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Case study: How Severstal fights corruption

Severstal is one of the world’s largest vertically integrated steel and mining companies and the fourth out of the six largest Russian steelmakers, ranked the 34th largest worldwide by World Steel Association. Zero tolerance for unlawful and unethical behaviour, is gradually becoming an integral component of Severstal’s corporate culture.  Tweet This!

This case study is based on the 2018 Corporate Social Responsibility and Sustainable Development Report by Severstal published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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The comprehensive culture transformation programme underway in Severstal, follows the principle of zero tolerance for both corruption and abuse of authority. In order to fight corruption Severstal took action to:

  • implement an anti-corruption programme and policy
  • develop the Severstal Employee Code of Conduct
  • provide anti-corruption training

What are the material issues the company has identified?

In its 2018 Corporate Social Responsibility and Sustainable Development Report Severstal identified a range of material issues, such as financial performance, occupational health and safety, atmospheric emissions, including greenhouse gases, employee education and training, power consumption and energy efficiency. Among these, fighting corruption stands out as a key material issue for Severstal.

Stakeholder engagement in accordance with the GRI Standards              

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Severstal engages with:

Stakeholder Group
Shareholders and investors
Employees
Government authorities
Customers and consumers
Suppliers and vendors
Local communities and general public

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Severstal carried out a survey of both internal (employees) and external stakeholders receiving 39 survey responses, including 22 responses from local communities, non-profits, business partners, the investor community, government authorities and local administrations.

What actions were taken by Severstal to fight corruption?

In its 2018 Corporate Social Responsibility and Sustainable Development Report Severstal reports that it took the following actions for fighting corruption:

  • Implementing an anti-corruption programme and policy
  • Severstal has a comprehensive anti-corruption programme focused on the practical implementation of the provisions of its Anti-Corruption Policy. This Policy is aligned with other anti-corruption standards and processes. Its provisions are based on international best practice, including the guiding principles of Transparency International. The policy focuses on reducing Severstal’s corruption risks and achieving maximum compliance with Russian and international anticorruption regulations. This policy regulates activities exposed to high corruption risks, which include cooperation with partners, acquisition of corporate securities, establishment of joint ventures, mergers and acquisitions, conflict of interest evaluation procedures, sponsorships and charities, gifts and entertainment, etc. The new edition of the policy was approved by Severstal’s Board in February 2019, and published on its website.
  • Developing the Severstal Employee Code of Conduct
  • As a part of its comprehensive anti-corruption programme, Severstal developed and adopted the Severstal Employee Code of Conduct, and introduced registration of gifts, sponsorship and charity programmes, and other corporate processes detailing the application of its Anti-Corruption The Severstal Code of Business Conduct extends anti-corruption requirements to Severstal’s complete supply chain. This effort is coordinated by Severstal Management’s Risk Management Department, which is also responsible for annually assessing the effectiveness of anti-corruption processes.
  • Providing anti-corruption training
  • All Severstal employees undergo regular anti-corruption training, while top executives and employees having an impact on commercial and financial decisions undergo regular anti-corruption checks. This effort brings positive change: there is a radical reduction of the number of employees involved in corruption. Thus, Severstal implements an Anti-Corruption Policy Training Programme and provides a mandatory biennial online training course, for all employees. In 2018, more than 11,000 employees received training, compared with 9,000 in 2017.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 205-1 Operations assessed for risks related to corruption

2) Disclosure 205-2 Communication and training about anti-corruption policies and procedures

 

Disclosure 205-1 Operations assessed for risks related to corruption corresponds to:

Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



FBRH GRI Standards Certified, IEMA & CIM recognised Sustainability Course | Venue: London LSE

By registering for the next 2-day FBRH GRI Standards Certified, IEMA & CIM recognised course you will be taking the first step in gaining the many benefits of sustainability reporting.

Most importantly, you will gain the knowledge to use the GRI Standards, project manage your own first-class sustainability report and:

  • Identify your most important impacts on the Environment, Economy and Society
  • Begin taking solid, focused, all-round sustainability action ASAP

 

References:

1) This case study is based on published information by Severstal, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Severstal: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.