Non-financial statement

of the Grupa Azoty Group

for the 12 months ended December 31st 2020

‎

1. Introduction

2. Management area

2.1. Structure of the Grupa Azoty Group

2.2. Business strategy and key financials

2.3. Key performance indicators

2.4. Sustainable development

2.5. List of certified management systems

2.6. Risk management

3. Environmental area, climate impact

3.1. Direct and indirect impact: feedstock and materials

3.2. Direct and indirect energy consumption within the organisation

3.3. Total water abstraction and information on recycled or reused water

3.4. Reduction of energy consumption

3.5. Biodiversity

3.6. Substances emitted to the atmosphere

3.7. Carbon footprint

3.8. Waste and waste management methods

3.9. Monetary value of fines and other sanctions

3.10. Mitigation of environmental impacts of products and services

4. Human resources

4.1. Diversity

4.2. Employment

4.3. Remuneration

4.4. Additional benefits

4.5. Occupational health and safety

4.6. Staff training

4.7. State Fund for Rehabilitation of the Disabled

4.8. Employee relations and freedom of association

5. Social and sponsorship policy

5.1. Rules governing community engagement at the Grupa Azoty Group

5.2. Supporting efforts to fight COVID-19

6. Ethics management (counteracting corruption and bribery, respect for human rights)

7. Product quality, production, storage and transport safety, and safety related to the impact of chemical substances and mixtures on humans

 

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1. Introduction

This non-financial statement for 2020 presents data and indicators for Grupa Azoty S.A. and the Group in which Grupa Azoty S.A. is the parent (“Grupa Azoty”, the “Grupa Azoty Group”, and the “Group”).

In accordance with the Accounting Act, Grupa Azoty S.A. is subject to regulatory obligations at the level of:

1.The Grupa Azoty Group,

2.The Grupa Azoty Zakłady Azotowe Puławy S.A. Group (the “Grupa Azoty Puławy Group”, the “Puławy Group”) and the parent Grupa Azoty Zakłady Azotowe Puławy S.A. (“Grupa Azoty Puławy”),

3.The Grupa Azoty Zakłady Chemiczne Police S.A. Group (the “Grupa Azoty Police Group”, the “Police Group”) and the parent Grupa Azoty Zakłady Chemiczne Police S.A. (“Grupa Azoty Police”).

The qualitative and quantitative data is presented according to this breakdown. This non-financial statement has been prepared in accordance with the guidelines contained in Directives of the European Parliament and of the Council (2014/95/EU and 2013/34/EU) and in the Accounting Act, concerning disclosure of non-financial information.

2. Management area

The management process at the Grupa Azoty Group is carried out in a responsible manner with a view to achieving sustainable development, materialising in an integrated approach to social, economic and environmental aspects.

 

Key products and services

The Grupa Azoty Group’s business is divided into the following five segments:

1.Agro Fertilizers

This is the key area of the Grupa Azoty Group’s business. The segment manufactures mineral nitrogen, nitrogen-sulfur, nitrogen-phosphorus, compound, and speciality fertilizers. This group also includes ammonia and other nitrogen-based intermediate products.

The segment’s manufacturing activities are conducted by the companies based in Tarnów, Puławy, Kędzierzyn, Police, Gdańsk, Chorzów, as well as Germany and Spain. The Grupa Azoty Group is Poland’s largest and European Union’s second largest manufacturer of mineral fertilizers.

2.Plastics

The Plastics segment accounts for the second largest share in the Grupa Azoty Group’s total sales. Its product portfolio includes: Tarnamid®, Alphalon® (trade names of polyamide 6), Tarnoform® (trade name of polyacetal (POM)), as well as polyamide 6- and polyacetal-based modified plastics. The Group is the leading manufacturer of PA6 in Poland and the third largest producer of this polyamide in the European Union. The principal investment project among the Grupa Azoty Group’s ongoing projects – a new polypropylene production unit being built as part of the Polimery Police strategic investment project – will be presented in this segment.

3.Chemicals

This segment comprises the following business segments: OXO products (OXO alcohols, plasticisers), pigments (titanium white), melamine, as well as smaller product groups, perceived by the market as less homogenous: technical grade urea, sulfur, catalysts and others. They are manufactured in Kędzierzyn, Puławy, Police, and Grzybów. The Group is a major manufacturer of melamine globally and the third largest in the European Union. As regards OXO products, the Group is the only manufacturer of OXO alcohols in Poland and the fifth largest in the European Union. The Group is Poland’s only producer of titanium white.

4.Energy

Grupa Azoty Group’s main production plants operate their own electricity and heat generating units. Given that Grupa Azoty Group companies operate their own energy distribution networks and captive generation has a major role in the base chemicals business, the Grupa Azoty Group identifies Energy as a separate auxiliary internal segment.

5.Other Activities

The Other Activities segment comprises laboratory services, rentals, maintenance and other services (automation, design, repairs, etc.), logistics, infrastructure management, environmental protection, and research.

Relevant geographical markets:

Most of the Grupa Azoty Group’s products are sold in Poland, with exports going mainly to EU member states, in particular Germany, the United Kingdom, the Czech Republic, Italy, France, and Belgium. Fertilizers and chemicals (urea and OXO alcohols) are the key product groups sold in the domestic market. Products exported to EU countries include mainly fertilizers (such as Saletrosan^® 26, Ammonium Sulfate AS21, Salmag^®, Pulan^®, RSM^®, Polifoska^®), plastics and OXO alcohols, whereas products exported to Asia – polyamide PA-6. Fertilizers manufactured by the Grupa Azoty Group are also sold in South American markets.

2.1. Structure of the Grupa Azoty Group

Over the last few years, Grupa Azoty S.A. successfully consolidated Poland’s largest chemical plants with an aim of harnessing their combined potential to deliver a common strategy, and acquired the COMPO EXPERT Group, a global manufacturer of speciality fertilizers selling its products to nearly a hundred countries, thus strengthening the Group’s position among Europe’s largest chemical companies. The Grupa Azoty Group includes Grupa Azoty Polyolefins S.A., owner of the Polimery Police project, one of the largest investment projects in the chemical industry expected to make Poland one of Europe’s leading polypropylene producers. The project will result in the construction of a petrochemical complex centred around:

a PDH propylene unit (with an annual production capacity of 400,000 tonnes),

a polypropylene unit (with an annual production capacity of 437,000 tonnes) with a logistics base.

The chemical complex will also feature a handling and storage terminal (gas port) and auxiliary systems.

The Grupa Azoty Group includes more than 50 businesses which distribute their products mainly to the European Union, South America, Asia, Africa and North America. A vast majority of our production capacities are located in Poland, with some production plants in Germany and Spain. Three group companies – Grupa Azoty S.A., Grupa Azoty Puławy and Grupa Azoty Police − are listed on the Warsaw Stock Exchange. 

The parent – Grupa Azoty S.A.

www.tarnow.grupaazoty.com

Grupa Azoty S.A. is engaged in manufacturing and trading in engineering plastics, engineering plastics intermediates and nitrogen fertilizers, as well as related services. The Company operates its own research facilities. It concentrates both on research into new products and technologies, and on advancing existing products. Grupa Azoty S.A.’s registered office is located in Tarnów.

Grupa Azoty S.A. has been listed on the Warsaw Stock Exchange since June 30th 2008 and is included in the WIG, WIG30, mWIG 40, WIG-Poland, WIG-CHEMIA and WIG.MS-PET indices. It is also represented in some foreign indices.

The company is subject to non-financial reporting requirements under the Accounting Act of September 29th 1994, and its non-financial information is presented in this statement.

As at December 31st 2020, the Grupa Azoty Group comprised Grupa Azoty S.A. as the parent, and its subsidiaries and associates:

Diagram 1. Structure of the Grupa Azoty Group

Source: Company data.
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Grupa Azoty S.A.’s direct subsidiaries:

Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna

(“Grupa Azoty Puławy”)

www.pulawy.grupaazoty.com

The company is the largest supplier of nitrogen fertilizers for Polish farmers and the second largest player on the EU market of granular urea, ammonium nitrate, ammonium sulfate, and urea-ammonium nitrate solution (UAN). The Puławy plants are Poland’s only and Europe’s third largest manufacturer of melamine, Poland’s only producer of hydrogen peroxide and a major producer of caprolactam.

Grupa Azoty Puławy has been listed on the Warsaw Stock Exchange since November 2005.

The company is subject to non-financial reporting requirements under the Accounting Act of September 29th 1994, and its non-financial information is presented in this statement.

 

Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna

(“Grupa Azoty Police”)

www.zchpolice.grupaazoty.com

Grupa Azoty Police is a major manufacturer of compound and nitrogen fertilizers, as well as pigments (titanium white). Grupa Azoty Zakłady Chemiczne Police S.A. has been listed on the WSE since September 2005.

Grupa Azoty Police is subject to non-financial reporting requirements under the Accounting Act of September 29th 1994, and its non-financial information is presented in this statement.

 

Grupa Azoty Zakłady Azotowe Kędzierzyn Spółka Akcyjna

(“Grupa Azoty Kędzierzyn”, “Grupa Azoty ZAK”)

www.zak.grupaazoty.com

The company’s two business pillars are nitrogen fertilizers and OXO products (OXO alcohols and plasticizers used in the production of plastics).

 

COMPO EXPERT Holding Gesellschaft mit beschränkter Haftung,

(a holding company for subsidiaries which are referred to collectively as COMPO EXPERT)

www.compo-expert.com

The company’s registered office is located in Münster, Germany. It is a holding company for a group of subsidiaries, including the main operating company COMPO EXPERT GmbH, one of the world’s largest manufacturers of speciality fertilizers for professional customers.

 

Grupa Azoty ATT Polymers Gesellschaft mit beschränkter Haftung (“Grupa Azoty ATT Polymers”)

www.att.grupaazoty.com

The company’s registered office is located in Guben, Germany. The company manufactures modified plastics based on polyamide 6 (PA6).

 

Grupa Azoty Polskie Konsorcjum Chemiczne spółka z ograniczoną odpowiedzialnością

(“Grupa Azoty PKCh”)

www.pkch.grupaazoty.com

Grupa Azoty PKCh’s services encompass comprehensive design support for investment projects in the chemical industry − from study and concept work to engineering design, building permit design and working plans, to services provided during the construction, commissioning and operation of process units.

 

Grupa Azoty Koltar spółka z ograniczoną odpowiedzialnością (“Grupa Azoty Koltar”)

www.koltar.grupaazoty.com

Grupa Azoty Koltar provides countrywide railway transport services. It is one of the few organisations in Poland to hold licences required to perform comprehensive repairs of rail car chassis and tank cars used in the transport of dangerous materials (according to RID).

 

Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol Spółka Akcyjna (“Grupa Azoty Siarkopol”)

www.siarkopol.grupaazoty.com

Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. is engaged in mining operations in a native sulfur deposit and is Poland’s largest producer of liquid sulfur.

 

Grupa Azoty Polyolefins Spółka Akcyjna (“Grupa Azoty Polyolefins”)

www.polyolefins.grupaazoty.com

The company’s purpose is to construct a propane dehydrogenation (PDH) unit and polypropylene production plant with related infrastructure, auxiliary systems and inter-unit connections, and extension of the Police sea port facilities to include a handling terminal for chemicals that would provide the required logistics infrastructure for receiving and storing the raw material.

Grupa Azoty S.A. and Grupa Azoty Police hold 30.52% and 34.41%, respectively, of shares in Grupa Azoty Polyolefins.

 

Grupa Azoty Compounding Spółka z ograniczoną odpowiedzialnością (“Grupa Azoty Compounding”)

www.compouding.grupaazoty.com

The business model of Grupa Azoty Compounding is based on a portfolio of specialised engineering plastics manufactured through the compounding of plastics, with the use of innovative technological solutions.

 

Grupa Azoty Folie spółka z ograniczoną odpowiedzialnością w likwidacji (in liquidation)

On December 31st 2019, the Extraordinary General Meeting passed resolutions to dissolve Grupa Azoty Folie Sp. z o.o. and to put the company into liquidation, remove the company’s Management Board members and appoint a Liquidator. The company did not carry out any operating activities in 2020, and the liquidation process ended in December 2020 by de-registration from the National Court Register.

