is more important Nexa was using the vertical retreat mining method at Vazante, a method (SHECS) Committee meets at least quarterly those who could work from home to do so. than keeping our people, customers and 0.22 that requires pillars of mineable ore to be left in place for the purpose of and undertakes site visits to review communities safe. We maintain a relentless Our people working in critical frontline 0.19 maintaining the stability of the rock mass. The mining of these pillars at the performance against targets, monitor focus on preventing injury and illness and and manufacturing roles are keeping our 0.17 0.16 end of the operation is a challenging aspect of this method as it exposes implementation of SHECS initiatives and 0.16 always improving the way we manage operations running safely. Rotating rosters workers to heavily damaged and backfilled areas of the mine. programs, and consider material risks and health and safety risks across our business. and stringent health and hygiene protocols issues. The SHECS Committee is informed Rather than require workers to re-enter the mine to load downholes, program This ensures that everyone returns home are in place to protect them. by our Safety, Health, Environment and detonators and fire the shot, the final pillar at Vazante was preloaded with safely at the end of each day. Security Assurance program (Assurance At the time of publication, all non-essential 88 WebGen™ 100 wireless units before access to the adjacent areas was lost. Our Safety, Health, Environment and program), which provides insights into international and domestic travel has been Once the ore from the block had been extracted and the pillar was no longer Security Policy was updated in FY2020. compliance with the Management System, deferred. Action response plans for sites required to provide stability, the WebGen™ detonators were remotely initiated It affirms our aspiration to avoid harm, including applicable legal requirements. and offices are in place for any employee, FY16 FY17 FY18 FY19 FY20 via ultra-low frequency signal after a 33-day sleep time. empower our people to perform their contractor or visitor who suspects they have tasks safely, and continuously improve been exposed to, or is confirmed positive our performance. pROGRESS IN Fy2020 for, COVID-19. “The blast happened two levels below us, so we are All Worker Recordable Case Rate Managing safety through COVID-19 400m away above the shot. All encoded signals were To guide our people we have a Where our plants are operating, our safety 0.66 sent through the rock with the safety protocols to comprehensive set of Group standards and health controls are in place to protect 0.63 The spread of COVID-19 continues to fire the blast being followed.” and procedures which form our Safety, have a significant impact on the world. the health and wellbeing of our people. Health, Environment and Security (SHES) Like many organisations, we continue to In some areas where our leaders were 0.48 Mateus Ribeiro, Chief Mining Engineer, Nexa Resources Management System (Management adapt our working practices as the situation unable to travel, we introduced augmented 0.37 0.39 System). These documents specify the evolves to ensure the health and safety of reality technology to allow remote safety This technique moved workers out of harm’s way. The process was completed requirements and controls that must be our people, customers and communities. verifications and technical support. with no misfires, adequate fragmentation and ultimately, an 88 per cent in place to protect our people, customers, recovery of the pillar. The single blast event resulted in a net benefit of and communities. US$1.59 million for Nexa Resources Vazante from the single blast event.
FY16 FY17 FY18 FY19 FY20 24 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 25
SAFETy, HEALTH AND SECURITy AS A pRIORITy, ALWAyS (Continued)
• We reviewed and updated our internal As part of the program, we extended HEALTH AND Occupational Exposure Limits (OEL) an existing control of mandatory RESpONSE TO TRAGEDy WELLBEING and Biological Exposure Indices (BEI) pre-employment and periodic respiratory IN BEIRUT for all identified harmful agents at assessments (in place for workers in coal OUR AppROACH our locations, in line with regulatory mining since FY2017), to include workers In August 2020, following the tragic explosion in Beirut, Lebanon, our Major Hazard We care about the health and wellbeing of requirements, best practice and in the quarrying industry and at non-coal Management (MHM) verification process was rapidly deployed to assess the long- our people and work continually to minimise emerging scientific literature. sites in Queensland, Australia. This type established controls in place to prevent such an event occurring at Orica facilities. the potential for adverse health impacts Unless local regulations require a of mandatory health control for workers associated with the workplace. We set more stringent limit, OELs and BEIs at high risk of exposure to respiratory As part of the process, over 400 verifications were completed globally in under minimum standards for managing health have been standardised to enable hazards is demonstrated to be effective a month. These detailed verifications looked at the key controls we require at and wellbeing through our Health Group better analysis and assessment for in detecting and preventing the progression all our operational sites to safely store ammonium nitrate (AN) including how Standard which is subject to continuous potential exposure in the future. of lung diseases. we segregate incompatible or combustible materials from AN and control improvement through regular internal potential ignition sources from our product. • We established Harmful Agents During the year, a cobalt catalyst operator auditing and review to assess effectiveness. (chronic) as a major hazard and from Kooragang Island, Australia, was While some opportunities for enhancing our safety and COVID-19 continues to present health incorporated relevant key controls diagnosed with occupational asthma. into our Major Hazards Management Medical advice confirmed this was due risk management controls were identified, robust key challenges, with several regions impacted by confirmed positive cases. In response program to ensure ongoing and either wholly, or in part, to exposure to controls to manage safe storage of ammonium nitrate to this new health risk, we focused on effective verification of controls. cobalt while on site. The impacted worker are in place and stakeholders can be assured this risk has been provided with medical support, prevention and mitigation strategies At a regional level, our focus was on continues to be well managed by our business. counselling and assistance, and continues through established operational protocols. managing respiratory health risks, to work at Orica on modified duties. Key controls for both operations and office particularly Respirable Crystalline Silica In response to this incident, we undertook environments were implemented using (RCS) and Respirable Coal Dust (RCD). a full investigation, including identification existing safety management tools, in Within our Australia Pacific and Asia and implementation of priority actions to addition to other hazard management region, we commenced the RCS and RCD Transport and distribution safety Our MHM program will be further embedded This will enable us to understand trends controls, such as the implementation of control this risk, such as routine biological into standard business processes throughout and identify actions related to process Assessment Initiative program. This aims to In FY2020, Severity 21 transport and physical distancing, moving to remote and health surveillance monitoring. FY2021, strengthening our approach to the safety events. enhance the risk controls for RCS and RCD distribution incidents increased overall. working where possible, increased cleaning management of both process and personal for our mining service teams by developing These events were outside the Orica- and disinfection, and a focus on educating safety major hazards in our business. and implementing monitoring programs, controlled network, occurring with product pRIORITIES AND FOCUS our people on personal hygiene practices. assessing compliance with revised OELs, shipped by third-party providers. No events We continue to monitor these controls Management systems and reporting FOR Fy2021 and reviewing the effectiveness of existing occurred within the Orica-controlled closely to ensure our people are protected. • Implement a five-year SHES key controls. network. We will continue to focus on Considerable work was undertaken strategic plan, centred around key addressing third-party transport and in FY2020 to refine and embed our themes of leadership, innovation pROGRESS IN Fy2020 distribution risks in FY2021. Management System globally. Compliance and risk management. guides have been developed for all group Despite the challenges in FY2020, we Distribution incidents standards under our Management System • Continue to implement the MHM completed a number of actions to improve to support assurance activities at regional program, including embedding the our approach and controls to managing Major Hazard Management program levels. The guides are being leveraged to program into the way we work. health and with targeted initiatives to 14 further embed our Management System address specific risks in our regions. requirements within our business. • Continue to focus on preventing fatalities and serious injuries, expanding • We developed health guidance material 12 Our Assurance Program helps verify that our existing approach to contractors in to support the requirements set out 9 required standards controls are in place addition to employees. in our Health Group Standard to assist 500+ 50+ GLOBAL 8 and operating effectively, best practices regions to achieve compliance. PARTICIPANTS SESSIONS COMMUNITY 6 are identified and shared, and corrective • Implement standardised contractor • We developed a standardised actions are effectively implemented pre-qualification processes for methodology for Health Risk where risks and issues are identified. contractors performing high-risk work. NAVIGATING WORRy AND ANXIETy THROUGH COVID‑19 1 3 1 1 Assessments (HRA) to identify, assess Despite COVID-19 affecting our ability • Pilot an innovative leadership program FY16 FY17 FY18 FY19 FY20 and control our risk of material harmful COVID-19 and the associated lockdowns have created economic uncertainty, to travel, all planned SHES assurance to position Orica at the forefront of Under Orica’s control Outside Orica’s control agents, enabling us to establish health increased social isolation, health fears and mental health challenges. As part activities were completed, leveraging safety leadership practice. exposure risk profiles at each of our of our commitment to prioritising the health and wellbeing of our people, As part of our strategic focus on virtual auditing tools in some instances operations. Using this methodology, we we introduced a six-week wellness program to support mental health. major hazards, we continue to further to conduct site assessments, regional commenced a qualitative HRA for our The program was developed in conjunction with a clinical psychologist and embed our MHM program within our assessments and corporate audits. continuous manufacturing operations organisational development expert and aims to help our people effectively operations. The program is designed to Building on work undertaken in FY2019 which will be completed in FY2021. navigate worries and anxieties related to COVID-19. identify and manage major hazards to to refine metrics and develop reports An HRA for quarry services and surface ensure our people return home safely at to provide greater visibility of our coal was also completed. Since inception, over 500 employees across our Asia Pacific and Latin the end of each day. After a successful performance, in FY2020 we developed and American operations, as well as selected office-based employees, have pilot, the program was rolled out globally refined a monthly process safety metrics taken advantage of the virtual sessions which are offered in English, Hindi, in FY2020, with more than 11,500 report in initiating systems/packaged Tagalog, Bahasa and Spanish. The program has received overwhelming verifications completed. explosives (IS/PE) manufacturing. positive feedback allowing us to support and learn from each other and continue to be a strong and connected team.
1 Incidents resulting in injury requiring medical treatment, or fatalities, or loss of security sensitive product, or significant financial impact. 26 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 27
SAFETy, HEALTH AND SECURITy AS A pRIORITy, ALWAyS (Continued)
pRIORITIES AND FOCUS While our detailed approach to In FY2021, standardised guidance for FOR Fy2021 managing product security remains regional teams on conducting security confidential, key elements include: event investigations will be developed Our focus is on controlling exposure to and implemented. material harmful agents, managing fitness • customer screening and vetting for work and building health systems and • site and transport security Security compliance frameworks that allow us to enhance the physical and mental wellbeing of our • ongoing engagement and No product security incidents categorised people. In FY2021 we are: collaboration with national and as Severity 32 or higher were recorded in international security agencies. FY2020. We are also not aware of any • continuing to develop our Health Risk incidents regarding non-compliance of Assessment and Exposure Risk Profile Annual self-assessments and Life Cycle regulations and voluntary codes relating templates and processes to support the Risk Assessments (LCRA) are performed to misuse of our products and services, methodology developed in FY2020 as part of our responsible product product information and labelling, or stewardship practices and SHES • completing the Continuous marketing communications. management system requirements. Manufacturing Exposure Risk LCRAs help ensure our products are To comply with mandatory product Profile commenced in FY2020 used as intended, both safely and ethically, traceability requirements that came into • undertaking a risk assessment and from order and shipment through to effect in FY2020, box level traceability has management standard to address end-use and disposal. LCRAs are mandatory been implemented for all our products in mine dust as part of our commitment at the beginning of product development India. The competent authority has also to address chronic injury and illness and maintained by accountable product mandated that the manufacture and and services managers. sale of electric detonators be reduced • continuing to design, configure and by 50 per cent over two years and replaced deploy an industrial hygiene module Our Security Group Standard, which forms by other technologies. To meet this for the Enablon database to ensure part of our SHES management system, requirement, a target of 20 per cent the collection and retention of data details the requirements and controls that reduction has been set for FY2021. is standardised must be in place to ensure security of our product and protect our people, customers • reviewing pre-employment and periodic and communities. health surveillance requirements in pRIORITIES AND FOCUS our countries of operation to identify Security key performance indicators FOR Fy2021 opportunities for standardising and and security events are tracked, • Implement the Group procedure improving risk management controls measured and reported monthly to the for security across our business, Executive Committee and quarterly to together with a comprehensive pROGRESS IN Fy2020 pRIORITIES AND FOCUS • maintaining our focus on our CyBER SECURITy the SHECS Committee. guidance document. FOR Fy2021 mental wellbeing program which Our cyber security strategy is focused on continues to be a priority during • Develop and implement an investigation OUR AppROACH controls designed to prevent, detect, respond Our multi-year cyber security program of the COVID-19 pandemic. pROGRESS IN Fy2020 methodology for security events. We implement cyber security procedures or recover from attacks that could result in work delivers enhanced controls supporting to protect our global information network. critical services outages, or loss of production the goals of the cyber security strategy, Strengthening security governance • In accordance with our strategic Our cyber security strategy defines our and business services in particular. with a particular focus on supporting our objective to always protect our people In FY2020, we continued to strengthen approach to securing our network from people as they continue to work remotely. pRODUCT and ensure a tight chain of custody In FY2020, we continued to mature our our governance and management of significant malware damage or disruption Activities in FY2021 include: SECURITy across our products, we will focus cyber security controls with a focus on: product security risks and updated our and improving our service continuity and • ongoing work to protect our IT on three key areas: • identity and access management OUR AppROACH Security Group Standard. disaster recovery capabilities. hardware, software, mobile devices – provide training for our people and controls, ensuring appropriate internal As a manufacturer of commercial explosives High-risk sites conducted self-assessments, The ability to protect our network, and network from malware both on our business partners to ensure they allocation of access to our network and blasting initiating systems, we take our benchmarking and reviews against the technology and data from cyber attacks and off the Orica network including are aware of security risks and our and systems responsibility and commitment to ensuring updated standard, with improvement is treated as a material operational risk. improvement of cloud security controls management systems and controls the security of our products very seriously. actions identified to be implemented Our cyber security program is governed by • systems, particularly Orica’s to increase visibility and protections This year’s tragic explosion at Lebanon’s in FY2021. – enable traceability of our products the BARC and managed by our Chief Cyber implementation of SAP, and replacement for cloud-based applications Beirut Port was a reminder of the serious Security Officer. Our internal Cyber Security of end-of-life systems that presented a All security events categorised as Severity 21 – explore new innovations and • strengthening controls around risks associated with the unsafe storage of Governance Committee is convened security risk or higher are tracked and reviewed quarterly technologies that may be used to critical systems and improving explosive product. Our approach to product each quarter to review risks, events and by the SHECS Committee. A deep dive prevent the misuse of our products. • protecting our systems and data on information protection security is sound. We ensure that those improvement initiatives and includes senior was conducted on these events during and off our network through the rollout we partner with and sell to share our business managers and our Vice President • continuing to engage with our the year, with each event investigated and of updated workstation control tools commitment to eliminating security risks of Safety, Health, Environment and Security. material and high-risk third-party across the lifecycle of our products and regulatory and security agencies involved • refining our incident detection and service providers to understand services. This includes ensuring our products where required. Action closeouts were In conjunction with our external service response processes, and extending our their cyber security approach also tracked. The tracking and analysis of providers, our Security Operations Centre vulnerability management capability to are used for their intended purpose. • continuing cyber security security events has enabled us to focus (SOC) monitors our facilities, information, detect vulnerabilities through our network on enhancing controls in high risk networks, data and other assets. assessments of customer products activities and locations. Cyber security is integrated with our • communication and training for including WebGen™, BlastIQ™ and Major Incident Management plan. our people to raise awareness FRAGTrack™ as part of our ongoing enhancement process. 1 Severity 2: events that resulted in loss of security sensitive Orica product. of cyber security threats and 2 Severity 3: events that resulted in misuse of security sensitive Orica product. recommended actions. 28 ORICA Sustainability Report 2020 I / Safe and Responsible Business / III / IV 29
ETHICAL AND RESpONSIBLE FOCUS ON SUSTAINABLE SUppLy CHAINS pALM OIL
At Orica, we have the ability to influence change through our The Roundtable on Sustainable Palm Oil (RSPO) is a not-for-profit body supply chain and opportunities to work collaboratively with our that draws membership from across the palm oil sector, from producers to buyers. The body’s environmental and social criteria are the most widely suppliers to address social, environmental and ethical impacts. accepted standard for certified sustainable palm oil. Bulk palm oil purchased We also recognise that procuring from local and diverse suppliers by Orica meets ‘segregated’ certification criteria and is currently sourced is a way to share economic value in the communities in which from multiple certified plantations. We maintain this purchasing strategy to ensure surety of emulsion supply to some of our customers and in order we operate and contribute to creating more inclusive economies. to meet compliance requirements associated with emulsion storage and transport. During the year, we initiated a concept study to investigate options to remove the use of palm oil from select products.
