The principles of the strategic vision of the Norilsk Nickel Group of Companies approved by the Board of Directors in the fall of 2013 in the reporting year 2014 gained momentum in the form of updated functional strategies and plans by a number of basic directions of Company activity focused on further enhancement of business efficiency. Thus, in 2014, the Plan for Reconfiguration and Modernization of Concentration, Smelting and Refining Facilities,
Program for Development of Human Capital Assets, Strategy in the Field of Industrial Safety and Labour Protection were developed and started being implemented, the elaboration of the Company Environmental Strategy was initiated. The multilateral agreement was signed with federal regional authorities concerning target investment program for accelerated closing of the obsolete Nickel Plant in Norilsk, which started its operation in 1942 .
The target investment program for closing of Nickel Plant will be implemented from 2016 concurrently with the launch of a comprehensive program for technical refurbishment of Norilsk Industrial Site.
The goal of MMC Norilsk Nickel is to ensure sustainable development of the Company irrespective of economic conditions on the market of non-ferrous metals. The Company concentrates its efforts on the first-class assets located in the territory of Russia for that purpose. These assets are characterized with high volumes, profitability, and high quality of crude materials.
Besides, the strategy provides for the optimization of the value chain due to optimum configuration and modernization of metallurgical facilities of the Company as well as formation of the culture of «responsibility for the capital» and efficient management of investments. Expected yield is assumed from foreign production assets located in Australia, South Africa, and Botswana. The social responsibility remains an overriding priority for the Company
The mission of MMC Norilsk Nickel is to manufacture products necessary for society, base and precious metals using, the most efficient
The Company mission is implemented through the corporate social responsibility (CSR) with respect to the stakeholders broken down by the following main priorities: Safety, Environment, and Society
The Company's activities cover all aspects of corporate social
responsibility according to the International Standard ISO 26000:2010. The Company shares the principles and approaches entirely set out in this Standard while demonstrating the integrity of CSR into the practice for adoption of decisions and management as well as improvement of effectiveness by each of the priorities: safety, environment, and society.
The Company development strategy provides for development of Tier I assets and concentration of capital investments into unlocking the full potential of the resource base of Norilsk industrial area in combination with application of the approaches in CSR ensuring discharge of Company liabilities to the personnel, local communities, and society in general.
The concept of corporate risk management is intended to achieve strategic goals and planned results, improve investment attractiveness and shareholder value of the Company.
The quality policy is aimed at continuous improvement of the activity for management of quality of the products and services in accordance with the requirements of the International Standard ISO 9001 .
The strategy in the field of industrial safety and labor protection defines the targets for accident rate at the Company and measures for their achievement. Achievement of zero fatal accidents is the key strategic objective of the Company in the field of industrial safety and labor protection.
The Program for Development of Human Capital Assets defines directions and development of the mechanisms for personnel management for medium and long-term period: implementation of segmentation and targeted approach to the employees, extension of the models for use of human resources, development of corporate culture, reinforcement of leadership potential, as well as transformation of the service for personnel management for fulfilment of the role of the leader in strategic changes.
Corporate social responsibility is one of the priorities in strategic development of the Norilsk Nickel Group of Companies. The management bodies and executive units of OJSC MMC Norilsk Nickel and subsidiaries are in charge of development and implementation of the policy by various aspects of corporate social responsibility of the Group within the scope of its functionality in accordance with the legislation and internal regulations.
The Company improves the management system continuously for the enhancement of its efficiency and compliance with the best world's practices. Since 2002, the Company follows the recommendations of the Code of Corporate Conduct of the Federal Commission for the Securities Market, and after approval of the Code of Corporate Conduct on March 21, 2014, by the Board of Directors of the Bank of Russia, the Company follows the main recommendations of the specified Code.
