ANNUAL REPORT 2017

Social Investment

Severstal is committed to improving the quality of life for its employees and supporting the local communities where it operates. This includes supporting local infrastructure development, environmental protection, education, culture and sports.

In 2017, the Group invested 2.3 billion roubles in social and charitable programmes including volunteering, child welfare and education programmes, investment in culture and sport and community outreach.

Investment in the local economies

Severstal participates in and develops innovative projects to support small and medium-sized businesses, as well as social development in the regions where it operates.

In Cherepovets, Severstal has established joint projects with local authorities including the NP Urban Development Agency (AGR) and ANO Cherepovets Investment Agency. These are aimed at promoting the growth of small and medium-sized businesses (SME) and providing comprehensive support to entrepreneurs at every stage of their careers.

A key area of support is provided through business partnerships. In 2017, more than 25,000 advertisements were placed as a result of the Electronic Business Cooperation project. In September 2017, more than 6.3 billion roubles-worth of contracts were signed between large enterprises and SMEs in the Vologda region. Since 2017, AGR has been working to improve business skills and develop partnerships promoting small and medium-sized businesses in Kostomuksha (the Republic of Karelia). With the Company’s support, AGR organises training events focused on sales, effective management, marketing, and business networking.

Through AGR, Severstal has helped establish a Social Innovation Centre. The Centre has become a hub for social entrepreneurs in the region and a starting point for new projects, providing over 6,000 business development consultations every year.

The agency supports industrial, food production, infrastructure, tourism and hotel industry, medicine, sports and services projects. The largest projects include the Cherepovets Industrial Park, the Central City Embankment Tourist and Recreational Cluster, the Noviy Greenhouse Complex and the cheese and dairy production plant.

Future Investments

In 2017 Severstal assisted in the development and transformation of the public gardens in Cherepovets and the opening of the Quantorium children’s technopark which is part of a new nationwide network of children’s technoparks.

One of our key successes has been the Way Home programme, supported by a successful trilateral partnership between the government authorities, businesses and local communities. Partners include the Russian Ministry of Economic Development, the Vologda Regional Government, the Foundation for Support of Children in Hardship, the National Charity Fund, the Lukoil Charity Fund, as well as social institutions, businesses and non-profit organisations from regions where the programme is available.

Way Home is a comprehensive child neglect, juvenile delinquency and social orphanhood prevention programme launched in 2006. It unites representatives from social groups interested in helping to address these issues. Alexey Mordashov, Severstal’s Chairman, launched the programme and continues to personally oversee its progress.

In 2017, 568 children were supported and kept safe in their own home, with their birth families, 484 minors were protected from abusive environments, and 48 children kept in the safe care of foster families.

Over the last three years, the programme has helped 2,314 children by reducing the risk of loss of parental support and keeping these children and their families together. In addition, more than 10,000 parents received parental training.

In 2017, in Cherepovets Severstal employees took part in a number of major charity events, including the Festival of National Culture in aid of those who suffer from substance abuse, the family city festival From Heart to Heart, and the Lifestyle Charity Quest.

In the Balakovo district, Severstal continues to support social projects such as Way Home: Together with Mom; Our kind home is a family school, and Step towards. In 2017 in Cherepovets, Severstal continued the Children of Cherepovets: Way to success programme, which engages a community of highly respected teachers to support and develop talented school students.

The Way Home charity and the Trajectory fund for scientific, educational and cultural initiatives were established with the help of the education department of the Cherepovets city administration. Lecturers from Russia’s leading educational institutions have helped develop special natural sciences programmes, including mathematics, chemistry, physics and biology, for teachers and school students. Experts from the Sirius educational centre have also contributed through the charitable foundation Talent and Success. The centre was created as part of the redevelopment of the Sochi Olympic village, on the initiative of the President of the Russian Federation, Vladimir Putin. It is a tribute to Russian masters of science, sports and art, and was established to identify, develop and provide future professional support to gifted children.

Support of culture and art

Severstal has partnered Russia’s leading museums and theatres for many years. Today the Severstal brand is aligned with many cultural organisations.

