Severstal : Integrated Report 2024 PDF, 10.23 mB
CHMF.ME
Published on 06/10/2025 at 09:39
A New Strategy for a Sustainable Metallurgy
of the Future
Integrated Report
Table of Contents
Message from CEO
4
Responsible Supply Chain
84
About the Report
6
Supplier and Contractor Engagement
87
About the Report
8
Product Quality and Safety
95
Identification of Material Topics
10
Customer Relationship Management
98
Severstal Today
12
Social Aspect
104
About the Сompany
15
Human Rights
106
Geography and Key Assets
17
HR Management
112
Business Model
19
Contribution to the Development of the
Sustainability Ratings, Rankings and Indices
21
Regions of Presence
Occupational Health and Safety
126
142
Sustainability Awards
22
Environmental Impact
164
Strategic Report
24
Climate Change
166
Market Overview
26
Energy Efficiency
183
Operational and Financial Performance 29
Environmental Management 188
Corporate Governance 30
Appendices 242
Corporate Governance System 32
Ethical Conduct of Business
and Anti-Corruption 38
Effective Risk Management 44
Information Security 52
Innovation Management
and Digitalisation of Production 58
Sustainability Management 68
Sustainable Development Management Structure 70
Severstal's Sustainability Strategy 71
Appendix 1.
GRI Compliance Table 244
Appendix 2.
SASB Compliance Table 256
Appendix 3.
TCFD Compliance Table 260
Appendix 4.
Table of Compliance with the Guidelines of the Ministry of Economic Development (MED) of the Russian
Federation 261
Appendix 5.
Additional Data 264
Contribution to the Focal UN SDGs
73
Independent Practitioner's Assurance
Participation in National Projects
76
Report
281
Participation in Organisations and
Appendix 7.
Initiatives
79
RSPP Independent Assurance Report
285
Key Stakeholder Engagement
82
Appendix 8.
Consolidated Financial Statements
286
Appendix 6.
Message from CEO
GRI 2-22
Sustainability at Any Market Phase
The reporting year was quite challenging for the metals sector due to the fluctuations in domestic demand, ongoing sanctions pressure, and overcapacity in China that continued to negatively impact steel product prices in many regions of the world. Nevertheless, Severstal still remains one of the most profitable metals companies globally.
In 2024, the Company demonstrated its resilience in the challenging market landscape. We managed to make progress in almost all priority areas, improve the Company's performance, and maintain our strong financial standing. Resultantly, Severstal is back to the practice of quarterly dividend payments in accordance with the dividend policy and accrued 100% of free cash flow to the shareholders in the reporting year.
The flexible sales model and business integration enabled Severstal to maintain sales at a decent level in 2024, despite the falling demand in the
Russian market. While cast iron and steel production declined amid the overhauls at the blast furnace
and converter sections, we were able to ramp up sales of steel products to 10.85 million tonnes.
The consolidated 12M revenue rose by 14% YoY to almost RUB 830 billion triggered by the increased share of HVA products in the sales portfolio.
The Company's investment activity soared in the reporting year, with the capital investments up by 63% to RUB 118.5 billion. The key project is
development strategy also takes account of these principles, thus providing for a close connection between the Company's business processes and sustainability efforts.
Social Aspect
In 2024, Severstal expanded its support for employees and residents of the regions of presence: the social investments almost doubled, with an increase in the expenditures on social security and pension liabilities by 2.4 times. Over the reporting year, we continued implementing the well-being programme for employees and members of
their families titled #Dlya Svoikh: With Care for Everyone. Starting 2024, to maintain a decent level of remuneration, the Company increased the average wages by 23%.
The Company's priorities include the production safety. In the reporting year, we kept on boosting the Safety Volunteers movement, where the number
of members reached over 400. In addition, the digitalisation of OHS processes and the upgrade of OHS Control SW package modules was proceeding apace, thus enabling us to maintain safe working conditions not only at Severstal's facilities but also at contractor entities. The Company's systemic work resulted in LTIFR of 0.44 among own employees and contractors, which is 24% lower than the 2023 injury frequency rate.
We continued supporting the integrated urban development projects in the regions of presence in 2024. Over the reporting period, Severstal completed the improvement of the historic centre
of Cherepovets, commenced the elaboration of the Kostomuksha Master Plan, and, as earlier on, was engaged in landscaping. We take good care of the people in the regions of our operations and, therefore, implemented projects in education, healthcare, culture, sports and rendered support to vulnerable
In the reporting year, the Company attained a number of environmental targets and approved new ones
for the period up to 2028. Specifically, in 2024, we managed to decrease the weight of pollutants discharged into water bodies, achieve the target
values of the Clean Air federal project at Cherepovets Steel Mill and reduce the aggregated air pollutant emissions by 30.7% against the 2017 baseline. The waste recycling rate constituted 98.1%. Also, Severstal continued its biodiversity conservation efforts: in the reporting year, we released our Conserve Biodiversity - Preserve Life Strategy 2036, and the Company's representatives joined the task force on the Kunming-Montreal Global Biodiversity Framework under the Conference of the Parties to the United Nations Convention on Biological Diversity (UNCBD).
The Company continued its climate change adaptation work. In 2024, Severstal commenced the elaboration of a corporate climate change adaptation plan by supporting the implementation of the Vologda Region Adaptation Plan. The active dialogue within the climate agenda continued with the authorities of other regions of presence as well, i.e. the Republic
of Karelia and Murmansk Region. The Company implemented an extensive programme for climate-related risks management measures investing over RUB 1.2 billion therein, and, also, expanded the list of green and adaptation products and increased the manufacture thereof.
Looking into the Future
As part of our updated strategy, we will continue to create extra opportunities for our customers and partners, ramp up capital expenditures to RUB 169 billion in 2025 by focusing on upgrading our production facilities and introducing pellet technology in the blast furnace process. This will foster our competitiveness and dominant position in the sector. The Strategy 2024-2028 reflects the
Dear shareholders, colleagues, and partners,
The reporting year 2024 was an important period for Severstal in the context of shaping the Company's long-term vision. Not only did we strengthen our market positioning, but we also presented the updated development strategy 2028 that sets the growth vector for the coming years. This fundamental document retains the time-honoured principles, yet is supplemented with the new goals aligned with the current challenges.
The amended strategy not only reflects the Company's business objectives but also emphasises the importance of environmental and social responsibility for Severstal. It encompasses five priorities: safety and environment, employees' quality of life, customer engagement, digital technologies, and cost of production.
the construction of an iron ore pellet production complex at Cherepovets Steel Mill, which will reduce dependence on sinter and improve environmental performance.
Therefore, despite the external challenges, Severstal retained its leadership position in the industry by combining its strategic investments in the upgrades with the focus on improving the product portfolio quality and financial discipline.
Sustainable Development Management
In the reporting year, Severstal continued delivering its Sustainability Strategy 2030 titled Together Towards Sustainable Metallurgy of the Future.
As normal, the Company adhered to the ESG principles and worked on the environmental, social, and governance aspects. Severstal's updated
groups. On top of that, to gain a better understanding
of how our social projects perform, we assessed the quality of urban environment and identified the key areas for further development for the first time in 2024.
Environmental Aspect
Reducing our climate and environmental footprint remained a focal area for Severstal during the reporting year. We pursued our collaboration with stakeholders on climate change and environmental protection issues and participated in the UN Climate Change Conference (COP29), entered into the cooperation agreement with the Ministry of Natural Resources of the Murmansk Region, and held training programmes and workshops. Moreover, in 2024, we arranged a traditional annual social survey that, inter alia, encompassed questions regarding Severstal's contribution to the Clean Air federal project.
balance between sustainability and innovation. We
maintain our leadership by performance yet strive to become a first-choice company for customers,
employees, and partners. I am confident that through joint efforts we will achieve all of our ambitious goals.
Alexander Shevelev,
CEO
AO Severstal Management
01.
About the Report
Integrated Report 2024
About the Report
GRI 2-3
The Integrated Report 2024 (hereinafter referred to as the Report) of PAO Severstal (hereinafter referred to as Severstal or Company) contains information on the activities of the enterprises located in and outside the Russian Federation. The reporting period is from 1 January to 31 December 2024. In addition, the
Report covers significant events beyond the specified reporting period to adhere to the principle of timely disclosure.
The Report discloses the approach to managing sustainable development, including climate change, energy efficiency and environmental protection, personnel management, occupational health and industrial safety, and community engagement in the regions where we operate, as well as to respecting human rights, ensuring a responsible supply chain and corporate governance.
The information on PAO Severstal's and its subsidiaries' financial and business operations is uncovered in accordance with the disclosed consolidated financial statements derived from the audited consolidated financial statements of
PAO Severstal and its subsidiaries for 2024, prepared in conformity with the International Financial Reporting Standards (IFRS). The present Integrated Report also contains alternative performance indicators (APIs) that are omitted from the disclosed
Approach to the Report Preparation
consolidated financial statements and are used by the management to assess business performance and as reference information for dividend payment recommendations.
The Board of Directors makes use of such indicators as the free cash flow and net debt (calculated as the total debt financing less cash and cash equivalents) as guidance for giving dividend recommendations. The free cash flow is defined as the sum of the following items: net cash flow from continuing operations, CAPEX, proceeds from fixed assets disposals, and interest and dividends received.
EBITDA, widely used in the industry, stands for the operating profit plus depreciation expense on
production assets (inclusive of the Group's share in depreciation of assets of associated companies' and joint ventures' assets) adjusted for gains/(losses) from sales of fixed assets and intangible assets and for a share of non-operating income/(expenses) of associated companies and joint ventures.
Severstal draws up annual non-financial reporting and publishes sustainability reports on its corporate website. The present Report is the Company's second report containing, inter alia, information on Severstal's financial performance. The Report was published on 9 April 2025.
GRI 2-2
Severstal adheres to the principles of clarity and comparability, owing to which the Report is comprehensible to a broad reading audience. The information in the Report is disclosed for a period of five years, with explanations regarding the dynamics of metrics. To maintain the Report's balanced nature, the Company discloses information not only on its achievements but also on the areas for improvement.
Where there are any data collection or calculation assumptions or adjustments to any values from the previous reporting periods due to the improved methodology or errors eliminated, the Report provides respective explanatory statements. No material restatements of indicators versus the preceding year were in evidence in 2024, unless stated otherwise.
Boundaries of the Report
GRI 2-2 GRI 3-1
Severstal strives to make sure that the boundaries of the Integrated Report fully match the boundaries of its consolidated financial statements prepared in accordance with IFRS. In the 2024 Report, information on certain material topics is disclosed in relation to the assets whose impact is most significant in the context of the relevant topic.
