Severstal Corporate Social Responsibility and Sustainable Development Report 2017
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BUSINESS AND CORPORATE CORPORATE OCCUPATIONAL SAFETY AND SOCIAL PROJECTS AND ABOUT THIS ABOUT SEVERSTAL EMPLOYEES SOCIAL RESPONSIBILITY GOVERNANCE ENVIRONMENTAL PROTECTION INVESTMENTS REPORT Severstal Corporate Social Responsibility and Sustainable Development Report 2017 1 Severstal 2 Corporate Social Responsibility and Sustainable Development Report 2017 BUSINESS AND CORPORATE CORPORATE OCCUPATIONAL SAFETY AND SOCIAL PROJECTS AND ABOUT THIS ABOUT SEVERSTAL EMPLOYEES SOCIAL RESPONSIBILITY GOVERNANCE ENVIRONMENTAL PROTECTION INVESTMENTS REPORT Table of Contents Review by Chairman of PAO Severstal 2 Occupational Safety and Environmental 82 Alexey Mordashov 5. Protection Review by Chief Executive of AO Severstal 4 Occupational Safety 84 Management Alexander Shevelev Environmental Protection 92 Power Consumption and Energy Efficiency 102 1. About Severstal 6 Core Businesses And Corporate Structure 10 6. Social Projects and Investments 106 Industry Environment and Corporate 17 External Social Programmes of Severstal: 108 Business Strategy Policy and Management Contribution to Sustainable Development of 109 2. Business and Corporate Social Responsibility 20 Severstal Regions Management of Sustainable Development 23 Social Investments and Social Partnership 112 in Severstal Support for Culture 116 2030 Agenda for Sustainable Development 25 Corporate Volunteering 119 Severstal Awards in 2017 30 Employee Participation in Environmental 120 Initiatives and Collaboration With Communities 3. Corporate Governance 32 on Environmental Matters Standards of Corporate Governance 34 Governing Bodies 34 7. About t his Report 122 Governance Structure 38 Approach Used to Evaluate the Significance of 124 Individual Topics for Inclusion in This Report Transparency 39 Description of the Information 125 Risk Management 39 Appendices 126 Managing New Opportunities 41 Quality Management 43 Customer Care 46 Stakeholder Engagement 47 4. Employees 58 Staff Profile 60 Policy and Management 61 Motivation and Compensation 62 Training and Development System 68 Engagement of High School and University 72 Students and Young Professionals Work Environment 76 Employee Benefits 76 Severstal Corporate Social Responsibility and Sustainable Development Report 2017 1 Review by Chairman of PAO Severstal Alexey Mordashov Dear partners and colleagues: In 2017, Severstal went beyond retaining its leadership in key financial performance indicators and laid the foundation for our future innovative development. Severstal 2 Corporate Social Responsibility and Sustainable Development Report 2017 BUSINESS AND CORPORATE CORPORATE OCCUPATIONAL SAFETY AND SOCIAL PROJECTS AND ABOUT THIS ABOUT SEVERSTAL EMPLOYEES SOCIAL RESPONSIBILITY GOVERNANCE ENVIRONMENTAL PROTECTION INVESTMENTS REPORT We completed a series of important investment projects, first and We actively contribute to social and cultural agenda of our regions foremost for construction and automotive industries. Ministry and continue supporting crucial social programmes. Last year, of Industry and Trade of the Russian Federation recognized we invested approximately 2.5 billion roubles in various projects the launch of our third colour-coating line at Cherepovets focused on supporting children in hardship, museums of Russian Steel Mill as the Key Event of 2017 in Russia’s Steelmaking. North, the Golden Mask Festival and other cultural projects. We invested approximately seven billion roubles in this project. Over the past five years, Severstal worked hard to improve the We commissioned our Ladle Furnace 2 with unique integrated economy of the regions where our assets are located. Minimising steel processing capabilities. Overall, we invested 34 billion roubles our environmental footprint and rolling out cutting-edge in the past year. technologies is a critical part of our contribution to sustainable To great extent, we owe our success to the Business System of development. Severstal. Technology upgrades, improved performance, reduced Under the Russia’s Year of Ecology initiative in 2017, Severstal manufacturing costs and product quality improvements delivered signed the Memorandum of Understanding with Russian Ministry by the Business System help us additionally generate up to of Nature, Rosprirodnadzor and the Government of Vologda two billion roubles per year. Oblast. All activities under the MOU have been completed. These achievements were partly made possible by professional In 2017, Severstal invested 2.65 billion roubles on environmental operation of our independent, highly skilled Board. Our Board protection, while total environmental investments over the past champions the adoption of customer-oriented corporate culture five years are