2 0 1 4 S U S TA I N A B I L I T Y R E P O R T
Advancing Our
Sustainability
Strategy
S U S TA
Overview
Arizona Chemical is the world’s leading biorefiner
of value-added pine chemicals. Our products
are made from biorenewable raw materials
and our solutions are used in the global markets
we serve: Adhesives, Roads & Construction,
Tires, and Chemical Intermediates. Chemical
Intermediates include biobased energy,
lubricants, inks, coatings and fuel additives. G4-8
global
growth
Sustainable
products
sustainable
raw
materials
innovation
&
Collaboration
Compliance
&
governance
er
m
o e
st lu
cu va
strategic
commitment
We have adopted the new Global Reporting
Initiative (GRI) G4 Guidelines and structured our
report in accordance with the core option. GRI
has verified that our Content Index is accurate
and aligned with the related G4 disclosure. Our
complete 2014 Sustainability Report is available
on our website at www.gri.arizonachemical.com.
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ARIZONA CHEMICAL
cascading
use of
materials
community
commitments
quality,
reliability
& service
sustainability means …
This 2014 Sustainability Report explains what
sustainability means to Arizona Chemical and how
we are managing our economic, environmental
and social performance. It describes impacts,
progress and our commitment to continuous
improvement in meeting our business goals as well
as the broader needs of people and the planet.
I N A B L E VA L U E
strategic
commitment
safety
first
environmental
stewardship
energized
employees
re co
sp rp
o o
ns ra
ib te
ili
ty
B usiness
Material Aspects of Arizona
Chemical’s Sustainability Strategy
In addition to the online Content Index at
www.gri.arizonachemical.com/gri-index/, we
have identified in the text where information
related to specific GRI G4 Indicators appears. G4-32
The abbreviations stand for:
••
EC – Economic
••
EN – Environmental
••
HR – Human Rights
••
LA – Labor Practices and Decent Work
••
SO – Society
••
PR – Product Responsibility
••
DMA – Disclosures on Management Approach
ceo messag e
our sustainability strategy
Arizona Chemical has a two-part sustainability strategy. First, our marketdriven approach is based on the development of sustainable chemical
solutions. This aspect of our strategy focuses on meeting customer
performance standards while enabling them to produce more responsible
products that contribute to reduced CO2 emissions. Second, we actively
work to decrease Arizona Chemical’s environmental impact, enable a
safe and engaging workplace, and make a positive difference in our
communities.
Kees Verhaar
President and CEO
Our vision as a leading biorefiner is to transform biorenewable raw materials
into value-added, high performance products. Recent product launches
demonstrate our momentum in fulfilling customer demand for innovative
biobased solutions. We have developed reclaimed asphalt pavement
additives that reduce solid waste and greenhouse gas emissions, tire tread
enhancements that improve wet grip performance for increased safety,
and tackifiers that improve adhesion on packaging with high amounts of
recycled content.
To address climate change issues and advance the efficient use of
resources, we are announcing long-term goals for reduction of energy
consumption, greenhouse gas emissions and waste production. We also
encourage governments to advocate policies related to biofuels that
respect the “cascading use” principle. This allows for maximum utilization of
the value of feedstocks such as Crude Tall Oil.
The introduction of a Global Quality Policy reinforced our ability to
deliver superior customer value. The Policy emphasizes excellence and
accountability in our market-driven business structure. These same qualities
play a role as we strive for a workplace in which “Nobody Gets Hurt.” On
most measures our safety performance improved slightly in 2014, and we
continue to advance policies and procedures that support our annual
safety goals.
I am extremely grateful to our employees for sharing their creativity,
skills and enthusiasm. We rely on their ongoing dedication to achieving
our potential as a preferred supply chain partner and global leader in
sustainable chemical solutions. Together with our diverse stakeholders
we will continue to focus on reaching our mutual business and
sustainability objectives.
G4-1
2014 SUSTAINABILITY REPORT
|
3
sustainability means … sa f ety f irst
table of
sustainability means …
Sustainability Means …
Safety Culture
contents
04
Safety First
07
Environmental Stewardship
10
Sustainable Products,
Innovation and Collaboration
13
Quality, Reliability and Service
15
Compliance and Governance
16
Sustainable Raw Materials and
Creating Maximum Value
19
Energized Employees
21
Community Commitments
23
safety first
Our goal is to have an injury-free workplace. To
achieve zero injuries, we constantly emphasize
safety and work to embed it into every aspect
of our daily lives. Nearly 85 percent of our
employees responding to an independent
survey said they recognized how important
safety is to our organization and over 75
percent are satisfied with the amount of
safety training they have received. G4-DMA
Team-building is a significant part of our
Environmental, Health and Safety (EHS) strategy.
Whereas previously we held separate EHS Summits
for European and U.S. team members, this year
we restructured the events so participants came
from different regions. Planned in 2014 and held
in early 2015, this year’s EHS Summits fostered new
interpersonal relationships that are enabling us to
better leverage worldwide corporate knowledge
about occupational health and safety.
Sharing skills and experience also occurs during
annual EHS audits at our plants as EHS team
members from diverse locations inspect the other
manufacturing facilities. This approach brings fresh
perspectives and learnings from people who work
in similar industrial environments. In 2014 these
audits were focused on contractor safety and
status checks for all EHS-related action items.
