Environmental policy Elementis is committed to protecting the environment, and the health and quality of life of the communities in which we operate.

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1 ENVIRONMENT Environmental policy Elementis is committed to protecting the environment, and the health and quality of life of the communities in which we operate. Elementis operates facilities to minimise impact on the environment. The Group views compliance with all applicable legal requirements and other codes of practice as its minimum standard. The Group s sustainable development strategy requires that the businesses work proactively to reduce emissions, minimise waste from Group processes, conserve valuable natural resources and ensure responsible product stewardship up and down the supply chain. Elementis recognises the importance of communication with all interested parties and is committed to open dialogue with its neighbours, contractors, customers and the general public about Group operations. The Board and Executive Leadership team of Elementis are committed to this policy and continually monitor performance to ensure its implementation. To achieve this we will: be a good neighbour identify and mitigate environmental risks associated with our activities protect biodiversity sensitive species, habitats and ecosystems comply with all applicable legal requirements and aim to stay ahead of increasing regulation have environmental management systems operated by trained, competent staff put measures in place to manage air emissions, effluents and waste generated from manufacturing operations reduce greenhouse gas emissions control dust, odours and noise conserve energy, water and other natural resources take advantage of opportunities where renewable energy sources are available source materials that have minimal impact on the environment when suitable transport, handle and store products safely to protect the environment be well prepared with emergency response plans in place at all manufacturing locations to mitigate the impact in the unlikely event of a major incident monitor and review performance, and seek to continually improve Key aspects are well engineered facilities, good operating discipline, and relentless pursuit for continual improvement identifying and mitigating vulnerabilities; using technology to reduce air emissions, effluent and waste arising from manufacturing processes; and recognising that conserving energy and water is aligned to operational performance. Local communities Elementis recognises the importance of a social licence to operate based on respecting the rights of local communities and gaining legitimacy, credibility and trust. This means we seek to minimise the impact of our activities on health and amenity for neighbours and local communities, as well as employees and contractors. There are measure in place to control pollution, dust, odours and noise. A process is in place for recording and addressing public complaints in a timely and effective manner. 1

2 Pollution, prevention and control Environmental risks are assessed for new plants, and modifications to plants, using for example HAZOP (Hazard and Operability) studies, PHA (Process Hazard Analysis), PSSR (Pre-Start Up Safety Reviews) and a Management of Change (MOC) process. Risk assessments concerning the manufacturing facilities and operations include environmental risks from emissions, discharges and waste. Learning from near miss reports reduces our vulnerability to more serious incidents arising from similar causes. Site / Plant managers and their employees are trained and competent to operate the plant according to the environmental permits, supported by Elementis policies, procedures and good practice. HSE Managers under the direction of the VP Global HSE provide environmental expertise and resource in support of site management. Biodiversity protecting the variety and variability of life We operate our plants in a way that does not damage sensitive species, habitats and ecosystems. Our policy is supported by biodiversity surveys that take into account site locations, natural features, flora, fauna and habitats. We protect biodiversity, and in some cases enhance it, in a variety of ways. A major contribution is achieved through effective design, operation and monitoring of environmental control systems. Biodiversity benefits generally from reduced emissions to air, discharges to water and waste disposal. However, some specific actions and controls are targeted at achieving particular objectives. Examples of our efforts and specific action plans implemented include the following: Action has been taken to preserve and protect the habitat of desert tortoises (a protected species), from activities at the Specialty Products hectorite clay mine in the Mojave Desert in California. These include erecting a tortoise fence and barriers and working with a certified biologist to remove tortoises that make their way beyond the barrier and return them to their own habitat. Monitoring and compliance with environmental permits and good environmental practice ensures that permitted discharges from the Specialty Products Charleston facility in West Virginia do not affect freshwater mussels in the Kanawha River, another protected species. Our Chromium business segment has maintained relatively large fenced areas of undeveloped land (130 hectares) adjacent to its main manufacturing site in Castle Hayne, North Carolina, which will remain forested to provide a haven for wildlife. At two sites: Milwaukee, Wisconsin (Chromium), and Anji, China (Organoclay Products), retaining walls have been constructed to prevent silt from being washed into the adjacent rivers. Seedlings for native species trees (more than one hectare) have been planted at the Specialty Products site at Palmital in Brazil. The Specialty Products facility in Livingston, Scotland, a primary manufacturing site for our Personal Care business, has achieved the rigorous standards required to be certified under RSPO (Roundtable on Sustainable Palm Oil). Our membership of RSPO means Elementis is committed to protecting and conserving the rich biodiversity found in tropical palm forests by using palm oil sourced from sustainable palm plantations that are responsible and responsive to the issues of soil degradation, biodiversity, local peoples and land rights. The site also achieved Good Manufacturing Practice certification from the European Federation for Cosmetics Ingredients, demonstrating our commitment to quality, safety, sustainability and innovation for the personal care industry. 2

