TOGETHER FOR SUSTAINABILITY (TfS)

Annual Activity Report 01

TOGETHER FOR

SUSTAINABILITY (TfS)

ANNUAL ACTIVITY REPORT 2015

TOGETHER FOR SUSTAINABILITY

Foreword by TfS President

1 TFS OVERVIEW 1.1 Purpose and Vision

1.2 Organizational Structure

2 TFS MEMBERS AND GROWTH

2.1 Membership Criteria

2.2 Membership Commitments

2.3 Membership Benefits

3 CORE ACTIVITIES

3.1 TfS Supplier Assessments

3.2 TfS Supplier Audits

4 TFS ACHIEVEMENTS

4.1 Assessment and Audits

4.2 TfS Events

4.3 External Recognition

5 TFS EXTERNAL RELATIONS

6 OUTLOOK 2016

CONTENT

FOREWORD For TfS, success is founded on the principle of collabo-

ration and the pursuit of a common objective, that of

improving sustainability practices and building resiliency

in the supply chain of the chemical industry. As active

members of TfS and leading chemical companies, we

subscribe to the principles of the UN Global Compact

and Responsible Care, and wish to extend such principles

beyond our direct operational impact and into the supply

chain.

The year 2015 was an exciting one for TfS; we welcomed

6 new members in addition to the 10 existing ones,

established TfS as a legal entity in Brussels, and successfully

carried out and shared a large number of supplier audits

and assessments.

This report is intended to provide a glimpse into the TfS

approach as well as our achievements and activities so far.

Any chemical company wishing to embark on this sustain-

ability journey is welcome to join us at the dynamic,

growing initiative that is TfS.

Rüdiger Eberhard

TfS President

04 Annual Activity Report

1 TFS OVERVIEW 1.1 Purpose and Vision Together for Sustainability (TfS) was founded in 2011 by the Chief Procurement Officers of six multinational

chemical companies. TfS was created to develop and implement a global supplier engagement program to

assess, audit and improve sustainability practices within the supply chains of the chemical industry. As part of the

members’ goals to achieve sustainable development and support compliance with regulations and societal expec-

tations within their supply chains, they formed and joined this initiative.

All current members subscribe to the fact that through the TfS approach, they can extend better management

practices with regards to environmental and social conditions beyond their own direct operations to also encompass

their suppliers.

Businesses are becoming increasingly aware that they cannot simply focus on short-term economic gain. Addressing

global challenges such as climate change, population growth, or water shortages and managing risk and uncertainty

across global operations has become an increasingly complex endeavor. Sustainability criteria are becoming essen-

tial for the selection of business partners. TfS aims to support chemical companies in identifying and mitigating such

sustainability risks along their supply chains through an efficient process. The TfS approach creates a path of continuous

improvement for both suppliers and their customers by initiating a dialogue and engaging them on crucial issues that

simultaneously create opportunities as well.

Following TfS’ principle of “An audit/assessment for one, is an audit/assessment for all” is to share sustainability

assessments and audit findings between all members. This translates into a reduction of customer requests, lessening

the bureaucratic burden and allowing a more efficient allocation of resources, with more time left to focus on actual

improvements. This benefits both the members, who are carrying out the requests through TfS, and the suppliers,

who only have to be assessed and/or audited once for multiple customers simultaneously. Another objective of TfS

is to raise awareness regarding sustainability standards, thereby initiating continuous improvements across sourcing

markets and geographical areas. TfS also aims to share and promote best practices, and being part of the TfS initia-

tive also means being part of a community of industry leaders active in the field of sustainability. In time, TfS aims to

create a standard for sustainable supply chains in the chemical industry.

The approach was developed by building on established principles such as the United Nations Global Compact

(UNGC) and the Responsible Care Global Charter, as well as standards devised by the International Labor Organization

(ILO), the International Organization for Standardization (ISO) and the Social Accountability International (SAI), among

others.


