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