Development and approval of the following regulatory documents by the Board of Directors (BD) should be put among the key initiatives for improvement of the management system of OJSC MMC Norilsk Nickel in 2014:
1. Code of Corporate Conduct and Business Ethics of the BD members;;
2. Policies of advanced training for BD members;
3. Performance appraisal policy (approved at the beginning of 2015, the first self-appraisal of BD performance was carried out at the same time);
4. Policies for development and approval of the recommendations for voting with respect to the candidates to the BD members (approved at the beginning of 2015);
5. Policy for remuneration to the BD members;
The General Shareholders' Meeting is the supreme body of Company management having the authority in electing the members of the Board of Directors, approval of the Company auditor, approval of annual reports, annual financial statements, including profit and loss statements (profit and loss accounts) of the Company. The audit commission, which carries out control of financial and economic activities of the Company, is accountable to the General Shareholders' Meeting.
The Board of Directors (BD) carries out the general management of Company activity, except for the issues referred by the Federal Law On Joint-Stock Companies and Charter of the Company to the competence of the General Shareholders' Meeting: defines the priority directions, strategic development, plans and budgets, approves major transactions and interested-party transactions, which are related to the Company activity, and implementation of measures and procedures for management of such risks. The BD is entitled to give instructions to the Company management (they are recorded in the minutes of the BD meetings) and control compliance with them. The BD serves a purpose for prevention, identification, and settlement of internal conflicts among the management bodies, shareholders, and employees of the Company.
According to the Code of Corporate Conduct and Business Ethics, the BD members have to comply with high standards of ethics, business integrity and responsibility, avoid conflict of interests and, in case of its occurrence, notify of its presence.
By the decision of the BD, the Committees are established for preliminary consideration of the most important issues and preparation of recommendations of the BD for decision making. The Committees are entitled to deliver consultations with the Company management bodies, receive opinions from outsourced consultants, as well as involve the employees of the units having due experience and qualification for more efficient and proper fulfilment of their functions.
The BD meetings are held as may be necessary but not less than once per six weeks. The meeting agenda is formed by the BD Chairman based on the request to convene a meeting of the BD, which can be initiated by the BD Chairman or its members, Audit Commission, auditor, Management Board, General Director, as well as shareholders holding not less than ten percent of ordinary shares in total.
In 2014, the BD considered the Company financial results, information about progress of strategic initiatives, reports of the management on the results of activity in the field of environment, industrial safety, labor protection, reports on performance indicators on a quarterly basis.
The BD is formed by the General Shareholders' Meeting. In accordance with the applicable legislation of the RF, the shareholders comprising the holders of at least two percent of voting shares of the company have the sole right to propose the candidates for being elected to the BD of joint-stock companies incorporated in the RF. The information about the candidates for being elected to the BD, which is sent to the shareholders in the form of candidate questionnaire, must contain data on the candidates in accordance with the Company Charter, including on the positions held in the management bodies of other legal entities, about the number of Company shares held by the candidate.
The composition of the BD changed in the reporting year by the results of annual General Shareholders' Meeting held on June 6, 2014.
Acknowledged world experts with many years of experience of work in mining industry are included into the BD members. The number of BD members at the year-end is 13, including 5 members elected for the first time and 1 executive member. There is one woman among the BD members.The average tenure in the BD is 3.5 years. The average age of the BD members is 47 years. The Chairman of the BD is an independent member and not the executive director.
In accordance with the world practice of Corporate Governance and recommendations of the Code of Corporate Conduct of the Federal Commission for the Securities Market of Russia, the independent directors are elected to the Company BD. For determination of independence of the BD members in 2014, the Company used the most conservative criteria stipulated with the Code of Corporate Governance approved by the Board of Directors of the Bank of Russia.
The Management Board and the General Director representing the collegial and sole executive bodies of the Company manage its daily operations. The position of sole executive body of the Company, General Director of the Company, was held in the reporting period by V. O. Potanin. He also fulfilled the functions of the Chairman of the Company Management Board.
The personal data on the members of the BD, Management Board, and General Director is disclosed in the annual report of OJSC MMC Norilsk Nickel for 2014 in the chapter «Corporate Governance», pages 148–163.