The Company constantly works towards improving its approaches to setting up a system of data collection and consolidation for future single-scope disclosures. Exceptions in the scope and extent of certain disclosures, including versus prior reporting periods, are, in all cases, explained directly in the text of the Report or in the footnotes.
Boundaries of disclosure of material topics
PAO Severstal
AO Izhora Pipe Mill
AO Severstal SMC-Vsevolozhsk
AO Severstal Distribution
OOO Severstal-Vtorchermet
OOO Aircompany Severstal
AO Severstal Steel Solutions
AO Severstal-Metiz
OOO OSPAZ
AO Severstal Kanaty
OOO UniFence
OOO UniSpring
AO Olcon
AO Karelsky Okatysh
OOO Yakovlevskiy Mine
Air quality
Occupational health and industrial safety
Waste and tailings management
Water use and impact on water resources
Climate change and energy efficiency
Land resources and biodiversity
Human capital development
Development of the regions of presence
Information security
Innovation and digitalisation
Product quality and safety for customers
Economic performance
Matches the scope of the IFRS consolidated financial statements
The present Report is prepared in accordance with the recommendations of non-financial reporting standards and sustainability initiatives, including:
Global Reporting Initiative (GRI) standards updated as of 2021 (application level - compliant), GRI Mining and Metals Sector Supplement
Sustainability Accounting Standards Board (SASB) standards for Iron & Steel Producers, Metals & Mining
International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC)
Recommendations of the Russian Union of Industrialists and Entrepreneurs (RSPP) on the use of basic performance indicators
Methodological recommendations of the Ministry of Economic Development of the Russian Federation on the preparation of sustainability reporting
UN Global Compact principles
Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
In addition, the Report reflects the Company's progress in achieving the UN Sustainable Development Goals 2030 (SDGs) and its contribution to implementing the National Projects of Russia.
GRI 2-14
The Report preparation is supervised by Severstal's Corporate Social Responsibility and Brand Department. Qualitative and quantitative data to be disclosed in the Report is provided by the relevant divisions.
8
About the Report
Approach to the
Boundaries
Identification of
External
Severstal
Strategic
Corporate
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Report Preparation
of the Report
Material Topics
Assurance
Today
Report
Governance
Management
Supply Chain
Impact
9
Identification of Material Topics
List of material topics
GRI 3-1 GRI 3-2
In its operations, Severstal consistently factors in stakeholder interests through extensive interaction, including in determining material topics of the Integrated Report. To this end, the Company performs an annual survey to eventually identify the topics of utmost importance for various stakeholder groups. In preparing the 2024 Report, Severstal remained committed to the previous year's approach to material topics identification.
The list compiled by the Company is based on the topics of the Sustainability Report 2023 identified by stakeholders as most material.
For each topic, the Company identified positive and negative impacts (both actual and potential) on the economy, environment and society. With that,
Severstal factored in its long-standing non-financial reporting practices, GRI industry standards, the recommendations of the Ministry of Economic Development of the Russian Federation, and stakeholders' suggestions recorded in drafting the 2024 Report. The resulting list of impacts served the basis for compiling a stakeholder survey questionnaire. Respondents were offered the opportunity to designate additional impacts and topics within each aspect.
Air quality
Occupational health and industrial safety Water use and impact on water resources Waste and tailings management
Product quality and safety for customers
Economic performance Decent working conditions
Climate change and energy efficiency Information security
Development of the regions of presence Innovation and digitalisation
Risk management Responsible supply chain
Land resources and biodiversity
Priority 2
Priority 1
In 2024, 75 stakeholder representatives took part in the survey, including 30 Severstal's employees,
12 shareholders and investors, and 33 representatives of other stakeholder groups.
Respondents by stakeholder groups
30
12
4
4
4
5
6
6
1
3
External Assurance
Governmental bodies, supervisory authorities
Suppliers and contractors
Business associations and unions, industry players
Media, bloggers, influencers
Customers and purchasers
Sustainability experts
Non-profit and public organisations, research, cultural, educational, sports, and
Analysts and banks
Shareholders and investors
Company employees
GRI 2-5
A number of key quantitative data is additionally verified as part of assurance by an independent practitioner to make sure the Report contains accurate and reliable data only. The Company's approach and the external assurance schedule are set out in the Audit and Assurance Policy of PAO Severstal. The assured information is marked in the present Report by a magnifier icon -
The Independent Assurance Report is presented in Appendix 6.
To improve the quality of non-financial disclosures, the Company liaises with the Council on Non-Financial Reporting of the Russian Union of Industrialists and Entrepreneurs and submits the Sustainability Report thereto for an independent public assurance. The Council opines on the significance and completeness of the information disclosed in the Report, being guided by the provisions of the Social Charter of Russian Business, including the principles of responsible business practice.
healthcare institutions
GRI 3-2
Further to assessing impacts by questionnaires, the respective topics were scored. Such scoring entailed summing up the averages for positive and negative impacts within the topics. Eighteen topics were then ranked and nested within three priority groups. According to the Company's approach, the topics that passed the 33% cut-off threshold and that were included in Priorities 1 and 2 are regarded as material; there turned out to be
13 such topics in 2024.
Priority 3 topics are also important for Severstal, for which reason the Company discloses them in the relevant sections. The Land Resources and Biodiversity topic was added to the list of material topics as resolved by the Sustainability Working Group in connection with its paramount importance for the Company and preparation of the relevant strategy in 2024.
10
About the Report
Approach to the
Boundaries
Identification of
External
Severstal
Strategic
Corporate
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Report Preparation
of the Report
Material Topics
Assurance
Today
Report
Governance
Management
Supply Chain
Impact
11
02.
Severstal Today
Integrated Report 2024
2024 Highlights, RUB million
MED-1
About the Сompany
Revenue
EBITDA
CAPEX
2023: 728,314
14%
2023: 262,229
2023: 72,629
GRI 2-1 GRI 2-6
Severstal (hereinafter also referred to as the Company) is one of the world's most efficient steel and mining companies that creates new steel products and integrated solutions together with its customers and partners. Its core assets are based in the European part of Russia.
The Company offers a wide range of goods and regularly expands it on account of new product types, with a focus on HVA items. Severstal takes a rational approach to capital investments by injecting cash in projects directed at the key elements of its strategy, in the first place, that is superior customer experience, cost leadership, implementation of new opportunities in the context of corporate culture, and commitment to sustainable development. The primary goal of investment projects is to enhance profitability, create a maximum value, and increase shareholder returns. Owing to cutting-edge technologies, the Company elaborates innovative solutions, advances HVA products, improves customer service, and reduces negative environmental impacts.
In addition to evolving its core production facilities, the Company dynamically creates innovative products and services, and provides customers with integrated engineering solutions. To date, Severstal captures such
promising practice areas as the production of wind turbines and cryogenic steel for liquefied natural gas (LNG) tanks.
Severstal's Business Strategy
Severstal completed another strategic cycle in 2023. The Company grew more resilient and flexible by having attained almost all the goals set, including the key metric - comprehensive shareholder income.
In the reporting year, Severstal presented its restated development strategy for 2024-2028 retaining its fundamental principles but supplementing it with elements that meet the imperatives of our time.
Severstal's response
Global challenges and trends
Global challenges and trends underlying the Company's strategic response
Free cash flow
2023: 119,970
Higher trade barriers and global steel market stagnation
Higher competition on Russia's steel market
Focus on the domestic market of the Russian Federation
Focus on customer needs
Focus on points of growth in the Russian Federation
Developing the domestic consumption
Net profit
2023: 190,907
Demographic crisis, fight for talent • Increasing labour productivity
Implementing digitalisation and automation
Restricting access to technologies • Import substitution of technologies and competencies
Inflation of costs, more expensive logistics
14
About the Report
Severstal
About the
Geography
Business
Sustainability
Sustainability
Strategic
Corporate
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Сompany
and Key Assets
Model
Ratings, Rankings
Awards
Report
Governance
Management
Supply Chain
Impact
15
Severstal's strategy aims to maintain the global leadership in efficiency and strengthen the positions on the Russian market. To achieve the goals set, the Company identified five strategic priorities with transparent metrics.
Geography and Key Assets
GRI 2-1 GRI 2-6
01
02
Severstal Resource
02
01
03
Severstal Russian Steel
04
03
05
Severstal-Metiz, Volgograd Region
05
Izhora Pipe Mill, St. Petersburg
02
Cherepovets Steel Mill, Vologda Region
01
Yakovlevskiy Mine, Belgorod Region
03
Karelsky Okatysh, Republic of Karelia
02
Olcon, Murmansk Region
0011
Severstal comprises two main industrial divisions: Severstal Resource and Severstal Russian Steel. The Company makes use of a vertically integrated business model, which makes it possible to manage all stages of the operating process - from ore mining and processing to the release of finished rolled steel, its distribution, elaboration of integrated solutions for customers and maintenance.
Strategic priorities
Key metric
Financial goal
Leader in occupational safety and environment
Preservation of life and health of employees and local residents, observance
of the legislation
Fatalities 0
LTIFR among employees <0.45
ollutant emissions ↓46%
150
EBITDA as at year-end 2028 against
2023 1
Faster EBITDA growth compared to competitors
Leader in employee life quality
Leader in customer engagement
We are the first one would think of when it comes
to rolled steel
Market share in the Russian Federation in the core segments 20%
Market leader in price efficiency
Leader in digital technologies
Advantage over competitors both in market operations and efficiency improvement
Improving labour productivity, creating an additional source of EBITDA
We are a reliable employer who values each and every employee and takes good care of them and their family members
Number one employer in the regions of presence
03
Severstal-Metiz, Cherepovets
04
Severstal-Metiz, Oryol Region
Severstal Resource
As one of the two key elements of Severstal's business model, Severstal Resource covers all mining assets of the Company in the Belgorod and Murmansk Regions, and in the Republic of Karelia. This segment almost completely supplies Severstal Russian Steel with iron ore and provides external customers with feedstock.
