Independent Assurance Report on Clariant's Non
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CLARIANT’S REPORTING The Clariant Integrated Report 2019 offers a detailed overview of the company’s multidimen sional approach to value creation, covering both tangible and intangible, and financial and non financial aspects of the business. Comprehensive details regarding the company’s performance are published in several online reports: Financial information can be accessed in the online Financial Report; governance and compensation details are available in the online Corporate Governance Report and the Compensation Report; and further informa tion on the company’s commitment to sustain able value creation can be found in the online GRI Report. THE FOLLOWING REPORTS ARE AVAILABLE ONLINE AND AS PDFS FOR DOWNLOAD: Integrated Report Corporate Governance Compensation Financial Report GRI Report reports.clariant.com Report Report reports.clariant.com/ reports.clariant.com/ reports.clariant.com/ reports.clariant.com/ 2019/ financialreport 2019/gri 2019/corporategovernance 2019/ compensation SUMMARY ON PERFORMANCE, PEOPLE, PLANET In 2019, Clariant decided to dispose the Business Units Masterbatches and Pigments. The two Business Units c oncerned have been reclassified to discontinued operations in the financial reporting. Clariant’s Integrated Report 2019 follows this structure for selected figures and separately reports on continuing and discontinued operations. Performance FINANCIAL CAPITAL in CHF m Continuing Discon tinued Total operations operations 2019 2018 Sales 4 399 2 127 6 526 6 623 EBITDA before exceptional items 740 203 943 1 018 EBITDA after exceptional items 461 158 619 871 EBITDA margin before exceptional items (%) 16.8 9.5 14.4 15.4 EBITDA margin after exceptional items (%) 10.5 7.4 9.5 13.2 EBIT before exceptional items 444 168 612 693 EBIT after exceptional items 165 124 289 546 Net income – 34 72 38 356 Basic earnings per share (in CHF) – 0.17 0.20 0.03 1.02 Adjusted earnings per share (in CHF) 0.87 1.50 Operating cash flow 509 530 Investment in property, plant, and equipment 273 237 Research & Development expenditures 207 209 Growth through innovation (%) 1 > 3.5 < 0.5 < 3.0 > 3.0 Personnel expenditures 2 1 068 410 1 478 1 518 Raw material procurement 1 758 884 2 642 2 948 Total assets 6 681 1 298 7 979 7 981 Equity 2 677 2 970 Equity ratio (%) 33.6 37.2 Net debt 1 372 1 374 Gearing ratio (%) 51 46 1 Contains the contribution to growth of the innovation portfolio from both Top Line Innovation and Life Cycle Innovation. Potential cannibalization of existing sales by Life Cycle Innovation has not been excluded. 2 Including own employees and external staff INTELLECTUAL CAPITAL Continuing Discon tinued Total operations operations 2019 2018 Patents (year-end) > 5 400 > 1 100 > 6 500 6 700 Active innovation projects > 315 > 60 > 375 > 375 Of which Class 1 Projects with double-digit million sales potential or of strategic relevance > 60 > 5 > 65 > 70 Scientific collaborations > 125 > 125 MANUFACTURED CAPITAL Continuing Discon tinued Total operations operations 2019 2018 Research & Development Centers 8 8 Technical Centers > 50 > 50 Production sites 66 52 118 125 Countries with production facilities 38 39 Raw materials procured (in m t) 2.79 0.34 3.13 3.57 Production (in m t) 1 3.99 0.26 4.25 4.34 1 For 2018 and 2019, the production volume is based on a reduced reporting scope, which includes sites that are responsible for 95 % of total production. People HUMAN CAPITAL in FTE (Full-time Equivalents) Continuing Discon tinued Total operations operations 2019 2018 Total staff 11 941 5 282 17 223 17 901 Employees 7 510 2 649 10 159 10 405 Of which male 4 939 1 955 6 894 (68 %) 7 115 (68 %) Of which female 2 571 694 3 265 (32 %) 3 290 (32 %) Workers 4 431 2 633 7 064 7 496 Of which male 4 065 2 538 6 603 (93 %) 6 890 (92 %) Of which female 366 95 461 (7 %) 606 (8 %) Total training hours 167 150 38 711 205 861 234 240 Training hours (Ø per participant) 16.7 10.0 14.8 15 Staff in Research & Development > 960 > 90 > 1 050 > 1 100 Lost Time Accident Rate (LTAR: accidents with at least 1 day lost/200 000 work hours) 0.15 0.13 0.15 0.14 1 1 Restated due to one reclassified injury, which was not considered by the statutory insurer as an incident but determined to be a personal health issue. RELATIONSHIP CAPITAL Continuing Discon tinued Total operations operations 2019 2018 Employee participation in engagement survey n.a. 1 2 466 Raw material suppliers 2 3 503 3 896 6 805 7 000 Raw material supply base by spend covered by sustainability evaluations (%) 80 74 78 74 Survey responses obtained from customer contacts n.a. 1 2 791 Customers who want to continue doing business with Clariant (%) n.a. 1 90 1 Survey is conducted every two years. 