TRANSFORMING FOR GOOD

“Transforming for Good” encapsulates our ambition to embed ESG-thinking into every business decision wemake. As our business continues to grow and create impact, we take on the role of global partners and align our vision to the UN’s Sustainable Development Goals (UN SDGs) by addressing challenges such as the climate crisis, water stress, biodiversity loss, equity, inclusion, human rights, and social development.

Our three sustainability-focussed pillars are depicted in the diagram below. There are nine goals listed under these three pillars that attest to our dedication to minimising harm. With the help of our ESG approach, the Company is able to meet the demands of its important stakeholders in the areas of climate change, human rights, secure working conditions, environmental stewardship, diversity and inclusion, and sound governance. It builds upon the strong foundation of world-class policies and standards that the Company has built over the last decade.

ESG Governance:

At Vedanta Limited, the ESG Board Committee is the top decision-making body for all ESG matters. Together with our Group Sustainability and ESG function, it is responsible for implementing, promoting, and monitoring initiatives under our 'Transforming for Good' agenda.

To ensure effective oversight and timely implementation of ESG initiatives, we have established dedicated forums at all levels of management and ESG-themed communities at each Business Unit (BU) and Strategic Business Unit (SBU). These communities are responsible for owning specific ESG Key Performance Indicators (KPIs) and driving their successful implementation.

Commitments and targets

We have 15 Communities of Practice, led by senior, experienced professionals within the organisation, to drive specific ESG KPIs. This robust ESG management approach will ensure that our commitment to sustainability is fully integrated into our business practices and that we continue to transform for good.

Communities of Practice at Vedanta

While Communities of Practice, drive implementation of our ESG aims across BUs and functions, their progress is governed by the ESG ManCom and the Board-level ESG sub-committee.

ESG Advisory Committee

The Company benefits from the advice of external ESG advisers, who have been on-boarded to assist decision-making bodies such as the ESG ManCom. These senior advisers have led ESG functions across the world at leading metals and mining operations and have extensive global experience in dealing with ESG issues. These include ESG governance, social stakeholder management and the adaptation of global best practices such as the International Council on Mining and Metals (ICMM) and the Voluntary Principles on Security and Human Rights (VPSHR), among others.

The ESG advisers provide valuable insights and inputs at the highest decision-making level. Their expertise and guidance ensure that our ESG initiatives are aligned with global best practices, enabling meaningful progress towards our sustainability goals.

Capacity Building of Senior Management on ESG

Leadership commitment and people are key enablers of ESG. We have successfully completed a basic ESG training programme, Sustainability 101, for our top 100 senior managers. It has now been extended to the rest of the organisation via the online mode. The programme, designed to provide a better understanding of ESG-related issues, challenges, opportunities, and their relevance to our business, will help increase sensitivity and awareness amongst employees in working towards our ESG goals. The training will help our leaders and employees make more informed decisions and drive our sustainability agenda forward. We remain committed to investing in our employees and building a culture of sustainability within our organisation.

Robust Model to Drive ESG Actions

To ensure standard implementation of sustainability practices across all our businesses, Vedanta introduced the “Vedanta Sustainability Framework” (VSF) in 2011. The VSF is supported by an annual audit program called the “Vedanta Sustainability Assurance Program” (VSAP). Collectively, VSF and VSAP have helped establish the foundation for the implementation of sustainability practices across the Group companies.

ESG Scorecard

As part of our ongoing commitment to ‘Transforming for Good’ by transforming the planet, communities and workplace, we have developed an ESG scorecard to track our progress towards our aims and targets. This helps us monitor our performance and take corrective action where necessary.

Transforming Communities

Transforming Planet

Transforming Workplace

Communities give us the licence to operate and therefore are a top priority in our efforts to strengthen our bonds and gain their trust and support. We continually engage with the surrounding communities to respond to their needs, adapt our actions to the evolving landscape and ensure stringent adoption of globally-recognised human rights principles. Our community engagements, which include our CSR programs, are designed to bring positive change into the lives of the local communities, including scalable socio-economic development.

Social Governance at Vedanta

Our social governance structure is founded on a social framework that includes management and technical standards and guidelines that are an integral part of the Vedanta Sustainability Framework (VSF). This social ethos is aligned with the International Finance Corporation (IFC) performance standards and based on industry best practices from organisations such as the International Council on Mining and Metals (ICMM).

