PhosAgro : Climate-Related Disclosures

PhosAgro's

Climate-Related

Disclosures

2020

TCFD REPORT

PHOSAGRO 2020 TCFD REPORT

CONTENTS

01 CEO'S STATEMENT

02 CLIMATE AGENDA IN THE GLOBAL

AND INDUSTRY CONTEXTS

/1

CEO'S

STATEMENT

04 IMPLEMENTATION OF TCFD

RECOMMENDATION

05 ABOUT THE COMPANY

10 CORPORATE GOVERNANCE

12 Role of the Board of Directors

15 STRATEGY

15 Climate Strategy: key elements

18 Resilience of climate strategy

27 Actions to deliver the Climate Strategy

33 CLIMATE RISK MANAGEMENT

33 Climate risk identification and assessment

36 Climate risk management

36 Climate risk integration into the Company's risk management framework

37 METRICS AND TARGETS

42 Existing metrics: description and statistics

Dear colleagues,

Now more than ever before the world's companies are being called upon to show leadership

in the fight against climate change and managing the related risks.

In our corporate Strategy to 2025, we have set our sights on sustainable development and growth which always satisfies and realizes

the expectations and interests of all stakeholders whilst taking special care of our impact on society

and the environment.

In 2019, we formed a Board

of Directors committee devoted solely to sustainable development where we manage the issues related to climate change. In 2020, a comprehensive Climate Strategy was developed on the committee's instruction which incorporates an in-depth analysis of risks, opportunities and scenarios as well as setting concrete science-based targets and a plan for low-carbon transition. The Climate Strategy has since been approved by the Board of Directors.

A fundamental part of the strategy is science-based GHG emissions reduction targets. This includes

a 14% reduction in emissions by 2028 compared to the 2018 baseline across all scopes. Our low-carbon transition plan reflects initiatives developed within the Company

to help fulfil our GHG emissions

reduction targets. This refers to organisational and technical measures to reduce direct (Scope 1) emissions and measures developed as part of our Energy Efficiency Programme that extend to energy suppliers and help improve the climate profile of energy supplies (Scope 2). Furthermore, the plan covers measures to cut GHG emissions that have already been actioned in partnership

with suppliers and consumers across the value chain (Scope 3).

We take special care to stay up-to-date with any changes to international regulatory frameworks on climate change, such as the European Green Deal which could impact on the Company. Meticulously analysing these frameworks is part of the Company's risk management approach. We take any necessary corrective action, for example, implementing an internal carbon price.

For many years, climate change has been a priority for the Company.

In 2019, we signed up to CDP (formerly the Carbon Disclosure Project) and have been disclosing Company GHG emission data across all three scopes ever since. I'd like to note that in 2020, the Company also saw its CDP rating raised from C to B-, which testifies to PhosAgro's success in combating climate change even more efficiently.

Managing climate-related risks requires concerted effort from all companies to assess, manage and disclose relevant information for the benefit of all stakeholders. This report is the first comprehensive, TCFD-compliant summary of the extensive work carried out by PhosAgro's team

in analysing, reporting and managing our impact on the climate. This complements the information published in the integrated report and CDP reports.

Andrey Guryev

CEO of PhosAgro

CLIMATE AGENDA

IN THE GLOBAL AND INDUSTRY CONTEXTS

Climate change stands in the way of food security, sustainable development, and poverty reduction.

Global GHG emissions (bln t of CO2 per year)

6 0

5 0

4 0

3 0

2 0

The significance of the climate agenda for PhosAgro as a producer of complex fertilizers:

Climate risks

Our production and logistic infrastructure is exposed to physical climate risks, primarily in the Far North.

Climate change

Climate

• Climate's impact on us
  Fertilizer production

In order to supply a growing population with food

and support economic growth, it is imperative to introduce science-based,eco-friendly industrial technologies

and agricultural practices.

1 0

0

- 1 0

1 9 9 0

2 0 2 0

2 0 4 0

2 0 6 0

2 0 8 0

2 1 0 0

The 1.5°C goal of the Paris Agreement

The 2°C goal of the Paris Agreement

Commitments and goals 2.6°C

Current policies 2.7-3.1°C

The materialised effects of climate	The Company has a significant
change and their consequences,	impact on climate, primarily
coupled with significant changes	through the production
in agricultural production, create	of ammonia and nitric
new challenges for the mineral	acid as well as resource
fertilizer industry in terms	consumption.
of the product mix and application
methods.

	Fertilizer application
Company	By using mineral fertilizers, our customers also
exert an impact on climate.

According to some estimates, no meaningful action may result in losing up to 30% of the global GDP by 2100 with 2-3 bln people left in dire living conditions.

The diagram shows the dependence between the projected annual GHG emissions average

and annual temperature average under different climate commitments and goals.

As of today, the goal to achieve carbon neutrality has been adopted by countries that together account for 70% of the global GDP and more than 60% of GHG emissions1.

In particular, the European Commission's Green Deal2 aimed at reducing climate risks envisages:

• investment in eco-friendly technologies
• support of industry-specific innovations, including agriculture
• introduction of clean
  and inexpensive means of private and public transport
• decarbonisation of the energy sector
• better energy efficiency in construction
• cooperation with global partners to improve environmental standards

Our impact on climate >>

The European Union has	emissions generated by agriculture,	to the list of PhosAgro's priority
spearheaded the shift towards	currently the world's biggest	goals. The Environmental, Health
a new hydrogen-based technological	methane emitter, increased by more	and Safety Committee of the Board
platform. In 2020, the EU adopted	than a third.	of Directors saw its functions
several climate strategies, including		expanded to include GHG emissions
the EU methane strategy that	Given the importance of the climate	target-setting and development
sets out measures to cut methane	agenda for PhosAgro, in 2020	of actions to combat
emissions by 2030. As compared	the Company's Board of Directors	climate change and monitor
to 1990, the volume of methane	added SDG 13: Climate Action	their implementation.