1.2 TfS Organizational Structure: The Association is an international non-profit association under Belgian law (“internationale vereniging zonder

winstoogmerk – IVZW” / “association internationale sans but lucratif – AISBL”). In 2015 the TfS office opened in

the CEFIC premises in Brussels.

TfS President: Rüdiger Eberhard, Chief Procurement Officer, Evonik Industries

TfS General Manager: Dr. Gabriele Unger

Legal Adviser: Dr. Arne Ott, Evonik Industries

General Assembly and Steering Committee:

The TfS General Assembly is the highest decision making body of the organization. It is composed of one CPO repre-

sentative from each of the member companies, who hold the voting rights in the Association.

The Steering Committee is the executive body of the Association and is composed of seven different members, includ-

ing the TfS President. The current Steering Committee was elected by the General Assembly in 2014.

TfS Work Streams:

Each Work Stream is responsible for developing and managing different aspects of the TfS program, and is composed

of staff from various member companies, making this a truly member-led initiative. Active participation from our mem-

bers is crucial for the success of the initiative.

Work Stream 1: Governance and Partnerships

Chair: Gabriele Willenbrinck (Lanxess)

This Work Stream is responsible for defining the governance structure of the initiative, as well as coordinating TfS

external partnerships.

Work Stream 2: TfS Assessments

Chair: Wolfgang Hierse (Merck)

Work Stream 2 focuses on the development of assessments and the management of the relationship with the service

provider (EcoVadis).

Work Stream 3: TfS Audits

Chair: Walter-Rudolf Jäger (Henkel)

This Work Stream concentrates on the development of the TfS audit program and process as well as management of

audit companies (SGS, Intertek, DQS, ERM).

Work Stream 4: Supplier Engagement and Communications

Chair: Goro Naito (Evonik)

Work Stream 4 is responsible for activities related to engaging suppliers, such as the development of a supplier

academy and the organization of TfS events, as well as matters of external communications for TfS.


2 TFS MEMBERS AND GROWTH TfS’ member base has steadily grown since the start of the initiative. From the six founding members in 2011, TfS

was counting 16 full members in Europe and North America, and 2 in onboarding by the end of 2015. Collectively,

TfS Members represent EUR 180 billion in spend (based on published financial reports) and an estimated € 276

billion in turnover.

TfS Members:

TfS is expanding and wants to invite members from all around the world. All members of TfS are chemical companies

with a significant share of business operations engaged in chemical production; trading/distributing of chemicals or

performing chemical synthesis, active in the area of sustainability and willing to join forces to enhance sustainability

performance in their supply chains. TfS’ long term goal is to become the standard for the chemical industry in terms of

Supply Chain sustainability – any chemical company wishing to partner with TfS can embark on that journey as well.

The current members as of 2015:

Arkema, AkzoNobel, BASF, Bayer, Clariant, Covestro, DSM, Eastman, Evonik Industries, Henkel, IFF, Lanxess, Merck,

Solvay, Syngenta and Wacker. Two members are in onboarding, Brenntag and DuPont.

2.1 Membership Criteria In order to become a member of TfS there are certain criteria that have to be fulfilled and principles adhered to: • UN Global Compact: Member or public supporter of the UN Global Compact

• Responsible Care: commitment of the applicant to the chemical industry‘s Responsible Care program or a commit-

ment to its guiding principles

• Transparency: Sustainability report published regularly (GRI or integrated report)

• Compliance: commitment to act in compliance with the applicable laws, anti-trust regulations and industry codes

of practices as well as fair business practices

• Sustainability ratings: EcoVadis score above 60

• Supplier assessments: Minimum number of shared supplier assessments via EcoVadis per year

• Supplier audits: Minimum number of shared TfS audits per year

2.2 Membership Commitments• Contribution by each member in the development, growth and success of TfS, for example by engaging in active

participation in the Work Streams

• Commitment to launch a certain number of assessment campaigns and audits per year, depending on company size

2.3 Membership Benefits• An efficient approach and avoidance of duplicative work by buyers through sharing of audit and assessment results

