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2. Relationship Capital

In 2018, Clariant successfully expanded its relationship capital. It increased the number of interactions along the customer journey and received positive feedback through its biennial global customer satisfaction survey, deepening its understanding of value chains and unmet customer needs. It also maintained strong contacts with chemical industry trade associations and policy makers.

Customer satisfaction survey
Clariant’s global customer satisfaction survey 2018 was made available to customers in nine languages.

Overview of Relationship Capital

 

 

2018

 

2017

 

Change in %

1

Surveys are conducted every two years.

Survey responses obtained from customer contacts

 

2 791

 

n.a.1

 

Customer interviews

 

538

 

515

 

4.5

Net Promoter Score (NPS) (%)

 

29

 

n.a.1

 

Raw material suppliers

 

7 000

 

7 000

 

0

Raw material supply base by spend covered by sustainability evaluations (%)

 

74

 

65

 

Market to Customer

2.1. Customer Relationships

Customer engagement, a key to profitable growth, lies at the core of Clariant’s commercial strategy. After taking significant steps in recent years to turn Clariant from a product-driven to a customer-centric organization, in 2018 Clariant refocused on strengthening the customer experience – a crucial shift to gain a better understanding of the customers’ needs and develop tailor-made value propositions.

Customer Relationships

 

 

2018

 

2017

 

Change in %

1

Surveys are conducted every two years.

Survey responses obtained from customer contacts

 

2 791

 

n.a.1

 

3.6

Net Promoter Score (NPS) (%)

 

29

 

n.a.1

 

Customers who want to continue doing business with Clariant (%)

 

90

 

n.a.1

 

Customers who plan to intensify the business relationship (%)

 

77

 

n.a.1

 

Customer interviews as part of marketing and strategy initiatives

 

538

 

515

 

4.5

Interviews with industry experts as part of marketing and strategy initiatives

 

150

 

59

 

154.2

Number of Marketing Excellence projects

 

37

 

34

 

8.8

Commercial margin (CHF m)

 

12.8

 

12.3

 

6.2

2.1.1. Leveraging customer feedback for continuous development

The large number of customer interactions throughout the year reflects the increased focus on customers. In 2018, Clariant conducted 538 customer interviews (2017: 515) and 150 industry-expert interviews (2017: 59) as part of marketing and strategy projects, yielding valuable feedback on how to further improve its product and solutions offerings and the entire customer journey.

The most important source of customer feedback in 2018 was the biennial comprehensive customer satisfaction survey. Customers of all in all regions were surveyed, with the total number of respondents increasing to 2 791, almost 100 more than in 2016. Compared to the previous survey, the participants were also more diverse, with a growing share of responding stakeholders from R&D and production functions.

The overall results show that the high level of customer satisfaction remained stable, with the Customer Satisfaction Index at 77 points (2016: 78). In total, more than three-quarters of participants stated that Clariant is a reliable business partner and solutions provider and 73% highlighted Clariant’s excellent customer-oriented approach. Respondents ranked »Technical Service« and »Products and Packaging« as the two most important buying criteria. In »Products and Packaging«, Clariant increased its competitive edge, with a larger share of respondents rating Clariant’s products higher than those of the competitors. The competitive performance of the »Technical Service« decreased slightly compared to 2016 but remained at a high level. Sustainability was introduced as a new assessment criterion in the 2018 survey and showed a strong competitive performance. Sustainability was ranked as the 7th highest buying criteria, with 92% of the respondents stating sustainability was important for their operations and/or markets.

Customer loyalty was also found to be very high in 2018. The Customer Loyalty Index reached 81 points (2016: 84), while the Net Promoter Score (NPS) decreased from 37% to 29%. In the chemicals industry, an NPS of 30% is considered the benchmark. 90% of respondents are likely to continue doing business with Clariant in the future (2016: 91%) and 77% stated they are likely to increase business with Clariant (2016: 81%). The results also revealed several areas with room for improvement, including complaint management and logistics. Since survey results differ considerably between regions and Business Units, future improvement efforts will target business-specific and regional challenges in order to further increase customer satisfaction and loyalty.

2.1.2. Advancing the Leading Marketing Organizations

Good customer and market research creates transparency at all touchpoints along the customer journey, delivers customer insights that create unique value propositions, and identifies market opportunities that can be addressed with innovative solutions. In 2017, Clariant launched the to rethink its approach to marketing and further integrate marketing within the Business Units. Setting up dedicated marketing functions within each Business Unit was a first step. In 2018, Clariant filled all key positions and established a Marketing Advisory Board that serves as a platform to share best practices between the Business Units’ Marketing Heads and the Head of Marketing Excellence. The Marketing Advisory Board plays a key role in the continuous development and delivery of the marketing programs within and across the Business Units. Other key aspects of implementing the Leading Marketing Organization were the launch of marketing essentials training and the development of an advanced strategic marketing training program. The latter is being co-developed by the Business Units’ marketing departments and an industry-leading partner. In 2019, the Marketing Excellence team will work with the Marketing and Innovation Heads to develop additional programs that satisfy the evolving needs of Clariant’s marketing community and customers.