 

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As at December 31st 2020, the Grupa Azoty Puławy Group comprised:

 

Diagram 2. Structure of the Grupa Azoty Puławy Group

Source: Company data.
‎

Grupa Azoty Zakłady Fosforowe Gdańsk spółka z ograniczoną odpowiedzialnością (“Grupa Azoty Fosfory”)

www.fosfory.grupaazoty.com

Gdańsk-based manufacturer of compound fertilizers and nitrogen compounds.

 

Grupa Azoty Zakłady Azotowe Chorzów Spółka Akcyjna (“Grupa Azoty Chorzów”)

www.chorzow.grupaazoty.com

Producer of inorganic and organic chemicals. The only Polish producer of fertilizer grade, technical grade and food grade potassium nitrate, also manufacturing calcium nitrate solution.

 

Agrochem Puławy spółka z ograniczoną odpowiedzialnością (“Agrochem”)

www.agrochem.com.pl

Agrochem is a trading partner of the agricultural sector, specialising in the supply of goods necessary for agricultural production, including in particular mineral fertilizers, crop protection products and certified seed, as well as in the purchase of grain.

 

SCF Natural spółka z ograniczoną odpowiedzialnością (“SCF”)

www.scfnatural.pl

The company offers high quality granulated hops and plant extracts for the food and pharmaceutical industries. Its core business includes execution of contracts for, purchasing, and processing of hops for domestic and foreign consumers.

 

PROZAP spółka z ograniczoną odpowiedzialnością (“PROZAP”)

www.prozap.com.pl

A comprehensive engineering design office with more than 45 years of experience in designing new and upgrading existing fertilizer and other chemical production units.

 

REMZAP spółka z ograniczoną odpowiedzialnością (“REMZAP”)

www.remzap.pl

The company carries out industrial construction, investment, and renovation projects, combining many years of knowledge and experience with a systematic approach to QHSE management.

 

STO-ZAP spółka z ograniczoną odpowiedzialnością (“STO-ZAP”)

www.stozap.pl

The company’s business activities include catering, trading, and provision of services. It provides cleaning services to Grupa Azoty Puławy and produces water and carbonated beverages, but its principal business is in catering services.

 

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As at December 31st 2020, the Grupa Azoty Police Group comprised:

Diagram 3. Structure of the Grupa Azoty Police Group

Source: Company data.
‎ Grupa Azoty Police’s subsidiaries:

 

Grupa Azoty Police Serwis spółka z ograniczoną odpowiedzialnością (“Grupa Azoty Police Serwis”)

www.policeserwis.grupaazoty.com

The company’s business includes overhauls and project execution in the mechanical and construction industries (construction of systems and apparatuses, including those made of plastics, maintenance services, workshop services, treatment of metals, and technical supervision services), project execution and technical and engineering services in the areas of automation and power engineering, repairs of control and instrumentation equipment and power generation plant and equipment, plant engineering in automatics and power generation.

 

Grupa Azoty Transtech spółka z ograniczoną odpowiedzialnością (“Grupa Azoty Transtech”)

www.transtech.pl

The company provides transport services, plant and equipment services, and workshop services (repair of battery-electric trucks, stackers, passenger cars, delivery vans, lorries, loaders, diggers, bulldozers and mobile cranes) as well as periodic inspection services.

 

Supra Agrochemia spółka z ograniczoną odpowiedzialnością (“Supra”)

www.supra.pl

Its business comprises revitalising post-industrial sites owned by the company and preparing them for the purposes of redevelopment projects.

 

Zarząd Morskiego Portu Police spółka z ograniczoną odpowiedzialnością (“ZMPP”)

www.portpolice.pl

The company’s business comprises sea port operation, port construction, property management, research work, sea and inland shipping, and coastal water transportation services. The subsidiary is a port authority within the meaning of the Act on Sea Ports and Harbours.

 

Grupa Azoty Africa S.A. w likwidacji (in liquidation) (“Grupa Azoty Africa”)

The company is in liquidation and is not conducting any business.

 

PROZAP spółka z ograniczoną odpowiedzialnością (“Prozap”)
‎ www.prozap.com.pl

A comprehensive engineering design office with more than 45 years of experience in designing new and upgrading existing fertilizer and other chemical production units.

 

2.2. Business strategy and key financials

Changes in economic conditions and in the immediate environment of the Grupa Azoty Group necessitated a revision (carried out in 2017) to its previous strategic objectives to better align them with the current market landscape.

 

Between 2013 and 2020, the Grupa Azoty Group grew in four areas representing its key challenges in line with its strategy.

 

The challenges identified by the Grupa Azoty Group were as follows:

1.Complete the Group consolidation process

2.Reinforce leadership in agricultural solutions in Europe;

3.Strengthen the second operating pillar by expanding non-fertilizer business

4.Develop and implement innovations to drive growth of the chemical industry

The Group continued its consolidation process to generate value added. It implemented management by business segments. The focus was mainly on process integration and consolidation of procurement, logistics, finance and IT functions.

 

Another important consideration in the implementation of the strategy from 2013 to 2020 was to maintain a strong position in the domestic and international fertilizer markets. The Grupa Azoty Group achieved more control over retail channels, partly through the acquisition of COMPO EXPERT. It also focused on production efficiency and development efforts in the Agro segment.

The launch of the Polimery Police project (the plastics segment) in the period covered by the strategy will enable the Group to better diversify its revenue in the future and to reduce its dependence on economic cycles in agriculture.

 

Grupa Azoty S.A. operates a Research and Development Centre which carries out innovative research and analytical testing to support the development and launch of advanced high-margin speciality fine products. The focus is in particular on sustainable technologies that improve the quality of people’s lives, helping the Group become a highly profitable and competitive market player.

Throughout 2020, the Grupa Azoty Group advanced its efforts to draw up strategic documentation as part of the project to prepare the Grupa Azoty Group’s 2021–2030 Strategy, which is to include in particular:

 

2.Strategy and growth directions

3.Growth prospects and market strategy

4.Significant external and internal growth factors

 

2.3. Key performance indicators

 

The Grupa Azoty Group is committed to delivering the key performance indicators set out in the Updated Strategy.

 

Table 1. Consolidated data Source: Company data.

 

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2.4. Sustainable development

Grupa Azoty has adopted a comprehensive approach to sustainable development. Oversight of the process of sustainability management rests with the Management Board of Grupa Azoty S.A. in accordance with the division of responsibilities. As the pursuit of sustainable development spans all areas of Grupa Azoty’s activities, representatives of various departments of Grupa Azoty and subsidiaries are also involved in the process.

 

Grupa Azoty treats its strategic approach to sustainability as a reflection of the integrated approach to the measures taken in the area of economic efficiency, responsibility towards employees and the natural environment, as well as relations with the external stakeholders.

 

In 2020, Grupa Azoty was a signatory of the partnership for the United Nations Sustainable Development Goals, which cover a wide range of challenges, their implementation being monitored worldwide through appropriate indicators. Our activities support the following goals:

 

PILLAR 1: Product and production

 

 

PILLAR 2: People and relations

‎

PILLAR 3: Good governance

 

Integrated Management Systems

Grupa Azoty S.A. pursues a Corporate Management Policy which guarantees that the Company's strategic goals are achieved in reliance on the integrated Management System, consistent with international standards. The Integrated Management System is structured around the following principles: giving priority to customers, reducing environmental losses and mitigating the risk of hazards, and continuous improvement.

 

The Corporate Management Policy sets out plans and principles for the Company’s operations at large, providing a framework for defining and reviewing strategic goals in quality, environmental protection, workplace health and safety, and food safety.

 

Grupa Azoty S.A. has the following systems in place:

1.Quality Management System compliant with the ISO 9001:2015 standard,

2.Environmental Management System compliant with the ISO 14001:2015 standard,

3.Energy management system conforming to the ISO 50001:2011 standard,

4.Occupational Health and Safety Management System conforming to the BS OHSAS 18001:2007 standard,

5.Food Safety Management System compliant with the ISO 22000:2005 standard,

6.Information Security Management System conforming to the ISO/IEC 27001:2013 standard,

7.Management Standard compliant with the Fertilizers Europe Product Stewardship Standard,

8.Laboratory Management System conforming to the PN-EN ISO/IEC 17025:2018-02 standard.

 

Grupa Azoty Puławy implemented and obtained certification for the following systems in 2004:

1.Quality Management System conforming to the ISO 9001 standard,

2.Environmental Management System conforming to the ISO 14001 standard,

3.Occupational Health and Safety Management System conforming to the PN-N 18001 standard.

 

The key document of the Integrated Quality, Environment and Safety Management System is the Quality, Environmental and Safety Policy which defines the goals of Grupa Azoty Puławy and the ways to achieve them.

 

Quality, Environmental and Safety Policy

A key objective related to the implementation of the Integrated Quality, Environment and Safety Management System that is set in the Policy is to cater to the changing customer needs by ensuring compliance with the legal regulations on environmental protection, employee and contractor safety and reduction of environmental footprint.

Energy Management System

In order to improve energy efficiency at Grupa Azoty Puławy, an Energy Management System conforming to ISO 50001: ‘Energy management systems – Requirements with Guidance for Use’ has been implemented. In accordance with the adopted Energy Policy, Grupa Azoty Puławy has established and implemented energy objectives and programmes and pledged to comply with all the legal requirements and other commitments it has made in the area of generation and rational consumption of energy necessary in its production processes, recognising energy consumption as an important factor having an impact on the natural environment and costs of operations.

Food Safety Management System

Grupa Azoty Puławy takes care to ensure that all foodstuffs made with the use of its products are safe to human health. Therefore, in 2008 it implemented the Food Safety Management System compliant with the ISO 22000 standard. The system is certified and covers the production and sale of industrial gases (carbon dioxide and hydrogen) used by the food industry.

FSSC 22000 system

Grupa Azoty Puławy has had a certified FSSC 22000 system in place since 2014. Grupa Azoty Zakłady Azotowe Puławy S.A. upholds its guarantee to ensure the required product quality, with particular focus on safety to health and due consideration of such priorities as safety and legality of production. Our objective is to meet the needs and expectations of our existing and future customers.

Grupa Azoty Police

Grupa Azoty Police pursues a Management Policy which guarantees that strategic goals are achieved as part of an Integrated Management System consistent with international standards. The Integrated Management System is structured around the principles assuming giving priority to customers, reducing environmental losses and mitigating the risk of hazards, and continuous improvement. The Management Policy in place at the company sets out plans and principles for the company’s overall business, providing a framework for setting and reviewing of strategic goals pertaining to quality, environmental protection, workplace safety, and food safety.

 

Grupa Azoty Police has the following systems in place:

1.Quality Management System conforming to the ISO 9001 standard,

2.Environmental Management System conforming to the ISO 14001 standard,

3.Energy Management System conforming to the ISO 50001 standard,

4.Occupational Health and Safety Management System conforming to the BS OHSAS 18001 standard,

5.Food Safety Management System conforming to the ISO 22000 standard.

2.5. List of certified management systems

 

Table 2. List of certified management systems

Source: Company data.

 

Grupa Azoty S.A., Grupa Azoty Puławy and Grupa Azoty Police apply the corporate governance rules described in the ‘Code of Best Practice for WSE Listed Companies 2016’. The Code defines in particular the rules of pursuing an investor information and communication policy, internal systems and functions, and relations with shareholders.

 

2.6. Risk management

Risk management is part of a corporate management process geared towards reducing uncertainty and building lasting protections for the Group’s value.

The enterprise risk management system in place at the Grupa Azoty Group was implemented based on ISO 31000:2018 ‘Risk Management – Guidelines’. The system framework for the process is defined in the corporate procedure ‘Enterprise Risk Management at Grupa Azoty’.

 

Enterprise risk management consists of the following stages:

1.Development of an enterprise risk management framework,

2.Analysis of the organisational context,

3.Risk identification and assessment:

a)Identification and classification of risks,

b)Quantitative and qualitative analysis of risks,

c)Analysis of control mechanisms,

d)Mapping and prioritization of key risks.

4.Risk management:

a)Selection of a risk management strategy,

b)Development of KRIs and procedures in case a risk threshold is exceeded,

c)Planning of risk mitigation measures,

d)Verification of effectiveness of risk measures taken,

5.Monitoring and reporting,

6.Refining the enterprise risk management process.

