Management Approach

103-1 Explanation of the material topic and its boundary

Reason for materiality

The discussion on how to halt and mitigate climate change is in full swing as its potential impacts, such as shifting weather and risk of flooding, are intensifying. If global warming cannot be contained to a safe level, society at large and thus Clariant’s business and its markets can be seriously impaired.

An increasing number of business stakeholders are focusing on the issue: customers are demanding low-carbon alternatives, while financial players show a growing interest in climate-resilient companies. In addition, more corporations are opting for renewable energy sources for business operations.

As the environmental performance of companies continues to gain importance, Clariant aims to actively contribute to a carbon-neutral economy, helping the company to maintain or increase its customer base and to enhance its reputation.

Contribution to value creation

Clariant contributes to avoid greenhouse gas emissions with its numerous sustainable products, ranging from catalysts to second-generation bioethanol solutions. Clariant also reduces its own carbon emissions through the optimization of its operations. Decreasing materials and energy consumption reduces cost and further increases the company’s competitiveness.

Boundary

Climate change is relevant for Clariant’s own operations, its customers, its global supply chains, as well as the entire life cycle of its products.

103-2 The management approach and its components

Responsibilities and resources

At Clariant, managing climate change is the responsibility of Corporate Sustainability & Regulatory Affairs (CSRA). Within CSRA, the topic is managed by the teams Corporate Sustainability Strategic Issues and Corporate Environmental, Safety, and Health Affairs (ESHA), whose Heads report directly to the Executive Committee. CSRA is also working closely with other departments, such as Group Technology & Innovation (GTI), Group Procurement Services, as well as different Business Units that are developing low-carbon and climate-friendly solutions.

Goals and targets

To abate its climate impact, Clariant pursues environmental targets to be achieved by 2025. Compared to a 2013 baseline, Clariant aims to reduce energy consumption and direct CO₂ emissions by 30% and emissions from greenhouse gases by 35%, each per metric ton of production. These environmental targets are an integral part of Clariant’s planning and investment strategy.

Further components

Beyond Clariant’s goals to reduce emissions, the company is running multiple initiatives related to energy management, such as Yield, Energy, Environment (YEE) and eWatch™, an energy efficiency program that identifies savings potential through detailed analyses of energy consumption across operations. Finally, Clariant and its Business Areas contribute to the fight against climate change with their sustainable offering. Climate change-related criteria, such as raw material sourcing, material efficiency, energy consumption, and greenhouse gas emissions, are part of Clariant’s Portfolio Value Program (PVP), which integrates sustainability into the product portfolio and the innovation pipeline. With its EcoTain® label, Clariant identifies best-in-class solutions that address sustainability challenges such as climate change.

103-3 Evaluation of the management approach and measurement

Evaluation and outcome

Clariant monitors its climate impact by collecting and analyzing data on energy consumption and greenhouse gas emissions across its Business Units. Thus, Clariant keeps track of the trajectory necessary to achieve the 2025 environmental targets. Clariant is well on track to meet these ambitious goals.

Since 2018, Clariant also reports on its Scope 3 emissions in order to meet growing expectations of external stakeholders regarding the development of a holistic climate strategy. This strategy will include a reduction in value chain emissions by opting for cleaner energy sources, fostering collaboration along the value chain, and deploying additional mitigation measures.

GRI 305:2016 Emissions

305-1: Scope 1: Direct energy GHG emissions
305-2: Scope 2: Indirect energy GHG emissions
305-4: GHG emission intensity

Direct greenhouse gas emissions result largely from the combustion processes operated by Clariant and are proportional to the amount of carbon in the fuels burned. Emissions of greenhouse gases, such as methane and nitrous oxide (N₂O), are measured locally and integrated into the consolidated calculation. Indirect greenhouse gas emissions result from external energy procurement, predominantly in the form of electricity and steam. Their emergence correlates with the type of production and the amount produced, and they are less influenced by Clariant than direct emissions.

To calculate Scope 1 emissions, stoichiometric emission factors of the primary fuels are applied. To calculate Scope 2 emissions, either specific emission factors from the local providers or country grid factors, which are published by the GHG Protocol, are used. For internal and ISO 50001 reporting, the eWATCH™ team calculates site-specific conversion factors in close interaction with the site energy managers. These factors help benchmark the carbon intensity of different energy carriers and utilities and may pinpoint operational improvements.

The amount of all greenhouse gases (expressed in CO₂ equivalents) decreased from 0.93 million t to 0.84 million t, mainly due to the change of ownership of a site in Muttenz, Switzerland, from Infraserv to Clariant, as well as a shift away from heating oil to natural gas and the purchase of green electricity at certain sites. These changes also had a positive impact on the emission intensity, which decreased from 215 to 198 kg per manufactured ton of production.

