Annual Report Sustainability Report
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As One –
for the Customer

President and CEO’s
Statement

Dear Reader,
A year has gone since we launched our Sustainability Strategy “Retail with Purpose” and published our first Sustainability Report. And what a year it has been with the Covid-19 pandemic bringing many extra challenges to the way we conduct our business and service our millions of customers.

We have used the time since launching to really build the foundations of a systematic business process driven approach of Sustainability throughout the organization. Last year was very much about measuring and building base cases, for example we had our first company wide Health & Safety Audit, Corporate Governance Audit and Employee Satisfaction Survey, by the way showing results that I am very pleased with as we had an overall satisfaction rate of 72.6% in the middle of a pandemic and at the back end of a a multi year transformation program.

I feel very strongly about Sustainability. To me, this is running Magnit in a way that benefits our stakeholders, be it customers, suppliers, employees or shareholders as well as the environment, thus ultimately making good business sense and positively effecting the bottom line.
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Our response
to COVID-19

On 11 March 2020, the World Health Organization (WHO) declared the outbreak of the novel coronavirus (COVID-19) a global pandemic. The staggering spread of COVID-19 in 2020 both in Russia and worldwide has taken its toll on the economy and business.

A COVID-19 Task Force was set up to rapidly address any issues arising as a result of the pandemic. Almost immediately after learning about the threat of mass infection, Magnit took measures to protect the well-being of its people and customers.

Support for employees

More than 17 thousand protective screens were installed at checkouts across of the "at home" format, supermarkets and drogeries. To keep its staff and customers safe, Magnit revised the cleaning schedule to ensure more frequent disinfection of retail areas, shopping trolleys, and tills and other equipment. The Company introduced special floor markings and signage across its store estate, urging shoppers to maintain social distance. All sampling testers for beauty and skincare products were removed from drogeries to avoid skin contact. Other measures included more frequent disinfection of distribution centers, availability of disinfectants and sanitizers at all logistics centers, limited staff movement between facilities and a new shift schedule to limit the risks of coming into contact with infected people.

Support for communities

Due to COVID-19 restrictions, not all customers were able to have their expired bank cards re-issued in a timely manner, so we temporarily accepted expired bank cards from shoppers, thus enabling them to continue to make cashless payments and minimize contact with cash.

Amid growing demand for essential goods, Magnit increased shipments from distribution centers by 20% to ensure that its store shelves remain full. Magnit also increased inventory levels across all product categories and doubled its stock of socially significant food products at distribution centers. We remain in close contact with the Russian Ministry of Industry and Trade and follow its recommendations to keep the stock at an appropriate level. Some delivery and distribution infrastructure that serves around 2,500 multi-format stores in Moscow and Moscow Region operated at night to ensure 24/7 supply and to meet customer needs.

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We spent a total of
RUB
1.5 billion
to support our employees, customers, health care workers and local communities

Environment

Magnit places a great emphasis on environmental protection. The Company is aware of its responsibility and is implementing a number of initiatives that contribute to achieving its sustainability goals.

In its Sustainability Strategy 2025 developed and adopted in 2020 with a particular focus on environmental protection, Magnit defines several priority areas and sets strategic goals up to 2025. The environmental initiatives will help Magnit not only achieve its sustainability goals but also implement the principles of the UN Global Compact that Magnit joined in 2020.

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We are determined to achieve the following environmental protection goals by 2025:
50%

recyclable, reusable or compostable packaging for private label products

100%

recyclable plastics in own operations

30%

reduction in GHG emissions

25%

reduction in water and power consumption

50%

reduction in food waste

BEGINNING THE JOURNEY

SUBSTANCIAL PROGRESS

SUBSTANCIAL PROGRESS

BEGINNING THE JOURNEY

SUBSTANCIAL PROGRESS

Sustainable sourcing

Building a responsible supply chain is high on Magnit’s agenda. We seek to partner with those companies that conduct business in a fair and transparent manner and observe all labor, environmental, ethical and social standards.

In its Sustainability Strategy 2025, Magnit defined a number of focus areas and set the corresponding goals it is committed to achieve in each of these areas by 2025.

Magnit’s supply chain includes over 5,800 suppliers within and outside Russia. We expect our suppliers to share our sustainability principles and values.

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On the sustainable sourcing front, we have the following commitments:
100%

responsible sourcing for socially important product categories

100%

Development and partnership programs for local suppliers and farmers

100%

Responsible sourcing for commercial and non-commercial purchases

100%

responsible approach to own production and agriculture

100%

Increased use of green packaging

BEGINNING THE JOURNEY

BEGINNING THE JOURNEY

BEGINNING THE JOURNEY

SUBSTANCIAL PROGRESS

BEGINNING THE JOURNEY

Our employees

Employees are at the heart of all we do at Magnit. Their engagement and commitment have helped us achieve high performance indicators. Every person is important to us with their needs and goals, and we seek to create fair, safe and comfortable working conditions for every employee and focus on staff development.

Our headcount rose by 2% from the 2019 level to 316,001 in 2020. Of them, 77% are women and 23% are men, 62% are aged from 30 to 50, 30% are under 30 and 8% are over 50. As many as 309,348 employees had permanent contracts (98% of the total headcount) and 6,653 (2% of the total headcount) had fixed-term contracts with the Company.

The Company employed 296,188 full-time workers and 19,813 part-time workers during the reporting year.

In line with its staff development roadmap, during the reporting year the Company carried out an assessment of employee positions, and developed and automated an employee performance management system as part of its efforts to improve the compensation system. It has launched a mobile HR application and improved the time-tracking system. Magnit has automated the hiring process, charted career paths and started to foster a career development culture.

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We pursue the following staff development goals to 2025:

Employee satisfaction of

Reduction in lost time injuries and zero occupational fatalities

A turnover of no more than

70%
50%
40%

GOAL ACHIEVED

BEGINNING THE JOURNEY

SUBSTANCIAL PROGRESS

Communities

We depend on thriving local communities to continue to prosper. Caring for people has been at the heart of all we do since the start of our business. By providing access to affordable, quality products we make a positive impact on the life of our customers and take care of their health and wellness.

We create jobs and provide regular revenue streams to local budgets in the form of taxes, thereby contributing to the development of local infrastructure and the improved well-being of local communities. Magnit is also committed to promoting volunteering and charity programs and helping people in emergency situations.

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As a socially responsible business, we have identified special focus areas in our sustainability strategy that are aimed at improving the quality of life of Russian citizens, and have set the following goals:

10% of our people to be involved in volunteering

Community programs to be available in all regions where we have a presence

BEGINNING THE JOURNEY

GOAL ACHIEVED

Health and wellness

We are committed to protecting the health and wellness of consumers. Not only do we provide customers with access to healthy and balanced foods, but we also support initiatives for the promotion of active and healthy lifestyles.

To that end, in 2020 we adopted a corporate Health and Wellness Policy that outlines our principles and responsibility regarding the health and wellness of consumers and sets out our standards and approaches to maintaining their health.

The year 2020 was a starting point for health and wellness initiatives, the first being Health Cubes – special areas in 52 stores where customers can find food items labeled as organic, sugar free or gluten free, as well as superfoods.

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Information about healthy lifestyles and diets to be available to all customers

Health-related products and services to be available to all customers

SUBSTANCIAL PROGRESS

SUBSTANCIAL PROGRESS

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Chapter 1
About the Company

Chapter 4
Sustainable sourcing

Chapter 6
Communities

Chapter 2
Our response to COVID-19

Chapter 5
Our employees

Chapter 7
Health and wellness

Chapter 3
Environment

Also in this Report:
© 2021 PJSC Magnit