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 on accounting and taxation, anticompetitive practices, money-laundering, bribery and corruption, lobbying and political involvement, and intellectual property rights.
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 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.
Clariant launched 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 2021, with the close involvement of Management in the rollout. A 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. Resource Center is available to resolve dilemmas, get input for team meetings, scenarios, videos and other materials. For 2022, the focus is on the company’s new purpose and values, and it has also anchored business ethics in the value »act with integrity.«
Environmental Safety and Health Affairs (ESHA), Sustainability, Information Security, Data Privacy, Enterprise Risk Management (ERM), and Internal Control over Financial Reporting provide annual program overviews. 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
Until the new operating model was put in place in July 2022, the former Executive Subcommittee Ethics & Risk reviewed and assessed 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 CommitteeUntil 30 June 2022, the Executive Committee was mainly responsible for implementing and monitoring the Group strategy, for the financial and operational management of the Group, and for the efficiency of the Group’s structure and organization. Effective 1 July 2022, the Executive Committee was replaced by the Executive Steering Committee (ESC). participated in the subcommittee with the CEO as its chair. The subcommittee received regular reports and updates on individual measures, case reports, and remediation taken. It also approved 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 reviewed the quarterly progress report. With the new operating model since July 2022, Clariant has a different composition of the subcommittee. Following the new bylaws, the subcommittee Charter will be reworked and submitted to the Audit Committee for approval. In Q3 and Q4 2022, the subcommittee has had as attendance the CEO, the CFO, the General Counsel, the CHRO, the 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., and, as a standing guest, Internal Audit.
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 sales agents and distributors and all regions. 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. Participants submit a self-assessment questionnaire afterwards.
Clariant assesses third parties against a predefined risk model: Enhanced due diligence is required for medium- and high-risk business partners. All business partners must confirm, however, that they have an appropriate compliance framework in place. They are also required to complete a relevant training program provided by Clariant. 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 and is applicable from 1 January 2023.
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 and the EU CSRD, increasingly demand greater transparency, particularly with respect to the protection of human rights. Clariant commits to enhancing its existing activities, proving its commitment, and focusing on human rights in its own operations and the supply chain.
Clariant has introduced a clear statement related to human rights in its revised 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., which was launched in 2021. Building on this commitment, the current Human Rights Framework as well as due diligence for suppliers is being reviewed for completeness and compliance with the upcoming regulations.
Information security and data privacy
Clariant has established an Information Security Program to create awareness and train employees on the appropriate use of data. The Information Security Program 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 the 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. The Data Privacy Program is still operational in 2022. 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, IT, and Sales, and to introduce new employees to 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, which were further enhanced in 2022: 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 the Data Privacy rights of individuals and legal entities. 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 has completed the implementation of the new standard contractual clauses (SCCs) adapted by the EU and, in the reporting year, has been implementing the upgrade of the revised Intragroup Data Processing and Transfer Agreement (IGDTA) in this respect.
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 22 key performance indicators from these categories, which the Executive CommitteeExecutive CommitteeUntil 30 June 2022, the Executive Committee was mainly responsible for implementing and monitoring the Group strategy, for the financial and operational management of the Group, and for the efficiency of the Group’s structure and organization. Effective 1 July 2022, the Executive Committee was replaced by the Executive Steering Committee (ESC). and the Audit Committee set in 2018, and has continued to be in effect throughout the reporting year. 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., »We 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 2020. It was launched in February 2021. Since 2022, 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. has been available in Korean and Japanese, among other languages.
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 daily work 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 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 responsibly.
- 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. In October 2021, Ethics & Integrity asked all employees (including management) to provide their personal Integrity Pledge in the form of a short text/sentence. 1 637 employees made a pledge.
In September 2022, Ethics & Integrity initiated the rollout of a 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. e-learning to promote greater understanding and to explore Clariant’s principles and values in a journey through the new Clariant 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. e-learning. It will be rolled out in 9 modules through 2022 and 2023.