3 Compliance with legal regulations Elementis manufacturing facilities are subject to stringent environmental permits. Any permit non-compliance is reported to the VP Global HSE and to the relevant regulator in a timely manner, and appropriate corrective action taken. Elementis has environmental management systems to deliver regulatory compliance and a high level of sustainable environmental performance. Six sites are certified to ISO14001, other sites have systems that are broadly similar. Elementis has global product stewardship organisation that ensures that the safety and environmental hazards of our products are fully understood and communicated to customers. Our products are supplied in compliance with the Global Harmonized System of classification and labeling of chemicals (GHS) including safety data sheets. Packaging of hazardous materials complies with UN standards and goods are transported by approved carriers. The VP Global HSE conducts audits for environmental compliance and best practice on a three-year cycle with globally recognised consulting firms specialising in environmental compliance. The third party auditors are familiar with the environmental regulations and language of the country in which the audits take place. Air emissions abatement Air pollution control equipment such as cyclones, scrubbers, baghouses and electrostatic precipitators are used to contain dust / particle emissions and reduce odours. Volatile emissions are reduced using thermal oxidisers, scrubbers and activated carbon absorbers. Wastewater treatment Biological wastewater treatment plants (WWTPs) are constructed where needed to improve the quality of effluent and comply with discharge permits. There are WWTPs at Castle Hayne, NC (US); Charleston, WV (US); and Anji (China), and Changxing (China). The process at the New Martinsville, WV (US), facility uses toluene. Toluene is recovered from the waste stream in a separation process and in a distillation portion. The toluene is reused on subsequent batches until it is spent. Soil and groundwater contamination Current operations are conducted so as to prevent soil and groundwater contamination. Above ground storage tanks have independent high level alarms. Bunds / dikes provide secondary containment to contain overflow, spills and leaks. Elementis also has underground storage tanks. These are subject to inspections to ensure that they remain in serviceable condition. Where invasive work is required on known or suspected historic activity, or following an incident that could cause contamination, appropriate soil testing for heavy metals such as chromium and lead is carried out using qualified services. Routine groundwater monitoring is conducted at the Eaglescliffe, Corpus Christi, TX, Castle Hayne, NC and Amarillo, TX chromium sites. Waste minimization The first concern is to minimize hazardous waste arising from process operations. For example residue from the chromate kilns at Castle Hayne is treated to render it inert before disposal. Beyond that, non-hazardous waste is minimized and recycled where possible. The gangue clay from the Hector mine (the unwanted material associated with the hectorite clay) is a good example of recycling and reducing the impact on land. Residual 3