Performance and Policies
Global Growth
We continue to emphasize process safety and
conducted process hazard analyses (PHA) at
all our manufacturing plants. Key performance
indicators (KPIs) for monitoring PHA corrective
actions were developed and a global PHA
Policy will be put into place in 2015.
Our process safety reporting tracks both leading
(Near Miss events) and lagging (Process Safety
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ARIZONA CHEMICAL
DOVER SAFETY RECORD HONORED
Our Dover facility was honored with the Safety Council Member of the Year Award from
Tuscarawas Valley Safety Council. The Council also gave the plant the 100 Percent
Award for having worked an entire calendar year without a lost work day resulting from
an incident, and the Ohio Bureau of Workers Compensation recognized our attaining 1.6
million work hours without a lost time incident.
1.0
LWIR
0.88
0.78
0.67
0.54
0.53
0.5
0.09
0.09
0.10
0.10
2014
2012
2011
2010
0.0
2013
0.00
PROCESS SAFETY INCIDENT RATE (PSIR)
low severity
HIGH SEVERITY
2.5
2.0
2.27
1.94
1.5
1.34
1.24
1.27
1.0
0.36
0.09
0.0
0.0
2014 SUSTAINABILITY REPORT
0.0
2014
0.18
2013
0.5
2012
Analysis of our total recordable incident rate
(TRIR) showed that many of the company’s
incidents were caused by slips and falls occurring
in locations that had high concentrations of
snow and ice. To address this issue, leaders from
facilities in colder climates shared their best
practices, which include heated sidewalks,
TIR
2011
Our in-depth reviews of all near misses are
uncovering situations with potential for a high
severity incident. In addition to undertaking
a formal root cause analysis (RCA) and/or
taking corrective action when warranted, we
distribute a “lessons learned” safety review
after an incident or significant near miss to
remind everyone throughout the company
of safety awareness opportunities.
TOTAL INCIDENT RATE (TIR) & LOST WORK DAY
INCIDENT RATE (LWIR)
2010
Incident) indicators. For the second year in a row
we had no high severity incidents. We expect this
trend to continue as we focus on loss of primary
containment (LOPC) and the overflow issues
that cause the majority of these unintended
releases. Using a data-based risk assessment tool,
we identified and began equipment upgrades
on our storage tanks that are at highest risk of
an incident. We formalized layers of protection
analysis (LOPA) procedures globally, undertook
LOPA pilot studies at two sites and provided LOPA
awareness training at our 2015 EHS Summit.
|
5
sustainability means … sa f ety f irst
effective salt coverage and announcing
weather changes. A new Traffic Safety Policy
that resulted in our making relatively simple
adjustments in areas such as signage, traffic
patterns and adding padding to concrete pillars
is also expected to have a positive impact.
!
Permit to Work
All contractors must obtain a valid permit to work on this site
We want our contractors to work as safely as
if they were our own employees. To improve
our contractor safety record, we audited each
site and developed a system for tracking and
analyzing incidents and implementing changes.
Through 2014, we completed nearly 100 percent
of our contractor safety audit action items and
incident reviews. Our contractor total incident rate
(TIR) for 2014 was 3.47, a slight decline from 2013.
We introduced a safe work plan metric that
requires contractors to write a method statement
including a description of the tasks to be
performed, the tools to be used, potential risks and
plans to ensure safety. Only after an on-site review
with the contractor will we grant a permit to work.
Employees from around the world gather at our Safety
Summits to share best practices, enhance skills and strengthen
interpersonal relationships.
2015 safety GOALS
total incident
rate (TIR)
process safety
incident rate (PSIR)
0.5
1.0
We conduct task risk assessments to
ensure that our personnel are wearing
appropriate Personal Protective
Equipment (PPE) when handling our
materials.
CHEMICAL SAFETY EXCELLENCE
Arizona Chemical received CSX’s annual Chemical Safety Excellence Award for the tenth time. The award
recognizes our ongoing commitment to the safe transportation and handling of hazardous materials by rail.
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ARIZONA CHEMICAL
sustainability means … E N V I R O N M E N TA L S T E WA R D S H I P
sustainability means …
environmental stewardship
Goal Setting
Arizona Chemical has long been committed to
continuous improvement. Over the last 10 years,
we substantially reduced our environmental
footprint and in 2014, we took a firm step forward
to build on that legacy. We identified our significant
operational impacts and established long-term
quantifiable goals for energy consumption,
greenhouse gas (GHG) emissions and nonhazardous waste disposal. We will achieve these
goals by implementing process improvements and
specific action plans at each plant. In addition, we
have integrated several environmental projects
into our future capital investment plans. G4-DMA
2021 ENVIRONMENTAL GOALS*
8%
ENERGY
CONSUMPTION
REDUCTION
G4-EN6
greenhouse
gas (GHG)
EMISSIONS**
10%
NON-HAZARDOUS
WASTE DISPOSAL
20%
REDUCTION
REDUCTION
*Base year 2014
**Greenhouse gases are Carbon dioxide (CO2), methane (CH4), nitrous
oxide (N2O) and fluorinated gases.