305-3: Other indirect (Scope 3) GHG emissions

To provide extensive reporting for the Dow Jones Sustainability Index (DJSI) and the Carbon Disclosure Project (CDP), as well as develop a holistic climate strategy, Clariant reports on its Scope 3 emissions. Clariant focuses on the categories deemed most relevant for its business: purchased goods, fuel- and energy-related activities (not included in Scope 1 or 2), upstream and downstream transportation and distribution, and end-of-life treatment of sold products. The categories and calculation methods are in line with the »Guidance for Accounting & Reporting Corporate GHG Emissions in the Chemical Sector Value Chain« issued by the World Business Council for Sustainable Development (WBCSD) and the GHG Protocol.

305-5: Reduction of GHG emissions

99 projects within Clariant’s eWatch™ and YEE initiative delivered energy and CO₂-reduction benefits in 2019. Since 2013, a total of CHF 37.3 million was saved by implementing energy-efficiency measures and energy-purchasing optimizations. In 2019, Clariant managed to save CHF 4.4 million.

305-6: Emissions of ozone-depleting substances (ODS)

Clariant no longer uses ozone-depleting substances. Cooling agents, if relevant, are reported under greenhouse gases.

305-7: Nitrogen oxides (NO_X), sulfur oxides (SO_X), and other significant air emissions

To calculate emissions, standard emission factors are applied that are based on stoichiometry and common waste gas treatment techniques. When available from suppliers, more specific local factors are used.

Management Approach

103-1 Explanation of the material topic and its boundary

Reason for materiality

Clariant carefully manages Employee Engagement to be an employer of choice, attracting top talent and helping the company deliver lasting results. Employee Engagement and retention programs thus improve Clariant’s internal and external reputation as an attractive employer, increasing interest of potential external candidates and motivation and commitment of Clariant’s employees.

Contribution to value creation

Employee Engagement and retention programs enhance employee motivation and commitment and hence drive employee performance. As a consequence, they reduce employee turnover, mitigate early-leaver risks, lower cost per hire, and hence support Clariant's overall cost-saving targets.

Boundary

Knowing that real performance excellence comes from challenged, empowered, and rewarded teams, Clariant continuously strives to keep people motivated and increase its Employee Engagement levels worldwide.

103-2 The management approach and its components

Responsibilities and resources

Employee Engagement is a responsibility of each leader in the organization. The strongest drivers of engagement are trust in the leadership team, a motivating work environment and atmosphere, a vision that employees can identify with, and a clear sense of purpose in what they are doing.

Goals and targets

The objective of employee engagement is to provide a clear direction to people by explaining strategic decisions and the implications of everyone’s responsibilities. The second dimension is to enable employees to deliver upon challenging objectives by providing the necessary infrastructure and implementing consistent processes.

Further components

Clariant’s strategies for Employee Engagement include regular communication on the direction of the company, involvement of employees in strategy sessions and an inclusive leadership. Key parameters for employee engagement include authentic leadership, recognition programs, career opportunities, and personal development.

Clariant’s Employee Policy includes key principles and minimum standards for working conditions and labor practices. These are crucial to ensure a fair, transparent, and discrimination-free work environment. The policy is globally applicable and must also be applied by employment agencies and contractors doing business with Clariant. The framework underscores Clariant’s commitment to its six corporate values: Drive for Excellence, Disciplined Performance Management, Deliver to Promise, Courageous and Decisive Leadership, Lived Appreciation, and Corporate Responsibility.

Clariant has a comprehensive Recognition Program in place that recognizes strong results with a diversity of rewards. The program includes monetary recognition awards for outstanding achievements and non-financial awards that encourage employees to recognize efforts and contributions of their peers and supervisors in the form of vouchers or presents.

The Global Benefits Policy contains key elements to be covered within all local benefit programs, including benefits related to retirement, flexible work arrangements, death, travel, accident, health, and well-being. It acknowledges country-specific circumstances. The policy was developed based on the input received through the global benefit survey conducted in 2018.

Read more: Integrated Report, Employee Engagement

103-3 Evaluation of the management approach and measurement

Evaluation and outcome

Clariant offers diverse platforms to collect employees’ feedback related to their engagement. Employee engagement surveys, team barometer evaluations, and functional feedback surveys are conducted on a regular basis.

To evaluate Employee Engagement across the organization, Clariant conducted a »Pulse Survey« in 2018 with a group randomly selected from the global workforce. Compared to former engagement surveys, the revised format covered more strategic and Clariant-specific topics, such as strategy, vision, and change, and asked for concrete reasons why people want to work for Clariant. The survey results are used for organizational development and help Clariant position itself as an employer of choice. The company plans to use »Pulse Surveys« to involve the different Business and Service Units more systematically to ensure that the specifics of each Unit are sufficiently considered. A global »Pulse Survey« will be conducted biennially.

Indicators

Apart from the survey, Clariant tracks employee turnover and compares it to industry benchmarks to detect and mitigate decreases in employee retention.

GRI 202:2016 Market Presence

202-1 Ratios of standard entry-level wage by gender compared to local minimum wage

Clariant pays wages and salaries that are determined by local relevant competitive market data rather than by legally defined minimum wages. However, as prescribed by Clariant’s global Employment Policy, minimum wage standards always have to be adhered to by local Human Resource departments.

