CREATING LASTING VALUE SUSTAINABILITY REPORT 2013 2 CREATING LASTING VALUE This is SABIC’s third annual sustainability report. It describes our continuous evolution in our initiatives and processes to create lasting value across the economic, natural, human, and social dimensions of sustainability. SABIC believes that our actions and our vision today play a significant role in ensuring the success of future generations. It requires us to innovate, to conserve, to collaborate, and to develop an inspired workforce. It requires us to demonstrate the values and behaviors that look to securing the future. 3 ABOUT THIS REPORT With this 2013 Sustainability Report, we have maintained consistency in format and scope – for the sake of comparability – while also broadening the coverage of our sustainability strategy, metrics, and stakeholder collaboration examples. In addition, the SABIC Sustainability Council brought the report’s release forward in order to enhance its usefulness to stakeholders and to tie this report closer to the release of our financial reporting. The content of the report is based on the requirements of international reporting frameworks, and also on feedback received from a range of internal and external stakeholders. These stakeholders include dozens of SABIC employees in each of our four operating regions, NGOs, investor groups, customers, and industry associations. The theme of this report is “Creating Lasting Value.” This emphasizes our continued focus on enduring sustainability. Genuine value is in solutions that last longer and do more. We have to deliver it in all its natural, financial, human, and social strands for SABIC and its stakeholders. In addition, we have used the International Integrated Reporting perioD, Reporting <IR> Framework to capture the various scope, anD bounDaries dimensions of value creation by SABIC on our journey to creating lasting value: economic, natural, human, This report was published in June 2014 and covers and social. Consequently, we have structured the report our sustainability performance for the 2013 fiscal year: around five key chapters: Sustainability Vision and 1 January 2013 to 31 December 2013. Content in this Strategy; Creating Economic Value; Protecting Natural report covers the SABIC businesses and operations that Capital; Developing Human Capital; and Building are financially consolidated in our 2013 Annual Report, Social and Community Relationships. Furthermore, available at http://www.sabic.com/corporate/en/ SABIC joined the UN Global Compact in June 2012. investorrelations/. This is a practical framework for the development, implementation, and disclosure of sustainability We believe external assessments enhance our practices and policies endorsed by chief executives sustainability reporting, and for the last three years we from some of the world’s largest companies. We are have used KPMG to increase our confidence in the data using this 2013 Sustainability Report as our official concerning SABIC’s global footprint. This data covers UN Global Compact Communication on Progress. four metrics – energy consumption, greenhouse-gas An overview of how we are meeting our UNGC (GHG) emissions, fresh-water usage, and material loss – commitments and actions is available on the SABIC which are collected and internally verified using robust Sustainability website. processes. For this 2013 Sustainability Report, KPMG provided limited assurance on these four sustainability footprint metrics and intensities, as well as on selected Report Governance corporate environment health, safety and security incident metrics, and our Recordable Incident Rate. The SABIC Sustainability Report is governed by an The assurance report is found in the Addendum to Executive Advisory Committee, led by our CEO and this Report. Vice-Chairman. The committee is made up of the CEO, the Corporate Communications VP, and several SBU and Corporate Function EVPs. The Report’s Executive Reporting frameworks Advisory Committee meets several times during its development to approve the strategy, messaging, We utilized the Global Reporting Initiative (GRI) and content, and to ensure that all material aspects G4 Sustainability Reporting Guidelines to direct the of SABIC’s sustainability effort are effectively and selection and organization of content for this report. accurately reported. We are self-declaring to be ‘In Accordance – Core’ with the Guidelines. A complete GRI Content Index can be To learn more about SABIC’s sustainability activities found on the SABIC Sustainability website. and performance online, visit http://www.sabic.com/ corporate/en/sustainability/sustainability_report. NATURAL CAPITAL FINANCIAL CAPITAL HUMAN CAPITAL SOCIAL CAPITAL • Protecting the • Creating economic • Building the • Building relationships environment and value through competencies, with and between ecosystems from our investments experience, communities degradation • Providing and motivation • Collaborating • Conserving innovative solutions of employees to achieve collective natural resources • Expanding the results and well-being intellectual knowledge-based assets of the organization NATURAL FINANCIAL CAPITAL CAPITAL VALUE CREATION HUMAN SOCIAL CAPITAL CAPITAL THESE ICONS WILL BE SEEN THROUGHOUT THE REPORT, HIGHLIGHTING SABIC STORIES THAT CREATE VALUE WITHIN SABIC’S NATURAL, FINANCIAL, HUMAN, AND SOCIAL STRANDS. 5 CHAIRMAN’S WELCOME PRINCE SAUD BIN ABDULLAH BIN THENAYAN AL-SAUD CHAIRMAN I am pleased to introduce our third Sustainability Report: “Creating Lasting Value.” This is a phrase that defines the very essence of SABIC. We have been on an incredible journey of achievement since our founding in 1976, and we know from our history that realizing success is rewarding, but does require hard work and dedication. We believe that our experiences in building this company from humble beginnings provide valuable lessons in how we approach our critical journey towards a sustainable business and a sustainable world. 6 “SustainabilitY is about continuing to create value into the future, baseD on effective resource strategies toDAY. ” SABIC has prospered in the marketplace because Each of the elements affects the others in various we have successfully created value for society – ways, and understanding these connections is vital by providing products and services that help people in order to make the most of them. For instance, our live better and more comfortably. As a result of that ongoing effort towards energy and water efficiency success, we have also created jobs and opportunities in operations saves money or expands capacity, while for our employees and the communities in which they also reducing the environmental burden and freeing live and work. up resources for use elsewhere within our communities. In a similar way our investment in innovation creates Sustainability is about continuing to create value into human and intellectual capital, which enables the future, based on an effective use of the resources solutions to society’s needs and environmental issues, available today. And much like our 2012 Sustainability and drives the economic growth of our business. Report, this year we have focused our attention not only on creating economic value, but also on As we continue our mission to maintain and build environmental, human, and social value. our global chemical business position, we realize how important it is for us to focus on strategic priorities It is typical for a business to focus on its financial and that will meet the expectations of an ever-changing manufacturing assets – economic capital. In other global business environment. As I described this time words – to judge the health of its operations. However, last year, our focus on sustainability is central to our the world has come to realize that business health and business strategy. Only through achievements on this sustained value creation depend on other vital forms issue can we be assured that we will become more of capital as well. Natural capital is made up of the global, and more distinctive in our product offerings, resources and ecosystems of the planet that are and that we will grow in the markets we serve. required to make our products. Human capital includes the productive and intellectual capacities of Never before have people, technology, capital, our employees, both inherited and acquired through information, and products moved more freely across education and training. Finally, social capital refers international boundaries. This freedom of movement to the relationships, collaborations, and shared values has minimized past economic, geographic, and we develop with all the organizations we interface cultural advantages and disparities. It creates a world or network with. where transparency in communication, collaboration, strong relationships, and action determine success. The successful development and active management of each of these capitals enables a company to sustain SABIC is actively responding to this new environment. itself, and the planet and people it relies on, as well To do this we depend on the capabilities and as to continue to generate economic value. Together motivations of our highly skilled employees and they form what we refer to as sustainable value committed stakeholders. I thank you for your “capital” creation. achievements that are reflected here, and for those that are sure to come. I also thank all our stakeholders for their contributions to and confidence in SABIC. With the evidence of the priorities and actions