Capital I n v estment Proje c ts
FOCUS
Energy efficiency of
our processes
contributes
to goal
DESCRIPTION OF PROJECT/ACTIVITY
••
••
••
••
••
Spill & leak prevention
••
••
••
Wastewater treatment
& discharge
improvements
••
••
Upgrading heating systems on our reactors
Upgrading lighting to more energy efficient systems
Recovering and reusing waste heat in our processes,
e.g., flue gas heat recovery
Adding energy-efficient, natural gas-fired steam boiler to
replace an older unit
Assessing the gaps and installing overflow protection
controls on our tanks
Upgrading and maintaining our secondary containment
Replacing flanges with welded joints and training
maintenance personnel on torqueing techniques
Improving processing and recovery of by-product
streams and reducing biological oxygen demand (BOD)
Rerouting stormwater to wastewater treatment plant to
eliminate potential off-site contamination
Upgrading oil skimming operation to minimize risk of leaks
and odors
2014 SUSTAINABILITY REPORT
|
7
Our Performance
NIORT PLANT WASTE REDUCTION SUCCESS
The Niort facility took up the local Chamber of Commerce’s challenge to
area companies to reduce waste by 10 percent collectively between 2013
and 2014. Our plant installed a new fluorine treatment system that enabled us,
within the two years, to reduce the amount and toxicity of fluoride and phenol
contaminated water in our discharge, and completely eliminate off-site disposal
of a waste stream. We also developed systems to reduce packaging waste and
implemented a recycling program for what remained of packaging waste. This
resulted in recognition by the Niort Chamber of Commerce in 2014.
Non-hazardous Solid Waste Disposal
hazardous waste generation
25,000
6,000
5,000
15,000
25%
10,000
5,000
REDUCTION
0
TONS GENERATED
4,000
3,000
30%
2,000
1,000
REDUCTION
2014
2013
2012
2011
2014
2013
2012
2011
2010
0
2010
TONS DISPOSED
20,000
Non-hazardous Solid Waste
Hazardous Waste
Since 2010, Arizona Chemical has reduced
non-hazardous solid waste generation by 25
percent. In 2014, we achieved a 6 percent
decline, owing in large measure to quality
improvements, such as increased production
consistency and reduced off-site disposal of
process residuals. The Sandarne and Panama
City sites were major contributors to the effort,
with each reducing waste by 20 percent.
We have decreased hazardous waste generation
by 30 percent since 2010 and, after a 2013
spike caused by atypical conditions, we are
back on track with results that are on par with
2012. Operational improvements at the Niort
plant and increased production reliability
at the Savannah facility – which marked its
lowest hazardous waste generation ever –
helped advance our progress significantly.
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ARIZONA CHEMICAL
Our operational carbon footprint includes
both direct (Scope 1) and indirect (Scope 2)
GHG emissions at our manufacturing plants.
Scope 1 emissions are due to energy use at
our sites which is primarily natural gas used
to run our boilers. Scope 2 emissions are due
to purchased energy such as electricity and
steam. We anticipate continuing to reduce our
carbon footprint by increasing both our energy
efficiency and use of biomass in our operations.
SCOPE 1 DIRECT
energy use
SCOPE 2 INDIRECT
8,000
300,000
6,000
200,000
4,000
100,000
2,000
TJ
400,000
2014
2013
2012
0
2011
0
2010
Sixty-five percent of our global energy supply is
derived from natural gas, a source that emits less
greenhouse gas (GHG) than other fossil fuels. Our
aim is to optimize the use of biobased resources.
Therefore, 11 percent is directly sourced from
by-product fuels such as pitch. Approximately
50 percent of our purchased steam – which is
managed through cooperative arrangements
our facilities maintain with other manufacturers –
comes from biomass. In total, about 15 percent
of our energy comes from renewable sources.
GREENHOUSE GAS EMISSIONS
MTCO2E
Energy Use and Greenhouse Gas Emissions
ENERGY SOURCE BREAKDOWN
11%
TOTAL ENERGY
5,199 TJ
7%
11%
NATURAL GAS
BY-PRODUCTS
PURCHASED STEAM
ELECTRICITY
Risk Mitigation
A key aspect of our risk mitigation strategy
is minimization of the possibility of an
environmental incident. In 2014 we had no
significant environmental incidents or spills,
an outcome we attribute in large part to
the implementation of multiple protective
measures over the last several years. G4-DMA
6%
65%
FUEL OILS
2014 Energy Efficiency Initiatives
• Replacement and full commissioning of a new hot oil heater in the Sandarne facility. As a result of using
by-products from our operations as energy, the facility reduced petroleum-based fuel consumption by
50 percent.
• Installation of a waste heat steam generator at our Panama City plant. The generator recovers the
exhaust of a thermal oxidizer control device to heat our operations.
2014 SUSTAINABILITY REPORT
|
9
sustainability means … sustainable pro d u c ts , inno vation an d c ollaboration
sustainability means …
Sustainable products, innovation
and collaboration
Arizona Chemical’s innovation vision is to meet
customer demand for materials that come from
biorenewable sources, help reduce the CO2 and
environmental footprint of their supply chains, and
provide high performance.
Adhesives
We are helping adhesives customers save time
and avoid extensive research and development
(R&D) tests through the use of advanced
Dynamic Mechanical Analysis (DMA) equipment
and supporting methodologies. Our approach
applies DMA results to determine the bestsuited formulations and preparation methods
for customer applications. The process pinpoints
solutions to hot melt pressure sensitive adhesives
(HMPSA) formulation challenges (for example,
enhanced deep freeze properties), thereby
enabling customers to narrow their resin choices
for optimal performance in a shorter timeframe.