4 clay is recovered from the discharge water and blended back into the process with the hectorite ore feedstock. Tailings with minor clay content are sold for use as liner for recreation ponds, fish rearing lakes and some agricultural applications. Overburden is sold as rip-rap (to prevent erosion of river banks etc) and for agricultural use. Optimising stockpile height has the additional benefit of reducing the overall area impacted at the mine. The Livingston site has supplied waste hectorite clay for agricultural use (to adjust soil ph) and waste bentonite clay as a landfill liner. Emissions, discharges and waste performance monitoring and audit We monitor key environmental data for each manufacturing facility. Any exceedance to permits are reported as an environmental incident and dealt with accordingly. Representatives for each Elementis facility record and report the following key environmental metrics annually: Air emissions: Carbon dioxide (CO 2), Oxides of Nitrogen (NO X), Oxides of Sulphur (SO X), Volatile Organic Compounds (VOC) Water quality: Total Suspended Solids (TSS), Chemical Oxygen Demand (COD), Biological Oxygen Demand (BOD) Solid Waste: Hazardous, non-hazardous Emissions, discharges and non-hazardous waste vary with production output which is a function of demand as well as changes in product mix and plant efficiencies related to operational requirements and special events (planned and unplanned). As is standard practice in the chemical industry, emission and discharge values may be calculated from energy use or based on representative sampling or, in some cases, continuous monitoring. Annual data for the Elementis Group are shown in Table 1 and accompanying charts. Air emissions have improved. The significant reduction in SO 2 emissions in recent years is attributed to the conversion from coal to biomass at the Anji and Changxing organoclay plants in China. Modified operations at our Songjiang site in China has led to a significant reduction in VOC emissions. Hazardous waste is principally associated with chromite kiln brick disposal. Environmental performance is included in the 3-yearly HSE compliance audits. In addition the Elementis Internal Auditors (PwC) include health, safety and environment in their schedule of site audits, and the external auditors review HSE data reported by Elementis in the Elementis plc Annual report. Greenhouse gas emissions Global warming and climate change are concerns that are affected by greenhouse gas ( GHG ) emissions. We report GHG emissions for our global operations as Scope 1 and Scope 2 according to the requirements of The Companies Act 2006 (Strategic Report and Directors Report) Regulations The principal GHG due to operations at Elementis locations is carbon dioxide from energy use. These GHG emissions are calculated from energy purchased. Energy units are converted into carbon dioxide equivalent (CO 2e) using official data provided by the UK Department for Environment, Food and Rural Affairs ( Defra ). Defra data is used for UK generated electricity. Emission factors associated with non-uk electricity consumption are derived from International Energy Agency ( IEA ) data. These factors vary significantly between countries and from year to year depending on the fuel mix for generation and proportion of imported electricity There are also GHG emissions from chemical reactions in production processes, wastewater treatment and carbon dioxide used for process cooling. GHG emissions are 4

5 reported for all manufacturing sites, the principal offices and laboratories. A number of locations are excluded because the level of CO 2e emissions was deemed not to make a material contribution to the total. Elementis participates in the CDP (formerly known as the Carbon Disclosure Project) providing information relating to the impact of Elementis on climate change. Annual GHG emission data for the Elementis Group are shown in Table 2, with a split of GHG emissions by region shown in Table 3. Emissions in 2017 were impacted by the addition of the SummitReheis sites acquired in March 2017 and increased production, particularly in the USA. Our GHG emissions reporting process has been audited by PricewaterhouseCoopers. The audit report found the procedures to be appropriate and the data collection and conversion process to be robust and supportable. Energy Elementis consumes energy from several sources (electricity, steam, natural gas, LPG, biomass and oil). We look for opportunities to improve our energy efficiency as it lowers cost and reduces our impact on the environment. Examples have been: installing new high efficiency steam boilers switching from coal to biomass air balancing and building optimisation installing low energy LED lighting installing variable speed drives on electric motors improving equipment utilization Annual energy data for the Elementis Group is shown in Table 4. The reduction in recent years was impacted in 2017 by the addition of the SummitReheis sites acquired in March Tables 5 and 6 show energy split by type and by region respectively. Water use Water is recognised as a valuable resource, and water scarcity is a global issue likely to become more acute with increasing demand, aging infrastructure, global warming and climate change. Elementis seeks to minimize water use by recycling. Examples include returning water from the residue disposal areas at the Castle Hayne NC facility; a closed loop system on the spray dryers at Newberry Springs, CA. To reduce consumption of public supplies, and where available, water is extracted from boreholes (Newberry, CA, and Livingston, Scotland), or rivers/canals (Castle Hayne, NC and Anji, China). Water use at Elementis manufacturing facilities varies with production output. Data is shown in Table 7. The main contributing factor to the increase in 2017 is the acquisition of the SummitReheis sites. Incident management and emergency response Environmental incidents are classified by Elementis into Tiers according to severity, reported up the Management chain based on a reporting schedule, recorded and investigated using a Corporate incident database. Emphasis is also placed on reporting and investigating near misses so that action can be taken to reduce the potential for more serious consequences. 5

