As one of the world’s leading specialty chemicals companies, Clariant creates value with innovative and sustainable solutions for customers from many industries. Corporate sustainability supports long-term success in the marketplace, as illustrated by positive customer feedback and take-up of Clariant’s sustainability offerings. Sustainability programs also underscore Clariant’s role as a corporate citizen, committed to environmental protection and social responsibility, and driving positive impact.

For Clariant, sustainability management encompasses environmentally compatible, ethical, socially responsible and forward-looking action, the careful use of raw materials, and the fair treatment of customers and employees. While the preceding chapters have described key aspects of sustainability management at Clariant in more detail, this section provides a summary overview of how Clariant strategically addresses these sustainability topics.

Full integration into corporate strategy

To ensure that it is factored into all of Clariant’s activities, sustainability has been ingrained as one of the five pillars of the overall corporate strategy since August 2014. This integration is not only paramount to ensure Clariant’s success and growth, but also to align this success with social and environmental targets.

In 2016, the strategic pillars were reviewed and refined. Following innovation, which is seen as the strategic starting point, sustainability is the next guidepost for future-oriented value generation. Repositioning the portfolio, intensifying growth, and increasing profitability then build on these two initial pillars, further strengthening the focus on value generation for shareholders and other stakeholders. Clariant’s Business Units then substantiate these five pillars in their respective Business Unit strategies (see chapter Value Creation in the Four Business Areas in the Integrated Report).

THE FIVE-PILLAR STRATEGY

Interview with Joachim Krüger

»To create sustainable value, Clariant must constantly stay on the pulse of customer needs and the latest developments in the industry.«

Joachim Krüger, what does sustainability success at Clariant mean to you? What do you see as major indications of progress for your team and Clariant as a whole?

Joachim Krüger To foster progress and innovation, the Corporate Sustainability and Regulatory Affairs team stays in close and regular touch with employees across the whole company to keep them engaged in sustainability issues. Strong interest and awareness of the staff combined with stringent processes such as the Portfolio Value Program, which analyzes the sustainability aspects of Clariant’s products, are the basis of success.

To create sustainable value based on this, Clariant must constantly stay on the pulse of customer needs and the latest developments in the industry. Our Sustainability Dialog events held in Frankfurt in 2015 and Shanghai in November 2016 are important for this. Insights from these events feed into our knowledge of market needs, which ultimately supports the development and expansion of sustainability solutions offered to customers. For example, the number of Clariant’s sustainability flagship products awarded the EcoTain® label for their excellent sustainability profile grew from 60 in 2015 to more than 140 in 2016.

How is customer interest in sustainability developing, and is there a willingness to pay a premium for certain sustainable solutions?

Our customers are expressing an increasing demand for products that offer sustainability excellence. In this respect, we get very positive feedback on the EcoTain® label as a solid and transparent tool that supports them in their own sustainability targets and market differentiation.

However, the willingness in the marketplace to pay a premium for more sustainable products and services remains limited. Sustainable innovations have to be competitive compared to benchmark solutions or even offer additional value. For example, Clariant’s bio-based pigments, sugar-based home and personal care products, sustainable additives, and non-halogenated flame retardants combine sustainability and business advantages for our the customers. Overall, our EcoTain® products also generate higher margins than the average product portfolio. This shows that sustainability and business can go hand in hand.

You’ve talked about the sustainability of solutions offered to customers. What about the sustainability of Clariant’s own operations?

As an open company that communicates in a transparent manner with all stakeholders, Clariant publicly sets environmental targets and holds itself accountable to them. After we exceeded our environmental targets that were set in 2011 for 2020 well ahead of time, we committed to further significant environmental improvements by 2025 compared to production volume based on 2013 levels. While in 2016 we have achieved further progress toward all of them, in order to continue to advance and optimally align investments, a cross-company 2025 Target Team closely works together to identify further improvement areas.

In addition to environmental topics, issues such as the health and safety of our employees are central to the sustainability of our operations. Since its inception in 2007, the AvoidingAccidents@Clariant initiative has helped to significantly reduce Clariant’s lost time accident rate (LTAR). This rate, which reflects the number of occupational accidents with at least one day of work lost in relation to 200 000 hours of work, fell from 0.92 in 2007 to 0.19 in 2016.

Further areas of exploration include defining additional social targets to complement our sustainability target set and increasing integration of human rights aspects into sustainability assessments to ensure that we continue to have a comprehensive, well-rounded approach to corporate sustainability.

How do you include your suppliers in your sustainability initiatives?

Today’s complex supply chains offer major opportunities and risks with regard to sustainability. To work on these in a collaborative manner, Clariant has participated in the chemical industry’s Together for Sustainability (TfS) initiative since 2014, which shares results from supplier assessments and audits by independent certified experts among all participating companies. In 2016, this allowed us for the first time to cover more than half of our supply base by expenses with sustainability evaluations. In the future, we want to further increase consequence management and corrective action plans.

What else do you see on the horizon for sustainability at Clariant over the next years?

