ACRA has assigned ESG-2, category ESG-B to PJSC Polyus (hereinafter, Polyus, or the Company), which corresponds to a very high assessment in the field of the environment, social responsibility, and governance. According to the ESG Assessment Methodology, a very high ESG assessment means that the Company pays increased attention to environmental, social responsibility, and governance matters.
The assessment is based on the Company’s favorable indicators in the fields of environmental impact and social responsibility compared to companies in the sample1. In addition, the Company has policies and procedures for managing industry ESG risks, as well as a high level of compliance with best practices.
Polyus is the largest gold producer in Russia with the largest gold reserves in the world (the Company’s proven and probable reserves amount to 101 mln ounces). The Company’s main operations are located in the Krasnoyarsk Krai, the Irkutsk and Magadan Regions, and the Republic of Sakha (Yakutia) and include five operational mines, gold placers and a number of projects under construction and development.
1The sample included Russian and foreign companies in the Diversified Metallurgy and Mining Industry.
key assessment factors
Highest assessment of the Company’s activity in the area of environmental impact and its actions to minimize environmental risks. This assessment is based on the Company’s relatively favorable environmental metrics compared to industry peers, the high-quality study of most relevant environmental risks, as well as a high degree of compliance with best practices.
The Company demonstrates positive (low) indicators for energy consumption, water consumption, and wastewater discharge per unit of revenue in monetary terms when compared with the companies in the sample. In particular, the Company has an extremely low specific energy consumption indicator, which indicates high energy efficiency of production processes. The indicators of emissions of harmful substances and greenhouse gases generally correspond to the average specific value for the industry. The amount of generated waste per unit of revenue constrains the environmental impact assessment, mainly due to a significant share of overburden rock and tailings in waste, which accounts for more than half the waste generated by the Company.
ACRA pays special attention to the Company’s efforts to reduce the level of negative impact on the environment — over the past three years, the Company has reduced specific indicators by more than 40% for all environmental metrics (waste generation, water consumption, emissions of harmful substances, greenhouse gas emissions, energy consumption and wastewater discharges) analyzed as part of the assessment, except water consumption.
During the assessment of Polyus, the Agency applied positive modifiers in the area of environmental impact for providing 93% of water resources via recycled water consumption, as well as for the widespread use of renewable energy sources. The Company switched to the consumption of 100% renewable electricity in 2021 due to the transition of the energy supply of the Company’s key production assets to hydroelectric power through the conclusion of contracts for the supply of this type of energy. The share in the energy consumption structure of PJSC Polyus that is not yet directly covered by the use of renewable sources is covered by the acquisition of green I-REC certificates.
ACRA applied an additional positive analytical adjustment in view of the Company’s disclosure of information on greenhouse gas emissions under the Scope 3 parameter, since this information is disclosed by a small number of companies in the Russian Federation.
The Company actively manages environmental risks. Top-level documents have been drawn up to manage key industry environmental risks, including climate risks (the Company presented its Climate Strategy in 2022). Necessary measures are taken to minimize all the risks that are relevant to the Company. At the same time, as ACRA notes, despite a fairly detailed study of the risks of negative environmental impact, soil pollution risks are not explicitly identified in the Company’s documents, which has a constraining effect on the assessment.
Fr om the point of view of compliance with best practices, the Company also received a very high assessment. Polyus regularly monitors and assesses environmental risks, publishes its Environmental Policy, and carries out several biodiversity conservation projects. Polyus has feedback systems and external communication in place with relevant parties with regard to environmental issues. The assessment of the compliance with best practices unit is constrained by the Company’s lack of a separate ESG committee under the board of directors, as well as an energy efficiency program (which, according to the Company’s annual report for 2021, is under development).
Very high assessment of the Company’s social impact and actions to minimize social risks. This assessment is based on Polyus’s favorable social impact indicators compared to peers, and the elaboration of most of the social risks relevant to the Company and the high degree of compliance with the best practices.
Among the key indicators of social impact, the indicators of social investments and injuries have the most positive impact on the assessment of the Company in this area. Polyus is far ahead of its peers in terms of these indicators. The average salary (in US dollars, taking into account purchasing power parity) and gender equality indicators are generally equal to industry averages. The assessment is constrained by the fatal injury and turnover rate indicators.
The social impact assessment has been upgraded in view of the Company’s substantial contribution to the development of the social sector in its regions of presence, and the use of automated safety systems.
The Company has core top-level regulations on managing the key industry-specific social risks. In particular, the Agency notes the high degree of elaboration and detail of the procedures for occupational health and safety, human rights protection, and managing human resources. The risk for the health and safety of the local population is the sole risk wh ere the Company has room to improve its policies and procedures, in the Agency’s opinion.
From the viewpoint of compliance with best practices, Polyus discloses information on gender composition, holds regular staff training sessions, and maintains a hotline for complaints and suggestions. The Agency also notes a relatively high level of information transparency. At the same time, the lack of specific procedures aimed at preventing sexual harassment is negative for the assessment.
The very high assessment of corporate governance quality reflects the detailed elaboration of corporate governance risks and rather high compliance with best practices in this area.
ACRA notes the high degree of information transparency, which is due to the high level of disclosure of non-financial statements (GRI, extended), and the high quality of strategic planning. The assessment is negatively affected by changes to the Company’s board of directors that were made in June 2022. At the time of assessment, there were no independent directors on the board, and over half the directors were incumbent for less than a year. Nevertheless, ACRA is of a high opinion about the industry experience of the Company’s directors and is positive about the shareholding structure that allows the Company to take informed strategic decisions to the benefit of all shareholder groups.
The assessment has additionally been upgraded due to the presence of third-party opinion on the non-financial reports of Polyus.
Effective measures are taken in the Company to minimize corporate governance risks, top-level documents have been drawn up to manage these risks, and internal regulations and procedures have been adopted. In ACRA’s opinion, the only risk that the Company should address is, the key person risk.
Among the best corporate governance practices adopted by Polyus, the Agency notes the availability of a code of corporate ethics, disclosure of risks in annual corporate reports, clear role and responsibilities of the internal audit department, and effective management of stakeholder relations. The assessment of corporate governance quality is constrained by the lack of a corporate governance code, specific ESG strategy, procedure for shareholder approval of top managers’ remuneration, and public policy on related-party transactions.
key assumptions
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In its assessment of quantitative indicators of Polyus, the Agency used its own database to form, in accordance with the Agency’s methodology, a sample of industry peers;
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Data specified in questionnaires and documents of Polyus is reliable and comparable to benchmarks;
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The analysis was carried out using current data on the system for managing all ESG aspects at Polyus and it excluded the Company’s plans to implement sustainable development practices currently being developed and implemented.
assessment components
Final ESG assessment: ESG-2.
Final ESG category: ESG-B.
ESG assessment determination: very high assessment in the field of the environment, social responsibility and governance. Increased attention is paid to the environment, social responsibility, and governance matters.
E assessment: ESG-1.
S assessment: ESG-3.
G assessment: ESG-4.
additional information
The ESG assessment has been assigned in accordance with the ESG Assessment Methodology.
An ESG assessment has been assigned to PJSC Polyus for the first time. The assessment is expected to be revised within one year from the publication date of this press release.
The ESG assessment has been assigned based on data provided by PJSC Polyus, information from publicly available sources, and ACRA’s databases.
The ESG assessment is solicited and PJSC Polyus participated its assignment.
In assigning the assessment, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodology.
No conflicts of interest were discovered in the course of the assessment process.
The assigned assessment is not a credit rating.
