DMA

Management Approach
Disclosure and Description

Information

2010 Corporate Commitment to Sustainability: Strategic Growth, Profitability, Market Innovation, Customer Value and Relationships: p. 6–9

Our strategic plan calls for achieving organic growth, attractive margins and cash flow with a market driven approach. In addition to providing products and technical service for markets that we have successfully served for decades, e.g. inks, we are creating distinctive products to serve customers’ unmet needs in select markets: adhesives, roads and construction, tires and rubber and consumer products. We continue to research attractive market segments and have invested further in our already world-class Science and Technology team with the addition of a new senior leader who is a member of our top management team, the Global Lead Team (GLT). To achieve our geographic expansion goals we have opened offices in new locations and established joint ventures and strategic alliances.

Arizona Chemical’s Global Lead Team (GLT) is ultimately responsible for the company’s economic performance. We leverage a global Business Process approach that captures and standardizes information about all aspects of our business and integrates it into actionable reports. In monthly meetings and ongoing assessments,  the GLT analyzes economic results in terms of goals, trends, emerging opportunities and market conditions.

Others throughout the organization have responsibility for economic performance through a layered approach that aligns with Arizona Chemical’s goal oriented culture. At levels below the GLT, our teams monitor and control Key Performance Indicators (KPIs) by shift, week, month, quarter and year. We measure performance against established budgets and personal goals, so that individuals can be rewarded for their results. In conjunction with our philosophy of “continuous improvement,” we provide employees at all levels of the company with progressive training to enable them to attain the knowledge required for superior job performance and career advancement.

We are fully aware that our operations have effects beyond our own employees. We plan to participate in industry sector studies that evaluate this impact more holistically in 2011. We also maintain a close relationship with the United Way, our partner of choice for public investment. 

More information is available in EC1.

2010 Corporate Commitment to Sustainability: Safety and Emergency Planning, Environmental Responsibility: p. 3–5

Arizona Chemical's Environmental, Health and Safety (EHS) Policy sets the standard for company environmental performance. We take an integrated approach and hold health and safety at our facilities, as well as protection of the environment, as core values that are critical to the success of our business. We are committed to promoting the safety and wellness of our employees at work and at home and encourage and empower employees to actively participate in safety on and off the job.

While GRI considers some facets of safety in the Social category, we have expanded our approach to environmental sustainability to include this aspect. The Global EHS Director leads our EHS efforts and reports directly to the CEO.  In addition, the Vice President, Operations also reports directly to the CEO and is responsible for achieving world class performance in our manufacturing facilities. With this reporting structure, top management maintains an active and visible role in ensuring a safe workplace. Senior management sets goals for EHS performance as do individual facilities to address site specific issues.

Our safety vision, “Nobody Gets Hurt,” is the foundation of everything we do. From our point of view, safety cannot and will not be compromised at any time by Arizona Chemical employees or contractors. We work safely, watch out for each other, and report and correct all unsafe conditions and situations. In 2010 we focused on Life Critical Processes that were launched in 2011 to improve our already robust policies. We established a new position of Global Process Safety Engineer whose primary responsibility is to develop and support implementation of our global Process Safety Management System. Our system will be benchmarked against well-recognized standards and customized to reflect best practices. 

Arizona Chemical is committed to fostering sustainable business practices through environmental stewardship. For example, all our facilities have implemented an Environmental Management System (EMS). In the US, we adhere to EPA’s Performance Track model, consistent with ISO 14001. Our Sandarne, Sweden; Oulu, Finland; and Chester-Le-Street, UK facilities are active members of the Responsible Care Program which includes self auditing and reporting. We use several internationally recognized standards, including ISO 14001 and 9001 and OHSAS 18001, as applicable and were proud to add Savannah Technology to the ISO 9001 certification. We also consider sustainability issues when selecting raw material and other suppliers, energy and natural resource consumption, and the potential impacts and benefits to our communities in the manufacture and use of our products.

The Company does not have a separate policy on biodiversity as there are no known impacts from its operations, which are primarily based on by-products from other industries. Additionally, we have negligible land assets.

Facility based EHS training programs are designed and implemented to ensure all personnel whose work may create a significant impact upon the environment have received appropriate training. This training covers compliance, awareness topics and competency as well as site specific issues.

We seek continuous improvement and track EHS performance through auditing against best practice standards and use of our global Business Processes. Official reports trigger corrective action planning and implementation when needed.  To ensure that our standards are widely accepted best practices, we will have a third party audit of our safety systems in 2011.

These efforts have resulted in significant improvements to our environmental operations, with notable decreases in our environmental events, odor complaints, hazardous waste generation rates, energy use, GHG emissions, and VOC emissions.

For environmental improvement and cost savings, the Company actively seeks to reduce its transportation impact. Consolidation of operations to minimize manufacturing transfers, mode switching to bulk systems, and technology upgrades to completely fill loads are a few examples of the activities undertaken by our Procurement and Supply Chain Teams to minimize this impact.  

2010 Corporate Commitment to Sustainability: Business Conduct and Ethics, Our Social Responsibility: p. 10–11

Our Human Resources group manages our approach to labor including compliance to our policies and principles as well as regulations. The Vice President for Human Resources and Communication oversees these efforts which are reviewed by the Global Lead Team, our most senior internal governance body, on a regular basis.

Our Code of Business Conduct sets the expectations for compliance with labor laws. This policy includes specific labor-related sections on employees, safety and compliance with laws and regulations.

Arizona Chemical is an equal opportunity employer and does not discriminate or allow discrimination on the basis of race, sex, religion, national origin, pregnancy, age, disability or any other classification protected by applicable law. All personnel actions, including hiring, benefits, transfers, compensation, layoffs, and educational, recreational, and social programs are administered in a non-discriminatory manner.

