Social and Environmental Report 2016
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Social and Environmental Report 2016 SOCIAL AND ENVIRONMENTAL REPORT OF PJSC ALROSA 2016 TABLE OF CONTENTS ADDRESS BY THE PRESIDENT OF PJSC ALROSA 4 CALENDAR OF IMPORTANT EVENTS IN 2016 6 i ABOUT ALROSA GROUP 8 General information 10 Strategy of ALROSA Group 13 Production chain and geography of operations 15 New projects for the future development of PJSC alrosa 20 ii SUSTAINABLE DEVELOPMENT 22 Sustainable development policy of PJSC alrosa 24 2 Managing the sustainable development 28 Key results of PJSC alrosa in the area of sustainable development for 2016 35 Stakeholder engagement 36 Ethics and anti-corruption activities 39 Innovative development of PJSC alrosa 42 iii ECONOMIC EFFICIENCY 48 Key economic performance indicators of ALROSA Group 50 Creation and distribution of economic value 54 Alrosa group investment program 58 iv ENVIRONMENTAL RESPONSIBILITY 60 Environmental policy of PJSC alrosa 63 Funding of environmental protection activities 69 Environmental performance indicators 72 Environmental activity of subsidiaries of PJSC alrosa 82 SOCIAL AND ENVIRONMENTAL REPORT OF PJSC ALROSA 2016 TABLE OF CONTENTS v SOCIAL RESPONSIBILITY 84 Staff 87 HR formation and development of personnel 90 Social investing in personnel 96 Social partnership and human rights 101 Industrial safety and labor protection 103 Social investments 112 Social responsibility of subsidiaries of PJSC alrosa 118 vi ABOUT THIS REPORT 122 3 General provisions 124 Outline of the report 125 Identifying material aspects to include in the report 126 Aspect definition boundaries 128 Independent report verification 128 vii APPENDICES 132 Appendix 1. Boundaries of Material Aspects 134 Appendix 2. G4 GRI Contents Index 136 Appendix 3. Social Outcomes 146 Appendix 4. Environmental Effectiveness Indicators 148 Glossary of terms and abbreviations 153 Contact information 160 SOCIAL AND ENVIRONMENTAL REPORT OF PJSC ALROSA 2016 ADDRESS BY THE PRESIDENT OF PJSC ALROSA Address by the president of pjsc alrosa G4 –1 Dear readers, We are pleased to present you the demand for rough diamonds allowed 4 Social and Environmental Report of to increase the sales of core products PJSC ALROSA for 2016 in the area of to 40 mn carats, which exceeded the sustainable development and we hope figures for 2015 by 33.2%. that it will provide a good framework In 2016, despite the high volatility on for continuing the dialogue and en- the rough diamond market, ALROSA gaging with all stakeholders. Group sold USD 4,392.1 mn worth of In 2016, ALROSA Group reaffirmed rough diamonds. A well-organized Sergey Ivanov its leadership in the global rough sales system based on long-term con- and polished diamond market. This The president of PJSC ALROSA tracts demonstrated its effectiveness. became possible by systematically In the reporting year, the number of following the course that was defined ALROSA Group’s long-term clients in the development strategy of the Company and provides increased from 54 to 69, and most of rough diamond for expanding the mineral resource base, focusing on production (69%) was sold under the contracts with them. the rough diamond business, improvement of production The Company continued to implement a major investment efficiency through innovation, and implementing a new project to establish a diamond-mining enterprise at the model of social responsibility. Verkhne-Munskoe deposit and build a service lane linking In the reporting year, ALROSA Group demonstrated high Verkhne-Munskoe deposit with Udachny town, as well operational efficiency, financial performance and excep- as the production infrastructure deposits. tional dividend yield for its shareholders, while reducing In 2016, we began to develop Zarya pipe, a new diamond the debt burden. deposit which, in the future, will ensure the long-term In line with the basic principles of its development strategy, utilization of production capacities at Aikhal Mining and the Company continues to make investments in expanding Processing Division (MPD). An equally significant event its resource base. In 2016, the funds allocated to geological for the Company was the fact that it reached the design exploration and onsite exploration amounted to about capacity of 1 mn tons of ore a year at Mir underground RUB 7.88 bn while the increase of ALROSA Group re- mine of Mirny MPD. sources and predicted resources reached 58.4 mn carats. The increasing production capacity and resource po- The production of rough diamonds by the Company’s tential of ALROSA Group as well as the stable economic enterprises amounted to 37.4 mn carats in 2016. Growing platform for the Company’s future development make SOCIAL AND ENVIRONMENTAL REPORT OF PJSC ALROSA 2016 ADDRESS BY THE PRESIDENT OF PJSC ALROSA it possible to follow the principles of social and envi- Every year, PJSC ALROSA invests in development of the ronmental responsibility and invest resources in the personnel. In 2016, the average time of training a manager public health and preservation of the environment for or a specialist was 34.3 hours and time of training