202-2 Proportion of senior management hired from the local community

At the end of 2019, 60% of all senior managers (Executive Committee and top four management levels) were citizens of or had an indefinite right to reside in the country where they were employed. Within the European Union, nationalities of all member states are considered »local.«

GRI 401:2016 Employment

401-1 New employee hires and employee turnover

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees

No intentional differentiation is made in the company benefits provided by Clariant according to the type of employment contract. This does not exclude differences depending on the individual case and local circumstances, such as local industry standards or cultural expectations. The deciding criterion in this case is the customary market standard.

401-3 Parental leave

Clariant promotes family-friendly job opportunities: All mothers are guaranteed a comparable position upon their return to work for up to one year following the birth or adoption of a child. For the two years following the birth or adoption, Clariant grants all parents a minimum of ten days of paid leave for family purposes, in addition to their standard annual vacation. Considering that all permanent employees of Clariant are theoretically entitled to this provision, this would extend to all 10 914 males and 3 331 females for 2019. In 2019, 211 mothers and 432 fathers took advantage of this opportunity. In the same year, 599 employees returned to their workplaces, of which 180 were female and 419 were male.

GRI 402:2016 Labor/ Management Relations

402-1 Minimum notice periods regarding operational changes

Clariant complies with all local statutory and operational requirements regarding the provision of information to employee representatives and employees. All employees are promptly informed of all significant operational changes. In addition, regular and ad hoc information is provided to all employees via the intranet as well as information letters from the CEO and management in all relevant languages. Corporate information sessions such as town hall meetings are regularly held.

GRI 405:2016 Diversity and Equal Opportunity

405-1 Diversity of governance bodies and employees

405-2 Ratio of basic salary and remuneration of women to men

With regard to the zero-tolerance approach of Clariant against any form of discrimination, regional and local Human Resources departments work toward ensuring avoidance or elimination of any discriminatory practices in work-related activities, particularly regarding remuneration, training, vocational guidance, and social security. Globally, the average basic salary of female employees was 99.75% of that of the average male employee in 2019. New hires and exits were excluded from these calculations.

Management Approach

103-1 Explanation of the material topic and its boundary

Reason for materiality

Clariant aspires to be perceived by its stakeholders as a world-class, high-performance company that acts with the utmost integrity. It believes that sustainable business success is closely linked to compliance with laws, regulations, and ethical standards. Clariant’s stakeholders and society at large do not tolerate bribery or corruption—adhering to this expectation is a mandate for a reputable and sustainable company.

Contribution to value creation

Applying the highest standards of ethics and integrity is fundamental to sustainable growth and essential for Clariant’s long-term business success.

Boundary

Compliance and ethical behavior apply not only to Clariant’s own operations, but also to third parties acting for or on behalf of Clariant.

103-2 The Management Approach and its components

Responsibilities and resources

Clariant’s Business Units are responsible for managing business ethics and compliance in their daily operations. Group Compliance and Group Legal Services provide support to the businesses in adhering to Clariant’s ethical standards by providing trainings and advice as well as by gaining trust from stakeholders and ensuring an impeccable reputation in the marketplace. As of 2019, Clariant has a full-time Head of Compliance, full- or part-time Regional Compliance Officers in each region, Country Compliance Officers, and an Ethics and Integrity project manager dedicated specifically to Ethics and Compliance. They are supported by employees from Group Legal Services.

Goals and targets

Clariant does not have goals and targets currently in place for Ethics and Compliance.

Further components

The Strategic Integrity Roadmap, with its five-pillar approach, provides guidance to achieve the highest standards for responsible business conduct by combining a leadership program, legal and compliance risk management, training and communication, standards and controls, as well as program measurement, auditing, and monitoring.

Code of Conduct and Policies

A central instrument to ensure ethical behavior is Clariant’s Code of Conduct, which guides employees in reflecting on decisions and acting responsibly. In 2019, Clariant revised its Code of Conduct, which will be published on its website in 2020. All employees will be trained on the updated Code of Conduct.

Besides its globally applicable Anti-Bribery and Anti-Corruption Policy (ABC Policy) and Gift Policy, Clariant developed local policies regarding gifts, entertainment, and community engagement work. The company also regularly updates its comprehensive antitrust guidelines.

Training and Communication

Clariant offers regular e-learning courses on anti-bribery and anti-corruption. Special target groups receive further face-to-face training courses. New employees are familiarized with the Code of Conduct and Anti-Bribery and Anti-Corruption Policy. Regular classroom and e-learning trainings on antitrust matters are mandatory for employees working in procurement, marketing, and sales functions.

Clariant also conducts »Leader-led Compliance Sessions,« which provide a forum to discuss ethical dilemmas that emerge in daily business practices. The dilemmas were tailored to the business functions and to Code of Conduct commitments related to Anti-Bribery, Antitrust, Data Privacy, Conflict of Interest, and Discrimination and Harassment. These sessions are mandatory for all managers in senior positions.

Data Privacy Program and Governance

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 encompasses Data Privacy Policy, a general Directive on how to process personal data, 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.