The volume of the annual remuneration to the members of the Board of Directors is determined by the decision of the annual General Shareholders' Meeting of the Company and includes the basic remuneration volume for the membership in the Board of Directors, compensation of expenses connected with discharge of their duties, as well as bonuses for participation and chairmanship in the committees of the Board of Directors. Determination of the volume of remuneration and compensation paid to the members of the Company Management Board is referred to the competence of the Company Board of Directors. The remuneration for the Management Board members depends on the results of the Company operation and is determined by both financial and nonfinancial figures; its volume is determined with involvement of external consultants for preparation of the labor market analytics, salaries overview and is established at the market level. The remuneration volume to the General Director is determined by the labor agreement, which is approved by the Board of Directors. The dismissal policy for the top executive officers does not differ from the dismissal policy for the employees.
The total amount of remuneration, which was paid to the Company management bodies for 2014, was RUB 1,491,947 thsd.
(1) Joined the Board of Directors, elected at the annual General Shareholders' Meeting on June 6, 2014.
(2) Did not join the Board of Directors, elected at the annual General Shareholders' Meeting on June 6, 2014.
(3) Jointed the Committee in accordance with the decision of the Company Board of Directors dated June 27, 2014.
(4) Left the Committee in accordance with the decision of the Company Board of Directors dated June 27, 2014.
(5) On April 1, 2014, a joint meeting of the Budget Committee and the Audit Committee was held.
On April 1, 2014, a joint meeting of the Budget Committee and the Audit Committee was held.
All Company functional units are in charge of implementation of the CSR policy within their competence. Coordination of activity of the executive units for implementation of the corporate social responsibility priorities is carried out by the Board of Directors, the General Director, and the following executive committees: Budget Committee, Charity Committee, Accident Prevention Committee, Investment Committee, Personnel and Remuneration Committee.
The operating management of activity in corporate social responsibility at foreign enterprises of the Group is carried out by the operating units within their functional responsibility by elaboration, adoption, and implementation of management decisions.
Coordination of the process for preparation of the Report on Corporate Social Responsibility, including determination of significant topics to be disclosed in the Report, conducting of the procedure for selection, and approval of the candidate from the independent organization for provision of services of Report certification (audit), is carried out by the units subordinate to the Units of the Deputy General Director for Social Policy and Public Relations. The Report on Corporate Social Responsibility is approved by the Board of Director of OJSC MMC Norilsk Nickel.
The objectives of risk management:
RMS is currently formalized with the Risk Management Concept and with a number of internal standards for management of certain types of risks.
The information characterizing external and internal factors that can exert a negative effect upon the achievement of the Company's goals is collected and analyzed.
The degree of possible influence of unfavorable events upon the Company's performance and the achievement of the Company's strategic goals is determined by using modern approaches and risk assessment methods (quantitative, qualitative, mathematic simulation).
While planning the construction of new facilities, the risks are analyzed, the influence and potential consequences from the planned activity are assessed with the qualified expert appraisal involved. Based on their results, a decision concerning the implementation of the project is taken. Moreover, the current regulations and standards are taken into account. Planning-and-surveying documentation under all the projects being implemented by the Company are subject to mandatory assessment regarding its compliance with the requirements of the current law within the state expert appraisal.
The Company regularly involves international engineer surveyors to perform the independent risk situation assessment in the Company's production units and subsidiaries and to make recommendations, which are strictly observed.
Admissible risk degrees are established. They are distributed with regard to the categories of their importance.
The decisions on risk regulation are made in compliance with their priority, and the implementation of the measures on risk regulation is under control.
In comparison with the previous period, there was no significant change in the risk list in the reporting year. In general, the degree of nonfinancial risks in the Company was stable during the whole year.In 2014, having the external consultants involved, the work on independent assessment of the Company's Risk Management System was performed. The Concept of Risk Management System Development was developed. The recommendations on bringing the Risk Management System in compliance with the best international practices were provided. In 2015, it is planned to update the complex of the Company's policy and internal standards taking into account the consultants' recommendations
In compliance with the Risk Management Concept, the results of risk detection and assessment as well as the measures on their decrease are subject to consideration by the General Director and Board and approval by the Board of Directors of OJSC MMC Norilsk Nickel.
The Company's strategic goals based on the pursuance to trust and interest in its activity of the shareholders, investors, partners, employees, state, Russian and international business communities, and society in general, are not compatible with any corruption manifestations.
