Business Ethics and Compliance
»Business ethics and compliance« refers to ethical, responsible, and integrity-based corporate behavior regarding, for example, management, procurement, marketing, and sales. It also involves complying with legal and regulatory frameworks.
Clariant is a world-class, high-performance company that acts with the highest standards of ethics and integrity. The company aspires to also be perceived in this way by its stakeholders. ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. with laws, regulations, ethical values, and integrity standards is necessary to be sustainably successful and to win the trust of business partners and customers.
Management approach
Clariant’s business units are responsible for managing business ethics and compliance in their daily operations. Group ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. supports the business units in adhering to Clariant’s ethical standards by providing the Ethics and Integrity Framework, communication, tools, trainings, and advice.
Clariant has a full-time head of Group ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors., full- or part-time Regional ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. Officers in each region, Country ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. Officers, an Ethics and Integrity project manager and compliance specialist, a Group Privacy Head and an Information Security team. The Group ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. team gets support from Group Legal Services.
Environmental Safety and Health Affairs (ESHA), Sustainability, Information Security, Data Privacy, Enterprise Risk Management (ERM), and Internal Control over Financial Reporting provide yearly overviews of their programs. These insights help to ingrain a culture of ethics and integrity throughout the organization and provide assurance on the overall program.
Evaluation of management approach
The Executive CommitteeExecutive CommitteeManagement body of joint stock companies; at Clariant the Executive Committee currently comprises four members. (EC) Subcommittee Ethics & Risk (ECS E&R) reviews and assesses compliance on a global and regional level in all four regions to foster a culture of ethics and integrity across the organization. The whole Executive CommitteeExecutive CommitteeManagement body of joint stock companies; at Clariant the Executive Committee currently comprises four members. participates in the subcommittee with the CEO as its chair. The subcommittee receives regular reports and updates on individual measures, case reports, and remediation taken. It also approves the annual Group ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. roadmaps and reviews the quarterly progress reports.
Due diligence
ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. and the highest ethical values apply not only to Clariant’s own operations, but also to third parties acting for or on behalf of Clariant, like distributors, agents, and other service providers. They must undergo a detailed due diligence process to ensure that they are not involved in any form of bribery or compliance violation, that they are reputable and in good standing, and that they do not appear on any sanctions list.
The due diligence process applies to all new and existing distributors and all regions. Participants submit a self-assessment questionnaire, while at the same time the relationship owner at Clariant describes the business relationship and business activity, explains the distributor’s background, and declares the purpose of applying the due diligence process.
Clariant assesses third parties against a predefined risk model: Enhanced due diligence will be required for medium- and high-risk business partners, while others can onboard without further due diligence. However, all business partners must verify that they have an appropriate compliance framework in place, and that they have access to a relevant training program provided by Clariant based on their risk rating. This process is currently under review to accommodate the new Swiss regulatory requirements for more transparency and social responsibility in reporting, which came into force on 1 January 2022.
StakeholderStakeholderStakeholders 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.-led regulatory proposals such as the Responsible Business Initiative in Switzerland increasingly demand greater transparency, particularly regarding the protection of human rights. In the coming years, Clariant will enhance existing activities, prove its commitment, and focus on human rights in its own operations and its supply chain.
Information security and data privacy
Clariant has established an Information Security Program to create awareness and to train employees on the appropriate use of data. This includes information classification, measures to avoid the loss of data, and measures according to the confidentiality, integrity, and availability (CIA) of information. To ensure a coordinated approach, Information Security Champions in each business and service unit support the implementation of this program in close collaboration with the IT Security team.
In 2018, Clariant implemented a Data Privacy Program in line with the General Data Protection Regulation (GDPR) of the European Union. An internally certified Data Privacy Organization is responsible for providing guidance and regular information, creating awareness, conducting trainings, and implementing the program throughout the company, with Data Privacy Champions in each business unit and region. Clariant’s internal information channels (intranet, Yammer, etc.) make important information directly available to end users.
The Data Privacy Program consists of the Data Privacy Policy, a general directive on how to process personal data, standardized operating procedures (SOPs) on selected aspects of the Data Privacy Policy, and basic data privacy e-learning courses. The aim of the courses is to familiarize all employees with the principles of the Data Privacy Policy, to provide deep dives for more exposed functions like Human Resources, Marketing, and Sales, and to introduce new employees to basic aspects of data privacy. All trainings include the main topics of the International Association of Privacy Professionals. Following a »train the trainer« approach, the certified employees are responsible for creating awareness and building up the relevant knowledge throughout the company.
