Horizon 2020 represents continuity with Umicore’s strategic choices of the past decade and sets out a further series of challenging economic, social and environmental goals for the company.
From an economic perspective the period 2011 to 2015 – which involved the pursuit of our Vision 2015 goals – illustrated clearly that the major megatrends that underpinned Umicore’s growth prospects were strengthening. The need for cleaner mobility and the increasing scarcity of resources have become two of the most pressing issues facing societies around the world. The one area where the landscape shifted significantly was in photovoltaics where a combination of economics and technology choices led to a less favourable market for Umicore’s higher-end solutions. Umicore has outstanding growth prospects in those products and services that are based on the drive towards cleaner mobility (automotive catalysts and rechargeable battery materials) as well as in those areas that tackle resource efficiency through our closed loop business model that ensures the recycling of precious and specialty metals. These activities will be at the heart of our ambition to double the earnings of Umicore by 2020.
In terms of environmental and social performance we have made great strides in the past 10-15 years. Our Vision 2015 achievements have set a strong benchmark in a number of areas such as metal and carbon emissions, employee and stakeholder engagement and working towards a sustainable supply chain. The challenge for the coming five years is to ensure that we maintain the progress that we have made in certain areas, continue focusing on topics such as safety where we fell short of our goals and to strive to develop goals that have a clearer ability to enhance Umicore’s competitive positioning.
Let us look at three examples to illustrate this approach:
Holding onto the benefits
Between 2011 and 2015 we drove down the impact of metal emissions to air and water by some 30% on average. This was well beyond the target of a 20% reduction that we set at the beginning of the process and our emission levels are at levels that are not only well below the legal norms set in any country where we operate but are setting the standard in our industry. Although we no longer see a need to set a further reduction objective we will of course continue to measure and report on the impact of metal emissions when relevant from a materiality point of view.
Could do better
Umicore has set a goal of becoming an accident-free company. Although the objective was achieved in the vast majority of our industrial sites which showed that this is an achievable goal, the reality between 2011 and 2015 was that safety remains a challenge in a limited number of sites. We will therefore continue to pursue the zero accident goal over the course of the coming five years.
In the period 2011 to 2015 Umicore made good progress in rolling out its Sustainable Procurement Charter to its suppliers and has developed a reputation for ethical sourcing. This approach is aligned with Umicore’s values and is undoubtedly the right thing to do. However, it has an economic cost that to date has not been matched by the prices that customers are willing to pay for such ethically-sourced materials. Horizon 2020 will see Umicore look to leverage this sustainable sourcing approach to generate an enhanced competitive edge in specific business units.
A value chain approach
Horizon 2020 adopts a more conscious view of Umicore’s presence in the overall value chain. The objectives that you can explore here cover Umicore’s presence and impact upstream, for example through the interaction with suppliers, in our own operations and also downstream in terms of the impact of our products and services. We have developed specific objectives in each of these areas and in order to maintain a sense of continuity with the work done in the past we have largely maintained the clustering of the various themes: Economic, Eco-efficiency, Great Place to Work, Value Chain & Society. There is very much an overlap and connectivity between these themes – an improved level of efficiency in operations should have positive economic benefits…the success of environmentally-friendly products tends to enhance employees’ sense of pride and engagement…responsible management of the supply chain should lead to economic benefits.
Covering the material risks and opportunities of Umicore
Horizon 2020 represents a strong focus on what is of material importance for Umicore in the coming five years in terms of opportunities and risks. As such it represents a good thermometer in determining whether Umicore is achieving its potential. In developing the strategy the Executive Committee conducted a thorough assessment of the achievements and shortfalls of Vision 2015 and reviewed and tested the continued validity of the megatrends that drive Umicore’s business. This assessment was road-tested with the broader senior management team in the spring of 2015 with the strategic framework being presented to all employees during spring 2015. You can read more about this process here. The strategy was then presented to shareholders and other investors at a dedicated capital markets event in London in September 2015 and met with a positive reaction. As we needed more time to understand the level of achievement of the Vision 2015 social and environmental goals the Horizon 2020 objectives in these areas were formulated in early 2016. The process involved a structured dialogue with the management of each business unit – particularly to determine the social and environmental topics that could generate a greater competitive edge. To ensure a degree of alignment with external expectations we also conducted an on-line stakeholder survey. The objectives were debated and ratified by the Executive Committee in February.
Umicore’s 2016 annual report, to be published in March 2017, will mark the first year of reporting on the Horizon 2020 goals. While the themes and certain specific targets have been elaborated already we will develop some further key performance indicators during the course of 2016 in parallel with the development of a revised reporting framework. Given the timing we have opted to continue using the GRI G3 reporting for this 2015 report as this provides the necessary degree of continuity and consistency with the approach of the previous four reports relating to the Vision 2015 goals.