Consolidated statutory Corporate Responsibility report for the financial year 2017 pursuant to sections 99 a and 99 b of the Danish Financial Statements Act

Schouw & Co. has prepared a statutory corporate responsibility report for the 2017 financial year, as required under sections 99 a and 99 b of the Danish Financial Statements Act.

The statutory report on corporate responsibility includes, in pursuance of section 99 a of the Danish Financial Statements Act, a description of Schouw & Co.’s business model in relation to corporate responsibility, corporate responsibility policies and risk assessments and a description of actions taken and results achieved. The statutory report as required in pursuance of section 99 b of the Danish Financial Statements Act comprises targets and policies on the gender composition of management.

The company’s website: www.schouw.dk/en/about-us/corporate-governance/ contains additional information on the individual subsidiaries (such information being provided purely as a supplement to this report).

Corporate responsibility (section 99 a)
The statutory report on corporate responsibility includes, in pursuance of section 99 a of the Danish Financial Statements Act, a description of Schouw & Co.’s business model in relation to corporate responsibility, corporate responsibility policies and risk assessments and a description of actions taken and results achieved.

Presentation of Schouw & Co.’s business model
Schouw & Co. is a diversified industrial conglomerate with an operational structure consisting of the parent company Schouw & Co. and a number of wholly owned portfolio companies each structured as focused sub-groups with their own subsidiaries.

Schouw & Co. has prepared a statutory corporate responsibility report for the 2017 financial year, as required under sections 99 a and 99 b of the Danish Financial Statements Act.

The statutory report on corporate responsibility includes, in pursuance of section 99 a of the Danish Financial Statements Act, a description of Schouw & Co.’s business model in relation to corporate responsibility, corporate responsibility policies and risk assessments and a description of actions taken and results achieved. The statutory report as required in pursuance of section 99 b of the Danish Financial Statements Act comprises targets and policies on the gender composition of management.

The company’s website: www.schouw.dk/en/about-us/corporate-governance/ contains additional information on the individual subsidiaries (such information being provided purely as a supplement to this report).

Corporate responsibility (section 99 a)
The statutory report on corporate responsibility includes, in pursuance of section 99 a of the Danish Financial Statements Act, a description of Schouw & Co.’s business model in relation to corporate responsibility, corporate responsibility policies and risk assessments and a description of actions taken and results achieved.

Presentation of Schouw & Co.’s business model
Schouw & Co. is a diversified industrial conglomerate with an operational structure consisting of the parent company Schouw & Co. and a number of wholly owned portfolio companies each structured as focused sub-groups with their own subsidiaries.

Each individual portfolio company has a high degree of operational autonomy as well as its own organisation and management in charge of its operations. Subsidiaries of the portfolio companies operate activities that are identical to or closely related to the general activities of the portfolio company.

More than half of the Group’s operations are located in Denmark or other parts of Europe, However, the Group also has considerable business operations in non-European countries, mainly in Malaysia, Thailand, Chile and Ecuador, but the production facilities there are generally on a par with the European units.

Most of the consolidated revenue is generated from automated or advanced production processes in which sourced raw materials are made into products resold to customers that manufacture the end products. The remaining revenue derives mainly from technical trading and processing operations in which sourced components are handled and/or processed before being resold to OEM customers. The Group’s operations are generally performed to high quality standards.

The Group sources a limited number of different raw materials that mainly include marine and vegetable raw materials and oil-based products generally supplied in large quantities from internationally recognised suppliers. On the other hand, the Group purchases a very large number of different components from many suppliers worldwide. It is a general characteristic of these products that they are manufactured by recognised technical manufacturers that meet high quality standards.

The Group sells its products to professional customers that use its products or incorporate them in an end product. Most of its process production is sold to a limited number of customers that are large-volume buyers. The Group does not sell directly to consumers and only sells to public sector customers to a limited extent.

The characteristics of the Group’s business model set out above mean that certain CR-related matters are of special importance to our business. This applies especially to matters related to our employees, our use of resources – i.e. energy and commodities – and our business ethics.

Corporate responsibility policies and risk assessments
Schouw & Co. has adopted corporate responsibility policies within the fields of human rights, social issues and labour conditions, anti-corruption and business ethics, and climate and the environment. The Group’s CR policy forms the framework for a common approach by our employees in respect of our values and our objective of ensuring sustainable and responsible conduct. The policy describes a number of guidelines and the expectations we have to each other, and it summarises how we should conduct ourselves in our respective roles as employees and employer. The policy is based on the ten principles of the UN Global Compact.

Schouw & Co. has also made an overall risk assessment in these areas. The principal risks are described below in the context of the policy applying to each individual area.

