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2. Relationship Capital

In 2019, Clariant focused on building strong customer relationships and understanding customers’ needs to gain valuable insights for sustainable value creation. As suppliers are critically important to Clariant’s value creation, the company continuously analyzes spend effectiveness and reduces risk in procurement. In 2019, Clariant received the World Procurement Award for its integrative supplier risks management approach that helps suppliers meet the company’s strict sustainability and risk expectations.

Overview Relationship Capital

 

 

Continuing

 

Discontinued

 

Total 2019

 

2018

 

Change
in %

1

Surveys are conducted every two years

2

Duplicate counts possible. One supplier may supply to continuing and discontinued operations.

Survey responses obtained from customer contacts

 

 

 

 

 

n.a.1

 

2 791

 

Customer interviews

 

 

 

 

 

404

 

538

 

–24.9

Net Promoter Score (NPS) (%)

 

 

 

 

 

n.a.1

 

29

 

Raw material suppliers2

 

3 503

 

3 896

 

6 805

 

7 000

 

–2.8

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

 

80

 

74

 

78

 

74

 

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 2019, Clariant refocused on strengthening the customer experience to gain a better understanding of the customers’ needs and develop tailor-made value propositions.

Customer Relationships

 

 

Total 2019

 

2018

 

Change
in %

1

Surveys are conducted every two years

Survey responses obtained from customer contacts

 

n.a.1

 

2 791

 

Net Promoter Score (NPS) (%)

 

n.a.1

 

29

 

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

 

n.a.1

 

90

 

Customers who plan to intensify the business relationship (%)

 

n.a.1

 

77

 

Customer interviews as part of marketing and strategy initiatives

 

404

 

538

 

–24.9

Interviews with industry experts as part of marketing and strategy initiatives

 

144

 

150

 

–4.0

Number of Commercial Excellence projects

 

33

 

34

 

–2.9

Margin from Commercial Excellence (CHF m)

 

24.7

 

31.7

 

–22.1

2.1.1. Deriving actionable insights from customer feedback

The significant number of customer interactions throughout the year reflects Clariant’s focus on customer experience. In 2019, Clariant conducted 404 customer interviews (2018: 538) and 144 industry-expert interviews (2018: 150) as part of marketing and strategy projects, yielding valuable feedback on how to further improve its offerings and the entire customer journey. The decline in conducted customer interviews mainly reflects the absence of follow-up interviews to the customer satisfaction survey, which is conducted biennially.

In 2019, Clariant responded to the results of the 2018 customer satisfaction survey by implementing a program for strategic key account management. The company also addressed other areas for improvement, including complaint management and logistics. Since survey results differ considerably between regions and Business Units, improvement efforts targeted business-specific and regional challenges in order to further increase customer satisfaction and loyalty.

2.1.2. Moving towards true customer centricity

An ongoing dialog with customers enables Clariant to address customer needs along the entire and to move towards true customer centricity.

Clariant’s Commercial Excellence comprises more and more a mix of tailored initiatives that encompass, for example, customer strategy, pricing and commercial execution. In 2019, Clariant carried out 33 Commercial Excellence projects to improve the ability to find, keep and grow business opportunities with customers. The margin from these Commercial Excellence efforts was CHF 24.7 million in 2019.

With the launch of the Leading Marketing Organization in 2017, Clariant built the foundation to fully integrate marketing into each Business Unit by developing the required capabilities and tailoring resources to individual business needs. Dedicated marketing functions and the Marketing Advisory Board ensure the continuous development and delivery of marketing programs within and across the Business Units through training and the exchange of best practices. In 2019, Clariant created a marketing training curriculum in collaboration with the renowned Kellogg School of Management at Northwestern University in the United States. A total of 37 employees completed the program, strengthening commercial competencies across the organization.