FY2020 PERFORMANCE MANAGING SUppLy CHAIN DISRUpTION RISK
In FY2020, challenges brought on by the COVID-19 pandemic required us to closely monitor supply chain risk to ensure security of supply. With our global footprint and manufacturing and distribution facilities distributed globally, total network disruption is unlikely. However, response measures to COVID-19 have resulted in restrictions on ports, airports and roadways around the world which have disrupted normal supply of purchased goods. LOCATED IN Early in the crisis, our regional and global supply chain and procurement teams implemented a number of actions to mitigate disruption risks including: 13,500 48 • identifying impacted routes of supply and determining alternate routes SUPPLIERS COUNTRIES and carry options to minimise impact to delivery times • identifying material suppliers to understand reliability of supply based on anticipated demand. Where goods were sole sourced, efforts were In FY2020, we procured products and A practical approach to moving beyond made to identify alternate sources of supply. In evaluating new suppliers, services from 13,500 suppliers in 48 compliance and improving sustainability a number of criteria were considered as part of the due diligence process, countries around the world. Prior to in supply chains is to identify critical issues including safety and sustainability performance doing business, we assess suppliers during across the whole supply chain, link our • focusing internal support for critical and highly specialised categories and the tendering and onboarding process to supply chain sustainability goals to the products through the development of strategic category plans ensure they meet our minimum standards. global sustainability agenda, and help As a condition of doing business with us, our suppliers manage their impact. • ensuring adequate safety stock to minimise effect on production in the our suppliers must: event of a disruption. In FY2020, we increased our understanding • agree to comply with all contractual and responded to specific social and Each of our manufacturing facilities also maintains a business continuity plan. conditions, policies and procedures, environment risks within our supply chain. These plans were reviewed to ensure potential material and labour disruptions including our Code of Business Conduct More specifically, we: were addressed. By implementing mitigating actions, coordinated between and Human Rights at Work Policy manufacturing, sourcing and other supply chain source groups, we successfully • performed a high-level country avoided any material or product shortages to customers and operating plants. • meet all country-specific legislative and procurement category-based requirements required to operate risk assessment to identify suppliers their respective businesses with high modern slavery risks pRIORITIES AND FOCUS • baselining current performance and • meet our safety, sustainability and • engaged with our global suppliers of FOR Fy2021 establishing a sustainable supply chain capability requirements. ammonia and ammonium nitrate to approach to address identified gaps obtain greater transparency of GHG In FY2021, our focus is to mature our We regularly engage and work closely and opportunities emissions through our supply chain approach to supply chain sustainability. with our suppliers to support improvements We need to better understand how we can • continuing to engage our suppliers where required. • set a FY2022 GHG emissions intensity most effectively manage material risks and and customers on social, environment target which covers Scope 3 supplier capture opportunities for positive contribution, and ethic topics, and responding emissions associated with ammonia particularly within our communities of through industry and investor-led pROGRESS IN Fy2020 and ammonium nitrate supply operation. Key actions include: initiatives such as the CDP Supply Our approach and performance on supply • responded through the Carbon Chain program chain sustainability continues to evolve. • identifying the necessary components Disclosure Project (CDP) Supply Chain for a practical and effective sustainable • completing a concept study for In recent years our focus has centred program, providing key customers on managing key compliance risks supply chain framework, covering our the removal of palm oil from with information on our climate key risks, opportunities, governance emulsion products. such as anti-bribery and trade sanctions, change performance. due diligence and assurance practices. and processes in relation to ethical, social and environmental performance 30 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 31
TRANSITIONING TO A LOW‑CARBON ECONOMy
We have matured our understanding of the potential impacts of climate change on our CLIMATE business and defined a credible plan to increase our resilience in a low-carbon economy. RESILIENT
ECONOMIC FY2020 PERFORMANCE GROWTH We have an important role to play in protecting the environment and addressing climate change by minimising our environmental footprint and delivering commercially beneficial solutions that enable our customers to minimise their own environmental impact. 9% REDUCTION IN OPERATIONAL PROGRESSED IMPLEMENTATION SET A NEW CLIMATE CHANGE SCOPE 1 AND 2 GHG EMISSIONS OF OUR TCFD ROADMAP TARGET FOR 2030 compared to FY2019
RESpONDING TO CLIMATE CHANGE Despite the global disruption caused by In electricity, renewable technologies In November 2020, following the the COVID-19 pandemic, we maintained are readily available but not yet deployed conclusion of the financial year, we included our efforts to mitigate and adapt to climate with sufficient scale. In hard-to-abate decarbonisation measures within our change. Climate action remains critical over sectors, including chemicals and explosives, relevant executive remuneration incentive the next decade and we believe a transition technologies to fully decarbonise industrial plan, with effect from FY2021. to a low-carbon economy can drive emissions are only just emerging or near-term job creation while increasing being demonstrated. economic and environmental resilience. Operational Scope 1 Despite these challenges, our priority and Scope 2 GHG emissions is to accelerate our decarbonisation over the next decade and continue to work 9% Reduce operational collaboratively to find solutions towards below FY2019 levels Scope 1 and Scope 2 a low-carbon future. GHG emissions by Our success can only be founded on AT LEAST 40% practical evidence-based initiatives, rapid by FY2030 (on FY2019 levels)1 deployment of mature technologies and access to emerging solutions and support incentives to reduce emissions in an Consistent with our Climate Change economically sustainable manner. Policy, we accept that human activities are influencing global warming and support This year, we progressed work to align our the primary objective of the Paris Climate reporting with the recommendations of the Agreement2 to keep global temperature rise Task Force on Climate-related Financial to well below 2 degrees Celsius and pursue Disclosures (TCFD). We know there is more efforts to constrain warming to 1.5 degrees to do, however our FY2020 disclosures Celsius. While scientific consensus3 suggests detail our progress on governance, risk achieving net zero emissions by 2050 is management, strategy, and metrics and required in support of these temperature targets in relation to climate change. goals, many challenges remain. Further information on our disclosures can be found in our TCFD Index.
1 Applies to existing operations. Base year emissions will be recalculated consistent with emissions accounting protocols if structural changes occur such as acquisitions or divestments. 2 On 12 December 2015, parties to the UNFCCC reached a landmark agreement to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future. This is known as the Paris Agreement. 3 Intergovernmental Panel on Climate Change (IPCC) Special Report, October 2018. 32 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 33
TRANSITIONING TO A LOW‑CARBON ECONOMy (Continued)
Board Audit and Risk Committee Executive Committee purchasing of ammonia, nitric acid, OUR STRATEGY FOR CLIMATE ACTION (BARC) ammonium nitrate, cyanide and related Our CEO and the Executive Committee STRATEGIC PILLARS blasting systems. Accordingly, responsibility The BARC assists the Board in are responsible for directing and promoting for managing GHG emissions is assigned assessing the adequacy and integrity the profitable operation and development to the Chief Manufacturing Officer. of our financial and operating controls, of the Orica Group. Key management providing oversight of risk management decisions are made in accordance with A cross-discipline internal governance systems, and compliance with legal their delegated authority. steering committee provides additional requirements. Exposure to material oversight of climate-related initiatives, Responsibility for assessing climate change strategic and operational risks is monitored management priorities and annual reporting. risks and opportunities is assigned to our for changes and reported on twice a Chief Financial Officer. A dedicated global During FY2020, the Executive Committee: year, along with their controls and plans EMBED CLIMATE IN ACCELERATE CATALYSE sustainability team in the Finance function to manage them. • supported operational efficiency and OUR STRATEGIC DECARBONISATION: CLIMATE ACTION: is responsible for advising the Executive emissions reduction opportunities DECISION MAKING: The BARC reviews a sustainability Committee, Board sub-committees and the materiality assessment each year, including Board on our response to climate change. Integrate consideration of Reduce Orica’s GHG emissions Mobilise our people, collaborate • formulated our long-term advice on emerging risks and opportunities. A representative of the sustainability team is climate change into our in the decade to 2030 and help customers respond to manufacturing strategy and During the year, the BARC considered also embedded in the Investment Committee governance, risk management, climate change, foster innovation decarbonisation pathway strategic risk updates on climate change, to inform financial planning decisions. and strategic and financial and technology, and advocate commodity demand and markets among Our Chief Development Officer and • endorsed our new climate change targets planning processes responsibly on climate other risks. Progress was monitored on strategy team are responsible for integrating and an updated Climate Change Policy aligning our climate action and disclosures climate change into strategic planning. • endorsed an enterprise-wide approach against the recommendations of the TCFD. GUIDING PRINCIPLES Orica’s material sources of GHG emissions to further embed climate change into A transition to a net zero The path to a net zero Commodities, raw Transparency arise from the manufacture and third-party our operating model. emissions economy is emissions economy must materials and technology and disclosure drive required to limit global represent a 'just transition' are fundamental to the individual and collective warming in line with the and encourage sustainable low-carbon transition business performance goals of the Paris Agreement4 development5 CLIMATE CHANGE GOVERNANCE
BOARD OF DIRECTORS pOSITIONING ORICA FOR A performance updates. Our Board is Following discussions between Non-executive Directors and CEO LOW‑CARBON ECONOMy experienced in climate-related matters (refer management and the SHECS Committee, Strategy, Performance, Risk Management, Culture 2020 Corporate Governance Statement), the Board endorsed Orica’s new climate As the global leader in mining and civil approves our Climate Change Policy and change targets for 2030 and a further blasting, we have a fundamental role monitors its implementation to support the updated Climate Change Policy in to play in addressing climate change. execution of the business strategy. Climate November 2020. BOARD COMMITTEES A low-carbon economy is about sustainable change strategic risk updates are provided Safety, Health, Environment, Board Audit and Risk Committee Human Resources and development and achieving economic In FY2021, the Terms of Reference to the Board annually, with climate risk Community and Security Committee Risk management Compensation Committee growth through societal and systems for the Board and committees will be SHECS management and performance Remuneration policy deep dives provided every two years. transitions that limit global warming in reviewed with regard to the oversight conjunction with poverty eradication During FY2020, the Board: of climate-related issues. and efforts to reduce social inequalities. • endorsed the revised Climate Change EXECUTIVE COMMITTEE Safety, Health, Environment, Our response is underpinned by four Policy in November 2019, following the Community and Security Committee Chiefs and Regional Presidents guiding principles and three pillars of consideration of a strategic climate risk Orica’s climate change response decarbonisation. This represents the update in FY2019 The SHECS Committee assists the Board in next phase of our actions to meet our the discharge of its responsibilities to allow • considered a new set of macro-economic responsibility to act on climate change. detailed consideration of complex climate scenarios incorporating a range of global issues, and has oversight of our SHECS STEERING COMMITTEE MANUFACTURING & SUPPLY CHAIN warming futures which will underpin management framework, systems and Chief Financial Officer, Chief Communications Chief Manufacturing Officer, Regional more sophisticated, quantitative scenario CLIMATE CHANGE GOVERNANCE performance, including climate change. Officer, representatives from Finance, Presidents and Group Executives analysis to be performed in FY2021 Orica Board The adequacy of our SHECS strategy and Strategy, Risk and Assurance, Sustainability, GHG emissions management • considered an update on our strategic updates on performance are monitored Company Secretary Office, Strategy, Human Resources Climate change is a material governance risks and mitigating responses quarterly in addition to other scheduled and strategic risk and is routinely overseen Orica’s climate change action plan (including climate change), risk meetings. Our climate-related disclosures and TCFD reporting by the Orica Board. Climate-related topics signposts, long-term manufacturing are reviewed and endorsed by the SHECS are considered during strategy discussions, strategy and decarbonisation Committee, including metrics and targets. strategic risk management oversight and opportunities as part of the Board GROUP POLICIES, STANDARDS AND PROCEDURES monitoring, policy implementation and strategy review in August 2020.