In 2018, Clariant carried out 37 Marketing Excellence projects, with the additional commercial margin from these efforts increasing from CHF 12.3 million to CHF 12.8 million in 2018. Figure 003

003 COMMERCIAL MARGIN in CHF m

Commercial Margin (bar-chart)

2.2. Ethics and compliance

In 2018, Clariant continued implementing the measures outlined in its Strategic Integrity Roadmap. Structured around the company’s five pillars of leadership engagement, communication and training, risk assessment, standards and controls, and monitoring, this roadmap anchors an ethical mindset and behavior in the workforce and continues the ongoing process of transforming Clariant from a rules- and principles-based organization to a value-based organization.

Ethics and Compliance

 

 

2018

 

2017

 

Change in %

Questions and allegations issued via the anonymous Integrity Line

 

104

 

80

 

30

Fully or partially substantiated

 

29

 

16

 

81.3

Closed during the year

 

72

 

46

 

56.5

Percentage of Board members that received training on anti-corruption (in %)

 

50

 

45

 

11

Percentage of employees that received training on anti-corruption (in %)

 

30

 

60

 

–50

Clariant uses a comprehensive set of key performance indicators to measure effective progress toward the objectives of the roadmap.

104

Through the anonymous Integrity Line, 104 questions and allegations were issued.

2.2.1. Excellence through Integrity

In 2018, Clariant continued the rollout of its »Excellence through Integrity« campaign, which was launched in 2017. As part of the campaign, members of the and regional heads articulated what ethics and integrity mean to them personally in order to further raise awareness for ethical behavior. These statements were printed on posters and displayed at all sites to increase the visibility of the campaign.

2.2.2. Improving compliance through leadership and training

To underscore its commitment to ethical business practice, Clariant launched »Leader-led Compliance Sessions«, which were held by roughly 1 000 leaders with their direct reports in 2018. These sessions provided a forum to discuss ethical dilemmas that emerge in daily business practices and share lessons learned and best practices. The dilemmas were all build around the commitments of the Code of Conduct related to the Anti-Bribery, Antitrust, Data Privacy, Conflict of Interest and absence of discrimination and harassment. With this effort, roughly 5 000 employees received Code of Conduct training. The »Leader-led Compliance Sessions« resulted in more request for guidance from the Ethics & Integrity functions and an increase of reports through the Integrity Line by 30%.

Clariant continued to conduct its mandatory compliance trainings for all employees, via e-learning and in-person, to prevent violations of the Code of Conduct. 50% of the Board members and 30% of employees received training on anti-corruption, while approximately 5 000 employees successfully completed the relaunched e-learning on antitrust law. Furthermore, an anti-bribery e-learning program was rolled out in 2018 that specifically targeted sales, marketing, and procurement professionals. In 2019, the anti-bribery e-learning will be rolled out to the remaining units of the organization.

2.2.3. Internal communication increases sensitivity for compliance issues

Clariant also strengthened communication regarding ethics and compliance by publishing regularly articles around business ethics and shared results from internal investigations in its ethics journal. Each example illustrated a real case from Clariant’s businesses and discussed how it was resolved. The articles caught considerable attention from employees, as indicated by above-average click rates.

2.2.4. Reducing risk exposure across regions

As Clariant’s businesses operate in a large number of countries with diverging risk profiles, an ongoing risk assessment is conducted to identify gaps in the ethics and compliance framework in different markets. In 2018, a compliance risk assessment was initiated for the most exposed Business Units. This process revealed gaps, which were closed by taking steps to reduce the risk exposure.

2.2.5. Launch of the Data Privacy Program

In response to the new General Data Protection Regulation (GDPR) of the European Union, Clariant started a Data Privacy Program in 2018. The program consists of a policy framework, consisting of a Data Privacy Policy, a general Directive on how to process personal data and SOPs on the subject of Data Breach and execution of privacy rights and a basic Data Privacy e-learning course, to familiarize all employees with the principles of the data privacy policy as well as dedicated deep dive sessions for the more exposed functions like Human Resources, Marketing, Sales. In addition, a Data Privacy Organization was set up and internally certified after extensive training, covering the main topics for a certified Privacy Professionals from the International Association of Privacy Professionals (iapp.org). The members of the Data Privacy Organization are responsible for creating awareness and build up the relevant knowledge throughout the organization with the »train the trainer« approach.

