Strategising Responsibly by Addressing Material Issues

At Hindustan Zinc, we have prioritised material assessment as a key tenet for building a responsive and responsible business strategy. We have proactively identified and prioritised the material issues that need our focussed attention on our path to sustainable development. The exercise is driven by our analysis of the various risks and opportunities facing our business. It enables us to steer our journey towards sustainability in line with the global transition.

OUR MATERIALITY ASSESSMENT FOCUS

A comprehensive materiality analysis is conducted at Hindustan Zinc once every three years, and the last such exercise was undertaken during FY 2022-23
Materiality issues are being reviewed annually and Company’s progress towards Sustainability Goals 2025 are reviewed bi-annually by the Board’s Environmental, Social and Governance (ESG) Committee
Since FY 2022-23, we’ve adopted a double materiality approach to conduct our materiality analysis. This method involves a comprehensive assessment that considers both financial and impact materiality strategies, guided by the principles embedded in the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB)
Additionally, we’ve integrated the approach and principles of Double Materiality outlined by the European Financial Reporting Advisory Group (EFRAG) and the EU Corporate Sustainability Reporting Directive (CSRD)
Impact materiality considers the organisation’s overall impact on environment and society, and financial materiality considers external risks and opportunities arising from sustainability matters that may impact the financial performance and position of the Company
Through this refined process, we’ve pursued a well-articulated impact materiality approach, which encompasses our organisation’s broader impact on people and the planet (environment and society), along with the financial materiality. This assessment involves a thorough analysis of both the negative and positive impacts, risks, and opportunities, allowing us to assess the severity and criticality of our sustainability matters from both impact and financial perspectives with a rigorous stakeholder process

A graphic illustrating the concept of double materiality, showing the inward and outward impacts on a company and the world. The image includes icons of buildings and a globe, emphasizing the bidirectional relationship between a company's operations and its external environment.

The materiality assessment serves as a vital tool, not only in identifying significant sustainability matters pertinent to our business but also in deepening our understanding of stakeholders’ views that reflect the impact of the Company’s activities and expectations from the Company on sustainability matters. Additionally, it enables us to proactively address the rising demand for integrated reporting, ensuring alignment of sustainability matters with industry-leading practices.

Our ESG committee at Board approves and signs off on the material issues. The same is then circulated to all the relevant functions and teams for taking relevant actions to address the impact. We also follow an annual assurance process, as part of which 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 CONDUCTING MATERIALITY ASSESSMENT

1

Identifying list of material topics

An initial lengthy list (of 85 topics) was identified by utilising leading standards based on the various emerging risks & opportunities.

The list was then cut down with further assessment to create an exhaustive list (of 24 material ESG topics) for Hindustan Zinc, based on four leading standards covering the concept of double materiality, and inputs of materiality faced by peer companies of Hindustan Zinc.

2

Gathering stakeholder inputs

For data collection, stakeholder-specific data tools like interview and survey questionnaires were developed.

Inputs were collected from seven groups of stakeholders (483 nos.) 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.

3

Risk and opportunity analysis

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.

4

Finalisation of materiality matrix

Determination of the high impact material issues was based on the risk & impact assessment and stakeholder responses that are analysed using a scoring methodology.

On the basis of severity, remediability and likelihood of occurrence, these issues were classified as high-high and medium-high impact areas.

The materiality matrix was developed following a thorough analysis of all stakeholder’s data.

A materiality assessment chart categorizing topics by their priority and impact on stakeholders, society, and the environment. It visually represents low, medium, and high priority topics in areas like health, safety, community engagement, climate change, and corporate governance.

OUR APPROACH TO MATERIAL TOPICS

We concluded that each impact 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.

Our category-wise strategic actions are based on their importance to our business. They take into account our materiality assessment, as well as the priority assigned to each material topic. We have also initiated a management approach to guide our actions in each priority area. This involves identification of specific programmes to address each material issue, based on its priority ranking. These programmes are being rolled out gradually, in phases, across the organisation.

High PriorityMaterial Topic	KPIs	Strategylinkage
Climate Change & Decarbonisation	Achieving net zero emissions by 2050 or sooner	S4 S5
	0.5 mn tCO₂e GHG emission savings in our operations in 2025 from base year of 2017



Air Emissions &Quality	Reduction in non GHG emission (SOx and NOx emission) by 17% by 2025 from base year of 2020	S5


WaterManagement	Become 5x water-positive Company and achieve 25% reduction in fresh water usage by 2025 from base year of 2020	S5



Circularity &Waste Management	3x Increase in gainful utilisation of smelting process waste by 2025 from base year of 2020	S2 S5



Tailings Management	Complete transition from wet tailing to dry tailing disposal by 2025	S1 S2 S5



Biodiversity & Ecosystems	Protect and enhance biodiversity throughout the life cycle	S5



Community Engagement &Development	Positively impacting 1 million lives through social, economic and environmental initiatives by 2025	S5



Health, Safety & Well-Being	Zero work-related fatalities and 50% reduction in Total Recordable Injury Frequency Rate (TRIFR) by 2025 from base year of 2020	S5



Talent Attraction & Retention	Inclusive and diverse workplace with 30% diversity by 2025	S5



Diversity, Equal Opportunity& Inclusion	Inclusive and diverse workplace with 30% diversity by 2025	S5



Data Privacy & Cybersecurity		S1 S2 S3 S4 S5

INTEGRATING MATERIALITY WITH ENTERPRISE RISK MANAGEMENT

Hindustan Zinc remains steadfast in its commitment to consistently assess the impact of diverse sustainability matters on its business. We accordingly focus on adapting our strategy to the assessment and in line with the evolving external dynamics. Critical areas like safety, climate change, biodiversity management, human capital management, community management, etc., which are listed among the risks faced by the Company, have been identified as material issues. This makes it extremely important for us to address these through an integrated strategic approach.