Sustainability Governance and Risk management
Sustainability Governance and Risk management
Strong Governance and Risk Management
A crucial component of securing a sustainable future is ensuring that Nouryon continues to always operate ethically and responsibly. This means maintaining a sound decisionmaking process while fulfilling regulatory requirements and commitments, mitigating risks, strengthening our cybersecurity, and establishing and enforcing ethical standards – for our customers, suppliers, and our Company. Our robust Governance and Risk Management capabilities form the core of Nouryon’ s operations.
In 2021, we completed a comprehensive qualitative analysis using the Task Force on Climate-related Financial Disclosures (TCFD) framework. As our first TCFD analysis, we see this as the beginning of our journey towards incorporating climate scenario analysis in reporting and planning, and we expect the guidance and tools to advance over time.
Board-level oversight of all
ESG (Environment, Social,
and Governance) areas
Task Force on Climate-related Financial Disclosures (TCFD)
Task Force on Climate-related Financial Disclosures
Nouryon’s Board of Directors (Board) is charged with accountability and oversight of our Company’s ESG (Environment, Social, and Governance) performance. The Company Leadership Team shares collective responsibility for the Company’s ESG performance. Progress is reported to the Board on a quarterly basis. The Board is supported by the following committees:
You can find more information about our Board and its committees here.
Effective risk management is a key success factor for realizing our strategic objectives. Nouryon employs an Enterprise Risk Management (ERM) approach to identify potential rewarded and unrewarded risks in order to take appropriate mitigating actions. Within Nouryon, ERM is used to augment the decision-making process. Nouryon’s approach to risk management and internal control is based on the Committee of Sponsoring Organizations of the Treadway Commission (COSO*) reference model and includes strategic, financial, IT, legal, business continuity, HSE, and security components. Transparency and accountability are confirmed through various cycles of monitoring and audits to ensure all mitigating actions are performed.
*COSO is a joint initiative of organizations that provides comprehensive frameworks and guidance on enterprise risk management. For more information: https://www.coso.org
Our ERM approach allows us to identify and manage strategic, operational, financial, and compliance risks to which Nouryon is exposed, including climate-related risks. This approach guides how we work and underpins our clear, strong, and consistent culture of ethical and sound decision-making. It also enables us to improve effectiveness and efficiency in our operations, accurately report financial results, and ensure compliance with applicable laws and regulations. Taken together, these factors reinforce Nouryon’s reputation and ability to be a consistently reliable business partner.
Nouryon’s Board is ultimately responsible for oversight of our Risk Management and Compliance. Our ERM and internal control activities are organized in three lines:
First line: all Business and Operations managers own and manage risk, which includes identifying and mitigating risks.
Second line: oversight functions, such as Internal Control, Legal and Compliance, and the Risk Committee, support Business and Operations management and help ensure that the risks are identified, properly mitigated, and that monitoring control procedures are operating as intended. In addition, the second line has oversight of the complete risk program.
Third line: Internal Auditing provides an independent, objective means to evaluate and improve the effectiveness of governance, risk management, and internal controls, including the way Business and Operations are led, as well as how oversight functions manage and control risk
Our risk management capability and resources ensure that risk management is more closely aligned with Nouryon’s strategic objectives. Sustainability-related risks and opportunities, including climate-related risks, are reviewed at three layers of strategy: macro (generic), meso (industry), and micro (Nouryon). These assessments cover strategic, financial compliance, and operational considerations.
The ERM process includes long-term sustainability risks. For example, the macro layer considers risks in the political and legal, sociocultural, ecological, demographic, technology, and economic environments.
Sustainability is therefore not only a pervasive topic within ERM but integral to every aspect of risk management, and ultimately to our growth. Our comprehensive ERM approach challenges us to continually ask ourselves whether we are acting appropriately, to minimize risks and maximize growth opportunities.
Cybersecurity is a component of the overall risk management program, reducing the risk to systems and plant outages, or loss of sensitive information, which are essential to our business operations. Our Chief Information Security Officer and team of cyber specialists continue to strengthen Nouryon’s digital defenses and cybersecurity foundation, enhancing our security operations, leveraging efficiencies, and continuously improving the Company’s position to ensure sustained operations and business continuity. This is achieved through strategic prioritization, targeted technology improvements, employee awareness campaigns, and aquiring and retaining strong talent.
Climate change is one of the most-pressing issues of our time, and the transition to a net-zero-carbon economy will create significant risks and opportunities. In 2021, we completed a comprehensive qualitative analysis using the TCFD framework. As our first TCFD analysis, we saw this as the beginning of our journey toward incorporating climate scenario analysis in reporting and planning, and we expect the guidance and tools to advance over time.
Our qualitative analysis included transition risks and opportunities as well as physical risks and referenced leading climate models and scenarios. We drew upon publicly available data from the United Nations Intergovernmental Panel on Climate Change peer reviewed climate models, and we considered a range of scenarios to identify potential risks and opportunities for the company. We considered potential risks over short, medium, and long-term time horizons, across our value chain – upstream, downstream, and in our direct operations.
These results are described in our 2022 Carbon Disclosure Project response, and other sections of this report also cover TCFD elements. In addition, we provide a summary table of how our results align with the TCFD framework.
For more information on our approach to climate change, see Mitigating Climate Change: Objectives and Opportunities in our Sustainability Report.