To ensure the effective implementation of our CSR initiatives, we have established a CSR Council, consisting of senior business leaders, CSR Heads and CSR Executives from all our business units. The Council meets monthly to discuss and make decisions on important matters related to CSR. The CSR Council is accountable to our Board CSR Committee, which approves the CSR budget, plans and reviews progress

Empowering Communities with Focussed Action

At Vedanta Limited, we have identified focussed community development areas, where we undertake dedicated efforts to drive holistic and scalable development. In FY 2023, we spent ₹454 crore on various community programmes benefiting ~44 million people. In the last five years, we have spent more than ₹1,750 crore on community development actions. Further, we participate in initiatives of national importance such as disaster mitigation, rescue, relief and rehabilitation. Since the last three years of the COVID-19-triggered emergency, we have been undertaking efforts to protect our employees and communities under the Vedanta Cares programme.

Making Community Welfare a Priority

Social Performance and Social Licence to Operate:

At Vedanta, we are building systems that will help build trust with local communities and thereby enhance our social licence to operate. Our processes are meant to regularly engage with community members and ensure that they are consulted/made aware of aspects of corporate performance that may impact their lives.

Under the aegis of “Social Performance”, we have constituted “Social Performance Steering Committees” (SPSCs) across all our sites. The SPSCs have been created to ensure that site management has comprehensive visibility to all community expectations and concerns and respond in a co-ordinated manner that helps build community trust.

All sites have grievance mechanism cells and well-laid-down procedures to handle community grievances transparently and in a timely manner. The SPSCs also help ensure that:

• All social incidents are investigated and closed in a systematic manner
• The site takes mitigative and pre-emptive action on any operational elements that may cause harm to the community
• There are strategies in place to ensure local procurement and local employment
• There is a coordinated stakeholder engagement strategy that involves the relevant internal teams such as CSR, External Affairs, and Security among others
• All social incidents are investigated and closed in a systematic manner

To further enhance our performance and governance on security matters, we have established a security Community of Practice (CoP). This CoP has been tasked to implement the recommendations of the Voluntary Principles on Security and Human Rights (VPSHR), which are recognised as global best practices for managing private and public security forces.

Highlights for FY 2023:

• Local procurement ¹ improved to 40% from 35% YoY
• Social Performance pilot project completed at VAL-Lanjigarh
• Completion of a human rights self-assessment across all BUs
• Programs being developed to hire women into the workforce from local and neighbouring communities

Note 1: Procurement done within/from the same State of operations

Enabling Brighter Futures and Quality of Life

We aim to improve the earning potential and quality of life of families within the communities near our plants and areas of operations through various skill-building and social interventions. We are committed to upskilling and empowering youths to obtain jobs through our skill centres. We assist farmers in improving agricultural practices for enhancing crop yield and quality and also to earn a second income through animal husbandry-related interventions. Additionally, we support more than 69,000 youth sports persons across Rajasthan, Goa, Odisha and Jharkhand with our sport-related works. This ensures them a better future while bringing laurels to their community, state and country.

Highlights for FY 2023:

• Micro-Enterprise Development Programme at HZL – (2 brands | 14 production units | 200+ products | 382 women employed | ₹2.26 crore turnover)
• 4,533 Nand Ghars completed
• TSPL: ~2,000 farmer beneficiaries and ~2,000 women beneficiaries under Project Navidisha and Project Tara respectively

Ensuring Transformational Change with Holistic Development

We collaborate with several NGOs to run programmes for enabling healthcare, education, nutrition, economic empowerment and digital governance for the local communities. Our flagship project, Nand Ghar, is an important pillar of this work. Currently, we have established 4,533 Nand Ghars that cater to 3.2 lakh women and children annually. Our target is to continue with these programmes and achieve breadth and depth of reach.

Highlights for FY 2023:

• Launch of Nutribar: A millet-based supplement to eradicate malnourishment in six months
• Sesa Technical School: 67 students in the second year of the vocational training course have completed their final year and passed out with a 100% placement rate

At Vedanta, we recognise our crucial role in addressing climate change and enabling a better and safer tomorrow. We are continually improving our practices to ensure that our operations and supply chain are more sustainable thereby setting benchmarks with pioneering initiatives around decarbonisation, circular economy, water positivity and increasingly efficient processes.

Building a Climate-Resilient Future

In FY 2022, Vedanta committed to decarbonise its operations and achieve net-carbon neutrality (net-zero carbon for Scope 1 & Scope 2 GHG emissions) by 2050 or sooner. Our GHG reduction strategy consists of four-levers, (i) Increasing the share of renewable energy, (ii) Switching to low-carbon or zero-carbon fuels, (iii) Improve the energy efficiency of our operations, and (iv) Offsetting residual emissions. In FY 2023, we have made progress in levers (i) – (iii). We only plan to purchase carbon offsets if we are unable to reduce our GHG emissions to target levels in 2030 and subsequently in 2050.

