Our responsibilities

Our operations have economic and environmental impacts on the communities in which they are located, and we are committed to ensuring that EuroChem supports the sustainability of these communities though its corporate social responsibility (CSR) and charity programmes, health, safety and environmental (HSE) performance and human resources management.

Environmental Performance

Production of chemical fertilizers involves environmental risks and impacts. Since our company was formed, EuroChem has worked to better manage these risks and reduce our impact on the environment. The tables below demonstrate the results of these ongoing efforts and investments, with continued year on year declines in energy consumption, effluent discharge and emissions into the air in 2009, despite a year on year increase in fertilizer production.

Another important achievement in 2009 was receipt of ISO certification for Environmental Management (ISO 14001:2004), and Quality Management (ISO 9001:2008). EuroChem’s head office and all of its plants in Russia received certification in November and December 2009. Our phosphate fertilizer plant in Lithuania, Lifosa, received the same set of certifications in 2003 and 2007.

Human resources management

In line with our values, we pursue a fair employment philosophy. This helps us to keep our people motivated and productive and retain the very best staff. We do this by investing in health and safety, providing fair remuneration and incentivising outstanding performance. Our six key objectives for human resources management are:

• Increase staff quality
• Improve employee productivity
• Ensure a competitive remuneration package (10% above the average for the industry in the same region)
• Ensure that staff costs rise in line with productivity
• Create continuity through succession planning
• Maintain a lean and effective structure by minimising management layers and empowering lower management with decision-making and responsibility.

As technology has advanced we have steadily been able to optimise staff numbers at our plants, while maintaining a management/production staff ratio of approximately 17%/83%. At the same time, staff turnover at production sites has declined to 2.6% in 2009, from 5.7% a year earlier, and 7.3% in 2007. Average monthly remuneration continued to rise in 2009, though at a rate lower than in previous years. While production output per employee continued to increase, sales per employee fell year on year due to the extreme price fluctuations in 2008-2009, though were at a higher level than 2007.

Staff motivation

Our staff motivation system is designed to function as part of a holistic approach to improving efficiency through financial and non-financial incentives. This system has three aspects:

• An employee benefit plan, which contains a significant share of variable remuneration depending on personal and company performance (37% in 2007, 32% in 2008, 2009: 20%)
• A bonus programme for top and middle management. This is based on the Management By Objective system of performance appraisal
• An annual bonus for other employees based on corporate results.

This new remuneration scheme has been in place for production staff at all of our production sites since 2008.

Occupational health and safety

EuroChem aims to achieve best-in-class occupational health and safety standards. We view safety management not just as a compliance issue, but as a top priority component of our social responsibility and human resources strategy. As recognition of our achievement in managing OHSAS issues, all of our plants in Russia received ISO Occupational Health and Safety (OHSAS 18001:2007) certification in 2009.

Due to our efforts the number of incidents at our sites has steadily declined, due to investments into maintenance of production facilities, mandatory training for technical personnel, implementation of the Industrial Control System and improvement of our HSE Management System. We had no fatal accidents in 2009 and our aim is to maintain this situation. Injuries resulting in absence from work in 2009 fell to 26, down from 32 in 2008 and 37 in 2007. This further improved our Lost Time Injury Rate (injuries resulting in absence from work per million hours worked) to 0.96. EuroChem’s LTIR is well below the industry average, based on surveys of safety performance regularly provided by the International Fertilizers Industry Association (IFA).

Corporate Social Responsibility

We implement one of the leading corporate social responsibility programmes in the Russian chemicals sector, a fact recognized for the second year in a row in the Russian Corporate Charity Research 2008 survey by Vedomosti, PricewaterhouseCoopers, and Donors’ Forum. Our CSR programme focuses on the following three areas:

• Education: Our support for schools and universities in the regions where we operate includes funding to build or renovate school and university chemistry labs, materials and equipment for ongoing lessons in these labs, and sponsoring scientific conferences at select regional universities;
• Sport: We sponsor a wide array of sporting events and competitions for our employees and the local communities, with a particular focus is on hockey. EuroChem supports both youth and professional hockey clubs through a number of methods, including providing equipment and uniforms, ice time, and other financial and material support depending on the needs of the club.
• Corporate giving and grants: Since 2006 we have partnered with the Fund for Sustainable Development (FSD), an independent, nongovernmental and non-profit Russian fund created to promote regional and community sustainable development through concrete projects addressing environmental, social and economic issues across the Russian Federation. With support from EuroChem and the United States Agency for International Development, FSD organized a grant programme in Nevinnomyssk to support environmental and public health programmes in the city. Further information about this programme is available on FSD’s website http://www.fund-sd.ru/english/ eurochem/index.htm and in our CSR Report.

EuroChem publishes an annual CSR Report in accordance with the Global Reporting Initiative G3, AA1000 APS and Global Compact standards. Every year following publication of our social report, we hold public discussions about our CSR report and CSR programmes in the communities where we operate. The latest report is available in Russian and English on our website www.eurochem.ru.