Integrated management system drives success

At LANXESS, a central management system provides the necessary global structures to ensure responsible commercial practices. With this toolbox, we have created a transparent framework of values and rules that unites management and employees across national borders. In addition to internal directives and operating procedures, the company is steered on the basis of strict quality and environmental standards in line with ISO 9001 and ISO 14001 which apply worldwide.

External, independent experts regularly audit the progress of system integration at new sites and the performance of our management system worldwide. Confirmation of our compliance with ISO 9001 and ISO 14001 takes the form of a global matrix certificate. We successfully completed a follow-up audit in 2013.

As of September 26, 2013, our matrix certificate covered 48 companies with 77 sites in 23 countries. In 2013, our production sites in Greensboro and Gastonia in the United States and the site we acquired from DSM in Triunfo, Brazil, were included in the certificate as planned. For our sites in the United States, we have also received certification to RC 14001 (RC = Responsible Care®). In 2014, we plan to integrate our new butyl rubber facility in Singapore into the matrix certificate.

HSEQ (health, safety, environmental protection and quality) management is an important part of our integrated management system. We have aligned our HSEQ management system toward ensuring uniform standards and reference bases for all our sites worldwide. The key performance indicators (KPIs) required for this purpose are recorded electronically, thus enabling us to systematically determine and analyze performance in each business unit and at each site and to develop this sustainably in the future.

Clearly defined responsibilities

We have established various committees to ensure compliance with and the ongoing development of our corporate responsibility (CR) strategy and the rules and standards defined in our management system.

The CR Committee, which is made up of representatives from relevant group functions, is responsible for developing our CR strategy and ensures that all LANXESS’s CR activities are in line with this strategy. In its capacity as an interdisciplinary competence center, it advises both the Board of Management and the business units on all matters relating to sustainability. It is also responsible for collecting and maintaining reliable data that comply with current market standards for use in our external CR communications.

The HSEQ Committee, comprising LANXESS’s senior executives under the direction of Board of Management member Dr. Werner Breuers, is tasked with ensuring worldwide compliance with uniformly high quality management, safety, environmental and climate protection standards. The committee has responsibility for initiating and monitoring the global implementation of all necessary HSEQ guidelines, strategies and programs, as well as for defining our HSEQ objectives and monitoring their achievement. It also defines the global strategy for our integrated quality and environmental management system in accordance with ISO 9001 and ISO 14001.

The Compliance Committee, which is made up of representatives from a range of specialist backgrounds, handles all referrals concerning compliance violations, with the goal of countering illegal or unethical conduct by LANXESS employees at an early stage and introducing suitable measures to prevent improprieties.

Comprehensive values system established

All management systems are based on values and guidelines that provide a clear framework for a company’s management and employees. Our system is based on established global standards and on our company’s own basic rules, which are subject to ongoing amendment.

Compliance LANXESS considers compliance with laws and ethical principles to be the basis of sustainable corporate governance. Our employees’ integrity and awareness of their responsibilities are key factors in the success of our company. The Code for Legal Compliance and Corporate Responsibility at LANXESS, which is applicable throughout the Group, specifies minimum standards and gives our employees advice and guidance on complying with these standards.

As a global enterprise, we are committed in all our markets to promoting respect for human rights at all times and preventing child and forced labor. Our code also covers issues such as anti-competitive behavior, anti-corruption, data protection, occupational, product and plant safety and environmental protection. To take sufficient account of the individual circumstances – particularly with respect to legislation – in certain countries or business areas, there are also many specific guidelines on the aforementioned issues. All globally applicable LANXESS directives and guidelines are contained in a system that is accessible to every employee. Our Compliance Code can also be found on our website at Corporate Responsibility.

“The company respects applicable law and requires its employees and business partners to do likewise.” This is the key statement of our Compliance Code and expresses our basic guiding principle – that each of our decisions and activities must satisfy this premise, irrespective of the aims we are pursuing or the conditions we face. In the first instance, we define applicable law as any applicable international or national legislation in the jurisdictions in which LANXESS operates. Moreover, human rights and ethical principles are considered to take precedence in all cases, even if they are not stipulated in the applicable legislation. In this context, we have also signed the U.N. Global Compact, and recognize the principles it sets forth as inalienable rights. We consider the stated principle of legality and ethical behavior to be more than just compliance issues. Instead, we see them as inextricable aspects of our corporate responsibility and sustainability culture.

We have established a Compliance Management System to implement our clear commitment to compliance in our daily business activities. This system supports and guides decision-makers and other company employees in their actions. In this way, we eliminate any potential uncertainties relating to our compliance principles. These range from basic questions such as the extent to which all laws must be obeyed in countries where the rule of law is limited, to specific questions such as whether issuing invitations to business partners can be considered to be corruption.

Compliance Management System The LANXESS Compliance Management System (CMS) is described in our CMS statutes and was externally audited by Deloitte & Touche GmbH in 2012. The global audit covered the largest possible scope (design, suitability and effectiveness). It was not limited to defined risks but focused on the ten main compliance risks identified in the course of our analysis. The audit was completed without observation – i.e. no significant weakness was identified – and with an unqualified audit opinion.

