Published on 22 October 2018

CSR

At Solvay, every innovation must prove sustainable ahead social and environmental challenges

How can companies better diffuse CSR (Corporate Social Responsibility) internally and throughout its ecosystem? This is the question all committed companies are asking. Novethic has identified good, achievable, and proven practices that have been put in place by major economic leaders. This week, Novethic focuses on Solvay. To better guide investment, innovation and development decisions, the specialty chemical company has developed an evaluation grid to promote its most sustainable products.

Solvay is the largest chemical company in the world.
@Solvay

Ten years ago, in an effort to choose investments that meet sustainable development requirements and consumer expectations, Solvay deployed the Sustainable Portfolio Management (SPM) tool. Developed internally and perfected with the help of independent organisations, the SPM assesses the sustainability and market suitability of 90% of the company's 2,000 product/application pairs, such as the use of carbon fiber for the automotive or aviation industry.

Betting on green ...

Step one: Measure the environmental footprint of the product. This is based on a life cycle analysis, from the extraction of raw materials to product output at the plant. It includes climatic, energy, water and toxicity criteria.

Step 2: Evaluate the product as a solution to environmental and social issues. The product is then ranked on a sustainability scale, ranging from a green zone - the most sustainable - to a red zone. In the latter case, these are considered risky solutions and in contradiction with consumer expectations, or as failing to meet CSR (corporate social responsibility) criteria.

Paying it forward...

"Our intention is clearly to grow in the green zone and minimize in the red," said Pascal Chalvon, Director of CSR and Energy at Solvay. Each business unit lead has to present his ideas and innovations to Comex under this SPM prism. "If a product is in the red zone, it must be necessary to be approved, and correspond to a strong demand for which there is no alternative, and one for which we are developing an alternative".

"In three years, we halved red zone products (8% of supply) and doubled those in the green zone, which represent 49% of the supply.  All that given our objective was to reach 50% in 2025!", he proudly noted. "Maintaining this level already represents a challenge because the dividing lines between zones are far from being immutable: according to regulation, stakeholder pressurem and consumer demand, products can change category", explained Chalvon.

But it’s all is worth the effort. "Sustainable development can create long-term value for the planet, for individuals, and financially for the company's business," says Karim Hajjar, CFO of the group.  The growth in sustainable solutions today is much higher than that for red products by as much as 10% per year.

A display of integrated thinking

The tool is part of an "integrated thinking" approach. "Sustainable development is at the heart of our strategic decisions and it guides our daily actions," says Chalvon. Beyond the SPM, this is also embodied in the Solvay Way (the group CSR strategy), a strategy of integrated reporting that combines financial and extra-financial indicators and CSR criteria into compensation decisions.

"Today we can only develop a sustainable strategy by incorporating extra-financial criteria and placing the company within its ecosystem, especially in such sectors with high social and environmental  impacts," assured Anne-Marie Jourdan(1), member of the jury of the Integrated Thinking Awards (2), one of which was awarded to Solvay this year. "When we reviewed its president, Jean-Pierre Clamadieu (3), we appreciated his involvement and motivation in this area. Many integrated reports are very well done but for this to be effective, governance remains key, at management and board level,” Jourdan said.

This approach was, however, born from a "rather negative" event: the group’s decline in DJSI-type (Dow Jones Sustainability Index) ratings. "We wondered what was missing, and it was the ability to integrate this approach into our strategy and management," said Hajjar. Thanks to the SPM and other tools, "the climate and the circular economy, or fundamental rights, are entering into dialogue with our consumers, our investors and also in the remuneration decisions of all our employees," he explained.

 

Béatrice Héraud @beatriceheraud

 

(1)   Anne Marie Jourdan is a Board Member of the International Corporate Governance Network (ICGN), FRR's Legal and Communications Director (Retirement Pension Fund).

(2)The Integrated Thinking Awards launched by the Institute of Responsible Capitalism, the IFaci (French Institute of Audit and Internal Control), Medef and Capitalcom, awarded Solvay in the < €7 billion capitalisation category, Nexans in the > €7 billion capitalisation and unlisted companies category, and Engie for its integrated reporting.

(3) Jean-Pierre Clamadieu will be replaced by Ilham Kadri in March 2019.


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