• Creation of faster supply chain transparency on sustainability risk and opportunities

• A common standard that allows benchmarking of supplier performance, globally and across commodity/

categories

• Improved quality of assessment and audit execution as well as follow up on the results

• Building up long-term business relationships with suppliers, and initiating a journey of improvement with them

• Best practice and knowledge sharing within a network of leading companies in supply chain sustainability

• Being part of the General Assembly, members can contribute to the direction of the Association


3 TFS CORE ACTIVITIES The TfS approach consists of two core activities: TfS assessments conducted by EcoVadis and the TfS audits con-

ducted by independent audit companies approved by TfS. These can be combined to evaluate a supplier, or applied

separately, depending on individual member priorities and analyses. The advantage for suppliers to undergo a TfS as-

sessment or audit is that they will not have to complete other sustainability assessments or audits from the members

of TfS since both results are shared among them. Hence the TfS’ principle “An audit/assessment for one, is an audit/

assessment for all”.

TOGETHER FOR SUSTAINABILITY

With the TfS assessments performed by EcoVadis, an external service provider for CSR assessments, and on-site TfS

audits, suppliers’ sustainability performance is verified against pre-defined criteria that are tailored to requirements of

the chemical industry

The TfS program is not meant to be understood as a simple certification scheme or a pass or fail exercise for suppliers;

it is instead geared towards being a starting point for a constructive dialogue between the supplier and the purchasing

organization of the TfS member. It offers instruments for both the supplier and the buyer to identify areas and oppor-

tunities for improvement and to initiate a journey of improvement. To reflect this idea, a Corrective Action Plan (CAP)

is established to guide the supplier through the improvements and document their progress. The findings are outlined

and follow up actions are devised for the supplier to work on, and for the member to engage with.

TfS has recognized the importance of engaging directly with suppliers. Therefore, annual events are also organized

to promote a dialogue and mutual understanding between TfS members and their suppliers regarding sustainability

challenges and the requirements of the chemical supply chain.

3.1 TfS Supplier Assessments A sustainability assessment is an evaluation of a supplier’s management approach and performance. A typical industry

specific assessment is conducted by using an online web-based questionnaire; documents will be requested as proof

of implementation and reviewed, and data and information will be analyzed. TfS decided to implement a simple pro-

cess based on international CSR standards and providing CSR experts’ feedback for both the members and the suppli-

ers to use. To ensure a consistent and reliable supplier assessment approach, TfS selected EcoVadis, a global leader for

Corporate Social Responsibility assessments, as its partner and service provider. The sustainability experts of EcoVadis

TfS member TfS member

Follow-up and manage business

relationship

Spend & Risk Analysis

TfS Assessment by EcoVadis

TfS Supplier Audit

TfS Assessment by EcoVadis or

Follow up-Audit

TfS Assessment Corrective Action Plan

TfS Audit Corrective Action Plan

Sharing of sustainability assessment and audit reports with all TfS members

Supplier Code of Conduct

Together for Sustainability


analyze the answers and supporting documents and other evidence of the supplier’s sustainability policies. The results

are combined on a dedicated scorecard that is accessible for both suppliers and TfS members on a shared, web-based

collaborative platform accessible by all TfS members.

Assessments are valid for three years but TfS members may ask suppliers to go through a more regular assessment to

show continuous improvement. The frequency may also depend on the result of the assessment itself.

TfS and EcoVadis extended their partnership in 2015 and established an Executive Council as a forum for regular

exchange and the development of a joint Operational Roadmap.

3.2 TfS Supplier Audits A TfS Audit is an on-site examination of a company‘s sustainability practices by an independent third party auditor. The

scope of a TfS audit typically covers a single or combined business location such as a production site, a warehouse, or

an office building. Within the TfS audit process the supplier‘s sustainability performance is verified against a pre-

defined set of audit criteria on management, environment, health & safety, labor & human rights, and governance

issues. These topics have been defined by TfS and are tailored to the requirements of the Chemical Industry. The TfS

audit is performed by sustainability auditors from a TfS pre-approved auditor pool of independent audit companies.