Using advanced
Dynamic Mechanical
Analysis (DMA)
equipment,
Roelof Luth, Expert
Rheologist, helps
adhesives customers
choose optimal resins
more quickly.
Tires
We have longstanding relationships with industry
leaders in tire manufacturing. As the leading
biorefiner of pine chemicals, we provide high
performance products with higher biorenewable
content than the fossil fuel-based alternative.
Customers appreciate our products’ performance
characteristics and sustainable content.
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ARIZONA CHEMICAL
Sita Janki, Science & Technology (S&T) Technician, works in a
climate controlled environment to measure elongation of EVA
hot melt materials.
SYLVATRAXX™ additives, made from
polyterpene and treated rosin, contain 90100 percent biorenewable content, and
our modified terpene solutions contain 4060 percent biorenewable content.
SYLVATRAXX™ tire tread enhancement additives
have proven highly beneficial to “green tires.” The
use of silica fillers improves rolling resistance and
improves fuel economy but with a trade-off in
traction. Our tread enhancement additives help to
recover wet traction while maintaining the benefits
of lower rolling resistance. This improves safety
performance while helping customers increase
their fuel efficiency and lower their CO2 emissions.
SYLVATRAXX™ tire
enhancement
additives enable more
effective processing
of the latest silica and
rubber polymers.
To add to customers’ manufacturing efficiency,
SYLVATRAXX™ process enhancement additives
allow for more effective processing of modern tire
compounds containing state-of-the-art silica and
polymers. They can reduce compound viscosity
and improve green strength, contributing to
more efficient production and less down time.
Chemical Intermediates
Arizona Chemical’s Tall Oil Fatty Acids (TOFAs)
help coating formulators improve their
environmental performance. The use of TOFA
generates significantly lower CO2 emissions than
vegetable oil-based alternatives, and it enables
customers to virtually eliminate volatile organic
compound (VOC) emissions and comply with
regulatory requirements. Our fuel additives
contribute to better air quality. They restore
lubricity to low sulfur diesel fuels mandated by
an increasing number of countries and provide
superior low temperature performance.
Our SYLVAROAD™ RP1000
Performance Additive enables
higher percentages of reclaimed
asphalt pavement (RAP) to be
used in asphalt mixes, which
results in a lower carbon footprint
and significant cost savings.
of pavement containing 100 percent virgin mix.
Additionally, when paving 30 kilometers of road
using a 50 percent RAP mix, there is an average
savings of approximately €1 million compared
to a 25 percent RAP mix using no additive.
Positive impact of sylvaroad™
RP1000 Performance Additive
Virgin
Aggregate
Virgin
Aggregate
RAP
Virgin
Bitumen
Our biobased product
portfolio addresses
environmental drivers
and delivers results for
metalworking fluids, base
oils and general lubricant
applications.
Roads & Construction
We are currently working with various stakeholders
in road construction who are seeking
performance, sustainability and cost effectiveness.
Our reclaimed asphalt pavement (RAP) solution
for road construction, SYVAROAD™ RP1000
Performance Additive, enables use of 50 percent
RAP – and up to 100 percent – with rutting,
cracking and water resistance equivalent to that
Virgin
Bitumen
SYLVAROAD™ RP1000
Performance Additive
A 2014 study conducted by Arthur D. Little
shows that cradle-to-gate, using SYLVAROAD™
RP1000 Performance Additive with a 70 percent
RAP mix results in:
27%
REDUCTION
50%
REDUCTION
carbon footprint
than virgin asphalt
VOC
volatile organic
compounds compared
to a 30 percent RAP mix
2014 SUSTAINABILITY REPORT
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11
sustainability means … sustainable pro d u c ts , inno vation an d c ollaboration
sylvaroad™ rp1000 performance additive for
reclaimed asphalt pavement (RAP): go-to-market process
A
A
B
B
C
Initial Customer Interaction
•• Requires constant dialogue and
technical support
•• Customer reviews and approvals to
introduce a new product into their
standard formulation can take months
or even years
Arizona Chemical Value
Proposition
•• Superior product performance to meet
customer objectives
•• Enabling customers to increase the
RAP content, while reducing costs and
meeting challenging specifications
C
Customer Lab Approval
•• Lab tests to ensure the product meets
specifications and country-specific
performance requirements
•• Arizona Chemical dosage study
recommends optimal amount of additive
for greatest cost savings and asphalt
performance
D
D
Road Trial
•• Takes place in real, outdoor field
conditions: average is 100 tons of asphalt
mix, enough for road approximately 100
meters long by 7 meters wide or a parking
lot with 20 spaces
•• Commercial and Technical teams
support customers on-site at test locations
E
E
F
Trial Results
•• Customer conducts further testing in field
conditions to assess if asphalt mix meets
specifications
•• Collaborative review of test results with
customers and the Commercial and
Technical teams
F
Commercial Relationship
•• Planning for large scale implementation
based on trial results
•• Customer Service and Commercial teams
provide documentation and ongoing
support
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ARIZONA CHEMICAL
sustainability means … Q U A L I T Y, R E L I A B I L I T Y A N D S E RV I C E
sustainability means …
quality, reliability and service
Customers rely on Arizona Chemical to provide
high quality products delivered through reliable,
service-oriented fulfillment processes. We have
emphasized these fundamental requirements
as the basis for success and have made
improvements that will help us meet – and
ideally exceed – customer expectations.
