Solvay
2019 Annual Integrated Report

Business environment

Built-in resilience to risk

GRI Disclosures

Uncertainty is a given in today’s world and robust risk management is key to thriving in business. Solvay must navigate volatile economic and political waters and address new dynamics in areas ranging from growth to shorter market cycles, climate change, energy transition, and technological transformation.

The Group’s annual risk review allows it to meet its strategic objectives and long-term Purpose and comply in full with laws, regulations, and the Solvay Code of Business Integrity.

Informed risk mitigation

Solvay’s risk assessment process is thorough and comprehensive. Sustainability is ever more present in our business activities and our risk management approach. Two of the four main impact types used to assess risks reflect our growing sensitivity to extra-financial issues, namely impacts on people and on the environment. The other two – economic and reputational impacts – directly affect the Group’s operational and financial performance. This enables better anticipation and strategic de-risking, as well as freeing up resources for new opportunities.

Managing risk is the responsibility of teams at all levels of the Group. Our dynamic and highly decentralized process tasks key players with assessing the risks that fall within their areas of authority and expertise. Progress made on mitigation actions, as well as changes in the risk and opportunities environment, are charted on a dedicated dashboard, updated twice a year.

Managing key risks

Solvay’s main risks are reviewed periodically by our Audit Committee. The effectiveness of our risk management process is assessed annually by the Audit Committee with other Board members present. Main risks also form part of our annual strategic review.

In 2019, we identified two emerging risks that will receive special attention given their potentially significant long-term impact:

  • Environmental impact: the environment and the increasingly demanding expectations of stakeholders on the potential environmental impact of our activities, in energy and water consumption, waste production or emissions.
  • Geopolitical risks: geopolitical rivalries may mean constraints on Group operations, in tariffs, investments, intellectual property, data ownership or staff mobility.

Criticality1

Risk

Trend

Sustainable development high materiality aspects

Stakeholders

Emerging risk: newly developing or changing risk that may have, on the long term, a significant impact which will need to be assessed in the future.

1: The criticality level is determined by combining the risk’s two ratings (impact and level of control) at the time of the assessment.

High

Security

Data security and customer privacy
Critical incidents management

Employees
Local communities
Customers

Ethics and Compliance

Management of the legal, ethics & regulatory framework

Suppliers
Employees
Planet
Investors

Industrial

Critical incidents management
Employee health and safety

Employees
Local communities

Transport accident

Waste and hazardous materials
Critical incidents management

Suppliers
Employees
Local communities

Climate change

Greenhouse gas emissions
Energy
Sustainable business solutions
Water and wastewater

Customers
Local communities
Employees
Planet
Investors

Moderate

Chemical product usage

Waste and hazardous materials
Sustainable business solutions

Employees
Customers

Emerging

Environmental impact

Emerging

Energy
Water and wastewater
Greenhouse gas emissions
Sustainable business solutions

Planet

Geopolitical risks

Emerging

Management of the legal, ethics & regulatory framework

Planet

-5%

Greenhouse Gas emissions2
compared to 2018, at constant scope

53%

Sustainable solutions (SPM)
as percentage of Group sales

22%

of our sales bring a climate-change benefit

Focus

Close-up on climate risks

2019 saw a full review of Solvay’s climate risks, focusing on four key areas:

  • Climate-related risks and opportunities for each product in each market. These were assessed through our annual Sustainable Portfolio Management (SPM) review.
  • A 2040 scenario analysis, in line with the TCFD recommendations and using the International Energy Agency’s Sustainable Development scenario as our reference. This reveals a positive impact on sales (resulting from the risks identified in the SPM review) outweighing the negative impact on costs.
  • Mapping of acute climate-related physical risks. We worked with our insurers to analyze these in collaboration, using their methodologies and tools.
  • Mapping of water scarcity risks. We updated our analysis of water scarcity, a chronic climate-related physical risk. We are developing action plans based on the specifics of each plant.

Solvay has a long-term commitment to taking action on the risks of climate transition, playing its part in the move toward a climate-friendly economy. We took an important step in that direction in 2018, pledging a 1 million tons cut in absolute greenhouse gas emissions from operations by 20253.

We are launching Solvay ONE Planet, our new sustainability program, raising our ambition in response to climate change. We are investigating how to accelerate our climate and energy transition and shorten the time to carbon neutrality of our operations globally.

2: scopes 1 and 2, 3: In CO2 equivalent on a like-for-like basis compared to 2017.