SUSTAINABILITY REPORT 2018 PACE THROUGH THE RACE Rusal sustainability report for 2018 Rusal sustainability report for 2018 CONTENTS STATEMENT OF THE CHIEF EXECUTIVE OFFICER 4 ABOUT THE COMPANY 8 ABOUT THE REPORT 16 SUSTAINABLE DEVELOPMENT STRATEGY 24 CORPORATE GOVERNANCE 34 ETHICS AND HUMAN RIGHTS 42 PERFORMANCE MANAGEMENT 50 SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT 64 ENVIRONMENT PROTECTION 74 HEALTH, SAFETY AND ENVIRONMENT 104 EMPLOYEES 122 INVESTING IN COMMUNITY DEVELOPMENT 138 APPENDIX 154 ABBREVIATIONS 165 2 3 Statement of the Chief Executive Officer CORPORATE STATEMENT PROFILEOF THE CHIEF 01 EXECUTIVE OFFICER Statement of the chief executive officer Rusal sustainability report for 2018 Statement of the chief executive officer Rusal sustainability report for 2018 STATEMENT OF THE CHIEF EXECUTIVE OFFICER [102-14] Last year, it is fair to say, that the Company faced con- hectares of forests around the world by 2030 in re- tion, adherence to business ethics norms and rules. The siderable challenges. We came up against US sanctions sponse to the damaging effects of climate change. We policy was approved by RUSAL’s Board of directors and and consequent market volatility, which inevitably im- considered various options to launch a reforestation was implemented in February 2019. pacted our performance and financial results. However, programme and by April 2019, the key parameters of the the Company remained steadfast in its ability to fulfil programme had been agreed and announced officially. As a global market player RUSAL develops programs to economic, environmental and social responsibility obli- The initiative will see 500,000 trees planted over an area ensure healthy living and promote well-being for resi- gations in accordance with sustainability strategy, based of 120 hectares in the Krasnoyarsk region and a forest dents in the countries of operations, which support the on the Ten Principles of the UN Global Compact and protection scheme for the Lower Yenisei forestry. An UN sustainable development goal. In this direction our the UN Sustainable Development Goals. additional 500,000 trees will be planted by RUSAL in significant engagement in the fight against the Ebola other regions later in the year. virus in the Republic of Guin ea. In previous years, we Supporting the Goal on climate action, we are investing have provided support, which enabled the construction in new green materials and discovering high-tech ap- We do understand, the progress in achieving Sustainable of medical infrastructure and distribution of the Rus- plications for aluminium and alloys in order to produce Development Goals requires joint efforts from all the sian GamEvac-Combi vaccine. The Company’s medi- more products with a low carbon footprint. I would like market players, that is why we pay special attention to cal service assisted in the programme. In 2018, during to highlight that over 90% of the Company’s metal is multi-stakehoder partnerships. I am proud to say that the testing program at the Russian-Guinean Scientific produced using renewable hydropower, which eliminates in June 2019, RUSAL’s Managing Company and three Diagnostic Center for Epidemiology and Mi crobiology, harmful emissions, and the Company is dedicated to production sites including the bauxite mine, alumina RUSAL administered the vaccination against Ebola to further improving this figure. The production of alu- refinery and the aluminium smelter, were successfully two thousand local residents. The vaccine is currently in minum using inert anodes, a carbon-free technology, certified against the Aluminium Stewardship Initiative the final round of testing. The vaccination is an important is a revolutionary step for the aluminum industry and (ASI) Performance Standard and ASI Chain of Custody tool in the fight against the spread of Ebola in Africa. CEO of RUSAL I am happy to report it is now at an advanced stage of Standard. The standards have been developed with the Evgenii Nikitin development and pre-production testing. assistance of RUSAL, which joined the ASI in 2015. The I am pleased to say that RUSAL’s sustainability practices ASI is a voluntary initiative aimed at addressing sus- are considered to be among the most advanced in the In addition, we continue to develop our innovative low- tainability standards throughout the aluminium value market by leading independent associations and agen- carbon aluminium brand ALLOW, which was launched chain. This is an important milestone for RUSAL and cies. In January 2018, RUSAL’s ESG practices received an in 2017. The metal, produced under the ALLOW brand further proves that we are committed to being a leading, award in Hong Kong by BDO Limited, representing the is independently verified as being within the declared responsible aluminium producer. 