OUR PEOPLE 4 Net zero emissions: achieved when human-induced emissions to the atmosphere are balanced by natural removals over a specified period. The Paris Agreement recognises the need to achieve net zero emissions by the second half of this century. 5 Ambitious emissions reductions are achieved in conjunction with economic development, adaptation, poverty eradication and reducing social inequity. 34 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 35
TRANSITIONING TO A LOW‑CARBON ECONOMy (Continued)
• reputational considerations as the A SUMMARy OF THE SCENARIO NARRATIVES expectations from our customers, investors and other stakeholders continue to evolve • the physical impacts of climate change under different global 3°C <2°C >4°C 3°C warming trajectories. Base case Scenario 1: Scenario 2: Scenario 3: Ambitious, coordinated Widespread nationalistic Emergence of new global climate action economic policy regional powerhouse TIME HORIZONS
Informed by IEA WEO6 2019 STEPS7, Informed by IEA WEO 2019 SDS10, Informed by IEA WEO 2019 STEPS, Informed by IEA WEO 2019 STEPS and o in orm t e scenario Wood McKenzie ETO8, and IPCC RCP6.09 Wood McKenzie AET-211, and Wood McKenzie ETO, and IPCC RCP8.5 SDS, Wood McKenzie ETO and AET12, narrati e de elopment IPCC RCP2.6 and IPCC RCP6.0 and t e assessment o risks and opport nities • Global economic growth is • Global cooperation and • Increasing nationalism leads • Successful economic reforms constrained by moderating commitment among to limited global cooperation, result in unconstrained e de ined rele ant demographic factors, governments to address reversal of free trade, and growth in many developing s ort medi m and geopolitical frictions and climate change puts global ultimately suppressed growth countries. Emergence of new long term time ori ons sluggish productivity growth. emissions on the well-below in economic output. economic powerhouses – • While governments deliver 2-degree trajectory, in line • Governments abandon India and Africa – supported ort term ears on stated climate and energy with the Paris Agreement. global climate change by a favourable global trading and investment environment. We have a three-year business policies, limited additional • Transition to a low-carbon commitments in favour of policy intervention results in economy becomes one of the other national priorities. • To offset additional emissions pROGRESS IN Fy2020 Integrated scenario planning planning outlook considering financial and operational aspects. an uncoordinated transition drivers of global economic • Weak investment limits experienced in India and Embedding climate in decision making We have a long history of using scenario both at the national and growth, partly constrained research and development Africa, the US, the EU and by reduced end-use China ramp up their ambition planning as a strategic tool to inform edi m term ears international levels, that activity and commercialisation During FY2020, we undertook a program falls short of the Paris consumption. to a level aligned with the our commodity outlooks and long-term Our market and customer outlooks of new technology, of work to improve understanding of our Agreement’s objectives. Paris Agreement. strategic direction. In FY2020, we built typically have a five-year horizon. • Broader innovation and hindering adoption of exposure to climate change and integrate • Modest investment in technology investment low-carbon alternatives. • High capacity of both the on work done in previous years these considerations into our risk management ong term ears research and development sees drives accelerated adoption private and public sectors to embed climate-related factors more • Consumers and the and strategic planning. Our FY2020 work incremental advancements of new technology, to invest in technology comprehensively into our corporate Our long-term commodity industry are driven by program was aligned with the TCFD and business strategy outlooks in technology, rather than including breakthrough economic choices and rely development leads to a macro-economic scenarios. recommendations and included: incorporate semi-quantitative major breakthroughs. clean technologies and on conventional options. proliferation of innovative early retirement of products and an acceleration A base case and three scenarios were scenarios extending • The industry continues • As countries fail to deliver on • undertaking a climate change risk conventional capacity. of technology adoption in developed in the context of relevant out to 2040. to focus on productivity, stated climate commitments assessment across our global value most industries. megatrends impacting our industry and steadily increasing adoption • Consumer and stakeholder and in the absence of a chain to identify our most significant of innovative products preferences evolve towards • Strong adoption of low- tailored to our business success drivers. global mitigation framework, physical and transitional climate risks and services. building a zero-emissions carbon emission technologies These represent a range of alternative focus shifts to adaptation and and opportunities, building on past circular economy. in the developed world; India futures compliant with the five TCFD • Rate of adoption of low- resilience. Physical climate work completed over the last two years carbon emission technologies • Carbon pricing broadly change intensifies impacts on and Africa progress along a principles of plausible, distinctive, consistent, and retirement of existing aligned with the IEA’s WEO operations and supply chains. more conventional pathway. • further integrating physical climate relevant and challenging, and considered: conventional capacity driven 2019 SDS: A$121-$161 in • The physical impacts of and transitional risks and opportunities • macro-economic and demographic by cost competitiveness. 2030 (in FY2020 real terms). climate change intensify, into our strategic scenario planning, including the frequency and factors, including gross domestic • Carbon pricing broadly • Timely adaptation and risk management and decarbonisation intensity of extreme weather product (GDP) and population growth aligned with the IEA’s mitigation measures allow processes Qualitative and quantitative assumptions WEO 2019 Stated Policies the economies to deal with events, increasing the costs • changes to policies and regulations, underpinning the scenarios were drawn Scenario. A$19-58 in 2030 physical climate impacts. of doing business. • updating Board, BARC and SHECS including carbon policy, trade barriers from publicly available reference scenarios (in FY2020 real terms). committees reporting and establishing and recycling regulation and data sets produced by the International a management steering committee • The physical impacts of Energy Agency (IEA), the Intergovernmental climate change intensify, to monitor progress against the • technology development and uptake, Panel on Climate Change (IPCC), Wood including the frequency and implementation of TCFD with a focus on hydrogen, battery Mackenzie and Bloomberg New Energy intensity of extreme weather storage, electric vehicles, renewable • extending membership of the Orica Finance, and complemented by internal events, increasing the costs energy, carbon capture, utilisation of doing business. Investment Committee to sustainability analysis on demand forecasting and other and storage, and automation to support climate-related decision- relevant external sources. Assumptions making in capital allocation. • changes in market supply and demand arising due to the global COVID-19 pandemic were not incorporated. 6 International Energy Agency World Energy Outlook 2019. for inputs and commodities, including 7 Stated Policies Scenario. consideration of fuel prices, trends 8 Energy Transition Outlook. towards more conscious customer 9 Representative Concentration Pathway. 10 Sustainable Development Scenario. behaviour and the degree of substitution 11 2-Degree Scenario. of certain minerals and raw materials 12 Accelerated Energy Transition. 36 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 37
TRANSITIONING TO A LOW‑CARBON ECONOMy (Continued)
Our strategic planning in FY2020 While our understanding of physical climate • increasing organisational focus on Climate risks and opportunities focused on understanding long-term change risks is evolving, they are not future commodities such as copper, Our corporate scenarios informed commodity demand changes and key anticipated to materially threaten our ability to as demonstrated by our recent an assessment of climate risks and response areas to maintain business serve our customers. Orica’s security of supply acquisition of Exsa in South America opportunities, which was aligned with resilience. Critical signposts have been is a key competitive advantage facilitated • growing our market share across a our enterprise-wide Risk Management identified to monitor and help predict by our global manufacturing supply chain. diversified commodity portfolio and framework and the recommendations the world’s future state. We are focused on managing risk and capturing sectors such as quarrying, construction, of the TCFD. The assessment was We continue to confront medium-term growth and diversification opportunities to civil infrastructure and tunnelling. undertaken through a highly collaborative climate policy uncertainty in our two maintain the resilience of our business by: process, involving representatives from While we strengthened our integrated key jurisdictions of Australia and Canada. our risk, strategy, manufacturing, product, • monitoring and actively managing the strategic thinking in FY2020, we will Exposure to carbon costs is modest financial, supply chain and sustainability scale-back from thermal coal exposure continue to enhance our approach to and we largely offset financial impacts functions. Risks and opportunities identified integrated scenario analysis by analysing through the generation of carbon credits • continuing to invest in new mine were assessed for their relative significance potential financial implications and and participation in relevant global technology and assembling a portfolio based on Orica’s time for reaction and the strategic responses to ensure our carbon markets. of digital products servicing the magnitude of potential financial impact. ongoing business resilience. broader mining value chain Deep dives using a semi-quantitative risk methodology have been undertaken or are planned for those risks and opportunities deemed of most significance to Orica. Our most material climate-related OUR pOSITION ON THERMAL COAL risks and opportunities, and our management responses are summarised on pages 38-39. The impact of the In Fy2020, 16 per cent of our global revenue climate policy support and accelerated commercialisation risks and opportunities will likely vary came from servicing the extraction and of low emission technologies. across the different geographies and jurisdictions in which we operate. supply of thermal coal, rendering it one of This is a crucial decade for climate action and we are the key commodities in our existing portfolio committed to playing our part. We believe the necessary In FY2021, we will progress our TCFD mix. Due to its size and ongoing demand-side transition to a lower carbon economy must be responsible, journey by: uncertainty, energy markets and the future of coordinated and just for both developed and developing economies. This is why we will: • strengthening our assessments thermal coal has for a number of years been of the physical impacts of climate recognised as a strategic business risk for • Continue to service our coal customers in the medium change on our major global assets Orica. We continuously monitor relevant term, acknowledging the right to development of and operating regions signposts to gauge key changes and trends in emerging economies, while seeking opportunities the external environment to ensure risks are to become a partner in our customers’ efforts to • further integrating responses to the climate risks and opportunities identified understood and our business strategy transition to a low-carbon economy. remains resilient. • Leverage our expertise in science and technological • developing additional metrics and targets to monitor and drive Thermal coal is mainly used as a fuel source in electricity innovation to help develop sustainable products and services for our customers, and foster smarter, safer improvement of our management generation, representing 38 per cent of global generation1. of climate risks and opportunities. The analysis supporting our ‘base case’ forecast2 shows a mining with the potential to enable emissions modest increase in global thermal coal demand in the medium savings across the mining sector’s value chain. term3, driven by continued electricity demand growth and the • Continue to strengthen our scenario analysis, assess lack of cost-effective base-load alternatives in developing Asia. and capture growth and diversification opportunities This is despite ongoing reduction in thermal coal consumption to increase our exposure to commodities that contribute in developed countries, as more reliance is placed on natural to a low-carbon future, such as copper (for example, gas, wind and solar generation. With limited expected our recent Exsa acquisition increases our exposure to deployment of carbon capture, utilisation and storage (CCUS) copper in South America). in our ‘base case’, global thermal coal consumption peaks in • Collaborate and partner with industry and government the mid-2020s with demand trending downwards thereafter. to reduce emissions and further understand pathways This trend is expected to accelerate after 2030 as utility-scale towards net zero emissions. Orica is a founding member battery solutions become commercially attractive in of the Australian Industry Energy Transitions Initiative, developing countries. working to research and demonstrate decarbonisation in One recommended disclosure from the Task Force on hard-to-abate sectors like mining, explosives, and oil and gas. Climate-related Financial Disclosures is to consider different climate-related scenarios, including a 2°C or lower scenario. 1 International Energy Agency (2019), ‘Coal 2019. Analysis and Forecasts to 2024’. 2 Orica’s ‘base case’ represents our company’s view of the most likely 2030 forecast Long-term commodity demand assumptions underpinning based on the information available at the time of the analysis (February to August 2019). our ‘base case’ are stress-tested through comparison Orica uses its ‘base case’ forecast to inform business and strategic planning. Since we finalised our FY2020 corporate scenario analysis, new reference scenarios have been against our three alternative scenarios. With ambitious, developed, including the IEA WEO 2020; this and other relevant updated sources will coordinated global climate action, thermal coal demand be incorporated into our FY2021 scenario planning. 3 Thermal coal production forecasts are informed by our internal commodity analysis decreases more steeply than the ‘base case’, driven by and Wood McKenzie ETO 2019. 38 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 39
TRANSITIONING TO A LOW‑CARBON ECONOMy (Continued)
Theme Description of risks and opportunities Orica’s response Theme Description of risks and opportunities Orica’s response
Supply chain Increased frequency and/or intensity of extreme The disruption of our supply chain has long been identified and Carbon pricing The development of carbon market mechanisms We integrate an internal carbon price into our emissions reduction resilience and weather events (cyclones, floods, bushfires) managed as one of our material operational risks. We have: and markets and government carbon policy can provide investment cases to inform our business and financial planning. security have the potential to disrupt our supply chain, • robust supplier on-boarding processes that include consideration (Continued) opportunities to participate in carbon markets We will: impacting our ability to maintain production to support our emissions abatement strategy. Time horizon: of the supplier’s geographical exposure to extreme weather events • seek further opportunities to collaborate with government, levels and service customer demand. short, medium • supplier managers assigned to our critical suppliers to increase industry bodies, research institutions and our customers to advance and long term Changes in the supply and demand dynamics awareness on issues, including climate-related, that may have low-emissions technology and carbon market opportunities to Physical: Acute of critical inputs may also impact our ability the potential to impact our supply chain and develop mitigation help manage our exposure to carbon pricing to secure our sourcing needs while preserving actions where necessary • advocate for clear and effective policy signals and regulatory Transitional: cost-competitiveness. For example, the frameworks that enable an orderly and just transition to a Market, Policy prospects of ammonia being increasingly used • alternative sources of supply for critical goods such as ammonia low-carbon economy. and Legal, and as a vehicle to transport hydrogen may impact and ammonium nitrate Reputation the demand and cost profile for ammonia. • safety stocks at our sites to increase adaptability and ensure production continuity Orica’s Our reputation may be negatively impacted Climate change is one of our material business risks. We have Increasing regulated carbon pricing may reputation if we fail to demonstrate and communicate updated our Climate Change Policy to better reflect our long term • relationships with multiple global shipping companies and increase our sourcing costs due to raising prices appropriate climate action, both with regards commitment to playing our part in achieving the goals of the evaluations of ports and shipping routes to increase the resilience Time horizon: of key inputs and services, including raw to our decarbonisation efforts as well as our Paris Agreement and aligning with the TCFD recommendations. materials, gas, electricity and freight services. of our sea freight services. short, medium and long term market positioning. This could impact our ability In FY2020, we undertook substantive work to shape the way We will: to secure financing and investment capital, Transitional: in which we will implement and disclose climate action over the next • further assess and respond to our supply chain’s exposure to our social license to operate, and our ability Reputation crucial decade. We have contracted additional resources specialised in physical climate risks to attract and retain talent. climate change to inform our abatement strategy and accelerate the • continue to build capability within the business to ensure climate Alternately, positioning our business to support implementation of TCFD. This work has allowed us to formulate our change considerations are embedded into our sourcing strategy. the transition to a low-carbon economy can strategy for climate action. bring positive stakeholder response and We will: enhanced reputation. Asset integrity Increased frequency and/or severity of extreme In FY2018, we undertook physical climate risk assessments for several • continue to embed climate in our decision-making, reduce our and production weather events (flooding, storm surges, winds, of our global manufacturing assets. These assessments helped us emissions and be a catalyst for climate action through technology continuity bushfires) have the potential to damage our assets understand our exposure to natural perils and key potential physical and innovation, partnerships and responsible climate advocacy. Time horizon: and/or interrupt our ancillary services, leading climate change impacts. At the time, we deemed our current risk to short, medium to operational disruptions, impacts to planned sites as low and the existing controls in place as appropriate in the Changing The demand for our products and services may Our strategic scenario planning process helps us explore relevant and long term production levels and increased repair costs. short to medium term. However, we recognise