Disclosure 103-1 Explanation of the material topic and its Boundary

Employee engagement and retention programs improve Clariant’s internal and external reputation as an attractive employer, leading to higher job consideration by potential candidates. These programs reduce employee turnover, mitigate early-leaver risks, lower cost per hire, and hence support Clariant's overall cost-saving targets.

While employee engagement is a high priority throughout the organization, business and service units with comparatively lower engagement scores and a larger number of employees are a key focus.

Disclosure 103-2 The management approach and its components

Clariant deliberately manages employee engagement in order to achieve its ambition to be an employer of choice attracting top talent and helping Clariant to deliver permanently good business results. The words of the Executive Committee set the stage for this: “We invite you to contribute to our journey in becoming one of the best. We encourage and expect high performance and we strive for excellence in all that we do. We support and provide you with the flexibility and the experiences needed to succeed. We foster a diverse, dynamic environment and an open and respectful culture.”

With the awareness that real performance excellence comes from challenged, empowered, rewarded, and excited teams, Clariant continuously strives to increase its engagement levels worldwide. Clariant’s strategies for employee engagement include a focus on strong leadership, performance management, onboarding experience, career opportunities, and personal development. Organizing and conducting the global employee engagement survey lies within the responsibility of the Corporate Human Resource (HR) Department. The management of each business unit then drives the implementation of the engagement follow-up activities according to their specific needs and objectives.

With an increase of 6 p.p. in the overall engagement score in the 2016 employee engagement survey, Clariant demonstrated that the efforts taken in the past few years are paying off. Business Units Oil & Mining Services and Functional Minerals reached an engagement score above the global chemistry benchmark and show improvements of around 12 p.p. Clariant’s objective is to further improve employee engagement scores by 6 p.p. in the next survey, achieving the global chemistry benchmark for all business units.

Following the 2016 engagement survey, Clariant began implementing the structured follow-up process “Make Engagement Happen” in 2017, in which Clariant leaders on different levels took ownership for action planning and implementation. With the support of Human Resources, region and country heads coordinated the process and ensured consideration and alignment with regional and local improvement needs. The business and service units have nominated so-called action managers that plan, implement, communicate, and track employee engagement activities over time.

In 2017, Clariant also developed a new onboarding curriculum to fully leverage the potential of successful onboarding by combining the global process with functional training needs. Clariant also launched an employer branding social media campaign called “Real People of Clariant” to illustrate career and growth opportunities to potential candidates and portray the company as an employer of choice.

In addition, Clariant strengthened its employee referral program, fostered the utilization of special recognition awards, and expanded its compensation programs, including long-term incentives and non-monetary benefits.

Disclosure 103-3 Evaluation of the management approach

To evaluate the effectiveness of the management approach, after each survey, Clariant performs a comprehensive and detailed analysis of all fifteen engagement drivers such as senior leadership, brand, and safety. The employee engagement survey is conducted every second year in order to give enough time for follow-up activities. Furthermore, the employee turnover rate is tracked over time and compared to the industry benchmark.

In 2017, Clariant reviewed its materiality matrix, including the topic of employee engagement. Consequently, the current management approach has been reviewed and improvement opportunities, such as a more systematic involvement of business and service units, have been identified. This is particularly important as Clariant follows a decentralized management approach for the follow-up to the engagement survey to ensure that the specifics of each business and service unit are sufficiently considered. By doing so, Clariant improves its engagement over time through targeted action planning.