The CMS principles we apply are based on a comprehensive framework for company-wide risk management (COSO II). The basic elements of our CMS include:

  • Compliance culture
  • Compliance objectives
  • Compliance risks (identification, evaluation and measures)
  • Compliance program
  • Compliance organization
  • Compliance communication
  • Compliance monitoring and improvement

At the top, our compliance culture is shaped by the commitment of our Board of Management and Supervisory Board. If it is to permeate the entire company, the process of living and communicating our compliance culture must also be an essential aspect of the leadership role at every subsequent decision-making level. At LANXESS, responsibility for compliance and business activities goes hand in hand.

Our compliance objective is to avoid any violations. It is based on the principle outlined above that compliance represents the fundamental condition for every decision and action taken by our company.

Compliance risks are regularly analyzed by the Compliance Committee and presented to the Board of Management for discussion. They are evaluated according to the likelihood of occurrence and damage potential. Risk exposure is analyzed both for business areas and countries, and Risk Officers are appointed accordingly. Wherever possible, early-warning indicators and monitoring instruments are defined and countermeasures initiated to reduce the risks identified. The principal risk exposures we have identified relate to antitrust law (horizontal), competition law (vertical), anti-corruption, export control, environmental and safety regulations, data protection, product liability, insider trading, discrimination, accounting law and – being closely related to compliance – fraud (against the company).

Our compliance program includes all of the “classical” CMS elements, such as issuing a compliance code and specific guidelines and work instructions, and establishing guidance systems, information and training. We ensure compliance in the broader sense by clearly assigning responsibilities within our structural and process organizations, and by implementing a functioning internal control system and suitable auditing and monitoring activities.

The compliance organization includes a global Compliance Committee, a global Compliance Officer drawn from this body and local compliance officers and/or committees in every country where a LANXESS company operates. Various group functions also assume support and/or monitoring roles in the compliance system, for example Legal, HSE and Internal Auditing in particular. The responsibility for ensuring legally compliant behavior, however, always rests with the respective decision-maker. We therefore view compliance primarily as a key leadership task within the company.

Our compliance communication involves both top-down and bottom-up processes in equal measure. Information events and training courses enable our employees to fulfill their tasks correctly and in compliance with the law. Our communication activities include the “Compliance” section on the LANXESS intranet, coupled with e-learning programs. From a bottom-up point of view, compliance issues and problems are reported to local compliance officers and on to the central Compliance Committee. The global Compliance Officer reports significant developments, findings and measures to the Board of Management and the Audit Committee of the Supervisory Board on a regular basis. There is an obligation to report ad hoc to the Board of Management and the Supervisory Board in the event of wide-reaching compliance violations. However, there has been no need to do so as yet.

Compliance monitoring is performed by means of general audits and dedicated audit programs conducted by Internal Auditing and a central HSE department. Since Internal Auditing is itself part of the CMS framework, we have this organizational unit regularly audited by independent third parties. The status of compliance at LANXESS is also subject to regular review by the auditor of the annual financial statements.

Global Compact We are committed to the established principles of the world’s largest corporate social responsibility initiative, the U.N. Global Compact. Since we signed up in 2011, we have continued to raise our sustainability profile. You can find more information about the Global Compact at www.unglobalcompact.org.

Responsible Care® Transparency and improved public dialogue are among the stated objectives of the Responsible Care® Global Charter launched by the International Council of Chemical Associations (ICCA). This is the only way to build confidence and trust in an industry that plays a crucial role in improving people’s living standards and quality of life. We have supported this initiative since 2006, when we also became one of the signatories to the ICCA charter. For us, applying the Responsible Care® Global Charter to our business means working consistently to improve our processes and services in terms of environmental and climate protection, health, safety and quality. Our corporate directives ensure that the principles of the charter are integrated into our management principles and corporate strategy.

We also expect our suppliers to commit to our values and rules, especially the Global Compact, and establish adequate systems to ensure legally compliant behavior and carry ethical behavior throughout their organizations. The LANXESS Supplier Code of Conduct is part of our communication with suppliers. Additionally, in the course of acquisitions, we make it a principle of our due diligence processes to ensure that human rights are also respected by the target company.

The Ten Principles of the Global Compact
   
Area Principle
   
Human rights 1) Businesses should support and respect the protection of internationally proclaimed human rights.
2) Businesses should make sure they are not complicit in human rights abuses.
   
Labor 3) Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
4) Businesses should uphold the elimination of all forms of forced and compulsory labor.
5) Businesses should uphold the effective abolition of child labor.
6) Businesses should uphold the elimination of discrimination in respect of employment and occupation.
   
Environment 7) Businesses should support a precautionary approach to environmental challenges.
8) Businesses should undertake initiatives to promote greater environmental responsibility.
9) Businesses should encourage the development and diffusion of environmentally friendly technologies.
   
Anti-corruption 10) Businesses should work against corruption in all its forms, including extortion and bribery.