climate-related risks demand for change if market demand shifts as the world trends with the potential to impact market demand. We use a range are dynamic and regular assessment is required to ensure we continue Physical: More frequent and prolonged droughts Orica’s products transitions to a low-carbon economy. This brings of scenarios to ensure our strategy remains flexible and resilient under and changes in rainfall patterns may lead to to appropriately manage any risks to our asset integrity and and services both risks and opportunities. different possible futures. This year, we continued to improve our Acute and production continuity. Chronic constrained water supply in areas where we Time horizon: For example, we may experience reduced integration of climate change considerations into our corporate operate, impacting the production capacity We will: medium to demand from thermal coal customers as the scenario analysis. and environmental obligations of our • revisit and strengthen our approach to assessing physical long term substitution of thermal coal in power generation We will: manufacturing processes. climate risks on our major global assets and develop additional Transitional: accelerates over the next decade. Similarly, an • enhance our scenario planning processes to better understand Increasing temperature extremes may also lead risk mitigation and adaptation responses, where required. Market and increase in the use of scrap and a potential move any necessary adjustments to our strategic direction ensuring to reduced performance, reliability or integrity Technology towards electric or hydrogen-based processes our products and services continue to cater for the evolving of our plant equipment. in the steel manufacturing sector may reduce needs of our customers demand for metallurgical coal, impacting the demand for the products and services we offer • focus on capturing growth and diversification opportunities Worker health Acute (extreme weather events) and chronic Nothing is more important than the health and safety of our people. to mine this commodity. More generally, to increase our exposure to commodities likely to be in higher and safety (increasing temperatures and number of hot Preventing illness and injury, particularly due to heat stress and other increasing circularity trends have the potential demand in a lower emissions world, and to use our technology days, increased prevalence of tropical diseases, weather extremes, is governed by our Safety, Health and Environment Time horizon: to reduce the need for primary mined and innovation expertise to develop more sustainable product etc.) physical climate change has the potential policy and our SHES management systems. The systems, processes short, medium commodities such as copper, gold and iron ore. and service solutions for our customers. and long term to pose increased health and safety risks for and controls in place to protect our people are included in our SHES our employees and contractors, impacting Group standards and underpinning procedures. Alternately, the development and mass adoption Physical: of new technologies such as hydrogen and electric productivity and absenteeism rates, as well We will: Acute and as our ability to attract and retain talent. vehicles have the potential to increase the end use Chronic • continue to improve our management responses to health and of materials produced by Orica and our customers. safety risks, including with consideration to the threats posed by Increased investment in climate change adaptation climatic trends and events and resilience measures may also lead to increased • continue to build our people’s capability to better understand and demand for quarrying and construction materials, manage the impacts of climate change on their health and safety. increasing the demand for our products and services targeted to these commodities. Carbon pricing An increasing price on carbon may lead to One of the pillars of our strategy for climate action focuses on and markets increasing operating costs, including through reducing our GHG emissions over the next decade. To deliver Operational The development and deployment of As part of our manufacturing strategy, we have explored opportunities competitiveness low-carbon energy and transport technologies to achieve emissions reductions through a range of technology, energy Time horizon: higher input prices, compliance costs and on this commitment, we have set new climate targets to 2030 have the potential to impact our ability to remain efficiency improvements and renewable energy initiatives at our short, medium insurance premiums. supported by an evidence-based decarbonisation pathway. Time horizon: competitive in our operations. This impact can manufacturing sites. Our analysis has allowed us to confidently set and long term The introduction of trading taxes and/or We continue to monitor our direct (Scope 1 emissions) and indirect medium to be positive if we successfully integrate these evidence-based climate targets to 2030 and provided a clear pathway barriers for high emissions intensive products (Scope 2 and Scope 3 emissions) potential exposure to carbon policy, long term Transitional: technologies to drive lower operating costs forward to improve both our emissions intensity and our operational has the potential to impact our import and trade and carbon costs in our key jurisdictions. Our operational Policy and Legal Transitional: and emissions intensity, or negative if we competitiveness. export costs and/or our ability to import/export emissions are currently subject to direct regulatory carbon cost in Technology transition at a slower pace than our competitors in some jurisdictions. Australia and Canada. Our exposure in these jurisdictions continues to We will: and customers. be modest. We largely offset financial impacts through the generation • continue to explore opportunities to integrate emissions reduction of carbon credits and participation in global carbon markets. technologies into our operations. 40 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 41
TRANSITIONING TO A LOW‑CARBON ECONOMy (Continued)
Accelerating decarbonisation GHG emissions performance IMpROVING THE ACCURACy AND A pUBLIC‑pRIVATE pATHWAy TO COMpLETENESS OF OUR SCOpE 3 INVENTORy Global Scope 1, 2 and 3 GHG emissions13 DECARBONISING INDUSTRy were 6.3 MtCO2-e, a reduction of 9.8 per cent from FY2019. Emission reductions this year facilitated the Successful decarbonisation and adaptation to climate change impacts achievement of our short-term FY2020 During FY2020, we reviewed our approach to estimating Scope 3 emissions requires a collaborative approach across supply chains. We continue to GHG emissions intensity target. In FY2020, from purchased ammonia and ammonium nitrate to improve the accuracy support national and sub-national government efforts to implement we achieved a GHG emissions intensity of our calculations. As part of this process, we: effective policy frameworks to support decarbonisation that would be of 1.64 tCO -e per tonne of AN sold, 2 • updated the emissions factors used to better capture the life cycle of otherwise uneconomical. 6.5 per cent below our FY2019 intensity our purchased products across different regions (1.75 tCO2-e per tonne of AN sold). This year, in partnership with the Alberta provincial government in Canada, • engaged with our main suppliers of ammonia and ammonium nitrate we co-invested in a new catalyst abatement system. This technology will In FY2020, our total operational Scope 1 to obtain actual emissions intensities where possible. deliver over 95 per cent abatement of nitrous oxide emissions in one of our and Scope 2 emissions were 2.1 MtCO2-e. These changes have seen our Scope 3 emissions increase by 11 per cent nitric acid plants from FY2022. This represents a 9.5 per cent (222 ktCO2-e) reduction from FY2019, achieved by compared to our previous methodology. This increase is due to our revised We concluded a grant partnership with the New South Wales Government replacement and improved performance methodology incorporating a more complete boundary. in Australia, focused on best practice energy management at our Kooragang of selective catalyst abatement in our Island manufacturing facility. Following management system diagnostics, • FY2020 emissions calculated in line with revised methodology: 4.2 MtCO2-e nitric acid plants. renewable energy procurement and energy efficiency opportunity analysis, • FY2020 emissions calculated in line with previous methodology: 3.7 MtCO2-e we identified several efficiency and carbon reduction opportunities with a Bontang, Indonesia recorded a 43.3 per cent payback of less than two years. Some of these will be implemented in FY2021. reduction in net emissions despite Our new methodology will enable us to more accurately increasing production by 6.3 per cent We also became a founding participant of the Australian Industry Energy compared to FY2019. Our Kooragang Island track and report on our Scope 3 emissions and continue Transitions Initiative convened by independent not-for-profit bodies, Nitrates Plant, in Australia achieved a to engage with key suppliers to progressively drive ClimateWorks Australia and Climate-KIC Australia, and in collaboration 6.3 per cent reduction in net emissions emissions reductions along our supply chain. with the Energy Transitions Commission. The initiative will strengthen our despite increasing production by knowledge to develop pathways and actions that can accelerate emissions In FY2021, we will continue to progress the completeness of our Scope 3 0.2 per cent. Our Carseland, Canada reductions across our operations. inventory by estimating additional relevant and material emissions sources facility reduced its net emissions by beyond purchased products. 8.6 per cent compared to FY2019. Scope 2 (purchased electricity) emissions increased 12.3 per cent from FY2019 primarily due to updating our GHG emissions inventory with region-specific Canadian electricity emission factors. Global GHG emissions and emissions intensity per tonne of AN sold Decarbonisation strategy and Global operational GHG emissions emissions targets (Scope 1 and 2) by source Our Scope 2 emissions have reduced 1.86 1.81 18.1 per cent over the last three years. 1.77 1.75 Since FY2018, we have continued to Electricity 1.64 We continue to implement a range of focus our decarbonisation studies and (Scope 2) 11% energy efficiency initiatives and in FY2020, 4,676 4,416 4,615 trials on continuous manufacturing generated 600 MWh of electricity from 4,134 4,155 facilities where we are targeting substantial Natural gas reductions in our nitrous oxide emissions, (Scope 1) renewable sources. We are presently 33% investigating new opportunities for which represent 55 per cent of our total operational emissions. Other renewable energy across the company. (Scope 1 & 2) 260 242 Our Scope 3 emissions reduced by 318 332 272 Over the past two years we: 2% 10 per cent in FY2020 from FY2019 levels. Nitrous oxide • replaced selective abatement catalyst This was primarily due to lower volumes 1,825 1,799 2,244 2,092 1,840 (Scope 1) in Bontang, Indonesia – reducing the 55% of third-party sourced bulk products this FY16 FY17 FY18 FY19 FY20 facilities nitrous oxide (N2O) emissions year as the impacts of the COVID-19 Total Scope 1 Emissions Total Scope 2 Emissions Total Scope 3 Emissions Emissions Intensity by 61 per cent (195 ktCO2-e) since pandemic were felt across the world. (ktC02-e) (ktC02-e) (ktC02-e) tC02-e/tonne AN sold Global nitrous oxide emissions from nitric FY2018 acid production per tonne of nitric acid Our Scope 3 emissions inventory accounts • performed a range of abatement for the emissions associated with the catalyst trials at Kooragang Island, 1.30 sourcing of ammonia and ammonium Australia – reducing N O emissions by nitrate from third parties, a material source 2 1.08 29 per cent (243 ktCO -e) since FY2018 of indirect emissions. In FY2021, we will 2 0.98 improve the completeness of our inventory • designed and procured a new catalyst by accounting for other relevant and abatement system for installation at material Scope 3 emissions sources. Carseland, Canada in late 2021. Further details on our progress will be 13 FY2020 global GHG emissions include estimations for some missing periods; estimated data represents 2.3 per cent of total Scope 1, 2 and 3 data for the reporting period. FY2020 global GHG emissions data excludes Exsa operations due to the acquisition included in our FY2021 corporate reports. taking place in May 2020. Emissions associated with Exsa operations will be included in our emissions reporting from FY2021. FY18 FY19 FY20 42 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 43
TRANSITIONING TO A LOW‑CARBON ECONOMy (Continued)
During FY2020, we performed an Our targets are underpinned by a credible We will continue to use our capability Our approach is governed by our evaluation of longer-term abatement and achievable pathway to decarbonisation to support research, development and Corporate Affairs and Brand, Government opportunities as part of developing our focused on the reduction of Scope 1 and 2 innovation of low-carbon solutions and Community Relations Group manufacturing strategy. A range of emissions across our global operations. and technologies. This will both support Standard. The standard outlines business practical, proven technology-driven This includes a continued focus on industrial the progressive decarbonisation of our requirements in relation to memberships solutions are available to unlock further process emissions, energy efficiency and manufacturing assets and the transition aligning to business needs, internal approval decarbonisation of our global operations. heat recovery, and renewable energy. efforts of our customers and the pathways and responsible advocacy. With natural gas feedstock a significant broader community. We have renewed our suite of emission It requires that representations to component of our emissions profile reduction targets to drive our efforts over stakeholders are consistent with any and cost base, we are assessing how Responsible advocacy the decade to FY2030. The target-setting Orica Group positions on regulatory or renewable hydrogen could play a role Orica is a member of industry associations process was informed by the Science Based government-related issues. in our decarbonisation journey over the around the world. We believe industry Targets Initiative (SBTi). While a chemical longer term. plays an important role in helping formulate We suspended our membership with sector-specific methodology is currently effective policy frameworks, standards and the Business Council of Australia (BCA) under development, we provided feedback Implementation of low emissions practice to facilitate a low-carbon economy. in February 2020 and will review our during the year and will assess its abatement technology has a long lead The principles guiding our climate-related approach in FY2021. This decision reflected applicability upon publication. time. Over the short term, we forecast advocacy efforts are included in our our increasing focus on sector-based global GHG emissions to stabilise or rise Climate Change Policy, in addition to: manufacturing policy issues such as the modestly as customer demand for our national growth agenda, research and products increase and execution of our • open and transparent international development incentives and in particular, decarbonisation pathway commences. carbon markets long-term energy affordability and security. AT LEAST • managed transition for the energy Catalysing climate action sector towards low emissions In response to increasing investor and stakeholder interest on climate change Low-carbon innovation and technology generation, while balancing the needs of energy security, affordability advocacy, we reviewed our governance The low-carbon transition will require 40% and emissions reduction and approach to industry associations in REDUCTION IN OPERATIONAL innovation, government support incentives FY2020. This has identified opportunities MINERAL CARBONATION INTERNATIONAL – and rapid technology development and • consideration of emissions-intensive, to further strengthen our Group Standard SCOPE 1 AND 2 GHG CREATING VALUE FROM CO EMISSIONS EMISSIONS BY FY2030 2 deployment across all sectors of the trade exposed businesses and the priority in FY2021. ON FY2019 LEVELS14 economy. We believe our innovation and of maintaining relative competitiveness technology expertise can serve as a catalyst between trading nations. In 2016, Mineral Carbonation International (MCi) switched on the world’s to improve our response and the action first carbon reactor at the University of Newcastle in Australia. The pilot plant of our customers to climate change. MAINTAIN EMISSIONS reacts industrial CO2 emissions with alkaline mine waste to produce a range of carbonate products for the construction sector. Since 2013, we have supported Mineral INTENSITY Carbonation International (MCi), an With backing from Orica, the start-up joins a growing research effort targeting Australian start-up focused on developing AT OR BELOW negative emissions technologies (NETs). NETs aim to capture emissions technologies to safely capture carbon at the source or remove them directly from the atmosphere for safe and dioxide emissions for potential use in 1.7 tCO2 e/ permanent storage via physical or chemical means. The IPCC has noted construction materials such as cements it is now impossible to meet the 1.5°C target established under the Paris and plasterboard. TONNE AN Agreement without significant deployment of NETs. We have also established partnerships SOLD Conventional wisdom views carbon emissions as waste and this viewpoint with universities and research institutions BY FY202214, 15, 16 has underpinned the development of early carbon capture and storage (CCS) including CSIRO and CRC ORE17 in technologies. However, by converting carbon emissions into useful new Australia, to develop a knowledge base products, MCi is part of an emerging subset of the NET industry called of decarbonisation technologies and carbon capture and utilisation (CCU). solutions. For example, Orica has been collaborating with CSIRO on a project This is transforming the way we think about carbon funded by the Australian Renewable ‘waste’. Where CCS is driven by cost, CCU is driven by Energy Agency to develop a novel value. By providing pathways for industrial partners to process for ammonia synthesis that is compatible with hydrogen produced transform their CO2 and alkaline waste streams into useful products such as cement, aggregate, plaster from renewable sources. board and pavers, MCi is decoupling its NET from legislation and subsidies.
14 Applies to existing operations. Base year emissions will COO Sophia Hamblin Wang says that if they can create business models, “we can be recalculated consistent with emissions accounting incentivise these industries quicker than waiting for governments to legislate.” protocols if structural changes occur such as acquisitions or divestments. MCi was in Davos, Switzerland this year to showcase this technology on 15 This target will be reviewed and updated in FY2022 to account for a more complete Scope 3 emissions inventory. the world stage. MCi is now working with partners in hard-to-abate sectors 17 CRC ORE is part of the Australian Government’s Cooperative 16 Short-term emissions intensity target is above FY2020 to commercialise the mineral carbonation technology. Research Centre (CRC) program, which supports industry-led performance due to forecast production increases in collaborations between researchers, industry and the facilities with less effective abatement technology. community to address major challenges facing Australia. 44 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 45
TRANSITIONING TO A LOW‑CARBON ECONOMy (Continued)
Key industry association memberships TCFD ROADMAp In FY2020, we undertook a gap analysis against the TCFD recommendations and developed a roadmap to guide our response over Industry association Geography Involvement and contribution a three-year period. Progress against the delivery of our TCFD roadmap is overseen by the BARC.
