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. We view this as the starting point of our journey to integrate climate scenario analysis into our reporting and planning processes, and we expect the guidance and tools to advance over time. In 2024, in line with Corporate Sustainability Reporting Directive (CSRD) requirements, we are completing a new Double Materiality Assessment, and this process incorporates the TCFD results.

Highlights

Board-level oversight of all
sustainability-related
areas

Corporate
Responsibility
Committee

Task Force on Climate-related Financial Disclosures (TCFD)

Climate-related Risk Analysis Findings

We actively plan investments around our Eco-Premium Solutions both in product development as well as facility investments and production capability to meet market demand, including consideration of low carbon and emission reduction policies impacting our customers and affecting potential market demand.

Read more in the 2023 Sustainability Report

Governance

Our Board of Directors (Board) and our Leadership Team share oversight of our company's sustainability performance, including sustainability-related target setting and the monitoring of progress against targets. To support the Board in its duties, there are several committees:

  • The Corporate Responsibility Committee provides Board[1]level oversight on matters of sustainability, health, safety and environmental (HSE), product quality, social policies, and programs, and other issues that may affect the Company’s reputation.
  • The Audit Committee oversees the integrity of our financial statements, the effectiveness of our internal controls over financial reporting, risk management, cybersecurity, tax, and ethical conduct.
  • The Compensation Committee manages the compensation of key employees and other aspects of the company’s total rewards philosophy and strategy.
  • The Nominating & Corporate Governance Committee is responsible for recommending the nomination of individuals to serve on our Board and for setting up our corporate-governance practices. They ensure that the Board has the necessary expertise and diversity in terms of, experience, qualifications, knowledge, abilities, gender, age, and ethnicity.

You can find more information about our Board and its committees here.

Risk Management

Effective risk management is crucial to achieving our strategic goals. We employ an Enterprise Risk Management (ERM) approach to identify potential rewarded and unrewarded risks and take suitable mitigating actions. Our ERM approach enhances the decision-making process within the company. Our approach to risk management and internal control is based on the Committee of Sponsoring Organizations of the Treadway Commission (COSO*) reference model. It encompasses strategic, financial, IT, legal, and business continuity components as well as security measures to help ensure that we operate in an ethical and responsible manner. We drive transparency and accountability through various cycles of monitoring and audits, to ensure all mitigating actions are completed.

Sustainability report

*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 comprehensive ERM approach compels us to consistently question whether we are acting appropriately to minimize risks and capitalize on growth opportunities, including those related to sustainability. It empowers us to identify and manage the strategic, operational, financial, and compliance risks. These include sustainability-related risks and opportunities, including those related to climate, to which Nouryon is exposed. This approach shapes how we work and strengthens our culture of ethical and sound decision-making. It also allows us to enhance the effectiveness and efficiency of our operations, report financial results accurately, and ensure compliance with relevant laws and regulations. Collectively, these aspects reinforce our reputation and our capacity to be a consistently reliable business partner.

The ultimate responsibility for oversight of Risk Management and Compliance lies with Nouryon's Board. Our ERM and internal control activities are organized into three lines of defense:

  • First line: all business and operations managers. They are responsible for owning and managing 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. They help ensure that the risks are identified, properly mitigated, and that monitoring control procedures operate as intended. Additionally, the second line oversees the complete risk program.
  • Third line: Internal Audit. They provide an independent and objective assessment to enhance the effectiveness of governance, risk management, and internal controls. This includes evaluating the leadership of business and operations, and how oversight functions manage and control risks.

Identifying and Mitigating Risks to Leverage Growth Opportunities

Our risk management capabilities and resources are designed to align closely with Nouryon's strategic objectives. The ERM process incorporates sustainability risks with a two-to-five-year outlook. We review sustainability-related risks and opportunities at three levels: (1) macro (generic, including political, regulatory, legal, sociocultural, ecological, demographic, technological, and economic environments); (2) meso (industry); and (3) micro (Nouryon). These evaluations encompass strategic, financial compliance, and operational aspects.

Cybersecurity

Cybersecurity is a crucial part of our overall risk management program, aimed at reducing risks to our systems and preventing production outages or loss of sensitive information. Our goals are to:

  • Continually improve our security posture
  • Mature our response preparedness
  • Advance our security foundations
  • Enhance our security operations

Our Chief Information Security Officer, along with a dedicated team of cybersecurity specialists, continually work to strengthen our digital defenses and cybersecurity infrastructure. They focus on enhancing our security operations and perpetually improving the Company's ability to ensure uninterrupted operations and business continuity. This is accomplished through robust monitoring, targeted technology enhancements, and frequent employee awareness campaigns, including internal testing.

Task Force on Climate-related Financial Disclosures (TCFD)

Our Approach to Assessing Climate-related Risks and Opportunities

Climate change is among the most urgent challenges of our era, and the shift towards a net-zero-carbon economy presents significant risks and opportunities.

Our qualitative analysis encompassed both transitional and physical risks and opportunities, and it referred to leading climate models and scenarios. We utilized publicly available data from the peer-reviewed climate models of the United Nations Intergovernmental Panel on Climate Change (IPCC). We considered a variety of scenarios to pinpoint potential risks and opportunities for the Company. We evaluated potential risks over short, medium, and long-term time horizons, across our entire value chain – upstream, downstream, and within our operations.

For more information on our approach to climate change, see Mitigating Climate Change: Objectives and Opportunities in our Sustainability Report.

Sustainability report

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