Sustainability Report 2017 Table of Contents

01 About This Report 2 08 Environmental Protection 28 Reporting Period, Scope and Limits 2 Energy and Climate 28 Report Content and Practical Information Emissions 32 Water 34 02 Key Performance Indicators 4 Materials 37 Waste 38 03 Foreword by Management 6 Logistics and Transportation 39 Damage Events 40 04 About Heubach 8 Organization 8 09 Employee Responsibility 42 Milestones 12 Employment 42 Stakeholders 14 Remuneration Policy and Employee Benefits 44 Materiality Matrix 16 Job Satisfaction and Employee Retention 45 Personnel Development 48 05 Sustainability Management 18 Demographic Change 50 Organization of Sustainability Management 18 Diversity and Equal Opportunities 51 Sustainability-Oriented Corporate Policy 18 Safety and Health 54 Management Systems 19 Memberships in Initiatives and Associations 20 10 Supply Chain Management 58 Compliance 20 Procurement 58 Vendor Selection and Evaluation 58 06 Sustainability Program 22 11 Social Commitment 60 07 Products 24 Sustainable Pigment Solutions 25 12 Reference Table for the German 62 Product Responsibility 26 Sustainability Code Research and Development 27 13 Glossary and Abbreviations 66

Legal Notice 69

 Contents 1 01 About This Report

2017 > Reporting Period, Scope and Limits > Report Content and Practical Information

22 309 This is the first sustainability report of the 61 This sustainability report is published in Ger- Heubach GmbH Group. Key figures and man and English. For better readability, per- developments in this report generally refer to sons will be referred to in the male form. But the 2017 reporting year. Where possible and Employees this encompasses all people, regardless of appropriate, we also present time series for Heubach GmbH Group* gender. the financial years 2015, 2016 and 2017. The editorial deadline for the sustainability report 392 In preparing this report, we observed the was July 28, 2018. following guidelines: the Chemie3 Reporting Guide for SMEs, the Sustainability Report Ran- Unless otherwise indicated, the information king criteria of future e. V. and the IÖW (Insti- and figures contained in this report refer to tut für ökologische Wirtschaftsforschung, In- the Heubach GmbH Group. This includes stitute for Ecological Economy Research), the Heubach GmbH, located in Germany DNK (Deutscher Nachhaltigkeitskodex, Ger- 2016 (Langelsheim and Cologne), and the sub- man Sustainability Code, as of 2015) of the sidiary Heubach Pigment Manufacturing RNE (Rat für Nachhaltige Entwicklung, Coun- cil for Sustainable Development), and the UN GmbH & Co. KG, which has its production 22 311 facilities at the Langelsheim site. In addition, 61 Global Compact guidelines. In addition, we the North-American production subsidia- consider selected criteria of the Sustainabi- ry Heucotech Ltd., Fairless Hills, USA, and lity Reporting Standards (SRS) of the Global Hangzhou Heubach Pigment Co. Ltd., a sa- Reporting Initiative (GRI) where this proves Employees les subsidiary in Hangzhou, China, belong to beneficial to readers of this report. Heubach GmbH Group* the Group. As a member of the UN Global Compact, we Heubach Color Pvt. Ltd., India, is not part of 394 also present our first progress report (Com- the Heubach GmbH Group and therefore not munication on Progress, CoP) with this sus- included in this sustainability report. How- tainability report. We further plan to submit ever, we will refer to that production site in the declaration of conformity in accordance key passages. with the DNK (Deutscher Nachhaltigkeitskodex, German Sustainability Code). Heubach – including Heubach Color Pvt. Ltd. 2015 in India – has 1,093 employees worldwide, Our objective is to inform the stakeholders with 392 employees working at the Heubach of our company – customers, employees, 21 302 business partners, local residents and all other GmbH Group. The employees are distributed 60 across the different sites as follows: interested parties – about our sustainability activities no later than every three years. These Employees include economic, environmental and social Germany Heubach GmbH Group* aspects. USA China 383 Accordingly, we will publish our second sustainability report by 2021 at the latest.

* Effective date: 31.12.2017 without temporary workers.

2  About This Report 3 02 Key Performance Indicators Percentage change 2017 vs. 2016 2017 2016 2015 We regularly record the key performance in- 1) dicators (KPIs) that are economically, so- Total production (t) +3.7 23,172 22,348 22,205 cially and ecologically decisive for Heubach. On the basis of these indicators, we measure Sales (t) +5.9 25,746 24,306 23,646 and control the implementation of the focal areas of sustainability, and thus create a basis Sales revenue (€ million) +8.0 145.6 134.8 132.1 for forecasts as well as for other objectives. As far as possible we record the KPIs on the Investments (€ million) +17.9 9.5 8.1 3.3 same basis and provide transparent information about any changes in order to guaran- R&D expenditure (€ million) +1.3 3.7 3.7 3.6 tee a high degree of reliability, comparability and consistency of our data. Employees -0.5 392 394 383 -0.3 30.6 30.7 31.9 A selection of the most important KPIs is Share of female employees (%) +2.1 34.0 33.3 33.3 shown in the following table. Further key Share of women in executive positions (%) -24.5 1.9 2.6 2.0 indicators are described in the respective Percentage of trainees (%)1) -4.5 4.8 5.1 8.1 chapters. Staff turnover (%) -40.9 9.4 15.9 8.1 Frequency of accidents 2)

Environmental protection

Energy consumption (MWh) +5.5 60,254 5 7,10 5 56,361 Energy intensity 3) (MWh/t) +1.8 2.6 2.6 2.5 Scope 1-Emissions 4) (t) -3.7 6,050 6,285 6,378 Scope 2-Emissions 5) (t) +16.2 15 , 412 13,264 12,962 Water input (m3) -10.6 152,977 171,202 169,286 Specific water input 6) (m3/t) -13.8 6.6 7. 7 7. 7 Waste (t) +2.9 3,873 3,765 3,045

1) As measured against the number of employees in Germany. 2) Number of industrial accidents with at least three days of work missed per 1 million working hours. 3) Ratio of energy consumption and sales volume produced (total production). Commercial products are not included. 4) Emissions resulting from own business, that is, from the consumption of natural gas, for example, for steam generation, the operation of production plants, heaters or lift trucks. The emission factors used are based on the report "Emissionsfaktoren für Strom, Fernwärme und Kraftstoffe" (Emission Factors for Electricity, District Heating and Fuels) by the VDA (Verband der Automobilindustrie, German Association of the Automotive Industry) (2018). The stated values for Germany, China East and USA East were used. Our calculations are

based on the assumption that only CO2 is emitted by the complete combustion of all natural-gas components. 5) Emissions from the production of energy sourced from outside the company (e.g., electricity). The conversion factor for Germany was specified by the electricity supplier. For the U.S. and China, the regional average emission factors relative to the electricity provided according to the 1) Note: The key indicators shown in the report are commercially rounded to a maximum of one decimal place. For the purpose of a more precise representation, however, report "Emissionsfaktoren für Strom, Fernwärme und Kraftstoffe" (Emission Factors for Electricity, District Heating and Fuels) by the VDA (Verband der Automobilindustrie, German the calculation of percentages is based on exact, non-rounded numbers. In individual cases, this may lead to them not resulting from the values shown. Association of the Automotive Industry) (2018) were used. 6) Ratio of water input and sales volume produced (total production). Commercial products are not included. 4  Key Performance Indicators 5 03 Foreword by Management Dear Readers, That Heubach has grown into a global pro- This is why we use the different arrangement In addition, with the Heubach GmbH Group ducer of pigments and pigment preparations options in our business activities and develop joining the UN Global Compact in 2017, we is, above all, the result of our staying true to solutions that actively address the challenges have made a public commitment to uphol- our core values: linking comprehensive chemi- of climate change, scarcity of resources and ding human rights and labor standards, pre- cal know-how, technological competence, environmental protection. We also seek for venting discrimination, protecting the envi- internationalization, service, quality and reli- solutions in the areas of health protection, ronment and combating corruption. ability – and combining this with enthusiasm occupational safety, demographic change or that has stayed alive for generations. It is this reconciling life and work. With our first sustainability report, we cordi- force that breeds innovation. ally invite you to get to know Heubach as In order to identify the sustainability issues a responsible manufacturer and supplier Sustainability and intergenerational thin- relevant to Heubach and its main stakehol- of pigments and pigment preparations. In king have always been a high priority in ders, we conducted a sustainability check it, we provide a comprehensive picture of the 210-plus-year history of our company. Alt- developed by the Chemie3 initiative. Through our sustainability performance in terms of hough it must be said also that not all susta- a cross-departmental workshop, we iden- the "triple bottom line", by reporting on the inability aspects have always been taken into tified fourteen relevant sustainability areas implementation of sustainability in our core account equally. Nonetheless, the long-term with the help of this tool. We are already business and detailing the measures taken success of a manufacturing company always very well positioned in some of the fields of and planned. requires sustainability-based handling of the action, and others will have to be filled with needs of customers, vendors, service provi- further measures in the future. Furthermore, we use the reporting process ders, principals, employees, neighbors and to focus our sustainability activities in a tar- the environment. Successful implementation requires the geted manner, to strategically align them, to sensitization of individual responsibility and achieve our objectives, and to continuously Today, sustainability is inseparably linked to awareness for sustainable actions of each expand our reporting. our corporate strategy. For the development, employee. After all, the success of Heubach production and marketing of chemical pro- depends largely on the ingenuity and moti- We would like to thank all the employees ducts comes with a responsibility that does vation of our employees. This is why we have who, through their commitment, make Heubach not only extend to economic aspects. On integrated the essential aspects of a susta- a sustainable employer, business partner and the contrary, our business also affects the inability strategy into our corporate policy neighbor, and we hope you will enjoy rea- environment and the society in which we and, through the corresponding manage- ding this report. operate. ment systems, into the respective processes, and set up a sustainability program. By way of continuity and conviction, we will promote the further development of all aspects of sustainability on the solid basis that we have put in place so far. Dr. Reiner Martens Birgit Genn

Management of Heubach GmbH

6  Foreword by Management 7 04 About Heubach

> Organization

For more than 210 years, Heubach has been An extensive distribution network on six The majority of our products are used in prin- 01 02 03 04 05 06 producing pigments and pigment prepara- continents supports and advises the custo- ting inks, coatings and plastics industries. The tions for numerous applications. Since the mers of all Heubach locations through their color and protective pigments from Heubach 1980s, the company has developed into a respective sales and service organizations, are also suitable for use in many other fields global organization with production facilities including the laboratory capacities available of application, for example, the coloring of in Germany, the USA and India. The parent there. In addition, a global team of experts latex, seeds, adhesives or building materials. Purchasing Marketing & R&D/Application Production Storage & Processing Raw materials Sales company has its head office in Langelsheim, ensures on-site technical support in the indi- technology Transportation Industry near Goslar in Lower Saxony. The companies vidual national markets. In 2017, the Heubach GmbH Group gene- of the Heubach Group are owned by the rated annual consolidated sales of €145.6 Heubach family, and are consolidated under Our comprehensive product portfolio ranges million on a production volume of 23,172 t. the Austrian Heubach Holding GmbH. from high-quality organic and inorganic colored pigments to various pigment pre- Purchasing Merchandise The Heubach GmbH Group manufactures parations and customized color shade solu- inorganic colored pigments and selected tions. In addition, Heubach produces a variety pigment preparations for the plastics and of so-called corrosion inhibitors to cover the coatings industry at the German site in Lan- entire performance spectrum of modern gelsheim. At our sites in Germany and the protective coating. USA, we also manufacture anti-corrosive pigments, printing ink concentrates and pigment pastes. Founded in 1994, the affiliated company Heubach Color Pvt. Ltd. based in Ankleshwar, India, produces organic pigments as well as some pigment preparations. 26,000 t €146 million 145.6

In Asia, the establishment of Hangzhou Heubach 25,746 Pigment Co. Ltd., Hangzhou, China, in 2009

was another important step of our growth 24,306 134.8 23,646

strategy. The focus is on supporting national 132.1 and international customers in the dynami- cally developing Chinese market.

