Ciech S A : .PDF Non-financial report of the CIECH Group for 2020

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CIECH Group

NON-FINANCIAL

REPORT

2020

1	RaportNonniefinansowy-financial report2020/202120

Table of Contents

1.	Letter from the President of the Management Board of CIECH S.A.	....................................................................5
2.	Characteristics of the CIECH Group.....................................................................................................................................................	9
	2.1.	Structure of the CIECH Group - operational segments....................................................................................................	10
	2.2.	Companies of the CIECH Group........................................................................................................................................................	11
	2.3.	Business model............................................................................................................................................................................................	12
	2.4.	Strategy of the CIECH Group for 2019-2021............................................................................................................................	13
	2.5.	Shareholders of the CIECH Group..................................................................................................................................................	16
3.	Our products.............................................................................................................................................................................................................	18
	3.1.	Soda segment...............................................................................................................................................................................................	19
	3.1.1.	Sodium carbonate (Na2CO3)............................................................................................................................................................................	19
	3.1.2.	Sodium bicarbonate (NaHCO3).......................................................................................................................................................................	19
	3.1.3.	Production processes of sodium carbonate and bicarbonate..............................................................................................................	20
	3.1.4.	Salt (NaCl).............................................................................................................................................................................................................	21
	3.1.5.	Salt production process..................................................................................................................................................................................	23
	3.1.6.	Other soda segment products.......................................................................................................................................................................	23
	3.2.	Agro segment - plant protection products..............................................................................................................................	24
	3.3.	Foams segment..........................................................................................................................................................................................	26
	3.3.1.	Polyurethane foams..........................................................................................................................................................................................	26
	3.3.2.	Protective masks...............................................................................................................................................................................................	26
	3.4.	Silicates segment.......................................................................................................................................................................................	26
	3.4.1.	Silicates and water glass.................................................................................................................................................................................	26
	3.4.2.	Extension of the production capacity of sodium silicates......................................................................................................................	27
	3.5.	Packaging segment..................................................................................................................................................................................	27
	3.6.	Quality and safety of products..........................................................................................................................................................	28
	3.6.1.	Key achievements in 2020.............................................................................................................................................................................	28
	3.6.2.	Management Systems with the CIECH Group..........................................................................................................................................	29
	3.6.3.	CIECH Quality Standard (CQS)......................................................................................................................................................................	29
	3.6.4.	Tasks for 2021....................................................................................................................................................................................................	30
	3.7.	Customer relations...................................................................................................................................................................................	30
	3.8.	Risk management.......................................................................................................................................................................................	31
	3.9.	Investments implemented in 2020................................................................................................................................................	33
	3.10.	Research & development.....................................................................................................................................................................	35
4.	Sustainable development management.........................................................................................................................................	37
5.	Safety and health of our employees.................................................................................................................................................	39
	5.1.	Labour safety management................................................................................................................................................................	39
	5.2.	Occupational risk assessment..........................................................................................................................................................	39
	5.3.	Safety training..............................................................................................................................................................................................	40
	5.4.	Key achievements of 2020.................................................................................................................................................................	40
	5.5.	Figures and ratios.......................................................................................................................................................................................	41
	5.6.	Employee engagement, corporate culture and employee relations.......................................................................	42
	5.6.1.	HR strategy.........................................................................................................................................................................................................	42
	5.6.2.	An integrated performance management system...................................................................................................................................	42
	5.6.3.	Values and competency model and organisational culture developed on their basis..................................................................	42
	5.6.4.	System of skills and production employee development (the ABCD model)...................................................................................	43
	5.6.5.	Unification of remuneration and development policies..........................................................................................................................	44
	5.6.6.	Employee development..................................................................................................................................................................................	44
	5.6.7.	Feedback - we check the pulse of our organisation..............................................................................................................................	45
	5.6.8.	Rewards and certifications.............................................................................................................................................................................	45
	5.6.9.	Employee benefits............................................................................................................................................................................................	45

