Sustainable Supply Chains
Clariant’s supply chain is an integral part of its value chain and the company actively works with suppliers to steer and ensure the sustainability of raw materials, suppliers and logistics providers. To get in contact with us regarding procurement matters please use this link here.
In a more and more globalized value chain, balancing cost efficiency and a high level of quality, ecological and social standards with a sustained security of supply is a major challenge. Increasingly closer relationships with suppliers and customers offer opportunities to create sustainable value with secure, high value added value chains. At the same time, the supply chains at procurement may be exposed to potentially significant risks. Clariant is fully committed to continuously reducing these risks, and therefore, increasing the sustainability in its supply chain. Clariant’s supply chain risk management is based on three main areas:
Supplier Risk Management Framework1 Company Perspective
- Economical Risk / Financial stability
- Business Interruptions
- Currency Fluctuation
- Knowledge Sustainability
- Fair Business Practice
- Labor and Human Rights
- Sustainable Procurement
- Market / Price
- Availability / Supply Delivery / Supplier Capacity
- Country Risk
Supplier Assessment and Audit ProgramsSuppliers may be asked to fill out a self-assessment form. This has already happened for specific geographic areas and will be extended where relevant to other regions in the future. Further measures will be defined based on the response and the defined risk profile for the supplier. Audits will be performed at the site if needed. For suppliers that do not meet Clariant’s requirements for responsible dealings, corrective actions will be discussed with the supplier.
Together for Sustainability (TfS) is a joint initiative of major chemical companies to assess and steer sustainability in the supply chain. Clariant and the other companies participating in TfS operate together standardized supplier sustainability assessments and audit programs and share the respective results according to the approach »one for all«. By joining TfS, Clariant has strengthened its internal activities in supplier assessments and audits.
Continuous Spend AnalysisSpend Analysis is integral part of monthly reviews and the way Procurement actively manages its supply base. To identify and manage potential risks in its Supply base, Clariant adopted a definition of »Critical Suppliers« and »High-Risk Suppliers« based on Business and Sustainability Risks.
Evaluation of Supplier PerformanceSupplier Individualized Key Performance Review:
With the Supplier Performance Dashboard, Clariant has a consolidated overview / summary at its disposal. This overview covers all topics – inter alia sustainability – with regard to suppliers. What is more, the company is able to cover much more than 50% (according to spend) of its suppliers by the Supplier Performance Dashboard.
Supplier Evaluation Spend Coverage through Lean Questionnaire:
,Soft Factors’ which are neither covered by Together-for-Sustainability nor the Supplier Performance Dashboard are considered to round up Supplier Performance review. A new evaluation methodology enables more than 35% higher spend coverage with 40% less time effort through optimized approach (Lean Questionnaire).
Raw Material Based Risk AnalysisThe Risk Analysis is based on the top raw materials according to CAS-Numbers. Thereby, more than 65% of the spend (Direct Spend) are already covered. The objective of the risk analysis is to implement an as automated as possible analysis for Direct Spend based on the raw materials which is as precise as possible to recognize the risks as well as to reduce these risks.
Continuous Improvement of Suppliers
Active supplier communication and engagement is an essential element in Clariant’s sustainability strategy. A standard toolkit is regularly updated and shared with suppliers. In addition, Clariant Procurement regularly engages with suppliers in key sourcing markets, such as China, Japan, Brazil and India to explain the company’s sustainability efforts, strategy and expectations of suppliers.
Procurement Staff Training and Internal KPIs
Clariant organizes internal trainings every year to increase awareness and enhance its capability for evaluating sustainability performance in the supply chain. Opportunities for awareness-building include webinars and exchange meetings. The training mainly targets employees within the Global Procurement Services (GPS) organization and business unit associates. For more details see Clariant’s online annual Integrated Report.
To help our buyers evaluate, monitor and respond to the sustainability performance (Together for Sustainability assessment result) of their suppliers, we have developed a consequence management framework, which is based on Together for Sustainability standards, EcoVadis Ratings and internal feedback.
Our goal is to provide unparalleled learning for our employees. The focus is on improving processes and structures. Learning plans are designed to help employees to develop the competences that will help them excel in their current (and even future) roles. Performance improvement and sustainability targets drive numerous initiatives in Clariant’s supply chain.