2 Duplicate counts possible. One supplier may supply to continuing and discontinued operations. Planet NATURAL CAPITAL 1 Continuing Discon tinued Total operations operations 2019 2 2018 Total energy consumption (in m kWh) 2 400 652 3 058 3 209 Energy consumption (in kWh/t production) 601 2 547 720 739 Total water consumption (in m m³) 25.7 17.3 44.3 49.0 Total wastewater generation (in m m³) 6.7 3.7 11.9 12.6 Total greenhouse gas emissions (Scope 1 & 2 CO₂ equivalents) (in m t) 0.68 0.16 0.84 0.93 Total indirect greenhouse gas emissions (Scope 3 CO₂ equivalents) (in m t) 4.99 5.69 Greenhouse gas emissions (Scope 1 & 2 CO₂ equivalents) (in kg/t production) 171 609 198 215 Total quantity of waste (in thousand t) 215.7 32.6 250.2 232 1 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2018 and 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production. 2 The difference in the sum of continued and discontinued operations compared to the group total is due to the resource consumption of non-production sites. INTEGRATED REPORTING Clariant’s integrated reporting is based on a framework developed by the Interna- tional Integrated Reporting Council (IIRC). The IIRC promotes sustainable change through a holistic approach to corporate reporting that focuses on both financial and nonfinancial value creation. Integrated Reporting extends traditional formats of corporate disclosure in order to communicate the full range of factors that significantly affect a company’s ability to create value through its business model. In this fourth annual report published in the form of an Integrated Report, Clariant provides a comprehensive overview of its value-creation process. The resources Clariant uses and affects are categorized into the following six »capitals«: financial, intellectual, manufactured,human, relationship, and natural. Financial capital Intellectual capital Manufactured capital Human capital Relationship capital Natural capital The pool of funds avail- Knowledge-based in- Manufactured physical The company’s staff Key relationships, in- Renewable and nonre- able to the company tangibles used and objects, such as build- and its composition, cluding those with newable environmental for use in the production created by the company, ings, equipment, and competencies, capabil- significant groups of resources and pro cesses of goods or the provi- often in collaboration products. These can in- ities, experience, and stakeholders and that support the past, sion of services. This can with partners. This can clude objects that are motivation to innovate. other networks. This current, or future pros- include funds obtained include intellectual available to the com- This can include em- can include shared perity of the company through financing, such property, such as pa- pany for use in the pro- ployees’ alignment with values, the trust and or are affected by it. as debt, equity, or tents, trademarks, copy- duction of goods or corporate values and willingness to engage, Examples can include grants, and funds gen- rights, software, rights, the provision of services, their ability to under- and related intan- resources related to air, erated by the company, and licenses, and or that the company stand and implement gibles associated water, and land that for example, through »organizational capital,« produces for sale to the company’s strategy. with the company’s are utilized or impacted sales or investments. such as tacit knowledge, customers or for its brand and reputation. by emissions. systems, procedures, own use. and protocols. CLARIANT INTEGRATED REPORT 2019 3 Table of Contents 004 Interview with the Executive Chairman 008 Letter to Shareholders 010 Introduction– Here We Go 012 014 Trends in the Specialty Chemicals Value Chain The Foundation 016 Operatingan Integrated Business Model 020 Buildingon Vision, Mission, and Values of Success 022 Internal and External Stakeholder Engagement 024 AddressingSocietal Needs 026 Materiality Assessment 028 Becominga More Focused Specialty Chemicals Company 032 Make Use of Nature’s Design Process 042 Overviewon Corporate Governance 046 Leadershipin Times of Change 048 Find Skills for the Digital Age 054 Overview on the Compensation Policy 056 Core Processes for Value Creation 064 Manage Risks Faster and Smarter 072 074 How Care Chemicals Creates Value Value Creation 080 Advance Natural Ingredients 088 How Catalysis Creates Value in the 094 Be a Local Partner Business Areas 102 How Natural Resources Creates Value 108 Help Cities Move Forward 118 Discontinued Operations 122 124 Performance 134 Focus on the Core Businesses Multicapital 154 People Review 170 Keep the Team Safe 178 Planet 186 Drive Change in the Industry 194 Independent Assurance Report (PwC) 4 INTERVIEW WITH THE EXECUTIVE CHAIRMAN Improving Performance by Focusing on Sustainability and Innovation Mr.