Strategy and management

Key figures
In 2020, we spent RUB 183.3 bn (16.4% of consolidated IFRS revenue) on SDG-linked projects.

Key events and facts
In 2020, Nornickel developed a Holistic Environmental Strategy that reviewed approaches to environmental risk management, water resources management, biodiversity restoration, and climate change issues, as well as presented goals and investment volumes in each area.

Mission and values

The Company seeks to foster a group-wide corporate culture of partnership and mutual respect shared by every employee. This will help us effectively implement our strategy based on sustainable development principles and enhance the Company’s business reputation «Норникеля»^* . 102-16

Our mission

Through the efficient use of natural resources and equity, we supply mankind with non-ferrous metals, which make the world a more reliable place to live in and help people realise their aspirations for development and technological progress.

Nornickel’s corporate values

Reliability
Ability to address any challenges to ensure success for the business

Growth
Effective production ramp-up and upgrade, leverage of groundbreaking technologies and development of our people

Collaboration
Commitment and ability of our employees to achieve goals and objectives through teamwork

Professionalism
Ability to ensure a sustainably strong performance

Responsibility
Desire to honour our commitments and take on responsibility for our decisions

Efficiency
Delivering against our targets in due time and at minimum cost

Strategic vision

The global transition to a green economy and growing ESG expectations of stakeholders offer a unique opportunity for the Company to become a key responsible player in the metals market leading the way in terms of low-carbon growth. This will allow Nornickel to make a significant contribution to the global economic framework by facilitating the electrification of the transport system and the development of renewables and hydrogen energy. The Company's stability at the fundamental level is underpinned by its traditionally reliable and well-oiled supply chain, fast-growing metal production, a high-quality product portfolio and our efforts to further diversify it.

By accomplishing its previous goals, the Company laid the foundation for advancing along its strategy with a focus on delivering market-leading shareholder returns, all while sticking to its broader sustainable development agenda.

Key sustainability trends

Nornickel is a leader of the Russian metals and mining industry. In this role, we meet Russia's and global economy's growing need for materials to manufacture products that can enhance the quality of life and facilitate the transition to a low-carbon and energyefficient economy. 102-15

ПSupplied to 37 countries, our products are used in mechanical engineering, car manufacturing, electronics, electrical engineering, petrochemical and oil refining, power generation, construction, consumer goods, healthcare, food, chemical and other industries.

Nickel consumption is predominantly driven by the stainless steel industry. These steels are used in multiple sectors – from mechanical engineering and construction to renewable energy and healthcare. The second largest nickel consumer is the battery industry, which has been growing on the back of the electrification of transport, a rise in the number of electric cars and hybrid vehicles, and the cathode material production gravitating towards nickel-rich types.

The electrical conductor industry, including the manufacture of various cables and wires, consumes up to 60% of the global refined copper output. This makes copper a key material for renewable energy development.

The main application of palladium is in automotive catalysts of gasoline engines. It is used to make catalytic converters to detoxify exhaust fumes. In most countries, such converters are legally required to be installed on all cars, and the laws are constantly growing more stringent. Palladium has unique catalytic properties enabling effective chemical reactions at every stage of a car's lifecycle. Its wide application will therefore be highly conducive to achieving the GHG emission targets and implementing the Paris Agreement in the coming decades. Palladium is also used in electronics, dentistry and jewellery manufacturing.

The transition to a green economy will drive the need for nickel, copper, palladium, and platinum. That is why we are now investing in sustainable and environmentally friendly production growth. We intend to be absolutely transparent and easy to work with for our customers by offering them new digital solutions. As an industry leader and a responsible miner Nornickel will continue to develop its strategy in a sustainable manner that is aligned with the public interest.

Vladimir Potanin,
President, Chairman of the Management Board
of MMC Norilsk Nickel

The automotive industry is the main consumer of platinum. Over 30 % of platinum in this industry is used to manufacture exhaust gas catalysts for diesel vehicles. The second largest consumer of platinum is the jewellery manufacturing industry representing one-third of total demand for the metal. Platinum is also used in glass manufacturing to produce glass fibre and optical glass and in electronics.

Platinum group metals, including palladium, platinum, rhodium, ruthenium and iridium that are produced by the Company, are also extensively used as catalysts to manufacture key chemicals.