The Company assures the compliance with the law of the Russian Federation and applicable law in the area of corruption control being governed by such key regulatory documents as the United Nations Convention Against Corruption ratified by the Russian Federation, the Federal Law No. 273-FZ On Combating Corruption, Order of the President of the Russian Federation No. 226 On National Anticorruption Plan for 2014–2015, the Criminal Code of the Russian Federation, the Federal Law No. 115-FZ On Countering Legalization (Laundering) of Proceeds of Crime and Financing of Terrorism, the US Foreign Corrupt Practices Act of 1977 (FCPA), the UK Bribery Act 2010, as well as the Council of Europe Criminal Law Convention on Corruption ratified by the Russian Federation.
In addition to the requirements of the law, in January 2014, the Company undertook voluntary obligations on counteracting corruption: it joined the Anticorruption Charter of the Russian Business of the Russian Union of Industrialists and Entrepreneurs. To develop this initiative, by the Decision of the Board of Directors of OJSC MMC, Norilsk Nickel approved the Anticorruption Policy of OJSC MMC Norilsk Nickel in November 2014.
In October 2014, a meeting of the Company's Board devoted to the creation of the Anticorruption Compliance System was held. The areas of priority in corruption counteraction, key measures, the role of the management bodies were determined at this meeting.
Internal regulatory basis in the area of corruption counteraction includes the following documents:
The Department of Equity Capital, Compliance, and Counteraction of Illegal Use of Insider Information is a responsible unit organizing and controlling the measures on corruption averting and prevention in the Company. The functions of the Department include the detection of and documenting the risks related to corruption as well as the development of measures on risk management and control over their implementation. The Company classifies the corruption risks as compliance risks.
Corruption risk management means the detection, studying, limitation, and/or elimination of the reasons and conditions encouraging corruption. The Company has highlighted the business processes whose implementation involves a high probability of committing corruption offences. They are procurement, interaction with the counterparties, business partners, and other third parties, participation in charity, sponsorship, etc.
The Company has developed a complex of measures on removal or minimization of corruption risks, including anticorruption monitoring, control over procurement, creation of an effective system for considering the applications regarding the facts of corruption in the Company, measures on fixing the corruption counteraction principles while signing labor agreements with the employees and signing deals with the counterparties, a procedure for settling a conflict of interests and business gift exchange. These measures are introduced in all the units and companies of the Norilsk Nickel Group.
The Company regurlarly holds trainings for its personnel on the matters of corruption averting and prevention. In 2014, two employees of the Company took part in the conference of Compliance and Anticorruption Business Protection, eleven employees passed trainings under the advance training program in the area of procurement.
The information about corporate documents in the area of corruption counteraction is brought to all the employees; with each of them an agreement fixing obligations in the area of the corruption counteraction is signed individually.
To inform potential business partners of the Company, the Anticorruption Policy of OJSC MMC Norilsk Nickel supporting its internal regulatory documents, and the description of the anticorruption measures being held are placed on the official website www.nornik.ru.
The Corporate Trust Service (CTS) has been operating in the Company since 2010. Its purpose is a rapid response to the information about violations, abuses, and thievery. CTS functions in compliance with the internal Regulation on Corporate Trust Service of OJSC MMC Norilsk Nickel.
The Regulations of CTS cover the Company's Head Office, branches, divisions, Company's subdivisions of the Russian Corporate Structure Organizations (hereinafter referred to as the “SCSO”) in the territory of the Russian Federation. The parties interested (employees and shareholders) can send an application about a commitment of actions that inflict or may inflict a property damage or damage the Company's goodwill. CTS contacts: e-mail: firstname.lastname@example.org, telephones: 8-800-700-1941, 8-800-700-1945. The procedure of processing the incoming applications includes the assessment of the information importance,
formation of request to organize an examination by the Internal Control Department, Company's RCSO subdivisions, Corporate Security Directorate (if it is necessary to hold operating measures), formation of statistical reports for the Company's top managers. Standard period for the CTS process from the time of the application registration by an operator until the consideration of the examination results by the CTS Chief is 21 days.