2017 2016 2015 2017 2016 2015

Sales Sales revenue (consolidated) (consolidated)

8  About Heubach 9 Germany

Production: Anti-corrosive pigments, inorganic pigments, pigment preparations China

Laboratories

USA

Production: Anti-corrosive pigments, India pigment preparations

Production: Organic pigments, pigment preparations

10  About Heubach 11 > Milestones

Becoming a globally operating and re- 2012 cognized producer of high-quality color > Expanded production for pigments and pigment preparations was anti-corrosive pigments by 700 t accompanied by numerous technical inno- > Implementation of a fully automated vations and various strategic acquisitions. calcination technology for the manufacture As early as in 1984, a link to North Ameri- of inorganic colored pigments ca was established through the acquisition of the pigment division of the U.S. company 2016 DuPont de Nemours. In Germany, Heubach > Setup of a second, fully automated increased its product portfolio by acquiring calcination line to manufacture the lightfast pigment business of Bayer AG inorganic colored pigments in 2002. 2017 The expansion of organic pigment produc- > Launch of an innovative, highly tion in India was made possible by the flexible production concept to acquisition of the pigments business of Ave- manufacture pigment pastes in Germany cia (formerly: ICI) in 2003. We also invested in production facilities for the manufacture of 2018 high-quality organic red, yellow and orange > Launch of a new production pigments, as well as in the plant completed system for anti-corrosive pigments in in 2013 for the manufacture of indanthrone the USA (capacity: 4,000 t) blue crude.

At the German and American locations, the following investments have contributed significantly to the growth of our Group in recent years:

12  About Heubach 13 > Stakeholders

Having trusting and cooperative communi- We re-analyzed the key stakeholders along The open dialog with the stakeholders regu- In order to develop our stakeholder commu- The respondents were to assess the relevan- cations with numerous stakeholders is cru- the value chain as part of the recertification larly takes place both directly – for example, nications further, and to review our assess- ce of a wide range of sustainability topics as cial for the future-oriented development of of our quality and environmental manage- with customers and vendors – and indirectly ments, we conducted our first stakeholder well as which instruments were suitable for our company. We see this as an opportunity ment system, and explored their basic requi- through advocacy groups and our member- survey in the second quarter of 2018. dialoging with stakeholders. to identify the expectations and needs of the rements and expectations with respect to ship in associations. The individual channels various stakeholders and to respond to new the company. and formats depend on the respective stake- Heubach invited selected representatives of The evaluation of this survey and the measu- risks, requirements or trends at an early sta- holder group as well as the topics. the following stakeholders to a survey: cus- res taken in this context will be published in ge. tomers, vendors, employees, financial service the next sustainability report in 2021. providers, authorities, neighbors, cooperation partners, and members of the local public.

Stakeholders Formats & Channels Key Topics Stakeholders Formats & Channels Key Topics

Product selection / quality / availability Profitability / cost efficiency Contract-compliant order processing General shareholders' Sustainability / growth Owners Customer visits Know-how transfer/service meeting Livelihood security Trade shows Sustainable alignment of processes with regard to quality standards Profit optimization Customers Satisfaction surveys Socially acceptable production conditions Website Innovation Competitiveness No adverse effects due to environmental impacts Global presence Open House Day (e.g., noise, emissions) Neighbors Neighborhood brochure Information Prevention of accidents (e.g., road traffic, plant damage) Audits Purchase of specified quantities / compliance with payment conditions Jobs Vendors and Vendor evaluations Sustainable partnership / business relationship Service Providers Trade shows Solvency Liquidity Reserves Banks Meetings Motivation Company performance / rating Safe workplaces Loans / other banking products General meeting Regulation of tasks / competencies Feedback meetings Opportunity for personal development Complaints box Clear communication structures / leadership Visits Regular exchange Employees Intranet Provision of necessary resources Regional Policy Meetings Economic success Employee surveys Fair and secure income Networking Social/cultural commitment Work-life balance Inclusion Compliance with standards and regulations Further development of the M-system Auditors Audits Provision of documentation Fulfillment of promised personnel resources Employee availability Equal treatment of employees Meetings Compliance with labor law requirements Works Council Respectful way of interacting with employees Compliance Assemblies Meetings Inclusion / information regarding personnel management Regulatory Authorities Transparency in relevant areas / processes / documents Visits Binding collective bargaining Implementation of specific measures identified

14  About Heubach 15 > Materiality Matrix

In order to identify the sustainability issues The materiality analysis resulted in the priority relevant to Heubach and its main stakehol- areas of action, which we then analyzed, ders, we relied on the sustainability check of discussed and evaluated in a second step – the Chemie3 initiative. This is a partnership under the direction of an external consul- Corporate governance / between the VCI (Verband der Chemischen tant. The sustainability officer, management, compliance Industrie e. V., Chemical Industry Association), and the department heads responsible for Strengthened skills basis the IG BCE (Industriegewerkschaft Bergbau, Purchasing, Sales & Logistics, Production, Protection of the environment Chemie Energie, Industrial Union for Mining, Environmental and Quality Management, Supply and value chain Chemistry, Energy) and the BAVC (Bundesar- Product Management and Marketing & R&D Climate protection beitgeberverband Chemie, Federal Emplo- Communications participated in this evalu- Sustainability in corporate strategy Conservation of resources yers' Federation for the Chemical Industry). ation. Sustainability information The sustainability check covers 31 action areas Sustainability based on the sustainability guidelines for The materiality matrix of the Heubach GmbH Strategic significance for Heubach management Personnel policy; management and the chemical industry. These fields of action Group shows – as a result of this sustai- corporate culture were developed by the Chemie3 initiative in nability check – all the topics dealt with in a comprehensive analysis; in the process, it this sustainability report. We rated issues as

involved various stakeholders (in the form of particularly important if they were highly re- Work-life balance surveys) and evaluated studies and literature. levant for both stakeholders and Heubach. In Thanks to these thorough preparations, Heubach addition, we included topics of great signifi- Stakeholder dialogs was able to forego a direct survey of its cance to Heubach. Among other things, we stakeholders in 2017. identified in the analysis the following social Age and health-appropriate design of jobs and environmental aspects as being essen- We carried out our own sustainability check tial: energy efficiency, climate and resource in a two-day, in-house workshop. In a first protection, compliance, work and family life, step, the sustainability officer – in close con- occupational health and safety, strengthened sultation with management – assessed the skills base, personnel management, procure- materiality of the individual action areas, both ment and vendor selection. from the point of view of specific stakeholders and from the point of view of Heubach. Materiality from stakeholders' point of view

16  About Heubach 17 > Ensuring a High Standard > Protection of the Environment > Safety and Health of Quality and Energy-Efficient Action Protection

Assuming quality responsibility means for us To avoid environmental impacts, we con- We are aware that achieving these quality, the obligation to fulfill the requirements de- tinuously improve our products and pro- environmental and energy objectives is not manded of us. This includes the high quality cesses. We ensure the monitoring, testing possible without our employees. For this rea- 05 of our products and services, adherence to and evaluation of products and processes son, ensuring occupational safety and health delivery times, comprehensive advice for our through comprehensive HSE and quality is one of our overarching goals. Sustainability Management customers, and protecting the interests of management. our employees. As part of our energy management, we not only commit ourselves to optimizing the use of energy in our production, but also to increasing energy efficiency in the procurement of new plant and equipment, as well as in product development.

> Organization of > Sustainability-Oriented Sustainability Management Corporate Policy > Management Systems

Heubach management sets the strategic For Heubach, economic success and susta- To underscore the importance of these values Heubach has introduced an integrated ma- In order to ensure a systematic preparation The planning and supervision of the M-sys- direction for sustainability. Together with an inability are inextricably linked. That is why and beliefs, we have formulated three guide- nagement system (M-system). This supports of our sustainability activities, we also plan tem as well as document maintenance are interdisciplinary team, it coordinates the sus- we have integrated the essential aspects of lines. They have already shaped Heubach in us in implementing our corporate policy – to integrate sustainability management into the responsibility of the management officer. tainability-oriented corporate policy and lays a sustainability strategy into corporate policy the past, and are decisive for the sustainable above all, in the continuous improvement of the M-system. In addition, all managers and employees are down the sustainability program. On the one and into the respective processes via the development of our company both over the our processes, increasing customer satisfac- encouraged to contribute to the ongoing hand, this team consists of the sustainability corresponding management systems. The medium and long term: tion, operational safety, compliance with all Through performance measurement sys- development of the M-system. Management officer and, on the other hand, the depart- company objectives, therefore, include the relevant legislation, and protecting the envi- tems, organizational guidelines, process and is responsible for providing appropriate finan- ment heads for Purchasing, Sales & Logistics, sustainability targets, which we break down ronment and resources. work instructions, regular internal and exter- cial and human resources to implement the Production, Environmental and Quality Ma- into division and departmental objectives nal audits, we ensure that our management M-system. nagement, Product Management and Mar- according to the organization. For decades, we have had a certified quali- systems meet specific requirements, and keting & Communications. ty management system in accordance with continue to drive the continuous improve- We are convinced that the satisfaction of our DIN EN ISO 9001 in Germany, which we also ment process. The sustainability program is implemented customers is crucial to the success and repu- rolled out to our U.S. site a few years ago. together with the specialists in the individual tation of our company. Therefore, we rely on In order to determine and steer the envi- A central document management system areas – from sustainability-relevant processes customer-specific services as well as long- ronmental impact of our corporate activities, (DocMan) has been set up to ensure com- to the defined objectives and the associated term cooperation. This is characterized by we introduced an environmental manage- pany-wide access to all valid documents and measures. All parties involved report on the trusting, open and respectful action in order ment system in accordance with DIN EN ISO process descriptions of the M-system. current state of affairs in regular meetings to recognize the requirements of customers 14001 in Germany in 2008. and assess the status achieved. and markets at an early stage and to be able to respond to them promptly. Furthermore, the German site maintains a Management Systems by Location The tasks of the sustainability officer include safety management system according to the the further development, coordination and First and foremost, the quality features of our Hazardous Incident Ordinance. monitoring of the sustainability activities as business policy are the continuous improve- Germany well as the preparation of the sustainability ment of products, services and processes, In 2013, we introduced an energy manage- Quality management DIN EN ISO 9001 : 2015 report and the implementation of the volun- taking into account the relevant environment system in accordance with DIN EN ISO Environmental management DIN EN ISO 14001 : 2015 tary commitments. mental and safety aspects – secondly, the ac- 50001, which systematically records and eva- Energy management DIN EN ISO 50001 : 2011 tive commitment and, thirdly, the conscious luates our energy consumption, and identi- Occupational safety Partially integrated into M-system, interaction of employees, executives and fies potential for energy savings. In addition, but no certification at this time management. occupational safety aspects are comprehen- Construction Products Regulation DIN EN 12878 : 2005 sively integrated into our management system, so that certification according to DIN USA ISO 45001 is currently not planned. Quality management DIN EN ISO 9001 : 2015

