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Annual Report & Accounts 2012

Corporate responsibility

The Company sees its social mission as the achievement of sustainable development that is in the long-term economic interests of the business and contributes to the social well-being of citizens, to the protection of the environment and pays respect to human rights in regions where the Group operates.

Our CR objectives

CR areas

The key aspects of our approach to corporate responsibility are:

Cooperation with all stakeholders.

Occupational health and safety.

Development of our employees and protection of their rights.

Interaction with the community and development within the regions where the Group operates.

Environmental activities.

CR strategic objectives

The combined efforts of the Company, its employees and local communities seek to achieve the following strategic objectives:

Creating a favourable and stable socio-economic environment for employees and local residents.

Improving corporate governance mechanisms in the Company’s economic, environmental, and social activities.

Complying with international and national standards for the protection of the environment with a focus on the best modern technology.

Acting in accordance with the principles of business ethics.

Creating new products which meet customer expectations.

Creating the conditions necessary to ensure high employee productivity.

Ensuring sustainable improvements in employee welfare and social security; creating a safe environment in the workplace.

Preventing human rights violations and promoting compliance with current workplace legislation.

How we manage CR

NLMK’s corporate responsibility management system is a multilevel structure that includes various positions of corporate management, from strategic decision-making to specific objectives at each individual production site in the areas of Human Relations (HR), community interaction, and the environment.

Strategic decisions on HR, social, and environmental policies are taken by the Board of Directors. The Human Resources, Remuneration, and Social Policies Committee, the Investment Committee, and the Management Board develop and present recommendations to the Board of Directors. Vice Presidents are responsible for establishing HR, social, and environmental policies in their areas of responsibility, and for monitoring their effectiveness. Division heads develop key performance indicators, ensure that they are met and monitor the implementation of individual projects by the production units. The latter, in turn, put the strategies adopted into effect in various areas of their activity, taking decisions on current issues and projects.

For more information on our corporate responsibility please visit CR section of our website

 

Stakeholder engagement

2012 goals

Performance in 2012

Performance against goals

2013 goals

Improvement of the stakeholder engagement system.

The Group regularly analyzed the opinions of key stakeholders through surveys and consultations, and interacted with them through negotiations, meetings, working groups and standing commissions.

Further development of cooperation with stakeholders, improvement of existing approaches to dialogue with a view to more quickly identifying and resolving bottlenecks.

For more information

Health and safety

2012 goals

Performance in 2012

Performance against goals

2013 goals

Implementation of measures designed to create healthy and safe working conditions for Company employees.

Expenditure on occupational safety measures amounted to US$ 20 million.

Upgrade of working conditions for 1,900 employees at the Group’s Russian facilities.

Reduction of the number of fatal accidents to seven.

Implementation of measures to ensure safe working conditions for company employees with the aim of reducing workplace injuries and eliminating fatal accidents.

Promotion of basic safety standards at the Group’s sites; training employees in key aspects of occupational safety.

For more information

Employees and human rights

2012 goals

Performance in 2012

Performance against goals

2013 goals

Improving the motivation scheme for Company employees.

Average wages at the Group’s Russian companies increased by 12%.

Improvement of the material and moral incentive scheme.

Development and improvement of HR procedures at the Group’s subsidiaries, bringing them all up to the same corporate standard.

In 2012, around 47,000 Group employees underwent professional training.

Further development of HR procedures at all subsidiaries to bring them up to the same corporate standard.

Continuation of the practice of collective bargaining at NLMK Group companies and ensuring compliance with collective agreements.

In 2012, the Group’s companies essentially met all of their obligations under collective agreements.

Continuation of the practice of collective bargaining at NLMK Group and ensuring compliance with collective agreements.

Headcount optimization at NLMK.

NLMK Group employee numbers increased 3%, while steel production rose by 25%. The growth in productivity for the Group was 20% compared to 2011.

Continued headcount optimization in accordance with the best international practices in order to increase productivity.

Implementation of the second and third stages of the introduction of key performance indicators (KPI). Cost management to meet target levels based on best practice.

NLMK has created an automated KPI system. The cost of steel produced by the Group is one of the lowest in the world (US$ 388/t).

Expansion of the system scope to include NLMK Russia Long companies.

Increase in the number of business processes covered by the KPI system.

For more information

Community and people

2012 goals

Performance in 2012

Performance against goals

2013 goals

Implementation of programmes aimed at social and economic development in the regions where we operate.

Social investment and development in the regions where we operate totalled US$ 68 million, with more than US$ 12 million given to charities.

Continued implementation of measures to promote sustainable development in the regions where we operate, and maintenance of a stable socio-economic environment in local communities.

For more information

Environment

2012 goals

Performance in 2012

Performance against goals

2013 goals

Continued implementation of environmental protection measures to reduce our negative impact on the environment.

Investments in environmental measures in 2012 amounted to US$ 77 million.

Start of projects in phase 3 of the Environmental Protection Programme for 2013–2016.

Reduction of negative impact on the environment in regions where the Group operates.

Specific atmospheric emissions were 22.6 kg/t of steel, which is 19% lower than in 2011.

Further reduction of negative environmental impact in regions where the Group operates: reducing emissions per tonne of steel, reducing water consumption and discharge of pollutants into watercourses, high level of recycling for industrial waste, and further improving energy efficiency.

For more information

The goal set for 2012 has been achieved The goal set for 2012 is in the process of being achieved