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Addressing Material Issues on Our Journey to a New Horizon

A materiality assessment provides the foundation for shaping Hindustan Zinc’s business strategy. An analysis of risks and opportunities has proved to be the most effective way to prioritise the issues on which we need to focus, in our journey to a new horizon of growth. This becomes particularly important in the context of the global transition to sustainability, which could have significant impact for the metals and mining sector.

We conduct a comprehensive materiality analysis every three years – the last having been conducted in FY 2022-23. Our Board’s Environmental, Social and Governance (ESG) Committee reviews this materiality analysis and progress towards Sustainability Goals 2025 which addresses material issues six monthly, we adopted double materiality principle while conducting analysis. We engage with relevant stakeholders to understand the impact of Hindustan Zinc on society and the environment, particularly how it affects them. We also explore any potential consequences of the impact that could improve or undermine our reputation and relationships with them. We then assess the significance of the material topics especially with regards to being a possible risk for Hindustan Zinc. These topics are included in the assessment process because of their significant impact on our ability to execute our strategy, and impact our value drivers, such as revenue growth, margins and capital requirements.

The materiality assessment not only identifies all the significant ESG topics relevant for our business, but also helps us to better understand the stakeholders’ priorities and expectations from the Company on ESG issues. Additionally, the assessment enables us to be better prepared to meet the growing demand for sustainability reporting in line with leading practices.

The corporate Sustainability Committee approves and signs off on the material issues that are then circulated to all the relevant functions and teams for taking relevant actions to address the impact. As part of our annual assurance process, a third party validates our approach on materiality and ascertains its relevance in the context of our business and sector.

Our 4-Step Approach to Conduct Materiality Assessment

An initial lengthy list of 85 topics was identified by consulting leading standards and material issues faced by peer companies. The list was then cut down to create an exhaustive list of 24 material ESG topics for Hindustan Zinc, based on four leading standards and inputs of materiality faced by peer companies of Hindustan Zinc.

For data collection, stakeholder-specific data tools like interview and survey questionnaires were developed. Inputs were collected from 483 stakeholders through interviews, focus group discussions and surveys. This included both qualitative and quantitative inputs to better understand stakeholder perceptions about Hindustan Zinc’s impact on environment and society.

We analysed the potential impact of the identified issues on Hindustan Zinc’s ability to execute its business strategy and those with financial implications. These topics were then assessed against the risk threshold as defined in the enterprise risk management matrix.

Determination of the high priority material issues was based on the risk assessment and stakeholder responses that were analysed using a scoring methodology. On the basis of severity and likelihood, these issues were classified as high-high and mediumhigh priority areas. The materiality matrix was developed following a thorough analysis of all stakeholder data..

Impact on Hindustan Zinc

Through quantification of stakeholder inputs, 12 high priority material topics were identified for Hindustan Zinc across the metrics of Environment, Social and Governance.

Our Approach to Material Topics

We concluded that each priority level requires a differentiated management approach, and accordingly formulated a unique strategy across each category, based on the level of risk, opportunity and/or impact.

High Priority Topics

Climate Change & Decarbonisation

Air Emissions & Quality

Water Management

Circularity & Waste Management

Tailings Management

Biodiversity & Ecosystems

Community Engagement & Development

Health, Safety & Well-Being

Talent Attraction & Retention

Diversity, Equal Opportunity & Inclusion

Risk Management & Controls

Data Privacy & Cybersecurity

Medium Priority Topics

Sustainable & Inclusive Supply Chain

Labour Practices

Land Acquisition, Rehabilitation & Closure

Learning & Development

Business Ethics & Corporate Governance

Responsible Advocacy

Innovation R&D

Pandemic Response & Preparedness

Macro-Economic & Geopolitical Context

Product Stewardship

Low Priority Topics

Human Rights

Indigenous People & Cultural Heritage

Based on our refreshed materiality assessment and prioritisation of material topics, we are developing strategic actions to effectively address these priorities based on their importance to our business. Hindustan Zinc has initiated a management approach to guide necessary action in each priority area.

Lead and Shape

(High Priority Topics)

These are topics that can significantly impact business performance
Hindustan Zinc will look at setting the industry benchmark in these topics
Hindustan Zinc will be actively involved in policy advocacy on these topics to ensure that a strategic, balanced and forwardlooking approach is adopted by regulators in these areas

Align and Amplify

(Medium Priority Topics)

Hindustan Zinc will align with industry best practices on these topics
These topics will be closely monitored to reshape strategy if any of them transition into the ‘High Priority’ category in future

Manage and Comply

(Low Priority Topics)

Whilst these topics are low priority, they are still relevant to the business, and therefore Hindustan Zinc will continue to manage and monitor them as per policies and technical standards of Vedanta Sustainability Framework (VSF)

We have, accordingly, identified specific programmes to be rolled out progressively to address each of the material issues based on their priority ranking.

Changes in the High Priority Landscape

The materiality assessment has shown distinct changes in Hindustan Zinc’s high priority landscape as a result of the evolving external ecosystem, which continues to impact our business in significant ways.

A comparative analysis with the 2019 materiality assessment showed that the following topics now listed as high priority were not present in this category three years ago:

Circularity & Waste Management
Biodiversity & Ecosystems
Data Privacy & Cybersecurity
Risk Management & Controls

In contrast, there are certain topics that were high priority in 2019, but have been excluded from the list this time, or have been merged with or transitioned into another category. These are:

Local Employment (this is still relevant, but subsumed under Community Engagement & Development)
Human Rights (stakeholders feel that existing processes are strong enough to avoid these risks)
Ethics & Integrity (stakeholders feel that existing processes are strong enough to avoid any risks)
Compliance & Government Regulations (this has not been considered as a separate topic but assumed to be a theme across all topics)

Topics Integrated in Enterprise Risk Management

Hindustan Zinc will endeavour to continue to map the impact of various ESG topics on our business and revisit strategy as required, from time to time, in accordance with the evolutionary developments materialising in the external environment. These include topics like safety, climate change, human capital management, community management, etc., which have been identified as material issues while also being listed among the key risks faced by the Company. Given their high level of significance, it is important for us to ensure integration of our strategic approach while addressing these topics as material issues and risks.