Key assets of Severstal Resource
Region/facility
Products
Operating performance1
Leader in cost
Strengthening global cost leadership in an environmentally friendly manner
Ensuring a 15% gap in the end-to-end cost of converter slab from the nearest competito
Iron ore concentrate
01
Iron ore concentrate -
2.2 million tonnes
Iron ore pellets
02
Pellets -
11.0 million tonnes
03
Iron ore mining and processing
Iron ore concentrate -
3.2 million tonnes
The Strategy 2024-2028 version in effect is available on the website
1 The Company's pre-estimate calculated in macroeconomic conditions and forecasts for H1 2024 is subject to change.
2 This document is only available in Russian.
1 Data for 2024 and as at 31.12.2024.
16
About the Report
Severstal
About the
Geography
Business
Sustainability
Sustainability
Strategic
Corporate
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Сompany
and Key Assets
Model
Ratings, Rankings
Awards
Report
Governance
Management
Supply Chain
Impact
17
Severstal Russian Steel
Severstal Russian Steel covers the Company's assets involved in manufacturing and selling finished rolled steel. The key asset - Cherepovets Steel Mill - is one of the most cost effective metallurgical enterprises in the world that is well-positioned in terms of its vicinity to Severstal's mining facilities, the Baltic Sea ports, and Russian industrial clusters.
Severstal Russian Steel offers a wide range of products with the largest share of flat rolled steel.
01
High value-added (HVA) flat rolled products
Long products
(including for the construction industry)
Downstream products
Galvanised steel
Cold rolled steel
Hot rolled steel
Steel - 10.4 million including:
Basic Oxygen Furnace (BOF) method - 9.3 million tonnes
Electric Arc Furnace (EAF) method -
1.1 million tonnes (~10%)
Electric welded pipes
02
Large diameter pipes -
0.5 million tonnes
03 04 05
Metalware
and secondary products
Metalware - 0.4 million tonnes
Key assets of Severstal Russian Steel
Region/facility
Products
Operating performance1
Business Model
GRI 2-6
Severstal demonstrates stable financial and non-financial performance owing to the reliance on its efficient vertically integrated business model. A combination of mining and metals operations as well as the Company's self-sufficiency in raw materials help maintain high profitability of production assets and protect the Company from seasonal fluctuations in feedstock prices. Severstal dispatches its finished products to construction, machine building and power engineering enterprises.
Resource business Vtorchermet
(recycled ferrous metals)
Coke agglomeration
and blast furnace process
Upstream
Innovation, business models, exploration
Steelmaking
(up to molten steel inclusively)
Energy Construction Machine building
Distribution
Flat rolled products (including finished slab)
Long products Pipes and tubes Metalware
1 Data for 2024 and as at 31.12.2024.
Responsible business practices are integrated into the Company's business model with due regard to the UN Sustainable Development Goals and the national projects' goals. The Company continuously harmonises its processes in accord with best practices and transforms the resources used to stakeholder value.
Downstream
Severstal adheres to a well-balanced investment policy by injecting capital in projects that are aligned with the key strategic priorities in order to enhance profitability, maximise partner value, and increase shareholder returns.
18
About the Report
Severstal
About the
Geography
Business
Sustainability
Sustainability
Strategic
Corporate
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Сompany
and Key Assets
Model
Ratings, Rankings
Awards
Report
Governance
Management
Supply Chain
Impact
19
MED-1 MED-2 MED-3 MED-4 MED-5 MED-7 MED-10 EM-MM-000.A EM-IS-000.A EM-IS-000.B
Business model
Sustainability Ratings, Rankings and Indices
MED-39
Capital
Resources in 2024
Performance in 2024
Human capital
Employees, personnel training and development, workplace safety
50,553 employees - average headcount
RUB 118,852 billion - salaries and
social contributions
RUB 452 million - investments in personnel development programmes
RUB 7.1 billion - investments in OHS
activities
Ranks first in the industrial employer IT brand rating (habr.ru)
88% - share of employees covered by training
0.44 - LTIFR among Company employees and contractor
Social capital
Stakeholder engagement
22% - share of purchases from SMEs
33% - share of purchases from local suppliers
RUB 7.5 billion - social investments
RUB 35.2 billion - tax and non-tax payments across the key regions of presence in Russia
97% - overall customer satisfaction
300 charity projects
>30 events dedicated to information support of SMEs and promotion of entrepreneurship
Natural capital
Environmental footprint reduction solutions
>10 iron ore deposits
>10 billion tonnes of iron ore reserves
RUB 10 billion allocated for environmental protection activities
98.4% - share of recycled water
98.1% - share of waste recycling
2.180 tonnes of СO2 / tonne of steel -carbon intensity
Production capital
Production capacity, operating performance
2 segments
46 enterprises
10 million tonnes of cast iron production
10.4 million tonnes of steel production1
RUB 638 billion - Operational Expenditure (OPEX)
>500 partners involved in improving the operating performance and optimising the production processes
205 tonnes of produced steel / person - labour productivity2
Financial capital
Investments in the production activities development
RUB 118.5 billion - investments in production development projects (CAPEX)
RUB 25.5 billion - interest paid
RUB 829.8 billion - revenue
RUB 228.4 billion - net value added3
10.85 million tonnes - sales of steel products, including:
5.62 million tonnes - sales of HVA products
4.76 million tonnes - sales of commercial steel (commercial mill products)
0.47 million tonnes - sales of semi-finished products
16.8 million tonnes - sales of iron ore4
Knowledge capital
Knowledge, skills, and production expertise
RUB 317 million - R&D funding
>66 thousand ideas submitted under the Idea Factory initiative
589 patents in ownership in the Russian Federation
9.2% - share of new product types
RUB 1.7 billion - economic effect from inventions
High ESG index (Level I) among Russian non-financial companies
Ranked first in the ESG ranking of Russian companies in the ferrous metallurgy sector
Ranked ninth in the overall ESG rating1
Ranked second and fourth in the ESG rating of Russian companies leading in waste management quality
Group AA - Very high level
AA.esg - a very high level of the ESG agenda integration into the Company's activities, and of the quality of relevant practices observance
Group A in the Responsibility and Transparency Index - companies with best disclosures
Group A in the Sustainability Vector Index - companies with best performance dynamics
Ranked first in the ferrous metallurgy sector of the ESG Transparency Ranking of Russian companies
Group AAA - companies with a very high anti-corruption level
87% (corresponds to the industry average) out of the maximum 100%
Highest A+ category in the Leaders in Corporate Charity rating
1 ~90% of steel produced through the basic oxygen furnace (BOF) process, and ~10% - through the electric arc furnace (EAF) process.
2 244.5 tonnes of produced steel / person is the 2023 indicator.
3 RUB 359.9 billion is the value added for 2023.
4 Including the ore designated for own use and for sales (2.2 million tonnes - iron ore sales to third parties). 1 As at December 2024.
20
About the Report
Severstal
About the
Geography
Business
Sustainability
Sustainability
Strategic
Corporate
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Сompany
and Key Assets
Model
Ratings, Rankings
Awards
Report
Governance
Management
Supply Chain
Impact
21
Sustainability Awards
Responsible business practices
First-degree laureate of the Leaders of Responsible Business national award
Finalist in two nominations: For the contribution to achieving environment- and climate-oriented objectives, For the contribution to sustainable development of territories
Ranked first for the Company's Unified Report in the Best ESG Disclosure nomination
Leader status in the Best Sustainability Report nomination
Gold Winner in the 2023 Rating of Best Russian Employers for the contribution to employees and society (S); Platinum Winner in the E and G nominations
Winner of the Leaders of Business: Dynamics, Responsibility, Sustainability 2023 all-Russian competition in two nominations: For the contribution to sustainable development of territories, For the high quality of sustainability/ESG reporting
Ranked second in the competition of annual reports
Highest Quality of Report status for the Company's Unified Report
Best employer among industrial companies in the rating of employers
Five Severstal's programmes contributing to the delivery of national projects are finalists in the Award
Partner of National Projects status
Environmental aspect
The Cherepovets Air Environmental Monitoring project wins the Sustainable Development nomination
The Clean Air project wins the Eco-Enterprise nomination of the Komsomolskaya Pravda National Environmental Award
22
About the Report
Severstal
About the
Geography
Business
Sustainability
Sustainability
Strategic
Corporate
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Сompany
and Key Assets
Model
Ratings, Rankings
Awards
Report
Governance
Management
Supply Chain
Impact
23
Social aspect
#Dlya Svoikh: With Care for Everyone welfare programme takes the Grand Prix at the 2024 InterComm International Award
Silver Winner in the Territory of Good nomination for the corporate Doing Good Deeds volunteering programme
Bronze Winner in the Work without Danger nomination for the Safety Volunteers project
Laureate of the Corporate Donor Culture all-Russian competition (III) in the Best Corporate Donor Day nomination
Ranked third for the Severstal Engineering Classes project in the Best Programme (Project) Contributing to the Development of Science and Education in the Russian Federation nomination
Ranked third for the Choose Life project in the Best Programme Contributing to the Achievement of the UN Sustainable Development Goals (UN SDGs) to Ensure Health, Healthy Lifestyle and Well-Being for Sustainable Development nomination
Ranked first in the Healthy Lifestyle nomination for #Dlya Svoikh: With Care for Everyone programme
Ranked second in the Development of Local Communities nomination for the Cherepovets integrated development project
Ranked first in the Transparency of Activity nomination and ranked fifth in the Appreciation by the Society, and Activities in Social Media and Mass Media nomination among corporate and private NPOs for the Company's Way Home charitable foundation
Other
Winner in the For Business Efficiency Improvement nomination for the Autotemp 2.0 software package
Diplomas in the Best Electronic Corporate Media nomination of the Best Corporate Media in the Russian and CIS Metallurgical Industry competition for the first metallurgical podcast 'Ne v Lom' and Severstal. News TV programme
Winner in the special nomination in the national category of the ISAR Honours 2024 award for the Company's ESG metrics automation project
The Safety Volunteers film wins in the Best Camerawork nomination of the Metal-Vision'2024 competition for the best video production in the metals sector
03.
Strategic Report
Integrated Report 2024
Market Overview
Price for hot rolled sheet EXW Russia, net of VAT, thousand RUB/tonne
80
Global Economy and Steel Market
In 2024, the global economy retained resilience despite multiple negative forecasts on its development. Disinflation supported household consumer spending and allowed monetary policy easing in most major economies, which helped offset the uncertainty caused by geopolitical tensions. The OECD estimates the global GDP growth of 3.2% in 2024, with ambiguous results in developing economies. In China, the GDP growth remained unchanged, encouraged by the rising industrial production owing to stronger exports.
However, consumer demand remained weak, and the lengthy correction in the property sector continued, impacting the steel market.