6 Each manufacturing location has an Emergency Response Plan. Where required, certain US sites also have a SPCC (Spill Preventions Control and Countermeasures) Plan and/or SWPP (Stormwater Pollution Protection) Plan. Personnel are trained to clean up smaller spills and leaks (e.g. via HAZWOPER training in the USA). External providers are used where the extent of the spill or leak is beyond the competence or resources of the local teams. In the unlikely event of a major environmental incident, Elementis has a comprehensive response and recovery plan for activating both Site Incident Command and Corporate Command Exercises are conducted regularly at site and corporate levels to maintain readiness to respond as required. 6

7 Table 1 Emissions, discharges and solid waste Data in tonnes Emissions to air (absolute) Total SOx Emission (te) Total NOx Emission (te) Total VOC's (te) Discharges to water (absolute) BOD (te) COD (te) 1,307 1,265 1,086 1,174 1,078 TSS (te) Emissions to air (related to production) SOx (te/1000 te) NOx (te/1000 te) VOC (te/1000 te) Discharges to water (related to production) BOD (te/1000 te) COD (te/1000 te) TSS (te/1000 te) Solid waste disposal Hazardous waste (te) ,537 1,428 Other chemical waste (te) 104, , ,392 94, ,436 Recycle (te) 32,040 35,775 33,338 34,671 33,722 Solid waste disposal (related to production) Hazardous waste (te/1000 te) Other chemical waste (te/1000 te) Recycle (te/1000 te) Abbreviations SOx - oxides of sulphur NOx - oxides of nitrogen VOC - volatile organic compounds BOD - biological oxygen demand COD - chemical oxygen demand TSS - total suspended solids te - metric tonne 7

8 Table 2 GHG emissions Elementis total CO2e Total GHG emissions te CO2e 310, , , , ,588 Scope 1 te CO2e 221, , , , ,198 Scope 2 te CO2e 89,500 82,265 78,750 88,365 92,390 Out of Scope te CO2e - - 3,408 7,904 7,248 te CO2e per te production kg CO2e per kwh consumed te CO2e per TJ For reference: I GJ (GigaJoule) = kwh CO2e is carbon dioxide equivalent, which takes account of the global warming potential of other gases such as N2O and CH4 Table 3 GHG emissions by region CO2e by Region Scope 1 emissions Americas te CO2e 192, , , , ,890 Europe te CO2e 15,024 14,315 13,419 15,616 15,520 Asia Pacific te CO2e 13,803 15,346 10,568 2,930 2,788 Total te CO2e 221, , , , ,198 Scope 2 emissions Americas te CO2e 77,318 73,653 69,215 73,033 74,843 Europe te CO2e 8,754 4,622 4,662 9,142 10,959 Asia Pacific te CO2e 3,428 3,990 4,873 6,189 6,589 Total te CO2e 89,500 82,265 78,750 88,364 92,391 Out of Scope Biomass, Asia te CO2e - - 3,408 7,904 7,248 Note that data rounding means that the totals may not match the data in Table 2 exactly. Table 4 Energy Total energy (TJ) 5,102 5,046 4,864 4,794 5,333 (primary basis) GJ/te production TJ (TerraJoule) = 1000 GJ 8

9 Table 5 Energy by type Energy type Natural Gas TJ 3,337 3,281 3,154 3,103 3,416 LPG TJ Diesel TJ Fuel Oil TJ Coal TJ Biomass TJ Steam (consumed) TJ Electricity (metered) TJ Table 6 Energy by region (as metered) Energy Region Americas TJ 3,616 3,565 3,464 3,361 3,745 Europe TJ Asia Pacific TJ Table 7 Water usage Water usage (m3) 1,907,844 1,811,378 1,777,750 1,745,053 2,296,185 Water usage related to production (m3/1000 te)

10 Emissions to air (te per 1000 te of production) SOx (te/1000 te) NOx (te/1000 te) VOC (te/1000 te) Discharges to water (te per 1000 te of production) BOD (te/1000 te) COD (te/1000 te) TSS (te/1000 te) Solid waste and recycle (te per 1000 te of production) Other chemical waste te/1000te)) Recycle (te/1000te) Hazardous waste (te/1000te)