close to 11 billion roubles. and transparent investor relations. The concepts of sustainable development are more than just an We believe emerging technologies are the primary driver of our idea; they are tightly integrated in Severstal’s everyday operations. opportunities. Industry experts estimate the potential benefit from We work towards UN Sustainable Development Goals, and this the application of tools brought to us by the fourth-generation year, we signed on the UN Global Compact whose principles we industrial revolution at US$115 billion, and Severstal has already agreed to follow. made the first steps towards digital transformation. In the reporting year, we launched the largest data lake in the Russian industry. Big data projects will help us improve the efficiency of preventive equipment repairs, optimise the use of materials, improve quality Alexey Mordashov assurance and prevent defects. We plan to sell approximately one Chairman of PAO Severstal third of all our products through Severstal’s online store this year. In the short term, we are planning to digitalise all our assets and integrate them into a single ecosystem. We are building a single culture of continuous improvement and staff development to ensure efficient and sustainable operation of Severstal as well as occupational health and safety. Employee safety remains a top priority for Severstal. We strive to become the best company in Russia by occupational health and safety, and eliminate work-related fatalities. In 2017, we invested 4.4 billion roubles in occupational health and safety initiatives. 10 out of 13 businesses of Severstal Russian Steel had zero injuries in the reporting year. LTIFR reduced significantly across Severstal, to 0.96 compared to 1.77 a year before. Severstal Corporate Social Responsibility and Sustainable Development Report 2017 3 Review by Chief Executive of AO Severstal Management Alexander Shevelev Without doubt, 2017 was a successful year for Severstal. We achieved all our objectives. We remained an industry leader by profitability with EBITDA of US$2.577 billion, and increased our revenue by one third. We exceeded our steel and rolled product production plans, shipped almost 11 million tonnes of products, and took the second spot in the World Steel Dynamics ranking of the most competitive steelmakers worldwide. While favourable market environment was a significant factor in achieving these positive results, our internal productivity programme was equally important. To a great extent, this achievement is attributable to our 50 thousand employees. We established a motivation and innovation system that rewards every employee for identifying and suggesting opportunities for improvement at their workplace. This effort generates strong return, including financial benefits. Over the past few years, we have implemented multiple initiatives to become a more customer-centric business. The most important one is our online store that brought the quality of our services to a whole new level. We also achieved serious progress with product quality. We try to anticipate issues with our products and services and respond to all their needs. The world is changing so quickly that we cannot afford being static. Our strategy focuses on enabling Severstal to adjust to fast changes to the environment while remaining a leader in efficiency. We need new growth drivers, and we believe they will mostly come from innovations. We developed a concept for innovation programme and a set of tools to implement it. Pilot projects are running throughout our manufacturing and business operations, and we are working on approximately 1,300 new ideas. Severstal 4 Corporate Social Responsibility and Sustainable Development Report 2017 BUSINESS AND CORPORATE CORPORATE OCCUPATIONAL SAFETY AND SOCIAL PROJECTS AND ABOUT THIS ABOUT SEVERSTAL EMPLOYEES SOCIAL RESPONSIBILITY GOVERNANCE ENVIRONMENTAL PROTECTION INVESTMENTS REPORT We offer our employees opportunities for training and Cherepovets has more than 20 thousand entrepreneurs who have development, and care about their health and well-being. We already created approximately 50 thousand jobs. Severstal is one consistently maintain a high standard of social responsibility. of the 50 largest taxpayers in Russia. In 2017, our businesses Between 2012 and 2016, Severstal invested over 5 billion roubles paid approximately 46.2 billion roubles in various budgets and in social benefits and support programs, including support for extrabudgetary funds. mothers and children. New collective agreement signed in 2017 Social investments in the regions of our presence remain an increased minimum monthly pay and financial benefits for almost important aspect of our work. We make significant contributions 24 thousand employees of PAO Severstal. to the improvement of municipal infrastructures