ALROSA Partners with McKinsey & Company to Chart Ambitious Environmental and Climate Strategies Towards 2050

As a global leader in the diamond mining industry, ALROSA is making a definitive statement about its commitment to environmental stewardship and climate action. On October 22, 2021, the company announced a pivotal partnership with McKinsey & Company, a renowned strategic consultant, to develop comprehensive Environmental and Climate Strategies. This ambitious initiative will outline ALROSA’s sustainability roadmap up to 2030, with a forward-looking horizon extending to 2050. This strategic collaboration underscores ALROSA’s proactive approach to integrating responsible business standards into its core operations, aiming to strengthen consumer trust, ensure the long-term sustainability of the diamond industry, and contribute positively to global environmental goals. The move reflects an increasing recognition within major industries that sustainable development is not merely a compliance issue but a fundamental driver of future success and resilience.

The development of these strategies represents ALROSA’s next significant stride in championing environmental, social, and governance (ESG) principles. By enlisting McKinsey’s profound expertise in climate and sustainability consulting, ALROSA aims to create a robust and actionable framework that goes beyond current industry benchmarks. This strategic partnership is designed to leverage global best practices and innovative solutions, ensuring that ALROSA remains at the forefront of responsible mining and ethical sourcing within the natural diamond sector. The resulting strategies will be instrumental in guiding ALROSA’s operational decisions, technological investments, and stakeholder engagements, setting a new precedent for environmental accountability in large-scale resource extraction.

Strategic Imperatives: ALROSA’s Vision for Environmental and Climate Action

Through the formulation of these Environmental and Climate Strategies, ALROSA is committed to addressing a series of critical objectives designed to mitigate its ecological footprint and enhance its resilience against climate change. The company’s comprehensive plan encompasses several key areas:

Robust Assessment of Climate and Environmental Risks: ALROSA plans to conduct a thorough and systematic assessment of existing and potential climate and environmental challenges and risks pertinent to its operations and the broader regions where it operates. This involves developing an advanced methodology for evaluating these risks, moving beyond traditional assessments to incorporate predictive models and scenario planning. The ultimate goal is to significantly enhance the efficiency and responsiveness of its environmental impact risk management system. This proactive approach aims to identify vulnerabilities ranging from regulatory changes and supply chain disruptions due to extreme weather events to potential impacts on local biodiversity and water resources. By strengthening this system, ALROSA seeks to ensure operational continuity and minimize unforeseen environmental consequences.
Advanced Methodology for Scope 3 Emissions Measurement: A crucial aspect of modern corporate sustainability is the accurate measurement and reduction of indirect emissions. ALROSA is committed to developing a sophisticated methodology for assessing other indirect emissions, commonly known as Scope 3 emissions. These encompass a broad range of emissions occurring across the company’s value chain, including those from purchased goods and services, employee commuting, business travel, waste generation, and the use of sold products. Measuring Scope 3 emissions is notoriously complex but vital for achieving comprehensive decarbonization. By meticulously tracking these emissions, ALROSA will gain deeper insights into its overall carbon footprint, enabling it to influence and drive sustainability improvements not just within its direct operations but throughout its entire supply chain and broader ecosystem.
Long-Term Decarbonization and Climate Impact Reduction Plan: At the heart of ALROSA’s new strategies is the formulation of a comprehensive, long-term plan dedicated to reducing the company’s carbon footprint and its wider impact on climate change. This ambitious plan will outline specific targets, timelines, and actionable initiatives aimed at achieving significant reductions in greenhouse gas emissions. Potential strategies could include transitioning to renewable energy sources for its mining and processing operations, enhancing energy efficiency across all facilities, optimizing logistics, exploring carbon capture technologies, and investing in nature-based solutions. This commitment extends beyond incremental changes, signaling ALROSA’s intent to pursue a path towards substantial decarbonization in line with global climate objectives and the Paris Agreement.
Enhanced Transparency and Stakeholder Engagement: Recognizing the paramount importance of trust and accountability, ALROSA aims to significantly improve the transparency of its activities related to environmental protection and combating climate change. This involves establishing robust communication channels and reporting mechanisms to provide all stakeholders – including investors, employees, customers, local communities, and regulatory bodies – with full, accurate, and easily accessible information. Increased transparency will cover performance metrics, progress towards sustainability goals, challenges encountered, and corrective actions taken. This commitment to openness is crucial for building and maintaining stakeholder confidence and demonstrating genuine progress in environmental stewardship.
Implementation of Global Best Practices and Measurable KPIs: To ensure the effectiveness and accountability of its environmental and climate initiatives, ALROSA will create a transparent and comprehensible system of Key Performance Indicators (KPIs). These KPIs will be rigorously defined and designed to track progress across all strategic objectives. Furthermore, the company will draw up and implement cutting-edge technical and organizational solutions to achieve these KPIs, heavily relying on global best practices in sustainable mining and environmental management. This includes adopting innovative technologies, fostering a culture of environmental responsibility among employees, and continually evaluating and refining processes to maximize positive environmental outcomes. The integration of measurable KPIs will ensure that the strategies are not just aspirational but are driven by tangible progress and verifiable results.