Steel Prices
According to the World Steel Association, global steel consumption fell by 0.9% in 2024 to 1.75 billion metric tonnes. Global steel production also declined by 0.9% to 1.83 billion tonnes. Chinese smelting declined by 1.7%, with WorldSteel estimating that China's ongoing property market crisis led to a 3.0% fall in domestic steel demand in 2024. The fall in demand at a rate faster than the decline in smelting resulted in a surge in exports of semi-finished and finished rolled steel from China to a record high of 117 million tonnes, up 25.1% YoY. The increased exports of rolled steel from China impacted prices in many regions of the world.
70
60
50
40
Jan '23
Feb '23
March '23
April '23
May '23
June '23
July '23
Aug '23
Sep '23
Oct '23
Nov '23
Dec '23
Jan '24
Feb '24
March '24
April '24
May '24
June '24
July '24
Aug '24
Sep '24
Oct '24
Nov '24
Dec '24
30
Iron Ore Prices
In 2024, the average iron ore prices decreased by 8% to USD 110 per tonne CFR China. In general, the downward trend continued throughout the year. The prices declined from the January 2024 peak of USD 145 per tonne to the low of USD 90 in late September. It was followed by stabilisation at around USD 105 per tonne, which is close to the cost support levels of the least efficient producers.
On average, the export prices for Russian hot rolled coil FOB Black Sea in 2024 decreased by 11% year-on-year. The decline was driven by the pressure exerted by Chinese exports.
The prices for hot rolled steel in Russia in 2024 turned out to be more resilient amid the favourable domestic demand for rolled steel in H1, as well as due to higher (vs the global average) inflation rates. However, in H2, the prices moved downwards due to a tighter monetary policy and the resulting weaker demand for rolled steel.
Nevertheless, in 2024, the prices increased by an average of 2% YoY.
Price for hot rolled coil FOB Black Sea, USD/tonne
Prices for iron ore (62% Fe) CFR China, USD/tonne
150
140
130
120
110
100
800 90
80
700
70
Jan '23
Feb '23
March '23
April '23
May '23
June '23
July '23
Aug '23
Sep '23
Oct '23
Nov '23
Dec '23
Jan '24
Feb '24
March '24
April '24
May '24
June '24
July '24
Aug '24
Sep '24
Oct '24
Nov '24
Dec '24
600 60
500
400
300
Jan '23
Feb '23
March '23
April '23
May '23
June '23
July '23
Aug '23
Sep '23
Oct '23
Nov '23
Dec '23
Jan '24
Feb '24
March '24
April '24
May '24
June '24
July '24
Aug '24
Sep '24
Oct '24
Nov '24
Dec '24
200
26
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Coking Coal Prices
In 2024, the average coking coal prices decreased by 15% to USD 183 per tonne CFR China. As is the case with iron ore prices, among the key factors affecting the price fluctuations in 2024 were the concerns about the property market activity in China. However, the strong demand for coking coal from India, which significantly increased its steel production, was not the least of the factors either.
Prices for coking coal CFR China, USD/tonne
Operational and Financial Performance
Operational Performance
300
280
260
240
220
200
180
160
140
120
Jan '23
Feb '23
March '23
April '23
May '23
June '23
July '23
Aug '23
Sep '23
Oct '23
Nov '23
Dec '23
Jan '24
Feb '24
March '24
April '24
May '24
June '24
July '24
Aug '24
Sep '24
Oct '24
Nov '24
Dec '24
100
Russian Economy and Steel Demand
The Russian economy grew by 4.1% in 2024, as in 2023, according to Rosstat. The greatest influence was exerted by the growth of value added in such industries as information and communication (+11.9%), hotels and restaurants (+9.6%), wholesale and retail trade (+6.9%), and manufacturing sectors (+7.6%). According to Rosstat, inflation for 2024 was 9.5%, while unemployment was at a historic low of 2.3%, reflecting a stressful situation in
the labour market. In 2024, the Bank of Russia anticipated the Russian economy to grow by 1.0-2.0%, whereas the IMF predicted 1.4%.
As per the Company's estimates, steel consumption in Russia declined by 5.6% to 43.8 million tonnes in 2024 primarily due to lower activity in the construction sector against the backdrop of the rising key rate and the resulting lower purchasing and investment activities.
The cast iron production decreased by 11% year-on-year to 10.03 million tonnes amid the overhaul of blast furnace No. 5, whereas the steel production declined by 8% to 10.38 million tonnes.
The consolidated sales of rolled steel rose by 1% to
10.85 million tonnes despite the large-scale repairs. The commercial steel sales (hot rolled and long products) increased by 5% to 4.76 million tonnes, while the sales of HVA products rose by 7% to
Financial Performance
Owing to the average selling prices growth on the back of the growing share of finished rolled steel and HVA products, as well as higher sales volumes, the revenue increased by 14% to RUB 829,779 million.
However, EBITDA decreased by 9% down to
RUB 237,880 million, and EBITDA margin declined by 7 p. p. to 29% on the backdrop of the increased production cost due to higher prices for goods and services of natural monopolies, higher payroll, and the acquisition of the A GROUP.
CAPEX surged by 63% to RUB 118,460 million amid dynamic implementation of projects in tune with the Company's new strategy. The largest projects in the reporting year were the overhaul of blast
furnace No. 5 and continued construction of an iron ore pellet production complex at Cherepovets Steel Mill. Severstal will keep on investing in strategically important projects that will enable the Company to
Financial Standing
5.62 million tonnes. As at year-end 2024, the share of HVA products increased by 3 p. p. to 52%. The semi-finished products sales decreased to 465 thousand tonnes (-51%) due to several major BOF repairs.
The sales of iron ore to third parties increased by 51% to 2.23 million tonnes due to a decline in demand for iron ore raw materials (IORM) at Cherepovets Steel Mill during the overhaul of blast furnace No. 5.
ensure the leadership in costs, expand its customer base, enter new market segments, and reduce
its environmental footprint. In 2025, Severstal's investments are expected to reach RUB 169 billion, of which RUB 81 billion will be allocated to maintain the existing capacities, and RUB 70 billion - to invest
in development projects. Investments in IT and digital projects, as expected by the Company, will amount to around RUB 13 billion, and the amount of investments in environmental protection, occupational health and safety systems improvement shall total RUB 5 billion.
Lower EBITDA and record-breaking investments resulted in a 19% decrease in free cash flow to
RUB 96,767 million for 12M 2024, with Severstal back to paying dividends in the reporting period. Thus, in 2024, the Company accrued dividends for 2023 in the amount of RUB 160.4 billion and interim dividends for Q1-Q3 2024 in the amount of RUB 99.2 billion.
In 2024, the Company managed to retain its strong financial standing with a low debt burden. Monetary funds and equivalents thereof reduced to RUB 128,571 million (vs RUB 373,568 million as of 31 December 2023)
due to payment of dividends in the amount of RUB 242,310. The total debt declined to RUB 108,503 billion
(vs RUB 163,105 million as of 31 December 2023). The net cash position was RUB 20,068 million. The Net Debt/ EBITDA reached -0.08.
28
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29
04.
Corporate Governance
Integrated Report 2024
Corporate Governance System
Corporate Governance Standards and Principles
In its operations, Severstal is guided by best Russian and international corporate governance practices.
Its corporate governance system aims to efficiently administer the Company's activities and manage sustainability risks and opportunities while respecting the interests of shareholders, investors, and other stakeholders.
Internal
The fundamental principles underlying the corporate governance system are outlined in the Corporate Governance Code of PAO Severstal, namely:
Efficient and transparent mechanisms for ensuring shareholder rights and interests
Equal treatment of all shareholders
Exercising shareholder rights to participate in managing the Company
High-level engagement with all stakeholders, including customers, suppliers, employees, and professional communities, and
Increasing the market value of the Company's shares
External
Corporate Governance Code recommended by the Bank of Russia
Key corporate governance documents
Winner of the Director of the Year Award
On 26 February 2025, Corporate Secretary of PAO Severstal won the XIX National Director of the Year Award in the Corporate Governance Director / Corporate Secretary nomination. The award recognises corporate governance leaders for their individual contribution to creation and promotion of advanced corporate governance standards, and introduction of prospective technologies and practices in the Board proceedings of not only public but also private Russian companies.
The Award was founded by the Association of Professional Directors (APD) and the Russian Union of Industrialists and Entrepreneurs (RSPP) in partnership with the Moscow Exchange, PJSC, Sberbank, PJSC, and Unicon, JSC.
50%
the share of independent directors in the Board of Directors
100%
of Severstal's employees
and business partners introduced to the Anti-Corruption Policy
3,786
persons completed the anti-corruption training course (more than twice as much)1
0
cases of violation of personal data confidentiality
2024 Highlights
Principle 10. Businesses should work against corruption in all its forms, including extortion and bribery.
UN Global Compact Principles
UN Sustainable Development Goals
Risk management
Material Topic
Company's Corporate Governance Structure
GRI 2-9
General Meeting of Shareholders
Board of Directors
Audit Committee
Safety and Sustainability
Nomination and Remuneration
Sole Executive Body CEO
1 Against 2023.
32
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Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
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Today
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Governance
Governance
of Business and
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Security
and Digitalisation of
Management
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Impact
33
The General Meeting of Shareholders (hereinafter referred to as the Meeting) is the supreme governing body of Severstal. The Meeting's authority is determined by Russian laws and the Charter of PAO Severstal1.
All aspects related with preparing for and conducting the Meeting, including its composition, functions, powers and authority of its working bodies, are governed by the Regulations on the Procedure of Conducting General Meetings of Shareholders.
GRI 2-10 GRI 2-11
When forming the Board composition, the Company proceeds from professional competencies and experience of applicants in the relevant area. The sitting Board members have vast knowledge and many years of experience in such domains as economics and finance, engineering, technology, law, and personnel management.
In conformity with the legislation of the Russian Federation, the Company shall convene the annual General Meeting of Shareholders on an annual basis. Extraordinary meetings may be convened at the initiative of the Board of Directors or as required by the Company's audit firm or by the shareholders (shareholder) holding at least 10% of the Company's voting shares as at the date of the request. In 2024, Severstal conducted the annual General Meeting of Shareholders and two extraordinary meetings by absentee voting.
Board of Directors
GRI 2-12 GRI 2-13 GRI 2-14 MED-37
The Board of Directors is in charge of the overall management of the Company's activities, including actualisation and approval of its strategy and business model, exercises control over the proceedings of its executive
bodies, and executes other functions assigned by PAO Severstal's Charter in accord with the legislation of the Russian Federation. Apart from analysing the implementation of the development strategy, situation on stock markets and trends in the main sales markets, the Board of Directors regularly reviews progress reports on PAO Severstal's focal areas and sustainability issues.
