AK&M Rating Agency Increases OMK's ESG Rating to High Level of Disclosure Regarding Sustainable Development

The AK&M rating agency increased the rating of the United Metallurgical Company's ESG report to RESG 2. OMK is a Russian manufacturer of high-quality steel products and integrated solutions for the energy sector, transportation, construction, and other sectors of the economy. This is an indication of a high degree of disclosure of sustainable development information in the organization's public reports. In 2020, OMK was assigned the RESG 3 rating.

The Company discloses sustainable development information in its annual report. As part of its operations, the Company has pledged to respect human, rights, to protect the environment, to develop local communities, to combat corruption, to care for consumers, to develop sustainable corporate governance as well as to extend responsible practices throughout its supply chain.

When developing local communities, OMK promotes an accessible environment, the creation of educational, instructional, and creative opportunities for residents of the areas that host its manufacturing facilities. The Company also undertakes long-term social programs, such as Start Your Own Business to support social business initiatives and the OMK Partnership competition for grants to social and charity projects. In 2020, in the environment of a developing pandemic, OMK preferentially provided funding to projects designed to help vulnerable populations and medical facilities and offered support to local business people. The amount of of social investment in 2020 was RUB 1,000,000,000.

OMK believes that its personnel training system is very important which is also reflected on the report. The Company collaborates with and supports over 50 educational institutions having allocated RUB 85 million for these needs in 2020 (almost twice the amount allocated the previous year). In 2018, OMK launched an in-house corporate university and announced that it would start building a campus for it in 2020 in the Nizhniy Novgorod Region. The university will be located next to the Company's largest facility in Vyksa. It will be able to train up to 460 people simultaneously. The design for the future educational facility will include 11 state-of-the-art training labs for future and business skills. OMK will establish the nation's first specialized labs to develop lean manufacturing and industrial safety tools.

The report discloses a lot of information on industrial health and safety. The amount invested in industrial safety was RUB 1,000,000,000. Incident prevention is especially important for the Company. In 2016, OMK set itself the objective of reducing LTIFR to 1.4 over a 5-year period. At the end of 2020, the metric stood at 0.79 which is practically half of the planned value.

OMK provides detailed environmental data in its report. The Company implements nature conservation measures, increases the percentage or recycled industrial waste, uses natural resources efficiently by recycling and using closed-circuit water.

BACKGROUND:

OMK's sustainable development is controlled by a committee that includes executive management representatives. It formulates annual and three-year objectives for the Company's sustainable development, tracks implementation, and approves the annual report.

The AK&M Rating Agency has been calculating an ESG report rating since 2020. The assessment focuses on how completely reports (annual reports and sustainable development reports) disclose sustainable development information and how available that information is. The assessment considers 88 indicators. The primary objective of the rating is to acquaint the professional community with the best practices for the disclosure of information regarding social and environmental activities.

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