The Marketing Excellence initiatives capture growth opportunities. In 2019, Clariant carried out 15 Marketing Excellence projects to identify subsegments of customers and gain in-depth knowledge of the customer decision journey. Read more in

GRI Online Report

2.2. Ethics and compliance

In 2019, Clariant remained committed to implementing its Strategic Integrity Roadmap. This roadmap, which is structured around the company’s five pillars of leadership engagement, communication and training, risk assessment, standards and controls, and monitoring, lays the foundation for an ethical mindset and responsible behavior in the workforce. By carrying this commitment forward, Clariant’s transformation from a rules- and principles-based organization into a value-based organization continues.

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

Ethics And Compliance

 

 

Total 2019

 

2018

 

Change
in %

Questions and allegations issued via the anonymous Integrity Line

 

116

 

104

 

11.5

Fully or partially substantiated

 

8

 

29

 

–72.4

Closed during the year

 

31

 

72

 

–56.9

Percentage of Board members who received training on anticorruption (in %)

 

100

 

50

 

Percentage of relevant employees who received training on anticorruption (in %)

 

85

 

30

 

2.2.1. Revising the Code of Conduct to embed ethical behavior

As part of the standards and controls pillar of the Strategic Integrity Roadmap, Clariant’s Code of Conduct guides employees through ethical commitments and supports them in reflecting on responsible actions and decisions. In 2019, Clariant revised the Code of Conduct, which applies to everyone working for Clariant. It includes new topics and commitments, a Q&A section, as well as scenarios that demonstrate these commitments in practice and emphasize the speak-up culture by strengthening its commitment to non-retaliation and the manager’s responsibility. The updated Code of Conduct will be published on Clariant’s website and will be rolled out throughout the organization in 2020.

2.2.2. Engaging people for ethics and compliance

To underscore the importance of ethical business practice, in 2019, Clariant continued the rollout of its Leader-led Compliance Sessions to the company’s senior leaders and the commercial organization. These sessions provided a forum to discuss ethical dilemmas that emerge in daily business practice and share lessons learned and best practices. The dilemmas were based on scenarios addressed by the Code of Conduct, such as anti-bribery, antitrust, data privacy, conflict of interest, and discrimination and harassment. As observed in 2018, the Leader-led Compliance Sessions resulted in more requests for guidance from the Ethics & Integrity functions and increased the number of reports received through the Integrity Line by 11.5% compared to the years that preceded the rollout of Leader-led Compliance Sessions.

Clariant continued to conduct its mandatory e-learning and in-person trainings for all employees to prevent violations of the Code of Conduct. In 2019, roughly 6 000 employees received Code of Conduct training; 100% of the Board members and 85% of employees received training on anti-corruption; and approximately 8 200 employees successfully completed the e-learning on antitrust law.

In 2019, Clariant further strengthened communication regarding ethics and compliance, which included regularly publishing articles on the intranet regarding business ethics and sharing results from internal investigations in its ethics journal. Each communication 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.

2.2.3. Taking steps to reduce risk exposure

Since Clariant’s businesses operate in countries with diverging risk profiles, an ongoing risk assessment is conducted to identify gaps in the ethics and compliance framework in different markets. In 2019, Clariant carried out additional compliance risk assessments in two Business Units. After this process revealed gaps, steps were taken to reduce the risk exposure. For example, the Economic Sanction policy will be revised and a provision regarding anti-money laundering will be added to the Anti-Bribery and Anti-Corruption Policy. In addition, employees working in compliance functions were trained on topics such as anti-bribery, data privacy, and general ethics and integrity.

2.2.4. Establishing the Data Privacy Program

In response to the General Data Protection Regulation (GDPR) of the European Union, Clariant implemented a Data Privacy Program in 2018. The program consisted of a policy framework that encompassed a Data Privacy Policy, a general Directive on how to process personal data, standardized operation procedures (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. In 2019, Clariant focused on further implementing the framework, offering deep-dive sessions for more exposed functions, and introducing a second module to the Data Privacy E-Learning. Furthermore, Clariant continued its efforts to establish a personal data inventory and record of processing activities aligned with the GDPR requirements.