World Coal Association International • Membership fee Recommendation Action FY2020 FY2021 FY2022 • Participation in strategic projects, contribution to submissions Disclose the organisation’s • Strengthen Board and committee oversight of Chamber of Minerals and Energy Australia • Membership fee governance around climate-related issues. climate change-related of Western Australia • Participation in strategic projects of relevance risks and opportunities. • Establish a cross-functional, management-level Energy Users Association of Australia Australia • Membership fee steering committee to ensure progressive alignment with TCFD and integrated thinking. • Participation in strategic projects, contribution to submissions Governance • Strengthen climate-related governance processes to Australian Industry Group (Ai Group) Australia • Membership fee embed climate-related considerations into decision-making • Participation in strategic projects, contribution to submissions at function, region and division level of the business. Disclose the actual and • Complete a company-wide climate risk assessment to Chemistry Australia Australia • Membership fee potential impacts of identify physical and transitional risks and opportunities • Participation in strategic projects, contribution to submissions climate-related risks and over the short, medium and long-term. opportunities on the Carbon Market Institute Australia • Membership fee organisation’s businesses, • Review strategic and operational risk definitions, outlooks and signposts in light of the outcomes of the climate risk • Participation in strategic projects, contribution to submissions strategy, and financial planning where such assessment and scenario planning processes. information is material. Minerals Council of Australia Australia • Membership fee • Review Enterprise Risk Management framework to ensure • Participation in strategic projects of relevance it appropriately incorporates climate change considerations. Risk Management Risk
Australian Industry Energy Transition Australia • Participant fee • Complete further detailed analysis of priority Initiative (ETI) • Steering Committee member, participation in research, workshops, reports climate-related risks and opportunities.
Fertilizer Canada Canada • Membership fee Disclose how the • Integrate climate change considerations into strategic scenario • Participation in strategic projects, contribution to submissions organisation identifies, planning processes to analyse potential financial impacts assesses, and manages and assess business resilience under different scenarios. climate-related risks. The Fertilizer Institute USA • Membership fee • Review and develop strategic responses to mitigate • Participation in strategic projects of relevance risks and maximise opportunities informed by scenario planning and risk assessments. International Fertilizer Association International • Membership fee
Strategy • Develop a long-term operational GHG emissions • Participation in strategic projects of relevance decarbonisation pathway.
Federation of European Explosives Europe • Membership fee • Participate in the Australian Industry Energy Manufacturers • Participation in strategic projects of relevance Transitions Initiative to support efforts to decarbonise hard-to-abate sectors. Institute of Makers of Explosives (IME) USA • Membership fee • Participation in strategic projects of relevance Disclose the metrics and • Set long-term emissions reduction targets informed targets used to assess by the decarbonisation pathway. and manage relevant climate-related risks and • Improve the completeness of the Scope 3 GHG pRIORITIES AND FOCUS FOR Fy2021 opportunities where such emissions inventory. information is material. • Implement year two of our TCFD roadmap with a focus on our integrated approach to scenario analysis. • Disclose Scope 1, 2 and (material) 3 GHG emissions. • Finalise preparations for abatement technology deployment at Carseland, Canada in late 2021. • Collaborate with partners to accelerate emissions reductions across our operations. • Introduce climate-related performance metrics into • Improve the completeness and accuracy of our Scope 3 emissions inventory. management-level remuneration incentives.
• Develop additional relevant financial and non-financial metrics to monitor our climate performance. Metrics & Targets • Develop additional metrics and targets for assessing • Strengthen our governance by updating our Group Standard with regard to climate change performance and responsible advocacy, climate-related risks and opportunities in line with and reviewing the Terms of Reference for our Board and committees in relation to the oversight of climate-related issues. strategy, financial and risk management processes. • Disclose metrics and performance against targets for assessing climate-related risks and opportunities.
Key Commencement date Target completion date Target completion date and ongoing Action completed 46 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 47
STEWARDING NATURAL RESOURCES
Our business depends on and impacts natural resources and we are committed to strong ENVIRONMENTAL Water is a raw material used in our interrupted through Q4, and as a result environmental stewardship across all our operations. products, within manufacturing and our annual potable water intensity rose COMpLIANCE safety processes, and for site amenities. five per cent to 0.77 kL per tonne of AN The water we use is drawn from surface sold, higher than our target of 0.71 kL water, ground water, potable water and per tonne of AN sold. In the absence ZERO recycled water sources. of the Kooragang Island recycled water access issues, potable water intensity Severity 2 or Severity 3+ Our focus at all sites is on reducing our would have remained below target. environmental events dependency on potable water to limit FY2020 PERFORMANCE our impact on host communities and Overall water use decreased slightly increase our resilience to water stress. (two per cent) to 8.54 million kL driven We purchase, manufacture, transport, We are aiming to achieve this by increasing primarily by COVID-19 related site activity and store hazardous materials in facilities the efficiency with which we use water reduction. Recycled water and potable globally. Eliminating loss of product events and maximising our use of recycled water water contributed 26 and 34 per cent of and managing our material environmental wherever possible. total water use respectively, slightly below risks are foundational objectives that support our performance in FY2018 and FY2019. our stewardship of natural resources. We aim Total consumption of potable water rose We are committed to increasing our use of to comply with relevant environmental slightly to 2.94 million kL compared to recycled water, with our FY2021 target for legislation, licenses, and environmental 2.91 million kL in FY2019. The supply of potable water intensity set at 0.67 kL per consents across our global operations. recycled water to our Kooragang Island site, TH tonne of AN sold. our most water intensive facility, was 12% 4.7% 5.7% 4 EXPORT In FY2020, we increased our focus on REDUCTION IN WASTE INCREASE IN POTABLE REDUCTION SHIPMENT OF identifying environmental impacts and DISPOSAL, AND 65% WATER INTENSITY TO NET ENERGY HEXACHLOROBENZENE improved our site event and spill response Potable Water Consumption and Intensity DIVERSION OF WASTE 0.77KL/TONNE AN SOLD INTENSITY WASTES IN JULY 2020 protocols. These actions, in part, have FROM LANDFILL due to disruption of supply of to 5.61 GJ/tonne and good progress on remediation at Deer Park reduced the severity of environmental 0.81 0.77 0.77 recycled water AN sold and Yarraville (pre COVID-19 interruption) 0.73 impacts from our day-to-day operations 0.6 and contributed to our environmental 3.3 3.1 performance in FY2020. 2.9 2.9 2.5 In addition to achieving our target of zero The Environment Group Standard Severity 3+1 environmental events, we 2 within our SHES management system UpDATING SHES pROCEDURES TO MEET STANDARD also reported zero Severity 2 events for defines performance requirements and REQUIREMENTS FOR ENERGy, WATER AND WASTE the period. In FY2021 we will continue expectations for environmental practices to focus on opportunities to avoid loss across our global network. It requires of containment at our sites to reduce us to identify and understand our key our environmental impact. FY16 FY17 FY18 FY19 FY20 environmental risks and to proactively In FY2020, we worked with our environmental experts and key business Potable (million kl) Potable Intensity (kl/tonne AN) manage them to minimise the likelihood stakeholders to develop and release global guidance on: and impact to the environment. MINIMISING OUR Material environmental risks are assessed • spill preparedness and response ENVIRONMENTAL as part of our risk management programs, Gross Water Consumption (%) • engaging environmental consultants which aim to identify and mitigate FOOTpRINT unacceptable risks to the business. • reviewing consultant reports and setting up environmental 25 24 33 28 26 monitoring plans We develop, implement and embed Potable water intensity programs to achieve the environmental • understanding and managing contaminated land 11 11 0.77KL/TONNE 14 14 requirements set out in our SHES 13 Management System. Our guidance • conducting environmental aspects and impacts assessment reviews AN SOLD 23 24 documents, training materials and other • inspection and testing of in-ground pits and bunds. 25 26 support tools enable standardisation 25 of our approach, and assessment and Continuing our commitment to standardisation and simplification, verification of environmental performance we revised and updated: WATER 41 40 29 33 34 and natural resource management. • guidance on environmental reporting requirements for energy, Management of freshwater resources FY16 FY17 FY18 FY19 FY20 In FY2020, we maintained our focus on water, waste and emissions continues to be a core focus area and managing environmental risks, reducing our Potable Water Ground Water Surface Water Recycled Water is an issue that impacts directly on the environmental footprint and progressing • Environmental Management Plan template focused on mining communities in which we operate. our legacy remediation projects. services operations While competition for water resources • training on the environmental aspects and impacts identification process. continues to increase globally due to multiple pressures (particularly climate change, population growth and pollution), 1 Severity 3 environmental events result in relatively wide-spread serious environmental damage, with some impairment we recognise the critical importance of of ecosystem function that will recover after remediation. water for community and ecosystem health. 2 Severity 2 environmental events have a localised but measurable environmental effect that is reversible after clean-up. 48 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 49
STEWARDING NATURAL RESOURCES (Continued)
WASTE Gross waste disposal by destination (kT) ENERGy Gross energy consumption in product vs ancillary
7.1 Total waste diverted 7.7 Net energy intensity FY18 12.3 8.7 6.0 7.4 from landfill 5.7% 0.4 65% 0.6 0.2 below FY2019 0.2 FY19 13.6 10.1 up 9% on FY2019 3.9 5.0 4.4 4.3 1.9 In FY2020, our gross energy consumption 1.0 0.2 In FY2020, we continued to make progress fell nine per cent from FY2019 levels to FY20 12.8 8.7 toward the goals of minimising total waste 2.9 8.2 8.4 8.3 6.3 21.5 million GJ. Net energy intensity also FY16 FY17 FY18 FY19 FY20 disposed and maximising diversion of waste fell 5.7 per cent from 5.94 GJ per tonne Energy consumed ancillary to product (million GJ) 3 from landfill. Our total waste disposed Landfill (on or off site) Treated/Destroyed Resused Recycled of AN sold to 5.61 GJ per tonne of AN Energy consumed in product (million GJ) fell by 12 per cent to 18.2 kT, meeting our sold. The proportion of energy in product target of two per cent, however reduced increased by two per cent, largely due production volumes due to COVID-19 to energy efficiency improvements at contributed to this result. Waste diverted Kooragang Island which reduced overall from landfill rose to 65 per cent up from Proportion (%) of waste diverted from landfill ancillary energy use. Ancillary energy was 60 per cent in FY2019. For Mining Services 41 per cent of gross energy. Kooragang in Asia-Pacific, Europe and Middle East Island and Yarwun remain our largest 48.0 44.0 40.0 40.0 34.7 and Latin American regions, greater energy users, accounting for 77 per cent than 80 per cent diversion was achieved. of total energy consumption. The reduction In continuous manufacturing and other in gross energy consumption can be manufacturing activities comprising attributed to reduced production initiating systems/packaged explosives/ volumes due to COVID-19 as well as the specialty chemicals, 76 and 78 per cent implementation of efficient manufacturing diversion was achieved respectively. 52.0 56.0 60.0 60.0 65.3 processes. Each site is committed to These results reflect our focus on improving energy efficiency over time sustainable waste management practices FY16 FY17 FY18 FY19 FY20 and is actively pursuing more efficient and help set a path to increase our total Waste diverted from landfill (%) Waste sent to landfill (%) means of manufacturing. waste diverted from landfill though FY2021 and beyond. We pursue our waste reduction goals by adhering to a site-based hierarchy of avoiding waste generation wherever possible, increasing reuse and recycling, and diverting wastes from landfill. To further support our ongoing commitment to waste reduction, this year we conducted an extensive review of our FY2018 and FY2019 waste data. More detailed assessment of the types and volumes of wastes through FY2021 and beyond is required to establish programs which will prevent waste generation, or reuse or recycle more of the higher volume wastes generated as a result of our process and manufacturing.