At the Grupa Azoty Group, enterprise risk management is designed to ensure continuous control of the risk level and its maintenance within the risk tolerance range in the ever changing macroeconomic and legal environment, as adopted by the Management Board of Grupa Azoty S.A. As risk level is an important factor in the planning and decision-making process, the operation of the risk management process is subject to ongoing monitoring and reporting. The persons responsible for managing identified risks are risk owners, who are tasked with managing their respective risks effectively, including by taking action to improve the understanding of the causes and implications of the risks, and implementing appropriate control and mitigation measures.

In 2020, the Corporate Risk Register of Grupa Azoty was updated. Work is underway on the identification and preliminary examination of climate change risk. The table below presents selected risks broken down into environmental, social and governance risks.

 

Risk management at Grupa Azoty Police and Grupa Azoty Puławy is integrated with the Group-wide risk management process. It is a continuous process consisting in ongoing risk identification, review and response to changes in risk, application of analytical risk mitigation and constant improvement in risk controls.

3. Environmental area, climate impact

 

The Grupa Azoty Group’s activities in the field of environmental protection are strictly regulated and subject to a number of requirements which follow from the Environmental Protection Law, the Waste Act, the Water Law and other regulations, as well as permits issued by governors and marshals of the provinces where the Group operates. In accordance with the Environmental Protection Law, all companies of the Grupa Azoty Group are required to adapt their permits to the requirements laid down in applicable regulations.

 

 

Each Group company (except for Grupa Azoty Koltar) has implemented the Environmental Management System conforming to the ISO 14001 standard, which supports the activities related to environmental protection and prevention of contamination. The system also requires the companies to assess compliance of their activities with applicable laws and other standards, and to pursue continuous improvement in environmental protection methodology they apply.

 

However, given the scale and scope of the Grupa Azoty Group’s activities as well as its capabilities, its ambition is to go beyond what is required by law. Every year, the Grupa Azoty Group incurs significant expenditure on installations that reduce its negative impact on the natural environment. For years, the Grupa Azoty Group laboratories have been conducting research into products that are consistent with the objectives of the European Green Deal.

 

 

Source: Company data.

 

3.1. Direct and indirect impact: feedstock and materials

 

The table below presents total consumption of key feedstocks and materials in 2020, including materials purchased from external suppliers and internally generated inputs.

 

The table presenting the consumption of key feedstocks is supplemented by a description of how the feedstocks are used and of the products manufactured from them.

 

Table 4. Consumption of strategic raw materials at the Grupa Azoty Group (2020)

Source: Company data.

 

Grupa Azoty S.A.

Grupa Azoty S.A. uses natural gas mainly to produce ammonia and hydrogen. To produce fertilizers, the Company also uses dolomite, technical-grade nitric acid and technical-grade sulfuric acid, which is also an input in caprolactam production. Liquid ammonia purchased by Grupa Azoty S.A. is used in the manufacture of nitrate fertilizers and caprolactam. Other necessary inputs in the production of caprolactam are benzene, phenol and liquid sulfur. Heavy fuel oil and hard coal are used in heat and electricity production. The Company uses technical-grade methanol for the manufacture of Tarnoform and formalin.

 

Grupa Azoty Puławy

At Grupa Azoty Puławy, high-methane natural gas is the main input used in the production of ammonia. High-methane natural gas is also used for heating purposes in the production of caprolactam and melamine and as an auxiliary fuel at the CHP plant. Coal is the primary source of energy at the company. Benzene is used to produce cyclohexanone, a semi-finished product applied in the production of caprolactam. Sulfur is used to make sulfuric acid, which in turn is used in the production of caprolactam. Ammonia and nitric acid are the main intermediate products for fertilizer production. Ammonia manufactured internally is periodically supplemented with purchased ammonia.

Grupa Azoty Police

Grupa Azoty Police uses potassium chloride, phosphates, sulfur and sulfuric acid procured from suppliers to produce compound fertilizers. Sulfuric acid, ilmenite, titanium slag and natural gas are key raw materials in the production of titanium white. Natural gas is used, among other things, in the production of ammonia intended for sale and ammonia used as a semi-finished product to make urea and compound fertilizers.

 

The difference in the consumption of raw materials by Grupa Azoty Group companies is largely attributable to changes in production volumes of individual product groups and customers’ problems caused by the coronavirus pandemic.

 

It should be stressed that Grupa Azoty Group companies have been reducing the amount of feedstocks used in production for many years, maximising efficiency while minimising consumption. We thus improve our financial performance and at the same time protect the environment and climate.

 

3.2. Direct and indirect energy consumption within the organisation

 

Direct energy consumption is the consumption of energy by the organisation and by its products and services. Direct energy is used to generate final energy (e.g. for heating, transport) or transitional forms of energy such as electricity or heat. Among the primary sources of energy used by the Grupa Azoty Group there are non-renewable energy sources, such as coal and natural gas.

 

In 2020, Grupa Azoty took numerous measures to improve the energy efficiency of its technological processes. This, coupled with other energy saving initiatives, helped achieve a clear reduction in energy consumption. The measures taken included:

1.Process redesigning and streamlining,

2.Replacement of equipment with more energy-efficient one,

3.Operational changes.

 

2020 was another year in which Grupa Azoty reduced its energy consumption.

 

The table below presents the volume of fuels used to generate electricity in 2020.

 

Table 5. Fuels used in electricity generation (2020)

Source: Company data.

 

Indirect energy consumption at the Grupa Azoty Group is presented below.

 

Table 6. Indirect energy consumption at the Grupa Azoty Group (2020)

Source: Company data.

 

3.3. Total water abstraction and information on recycled or reused water

The operations conducted by the Grupa Azoty Group involve significant water consumption. The following table shows total volumes of abstracted water (irrespective of the course) both directly by the organisation and by intermediaries, such as municipal utility companies.

 

Table 7. Water abstraction at the Grupa Azoty Group by source (2020)

Source: Company data.

 

Compared with 2019, most Group companies reduced their water extraction volumes, with the exception of Grupa Azoty Police, where the volumes increased due to a change in its product output. As a result, the volume of water abstracted by the Grupa Azoty Group grew slightly, as described in more detail below.

 

Grupa Azoty S.A.

Grupa Azoty S.A. is committed to sustainable water and wastewater management. The Company uses water resources responsibly and takes care to ensure that its wastewater is properly treated.

The Company draws water from two sources: from the Dunajec River (surface water) and from Quaternary formations (underground water). At Grupa Azoty S.A., water is used primarily for cooling purposes and in technological processes, for drinking, as a raw material for production of special waters, and for fire protection purposes. The reduction in groundwater abstraction followed from a change in the proportion of volumes of surface water and groundwater used to produce drinking water. In 2019 and 2020, due to economic reasons relating to collective water demand and collective wastewater discharge, drinking water losses were compensated with treated surface water. In 2020, the regularly performed maintenance work contributed to reducing drinking water losses. Removal of leaks on outflow sewers at surface water sedimentation tank helped lower the volume of abstracted groundwater and surface water by 15% relative to the previous year.

 

In recent years, Grupa Azoty S.A. has completed a number of investment projects supporting more efficient use of water and improving the safety of water and sewerage systems.

Liquidation of unprofitable units, modernisation of production and adaptation of production processes to higher environmental protection standards, as well as measures taken at individual units with a view to reducing water consumption in technological processes, have all directly translated into a significant reduction in wastewater output. The Company recycles water so that it can be recovered and reused.

 

Grupa Azoty S.A. supplies drinking water to third parties, both businesses and households. The drinking water treatment station has a HACCP system in place, under which the drinking water production process is monitored along the entire chain, from water intake, through treatment, to distribution. With an ISO 22000:2005-compliant food safety management system in place, the drinking water is of high quality. The water supplied to consumers must meet relevant quality standards. Therefore, analytical monitoring is performed along two lines: continuous quality testing (operational analysis) performed by the Laboratory of the Utilities Production and Distribution Department, and analytical oversight provided by the County Sanitary and Epidemiological Station in Tarnów as part of its monitoring activities. Given the analytical scope of the monitoring, analytical tests are contracted out to the municipal water supply and sewerage company (MPWiK) in Kraków.

 

Grupa Azoty Puławy

Grupa Azoty Puławy draws surface water from the Vistula river through a system of four pipelines (R1-R4), on which flow meters measuring the amount of abstracted water are installed. The company’s second source of water is surface water from the Kurówka river (a flow meter is installed on the pipeline supplying water to the plant). Water is also supplied to Grupa Azoty Puławy from groundwater intake points via two pipelines on which flow meters are installed. STO-ZAP, a Grupa Azoty Puławy Group company, reported abstraction of domestic hot water, production water and drinking water for sale as total water abstraction presented in ‘other’. Compared with 2019, total water abstraction at Grupa Azoty Puławy and the Grupa Azoty Puławy Group fell by about 5%.

 

Grupa Azoty Police

In 2020, Grupa Azoty Police increased its water abstraction from the Oder relative to 2019 due to a change in its product output. Water abstraction from the Gunica river decreased; water from the Gunica is drawn periodically. The volume of inland water drawn depends on the salinity of water in the Oder river (internal sea waters).

 

Grupa Azoty Police abstracts water from two surface water intake points, located on the Oder and Gunica rivers. The water is used for industrial purposes, as a cooling agent, and for fire-fighting applications.

 

The company monitors the quantity and quality of abstracted water. The volume of water drawn from the Gunica and Oder rivers is measured by means of flow meters located at measurement points. The amount of underground water drawn from the S-1 well is measured using a water meter.

 

Spent cooling water is partly reused in production of softened water and then demineralised water. Some volumes of spent cooling water are returned to the water intake point and then reused. Condensates are recycled and reused at the plant for various purposes, depending on the degree of purity.

 

The volume of reused/recycled water was over 16.5 mcm, representing nearly 11% of the total water abstracted by the company.

 

Grupa Azoty ZAK

The volume of water abstracted by Grupa Azoty ZAK remained virtually unchanged, with a concurrent rise in the company’s production volumes. Increased availability of surface water following considerable rainfall in 2020 led to a positive change in the structure of water abstraction: surface water abstraction increased while groundwater abstraction decreased.

 

Grupa Azoty ZAK has in place a system for recirculation of treated industrial wastewater, water from ash and slag hydrotransport, cooling water and stormwater – all this water is used to produce industrial water. The amount of wastewater reused to produce industrial water in 2020 was close to 1.6 mcm, which accounted for 23% of the total water abstracted by the company.

 

COMPO EXPERT

Most of the surface (river) water abstracted by the Krenfeld plant in Germany is reused for industrial processes up to three times before being discharged to the public sewage network.

 

Grupa Azoty Siarkopol

Grupa Azoty Siarkopol uses such methods as closed reservoir water circuits, sealing of process units, elimination of process water release through continuous monitoring of pipelines and prompt failure removal, and immediate removal of uncontrolled flows of reservoir water (blowouts). As a result, in 2020 the volume of recycled water was 1,503,380 cubic metres, representing 71% of the company’s total water abstraction.

 

For years now, the Grupa Azoty Group has been consistently investing in solutions to reduce the amount of water used in production and increase its reuse. The charts below present reduction of water consumption at Grupa Azoty S.A. and Grupa Azoty Puławy over the last 30 years (1990−2020).

 

 

Grupa Azoty S.A.

Chart 1. Reduction of water consumption at Grupa Azoty S.A. (1990–2020)

Source: Company data.

Grupa Azoty Puławy

Chart 2. Reduction of water consumption at Grupa Azoty Puławy (1990–2020)

Source: Company data.

 

The chart below presents reduction of water consumption at Grupa Azoty Police over the last 20 years (2000−2020).

 

Grupa Azoty Police

 

Chart 3. Reduction of water consumption at Grupa Azoty Police (2000–2020)

Source: Company data.

 

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3.4. Reduction of energy consumption

 

In 2020, Grupa Azoty took measures to improve the energy efficiency of its technological processes. Selected energy efficiency improvement initiatives are presented in the table below.

Table 8. Description of initiatives reducing energy consumption (2020)

Source: Company data.

* This amount is based on direct measurements (where possible) and on approximate estimates of initiatives completed or in progress.

