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

Protecting customers, consumers, and the environment by providing safer and more sustainable solutions is one of Clariant’s top priorities.

Product stewardship adds value to Clariant’s portfolio by providing all required information to ensure the safe use and handling of its products, compliance with national and international regulations, and preventing reputational or legal damages. In addition, product stewardship supports Clariant’s business through active communication with customers on product safety for their applications, thereby playing an important role in supporting business and environmental and health protection.

As sustainability leadership requires moving beyond compliance and current standards, Clariant steers its product portfolio towards more sustainable and innovative solutions considering all three dimensions of sustainability: people, planet, and performance. For Clariant, embedding sustainability aspects in product development and other business processes is a must. Driven by societal demand and policy attention, customers and markets are increasingly aware of and sensitive to sustainability aspects. By proactively screening its products against strict and forward-looking sustainability criteria, Clariant aims to develop more sustainable and innovative solutions, which support long-term value creation.

Product stewardship and sustainable chemistry applies to all product cycles from cradle to grave, as impacts can result from all phases of product development, operations, and downstream value chains.

Disclosure 103-2 The management approach and its components

Clariant’s approach to product stewardship is globally oriented and ensures that local and regional product stewardship teams play an integral role in the Global Product Stewardship organization and support business and external customer communication on all regulatory issues regarding the management of chemicals.

Clariant's product stewardship practices are embedded in the innovation process, guaranteeing that chemical safety is considered throughout the entire product life-cycle. Regulatory compliance and communication to customers on the safe use and management of the products are also ensured when placing new products on the market.

Regulatory Compliance
Clariant monitors and assesses the impact of changes in chemical management regulations worldwide in order to be prepared for any shifts in the regulatory landscape. Proximity to regulatory bodies and participation in expert groups and associations support proactive management. Ensuring regulatory compliance also includes substance registration with relevant regional and national authorities and supply chain communication on product safety.

European Union Registration, Evaluation, Authorization, and Restriction of Chemicals (EU REACH) Targets
Clariant is fully committed to the REACH targets: Clariant continuously prepares and submits required information for the successful registration of substances that are under the scope of the third phase of the EU REACH regulation. The registration application deadline is May 2018. Clariant has put in place clear targets and management processes to meet the upcoming May 2018 registration deadline. In 2017, information for 85 % of all relevant substances was submitted. Clariant is on track to register 100 % of applicable and relevant substances by May 2018.

Clariant goes beyond mere compliance: Its Global Toxicology & Ecotoxicology Group has initiated and co-developed in a Cefic (European Chemical Industry Council) LRI (Long-Range Research Initiative) project the so-called AMBIT tool – a new, open IT-based system on a predictive toxicity model. AMBIT helps predict the properties of one chemical using the known properties of similar chemicals. The European Chemicals Agency (ECHA) supports this tool by giving access to non-confidential registration data.

Policies and Guidelines
As a signatory to the Responsible Care® Declaration, Clariant supports the Responsible Care® Global Charter. Clariant embedded the Responsible Care® principles in its Sustainability Policy, underlining the company’s strong commitment and leadership in sustainable chemistry, and promoted the program in several countries. Reflecting the holistic approach in fulfilling the Responsible Care® principles, Clariant’s Global Product Stewardship Team manages the health, safety, environmental, and other sustainability aspects throughout product life cycles following clear guidelines and process descriptions.

Clariant adheres to the Precautionary Principle and takes a proactive approach to ensure the health and safety of people and the environment, while designing more sustainable and innovative products.

Product Portfolio Sustainability Screening
Beyond product safety, screening for sustainability is a mandatory step for all major product development projects at Clariant. Under the Portfolio Value Program (PVP), Clariant systematically assesses its product portfolio for strengths and weaknesses in terms of sustainability by taking impacts across the entire life cycle into account. The product portfolio, which includes all existing products and the innovation pipeline, is screened for sustainability performance on 36 criteria that consider all three dimensions of sustainability: people, planet, and performance. Clariant awards products that show an excellent sustainability profile based on the PVP criteria with its EcoTain® label. These products are nominated by business units and undergo the scrutiny of the internal EcoTain® panel, comprised of Corporate Sustainability & Regulatory Affairs (which includes relevant product stewardship experts), Group Technology & Innovation, and Group Communications. In 2017, 18 products were awarded the EcoTain® label, bringing the total number of Clariant products branded with the sustainability excellence label to 169. PwC

Clariant announced in its Sustainability Dialog held in Frankfurt in 2015 that 80 % of its product portfolio has been screened for sustainability performance since the inception of the program in 2012. This evaluation determined that 75 % of the screened product sales meet Clariant’s sustainability definition, while 25 % are targeted for improvement opportunities. Roadmaps for these improvement opportunities include, among other objectives, the focus on reducing hazardous substances across the Clariant product portfolio.

In 2015, Clariant’s Business Unit Masterbatches committed to gradually phase out the use of heavy metal-based pigments and offer its customers alternatives. Progress is continuous, with phase-out already achieved in Europe and North America in 2016 and in several sites in Latin America, Middle East, Africa and Asia-Pacific during 2017.

By participating in the development of a Product Portfolio Steering Framework of the World Business Council for Sustainable Development (WBCSD), Clariant supported the development of a set of sustainability indicators for evaluating product portfolios in the chemical industry. The initiative supported bringing best practice forward in evaluating product portfolio from a sustainability perspective and encourages companies to adopt methodologies for evaluating and steering their product portfolio towards increasing sustainability based on facts, market, and stakeholder expectations.

Disclosure 103-3 Evaluation of the management approach

Clariant developed the Portfolio Value Program (PVP) and EcoTain® label in close cooperation with external stakeholders. Customers, suppliers, scientists, non-governmental organizations, policymakers, and authorities were consulted in workshops and dialogs and provided valuable feedback. The stakeholders appreciated the focus on continuous improvement, transparency, and the inclusive consultation process. They also valued the PVP approach for being focused, balanced, and ambitious. They commended the 36 criteria for being comprehensive and fit for purpose.

In addition, Clariant received an independent third-party assurance statement on the PVP/ EcoTain® system from PricewaterhouseCoopers (PwC) in December 2015. In 2017, Clariant had the number of EcoTain® products verified by PwC.

The overall evaluation of the management approach includes internal audits, PVP progress-tracking dashboards, benchmarking against peers using external benchmarks, such as the Dow Jones Sustainability Index, as well as participation in external networks, discussions, and report reviews.