3 Metric title was changed to waste disposed in FY2020 from waste generated as a more accurate description of the metric 50 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 51
STEWARDING NATURAL RESOURCES (Continued)
ENVIRONMENTAL pRIORITIES AND FOCUS REMEDIATION FOR Fy2021 • Build capability towards eliminating OUR AppROACH loss of product events that adversely impact soil or water at our sites. Our major environmental (land and groundwater) contamination and • Enhance risk identification and remediation challenges are dominated mitigation to identify environmental by legacy issues from former chemical risks and implement further controls manufacturing activities. However, there with tracking of actions and verification are some remediation requirements at key manufacturing sites. associated with ongoing manufacturing • Identify feasible opportunities to operations. increase the proportion of waste Our approach to managing environmental diverted from landfill. remediation is situationally dependent. • Progress remediation programs It broadly includes: including: • compliance with local regulations – evaluation of MBBR pilot trial and guidelines as a minimum at the Botany Groundwater • assessment and proactive management project, Australia of risks to human health and the – fifth export shipment of environment with interim controls Hexachlorobenzene Wastes • remediation to permanently reduce from Botany, Australia risks to human health and the – completion of soil remediation environment where required, works at Deer Park, Australia considering the technical efficacy, logistical, financial and sustainability – completion of onsite in-situ thermal aspects of alternative approaches groundwater remediation project at Yarraville, Australia. • remediation of surplus land to enable divestment and reuse INNOVATION AND COLLABORATION SUppORTING REMEDIATION pROGRESS IN Fy2020 • active involvement and consultation with key stakeholders including regulators, neighbouring sites and Our ongoing remediation of legacy sites continues. In FY2020 we progressed Botany Hexachlorobenzene (HCB) Wastes, NSW, Australia local communities. a number of projects, collaborating with partners and applying innovative We continue the removal of hexachlorobenzene (HCB) waste from our Botany technologies where possible as part of our remediation approach. We maintain a core group of environmental facility, with destruction of HCB waste from the third shipment to Finland and remediation experts who are responsible Sweden completed, and the fourth shipped in July 2020. Planning for the fifth Botany Groundwater Project, New South Wales (NSW), Australia for our more challenging chemicals business shipment is in progress as we progressively eliminate this long-term legacy from legacy remediation projects, as well as In March 2020 we held a workshop involving international and local experts chlorinated solvents manufacture at Botany. providing support to Group SHES and and the NSW Environment Protection Authority to review clean-up progress regional SHES teams on remediation and remediation. It was followed by an open information session with broad Deer Park, Victoria, Australia projects where necessary. community attendance. This is an example of our policies and commitment to The remediation of soils contaminated with various nitrated and chlorinated use appropriate remediation technologies and effective stakeholder engagement. benzenes was undertaken in FY2020. The remediation area was close to heavily trafficked public roads, a busy railway station and residential housing. Excavation We are seeking to improve the sustainability of our of contaminated soils and truck loading was completed inside a large temporary remediation systems through a pilot trial of Moving Bed emissions control enclosure to mitigate risks from contaminant vapours and odour. Biofilm Reactor (MBBR) technology. The process could Works were completed without community complaint. This was evidence of our potentially replace the more energy-intensive air stripping commitment to permanent reduction of risks to health and the environment, and thermal oxidation front-end of the treatment for while protecting the health and wellbeing of our neighbouring communities. destruction of chlorinated hydrocarbons. Yarraville, Victoria, Australia Brownsburg, Quebec, Canada Remediation of shallow soils component was completed. The construction We are partnering with the Institute for Research in Plant Biology in Montreal of an in-situ thermal remediation system was progressing to schedule when on a trial program of phytoremediation (plant-based uptake and/or root zone interrupted by the inability of the US-based contractor’s team to travel to biodegradation) of mercury and polychlorinated biphenyl shallow contaminated site due to the Australian Government’s COVID-19 response. Evaluation of soils. This is an appropriate sustainable technology where human health and remediation requirements and approach for a neighbouring property continues. environmental risks are not acute and delivers significant co-benefits to the This project is evidence of our commitment to risk-based remediation including host community including increased biodiversity and aesthetics. on off-site properties. 52 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 53
SUSTAINABLE COMMERCIAL SOLUTIONS
Our purpose is to create value for our customers. As a company, we are recognised by our customers as an innovative leader ORICA AND EpIROC FULFILLING OUR COLLABORATE COMMITMENT TO MAKING in blasting technology. ON SHARED OUR CUSTOMERS AUTOMATION SUCCESSFUL, EVERy We believe we are uniquely placed to address our own GOAL DAy, ALL AROUND environmental footprint and deliver commercially beneficial THE WORLD solutions for our customers that enable them to minimise their own environmental impact. Our portfolio of research As mines go deeper and ore bodies become more remote, and development projects are targeted at creating solutions In addition to leveraging VoC the case for blasting automation feedback to learn how we can to optimise the blasting process, delivering more productive becomes clearer. Orica has better support the evolving and safer outcomes that also reduce the environmental partnered with Epiroc to jointly needs of our customers, develop a semi-automated footprint of our customers’ operations. cross-functional teams explosives delivery system, consistently work hand-in- enabling safer and more hand with colleagues across productive blasting operations our geographical regions to in underground mines. engage customers and understand their unmet needs, Epiroc is the industry especially in the challenging FY2020 PERFORMANCE leader in developing COVID-19 environment. innovative While COVID-19 prevented face-to-face With our customers underground mining pROGRESS IN Fy2020 meetings, we rolled-out multiple webinar- increasingly facing remote FY2020 saw a record improvement in equipment, including style learning series to keep customers working challenges, our digital customer satisfaction with a 21 per cent face drill rigs and updated of our latest innovations and solutions team provided increase in NPS. This was largely driven production drill rigs. technological enhancements designed to guidance and support in by recognition from our customers of solve their unique and evolving challenges. leveraging our suite of digital The partnership brings together our sustained service and supply reliability tools and platforms to keep the deep expertise and during COVID-19, and the application their mining operations experience of two global industry of technology to remotely support pRIORITIES AND FOCUS IN Fy2021 running smoothly. leaders to address the growing their operations. demand from customers who Our improved NPS signals our customers One example is a series Our NPS in FY2020 represents an overall are mining in increasingly more are confident in our ability to deliver on of remote installations of improvement in customer satisfaction 21% hazardous and challenging our promise. We remain cognisant of the our award winning blast of 54.5 per cent since the inception of our IMPROVEMENT IN NPS ON FY2019 LEVELS underground operations. uncertainties arising from COVID-19 and will fragmentation analysis system, VoC program in FY2017, with 92 per cent continue to build on our customer support FRAGTrack™ across the globe. Epiroc President and CEO, of participants registering positive and and deliver superior customer service by: Our teams worked together to Helena Hedblom, says the neutral feedback. rapidly deliver a ‘plug and play’ promising collaboration with • further simplifying our global product portfolio and optimising our supply solution with rigorous training A CUSTOMER FOCUSED BUSINESS Orica is an important first step +21% material and installation on an exciting journey toward chain network +14% instructions, and real-time OUR AppROACH Our Voice of the Customer (VoC) program automating the entire drilling +12% • targeted product releases focused support via augmented reality is our main vehicle for independently and and explosives charging process. To ensure we deliver on our promise to on blast optimisation to minimise to guide customers through consistently capturing customer feedback our customers, more than 100 area and . environmental impacts, address the installation process. across our global operations and rapidly territory business managers across our “It is a vital part of complex conditions and remove people This ensured customers could responding to feedback. The main metric ™ main geographical business regions are both Epiroc’s and from harm’s way, i.e. WebGen 200, continue to operate efficiently is the Net Promoter Score (NPS), which accountable for understanding customer Orica’s vision of Underground Automation, specialty and continuously optimise provides a measure of loyalty and whether needs and delivering commercial outcomes. explosives formulations and digital their operations with real-time customers would recommend Orica to making the mining The experience of our customers, our FY17 FY18 FY19 FY20* product offerings data and analysis. others. Feedback noted in survey responses operation as safe, plans to continually improve and the results is promptly addressed to ensure our productive and cost • continuing to develop and deliver Fulfilling our commitment to of our customer surveys are strategic customer needs and expectations are met. efficient as possible.” new blasting, digital and automated making our customers successful, metrics for our business. Our Executive Considerable improvements were technologies to enhance customer every day, we also extended Committee reviews customer experience In view of the global COVID-19 disruptions, recorded across all aspects of our outcomes complimentary SHOTPlus™ on a monthly basis and continually identifies an additional section was introduced into Helena Hedblom, Epiroc Customer Promise. Customers have Premier licenses to customers initiatives to improve customer experience our customer survey to understand how we President and CEO • further reducing procedural observed increased responsiveness and at the onset of COVID-19 at the global, regional and account level. can best support them to ensure the continuity controls through the technology The first prototype system is engagement, more timely and accurate ensuring they could continue of their operations during this time. development process expected in 2020, with the order delivery, greater product quality to design, visualise and analyse first commercially available and reliability, and overall value delivered • increasing overall customer experience blast initiation sequences while systems to enter service after through technology and innovation. and satisfaction through increased working from home. extensive trials throughout 2021. engagement and communication. * As of August 2020. 54 ORICA Sustainability Report 2020 I / II / Climate Resilient Economic Growth / IV 55
SUSTAINABLE COMMERCIAL SOLUTIONS (Continued)
COMMERCIALISING NEW TECHNOLOGy SpOTLIGHT ON MEASURING AND MONITORING TECHNOLOGy TO CREATE SUSTAINABLE Supporting downstream mine Insights from Kevitsa, GroundProbe radars have long been OUTCOMES processing efficiency Boliden Group, Finland deployed in open pit mines and have successfully detected thousands of slope By working with our customers to understand Over the past few years, inroads FRAGTrack™ has been deployed at the instabilities. Our proprietary radar and their sustainability challenges, we can design have been made to reduce our own Kevitsa nickel, copper, gold, platinum LiDAR technologies continuously scan a and develop solutions that deliver commercial operational emissions. We have rolled and palladium mine in Finland since slope in real time, detecting the often outcomes for Orica and enhanced out a global abatement plan, pursued a 2016. Kevitsa identified fragmentation very small movements that precede a sustainability outcomes for our customers. range of energy efficiency projects, and as a key performance indicator for slope collapse event, issuing alarms Safety, process efficiency and environmental this year, set medium-term emissions several productivity improvement and predicting when a collapse performance are at the heart of our reduction targets. While we will continue projects including optimising crusher is likely to occur. Early warning allows innovation process and drive our focus toward to pursue innovative solutions to reduce settings and increasing powder factors. for informed decision-making, risk digitisation, automation and increased our direct environmental impact, we also The mine is located 150km north management and most importantly, the use of data to optimise the downstream recognise the opportunity to facilitate of the Arctic Circle, requiring a tough, movement of people out of harm’s way. processes. Commercialising sustainable downstream emissions reductions automated system to provide the large customer solutions is a fundamental in the industries we service. Recently, we have seen a growing data samples needed to assess the element of our sustainability approach. demand for our technology in the Electricity consumption associated with productivity improvement projects. monitoring of tailings dams, an issue milling and grinding dominates the Two shovel units and one conveyor that attracted global concern in the pROGRESS IN Fy2020 energy and emissions profiles of mineral mounted system were installed in 2016. wake of several catastrophic failures. processing operations, typically requiring In FY2020, we continued to develop, The shovel systems measured post-blast In the last 24 months, we have deployed between 10 to 40kWh for every tonne commercialise and apply technologies Particle Size Distribution (PSD) allowing custom monitoring solutions to dams in of ore milled. However, the need for to improve safety and reduce engineers to assess and modify blast Brazil, Peru, Canada, Mexico, Australia downstream processing can be significantly environmental impact at our customers’ design. Meanwhile, the conveyor unit and Africa. Our best-in-class hardware reduced by optimising fragmentation operations including: measured PSD of material leaving the and software are well suited to the during the blasting phase. We believe primary crusher allowing crusher settings monitoring of dam wall deformation. • bulk explosives that improve our the best blast outcomes are achieved to be optimised. As our customers expand their customers’ productivity and enable when design decisions are underpinned safety focus to non-operational sites, them to operate in increasingly by robust, unbiased data. Within the first 12 months, the two shovel difficult environmental conditions it is our customer-centric model and systems collected over 30,000 images commitment to ongoing support that ™ • deployment of WebGen™ to enable the FRAGTrack across 256 blasts and allowed engineers to has positioned us as a trusted partner. adapt the blasting approach to specific world’s largest wireless blast conducted FRAGTrack™ is a complementary ™ geological domains. For example, the This year, as COVID-19 forced mine using our wireless detonators. WebGen technology that supports our data- FRAGTrack™ data revealed that areas shutdowns around the world, we saw removes people from harm’s way by driven approach to blast optimisation. pRIORITIES AND FOCUS FOR Fy2021 of high amphibole content yielded a an increase in demand for our remote allowing blasts to be loaded under safe The state-of-the-art fragmentation 20 per cent coarser fragmentation when monitoring services. GroundProbe’s The convergence of our new technologies The system enables explosives conditions and initiated remotely using measurement tool provides through- compared to equivalent blasts in lower Geotechnical Support Services (GSS) and solutions is enabling us to think charging at the development tunnel through the rock technology the-rock rapid insights into the outcome amphibole content areas. This information is a pillar of our ongoing commitment differently, mine differently, operate face in underground mining. enabling of the blasting process. The binocular • continuing to facilitate a data-driven allowed engineers to make targeted to building long-term partnerships more precisely and sustainably and most people to be removed completely vision camera systems provide automated approach to blast optimisation through modifications, with FRAGTrack™ with customers and allowed us to importantly, remove people from harm’s from harm’s way. high-quality fragmentation image way. We have a number of products and our blast fragmentation analysis system able to measure how effective each deliver safety-critical support during • The launch of bulk explosive specialty ™ analysis, allowing high performance solutions in various stages of evolution FRAGTrack . By enabling more precise modification had been. unexpected periods of restriction applications, including Fortis™ Protect, ™ in variable lighting, material colour within our research and development and optimised blasts, FRAGTrack on site. GSS conduct 24/7 monitoring to help open cut operations operating and textured environments. The system After adapting the blast design to the portfolio, all part of this transformation. can reduce downstream processing of GroundProbe systems from in difficult conditions to minimise the requirements leading to improved can be shovel or conveyor belt mounted high amphibole geological conditions, remote monitoring centres ensuring In FY2021, our focus is on: to provide continuous particle size Kevitsa achieved finer fragmentation potential for nitrate leaching into productivity and operational efficiencies no movement goes undetected. ™ ™ assessment at the dig face or at better suited to optimised processing. • The launch of WebGen 200, a ground water, and our Cyclo used across the mining value chain We have monitoring centres in new generation of wireless initiation oil to emulsions service, enabling our the conveyor. Indonesia, Chile and Brazil and • deploying GroundProbe remote system, featuring improved safety, remote customers to recycle their used ™ GroundProbe allows remote safety provide support in English, Bahasa, monitoring services to support The insights gleaned from FRAGTrack reliability, and enhanced security equipment oil into the manufacture monitoring during COVID-19 Spanish and Portuguese. customers through unplanned site data enable engineers to adapt strategies to support new and complex of bulk explosives on their site. to varied geological conditions, make Our customer-oriented approach to mining applications. shut-downs due to the COVID-19 GroundProbe is now focused on refining • Our digital solutions portfolio, pandemic. GroundProbe uses radar targeted design modifications and innovation and technology continued existing hardware and data aggregation immediately assess the effectiveness to deliver safety outcomes during the • The commercial launch of our including solutions to measure and Light Detection and Ranging software and increasing automation semi-automated explosives delivery downstream impacts using smart (LiDAR) to monitor slope stability of each action. unique challenges of 2020. GroundProbe and incorporation of artificial intelligence. is our slope stability monitoring business system (leveraging the unique sensors and edge computing to in mines and tailings dams. Looking forward, we plan to conduct As always, our innovation process will ™ and over the last few years, has been capabilities of WebGen ) in measure data in real time to drive The Geotechnical Support Services further research to quantify the remain customer driven. helping our customers respond and collaboration with partner Epiroc. downstream efficiency and value. unit is delivering uninterrupted downstream emissions reductions that adapt to emerging risks and changing safety-critical support during can be achieved through achieving safety priorities. the pandemic. optimal fragmentation outcomes. 56 ORICA Sustainability Report 2020 I / II / III / Empowering Social Progress 57
DIVERSE, INCLUSIVE CULTURE AND INSpIRED WORKFORCE
We believe a successful workforce is one in which our people are energised by the work they do, empowered to achieve their full potential, and inspired to have a positive impact. EMpOWERING SOCIAL pROGRESS FY2020 PERFORMANCE We actively seek opportunities to collaborate and contribute to social progress, by building diversity, capability and leadership within our workforce and driving social and economic impact in the regions in which we operate.