Our GHG reduction roadmap consists of 4 stages:

In stage 1 (FY 2021-FY 2025), we plan to reduce to GHG intensity (tCO₂e/tonne) of our metals businesses by 20% by FY 2025 (from a FY 2021) baseline.

In stage 2 (FY 2021-FY 2030), we will deploy the renewable energy capacity to ensure that we will have 2.5 GW of Round-the-Clock renewable power by 2030.

In stage 3 (FY 2026-FY 2030), we anticipate a reduction in our absolute GHG emissions in line with our target to reduce our absolute GHG emissions by 25% by FY 2030 (from a FY 2021 baseline).

In stage 4 (beyond 2030), we aim to deploy emerging technologies at scale and expand our renewable energy capacities to become a net-zero carbon business by 2050.

Note: Due to significant capacity expansion projects underway, we anticipate that our energy consumption will increase, thus peaking our greenhouse gas (GHG) emissions around FY 2026-27.

In FY 2023, we initiated multiple measures to help achieve our mid-term targets. Over the past two years, our efforts have resulted in avoided emissions of 4.17 million tCO₂e based on the FY 2021 baseline and 14.62 million tCO₂e based on the initial FY 2012 baseline.

Key Highlights, FY 2023

Lever 1: Increasing Renewable energy

By the end of FY 2023, Vedanta has signed 788 MW (RTC) renewable energy (RE) power delivery agreements (PDAs). Implementation of these PDAs will result in RE power consumption in operations increasing to ~ 6,900 million units, thereby avoiding 6.6 million tCO₂e in the atmosphere per year. With this, we shall meet 32% of our RE target of using 2,500 MW of RE RTC (eq.) power by 2030. An RE Steering Committee has been set up to coordinate efforts between different business entities.

Lever 2: Switch to low-carbon/zero-carbon fuels

Transitioning from coal to biomass is the mainstay of our fuel switch strategy. Our goal is to substitute 5% of the coal used in thermal power plants with biomass, a net zero-carbon fuel. In FY 2023, we used ~78,000 tonnes of biomass in our operations, a ~4x increase over FY 2022 levels (18,000 tonnes), resulting in a 0.2% coal switch. The biomass working group is creating a 3-year roadmap to use 5% biomass in operations.

We have also made positive progress on reducing emissions from LMV and mining fleet, through electrification and other measures. HZL and ESL have initiated the use of electric vehicles. HZL has launched the first battery-powered electric underground vehicle and LNG-powered 55-tonne heavy-duty trucks. A large electric forklift fleet of 27 is operating at our Jharsuguda location. Biofuel trials have started at BALCO and VAL-Jharsuguda and planning is underway to start trials at Sterlite Copper and Sesa Value-Added Business (VAB)

Lever 3: Improving the energy and process efficiency of our operations

Our commitment to the plan drives our efforts towards energy efficiency and process improvement, which are areas of keen focus. In the pursuit of these goals, we have undertaken some major projects in the aluminium sector that are expected to boost our efficiency levels. Some of these projects include:

• 100% Graphitisation with copper inserted collected bar (potential 1 million tCO₂e/year)
• Vedanta pot controller implementation (potential 0.2 million tCO₂e)
• Commissioning of TRT and BPRT at ESL (potential 82,000 tCO₂sub> e/year)
• Natural gas usage at Lanjigarh Alumina Refinery (potential 1,20,000 tCO₂e/year)

While these are projects under progress, there are some major energy efficiency projects we have completed at our sites:

• R&M of 1 unit of 600 MW at VAL Jharsuguda (3,70,000 tCO₂e/year)
• VAL Lanjigarh Evaporation - 1 Calendria 1 and 2 tubes replacement (18,000 tCO₂e/year)
• VAL Lanjigarh Boiler 2 junior APH replacement (16,000 tCO₂e/year)
• ESL Fuel crushing index improvement (31,000 tCO₂e/ year)
• ESL LD gas recovery project completion (18,000 tCO₂e/year

Lever 4: Purchasing carbon offsets for residual emissions
We have currently not initiated work on our fourth lever of GHG reduction i.e. carbon offset and will consider purchase or investment options for residual/hard-to-abate GHG emissions at the end of our target period.