SUPPLIER CODE OF CONDUCT
Our suppliers form an integral part of our network and we expect that they commit to the ethical and sustainable business practices with consideration for human rights, child protection, labor standards and anti-corruption. In order to set a binding framework, we have issued a Code of Conduct for Suppliers in which we outline our strategy, scope and expectations, both in general terms and in detail. Our suppliers are expected to have read and agreed this code of conduct in full – and to act accordingly at all times. The Code of Conduct for Suppliers can be downloaded from our corporate web site and will be distributed to our suppliers.
Clariant will monitor the behavior of business partners and record any violations of the code of conduct. In addition to the standard operating procedures for selection of suppliers, Clariant pays specific attention to the assessment of the suppliers risk profile.
Suppliers may be asked to fill out a self-assessment form. This has already happened for specific geographic areas and will be extended where relevant to other regions in the future. Further measures will be defined based on the response and the defined risk profile for the supplier. Audits will be performed at the site if needed. For suppliers that do not meet Clariant’s requirements for responsible dealings, corrective actions will be discussed with the supplier.
Internal training on sustainability for our managers in Procurement is organized regularly. Managers are asked to identify and implement sustainability opportunities in the supply chain. Performance improvement and sustainability targets drive numerous initiatives in Clariant’s supply chain.
Supplier Code of Conduct
Commitment to Sustainability in the Supply Chain
By jointly operating global supplier assessments and audit programs via the initiative “Together for Sustainability”, Clariant improves transparency and efficiency and lowers risks in the procurement process, at the same time reducing the burden for suppliers to participate in numerous programs. Together for Sustainability is an organization that was founded in 2011. It is aiming at jointly improving sustainability practices within the supply chains of the chemical industry. Clariant became the eighth member in 2014 in the initiative with other European chemical companies (AkzoNobel, BASF, Bayer, Evonik Industries, Henkel, Lanxess and Solvay).
Through TfS, Clariant is able to further and more significantly improve transparency and management of its supply base in each of the ESG criteria. In fact, TfS developed and deploys a rigorous standard process for supplier assessments and audits supported by qualified external service providers.
Increasing use of renewable raw materials
Sourcing of raw materials
Raw materials make a significant contribution to the life-cycle performance of Clariant’s products and are therefore key for the company’s sustainability efforts.
Renewable Raw MaterialsUse of renewable materials in the chemical industry is becoming ever more important, both in terms of long-term costs and as regards environmental protection and sustainability. Clariant is working intensively to increase the innovative use of renewable raw materials in its products and already has a number of renewable-based products in its portfolio.
Renewable based product examples
- BU ICS: Plantasens® olive squalene, a 100% olive based emollient that can be used in a wide range of cosmetic applications
- BU Additives: Ceridust 8330, a natural polymer wax for printing inks
- BU OMS: Flotigam 5806, a phosphate flotation agent used for purification of phosphorus rock in fertilizer production
- GTI: sunliquid® a technology that uses modern biotechnology to convert straw and other lignocellulose material into a valuable, sustainable and climate-friendly product: high-quality ethanol for fuel and as a chemical building block.
Ensuring the sustainability of bio-based raw materialsClariant intends to steadily increase the use of renewable raw materials in its products. However, the increased use of certain renewable raw materials for biochemical or biofuel production opens up discussions on deforestation, loss of biodiversity and competition with food usage. Therefore, Clariant has set out the following interconnected principles for the sustainable sourcing of renewable raw materials:
- Clariant supports the responsible and sustainable sourcing of renewable raw materials in order to avoid deforestation, loss of biodiversity and shortage in food supply. Clariant is for example a member of RSPO (Roundtable on Sustainable Palm Oil) and has set out targets for RSPO certification of all relevant production sites.
- Clariant increases the use of renewable raw materials in its processes and products where this is possible and reasonable, taking into account product performance and environmental, social and economic considerations across the full product life-cycle.
- Clariant focuses on the development and production of innovative and bio-based chemicals and biofuel, for example with the biotechnological process sunliquid®
Targets for sustainability certification of palm based raw materials
Clariant uses oleo-chemicals derived from palm and palm kernel oil in its surfactants, emulsifiers and preservatives. To ensure the sustainable sourcing of these raw materials, Clariant has certified all production sites that are processing palm oil derived raw materials under the sustainability certification scheme of RSPO (Roundtable on Sustainable Palm Oil).
Clariant offers more than 200 products with the Mass Balance certificate. For the Mass Balance certification, sustainable palm oil from certified sources is monitored administratively in the chain, but is mixed with ordinary palm oil. A company is compliant as long as the input-output quantities are balanced. Clariant will continue to extend the certified product portfolio in order to help its customers meet demand for certified palm ingredients.