 

It should be noted that there are a number of ongoing projects affecting energy consumption. Examples include the construction of a turbine generator using steam from the Hydrochloric Acid Department and the dual-pressure nitric acid unit at Grupa Azoty S.A. The project, worth more than PLN 22m, will help reduce the carbon footprint and the volume of purchased electricity by 14,900 MWh/year (more than 53 thousand GJ per year).

 

 

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3.5. Biodiversity

 

The Grupa Azoty Group attaches great importance to the natural environment as a whole, with particular emphasis on the impact of its operations on changes taking place in the environment, and undertakes various preventive and compensatory measures.

 

Grupa Azoty S.A.

Grupa Azoty S.A. manages environmental issues in a strategic and comprehensive manner. This is possible primarily due to the existing Environmental Management System, which complies with the ISO 14001 standard. This system ensures balance between environmental protection and pollution prevention on the one hand and socioeconomic needs on the other. At Grupa Azoty S.A., environmental impacts have been identified, and those that proved significant are subject to supervision. The adopted supervision criteria facilitate transparent monitoring and assessment of the effectiveness of individual processes affecting the environment. Assessment of compliance with applicable requirements is carried out on an ongoing basis.

 

Grupa Azoty S.A.’s premises are located in Mościce, a district of Tarnów located in the western part of the city. None of the Company’s products or services affect biodiversity. Likewise, no impact of the Company’s operations on biodiversity has been identified. The Company has registered its products in accordance with the REACH Regulation. Chemical Safety Reports have been prepared. Appropriate instruction manuals and data sheets describing their possible effects on living organisms have been prepared for each product. Periodic inspections by administrative authorities have revealed no irregularities.

 

Grupa Azoty Puławy

The Grupa Azoty Puławy facilities are located within a forest complex on the right bank of the Vistula river, some three kilometres north of the town of Puławy. They cover an area of approximately 299.4 ha. The area adjacent to the Grupa Azoty Puławy’s site is located on the border of two physico-geographical subprovinces – the Central Polish Lowlands and the Lublin-Lviv Upland and their geographical mesoregions:

1The Middle Vistula River Valley (north-west),

2The Radom Plain (south-west).

 

Grupa Azoty Puławy’s operations have no impact on people, plants, animals, fungi, natural habitats, water or air. Calculations of air pollution dispersion made for the purposes of the documentation prepared to obtain the Integrated Permit show that the company does not exceed the permitted emission levels outside the area it owns.

 

Grupa Azoty Puławy is located in an industrial area and its operations have no negative impact on the landscape. The area on which Zakłady Azotowe Puławy S.A. is located is not one with a high natural and landscape value.

 

In the vicinity of the company’s plant, ambient concentrations in the air are much lower than the TLV (immission). For over 50 years of the plant’s operation, no hard evidence has been found that the health of the Puławy region’s population deteriorated due to ambient concentrations.

 

The amount of noise from noise emitters located on the premises of Grupa Azoty Puławy does not exceed the permitted night- and day-time noise levels in the acoustically protected areas.

 

With environmental protection in mind, in 2005 Grupa Azoty Puławy placed a peregrine falcon nesting box on its CHP plant flue gas stack. Peregrine falcon chicks successfully hatched in the Lublin Province in 2013, which was the first such case to have been documented. The programme was also continued in 2020.

 

Grupa Azoty Police

The company is located within the Police city limits, about 3.5 km north of the city centre, on the left bank of the Oder river. It occupies an area of about 1,300 ha, covered by a valid local zoning plan. The area is classified as an industrial and warehouse area.

 

In accordance with the local zoning plan for the town and municipality of Police, in the vicinity of the plant, in the protection zone and in the 200-metre belt around the zone, there are mainly areas designated as industrial and warehouse areas, screening greenery, meadows, farmland and, locally, farm buildings in the village of Tatynia.

 

The area owned by the company has no significant natural value and is not subject to any national or EU nature protection measures. However, areas subject to various forms of such protection are located in the vicinity of the company’s sites:

Nature reserves:

1.Białokrzew Kopicki,

2.Olszanka,

3.Uroczysko Święta,

4.Świdwie.

Natura 2000 sites:

1.Police – Kanały (Police Canals) (PLH320015) – about 0.4 km to the south of the plant site,

2.Zalew Szczeciński (Szczecin Lagoon) (PLB320009) – about 2 km to the north of the plant site,

3.Ostoja Wkrzańska (Wkra Refuge; formerly Puszcza Wkrzańska) (PLB320014) – about 2 km to the west of the plant site,

4.Oder Estuary and Szczecin Lagoon (PLH320018) – about 2.5 km to the east of the plant site.

 

There are two landfills on the company’s premises: an iron sulfate landfill and a phosphogypsum landfill. The company has implemented and observes a strict process regime that minimises the landfills’ impact on the environment. Since 1994, efforts have been made to introduce high growing vegetation at the landfill site.

 

The landfill site is covered with trees. The condition of the grass sod, the extent to which it covers the site, the visual appearance of the plants and their ability to go through all development phases, including growth of fertile shoots, demonstrate that many plant species develop normally in this environment.

For a number of years, the landfill site has been a habitat for many plant species and animals, such as beech martens, otters, stoats, foxes, roe deer, boars and about 100 species of birds.

 

Based on field observations, ornithologists from Szczecin University found that the area adjacent to the landfill site (storage reservoirs of the wastewater treatment plant) compares to the Świdwie reserve in terms of the number and diversity of bird species.

 

Grupa Azoty Police supports efforts to promote biodiversity also by having a peregrine falcon nesting box on one of the Company’s CHP plant flue gas stacks. Azoty Police Group covers the costs of online broadcast from the nest and from the front of the nesting box. The project has been run in cooperation with the ‘Sokół’ (‘Falcon’) Wildlife Protection Association of Włocławek since 2016.

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3.6. Substances emitted to the atmosphere

Grupa Azoty is strongly committed to ensuring compliance with the legal standards applicable to air protection and constantly adapts its units to meet emission standards.

 

The table below presents the volumes of selected compounds emitted into the air in 2020 by the main companies of the Group.

 

Table 9. Compounds emitted into the air by Grupa Azoty (2020)

Source: Company data.

 

Emissions at Grupa Azoty are measured in keeping with generally applicable laws, including the Minister of Environment’s Regulation on the requirements with respect to measurement of emissions and water abstraction volumes, dated October 30th 2014.

Grupa Azoty recorded a noticeable decline in its air emissions, Mainly emissions of nitrogen oxides (down by more than 25% relative to 2019). 2020 saw reduction also in Grupa Azoty’s carbon dioxide emissions (down by over 17% compared with 2019).

 

Grupa Azoty S.A.

Grupa Azoty S.A. measures, on a continuous basis, its emissions from the CHP plant and the dual-pressure nitric acid unit. Fertilizer units are subject to periodic measurements of, among others, total dust emissions (in accordance with the PN-Z-04030-7:1994 standard) and ammonia emissions and concentration (in accordance with the WT-07/ZA-123 standard).

Grupa Azoty S.A. constantly monitors air quality at five sites across Tarnów. The locations of the measurement sites were selected to span the wide area that may be affected by particulate matter and gas emissions from the plant.

 

Grupa Azoty Puławy

Grupa Azoty Puławy’s main emission sources are its CHP plant and the nitrate production unit. In 2020, emissions of aliphatic hydrocarbons (other) increased significantly as a result of periodic discontinuation of sending gases for combustion at the CHP plant.

 

Grupa Azoty Police

Emissions from Grupa Azoty Police’s CHP plant facilities are monitored on a continuous basis, while emissions from the titanium white unit are measured both on a continuous and periodic basis. In line with the Integrated Permit, emissions from the other Grupa Azoty Police’s process units are measured on a periodic basis.

 

The CHP plant as well as the titanium white, sulfuric acid, fertilizer and urea production units, which are the main emission sources, account for ca. 65% and ca. 35% of emissions of gaseous pollutants and particulate matter, respectively. Changes in air emission volumes depend on the output from the Company’s main units and the results of periodic measurements.

 

The emissions are monitored by Grupa Azoty Police on a 24/7 basis at three measurement points whose location allows the company to assess the impact of pollutants generated during everyday operation of its units.

 

The table below presents the Group’s greenhouse gas emissions in 2020.

 

Table 10 GHG emissions by the Grupa Azoty Group (2020)

Source: Company data.

3.7. Carbon footprint

 

The Group carries out its activities in a responsible manner. Being responsible goes beyond achieving business targets or complying with formal and legal requirements – it also means investing in human resources and environmental protection.

 

The Grupa Azoty Group has started to calculate its carbon footprint as its measurement is the most reliable tool that enables comparison with environmental protection efforts made by other businesses.

The Grupa Azoty Group has set up a carbon footprint team, which is responsible for:

1.Defining the needs and monitoring the applicable regulations,

2.Calculating the carbon footprint for the Grupa Azoty Group and its products; for Grupa Azoty Group companies in accordance with the GHG Protocol standard; for fertilizer products in accordance with Fertilizers Europe's methodology,

3.Analysing the potential to reduce the carbon footprint for the Grupa Azoty Group and its products, taking into account the supply chain,

4.Developing a communication standard,

5.Risk analysis for the carbon neutrality policy (the European Green Deal).

 

A carbon footprint verification audit for selected products was carried out in 2020 by DNV GLV Business Assurance, which issued a certificate confirming the accuracy of the data used in the calculation with the Fertilizers Europe calculation tool.

 

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Carbon footprint for selected Grupa Azoty products (Scope 1 and Scope 2).

 

Table 11 Carbon footprint for selected Azoty Group products Source: Company data.

3.8. Waste and waste management methods

 

An organisation’s environmental impact can be analysed on the basis of data on the types of waste it generates and the waste management methods. Below are presented the amounts of waste generated by the Grupa Azoty Group in 2020, broken down into two categories:

1.Hazardous waste, as defined by the national legislation in force at the point of generation,

2.Non-hazardous waste including all other forms of waste, excluding used water.

 

Table 12. Type of waste generated by the Grupa Azoty Group (2020) Source: Company data.

 

The information on the total volume of waste by type has been supplemented with information on waste disposal methods, which include:

1.Landfilling,

2.On-site recovery,

3.Transfer to third-party contractors,

4.Storage,

5.On-site disposal.

 

Table 13. Waste disposal method (2020) Source: Company data.

 

The tables above show the quantity of waste generated as a result of the organisation’s operations in 2020 and present the methods of waste disposal. The difference between the amount of waste generated and the amount of waste disposed of is attributable to the storage volumes of waste generated in the previous year.

 

Hazardous waste represents as little as 0.36% of the total waste generated by the organisation (an increase on 2019). More than 41% of waste generated by the organisation in 2020 was disposed of within the organisation, while more than 42% was landfilled. 9.24% of waste was recovered on site. Only 7.05% was transferred to third-party contractors (a decrease on 2019).

 

 

3.9. Monetary value of fines and other sanctions

 

Within the Grupa Azoty Group as a whole, an environmental fine was imposed on Grupa Azoty Puławy by a decision of March 27th 2020 issued by the Lublin Provincial Inspectorate for Environmental Protection in Lublin. The fine totalled PLN 3,276,186 for 2019 and was imposed for excessive air emissions of sulfur dioxide, nitrogen oxides and particulate matter from the CHP plant.

 

In view of ongoing projects which, once completed, will ensure that the emission limits are observed, the company has applied to the Provincial Inspector for Environmental Protection for postponement of the fine.

 

By decisions of May 25th 2020, the Provincial Inspector for Environmental Protection postponed the fine payment date until December 31st 2022. Upon completion of the projects, the company will apply for a reduction of the deferred fines by the amount of expenditure incurred to implement them.

 

3.10. Mitigation of environmental impacts of products and services

The Group is carrying out a number of R&D initiatives which are seen as major investment projects in their respective regions. They contribute to running a socially responsible business. Due to the nature of the Grupa Azoty Group’s operations, we place the natural environment at the centre of our efforts.

 

Grupa Azoty S.A.