2.2.6. Providing clear grievance mechanisms

A key instrument to track Clariant’s performance on ethics and compliance is the Integrity Line, which is used to report workplace-related issues. To strengthen this channel, Clariant rolled out the »Speak-up« campaign. As part of this campaign the Integrity Line was promoted on Clariant’s website and made accessible to external stakeholders to anonymously report any alleged violations of the Code of Conduct. In 2018, 104 questions and allegations were issued via the Integrity Line (2017: 80), of which 29 were fully or partially substantiated (2017: 16). The substantiation rate is low, and we will focus in the coming year on more transparency related to the process and what should be reported.

2.3. Policy and stakeholder relations

Clariant believes that maintaining an open and trustworthy dialogue with all stakeholders and participating in relevant public policy developments are important aspects of its corporate responsibility. As a responsible corporate actor that values transparency, Clariant publicly discloses its contributions to trade and business associations.

The engagement of Clariant representatives in trade associations and other platforms supports strategic alignment across the industry, provides an opportunity for exchange on industry perspectives and best practices, and brings forward Clariant’s views and positions on various policy areas.

Clariant is a member of numerous interest groups and trade associations. At the international and regional level, these include, among others, the International Council of Chemical Associations (ICCA) and the European Chemical Industry Council (Cefic). At the local level, Clariant is part of national business federations and chemical industry associations, such as ABIQUIM in Brazil, CPCIF in China, the Verband der Chemischen Industrie (VCI) in Germany, and the American Chemistry Council (ACC) in the United States.

Clariant is also active in sectorial associations, for example in the bio-economy field, and supports scientific and research associations, such as SusChem, the European Technology Platform for Sustainable Chemistry.

The top three contributions in 2018 were all made to Europe-based associations. Together, they represented more than 50% of Clariant’s total membership costs:

  1. Verband der Chemischen Industrie e.V. – VCI, the German national association of chemical producers;
  2. Handelskammer beider Basel, the Basel Chamber of Commerce; and
  3. Scienceindustries, the Swiss business association for the chemical, pharmaceutical, and biotech industries.

In 2018, Clariant decided to step up its support of the transition to a circular economy in the European Union. It joined associations such as the »Plastics Recyclers Europe« and »Petcore«, the association representing the complete Polyethylene terephthalate (PET) value chain in Europe.

Active engagement in these bodies helps Clariant maintain a continuous stakeholder dialogue in strategically important fields. In 2018, dossiers related to sustainable chemistry, circular economy, bio-economy, and innovation policy frameworks were a particular focus.

Customer to Cash

2.4. Sustainability performance in the supply chain

Clariant sources over 34 000 types of raw materials from approximately 7 000 suppliers. In 2018, CHF 2.9 billion was spent on raw materials, representing the largest portion of Clariant’s total expenditure. Suppliers are critically important to Clariant’s value creation and substantially impact the company’s overall sustainability performance. Clariant uses a comprehensive set of criteria to select and manage suppliers, outsourcing partners, and service providers. Apart from economic and product-specific performance, these criteria include sustainability considerations such as environmental and safety standards, social and governance aspects, complaint management, working conditions, and respect for human rights.

Sustainable Value Chain

 

 

2018

 

2017

1

»Together for Sustainability« Supplier assessments

2

»Together for Sustainability« Supplier audits

Number of new Sustainability Assessments shared1

 

1 491

 

2 309

Percentage of direct spend (raw materials) on suppliers covered by shared Sustainability Assessments

 

74

 

65

Number of new Sustainability Audits shared2

 

358

 

441

2.4.1. Supplier Code of Conduct

In its Supplier Code of Conduct, Clariant outlines the strategy, scope, and expectations regarding the sustainability engagement and performance of suppliers. The Code is part of Clariant’s General Terms and Conditions of Purchase, which are incorporated into every purchase order issued by procurement. Suppliers and their subsidiaries are required to agree and fully comply with the Code.

2.4.2. Assessing and steering sustainability in the supply chain

In order to ensure compliance with the Supplier Code of Conduct, Clariant relies on assessments and audits conducted by »Together for Sustainability« (TfS). In 2018, TfS members assessed 1 491 suppliers for the first time, compared to 2 309 assessments in 2017. In total, more than 10 000 suppliers have been assessed since the inception of TfS. To identify which portion of its total spend is covered by TfS assessments, Clariant maps completed assessments against its supplier base. In 2018, coverage was 74%, an increase of 9% compared to 2017. With this, Clariant managed to reach its goal of a direct spend coverage of 70% by 2019 one year early. The number of new audits amounted to 358 in 2018, compared with 441 in 2017, adding up to a total of more than 1 500 audits conducted since 2012. As such, TfS achieved its goal of 1 400 audits one year early.

