CHT Sustainability Report 2022

REPORTING PERIOD: January 1 to december 31
(2022 (editorial deadline may 31, 2023)

REPORTING PERIOD: January 1<sup>st</sup> to december 31<sup>st</sup>, 2022 (editorial deadline may 31<sup>st</sup>, 2023)

EFFECTS OF SUSTAINABILITY

Our comprehension of sustainability

Set guidelines for sustainable actions

Sustainability is fundamental to our company. It harmonizes with our culture and our self-perception as a global commercial company. A foundation-owned company rooted in tradition, the CHT Group has embraced the aspects of sustainability for a very long time. The legacy of the company’s founder already stipulated job security, family-friendly working time models and corporate social responsibility (CSR). We recognize that the current challenges arising from a growing global population, climate change and an increasingly complex flow of goods will only be met by implementing sustainable actions and management. We take responsibility for our actions, our company, and society. Not least for this reason, we have aligned both our vision and mission as well as the entire corporate strategy with the three dimensions of sustainability (environment, society and economy) and anchored them with clear goals.

Make use of growth opportunities

We have recognized the importance of sustainability as an essential, global growth driver and a critical factor for the future. Therefore, we always analyze sustainability trends in the market segments we serve. This enables us to develop new business opportunities and support our customers with innovative and sustainable products and solutions. Critical success factors for chemical companies are, among other things, the type and quality of raw materials and how they are secured. Therefore, for the selection and evaluation of new and existing suppliers, in addition to economic criteria, we consider environmental, social, and corporate governance standards. By defining sustainability criteria for research and development we ensure that new products and processes support our company goals worldwide. Our sustainable personnel policy leads to staff that have a strong identification with our company. What is more, by our commitment to sustainability we see it as increasing our chances to win young “high potentials” as employees worldwide and to integrate them in the further development of the CHT Group. Ecological and social responsibility meets the younger generation’s interest in a highly globalized world. We see the expansion of a family-friendly working environment with flexible working hours and workplace models as both an obligation and an opportunity for our company.

Joint commitment

CHT commits itself to its responsibility to respect internationally valid human rights. We do not tolerate human rights violations in our business activities. It is important to us that our partners along the entire value chain also commit themselves to this. We therefore call on them to recognize our Code of Conduct. We continuously communicate our goals and how we comprehend sustainability both internally and externally. That is why we inform our staff, customers, and the public about what they can expect from us. Moreover, CHT is committed to national and international associations, and together with customers, partners, and NGOs we implement sustainability along all relevant value chains with defined common goals. Our sustainability commitment is supported by our staff. They get involved in projects and are compliant with sustainability goals. On the one hand, they support our customers in terms of sustainability, on the other hand they act sustainably at their workplace – a great idea which will spread even wider.

Which challenges do we have to meet?

We see the transformation to a sustainable and climate-neutral society as the greatest challenge of the coming decades.

Many of our products and technologies have an influence on the success of this transformation. We work on the development of products and process solutions that reduce the CO2 footprint of our customers and at the same time we make internal efforts worldwide to reduce the CO2 footprint of our own productions and products.

The increasing global scarcity of resources also calls for the responsible use of raw materials. In addition, we see the expansion of the circular economy with increases in mechanical and chemical recycling and the increased use of biobased raw materials as the only way to advance climate protection through defossilization.

In the future, we will focus our products and processes even more strongly on the circular economy, as this global trend will also open new business opportunities for us.

Together with the major international textile chemical companies, we founded the Sustainable Chemistry for the Textile Industry (SCTI) alliance in the fall of 2020 to drive sustainability in the textile industry. In the textile trade and textile manufacturing, the high demands and strict legal requirements within the European and US buyer markets are linked with the topic of sustainability. High cost pressure is caused by a global sourcing structure and low social and ecological regulations in many textile producing countries in Asia and South America. Complex supply chains no or non-uniform legal requirements and environmental standards globally, resulted in more than 300 chemical requirements according to the Manufacturing Restricted Substances List (MRSL) for the manufacture of textile products. This development can neither be managed by the affected industrial companies nor does it lead to transparency for end users. SCTI has therefore initiated a joint effort with all participants to establish uniform environmental standards worldwide within the international textile value chain.

The implementation of the requirements of the EU Green Deal confronts us with additional tasks and the associated financial burdens: The previously voluntary sustainability reporting will be replaced by an ESG reporting obligation, based on the EU taxonomy, human rights principles, and climate targets to be implemented. The implementation of the new European chemicals law, CSS and the introduction of polymer REACH will not only thin out the product range in Europe, but also significantly restrict it. Above all, however, the EU Green Deal presents companies like CHT with the challenge of having to invest in additional specialist staff in the finance, product safety, legal and sustainability departments.

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