5th biggest accounting network. In December, RUSAL’s carbon footprint level of 4 tonnes of CO2 equivalent commitment to sustainability and best international DEAR FRIENDS, emissions per tonne of aluminium produced, which is Aiming at establishing high-quality education system practices was once again acknowledged, this time by quite an achievement considering the world average level RUSAL has continued to expand its partnership with Vigeo Eiris, a reputable international ratings agency. is approximately three times more. Bloomberg Intelli- specialist institutes, universities, and vocational schools. RUSAL was listed among the top 100 Best Emerging I AM PLEASED TO PRESENT gence named RUSAL the cleanest producer among the In 2017, we launched a programme ‘New Generation’ Markets performers. RUSAL’S SUSTAINABILITY top five global aluminium leaders, having reduced carbon to find prospective employees from an external candi- REPORT 2018. emissions by 53% in 1990–2015, which demonstrates date pool, and by the end of 2018, RUSAL helped 400 This report has been prepared in accordance with the the progress we have made in this field and we are still graduates from across the country begin their careers Sustainability Reporting Standards of the Global Report- working hard to improve on these figures. at our Company. In addition, a number of major Siberian ing Initiative, and takes into account the requirements of universities have opened faculties at the Company’s key the Hong Kong Stock Exchange’s Environmental, Social Moreover, in 2018, RUSAL continued to cut direct spe- production sites, allowing them to more effectively train and Governance Reporting Guidelines and Aluminium cific green house gas emissions at existing aluminium highly skilled metallurgists in an environment, which Stewardship Initiative standards. The report also includes smelters as part of the Company’s strategy to reduce can guarantee employment opportunities and career information on the Company’s contribution to the UN’s emissions by 15% by 2025 as compared to the levels of progression. Sustainable Development Goals and its compliance with 2014. During 2018, our emissions output was 7.5% lower the principles of the UN Global Compact. than the levels registered in 2014. Last year, the accura cy RUSAL has a strong corporate culture, where human of the Company’s measurements of CO2 emissions was rights and ethical principles are core to the Company CEO of RUSAL verified by our auditor, KPMG. and form the values shared by all employees. In 2018, Evgenii Nikitin RUSAL developed its own human rights policy governing In late 2018, the Company decided to make a special the provision of healthy and safe working conditions for contribution to the UN’s target to restore 350 million all employees, prevention of any forms of discrimina- 6 7 About the Company CORPORATEABOUT THE 0102 PROFILE COMPANY About the company Rusal sustainability report for 2018 About the company Rusal sustainability report for 2018 COMPANY PROFILE 102-1, 102-2, 102-7 RUSAL, together with its subsidiaries, is one of the larg- Its production facilities are located throughout the world, Table 1. Direct economic value created and distributed in 20181 [201-1] est producers of primary aluminium and alloys. In 2018, including Company[102-7]: the Company accounted for 5.8 % of global production Direct economic value created 11,267,000,000.00 10,606,000,000.00 of aluminium and 6.2 % of alumina. [102-1] — 10 aluminium smelters, of which nine are in Russia Revenue 10,280,000,000.00 9,969,000,000.00 and one is in Sweden; — eight alumina refineries, of which three are located in Share of profits of associates and joint ventures 955,000,000.00 620,000,000.00 Russia, one in Ireland, one in Ukraine, one in Jamaica, one in Italy and one in Guinea; Interest income on loans 32,000,000.00 17,000,000.00 — seven bauxite mines, of which two are in Russia, one Economic value distributed (9,234,000,000.00) (9,053,000,000.00) in Jamaica, three in Guinea and one in Guyana; — one nepheline mine in Russia; Operating costs (8,202,000,000.00) (7,766,000,000.00) — four foil mills, of which three in Russia and one in including employee wages (739,000,000.00) (718,000,000.00) Armenia; — four powder plants located in Russia; Retirement costs (173,000,000.00) (197,000,000.00) — two silicon plants located in Russia; Community investments (22,000,000.00) (24,000,000.00) — two wheel factories located in Russia. [102-2] Payments to providers of capital (501,000,000.00) (886,000,000.00) The detailed structure of the Company’s divisions is including dividends paid (299,000,000.00) presented in the Appendix to the Report. including financial expenses (501,000,000.00) (587,000,000.00) RUSAL’s ordinary shares are listed on the Hong Kong Payments to government by country (336,000,000.00) (180,000,000.00) Stock Exchange and Moscow Exchange. including income tax (305,000,000.00) (140,000,000.00) Economic value retained 2,033,000,000.00 1,553,000,000.00 Table 2.