TfS members have agreed on a set of sustainability audit criteria and a process to ensure consistent quality. Sharing

audit results allows to reduce duplicative efforts and free resources for driving sustainability improvements within the

supply chain. The audits mark the starting point for a collaborative engagement with the suppliers in assessing and

improving sustainability standards in the supply chain.

Suppliers are requested to meet the standards mentioned below and continuously improve in those areas:

• Management: Management in charge, policies, continuous improvement, management systems, risk assessment

training

• Environment: Environmental compliance, waste, air emissions, climate change, water and groundwater, wastewa-

ter, energy, nuisance (noise & odor), land use & biodiversity, soil, hazardous chemicals

• Health & Safety: health & safety compliance, product safety, transport safety, process safety & storage, occupa-

tional health & safety, emergency preparedness, medical care, security, hygienic facilities

• Labor & Human Rights: labor & human rights compliance, child labor, forced & compulsory labor, working hours,

minimum wages, freedom of association, discrimination, special work contracts

• Ethics and Governance: supplier standards, memberships, business integrity, privacy & intellectual property, fair

completion, disciplinary & compliant procedures

Only pre-approved audit firms are allowed to perform a TfS audit. Audit firms have to meet specific criteria such as

quality management, adequate auditor trainings and availability of auditors in key markets. Only auditors with an

appropriate level of industry knowledge, audit experience as well as technical and language skills are pre-approved to

perform TfS audits. Currently there are 366 TfS approved auditors worldwide from the four selected audit companies.

There are several quality assurance mechanisms that assure consistent and high quality audits, for example, witness

auditors evaluate the audit process against predefined criteria. That means, experts of TfS members accompany audi-

tors on a sample basis and evaluate the auditor’s competence and the audit process.


4 TFS ACHIEVEMENTS 4.1 Assessments and Audits Since the start of the TfS initiative, the sustainability performance of 4,600 suppliers has been rated within the TfS

initiative based on assessments and 446 TfS audits have been conducted by means of the TfS Audit Program.

In 2015, 179 new TfS audit reports were received by the TfS initiative and a total of 2,580 sustainability assessments

of suppliers were shared among TfS Members through the platform.

In 2014, a feedback survey was shared amongst 100 suppliers who had participated in the TfS audit program:

• 91% of suppliers who participated in the TfS audit program responded that the audit provided added value.

• 86% of suppliers think that the audit report is easy to understand.

• 67% of suppliers rate auditor competence as “highly professional”.

4.2 TfS Events As part of TfS’ efforts to engage with suppliers, annual events are organized and in 2015 TfS organized its conference

in Brazil. Around 300 participants, including suppliers, TfS member company-representatives, local and international

associations and non-governmental organizations, joined the TfS conference in Sao Paulo, Brazil, on the 29th of June

2015. The event featured presentations from key sector executives and a discussion panel on the “Creation of Sustain-

able Competitive Advantages in the Global Supply Chain.”

Through an official invitation from China Petroleum and Chemical Industry Federation (CPCIF), TfS held a breakout

session during their annual conference on September 17, 2015, in order to strengthen awareness on sustainability

through the entire supply chain in the region. Among the 450 participants were suppliers, TfS member representatives

and local as well as national associations.

4.3 External recognition: At the Ethical Corporation‘s Sixth Annual Responsible Business Awards ceremony held in London (2015), the TfS initia-

tive was recognized “highly commended” in the category 'Best Supplier Engagement'.

“Together for Sustainability is an excellent, industry-leading initiative that has a tangible impact on supply chain that

can be replicated in other industries, and should studied more closely by major companies worldwide.” – Ethical

Corporation’s Sixth Annual Responsible Business Awards


5 TFS EXTERNAL RELATIONS TfS is open to dialogue and cooperation with representatives from a range of organizations, in order to work jointly

on improving sustainability in the chemical supply chain. As the focus of TfS is on the supply chains of the Chemical

Industry, the International Council of Chemical Associations (ICCA) and the regional Chemical Associations – ACC for

North America, CEFIC for Europe – as well as local Chemical Associations are important stakeholders.