Key environmental protection projects implemented by Grupa Azoty S.A. in 2020 included:

1.Construction of a turbo generator set using steam from sulfuric acid unit and dual-pressure nitric acid unit, and 4 MPa steam pipeline from sulfuric acid unit to dual-pressure nitric acid unit. The purpose of the project is to construct a turbine generator set that will use steam at 4 MPa, which is currently lost in the steam reduction process at pressure reducing and cooling stations in the Sulfuric Acid Department and Hydroxylamine Sulfate Department, and steam from the dual-pressure nitric acid unit. As a result, waste heat will be utilised to generate electricity, while purchases of more costly third-party generated electricity will be reduced to ca. 14,900 MWh annually. This initiative is aligned with the energy efficiency improvement and carbon footprint reduction strategy pursued by Grupa Azoty S.A.;

2.Upgrade of power generation facilities – the goal of the project was to secure a peak-load/reserve source that would meet the emission requirements arising from BAT conclusions as well as to maintain a sustained generation capacity of the process heat source for Grupa Azoty S.A. Aside from providing energy security, the project will make it possible to adjust the captive CHP plant to the pollutant emission requirements;

3.Adjustment of the FGD absorption unit to the requirements of BAT conclusions. The project is aimed at adjusting the FGD unit for K5 boiler, which is the main source of heat for Grupa Azoty S.A. As a result, captive generation activities will be brought in compliance with more stringent environmental requirements arising from BAT conclusions;

4.Testing a pilot containerised system to verify the efficiency of waste water treatment using a membrane technique and to recover water for process purposes. The project is consistent with the circular economy concept;

5.Construction of a pilot-plant unit for biological treatment of wastewater from production units of Grupa Azoty S.A. Based on the tests carried out on the pilot plant, assumptions for the upgrade of the biological wastewater treatment plant will be developed;

6.Collection of slag from ECII boilers. The project involves the construction of a dry slag collection unit at the Grupa Azoty S.A. Power Centre. Upon completion, the hydraulic conveyor system can be decommissioned and the consumption of electricity and water will be reduced. Furthermore, the project will allow the Company to discontinue slag storage and to recover dry slag for use in road construction.

 

Grupa Azoty Puławy

In 2020, Grupa Azoty Puławy carried out projects aimed at reducing its environmental impact. Some noteworthy initiatives included:

1.Purchase and erection of a boiler (top part and economiser) for the nitric acid unit, which improved the efficiency of process steam generation;

2.Upgrade of the unit for CO₂ absorption in potassium carbonate solutions for Line 2 and Line 3 of the gas pre-treatment unit at the Ammonia Department, which helped reduce the overall energy intensity of the process and bring down the wastewater discharge volumes;

3.Upgrade of the closed circuit water system at the Ammonium Nitrate and UAN Department, which helped improve the quality and pressure parameters of cooling water;

4.Continued modernisation of lighting systems, cable ducts and switchgears, which also indirectly improves energy and environmental efficiency.

 

Grupa Azoty Police

Grupa Azoty Police engaged in a number of measures to mitigate the environmental impacts of its products and services. These were, most notably:

1.Replacement of WAII absorption tower at Line 7 of the Sulfuric Acid Department. The purpose of the replacement is to maintain uninterrupted operation of the sulfuric acid and steam production unit and to avoid a major accident which could result in environmental contamination (leakage of sulfuric acid into soil);

2.A project to make production of demineralised water independent of variable salinity of the Oder river and increase the capacity to produce special waters in the water preparation units. The project is designed to upgrade the water demineralisation station, and in particular to add a new desalination unit based on the electrodialysis reversal (EDR) technology to desalinate raw water which will supply the existing demineralisation station, and to increase the overall station throughput from approximately 900 m3/h to 1,200 m3/h by building new ion exchange demineralisation lines and associated systems. In periods of high salinity, water from the Oder river fed into the system producing demineralised water is diluted using condensates and water from the Gunica river. Giventhe current legal requirements for water management, the abstraction of water from the Gunica river for process purposes is being reduced. The upgrade and expansion of the water treatment and demineralisation station will help protect Grupa Azoty Zakłady Chemiczne Police S.A. against periods of elevated salinity in the Oder river and will enable the use of the Oder river as the only supply source;

3.A project to enable recycling of hydrogen originating from the propylene unit to be used at the ammonia unit. As a result of this project, infrastructure will be established to collect hydrogen from the propylene unit and utilise it in the ammonia unit at the Nitro Business Unit of Grupa Azoty Zakłady Chemiczne Police S.A. This will reduce the amount of natural gas consumed in ammonia production and will contribute to lower carbon dioxide emissions. Replacing 67.6 million Nm³ of natural gas annually with hydrogen from the PDH unit will reduce carbon dioxide emissions.

 

Grupa Azoty Kędzierzyn

Grupa Azoty Kędzierzyn carried out the following projects in 2020:

1.Upgrade of E-102 boiler and E-117 superheater at the ammonia unit

2.Replacement of K-2 and K-3 steam compressors compressing ammonia gas with three new electric compressors with auxiliary equipment (separators, heat exchanger), design work for the construction of a peak-load/reserve boiler house with a 100 Mg/h steam boiler;

3.Start of land remediation activities at facility No. 861 (former maleic anhydride unit) – planned remediation period: 2020–2027. The goal is to reclaim the contaminated site: to improve the environmental status of the groundwater environment within the facility by achieving acceptable pollutant concentrations for industrial sites;

4.Improving the technical condition of floors in the crystallisation building at the urea unit and the technical condition of a sewer discharging sewage from this building to the so-called ‘waste basin’. This measure will reduce discharges to the industrial sewerage system of sewage containing urea and ammonia produced during washing of apparatus and equipment in the crystallisation building at the urea unit to prepare them for an overhaul;

5.Reduction of the amount of ash/slag mixtures stored in the on-site landfill by removing and transferring them to licenced third party collection companies.  

 

REMZAP

In 2020, in order to mitigate environmental impacts of its products and services, the company continued work on constructing a paint shop in one of its production halls.

 

Launching the paint shop will reduce third parties’ exposure to harmful effects of substances used for painting. A separated and closed space with a separate air feeding system as well as the use of extract ventilation with appropriate filters will significantly improve work comfort and eliminate the risk of employees inhaling harmful vapours and dust.

 

The use of filters will reduce emissions of harmful substances during painting. To date, such substances have been emitted directly to the environment.

 

4.

Human resources

 

The basic principles of HR management and respect for human rights are defined at the Grupa Azoty Group in the Collective Bargaining Agreements, which have been individually developed and implemented by each Group company. The matters provided for in the Agreements include rules of remuneration for employees, working hours, rules governing allowances and other remuneration components, as well as rules governing benefits other than remuneration for work (pension and death benefits). At Grupa Azoty S.A. and Grupa Azoty Police, the approach to workforce management is additionally governed by the HR Policy, and at Grupa Azoty S.A., Grupa Azoty Puławy and most of the Puławy Group companies also by the Work Rules.

 

4.1. Diversity

 

The Group has not formally introduced any diversity policy but in its operations it follows clear employment and promotion rules. It also seeks to achieve diversity in terms of gender, education, age and professional experience of its workforce, including in particular members of the governing bodies and key management personnel.

 

Table 14. Diversity on Management and Supervisory Boards at the Grupa Azoty Group (Dec 31 2020) Source: Company data.

 

It is the Grupa Azoty Group’s intention to apply transparent criteria in relations with its employees, depending on their experience, performance, potential, and values defined by the Group.

 

One of the key principles applied at every stage of a relationship with an employee is the guarantee of fair and equal treatment, as defined in Grupa Azoty Group companies’ Codes of Ethical Conduct. The Codes lay down the principles that should be followed by all employees and managerial staff at the workplace, including both the principles of day-to-day cooperation in performing job duties and the rules applied in recruitment processes conducted by the Grupa Azoty Group companies.

 

Some of the main principles defined in the Codes require that:

1.All current and prospective employees are guaranteed a fair and objective assessment;

2.The scope of responsibilities and expected performance for all jobs are communicated in a transparent and clear manner;

3.Development and in-service training opportunities are offered to all employees;

4.All decisions relating to employee promotion are made carefully and are clearly justified;

5.Everyone is treated with respect, regardless of their position, length of service, or experience.

4.2. Employment

People are the Grupa Azoty Group’s most valuable asset. The expertise and commitment of more than 15,500 Group employees are a driver of all our successes.

We work hard to ensure that all our employees are satisfied with their jobs, feel safe and know that we provide them with the best possible working conditions. Recognising that we are responsible for our employees, we take care to cater to their needs.

At the end of 2020, the Group's workforce was 15,625 staff, up year on year.

 

As at December 31st, Grupa Azoty S.A. employed 665 women and 1,553 men, with 12 employees working part-time and 84 persons under fixed-term contracts.

 

Grupa Azoty Puławy is the largest employer of all Grupa Azoty Group companies – its headcount is 3,605, with women accounting for nearly 22.5% of the total. Only three of the company’s employees worked under part-time contracts, and 305 were employed under fixed-term contracts.

 

Grupa Azoty Police had 2,505 staff, including 527 women.

 

The table below shows the Grupa Azoty Group’s workforce as at December 31st 2020.

 

Table 15. Number of employees at the Grupa Azoty Group (2020) Source: Company data.

 

4.3. Remuneration

 

Each of the key Group companies is a significant and valued employer in the region in which it operates. The table below provides information on the ratio of standard entry level wages at Grupa Azoty S.A., Grupa Azoty Puławy, Grupa Azoty Police and their respective Groups to national minimum wage in Poland in 2020.

 

 

 

 

Table 16. Ratio of wages at the Grupa Azoty Group to national minimum wage in Poland in 2020 Source: Company data.

 

4.4. Additional benefits

 

The Grupa Azoty Group provides its employees with a number of additional benefits. The Group does not have a uniform standard in this respect and each Group company defines its own policy taking into consideration the employees’ expectations and the company’s capabilities.

 

Grupa Azoty S.A.

Grupa Azoty S.A. has established an Employee Pension Plan, which was registered with the Polish Financial Supervision Authority on July 26th 2012. The plan has the form of an agreement whereby the employer pays employee contributions to an investment fund. The fund manager is Towarzystwo Funduszy Inwestycyjnych PZU S.A. At the end of 2020, 1,855 employees were registered plan members.

 

Medical care has been provided to employees since October 1st 2008. Currently, through cooperation with Luxmed Sp. z o.o., the employees have access to healthcare services, i.e. primary and specialist care physicians, specialist examinations and diagnostic tests. Medical care is subsidised by the Company in the amount of PLN 36 per employee. Last year, 1,788 employees and 782 employee family members were covered by the medical care plan, making up a total of 2,570 people.

 

Life insurance under a policy with PZU is a voluntary insurance for employees and their families. It is not subsidised by the Company. In 2020, a total of 2,824 employees, including family members, were covered by the insurance.

Grupa Azoty Puławy

Grupa Azoty Puławy has established an Employee Capital Plan (PPK) by signing a PPK management agreement (on October 17th 2019) and a PPK operation agreement (on November 8th 2019). The PPK was established pursuant to the Act on Employee Capital Plans of October 4th 2018. The plan manager is PKO Towarzystwo Funduszy Inwestycyjnych S.A. In 2020, 948 employees were registered plan members. The basic contribution payable by the employer and the employee is, respectively, 1.5% and 2% of the employee's gross pay.

 

Medical care has been provided to employees since June 1st 2015. Employees receiving medical care from Luxmed have access to healthcare services, i.e. primary and specialist care physicians, specialist examinations and diagnostic tests. Medical care is subsidised by the Company in the amount of PLN 36 per employee. In 2020, 2,943 employees and 2,418 employee family members were covered by the medical care plan, making up a total of 5,361 people.

Group life insurance for employees and their families, provided under a policy taken out many years ago with PZU Życie S.A. and renewed on November 1st 2018, is voluntary. It is not subsidised by the Company. In 2020, 3,394 employees and 1,369 family members were covered by the insurance. Total number of insured persons: 4,763.

 

Capital-linked group life insurance under an agreement executed with PZU Życie S.A. on January 26th 2001 is an employee plan consisting of an employee's life insurance and an investment fund. The insurance premium is fully funded by the employer.

 

Grupa Azoty Police

Grupa Azoty Police has established an Employee Pension Plan, which was registered with the Polish Financial Supervision Authority on May 6th 2006. The plan has the form of an agreement whereby the employer pays employee contributions to an investment fund. The fund manager is Towarzystwo Funduszy Inwestycyjnych PZU S.A. At the end of 2020, 2,088 employees were registered plan members.