2	Non-financial report 2020

	5.6.10.	Developing an attractive brand on the labour market and clear principles of recruitment	.......................................................... 45
	5.6.11.	Communication with Employees....................................................................................................................................................................	47
	5.6.12.	Activities to engage employees.....................................................................................................................................................................	47
	5.6.13.	Relations with the social counterparties.....................................................................................................................................................	48
	5.6.14.	Figures and indicators.....................................................................................................................................................................................	48
6.		Our impact on the environment............................................................................................................................................................	53
	6.1.	Greenhouse gas emissions................................................................................................................................................................	53
	6.1.1.	Emission sources..............................................................................................................................................................................................	53
	6.1.2.	Management of this area................................................................................................................................................................................	53
	6.1.3.	Figures and ratios.............................................................................................................................................................................................	54
	6.2.	Energy management...............................................................................................................................................................................	55
	6.2.1.	Energy assets of the CIECH Group..............................................................................................................................................................	55
	6.2.2.	Third-party sources for electric and thermal energy purchases..........................................................................................................	55
	6.2.3.	Energy efficiency...............................................................................................................................................................................................	55
	6.2.4.	Figures and ratios.............................................................................................................................................................................................	56
	6.3.	Water resource management and sewage management..............................................................................................	57
	6.4.	Air quality........................................................................................................................................................................................................	57
	6.5.	Waste and hazardous substance management....................................................................................................................	57
7.		Our environment..................................................................................................................................................................................................	59
	7.1.	Membership in organisations............................................................................................................................................................	59
	7.1.1.	UN Global Compact..........................................................................................................................................................................................	59
	7.1.2.	Other associations and organisations in which the CIECH Group is engaged................................................................................	59
	7.2.	Relations with local communities ...................................................................................................................................................	60
	72.1.	We support young talents...............................................................................................................................................................................	60
	72.2.	We support the largest charity fundraiser in Poland...............................................................................................................................	60
	72.3.	We support helping others and employee voluntaries............................................................................................................................	61
	7.3.	State aid............................................................................................................................................................................................................	61
8.		Management within the CIECH Group............................................................................................................................................	63
	8.1.	Management structure...........................................................................................................................................................................	63
	8.1.1.	CIECH...................................................................................................................................................................................................................	63
	8.1.2.	The CIECH Group.............................................................................................................................................................................................	64
	8.2.	Management standards and compliance system................................................................................................................	65
	8.3.	The code of conduct of the CIECH Group................................................................................................................................	65
	8.4.	List of internal procedures...................................................................................................................................................................	66
	8.5.	Rules for reporting violations.............................................................................................................................................................	67
	8.6.	Counteracting corruption and frauds...........................................................................................................................................	68
	8.7.	Observance of human rights..............................................................................................................................................................	68
	8.8.	Competition protection..........................................................................................................................................................................	68
	8.9.	Counteracting conflicts of interests...............................................................................................................................................	69
	8.10.	Compliance training.................................................................................................................................................................................	69
9.		About this report...................................................................................................................................................................................................	71
	9.1.	Methodologies forming the basis for preparation of this report.................................................................................	71
	9.2.	Our stakeholders and the manner of interacting with them..........................................................................................	71
	9.3.	Materiality analysis.....................................................................................................................................................................................	73
	9.3.1.	Process.................................................................................................................................................................................................................	73
	9.3.2.	Results...................................................................................................................................................................................................................	74
	9.4.	Indexes..............................................................................................................................................................................................................	74
	9.4.1.	GRI Content Index..............................................................................................................................................................................................	74
	9.4.2.	Table of compliance with the requirements of the Accounting Act....................................................................................................	75
	9.5.	Contact.............................................................................................................................................................................................................	75
3			Non-financial report 2020

CIECH GROUP IN 2020

2 976m	604m	128m
sales revenues	PLN	PLN
	Adj. EBITDA	net profit
	(incl. CIECH Resins)

3 415	839m	100
employees	PLN	number of market
	capital expenditures	that our products go to

SCOPE 1			SCOPE 2
CO2 emissions			CO2 emissions
2534 kt (-9%y-o-y)			164 kt (-73%y-o-y)
	SODA
	SEGMENT

PACKAGING	AGRO
SEGMENT	SEGMENT

	SILICATES		FOAMS
	SEGMENT		SEGMENT

4	Non-financial report 2020

1. Letter from the President of the Management Board of CIECH S.A.

Dear Sir or Madam,

You are most kindly welcome to read the non-financial report of the CIECH Group for 2020, which shows the impact of our company on its environment and our initiatives in the areas of sustainable development, environmental protection, business ethics and employee matters. For us, the past year was a crucial period of preparation and implementation of numerous projects confirming our responsible approach to business operations.