18  Sustainability Management 19 > Memberships in Initiatives > Compliance and Associations

Our long-term objective is to sustainably in- > AGV (Allgemeiner Arbeitgeberverband, It is critical to our business success and repu- > Code of Conduct > Compliance Organization > Data Privacy crease the business activities of the Heubach General Employers' Federation) tation that our stakeholders have confidence GmbH Group and the associated enterpri- > ACA (American Coatings Association) in the responsible and lawful conduct of all As the key compliance element, our Code Within the framework of the materiality ana- Maximum care, the utmost in confidentiality se value. That is why we align our business > Arbeitgeberverband ChemieNord of our employees and managers. As a global of Conduct includes commitments to respect lysis carried out for this report, the topic of and compliance with applicable laws and practices with different principles of respon- (Employers' Organization Chemistry North) company, the highest priority for us is the ob- human rights, to uphold fair competition, to corporate governance/compliance was regulations have the highest priority for Heu- sible corporate governance. > VEA (Bundesverband der Energie- servance of company-specific and legal rules protect the climate, environment and health ascribed special significance from the stake- bach in handling personal data of emplo- Abnehmer e. V. (German Association of for the protection of human rights and the in a sustainable manner, to ensure equal op- holders' point of view as well as from the yees, business partners or other third parties. For example, Heubach has been a member Energy Consumers) environment as well as for the prevention of portunities, and to oppose all forms of discri- perspective of Heubach. of the Ecological and Toxicological Associa- > ChemieNetzwerk Harz e. V. (Chemistry corruption. mination. In the performance of their tasks, the mana- tion of Dyes and Organic Pigments Manu- Network Harz) This is why we decided to set up an ISO gers are assisted by both an external data facturers (ETAD) since 1998. We are commit- > CPMA (Color Pigment Manufacturers The trust placed in Heubach is based on the All employees are called upon to uphold the 19600 compliance organization. In a first protection officer and an internal data pro- ted to adhering to the ETAD Code of Ethics Association), USA, Canada, Mexico integrity of each individual. In our Code of provisions and ethical principles of the Code step, the scope of application covers the Ger- tection coordinator; both report directly to based on the principles of the Responsible > DIN (Deutsches Institut für Normung, Conduct, we have therefore defined clear of Conduct within their activities. man locations of the Heubach GmbH Group. management. In order to be able to better Care Initiative. With this membership, we German Institute for Standardization) and comprehensible guidelines as a beha- An expansion of the organization to the USA reflect the diverse data protection require- want to meet the demands made of us for > DKG (Deutsche Keramische Gesellschaft vioral standard. They provide a summary of Special responsibility rests with the manage- and China will follow in a second step. ments in the planning, installation and ope- the continuous minimization of possible im- e. V., German Ceramics Society) the key compliance principles based on the ment of our company, who are required to ration of information processing procedures pairments of health and the environment by > Forschungsgesellschaft für Pigmente und UN Global Compact. They also provide the convey the meaning of the Code of Conduct in the future, we plan to introduce a data way of organic pigments. Lacke e. V. (Research Institute for Pigments foundation for a common value system that to their employees and to support them in protection management system by 2022. and Paints) is not only relevant to internal collaborati- its implementation, as well as compliance In addition, the Heubach GmbH Group has > Industrieverein Goslar (Industrial Group of on, but also to our conduct toward external thereof. been a member of the UN Global Compact Goslar) business partners. since 2017. The ten principles relating to > International Zinc Association As any breach can have far-reaching conse- human rights, labor standards, environmen- > MNYCA (Metropolitan NY Coatings quences for both the company and the em- tal protection, and the fight against corrupti- Association) ployees concerned, anyone who is aware of on represent another guideline for respon- > NAM (National Association of Manufacturers) any violations of laws or this voluntary com- sible corporate governance. > NAPIM (National Association of Printing mitment is required to report them. Ink Manufacturers) We are also involved in working groups or > VCI (Verband der Chemischen Industrie During the reporting period, we did not re- specialist lectures in various specialist and e. V., German Chemical Industry Association) gister any reports via the central compliance industry associations, including: > CEFIC (European Chemical Industry Council) hotline or the compliance e-mail address. > VDSI (Verband für Sicherheit, Gesundheit und Umweltschutz bei der Arbeit, Federation of OSH Professionals) > Verein zur Förderung der Fachschule für Wirtschaft und Technik e. V. (Association To Promote Colleges of Business and Technology) > VILF (Verband der Ingenieure des Lack- und Farbenfaches e. V., Association of Engineers of the Coating and Paint Industry)

20  Sustainability Management 21 06 Sustainability Program

Field of Action Objective(s) and Measures Period Field of Action Objective(s) and Measures Period

Environmental Protection Sustainability Management

Energy Efficiency Improvement of energy efficiency by 4% by 2020 Compliance Expansion of a systematic protection of the company by 2022 > Establishment of the new calcination technology and introduction of new (Base year: 2015) > Setup of a compliance organization technologies in wet grinding > Implementation of a data protection management system > Continued switchover to energy-saving lighting (LED) > Development of a heat exchanger strategy for heat recovery Management and Development of a systematic survey of sustainability-relevant data and by 2020 > Systematic consideration of energy-saving potential in Controlling development of rules for reporting key performance indicators investment decisions

Voluntary Development of a concept to support the United Nations Sustainable by 2020 Emissions Reduction of specific dust emissions by more than 5% by 2020 Commitment Development Goals (SDGs) > Installation of new exhaust-air purification technologies (Base year: 2017)

Reduction of specific CO2 emissions by 10% > Increased efficiency through new production technologies > Conversion of the energy supply to a power mix with a higher proportion of from 2020 Employee Responsibility renewable energies Reduction of accident frequency (occupational accidents with at least three by 2020 Water Reduction of specific water requirements by 5% by 2020 Safety days of work missed per 1 million working hours) to six (Base year: 2017) > Continued conversion to dry processes (Base year: 2017) (interim target 2018: eight). > Optimization of the cooling water system Health Promotion of employees' health Waste Reduction of specific waste by 5% through process optimization by 2020 > Decision on the introduction of e-bike leasing by 2020 (Base year: 2017) > Promotion of physical activity through participation in sporting events (e.g., Business-Run) from 2019

Supply Chain Personnel Methodological and content-related further development of professional Development training and development > Introduction of the key performance indicator "Average number of hours for from 2019 Greater anchoring of sustainability in supply chain management by 2020 training and development per year and per employee" > Expansion of the vendor-audit evaluation sheet to include labor and > Evaluation of cooperation with the Technische Universität Clausthal (Clausthal by 2019 social standards, human rights, corruption and antitrust law University of Technology) a dual Bachelor's program > Check to see to what extent a rating platform of sustainability services can be used and integrated by Heubach Demographic Development of a demography concept focusing on health, work and family, by 2022 Change qualification, knowledge, employer attractiveness

Products Work-Life Balance Additional childcare by 2020 > Development of a concept Expanded integration of sustainability into product development Focus on the topic of care > Development of a concept for the analysis and evaluation of the most important by 2020 > In-house information events; external counseling products/product lines from a sustainability point of view > Creation of a do-not-use list for product development as well as extended by 2019 specifications/specification descriptions to include quality/energy/environment/ sustainability

22  Sustainability Program 23 One of our key guidelines is to provide high quality pigments and pigment preparations that 07 incorporate environmental and safety concerns along the entire product lifecycle. Products

> Sustainable Pigment Solutions

The demands made on pigments and pig- > Zinc-Free Pigments > Lead Chromate Replacement ment preparations are growing steadily: Our customers expect our products to have an Heubach has been developing zinc-free The worldwide use of chrome-yellow or ever longer service life and a qualitative anti-corrosive pigments for decades. In re- molybdenum-red pigments has dropped superiority for end products, but at the same cent years, zinc has come increasingly significantly in recent decades due to their time demand the consideration of ecologi- under attack, as it is a harmful to aquatic toxicity. However, these pigments have not cal factors. organisms. In the course of our long-term completely been replaced due to their good development program, we therefore manu- price-performance ratio. So far, their use has The Heubach portfolio includes numerous factured zinc-free anti-corrosive pigments only been significantly limited by the REACH products that make an important contribution with ever better long-term protection, which Regulation in the European Union (EU), but to sustainability. For clarification, we provide can also be used as universally as possible. not completely eliminated. some examples below: The result is a comprehensive product port- Heubach has been working intensively for folio of zinc-free ortho- or polyphosphates – decades to replace these toxic inorganic pig- > Anti-Corrosive Pigments based on harmless metals such as calcium, ments and developed a product line of high- strontium or magnesium, which provide performance hybrid pigments. These high- Worldwide, around five tons of steel are excellent protection for a wide range of ap- quality yellow, orange and red pigments destroyed by rust every second. In Germany plications. provide excellent coloristic properties such alone, the overall economic loss amounts to as high color strength, opacity and durabi- more than €90 billion a year. 1) lity. Easy incorporation and high stability in all > Water-Based Pigment Preparations common coating systems make this product With the development, production and mar- line an excellent alternative for high-quality keting of so-called corrosion inhibitors, our In recent decades, the market share and de- applications. In addition, Heubach offers various company contributes significantly to the mand for environmentally-friendly, aqueous custom pigment preparations as a direct manufacture of long-lasting and resistant paints and varnishes has risen continuously. Heu- one-to-one replacement for the chrome- coatings, and thus also to the conservation bach has actively helped shape this develop- yellow and molybdenum-red pigments. of resources. ment by developing and producing aqueous pigment preparations for a wide variety of applications for 30 years. These modern water-based products contain no solvents, and are therefore particularly environmentally-friendly.

1) Online article in Farbe und Lack: Eine Industrie gibt Auskunft: Korrosionsschutz kann mehr! (An industry Provides Information: Corrosion Protection Can Do More!)

24  Products 25 > Product Responsibility > Research and Development

From raw material purchasing as well as As part of its research and development, the In addition to the aforementioned aspects These properties provide our customers with research and development to production, Heubach GmbH Group is constantly wor- of health and environmental protection, we maximum flexibility, significantly reduced storage, transport and further processing king to make its products more sustainable. also consider all other safety aspects along stock levels, and thus a cost advantage. to sales and disposal: Product responsibili- the entire product life cycle. ty at Heubach covers the harmless and safe For example, Product Safety regularly informs 2. Heubach has been working together with handling of chemical substances and pro- the R&D department about changes in the Expenditure for research and development the Technische Universität Clausthal (Claust- ducts along the entire product life cycle. status of chemicals, especially if their use is (R&D) amounted to approximately €3.7 hal University of Technology) for decades, prohibited, restricted, controversial, or other- million in 2017 and 2016, respectively. R&D and has further intensified the cooperation wise undesirable for the customer. This infor- expenditures in 2017 accounted for 2.6% through a very closely networked partner- mation flows into our product developments. of sales, just below the previous year (2016: ship. The two cooperation partners jointly > Chemical Control Regulations > Product Information 2.7%). The majority of these expenditures operate a high-performance X-ray diffraction Furthermore, we regularly review the use of accounted for the (energetic and resource- device. This analysis method is used to de- REACH raw materials from recycling processes or the saving) optimization of inorganic pigments termine crystal structures and so-called se- substitution of water-soluble and (environ- as well as the development of water-based condary phases, which can arise in the pro- In the field of chemical safety, the EU Che- Of great importance to the responsible In addition, upon request, we will use our mentally/aquatically/human-)toxicologically pigment pastes for the production of decora- duction process. The combined know-how micals Regulation for the Registration, Eva- handling of pigments and pigment prepara- Regulatory Affair Sheets (RAS) to pass on all active components. When selecting raw ma- tive paints and the coloring of paints. enables us to meet the requirements of the luation, Authorization and Restriction of tions is not only their safe handling, but also the regulatory information we have on a pro- terials, we also evaluate their potential pollu- lowest detection limits. With the X-ray diffrac- Chemicals (REACH) came into force in 2007. the provision of comprehensive information duct. In this way, we support our customers tant inputs during the production process in tion device, we have a tool at our disposal This regulation states that manufacturers, for customers and partners. in complying with the downstream legal order to minimize them if necessary. > Partnerships in to optimize processes, on the one hand, in importers and users take responsibility for regulations, such as when our products are Product Development research and development and, on the other their chemicals by ensuring their safe use. Heubach creates safety data sheets (MSDS) used in toys or food contact materials. During new product development, we always hand, to issue product certificates attesting In due course, Heubach has registered all for all its products in accordance with Art. take into account all regulatory aspects, from Through our collaboration with universities, that the products are free of by-products. substances that are produced or imported in 31 REACH. If the creation of an MSDS is not the raw materials to the final product (e.g., research institutes, customers and vendors, quantities of more than one tonne with the required for products, Heubach will prepa- with regard to the wastewater to be dispo- we ensure a comprehensive and efficient 3. Furthermore, Heucotech Ltd. has developed European Chemicals Agency (ECHA). re Product Information Sheets (PIS) for the sed of or cleaned). Of course, we also take development of pigment innovations that bio-based printing ink concentrates as part dissemination of information in accordance into account the energy requirements of the not only improve the performance of end of a cooperation project with customers. with Art. 32 REACH. MSDS and PIS are sent relevant process engineering projects. The products, but are also safe in terms of health Thanks to the successful substitution of Globally Harmonized System (GHS) / either automatically with every first delivery of aim is, for example, to optimize production and the environment. petroleum-based raw materials, CLP Regulation a new product, or with relevant changes to steps with high energy requirements ener- the selected dispersions contain about 38% information or on request. In total, we pub- getically, or to avoid energy-consuming pro- The following three examples illustrate our of renewable materials – and that with the In parallel with REACH, Heubach implemented lish more than 1,800 MSDS per year in up to cess steps. collaborative development partnerships: same or even better application properties. the requirements of the CLP Regulation ((EC) 27 languages. No. 1272/2008), which came into force in In the (further) development of liquid pig- 1. Together with an external partner, our 2009, which transfers the United Nations To support customers' product development, ment preparations, Heubach works conti- specialists develop pigment preparations Globally Harmonized System (GHS) to the Heubach provides Technical Data sheets nuously to minimize the concentration of for coloring plastics. Thanks to an innovative European regulations. The aim of the GHS is (TDS) containing all application-related infor- additives in the formulation. We, therefore, production technology, to maximize the standardization of chemical mation – for example, light and weather fast- reduce the levels of volatile organic com- we can produce highly concentrated pig- labeling worldwide. ness, heat and chemical resistance, density pounds (VOCs) and biocides to a minimum. ment granules that are dust-reduced, low- or pH. These are available for download on When selecting additives, we make sure that dusting and easy to disperse – they are In connection with the CLP Regulation, we our website, or will be sent on request. as far as possible no polyaromatic hydrocar- characterized by their universal compatibility. have reviewed, reclassified and, if necessary, bons (PAHs), no halogenated compounds, The preparations can be applied to plastics re-labeled more than 1,800 products. and no formaldehyde are included. Moreo- of all kinds (polyolefins (PO), polyvinyl chlori- ver, additives based on renewable raw made (PVC) or engineering plastics). Due to the terials are becoming increasingly important. highly concentrated pigment content of our product, we were able to reduce its input quantity compared to conventional products.