 

Medical care has been provided to employees in cooperation with Luxmed. The employees have access to healthcare services, i.e. primary and specialist care physicians, specialist examinations and diagnostic tests. Medical care is subsidised by the Company in the amount of PLN 36 per employee. At the end of 2020, 1,857 employees and 1,048 employee family members were covered by the medical care plan, making up a total of 2,905 people.

 

Life insurance under a policy with PZU is voluntary insurance for employees and their families. It is not subsidised by the employer. At the end of 2020, 3,153 employees, together with family members, were registered under the insurance plan.

 

Benefits offered under the occupational welfare scheme

Part of our commitment to supporting employees is a wide range of employee benefits offered by Grupa Azoty Group companies under their occupational welfare scheme. We do not have a uniform Group-wide standard of benefits, and each Group company offers benefits depending on the employees’ expectations and the company’s capabilities.

 

The employee benefits include:

1.Corrective glasses,

2.Protective wear and workwear,

3.Retirement benefits,

4.Social fund,

5.Length-of-service award, annual bonus,

6.Training and courses,

7.Maternity/parenting/paternity leaves,

8.Co-financing of holidays and other forms of leisure,

9.University tuition allowance,

10.Non-repayable allowances and cash loans.

 

 

 

 

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4.5. Occupational health and safety

The Group's business requires compliance with the most exacting safety standards. Therefore, training in occupational health and safety and prevention of accidents and injuries at work is very important for the entire Group. OHS issues are globally regulated across the Group as part of formal agreements with trade unions. Detailed rules, internal policies and management systems regarding OHS vary across the Group companies.

 

At Grupa Azoty S.A., the OHS matters are governed by the Work Rules. The Company has also implemented the Occupational Health and Safety Management System compliant with the BS OHSAS 18001 and PN-N-18001 standards.

At two Grupa Azoty Puławy Group companies OHS matters are covered by the Integrated Management System, while other entities of the Grupa Azoty Puławy Group implemented Safety Policies. At the Grupa Azoty Police Group, OHS rules are included in the Collective Bargaining Agreements, with more specific matters provided for in the applicable internal regulations. In addition, Grupa Azoty Police has implemented a management system compliant with the BE OHSAS 18001 standard, together with the Safety Book and numerous procedures for OHS monitoring, hazard identification and occupational risk assessment, testing and measurements of work environment, etc.

 

The number of workplace accidents at the Grupa Azoty Group fell by more than 20% year on year. There were no work-related fatal accidents in 2020; however, eight cases of occupational disease were reported.

 

Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by gender in 2020 are presented in the tables below.

 

Table 17. Total workplace accidents at the Grupa Azoty Group (2020)Source: Company data.

 

Table 18. Total workplace accidents at the Grupa Azoty Group (2020)

Source: Company data.

Following announcement of the epidemic emergency at the beginning of 2020, Grupa Azoty implemented various information and preventive measures to ensure the safety of its employees and trading partners, including:

1.Appointment of special teams to minimise the public health threat posed by the coronavirus – the teams are tasked with developing and implementing special internal procedures to curb the risks posed by the spread of the virus.

2.Meetings, consultations and training courses have been limited, suspended or replaced with teleconferences.

3.Business trips have been limited to the necessary minimum.

4.Remote work procedures have been designed and implemented. The computer equipment of the employees has been appropriately prepared for this purpose by the IT services;

5.The flow of paper documents has been reduced in favour of using digital signature.

6.Information campaigns about new rules of operation of the companies and their employees, as well as the coronavirus itself, are being conducted using internal communication channels (intranet, company radio, email, etc.).

7.Employees taking care of children were given exemption from the obligation to work, with the proviso that one used day of leave will entitle the employee to use one day of the exemption period.

8.Direct contact between company staff and customers has been limited to the minimum. Receiving visitors and visiting any other parties has been limited to the minimum, and employees have been advised to leave their office rooms only if absolutely necessary. For this purpose special communications have been developed.

9.Access to buildings with office rooms has been restricted. Any person entering the company’s premises may have a temperature taken. To reduce traffic, access to certain units has been restricted or closed;

10.Office and other premises are being disinfected regularly. Additional hygiene supplies and dispensers have been purchased.

11.Employee attendance is monitored on an ongoing basis and projections of absence from work are being prepared.

12.Celebration of the Chemist’s Days has been cancelled.

13.The periodic OHS training for the Group’s employees takes the form of guided self-study courses. All instructional material has been made available on the intranet.

14.Based on the opinion of the Chief Labour Inspector, employees have been exempted from the obligation to undergo periodic medical checks until the public health threat has been lifted.

 

4.6. Staff training

 

The indicator shows the scale of Grupa Azoty Group’s investment in employee training in 2020 and the extent of this investment across the workforce. Compared with 2019, there was a significant drop in the number of training sessions, which was directly attributable to the epidemic.

 

Table 19. Employee training at the Grupa Azoty Group (2020)

Source: Company data.

 

The data presented includes external and internal training, excluding OHS training and job training.

 

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4.7. State Fund for Rehabilitation of the Disabled

 

Contributions to the State Fund for Rehabilitation of the Disabled are paid by all employers who have at least 25 employees (measured in FTEs), with less than 6% of them being disabled.

 

 

Table 20. Contributions paid to the State Fund for Rehabilitation of the Disabled (2020) Source: Company data.

 

The largest portion of the money is transferred by the Fund directly to employers as wage subsidies. The Fund also supports disabled individuals, non-governmental organisations working for people with disabilities, and specialist institutions, such as occupational therapy workshops, or social economy projects, such as occupational activity centres. A part of the Fund’s financial resources, mainly those for disabled individuals, is distributed by county local-government units, which – through their subordinate structures – collect and consider applications for financial support and then transfer the money.

 

 

4.8. Employee relations and freedom of association

 

Grupa Azoty attaches great importance to employee matters, including to building appropriate relations with employee representatives, i.e. trade unions.

 

The table below shows the total number of (representative and other) trade unions active at the Group and the percentage of employees who are members of the trade unions.

 

Table 21. Basic information about the trade unions active at Grupa Azoty.

Source: Company data.

 

 

5.

Social and sponsorship policy

Our products are used by consumers all over the world, but we never forget where they come from and how our manufacturing facilities impact the local communities. We are committed to ensuring that this impact is as positive as possible and that residents and local authorities consider us a good neighbour that supports economic, cultural and social development.

 

In 2020, the Grupa Azoty Group made donations of over PLN 4.7m and spent nearly PLN 1.5m to support children’s and youth sports.

 

5.1. Rules governing community engagement at the Grupa Azoty Group

The Grupa Azoty Group treats engagement with its social environment and local communities as a strategic and long-term objective.

 

CSR and sponsorship initiatives contribute to the implementation of the long-term growth strategy of the Grupa Azoty Group. Grupa Azoty S.A. and other Grupa Azoty Group companies undertake initiatives in this area based on the Grupa Azoty Social and Sponsorship Policy and the rules for its application at the Group, which define the focus of social and sponsorship activities, including:

1.Investments benefiting the local community, solving social issues, charitable assistance in the form of cash and non-cash donations and services, addressed directly to the communities or to charitable organisations, NGOs and non-profit organisations;

2.Social and sponsorship projects relating to local initiatives, often with a supraregional, or even international, media coverage;

3.Nationwide and international social and sponsorship projects, going beyond the framework of local initiatives.

 

Objectives of the social and sponsorship activities:

1.Building a positive image of the Group as a people- and environmentally-friendly business;

2.Building the Group’s and its companies’ image as socially responsible businesses supporting local initiatives;

3.Promoting the Grupa Azoty brand by increasing its recognition outside the group of its customers and buyers of its products;

4.Communicating Grupa Azoty’s message to stakeholders which are important to the Company, with focus on the importance of high standards of projects and initiatives implemented by the Group;

5.Building the Group’s and its companies’ reputation, and gaining recognition and favourable perception among the public, particularly for the positive role the Group plays in solving social and environmental issues of today’s world;

6.Enhancing attractiveness of the regions in which the Group operates as places to live, work, pursue passions and fulfil ambitions; while offering young people the best possible education, health and wellbeing opportunities;

7.Supporting promotional and commercial activities.

 

National and international community engagement initiatives, including social and sponsorship projects, are coordinated by Grupa Azoty S.A. on behalf of the entire Grupa Azoty Group. At the same time, each of the Grupa Azoty Group companies implements projects and social activities of a local nature and reach. Decisions to undertake individual initiatives are made by the Management Board of a given company, based on the plan of social and sponsorship activities approved by the relevant Supervisory Board.

 

The principles of engaging with local communities are also incorporated into the Codes of Ethical Conduct of Grupa Azoty S.A., Grupa Azoty Puławy and Grupa Azoty Police, which stipulate that the companies should:

1.Have an open approach and be ready to engage in dialogue with the local community;

2.In contacts with representatives of local communities – respect their dignity and reputation;

3.In a situation of conflict – always look for ways to protect the legitimate interests of each party;

4.Be sensitive to the needs of the environment;

5.Not let themselves be guided by political views.

 

Detailed rules governing charitable donations are laid down in the Group-wide Grupa Azoty Donation Policy and in Donation Rules in place at individual Group companies. The Policy and the Rules set out the principles to be followed when making charitable donations.

 

Through its social and sponsorship projects, the Grupa Azoty Group builds its reputation of not only a financially successful, but also socially responsible business. As an entity using natural resources, the Group undertakes social and sponsorship activities dedicated primarily to local projects and the needs of local communities. The Grupa Azoty Group cares in particular about the development of the regions in which its companies operate. At the same time, it seeks to ensure that the reach and nature of the projects it chooses to sponsor is supra-regional. With this goal in mind, it undertakes activities extending beyond its local borders, thus becoming a global brand. The Group’s social and sponsorship policy may therefore also cover international entities and projects.

 

Grupa Azoty addresses its social and sponsorship efforts to organisations and institutions working for the following causes in a given region:

1.Education of children and youth;

2.Culture;

3.Economic development and promotion of the region;

4.The founding fathers and traditions of the Polish chemical industry;

5.Protection of life and health;

6.Amateur sports.  

 

5.2. Supporting efforts to fight COVID-19

 

In connection with the public health threat announced early in 2020, Grupa Azoty has joined the efforts to help healthcare facilities. The key companies donated a total of PLN 4.2m to the institutions and facilities fighting the spread of the coronavirus.

 

To combat the spread of SARS-CoV-2, Grupa Azoty S.A. lent its support to the following organisations:

1.Healthcare Complex in Dąbrowa Tarnowska – in-kind donation (protective equipment);

2.Edward Szczeklik Specialist Hospital in Tarnów – financial donations for the purchase of medical and protective equipment;

3.Independent Public Healthcare Complex in Brzesko – financial donation for the purchase of medical equipment;

4.Edmund Biernacki Specialist Hospital in Mielec – financial donation for the purchase of medical equipment;

5.Independent Public Healthcare Centre in Bochnia – Blessed Marta Wiecka County Hospital – financial donation for the purchase of medical equipment.

Additionally:

1.The Research and Development Centre produced antiviral gloves impregnated with silver, a material which has been long and widely used to fight viruses and bacteria.

2.The Research and Development Centre also joined the #DrukarzeDlaSzpitali (#PrintersForHospitals) initiative and donated Tarfuse^® 3D printing filaments to make protective shields and goggles for hospitals.

3.Filaments were also donated to support the project to build @VentilAid, Poland’s first ventilator. This open source project is carried out by Polish engineers and designers sharing documentation of a ventilator that can be made anywhere using a 3D printer and basic parts.

 

The Company also provided company cars to medical facilities.

 

Grupa Azoty Puławy

The company has actively joined the battle to fight the spread of COVID-19. The funds it donated were used to purchase:

1.Specialist medical ambulance with equipment, equipment for emergency medical services, ultrasound machine and ventilator for the Independent Public Healthcare Centre in Puławy;

2.Diagnostic equipment for the Military Institute of Hygiene and Epidemiology in Warsaw;

3.Professional personal protective equipment for the Independent Public Clinical Hospital No. 4 in Lublin;

4.Medical and laboratory equipment for the Provincial Sanitary and Epidemiological Station in Lublin;

5.Professional protective masks for the staff and residents of residential care homes in the Świdnik County;

6.Cardiology equipment and apparatuses for the Health Centre in Mikołów;

7.Equipment for the Independent Public Clinical Hospital No. 1 in Lublin to create a Temporary Hospital in Lublin;

8.Medical and personal protective equipment for the County Hospital in Ryki.