Clariant also established a certified Data Privacy Organization. Employees are trained on the main topics of the International Association of Privacy Professionals (iapp.org). The certified employees are responsible for creating awareness and building up the relevant knowledge throughout the company with a »train the trainer« approach.

Grievance mechanism

Employees can confidentially report noncompliant behavior to the Ethics & Integrity organization. All violations against the Code of Conduct and any workplace-related compliance issues can be reported through the »Clariant Integrity Line.«

103-3 Evaluation of the management approach and measurement

Evaluation and outcome

The Ethics and Risk Management Committee (ERMC)—a subcommittee of the Executive Committee—receives regular reporting on the delivery of the Strategic Compliance Roadmap as well as updates on individual measures, cases reported, and remediation taken. These insights help Clariant improve compliance and ethics throughout the organization.

Clariant designed its five-pillar strategy based on a detailed three-year plan, including key performance indicators that have been tracked since 2018. These indicators are further evaluated to continuously improve the effectiveness of Clariant’s approach. Both the Executive Committee and Audit Committee were involved in setting the indicators. The Executive Committee receives quarterly updates on the progress and measures that are taken, and the Audit Committee receives biannual updates.

Clariant employs a due diligence process to examine distributors and agents. The process ensures that they are not involved in any form of bribery or compliance violation, and that they do not appear on a sanction list. It further verifies that they have an appropriate compliance framework in place and have access to a relevant training program provided by Clariant.

Clariant's investigation and remediation process applies to all reported concerns and breaches of the Code of Conduct. Corporate Functions (Group Compliance, Group Human Resources, Corporate Auditing, Environmental Safety and Health Affairs (ESHA), and other functions where appropriate) are responsible for the investigation, and Compliance Committees (regional or Group level) are responsible for remediation.

Indicators

To evaluate effectiveness, Clariant internally tracks a total of 25 indicators in the categories »Leadership,« »Risk Management,« »Training,« »Communication,« »Standards and Controls,« and »Monitoring, Auditing, and Reporting.« Clariant also tracks the number and type of the process changes made in response to allegations.

In 2019, Clariant received 116 reports, including questions, through its Integrity Line System, of which 99 are alleged breaches of the Code of Conduct. Of these, 58 cases were related to business integrity and 21 cases were related to treatment of employees. Among the other cases, 6 were related to Health & Safety or Environmental violations, 17 were »ask a question,« and the remaining cases relate to Information Security, Cyber Risk, Data Privacy and others.

GRI 205:2016 Anti-corruption

205-1 Operations assessed for risks related to corruption

Corruption risks are investigated as part of Clariant’s ongoing internal auditing. Clariant conducts business reviews of high-risk businesses in high-risk environments with high-risk customers. In 2019, the reviews suggested that Clariant should establish a holistic fraud prevention approach and strengthen the risk management process of third parties. In addition, Clariant will explore the option of job rotation for employees in exposed functions.

205-2 Communication and training on anti-corruption policies and procedures

205-3 Confirmed incidents of corruption and actions taken

In 2019, there were 15 allegations regarding bribery, corruption, and kickbacks brought forward. They led to disciplinary actions against 6 employees. In 3 cases, the responsible employee was dismissed, and 6 cases are still under investigation.

There were no legal proceedings against Clariant or its employees for alleged corruption. Clariant terminated relationships with 5 business partners (agent, distributor, or consultant).

GRI 206:2016 Anti-competitive Behavior

206-1 Legal actions for anti-competitive behavior and antitrust and monopolistic practices

In 2019, Clariant was still subject to an ongoing competition law investigation by the European Commission into the ethylene purchasing market, which had started in 2017. The company is assisting the relevant authorities and cannot comment further on the details of the ongoing investigation. For further information, please refer to the Financial Review Full Year 2019. In 2019, there were no further reported legal actions for anti-competitive behavior or antitrust or monopolistic practices. Clariant reports significant legal actions in its Integrated Report.

GRI 419:2016 Socioeconomic compliance

419-1 Noncompliance with laws and regulations in the social and economic area

Clariant was not aware of any cases in the year under review in which the company was accused of not having acted in compliance with laws, regulations, and voluntary codes of practice. Consequently, no significant fines or nonmonetary penalties for failure to comply with legal regulations were levied.

Management Approach

103-1 Explanation of the material topic and its boundary

Reason for materiality

Clariant is firmly committed to protecting human rights during all phases of value creation within all Business Units, as this is a prerequisite for sound business governance and license to operate.

Contribution to value creation

Respecting human rights is key to sound business governance and to promoting socially responsible growth.

Boundary

Clariant’s commitment to human rights applies not only to Clariant’s own business operations, but also to its entire supply chain and contracted workers. It expects suppliers and business partners to maintain the same high human rights standards.

103-2 The management approach and its components

Responsibilities and resources

Corporate Sustainability and Regulatory Affairs (CSRA) and Human Resources, Legal, and Procurement departments have a shared responsibility for managing human rights.