To guide our progress, we unveiled a Global
Quality Policy in 2014. It consolidates our core
values, standards and accountability expectations
into a unified, worldwide approach. For
maximum utility, it was translated into employees’
native language at each of our facilities.
We established a Global Quality Council and
an Operations Lead Team to facilitate sharing
and implementation of best practices across our
plants. Our quality improvement efforts included
the addition of engineers, and education and
training on the theory and implementation
of methodologies such as Six Sigma, lean
manufacturing and Gage R&R (reproducibility
and repeatability) for measurement systems.
We established cross-functional teams to more
thoroughly explore root causes of issues and set
“fit for use” specifications for multiple products.
We are working to minimize non-conforming,
off-specification products in order to increase
customer satisfaction and reduce waste.
Ongoing initiatives
to enhance
production quality
and efficiency
reinforce our
position as a
global leader in
biorefining.
To enhance our customer responsiveness, we
improved alignment of our internal resources
by integrating customer-facing teams such as
Technical Support into the business units. Each
Technical Support team operates in partnership
with our Science & Technology (S&T) Centers which
are strategically located in the Americas, Europe
and Asia Pacific regions. The S&T Centers are
directly involved in quality initiatives, applications
development and engineering innovations.
Global
Quality Policy
•• We are a global leader in the development,
production, and marketing of chemical
products derived from sustainable resources.
•• It is our goal to understand the markets into
which we sell our products and to provide
products and services which meet or
exceed the expectations of our customers
while meeting all regional regulations and
standards.
•• We strive to continually improve and
develop our products, services, operations,
and people, through internal teamwork
and through cooperation with our suppliers,
customers, and other business partners.
•• We establish, monitor, and update business
and operational processes to ensure they
are effective and to ensure we are using
our resources efficiently to maintain our
competitiveness and profitability.
•• All employees are responsible and
accountable for the quality of their own
work, and managers are responsible to
ensure that goals/objectives and metrics are
in alignment and support the results desired
by our customers and owners.
2014 SUSTAINABILITY REPORT
|
13
sustainability means … quality, reliability an d S erv i c e
Initiatives to Enhance Performance
Manufacturing:
To maintain strong operational performance,
we enhanced our preventative maintenance
procedures worldwide and implemented a
scorecard system for equipment reliability
monitoring in Sandarne and at all our U.S.
plants. We advanced our mechanical integrity
management systems and are measuring results
against key performance indicators (KPIs) for
achieving target manufacturing reliability goals.
On Time, In Full (OTIF):
We collaborated with key customers on ways
to align our OTIF improvement efforts with their
needs. To help guarantee long-term reliability we:
••
Implemented a highly-advanced rail tracking
system that allows for greater visibility into
shipments by our freight carriers.
••
Used statistical analyses to determine averages
and standard deviations so we could identify
and act on weaknesses.
••
Began conducting root cause analyses (RCAs)
of every OTIF miss and coordinating corrective
action across various functions.
••
Improved data management at every stage of
the order cycle.
••
Integrated a proof-of-delivery step to our
shipment process.
••
Installed the latest International Commercial
Terms (Incoterms®), the International Chamber
of Commerce’s global shipment terms initiative.
Adhesives:
Production began on the Adhesive business’
upgrade of SYLVALITE™ RE 100L to a Golden
Batch version in our Savannah plant. The benefits
of the change are derived from reducing
particle formation during esterification, improved
oxidation resistance and adding more robust
packaging so the product lasts longer. We
are using well established technology and
the changes have no regulatory impact.
This implementation applies chemistry best
practice to our primary product line. Based on its
success, we will be applying these improvements
to the rest of our rosin ester products.
Tires:
Customers raised questions about proper
warehouse conditions, and in response, we
began inserting a temperature sensitive
device to alert them if they were storing
a product at a sub-optimal temperature
level. Launched in 2014, the adaptation has
nearly eliminated product storage issues.
TIRE CUSTOMER GRANTS SYLVATRAXX™ PLANT HIGHEST RATING
One of the world’s largest tire manufacturers conducted a comprehensive, inperson audit of our Niort plant. The purpose was to assess our supplier and quality
management processes, which are key compliance measures in the automotive
industry. Their review included our planning, manufacturing, process control,
logistics and site housekeeping.
The outcome of the audit plays a critical role in the customer’s purchasing
decision. The results were outstanding, with Arizona Chemical earning an “A”
grade and 99 percent compliance with the manufacturer’s requirements.
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ARIZONA CHEMICAL
sustainability means … C O M P L I A N C E A N D G O V E R N A N C E
sustainability means …
complianCe and governance
For Arizona Chemical to maintain its position
as a sustainable business partner, we strive
to ensure compliance to relevant product
regulatory standards. This means that we conduct
extensive testing in order to characterize our
product risk profiles before going to market.
Product Regulatory:
We upgraded the compliance database that
contains information on the chemical properties
of all our products, as well as the regulatory and
legal requirements of every country where we
make shipments. Product compliance is critical
to our customers and our dedication to meeting
every obligation is evident in the multi-functional
teams that get involved in the review process.
Procurement:
To ensure regulatory, legislative and ethical
compliance as well as supply chain responsibility,
the Procurement team conducted human rights
awareness training in early 2015. The goal was to
provide the team with guidance in recognizing
potential human rights abuses in the procurement
supply chain. The training included a list of 15
warning signs compiled in collaboration with
several major Arizona Chemical suppliers who
had similar interests in being proactive about
increased transparency in the supply chain.