A key trend for the Company is the evolution of automotive industry towards better environmental performance. The International Energy Agency's Sustainable Development Scenario contemplates the following auto mix by 2030: electric vehicles – 14%, internal combustion engine vehicles, including hybrids – 86%. By 2040, this mix will be 31% and 69%, which suggests targets for the reduction of CO2 emissions by light vehicles from 3.6 bt in 2019 to 2.9 bt in 2030 and 1.4 bt in 2040.

According to our estimates, the demand and current and potential supply under the International Energy Agency Sustainable Development Scenario until 2040 will have a positive effect on the metals produced by the Company.

Long-term trends supporting consumption growth for Nornickel’s metal basket

Light-duty vehicles sales^* , mln units

Global decarbonisation – risk and opportunity assessment for Nornickel’s metals

Palladium: deficits to sustain, balanced market in LT subject to flattening demand growth, Moz

Platinum: Well in Surplus Until (Possibly) 2030+, Moz
 

Nickel: Balanced with Deficits to Rise in Longer-term, Mt

Copper: balanced, demand-driven market, Mt

Long-term investment programme targets, USD bn

Strategic goals and initiatives

Our strategic goals until 2030 include mining volume growth, upgrade and expansion of processing facilities, contribution to combating climate change, implementation of Sulphur Programme 2.0 and other aspects of the Company’s Holistic Environmental Strategy. To support the growth strategy and environmental projects, Nornickel updated its long-term CAPEX plan in 2020, with the active phase of its investment cycle starting in 2021.

Holistic Environmental Strategy

As part of its updated strategic vision, the Group overhauled its approaches to environmental risk management, water resource management, biodiversity recovery, and climate change, with clear

targets set for each of the focus areas. In 2020, the Company developed a Holistic Environmental Strategy, which is going to be fleshed out during 2021.

Targets and objectives of the Holistic Environmental Strategy

Nornickel’s support for sustainable development initiatives and standards

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We support leading global and national initiatives in sustainable development often pioneering integration of their requirements into our policies and governance practices. Back in 2005, Nornickel was among the first Russian companies to join the Social Charter of the Russian Business adopted by the RSPP. In 2018, the Company was Russia’s first business taking part in the project of reporting on contribution towards the implementation of the UN Sustainable Development Goals (UNCTAD). In 2020, the Company launched self-assessment for compliance with the requirements of the Initiative for Responsible Mining Assurance (IRMA) and of the International Council on Mining and Metals (ICMM). In 2021, we will also continue furthering the practice of reporting in line with the standards of the FSB Task Force on Climate-Related Financial Disclosures (TCFD).

On top of that, the Company contributes substantially to the country’s National Projects in healthcare, environmental protection, housing and urban environment, productivity, employment, science, and digital economy.