A Data Privacy Organization was also set up and internally certified after extensive training that covered the main topics for certified Privacy Professionals from the International Association of Privacy Professionals. The certified members of the Data Privacy Organization are responsible for creating awareness and building up the relevant knowledge throughout the company with a Train-the-Trainer approach.

2.2.5. Improving performance of the grievance mechanism

A key instrument to track Clariant’s performance on ethics and compliance is the »Clariant Integrity Line,« which is used to report workplace-related issues and violations against the Code of Conduct. All employees are encouraged to confidentially report non-compliant behavior. In 2019, Clariant improved the Integrity Line by simplifying the process of raising a concern and by enhancing the reporting on multiple indicators. With improved assessments and classifications of allegation types, Clariant is able to gain better insight into potential misconduct and take preventative actions.

GRI Online Report

2.3. Policy and stakeholder relations

Clariant believes that maintaining an open and trustworthy dialog with all and participating in relevant public policy developments are both important aspects of its corporate responsibility.

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 national levels, Clariant is part of national business federations and chemical industry associations, such as the Associação Brasileira da Indústria Química (ABIQUIM) in Brazil, the China Petroleum Chemical Industry Federation (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, such as in the bioeconomy field, and supports scientific and research associations, including SusChem, the European Technology Platform for Sustainable Chemistry.

As a responsible corporate actor that values transparency, Clariant publicly discloses its contributions to trade and business associations.

The top three contributions Clariant made in 2019 were all for Europe-based associations. Together, they represented more than 50% of Clariant’s total membership costs. These were:

  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.

Active engagement in these bodies helps Clariant maintain a continuous stakeholder dialog in strategically important fields. In 2019, Clariant has worked on a number of policy areas related to sustainable chemistry, climate change, circular economy, bioeconomy, and innovation policy frameworks.

GRI Online Report

Customer to Cash

2.4. Sustainability performance in the supply chain

Clariant sources over 20 500 types of raw materials from approximately 6 800 suppliers. In 2019, CHF 2.6 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

 

 

Continuing

 

Discontinued

 

Total 2019

 

2018

 

Change
in %

1

Together for Sustainability supplier assessments

2

Together for Sustainability supplier audits

Number of new Sustainability Assessments shared1

 

 

 

 

 

1 043

 

1 491

 

–30

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

 

80

 

74

 

78

 

74

 

Number of new Sustainability Audits shared2

 

 

 

 

 

309

 

358

 

–13.7

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 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), which uses the internationally recognized EcoVadis platform. In 2019, TfS members assessed 1 043 suppliers for the first time, compared to 1 491 new supplier assessments in 2018. In total, there are more than 9 000 suppliers with an active assessment registered at TfS. Clariant maps completed assessments against its supplier base to identify which portion of its total spend is covered by TfS assessments. In 2019, coverage was 78%. With this, Clariant surpassed its goal of a direct spend coverage of 70% by 2019. The number of new audits amounted to 309 in 2019, compared with 358 in 2018, adding up to a total of more than 1 800 audits conducted since 2012.

Based on TfS assessments, Clariant initiates Corrective Action Plans (CAPs) to reduce identified sustainability risks. In 2019, the 100 largest, previously not covered suppliers, and risk suppliers characterized by a TfS assessment score of less than 45, were selected for a TfS assessment or an improvement via CAP. Further, at the AchemAsia International Expo in China, TfS conducted a training for suppliers involving more than 300 participants, 20 of which were invited by Clariant.

In 2019, Clariant invited suppliers from outside of the TfS supplier pool to share valid (that is, not older than three years) assessment scorecards with Clariant in order to increase spend coverage and contribute toward the TfS impact KPIs.