We require that all of our employees understand and abide by non-discriminatory hiring principles. We require that all employees add their support to achieving our objectives of equal opportunity employment and of zero tolerance for any type of illegal harassment or discrimination. Violations are dealt with in a serious manner and any employee who engages in such behavior will be subject to appropriate disciplinary action up to and including discharge.

To put our policies into practice, we are guided by six key human resource principles. We are committed to:

• Champion a culture of employee engagement, inclusion, and diversity to continually improve business results.
• Lead organizational change, while recognizing and honoring differing opinions.
• Act as a strategic business partner to help the business achieve its goals by providing perspective and consultation on organizational issues.
• Ensure that our employees value our workplace as an environment in which they can develop and prosper personally and professionally.
• Serve as a source of information and expertise that provides quality customer service to employees.
• Hire, develop and retain talent to help the business achieve results.

We work to accomplish this mission by setting goals where appropriate, establishing management practices and standards for our organization and training staff to ensure employee awareness of expectations and required behavior.

Formal business processes are defined in various employee handbooks distributed in both North America and Europe. These handbooks address items such as Equal Employment Opportunity, open door policy, dispute resolution, violence in the workplace and policy against harassment.

We have formal labor agreements that guide our actions at each of the manufacturing sites. These agreements are reached through good faith bargaining that respect local needs.

DMA Human Rights
Disclosure on Management Approach HR

2010 Corporate Commitment to Sustainability: Business Conduct and Ethics, Our Social Responsibility: p. 10–11

Arizona Chemical complies with the laws of every country in which we operate. Operating primarily in North America and European Union, we have identified no operations where the right to exercise freedom of association and collective bargaining may be at significant risk, or where a significant risk exists for incidents of child labor or of forced or compulsory labor or human rights security. Training on our Code of Business Conduct (available on our website) addresses our expectations in these areas. No incidents or violations involving rights of indigenous people have occurred. Were issues to arise, our Vice President for Human Resources and Communication along with our Global Lead Team would have responsibility for addressing them.

DMA SO
Disclosure on Management Approach SO

2010 Corporate Commitment to Sustainability: Business Conduct and Ethics, Our Social Responsibility: p. 10–11

A core Arizona Chemical tenet is to be welcomed in the communities in which we operate. Our Code of Business Conduct sets the expectation for employee and community engagement, with additional guidance coming from our human resource policies and facility goal setting process.

Our efforts to encourage dialogue typically take the form of formal meetings conducted by our Community Action Panels and informal engagement between local facilities and members of the communities we affect.  We seek ways to address concerns and take appropriate actions to rectify issues.

As active members of the community, each of our facilities maintains a budget to support local organizations and causes. These funds and employee volunteer efforts support local organizations and efforts with approval from Corporate HR.  We specifically target youth education and health to focus our gifts.

Our site managers are responsible for community engagement with the support of human resources in the oversight of and compliance with all expectations.

Our Code of Business Conduct establishes expectations relating to compliance with laws and regulations, conflict of interest and competitive practices. We recently published the second edition of a brochure for our employees entitled “Antitrust and Competition Law Compliance Guidelines.”

Our evolution includes planning for an Internal Audit Department during 2010 and launching it in 2011. The department provides independent, objective assurance and advisory functions in areas of risk management, internal controls, business processes and corporate governance.

More information is available in SO5.

For Arizona Chemical, product responsibility means exercising due care in the design of our products, to ensure they have no unintended hazards to health and safety when used appropriately. We have longstanding management systems in place to assess the health and safety impacts of our products at every stage of their life cycle.

Our Product Regulatory department reviews raw materials purchased for use in any Arizona Chemical product to ensure they comply with laws and regulations and that their use will not adversely affect compliance of our products.  We use a Raw Material Process questionnaire as the basis of screening all raw materials being allowed onsite. We adhere to any existing restrictions on individual materials and either ban them from use or require senior management approval prior to use.  We conduct a formal Multistage Product Information Review process prior to allowing any material to leave a site. We review all experimental and commercial products for regulatory compliance in accordance with standards such as international chemical control (TSCA, REACH, etc.), FDA, state right to know, transportation, and safety and health before they are sent to customers for evaluation or before they are manufactured in one of our facilities for commercial purposes.

Management systems are in effect to trigger review of existing products when formulation or process changes occur. The systems provide a structured way to evaluate the change in relation to regulations and to approve it only when it meets regulatory compliance and other criteria. Regulatory compliance information on products is made available within the company to all functions through various databases and systems.

Appropriate warnings appearing in highly visible blocks of text and prominent statements on support material are integrated into our sampling and order systems. This ensures that both internal parties and external customers are made aware of issues such as restricted countries and special exemptions that may apply to our products or their sale or sampling in various countries. Information regarding the safe use of our products is provided on all product labels, in accordance with both the applicable regulatory requirements, and company policies and procedures.

For employees whose job functions require specific knowledge, we provide training on labeling to meet transportation requirements, such as those of the U.S. Department of Transportation, HAZCOM, and TSCA. Additional formalized training programs on product responsibility will be developed and globalized. This program will ensure that our practices are in compliance and that we follow best practice procedures.

We maintain a formal process for evaluating our suppliers. Areas of focus include quality, price, safety, logistics, environmental and safety compliance (for toller operations), and financial performance. We employ full-time engineers whose sole function is to work with our primary raw material suppliers in minimizing waste, improving material recovery and ensuring the application of best practices.

We work with our transport providers by participating in regular technical meetings to ensure safe truck, rail and marine transport of our raw materials. We perform EHS audits on select contracted storage tank terminals to ensure compliance with appropriate EHS standards and all applicable regulatory requirements.

More information is available in PR8.