Spending on SDG project in 2020

Number of SDG projects

Nornickel’s key SDG-linked projects in 2020

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SDGs	Projects and programmes	Contribution towards UN SDGs	2019	2020	Year-on year change
Central SDG Relevant targets: 3.4, 3.6, 3.9 Relevant national projects:	Health improvement and wellness programmes for employees and their families* Voluntary health insurance for employees and their families* Air protection projects* Water conservation and sustainable use projects* Waste management projects* Occupational safety initiatives* Corporate Healthcare project* COVID-2019 response measures	Participants in health improvement programmes	24,000	13,000	-46%
		VHI policy holders	71,500	72,800	+2%
		LTIFR	0,32	0,21	-34%
		Fatal workplace injuries	9	8	-11%
Relevant target: 4.4 Relevant national projects:	Staff training and development* Corporate scholarships for university students and internships with Nornickel Group companies* The World of New Opportunities charity programme: grants for educational institutions and projects*	Employees covered by Nornickel’s staff training, professional development, retraining, and upskilling initiatives	90,814	70,902	-22%
		University students covered by Nornickel’s corporate scholarship programmes	50	90	+80%
		Education projects supported under the World of New Opportunities charitable programme	71	71	-
Relevant target: 6.3 Relevant national projects:	Water use improvement and water supply projects* Water conservation and sustainable use projects*	Effluents treated to standard quality at treatment facilities	4.56 mcm	4.34 mcm	-5%
		Water withdrawal	0.36 thousand m3/ RUB mln	0.34 thousand m3/ RUB mln	-6%
		Effluents	0.16 thousand m3/ RUB mln	0.18 thousand m3/ RUB mln	+13%
		Pollutants in effluents	0.24 t / RUB mln	0.22 t / RUB mln	-8%
		Share of total used water recycled and reused	87,2%	86,4%	-1.2 pp
Relevant targets: 7.1, 7.3 Relevant national projects:	Rollout of the Automatic System for Commercial Accounting of Power Consumption across Polar Division* Energy efficiency and energy saving projects* Projects to upgrade power and heat generation, electrical grids and heat networks*	Fuel and energy savings resulting from energy consumption reduction and energy efficiency improvement initiatives	3,184 TJ	4,084 TJ	+28%
		Share of renewables in the Group’s power consumption	44,5%	46%	+1.5 pp
Central SDG Relevant targets: 8.2, 8.4, 8.5, 8.8. Relevant national projects:	Ensuring decent compensation for labour* Securing employees’ involvement in social partnerships* Programme to improve the workers’ social and living conditions Health and safety initiatives Ensuring employees’ involvement in improvement of the health and safety system* The Operating Unit’s investment projects (concentration and metal production)	Average monthly salary	RUB 118,800	RUB 131,800	+11%
		Employees covered by collective agreements	83%	93,7%	+10.7 pp
		Social facilities commissioned after renovation	26	138	+431%
Central SDG Relevant targets: 9.1, 9.4, 9.5 Relevant national projects:	Projects to increase production and upgrade processing facilities Projects aiming to develop local communities’ infrastructure (including transport accessibility improvement) as part of a public-private partnership and agreements with local administrations* Projects to develop power and heat generation, electrical grids and heat networks Research and development (R&D) and feasibility studies aimed to update Nornickel Group’s Development Strategy, expand production and protect the environment* Transportation and logistics projects Operational and management digitalisation projects* Enhancing the reliability of the fibre optic communication line in Norilsk*	Digitalisation expenses	RUB 6.7 bn	RUB 7.2 bn	+7%
		Expenses on R&D and feasibility studies*	RUB 128.2 mln	RUB 104.0 mln	-19%
Relevant target: 10.7 Relevant national projects:	Complementary Corporate Pension Plan Relocation assistance to new employees* Assistance programme for residents of Norilsk and Dudinka relocating to regions with better climate and socioeconomic conditions Our Home and My Home social programmes (purchase of apartments for employees in various Russian regions)	Complementary corporate pensions paid	RUB 394.8 mln	RUB 411.3 mln	+4%
		Expenses on relocating Norilsk and Dudinka residents to regions with better climate conditions	RUB 830 mln	RUB 830 mln	—
		People covered by the relocation assistance programme	352	829	+136%
Central SDG Relevant target: 11.6 Relevant national projects:	«Sulphur Programme 2.0»* Air protection projects* Waste management projects (including projects to eliminate inherited waste)* Response to environmental incidents Other environmental protection activities*	Air pollutant emissions	2.22 t / RUB mln	1.76 t / RUB mln	-21%
Central SDG Relevant targets: 12.2, 12.4, 12.5, 12.6 Relevant national projects:	Waste management projects* Other environmental protection activities*	Waste generation*	36 mt	145 mt	+302%
		Non-hazardous class 5 waste	97%	99%	+2%
		Waste generation	0.04 kt / RUB mln	0.13 kt / RUB mln	+225%
Central SDG	Projects to upgrade power and heat generation, electrical grids and heat networks Energy saving and energy efficiency improvement initiatives	GHG emissions (Scope 1 and 2)	9.95 mt of CO2 equivalent	9.70 mt of CO2 equivalent	-3%
		GHG emission intensity (Scope 1 and 2)	11.32 tonnes of CO2 equivalent per RUB 1 mln of consolidated revenue	8.68 tonnes of CO2 equivalent per RUB 1 mln of consolidated revenue	-23%
Relevant targets: 15.1, 15.5 Relevant national projects:	Cooperation with nature reserves (support for research and educational projects at the Pasvik, Lapland, Relict Oaks and Urumkansky nature reserves, Joint Directorate of Taimyr Nature Reserves, etc.)* Response to environmental incidents Scientific expeditions Fish stocking at water bodies across the regions of operation	Total area of supported nature reserves and parks	2,334,000 ha	2,334,000 ha	—
		Release of fingerlings of valuable fish species into natural water bodies across the regions of operation	205,000	136,000*	-34%
Relevant target: 16.5	Anti-corruption measures Raising awareness of its anti-corruption practices among Nornickel Group’s employees	Confirmed incidents of corruption	0	0	—
		Operating business units involved in anti-corruption activities	100%	100%	—
		Employees educated on anti-corruption practices	100%	100%	—
Relevant targets: 17.16	Cooperation with federal legislative and executive authorities, civil society institutions, and the business community Reporting on the Company’s contribution to the achievement of UN SDGs in line with the UNCTAD guidance UN Global Compact membership and related reporting Plans to join other major sustainable development initiatives (ICMM, IRMA, TCFD) Support for corporate volunteering	Working bodies (committees, expert and working groups, etc.) established by NGOs and government authorities where Nornickel Group is represented	23	25	+9%

Risk management framework

An efficient risk management framework is instrumental in helping the Company to deliver its strategic and day-to-day goals.

