CREATING VALUE FOR THE FUTURE THE BUSINESS CASE FOR SUSTAINABILITY IN INDUSTRIAL AND CONSUMER SPECIALTIES Christian Vang Head of Business Unit Industrial & Consumer Specialties Clariant
2, Performance. Growth. Innovation. Key facts Business Unit Industrial & Consumer Specialties (BU ICS) The business unit ICS is one of the largest providers of specialty chemicals and application solutions for consumer care and industrial markets. Combining market knowledge with high-performance ingredients and formulation expertise, ICS delivers solutions with the best cost-performance ratios. Its EcoTain labeled products exemplify its uncompromising pursuit of the principle of sustainability.
3, Performance. Growth. Innovation. Key facts Business Unit Industrial & Consumer Specialties (BU ICS) 1,495 Sales 2014 (in million CHF) 2,171 Base Products 24% Production sites LATAM 19% Industrial Applications 36% 4 Competence Centers (Application Development Centers) APAC 13% Consumer Care 40% Employees 16 NORAM 17% Sales 2014 by segment EMEA 51% Sales 2014 by region
4, Performance. Growth. Innovation. Markets Industrial & Home Care Personal Care Crop Solutions Automotive Fluids Aviation Construction Gas Treatment Heat Transfer Fluids Industrial Lubricants Paints & Coatings
5 SUSTAINABILITY IN THE BUSINESS UNIT INDUSTRIAL & CONSUMER SPECIALTIES
6 Sustainability a priority at BU ICS over recent years 2010 2011 2012 2013 2014 2015 cont. Collecting first ideas on a BU ICS EcoTain label Launch of wide range of products under the BU ICS EcoTain label Becoming a member of the Roundtable on Sustainable Palm Oil (RSPO) Achieving the RSPO Mass Balance certification in Gendorf, Germany Completing the internal roll-out of the ICS EcoTain label Introducing the PVP1 based Clariant EcoTain to the ICS market segments 1PVP = Portfolio Value Program
7 Sustainability today at the BU ICS UNIT STAKEHOLDER FOCUS CORPORATE SUSTAINABILITY Shareholders/Investors General public NGOs, policy-makers and regulatory authorities BU ICS SUSTAINABILITY Individual customers, markets and business partners Ensuring group-wide sustainability goals, frameworks and systems for driving sustainability in the company MARKETING AND SALES MANAGERS deeply involved in their segment s sustainability challenges to identify issues SUSTAINABILITY MANAGER to address and solve issues, e.g. Internal stakeholders KEY TASKS Requires close collaboration: Tailoring of solutions for diverse customer requirements Avoiding lost business due to sustainability issues Provide required data to customer Orchestrate joint sustainability projects with customers Link to corporate sustainability
8 OVERARCHING ASPECTS COPING WITH INCREASING COMPLEXITY IN A FASTCHANGING ENVIRONMENT
9 ICS is closely connected to the market In ICS we serve a whole series of global trends at Care Chemicals, particularly Consumer Care Products. WORLD POPULATION GROWTH AND URBANISATION BETTER LIFESTYLE AND HIGHER LIVING STANDARDS Today, customers expect innovative products and solutions to meet the requirements of sustainability and efficiency. We see great growing potentials from these new trends across the entire value chain of products. DIGITALISATION AND INCREASING TRANSPARENCY
10 Sustainability and innovation are highly interlinked ACTING RESPONSIBLY balancing economy, environment and society CLOSE COLLABORATION with our customers, responding to needs and market trends To fulfil market needs we establish sustainability partnerships with our customers and build corresponding innovation pipelines. REACHING TOP-LINE GROWTH offering smart and sustainable solutions
11, Clariant Sustainability GlucoTain range achieves best-in-class sustainability and performance excellence Surfactant innovation GlucoTain obtains EcoTain sustainability excellence label Glucamides demonstrates a typical model for the innovation chain from the generation of an innovative idea to the market launch of the finished product.