Goals and targets

Clariant does not have goals and targets currently in place for human rights.

Further components

Clariant’s commitment to respecting human rights is enshrined in its Human Rights Policy Statement, in which Clariant reaffirms its commitment to the United Nations Human Rights Declaration and the ILO Declaration on Fundamental Principles and Rights at Work. The policy statement applies to all direct operations and activities and articulates a clear expectation of suppliers and contractors to uphold the same standards.

In addition, requirements regarding key human rights principles are included in Clariant’s Code of Conduct, the Code of Conduct for Suppliers, and the Employment Standards Guidelines, which protect workers’ rights with regard to nondiscrimination, forced labor, child labor, fair working conditions, freedom of association, privacy, effective remedies, and workplace health and safety. The Code of Conduct is binding for Clariant’s direct operations, including all joint ventures that are controlled by Clariant or in which it holds a majority interest. The Code of Conduct for Suppliers extends to Clariant’s suppliers and their contractors. The rights of community members—particularly regarding environmental health and safety—are a key priority for Clariant. Thus, it protects them with a comprehensive set of binding environmental, health, and safety rules.

Clariant is a signatory to the UN Global Compact. It also strongly supports collaborative initiatives that promote sustainability and respect for human rights across the industry as a member of Together for Sustainability (TfS), the Roundtable on Sustainable Palm Oil (RSPO), and the Responsible Mica Initiative.

In 2016, Clariant carried out a human rights due diligence assessment with the support of external human rights experts to evaluate the potential human rights impacts of its operations and activities as well as the effectiveness of the management and monitoring systems in place. The accompanying graph illustrates the key elements of the due diligence process.

Through a series of interactive working sessions, several key functions and departments prioritized activities based on their scale and relevance to the business and their probability of having adverse effects on the human rights of workers, communities, and other groups. A human rights assessment was carried out for a number of priority activities, integrating both internal and external risk factors, such as complex subcontracting arrangements and vulnerabilities of specific groups, as well as aggregate human rights risk levels of countries and industries. The evaluation of environmental and social impacts, as well as labor rights in Clariant’s own operations and along its supply chain, played an important role in determining the extent to which Clariant appropriately mitigates adverse human rights impacts.

The assessment found that Clariant has a comprehensive set of policies, guidelines, and processes in place to ensure the implementation of its human rights commitments. In addition, it found that specific mitigation actions had been conducted for some of the high-risk areas identified in the human rights impact assessment. The assessment further concluded that Clariant’s potential human rights impacts primarily relate to contract labor and the supply chains for natural raw materials, particularly in geographies with weak national legal frameworks.

Building on this assessment, Clariant carries out a review of the legal requirements, conditions, and control measures related to contract labor in India. The review found that the country organization is well aware of the legal requirements and has implemented a clear and comprehensive process, supported by detailed evidence, checklists, and regular exchanges with authorities.

Addressing and closing the identified gaps in Clariant’s mitigation framework is a priority in the coming years. Clariant is focused on securing the same requirements for contract labor that are applied by employment agencies and contractors. Regarding the supply chain, Clariant will continue to address supply chain risks based on the geographical origin of particular raw materials to gain a better understanding of potential human rights impacts, especially in high-risk countries.

103-3 Evaluation of the management approach and measurement

Evaluation and outcome

Clariant relies on well-established management and monitoring systems that enable the company to detect and mitigate potential human rights risks. In the future, Clariant will further align and streamline its activities and review the need for additional internal human rights training. The evaluation of the management approach includes benchmarking against Clariant’s peers, using external benchmarks such as the Dow Jones Sustainability Index, and participating in external networks, discussions, and report reviews.

EcoVadis assesses suppliers’ sustainability and monitors their performance across 21 indicators. Clariant received a World Procurement Award in 2019 for implementing a holistic risk management process and integrating procurement into company-wide sustainability efforts.

GRI 406:2016 Non-discrimination

406-1 Incidents of discrimination and corrective actions taken

GRI 407:2016 Freedom of Association and Collective Bargaining

407-1 Operations and suppliers with which the right to freedom of association and collective bargaining may be at risk

Clariant supports freedom of association. As part of this, it respects the right of employees to join unions and be represented by representatives of these unions internally and externally in accordance with the applicable national or local laws and practices. The same standard is applicable for suppliers. As laid down in the Code of Conduct for Suppliers, they must observe the right of their employees to strike and to be members of trade unions. Clariant knows of no cases in which freedom of association or the right to collective bargaining has been seriously jeopardized or breached.

Clariant is assessing its suppliers in relation to freedom of association, among other social, governance, and environmental topics, together with other companies via the Together for Sustainability (TfS) platform. For more information, please see disclosure 308-1. In 2016, Clariant also launched a human rights due diligence assessment that continued in 2019 with mitigation activities.

GRI 408:2016 Child Labor / GRI 409: 2016 Forced or Compulsory Labor

408-1 Operations and suppliers at significant risk for incidents of child labor / 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor

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

Read more: GRI Report, 308-1 New suppliers that were screened using environmental criteria

In 2016, Clariant also launched a human rights due diligence assessment that continued in 2019 with mitigation activities.