In addition, Clariant encourages its suppliers that use palm based oils or their derivatives to sign up and endorse the principles developed by the RSPO. RSPO membership is a supplier selection criteria for palm based materials.
Material and services supplySustainable supply chains are not only about the materials Clariant buys, but also about the suppliers with which the company works and how it collaborates with and manages suppliers of materials and services.
In recent years, the issue of “conflict minerals” emanating from mining operations in the Democratic Republic of the Congo (DRC) and adjoining countries has been under increasing international focus. Armed groups engaged in mining operations in this region are believed to subject workers and indigenous people to serious human rights abuses. It is also believed that the proceeds from the sale of minerals are used to finance regional conflicts.
Under the U.S. Securities and Exchange Commission (SEC), section 1502, public companies that use minerals including tantalum, tin, gold or tungsten are required to demonstrate they do not source those minerals in conflict areas and have to respect and report a number of due diligence requirements. Clariant does not fall under the scope of the US regulation. However, we are fully committed to ethical business conduct and responsible sourcing. Our commitment compels us to proactively address these concerns and also support our customers and provide them with the adequate assurance. Clariant has performed an in-depth analysis to determine whether we obtain raw materials that may fall under the scope of “conflict minerals”. To our current knowledge, this is not the case. Our suppliers have confirmed to us that they do not source their minerals from the Democratic Republic of Congo or its neighboring countries, and have submitted “conflict-free minerals” declarations. As the international supply chain for these minerals is complex, and the tracing of them is challenging, Clariant must rely upon its suppliers to identify the sources of Conflict Minerals and declare the Conflict Mineral status of their products.
Clariant has defined and is currently implementing a company policy on conflict-free sourcing. A detailed Guideline to ensure the tracking of materials that potentially originate from conflict-affected and high-risk areas was developed. On this basis, suppliers of materials potentially falling under the scope of “conflict minerals” are reviewed and “conflict-free statements” are collected where relevant.
For more information see also Clariant Position Paper “Ensuring ethical and responsible sourcing”
Optimizing supply chainsIn an ongoing effort to improve profitability within its West USA operations, Business Unit Oil & Mining Services and regional procurement were able to partner with an East Coast USA raw material manufacturer to optimize their supply chain, which resulted in a positive savings and a significant decrease in associated emissions.
In a market driven by complex and competing supply chains, it is no longer merely a function of cost and service levels. By managing the distribution network and planning more effectively, positive impact through sustainable efforts in addition to our cost efficiency goals can be achieved. Through effective planning with West USA operations management and Demand & Inventory Planning, the BU OMS was able to transition from bulk truck deliveries to intermodal deliveries of the same material across the USA. Not only did this result in the net savings of approximately CHF 37’000/yr in freight (a 29% reduction), but it also resulted in a reduction of CO2 emissions of 36.75 tons/yr (a 65% reduction) for a single product.
Lower costs and emissions in moving of goodsAn example is the initiative on rebottled IBC initiative. For the transport of liquid chemicals barrels are commonly used. These have the disadvantage that they are difficult to handle and space during transport and storage is poorly utilized. As part of our initiative for a sustainable supply chain this situation could be improved through the use of so called IBC (intermediate bulk containers). These cubic containers can easily be stacked and closer strung together. Due to the reduced dimensions, less truck trips are needed and less storage space is used.
A further improvement could be achieved by the use of a new generation of IBC, which are lighter and include less material (steel and plastic). On the one hand this leads to a further reduction in weight, on the other hand it results in a lower CO2 footprint due to the smaller amount of material of the package. Another effect is that the simple handling of the IBC pallets when moving goods leads to relevant time savings. Cost savings are significant as well, around 100 000 CHF per annum, compared with the conventional solution.
Considerable CO2 savings could be achieved with the reuse and recycling of IBC. Some parts of the container are cleaned and reused; others are replaced and recycled (e.g the polyethylene from the container). Clariant calculated a reduced carbon footprint by around 1.238 tons CO2e emissions when washing and reusing the containers compared to the use of new IBC.
With the cost savings achieved and a significant reduction of our carbon footprint for logistics we pro-actively contribute to the sustainability goals defined in our sustainability policy: optimizing both our economic and environmental performance at the same time.
Sustainable Supply Chain Indicators
Procurement deals with materials and services provided to Clariant, except logistics. Procurement at Clariant maintains a very comprehensive and detailed supplier information database enabling a wide variety of analyses on both commercial and non-commercial Key Performance Indicators (KPIs).