Human rights
Schouw & Co. operates in a number of different countries worldwide. Regardless of which country we operate in, we endeavour to observe human rights and to treat our employees with dignity and respect. We support and respect the protection of internationally proclaimed human rights as set out in the UN Universal Declaration of Human Rights and in the declarations and recommendations of the ILO.

Schouw & Co. has performed a general risk assessment in relation to human rights. The Group has operations in many different countries, including in what are defined as high-risk countries. The production units of our subsidiaries generally operate on a very similar basis, and we strive to uphold the same high standards at all production units, regardless of geographical affiliation. The latter is believed to contribute to reducing the risk of adverse human rights impacts.

Social issues and labour conditions
At Schouw & Co., we believe that results are created by people. We aim to be a responsible employer and to provide proper employment conditions, healthy and safe working conditions and a motivating working environment for our employees.

Schouw & Co. has performed a general risk assessment in relation to social issues and labour conditions. At Schouw & Co., we believe our employees constitute our most important resource. As a result, we consider CR risks relating to social issues and labour conditions to be of material importance.

The large proportion of automated production and the handling of many different technical products, requires that our employees have very demanding skills. In Europe as well as in all of our other countries of operation, we generally employ skilled labour and well-trained employees who acquire the necessary skills by receiving teaching and training, thereby enabling our portfolio companies to comply with their quality and safety standards. This contributes to ensuring and maintaining a high level of health and safety, and constant efforts are made to minimise risks in this field.

Anti-corruption and business ethics
Over the years, Schouw & Co. has built a reputation of a company maintaining a high degree of integrity and ethical conduct. We combat all forms of corruption, including bribery and facilitation payments.

Schouw & Co. has performed a general risk assessment in relation to corruption and business ethics. Schouw & Co.’s vision is to be among the best in terms of creating value in a proper and reliable manner by committing ourselves and our businesses to taking responsibility and acting sustainably in any country we operate in. This vision is firmly anchored in the way we at Schouw & Co. run our business, and it has contributed to building the Group’s strong reputation over the past many years.

Based on the Group’s general business model and its long-standing tradition for responsible business operations, this area is not assessed to constitute a significant CR risk, with the exception of the inherent risk that not all employees – and especially not new employees – may be aware of the Group’s policy. Hence, good information and communications are required to ensure that Schouw & Co.’s high standards are maintained.

Climate and the environment
Many of the companies of the Schouw & Co. Group are involved in large-scale processing of commodities, and we recognise the environmental impact of our production processes. Our CR policy on climate and the environment goes hand in hand with good business acumen. We work to protect the environment and to reduce on a regular basis our emissions relative to our production output.

Schouw & Co. has performed a general risk assessment in relation to climate and the environment. Due to the extensive use of oil-based products and marine raw materials and the considerable consumption of energy for processing purposes, this area is considered to make up a significant CR risk for most of the Group’s businesses.

It is inherent to and an integral part of the Group’s business model that we seek to optimise consumption of raw materials and minimise the volume of waste, and thereby to reduce the volume of energy consumed and the impact on climate and the environment and to lower the relative volume of emissions. Going forward, our individual companies will maintain a consistent focus on improving their performance in terms of climate and the environment. 

Strategy for our CR efforts
Schouw & Co. has set up a CR strategy house that will provide the basis for the Group’s long-term CR efforts going forward to 2020. The CR House forms part of our statutory corporate responsibility report.

Presentation of the CR House
The foundation of the CR House consists of the Group’s CSR policy along with established reporting, accounting policies and management systems. In addition, two CR areas, human rights and anti-corruption and business ethics, are considered absolutely fundamental to all of the Group’s businesses.

The columns of the CR House comprise the CR areas social issues and labour conditions as well as climate and the environment. These are areas where our portfolio companies are given considerable autonomy in determining what is the most relevant for their particular business. However, they are expected to ensure that all of their efforts are consistent with the Group’s overall objectives to reduce the relative consumption of energy and water, reduce volumes of waste and to increase recycling, and to ensure their employees have good working conditions and a motivating working environment.

Our vision at Schouw & Co. is to be among the best in terms of creating value in a proper and trustworthy manner by committing ourselves and our businesses to taking responsibility and acting sustainably while also creating a motivating working environment. This general vision for responsibility makes up the roof of the CR House.

Please follow this link to the CR house.

Review of actions taken and results achieved
In 2017, Schouw & Co. worked specifically with the CR areas of human rights and anti-corruption and business ethics across the portfolio companies. The efforts during the year were coordinated through a number of workshops facilitated by external consultants.