The Company’s risk management involves the following key stages:

• identifying external and/or internal risks;
• assessing the risks in terms of their impact on key financial and non-financial metrics;
• developing and implementing risk prevention and/or mitigation measures.

The Company’s key risk management regulations:

• Corporate Risk Management Policy^*
• Corporate Risk Management Framework Regulations
• Internal Control Policy

The risk management framework is based on the principles and requirements of the Russian and international laws and professional standards, including the Corporate Governance Code recommended by the Bank of Russia, GOST R ISO 31000:2019 (Risk Management) and COSO ERM (Enterprise Risk Management – Integrating with Strategy and Performance).

To manage production and infrastructure risks, the Company develops, approves and updates business continuity plans that in case of emergency set out:

• procedure to coordinate the activities of functions in order to save the lives of people, minimise damage to property, and ensure the stability of processes;
• operations support or resumption plan;
• rehabilitation or reconstruction plan for affected assets.

Structure of the risk management framework

We have formalised our risk management structure, allocating relevant roles and duties to all employees. The Board of Directors defines the principles and approaches to organising a risk management framework and oversees its performance. 102-29 102-30

Improving the risk management framework

In 2020, the Company made the following efforts to enhance its risk management framework:

• established the Risk Management Committee that supports the Management Board and is led by the Company’s President, and a number of dedicated committees to manage risks at separate functions. The Risk Management Committee aims to improve and develop the corporate risk management framework;
• started a project to introduce a GRC-based automated risk management system capable of establishing key risk indicators;
• provided regular training on risks to the Group’s employees;
• to update the risk management roadmap, underwent a self-assessment and conducted an external maturity evaluation in respect of the corporate risk management framework and a number of business lines to confirm alignment with best global practices;
• to ensure risk-oriented decision-making, the Company’s investment committees regularly reviewed the results of quantitative risk analysis for investment projects;
• as part of rolling out simulation modelling to investment risk assessment, the Company assessed the combined impact of risks of key investment projects on the Company’s financial and operating metrics (the assessment considered potential scenarios under each of the investment projects);
• the Company set up an inspection for monitoring technical, production and environmental risks within the Internal Control and Risk Management Unit. It will focus on streamlining the processes relating to identification, analysis and assessment of technical, production and environmental risks;
• the Company took a scenario-based risk assessment approach for investment projects exposed to the impact of COVID-19;
• a number of tasks were solved as part of our efforts to develop scoring methods for evaluating specific technical and production risk categories.

In accordance with plans to improve the risk management framework, the following work streams have been identified for 2021 and beyond:

• development of a special-purpose quantitative model for evaluating equipment failure risks at Kola MMC, including development of a buildings and structures monitoring system for automated risk recording and prevention at Norilsk Division;
• regular self-diagnostics and assessment of the risk management framework for compliance with global best practices;
• continued improvement of risk management practices in strategic and operational planning;
• further enhancement of simulation modelling as an approach to assess investment project risks;
• methodology enhancement to analyse various categories of technical and production risks;
• methodology enhancement to account for climate risks;
• analysis of risks within the Company's supply and production chain;
• implementation of the project for risk management automation based on SAP GRC RM.

Insurance

Insurance is one of the key tools for managing risks and protecting the assets of the Company and its shareholders against any unforeseen losses related to our operations, including due to external hazards.

To ensure consistent application of the Group’s uniform policies and standards, the insurance function is centralised. Every year, the Company approves a comprehensive programme that defines key parameters by insurance type, key business line and project. Nornickel runs a corporate insurance programme that covers assets, equipment failures and business interruptions across the Group. Our corporate insurance contract is issued by major Russian insurers in cooperation with an international broker. This helps us make sure that our risks are underwritten by highly reputable international re-insurers.

The same principles of centralisation apply to our freight, construction and installation, aircraft and ship insurance arrangements. The Group companies, as well as its directors and officers, carry business and third-party liability insurance. To secure the best insurance and risk management terms, we follow the best mining industry practices and trends in the insurance market.