For more details regarding the approach to sustainable development management, see the Sustainability Management section.
The Board of Directors convenes its meetings as deemed necessary, both in person and by absentee voting. Board meetings may be convened at the initiative of the Chairman of the Board of Directors, a member of the Board, Head of the Internal Audit Department or the Company's audit firm, the executive body as well as shareholders (shareholder) cumulatively holding at least 2% of the Company's voting shares.
For more details regarding the standard operating procedures of the Board of Directors, see the Regulation on the Board of Directors of PAO Severstal.
MED-36
In 2024, the Board of Directors conducted ten meetings. The attendance rate was 100%. The Board of Directors considered 88 issues, including the reports of the Chairman of the Safety and Sustainability Committee of
PAO Severstal and the climate-related risks and opportunities analysis.
Structure of issues considered by the Board of Directors, pieces
5%
10%
3%
The Board members are elected by the General Meeting of Shareholders for a term until the next annual Meeting. The Chairman of the Board of Directors is elected by the Board members from among themselves by a majority of votes of all members of the Board. The Board of Directors may reelect the Chairman at any time by a respective resolution passed by the majority of votes.
For more details regarding the Board members election procedure, see the Charter of PAO Severstal.
GRI 2-9 MED-37 MED-44
As at 31 December 2024, the Board of Directors was composed of ten members. With that,the share of women increased to 20% against 2023 (10%), and the share of independent directors grew to 50% (20% in 2023).
Term of office of the Board members
30%
70%
GRI 2-18
Status of the Board members in 2024
50%
Age of the Board members
50%
aged over 50
50%
50%
17%
28%
36%
Sustainable development
The Board of Directors performs a self-assessment on a regular basis. The Board conducts an internal assessment of its performance annually, and an external independent assessment once in three years.
In 2024, it was resolved that it would be inappropriate to assess the performance of the Board of Directors and its committees due to the significant renewal of their members and a short-duration term of office.
1 On 6 December 2024, the General Meeting of Shareholders of PAO Severstal approved the Company's Charter in a new edition so that General Meetings are conducted in conformity with the legislation in effect, with consideration to the amendments introduced by Federal Law dated 08.08.2024 No. 287-FZ On Amendments to the Federal Law on Joint-Stock Companies and Certain Legislative Acts of the Russian Federation. This document is only available in Russian.
34
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Ethical Conduct
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and Materiality
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Supply Chain
Impact
35
Name of Committee
Audit Committee
Nomination and Remuneration Committee
Safety and Sustainability Committee
100%
100%
80%
20%
Term of office
of Committee
members
0-3 years
over 6 years
100%
67%
33%
60%
40%
Age of
Committee
members
aged 31-50
aged 31-50
aged over 50
aged over 50
Committees of the Board of Directors
GRI 2-13
There are three committees operating under the Board of Directors of PAO Severstal: the Audit Committee, the Nomination and Remuneration Committee, and the Safety and Sustainability Committee. The committees are consultative and advisory bodies in charge of accomplishing the tasks assigned by the Board of Directors.
For more details regarding the election procedure and other aspects of the committees' activities, see the Regulation on the Committees of the Board of Directors of PAO Severstal.
In 2024, the Safety and Sustainability Committee reviewed, inter alia, the following sustainability issues:
Climate-related risks assessment and environmental metrics;
Implementation of the decarbonisation strategy, and
Policy for conservation of biodiversity, ecosystems and ecosystem products.
MED-38
In the reporting year, the Audit Committee conducted three meetings. The attendance rate was 100%.
Name of Committee
Audit Committee
Nomination and Remuneration Committee
Safety and Sustainability Committee
Committee's objectives
Ensures the participation of the Board of Directors in exercising control over the Company's financial and economic activities, including monitoring the
status of risk management, internal control, and corporate governance systems
Facilitates involving qualified specialists in managing the Company and incentivising them to perform efficiently
Renders assistance to the Board of Directors in providing for the
appropriate functioning of the safety and sustainability risk management system
Composition
Three directors
Percentage of men - 100%
Three directors
Percentage of women -33%
Five directors
Percentage of women -40%
Status of Committee members
100%
100%
60%
40%
Committees of the Board of Directors of PAO Severstal in 2024 1
Top Management Remuneration
GRI 2-19 GRI 2-20
At the General Meeting of Shareholders, Severstal's shareholders might pass a resolution on payment of remuneration to the Board members for discharging their duties and on compensation of their expenses related to such activities. The amount of the said remuneration and compensation is determined by a respective resolution of the General Meeting of.
In the reporting year, the annual General Meeting of Shareholders passed the resolution on establishing the following types of remuneration from 1 July 2024 in addition to compensation for documented expenses related to the functions discharged by the Board members:
Monthly remuneration payable to the Board members of PAO Severstal who are ecognized as independent directors in accordance with the Regulation on the Board of Directors of PAO Severstal and the Corporate Governance Code of PAO Severstal, in the amount of RUB 1.2 million;
Monthly remuneration payable to the Chairman of the Board of Directors of PAO Severstal in the amount of RUB 1.2 million, and
Monthly remuneration payable to an independent director elected by the Board's resolution to chair any of PAO Severstal's Board Committees in the amount of RUB 1.6 million.
The remuneration payable to the members of the Board of Directors of PAO Severstal for contributing to the work of the governing body in 2024 amounted to RUB 62.9 million.
Remuneration of Severstal's top managers is determined by local regulations and provisions of respective employment contracts. Moreover, the Company has the Regulation on the Reduction of Long-Term Remuneration Elements in AO Severstal Management in place that enables the Nomination and Remuneration Committee to reduce payments under the long-term incentive and bonus system in favour of the key top managers, should any deliberate wrongful behaviour be revealed on their part. The Regulation aims to mitigate the Company's financial, reputational and other risks occurred for reasons attributable to the said behaviour.
1 As at 31 December 2024.
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Ethical Conduct of Business and Anti-Corruption
Approach to Management
Severstal's corporate governance is based on the principles of business ethics and anti-corruption that contribute to building trust-based relationships both within the Company and with contractors and stakeholders. Not only does the Company follow the principles of responsible business conduct, but it advances the corporate ethical and anti-corruption requirements throughout the entire supply chain.
For more details regarding the stakeholder engagement, see the Sustainability Management section.
GRI 2-23 SASB EM-MM-510a.1
Code of Business Conduct of the Severstal Group of Companies
Anti-Corruption Policy of PAO Severstal and Related Legal Entities
Anti-Corruption Policy for Severstal Counterparties
Gifts and Business Hospitality Policy
Conflict of Interest Management Policy1
Human Rights and Community Relations Policy
Anti-Bribery Management System Standard
Employee Code of Conduct of the Severstal Group of Companies
Regulations on the Compliance Commission
Procedure for Documenting Employment/Civil Law Relationships with Former Public Officials at AO Severstal Management and Managed Companies
Key internal business ethics and anti-corruption documents
Board of Directors
Audit Committee
Sole Executive Body CEO
Internal Audit Department
Risk Management and Internal Control Department
Ethics Committee
Business Support Service
Compliance Commission
1 This document is only available in Russian.
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Business unit
Functions
Board of Directors
Responsible for approval and implementation of the Anti-Corruption Policy
Responsible for monitoring the observance of the Anti-Corruption Policy provisions
Audit Committee
Control over the procedures that ensure observance of legislative requirements, and ethical norms, rules and practices of the Company
Management of the Company and operational management
Displays commitment to the principle of zero tolerance towards any signs and forms of corruption
Ensures formation, implementation and efficient operation of the anti-corruption management system
Risk Management and Internal Control Department
Ensures identification and assessment of corruption risks in the business processes
Exercises supervision over elaboration and integration of the anti-corruption management system procedures by the Company
Conducts regular training, consults the Company's management and employees on anti-corruption issues
Forms reporting on anti-corruption risks, outcomes of the anti-corruption management system operation for the Board of Directors and senior executives of the Company
Internal Audit Department
Carries out verification of observance of the ethical principles and corporate values of the Company
Reviews the Ethics Committee's reports on the outcomes of processing the submissions
Informs the Audit Committee, the Board of Directors and the sole executive body about any violations identified, including the outcomes of addressing the submissions on potential business ethics breaches
At least once a year, reports the results of monitoring the observance of the Anti-Corruption Policy provisions to the Board of Directors
Ethics Committee
Reviews submissions on potential business ethics violations
Responsible for explaining the corporate ethics principles (including conflict of interest cases) and investigating the breaches revealed in employees' behaviour
Forms reporting on its performance for the Internal Audit Department and provides recommendations on the Employee Code of Conduct enhancement
Business Support Service
Carries out the actual and potential counterparties checkup procedures
Accepts and processes applications on violations or suspected corrupt practices, carries out internal investigations of corruption incidents
Conducts preventive meetings with the heads of structural units and contractor entities to inform them of the consequences of corruption incidents and measures to be taken in the case of revealment thereof
Conducts training sessions for business units
Liaises with law enforcement agencies
Compliance Commission
Reviews cases of employees' non-observance of the internal anti-corruption documents and takes decisions on appropriate measures in the case of revealment thereof
Business Ethics
GRI 2-15 GRI 2-23 GRI 408-1 GRI 409-1
The Company's key values and principles of ethical behaviour are set forth by Severstal's Employee Code of Conduct, an important pillar of the personnel evaluation, development and motivation system. The Company prioritises employee safety and demonstrates zero tolerance to any forms of discrimination, improper or offensive treatment in its business practices. In this context, the Company's executivesundertake to not
only follow the high standards of behaviour but also to provide a lead in ethical standards and introduce their respective divisions' staff to Severstal's business ethics principles.
Severstal also expects its employees to avoid conflicts of interest, that is situations when a personal interest may affect appropriate, objective and impartial discharge of their duties. The Company looks into each conflict of interest on an individual basis, following an unbiased and equal approach to all employees and balancing the interests of the Company and its personnel. In 2024, 57 conflicts of interest identified in the course of formal declaration procedure were reviewed by the Compliance Commission. In the reporting period, the Commission
conducted a total of three meetings followed by the adoption of measures on the reconciliation of the conflicts of interest cases under review.
For more details regarding the Company's approach to managing conflicts of interest, see the Conflict of Interest Management Policy.1
The Code of Business Conduct sets forth the ethical principles Severstal is guided by in its interaction with partners throughout the supply chain. The Company adheres to high standards of integrity and openness, safety, occupational health, and environmental protection. In carrying out its activities, Severstal does not tolerate human rights abuses, forced or child labour and expects its counterparties to take the same approach. The obligations to observe the provisions of the Code of Business Conduct of PAO Severstal are included in the standard wording of procurement contracts.