Accepted for examination
Settled ( not confirmed)
The Regulation on Information Policy is enforced at MMC Norilsk Nickel, pursuant to which the Company is not limited to the mandatory disclosure of information under the requirements of Russian legislation and is committed to maximum transparency.
Press releases are forwarded to the Russian and foreign mass media concerning all essential events, information about the Company is regularly published on the official website and on the corporate pages in the social networks, press conferences and briefings are held. In the reporting year, more than 30 interviews and speeches of Norilsk Nickel top managers were published in mass media. Federal media issued about 25 thousand materials devoted to the Company. They are production and financial news about the Company, publications about the plans of development, social projects, environment, development of the territories of operating.
Norilsk Nickel affiliated companies are stakeholders of mass media (radio and TV channels) in Norilsk and Murmansk.
MMC Norilsk Nickel carries out production in the most efficient way in corresponding volumes, quality, and range , meeting market demand, in full concordance with the legal requirements for assurance of environmental and industrial safety and health.
The Company's activity concerning the product quality and environment aspects management is performed in compliance with the Quality Policy and Environment Policy, meeting the Company's strategic goals and creating the basis for establishment of goals and tasks in the area of quality and environment as well as the management analysis and improvement.
The Company manages quality and product safety on the grounds of the requirements and provisions of the World Trade Organization, the London Metal Exchange, the European Union, the International Organization for Standardization (ISO),
interested parties (consumers, shareholders, states, society, employees), and eventually, it aims at enhancing the Company's position at the market, stable growth of its shareholder value, and financial performance.
252 employees passed training with regard to quality management issues in 2014.
The Company carries out production in compliance with the established requirements regarding safety of processing procedures, which is confirmed by the availability of state licenses and patents.
The production units carry out the assessment of product safety and provide information under the established requirements for all significant products of the Company.
The assessment results are fixed obligatorily in the data cards of potentially hazardous chemical and biological matters. Safety Data Sheets are issued in compliance with the requirements of REACH Regulations (Registration, Evaluation, Authorization, and Restriction of Chemicals) to assure secure transportation. The commercial output is transported by the sea in compliance with the specification of the Cargo Declaration Form.
The products supplies are accompanied with MSDS documents (Material Safety Data Sheet), which are mandatory in the countries of the European Union, the USA, etc., specifying safety precautions while handling the product. MSDS task is to provide information on product safety, not excluding probable hazardous aspects.
The Company's Policy in the area of quality aims at maximum consideration of the consumers' interests. Annually, the sales companies of the Norilsk Nickel Group carry out a survey among the Russian and foreign consumers to find out their wishes regarding products and services quality. Such factors as chemical composition (including related substances), geometrical dimensions, state of surface, packaging and marking, meeting the deadlines for supply, information support, manager's competence, and quality of interaction with him/her are subject to assessment.
The main criteria for positive result is maintenance or enhancement of the target service quality degree–not less than 2.5 points. In 2014, this indicator was kept and amounted to 2.7 points, which is 8% higher than the target one. The key positive contribution into the total assessment of the service quality was made by carbonyl nickel (+1.9%) and copper (+5.1%) consumers.
15 complaints concerning the Company's product quality were received in the reporting period. They were successfully settled pre-trial, taking into account the interests of consumers (5 of them were denied as invalid).
The Company's employees, shareholders and investors, business partners, state and local authorities, nongovernmental and noncommercial organizations are the important interested parties (stakeholders) of MMC Norilsk Nickel. The Company determines a range of interested parties taking into account the degree of mutual influence and intersection of interests.
The Code of Business Conduct approved in 2012
establishes principles and procedures for cooperation with the interested parties.
The Company's and stakeholders' interests are subject to approval as a direct dialogue with the representatives of interested parties through negotiation, participation in the activity of joint working groups and permanent commissions, organization and holding conferences and forums, different meetings, assemblies and conferences as well as while implementing target projects.
The detailed information about cooperation with interested parties in 2014 is placed in the following sections of the Report: «Dialog with Shareholders and Investors», «Dialog with Business Communities», «Dialog on the Matters of Environment», «Dialog with Employees», «Dialog with Authorities and Population».