FY 2023: Emission Performance

Absolute GHG Emissions: Our Scope 1 & Scope 2 GHG emissions have increased marginally by 4.6% increase from last year, however, our combined Scope 1, 2, & 3 emissions have flat-lined compared to FY 2022. As mentioned above, we anticipate a reduction in our Scope 1 & 2 GHG emissions after FY 2026.

GHG Intensity: We are on track to achieve a reduction in the GHG intensity of our metals business by 20%. In FY 2023, we were able to achieve a reduction of 3%.

Scope 3 targets: Currently, we do not have Vedanta-wide reduction targets for our Scope 3 GHG emissions. These will be finalised in FY 2024. However, two of our businesses have taken Scope 3 reduction targets:

• HZL has the target of reducing scope 3 emissions by 20% by 2027 over the 2017 baseline
• Aluminium sector has taken the target of a 25% reduction in scope 3 emissions over the 2021 baseline

Internal Carbon Price (ICP): Vedanta has set an Internal Carbon Price of US$15/tCO₂e. This is a shadow price that will be deployed for any project that has a budget of ₹50 million or more. We also have BU-specific ICPs.

Financing our Net Zero transition: As part of its net-zero commitments, Vedanta aims to spend US$5 billion over the next decade. While the allocations are still under planning, the goal is to spend more than 60% on increasing the use of renewable energy in our operations. The remaining 40% will be split almost evenly between energy efficiency, fuel switch, fleet decarbonisation, and carbon offset projects.

More details about Vedanta’s decarbonisation strategy can be found in our FY 2023 TCFD Climate Change Report.

Striving for a Water-Positive World

Vedanta defines net water positive impact as the ratio of Water Credit (water given back to natural water bodies) and Water Debit (water taken from natural water bodies).If the ratio is >1, then the site is said to be water positive. We have undertaken significant initiatives to progress towards becoming water positive, which has resulted in a 2% reduction in our overall water consumption in FY 2023 from FY 2021 baseline. Site-specific roadmaps are being developed, which involve identifying projects both within and outside our premises to improve our water positivity ratio.

To ensure consistency and accuracy in our calculations, we have also developed and approved standard operating procedures (SOP) related to water positivity.

Key Highlights, FY 2023

Freshwater reduction

We are banking on technology deployment across our sites to reduce freshwater usage through process improvement and recycling of wastewater. Out of our total water projects pipeline, 77% are focussed on reducing waste from operations as well as reusing wastewater in operations.

Replacing fresh water with alternate sources

We have resorted to alternative water sources like municipal wastewater and saline water or even harnessed the power of rainwater harvesting for usage in our operations. Nearly 10% of our projects are related to this lever.

Giving back to the community

We are creating rainwater harvesting and groundwater recharging projects for our communities to improve freshwater availability and retain biodiversity in the area. Almost 13% of our water-related projects are in these areas.

RE-led water consumption reduction

The increased usage of RE power in our operations at major locations like HZL, VAL Jharsuguda and BALCO are helping to improve our water positivity ratio. It has helped reduce coal power generation, which currently requires a large amount of fresh water.

Enabling a Cleaner, Greener and Sustainable Tomorrow

A greener business model translates into efficient management of natural resources and improvement in the circularity of our business, reducing the impact of our operations on biodiversity besides evaluating new green business growth opportunities.

Key Highlights, FY 2023

Circular business models

We are improving the circularity of our businesses by maximising utilisation of the high-volume-low-toxic (HVLT) wastes generated in our operations.

In FY 2023, nearly 164% of our HVLT wastes were reutilised. Fly ash, which forms the bulk of these wastes, saw 200% utilisation. Our goal is to ensure that by 2035, we utilise 100% of the generated waste and reduce to zero the legacy waste stored at our sites.

We are working with the cement industry to utilise operational waste as raw material and with the National Highways Authority of India (NHAI) to use the waste as substrate for road construction.

HVLTs such as red mud contain traces of Rare Earth Minerals (REE) and Research and Development projects are underway to enable the economical extraction of these minerals. Trials are also underway to use this waste as an alternative to sand. We are collaborating with CSIR, CRRI, IIT Kharagpur, IMMT, and NITI Aayog on these projects.

Reducing biodiversity impact

During the year, we established the biodiversity baseline for our sites. This will help us to understand the impact of our operations on biodiversity and guide the actions to be initiated to achieve No Net Loss (NNL)/Net Positive Impact (NPI) impact in the long term. We can accordingly update our biodiversity management plan (BMP). In FY 2024, we intend to finalise actions and timelines to reach the No Net Loss state, to kickstart relevant actions on the ground.