For more details regarding the requirements to business partners, see the Responsible Supply Chain section.
Anti-Corruption
MED-42
In addition, all employees take regular training in anti-corruption management. The frequency and programme of such training depend on employees' job duties and are set out in Severstal's local regulations. In 2024, 3,786 employees were covered
by the anti-corruption training, which is twice as much against 2023.
Relationship with Severstal's business partners is governed by the Company's Anti-Corruption Policy for Severstal Counterparties. The obligations to comply with its provisions were added by the Company to the standard wording of procurement contracts. In 2024, Severstal notified over 2,000 suppliers about the Company's anti-corruption policies and procedures in effect. In the event corruption incidents are revealed in the practices of Severstal's business partners, the Company terminates contractual obligations with bad faith counterparties and includes them on the list of non-recommended organisations.
Name of IT system
Number of checks
Outcomes
Automated Scoring
>4,000 supplier checks completed
The acquired data factored in by tender committees in
decision-making under tendering procedures
Supplier Business Reputation Monitoring
>6,000 actual counterparty checks completed
The monitoring outcomes factored in during decision-making on interaction with business partners and in taking measures for mitigating respective risks
Performance of IT systems in 2024
For example, in the reporting period, one corruption incident revealed in the activities of Severstal's business partner led to the Company's refusal to sign a contract therewith.
GRI 205-1
To identify vulnerabilities and enhance its anti-corruption system, Severstal conducts an annual corruption risk assessment. In 2024, the said assessment was performed with regard to all of the Company's functional areas, however, it did not identify any material corruption risks.
In addition, to minimise corruption risks in counterparty engagement, Severstal makes use of the Automated Scoring IT system (prompt obtaining of information on the integrity of a
business partner) and Supplier Business Reputation Monitoring (automated check of significant changes in counterparty's activities that could give rise to corruption risks).
GRI 2-23 GRI 205-2 GRI 205-3 MED-43
Severstal pursues a policy of zero tolerance for any forms of corruption whatsoever. The Company's own-developed anti-bribery management system fully complies with the requirements of Russian
legislation and provisions of the international treaties of the Russian Federation and has been successfully certified under ISO 37001:2016. The anti-corruption management system rests on the Anti-Corruption Policy of PAO Severstal and Related Legal Entities that is binding upon all Severstal's employees, members of the governing bodies, and contractors. In the reporting year, in addition to the anti-corruption management documents in effect, the Company approved the Procedure for Documenting Employment/Civil Law Relationships with Former Public Officials at AO Severstal Management and Managed Companies.
The primary goals of the Anti-Corruption Policy of PAO Severstal and Related Legal Entities consist in:
Mitigation of corruption risks and formation of an efficient anti-corruption mechanism;
Observance of anti-corruption laws;
Instilling and fostering an anti-corruption corporate mindset in employees along with a consistent understanding of Severstal's zero tolerance position towards any forms and manifestations of corruption thereby.
Severstal's fundamental anti-corruption principles include:
Legitimacy;
Zero tolerance for any forms and manifestations of corruption;
Tone at the Top;
Risk assessment and regular monitoring, and
Informing and training.
At all times, Severstal notifies all its new hires of the requirements of the Anti-Corruption Policy and communicates any actualisation thereof to all
employees via email, without exception. The version of the Policy in effect is available to employees on the corporate web portal.
In the reporting year, the Business Support Service designed a special course for all Severstal's business units on risk assessment in counterparty engagement, counterparty checks, and risk mitigation in interaction with business partners. More than 100 employees of the procurement function completed training as part of the course.
Severstal's anti-corruption awards in 2024
Severstal once again became one of the leaders in the RSPP's Anti-Corruption Rating of Russian Business: following the assessment of the anti-corruption system performance, the Company was assigned the highest class of the A category - AAA class (companies with a very high level of anti-corruption). The jury pointed out that Severstal strictly observes the standards of procurement practices, payment process, building relationships with partners and suppliers, and personnel engagement.
1 This document is only available in Russian.
40
About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
and Digitalisation of
Management
Supply Chain
Impact
41
Feedback Mechanisms
GRI 2-25 GRI 2-26
Unified Hotline communication channels
Ethics Committee
Company's Business Support Service
Confidential telephone call line
Messenger (WhatsApp)
E-mail address [email protected]
Corporate web portal
E-mail address [email protected]
Postal address
E-mail address [email protected]
Any stakeholder is welcome to submit a grievance through Severstal's feedback mechanisms in order to obtain clarifications on the corporate ethics principles and to potentially enhance these, as well as to report any potential fraud and corruption cases. The Company guarantees an independent and unbiased review of all submissions, full confidentiality of information and protection from retaliation against good faith reporters of potential violations.
Submissions structure by topic in 20241
25%
%
8%
8%
12%
5
42%
Upon reviewing the submissions received by the Ethics Committee and via the Unified Hotline, the Company did not identify any cases of discrimination on racial, gender or other grounds in the reporting year.
Business Support Service
GRI 205-3
The Business Support Service (BSS) is in place to examine and check reports on potential or
committed fraud, corruption and theft. Its main goals and objectives are to combat threats and risks of causation of unlawful damage to the Company and to implement economic, information and personnel security measures.
In the reporting year, BSS received and addressed 35 reports of attempted commercial bribery towards the Company employees and identified three confirmed cases of corruption that led to criminal
Ethics Committee
GRI 2-25
Ensuring the observance of the Employee Code of Conduct, the Anti-Corruption Policy and such other local business ethics regulations, prevention and non-admittance of respective violations thereof, and enhancement of the Company's ethical principles and approaches is the responsibility of the Ethics Committee.
Compensation of mortgage interest
Goals and Plans of Development
proceedings.
In 2024, the Committee reviewed 31 submissions. Most of those referred to violations of the standards of behaviour in effect on the part of the Company's employees. The internal investigations carried out on the basis of the applicants' submissions evidenced that 48% of these were well-grounded. Following the consideration of the verified violations, the Ethics Committee elaborated remedial measures listing the actual measures against violators.
Severstal is committed to continuous development and enhancement of its anti-corruption management system. In 2025, the Company intends to update its approaches to the gifts and hospitality practices, conduct
in-person anti-corruption training courses for employees, draw up and implement procedures for monitoring the regulations approved
Unified Hotline
GRI 2-26 GRI 406-1
To promptly respond to ethics-related violations and for question or suggestion submissions, Severstal operates its Unified Hotline for employees and stakeholders.
Over the reporting year, due to the increased workload driven by the launch of #Dlya Svoikh: With Care for Everyone corporate welfare programme and introduction of newer employee financial support measures, the Company embedded new solutions to maintain high quality and prompt responses. In particular, it significantly expanded the Q&A practice on recurring topics and the pool of experts involved in preparing answers. Professionals from the HR, occupational health and safety, administrative support, social, welfare and other departments took on the role of experts. The measures taken provided for high performance of the Unified Hotline service
Submissions to the Unified Hotline, pcs
4,674
774
711
652
590
without increasing the support team size. 2020 2021
2022
2023
2024
1 The Other category covers the preferential lending programme, clean-up events, industrial safety, PPE, working, social and living conditions, non-financial motivation, etc.
42
About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
and Digitalisation of
Management
Supply Chain
Impact
43
Business unit
Functions
Internal Audit Department (IAD)
Renders assistance to the sole executive body and employees in elaborating and monitoring compliance with the RM&ICS enhancement procedures and activities
Assesses the internal control system performance
Draws up and submits to the Board of Directors and the sole executive body reports on the Department's performance, including information on material risks, deficiencies, results and efficiency of actions that aim to eliminate the deficiencies identified, results of implementing the internal audit plan, results of assessing the actual state, reliability and efficiency of the risk management and internal control system
Effective Risk Management
Approach to Risk Management
GRI 2-12 GRI 3-3
Severstal's risk management system is a crucial tool of the Company's business practices that enables it to boost business performance, find most appropriate solutions, and transform potential threats into development opportunities. Owing to its balanced approach to managing risks and opportunities, Severstal steadily attains its strategic goals.
Risk Management and Internal Control System Policy
Regulation on Internal Audit
Key internal risk management documents
Business unit
Functions
Board of Directors
Determines the principles and approaches to setting up the risk management and internal control system (RM&ICS)
Determines the level of the Company's risk appetite
Exercises control over the efficient operation of the risk management system, including regular reviews of the sole executive body's risk management status reports
Audit Committee
Exercises control over the reliability and efficiency of the risk management and internal control system, including the assessment of the procedures' efficiency and preparation of suggestions on the enhancement thereof
Analyses and evaluates the execution of the Risk Management and Internal Control Policy
Assesses the efficiency of the internal audit function
The management of the Company and operational management
Responsible for the risk management system formation and operation
Inform the Audit Committee and the Board of Directors of the RM&ICS status assessment
Risk Management and Internal Control Department
Carries out the overall coordination of the RM&ICS formation and operation
Elaborates, implements and updates the corporate standards governing the risk management and internal control process
Arranges for employee training on risk management and internal control issues
Analyses the key risks portfolio and works out proposals on the response strategy and resource reallocation for administering the relevant risks
Coordinates the drafting of reporting on the risk management process efficiency for the Audit Committee and the Board of Directors
Risk management and internal control structure
The Company's key approaches in this area are governed by the Risk Management and Internal Control Policy elaborated in accord with Russian laws, the recommendations of the Corporate Governance Code of the Bank of Russia, and the recommendations of international professional organisations. Severstal incorporated the
risk management and control functions and responsibilities into employee job descriptions and established risk management KPIs for dedicated personnel.
The Company identifies and analyses risks and elaborates risk management measures on an ongoing basis. The ESG risks identification, assessment and management processes are embedded into the overall risk management system. In this context, Severstal assesses its risk tolerance over three time horizons as follows:
Short-term tolerance (12 months from the date of approving the financial statements);
Medium-term tolerance (one to three years), and
Long-term tolerance (three to 15 years).
The Board of Directors factors in the final outcomes of the risk analysis when revising the Company's strategy and approving the budget.
To improve the employees' risk culture, Severstal conducts training on a systemic approach to risk management and internal control issues, as well as practical training on specific risk categories.