In 2017 Severstal continued its partnership with the Bolshoi Theatre (Moscow), the Russian Museum (St. Petersburg), the Mariinsky Theatre (St. Petersburg), the State Tretyakov Gallery (Moscow), the Pushkin State Museum of Fine Arts (Moscow), the State Historical Museum (Moscow), the Cherepovets Museum Association (Cherepovets), the Kirillo-Belozersky Museum-Preserve (Kirillov), the Museum of Dionisy Frescoes (Ferapontovo, Kirillovsky District), the Vologda Open Air Museum of Architecture and Ethnography (Vologda, Semenkovo), the Radishchev Arts Museum (Saratov), the Balakovo Art Gallery (Balakovo), the Valaam Monastery, Sergey Andriyaka’s Watercolor School (Moscow) and others.

Severstal continues to support the Golden Mask, Russia’s largest theatre festival, hosted in Moscow, Latvia and Cherepovets. In 2017, Severstal supported the inaugural visits of the Golden Mask to Petrozavodsk and Kostomuksha.

Severstal’s Museums of the Russian North is a major cultural grant programme dedicated to supporting the development of arts museums in the north of Russia.

In 2017, 116 applications were received for participation in events for museum professionals from four key regions in which Severstal operates: the Republics of Karelia and Komi, the Vologda and Murmansk regions. 65 representatives from different museums received grants for trips to participate in conferences, round table events, seminars, forums and professional internships. 56 project ideas from 11 northern regions of Russia: the Republics of Karelia and the Komi Republic, the Nenets Autonomous Okrug, the Arkhangelsk, Vologda, Kirov, Leningrad, Murmansk, Novgorod, Pskov Regions and the Perm Region were submitted in the first stage of the 8th open grant competition for Museums of the Russian North project. In October, the Project Laboratory was held in Cherepovets, where the staff of 39 regional museums (approximately 70 people, including experts in cultural management, education and tourism) took part in the training, before applying for the 8th open grant competition.

Sports and recreation support

Severstal encourages all of its employees and their families to lead healthy and active lifestyles. The Company sponsors sports events popular among its employees and local communities. Severstal also invests in professional sports and the Severstal Sports Club trains athletes to participate in both national and international events.

Severstal is also a proud sponsor of the Dynamo Moscow women’s volleyball club. In Cherepovets, Severstal supports the Cherepovets professional hockey club, the Almaz junior team, and the youth hockey school that trains over 1,000 children.

In 2017, Severstal continued its Hockey Without Borders project for people with disabilities. Through this project the Company organises transport and support for disabled sports fans so they can attend hockey matches. The project became an honoree of the Civic Initiative regional award.

In 2017, Karelsky Okatysh (Kostomuksha) invested around 66 mln roubles in social and charitable programmes. Approximately the same amount of funding will be allocated for this purpose in 2018. The enterprise supports social facilities (educational institutions, sports clubs, veteran organisations, an orphanage, a rehabilitation centre for disabled people), in particular the Friendship cultural and sports complex, which is visited by more than 90,000 people every year. It also supports the Kanteletar international folklore festival, the festival of chamber music, the Sergei Ozhigov Art Song Festival and the international Nord Session and Rhythms of Spring festivals.

Corporate Volunteering

Severstal encourages its employees to engage with corporate charitable programmes, including those focused on preventing child neglect and social orphanhood, mentoring, preservation of regional cultural heritage, environmental protection, and support for retirees, veterans and people with disabilities. In 2017 Severstal organised approximately 80 corporate volunteering events.

In 2017 Severstal once again took part in the international charity event Generous Tuesday. In addition, the Company traditionally supports Heartful Bazar, a major Russian charity project which takes place on New Year’s Eve.

Public initiatives

Severstal shares the principles of the Social Charter of the Russian Union of Industrialists and Entrepreneurs (RSPP) and the World Steel Association’s (Worldsteel) Sustainable Development Policy, reflecting the best practices of Russian and international businesses in collaborating successfully with communities.

When developing operational strategies, Severstal works with local stakeholders to ensure that due consideration is given to the priorities of individual regions and local communities. This involves a complex system of stakeholder communications:

  1. Informing the public about the Company’s initiatives.
  2. Feedback: regular interviews with employees and consumers; research into public opinion and hot lines for employees and consumers.
  3. Interaction with business partners, regional administrations, trade unions, public and expert organizations.
  4. Exchange of case studies, studying best practices