Closer collaboration along the supply chain Beyond the boundaries
Suppliers represent an integral part of Clariant’s strategy and success. In order to take into account aspects of quality and performance, environmental and social criteria in each stage of the value chain, significant efforts and close collaboration are necessary. This includes all relevant categories and geographies globally.
Warm, humid air blankets a lush field of tropical foliage, while bushels of small, bright-red palm kernels are harvested. Although Clariant does not source directly from palm oil producers, this place is just as important as the labs where Clariant processes its chemical products: It is the location where farmers harvest one of Clariant’s renewable raw materials – palm oil. In line with its sustainability commitments, Clariant selects suppliers, outsourcing partners, and service providers based on extensive environmental, performance, and social criteria, because Clariant pursues the highest quality of raw materials, packaging, capital goods, services, and other inputs needed. All of Clariant’s global suppliers – including those that supply palm oil – are valuable assets to the company, and therefore Clariant is focused on maintaining strong, collaborative relationships with each of them.
Suppliers are essential to Clariant’s success
A company does not excel without taking care of ensuring quality, performance and sustainability. With this in mind, Clariant takes special care in selecting and managing its suppliers. Clariant procures products and services from more than 25 000 suppliers worldwide every year. To reach and maintain high sustainability standards for the products and services procured, Clariant expects suppliers to apply comparable standards in the areas of human rights, employment conditions, environmental protection, and corruption prevention as Clariant applies to itself.
One step further: Supplier Code of Conduct and the UN Global Compact
Clariant’s suppliers are located across the entire world, but they abide by the same principles: providing high-quality and sustainable sources, with production carried out under ethical employment conditions. Clariant outlined these expectations in its Supplier Code of Conduct integrating, among others, the principles contained in the United Nation’s (UN) Global Compact. The goal of this commitment is to respect human rights, prevent discrimination against employees, exclude forced and child labor, ensure freedom of association of the workforce, comply with environmental standards, accept product stewardship, and ensure fair competition.
Challenges lead to opportunities and collaboration
It is very difficult for any company to be fully aware of every detail in its entire supply chain – particularly upstream where materials are sourced further away from its own operations. To address and manage this challenge, Clariant leverages different channels and collaboration initiatives with other stakeholders to enhance supply chain transparency. One of these channels is the Together for Sustainability (TfS) initiative, which Clariant joined in April 2014 to elevate supplier sustainability monitoring and improvements.
By participating in TfS, Clariant and the other chemical company members assess the sustainability performance of a supplier using a set of sustainability criteria tailored to the requirements of the chemical industry. These criteria are based on the principles of Responsible Care®, the UN Global Compact, the International Labour Organization (ILO), and national laws. Thanks to this innovative and collaborative program, more than 60% of Clariant’s yearly raw materials purchases are covered by a supplier sustainability evaluation.
Palm oil & the Roundtable on Sustainable Palm Oil (RSPO)
The tropical, bright-red kernels harvested from palm plantations produce a substance that is increasingly used as a renewable raw material in a broad variety of applications: palm oil. Clariant does not use palm oil, but derivatives based on palm kernel oil, mainly in the personal and home care sector. Unfortunately, some palm oil agriculture contributes to deforestation and negative effects on local communities. As a result, in collaboration with its suppliers and its customers, Clariant is intensifying its efforts to achieve sustainably sourced palm oil derivatives to reduce the negative environmental effects and adverse social impacts associated with palm oil production.
»Mass Balance Certification underlines our commitment to sustainable sourcing of renewable raw materials.«
Ralf Zerrer Head of Strategic Marketing, Business Unit Industrial & Consumer Specialties
The foundation to enable more sustainable choices is transparency. To ensure this, Clariant achieved its goal of certification from the Roundtable on Sustainable Palm Oil (RSPO) to all sites manufacturing products based on palm-based raw materials (i.e., Clariant’s personal and home care products). Under RSPO Mass Balance Certification, the volume of palm kernel oil in a product reflects an equivalent volume of palm kernel oil produced by RSPO-certified mills and plantations. By offering products based on RSPO Mass Balance Certified palm oil derivatives, Clariant provides its customers the chance to claim a contribution to the production of certified sustainable palm oil. For a description of RSPO and Mass Balance Certified palm oil, please view the paragraph Principles of the RSPO below.