1. Sources: Carbon Action Tracker / Net Zero Tracker
2. The European Green Deal is a climate strategy of the EU member states that aims to achieve net- zero carbon emissions by 2050. It was presented in December 2019 by the head of the European Commission and adopted in March 2020 by the European Council.

	PHOSAGRO 2020 TCFD REPORT
IMPLEMENTATION
OF TCFD
RECOMMENDATIONS
TCFD recommendations	Reported
Corporate governance
The Board of Director's role in monitoring climate-related risks and opportunities.		p. 12
The management's role in assessing and managing climate-related risks and opportunities.		p. 11
Strategy
Description of the climate-related risks and opportunities the organisation has identified		p. 20
over the short, medium, and long term.
Description of the impact of climate-related risks and opportunities on the organisation's		p. 26

4 /5

ABOUT THE COMPANY

businesses, strategy, and financial planning.
Assessment of the resilience of the organisation's strategy, taking into consideration	p. 18
different climate-related scenarios, including a 4°C and 2°C scenario. .
Climate risk management
Description of the organisation's processes for identifying and assessing climate-related	p. 33
risks.
Description of the organisation's processes for managing climate-related risks.	p. 28, p. 30, p. 36
Description of processes for identifying, assessing and managing climate-related risks.	p. 36
Metrics and targets
Description of the metrics used by the organisation to assess climate-related risks	p. 37
and opportunities in line with its strategy and risk management processes.
Disclosure of Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related	p. 39
risks.
Description of the targets used by the organisation to manage climate-related risks	p. 42
and opportunities and performance against targets.

PhosAgro is a vertically integrated mineral fertilizer producer. All mining and production activities are conducted in the Russian Federation.

The Company has its own resource base and carries out a full cycle of mineral fertilizer production - from extraction

and processing of apatite-nepheline ore to the production of mineral fertilizers. The Group includes its own research and development department, which ensures the best possible quality control of products, and is the largest European producer of phosphate fertilizers, the largest global producer

of high-grade phosphate rock, and the world's second (excluding China) manufacturer of ammophos and diammonium phosphate.

The Company is one of Europe's leading producers of complex mineral fertilizers (NPK). It employs over 17 thousand people.

PhosAgro's shares are traded

on the Moscow Exchange. The Global Depository Receipts for its shares are traded on the London Stock Exchange (ticker: PHOR), and since 1 June 2016 they have been included in the MSCI Russia and MSCI Emerging Markets indices.

PhosAgro has LEAD status under the UN Global Compact and is a participant of its Climate Ambition initiative. The Company's representatives are members of climate change and sustainable development task and expert groups, and are actively engaged in discussions on current global challenges.

PhosAgro's environmental activities, including actions to combat climate change, are conceived to be all- round and long-term. In particular, the Company continuously invests in equipment that allows

it to generate electricity utilising production waste heat in a process known as cogeneration.

For a detailed description of the Company, see

INVESTING IN

PHOSAGRO 2020 TCFD REPORT

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1

UPGRADES

As early as 2002, PhosAgro began investing heavily in facility upgrades and introduction

of the new technologies meeting the highest

electrical energy consumption	generation of steam was
was reduced from 134 to	increased from 0.48 to
51.8kWh/t	0.97Gcal/t

environmental requirements of the day.

2

One example is a large-scale upgrade of the sulphuric acid production facility at the Cherepovets site implemented in 2002-2009, owing to which:

• electrical energy consumption was reduced from 134
  to 51.8 kWh per tonne of sulphuric acid (monohydrate) output,
  and generation of steam was increased from 0.48
  to 0.97 Gcal per tonne of sulphuric acid (monohydrate) output
  to maximise the share of own electrical energy in the total electrical energy consumption;
• formation of hazard class 4 large- tonnage waste (pyrite cinder) of 1 mtpa was avoided;
• specific sulphur dioxide
  and trioxide emission standards were decreased.

Between 2018 and 2020,

the Company further upgraded its sulphuric acid production facilities in Cherepovets and Balakovo, having increased the volume

of electrical energy generated by utilising the production waste heat. The waste heat generated in the process of sulphuric acid production covers a significant share of the energy the facilities require for production purposes.

Increase in the production of power- generating steam allows for saving electrical energy and thus reduces Scope 2 GHG emissions.

In 2015-2017, a major investment project was implemented

in Cherepovets to put

into operation an ammonia production plant

with a capacity of 760 ktpa and a new granulated urea unit.

The new ammonia production plant boasts the following environmentally-friendly features:

• no effluent discharge resulting from ammonia production;
• air cooling technology for process environment was introduced
  to reduce water consumption;
• recuperative technology of air pre-heating before primary reforming was introduced
  to reduce natural gas consumption and air emissions.

The green features of the new granulated urea unit include:

• lowest rates of ammonia
  and urea dust emissions thanks to state-of-the-art technical solutions;
• carbon dioxide processing, which has a double effect: increased use of natural gas (as a complex hydrocarbon material) along with the respective reduction of the emissions of carbon dioxide (Scope 1 GHG).