TfS’ cooperation with CEFIC is a strategic as well as a practical one: TfS supports Responsible Care by raising suppliers’

awareness concerning the international requirements and principles of the initiative in the area of its influence. Whilst

one of the membership criteria of TfS is a commitment to Responsible Care for itself, the focus of TfS as an association

is to enable the upstream supply chain to also fulfil these principles, from sourcing of raw materials until delivery of

products at customers’ premises, including transport safety and waste disposal. Both programs – Responsible Care and

TfS – build on each other and complement each other.

In order to avoid duplication of audits, increase acceptance by suppliers and save resources, TfS and Safety & Quality

Assessment System (SQAS) have agreed to cooperate particularly on audits. (To avoid misunderstanding: in SQAS the

word “assessment” has the same meaning that the word “audit” has in TfS – both describe an on-site evaluation of a

supplier according to a pre-defined questionnaire). The cooperation between SQAS and TfS is focused on the mod-

ules Transport Service (covering Logistics Service Providers offering transportation) and Warehouse (warehousing to

chemical companies). Following the recent revision of the SQAS audit core questionnaire (update 1/04/2016), SQAS

assessment reports can be submitted by suppliers to TfS.

VCI (Verband der Chemischen Industry – German Chemical Industry Association) developed “Chemie3 – The Sustain-

ability Initiative of the German Chemical Industry”. Chemie3 and Together for Sustainability complement each other

well and work together for the benefit of their members. A company who has successfully gone through the Chemie3

program is very well prepared for a TfS assessment or audit.

China Petroleum and Chemical Industry Federation (CPCIF) and TfS are in contact and CPCIF contributed with a high

ranking speaker from their organization to the first TfS supplier event in China in 2014. The following year (Sep. 2015)

TfS hosted a full day session for representatives from chemical companies in China on TfS and topics of Supply Chain

Sustainability at the annual CPCIF Conference in Shanghai in and Mr. Li Shousheng, Chairman of CPCIF gave a key

note speech at this event.

ABIQUIM (Associação Brasileira da Indústria Química – Brazilian Chemical Industry Association) and TfS are in contact

and Mr. Carlos Fadigas, Chairman of the Board of Directors Abiquim & CEO of Braskem has given a key note speech at

the supplier event of TfS in Brazil in June 2015.


6 OUTLOOK 2016 Growth and Optimization of Internal Processes

After the initiation, pilot and expansion phases, TfS is looking to consolidate and expand to become a truly global

initiative and keep working to develop a standard for sustainable supply chains in the chemical industry.

Work Streams in Asia: (Regional Operating Committee)

To facilitate cross-border communication and coordination of activities, a regional Work Stream is being established in

Asia. This ensures a global reach and allows for the development of specific regional topics. For example, engagement

with local suppliers will be managed by regions.

India Event:

The annual TfS event in 2016 will be a one-day conference in Mumbai, India, on September 20, 2016 for around 400

suppliers and 100 external guests.

Supplier Academy:

To further increase the opportunities for supplier engagement and improvement, TfS is working on devising a Supplier

Academy containing more training and material on the website.

THE CURRENT MEMBERS ARE

CONTACT

Members in

onboarding

Rüdiger Eberhard

TfS President

Mrs. Gabriele Unger

General Manager TfS

Phone: +32 2792 7515

[email protected]

Bank Account

BNP Paribas Fortis

TOGETHER FOR SUSTAINABILITY AISBL

IBAN: BE33 0017 5100 0146

BIC: GEBABEBB

VAT/ TVA: BE 0589 936 479

Together for Sustainability aisbl (TfS)

Avenue E. van Nieuwenhuyse 4

B - 1160 Brussels

www.tfs-initiative.com

[email protected]

TOGETHER FOR SUSTAINABILITY (TfS)

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