12 ECOTAIN PUT IN EFFECT OUR ANSWER TO CONSUMER CALLS FOR MORE TRANSPARENCY AT PRODUCT-LEVEL
13 Value creation through EcoTain In total 22 ICS excellent products awarded with EcoTain flagship label (Paints & Coatings, Home Care and the Glucamides family) 40 more nominations in the pipeline (Crop Solutions, Industrial Lubricants and Personal Care) Screening process ongoing until end of 2015
Sustainability is a challenge and an opportunity posted to the BU ICS by customers and society Key objectives Current focus areas (non exhaustive) PERSONAL CARE HOME CARE Environmental protection Consumer protection Palm oil High Bio based High CROP SOLUTIONS Environmental protection Biodegradability High Aqua toxicity High INDUSTRIAL APPLICATIONS INDUSTRIAL LUBRICANTS Work safety Safe handling High PAINTS & COATINGS Work safety Environmental protection VOC free High Hazard free High TOP PERFORMANCE 14
15 Performance EcoTain products are outgrowing classical products Growth in % by region (EcoTain only) Growth in % (FX free sales - Jan - Jun 2015) (FX free sales Jan - Jun 2015) 57% 22% 32% 20% 5% Non -5% EMEA APAC LATAM NORAM
16 SUSTAINABLE PALM OIL SOURCING PALM OIL AS KEY INGREDIENT WITH CHALLENGING SUSTAINABILITY PROFILE
17 Clariant is committed to the RSPO principles for sustainable production and sourcing of palm based raw materials Clariant is an RSPO member since 2011: Members commit to work proactively towards the production and promotion of sustainable palm oil. Clariant has successfully certified its first site Gendorf/Germany according to the RSPO Mass Balance supply chain standard in July 2014. By 2016 all relevant Clariant key production sites will be RSPO certified, following the Mass Balance certification rules. By 2020, Clariant intends to achieve a RSPO Segregation supply chain certification for its concerned production sites. Clariant also supports its joint venture GAC (Global Amines Company), to achieve Mass Balance certification for its production sites.
18 ICS RSPO Mass Balance Roadmap By December 2015, Lianyungang (Global Amines Company) Gendorf, Germany: first site certified according to RSPO mass balance scheme (July 2014) Gendorf Clear Lake Mt Holly Shizuoka Tarragona Zhenjiang Dayabay Santa Clara Coatzacoalcos Maracay Tangerang Suzano By June 2016 Zarate By December 2016 By December 2015
19 Acting responsibly and responding to the market needs by enabling transparency across the value chain Traceability of palm materials is a market need: EXAMPLES OF ICS CUSTOMER TARGETS: Unilever: all palm oil from traceable and certified sources by 2020 L Oreal: zero deforestation and 100% raw materials from sustainable sources by 2020 Henkel: zero net deforestation and full traceability of palm feedstock by 2020 Clariant commits to address traceability of palm based ingredients in parallel to the ongoing RSPO supply chain certification roll-out.
20 CREATING VALUE FOR THE FUTURE OUTLOOK AND CONCLUSIONS
21 Sustainability at the BU ICS 1 1 2 OVERARCHING ASPECTS Coping with increasing complexity in a fastchanging environment ECOTAIN PUT IN EFFECT 1 3 Our answer to consumer calls for more transparency at product-level DEEP DIVE: SUSTAINABLE PALM OIL SOURCING 1 Palm oil as key ingredient with challenging sustainability profile
22 1. Integrating Sustainability in the BU ICS Strategy ICS Strategic pillars 2015 reflect developments by including sustainability IMPROVE INNOVATION AND APPLICATION KNOW-HOW EXPAND REGIONAL BUSINESS FOCUS OPERATING MODEL IN LINE WITH NATURE OF BUSINESS SECURE COMPETITIVE RAW MATERIAL ACCESS DIFFERENTIATE THROUGH SUSTAINABILITY
23 2. EcoTain and the Portfolio Value Program: Continuous improvement following market needs Conclusions from screening process: IDENTIFICATION OF KEY IMPROVEMENT AREAS SHIFT TOWARDS RENEWABLE FEEDSTOCK Continue foster innovation of new generation»smart and sustainable«products ENSURE SUSTAINABLE USE OF RENEWABLES IDENTIFY IMPACTS ACROSS THE LIFE-CYCLE Strengthen commitment on sustainable sourcing of palm materials Empower sustainable product alternatives in partnership with suppliers and customers
24 3. Our triple approach towards Zero-deforestation Sustainable sourcing starts with transparency across the supply chain: 1 2 3 CONTINUE RSPO SUPPLY CHAIN CERTIFICATION ROLL-OUT DEVELOP A THOROUGH TRACEABILITY POLICY AND ACTION PLAN INCREASE THE MARKET SHARE OF SUSTAINABLE PALM MATERIAL RSPO Mass Balance certification by 2016 Continue jointly working on traceability with customers and suppliers Enable joint value chain collaboration projects with suppliers and customers Develop RSPO Segregation roadmap Establish collaboration with a think-tank
CREATING VALUE FOR THE FUTURE THANK YOU FOR YOUR ATTENTION