Legal and Governance:
We require our employees to uphold our
Anti-Corruption Guidelines, Antitrust and
Competition Law Compliance Guidelines,
Code of Business Conduct and other standards.
We have implemented an internal control
framework for financial reporting in line with
the requirements under the Sarbanes-Oxley
Act, established a Whistleblower Policy and
Hotline, and encourage an open dialogue with
employees as well as external stakeholders
through our Internal Audit function. G4-DMA
PR O D U C T R E GULATORY framework
Protect & Defend
•• Comprehensive risk
assessments
•• Country-specific
registrations
•• Adherence to changing
global requirements
Support Business
Growth
•• Toxicology and ecotoxicology profiling during
product development
•• Monitoring regulation
changes and alerting
customers to new
regulations
•• On-boarding new
customers
Support Operations
•• Traceability from supplier
through shipment
•• Review plant
improvement-driven
changes for regulatory
compliance
•• Audit operations to ensure
regulatory compliance
Advocate & Engage
•• Participation in American
Chemistry Council (ACC),
European Chemical Industry
Council (CEFIC) and Pine
Chemicals Association
(PCA)
•• Reach out to nongovernmental organizations
(NGOs) and authorities
to provide education on
Arizona Chemical products
that are biobased and
sustainable
•• Provide regulatory training
to all employees to stress
the role of the individual in
ensuring compliance
C O M P L I ANC E S YS T E M S A N D D ATA B A S E S
2014 SUSTAINABILITY REPORT
|
15
sustainability means … sustainable raw materials an d c reatin g maximum value
sustainability means …
sustainable raw materials and
creating maximum value
pine chemicals’ sustainability impact
TOFA
substitutes
1,327
1400
1,207
1200
1,110
gCO2e/kg
1000
CTO and CST are products from pine tree-based
pulp and paper manufacturing. Most of our
suppliers hold forestry certifications that recognize
their sound practices in planting, harvesting
and managing the growth of pine trees.
849
800
600
400
200
141
FA
RAPESEED
MI
FA
OLEIC
SUNFLOWER
FA
SOYBEAN
XTURES
0
TOFA
Having a sustainable supply base has multiple
meanings. It includes our use of biobased
raw materials such as Crude Tall Oil (CTO)
and Crude Sulfate Turpentine (CST), their
overall carbon footprint and access to a
steady supply of these materials. G4-DMA
TOFA’s (Tall Oil Fatty Acid) carbon footprint is
at least five times lower than the vegetable oil
substitutes made from soy beans, sunflowers,
rapeseed and oleic mixtures. These substitutes
all have nutritional value, whereas our TOFA
does not compete with the food supply.
Arthur D. Little for Arizona Chemical Europe
By using a diversified base of suppliers from
around the world, we have greater flexibility to
ensure that we have the right amount of material
available. Our well-established supply chain
includes long-term contracts with pulp and paper
manufacturers with whom we work closely to
encourage recovery engineering improvements
that increase the yield of these materials.
As a result of climate change and governments’
efforts to decrease the use of petroleumbased transportation fuels, a few European
countries are subsidizing the direct burning of
CTO as biofuel. We believe that this practice is
counterproductive to the biobased economy
and creates an uneven and unfair playing field.
“According to ACC [American Chemistry Council], the study proves that the pine
chemicals industry makes a positive contribution to achieving the twin bio-economy
goals of reducing greenhouse gas emissions and fossil fuel consumption.”
CTO Diversion Provides No Benefits
February 21, 2014
(www.environmentalleader.com)
16
|
ARIZONA CHEMICAL
We are actively involved in discussions on policies
related to biofuels that possibly challenge the
availability of CTO. In conjunction with various
industry associations, Arizona Chemical has
advocated in favor of “cascading use” of CTO
in the context of policies relevant to biofuels. This
principle promotes maximization of the value of
the resource before its consumption as fuel. We
recommend that policy-makers maintain marketbased, non-subsidized price equality for all CTO
uses. By using the raw material for their highest
value, we create truly sustainable products
and a resource-efficient biobased economy.
Pine Chemicals’ Carbon Footprint is
Substantially Lower Than Substitutes
pine chemicals footprint
pine chemicals substitutes*
EUROPE
CO2 difference: pine chemicals
vs. substitutes
70.4%
U.S.
39.2%
global
50.7%
Our value-added pine chemical solutions are derived from
biorenewable raw materials and have a lower carbon footprint than
the most likely mix of substitutes.
Pine chemicals have been proven to have a
lower carbon footprint than their substitutes. On
a global scale, pine chemicals cause carbon
emissions that are over 50 percent less than
when using a substitute.
*Pine
Chemical Substitutes = weighted average
Life cycle analysis undertaken by Franklin Associates, a
Division of Eastern Research Group, and sponsored by
the American Chemistry Council’s Pine Chemistry Panel
2014 SUSTAINABILITY REPORT
|
17
sustainability means … sustainable raw materials an d c reatin g maximum value
incorporatING sustainability inTO our value chain
1
2
3
recovery
engineering
5
4
Our Products
•• Rosin Esters
•• Distilled Tall Oil
•• Rosin
•• Tall Oil Fatty Acids
•• Terpenes
We source most of our raw materials
from suppliers with established,
responsible, forest management
programs.
