Human and Labor Rights
Clariant is firmly committed to protecting human and labor rights in all business operations. This includes the entire supply chain and all contracted workers. The company expects all suppliers and business partners to comply with these human and labor rights standards.
Management approach
The Sustainability Transformation team within Technology and Sustainability, together with the Human Resources, Legal, and Procurement departments, manage human and labor rights at Clariant.
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.
Human and labor rights policies
Over the years, Clariant has built a comprehensive framework of policies, guidelines, and processes to ensure the implementation of its human and labor rights commitments.
The company’s Human Rights Policy Statement is in line with the United Nations (UN) Human Rights Declaration and the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work. This policy statement applies to all direct operations and activities. It states clearly that Clariant expects its suppliers and contractors to uphold the same high standards.
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. also includes requirements regarding key human and labor rights. It is compulsory for the company’s direct operations, including all joint ventures that it controls or in which it holds a majority interest.
Clariant’s general terms and conditions of purchase refer to the company’s Supplier 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.. It extends to all its suppliers and their contractors. As part of its collaboration in the Together for Sustainability (TfS) initiative, Clariant regularly assesses its suppliers in relation to social, governance and environmental topics. The assessment is performed by the ratings provider EcoVadis and includes an evaluation of a supplier’s management system related to human rights.
Clariant’s 2018 Global Employment Policy and its employment standards guidelines protect workers’ rights regarding nondiscrimination, forced labor, child labor, fair working conditions, freedom of association, privacy, effective remedies, and workplace health and safety. The documents are available in local languages. They are also part of the onboarding curriculum for all new employees.
Clariant supports collaborative initiatives that promote sustainability and respect for human and labor rights across the industry. The company is a signatory to the UN Global CompactUN Global CompactThe UN Global Compact is a corporate sustainability initiative that supports companies to do business responsibly by aligning their strategies and operations with ten principles on human rights, labor, environment and anti-corruption, and take strategic actions to advance broader societal goals, such as the UN Sustainable Development Goals, with an emphasis on collaboration and innovation. and a member of the Together for Sustainability (TfS) initiative, and the Roundtable on Sustainable Palm Oil (RSPO).
Priorities 2022
Clariant regularly updates its human and labor rights framework in anticipation of upcoming legislation. In 2022, a focus was on preparing for increased due diligence due to the implementation of the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz), for which one German Clariant subsidiary will fall into the scope starting as of 2024. A separate project was set up for this, working on the amendment of risk assessment and risk management for own operations and for suppliers for the entity in scope. The objectives are to amend the risk assessment and risk management for suppliers, conduct a risk assessment for Clariant operations, and establish the required documentation and reporting, all with a focus on the German entity. According to timeline and planning, the project will be completed by mid-2023.
In addition, a cross-functional project (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., Sustainability Transformation, Procurement, HR, Communication) started in January 2023 to develop a more comprehensive Human Rights Framework and to review and update associated policies. The goal is to further develop Clariant’s governance structure and processes based on a benchmark analysis and mapping of the regulatory requirements and to monitor implementation of measures internally and within the supply chain.
Ensuring human and labor rights compliance in high-risk supply chains will remain a challenge and a priority for Clariant. This relates especially to supply chains for palm-based and other renewable-based materials.
Human and labor rights assessment
Clariant relies on well-established management and monitoring systems that enable the company to detect and mitigate potential human and labor rights risks. Addressing and closing identified gaps in this framework will be a priority for the coming years.
Clariant carried out a human rights due diligence assessment with the support of external human rights experts a few years ago. It evaluated not only potential human rights impacts of its operations and activities, but also the effectiveness of its management and monitoring systems.
Additionally, in a series of interactive working sessions, several key functions and departments prioritized their activities as to their scale and relevance to the business and their probability of having adverse effects on the human and labor rights of workers, communities, and other groups. Subsequently, Clariant carried out a rights assessment for several priority activities, including both internal and external risk factors, such as complex subcontracting arrangements and vulnerabilities of specific groups. A particularly thorough investigation took place for those areas identified as high-risk.
The assessment aggregated human and labor rights risk levels of countries and industries. It found that the company’s potential impacts primarily relate to contract labor and supply chains for natural raw materials, particularly in regions with weak legal frameworks. For high-risk areas, it validated specific mitigation actions.
Human and labor rights in the supply chain
Clariant will continue to address supply chain risks connected to the geographic origin of particular raw materials. In 2020, Clariant reviewed its conflict minerals approach to ensure compliance with the new EU conflict minerals legislation.
Based on its 2021 Palm Oil Policy, Clariant started a comprehensive analysis of environmental and social sustainability regarding palm-based raw materials. To facilitate the transformation in palm oil procurement, Clariant intensified its collaboration with suppliers to increase transparency in the palm oil value chain.
Contract labor
Clariant focuses on securing the same working conditions for contractors as for employees, and supports the freedom of association. As laid down in the Supplier 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., contractors must have the right to strike and to be members of trade unions in accordance with national or local laws and practices. Within the Together for Sustainability (TfS) Initiative, Clariant assesses Human and Labor rights practices of its suppliers via the EcoVadis platform. This evaluation plays an important role in determining the extent to which Clariant appropriately mitigates adverse human and labor rights impacts.
Overall, 4 242 suppliers of Clariant have performed an EcoVadis assessment, including an assessment of their labor and human rights management systems and practices. The risk exposure, i.e., the percentage of suppliers with an overall EcoVadis score below Clariant’s expectations, remains below the 10 % target. Suppliers that present a high or medium risk score are required to work on Corrective Actions and are reassessed after one or two years, respectively, in line with Clariant’s Supplier Sustainability Journey. In 2022, 64 % of reassessed suppliers improved their score.
Regarding the tier 1 suppliers, Clariant knows of no cases in 2022 in which the freedom of association or the right to collective bargaining was jeopardized or breached.
Child, forced, or compulsory labor
Clariant condemns all forms of child labor and respects the rights of children. It expressly acknowledges International Labour Organization (ILO) conventions 138 (Minimum Age Convention) and 182 (Worst Forms of Child Labor Convention) as the minimum standard. Human Resources ensures that minimum age provisions of national labor laws and regulations are adhered to and that local Human Resources at Clariant workplaces use adequate and verifiable mechanisms for age verification.
Clariant assesses its suppliers in relation to child and forced labor via the EcoVadis platform. The company is not aware of any cases of child, forced, or slave labor in the company or with its suppliers.
Employee training and involvement
E-learning modules and internal trainings related 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 to human and labor rights are mandatory for all employees. Participation in these trainings is registered with defaulters receiving a warning.
The company has established the »Clariant Integrity Line,« an independent, third-party operated channel. Clariant employees and external stakeholders can anonymously report all 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., including discrimination and violations of human and labor rights. Read more in the chapter Business Ethics and Compliance
Human and labor rights clauses in investment agreements and contracts
Investments are subject to Clariant’s internal capital appropriation request process, and approvals are granted according to the Management Bylaws. Significant investments are subject to the approval of the Executive Steering CommitteeExecutive Steering CommitteeThe Executive Steering Committee (ESC) is authorized by the Board of Directors to steer the company. It has overall strategic and financial responsibility, including for our profit and loss statement. The ESC consists of the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), and the three Business Presidents. or its respective subcommittees and take into consideration financial, strategic, and sustainability criteria, which also include human and labor rights aspects.
017KEY ELEMENTS OF THE HUMAN RIGHTS DUE DILIGENCE PROCESS