Against the backdrop of increasing global requirements concerning data privacy, Clariant adapts and develops its data privacy strategy as »Think Privacy 2.0.« In 2021, the company advanced the six strategic pillars: ensure compliance with regulations, document systems where personal data is processed, foster a risk-based approach, create awareness, train relevant employees, and monitor program execution. To fulfill GDPR requirements for the management of personal data, Clariant has integrated the information life cycle management (ILM) concept into its SAP system.
Many countries now have strict legal frameworks in place to protect data privacy rights of individuals. Clariant rigorously monitors regulatory changes and takes necessary measures. For example, in 2020, when the Schrems II court decision invalidated the EU-US privacy shield and subsequently the Swiss-US privacy shield, Clariant immediately set up a project to address the required changes. The company is currently completing the implementation of the new standard contractual clauses adapted by the EU in June 2021.
Strategic Integrity Roadmap
Clariant’s Strategic Integrity Roadmap lays the foundation for the company’s ethics and integrity strategy, the purpose of which is to foster an ethical mindset and responsible behavior in the workforce. The Strategic Integrity Roadmap is the overarching document to implement the highest standards for responsible business conduct around five pillars: leadership engagement; communication and training; legal and compliance risk assessment; standards and controls; and monitoring, auditing, and reporting.
The roadmap is a detailed plan, including 25 key performance indicators from these categories that the Executive CommitteeExecutive CommitteeManagement body of joint stock companies; at Clariant the Executive Committee currently comprises four members. and the Audit Committee set in 2018. Updates on progress and measures are provided quarterly to the ECS E&R and biannually to the Audit Committee. Clariant continuously evaluates the indicators to improve the effectiveness of its approach. The Audit Committee on behalf of the Board of Directors approves the Strategic Integrity Roadmap annually.
Code of Ethics
A central instrument to ensure ethical behavior under the roof of the roadmap is Clariant’s Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity., »Reflect Ourselves,« which guides employees in their decisions and actions. Following the release of the Strategic Integrity Roadmap, Clariant revised its former Code of Conduct into the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. in 2019 and published it on the company website in February 2021.
The new Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. outlines the company’s ethical commitments and supports employees in reflecting on responsible actions and decisions. In addition, Clariant launched a tool called »Integrity Yes Check.« It helps employees to ask questions related to their projects to find out whether they are on the right track or should seek support. The Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. is value-based and designed around Clariant’s eight guiding principles:
- We treat each other with respect.
- We comply with the highest ethical standards and the law.
- We put safety first and are committed to protecting the environment.
- We are committed to fighting corruption.
- We care about our community and behave as a good corporate citizen.
- We handle information with care.
- We communicate responsibility.
- We take care of our resources.
Until October 2021, Clariant rolled out the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. with monthly campaigns and interactive virtual events to reach all employees despite pandemic circumstances. The company presented the eight principles in webinars, articles, interviews, and videos. In addition, for every principle, it described three dilemmas relevant to all employees, particularly to its site personnel. Supervisors, managers, and global leaders used them to engage in dilemma-based discussions to make the principles more tangible. In the rollout campaign, the Executive and Senior Management committed to living up to the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. and gave an integrity pledge. Code of Ethics
Anti-bribery, anti-corruption, antitrust
In addition to its global anti-bribery and anti-corruption policy (ABC Policy) and gift policy, Clariant has developed local policies regarding gifts, entertainment, and community engagement work. The company also has a comprehensive antitrust compliance program and guidelines, which it updates regularly. It particularly investigates corruption risks during reviews of high-risk businesses in high-risk environments with high-risk customers.
In 2020, Clariant drafted a holistic fraud program, implemented a third-party risk management system, and mandated job rotation for employees in exposed functions whenever possible. It developed the fraud program further in 2021 and will re-implement it in 2022 with key performance indicators to be set and monitored.
Investigation process
With the new Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity., Clariant has updated its investigation process. This nine-step-approach applies to all reported concerns and breaches of the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity.. Corporate functions (Group ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors., Group Human Resources, Corporate Audit, ESHA, and other functions where appropriate) are responsible for the investigation and have received appropriate training. Remediation lies with the global ECS E&R and the regional Ethics and Risk Management Committees. The company tracks the number and type of process changes made in response to allegations. Figure 001
001NINE STEP APPROACH
Clariant Integrity Line
In addition, employees and business partners can confidentially report malpractices, violations of the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity., and workplace-related compliance issues through the »Clariant Integrity Line.« Reports are anonymous and can be made 24/7 via an easy-to-use online portal. Clariant increased its focus on ways to speak up as part of the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. launch campaign in 2021 with an employee survey, senior management discussions, and an ethics journal. The Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. even includes a nonretaliation commitment to foster the company’s speak-up culture. The Integrity Line will be adapted to upcoming legal requirements on whistleblower protection and data privacy laws in the future.