 

The company also provided company cars to medical facilities and, together with the Puławy hospital, organised transport for convalescent plasma donors.

 

Grupa Azoty Police

The company donated funds to:

1.The Provincial Sanitary and Epidemiological Station in Szczecin;

2.The Regional Hospital in Kołobrzeg;

3.The Professor Tadeusz Sokołowski Independent Public Clinical Hospital No. 1 of the Pomeranian Medical University in Szczecin.

 

Furthermore, funds were donated to the Foundation for Polish Values to help prevent the spread of COVID-19 among Polish communities in Lithuania and to buy equipment for school day care centres.

 

The company also provided hygiene products and personal protective equipment to:

1.The St. Borromeo Rehabilitation Hospital in Szczecin;

2.The County Headquarters of the State Fire Service in Police;

3.The Szczecin Provincial Emergency Medical Service Station.

 

The Company also provided company cars to medical facilities.

 

Grupa Azoty ZAK

The company made a donation to the Independent Public Healthcare Complex of Kędzierzyn-Koźle, which was designated for treatment of patients diagnosed with or suspected of having coronavirus within the network of COVID-only hospitals. The funds were used to purchase coronavirus diagnostic equipment, cardiac monitors and ventilators. The Company also provided company cars to medical facilities.

 

Grupa Azoty Polyolefins

Grupa Azoty Polyolefins also joined the fight against the effects of coronavirus. It made a donation to the Police County, and provided the necessary personal protective equipment to the Szczecin Provincial Emergency Medical Service Station.

 

In addition, Grupa Azoty Polyolefins and Hyundai Engineering Ltd., Co. (General Contractor of the Polimery Police project) provided 16 new computers to Primary School No. 6 with Bilingual and Pre-School Groups in Police, which are used by pupils in online learning.

 

It should be noted that Hyundai Engineering Ltd. also donated funds to purchase ventilators for the hospital in Police.

 

Grupa Azoty Siarkopol

The company provided its own ambulance to the Independent Public Healthcare Complex of Staszów. It also donated funds to buy equipment for the hospital and compound the efforts to contain the spread of the pandemic.

 

The Grupa Azoty PKCh Group

Grupa Azoty PKCh and other companies of its Group (Grupa Azoty Automatyka, Grupa Azoty JRCh and Grupa Azoty Prorem) donated funds to the Edward Szczeklik Hospital in Tarnów, and made in-kind donations to outpatient clinics in the region by providing them with personal protective equipment, such as face masks and protective clothing (coveralls), and disinfectant liquids.

 

5.3. Community engagement of the Grupa Azoty Group

Grupa Azoty S.A. undertakes central-level activities aimed at promoting and advertising the entire Group (financed by companies using the Grupa Azoty brand) and also pursues local projects promoting Grupa Azoty S.A., the parent of the Group.

 

All such activities are governed by the Grupa Azoty Social and Sponsorship Policy, Grupa Azoty Donation Policy, Grupa Azoty Donation Rules, Grupa Azoty Group CSR Policy (adopted in 2020), and additional internal documents.

 

Due to the pandemic emergency announced in 2020, some of those activities could not be carried out given the bans and restrictions imposed by Polish authorities.

 

Grupa Azoty S.A.

 

CENTRAL-LEVEL PROJECTS

The central-level activities included:

1.Cooperation with the Polish Skiing Association, which guarantees advertising of Grupa Azoty using the ski jumping, cross-country skiing, Nordic combined and snowboard national teams;

2.Cooperation with individual ski jumpers:

Piotr Żyła, ski jumper with National Team A, who in 2021 won the title of the World Ski-Jumping Champion;

Jakub Wolny, ski jumper with National Team A, one of the most promising young jumpers;

Aleksander Zniszczoł, ski jumper who has had several good performances in National Team A;

3.Cooperation with Monika Skinder, a cross-country skier, who became the 2021 Junior World Champion in cross-country skiing;

4.Support for sports events – the Grupa Azoty logotype was displayed at numerous sporting events, including the World Ski Jumping World Cup in Wisła and Zakopane;

5.Support for CSR initiatives in sports – the Grupa Azoty Group is the Main Partner of the National Cross-Country Skiing Development Programme;

6.Initiatives related to environmental protection and safety, including the ‘Polish Chemical Industry’ congress. In addition, Grupa Azoty was a partner of the Safe Chemicals Programme, run by the Polish Chamber of Chemical Industry.

 

LOCAL ACTIVITIES

Community Development

In 2020, Grupa Azoty S.A. conducted a wide range of CSR initiatives. Through these activities, which include educational, cultural and sports projects, the companies support their local communities and regions, thus building and promoting their perception as valued and respected partners and neighbours. These activities also contribute to a significant tightening and strengthening of positive relations between the companies and their immediate environment.

 

Development of the region

In 2020, Grupa Azoty S.A. participated in numerous initiatives for regional and community development, supporting the operations of such institutions as:

Polish Tourist Association Branch at Grupa Azoty S.A. in Tarnów-Mościce

KANON Association

Society of the Friends of Mościce

Social Initiatives Association

‘Linking Foundation’ for the Support of Local Ties.

 

Development of education

Grupa Azoty S.A. has a long-standing commitment to promoting the local community development, which is delivered through various educational activities, campaigns and programmes designed to support children and young people in pursuing their interests, improving their skills and acquiring new knowledge in such fields as environmental protection. Last year, Grupa Azoty S.A. worked in partnership with schools from the Tarnów region, including the Technical School Complex in Tarnów.

 

Grupa Azoty S.A. seeks to give this collaboration a long-term dimension. For instance, under an agreement with the Ignacy Mościcki Technical School Complex the Company plans to employ up to ten students each year, provide apprenticeship opportunities, help prepare classes and organise educational field trips, and offer support in applying for EU funds.

 

Development of sports

The sports development initiatives cover the sports which are most popular in Poland, such as ski jumping, volleyball, speedway, football, as well as field and track sports. Supporting the best Polish athletes is one of the key elements in building the awareness of the Grupa Azoty brand. In its activities, the Company attaches great importance to supporting local sports, including both professional sports and children’s and teenagers’ sport activities, as part of CSR activities.

 

In 2020, we supported many sport disciplines, including:

• Grupa Azoty PWSZ Tarnów Club (volleyball);

• Jaskółka Tarnów (handball);

• ZKS Unia Tarnów Sports Club (football, futsal);

• Unia Tarnów Żużlowa Sportowa Spółka Akcyjna (speedway).

 

Development of culture

Believing that culture is an invaluable social phenomenon and an integral system within the process of education, which stimulates imagination, sensitivity and creativity of successive generations and plays a significant role in shaping both individual and national identity, Grupa Azoty undertook the following initiatives:

• Organisation of cultural events and workshops promoting respect for the national and cultural identity;

• Support of cultural projects and programmes promoting the region;

• Support for projects promoting national culture.

As part of local art and culture initiatives, Grupa Azoty lent assistance to:

• ArtContest Artistic Association of Tarnów (Grupa Azoty International Jazz Contest);

• Paderewski Centre in Kąśna Dolna.

 

Protection of life and health

Aware of the need to engage in initiatives for the protection of human health and life, help the suffering, sick and terminally ill, as well as those deprived of opportunities for development and unable to function on their own in society, last year the Company extended particular support to the institutions which help those in need. Some of the beneficiaries in 2020 were:

• ‘Their Better Tomorrow’ Association;

• Tytus Chałubiński PCK Blood Donors Club at Grupa Azoty S.A.

 

Grupa Azoty Puławy 

Grupa Azoty Puławy views social and sponsorship activities as a tool for the implementation of its long-term development strategy aimed at strengthening its production and business potential. Through engagement in such initiatives, the company seeks to promote its image of not only a manufacturer of fertilizers and chemical components, but also of a friendly and socially responsible business. As a company using natural resources, Grupa Azoty Puławy undertakes activities dedicated primarily to supporting local initiatives and needs. At the same time, it wants the initiatives it sponsors to have a supra-regional reach and character.

 

Community Development

With the safety of the local community in mind, the company continued the ‘Safety is Our Common Goal’ programme run jointly with the County Headquarters of the State Fire Service in Puławy and the Board of the Puławy County Unit of the Voluntary Fire Brigades Association of Poland. Specialist fire helmets were purchased for members of five fire brigades from the Puławy County.

In promotion of healthy lifestyles, the company provided support to various associations of sports enthusiasts. In 2020, it sponsored the Azoty Yacht Club of Puławy, which organises sailing courses and camps on lakes and the Vistula River, the Company's PTTK (Polish Tourist Association) Branch, which organises and promotes tourist activities among company employees, and the ‘Chemik’ Puławy Society for the Promotion of Physical Culture.

Development of education

Grupa Azoty Puławy continued its partnership with the ‘Chemik’ Technical School Complex and the Maria Curie-Skłodowska University in Lublin (the Puławy campus), whose curricula have been designed to match the skills and competencies needed in the chemical industry. The cooperation with Maria Curie-Skłodowska University allows the graduates of the Technical School Complex of Puławy to continue their education by taking relevant courses at the University, and the company employees have the opportunity to advance their education through extramural studies.

Development of sports

In 2020, the largest amount of funds was allocated to sponsoring professional sports. Grupa Azoty Puławy continued its partnership with:

Azoty-Puławy handball club;

Wisła Puławy Sports Club;

Malwina Kopron;

Speedway Motor Lublin speedway club;

MKS Padwa Zamość.

The company co-organised the 26th Polish Youth Indoor Olympic Games – ‘Lubelskie 2020’.

Development of culture

Grupa Azoty Puławy engages in activities fostering development of the local community by helping to organise cultural events and supporting cultural initiatives. In 2020, the company continued its partnership with the ‘Dom Chemika’ Puławy Cultural Centre, the Lublin Music Theatre, and the Vistula Museum in Kazimierz Dolny. The company took part in the celebrations of the 400th anniversary of the church organ in Kazimierz Dolny, which provided an opportunity to organise a number of musical performances. It also became involved in the celebrations of the 40th anniversary of the 1980 Lublin strikes and the 100th anniversary of the Battle of Warsaw. Grupa Azoty Puławy was the main strategic sponsor of the ‘The Pope and the Primate. Friendship Born in the Lublin Region’ television show made to commemorate the 100th anniversary of the birth of Saint John Paul II. The entire project was carried out in the Lublin region.

Social campaigns

In 2020, activities undertaken by Grupa Azoty Puławy for the benefit of local communities included:

A Christmas gifts drive for families in need – in partnership with the Municipal Social Welfare Centre;

Collecting plastic bottle caps – at the request from the Puławy hospice. Dedicated collection boxes have been placed on the company’s premises for several years now;

The purchase of 1.5 thousand visibility vests for employees who commute to work on bicycles;

Looking after a peregrine falcon’s nest – the Company works with local ornithologists in looking after the nest boxes located on the CHP plant flue gas stack, as well as watching and ringing of falcon chicks; in 2020, another two peregrine falcon chicks hatched in the nest on the flue gas stack of the Puławy CHP plant;

The ‘We Play Clean’ environmental campaign – a series of environmental protection initiatives designed to promote waste segregation;

Patronage of environmental projects for children, teenagers and senior citizens in local newspapers;

A social campaign in which the company encouraged its employees to bike rather than drive to work. As part of the campaign, it dedicated one of the gates to the company's site to its bike-riding employees and built the missing section of the cycle path leading to the company's site.

 

Grupa Azoty Police

Community Development

One element of the company’s strategy is to support the development of local communities. These efforts are undertaken in line with the plan of social and sponsorship activities, which covers promotion and advertising agreements and donations. Partnerships are established with local and regional clubs, associations and foundations. Support is also offered to private individuals.

 

Development of education

Grupa Azoty Police is consistently pursuing its efforts to develop professional and occupational education. Cooperation with secondary schools facilitates education of future employees with skills and knowledge needed in the chemical sector.

 

The company has under its auspices the chemical engineering class at the Ignacy Łukasiewicz School Complex in Police. Its students are given the opportunity to complete work placements and apply for scholarships.