a worker future generations. was 46.7 hours with training expenses per one worker of We constantly focus on ensuring the environmental safe- the Company amounting 8.1 and 9.5 rubles accordingly. ty and reducing the burden on the environment. In the In 2016, the Company implemented all planned initia- reporting year, the Company continued to work on the tives under the corporate social programs. Over two transition of its transport and production equipment to thousand workers of PJSC ALROSA underwent medical natural gas motor fuel, which allows reducing the emis- examination and received treatment in leading medi- sions of harmful substances. Since 2014, the greenhouse cal centers in the Russian Federation and Republic of gas emissions are calculated in accordance with the Sakha (Yakutia). In the reporting year, over 14.0 thousand Company’s Methodological Guidelines for Calculation workers of the Company and their family members im- of Carbon Dioxide Emissions by Stationary and Mobile proved their health and received preventive treatment Sources of PJSC ALROSA Enterprises. This makes it in corporate resort facilities. possible to consider all atmospheric emissions in the For improvement and provision of housing to employees environmental management system and contributes of the Company there was invested RUB 466.8 mn, most to further development of greenhouse gas emissions of which was allocated to construction of a dormitory management. with beds for 340 people in Mirny, RUB 72.3 mn was The Company continues to implement the Comprehensive financial aid by the Company to the employees to buy Environmental Protection Program of PJSC ALROSA for their housing and RUB 57.1 mn was allocated under 2011–2018. In 2016, the expenses of the Company on en- the mortgage scheme. vironmental projects amounted to more than RUB 5.5 bn. Over 18,500 pensioners, veterans of the Company, par- Most of the funds were allocated to capital investments ticipate in the private pension program and receive ad- in construction of environmental protection deposits, ditional corporate pension, which, in 2016, amounted sewage treatment facilities, land rehabilitation and R&D to RUB 5,268 a month. support of environmental protection activities. In accordance with voluntary obligations of the Com- Labor protection and industrial safety are crucial com- pany with respect to funding the construction of social 5 ponents of social responsibility of the Company. Over facilities in the Republic of Sakha (Yakutia), RUB 584 mn the past five years, the Lost Time Injury Frequency Rate was transferred to the “Target Fund for Future Gener- (LTIFR) decreased by 30.9% down to 0.38 in 2016. ations”. In accordance with the obligations set by the ALROSA Group consistently fulfills its tax and social obli- regional agreements concluded with nine districts of gations. In 2016, RUB 62.6 bn was transferred to budgets Yakutia under the Regional Development, Charitable and of Yakutia and several municipalities of the region. The Sponsorship Assistance Program, the Company allocat- social investments reached over RUB 10.0 bn, includ- ed RUB 83.25 mn to agriculture, traditional trades, and ing RUB 6.5 bn directed to charity, local infrastructure, charitable campaigns for children. healthcare and education; RUB 3.9 bn was invested in The significant progress achieved by the Company in the the personnel. area of sustainable development over the recent years is The workers of the Company are its most valuable asset gaining increasing recognition. PJSC ALROSA was ranked and one of the main factors for successful development among top three leaders of the first environmental re- of PJSC ALROSA. Caring about workers, their health sponsibility rating of Russian mining companies prepared and well-being, implementing the principles of social in 2016–2017 by the national rating agency at the initia- partnership and mutual responsibility are important for tive of the World Wildlife Fund (WWF) and the Ministry success of the Company. of Natural Resources and Environment of Russia. The In 2016, PJSC ALROSA and Profalmaz Interregional Company’s efforts were also fairly appreciated when, in Trade Union have signed a new Collective Agreement 2016, PJSC ALROSA was included in the Responsibility for 2017–2019. The document preserves all previously and Transparency and Sustainable Development Vector established social obligations and personnel benefits sustainability indexes of the Russian Union of Industri- set in addition to those provided by the applicable laws. alists and Entrepreneurs (RSPP). The Company remains a responsible and attractive em- Thinking about the future, PJSC ALROSA sets goals ployer. In 2016, the average wage of Company’s worker and objectives in the area of sustainable development, increased by 18.5% to reach RUB 121.1 thousand, which achieves them and makes a substantial contribution to is three times more than the wage level in the Russian ensuring stable onward development in the regions where Federation and two times more than the wage level in the Company operates, and to raising the standards of the Republic of Sakha (Yakutia).