In 2021, Clariant received 13 questions and 82 reports through its Integrity Line. One case can relate to several issue types. Of the reports, 23 were related to business integrity, 34 to the treatment of employees, ten to health and safety or environmental violations, and the remaining cases related to information security, cyber risk, data privacy, and others. 31 cases were substantiated fully or partially.
Integrity Line
| Total 2021 | 2020 | 2019 | 2018 | 2017 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cases submitted via the anonymous Integrity Line | 82 | 64 | 99 | 95 | 70 | |||||
| thereof fully or partially substantiated | 31 | 17 | 8 | 29 | 16 | |||||
| thereof closed during the year | 56 | 38 | 31 | 72 | 46 | |||||
| Questions submitted via the anonymous Integrity Line | 13 | 9 | 17 | 9 | 10 | |||||
| Total submissions | 95 | 73 | 116 | 104 | 80 |
Training and communication
Clariant has set a target of mandatory compliance trainings as part of employee performance management. The company offers regular e-learning courses on anti-bribery and anti-corruption as well as micro learnings on speaking up, nonretaliation, and how to use the Integrity Line. In 2021, a total of 11 751 employees, i. e., 87 % of the workforce, were trained on elements of the Group Compliance programs. Special target groups, like employees with higher exposure, receive further face-to-face trainings. The company also familiarizes new employees with the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. as well as anti-bribery and anti-corruption policies in introductory trainings. Classroom trainings and e-learnings on antitrust matters are mandatory for employees working in procurement, marketing, sales, and other relevant functions. Clariant developed a training curriculum in 2021, which defines the frequency, target groups, and further details, and is going to put it into practice in 2022.
In monthly campaigns, topic owners share the eight guiding principles of the Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. in short videos, interviews, articles, and dialog sessions. Every month, they present three dilemmas related to the guiding principles for discussion in team meetings. One of these cases is always tailored to the production site environment to ensure relevance to all employees at Clariant. In 2021, Clariant encouraged all leaders to use the dilemmas to engage in active discussions about the new Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity..
In addition, Clariant started a new »Ethics Dialogs« format in Latin America in 2021, but soon broadened it globally. Throughout the year, about 1 500 employees participated in ten global dialogs held on the various Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. principles. During these calls, participants can ask questions about various Code of EthicsCode of EthicsThe Code of Ethics is laying down Clariant’s commitments and is intended to be a guide with ethical principles and examples to enable all personnel and associated parties to act with the highest standards of integrity. topics, which different leaders answer directly. Questions can also be submitted anonymously after the call. In 2022, Clariant plans a Global Ethics Dialog and regional Ethics Dialogs in all regions.
Since 2020, Clariant has trained more than 4 500 employees in its antitrust training campaign with more than 320 global webinars. The campaign training movie, »Pay the Price,« won the intermedia-globe GOLD Award at the World Media Festival Hamburg 2021 in the category »Internal Communications: Training« and the Grand Award in the category »Internal Communications.«
Communication and training on anti-corruption policies and procedures
| Total 2021 | 2020 | 2019 | 2018 | 2017 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Percentage of members of the Board informed about anti-corruption policies (%) | 100 | 50 | 100 | 50 | 50 | |||||
| Percentage of employees informed about anti-corruption policies (%) | 3 | 14 | 90 | 40 | 60 | |||||
| Percentage of business partners informed about anti-corruption policies (%) | 70 | 60 | 60 | 40 | 50 | |||||
| Percentage of members of the Board who received anti-corruption training (%) | 100 | 50 | 100 | 50 | 45 | |||||
| Percentage of employees who received anti-corruption training (%) | 3 | 14 | 86 | 30 | 60 | |||||
| Percentage of employees who received compliance training (%) | 81 | 14 | 86 | 45 | 60 | |||||
| Number of employees trained on elements of the Group ComplianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. Programs 1 | 11 751 | n.a. | n.a. | n.a. | n.a. | |||||
| Number of participants in »Ethics Dialogs« 2 | 1 500 | 1 000 | ||||||||
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1 Headcounts
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2 This format was introduced in 2020.
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Compliance incidents
During the annual external audit cycle, there is also a review of the Integrity Line, case management handling, reporting, and program oversight.
Noncompliance
In 2021, nine allegations regarding bribery, corruption, and kickbacks were brought forward. They led to disciplinary actions against seven employees. In four cases, Clariant dismissed the responsible employees, and one case is still under investigation.
There were no legal proceedings against Clariant or its employees for alleged corruption. However, Clariant did not terminate relationships with business partners (agent, distributor, or consultant).