 

Grupa Azoty Police also cooperates with other schools in Szczecin, including the Electricity and Electronics School Complex, the Władysław Orkan School Complex No. 2 and the Home Army School Complex No. 4. Students of chemical engineering classes, like their peers from the Police-based school complex, can complete work placements and receive scholarships.

 

In September 2020, Grupa Azoty Police, Grupa Azoty Polyolefins, Grupa Azoty Police Serwis and the Maritime University of Szczecin signed a cooperation agreement. This is another example of efforts to strengthen ties between science and business. The agreement is an outcome of projects executed by the parties, including first of all creating a joint course of study, educating engineering and technical staff, and implementing scientific and research projects. Industrial engineering and offshore wind power plants, the curriculum of which is drawn up in cooperation between the University teachers and Grupa Azoty experts, will be a one-of-a-kind course of study not only in the region.

 

In addition, Grupa Azoty Police continues to work with the West Pomeranian University of Technology, including on R&D projects, implementation-based doctoral programmes, educating technical staff, and organising work placements for students of Chemical and Process Engineering and the Faculty of Mechanical Engineering and Mechatronics.

 

In January 2021, Grupa Azoty Police and the University of Szczecin signed an agreement on research and educational cooperation. The company is interested in attracting not only highly-qualified technicians and engineers, but also specialists in management, accounting, law, etc.

 

The Company positively responded to students’ needs by providing them with selected information which was used in a number of dissertations. The company arranges internships and work placements which attract students from the region. Examples include ‘Green Forge’, the HR Department’s proprietary project implemented as part of the Employee Engagement Enhancement Programme, designed to offer free work experience for students and paid internships for graduates.

 

The cooperation with the West Pomeranian Business School and the WSB University allows employees to pay lower tuition fees.

 

Development of sports

The sports teams with whom Grupa Azoty Police cooperated in 2020 included Pogoń Szczecin, a premiership football team (until the end of June 2020), and the Chemik Police Volleyball Club, whose players won all domestic trophies in the 2019/2020 season.

 

Cooperation was also continued with Marcin Lewandowski, a multiple European indoor champion and the 2019 World Championship bronze medal winner in the 1,500-metre run, who qualified for Tokyo 2020 Olympic Games. The event was postponed for 2021 due to coronavirus pandemic.

 

Grupa Azoty Police once again became the Main Partner of the West Pomeranian Fencing Association, which in 2020 organised the Polish Senior Cup in épée fencing, the Northern Poland Cup for children and youth in foil and épée fencing.

 

To meet the local community’s expectations, the company also supported local amateur clubs. Another agreement was signed with the Chemik Police Football Club, which plays in the third league. Support was also provided to ‘Champion’ Students’ Sports Club whose members are table tennis players of various ages.

 

Protection of life and health

The Polish Association of Voluntary Blood Donors – the Henri Dunant Voluntary Blood Donors Club of Police, supported by Grupa Azoty Police, Is active in the Police County, promoting the idea of voluntary blood donation. In 2020, 175 volunteers donated almost 80 litres of blood during the six blood donation drives hosted on the company’s premises.

 

Social campaigns

Grupa Azoty Police commenced cooperation with the ‘Useful Ones’ Social Cooperative, which supports individuals with disabilities. The cooperative, being a part the Polish Association For Persons with Intellectual Disability, Police Branch, runs two restaurants in which disabled persons can pursue their interests, raise their qualifications and integrate with others.

 

In 2020, the company continued its cooperation with the Foundation for Polish Values, including through the ‘Package for the Compatriot and Hero Living in the Eastern Borderlands’ campaign, aiming to donate Easter and Christmas gifts for Poles and their families living east of Poland.

6.

Ethics management (counteracting corruption and bribery, respect for human rights)

The Group’s principles of ethics and respect for human rights, as well as the desirable attitudes and standards of conduct, are defined in the Grupa Azoty Code of Ethical Conduct. The Code describes the measures to be taken by the Group to foster responsible employee behaviour and build relations with its environment.

 

The Code defines the values applicable to all Grupa Azoty Group companies, namely:

1.Economy – understood as responsible management of the Group’s tangible and intangible assets based on a cost-benefit analysis so as to maximise benefits to the Group’s shareholders and other stakeholders.

2.Professionalism – making every effort to ensure that its management, operational and control system standards are effective and conducive to the achievement of its business strategy. To be professional is to apply the highest standards of care and make proper use of expertise, skills and business competence;

3.Cooperation – good cooperation means arranging mutual relations in a way that maximises benefits to the Grupa Azoty Group while respecting the interests of the other party. This requires communication aimed at achieving a win-win situation, based on implementing common goals in an atmosphere of trust and understanding;

4.Respect – respect is understood as full recognition of another person's dignity, irrespective of their nationality, race, gender, age, physical ability, religion, political views or sexual orientation;

5.Transparency – transparency means openly communicating our decisions and the reasons behind them, as well as our expectations and requirements. We practice transparency in all aspects of our activity except for those which must remain confidential for business or legal reasons.

 

Grupa Azoty Group companies have in place a number of documents covering ethical issues: the Anti-Corruption Code, Grupa Azoty Group Code of Ethical Conduct, Conflicts of Interest Policy, Whistleblowing Policy, Code of Conduct for Business Partners, and the Grupa Azoty Group Gift Policy. The Group companies monitor the contents of those documents on an ongoing basis. The Whistleblowing Policy was updated in February 2020.

 

In 2020, there was one case of workplace bullying reported at the Grupa Azoty Group, more specifically at Grupa Azoty S.A., where the anti-mobbing procedure was launched in accordance with internal regulations.

In 2020, 12 instances of irregularities were reported concerning the following areas:

1.Irregularities in the services performed by a service provider;

2.Breach of procurement regulations;

3.Mismanagement;

4.Breach of the Code of Ethical Conduct;

5.Breach of the Commercial Companies Code and the Labour Law.

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7.

Product quality, production, storage and transport safety, and safety related to the impact of chemical substances and mixtures on humans

 

Ensuring product safety and quality throughout a product life cycle is our main priority and one of the adopted strategic goals. We strive to minimise the risk inherent in our operations, related to, inter alia, the use of potentially hazardous chemicals, environmental footprint, and impacts on the local community, by applying the highest global standards and stringent regulations implemented across the Grupa Azoty Group. The legal framework for ​​our production and investment activities, as well as the reclamation of contaminated land and ensuring of appropriate conditions for production, storage and transport of our products, is set out in the following laws:

1.The Environmental Protection Law;

2.The Water Law;

3.The Waste Act; and

Other regulations applying to environmental protection, occupational health and safety and fire protection.

 

One of the basic principles underlying the operations of Grupa Azoty is responsibility for all activities related to the manufacture of products across the entire supply chain. Therefore, as part of its membership in Fertilizers Europe, the Grupa Azoty Group runs the Group-wide Product Stewardship programme, based on international regulations and quality standards. Under the programme, all companies of the Grupa Azoty Group are obliged to ensure that their fertilizer products, as well as all raw materials and intermediates used in their production, are processed, transported, stored, distributed and used in a responsible manner, causing no harm to human health and safety or to the natural environment. In 2020, 100% of key product categories across Grupa Azoty were assessed for their potential impact on consumer health and safety and on the natural environment.

 

The products and materials produced by Grupa Azoty are sold, inter alia, to food producers and farmers. Ensuring their highest quality and safety is therefore of utmost importance as it has a direct impact on the safety and health of people – the consumers of food products made of crops grown by Grupa Azoty's customers. Bearing in mind the need to ensure food security, Grupa Azoty has adopted and achieved the following objectives:

1.To offer mineral fertilizers supporting efficient and environmentally-friendly crop production to make agriculture profitable and guarantee the supply of affordable food;

2.To contribute to the security of food supply, thereby reducing poverty and supporting human development;

3.To prevent degradation of soil and restore it to original condition with a view to achieving wider environmental goals, such as prevention of desertification;

4.To eliminate (wherever possible) or mitigate the negative environmental impacts of our fertilizers and agricultural production.

 

The key document in that area is the Grupa Azoty Group's Food Safety Policy adopted across the Grupa Azoty Group, including subordinate groups and parent companies. The Policy is implemented through:

1.Ongoing monitoring of the parameters affecting the quality and safety of products;

2.Compliance with high standards of hygiene at the stage of production, storage and distribution;

3.Consistent upgrades and improvement of production infrastructure and technology;

4.Building health and safety awareness among the staff;

5.Managing internal and external communication so as to exchange information about hazards to product safety in the food chain.

 

In 2020, no penalties were imposed on any of the Grupa Azoty Group companies for non-compliance with the laws and regulations regarding the supply and use of products at any stage of their life cycle.

 

Jednostka Ratownictwa Chemicznego, a subsidiary of the Grupa Azoty PKCh Group, reported two incidents involving breach of procedures concerning safety of products and services, but no penalties were imposed. 

 

In the European Union, pursuant to Regulation (EC) No 1907/2006 of the European Parliament and of the Council concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), there is an obligation to register manufactured or imported chemical substances and conduct the chemical safety assessment in terms of the risks they pose to human health and the environment. The regulation requires manufacturers and importers to communicate information down the supply chain to downstream users regarding the safe use of substances on their own or in mixtures (as part of other products) by means of a mandatory document form (material safety data sheet). All Grupa Azoty Group companies complied with the duty to register all manufactured substances, and prepared and published appropriate material safety data sheets (or equivalent documents) in accordance with the REACH Regulation for all products placed on the market.

In 2020, those documents were updated on an ongoing basis, and the process of consolidation of all REACH measures and closer cooperation across the Grupa Azoty Group was continued.

 

The Grupa Azoty Group also pays particular attention to ensuring the safe transport of manufactured intermediates and products. In transporting particularly dangerous goods, we apply the European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR, L'Accord européen relatif au transport international des marchandises Dangereuses par Route). With the safety of local communities and the environment in mind, the Grupa Azoty Group companies provides support for other entities and business partners in the event of accidents in transport of hazardous materials. Grupa Azoty S.A., Grupa Azoty Police and Grupa Azoty Puławy are part of the SPOT System of Assistance in Transport of Hazardous Materials, which was established to improve the safety of hazardous materials transport in Poland, and in case of any incidents – to facilitate effective elimination of accident consequences by joint efforts and measures of the national rescue and fire services and the SPOT members.

All companies of the Grupa Azoty Group have the necessary monitoring systems, safeguards and procedures in place to prevent accidents and to contain their consequences, and report their safety issues on a regular basis. The main procedures implemented across the Grupa Azoty Group include preventive plans, production process controls, particularly hazardous work procedures, emergency/accident response, monitoring of health and safety at work, operational controls, assessment of compliance of the adopted safety objectives with applicable standards, and storage procedures. The procedures implemented by the Grupa Azoty Group are also related to product labelling, transport vehicles and packaging, in accordance with the REACH Regulation and Regulation (EC) No. 1272/2008 on classification, labelling and packaging of substances and mixtures (CLP).

 

The systems implemented by the Grupa Azoty Group companies include:

1.Industrial Accident Prevention Programme and High Risk Establishment Notification;

2.PN-EN ISO/IEC 17025 Management System (general requirements for the competence of testing and calibration laboratories);

3.Automotive Industry Quality Management Standard implemented in accordance with the ISO/TS 16949 standard;

4.Management Standard compliant with the Fertilizers Europe Product Stewardship Standard.

 

In order to comply with highest product safety standards and requirements, a system compliant with the requirements of the Codex Alimentarius standard, ISO 22000 and the applicable legal provisions is implemented and maintained in all Group companies whose products are sold to the food industry. The FSSC (Food Safety System Certification) system was implemented at Grupa Azoty Puławy in September 2014.

 

In 2020, Grupa Azoty Group companies improved, maintained and sought to integrate the common elements of their management systems. The integration process across the Grupa Azoty Group is carried out by a dedicated team, which is responsible for monitoring all amendments to standards and for initiating necessary adaptation measures for the certification of management systems according to the requirements of ISO 9001 and ISO 14001.

 

The relevance of adopted safety measures is also assessed by external inspection authorities and accreditation/certification bodies. Audit recommendations are implemented within prescribed time limits, and the certificates obtained confirm our due care and concern for safety.

 

 

 

 

 

 

 

Signatures of members of the Management Board

 

 

 

 

 

 

 

 

Tarnów, April 12th 2021