Clariant condemns all forms of child labor and respects the rights of children. Consequently, Human Resources ensures by appropriate processes and practices that minimum age provisions of national labor laws and regulations are adhered to and that adequate and verifiable mechanisms for age verification at Clariant workplaces are used by local Human Resources. ILO convention numbers 138 and 182 are expressly acknowledged as the minimum standard. Clariant is not aware of cases of child labor in the company or with its suppliers. Similarly, Clariant rejects any form of forced labor or slavery and is not aware of any cases of forced labor or slavery in the company.

GRI 412:2016 Human Rights Assessment

412-1 Operations that have been subject to human rights reviews or impact assessments

Clariant monitors and manages human rights impacts, both in its own operations and in its supply chains, and works to make sure that there is no contribution, knowing or unknowing, to any adverse human rights impacts. Clariant assessed all of its operations globally in a human-rights due-diligence review.

Furthermore, Clariant established the »Clariant Integrity Line« to enable people to bring any concerns they may have to our attention. The Integrity Line is a channel through which all violations against the Code of Conduct can be reported, including discrimination or violations of human rights.

Read more: Corporate Website, Human Rights

412-2 Employee training on human rights policies or procedures

E-learning modules are mandatory for all employees. Participation in these training courses, which cover different topics or themes of the Code of Conduct, is registered, and defaulters receive a warning. The code is available in all relevant national languages.

412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

All investments with a total volume of more than CHF 1 million must be approved by the Investment Subcommittee of the Executive Committee (EC). The subcommittee makes its decision based on financial, strategic, and sustainability criteria, the latter of which also includes human rights aspects.

Management Approach

103-1 Explanation of the material topic and its boundary

Reason for materiality

Clariant believes that participating in policy dialogue is an important element of corporate responsibility. Thus, in line with the company’s strategy and business objectives, Clariant contributes to policy development in relevant areas such as chemical management and substitution, climate change, energy, bioeconomy, circular economy, industrial policy and competitiveness, trade, and innovation.

Contribution to value creation

An open, transparent, and trustworthy dialogue with all stakeholders is essential for Clariant. Building networks and relationships within the chemical industry, as well as with policymakers and other stakeholders such as non-governmental organizations (NGOs), helps Clariant anticipate and mitigate risks driven by regulatory or stakeholder pressure, identify business opportunities, and create competitive advantages.

Boundary

The topic is not only relevant for Clariant’s operations and value chains, but also impacts its public outreach—for example, via trade associations—to position the company and the chemical industry on strategic policy areas.

103-2 The management approach and its components

Responsibilities and resources

The overall responsibility for policy and stakeholder relations is assigned to Corporate Sustainability & Regulatory Affairs (CSRA). At the local level and within certain sectors, the Business Units and regional organizations have a responsibility to maintain and engage in the policy dialogue, as they are well positioned to understand and address the local and sector-specific challenges and stakeholder networks.

Goals and targets

Clariant does not see the need to establish specific goals and targets for policy and stakeholder relations.

Further components

Clariant follows several avenues to contribute to public policy development. It periodically publishes position papers and responds to public stakeholder consultations and surveys. Clariant also anticipates and goes beyond regulatory requirements to abide by its ambitious sustainability commitments, and promotes policy development and stakeholder relations accordingly.

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 interests.

Clariant has implemented clear policies for engaging in public policy development, addressing the increasing attention stakeholders and the public pay to such activities. Clariant’s Anti-Bribery and Anti-Corruption Policy establishes detailed rules for employees’ interactions with public officials and political advisors, as well as for charitable contributions and political donations, and forbids any donations to political parties and related organizations. Clariant openly discloses information about its fields of interest and the scope of public affairs activities, for example, in the »Transparency Register« of the European Union.

Other activities include active participation in associations, such as the European Chemical Industry Council (Cefic), national chemical associations, sectoral business associations, and ad hoc collaborations with NGOs.

103-3 Evaluation of the management approach and measurement

Evaluation and outcome

Clariant’s advocacy activities are strongly linked to the company’s growth and sustainability strategy. In the context of its advocacy strategy, which is currently under review, Clariant aims to further strengthen these ties by paying closer attention to topics such as bioeconomy, plastics circular economy, climate change, and sustainable chemistry.

Clariant supports the call for increased transparency regarding lobbying activities and political contributions. Through its reporting on the Carbon Disclosure Project (CDP) and the Dow Jones Sustainability Index (DJSI), Clariant discloses the issues it has discussed with policymakers and trade associations that are likely to take a position on sustainability topics such as climate change. Moreover, Clariant performs an annual review of its membership costs and publicly discloses its top membership contributions, as well as the budget allocated to policy memberships.

Clariant’s continuous dialogue with policymakers, NGOs, and forward-looking industry associations further supports evaluating the effectiveness of its public policy management approach.

Indicators

Clariant does not intend to develop specific indicators for policy and stakeholder relations.

