Social

Performance Indicator and Description

Information

Reported

Arizona Chemical hires the majority of its work force from the communities surrounding our facilities. The table illustrates the breakdown of our workforce, by employment type, employment contract, and region.  

Blue Collar figures consist of union workers in the U.S. and plant workers along with workers council members in Europe.

Our global “Hire to Retire” business process area documents many important aspects of human resources at Arizona Chemical and specifically defines procedures for on-boarding and recruiting, performance management, compensation, and communications.

LA2
Total number and rate of new employee hires and employee turnover by age group, gender, and region.

The number of new employee hires by region is:

• North America: 34
• Europe: 48
• Asia: 5

Benefits for Salaried Employees – U.S.

• Dental and Medical insurance plans including prescription drug coverage are offered for employees and their families. The cost is supplemented by Arizona Chemical. 
• Short Term & Long Term Disability, Basic Life, Accidental Death & Dismemberment and Business Travel Accident Insurance coverage is offered at no cost to the employee.
• Additional optional Life and Vision insurance coverage are available.
• A 401K Savings plan is offered with a company match on the first 8% of employee contribution.
• Other benefits include vacation and holidays, Employee Assistance Program, Flexible  Spending Program, Severance Program and Tuition reimbursement.

Benefits for Hourly Employees – U.S.

• Benefits vary according to union contract agreements.  All sites offer Medical, Dental and Supplemental Disability and Life insurance.
• A 401 K saving plan is offered with company match at various levels determined by the contract.
• Other benefits include vacation and holidays, Employee Assistance Program, Flexible Spending Program and Tuition reimbursement.

Benefits for Employees – Europe

• Benefits are driven by country regulations and vary accordingly. 
  

LA4
Percentage of employees covered by collective bargaining agreements.

Approximately 52% of the United States employees (359 people) are unionized and are covered by collective bargaining agreements. In Europe, about 86% (361 people) of our employees are represented by local workers councils and/or unions. In addition, we abide by national employment laws for the countries in which we operate.

LA5
Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.

LA6
Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.

Over 75% of our workforce is represented by formal joint management-worker health and safety committees. Each facility has at least one formal health and safety committee with joint management-labor representation.

2010 Corporate Commitment to Sustainability: Safety and Emergency Planning: p. 3–4

Arizona’s long-term ambition is to achieve safety excellence.  Safety performance is overseen by the Director of EHS, who reports directly to the President and CEO. Our vision “Nobody Gets Hurt” has been formulated and communicated by the CEO. The five-year EHS excellence strategy has been developed to achieve this vision. The safety target is to achieve 0.3 TIR (Total Incident Rate) in 2014. We exceeded our 2010 goal of a 0.99 TIR and achieved a TIR of 0.89.

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No fatalities occurred in 2010 among our employees. However we are deeply saddened by a fatal incident to a contract worker at our Oulu facility. As part of our effort to prevent a recurrence, we focused on six Life Critical Policies that were launched in January 2011.

Employee Assistance Programs are available to all employees and their families. They cover education, counseling, prevention, and treatment. The programs offer professional help for emotional, financial and substance abuse problems as well as guidance on dealing with medical and other issues. The service is available at no cost to employees.

We maintain a robust preventative program to monitor for and take mitigating actions against any specific diseases for which our employees may be at high risk. While we have not conducted formal data-based studies on high risk diseases in our workplace, our efforts to help manage the health and safety of our workforce include implementation of an Industrial Hygiene Program.

LA9
Health and safety topics covered in formal agreements with trade unions.

LA11
Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

We have a tuition reimbursement program to encourage employees to further their education to achieve individual career goals. In support of this philosophy, the program reimburses up to 100% of the cost of certain courses up to a defined maximum for most eligible employees, with additional reimbursement for approved graduate courses.

We also provide annual reviews, succession planning, career development, and skill improvement services to enable our work force to grow within the organization. To support ongoing development of employee skills, we provide leadership and professional development training. Numerous courses, conferences and online training are available with the approval of the employee’s manager.

In some cases of termination, employees may be provided a severance package with provisions for outplacement counseling to assist in the job search.

LA12
Percentage of employees receiving regular performance and career development reviews by gender.

HR5
Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.

HR6
Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.

HR7
Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.

