Stakeholder Engagement 

In the current year, ALROSA has begun the process of preparing a series of documents regulating activities aimed at advancing the social responsibility management system and sustainability reporting , one of the fundamental principles of such a system being on-going engagement with stakeholders. 

Today, the company has a clear understanding of the need to develop regulatory procedures to profile and map stakeholders, and to determine mechanisms for engagement. These measures will facilitate greater transparency and openness of our organization to stakeholders and improve the productivity of the company as a whole.

Internal corporate approaches to identifying stakeholder groups based on definitions and criteria of the AA1000SES Stakeholder Engagement Standard: Stakeholders are groups that affect or may be affected by the company’s activities.

Criteria

Reasons of interest

Stakeholders

Responsibility

Stakeholders towards whom the organization has or may have in future have, legal, financial and production commitments and inscribed in regulatory acts, contracts, programmes and work rules. 

  • Shareholders
  • Investors and the financial community
  • Employees and their trade union
  • Local communities (local self-government authorities, residents, local NGOs)
  • State bodies at the federal and regional levels
  • Buyers and customers of rough and polished diamonds
  • Russian and international diamond sector community
  • Mass media 

Influence

Stakeholders have an influence on the organization or are authorized to make decisions.  

Proximity

Stakeholders the organization engages the most. Stakeholders with whom the organization has long-standing relations and stakeholders on whom everyday operations of the organization depend.

Dependence

Stakeholders that directly or directly depend on the organization economically or financially or belong to the regional or local infrastructure. This group also includes stakeholders that depend on the organization because it is responsible - directly or indirectly – for meeting their basic needs.

Representation

Stakeholders that, in view of effective legal norms, and historical or cultural traditions, may legally claim the right to represent the interests of voters. 

Political and strategic intentions

Stakeholders to whom the organization repeatedly appeals, directly or indirectly, in its programmes and statements, including stakeholders that may give advance warning about emerging problems and risks. 

Thus, to profile our stakeholders in 2012, we used a simple classification according to the AA1000SES criteria; stakeholders were not engaged in this procedure, but we are confident that in the future the process will develop in the given direction.

In accordance with the AA1000SES standard, any stakeholder engagement is based on the principles of inclusivity, materiality and responsiveness. These principles imply that in addition to profiling and mapping stakeholders, companies must have an understanding and awareness of the interests, expectations and concerns of stakeholders, and their views on issues that are important to them, as well as a consistent response to such questions.

In ALROSA, engagement with most stakeholders is part of our daily systematic activities using all the necessary tools of engagement (e.g., forums, dialogues, consultations, expert reviews, round tables, etc.). However, stakeholder engagement often is not perceived as an independent sphere of management.  It should be recognized that at this stage of stakeholder engagement in our company, there is much room for action to improve the process.

At the same time, it should be noted that the company employs unique forms of shareholder engagement.  First of all, ALROSA Extended Management Leadership Team meetings, which are held annually. Although such meetings are in-house corporate events, they are not limited to representatives of operating units and company divisions but also offer other stakeholder representatives the opportunity to participate in discussions of issues that affect them. 

The sixteenth meeting of the ALROSA Extended Management Leadership Team took place on February 28, 2012.  In addition to 500 representatives of divisions, subsidiaries, and the many thousand strong ALROSA Group workforce, the forum invited key stakeholders of the company, including representatives of regional and municipal authorities, trade union officials and the mass media.

The specifics of the company as the local economic mainstay, or town-forming business, with state participation account for the unity of interests of different stakeholder groups. For instance, more than 90% of ALROSA employees are residents of the districts of Western Yakutia and, therefore, share many concerns and interests; governmental regional authorities, together with the local governments of the "diamond province” are shareholders in the company.

Corporate social responsibility and the need for collective decision-making in anticipation of privatization loomed large in the statements of all stakeholders.

Appropriate resolutions are taken at annual Extended Management Leadership team meetings. 

ALROSA stakeholder engagement mechanisms 

Stakeholders

Engagement tools

Response

Outcome of engagement

Shareholders

Annual General Shareholders Meetings and Supervisory Board meetings. Reports and statements posted at the corporate website under the heading “For Investors and Shareholders”: financial statements and annual reports, credit ratings, analytical papers, information about the structure of chartered capital, FAQs on AGMs, dividends and chartered capital.  

Development of joint decisions on issues pertaining to the forthcoming privatization of the company in the interests of its further advancement.