GRI 415:2016 Public Policy

415-1 Political contributions

The Clariant Corporate Citizenship Management Policy and the Anti-Bribery and Anti-Corruption Policy explicitly exclude donations to political parties. Accordingly, Clariant did not render any donations to parties, politicians, or related organizations in 2019.

Management Approach

103-1 Explanation of the material topic and its boundary

Reason for materiality

Clariant believes that true leadership in sustainability extends beyond the company’s operations and considers sustainability impacts and opportunities across the entire value chain. Customers, employees, community members, the general public, and other stakeholders expect companies to understand their wider impact and foster sustainable change and growth.

Contribution to value creation

As part of Clariant’s commitment to identifying and reducing potential risks, enhancing the sustainability performance across its end-to-end supply chains, Clariant proactively engages with suppliers to monitor and improve the sustainability performance of the materials and services it sources from them.

Boundary

In order to be a true sustainability leader, Clariant goes beyond its own operations and drives its sustainability strategy across its entire spend on materials and services. Clariant’s sustainability strategy includes its comprehensive and complex global supply chains, including its suppliers.

103-2 The management approach and its components

Responsibilities and resources

Clariant Procurement has developed and rolled out its sustainability strategy across all regions and spend categories, covering more than CHF 4 billion of yearly spend. Sustainability in the supply chain is coordinated and steered by the Group Procurement Service’s sustainability team, which reports directly to the Head of Clariant’s Center of Expertise.

Goals and targets

Clariant derives yearly supply chain sustainability targets from its Procurement Sustainability Roadmap. In 2019, four out of eight procurement key performance indicators relate to sustainability. They are:

1. Increasing spend coverage with sustainability evaluation and decreasing spend with risk suppliers, based on supplier sustainability assessments. This target is to be reached in collaboration with the different Business Units.
2. Number of new supplier sustainability assessment scorecards generated
3. Number of new sustainability audit reports generated
4. Number of Corrective Action Plans completed on high- and medium-risk suppliers identified through assessment scorecards in order to improve the suppliers’ score in consecutive reassessments.

In 2019, Clariant adopted an overall target on spend coverage and risk spend, which is characterized as spend on suppliers with a »Together for Sustainability« (TfS) assessment score of less than 45. The target includes the 100 suppliers with which Clariant spends the most, as well as risk suppliers previously not covered by TfS assessments. Clariant also set a target on the number of audits conducted via TfS.

Further components

Sustainability forms an integral part of Clariant’s procurement practices, irrespective of material, geography, or risk potential. Suppliers, outsourcing partners, and service providers are selected and managed based on a comprehensive set of criteria. These benchmarks include not only economic and product-specific performance, but also nonfinancial and sustainability considerations, such as complaint management, creditworthiness, safety standards, working conditions, and respect for human rights.

Supplier Sustainability Management Trainings

To build and continuously update skills in supplier sustainability management and ensure sustainability is a critical part of the state-of-the-art procurement expertise, Clariant Procurement develops and deploys a Sustainability Capability-Building Program with yearly waves of training sessions and supporting materials, such as dedicated toolkits for buyers as well as suppliers.

Procurement Sustainability Roadmap

Clariant annually develops a Procurement Sustainability Roadmap based on insights, learnings, and feedback gathered in previous years. The roadmap defines focus areas, strategies, and indicators and is deployed across the entire organization and spend. The procurement sustainability program is discussed and aligned with Corporate Sustainability & Regulatory Affairs (CSRA).

Supplier Code of Conduct

The policy cornerstone of Clariant’s sustainable procurement approach, the Supplier Code of Conduct, is based on the UN Global Compact and Responsible Care® principles. It was rolled out in 2014 across the entire supply base of more than 22 000 suppliers through written communication and via face-to-face meetings with top suppliers in each region. It is also incorporated into the General Terms and Conditions of Purchase included in every purchase order issued by the procurement organizations. Clariant expects its suppliers to abide by this Supplier Code of Conduct and make every effort to keep the environmental impact and negative social effects arising from business activities at a minimum. If the Code of Conduct is not embraced by business partners, Clariant retains the right to end business relationships.

Read more: Corporate Website, Sustainable Supply Chains

Supplier Sustainability Assessments and Audits

Since 2014, Clariant has been a member of the »Together for Sustainability (TfS)« initiative. The TfS supplier sustainability assessment covers both materials and services and is based on standard state-of-the-art methodologies and an approach jointly developed by the procurement leadership and organizations of large chemical companies. It is managed through leading external global service providers specialized in sustainability: EcoVadis for online assessments; and DSQ Group, ERM, Intertek, and SGS for on-site audits. The approach developed and implemented by TfS leverages synergies among the participants and delivers an independent, standardized, and quantitative evaluation of suppliers’ sustainability performance and risk profiles. The outsourcing to third-party service providers guarantees process robustness, independence, confidentiality, and conformity with antitrust and competition law. Clariant prioritizes the assessment and audit of suppliers according to country and business risks, global category priorities, and purchase volumes. In 2019, Clariant also adopted eTfS audits, an enhanced TfS questionnaire with specific questions relating to the mining industry.