HR9
Total number of incidents of violations involving rights of indigenous people and actions taken.

 No incidents of violations involving rights of indigenous people have occurred.

All of our operations are in countries that have national legislation protecting human rights. Our policies and programs are in compliance with this legislation and therefore we have not documented any human rights reviews or impact assessments. Countries where we are located and number of operations of any type, e.g. plant, sales office, etc.

• United States: 8
• Netherlands: 1
• Russia:1
• Singapore: 1
• China: 1
• Mexico: 1
• UK: 2
• Germany: 2
• France: 2
• Finland: 2
• Sweden: 2
• Italy: 1
• Benelux: 1
• Spain: 1

A detailed Code of Business Conduct appears on the Arizona Chemical website and is accessible to all employees. This Code includes issues relating to conflict of interest; accepting, agreeing to accept, offering, soliciting gifts or any form of remuneration that might influence business decisions or behavior; and the need to disclose any concerns to a Manager.

http://www.arizonachemical.com/en/About-Us/Code-of-Business-Conduct/

SO5
Public policy positions and participation in public policy development and lobbying.

We oppose legislation that distorts markets and affects our biorefining business, particularly in the energy area. In recent years, the primary form of public policy distortion affecting our business has been energy legislation promoting renewable biomass using our raw materials – co-products of Kraft pulp and paper processing – to reduce the pace of climate change. Accordingly, we lobbied on climate change legislation at multiple levels of government in both Europe and the United States.

Based on over 80 years of biorefining experience, our expert position is that legislation should be guided by long-term, holistic sustainability considerations and efforts to maximize the value of each natural resource. Support for non-specific bioenergy solutions takes a narrow-minded, tunnel vision perspective. In Sweden, for example, the government paid substantial sums to the bioenergy sector to convert our raw materials to fuel. In addition to causing raw material price increases and shortages, the incentive does not allow for extraction of the materials’ optimal value and over the long term, threatens to force producers of petroleum product replacements out of business.

Beyond our worldwide focus on the environmental impact of efficient resource utilization and of the lower CO2 emissions associated with our production compared with that of alternative products, our U.S. lobbying efforts specifically reinforce messages about the impact of the incentives on employment and imports of foreign goods. At a time when the country is facing high unemployment and large trade deficits, we want to be sure that legislators fully understand the broad scope of their decisions in this area. The pine oils industry employs over 10,000 workers and domestic pine oil bio-refineries offset the need for up to 4.4 million barrels of imported oil per year. The facts, therefore, show that to optimize the use of renewable biomass, legislators should be equally supportive of biobased products like those made by Arizona Chemical as they are of bioenergy products. 

Arizona Chemical team members are actively engaged in several industry trade associations that are involved in public policy development. We are members of the Pine Chemicals Association (PCA), an organization that supports innovative, safe and environmentally responsible practices to assure a reliable supply of high quality pine chemical products. Gary Reed, our Vice President, Operations, is the association’s Chairman and CEO. Mike Husain, our Director, Sustainability, is a leading member of the Sustainability Committee.  PCA has clearly outlined the industry’s position on government incentives for bioenergy at: http://www.pinechemicals.org/clientuploads/Publications/PCA_Position_paper_FINAL.pdf 

In 2010 Arizona Chemical decided to join the American Chemistry Council (ACC) Pine Chemistry Panel, a relationship that became effective in 2011. The Panel will focus on the issue of government support for inefficient uses of raw materials for energy consumption.
To explain our position to a broad audience of interested parties, we share our point of view as speakers at industry conferences. Our speaking engagements include the International Biomass Conference, Biomass 2010, and the World Biofuels Markets Conference.

SO6
Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

SO7
Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.

SO8
Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

PR1
Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.

For Arizona Chemical, product responsibility means exercising due care in the design of our products to ensure they do not pose unintended hazards to health and safety, when used appropriately. We have longstanding management systems in place to assess the health and safety impacts of all of our products at every stage of their life cycle – product concept; R&D; certification; manufacturing and production; marketing and promotion; storage, distribution and supply; use and service; and disposal to ensure that we remain in compliance with all regulations and applicable voluntary codes. The cohesiveness and effectiveness of these systems are increasingly robust as a result of the implementation and continuing improvements in utilization of our global business processes and enterprise resource planning mechanisms.