Map of key sustainability risks

The risks to the Company’s sustainability goals are mainly related to occupational health and safety, power blackouts at production and social facilities in the NID, environmental and conservation legislation, social and labour relationships and shortage of qualified workforce in regions of operation, information security, insufficient water resources and soil thawing.

The most significant risks in terms of their impact on the Company’s goals are shown on the map of key sustainability risks.

In 2020, the technical and production risk materialised when above-ground storage tank No. 5 at HPP-3 was destroyed, resulting in a diesel fuel spill accident. Facilities of HPP-3, including tank No. 5, underwent risk assessments on a regular basis. The risk of the tank being destroyed had been identified earlier, with the probability of the risk event occurring assessed as low. The risk was assessed based on a number of expert documents (including the industrial safety assessment report and the industrial safety declaration that was issued by an expert organisation and registered with the Federal Service for Ecological, Technological and Nuclear Supervision – Rostechnadzor) and the internal NTEC risk management regulations.

Investigations showed that the risk materialised mainly due to some of the piles failing to penetrate the hard rock as required by the design documents. The Company conducted a thorough reassessment of risks related to hazardous production facilities and expanded the power infrastructure upgrade programme. On top of that, it developed a set of initiatives, including a project to set up geotechnical and satellite monitoring of its facilities in permafrost areas.

As part of its efforts to adapt to global challenges caused by the pandemic, Nornickel identified the risk of COVID-19 impacting its production programme and staff. Managing this external risk effectively is essential to securing our stability in the long run and maintaining our competitiveness in metals markets.

Risk map

Key sustainability risks

This section presents the key linked to our sustainability priorities. For more details on other risks, please see our Annual Report for 2020. 102-15

1. Risk of toughened environmental requirements

2. Workplace injuries

3. Information security risks

4. Technical and production risk

5. Power blackouts at production and social facilities in the Norilsk Industrial District (NID)

6. Compliance risk

7. Social risk

8. Risk of insufficient water resources

9. Soil thawing^*

10. Epidemiological risk

Respect for human rights

UN Global Compact Principles

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights.

Principle 2: Businesses should make sure that they are not complicit in human rights abuses.

Respect for human rights is one of fundamental principles of Nornickel's operations.

The Company does not tolerate any forms of discrimination and does not use forced or child labour, giving every employee an equal opportunity to exercise their labour rights regardless of gender, race, nationality, origin, financial, social, and occupational status, age, domicile, religion, political beliefs, and other circumstances not related to professional qualities. The Company is also committed to addressing socially significant issues in all regions of its operations. No operations are run in, and no raw materials are procured from, areas involved in military conflicts.

As a socially responsible business, major employer and a taxpayer, Nornickel respects and promotes human rights and freedoms in line with internationally recognised norms and practices. Also, the Company fully complies with the applicable laws of the Russian Federation and other countries of its operations and respects both international standards for human rights protection and labour standards set out in the International Bill of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and the UN Guiding Principles on Business and Human Rights.

Applicable regulatory framework

We operate in countries with a mature legal framework where the risk of human rights violations is very low. Hence, by observing applicable Russian laws, for instance, we automatically comply with most of the core ILO conventions on human rights ratified by our government.

Importantly, even though some of the above ILO conventions on human rights are not officially ratified by Russia and not directly enshrined in the national law, Nornickel seeks to voluntarily comply with them in its by-laws and operations.

Core ILO conventions ratified by the Russian government

Human rights governance

The Company's commitment to respect human rights is reflected in its Human Rights Policy^* and other by-laws governing HR, environmental, social and other matters.

The Company's President is responsible for ensuring that Nornickel respects human rights. The Company's management and employees are committed to complying with Russian and international laws and the Company's by-laws on human rights. The Company has a clear governance structure with a defined hierarchy for reporting and escalating concerns about human rights issues.

Nornickel regularly assesses the potential impact of its operations on human rights. On top of addressing human rights risks and ensuring full compliance with applicable requirements, the Company also implements best practices (signs employment contracts and collective bargaining agreements, creates favourable work and rest conditions for employees) and expects its suppliers and contractors to respect human rights throughout their operations.

All of the Company’s new projects are vetted for compliance with national and international legislation and are subject to a comprehensive human rights review, including an impact assessment. These checks involve over ten of Nornickel’s departments and functions.

Information on alleged human rights violations is collected via Nornickel’s Corporate Trust Line, employee questionnaires, and sentiment surveys among local population. The Company guarantees confidentiality for whistle-blowers and respondents. Report statistics are regularly reviewed by the Audit and Sustainable Development Committee of the Board of Directors.

