Magnit sums up the results of its work in sustainability for 2020

Krasnodar, Russia (April 27, 2021): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia’s leading retailers, has published its annual sustainability report. The Company has significantly reduced greenhouse gas emissions, waste production and water consumption, as well as implemented major social initiatives in the regions of its operation.

This is the second non-financial report of the Company, and the first since Magnit has adopted a sustainability strategy called “Retail with Purpose” (the Strategy) in 2020. The Strategy is based on 17 UN Sustainable Development Goals and sets up quantitative and qualitative indicators for the Company by 2025. In particular, Magnit undertakes to ensure that 100% of plastic used in its own operations to be collected and recycled, while reducing waste production, greenhouse gas emissions, as well as water and power consumption by 50%, 30%, and 25%, respectively.

The sustainability report for 2020 was made in accordance with the GRI Standards. The Company has released more non-financial metrics this year, striving to meet stakeholder expectations, and refined historical data on environmental indicators. Also, the quality of disclosure was improved thanks to the development of internal data collection processes.

Key Achievements in 2020

Within the Strategy, Magnit has singled out five priority areas to focus its efforts in: Environment, Sustainable Sourcing, Employees, Communities, Health and Wellness. Last year, despite all pandemic-related challenges and constraints, the Company showed progress in all areas of the Strategy.

The Сompany’s main achievements in sustainability have become:

· Greenhouse gas emissions reduced by 6.9%;

· Procurement from local producers increased by 5.4%;

· High rate of employee satisfaction – 72.6%;

· All the regions of the Company’s presence are encompassed with social programs, including #MagnitCare;

· Healthy lifestyle magazine called “My Magnit” was launched.

COVID-19

The Company established an anti-crisis office to promptly solve the pandemic-related issues. Magnit took measures to protect health of its employees and customers, substantially immediately, when the threat of mass infection became known. The Company also employed 2.5 thousand workers of the companies, which were forced to suspend their business due to the COVID outbreak. Additional personnel employed by Magnit helped ensure the uninterrupted operation of stores and the service level in difficult conditions, while the employees of other companies were able to retain a source of income. Also, the Company granted a 10% discount to volunteers and social workers who bought goods for elderly people during self-isolation regime.

Environment

Greenhouse gas emissions reduction was one of Magnit’s key priorities in 2020. The Company continued to modernize its vehicle fleet with medium-duty trucks (Euro 5), which enabled optimizing fuel consumption. In addition, Magnit started testing trucks running on NGV and the first Russian electric truck to explore a possible reduction of emissions while maintaining delivery efficiency.

In 2020, Magnit also devoted much attention to recycling, as well as to collection of used plastic and reduction of its consumption. The Company partnered up with Procter&Gamble to launch the project called “Give Plastic a Second Life”, which saw 40 reverse vending machines (fandomats) for plastic packaging collection installed in Moscow and Krasnodar, and 40 more will come in 2021.

In addition, the Company switched to using bags with 30% recycled plastic content.

Also, leveraging the optimized parameters of individual packaging enabled Magnit to reduce the total consumption of packaging materials at its own production facilities by 9.5% in 2020.

In the reporting period, Magnit’s HQ in Krasnodar was certified according to the EcoGreenOffice standard, which saw separate waste collection established and an optimal resource consumption system implemented. The Company installed additional 120 bins in its HQ to ensure collection of plastic, glass, metal packaging, and paper waste.

Sustainable Sourcing

As of the end of 2020, Magnit had over 5.8 thousand suppliers in Russia and abroad. During the reporting period, the Company continued to develop responsible sourcing tools, joint projects related to the eco-friendly goods production and the use of green packaging, as well as implement social and charity projects.

Magnit continued to focus on expanding the pool of local suppliers. In 2020, the Company saw 5.4% increase in procurement from local producers, while expanding the number thereof from 2,371 to 2,422. Last year, Magnit also launched the project called “Farmer’s Yard” – a dedicated zone in the stores of the chain to gather the local suppliers’ goods in. In addition, Magnit and Rosselkhozbank signed an agreement aimed at supporting and promoting farm goods in the Company’s stores.

Communities

In the midst of the COVID pandemic, Magnit launched a social program called #MagnitCare. Within the initiative, the Company provided 350 thousand free food packages to socially vulnerable citizens in 24 regions of Russia. In addition, Magnit issued over 150 thousand special discount loyalty cards granting increased cashback accrual to medical workers in all regions of the country and supported over 100 thousand medical professionals with delivery of tea and coffee gift boxes to the hospitals. Three thousand five hundred employees of the Company completed training to become volunteers and help elderly people during self-isolation regime.

Employees

While many companies had to cut staff during the pandemic, the number of Magnit employees increased by 2% and amounted to 316 thousand people in 2020. The employee engagement survey showed that 72.6% of employees were satisfied with their work in the Company, despite the ongoing business transformation program, and their level of engagement was 84.2%. Staff turnover in the reporting period decreased significantly – by 15.6 percentage points.

Health & Wellness

Magnit cares about health and well-being of its customers, providing them with access to healthy and balanced goods and supporting initiatives aimed at promoting an active and healthy lifestyle. In 2020, the Company significantly increased sales of fruits and vegetables, and also launched the “Healthy Lifestyle Cubes” project in hypermarkets to offer natural foods, sugar and gluten-free products, as well as superfoods on a special rack. In addition, exclusively for its customers Magnit started publishing a magazine called “My Magnit”, dedicated to a balanced diet and a healthy lifestyle.

Sustainability Focus Areas for 2021

In 2021, Magnit will focus on the implementation of programs aimed at healthy lifestyle promotion, reduction of waste production and greenhouse gas emissions, building a sustainable supply chain and increasing the share of local suppliers, greening the packaging of private label goods, as well as initiatives to involve customers in taking care of themselves, their loved ones and the environment.

“Despite the turbulent 2020, Magnit managed to lay the foundations for a systematic approach to sustainable development. We have analyzed and launched the transformation of business processes taking into account the ESG principles, audited corporate governance, industrial safety and labor protection systems, conducted the first employee satisfaction survey and implemented several important social projects. We continue to work on all focus areas of the Strategy and feel quite confident in achieving our strategic goals by 2025”, - commented Jan Dunning, Magnit's President and CEO.

The full version of Magnit 2020 sustainability report can be found here:

https://www.magnit.com/en/sustainable-development/non-financial-performance-indicators/