26  Products 27 08 Environmental Protection Emissions As a manufacturer of chemical raw materials, we cannot completely avoid environmental impacts, as our company uses up resources, and > Carbon dioxide the production process produces emissions, wastewater and waste. However, we can continuously minimize the risk of polluting factors and, > Nitrogen oxide thus, ensure careful and respectful action with respect to the environment. We have committed ourselves to this goal, and have therefore > Sulfur oxide incorporated resource conservation and climate protection in our corporate policy. > Dust

> Energy and Climate Pollution The main impacts of our production activities The energy sources that we mainly use are After some directly fired calcination units > Noise include energy consumption and the emission electricity and natural gas. About 75% of were replaced by electrically heated pro- > Heat Pollution of climate-damaging greenhouse gases. natural gas is used to generate steam in duction processes back in 2013, a similar > Light our own steam boilers and 20% for directly second plant was put into operation at the For this reason, we have focused in recent fired calcination units for the production of end of October 2016. During the reporting years on developing and implementing colored pigments at a temperature of up to period, however, it was only used in trial ope- measures to increase energy efficiency and 1250°C. The remaining 5% is consumed in ration for up-scaling purposes. This led to a optimize production processes. the heating of buildings. reduction in natural gas consumption, while increasing the required electricity input. But The majority of the electricity consumption the specially developed process allows for a > Energy Consumption is for the operation of additional calcination considerable increase in throughput: At full units for colored pigment manufacturing. capacity utilization of both systems, we ex- Heubach uses energy in different ways. On The balance of the electricity is used for the pect a reduction of the specific energy requi- Raw Products the one hand, the company converts heat generation of compressed air, the seconda- rement for the high-temperature processes materials and kinetic energy to chemical energy via ry energy driving various production equip- by up to 3% (about 700 MWh/year). endothermic chemical processes. On the ment such as grinding, drying, precipitation Electricity other hand, Heubach operates exothermic processes and cleaning filters. At our U.S. facility, we produced only water- Storage & transport chemical processes in which heat is released based pigment preparations in the reporting Waste by chemical reactions, which requires appro- The increased energy demand in 2017 is period. The energy requirement for the cor- > Slurry priate cooling. In addition, energy is spent exclusively attributable to strong growth in responding process steps (grinding, dispersi- > Paint waste on numerous ancillary processes, such as for production volumes in the energy-intensive on) is small compared to the German facility. Water consumption Resource consumption > Packaging Wastewater compressed-air generation, for the operation production area of inorganic colored pig- The first production plant for anti-corrosion > Well water > Natural gas of heating systems and steam generators, for ments. This is associated with a plant-related pigments with a capacity of 4,000 t was > Municipal water > Heating oil Indirect discharge the in-house transport of raw materials and capacity expansion at the German site. commissioned in early 2018. Due to this ca- > Mineral & metallic Sewer / sewage treat- products, as well as for laboratory and office pacity increase, we expect energy demand resources ment plant operations. to increase in the future, especially for the > Polluted wastewater grinding and drying processes. > Heat

Direct discharge > Purified wastewater > Heat

28  Environmental Protection 29 > Energy Efficiency

Heubach works continuously to improve To raise employees' awareness, the voluntary In addition, a development partnership was energy efficiency and reduce energy inten- commitment to energy efficiency has been entered into to optimize horizontal bead sity. included officially in the company's goals. mills. The potential energy-saving potential due to shorter process time is estimated at In 2013, we introduced an energy manage- We developed an energy strategy for the 10 to 15%. ment system in accordance with DIN ISO production area at the German site by 2020 50001 at the German site. As part of this, in (base year: 2015). The goal is to improve As a next step, we plan to increase efficiency addition to the measures described above, energy efficiency by around 4% by 2020 in the production of anti-corrosive pigments we planned and implemented numerous using the latest technologies. as well. Based on the operating experience 60,254 actions – for example, the installation of of the state-of-the-art plant installed in the solenoid valves in compressed-air lines to The focus here is on the energy-intensive USA, we would like to introduce various 5 7,10 5 minimize the risk of leakage, or the conver- production of inorganic pigments, as well as measures for increasing energy efficiency in sion of lighting in the warehouses from HQL on the optimization of the process techno- individual process steps or units in Germany 56,361 luminaires to LEDS. Especially in the latter, we logy, which is used in wet grinding and in from 2020 onwards. achieved an annual saving of 88.9 MWh 2). almost all production areas. In order to further expand on this success, As the implementation of the energy strategy we will develop a concept for equipping all An example would be the new calcination is still in its initial phase, only the individual

30,333 lighting with energy-efficient LED light sour- technology which described above guaran- value considerations already mentioned are 26,023

24,828 ces over the next few years. tees highly efficient, quality-optimized pro- currently available. In the Sustainability Report cess control in the production of inorganic 2021, however, we will report in detail on the With the setup of an energy team we pro- colored pigments. Thanks to this, we have al- achievement of the planned targets and ob- 2 vided further necessary human resources to ready reduced the specific energy consump- jectives. 2.5 .6 continuously evaluate and institute options tion of some product lines by up to 50%. for the most efficient utilization of energy in order to ensure the effectiveness of the energy management system. 31,533 Energy intensity 1) 31,082 29,9201 in MWh/t

2 2 017 .6

2 016 MiWh 2 015 Electricity 2017 2016 2015 Natural gas

Energy consumption

1) Ratio of energy consumption and sales volume produced (total production). Commercial products are not included. 2) Extrapolated to one year.

30  Environmental Protection 31 > Emissions

> Greenhouse Gas Emissions 6,400 t CO2 > Pollutant Emissions into the Air > Noise Emissions 6,378

The chemical processes for the manufac- 6,285 ture of pigments and pigment preparations 6,050 The manufacture of inorganic pigments pro- By switching from gas to electricity-powered The German factory site is located in a com- themselves release no greenhouse gases. duces dust emissions. The permits for our calcination units, we reduced emissions of mercial area with predominantly industrial

Rather, these are energy-related emissions. production areas, therefore, contain limits for nitrogen oxides (NOx) and carbon monoxide use and is adjacent to a mixed area with re-

Direct CO2 emissions include, for example, dust as well as for metals, which are used in (CO). In the case of the latter, a further favo- sidential buildings. Accordingly, the minimi- steam generation (60-68%), the operation zation of noise emissions for the protection 0.29 t CO2/t the form of metal oxides. Depending on the rable trend in 2017 was the fact that the oil- of gas-fired calcination units (24-30%), some 0.29 particular raw materials used for the manu- based operation of steam boilers – as back- of the neighborhood has a very high priority drying units and heating systems. Indirect 0.28 facture of the pigments and the pigments up in the event of natural gas failure – hardly for Heubach. We have already successfully 0.26

CO2 emissions are caused by the electricity handled, these involve primarily zinc (Zn), tita- needed to be used. implemented a multi-year soundproofing purchased. nium (Ti), bismuth (Bi), cobalt (Co), nickel (Ni), program. Scope 1 absolute antimony ( Sb), chromium (Cr), copper (Cu), The increase in dust emissions results from Greenhouse gases other than CO are not 2) In order to achieve the necessary reduction 2 Scope 1 GHG intensity manganese (Mn), calcium (Ca), iron (Fe) and the two-stage expansion of production emitted. Even though methane (CH4) is the vanadium (V). There are emissions, to a low capacities; this is accompanied by additional of noise emissions, we installed sound main constituent of natural gas, it is incinera- degree, of both raw materials, such as the emission sources with high air volumes. In absorbers on all relevant noise sources. In 2017 2016 2015 ted and emitted as CO2. This assumes com- corresponding metal oxide, and the product 2017, we planned additional extensive mea- addition, we pay close attention to the strict plete combustion. manufactured, that is, the pigment. sures to further reduce dust emissions; we observance of various nocturnal measures. Greenhouse gas emissions Scope 1 1) already installed a corresponding exhaust-air For example, there are no truck movements

Our CO2 emissions increased by around The manufacture of some products also filter in the first half of 2018. We plan to in- at night; forklifts may operate only inside the

9.8% in 2017. Although the share of direct creates sulfur oxides (SOx). vest a total of around €1.5 million in the 2018 buildings, and doors and windows must be emissions (Scope 1) fell by just under 3.7%, financial year to implement these measures closed. we recorded an increase of around 16.2% in in order to reduce specific dust emissions by the case of indirect emissions (Scope 2). This more than 5% by 2020. Furthermore, we have sound measurements is due, on the one hand, to the increased ca- 15,500 t CO2 taken by an external expert after every new 1 5 43.0 8.43 pacity of the calcination technology and, on SO2 emissions increased during the reporting construction of a plant or every significant the other hand, to the partial replacement of 15 ,412 period, as the raw material used for some change to existing plants.

gas by electricity in the calcination processes. 13,263 of the more highly demanded product lines 12,962

contains sulfate, which causes SO2 emissions The last noise measurement (October 2017) Specific dust emissions 1) during subsequent calcination. The use of at the relevant affected location (a residen- 0.67 t CO /t 2 in g/t this raw material is essential due to quality tial building in the adjacent street) showed 0.67 standards. Nevertheless, teams in R&D pro- that the exposure reference values (45 dB(A)) 0.59 0.58 jects are working on minimizing the use of were clearly undershot with 42.5 dB(A). 5 5 this raw material or, at best, substituting the .7 2 substance. Scope 2 absolute Scope 2 GHG intensity 4)

2017 2016 2015 2 017 Air emissions in kg 2017 2016 2015 2 016 Greenhouse gas emissions Scope 2 3) 2 015

Sulfur oxide (SOx/SO2) 1,341 1,286 1,18 4

Nitrogen oxide (NOx) 7,050 8,356 8,061

Carbon monoxide (CO) 569 740 881

1) Emissions resulting from own business, that is, from the consumption of natural gas, for example, for steam generation, the operation of production plants, heaters or lift trucks. Volatile organic compounds without 0 0 0 The emission factors used are based on the report "Emissionsfaktoren für Strom, Fernwärme und Kraftstoffe" (Emission Factors for Electricity, District Heating and Fuels) by the VDA methane (NM-VOCs) (Verband der Automobilindustrie, German Association of the Automotive Industry) (2018). The stated values for Germany, China East and USA East were used. Our calculations 1,354 1,245 are based on the assumption that only CO2 is emitted by the complete combustion of all natural-gas components. Dust 955 2) Relative to sales volume produced (total production). Commercial products are not included. 3) Emissions from the production of energy sourced from outside the company (e.g., electricity). The conversion factor for Germany was specified by the electricity supplier. For the U.S. and China, the regional average emission factors relative to the electricity provided according to the report "Emissionsfaktoren für Strom, Fernwärme und Kraftstoffe" (Emission Factors for Electricity, District Heating and Fuels) by the VDA (Verband der Automobilindustrie, German Association of the Automotive Industry) (2018) were used. 4) Relative to sales volume produced (total production). Commercial products are not included. 2) Relative to sales volume produced (total production). Commercial products are not included.

