UC RUSAL Sustainability report 2016

Social Programs Management

Management of social investment in Russia

In Russia, the social investment of the Company is carried out in the form of four social programmes: G4-ЕС8, HKEx Appendix 27 KPI B8

          RUSAL Territory is a programme for the social and economic development of the territories of operation;

          Helping is Easy is a program to support and develop corporate and city-wide volunteering;

          The Formula for the Future is a programme to support youth initiatives; and

          Social Entrepreneurship development programme is a programme to support and develop small businesses with significant social impact.

For each programme, impact assessment is carried out: a number of indicators is used to determine its relevance and sustainability. 100% of the programmes implemented in Russia are assessed but with varying frequency depending on the nature of the programme. G4-SO1

The implementation of the social investment of UC RUSAL in Russia is carried out by the Center for Social Programs, the corporate charitable fund of the Company (hereinafter  the CSP, for more details please see http://www.fcsp.ru), which has representation offices in most regions of the Company's operation in Russia and operates in accordance with the Development Strategy. The Social Entrepreneurship development programme is administered by ANO Centre for Innovation in Social Sphere (hereinafter the CISS).

The total budget for the financing of social programmes in Russia from UC RUSAL funds in 2016 was of RUR 140 million.HKEx Appendix 27 KPI B8.2

Agreements with territories of operation in Russia

UC RUSAL cooperates with the state and municipal authorities of the territories of operation within Russia in the framework of the social and economic cooperation agreements. In 2016, agreements were in force with the administrations of the Kemerovo region, the Komi Republic and the Republic of Khakassia, as well as the cities of Achinsk, Bratsk and Kamensk-Uralsky. HKEx Appendix 27 KPI B8

The total social investment budget under the social and economic agreements with the territories of operation in 2016 was of RUR 271 million HKEx Appendix 27 KPI B8.2

Management of social investment outside of Russia

         Social investment programmes in foreign countries varied depending on the living conditions in Jamaica (the island country south of Cuba), Guinea (West Africa), Ireland (Northern Europe) and Guyana (north-eastern part of South America). The priority of the programmes is the development of local healthcare and education systems, as well as the improvement of the quality of life and the reduction of poverty, including the provision of potable water, improved sanitation (in the countries where this issue is relevant), development of agriculture and access to energy resources.HKEx Appendix 27 KPI B8

          The total budget for social investment outside Russia in 2016 amounted to USD 1 million HKEx Appendix 27 KPI B8.2

In total, in 2016, UC RUSAL allocated USD 13.8 million for social investment and charitable projects in Russia and abroad. HKEx Appendix 27 KPI B8.2

Results of 2016

In 2016, the activities planned in the framework of social investment programmes have been implemented and the following main results were achieved:

       expanded geography of operation of the Social Welfare for Local Communities – branch office opened in Volgograd;

       continued international cooperation of the CSP – increased participation in the international programme for the development of social entrepreneurship among the young Social Impact Award in cooperation with the Impact Hub infrastructure network, joint activities were implemented in the framework of the International Programme Actors of Urban Change of the R. Bosch Foundation, cooperation with other international organisations has been established and continued;

       the scope of members of the National Council for Corporate Volunteering has been expanded -  at the initiative of UC RUSAL, the regional offices of the Council have been opened in Krasnoyarsk, Novokuznetsk and Bratsk;

       in total, 167 thousand persons benefited from the social programmes of the Company in Russia, more than 6,300 volunteers were recruited; programmes were supported by more than 2,000 partners;

       the environmental volunteer project 'Yenisey Day' in Krasnoyarsk, as well as the project to assist the victims of the Khakassia fires, received recognition in the 'Champions of Good Deeds' competition (I and III places respectively); the project of the educational olympiad 'the 13th element. ALchemistry of the Future' won the first place of the 'Corporate Philanthropy Leaders' award in the category 'Best programme to promote education in the Russian Federation';

       obligations under agreements concluded with the constituent entities of the Russian Federation and the towns of operations have been met; and

       Nadvoitsy was granted the priority development area status.

Participation in the development of the territories of operation

Agreements about social and economic cooperation are a tool to bring together the Company and local authorities to improve the quality of life in the regions and cities and the effectiveness of the production facilities of UC RUSAL located there.

The main areas of the partnership of UC RUSAL with the constituent entities of the Russian Federation and the cities, where its production facilities operate, include:

       support for general education schools, community centres, theatres, orphanages and further education institutions;

       provision of urban amenities;

       improvement of the quality of transport and social infrastructure;

       improvement of environmental situation G4-EC7.

For example, in the city of Achinsk in school No 9, the laboratory class of the industry technology and business college was equipped, music school No 2 received new instruments for teaching children, the drama theatre was able to participate in the international festival, the city Palace of Culture was repaired, a section of the road from the city to the alumina refinery was repaired. In Novokuznetsk, the main street of the Kuznetsk district – Lenina street – was repaired, as well as the boarding school there.

A related social partnership with the Company’s territories of operation is a strategic development of single-industry city. Small cities that emerged around the plants built 60-80 years ago are now deprived of the future: obsolete production is closed and there are no other sources of income for local residents. According to the concept of the state programme of comprehensive development of single-industry cities, plans to transform such cities into economic and social priority development areas may be a solution. The 'stable single-industry city' strategy implies the retrofitting of the main enterprise, the development of social services, the reduction of taxes to attract investors, and the encouragement of migration of residents to work in the closest major cities.

The list of territories classified as the cities with the most difficult social and economic conditions included, among others, Krasnoturyinsk and Nadvoitsy. The Company took the initiative to set up an industrial park on the premises of the unfinished in the 1970s second stage of the Bogoslovsk aluminium smelter in order to maintain jobs and improve the investment climate. New production, small and medium-sized businesses and non-industrial companies can also be developed within the park.

In 2015, agreement was concluded for the federal and regional co-financing of infrastructure facilities of the Bogoslovsky industrial park in Krasnoturyinsk (Sverdlovsk region). UC RUSAL is one of the founders of the management company of the park.

In 2016, a town of Nadvoitsy (Republic of Karelia) has also received the status of priority development area, where it is planned to create more than 400 new jobs by 2020. G4-ЕС7

At the initiative of UC RUSAL, strategic plans for the development of small towns in partnership with town administrations are also being developed. The first urban development strategy was developed and adopted in 2015-2016 for the city of Achinsk. The strategy identifies eight promising urban infrastructure facilities, the plan to involve urban activists, businesses and government representatives in the implementation of city development projects is developed. A number of projects initiated in accordance with the Achinsk urban development strategy was supported by the Company under the RUSAL Territory programme at the end of the reporting period.