Nornickel’s human rights protection process

For more details, please see the Human Rights Policy

Respect for human rights across Nornickel’s operations

Stakeholder engagement

Stakeholders and interaction mechanisms

Effective stakeholder engagement enables us to properly manage risks and opens up new opportunities for integrating sustainability principles into our strategy. 102-42

Stakeholder engagement principles and procedures are set out in MMC Norilsk Nickel's Business Ethics Code^* , Human Rights Policy, Local Community Relations Policy, Transparency Policy and other by-laws. We maintain dialogue with stakeholders in line with international standards andaccountability principles^* .

Our key stakeholders are employees, shareholders, investors, business partners, national and local government authorities, local communities, and Russian and international non-profit organisations. We keep working to strengthen our relations with stakeholders, with a focus on timely collecting full information on their interests and proposals, designing and improving relevant accounting methods used in management practices, improving cooperation mechanisms and enhancing all aspects of dialogue across our footprint.

Our Corporate Trust Line is a permanent tool to manage complaints and queries created in 2010 for a wide audience. It helps identify and quickly respond to matters of importance for stakeholders.
For more information, see the Preventing and Fighting Corruption section.

Stakeholder map^*

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Investor dialogue and key ESG ratings

In 2020, despite the COVID-19 pandemic, we maintained an active dialogue with investors and continued to diversify our shareholder base.

From March 2020, after the start of the nation-wide lockdown in Russia, all investor communications migrated online. For the first time in the Company's history, the top management held over 300 virtual meetings with investors and organised an Investor Day remotely along with conference calls on IFRS results and spill clean-up operations at HPP-3.

As part of our dialogue with investors, we note their increasing interest in responsible investing. One of the key initiatives in this domain is the Principles for Responsible Investment (PRI), signed by over 3,000 investors (up 28% in 2020 alone) with north of USD 100 tn of assets under management.

Another important effort is Climate Action 100+ led by more than 500 investors with over USD 50 tn of assets under management to ensure support for action on climate change.

We seek to increase transparency by improving and expanding sustainability disclosures on our corporate website, in various global databases and surveys, investor presentations and dedicated reports. To strengthen dialogue with investors and rating agencies taking ESG-driven investment decisions and using these factors to assess the Company, we created a dedicated section called ESG Highlights on our website. It features all the related corporate information subject to regular updates.

Key ESG ratings

Name	Current status/score
	After joining the UN Global Compact in 2016, the Company has continuously demonstrated its commitment to sustainability principles
	The agency confirmed the inclusion of Nornickel’s shares in the FTSE4Good Emerging Index, with a score of 4.0 out of 5
	ISS gave us environmental and social ratings at 3, and corporate governance – at 4 on a scale from 1 (low risk) to 10 (high risk)
	ESG score of 44 (out of 100), up from 33/100 in 2019
	ESG score of 61 (out of 100), Average Performer rating (in 2019 – 63); ESG risk of 38.9 (out of 100)
	ESG rating "В", score of 3.3 (out of 10)
	In 2020, Nornickel provided its first ever disclosures to CDP Ratings: “D” (Climate Change), “C” (Water Security)
	The Company has invariably ranked among the index leaders since 2014 (first year they were composed)

Dialogue with employees

The key tools we use to build dialogue with our people are social partnerships regulating labour relations and offices for social and labour relations. We conduct regular surveys to measure employee engagement and assess social programmes, along with targeted polls.

As a way to raise awareness, shape a better understanding of the Company’s goals and values, and increase the level of trust between the team and the management, we are running a number of initiatives to establish a dialogue between senior executives and the personnel. The following activities were held as part of the project in 2020:

• 31 corporate dialogues
• Norilsk Live, a Q&A session with the Company’s Vice Presidents
• Challenges-2020: Pandemic, Environment and Safety video conference

More than 45,000 Nornickel employees participated in the initiative.

In 2020, we also launched a series of large-scale information campaigns involving over 55,000 employees of Nornickel’s divisions and RBUs to discuss salary indexation, supplement payments, bonuses for production and business achievement and improvements following the engagement survey.

To support our people during the COVID-19 pandemic, we set up a response centre, task forces at divisions and RBUs, and a corporate hotline. In 2020, hotline operators handled 3,300 queries.