32  Environmental Protection 33 2017 2016 2015

,463 120,5 00 140 0 138 32 14 0,7 ,50 ,90 ,38 3 2 30 6

Water input Water input Water input in m3 in m3 in m3 152,977 171,202 169,286

Industrial water Water consumption at Heubach 2017 (in m3) > Water Drinking water

Water withdrawal Water use Wastewater Water is an essential resource for the pro- In the U.S., only drinking water is available for In addition, the closed-circuit cooling system production. Since we produced only aque- Wastewater treatment 121,591 duction of pigments and pigment prepara- introduced at the American site contributed tions. ous pigment preparations in the USA during significantly to this pleasant development. Cooling water 62,300 (91.5% direct discharge into water, 8.5% discharge to municipal treatment plants) the reporting period, the use of drinking (11% reuse) However, since the availability of water can- water is also indispensable for guaranteeing The increase in drinking water consumption Industrial water 120,514 not be taken for granted in all parts of the product quality there. Again, some of the wa- is due to the increased production volumes Water losses 1) 2 9 ,113 world, the most efficient and sustainable use ter remains in the product. of aqueous pigment preparations. (19%) is also of particular importance for Heubach.

Despite increased production volumes, our Through the implementation of closed-circuit Drinking water 32,463 Production* 90,677 Most of the water used for production at the water consumption in 2017 fell by almost cooling, it was possible during the reporting German site is industrial water (2017: 88%), 11% compared to the previous year. This period to reduce the specific water input (*Total production, laboratory, Disposal 2,273 which we extract from our own wells. We significant decrease is attributable to the in the USA by 17.6%. Overall, a reduction of cleaning, sanitary wastewater) (1.8%) cover the remaining 12% of our water needs lower proportion of industrial water at the 13.4% was achieved. with drinking water, which we use in sanitary German site. The water savings resulted from 1) Losses resulting from evaporation, leaks, quantities of water remaining in the product as raw material and laboratory areas, and on a smaller sca- the increased use of dry processes (e.g., in le to produce individual product lines (e.g., the grinding processes), as well as from op- aqueous pigment preparations). The water timized individual precipitation processes in used for these product lines remains to a production. significant extent in the product (up to the end user), and cannot be replaced by service water for quality reasons. 7.6 6.6

Specific water input 1) in m3/t 2 017 2 016 7 .7 2 015

1) Relative to sales volume produced (total production). Commercial products are not included. 34  Environmental Protection 35 > Wastewater

The wastewater produced by the German The increase in the nitrogen and TOC emis- The German site is located in an area with plant is taken in collection tanks to our waste- sions of our wastewater results from the in- legacy soil contamination caused by mining water treatment plant. There, we first analyze creased production and the implemented activities in the past. The increased emissions the constituents, and evaluate them before process optimization of our precipitation and of metals in the wastewater, according to de- we process the wastewater chemically and grinding processes and the accompanying tailed investigations, were attributable to the physically in accordance with the legal and wastewater prevention. leaks in the sewage system on the factory regulatory requirements for the elimination site; the contaminated sites release zinc into of inorganic pollutants. After our wastewater Our U.S. site also collects and processes the the groundwater. By 2022, we will have the treatment, we can discharge 91.5% of the production wastewater to eliminate solids, entire sewage system on the factory site fully treated wastewater directly into surface wa- organic matter, metals, and discoloration as refurbished. ters. much as possible using chemical and physical processes. Subsequently, the wastewater After removal of mineral pollutants, we coll- is fed to the municipal wastewater treatment ect nitrate-containing wastewater and was- plant in compliance with specified limit va- tewater containing organic components lues. separately and feed it to municipal sewage treatment plants as indirect discharges. There, potential nitrogen and nutrient inputs and, thus, water risks are eliminated. > Materials

For the manufacture of pigments and pig- In the case of aqueous pigment prepara- Wastewater loads in kg 2017 2016 2015 ment preparations, Heubach relies on nu- tions, on the other hand, we achieved initial merous raw materials and supplies. Essential success in the development project for bio- TOC 1) 5 ,10 6 4,363 8,404 feedstocks include metal oxides, phosphoric based printing inks. Through the successful acid, binders, additives, PVC, sewage chemi- substitution of petroleum-based raw materi- Nitrogen (N) 25,721 21,681 16,565 cals, lubricating oils and greases. We do not als, we developed a dispersion that consists publish exact weight or volume information of around 38% renewable materials with the Phosphorus (P) 34.3 36.7 38.4 on our materials used, since we consider this same or better properties. Adsorbable organically bound halogens (AOX) 0.3 0.3 0.5 information proprietary.

Metals 12 0 83 60 The use of renewable raw materials does not currently play any role in the production Persistent organic pollutants (POPs) 0.16 0.15 0.17 of inorganic pigments. The extraction of pigments directly from nature is currently not a meaningful alternative either, because such pigments do not meet the required high standards on light fastness, temperature and weather resistance as well as chemical resistance while ensuring high color intensity.

1) Total Organic Carbon

36  Environmental Protection 37 > Waste

Thanks to the many years of experience in By far the most waste is in the form of slurry The total amount of waste, in line with the production and the numerous findings from in the production of aqueous pigment pre- increase in production in 2017, increased research and development, we are able to parations as well as in wastewater treatment. slightly compared to the previous year. The operate very sustainable processes. There In addition, aqueous waste and packaging decisive factor is slurry, which is primarily are only few production wastes, which we are significant. produced during wastewater treatment. The do not process within the plant and return specific amount of waste is, however, slightly to the value stream. Paper and plastic waste is recycled by speci- decreasing. alist companies using standard procedures. For example, particulate raw materials from The wood of the discarded pallets is shred- 2017 2016 2015 the filter cleaning are sucked off, deposited ded and energetically utilized, since the re- 168.5 kg/t and automatically returned to the manu- quired material quality for reuse is usually not 168.5 167.1 0.5 0.4 7 0.3 7 facturing process proportionally in as many obtained (such as through treatment of the 76.6 5.8 3.1 .9 .8 6 places as possible. In addition, we also re- wood or adhering impurities). The unsorted 2 3 6. 2 2 2 integrate – if technically possible – material residual waste goes into thermal recycling. 137.1 that does not comply with specifications.

Transport volume We distinguish waste that cannot be recycled Transport volume Transport volume in % at the site according to its material properties in % in % and collect it separately. The wastes are clas- sified as "hazardous" and "not hazardous", as well as according to the criteria "for recycling" and "for disposal".

2017 2016 2015

Specific amount of waste 1) > Logistics and Transportation

Most of the transports of Heubach pigments To this end, we optimize the use of the cargo 2017 2016 2015 and pigment preparations are by road space for outbound shipments: on the one (76.6%). The rest is 22.9% by sea and 0.5% hand, by combining orders for the same by air. Due to the structure of the consign- consignee and, on the other hand, by bund- 50 3,323 3,2 4 2,50 5 512 53 54 1 ment, lack of infrastructure and insufficient ling consignments of different consignees. 49 624 55 3,2 3 572 488 7 flexibility, transport by rail is logistically and 3,19 2 economically inefficient. In addition, if possible, we use packaging Waste Waste that is recyclable in its life cycle. These inclu- Waste Waste in t Waste in t In order to minimize the environmental im- de, for example, paper sacks, so-called big in t in t in t Total: Total: pact of inbound and outbound transport, we bags (flexible bulk goods containers), reu- 3,873 3,045 want to reduce the number of vehicles and sable pallets (EURO), reconditioned IBCs, as 3,7653,765 3,045 transports to be dispatched in the future. well as refillable returnable containers.

Waste disposal Waste recycling 1) Relative to sales volume produced (total production). Commercial products are not included. Hazardous waste Non-hazardous waste 38  Environmental Protection 39 > Damage Events

Although the focus of all safety-related The aim of this modified reporting system In 2017, we recorded a total of 18 events with In order to ensure the safety of employees In emergencies, in case of major dama- is to make employees even more aware chemical leakage. In 15 cases, it was mate- 35 66 (1 measures is on prevention, damage events and local residents, Heubach has developed ge events and at the request of the plant's 8) cannot always be ruled out. Heubach defi- of operational disruptions and to identify rial leakage inside the building, for example, a comprehensive concept for the prevention standby emergency service, a crisis team nes damage events as all occurrences in potential for improvement more quickly. In due to defective screw connections, seals or of major accidents. For example, the Safety is assembled, consisting of managers and production or on the company premises order to be able to establish suitable mea- peristaltic pumps. In all cases, only very small Report and the Operational Alarm and Ha- company representatives. The tasks of the (incident reports) as well as in connection sures for the future avoidance of damaging amounts of materials have leaked out. We zard Prevention Plan (BAGAP, Betrieblicher crisis team include: Operational disruptions with the transport of the products (transport events, we analyze and evaluate all incidents have collected these in the retention areas Alarm- und Gefahrenabwehrplan) describe > Initiation and continuation of measures to (of which involving chemical incidents). in detail. within production, picked them up and thus in detail our facilities, various alarm scenarios, protect people, the environment and 2 either returned them to the process or dispo- 4 leakage*) the organization of hazard prevention, inclu- property, (1 4 The increase in the total number of repor- sed of them properly. ding cooperation with external emergency > Coordination of operations with ) > Incident Reports ted disruptions in 2017 compared to 2016 is services, and the communication process for external emergency-response teams, primarily due to the change in the reporting There were only three safety and environ- contacting the authorities, the public and the > Evaluation of events and analysis of the In accordance with a new internal voluntary system described above. In addition, the mentally relevant events in 2017, as listed media. causes. 2 017 commitment, Heubach has recorded since commissioning of a new production facility – below. 2 016 2017 any kind of business interruption in as in 2017 – is always associated with some Furthermore, around-the-clock processing of An external service provider also operates an 2 015 the company, that is, all events that deviate additional disruption until regular operation At no time was there any risk to employees, plant malfunctions and incidents by in-house emergency hotline in the event of a chemical from normal operations. These range from can be ensured. local residents or the environment. bodies, especially the plant's standby emer- leak. * A systematic evaluation of fault messages on systems the smallest general technical disruption to gency service, is guaranteed. has only been available since 2016. Until then, only the total number of fault messages events with material leakage, power failures, had been counted, but not categorized. or even fires.

> Transport Incidents

We split the reporting of transport incidents Safety measures for internal and external into transport accidents and transport damage. transport include, for example, regular trai- Heubach records as accidents all critical ning for forklift operators with respect to load securing and forklift handling, as well as Event Measure events that occur during the distribution of our pigments and pigment preparations general safety instructions. commissioned by us. This includes all events Installation of a super-fine droplet separator for additional exhaust air that are associated with personal injury or Occurrence of "blue clouds" after exhaust air purification in purification following gas scrubbing to avoid the purely visual phenomenon property damage as well as environmental the gas scrubbing (installation by the end of 2018) damage due to chemical spills or released substances.

78 21,0 Transport damage The smoldering fire in the filter was extinguished within minutes by the Looking at the statistics on transport acci- 1 84 dents, we are fortunate to find that in recent Shipments immediate intervention of the production staff. A precautionary examination 160 19,41 Smoldering fire on a filter due to overheating years, with an average of around 20,000 de- 1 of the exhaust air filters by the fire department helped rule out glowing 19 155 ,40 embers. liveries per year, no accidents have occurred 4 2017 in connection with transports commissioned 0.8 % by us.