The Internal Audit Department conducts an annual assessment of the RM&ICS performance. In 2024, the Department performed 28 audits across Severstal's key business processes: product sales and logistics, capital projects and repairs, procurement of materials and equipment, contracting, occupational health and safety, operating processes, inventory management, personnel management and IT. Based on the assessment results, it was pointed out that Severstal's risk management and internal control system was by and large efficient in all material aspects and sufficient for achieving the goals of Severstal's business activities.
44
About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
and Digitalisation of
Management
Supply Chain
Impact
45
The Company's key risks and risk management measures in 2024
Risk factors
Risk mitigation measures
Outcomes in 2024
Risk factors
Risk mitigation measures
Outcomes in 2024
Occupational health and industrial safety risks
For more details, see the Occupational Health and Industrial Safety Risk Management section
Workplace hazards (danger of material collapse, metal structures, electric current, railway and motor vehicles, moving mechanisms, metal
melts, poisonous gases, when moving cargo and working at height), accidents at hazardous production sites
← →
regulations, and relevant corporate documents
of fatality risks with the participation of representatives of the OHS function, production and maintenance departments.
It resulted in a 14% reduction in potential fatalities for the top
10 fatality risks, a 17% reduction in severe injuries, and a 39% reduction in total injuries against 2023
140 registered potential fatalities, with the top 10 fatal risks occurrence (eight of them with the injured). In addition, two fatalities occurred in the Material Collapse risk category at Yakovlevskiy Mine
Observance of occupational health and industrial safety laws,
Implementation of the integrated Occupational Health and Safety Strategy adopted in 2021
Thorough control over with the observance of comprehensive health and safety policies
Regular screening of all employees for awareness of health and safety risks using a polygraph
Thorough root cause analysis of all safety issues and implementation of appropriate remedial measures
Continuous training, staff awareness-raising, and behavioural training
Extended contractor control in occupational health and industrial safety
The main activity was the formation of self-organising teams for the core areas
In 2024, there were
Environmental risks
For more details, see the Environmental Management System section
Pollutant emissions, discharges to water bodies, waste management violations that may affect human health, property, and the environment and incur various costs, non-observance of regulatory requirements, accidents with environmental damage
← →
2026 targets under the Clean Air project:
Observance of environmental laws, regulations, and relevant corporate documents
Industrial environmental control across the enterprises
Monitoring the engineering condition of the environmentally protected sites
Investing in environmental protection activities, enhancement of industrial equipment and technological processes
Early achievement of the
Reduction of Cherepovets Steel Mill'sgross pollutant emissions by 30.7% against the 2017 baseline
Reduction of Cherepovets Still Mill's emissions of hazardous (priority) pollutants by 27.6% through the implementation of major pollutant emissions reduction projects
Avoidance of any major environmental incidents
Climate-related risks
For more details, see the Climate-related Risks and Opportunities Management section
hydrometeorological and other climate-related phenomena) and chronic (associated
with long-term global and macroregional climate changes)
← →
0.78 billion for resource (extraction) assets and RUB 0.43 billion for production (refining) assets
management of 300 buildings and structures
risk management system and activities in progress
3.37% in 2024
Climate-related physical risks: acute (associated with certain dangerous
Climate-related transition risks associated with the transition to a low GHG emission economy and the measures implemented thereupon
Implementation of 346 adaptation, climatic and climate-related risk management measures totalling RUB 1.21 billion, including RUB
Extensive audit of the condition of buildings and structures, including the creation of digital databases
Commencement of elaboration of a climate change adaptation plan for Cherepovets Steel Mill
Consistent implementation of the Decarbonisation Strategy approved in 2023, including major investment activities aimed at improving the overall production efficiency and reducing the carbon footprint of products
Consistent diversification of the product range and expansion of green and adaptation products
Identification, accounting and organisation of efficient
Formation of a list of climate-related key risk factors for Cherepovets Steel Mill, execution of other works under the Climate Risk Management Standard approved in 2023
Preparation of an annual Climate Report detailing the climate
Reduction of specific CO2 emissions from production by 3.4% YoY
Increasing the share of green and adaptation products in the revenue from 2.36% in 2023 to
Supply chain risks
For more details, see theResponsible Supply Chain
Supply disruptions supply
← →
ESG risks on the part of suppliers and contractors
← →
references to Severstal's policies that are expected to be observed by the Company's suppliers and contractors
Reliable supply channels, solution-minded search for substitutes of the items under restriction
Import substitution, switch to alternative markets
IT systems development to enhance the procurement process efficiency
Timeliness of catering for customer needs constituted 97%
Equivalents found for 58% of imported risky need-based items for 2024
Launch of a procurement automation improvement project
Adding to original contracts the OHS compliance clause, the anti-corruption clause, and
Significant reduction of ESG risks on the part of suppliers and contractors
46
About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
and Digitalisation of
Management
Supply Chain
Impact
47
Risk factors
Risk mitigation measures
Outcomes in 2024
Risk factors
Risk mitigation measures
Outcomes in 2024
Social risks
For more details, see the Personnel Management section
← →
← →
300 social and charity projects aimed to support culture, sports, education, and SMEs implemented
projects implemented in Cherepovets and Kostomuksha in partnership with local authorities and non-profit organisations
employees and their family members residing in the Belgorod Region elaborated and implemented
Potential growth of social tension in the workplace related to payroll, potential human rights abuse, scope of work and working conditions or with manpower displacement in the course of ongoing technological enhancement and digital transformation
Efficient communication and feedback system, dialogue with employees and trade union leaders
Maintaining the wage level above the average prevailing in the regions of presence, social support measures for employees and their family members
Implementation of the personnel reallocation system at other enterprises
Analysis of the wage level in the labour markets of the regions of presence, indexation, extra payments
Support to employees and their family members residing in border areas
In 2024, the Company's average salary growth constituted 23%
Launch of #Dlya Svoikh: With Care for Everyone programme aimed to improve the living standards of employees and their family members
Implementation of extra measures to support employees and their family members working and residing in border areas
Potential growth of social tension among local communities related to unfavourable trends in the labour market or changes in socioeconomic conditions
Formation of an unfavourable social climate for the Company's enterprises' operation
Affirmative interaction with local authorities and the public
Investments in building the territories' social capacity
Involvement in addressing specific social issues of the communities
Development programmes for SMEs, local workforce capacity, improvement and creation of a high-quality urban environment
Support to employees and their family members residing in border areas
In 2024, the social investments totalled RUB 7.5 billion;
Integrated development
Support measures for
Strategic risk
High uncertainty in the global political stage and potential actions of governmental authorities (new taxes, export duties), risk of imposing additional sanctions
← →
Company's business resilience
Response plans to address the obstacles to ensuring the
Regulatory compliance procedures
The Board of Directors approved the main response plans in terms of addressing the obstacles to ensuring the Company's business resilience
Market risks
Change in steel demand
← →
Steel price fluctuations
← →
volatility of the average selling prices decreased
Fluctuations in prices for feedstock, fuel, and services
← →
Competition risks
← →
Customer focus in sales
Optimisation of the sales' geographical structure
Search for new sales markets
Concentration on the most resilient segments with higher added value
Despite the lower demand for steel in the Russian Federation in 2024, the Company managed to ramp up the rolled steel sales to 10.85 million tonnes
The percentage of HVA products in total sales increased by 3 p. p. YoY to 52%
Customer focus
Use of long-term contracts
Liaison with anti-dumping and tariff regulation authorities
Due to the implementation of a new strategy focusing on the Russian market and HVA products, as well as other measures listed above, the
Optimal planning of feedstock purchases, including scrap
Feedstock use efficiency improvement
In 2024, raw materials were purchased in sufficient amounts and at optimal prices. Despite this fact, the cost of production per tonne of slab, with account taken of the vertical integration effect, increased by 22% due to the execution of major repair works
Cost-saving and product quality improvement activities
In 2024, the cost-saving and product quality improvement activities were carried out as scheduled
Regulatory risks
Changes in the legislation of the Russian Federation on taxes and levies
← →
with tax, customs and other regulatory authorities
Observance of the tax, customs, currency and other laws in effect
Tracking and timely response to changes in legislation
Constructive dialogue with regulatory authorities on the interpretation of rules of law and the Company's standpoint (as and where necessary)
In 2024, the Company continued its constructive dialogue
48
About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
and Digitalisation of
Management
Supply Chain
Impact
49
Risk factors
Risk mitigation measures
Outcomes in 2024
Cyber security risks
For more details, see the Information Security section
External cyber attacks
↑
Vulnerability of an internal landscape of IT systems
↑
minimised access from external resources
Elaboration of IT service continuity and cyber attack emergency response plans
Implementation of measures for strengthening the cyber defence of IT assets
Enhancement of the processes for monitoring attacks on an external IT perimeter and automatic blocking of unwanted activities
External independent security audit
Increased cyber security awareness among personnel
34,000 Company employees covered by the information security training
Independent cyber security assessment reaffirming the high level of ISMS performance
Absence of incidents that might result in disruption or termination of the operation of critical facilities or critical information infrastructure facilities
Automated control and record of all corporate devices and software
Regular security tests, account security audits, restricted areas access testing
Centralised continuous monitoring of security events and network traffic analysis
Updates and configuration management
Application of best practices in building secure software code development processes
Elaboration of requirements and scoring model for external IT service providers
Improved control environment for software update installation processes
Enhanced segmentation of critical IT services and
Implementation of enhanced monitoring of anomalies, automation of cyber incident handling
Launch of a programme for involving employees in the detection of ISMS vulnerabilities
Risk factors
Risk mitigation measures
Outcomes in 2024
Cyber attacks on users who are the Company employees
corporate systems from the web
Information security training, briefings and workshops
Simulation of phishing attacks to test vigilance
Incident response drills and exercises
Gamification of training
Implementation of a programme to nurture a culture of cyber security and personal digital immunity for employees
Introduction of mandatory two-factor authentication and compliance check of devices when remotely accessing
Implementation of targeted notification of users within the comprehensive cyber threat reporting process and monitoring data leaks from external public services
Relative risk severity:
- less than three months
- less than a year
- more than a year
General variation against 2023:
↑- risk increased ← → - no change ↓- risk decreased
Plans for 2025 and Mid-Term
Severstal's risk management plans cover:
Assessing the risks of the data quality management process;
Assessing the risks of critical information systems access, and
Elaborating the measures to assess and manage production risks under the insurance programme development.