The non-commercial KPIs were significantly expanded to track supplier performance in terms of not only of criteria such as quality, service, and e-procurement matter, but also sustainability, which is highly relevant and therefore considered.
supplier sustainability management framework
Key Figures and Ambitions*
2015 2016 2017
3rd Party Sustainability Assessments1
Percentage of direct spend (raw materials) covered 53% 63% 65% 74% 78%
80% Number of shared Sustainability Assessments1 4442 6383
8692 10566 12200
11500 3rd Party Sustainability Audits2 Number of shared Sustainability Audits 321
1526 2030 2000 Spend covered with Raw material based risk assessment3 40%
50% 60% 65%
70% Automation rate4 58% 63% 65% 70% 73%
Supplier individualized Key Performance Review5 < 46% >90% >95% >95% 99%
Supplier evaluation spend coverage (direct spend) 42% 65% 75% 82% 85% 88% Procurement workforce development6 < 40% >90% >97% >97% 97%
1 Based on TfS supplier assessments2 Based on TfS supplier audits3 Spend coverage of Group wide Risk Assessment of Top Raw Materials evaluating, addressing and tracking progress of identified risks in the area of Market / Price, Quality, Availability, Supplier Capacity, Sustainable Sourcing & Innovation, Country Risk and Legal Requirement (REACH)
4 Automation Rate: Fully automated (Zero Touch) order processing of all Indirect Spend, % based on transactions5 Based on core Indicator (Price, Quality, Terms, Service) coverage of Direct and Indirect Spend6 Share of Procurement Employees with personalized strength / opportunity assessment and individual learning plan
Safe transportation of goods
Clariant uses logistics services provided by third parties to store, handle and transport raw materials, intermediates and finished chemical products. Clariant is committed that these operations are carried out safely and responsibly with due regard for the protection of employees, the public and the environment and has set the necessary management framework. This includes assessment and audits, but also standard requirements included in the “Request for Quotation” and contracts. In addition, the Safety and Quality Assessment System (SQAS) and capacity building through e-learning are important building blocks.
The Safety and Quality Assessment System (SQAS) of logistics providers
For logistics suppliers, Clariant evaluates and tracks whether they have Safety and Quality Assessment System (SQAS) certification to evaluate their quality, safety and environmental performance. This system uses a standardized assessments carried out by independent assessors using a standard questionnaire. We have also contributed to a comparable initiative in India addressing transport distribution safety and emergency response which is called “Project Nicer Globe”, under the umbrella of Responsible Care India and other large chemical companies.
E-learning for logistics providers
Clariant uses an e-learning program for training for suppliers and employees in respect of legislative regulation and security for people and planet. For this publically available training module Clariant was awarded with the innovation award “Gefahr/gut”. The e-learning platform continues to be widely used by the company’s logistics providers.
The California Transparency in Supply Chains Act requires companies to disclose efforts they have taken to eradicate human trafficking and slavery from their direct supply chain. Clariant has several programs that address this issue.
Clariant is a member of Together for Sustainability (TfS), a joint initiative of major chemical companies to assess and steer sustainability in the supply chain. Clariant and the other companies participating in TfS obtain standardized supplier sustainability assessments done by third party provider EcoVadis. The assessments encompass questionnaires completed by the supplier as well as verification documents and screenings. The assessments include evaluation of compliance with international labor and human rights standards.
Where an audit is deemed necessary, it can be conducted through our membership in Together for Sustainability (TfS). Clariant and the other TfS companies participate in standardized audit programs and share the respective results. The audits are conducted by approved third party audit firms and include evaluation of compliance with international labor and human rights standards.
Clariant has a Code of Conduct for Suppliers that outlines our expectations for suppliers. Our suppliers form an integral part of our value chain network and we expect that they commit to ethical and sustainable business practices with regard to human rights, child protection, and labor standards. Our suppliers are expected to have read and agreed to this code of conduct in full and to act accordingly at all times.
In addition, we have a Clariant Code of Conduct for Employees that makes clear that Clariant recognizes the principles of the International Labor Organization and that those principles apply to our employees as well as our suppliers. Violation of the Code of Conduct may result in disciplinary action. Employees who learn of illegal or improper conduct within the company or at its suppliers are encouraged to report such conduct to their manager or to the legal department, or through a confidential, third-party compliance organization with whom we partner.
Internal training on sustainability for Clariant’s procurement managers is organized regularly. In addition, procurement managers are asked to identify and implement sustainability opportunities in the supply chain as part of their annual performance targets.