ACRA has affirmed ESG-2 (AA+) (ESG-AA on the scale valid until April 2, 2025) to PJSC “MMC “NORILSK NICKEL” (hereinafter, Norilsk Nickel or the Company), which corresponds to a very high assessment in the field of the environment, social responsibility, and governance. According to the Methodology for Assigning ESG Ratings, a very high ESG assessment means that the Company pays increased attention to environmental, social responsibility, and governance matters.
The ESG rating is based on the Company’s moderately negative indicators in terms of environmental impact, favorable social responsibility indicators compared to peer companies, and high quality of corporate governance. In addition, the Company has policies, procedures and measurable performance indicators for managing key industry ESG risks, as well as a moderately high level of compliance with the best practices.
The Positive outlook for the ESG rating reflects the Agency’s opinion on the expected improvement in the key environmental impact indicators over the 12–18-month horizon, taking into account the increase in the Company’s revenue in 2025 compared to 2024.
Norilsk Nickel is a Russian mining and metals company, the world’s largest producer of palladium, and a leading producer of nickel, platinum, cobalt, copper, and other metals. The Company’s production cycle is fully integrated — from ore mining to refining; the Company has its own energy, transport, support and R&D assets.
KEY ASSESSMENT FACTORS
Specific indicators of pollutant emissions, GHG emissions, water consumption and consumption per unit of USD denominated revenue (considered by the Agency as one of the base indicators of environmental impact) at Norilsk Nickel exceed industry averages, which constrains the assessment. In terms of specific waste generation and wastewater discharge per unit of revenue, the Company received moderate scores because these indicators are close to industry averages.
The Agency notes the negative dynamics of most specific environmental impact indicators over the past four years (growth of specific indicators per unit of revenue), which negatively affects the final scores. The Agency also notes that the Company has changed its approach to accounting of the water source from the cooling of TPP-1, due to which the wastewater discharge indicator grew in 2024. Nonetheless, the Agency expects that the key environmental impact indicators will improve in the medium term when the Sulfur Program is completed amid a positive dynamics of the Company’s USD denominated revenue.
In the Environmental Impact block, ACRA applied positive modifiers for: (1) high share of regulatory clean wastewater discharge (69%); (2) the computerized environmental monitoring and control system, including monitoring of GHG emissions; (3) implementation of the climate project (migration of ventilation units of the Severny mine from fuel oil heating to electric heating); (4) the goal of achieving carbon neutrality by 2060 (publicly disclosed in the Corporate Strategy on Ecology and Climate Change); (5) conducting an assessment of ecosystem services in the territories of the Kola site, as well as the Norilsk Site and the Energy Division.
The Agency also applied an additional analytical adjustment for the disclosure of information on GHG emissions (Scope 3). This information is disclosed by an extremely small number of Russian companies.
In general, the Company is characterized by a very high level of environmental risk management. For all industry risks, which, in ACRA’s opinion, are relevant, the Company received maximum scores due to the availability of top-level documents, internal regulatory documents, measures and measurable performance indicators, as well as documents setting forth measurable performance indicators.
The degree of elaboration of environmental issues at Norilsk Nickel is very high and generally corresponds to the best international practices. The Company regularly monitors and assesses environmental and climate risks, has its own environmental policy and climate change policy, has created the necessary competence centers, developed external communication and feedback mechanisms for environmental issues, and has adopted a program to improve energy efficiency, preserve biodiversity and improve water efficiency with specified targets. The Company carries out external verification of GHG emissions data (Scope 1, 2 and 3), calculates and verifies the carbon footprint of its products, and conducts a scenario analysis of the impact assessment of climatic factors on its operations. In 2024, the Company purchased carbon units and updated its public Strategy in Ecology and Climate Change until 2031. In addition, Norilsk Nickel continues to develop its own assets of electricity generation from renewable energy sources in the Zabaykalsky Krai.
The lack of a certified energy management system has a constraining effect on the score for the compliance with the best practices.
The Company is characterized by a favorable level of gender equality, low injury rate, and a high level of social investment per unit of revenue. At the same time, the Agency applied negative adjustments for the dynamics of injury rates (an increase in the indicator) and social investment (a decrease in the specific indicator) over the past four years. The Company’s fatal injury rates and average salary correspond to industry averages. The Agency also notes the positive dynamics in these indicators over the past four years. The staff turnover indicator, which is higher than the industry average, had a constraining effect on the assessment. At the same time, the Agency notes an expected decrease in staff turnover by the end of 2025.
Additionally, ACRA applied a number of positive modifiers for: (1) the Company’s significant contribution to the social development of the regions of its presence; (2) the use of automated safety systems; (3) an expanded social package to employees; (4) high coverage of employees with training (in 2024, coverage of employees with training was 95%); (5) annual indexation of wages of all employees; (6) multilevel trade union system down to subsidiaries and associates; (7) disclosure of median wages; (8) a high share of women among senior management; (9) a high share of women in the Company’s board of directors.