Dividend policy. Implementation of AGM decisions. One General Shareholders Meeting was held in 2012. 

Market capitalization of the company, improved investment attractiveness. 

Investors and the financial community 

Investor relations: communication with financial analysts, investors, a special section on the website (ratings, financials, and reports, securities information); financial audit. 

Systematic awareness enhancement of the investment and financial communities, including provision of information about strategic development plans; IR-releases, provision of information for analytical reports and taking weighted investor decisions. 

Advancement of relations with the investment community, increased information transparency. 

Employees

Corporate mass media (newspaper, website, radio and television, information stands), questionnaire surveying of demand for migrant workers, collective bargaining agreements, regular management meetings with employees).   

Improvement of the system of financial and nonfinancial motivation, wage indexation, response to written messages and appeals of employees. Consideration of the views of employees in shaping HR and social policies through interviews and public discussion of appropriate concerns. In 2012, there were management meetings with employees: one on February 28 at the ALROSA Extended Management Leadership Team meeting, and others as scheduled. 

The HR and social policy of the company is recognized as a key area of corporate strategy; recognition of the value of human capital as the key factor of competitiveness and improved performance efficiency, employee loyalty (average length of employment with the company exceeds 13 years).

Employee trade union

Collective bargaining agreement, social benefits and social protection (social safety net), follow-through activities of the bilateral commission for social and labour relations control and interest alignment. 

Alignment of interests of the management and employee trade union, response to appeals, introduction of amendments and changes to the collective bargaining agreement. Views of the trade union are incorporated in RS (Y) and social policies. 

Stability of parity contractual relations, observance of labour laws and corporate regulations in the field of social and labour relations. 

Local communities (municipal authorities of districts of the “diamond province” of the Republic of Sakha (Yakutia), local residents and NGOs) 

Employee representation on local legislative bodies (municipal and village councils and assemblies), sustainability reporting, participation in the work of groups and commissions for social and economic development of territories, official meetings, PR activities, corporate mass media (newspaper, website, radio and television, information stands), letters and appeals. Payment of corporate taxes.  

Accommodation of the views of representatives of local authorities and residents in social policies, in planning cultural and sports events in the areas of our operations, material assistance and charity, including requests of local NGOs. 

Implementation of measures of social responsibility of the company toward local communities, including indigenous peoples’ employment schemes, educational and environmental programmes, support for public health, science, culture and sports. ALROSA’s regional development investment programme. 

Federal authorities

Meetings and activities of the Supervisory Board committees. Representation of ALROSA management in the Diamond Chamber of Russia, a member organization of the Chamber of Commerce and Industry of the Russian Federation. Participation in the activities of the Council for International Cooperation in the Field of Geology and Use of Subsoil, Ministry of Natural Resources of the Russian Federation, cooperation with representatives of other departments of the Ministry of Natural Resources,  the State Depository for Precious Metals and Gemstones, members of the Council for Analysis and Assessment of the Current State and Prospects of Cooperation with Foreign Countries in the Field of Geology and Subsoil Use and Evaluation of Mineral Resource Base in Foreign Countries. Payment of corporate taxes. 

Reports for shareholders, annual and sustainability reports, engagement with and accommodation of the views of federal bodies when developing strategic decisions and documents. 

Implementation of joint decisions and programmes of social and economic cooperation as well as of measures aimed at strengthening the positions of the Russian diamond sector. 

State bodies of the Republic of Sakha (Yakutia) 

Supervisory Board, representation of ALROSA employees in the supreme legislative body of the Republic of Sakha (Yakutia), the People’s Assembly Il Tyumen, the Diamond Council, the Chamber of Commerce and Industry of the Republic of Sakha (Yakutia), participation in the work of groups and commission on social and economic development of territories, GR work, official dialogues, civil and environmental legislation of the Republic of Sakha (Yakutia). Payment of corporate taxes.  

Engagement with and accommodation of the views of regional bodies when developing strategic decisions and documents.

Meetings with state bodies are held at the initiative of both parties. 

Implementation of measures of social responsibility to residents of the region, a Regional Development Agreement on social and economic development of the Republic of Sakha (Yakutia). High level of taxes paid to the regional budget. 

Customers

Operations of specialized sales and marketing divisions (United Selling Organization and core business subsidiaries). Participation in core trade shows.