2
CTO and CST Supply
The CTO and CST we use is a
product of the paper and board
pulp mills serving the growing
packaging industry.
4 Renewable, Low Footprint Products
We refine and upgrade CTO and CST to produce high
value-added biobased chemicals. Pine chemicals’ carbon
footprint has been proven to be approximately 50 percent
lower than the most likely mix of alternatives.
G4-12
18
|
ARIZONA CHEMICAL
Alternatives
•• Edible
Vegetable Oils
•• Fossil Fuel
Feedstocks
•• Pitch
1 Responsible Sourcing
Using alternatives generates
more CO2 and competes
with the food supply.
•• Gum Rosin
•• Soy Oil
Deodistillates
3 Expertise and Knowledge
Our expertise in biobased chemistry has enabled us to become
a world leader in developing and biorefining sustainable pine
chemical solutions. As partners with suppliers, we support recovery
engineering techniques to maximize the yield and quality of the CTO
we purchase.
5 Reduced Life Cycle Impact
Our products are used in hundreds of applications including adhesives, roads
and construction, tires and rubber, fuel additives, and mining. Our biobased, low
footprint solutions substitute for alternatives originating from fossil fuels and foodgrade vegetable oils.
sustainability means … E N E R G I Z E D E M P L O Y E E S
sustainability means …
energized employees
Talent Development
Arizona Chemical‘s pursuit of excellence depends
on our having an enthusiastic, motivated
workforce. With an 83 percent response rate
to our 2014 employee engagement survey, we
know that people care about our organization
and their role in it. Our employees rated their
work environment more favorably than they
had in the previous 2011 survey and expressed
a much improved understanding of what
was expected for career success. G4-DMA
In spite of these advances, we did not
meet our overall employee engagement
goals and immediately took action. Each
functional group’s leader developed and
began implementing plans for increased
communication, morale building, training and
career development. Newly-established key
performance indicators (KPIs) measure the type,
impact and results of activities undertaken.
help strengthen employee understanding of our
strategy, required behaviors and the vital role
each individual plays in our mutual success.
Science & Technology (S&T) and all the
Commercial business units have begun a
“Six Questions” discussion process. These
conversations provide leadership with insight
into the root causes of the concerns raised in
the engagement survey and clarify how each
employee and group contributes to our profitable
growth. They also help give direction on how to
enhance clarity and alignment for their teams.
We expect that these communication efforts will
Enhancement of our global perspective
and management pipeline were among the
priorities of 2014’s training programs. Activities
included multicultural education, English and
Dutch lessons for expatriate employees, and
a tailored leadership development program
in Sandarne geared to meeting business
challenges and driving change. Teamwork,
interpersonal communication and time
management skills were also emphasized. G4-DMA
From left to right: Geert Bonnema, Wolfgang Pille-Wolf, Andreas
Schuster, Bas van Arem, Justyna Hinc, Mark Schaapman and Neil
Riddle are among the colleagues who participated in the Dam
tot Dam Cycling Classic to raise funds for a local Netherlands lung
charity, Longfonds.
ASSOCIATION RECOGNIZES OUR CUSTOMER SERVICE
The First Coast Manufacturers Association (FCMA) awarded Moiya Ingham, one of
our Customer Account Representatives, the 2015 Crane Award as the Outstanding
Employee of the Year. The honor recognizes a Northeast Florida employee for
fostering improvement in the workplace and community.
2014 SUSTAINABILITY REPORT
|
19
sustainability means … ener g ize d employees
Talent Retention
With talent retention being a significant goal,
we cultivated career growth in functional areas
throughout our company.
••
Several functions redesigned roles to
provide employees with additional career
opportunities. With an expanded professional
growth ladder, employees have greater
potential for advancement and more incentive
to develop their talents within our company.
Customer Service, Information Technology,
Commercial, and Finance were among the
groups restructuring roles.
••
Our investments in leadership training enable
team members to grow their skill sets and
take on varied and increased responsibilities.
One participant in our COMPASS Leadership
Institute, for example, joined our company
as an intern in Portugal, became a Technical
Specialist and then moved into the global
Commercial organization with account
management and business development
responsibilities. Citing the value of COMPASS
in improving his ability to influence decisions
and build team cohesiveness, this team
member has helped us expand our business
and develop and implement strategies
for enhancing our success in our four main
businesses throughout Latin America. In
addition to supporting his participation in
targeted training programs, Arizona Chemical
is also sponsoring his obtaining a Master’s in
Business Administration.
••
20
The benefits of participation in the Fendley
Leadership Guidance program, which provides
coaching for accelerated professional growth,
are evident in the cases of one employee who
was promoted into a plant manager role and
another person who gained insight into how to
better align team members from around the
world on complex procedures.
|
ARIZONA CHEMICAL
In interactive discussion sessions such as the one Mike Brantley,
Global Manufacturing Director, is leading, we take a global
perspective on continuous improvement opportunities.
Talent Recruitment
When recruiting new talent we think it is well
worth waiting for a candidate with the right
skill set and cultural fit. Given that employees
know us best, we launched an Employee
Referral Program to encourage introductions
of well qualified candidates. In most cases,
employees are eligible for monetary awards
for a referral leading to a new hire.