In 2017, our individual companies identified and described in detail which potentially negative impacts they may have on human rights, both in relation to our own employees, but also in their relations to suppliers, customers and the surrounding community. The companies have considered how they can monitor these potentially negative impacts and what can be done to mitigate risk in the most risky areas. The risk areas identified and the associated action plans have been reviewed by external consultants, who have provided feedback to each individual company. As could be expected, the efforts have led to the identification of a number of areas in which procedures and other factors could be stated more clearly or improved, but no areas were identified that required immediate implementation of material changes.

In addition, the companies of the Group jointly developed an e-learning programme in 2017 focused on anti-corruption and business ethics and consisting of a shared platform that can be customised to each individual company. The e-learning programme consists of a company-specific video with a welcome from the company’s CEO, a general presentation of the Group’s CR policy, a number of practical dilemmas and lastly a ten question quiz.

The development of the e-learning programme was completed with the assistance of an external consultant at the end of 2017, and the programme will be introduced to relevant employees of the Group's businesses during the first half of 2018.

As regards the other CR areas – social issues and labour conditions, and climate and the environment – the individual portfolio companies undertook various initiatives in 2017 in areas believed to represent a particular CR risk or which contained a business perspective. Representative examples of actions taken by individual companies are provided below. The website contains additional information from the individual portfolio businesses as a supplement to the statutory report.

In the field of social issues and labour conditions, BioMar continued its structured efforts to secure the work environment in the company’s units and to strengthen its corporate culture on security. In concrete terms, these efforts have produced a drop in the Lost Time Injury Rate from 8.5 (2015) and 9.1 (2016) to 6.4 in 2017.

Fibertex Personal Care and Fibertex Nonwovens have in recent years worked to define targets and align their accident registration procedures. Both companies also continually work to improve safety at their production facilities and to train their employees. Fibertex Personal Care recorded a drop in the number of industrial accidents per million hours worked to 15 in 2017 from 24 in 2015 and 22 in 2016. Fibertex Nonwovens has defined a benchmark for future measurements.

HydraSpecma worked systematically in 2017 to identify and eliminate causes of industrial injury. In particular, the company was focused on ensuring traffic safety in production areas by, for example, marking out pathways in production zones, introducing a mandatory requirement that visitors to production areas wear safety vests and redirecting forklift trucks away from areas with many employees.

Borg Automotive operates mechanical production plants that involve many manual processes, and health and safety has traditionally been a high-priority area for the company. Since becoming a Schouw & Co. portfolio company in April 2017, Borg Automotive has been preparing for the automation of a number of manual processes, particularly at its factory in Poland.

GPV had particular focus in 2017 on health and safety in its mechanics production. Specifically, the employees of the company’s Danish welding department received training in risks related to welding, including air contamination.

Within climate and the environment, BioMar has defined targets relating to the UN’s Sustainable Goals with respect to water and energy consumption and waste recycling. These efforts are being supported by a large number of local initiatives at the company’s factory sites. BioMar contracted for a second natural gas-powered ship for feed deliveries in Norway in 2017, which together with the other initiatives has helped reduce carbon emissions to index 89 in 2017 compared to the 2016 baseline of index 100.

Fibertex Personal Care and Fibertex Nonwovens continued to work towards being certified to environmental standards in 2017. By the end of 2017, Fibertex Personal Care had implemented environment management systems certified to ISO 14001 in Denmark, Malaysia and Germany. In addition, the factories in Denmark and Germany are certified to the ISO 50001 standard. Fibertex Nonwovens’ factory in Denmark had already been certified to ISO 14001 and ISO 50001 and its factories in France and Turkey became certified to ISO 14001 in 2017. Also in 2017, Fibertex Personal Care worked to make the logistics of shipping raw materials to the factory in Denmark less complex. A total of 18,000 tonnes of granulate arrives by ship in Aalborg harbour each year. The steps taken to optimise the supply chain are estimated to reduce carbon emissions by 150 tonnes per year.

HydraSpecma completed a pilot project in 2017 to replace light sources with LED in order to test whether the change can be made without impairing the physical work environment before additional replacements are made in 2018. In addition, HydraSpecma has begun to analyse heat source efficiency at a major unit and to test improvements in air filtration.

Borg Automotive remanufactures used automotive spare parts, an activity that inherently has a significant positive effect on climate and the environment. The company is continually working to improve its processes and to reduce resource consumption. A specific project in 2017 was to analyse the potential for increasing the recycling of packaging materials.

GPV prepared a project in 2017 to replace lighting with LED sources at its Danish production site.

The Group expects to roll out its e-learning programme on anti-corruption and business ethics to relevant employees across portfolio companies in 2018. In addition, the Group intends to continue its CR efforts on social issues and labour conditions, climate and the environment in the individual companies.