Fuel leak on a defective truck of a vendor The spilled fuel was collected and disposed of properly. Transport damage The number of transport damages, calcula- ted for the number of deliveries, has incre- 2016 ased by a minimal 0.02 percentage points 0.8 % compared to the previous year, but is still at a low level of 0.8%. This includes all events 2015 without any impact on people and the en- 0.8 % vironment, in particular packaging damage

40  Environmental Protection 41 . Qualified and motivated employees are critical to the success and reputation of any business. For this reason, we see it as our major responsibility to offer our employees a safe and attractive working environment, and to create opportunities for professional and personal 09 development. Employee Responsibility

> Employment

of which 46 Germany At the end of 2017, the Heubach GmbH In 2017, we employed 12.5% 2) temporary 3 USA Group had 392 employees worldwide 1) workers. In case of a successful collaboration, (2016: 394). This includes all employees with Heubach checks whether the temporary 9 39 permanent or temporary contracts, as well as agency worker in question can be taken on 4 2 trainees and apprentices. at the respective workplace or in another position at the company. In 2017, for ex- The vast majority of employees (89%) are ample, we hired eleven temporary workers. Germany employed on permanent contracts. Fixed- Further hirings have already been made and Temporary workers 309 (311) term employment contracts are issued only planned in 2018, so that the proportion of 2017 for reasons of fact and as part of an intern- temporary agency workers will decrease to 210 (211) Men 68% ship, training or temporary tasks. around 8%. 99 (100) Women 32% In order to flexibly cushion unexpected production peaks/large number of incoming USA orders, sickness, holiday periods and cyclical Employees by region downturns, we rely primarily on temporary and gender 2017* 61 (61) employees leasing for the production and 52 (52) Men 85% laboratory. In doing so, we exclusively con- 392 9 (9) Women 15% tract temporary employment agencies that Employees by type of contract 2017 2016 2015 (394) apply collective agreements and adhere to the minimum standards of socially accepta- China ble employment. Employees, total 392 394 383 22 (22) Employees with permanent contracts 350 356 348 Employees with fixed-term contracts 42 38 35 10 (10) Men 45% 12 (12) Women 55%

* Numbers for previous year in parentheses.

1) Figures without temporary workers; as of 31.12. of the year. 2) Ratio of temporary workers to total number of employees 42  Employee Responsibility 43 > Remuneration Policy and Employee > Job Satisfaction and Benefits Employee Retention

As a company in the chemical industry, In order to facilitate a gradual transition to re- Individual occupational groups also receive Our employees identify with the company to In addition to a long period of employment, The total turnover rate includes all termina- Heubach grants its non-exempt employees tirement, Heubach makes an annual demo- performance-based one-time payments at an extremely high degree. This is borne out the steadily declining turnover rate is clear tions – by the employee and by the emplo- (89.7%) above-average benefits in terms of graphic contribution to the collective old-age our U.S. location. In addition, we grant all by the long employment with the company evidence of the attractiveness of Heubach as yer – and retirements. It stood at just under salary, vacation or additional payments. Of pension scheme in accordance with the coll- employees a Christmas bonus as well as of many employees and low turnover. an employer. 5% in 2017, and thus fell by more than three course, we comply with the regulations set ective agreement "Lebensarbeitszeit und De- paid vacation days. Furthermore, Heucotech percentage points compared to 2015. out in the collective agreements of "Chemie mografie" (Working Life and Demography). Ltd. assumes part of the health insurance Nearly 60% of the total workforce has been The voluntary turnover rate (proportion of West". There are no differences due to gen- The current maximum employer contribution contributions, and – as part of a healthcare employed by Heubach for more than ten employees giving notice) has been between der, religion, origin, age, disability, or sexual is around €1,500. program – shares in the deductible of the years, while 29% of employees have been 2% and 4% for years (2016: 2.5%, 2015: orientation. health-insured. Every employee can also par- contributing to the company's success for 4.2%), and is at a favorably low level of 1.0% Heubach also guarantees minimum social ticipate in a FSA program (Flexible Spending more than 20 years. The average duration of in 2017. For temporary agency workers, we pay sec- security at foreign locations by paying atten- Account): This offers free disability, accident, employment at Heubach is 16 years (2016: tor allowances and adhere to the principles tion to fair and competitive pay and social life and dental insurance. To safeguard old- 15 years). of Equal Pay. benefits. In order to ensure a fair standard age pensions, employees also have the op- of living for employees, these are always tion, under a so-called 401(k) savings plan, However, we do not take such years of ser- Employee turnover 2017 2016 2015 Managers, exempt employees, and special based at least according to local laws and of paying part of their income tax-free into vice for granted. For this reason, every em- occupational groups receive – in addition standards. a pension fund in which our company par- ployee of Heubach GmbH and Heubach to a contractually agreed basic salary – one- ticipates. Pigment Manufacturing GmbH & Co. KG re- Total turnover 19 20 31 off bonuses partially based on performance For example, all employees employed by ceives a monthly loyalty bonus after full five Men 14 11 15 and agreed targets. These targets, which are Hangzhou Heubach Pigment Co. Ltd. in Chi- years of service, which automatically incre- Women 5 9 16 based on the respective area of responsibi- na receive a base salary that is well above ases every three years. For service anniver- Total turnover rate 4.8% 5.1% 8.1% lity, are negotiated by the employees in the the legal minimum wage. For performance- saries, employees are personally honored by annual employee appraisal with their res- related occupational groups, a performance- their respective supervisor with an individual Voluntary turnover 4 10 16 pective supervisors. Such agreements inclu- based, variable annual remuneration is also certificate and a gift in kind. In 2017 alone, 23 Men 2 5 9 de both quantitative targets, such as increa- paid. On average, employees at Hangzhou employees received such an award for their Women 2 5 7 sing sales, revenue or profits, and qualitative Heubach Pigment earn three times the statu- more than 20 years of service. Voluntary turnover rate 1.0% 2.5% 4.2% targets, such as improving customer satisfac- tory minimum wage. tion. Although special sustainability-related targets have not been included in the agreements so far, the close integration of sustainability and corporate strategy ensures that positive effects are achieved indirectly. 5 162 29 8 7

Employment with the company (2017) < 10 years Over 10 years 1 1 8 392 Over 20 years Over 30 years Over 40 years

44  Employee Responsibility 45 : 47 Full-t time ime: art- 345 P

13 > Suggestion Scheme > Work-Life-Balance

4 3

> Co-Determination and Feedback We see our employees as important innova- Whether family planning or dealing with The majority of our employees (88%) are

tors: Each one of them has knowledge and relatives in need of care – compatibility of full-time. The offer of part-time employment

8 6 To ensure that Heubach takes sufficient experience that extends far beyond his or family and work is increasingly becoming a is mainly taken up by women (72%). In 2017,

account of the rights and interests of all em- her actual area of responsibility. challenge in today's world. 28% of men worked part-time. The return

ployees in their day-to-day work, manage- rate from parental leave is 100%. Employees by type of contract 2

ment in Germany works closely with the (2017) 9 The goal of our ideas management is to To counter this trend, Heubach offers its

works council. drive the development of Heubach forward. employees flexible working hours. On the In coming years, we will continue to promo-

This means promoting creative potential, im- one hand, there is an internal flextime syste a better reconciliation of work and perso-

392

The works council is an important partner, for proving cooperation and communication, tem, and on the other hand, employees – of nal life. As a next step, we are planning to

example, in the event of changes to opera- and creating a climate that encourages in- course, depending on operational require- assess various solutions regarding "children

ments – choose different part-time models,

tional procedure, in the assessment of pro- novation. and work", as well as "care and work". The

posed improvement, in the further develop- such as the 3- or 4-day week, or a reduction goal is to provide even better support to our

ment of occupational pension schemes, or To recognize each individual's commitment in daily working hours. employees in their personal lives in the fu-

in occupational health and safety. In addition, appropriately, we have developed a bonus ture, and to promote compatibility of perso-

Those returning from parental leave can get there are numerous company agreements system that includes both monetary and nal concerns with work.

back into work flexibly through their preferred on personnel, IT, and occupational safety, non-cash bonuses. We determine the res-

Women

which were worked out and approved to- pective bonus amount on the basis of a de- working time model. Change requests at

Men

a later date can be discussed at any time gether with the works council. fined valuation scheme. It is geared to the

benefits created by the submitted improve- in consultation with the supervisor, and are As a representative body, the works coun- To this end, we conducted a survey on psy- At locations where no employee representa- ment proposal. usually accommodated. cil accepts suggestions of both employees chosocial factors at work in 2015. After inten- tion is required or established, participation and the youth and trainee representatives, sive analysis of the results, we identified and in the company's business is governed by and discusses them in regular meetings with implemented various individual technical local associations. management. measures. These led to further optimization of the direct working environment (noise In China, for example, all Heubach emplo- To maintain its attractiveness as an employ- protection, air-conditioning measures, etc.) yees are also members of a "Worker Union". er, however, not only indirect feedback from in individual production areas and offices. In Their task – in contrast to Germany – focuses the works council or shop stewards is crucial addition, employees identified a significant exclusively on improving employee satisfac- for Heubach, but also direct feedback from potential for improvement in the leadership tion through social activities, such as patient employees. behavior of their supervisors. In leadership visits or New Year's festivities. seminars lasting several days, we, therefore, had the majority of our managers trained; In addition, the staff of the personnel depart- we also developed a leadership model and ment look after the concerns of the emplo- rolled it out across the company. yees.

46  Employee Responsibility 47 > Personnel Development

An essential prerequisite for quality, know- how and innovative strength is the personal and professional development of our employees. In-company training and continuous advanced training are, therefore, important components of our personnel development.

> Training > Further Training

Against the background of social responsi- To ensure the further qualification of our em- Specialized training on occupational safety In order to determine the training require- In 2017, we organized a training course for The scope of the leadership mission state- bility and securing of the future of the com- ployees and a constant increase in the level as well as health protection represents ano- ments, we use both organizational and in- most managers – based on an employee ment is currently limited to the parts of company, Heubach wants to make it easier for of knowledge in the various specialist areas, ther pillar of our further training measures. dividual requirements: legal requirements survey and tailored to the company's needs. panies based in Germany. In the near future, young people to enter working life through we provide a broad range of training cour- and risk assessments, changes in the area For example, this led to the joint develop- we will examine the extent to which this an apprenticeship. ses. In addition to subject-related training of responsibility, findings from qualification ment of a leadership mission statement, can be applied to our foreign locations and, courses, this also includes language courses, matrices or agreed targets and assessment which unit and department heads jointly where appropriate, will implement it – taking In order to be able to give a long-term and IT and personal development training. interviews, requests from employees for per- developed in a workshop over several days. into account the cultural circumstances in secure perspective right from the start, the sonal development. each case. number of apprenticeship places is based The goal of this mission statement is to de- on actual personnel requirements. In addi- In 2017, 289 (2016: 292) employees took fine binding behavioral corridors for mana- In addition to the further development of tion, we ensure that trainees who perform part in 627 (2016: 503) training sessions. gers and employees, as well as to shape existing managers, the identification and de- well and successfully complete their training Trainees values and action standards for future lea- velopment of junior managers plays a major 1) 2017 (1.9 %) 2016 (2.6 %) 2015 (2.0 %) can usually be offered employment with the (Percentage of trainees) dership behavior. Furthermore, our mission role. This is why Heubach increasingly invests company. > Management Training and statement is to actively shape and promote in their training and further education. For ex- Talent Management change processes within the company. Our ample, production employees can apply for Trainees 6 8 6 new leadership mission statement consists a talent pool. We have the selected partici- There are four training occupations in natural Total science, technical and commercial areas: We Identification and development of managers of the following six guiding principles: pants qualified for future leadership positions train chemical laboratory technicians, indus- play a crucial role in entrepreneurial success, through special training. In the commercial, trial mechanics, warehouse specialists and because it is also the result of successful lea- > Clear structures will move us forward. scientific and technical areas (e.g., laborato- Technical industrial clerks. dership and motivation of employees. Heu- > Our objective is profitable growth. ries), we focus on the individual promotion of bach offers both individual, external further > We communicate our objectives and young, talented junior employees via external

In 2017, six young men and women were training courses as well as in-house training expectations clearly. and internal training measures. In this way, in being training at Heubach's German loca- and team development measures – on the > We ensure clear feedback on addition to recruiting from outside the com- Commercial tions. The apprenticeship rate (number of one hand, to prepare junior managers for work performance. pany, we also offer employees within our apprentices compared to the total number leadership tasks and on the other hand, to > We contribute praise and criticism in own ranks very good career opportunities. of employees at the German locations) was systematically and continuously develop exe- a constructive and objective manner. 1.9% below the level of the previous year cutives. > We support decisions taken and Scientific (2.6%). implement them together.

Heubach offers students the opportunity to gain interesting experience through intern- Employment of 3 2 2 ships and working student activities, and to trainees write bachelor's or master's theses in cooperation with us.