The reporting year saw a landmark event – the shutdown of the smelting shop in Nikel. When designing support measures for our staff, we leveraged the successful experience gained during the shutdown of Nickel Plant in Norilsk in 2016. As part of the shutdown, we provided a full package of social benefits to the shop personnel, including comfortable relocation to other sites, retraining and pension plans. Between 2020 and 2022, the Company will invest more than RUB 900 mln in a range of social programmes for smelting shop employees. 102-10

For more details, please see the Human Capital section.

Dialogue with business partners

As a participant in the global supply chain, the Company shares its partners’ sustainability values and undergoes regular audits in accordance with sustainable development and responsible supply policies. These audits take place as part of systemic independent ESG reviews requested by our partners.

An important element of our relations with business partners is advancing the responsible consumption of precious metals and metal-bearing products and creating a global mechanism to ensure the reliability of precious metal supplies as part of international non-profit organisations of producers and market players, such as the International Platinum Group Metals Association (IPA), International Information Security Research Consortium (IISRC) and the International Nickel Institute.

Twice a year, we publish nickel and PGM market reviews prepared together with ICBC Standard Bank based on the fundamental analysis of global economic and industry data. They offer the market a deep and high-quality insight into trends and forecasts in this domain.

The Company's expertise and solid track record in creating powerhouse industrial businesses that leverage cutting-edge technologies have laid the groundwork for successful implementation of projects with partners in both traditional and emerging industries.

In particular, we keep working on our innovative project to integrate business in the digital ecosystem to increase efficiency and transparency across the entire metal supply chain and support responsible sourcing. We plan to make part of our supply contracts digital using the Atomyze platform powered by the distributed ledger technology. In 2020, Nornickel's Global Palladium Fund issued the first tokens to digitise contracts with several major customers.

Dedicated to meeting the growing demand for battery materials used in electric vehicles, the strategic partnership between BASF and Nornickel became a landmark event for achieving SDGs and supporting green economy. In 2020, Fortum, BASF, and Nornickel signed a memorandum of intent to create a battery recycling cluster in Finland, serving the electric vehicle market.

In our relations with suppliers and contractors, we focus on building an open and productive dialogue supported primarily through competitive procurement, feedback via a dedicated Suppliers section on our website, conferences and SAP SRM interactions.

For more details, please see the Supply Chain Responsibility section..

Dialogue with authorities, communities and non-profit organisations

Norilsk Nickel Group's guiding principles in cooperating with government bodies, local authorities and non-profit organisations are strict compliance with Russian laws, regional and municipal regulations and the social responsibility principle, collaboration, and mutual respect of interests.

Following the information transparency principle, we have initiated an open dialogue with local authorities to build constructive and effective cooperation. The Company is represented in 25 committees, commissions, expert and working groups established by governmental bodies in association with the business community, thus supporting socially important projects. Currently, we mainly cooperate with the working groups under the Government Commission on the Use of Natural Resources and Environmental Protection. We also actively participate in the work of regional authorities’ expert boards across our geography.

The Company takes part in parliamentary sessions and round table discussions organised by the Federation Council and State Duma of the Federal Assembly of the Russian Federation, Government of the Russian Federation, Civic Chamber of the Russian Federation, Russian Union of Industrialists and Entrepreneurs, Chamber of Commerce and Industry of the Russian Federation, Association of Managers (an interregional public organisation), etc.

The Company's experts engage in draft regulation discussions held by the Open Government and by community councils of the federal executive bodies, as well as in anti-corruption due diligence and regulatory impact assessments. All of that helps maintain a constructive dialogue with the government, cut administrative red tape and improve business climate.

Our representatives are also part of various working groups created by federal executive authorities to help implement the regulatory guillotine mechanism. A regulatory guillotine is a Russian regulatory reform launched in 2019 to revise mandatory business requirements in effect.

Over the past year, we backed a number of large international and domestic conferences and forums:

• 9th Moscow International Forum “Corporate Volunteering: Business and Society”;
• 5th International Humanitarian Teaching Forum “Living Classics”;
• 8th National Conference of Transport Security and Anti-terrorism Technologies;
• R&D Conference “Corporate Security as Part of Russia's National Security”;
• R&D Conference “Transport Safety Formula. Law. Knowledge. Practice”;
• National Conference “The Language of the North”;
• International Research Conference “Svalbard: from Terra Nullius to All Man's Land”.

Cooperation agreements

In 2020, we signed a number of agreements with federal, regional and local authorities as well as major Russian companies.

The agreements covered a wide range of social and economic issues, including infrastructure projects.