Employees are key to propelling our business growth through their competencies, skills and knowledge. Vedanta thus encourages a work culture that ensures their health, well-being and safety, supports diversity and inclusivity and provides equal opportunity to all its people. These values enable us to attract the best talent and unlock their full potential, thereby making us an employer of choice.

Safety First, Safety Always

We regret to report that 13 tragic fatalities occurred in FY 2023, which is an area of utmost concern for our organisation. With a sincere commitment to improving our safety performance, we have already implemented a focussed approach to reducing fatalities and improving overall workplace safety.

Our analysis of fatal injuries indicates that man-machine interaction, vehicle driving and structural stability were the top three causes of fatalities this year. We recognise the importance of addressing these critical areas to prevent future incidents and have implemented steps to improve safety measures in these areas.

Key Highlights, FY 2023

We have identified three levers to improve our safety performance and prevent fatal injuries in the future:

Implementation of Critical Risk Management (CRM)

We have implemented a scientific approach to analysing the root causes of fatalities, learning from them, and implementing actions on the ground. Currently, we are focussing on three areas of risk at the work site: vehicle- pedestrian segregation, man-machine interaction and work at heights.

Improving safety infrastructure

We recognise the importance of providing a safe work environment to our employees and have therefore prioritised improvements in our safety infrastructure. We are installing walking pathways with guiderails, roads with markers and traffic signals and separate roads for ash dumpers. Our focus is on ensuring that there are no fatal injuries due to the lack of safe infrastructure in place.

Employee and business partner training

We recognise the value of ensuring the safety of all our employees and business partners. We are therefore organising on-site trainings, virtual webinars and group CEO sessions to reinforce the importance of working safely and stopping work in case of any unsafe situation on the ground. Our goal is to foster a culture of safety for our employees and business partners.

Breaking Barriers, Building Multi-Dimensional Workforce

We are committed to improving gender diversity in our workforce and have implemented several initiatives to achieve this goal. Our aim is to ensure gender diversity at all levels of the organisation, including recruitment, decision-making and leadership. Overall, we believe that our initiatives to improve gender diversity in the workforce will result in a more inclusive and diverse workplace. Our commitment to implement additional initiatives ensures that we continue to attract and retain the best talent from diverse backgrounds.

Key Highlights, FY 2023

Enhancing Women Participation

We have set a target of recruiting more than 50% of women employees to improve the gender ratio in the workplace. We are providing opportunities to women employees with relevant experience to become part of decision-making bodies like ManCom and ExCo.

To groom the top 100 high-performing women employees in the organisation for CXO roles, we have introduced the V-Lead programme, which will involve mentoring by senior business leaders.

We are also creating a second line of leaders in the organisation through early identification of talent through structured processes like ACT-UP, V-Reach and other similar programmes.

Encouraging Inclusivity

We have undertaken steps to improve workforce inclusivity performance and in FY 2023, HZL, BALCO and VAL Jharsuguda units have inducted 20 transgender employees. We remain committed to working on this aspect in FY 2024 and beyond.

Enhancing a Responsible and Ethical Work Culture

Key Highlights, FY 2023

Revitalising sustainability framework

In FY 2023, we undertook work to refresh our policies and standards that are part of the Vedanta Sustainability Framework (VSF). The refresh will simplify the framework, better align the standards to ICMM requirements and reflect the revised ambition of our ESG programme.

Incentivising ESG performance

We have kick-started discussions to better embed ESG metrics in executive compensation. Currently, HSE/ESG performance constitutes 15% of employees’ performance pay. Climate change considerations are now a part of our employees’ stock option scheme (ESOS). However, based on benchmarking, it has been decided that this linkage needs further refining and we plan to introduce an updated methodology in FY 2024.

Enhancing transparency

Transparency and disclosures form the foundation of all dialogue. We release several ESG disclosures, which include the Annual Integrated Report, Annual Sustainability Report, Annual TCFD Climate Report, and the newly-constituted Business Responsibility and Sustainability Report. All these reports align with global reporting standards such as GRI, TCFD, and the IR Framework. This year, we will be releasing our 15^th Sustainability Report.

The quality of our disclosures and the underlying improvements in our ESG governance and performance are evident in rating upgrades across multiple agencies. This provides our stakeholders an independent assessment, that we are headed in the right direction. We will continue to benchmark against these frameworks, to remain aligned with global expectations around ESG.

More details can be found in the governance section of the report