25% REFRESHED 8POINT WOMEN IN SENIOR PEOPLE AND CULTURE AND DIVERSITY IMPROVEMENT IN OUR HEALTH MANAGEMENT AND INCLUSION STRATEGIES SCORE SINCE 2018 TO 81¹
OUR AppROACH within remuneration, culture and diversity. In FY2020 we: Our Executive Committee meets at least Our global workforce comprises over • retained strong female twice a year for dedicated ‘People Days’ 13,000 people with diverse backgrounds representation of 37.5 per cent to drive the global talent and capability and capabilities, working together to deliver on our Board of Directors agenda. Senior human resources our business strategy. Our People and representatives also meet regularly to • increased the representation of Culture strategy is designed to support monitor execution of our People strategy. women in roles reporting directly to our teams and foster a culture where our This approach ensures a clear alignment the Executive Committee (excluding people are aligned to our purpose, engaged of our global strategy through to execution Executive Assistants) to 30 per cent, in our business, and inspired to deliver at a local level. an increase of 11 per cent from our results for our customers. We invest in our 2015 baseline of 19 per cent people throughout the employee lifecycle, seeking to attract, retain and develop pROGRESS IN Fy2020 • continued our focus on developing people who want to create a positive the next generation of female leaders Diversity and inclusion impact in a high-performing workforce. through our Enterprise Leadership Program (ELP), with 50 per cent We apply a systematic approach to We know a diverse and inclusive of the program nominees for next managing our people, while adhering workforce fuels innovation and creativity. year’s cohort identifying as female. to local legislative and regulatory Our commitment towards diversity and Our priority is to ensure gender requirements. We are guided by our inclusion is focused on attracting, growing balanced representation in the final Code of Business Conduct, which gives and retaining a pipeline of diverse talent, selection of participants. us a shared understanding of how we and providing a work environment where our people feel engaged, respected do business and deliver on our purpose. Ethnic and cultural diversity remains and connected. Our Human Resources Group Standard strong with 48 per cent of roles in senior provides the minimum requirements and FY2020 marks the final year of our leadership held by people who identify expectations to manage all aspects of current Diversity and Inclusion strategy their nationality as other than Australian human resources activities across Orica. (FY2017-20). We achieved our FY2020 or New Zealand, which is aligned to Our processes are enabled through our target for cultural diversity and we continue Orica’s revenue profile. Across the broader globally integrated HR system, Success Factors. to make progress on gender representation, organisation profile, 81 per cent of our workforce identify as a nationality other Our Board Human Resources and achieving our target of 25 percent women 2 than Australian or New Zealand. Compensation Committee monitors in senior leadership roles, including those progress against key strategic objectives acting in positions ( 1 2018 OHI score adjusted from 6-point to 5-point scale to compare 2019 results. 2 Defined as senior leaders at job bands A-C. 58 ORICA Sustainability Report 2020 I / II / III / Empowering Social Progress 59 DIVERSE, INCLUSIVE CULTURE AND INSpIRED WORKFORCE (Continued) As per other commitments made in our FY2017-20 strategy, we also: • raised the Inclusion Index in our last SUppORTING OUR pEOpLE THROUGH COVID‑19 all-employee Organisational Health Survey (results released in FY2020) to 85 • refreshed our Human Rights at Work and Diversity and Inclusion policies. Supporting our people and ensuring their health, safety, and wellbeing through COVID-19 is an ongoing priority. • Global and regional crisis management teams: we quickly established protocols providing guidance and global Diversity and inclusion: looking ahead consistency to team members who are showing symptoms of COVID-19 or have tested positive. As a global business, we are made stronger • New ways of working: we facilitated remote working where possible. Approximately 185,000 meetings have by bringing together diverse individuals been conducted virtually since March 2020. We introduced augmented reality technology to keep with unique backgrounds, perspectives, people safe while delivering services for our customers remotely. experiences and capabilities to shape our future strategy and meet the demands • COVID-safe workplaces: we adapted sites to new regulations and processes on social distancing, including infrared of a rapidly changing macro-environment. temperature checks, reduced on-site staff, enhanced quarantine measures and shift rotations. Our Diversity and Inclusion strategy was • Staying globally connected: we initiated virtual Town Hall events with updates on our approach to managing developed to build a diverse workforce and the impact of COVID-19, regular webcasts with advice from senior leaders and sharing resources to stay healthy, promote an inclusive environment. We are engaged and productive during uncertain times. accelerating our progress, by focusing on three key pillars over the next four years: • Mental health and wellbeing: we launched a global wellbeing campaign and regional wellness programs including access to webinars with external health professionals providing tips and resources. • build an attractive talent brand to strengthen our ability to attract and retain a diverse group of employees BRINGING TWO BUSINESSES TOGETHER • develop an inclusive culture and new ways of working by introducing flexibility and addressing limiting factors for inclusion in culture, systems and process In May 2020, Orica completed the acquisition of Exsa, Peru’s leading explosives Developing our capabilities opportunities for our teams. Most notably, manufacturer. This milestone marked the beginning of the process of bringing we launched a WebGen™ online learning • promote increased leadership In FY2020, we continued to build distinctive the two businesses together. series to provide sales and value proposition accountability to ensure we set the capabilities to deliver on our strategy, awareness across 12 modules as well as tone at the top and continuously with an increased focus on developing a a Webgen™ implementation playbook improve our performance across To support a smooth integration and foster inclusivity, pipeline of talent for senior leadership, and to ensure safe, efficient and consistent diversity and inclusion measures. we invited feedback from Exsa’s employees with a critical technical and commercial positions. application of this technology. To date, questionnaire aimed to gain insight into Exsa’s alignment This included redesigning our methodology Our measures for success under our new we have trained our field engineers with Orica’s values and to understand employee to enable a simplified and agile approach Diversity and Inclusion strategy are: on the WebGen™ system with other perceptions and concerns about the integration. to capability development. • 35 per cent of women in senior personnel undertaking the WebGen™ leadership3 roles by end 2024 The results demonstrated high levels of confidence in the merger and Recognising technology as one of the online learning series. growth engines of our business strategy, • cultural diversity in senior leadership informed our approach to bringing teams, processes and operations together. In addition, we delivered a holistic range we continued to focus on developing roles and key talent pipelines to reflect Key outcomes included: of leadership development programs and technical capability and fostering our geographic spread, revenue and initiatives across the global graduate • 98 per cent of Exsa’s 1,043 employees provided feedback innovation. We further invested in profit profile program, supervisor development, building our commercial and technical • 99 per cent of respondents were confident the merger will result in enterprise leadership program and • continuous improvement in our capability through an expanded Technology enhanced value for customers and are confident in their ability to adapt executive development. These programs Inclusion Index score to objectively Career Ladder, promoting development to changes as a result of the acquisition help develop our talent as we take a measure our success in developing and progression for employees in the longer-term view on the distinctive an inclusive culture. • 97 per cent of Exsa employees are confident the integration will be technology and digital solutions teams. capabilities required to develop a future a success. The Technical Career Ladder is a capability generation of leaders. Culture and engagement matrix, outlining the skills and capabilities In FY2020, we continued to focus on required at each level in the Technology We continued to focus on core systems, building a positive and engaged workforce stream to support our strategic goals upskilling our commercial teams for the who are motivated, supported to reach An enterprise-wide survey was deployed • We outperformed global industry and maintain our position as a market launch of our SAP Enterprise Resource their potential and deliver superior online only for the first time, with 68 per cent benchmark companies in all categories leader in technology. In March 2020, Planning system. We also completed performance. This is critical for realising of our workforce participating. The survey of organisational health. a commitment was made to develop a milestone in our global learning outcomes indicate strong cultural foundations and rollout a similar capability matrix transformation with full implementation a compelling employee value proposition • 50 per cent of people feel working amid a time of transformation and change for regional WebGen™ teams to further of the Learning Management System, that is aligned to our values. at Orica has changed for the better across the business. develop our pipeline of technical talent. providing learning plans for all jobs across as opposed to 36 per cent in the We evolved our approach to measuring the organisation. This standardised • Our overall Health Score improved previous result released in FY2019. The challenges of remote working due culture and engagement by implementing a global reporting, records management, by eight points since 2018 (73 to 81). to COVID-19 meant that opportunities for continuous listening strategy, building on the • Safety was our strongest result and planning of learning, achieving traditional training programs were limited. cultural transformation that began in 2015. outperforming industry and best greater compliance. In response, we provided online learning practice safety benchmarks. 3 Defined as CEO-2 (includes the CEO, Executive Committee and their direct reports, excluding Executive Assistants). 60 ORICA Sustainability Report 2020 I / II / III / Empowering Social Progress 61 DIVERSE, INCLUSIVE CULTURE AND INSpIRED WORKFORCE (Continued) SAFE, RESILIENT AND THRIVING COMMUNITIES A REFRESHED FRAMEWORK This year, we refreshed our People and Culture strategic framework to reflect our vision for the future of work at Orica. To support the implementation of our framework in FY2021, we defined four key focus areas: FY2020 PERFORMANCE 1. Implement our next generation operating structure • We are a diverse company operating in unique locations across the world. Our operating structure recognises the need for flexibility within our standard structures and supports processes to meet the specific needs of each location. ENTERpRISE $3.2M $15M+ ZERO LEADERSHIp DISTRIBUTED TO COMMUNITY IMPACT AND TARGET TO INVEST COMMUNITY COMMUNITIES INVESTMENT FRAMEWORK IN OUR COMMUNITIES 2. Build distinctive leadership and new ways of working pROGRAM (ELp) EVENTS REVISED AND UPDATED BY FY2025 (≥ severity 3) • Leaders shape culture and culture drives performance. We are focused on shaping leaders who inspire, engage and empower our people to meet their The Enterprise Leadership Program (ELP) is our signature potential and drive business performance. Western Australia. There is an opportunity The rollout of our framework and new leadership program to increase OUR AppROACH to learn and continually improve our funding commitment will commence capability and succession of In FY2020, we operated amid a series approach in FY2021 and beyond. in FY2021. key talent for enterprise senior of challenging events and incidents leadership roles in the future. with significant consequences for Acknowledging the broader need to evolve We target high performing communities around the world. This has with growing stakeholder expectations and Community investment target 3. Strengthen our talent engine individuals with high seen a considerable rise in stakeholder following a comprehensive review of our leadership potential, who are expectations around business conduct community investment strategy earlier in AT LEAST role models of our values and and engagement practices, as well as a the year, we introduced a refreshed Group $15 MILLION • Building distinctive capability is core to our new framework. We continue aspire to senior roles within growing desire for more transparency Community Impact and Investment framework By Fy2025 to invest in the development of the commercial and technical capabilities our business. to better understand how our business in FY2020. We have increased our planned of our people to enable realisation of our long-term strategic direction. operations impact communities. financial contribution over the longer The 12-month program applies term and are committed to invest at least a holistic view of talent Developing strong relationships with our $15 million globally across our communities development with a blended stakeholders at a corporate, regional and over the next five years to FY2025. learning approach including local level is vital for the success of our executive coaching, an off-site business. Our approach to how we engage 4. Enhance our performance culture development program, stakeholders and manage community mentoring and internally concerns and issues is outlined in our hosted executive webinars dedicated Group standard and highlighted pARTNERSHIpS FOR pOSITIVE IMpACT • Our purpose and values are what unites us. Our focus on fostering an inclusive to support individual growth in our Code of Business Conduct. and diverse workplace is a strength that enables us to deliver innovative results and global mindsets. for our customers. Issues surrounding cultural heritage management and First Nations/Indigenous engagement featured strongly throughout With the world facing enormous sustainability challenges, we continue to work FY2020. This highlighted the consequences towards better outcomes in partnership with industry bodies, NGOs, research These focus areas have been carefully developed to ensure we prepare for the future for First Nations Peoples, companies and and educational institutions, our customers, suppliers and peers. of work, attracting, developing and retaining talented, diverse individuals in critical roles, investors when there is a breakdown pRIORITIES AND FOCUS As recognised by the United Nations Sustainable Development Goals, and promoting a culture that inspires our people to deliver their best. in dialogue between companies and FOR Fy2021 (Goal 17, Partnerships for the Goals), increasing our positive impact through Traditional Owners/Native Title holders partnerships provides a much greater chance of success in overcoming We will commence implementation of and inadequacies in a company’s ability sustainability challenges by creating innovative solutions and shared value, our updated framework with a focus on: to effectively manage cultural heritage. and leveraging our core capabilities, assets and networks. • delivering our next generation In response, we are reviewing our global We continue to work with external partners across our business on projects operating model approach to First Nations/Indigenous that deliver a range of commercial, environmental and social benefits. stakeholder engagement. Our focus will We also seek opportunities to collaborate through voluntary initiatives, • deploying our approach towards building be on our governance structure and culture, leadership and distinctive capability such as the UN Global Compact, where our Chilean business is a member. policies, processes and practices, taking In FY2021, we will further develop and define our approach to partnerships • designing and deploying our employee into account the outcomes of the current and seek other opportunities for collaboration for impact. value proposition aimed at a diverse Australian Parliamentary Inquiry into the range of people. destruction of the Juukan Gorge caves in 62 ORICA Sustainability Report 2020 I / II / III / Empowering Social Progress 63 SAFE, RESILIENT AND THRIVING COMMUNITIES (Continued) COMMUNITy INVESTMENT By engaging closely with our community stakeholders in regions and across our ORICA COMMUNITY IMPACT AND INVESTMENT FRAMEWORK sites of operation throughout the year, we provided targeted funding to meet the specific needs of our communities. We were also well placed to offer in-kind support for GAUGNEIMCAENT OEMNM ITON community organisations, applying our C expertise, technology and utilising our networks IMPACT to deliver much needed assistance. REPORT RE R SU E A Y INV FI In FY2020, the total value of our E NIT ES N U VATION CO T E M NO MM M community investment contributions M IN Y INV UN & IT E I E M Y N ST TY N G U M P totalled $3.2 million, with almost half of O O M R T C L E O O M N G pARTNERSHIp TO SpARK A LEGACy OF CHANGE AND N R this directed to emergency services/disaster H O T E C C S E S relief efforts, including COVID-19 related OppORTUNITy FOR FUTURE GENERATIONS IN ZAMBIA T support, aid toward bushfire affected communities in Australia and donations to assist the Taal Volcano relief effort in the Philippines. Science, technology, engineering and mathematics (STEM) skill sets are in high SAFE, RESILIENT s demand globally. Like many African countries, Zambia has roughly one engineer & PROSPEROUS m y Almost 89 per cent of all community to every 10,000 people (compared to around 50 engineers in industrialised B COMMUNITIES m g u o R R e o i T t investments were made within our APA countries). Greater engineering capacity is crucial to Zambia’s growth in critical S C y e l E t f d o l a S c l c p t S h r E a t a region which includes Australia, China, o o a a I P i t economic sectors, including energy, mining, and infrastructure. N p n m r c l N O I S S t M S N S t w r m u C S U S m & Indonesia, India and the Philippines. p l e o L IBLE B E I c e e u t c U N s a t t g e u a i S I s x Our partnership with Funzeleo is helping to close the education gap, getting n r s a IVE BUS e p a n Although APA is a large and important i f r u l r e i t oe r I in Im g n students back into classrooms and engaging them in hands-on lessons and y e m s s e d n r T pa Bu s t n a region for Orica, attracting a larger portion m o ct al e n a l a ta AND tot sin I y P workshops by upskilling teachers and teaching methods across Zambia. n l So Bu ll c cial & a of overall annual community investment, e, rn sh te a significant one-off $1 million donation When we formed the partnership in 2018, our initial goal was to bring ar in e l Sha ess ies earn re succ stor was made to bushfire relief in Australia Funzeleo’s learning program to 10 high schools in Zambia. Since then, sto ings and gs ries & learnin in early 2020. we have tripled our target and reached 30 schools, engaging more than 12,000 students and training 58 teachers. This new approach to learning is changing the way students think about STEM. Mwanga, a 10th grade student at Chavuma Secondary School says: “Being part of Funzeleo has helped me access materials for conducting experiments in class. I can now see and touch the instruments during an pROGRESS IN Fy2020 1. Inclusive business policy, 2. Community investment experiment. It just makes me love engineering more.” practices and culture • Deliver more targeted, strategic Revising our Community Impact • Strive to create a positive impact investment prioritising initiatives and Investment framework on society by having policies, practices that are responsive to the needs Our revised approach will see Orica actively and governance processes that are and priorities of a community. Community investment Total community investment Total community investment look for opportunities to deliver positive integrated, fair and align with • Identify potential initiatives which by year ($m) by category (%) by region (%) outcomes for community stakeholders and expectations of our local communities leverage our existing technologies is focused on ensuring our contribution and other stakeholders. 