Sustainability analysis of Evonik's business

Transcription

1 Sustainability analysis of Evonik's business Our Vision Evonik is one of the world's leading specialty chemicals companies. We concentrate on attractive growth markets, especially health, nutrition, resource efficiency and globalization. Our chemical operations are grouped in three production segments - Nutrition & Care, Resource Efficiency and Performance Materials - with a total of 22 business lines. Our specialty chemicals products make an indispensable contribution to the benefits of our customers' products, which generate their success on the global market. We are convinced that sustainable and responsible business activities are vital for the future of companies. In keeping with this, Evonik accepts responsibility worldwide - for its business, its employees, its products, the environment and society. Our sustainability strategy takes up the growth markets identified in our corporate strategy and defines areas of action geared to balanced management of economic, ecological and social factors. page 1 of 8

2 Our Approach To support the long-term focus of our corporate strategy, we have developed a methodology for sustainability analysis of our businesses in collaboration with the operational units. The focus is on analyzing the sustainability challenges and opportunities facing our businesses along their value chains. We focus especially on market trends and future market developments. That meets the requirements of a rapidly rising number of customers who want an assurance that sustainability aspects are anchored along the entire value chain. At the same time, it further extends the set of instruments available to Evonik as a company operating in accordance with the principles of sustainability. Our Goals The findings of our sustainability analysis are designed to supplement established internal strategic business analyses. They should cover our entire portfolio of chemical businesses. Transparent and quantifiable evaluation of sustainability aspects is necessary to support business decisions. The core elements of our analysis are sustainability criteria relating to the ecological and social issues along the value chain that Evonik classifies as material. By taking these aspects into consideration when analyzing our businesses, we are able to identify opportunities as well as risks. In this way we support the market development of individual products and businesses. We expect this to have a positive influence on our business performance in the future and to help position Evonik as a sustainable investment. page 2 of 8

3 Our Procedure A sustainability analysis is performed on all business lines in Evonik's chemicals businesses. The analysis is based on the criteria shown in the chart so it reflects the value chains of our businesses and also takes account of sustainability aspects from the supplychain through production to subsequent use. For some criteria, the analysis is carried out on specific products or product groups. The findings are used in a structured overall evaluation of the sustainability performance of our businesses. On this basis, each business line is classified as a Leader, Driver or Starter (see chart). Leaders are business lines that take the lead in meeting the criteria for sustainable business defined by Evonik's evaluation principles. Leaders fully meet these standards which include implementing governance and risk assessment criteria, supply chain performance, and a focus on sustainable development. Drivers are business lines that are at an advanced stage in meeting the criteria for sustainable business set by Evonik's evaluation principles. They are close to meeting all requirements, but there is still scope for improvement on a few specific criteria. Starters are business lines that have potential to improve their performance based on the criteria of sustainable business set by Evonik's evaluation principles. There are several areas where they do not yet meet the standards required by the benchmark set for our sustainability analysis. page 3 of 8

4 Chart: Basic principles of Evonik's sustainability analysis Evonik s chemicals businesses Leader Driver Starter page 4 of 8

5 The Findings The results of our sustainability analysis provide a transparent insight into: the exposure of our business to issues that are critical for their reputation; e.g. sensitive end-markets, standards, product stewardship, our contribution to reducing our ecological footprint and hand print along the various value chains and the related drivers; e.g. environmental targets, especially greenhouse gas emissions and water consumption, the extended possibilities of product and technology development; e.g. the sustainability profiles expected by customers and endmarkets, the benefits of our products and solutions in overcoming the social challenges of population growth; e.g. as addressed in the WBCSD Vision 2050 and the United Nations Sustainable Development Goals. Evonik takes up these findings in its sustainability evaluation of its businesses and uses them to provide specific impetus for ongoing development. Aggregated results for the Evonik Group are used in external communication, for example in our Sustainability Report and dialogue with sustainability-oriented analysts. page 5 of 8

6 Status There is extensive internal process documentation of the methodology used for the sustainability analysis of our businesses. As well as the criteria used in the analysis, this defines responsibility within the organization, the time intervals between analyses, and controls and quality assurance steps. The methodology is based on the following quality principles: relevance, completeness, consistency, transparency, accuracy, feasibility and topicality. The process has been conducted with all business lines at Evonik with the involvement of the relevant specialist departments. The procedure and findings have been documented. The sustainability analysis uses a variety for Group-wide reporting and analysis tools, e.g. CRM systems, controlling, ESHQ, procurement. In addition, we use business-specific information, for example from Sales, Marketing and Product Development. We set high standards for the sustainability analysis of our businesses and have therefore arranged for external validation of the methodology through a limited assurance review. We will continue to develop our methodology and criteria in keeping with the objectives of our sustainability analysis. Essen, February 1st Evonik Industries AG Corporate Responsibility Rellinghauser Straße Essen page 6 of 8