Relocation programme

In 2011, we signed a special agreement with federal and regional authorities to contribute to a long-term targeted federal programme for relocating people living in Norilsk and Dudinka to other Russian regions with favourable climate conditions. During 2011–2020, 8,219 families, including 6,713 families from Norilsk and 1,506 families from Dudinka, received social benefits under the programme for the purchase of housing on the “mainland”. In 2020, 507 certificates granting the right to receive social benefits for housing were issued (387 for Norilsk and 120 for Dudinka), all valid until 1 December 2021. The participants are continuing to purchase housing under the programme

In 2020, though the agreement ceased to be effective, we decided to keep financing it unilaterally. In September 2020, Nornickel's President resolved to allocate RUB 830 mln for relocation purposes.

Local communities

We do our best to collect and take into account all the feedback from local residents on regional development and high-potential projects through interactions at forums, targeted surveys, polls, focus groups, foresight sessions, etc. Key parties to the dialogue are regional development centres established in cooperation with Nornickel, such as the Norilsk Development Agency, the Second School Centre for social projects in the Pechengsky District, and the Monchegorsk Development Agency (created in 2020).

In 2020, together with stakeholders we designed the Conceptual Framework for the Social and Economic Development of the Pechengsky District and conducted surveys as part of creating the Pechengsky District brand and master plans of Zapolyarny and Nikel. This coincided with the shutdown of the non-moderniseable smelting shop in Nikel during the year as part of the programme to stabilise the situation and set stage for the sustainable social and economic development of the settlement and the Pechengsky District post shutdown. 102-10

For more details, please see the Company's Contribution to the Development of Local Communities and Improving the Living Standards for Local Communities sections.

Environmental protection dialogue

Environmental dialogues are traditionally a priority area in the Company's information, internal and external communication policies.

In 2020, the following items were on the agenda of various forums and platforms:

• clean-up of the diesel fuel spill at NTEC’s HPP-3;
• preservation of ecosystems across the footprint of the Group’s production sites;
• industrial ecology problems.
• improvement of environmental laws and regulations;
• promotion of best practices in environmental protection;
• • environmental programmes and initiatives of Nornickel.

Coverage of the fuel spill clean-up

We provided real-time updates on the fuel spill clean-up in the dedicated section on our website^* .and in social media. The Company ensured close interaction with stakeholders, quickly responding to their requests for information. The civic chambers of Russia and Norilsk organised dedicated round tables, which served to provide information on the clean-up progress and stage discussions with the Company's top managers.

For more details, see the Environmental Responsibility section.

As part of the annual Investor Day held in December 2020, the management updated the investment community on Nornickel’s operating and financial performance, its metals market outlook and strategic vision for the next decade focusing on sustainable and eco-friendly development. For more details, please see the Strategy and Management section.

Ecology was also at the top of the agenda at multiple international and domestic forums backed by Nornickel and attended by government representatives, captains of industry, investors, experts, and analysts:

• International Forum “Arctic and Antarctic Days in Moscow”
• International Forum “Arctic: Today and the Future”

Our representatives are closely involved in developing key draft laws on natural resources management, environmental protection, environmental impact fees, environmental charges, and amendments to laws on preferential conditions for investments in the Arctic.

Over the years, we have successfully used volunteer movements to promote dialogue on environmental protection with our employees and local communities. One of our major projects in this area is the Let’s Do It environmental marathon bringing together thousands of our employees and local community members to support nature reserves, clean up certain areas, transplant young trees, and carry out other environmental initiatives.

Dialogue in public non-financial reporting

Each year starting from 2003, the Company has been engaging in dialogues with stakeholders while drafting sustainability reports. 102-43 102-46

Since 2014, we have staged these dialogues as part of the We Are the City! social technologies forum. Our reports undergo public verification including assurance by the Russian Union of Industrialists and Entrepreneurs.

As part of preparing the 2020 Sustainability Report, we held an online foresight dialogue – the first ever for the Russian metals and mining industry. Representing Nornickel were Andrey Bougrov, Senior Vice President for Sustainable Development, Larisa Zelkova, Senior Vice President – HR, Social Policy and Public Relations, and Svetlana Ivchenko, Head of the Sustainable Development Department.

In the course of the event, we presented the concept of the 2020 report and our strategy, updated to reflect the report's focus on the environment and development of local communities. We also had our matrix of material and additional disclosures verified by the experts.

For more details on the dialogue, please see the Definition of Material Topics and Stakeholder Dialogue Minutes appendices.

Number of survey participants as part of the 2020 Sustainability Report campaign, ppl^*

2020 survey participants (external) by territory,%