*Arizona Chemical has published procedures that we expect our employees to follow. However we do not currently have a formal process that monitors internal compliance or requires third-party certification.

**Many customers consider their use of our products as proprietary information, so this evaluation is restricted to our documented uses.

***As a business-to-business company, our products are sold to business customers who receive clear information that recommends proper disposal methods and warns against reuse of our products. They combine our materials with many others to manufacture a wide variety of complex, value-added products. As a result of this complexity, it is not feasible for us to assess the product to the end of its life cycle.

PR2
Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

We experienced no incidents of non-compliance in 2010, nor were there any penalties or fines levied.

We have an extensive audit system in place to ensure compliance with the U.S. Toxic Substances Control Act (TSCA). In practice, we go beyond TSCA requirements with a “precautionary approach” to issues that might fall within TSCA. When we uncovered European data indicating that rosin derivatives may cause skin sensitization or eco-toxicity, we proactively reported 23 potential violations to the U.S. EPA in 2010. We notified our customers of the data and made product labeling changes, even though our products go through a significant amount of reaction and dilution prior to reaching the consumer and are highly unlikely to cause any harm.

To ensure our customers' ability to make informed purchasing decisions, we have procedures in place that address incorporation of all relevant product information and requirements for proper and effective labeling. 

*Arizona Chemical has extensive procedures in place to ensure that we have all component sourcing information. However this information is proprietary and critical to our competitive position and therefore is not revealed.

PR4
Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.

We are in compliance with regulations and voluntary codes concerning product information or labeling and experienced no incidents of non-compliance in 2010.

As part of our corporate responsibility, we sometimes exceed compliance requirements by voluntarily providing additional information and/or labeling. One example is our decision to eliminate bisphenol A (BPA) from our ink additives. We took this action, which now eliminates BPA from our entire product line, as a precautionary measure in light of contradictory evidence and controversy about BPA’s potential human health impacts.

PR5
Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

2010 Corporate Commitment to Sustainability: Market Innovation, Customer Value and Relationships: p. 8–9

Our Global Commercial Team members are in frequent contact with customers to understand their needs and level of satisfaction. They work closely with the Global Science & Technology Team which is responsible for ensuring that our product applications are appropriate for customer requirements.

We supplement this direct contact with customer surveys conducted on a monthly basis. The surveys provide feedback on issues relating to product quality, on time and complete delivery, as well as the effectiveness of improvements being made. We use independent third parties for periodic interviews and reporting on customer reactions. On an ongoing basis, our Quality Control personnel assess comprehensive data compiled through our enterprise resource planning system and online forms that customers or their commercial team representatives complete.

We are considering conducting an Internet-based survey of all customers in 2011. Since customer input is currently more individualized, we are unable to report trends or reactions from a statistically relevant sample size.

The various methods we use for gauging customer satisfaction are applied across our entire product line.

Expectations regarding our marketing communications are set out in our Code of Business Conduct which applies across the organization. Adherence to our Code of Business Conduct is built into our standard practices and does not involve any formal auditing processes or general reviews of marketing compliance standards.

To ensure that we are legally compliant and abiding by accepted business marketing practices, every communication is expected to go through several layers of review and approval within the organization. Depending on the material, participants include communications professionals, senior managers, and corporate legal counsel.

It is not uncommon that in the course of doing business there is an occasional customer complaint about product quality or performance not meeting expectations. If and when any such cases arise, we typically involve our Science & Technology Team and others to determine if the problem is valid and/or ways to rectify the situation. None of our products have been the subject of public debate relating to responsible marketing communications.

Arizona Chemical does not produce products that are banned in any country. However, we have chosen not to market some products in certain countries due to the cost of performing special testing they require. In addition, through an internal raw material approval system, we actively seek to exclude "materials of concern" from our portfolio, including heavy metals, asbestos, dioxins, endocrine disrupters, fluorinated compounds, organo-tin compounds, toxic substances, bio-accumulative substances, pesticides, etc.

PR7
Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.  

Arizona Chemical had no regulatory or code non-compliance incidents relating to marketing communications in 2010. In past years there have been occasional incidents of customer complaints that could suggest misrepresentation of our products for their particular application. However no complaint has involved noncompliance with regulations or voluntary codes.