1 491

In 2018, the members of the »Together for Sustainability« initiative have assessed 1 491 suppliers.

Based on TfS sustainability assessments, Clariant initiates Corrective Action Plans (CAPs) to reduce identified sustainability risks. About 200 supplier CAPs were completed in 2017. The reassessment of these suppliers in 2018 showed positive results: 75% improved their score and the average score improved by 6%.

In 2018, Clariant formalized TfS assessments in order to use them for screening customer eligibility for ® licensing. Suppliers need to have a solid sustainability performance and reach a minimum score of 45 points in the online assessment conducted by third-party service provider EcoVadis to become eligible for the use of the EcoTain® label on their own products and marketing material. The assessment tool thus not only helps Clariant evaluate the sustainability performance of its suppliers but also contributes to the growth of the EcoTain® brand.

Together for Sustainability (TfS)

TfS was founded in 2012 and currently lists 21 major chemical companies as members, representing a combined yearly spend of more than CHF 230 billion. Clariant joined TfS in 2014 in order to assess and steer sustainability in its supply chain, alongside other members. As an active member, Clariant contributes to the initiative by providing sustainability performance assessments and audits of its own suppliers. In turn, it gains access to assessments generated and shared by other TfS members.

To ensure independence and consistency of results, TfS supplier assessments are conducted according to a standard approach by best-in-class service providers. The sustainability assessments consist of scorecards providing an overall score as well as a sub-score for performance in Environment, Labor Practices, Fair Business Practices, and Sustainable Procurement. The on-site sustainability audits are carried out by globally renowned and specialized service providers.

2.4.3. Goals and challenges in sustainable supply chain management

In 2018, Clariant established supply chain sustainability targets for each Business Unit individually. The targets address increasing customer requests and proactively support Clariant’s reputation as a sustainability leader. Clariant also organizes internal trainings every year to increase awareness and enhance its capability to evaluate sustainability performance in the supply chain. The trainings mainly target employees in Global Procurement Services (GPS) and associates in the Business Units. A particular focus of the trainings provided to GPS is put on the toolbox Clariant uses to further deploy sustainability with the company’s suppliers. The trainings for the Business Units serve to provide updates on GPS’ activities and inform them about sustainable procurement initiatives in other businesses.

While Clariant is committed to motivating its suppliers to participate in the »Together for Sustainability« program, a major remaining challenge is the systematic extension of Clariant’s supply chain management to tier 2 suppliers and beyond. As Clariant does not have a direct business relationship with these companies and in many cases does not know them, the company launches pilot projects that will facilitate an exchange with tier 2 suppliers on the issue of sustainability.

2.4.4. Strong engagement leads to outside recognition

Over the last few years, Clariant’s supply chain sustainability performance has consistently received external recognition. In December 2017, the European Institute for Purchasing Management (EIPM) honored Clariant with its prestigious »Sustainability Leadership in the Supply Chain« award. With a score of 80 points, it also received one of the highest EcoVadis assessment scores of more than 30 000 assessed companies in 2018. The assessment focuses on 21 sustainability criteria grouped into the four categories »Environment«, »Social«, »Ethics«, and »Supply Chain«. In 2018, Clariant reached 80 points in all four categories. In the supply chain category, this represents an improvement by 23 points since 2011.

2.5. Human rights

Clariant is firmly committed to protecting human rights during all phases of value creation within all business units. This obligation applies not only to Clariant’s own business operations, but also to its entire supply chain and contracted workers. As a prerequisite for sound business governance and license-to-operate, Clariant expects its business partners to uphold the same high standards regarding human rights.

Clariant crafted a comprehensive framework of policies, guidelines, and processes to ensure the implementation of its human rights commitments. Over the last two years, deep-dive investigations were performed in areas that were identified as high-risk during our 2016 human rights due diligence review. A specific focus was on contracted labor in order to assess that all corporate policies were well implemented and that the same requirements were applied to Clariant’s own employees as to temporary workers and contractors. These efforts concentrated particularly in high-risk geographies, such as India.

In order to reinforce its commitment to workplace rights and globally ensure the same high standards regarding working conditions, Clariant developed a new employment policy in 2018. The policy fosters sustainable employee relations and addresses fair working conditions, discrimination, freedom of association, occupational health and safety, as well as child and forced labor. The policy applies equally to permanent and temporary employees and workers, and is applicable to all employment agencies and contractors that collaborate with or engage on behalf of Clariant. The new policy was communicated to all employees across all countries.

Finally, via the Together for Sustainability (TfS) platform and in cooperation with other companies, Clariant assesses its suppliers in relation to child and forced labor, among other social, governance, and environmental topics.

Executive Committee

Management body of joint stock companies; at Clariant the Executive Committee currently comprises four members. View entire glossary

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