7 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft has performed a limited assurance engagement on the process of the sustainability analysis of the chemical business of Evonik Industries AG, Essen, and issued an independent assurance report, authoritative in German language, which has been translated as follows: Independent Practitioner s Limited Assurance Report To Evonik Industries AG, Essen We have been engaged to perform a limited assurance engagement on the process of the sustainability analysis of the chemical business of Evonik Industries AG, Essen (hereafter the Company ) as described in the accompanying conception Sustainability analysis of Evonik s business as of February 1, Management s Responsibility Company s Management is responsible for the design and development of an appropriate process for classifying the entire portfolio of the chemical business of the Company according to the quality criteria as set forth on page 6 of the accompanying conception, for designing, implementing and maintaining internal control and organizational safeguard measures relevant for ensuring such a classification as well as for describing and documenting the process of the sustainability analysis of the chemical business. Audit Firm s Independence and Quality Control We have complied with the German professional provisions regarding independence as well as other ethical requirements. The audit firm applies the national legal requirements and professional standards in particular the Professional Code for German Public Auditors and German Chartered Auditors (Berufssatzung für Wirtschaftsprüfer und vereidigte Buchprüfer) as well as the draft version of a Standard on Quality Control 1 published by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW): Requirements to quality control for audit firms (Entwurf eines IDW Qualitätssicherungsstandards 1: Anforderungen an die Qualitätssicherung in der Wirtschaftsprüferpraxis IDW EQS 1) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Practitioner s Responsibility Our responsibility is to express a limited assurance conclusion on the process of the sustainability analysis of the chemical business as described in the accompanying conception of the Company based on our work performed. We conducted our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised). This Standard requires that we plan and perform the assurance engagement to obtain limited assurance whether any matters have come to our attention that cause us to believe that, in all material respects, the Company s organisational measures especially the intended internal control and organizational safeguard measures as set forth in the conception are generally not appropriate to ensure a classification of the Company s entire portfolio of the chemical business in accordance with the quality criteria set forth on page 6 of the accompanying conception as of February 1, 2017, provided that the organizational measures are respected and complied with, or the Company s organisational measures especially the intended internal control and organizational safeguard measures as set forth in the conception are not presented correctly and implemented as of February 1, In a limited assurance engagement the evidence-gathering procedures are more limited than for a reasonable assurance engagement, and therefore the level of assurance obtained is substantially lower than in a reasonable assurance engagement. The procedures selected depend on the practitioner s judgement, including the assessment of the risks of material misstatement of the accompanying conception and of significant deficiencies in the organisational measures for classifying the entire portfolio of the chemical business in accordance with the quality criteria set forth on page 6 of the accompanying conception. page 7 of 8

8 Within the scope of our work we performed on a test basis amongst others the following procedures: Inspection of internal documentation and process descriptions; Inquiries of personnel responsible for the methodology and process of the sustainability analysis of the chemical business; Walk-through of the relevant process steps at central and decentralized company level; Inspection of the methodology s application for selected business lines based on the internal process documentation. Conclusion Based on our limited assurance engagement, nothing has come to our attention that causes us to believe that, in all material respects, the Company s organisational measures especially the intended internal control and organizational safeguard measures as set forth in the conception are generally not appropriate to ensure a classification of the Company s entire portfolio of the chemical business in accordance with the quality criteria set forth on page 6 of the accompanying conception as of February 1, 2017, provided that the organizational measures are respected and complied with, or the Company s organisational measures especially the intended internal control and organizational safeguard measures as set forth in the conception are not presented correctly and implemented as of February 1, Emphasis of Matter Without qualifying our conclusion, we draw attention to the fact, that the accompanying Company s conception was prepared as of February 1, Any projections of the information contained in the conception to a future date are subject to the risk that the accompanying conception is superseded due to changes made. The effectiveness of individual controls and organizational safeguard measures is subject to constraints inherent to the system making it possible that errors or omissions may occur without being detected. Also, any projections to future periods on the basis of our conclusion are subject to the risk that due to changes in organizational measures including the internal control and the organization safeguard measures the substance of this conclusion may be negatively affected. Restriction on Use and Distribution We issue this report on the basis of the engagement agreed with Evonik Industries AG. The limited assurance engagement has been performed for purposes of Evonik Industries AG and the report is solely intended to inform Evonik Industries AG about the results of the limited assurance engagement. The report is not intended for any third parties to base any (financial) decision thereon. Our responsibility lies solely with Evonik Industries AG. We do not assume any responsibility towards third parties. Munich, March 8, 2017 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft Hendrik Fink Wirtschaftsprüfer (German Public Auditor) ppa. Axel Faupel page 8 of 8