Anti-bribery, anti-corruption, antitrust
In addition to its global anti-bribery and anti-corruption policy (Anti-Bribery, Anti-Corruption, and Anti-Money Laundering Policy) and gifts and entertainment 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 has reimplemented it in 2022 with key performance indicators 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. The 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. Read more in Figure 005.
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 can be anonymously made if preferred by a reporter. Integrity Line is an independent third-party operated platform, and available in multiple languages 24/7 via an easy-to-use online portal. The Integrity Line will be adapted to the legal requirements of the EU whistleblower directive. Local legal requirements of EU member states affected will be implemented.
In 2022, Clariant received 20 questions and 120 reports through its Integrity Line. One case can relate to several issue types. Of the reports, 53 were related to business integrity, 62 to the treatment of employees (of which 17 related to the same concern), 7 to health and safety or environmental violations, and the remaining cases related to quality concerns, and others. 22 cases were substantiated fully or partially. 35 cases were unsubstantiated.
The increase in the reports received is partly connected to the focus on fostering the speak up culture that Clariant has adopted since 2018. The company has worked on the communication, training and also on delivering to what we promise to our colleagues. The launch of 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., together with its commitment to zero tolerance related to retaliation if the report is provided in good faith, gave an additional boost.
Integrity Line
| Total 2022 | 2021 | 2020 | 2019 | 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cases submitted via the anonymous Integrity Line | 120 | 82 | 64 | 99 | 95 | |||||
| thereof fully or partially substantiated | 22 | 31 | 17 | 8 | 29 | |||||
| thereof closed during the year | 69 | 56 | 38 | 31 | 72 | |||||
| Questions submitted via the anonymous Integrity Line | 20 | 13 | 9 | 17 | 9 | |||||
| Total submissions | 140 | 95 | 73 | 116 | 104 |
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, the Integrity Line, trade compliance, third-party risks, bribery and corruption, conflict of interest, and theft and misuse of sensitive information. In 2022, a total of 28 649 trainings were completed 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. 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. It was put into practice in 2022.
In addition, Clariant started a new »Ethics Dialogues« format in Latin America in 2021. It was planned in 2022, to hold a Global Ethics Dialogue and regional Ethics Dialogues in all regions. Due to the implementation of the new organizational structure and operational principles in the new Management Bylaws, the initiative was postponed to 2023.
Since 2020, Clariant has trained more than 5 000 employees in its antitrust training campaign with more than 380 global webinars.
Communication and training on anti-corruption policies and procedures
| Total 2022 | 2021 | 2020 | 2019 | 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Percentage of members of the Board informed about anti-corruption policies (%) | 100 | 100 | 50 | 100 | 50 | |||||
| Percentage of employees informed about anti-corruption policies (%) | 99 | 3 | 14 | 90 | 40 | |||||
| Percentage of business partners informed about anti-corruption policies (%) | 80 4 | 70 | 60 | 60 | 40 | |||||
| Percentage of members of the Board who received anti-corruption training (%) | 36 | 100 | 50 | 100 | 50 | |||||
| Percentage of employees who received anti-corruption training (%) | 99 | 3 | 14 | 86 | 30 | |||||
| Percentage of employees who received compliance training (%) | 98 | 81 | 14 | 86 | 45 | |||||
| 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 | 28 649 3 | 11 751 | n.a. | n.a. | n.a. | |||||
| Number of participants in »Ethics Dialogs« 2 | 641 | 1 500 | 1 000 | |||||||
|
1 Headcounts
|
||||||||||
|
2 This format was introduced in 2020.
|
||||||||||
|
3 This number represents the number of trainings completed by employees with a Clariant e-mail. In this number there are double counts, as one employee has been invited several times for 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. e-learning and other e-learnings in 2022.
|
||||||||||
|
4 80 % is an estimation based analysis run on our business partners
|
||||||||||
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 2022, four allegations regarding bribery, corruption, and kickbacks were brought forward. Three were still pending at the end of 2022. There were no legal proceedings against Clariant or its employees for alleged corruption, and Clariant did not terminate relationships with business partners (agents, distributors, or consultants).