3.2 and capabilities to create innovative to communities is steered toward creating Arts & Culture • Embed an inclusive, respectful and solutions to complex social and meaningful positive economic, social and Economic responsive approach to community environmental problems. This will Development environmental impact with enduring value. engagement, seeking to understand deliver long-term benefits for Education & APA 1.8 1.8 1.9 Our refreshed framework is anchored and address the needs and expectations communities and commercial value Young People EMEA by a vision to build safe, resilient and of our communities at a corporate, for our business and customers. Emergency LATAM thriving communities. To fulfill this vision, site and regional level. Service/Relief Our Community Impact and Investment NA we look to manage our impact and create Environment framework is underpinned by a value through: Health commitment to measure and report FY17 FY18 FY19 FY20 our total business and social impact. Other Social Welfare FY2020 community contribution $3.2 MILLION an increase of 68% from FY2019 64 ORICA Sustainability Report 2020 I / II / III / Empowering Social Progress 65 SAFE, RESILIENT AND THRIVING COMMUNITIES (Continued) COVID‑19 RESpONSE – UNDERSTANDING AND RESpONDING TO LOCAL NEEDS The COVID-19 pandemic has significantly impacted communities around the world, including our communities of operation. Our corporate funding initiative in response to the impacts of COVID-19 has worked to empower our sites and offices around the world to respond quickly and effectively. Our teams on the ground consulted directly with local community organisations to understand their needs and provide targeted support. From providing meals to vulnerable communities, assistance to address domestic abuse and enabling remote learning, we continue listening UNDERSTANDING AND DEEpENING to locals and provide the help that COMMUNITy INVESTMENT: GOMIA, INDIA is needed. Leveraging our skills and resources to assist during COVID Throughout FY2020, we have worked to better understand • Education: with approximately 2,200 students in our socio-economic support for communities in which we attendance, Pitts Modern School provides education Photo by: Dan Paled/AAP Our Deer Park site in Australia leveraged operate in preparation for more formal measurement of from kindergarten through to Grade 12. More than the technical expertise of our emulsifiers economic contribution in the coming years. 80 per cent of students are from the community, team and the raw materials available to while the remaining students are children of Orica SUppORT THROUGH EMERGENCIES them, to produce over 1,000 litres of employees. The school is run by an independent trust AND NATURAL DISASTERS Through our community engagement hand sanitiser for community groups, established with principal funding providing by Orica. Meals on Wheels and Libraries Victoria. activities we identified opportunities to deepen our investment and address We also donated the initial physical infrastructure for the school and maintained our support since. The donation has enabled Meals on critical community needs to provide Australian bushfires Wheels volunteers to maintain good health more meaningful, long-term benefits. • Girls education: the lack of female toilets was and hygiene practices, while delivering In response to a disastrous fire season in Australia in 2020, we provided identified as a barrier to girls attending school in their home-cooked meals and conducting support to the fire-fighting effort as well as the ongoing bushfire recovery. In FY2020 at our Gomia site in India, we continued our local community. To encourage girls to attend school welfare check-ins for elderly and socially A total of $1 million was donated, including a $400,000 donation to the support for the vital community services and we identified and participate in education, we invested over $14,000 isolated community members across NSW Rural Fire Service and $400,000 to the Victorian Bushfire Appeal. further investment opportunities to address and respond in FY2020 to construct girls’ toilets at Kaswagarh Victoria. The volume of sanitiser donated The remaining $200,000 was matched dollar-for-dollar to donations made to specific local community needs. These included: Middle School and Daridag School. also ensured volunteers were by our employees to a range of charities responding to community, wildlife able to provide sanitiser to every • Community health: Ardeer Hospital Trust (AHT) is • Emergency services: in response to the COVID-19 and economic impacts of the bushfire including Foodbank Australia, Meals on Wheels client visited. a 35-bed hospital with three full-time doctors and pandemic and the growing number of confirmed WIRES and Foundation for Rural and Regional Renewal. 10 paramedic staff. While the hospital provides basic coronavirus cases in the District of Bokaro, the fire team For Libraries Victoria, our donation ensured health services to our employees, we extend the medical from our site Fire Station partnered with local authorities teams at over 65 branch libraries across facilities to local community residents at a subsidised to undertake a sanitisation process to help reduce central and north east Victoria had Taal Volcano relief effort, Philippines cost. The hospital organises medical camps quarterly community transmission. Our team applied their access to hand sanitiser to keep themselves, with free health check-ups provided, particularly for expertise and used their equipment to develop an Many Filipino communities were impacted by the Taal Volcano, which erupted and those visiting the library safe during disadvantaged people within the community. On average, innovative hose system to apply the sanitiser, reducing in early January. Located in Batangas, the volcano triggered earthquakes, the pandemic. over 1,500 patients receive treatment at AHT annually. wastage and increasing the efficiency of sanitation. ashfall and destruction, leading to more than 40,000 people being evacuated from their homes. To support relief and recovery efforts on the ground, we launched an employee donation drive and we were gratified to see the kindness and community spirit of our people. Supporting our local communities them directly to vulnerable communities Across Peru, our teams are providing with vital supply deliveries across the city. ongoing support to education providers In addition to donations of water, clothing, blankets and healthcare services surrounding our With key supplies disrupted in many In Limay, Philippines our teams provided and other essentials, our people raised 37,000 pHp Peruvian operations. From providing tablets parts of the world, we supported local essential resources to local police, (A$1,089) which was delivered directly to Batangas to local students so they can continue communities by sourcing and providing firefighters, local hospital and school who through St. John the Evangelist Tanauan parish. learning remotely, to supplying personal essential food, medical and technical have been significantly impacted by the protective equipment and medical supplies to those who need it most. pandemic. As part of the team’s ongoing To further support the evacuated families, many of whom are still unable equipment to local hospitals, our teams to return to their homes, Orica matched employee donations making commitment to their community, 400 care To help ensure all members of the are contributing to building safe, an additional corporate donation to the Philippines Red Cross, totalling packages with groceries were donated to community had access to food and essential resilient communities. 837,000 PHP (A$24,600). families surrounding our Limay site to assist items, our team in Bontang, Indonesia them in the face of a growing food donated over 700 food packages to the shortage following the town’s lockdown. local government who, in turn, delivered 66 ORICA Sustainability Report 2020 I / II / III / Empowering Social Progress 67 SAFE, RESILIENT AND THRIVING COMMUNITIES (Continued) IMpROVING EDUCATION OUTCOMES FOR yOUNG ABORIGINAL AND TORRES STRAIGHT ISLANDER MEN In FY2020 we launched a national partnership with the Clontarf Foundation in Australia. The partnership aims to improve the education, discipline, life skills, self-esteem and employment prospects of young Aboriginal and Torres Strait Islander men by setting up academies in school communities around the country. The Clontarf Foundation currently have 135 academies with approximately 8,000 boys enrolled in programs nationwide. By supporting young Indigenous men to stay at high school longer and receive a better education, the • Community engagement review: Foundation is helping address the disadvantage cycle across health, education, pRIORITIES AND FOCUS conduct a review of our existing employment and incarceration. FOR Fy2021 community engagement approach, Our priorities in FY2021 are aligned Our team are working with Clontarf Academies nationally to provide insight practice and reporting including how to the rollout of our Community on the mining industry and where possible, help them commence we engage with First Nations People Impact and Investment framework. a career with Orica. and our approach to cultural heritage These priorities include: management, allowing us to implement “We, as a Foundation, are excited to enter into this new partnership with • Impact mapping: perform a gap improvements and deepen relationships. Orica and begin to engage locally where we co-exist. Private Sector funding analysis of our material sustainability brings with it so much richness and variety to our programs and in turn, our • Launch the Orica Impact Fund: issues against community-related Academy members lives. We are extremely grateful that many of the young as part of our community investment business practices, to help identify how men in our programs will now have the opportunity to explore the mining strategy, grant funding will be made best to protect community interests, industry, via Orica’s vast array of operational sites.“ available across our global operations manage business risk and capture for local community projects or to Russell Aitken, Partnerships Manager NSW, new opportunities. enable investment in technology and Clontarf Foundation innovation solutions to tackle social and environmental issues. 68 ORICA Sustainability Report 2020 I / II / III / Empowering Social Progress 69 SAFE, RESILIENT AND THRIVING COMMUNITIES (Continued) “ Throughout the year, our employees across the world have been actively supporting the communities around them. From donating blood, to volunteering and giving their time, and delivering vital items to vulnerable communities during the pandemic, we thank our teams for their commitment to making a positive impact.” 70 ORICA Sustainability Report 2020 I / II / III / IV / About this Report 71 ABOUT THIS REpORT ASSURANCE STATEMENT Our FY2020 reporting suite includes this Sustainability Report, our Annual Report, and our Corporate Governance Statement. These documents are available to download from our website. Independent Limited Assurance Statement to the Management and Directors of Orica Limited REpORTING AppROACH REpORTING STANDARDS VERIFICATION pROCESSES AND SCOpE This report contains standard disclosures We employ internal and external verification This Sustainability Report covers guided by the Core Global Reporting processes to assure the completeness and Our Conclusion: the financial year 1 October 2019 Initiative (GRI) Reporting Standards. accuracy of information. Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that suggests to 30 September 2020 (FY2020) for A GRI Content Index is available on that selected disclosures (‘Selected Performance Disclosures’) from the Climate Resilient Economic Growth section of Orica’s Our internal processes cover data Orica Limited, unless otherwise stated. our website. Sustainability Report 2020 (‘the Report’) and detailed in Table 1 below have not been prepared and presented fairly, in all material review, verification and validation to respects, in accordance with the criteria defined below. We report on the sites and activities In our reporting on climate change, accept, reject or qualify data in an Orica’s responsibility What we assured we wholly own and operate, and those we follow the guidance provided objective and consistent manner. Orica’s management was responsible for selecting the Criteria and we operate in a 50 per cent or more joint by the Financial Stability Board’s Task Our processes are governed by our Ernst & Young (‘EY’, ‘we’) was engaged by Orica Limited (‘Orica’) to preparing and fairly presenting the Selected Performance venture during the year. Information undertake limited assurance as defined by Australian Audit Disclosures in accordance with that Criteria. This responsibility Force on Climate-Related Financial integrated management system Standards, here after referred to as a ‘review’, over Selected includes establishing and maintaining internal controls, adequate regarding the controlled entities in Disclosures voluntary disclosure framework incorporating Group Standards covering Performance Disclosures in Orica’s Sustainability Report (‘the records and making estimates that are reasonable in the Report’) for the year ended 30 September 2020, as presented in circumstances. the Orica Group can be found in our (TCFD Framework). Pages 30 to 45 Safety, Health, Environment, Security Table 1 below. 2020 Annual Report. (Transitioning to a Low-Carbon Economy) (SHES) Management and Environment. Table 1: Selected Performance Disclosures Our approach to conducting the review of this report details how we consider We conducted this review in accordance with the International Selected Performance The structure of our report is aligned Requirements for monitoring equipment Section Sub-section Standard for Assurance Engagements Other Than Audits or governance, risk management, strategy, Disclosures to material sustainability topics identified calibration, data collection, recording, Reviews of Historical Financial Information (ISAE 3000), Assurance and metrics and targets in relation to through our materiality review. For each reporting, verification and validation Climate Transitioning • Absolute scope 1, 2, Engagements on Greenhouse Gas Statements (ASAE 3410) and climate change. Resilient to a Low and 3 emissions in the terms of reference for this engagement as agreed with Orica. topic we have provided an overview of are documented and implemented. Economic Carbon tonnes of carbon Summary of review procedures performed our approach and performance over the We report GHG emissions, energy Growth Economy - dioxide equivalent We perform independent limited Greenhouse (tCO2-e) A review consists of making enquiries, primarily of persons reporting period, with the aim of providing consumption and energy production Gas responsible for preparing the Report and related information, and assurance over a selection of performance a clear view of how we are addressing our from our Australian facilities under the Emissions • Total greenhouse gas applying analytical and other review procedures. Our procedures disclosures in our FY2020 Sustainability Performance emissions intensity included: most material impacts. Australian Government’s National Report. Specifically, this covers: (tCO2-e/tonne of ► Interviewing key personnel to understand the business, Greenhouse and Energy Reporting Act ammonium nitrate sold) reporting process and processes and systems for collecting and Data for energy, greenhouse gas emissions, collating data 2007, supporting regulations and relevant • Absolute Scope 1, 2, and 3 emissions Transitioning • Disclosures in relation water and waste is only reported for the ► Reviewing evidence to support Selected Performance guidelines. GHG emissions from our in tonnes of carbon dioxide equivalent to a Low to the Task Force on operations we wholly own and operate, Carbon Climate-related Disclosures within the selected material topics non-Australian sites are reported using the (tCO -e) and total GHG emissions Economy Financial Disclosures ► Undertaking data analytics to check the completeness of the with the exception of the Bontang 2 same general framework, with the intensity (tCO -e/tonne of ammonium (TCFD) data supporting the Selected Performance Disclosures Indonesia joint venture, which is included 2 application of local regulations, energy nitrate sold) within the section ► On a sample basis, based on our professional judgement, as we maintain management control of the Criteria applied by Orica agreeing claims and metrics to source information to check the and emission factors. The reporting Climate Resilient Economic Growth, accuracy and completeness of the claims operation and its material greenhouse gas The criteria for our assurance engagement (‘Criteria’) include the of non-Australian data is based on Transitioning to a Low Carbon following: ► Performing recalculations of Selected Performance Disclosures (GHG) emissions profile. to confirm quantities stated were accurate materiality thresholds. Economy – GHG Emissions Performance ► National Greenhouse and Energy Reporting Act 2007 ► Identifying and testing assumptions supporting disclosures Numbers in this document are subject ► National Greenhouse and Energy Reporting Regulations 2008 • Disclosures in relation to the TCFD, related to Selected Performance Disclosures. to rounding and presented in Australian ► National Greenhouse and Energy Reporting (Measurement) found within the section Climate Determination 2008 We believe that the evidence obtained is sufficient and appropriate dollars unless otherwise stated. to provide a basis for our limited assurance conclusion. Resilient Economic Growth, Transitioning ► Alberta Emissions Management and Climate Resilience Act, Additional sustainability metrics and to a Low Carbon Economy. Updated July 2020 ► Alberta Greenhouse Gas Quantification Methodologies, Version data is provided in our Sustainability 2.0 Our Assurance Statement can be found Data Centre available on our website. ► The GHG Protocol Corporate Accounting and Reporting on page 71. Standard, Revised Edition ► International Greenhouse Account Factors, equivalent to the Australian National Greenhouse Account Factors, July 2019 ► Orica's methodology for reporting Scope 3 emissions ► Principles defined in the Global Reporting Initiative (GRI) Standards (GRI 101: Foundation) ► Recommendations of the Task Force on Climate-related Financial Disclosures. Key responsibilities EY’s responsibility and independence Our responsibility was to express a limited assurance conclusion on the noted subject matter under “What we assured”. We were also responsible for maintaining our independence and confirm that we have met the independence requirements of the APES 110 Code of Ethics for Professional Accountants and have the required competencies and experience to conduct this assurance engagement. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 72 ORICA Sustainability Report 2020 ASSURANCE STATEMENT (Continued) Page 2 Other Matters We have not performed assurance procedures in respect of any information relating to prior reporting periods, including those presented in the Report. Our review does not extend to any disclosures or assertions made by Orica that do not relate to the Selected Performance Disclosures. Limited Assurance Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. While we considered the effectiveness of management’s internal controls when determining the nature and extent of our procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems. Use of our Assurance Statement We disclaim any assumption of responsibility for any reliance on this assurance report to any persons other than management and the Directors of Orica, or for any purpose other than that for which it was prepared. Our review included web-based information that was available via web links as of the date of this statement. We provide no assurance over changes to the content of this web-based information after the date of this assurance statement. Ernst & Young Terence Jeyaretnam FIEAust Melbourne, Australia Partner 16 November 2020 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Enquiries can be directed to [email protected]