We want to continue working on sustainability issues at the Business Unit level, including detailed sustainability roadmaps. We will further work on our targets toward our commitment to the sustainable sourcing of palm-based raw materials, phase out heavy-metal-based pigments in the Business Unit Masterbatches, and replace Cr(VI) Catalysts through innovation currently in progress. Generally speaking, collaboration beyond our own boundaries will become more and more important to achieve our ambitious sustainability targets. Best-practice like the SPOTS initiative of our Business Unit ICS are examples that show the way into the future.

Focus on material issues

To focus its approach to sustainability, Clariant determines the most relevant (or »material«) sustainability aspects through a materiality assessment. These issues are shown in the »Materiality Matrix« below.

MATERIALITY MATRIX BY CLARIANT

This matrix displays the sustainability topics for Clariant and its interest groups (»stakeholders«) with the highest relative relevance. It is the result of a comprehensive stakeholder and trend analysis by Clariant and external experts. A full materiality assessment has been conducted in 2012 including market analysis and stakeholders surveys. During the course of 2013, Clariant carried out further analyses and collected data to update and fine-tune the matrix.

The Clariant Sustainability Council, the central steering committee for sustainability chaired by the CEO, evaluates the results and determines those sustainability issues and fields that currently are of particular relevance or are especially important with respect to current projects and objectives of the company. Regional sustainability committees ensure that the sustainability strategy is adopted accordingly in the regions and implemented consistently. In addition, Clariant’s next full materiality assessment is planned for 2017.

Open communication for sustainability

Complementing surveys and conversations, Clariant has conducted annual stakeholder discussions on sustainability since 2015. The first Sustainability Dialog was held in Frankfurt in 2015, followed by the second in Shanghai in November 2016.

At this event, more than 200 customers, suppliers, and authorities participated in presentations, panel discussions, and parallel sessions that offered insights from Clariant specialists and external experts on China’s sustainability challenges and performance. With the Chinese government now steering customers and markets toward more sustainable solutions, Clariant demonstrated its proactive support through products and services linked to three global megatrends: Environmental Protection, Globalization & Urbanization, and Resources & Energy.

Employees and people processes

Clariant strives to be a preferred employer, attracting, engaging, and retaining strong candidates dedicated to its development as a high-performing company. Therefore, recruiting the right employees, onboarding and integrating them quickly and effectively, and supporting their professional development are all paramount to Clariant’s success. It is at the core of Human Resources’ priorities to strengthen Clariant’s reputation as employer, attract new talents by fostering new ways of working.

Clariant also considers the heterogeneity of its employees, who come from over 90 countries, a competitive edge in the marketplace. These employees have diverse cultural backgrounds and bring varying skills and talents to the company – the basis for innovative and creative solutions. In order to document its social commitment to diversity, Clariant has adopted the global Employment Policy, a workplace related internal directive that includes the promotion of a diverse workforce and aims to find the best candidates for open positions.

People processes at Clariant are managed using state-of-the-art digital technologies with particular focus on the performance management process, which plays a key role in employee engagement and in supporting the change agenda for a high-performing organization. In addition, global engagement surveys bolster Clariant’s strong focus on employee motivation and participation. The second of these surveys was conducted in 2016 with 15 803 employees in 26 countries (18 languages) that have been invited to participate (2014: 10 583 – 10 countries). This relates to almost 90% of the Clariant global workforce, the overall response rate has increased and in some countries even comes close to 100%. Going forward, Clariant wants to ensure that the company responds effectively to the changing global labor markets and the diverse cultural requirements of its increasingly globalized workforce (see chapter Employee Engagement in this Report and chapter Objectives and Strategy in the Clariant Integrated Report).

Business ethics and compliance

Business ethics and compliance is also a key corporate sustainability topic. Clariant is committed to respect and support human rights, both in its own operations and in business relationships. This commitment is enshrined in the Clariant Human Rights Policy Statement. The Clariant Code of Conduct, launched in 2007 and publicly available in the corporate governance section of Clariant’s website, covers responsible behavior, protection of the reputation of the company, and mitigation of risks for shareholders and is binding for all Clariant employees. To implement these commitments, we assess, monitor and manage our human rights impacts, both in our own operations and in our supply chains and work to make sure that we do not contribute, knowingly or unknowingly, to any adverse human rights impacts.

The ten compliance principles at the core of the Clariant Code of Conduct require all employees to avoid conflicts of interest, active or passive bribery, insider traiding, anti-trust violations, money laundering, account fraud, disclosure of confidential information, and abuse of business assets for private interests, and to prevent environmental hazards and abstain from discrimination and harassment. Clariant does not tolerate any violation of the Code of Conduct. All employees are encouraged to confidentially report noncompliant behavior to the compliance organization. An important channel through which all violations against the Code of Conduct can be reported is the »Clariant Integrity Line«, including discrimination or violations of human rights. Also any workplace related compliance issues or questions can be channeled globally via this tool. In close collaboration with the Compliance Team, a global HR Case Manager organization within Group Human Resources is taking care of any such substantiated concerns.