Another program that has proven to be effective
in introducing potential new employees to our
organization is the co-op experience offered
by our U.S. Science & Technology (S&T) and
Operations functions. Through this program,
select chemistry and chemical engineering
students from top tier universities join Arizona
Chemical for two or three rotations. During this
time they work on a variety of projects that
expose them to career opportunities within our
company and allow us to assess their viability
as candidates for a position after graduation.
sustainability means … C O M M U N I T Y C O M M I T M E N T S
sustainability means …
community commitments
All our facilities are engaged with their
communities, with the larger ones – constituting
nearly 80 percent of our employees – being
the most active. We focus on building
and maintaining relationships with local
philanthropies, governmental and industry
authorities, and emergency responders. G4-DMA
Safety, our highest priority, is an area of great
concern in our communities. All facilities have
health and safety councils and each location has
implemented a local crisis management process.
We conduct safety inspections and practice drills
in cooperation with fire and police departments
as well as other manufacturers in our regions. At
the Almere office’s annual training day, we heard
a presentation from the Regional Commander of
the Rotterdam Fire Brigade and gained hands-on
experience in extinguishing different types of fires.
We obtain insights into additional community
concerns such as economic development and
environmental impacts through participation
and interaction with Chambers of Commerce,
Community Advisory Panels, mayors, legislators
and industry organizations. The Niort facility,
for example, is a member of a local air quality
association and industrial risk monitoring
committee. In Jacksonville we joined the First
Coast Manufacturers Association, which brings
together nearly 300 manufacturing companies for
activities including workforce development training
and representation with government officials.
With the core of our business reliant on biobased
materials, it was a natural fit for our company
to initiate a global Earth Day program in 2013.
This annual event, which each facility tailors to
address local opportunities, frequently involves
environmental education and participation of
school children. In addition, most sites hold annual
health and wellness exhibitions to which family
and community members may be invited.
SAVANNAH TEAM
HONORED
Our Savannah location
received the Bronze Award
from United Way of the
Coastal Empire for having
achieved a giving level of
over $50,000 in 2014.
SUPPORTING WATER PURITY
Our Sandarne facility,
located adjacent to the
Gulf of Bothnia and in
close proximity to the
Ljusnan River, is actively
involved in Ljusnan Voxnan
Vattenvårdsförbund, an
organization dedicated to water conservation
and protection locally and throughout Sweden.
We participate on the board of directors and are
involved in efforts to educate people about the
area’s bodies of water, and the flora and fauna
living in it. Our role in the community includes close
cooperation with the Söderhamn municipality as
we take responsibility for much of the local water
sampling and analysis.
G4-SO1
2014 SUSTAINABILITY REPORT
|
21
sustainability means … c ommunity c ommitments
global
commitments
OULU, FINLAND
earth day
SANDARNE, SWEDEN
sea rescue cooperation
PANAMA CITY, FL
student plant tours
DOVER, OH
EARTH DAY
JACKSONVILLE, FL
bring your kids
to work day
SAVANNAH, GA
volunteerinG
NIORT, FRANCE
EARTH DAY
O ur Loc ations
Manufacturing Plants
Trading Office
Distribution Center
••
••
••
••
••
•• Shanghai, China
•• Marianna, Florida
Representative Offices
Science & Technology
Centers
••
••
••
••
•• Almere, the Netherlands
•• Savannah, Georgia
•• Shanghai, China
••
••
••
••
22
|
Dover, Ohio
Panama City, Florida
Pensacola, Florida
Savannah, Georgia
Chester-le-Street,
United Kingdom
Gersthofen, Germany
Niort, France
Oulu, Finland
Sandarne, Sweden
ARIZONA CHEMICAL
Miami, Florida
Singapore
San Juan del Rio, Mexico
Moscow, Russia
sustainability means … G L O B A L G R O W T H
sustainability means …
Global growth
Building our worldwide presence remains a
strategic goal. We are expanding our activities
and staffing so that we can service every
customer with the same level of quality, expertise
and support everywhere they operate.
Our emphasis is on regions that offer faster-growing
end markets and attractive product pricing
dynamics. For example, in China where safety and
environmental requirements are rapidly increasing,
there is strong potential for our fuel additives
to help reduce the CO2 footprint and our tire
enhancement products to improve safety. G4-DMA
MOSCOW, RUSSIA
EARTH DAY
SHANGHAI, CHINA
EARTH DAY
Arizona Chemical’s solid financial foundation,
global leadership in biorefining, market-driven
strategy, operational performance and
customer-focused mindset further our ability to
create superior value. These qualities all affect
achievement of sustainability’s triple bottom
line, which is summarized as people, planet
and profitability. For Arizona Chemical, being
responsive and effective in everything we do will
enable us to grow and thrive on a global basis.
ALMERE, THE NETHERLANDS
BRING YOUR KIDS TO WORK DAY
Principal Executive Offices
•• Jacksonville, Florida
•• Almere, the Netherlands
Team members from diverse functions discuss global strategies
with Kees Verhaar, our President and CEO.
2014 SUSTAINABILITY REPORT
|
23
w w w. arizona c hemi c al . c om
4600 Touchton Road East, Suite 1200
Jacksonville, FL 32246
Tel: +1 800 526 5294
Transistorstraat 16
1322 CE Almere
The Netherlands
Tel: +31 36 5462 800
[email protected]
Renewable Resources.
Endless Possibilities.™
G4-5