Gender composition (Section 99 b)
In 2017, the Board of Directors of Schouw & Co. fixed the following targets for the gender composition of its management:

For the measurement period from 01 April 2017 to 31 March 2021, the target is to increase the number of female board members of Aktieselskabet Schouw & Co. from one member currently, equal to 14%, to at least two members, equal to at least 28%. A target has also been defined for the Group that all of its Danish reporting class C companies should have at least one female board member, equal to at least 20%. At the start of the measurement period, none of these companies had female board members.

Schouw & Co. welcomed a new male member to its Board of Directors in 2017, bringing the board membership to seven, of which one is a woman. The new board member was elected on the basis of his special competences and insights which are considered to be of relevance to the listed parent company.

The Group has six group companies in the relevant reporting class: BioMar Group A/S with five shareholder-elected board members, BioMar A/S with three shareholder-elected board members, Fibertex Personal Care A/S with four shareholder-elected board members, Fibertex Nonwovens A/S, Hydra-Grene A/S and Borg Automotive Holding A/S each with five shareholder-elected board members and GPV International A/S with four shareholder-elected board members.

At the beginning of the current measurement period, these companies had no female board members, and no women were elected at the respective general meetings held in 2017, as no shareholder-elected board members were up for election in 2017 with the following exceptions:

  • When Borg Automotive Holding A/S was acquired by Schouw & Co. in 2017, a new board was established for that company consisting of two existing members of the previous board, two new members representing Schouw & Co. and a fifth, new member. 
  • The board of Fibertex Nonwovens A/S was increased by one new member. 
  • One member was replaced by a new member on the board of directors of BioMar Holding A/S. 
  • On the board of BioMar A/S (a subsidiary of BioMar Group), two internal members representing BioMar Group were replaced by two new, internal members representing BioMar Group.

Internal board members representing Schouw & Co. or BioMar Group have been appointed in consideration of the Group’s management structure. All other board members were elected on the basis of their special competences and insights which are considered to be of relevance to the business area in question.

In addition, the Board of Directors of Schouw & Co. has adopted the following policy for increasing the proportion of the under-represented gender at the Group's other management levels.

Schouw & Co. is aware that the proportion of women at management level in the Group is generally lower than the gender composition of the Group's employees in general. Accordingly, the companies of the Schouw & Co. Group will make a special effort to create a framework to support the career development of individual women employees, for example through networks, mentoring schemes or other specific initiatives that may help individual employees gain management experience.

The companies of the Schouw & Co. Group will also make a dedicated effort to ensuring the best possible women representation among candidates being considered for management positions.

Formally, the Group’s policy applies to the parent company and its Danish reporting class C companies that are reported for, but it also reflects a general position. The purpose of the Group’s policy is to promote a desired development in cases where the composition of senior managers is not aligned with the company’s general employee mix.

At the beginning of the current measurement period, there were no women among the registered executives of the Group’s Danish reporting class C companies, and no changes were made in 2017. The situation is different in the broader management levels of the Group in general, as the proportion of women among senior managers is much more reflective of the general employee mix. In several of the companies, the proportion of women senior managers was higher than or in line with the company’s general employee composition.

A more structured measurement of the proportion of women among senior managers and all employees made at the end of 2017 provided the following results:  

Proportion of women

Management

 All employees

 

Schouw & Co.

20%

33%

BioMar

19%

20%

Fibertex Personal Care

37%

15%

Fibertex Nonwovens

27%

23%

HydraSpecma

16%

21%

Borg Automotive

11%

31%

GPV

38%

 57%

 

The Group’s portfolio companies are aware of and aim to comply with the intentions of the general policy to the extent this is possible without violating their own specific codes of conduct or other internal policies serving the purpose of demonstrating that the companies do not discriminate.

Examples of specific initiatives made by the Group’s businesses include: BioMar held two five-to-six-day management development programmes in 2017. The proportion of women attending the two programmes was 25% and 27%, both percentages being higher than the proportion of women employees at BioMar, and a female manager at Fibertex Nonwovens was enrolled in a two-year MBA programme on 1 February 2017. All other portfolio companies have a goal of having at least one candidate representing each gender in recruitment processes if at all possible given the group of applicants.

The parent company Schouw & Co. is of a modest size (12 full-time staff in 2017). While there were no changes to the parent company organisation in 2017, a majority of the candidates in the final phase of a process to appoint a new General Counsel (Chief Legal Officer) were women. On completion of the process, Schouw & Co. appointed a woman for the position, who did not, however, join the company until after the year-end.

 

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