Read more: Integrated Report, Sustainability Performance in the Supply Chain

Responsible Mica Initiative

In 2019, Clariant became a full member of the Responsible Mica Initiative, which aims to eradicate child labor and unacceptable working conditions in the Indian mica supply chain.

103-3 Evaluation of the management approach and measurement

Evaluation and outcome

Clariant’s yearly Procurement Sustainability Roadmap draws from insights and feedback gathered through external evaluations (such as the DJSI SAM Company Sustainability Benchmark Report and EcoVadis Scorecard), industry benchmarks with TfS and best-in-class companies within and outside the chemical industry, and conference participation. Thus, breadth and depth of the roadmap are continuously enhanced.

The KPIs described under «Goals and Targets» above are tracked monthly in the management committee meeting.

In 2019, Clariant was honored by two organizations: EcoVadis granted the company the Sustainable Procurement Leadership Award for »Best Internal Stakeholder Engagement«; and riskmethods, a company assessing supplier risks, awarded Clariant with the »TOP Sustainable Supply Chain Program.« The awards recognize excellence in sustainable procurement practices and distinguish Clariant as a best-in-class example, driving internal engagement to roll out a global sustainable procurement program.

»Together for Sustainability (TfS)«

Through the »Together for Sustainability (TfS)« initiative, Clariant has online access to a large number of assessment scorecards and audit reports generated by external service providers on behalf of all TfS members. In addition to an overall score, the assessment scorecards contain an individual score for the critical categories of environment, labor and human rights, ethics, and sustainable procurement. Furthermore, and most importantly, assessment scorecards and audit reports provide detailed feedback on specific improvement areas and guidance on where and how to address the identified gaps. This comprehensive approach and outcome give Clariant the basis to engage with its suppliers and agree on ad hoc corrective action plans in order to mitigate sustainability risks and improve sustainability performance in its supply chain.

This enables Clariant to monitor, measure, and improve supplier sustainability performance, identify improvement opportunities against principles laid out in the Supplier Code of Conduct, and embed sustainability as an integral part of supplier selection and management.

GRI 204:2016 Procurement Practices

204-1 Proportion of spending on local suppliers

Clariant’s procurement preferentially sources goods and services from within the region in which its respective operations and manufacturing plants are located, if qualitatively compatible, technically feasible, and economically viable. This approach supports the economic development of the regions in which Clariant operates. This is particularly relevant for and encouraged in key emerging markets such as Brazil, China, and India. Clariant defines local suppliers as suppliers that are based in the same country or region where the materials and/or services are used.

GRI 308:2016 Supplier Environmental Assessment

308-1 New suppliers that were screened using environmental criteria

Clariant selects and manages its suppliers, outsourcing partners, and service providers based on a comprehensive set of criteria. In addition to economic and product-specific performance aspects, the selection of suppliers is also explicitly based on nonfinancial and sustainability considerations. Clariant’s sustainability standards are incorporated into its procurement strategies and activities, policies, and general guidelines (such as the Code of Conduct for Suppliers).

Through TfS, more than 9 400 (2018: 10 600) supplier assessment scorecards and more than 1 300 (2018: 1 500) supplier audit reports are active and shared among all TfS Members via an online platform. This serves as a basis to drive improvements in sustainability performance across the respective supply chains. In 2019 alone, 309 new TfS supplier audits were conducted, and 1 043 new supplier assessments were generated.

By mapping supplier TfS assessment scorecards against Clariant’s supply base, Clariant reached a share of 78% (2018: 74%) of its yearly CHF 2.6 billion (2018: 2.9 billion) direct spend that is covered by TfS assessments.

308-2 Negative environmental impacts in the supply chain and actions taken

These numbers are based on the mapping of the suppliers from the EcoVadis platform to Clariant's own spend database.

In 2017, Clariant began a program of Corrective Action Plans (CAPs) in order to reduce supplier sustainability risks. In 2019, 18% of the 784 suppliers identified as having actual and potential significant negative environmental impacts have been taken through the CAP program. Further, Clariant conducted a reassessment campaign via CAP in 2019. The campaign focused on suppliers with a TfS assessment score of less than 45. Of the more than 400 suppliers with such a score, Clariant targeted the 100 largest ones by spend to perform a reassessment via CAP.

GRI 414:2016 Supplier Social Assessment

414-1 New suppliers that were screened using social criteria

For information regarding 414-1, please see disclosure 308-1: New suppliers that were screened using environmental criteria.

414-2 Negative social impacts in the supply chain and actions taken

These numbers are based on the mapping of the suppliers from the EcoVadis platform to Clariant's own spend database.

In 2017, Clariant began a program of Corrective Action Plans (CAPs) in order to reduce supplier sustainability risks. In 2019, 16% of the 1 060 suppliers identified as having actual and potential significant negative social impacts have been taken through the CAP program.

For more information regarding 414-2, please see disclosure 308-2: Negative environmental impacts in the supply chain and actions taken.