Collaboration in action: Sustainable Palm Oil and Traceability in Sabah (SPOTS)
suppliers worldwide provide products and services to Clariant.
of Clariant’s raw material purchases are evaluated based on sustainability criteria.
suppliers have been rated based on EcoVadis criteria since 2011.
sustainability audits have been conducted by means of the TfS Audit Program since 2011.
For Clariant, collaboration has proven to be an effective tool for enhanced traceability and supply chain transformation. To this end, Clariant teamed up with Wilmar International Ltd, The Global Amines Company, Wild Asia, and L’Oréal to both support small Malaysian palm oil producers on sustainability, certification, and supply chain traceability, and to increase productivity by 20% until 2020. This joint venture, known as Sustainable Palm Oil and Traceability in Sabah (SPOTS), implements specific action plans regarding the sustainable sourcing of palm oil and palm-based derivatives by working on the transparency of the affiliates’ supply chains and supporting independent smallholders to increase their income, improve their quality of life, and sustainably enhance welfare. With this project, everyone involved enjoys benefits: the companies, organizations, and smallholders as well as the ecosystems and communities surrounding the palm oil plantations.
Together for Sustainability
Together for Sustainability (TfS) was founded in 2011 by the Chief Procurement Officers of six major multinational chemical companies and meanwhile has grown to 19 members. TfS develops and implements a global supplier engagement program to assess, audit, and improve sustainability practices within the supply chains of the chemical industry. TfS members have two tools at their disposal to evaluate the sustainability management of their suppliers: TfS assessments, conducted via EcoVadis, and TfS audits, on-site inspections conducted by pre-approved audit companies. The results are then anonymously shared amongst the members with the supplier’s consent. This collaborative approach increases efficiency for both suppliers and members.
Since the start of the TfS initiative, the sustainability performance of 6 383 suppliers has been rated based on EcoVadis assessments and 724 TfS audits have been conducted by means of the TfS Audit Program. In 2016, 241 new TfS audits were conducted through the TfS Audit Program, and 1 773 new supplier assessments were conducted through EcoVadis.
Value chain collaboration continues
Clariant strives to be the bridge between suppliers and customers. This means attempting – wherever and whenever possible – to trace and manage complex sources so that high levels of sustainability and quality are achieved. This holds true for suppliers down the street from Clariant as well as those across the globe. However, for Clariant to excel, its suppliers must excel, so it is important that suppliers are provided with the right resources and education to succeed. Collaborative efforts – such as SPOTS and TfS – have proven successful in managing this vital part of Clariant’s business, and Clariant hopes to pursue more opportunities that expand collaboration and improve transparency with suppliers to enhance sustainability of products and the industry overall.
Principles of the RSPO Supply chain certification
Supply chain certification requires compliance with the requirements of the RSPO supply chain certification standards, which are based on a quality management system in which production identification and control are the key objectives.
Segregated supply chain
Mass balance supply chain
Conventional supply chain
The RSPO developed environmental and social criteria that companies must comply with in order to produce Certified Sustainable Palm Oil (CSPO). These criteria can help to minimize the negative impacts of palm oil cultivation. RSPO offers certification schemes to monitor certified palm based material throughout the value chain. Mass Balance Certification confirms that the amount of incoming RSPO-certified palm-based material is equal to the outgoing amount of material. Ensuring such certification requires careful monitoring of the production, which Clariant undergoes as confirmed by RSPO auditors who have visited all of Clariant’s relevant sites. In future, in a segregated supply chain, sustainable palm oil from different certified sources is kept separate from ordinary palm oil throughout the chain.