The Company received maximum scores for all relevant social risks due to the presence of high-level documents, internal regulatory documents, risk mitigation measures and measurable performance indicators.
Social responsibility issues as well as environmental issues are priority areas for the Company, and approaches for resolving them are generally in line with best global practices. The Company discloses information on the ratio of average wages of men and women on a regular basis, has formed mechanisms for protecting the rights of employees, has certified its occupational health and safety management systems (ISO 45001), and has also implemented a personnel evaluation system with transparent KPIs that cover 100% of employees. In addition, Norilsk Nickel has developed and adopted programs for supporting parents beyond government guarantees, support of retirees and pre-retirees, housing programs for employees, youth support programs, and comprehensive programs for sports and healthy lifestyle among employees. The Company has a human rights compliance program, which includes employee training, and a comprehensive human resources development program (including the Norilsk Nickel Academy educational platform), as well as the program for collaborating with higher education institutions to support staff sustainability. The company conducts an annual employee involvement survey. Norilsk Nickel has adopted a public Strategy for Socially Sustainable Development until 2030 setting the quantitative goals.
The Agency notes the partial compliance of the Company with the criteria established for the factors Women’s Career and Leadership Support Program and Inclusive Programs, due to the lack of a formalized comprehensive program in these areas.
The Company received high scores for the level of information disclosure and the industry experience of members of the board of directors, as well as moderately high scores for the share of independent directors on the board of directors, stable membership of the board of directors, and for the shareholding concentration and the quality of strategic planning.
In the course of assessing the quality of corporate governance, the Agency additionally applied positive modifiers for: (1) education and experience of directors who are members of the ESG Committee in matters related to the environment (including climate) and social activities; (2) the Company having a report on compliance with the principles and recommendations of the Corporate Governance Code; (3) the presence of IT infrastructure and data safety system certified as per ISO 27001; (4) environmental, social and management trainings for suppliers; (5) absence of the CEO from the board of directors; (6) an interactive sustainability report, including visiting statistics.
The Company received maximum scores for all the relevant corporate governance risks due to the presence of high-level documents, internal regulatory documents, risk mitigation measures and measurable performance indicators, as well as documents setting forth measurable performance indicators.
ACRA highly assesses the Company’s corporate governance policies and procedures. The Company has adopted a code of business ethics, a dividend policy, a stakeholder policy, and a code of supplier’s corporate conduct; surveys of suppliers are regularly conducted. The corporate governance practices are strictly monitored, there is a risk management and compliance subdivision, and there is a documented and anonymous whistleblowing mechanism. Norilsk Nickel has formed the Board of Directors’ Committee on Sustainable Development and Climate Change. The Company also has long-term measurable strategic goals reflected in the Strategy for Ecology and Climate Change until 2031 and in the Strategy for Socially Sustainable Development until 2030 (both documents are publicly available).
Presence of non-executive directors in the remuneration committee and the lack of public information about the ultimate beneficiaries had a constraining effect on the corporate governance quality assessment.
KEY ASSUMPTIONS
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Companies from the Diversified Metals and Mining Industry were selected as benchmarks (i.e. peer companies).
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Data specified by the Company in the questionnaire and its sustainability report is reliable and comparable to benchmarks.
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The dynamics of the Social Investment indicator was assessed for the period from 2022 to 2024 due to the lack of comparable data for 2021.
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Revenue in US dollars in 2025 will exceed that for 2024.
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The Sulfur Program will be completed in full on time.
ESG RATING OUTLOOK
The Positive outlook assumes that the rating is highly likely to be upgraded within the 12 to 18-month horizon.
RATING COMPONENTS
Final ESG rating: ESG-2 (АА+).
ESG rating determination: very high assessment in the field of environment, social responsibility and governance. Increased attention is paid to the environment, social responsibility and governance matters.
E assessment: ESG-4 (AA-).
S assessment: ESG-1 (AAA).
G assessment: ESG-1 (AAA).
additional information
The ESG rating has been assigned in accordance with the Methodology for Assigning ESG Ratings and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The ESG rating of PJSC “MMC “NORILSK NICKEL” was published by ACRA for the first time on September 19, 2023. The ESG rating and its outlook are expected to be revised within one year from the publication date of this press release.
The ESG rating was assigned based on data provided by PJSC “MMC “NORILSK NICKEL”, information from publicly available sources, and ACRA’s databases.
The ESG rating is solicited and PJSC “MMC “NORILSK NICKEL” participated its assignment.
In assigning the ESG rating, 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 ESG rating process.
The assigned ESG rating is not a credit rating.