1) As measured against the number of employees in Germany

48  Employee Responsibility 49 45 166

17 2

Age structure (2015)

383

> Demographic Change > Diversity and Equal Opportunities

In the coming years, demographic change – What is more, the group of companies is To succeed as an international company, as a new factor – will impact the economic constantly working to maintain and expand Heubach relies on the skills and motivated 44 173 success of companies and the employment the attractiveness of individual companies commitment of each employee. We see di- situation of workers. for potential employees, because the com- versity as an enrichment, and equal opportu- 17 7 petition for qualified junior managers is nities as an indispensable prerequisite. Thus, Heubach has analyzed, through demo- also steadily increasing. Already today, the graphics management, the age structure of adequate filling of positions, above all with In line with our Code of Conduct, we are the workforce and the demographic deve- engineers and chemical technicians, poses committed to excluding any form of discri- Age structure < = 30 years lopments, and worked out initial measures. major challenges in view of falling numbers mination based on gender, racial or ethnic (2016) 30 - 50 years of applicants. origin, religion, belief, disability, age, sexual > = 50 years 394 The average age of employees of the Heubach identity or other personal characteristics du- GmbH Group was 43 years as of the 2017 We know that the efforts made so far are ring the recruitment, employment, promoti- balance sheet date. The workforce in China not yet sufficient at all sites to meet the chal- on and development of our employees. (32 years on average) is significantly younger lenge of an increasing average age and a than in Germany (46 years) and in the U.S. simultaneous decline in young talent. That is Anyone who becomes aware of any violations (50 years). why we want to gradually develop a syste- is required to report them to supervisors, matic demographics concept by 2022. specialist departments, the works council, Among the measures developed there are the HR department, or our complaints office programs to maintain the health of emplo- using the contact information available to 40 167 yees – e.g., ergonomic workplaces in pro- all. Complaints are immediately checked in duction and administration, health courses terms of content and, if necessary, measures 18 5 and days (see also: Health Protection) – as are taken to avert or limit possible damage. well as education and training available to them (see also: Personnel Development). There were no reports of discrimination during Age structure the reporting period. (2017) 392

50  Employee Responsibility 51 345 15 32 346 15 33 5 15 33 33 2017 Total 392 workforce

2016 394

> Women at Heubach 2015 383 The chemical industry traditionally has a high At our foreign locations and in occupational proportion of men. At Heubach, more than groups that are not covered by the provisions two-thirds of employees are male (69%). of the collective agreement, the top remu- Most of our female employees work in the neration criteria are qualification, perfor- lab and in administration. mance and responsibility. Women and men in the same positions are, thus, remunerated Looking at the distribution of managers, the equally. 104 3 13 proportion of female executives in senior 5 3 management is 27% in Germany, and 59% 10 13 3 in lower and middle management. > Severely Disabled People 106 13 2017 In the USA and China, management is pre- As a socially responsible organization, it is 120 Women dominantly male. Only 16% of managers our responsibility to specifically protect and (upper, middle and lower management) are promote employees with disabilities. Senior management female there. 2016 Lower & middle management As part of our integration agreement, we 121 Further employees Equality between women and men also have therefore made numerous provisions for the integration of severely disabled applies to remuneration. Thus, the collective 2015 agreement "Chemie West" forms the basis people – especially for personnel planning, 122 of remuneration for the majority of German workplace design, arrangement of the wor- employees. Assignment to the respective king environment, work organization, pay groups is based on the actual activities working hours, and regulations on imple- of the employees. Differences in salaries are mentation in companies and departments. essentially based on length of service or degree of professional experience. In 2017, an average of ten people with severe disabilities worked for the Heubach-GmbH 241 12 19 Group. 1 12 24 20 9 12 22 20 2017 272 Men

2016 273

261 2015

52  Employee Responsibility 53 > Safety and Health

32 32 The protection of employees is a basic requirement for entrepreneurial success. Only 29 Occupational accidents together with our employees do we reach 25 Tripping, slipping and falling (SRS) the company goals. Occupational safety and Bruises, contusions and cuts (PQS) health protection are therefore a high priority Commuting accidents (WU, Wegeunfall) at Heubach. Typically chemical accidents (CT) Other Electricity (ELT) = 0 > Occupational Safety 10 10 9 9 7 Occupational accidents 2017 2016 2015 7 All employees are required to comply with 7 6 5 the adopted occupational safety regulations 5 3 3 2 contained in our safety agreement. Manage- 2 Total occupational accidents 32 29 25 1 ment must lead by example: It has the parti- Occupational accidents 2017 2016 2015 cular responsibility of sensitizing employees (with at least three days of work missed) 6 10 5 to proper conduct, as well as to provide Frequency of accidents 1) 9.4 15.9 8.1 Occupational accidents by type of accident them with instruction and supporting them Fatal occupational accidents 0 0 0 in this regard.

Training Measures/Prevention Occupational Safety Committee

Heubach attaches particular importance to The annual safety instruction can be designed To ensure continuous and, above all, safe Heubach records and evaluates every inci- The evaluation of accident events shows that What is more, we work with other chemical increasing employees' sense of safety. individually and flexibly by each employee: operations, the Occupational Safety Com- dent, from work accident to minor injury, in "typically chemical" (CT, chemietypisch) acci- companies on a safety-at-work initiative as An electronic instruction system makes it mittee (ASA, Arbeitssicherheitsausschuss) order to derive measures for all incidents, as dents are the exception. Rather, tripping, slip- part of a regional network. This is why we offer targeted training on ope- possible to carry out the necessary training advises on essential issues relating to occu- far as possible, on how to prevent them. The ping and falling accidents (SRS, Stolpern, Rut- rational safety, regular fire extinguisher trai- independently. Each employee is assigned pational health and safety. For this purpose, frequency of accidents in 2017 fell by 40.9% schen, Stürzen) as well as bruises, contusions ning, and training for first responders. There the training topics that are important to him the safety officers and the respective safety year-on-year to 9.4. and cuts (PQS, Prellungen, Quetschungen, are also instructions for action, for example, or her at the PCs provided or at his or her experts work closely with management as Schnittwunden) are at the top of accident a safety agreement or the Operational Alarm own PC. Anyone can do the recurrent trai- well as with representatives of the works As a result, the Heubach GmbH Group is in statistics – often due to carelessness. and Hazard Prevention Plan (BAGAP, Betrieb- ning within a set period, but according to the council, occupational medicine and works the median range of the figures published by licher Alarm- und Gefahrenabwehrplan). person's individual availability. engineering. the BG RCI (Berufsgenossenschaft Rohstoffe It is our goal to reduce the accident frequen- und chemische Industrie, German Trade cy to a maximum of six by 2020. To achieve In addition, safety measures sharpen the At the regular Occupational Safety Com- Association for Raw Materials and Chemi- this, we continue to rely on the measures al- eye for accident hazards. For example, on mittee meetings, among other things, the cals) (2017: 9.3). However, we are not going ready introduced. These include, for example, a "tripping path" organized by the BG RCI accident situation is analyzed, solutions for to be satisfied with this result, and will work sensitization of our workforce through safety (Berufsgenossenschaft Rohstoffe und che- occupational health and safety are worked continuously to improve occupational safety actions and instructions, as well as the use mische Industrie, German Trade Association out, and the effectiveness of measures im- and reduce the frequency of accidents. of all other available prevention tools, such for Raw Materials and the Chemical Industry), plemented is examined. Furthermore, parts as risk and hazard assessments or safety in- employees were able to gain a clear idea of of the company are visited and inspected spections. In addition, we continue to fully the dangers that lurk on uneven surfaces, for with regard to occupational safety, accident record every accident and injury event. example, during day-to-day operations, such prevention and environmental safety. as climbing stairs or walking.

1) Number of industrial accidents with at least three days of work missed per 1 million working hours

54  Employee Responsibility 55 > Health Protection Risk area Description 4.1 4.0 Our health management makes an active contribution to maintaining the health and 1 Minimal impact. performance of our employees. This includes A health risk from excessive physical strain is unlikely. the ergonomic adaptation of workplaces, the implementation of necessary measures, 2 Elevated impact. as suggested by the risk assessment for Excessive physical strain is possible in less resilient persons. Putting in mental stress, and various other health-replace special measure for such people makes sense. Absenteeism due to illness lated services. in % 3 Significantly elevated impact. Excessive physical strain is possible also in normally resilient persons.

Special measures are indicated. 4 .5 2 017 4 High impact. 2 016 Excessive physical strain is likely. Countermeasures are required. 2 015

Ergonomic Workplaces Health Courses Reintegration Management

Over the past five years, we have improved For several years now, Heubach has offered Heubach pays the course fees, and 50% of After lengthy periods of incapacity for work, For example, after lengthy illnesses, emplo- Despite a variety of measures, the rate of working ergonomics for ascents, as well as physiotherapeutic advice during working the training time is credited as working time. the respective supervisors conduct return in- yees can return to work through gradual in- illness-related time missed has fallen only lifting and loading processes. For example, hours. In addition, there are weekly back-trai- terviews with affected employees. In doing tegration. An appropriate adaptation at the slightly compared to previous years. Howe- we analyzed the lifting and loading opera- ning courses and autogenic training under Similarly, we use the offers of various health so, they coordinate individual measures to workplace is also possible, as is a permanent ver, it is 4% below the target for the chemical tions in production and divided them into professional guidance. Both courses were insurance companies to participate in health restore health and fitness for work as quickly transfer within the company. industry in 2017 (< 5.0%). four risk areas. Through various measures, each utilized at around 60% in 2017. days. Just as self-evident for us is the travel- as possible. In individual cases, the company we achieved a shift from risk area 3 to risk medical support of our sales representatives doctor sits in on these interviews. That is to say, Heubach assumes responsibi- area 2. Employees who are exposed to special phy- and the offer to our employees to participate lity for its employees, and tries everything to sical stress during their daily work can also in flu vaccinations. make it possible for them to return to work in Furthermore, we minimized noise pollution take part in special back-training courses and a way that is conducive to their health. and further expanded the air conditioning of strength training in the gym. our premises.

56  Employee Responsibility 57 10 Supply Chain Management

As a global company and reliable partner for our customers and business partners, we are aware of the responsibility along the entire supply chain. We understand the need to manage environmental, social and economic impacts along the supply chain, and are constantly working to secure the sourcing of high quality raw materials. In order to adequately take into account sustainable aspects in the procurement process, we require a comprehensive knowledge of the individual raw material extraction and processing. The size and complexity of our raw materials portfolio present us with major challenges. Ultimately, these can only be mastered with systematic supplier management in order to achieve sustainable procurement goals.

> Procurement > Vendor Selection and Evaluation

Purchasing at Heubach involves the procu- The qualification and evaluation of vendors With our Supplier Code of Conduct, we have, Our 50 main vendors met the aforementioned > Inadequate infrastructure rement of raw materials (including auxiliary and the analysis of risk factors are the central thus, defined corresponding basic require- criteria at 90% to 100% according to the > Long transport routes (harbor strikes, materials), merchandise, packaging, consu- instruments for systematic and careful supply ments that must be met by all our vendors vendor evaluation. shortage of containers) mables, spare parts, technical devices and chain management. Only in this way can we as well as their employees, representatives > Climatic conditions (monsoon, equipment, as well as general goods and guarantee the supply of raw materials and and subcontractors in conducting business In addition, we carry out on-site audits of droughts) services. goods to our company, and secure compe- with Heubach GmbH. They are bound by it. our main vendors. We inspect purchasing > Unreliability due to cultural titive advantages. processes, production, quality assurance, differences In the reporting year 2017, Heubach > Vendors must conduct their businesses product responsibility, customer communica- > Violations of human rights and labor purchased from 986 vendors (2016: 955) The vendor selection starts with the qualifica- in accordance with the highest standards tions and service, environmental and climate standards goods worth €98.3 million (2016: €91.2 mil- tion. In addition to their offer, potential ven- of ethical behavior and in accordance protection. lion). Most of our vendors are based in one dors must answer a general questionnaire with applicable laws and regulations In the future, we will revise the process of of the OECD member states. In addition, we on ISO certification, REACH, GHS, and specific > Comply with environmental protection Apart from the aforementioned measures for vendor evaluation with regard to the targe- work with selected vendors, for example, product safety issues. The information will be laws and regulations the qualification and evaluation of vendor, ted evaluation of sustainability aspects and from India, China or Peru. included in the subsequent selection pro- > Implement solid labor practices we conduct a systematic risk analysis once a make it more efficient. To this end, we will cess. > Treat their employees fairly and year, taking into account selected countries, examine to what extent we can use and The share of local vendors averages 68% provide them with a safe and healthy vendors and substances on the basis of our integrate a rating platform for sustainability (Germany: 76%, USA: 48%, China: 81%). 1) We also expect our vendors to conduct their working environment, as well as existing supply relationships. services. In addition, we will look into ways business in an ethical, law-abiding and soci- > Comply with all economic sanctions and of dealing with a higher number of vendor ally responsible manner, regardless of legal trade embargoes. The most recent analysis identified India, Chi- audits efficiently. and cultural differences. na, Peru and Slovakia as the countries most In the regular review of vendors, we assess exposed to the following risks: Moreover, we will expand the evaluation their performance in terms of quality, delivery sheet for vendor audits to include labor and reliability and service, as well as the existing > Availability problems due to production social standards, human rights as well as management systems. shutdowns in China, resulting in lack corruption and antitrust law. of raw materials > Poor condition of production facilities

1) Local vendors in Germany are from all over the Federal Republic; USA radius: 100 miles; China radius: 300 km.