Together for Sustainability

Together For Sustainability (logo)

Together for Sustainability (TfS), which was founded in 2011, included 22 members by the end of 2019. In 2019, TfS welcomed its first Chinese member, the Wanhua Chemical Group. Collectively, TfS members represent EUR 325 billion in turnover, based on published financial reports, and an estimated EUR 235 billion in spend. Clariant joined TfS in 2014 in order to assess and steer sustainability in its supply chain. 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 that provide an overall score as well as a sub-score for performance in the categories of environment, labor and human rights, ethics, and sustainable procurement. The on-site sustainability audits are carried out by globally renowned and specialized service providers.

2.4.3. Going beyond direct suppliers

Clariant is committed to extending its approach to sustainable supply chain management beyond its own suppliers to include tier-2 suppliers. Tier-2 supplier evaluation has been considered and discussed within TfS. In 2019, Clariant looked into the Sustainable Procurement score of EcoVadis to assess specific suppliers against expected minimum requirements (that is, a score above 45). The Sustainable Procurement score represents the capabilities of a supplier to assess its own suppliers, which are Clariant’s tier 2 suppliers.

2.4.4. Enhancing capabilities for sustainable supply chain management

Clariant organizes internal trainings every year to increase awareness and enhance its capability to evaluating sustainability performance in the supply chain. Opportunities for awareness-building include Lunch & Learn sessions, workshops, and exchange meetings. The trainings mainly target employees in Global Procurement Services (GPS) and associates in the Business Units. The toolbox that Clariant uses to promote sustainability with the company’s suppliers is a particular focus of the GPS trainings. The trainings for the Business Units provide updates on GPS activities and inform them about sustainable procurement initiatives in other businesses.

2.4.5. Strong engagement leads to outside recognition

In the last few years, Clariant’s supply chain sustainability performance has consistently received external recognition. In 2019, Clariant was honored by two organizations: EcoVadis granted the company the Sustainable Procurement Leadership Award for »Best Internal Engagement.« Further, riskmethods, a company that assesses supplier risks, awarded Clariant with the »TOP Sustainable Supply Chain Program.« The awards recognize excellence in sustainable procurement practices and distinguished Clariant as a best-in-class example, driving internal engagement to roll out a global sustainable procurement program. Read more in

GRI Online Report

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. Clariant performed investigations in areas that were identified as high-risk during the 2016 human rights due diligence review.

In 2019, Clariant decided to join the Responsible Mica Initiative. This cross-industry initiative cultivates collaboration with local governments and NGOs as well as global stakeholders in the mica value chain, which include Clariant suppliers and customers. Clariant will be actively involved in the four action programs of the initiative: Traceability & Specifications, Legal Framework & Advocacy, Communication, and Community Empowerment.

To further advance ethical operations, Clariant developed a global employment policy in 2018 that addresses fair working conditions, discrimination, freedom of association, occupational health and safety, as well as child and forced labor. In 2019, particular emphasis was placed on trainings for employees working in the Human Resources departments in order to ensure global implementation. The policy’s content and objectives were further propagated throughout the organization to ensure comprehensive understanding and acceptance. Clariant also conducted an audit in all major countries to monitor implementation and adherence to the policy. As of 2019, the policy is also part of the onboarding curriculum for new employees. In order to ensure proper comprehension, the policy was translated to local languages and communicated to employees. By embedding the topic in leadership and management meetings and developing a learning and training curriculum, Clariant will further raise awareness.

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

GRI Online Report

Value chain

The value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the finished end product. View entire glossary

Compliance

Compliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with voluntary codes within the company. View entire glossary

Stakeholders

Stakeholders are people or groups whose interests are linked in various ways with those of a company. They include shareholders, business partners, employees, neighbors, and the community. View entire glossary

Stakeholders

Stakeholders are people or groups whose interests are linked in various ways with those of a company. They include shareholders, business partners, employees, neighbors, and the community. View entire glossary

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