We are part of the chemical industry, which due to its nature, has a very large impact on the environment. We are aware of this impact and our responsibility for the natural environment, as well as the quality of life of our employees, neighbours and future generations.

Responsibility begins with transparency and openness. We have been long well aware of the fact that modern business must take into account its impact on the environment, not only at the level of declarations, but also on the basis of hard and measurable indicators. Accordingly, out of concern for the highest ethical standards of our operations, environmental protection and the global natural resources, in comparison to its previous editions in this report we have significantly increased the scope of data provided on carbon dioxide emissions, energy issues or programmes and our human resources management initiatives.

In addition, meeting the expectations of our stakeholders, in recent months we have prepared ambitious goals for each of the key elements of CIECH's sustainable development, which will be incorporated in the ESG strategy we are in the process of preparing at the moment, with regard to environmental ("Environmental"), social ("Social") and corporate governance ("Corporate Governance") factors. The strategy is scheduled to be published in the second quarter of 2021.

The goals that we intend to present in the strategy relate to both decarbonisation processes, energy efficiency, the idea of a closed economy, the implementation of the highest safety standards and the creation of an engaging work environment, as well as transparency and business ethics. As an expression of our responsibility, in collaboration with the stakeholders of our Group - customers, suppliers and social partners - we will also incorporate the rules included in the CIECH's Codes of Conduct and the Codes of the Business Partner of the CIECH Group which are currently being prepared.

With regard to 2020, I would like to emphasise with great pleasure that in spite of the coronavirus pandemic, the global economic crisis and numerous difficulties - both business and social - our efforts to promote and implement corporate social responsibility solutions have not weakened, and what is more, they are now even more intensive.

In 2020, we continued initiatives in the area of environmental protection or creating a friendly work environment, while not forgetting about the support of local communities, which was so essential in this difficult period. Our companies financed, among others, purchases of protective equipment for the healthcare service in the regions where our plants operate. We supported our employees with equipment facilitating remote learning for children, we provided their families with disinfecting fluid manufactured by CIECH Sarzyna, and at the end of last year, CIECH Pianki launched the production of certified FFP2 face masks, which we regularly distribute to our employees and stakeholders. We also donated our masks to the organisers and volunteers of the The Great Orchestra of Christmas Charity charity fundraising event, in order to ensure that the 29th Final of this noble initiative was conducted in the safest possible conditions.

Looking for inspiration and the best examples, as well as the opportunity to exchange experience with other sustainable development leaders, in 2020 we joined the United Nations Global Compact - the largest initiative associating businesses operating in a responsible manner. Our internal analyses show that approx. 88 percent of our Group's revenues come from the manufacture of products whose end uses may help the world develop in a sustainable manner, and which are in line with the 17 goals of the UN's 2030 Agenda for Sustainable Development. Some of our products, such as medical sodium bicarbonate or modern and safe plant protection products, directly affect the quality of life of the planet's inhabitants. Others are an important, often irreplaceable, raw material or semi-finished product for e.g. electric vehicles (automotive glass or high performance tires), photovoltaic and solar panels (flat glass) or COVID-19 vaccine vials. The examples mentioned are actual end uses from our customer portfolio.

Being an important link in global value chains, we are aware that the benefits of applying our products must be significantly greater than the expenses and burdens we generate. As a global holding, we feel responsible not only for supporting the economic development and prosperity of Poland, Europe or the world in general, but also for sustainable development while respecting natural resources, supporting important social projects and building partnership relations with our environment: investors, employees, counterparties and local communities. This is accompanied by the maximum transparency of our company's impact on the surrounding world and a precise definition of the measures we take to make our environment more sustainable and friendly. All this is reflected in the content of this report, which I strongly and kindly encourage you to read.

YOURS FAITHFULLY

DAWID JAKUBOWICZ

PRESIDENT OF THE MANAGEMENT BOARD OF CIECH S.A.

5	Non-financial report 2020