58  Supply Chain Management 59 11 Social Commitment

Our role as an employer and client results Heubach also promotes scientific and tech- In terms of fundraisers, the focus is on the in opportunities and obligations to actively nical education in the region. Every year pu- regional environment of the respective loca- shape our social environment. Heubach is in pils from the 5th grade and up are given an tion. close contact with regional stakeholders. opportunity to get an insight into the company as well as the profession of a chemi- In Germany, for example, we mainly support Heubach is involved in the initiatives "pro cal laboratory assistant during the so-called social institutions and projects in the district Goslar" and "ChemieNetzwerk Harz" (Che- "Girls and Boys Day". In addition, we offer of Goslar, as well as cultural events and insti- mistry Network). The goal of these associa- young people places for student internships. tutions. Above all, the promotion of Steinway tions is to shape the framework conditions concerts 1) is a major concern for Heubach of the economic and living area of the West In addition, Heubach supports the volunteer GmbH. Harz and Goslar regions, and to promote fire department in Langelsheim: We make development there: Synergy potentials are to our company premises available for exer- The funds raised at our site in the United States be exploited and cooperative partnerships cises and release our employees for deploy- go primarily to local emergency services such struck in terms of recruiting and securing ments during working hours. as police, fire and ambulance services. skilled workers, occupational safety or energy.

Furthermore, Heubach participates in a regional project to identify and evaluate – as part of an overall perspective – the water pollution from actual and suspected contaminated sites and, on such basis, to identify alternative courses of action.

1) The Steinway concerts are a festival in honor of Heinrich Engelhard Steinweg – piano maker and founder of Steinway & Sons – who was born in Wolfshagen, near Goslar, in February 1797. For more information: https://steinway-wolfshagen.com/

60  Social Commitment 61 12 Reference Table for the German Sustainability Code

Area German Sustainability Code criteria UN Global Compact Chapter in the report Page GRI SRS Comments and online additions

General information Business purpose, services and products, business results, https://www.heubachcolor.com/products/ About Heubach 8 financial situation of the company, impact of business activities https://www.heubachcolor.com/about-heubach/contact/ Strategy Foreword, Sustainability-Oriented 6, 18, 1. Strategic Analysis & Measures Corporate Policy, Management Systems, 19, Memberships in Initiatives and Associations 20 Foreword, Sustainability-Oriented 6, 18, 2. Materiality Corporate Policy, Management Systems, 19, Memberships in Initiatives and Associations 20 3. Objectives Sustainability Program 22 4. Depth of the Value Chain About Heubach, Supply Chain Management 8, 58 Process Management Organization of 5. Responsibility 18 102-16 Sustainability Management 6. Regulations and Processes 1- 10 Management Systems, Compliance 19, 20 102-16 7. Oversight Key Parameters 4 102-16 102-35a 8. Incentive Systems 6 Remuneration Policy and Employee Benefits 44 102-38 This indicator is currently not being surveyed 9. Participation of Stakeholder Groups Stakeholders 14 102-44 Research and Development, 27 10. Innovation and Product Management 9 Job Satisfaction and Employee Retention 45 G4-FS11 This indicator is currently not being surveyed > Suggestion Scheme Environment 301-1 We do not publish exact weight or volume information on our materials used, since we consider this information pro- 11. Use of Natural Resources 7-9 Environmental Protection 28 prietary. 302-1 302-4, 303-1, 306-2 301-1 We do not publish exact weight or volume information on our materials used, since we consider this information pro- Environmental Protection, Sustainability 12. Resource Management 7-9 28, 22 prietary. Program 302-1 302-4, 303-1, 306-2 305-1, 305-2 13. Climate-Relevant Resources 7-9 Emissions, Sustainability Program 32, 22 305-3 This indicator is currently not being surveyed 305-5

62  Reference Table for the German Sustainability Code 63 Area German Sustainability Code criteria UN Global Compact Chapter in the report Page GRI SRS Comments and online additions

Society Job Satisfaction and Employee Retention 45 > Co-Determination & Feedback > Suggestion Scheme Safety and Health Protection 54 403-2, 403-4 14. Rights of Employees 3 Compliance 22 > Code of Conduct Supply Chain Management 58 > Vendor Selection and Evaluation Remuneration Policy and Employee Benefits 44 Diversity and Equal Opportunities 51 405-1, 406-1 15. Equal Opportunities 6 Job Satisfaction and Employee Retention 45 > Work-Life-Balance Safety and Health 54 Demographic Change 50 16. Qualification Personnel Development 48 404-1 This indicator is currently not being surveyed. Safety and Health 54 412-3 This indicator is currently not being surveyed. 412-1 So far, no explicit review has taken place, as the risk of human rights violations at the sites is considered to be very low. 414-1 This indicator is currently not being surveyed, because social Supply Chain Management criteria have not yet been considered in our vendor assess- 17. Human Rights 1, 2, 4, 5 Compliance ment. For the future, we plan to expand the evaluation sheet 58 > Code of Conduct for vendor audits and, by way of a standard, include the is- 20 sues of labor and social standards, human rights, corruption and antitrust law. 414-2 There are no known negative human rights implications in the supply chain, so no action has been taken. Key Performance Indicators 5 201-1 18. Community Social Commitment 60 Memberships in Initiatives and Associations 20 Heubach makes no direct or indirect financial or material 19. Political Influence 415-1 Social Commitment 60 contributions to political parties or persons. 205-1 There is currently no systematic review of business locations for corruption risks. 20 20. Compliance with Statutory and Regulatory Requirements 1- 10 Compliance 205-3 There are no known confirmed corruption cases. 419-1 No fines or penalties have been paid for non-compliance with laws and regulations.

64  Reference Table for the German Sustainability Code 65 13 Glossary and Abbreviations

Additives Auxiliary or additional substances added to products in small quantities (usually less than 1% of the total formulation) to achieve or improve IBC Packaging used for the transport and storage of liquid and free-flowing materials. positive effects, for example, with respect to the production, storage, processing or the product properties during and after the use phase. Intermediate Bulk Container

Chemie3 Initiative of the VCI (Verband der chemischen Industrie, Chemical Industry Association), the IG BCE (Industriegewerkschaft Bergbau, Chemie und LED Electric bulbs that use light-emitting diodes to generate light. Unlike HQL, they consume only a fraction of the energy and last much longer. Energie, Industrial Union for Mining, Chemistry, Energy) and the BAVC (Bundesarbeitgeberverband Chemie, Federal Employers' Federation for Light-emitting diode the Chemical Industry) to drive the sustainable development of the chemical industry at a national level.

M-system Integrated management system based on DIN EN ISO 9001 for quality, DIN EN ISO 14001 for the environment, DIN EN ISO 50001 for energy, Corrosion inhibitors Pigments that are used to formulate protective coatings and serve to substantially reduce the corrosion rate of metal. and the implementation of a safety concept according to Section 8 StörfallV (Hazardous Incident Ordinance) in conjunction with Annex III in the currently valid version. In addition, aspects of occupational safety are comprehensively integrated in the M-system. Demographic contribution On the basis of the collective agreement on "Demografie und Lebensarbeitszeit" (Working Life and Demography), Heubach contributes an annual demographic amount to the company's demographic fund for each eligible employee. There are various options for using these funds, REACH Chemicals Regulation for the Registration, Evaluation, Authorization and Restriction of Chemicals. It is based on the principle that manufacturers, such as long-term account or collective old-age provision. importers and users take responsibility for their chemicals by ensuring their safe use.

Equal pay Under the equal pay approach, temporary workers during their time working at Heubach receive a pay equal to that of comparable employees Scope 1 emissions Emissions resulting from own business, that is, from the consumption of primary energy sources, for example, for steam generation, the in direct employment. operation of production plants, heaters or lift trucks.

ETAD An international organization that encourages paint manufacturers to continue minimizing potential environmental and health impacts of Scope 2 emissions Emissions from the production of energy sourced from outside the company (e.g., electricity). Ecological and Toxicological organic pigments.

Association of Dyes and Organic SRS New guidelines on sustainability reporting published under the title "GRI Standards" in October 2016 by the Global Reporting Initiative. Pigments Manufacturers Sustainability Reporting Standards Globally Harmonized System The CLP Regulation ((EC) No. 1272/2008) transfers the United Nations Globally Harmonized System (GHS) to the European regulations. The aim (GHS) / CLP Regulation of the GHS is to maximize the standardization of chemical labeling worldwide. Stakeholders Individuals or groups that can influence the achievement of corporate goals or are affected by company decisions.

GRI The GRI was founded in 1997 by the Coalition of Environmentally Responsible Economies (CERES) in partnership with the Tellus Institute. The State-of-the-art plant A modern and advanced plant. Global Reporting Initiative guidelines, published for the first time in 2000 and continuously revised, represent the internationally best-known and most comprehensive standard for sustainability reporting. TOC One of the most important aggregate parameters for the assessment of the organic load of a water, soil or air sample. Total Organic Carbon HQL Light sources which, under an EU-wide legal ban, may no longer be marketed or sold or re-installed due to their high electricity consumption High-pressure mercury vapor and amount of dangerous mercury. Triple Bottom Line Based on the idea that the dimensions of ecological, economic and social issues should be given equal consideration for sustainable lamp development.

66  Glossary 67 Acknowledgment Published by

A sustainability report is always a joint project. In particular, the collection Heubach GmbH ASA Arbeitssicherheitsausschuss (Occupational Safety Committee) of key figures, facts and processes can only be realized with the support of Heubachstraße 7, D-38685 Langelsheim, BAGAP Betrieblicher Alarm- und Gefahrenabwehrplan (Operational Alarm and Hazard Prevention Plan) the various departments. At this point, we would like to express our sincere Germany

BAVC Bundesarbeitgeberverband Chemie (Federal Employers' Federation for the Chemical Industry in Germany) gratitude to all employees who have worked on the preparation of this first Phone: +49 (0) 5326 - 52 0

BG RCI Berufsgenossenschaft Rohstoffe und chemische Industrie (German Trade Association for Raw Materials and Chemicals) sustainability report with great dedication. [email protected]

IG BCE Industriegewerkschaft Bergbau, Chemie, Energie (Industrial Union for Mining, Chemistry, Energy) Jessica Gerner, Heubach GmbH HSE Health, Safety, Environment Phone: +49 (0) 2203 – 925 68 12 IÖW Institut für ökologische Wirtschaftsforschung (Institute for Ecological Economy Research) [email protected]

KPI Key performance indicator Layout MSDS Material safety datasheet

OECD Organization for Economic Co-operation and Development Debora Porschen, Heubach GmbH

PAHs Polyaromatic hydrocarbons Print PIS Product information sheet

PO Polyolefin Schloemer & Partner GmbH

POPs Persistent organic pollutants Paper PVC Polyvinyl chloride

R&D Research and Development Cyclus Print. Matte coated, natural white printing paper, Blue Angel, EU Ecolabel and RAS Regulatory affair sheet FSC®-certified, made from 100% recycled RNE Rat für Nachhaltige Entwicklung (Council for Sustainable Development) fibers. SME Small and medium-sized enterprises

TDS Technical data sheet

VCI Verband der Chemischen Industrie e. V. (German Chemical Industry Association)

VOCs Volatile Organic Compounds