In 2012, ALROSA launched a specialized diamond sales website to assist existing and prospective diamond buyers. In the reporting period a series of fundamental documents regulating ALROSA diamond selling operations was adopted, Regulations on the Procedures and Terms of Sales of Natural Rough Diamonds by OJSC ALROSARegulations on the Procedure of Natural Rough Diamonds Competitive Sale by OJSC ALROSA, and ALROSA Framework Sales and Marketing Policy for 2013-2015 (documents are freely available at the trading website of the company).    

Customer behaviour and preferences are taken into account in decision-making on sales and marketing issues and in product supply contracts. The specialized trading website of the company has a Frequently Asked Questions section, where potential customers may obtain detailed consultations on buying rough and polished diamonds. 

A sales and marketing strategy based on long-term contracts assures the stability of rough diamond supplies. Increased transparency of sales and marketing processes. 

Russian diamond industry community

Membership/founding membership/participation/sponsorship of campaigns organized by the following organization: The Diamond Chamber of Russia, the Association of Russian Polished Diamonds Producers, the Russian Union of Industrialists and Entrepreneurs, the Gold Miners’ Union, the Alliance of Mining Industries, the National Association for Subsoil Expert Reviews, the Russian Diamond Union, and the Guild of Jewellers Fairs.  

Organization of and participation in professional community discussions and other events, joint development of legislative and professional initiatives. 

Implementation of measures aimed at sustainable development of Russia’s rough and polished diamond and jewellery sector. 

International diamond industry community 

International resolutions and standards of the United Nations, ILO, OECD, and the International Council on Mining and Metals (ICMM). For several years, ALROSA has been actively cooperating with the World Federation of Diamond Bourses. The company has been a member of the World Diamond Council since the day it was founded in 2000. As of 2007, ALROSA has been an associated member of the World Jewellery Confederation. ALROSA supports the Kimberley Process. 

Organization of and participation in professional community discussions and other events, joint development of legislative and professional initiatives.

Implementation of the common mission of the players of the diamond business in strengthening demand building confidence of the buyers. Mutually beneficial exchange of the best experience and practices. Within the framework of international cooperation ALROSA represents and protects the interests of Russia’s diamond sector on the international market. 

Mass media

Interviews, management meetings with mass media, press releases, corporate website (www.alrosa.ru)

Creation of awareness and clarification of ALROSA's positions on topical business issues, situation on the world diamond market, and social responsibility. 

Improved awareness of stakeholders. 

KEY ENGAGEMENT EVENTS 2012 

January 1 – February 1

ALROSA President Fyodor Andreev held working meetings with employee representatives of corporate units and divisions in Mirny, Udachny, and Aikhal. At the meetings, proposals on the Framework Development Strategy and Social Policy up to 2021 were heard and taken into consideration. 

February 28

An ALROSA Extended Management Leadership Team meeting was held, with participation of representatives of employees, the Profalmaz Trade Union, shareholders and mass media.  

March 23

ALROSA specialists participated in a round table discussion on Geology and Subsoil Use that was held during the 1st Congress of Engineers of Yakutia in Yakutsk. 

May – June

ALROSA veteran workers of the diamond mining industry held round table meetings with students of Moscow-based institutes of higher education (National Institute of Business, Moscow State Mining University, Moscow University of Finance and Industry, and other schools). 

August 7

Representatives of the ALROSA HR services met with students and applicants of specialized secondary schools in Yakutsk. 

 

September 14-15

ALROSA specialists participated in a round table discussion on the use of new materials in a new economy within the framework of the Interra 2012 Innovation Forum in Novosibirsk. 

October 5-6

ALROSA representatives participated in the work of the international conference Social and Environmental Responsibility in the Mining Sector. Russian and International Experience that was held in Russia for the first time, in Moscow. 

November 15-16

ALROSA and Institute of Integrated Subsoil Development, Russian Academy of Sciences jointly held a scientific conference in Moscow on development of the Mir pipe diamond deposit. Participants in the conference included representatives of the Federal Service on Environmental, Technical and Nuclear Supervision (ROSTEKHNADZOR), the Union of Mineral Surveyors of Russia, and the Alliance of Mining Industries of Russia, and leading Institutes of the Academy of Sciences, Russian mining institutes, and foreign companies.

December 5

ALROSA President Fyodor Andreev, senior managers, and long-standing customers of the company had a business breakfast meeting to review year-end results. 

December 26

ALROSA senior managers met with the President of the Republic of Sakha (Yakutia) to discuss year-end results and plans for the year 2013.