Product safety, sustainability, and innovation as base for developing solutions

As a specialty chemicals company, product stewardship for ensuring protection of human health and the environment is key. Clariant’s Product Stewardship organization ensures regulatory compliance for the company products in the markets the company is active as well as relevant communication to customers on the safe use and management of our products (see chapter Product Stewardship). Going beyond product safety, screening for sustainability is a mandatory step for all major research and development projects at Clariant and the Portfolio Value Program (PVP) systematically analyzes the product portfolio for strengths and weaknesses in terms of sustainability over the entire life cycle (see chapter Product Portfolio). Through the Portfolio Value Program, the company sets an ambitious standard and approach for steering its product portfolio toward more innovative and sustainable solutions.

To draw particular attention to its sustainability offering in the marketplace, Clariant has launched the group-wide EcoTain® label, which recognizes products showing sustainability excellence and having a defined best-in-class performance. The more than 140 EcoTain® products available by the end of 2016 from all Business Units and examples are presented in both this report and the Integrated Report 2016 (see chapter Product Portfolio in this report and chapter Market to Customer in the Integrated Report).

Environmentally compatible and safe production

The sustainable use of renewable materials is increasingly important in the chemical industry to conserve valuable resources and reduce emissions and waste. Customers and consumers are also increasingly demanding solutions based on renewable materials. Clariant is gradually increasing the use of renewable raw materials in products wherever possible and appropriate, and is developing and producing innovative bio-based chemicals and biofuels (see chapter Renewable Raw Materials).

To mitigate environmental impacts from operations, Clariant wants to achieve significant improvements in six major areas compared to the base year 2013 and in relation to the volume of goods produced, as shown in the »Environmental Targets 2025« graphic.

ENVIRONMENTAL TARGETS 2025 (in % per t produced goods compared to 2013)

Compared to the previous year, in 2016 in all six areas a progress toward the 2025 targets has been recorded (see chapter Facts & Figures – Planet). Progress toward these environmental targets is supported by Clariant’s comprehensive analysis and continuous improvement efforts. The YEE (yield, energy, environment) program helps to identify potential improvement areas in the production system, defining measures and ultimately resulting in environmental and financial benefits. Clariant’s eWATCH energy efficiency program and its participation as a chemical industry representative in the European Union’s INSPIREWATER public-private partnership for innovative wastewater treatment are further elements of the company’s holistic approach (see chapter Water Management).

Health and safety are also overarching priorities at Clariant. The company’s approach and goal is to continuously aim for zero accidents. The company’s occupational health and safety strategy emphasizes prevention, training, incentives, and open dialog and is supported by the global AvoidingAccidents@Clariant program (see chapter Occupational Health and Safety).

Supply chain sustainability

Balancing cost efficiency, high product quality, environmental standards, social standards, and security of supply is a challenge in an increasingly globalized value chain. Since suppliers form an integral part of Clariant’s network, the company expects them to commit to ethical and sustainable business practices. These expectations are expressed clearly in the Code of Conduct for Suppliers, which can be downloaded from our corporate website and is being distributed to suppliers. Clariant expects its suppliers and business partners to maintain the same high standards with regard to human rights as it has set for itself. Our Code of Conduct for Suppliers makes it clear that we will not tolerate the use of child labor or forced labor anywhere in our business and supply chains and protect our employees’ and supply chain workers’ rights in key human rights areas, including non-discrimination, working conditions and freedom of association.

In addition, Clariant’s Group Procurement Services has developed a 2017 Sustainability Roadmap that includes goals such as generating 100 new supplier assessment scorecards and improving re-assessment scores in more than three-quarters of suppliers via the Together for Sustainability (TfS) initiative. TfS allows Clariant, in collaboration with other chemical company members, to assess the sustainability performance of suppliers against a set of criteria tailored to the requirements of the chemical industry (see chapter Supply Chain Collaboration). Its participation in TfS enabled Clariant to cover more than 60% of its raw materials supply base (by spend) with sustainability evaluations by the end of 2016.

Recognitions

In 2016, Clariant received a number of recognitions for its sustainability programs and performance including Responsible Care® awards in the United States, Brazil, Chile and Venezuela or the Clean Industry Certification for two sites in Mexico. A key recognition was Clariant’s repeat listing in the European as well as the global Dow Jones Sustainability Indices, receiving best-in-class scores of 100 points in the Innovation Management, Environmental Reporting, and Operational Eco-efficiency categories. RobecoSAM analysts confirmed that Clariant is among the top 3% of companies in the global chemical industry on economic, environmental, and social dimensions of sustainability, and Clariant received the RobecoSAM Sustainability Silver Class 2017 Award for its performance. In addition, Clariant is listed in other sustainability-oriented indices such as FTSE4Good, Vigeo Europe 120 Index, and the SXI Switzerland Sustainability 25 Index. The company is considered a leader in terms of sustainability by analysts such as Sustainalytics and IMUG/eiris.