50
About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
and Digitalisation of
Management
Supply Chain
Impact
51
Board of Directors
Information Security
Information security management structure
Audit Committee
Sole Executive Body CEO
Information Security Department
96%
of employees covered by the information security training
100%
of cyber attacks successfully repelled
0
personal data leaks
2024 Highlights
Information security
Material Topic
Cyber Security
GRI 3-3
Information Security Policy
Password Protection Policy of Severstal's Corporate Information System
Personal Data Processing and Protection Policy
Regulation on Trade Secret Mode
Regulation on Control of Access to Information Resources of the Severstal Group of Companies
User Manual for the Corporate Information System1
User Agreement on the Use of Access to the Internet1
Key internal information security documents
Severstal places special emphasis on the information security issues by constantly enhancing the measures for the critically important infrastructure protection, hence ensures the integrity of the Company's business processes and confidentiality of information of employees and business partners.
Structure of managing information security issues
Business unit
Functions
Board of Directors
Determines the focal areas of the information security (IS) strategy
Supervises the efficiency of the IS management system (ISMS), reviews reports on the assessment of ISMS performance on an annual basis
Audit Committee
Exercises control over the procedures for ensuring observance of legislative requirements to IS
Reviews the ISMS performance reports on a quarterly basis
Management of the Company and operational management
Responsible for the approval and implementation of the Information Security Policy and local IS regulations
Ensures the ISMS formation, coordination, and robust operation
Information Security Department
Identifies and analyses threats to IS
Determines the procedure and control over the observance of the confidentiality regime of protected information
Responsible for implementation of information protection tools and systems and control thereof
Manages access to information resources
Ensures the detection and elimination of the consequences of computer attacks, responds to cyber incidents
The key principles, objectives and focus areas of Severstal's ISMS are set out in the Information Security Policy. The Company aims to prevent and minimise losses from leaks of confidential information, use of inaccurate or distorted data, and disruption of information processing.
1 This document is only available in Russian.
52
About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
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Supply Chain
Impact
53
Principles underlying Severstal's information security management system
Business focus
Consistency
Integrity
Timeliness
Continuous improvement
Economic expedience
Authority minimisation
Control
Legitimacy
To provide for cyber security, Severstal consistently implements measures in the following areas:
Maintaining and streamlining an ISMS that complies with the business requirements, legislation, and global best practices;
Preventing, detecting, countering, and neutralising external and internal IS threats;
Minimising the damage from their impact;
Implementing measures to secure information systems, personnel, infrastructure, data transmission networks, and data carriers, and
Raising employee awareness of the IS issues.
To minimise the damage from external cyber attacks, malicious activity, and network anomalies, the Company has its incident response system in place. Severstal regularly elaborates IT disaster recovery plans to address the consequences of IT system disruptions. Based on the corporate response and monitoring centre, the Company embedded standard scenarios of responding to cyber threats and IS incidents, as well as a system for robotically detecting and auto-blocking typical cyber attacks.
To improve the efficiency of its activities and identify areas of growth, Severstal sets IS key performance indicators (KPIs) for the Information Security Management staff and IT managers in such ISMS categories as:
Asset management;
Operation of information protection systems (IPS);
Vulnerability management;
IS monitoring;
Backup copying, and
Infrastructure security, etc.
Severstal regularly monitors the efficiency of its IS control systems through independent audits. For example, at the premises of OOO Severstal -Shared Service Centre, Severstal's information security management system was certified to ISO 27001 and is recertified every three years for
compliance with the requirements of this standard, thus reaffirming the operability of data leakage prevention mechanisms, the relevance of measures against unauthorised access, and a high level of the IS risk management performance.
Severstal assesses cyber risks associated with external cyber attacks, internal vulnerabilities in IT systems, and attacks on users as material to its
operations and elaborates and implements mitigation measures on an annual basis.
Severstal achieves the IS risk mitigation through, inter alia, nurturing the corporate cyber security culture that it considers to be a critical element for digitalisation, it being the Company's strategic priority. Severstal notifies all employees about the content of internal IS documents and holds regular training on various aspects of information security - from recognising phishing emails to handling confidential data, including password
protection, device protection, use of cloud services, etc. In addition, the Company has a practice of cyber training for production personnel on the action plan in case of the occurrence of IS threats.
In 2024, Severstal successfully delivered a number of key projects aimed at improving cyber threat protection, in particular, by upgrading the authentication system for corporate IT services and the network traffic analysis system for automatic detection of IS threats for data processing centres' services. These projects resulted
in a two-fold reduction in the number of critical vulnerabilities in the IT infrastructure, mitigation of risks of undeclared network communication and improved security of software products being developed.
Severstal also performed a series of activities under the Cyber Security Culture project and launched an internal programme to engage employees in identifying the ISMS compromises. The Cyber Security Culture project was successfully scaled to all business units of the Severstal Group to encompass 100% of employees working with information systems. In the reporting year, over 9,000 employees contributed to regular knowledge sharing regarding the current threats and changes in the IS requirements. Those activities significantly improved the level of employee cyber literacy in terms of recognising and properly responding to cyber fraudsters.
1 120
34,000
employees of Severstal (96% of the Company's headcount) Completed the IS training in 2024
Over the reporting period, the Company conducted an independent cyber security assessment as part of a comprehensive simulation of real attacks. The assessment reaffirmed the high level of Severstal's ISMS performance.
The Company's IT staff automatically detected and blocked more than 26,000 cyber attacks, and
recorded about 200 minor violations of the IS rules. To prevent the occurrence of similar incidents in the future, the Company carried out compensatory training activities and scheduled the introduction of extra digital controls.
Owing to the ISMS robust operation, there were no incidents that might lead to disruption or termination of the operation of critical facilities or critical information infrastructure facilities in 2024.
Personal Data Confidentiality
GRI 418-1
Observing the Russian legislation on personal data processing and protection and following global best practices, Severstal respects the privacy and is committed to safeguarding the personal information of its employees, suppliers, customers, and other business partners.
Personal Data Processing and Protection Policy
Regulation on the Procedure for Personal Data Processing and Protection
Key internal documents on personal data protection
Sole Executive Body CEO
Personal data security management structure
Information Security Department
Personal Data Commission
54
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Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
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55
Structure for managing personal data security issues
Business unit
Functions
Management of the Company and operational management
Responsible for approving and implementing the Personal Data Processing and Protection Policy
Exercises control over the personal data protection performance
Information Security Department
Responsible for taking measures to prevent unauthorised access and/ or transfer of personal data to persons with no rights to access such information
Performs timely detection of unauthorised access to personal data
Ensures prevention of any impact on technical means of automated personal data processing, which may result in disturbing their operation
Exercises continuous control over maintaining the appropriate level of personal data protection
Personal Data Commission
Exercises control over the compliance with the personal data protection requirements
Works out recommendations on the personal data protection system improvement
To ensure reliable protection, Severstal incorporates an integrated system of organisational and technical measures to safeguard personal data. In this context, all transactions involving personal information in information systems are subject to mandatory record keeping. Access to work resources used for data processing and to the premises with personal databases is strictly regulated and limited. In its relationship with customers and partners, the Company makes use of statutory personal data protection mechanisms and tools.
Severstal-Infocom, an internal licensee, regularly verifies the Company's observance of personal data protection laws and gives recommendations on handling any defects identified.
To minimise the risks of compromising the confidentiality of personal information, Severstal
Plans for 2025 and Mid-Term
regularly trains employees to enhance their digital competencies through the Digital Steel IT platform and with the help of special training courses on the corporate portal.
In 2024, Severstal continued streamlining its personal data processing processes, adapting them to changes in internal regulations. For instance, the Company launched an updated training course on personal data protection completed by more than four thousand people. On top of that, Severstal held over 400 separate training sessions with employees on how to safeguard confidential data.
In the reporting year, there were no cases of compromising the personal data confidentiality or of illegal transfer of personal data to third parties.
Severstal's objectives for 2025 in cyber security include the following:
Continuing with the implementation of the cyber security improvement integrated programme;
Enhancing the maturity of supporting processes;
Expanding the use of domestic IT solutions;
Improving the cyber security culture among personnel;
Fostering the data security, including the access control processes improvement and limiting off-system processing of information;
Scaling the best practices to all business units, and
Updating the internal documents that govern the IS issues.
56
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Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
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Management
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57
Innovation Management and Digitalisation of Production
As one of Severstal's strategic customer focus areas, development of innovation enables the Company to design products that are unique to the market and best cater to the needs of Severstal's customers. In turn, the automation of routine and time-consuming tasks - digital transformation - makes it possible to optimise production, cut costs and increase productivity.
Internal Innovations and Products
GRI 3-3
Severstal successfully implements innovative solutions through a systemic approach. The Company's ecosystem is designed to monitor the current market trends and build robust cooperation with the relevant educational institutions, leading industrial companies, and academic experts to attain the Company's strategic objectives. Severstal's strategy in this domain is implemented in four practice areas:
Product innovation;
Process innovation;
Business model innovation and
Drastic innovation.
Organisation of the Patent Council Operation Proprietary Standard
Management of the Results of Intellectual Activity Proprietary Standard
Organisation of Streamlining Activities Proprietary Standard
Management of Scientific and Scientific and Technical Activities Proprietary Standard
Key internal innovation management documents
Principle 9. Businesses should encourage the development and diffusion of environmentally friendly technologies.
UN Global Compact Principle
589
patents in ownership in the Russian Federation (↑ 6%)
RUB 1.7 billion RUB
economic effect from innovation
2024 Highlights
Innovation and digitalisation
Material Topic
UN Sustainable Development Goals
In 2024, Severstal amended the internal standards governing its innovation activities: the Organisation of the Patent Council Operation Proprietary Standard and the Management of Scientific and Scientific and Technical Activities Proprietary Standard. The amendments, inter alia, referred to the approach to calculating remuneration for the authors of inventions and to harmonising the document flow, which helped reduce the number of reporting forms and optimise their structure for further digitalisation.
Innovation development management structure
Board of Directors
Sole Executive Body CEO
Technical Development and Quality Directorate (TDQD)
Technology Development Centre
Product Innovation and Solutions Department
US (User Story) Technology and Product Department
DS (Data Story) Technology and Product Department
Digital Quality Development Centre
Quality Department
Quality Development Department
Patent Council
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About the Report
Severstal
Strategic
Corporate
Corporate
Ethical Conduct
Effective Risk
Information
Innovation Management
Sustainability
Responsible
Social Impact
Environmental
Appendices
and Materiality
Today
Report
Governance
Governance
of Business and
Management
Security
and Digitalisation of
Management
Supply Chain
Impact
59
Disclaimer
OAO Severstal published this content on June 10, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on June 10, 2025 at 13:38 UTC.