Foundational Data and Strategic Oversight for Implementation

The development of these critical strategies will be underpinned by a meticulous and detailed study of ALROSA’s vast production facilities. This will be complemented by the company’s own extensive and accumulated database, which is built upon long-term, comprehensive studies of environmental impact, not only within ALROSA’s direct operational areas but also in the surrounding natural and social environments. This data-driven approach ensures that the strategies are grounded in real-world conditions and specific regional contexts, making them highly relevant and effective. The finalized documents, representing a culmination of intensive research and strategic planning, are slated for submission to the ALROSA Supervisory Board in the first quarter of 2022, marking a crucial step towards their formal adoption and implementation. This rigorous process demonstrates ALROSA’s dedication to developing scientifically informed and institutionally supported sustainability frameworks.

This current initiative is a direct and logical progression from the company’s previously approved frameworks. In 2021, ALROSA’s Supervisory Board formally endorsed an Environmental Policy and a comprehensive Sustainable Development Programme for 2021-2025. These foundational documents enshrine ALROSA’s core principles and overarching approach to environmental protection and sustainable development. They also clearly delineate specific objectives and targets across key environmental aspects, with a strong focus on climate change mitigation. In alignment with the ambitious goals set forth in the Programme, ALROSA is committed not only to significantly reducing its direct environmental impact in the regions where it operates but also to actively promoting the widespread adoption of advanced sustainability practices amongst its diverse network of business partners. This holistic approach aims to elevate sustainability standards throughout the entire diamond supply chain.

Leadership Perspective: Driving Industry-Wide Change

Sergey Ivanov, ALROSA’s CEO, articulated the profound importance of this strategic direction, stating: “Sustainable development and responsible business are today inherent elements of the global economy. A company’s success is now largely defined by its ability to be efficient and environmentally and socially responsible. As a key player in the global diamond industry, our company has for several years now been working on incorporating industry-leading sustainable development practices in its business model. I am confident that the profound expertise of McKinsey & Company’s experts, and their extensive experience of drawing up Environmental and Climate strategies for major international companies, will help to boost the introduction of best solutions and practices in ALROSA’s production cycle.” Ivanov’s statement underscores ALROSA’s conviction that sustainability is not an optional add-on but a core component of long-term commercial viability and societal contribution. By leveraging McKinsey’s insights, ALROSA aims to embed best-in-class environmental management systems and climate resilience strategies across its operations, influencing broader industry shifts towards more responsible and ethical practices. This leadership commitment reflects a strategic foresight to meet evolving global expectations and secure a sustainable future for natural diamonds.

ALROSA’s Broader Sustainability Landscape and Contributions

ALROSA’s dedication to responsible business practices extends significantly beyond its internal operational strategies. The company is a crucial and active participant in the diamond industry’s robust system of self-regulation. This includes its membership and adherence to the stringent standards set by organizations such as the Natural Diamond Council, which promotes the integrity and inherent value of natural diamonds; the World Diamond Council, focused on preventing conflict diamonds from entering the legitimate supply chain; and the Responsible Jewellery Council, which champions responsible ethical, human rights, social, and environmental practices throughout the jewelry supply chain, from mine to retail. These affiliations underscore ALROSA’s commitment to upholding the highest standards of transparency and accountability across the entire diamond value chain.

Further solidifying its global sustainability credentials, ALROSA officially joined the United Nations Global Compact in March 2021. This commitment signifies ALROSA’s pledge to align its operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment, and anti-corruption. The obligations undertaken as members of these prestigious organizations collectively demand an exceptionally high standard of responsibility from ALROSA. This responsibility encompasses diligently managing the environmental and social impact of its vast activities and ensuring the integrity of the entire diamond supply chain in the diverse social and natural environments where it maintains a presence. These memberships are not merely symbolic; they entail rigorous auditing, transparent reporting, and continuous improvement, compelling ALROSA to operate with exemplary ethical and environmental performance.

ALROSA’s commitment to its stakeholders and the environment is further demonstrated through its extensive social and environmental investment programs. As part of its overarching global ‘Diamonds that Care’ initiative, the company implements over 500 community projects and nature conservation initiatives annually. These diverse projects range from educational programs and healthcare support for local communities to reforestation efforts, wildlife protection, and scientific research aimed at preserving fragile ecosystems. A significant allocation of approximately 8% of its annual revenue is dedicated to these vital initiatives, showcasing a profound commitment that extends well beyond mere corporate philanthropy. Impressively, ALROSA’s annual social and environmental investments, amounting to between 20-25 billion Russian Rubles, are comparable in magnitude to its investments in technical retooling, modernizing production facilities, and developing crucial infrastructure. This balanced investment strategy highlights ALROSA’s integrated approach to sustainable development, demonstrating that economic growth and responsible stewardship are not mutually exclusive but are rather synergistic elements of its long-term vision for a thriving and ethical diamond industry.