Disclosure 103-1: Explanation of the material topic and its Boundary
Sika converts raw materials to value-added finished products and solutions relying mainly on non-renewable input materials. Direct materials are Sika’s major cost factor, corresponding to approximately 45% of sales. Almost all materials used in production – e.g. for polyurethane adhesives, epoxy-resin products, polymeric roofing and waterproofing membranes, cementitious mortars, polymer concrete admixtures or parts for the automotive industry – are based on crude oil or crude oil derivatives (downstream products) or require fossil fuels for conversion. Other large contributors are sand, minerals, cement, and water.
Sika is exposed to the price volatility of oil and raw materials from chemical conversion or natural provenience, such as chalk, titanium dioxide, etc. Amplified by the industrialization of developing countries, global demand for material resources is expected to increase in the long term, leading to rising prices, price volatilities and supply uncertainties.
Apart from those raw materials, Sika uses several other resources as input materials for its products which are subject to local availability and constraints. In some regions, even sand (in the required quality) may become a rare raw material. Besides ensuring security of supply, the management and efficient use of input materials have become very important focus points for Sika.
Materials are not only an important factor with regard to Sika’s own operations and supply, but also in relation to its customers, who also seek to become more resilient to supply chain disruptions and constraints.
Through investments in Sika’s sustainable solutions, the company strives to reduce its own resource consumption and that of customers in downstream industries, such as the construction, automotive, or cement and concrete industry, where Sika solutions, for instance, enable customers to increase the use of recycled input materials.
Disclosure 103-2: The management approach and its components
Sika’s management approach is twofold, primarily mitigating risks to its production and financial performance from supply chain disruptions and price volatility, and, secondly, providing sustainable, value-added solutions to its customers.
The management approach for materials within Sika includes the following components:
Sika strives to use input materials efficiently, to develop resource-efficient products, and to improve the existing portfolio accordingly.
GOALS AND TARGETS
Sika’s goal is to assess all new product developments in respect of their sustainability characteristics, using a systematic and comprehensive internally standardized methodology. As a result, these developments are geared towards a higher inherent sustainability profile in raw material consumption, production, marketing, use phase, and disposal / recycling, and also impact Sika’s own manufacturing processes, boost the efficiency of its operations and reduce dependency on raw materials. Sika, at the same time, manages the waste streams.
The responsibility with regard to material management is split between technology and the supply chain. While technology creates better conversion methods or less material-intensive products and solutions, the supply chain influences conversion efficiency and waste reduction. Efficiency targets have been set for both functions. The responsibility for securing supply and minimizing the exposure to price volatilities lies with Sika Global Procurement, which vouches for the worldwide, reliable, and on-time supply of raw materials. The ultimate responsibility lies with the CEO.
- Life Cycle Assessment (LCA): Sika sets out to undertake objective, transparent, and comparative assessments of the sustainability of its products – not only in manufacturing, but throughout their life cycle, in accordance with internationally recognized standards. These analyses may pinpoint potential improvements for existing products. They may also deliver important insights into resource management (raw materials, energy, water, and waste), production processes, or application efficiency and thereby promote innovation and optimize the development of new products and systems.
- Risk Management: The objective of risk management at Sika is to secure the supply of materials in all market situations in the required consistent quality at competitive conditions. A structured and systematic recording and rating process for relevant risks is implemented in order to enable early identification of critical materials and/or suppliers through the systematic analysis and implementation of measures based on a clear classification of potential risks.
- Sustainable Solutions: Sika seeks to enhance the outstanding and widely appreciated utility of its products by optimizing their sustainability profile, and thus to create added value for customers and contribute to sustainable development.
- Waste Management: Sika manages the waste streams and operates various waste reduction programs, e.g. avoidance of waste through internal recycling of adhesives, reduction of wash water in admixture production, and reuse of cleaning sand batches and filter dust in mortars.
Disclosure 103-3: Evaluation of the management approach
Sika evaluates its management approach through:
- Monitoring: Sika measures its material use and waste levels on a regular basis. Material use is reported quarterly to the Environment, Health, Safety & Sustainability department where results are followed up and management approaches adapted accordingly.
- Evaluation of results from LCA: Sika carries out life-cycle assessments (LCA) during the product development process. These serve to quantify energy demand, resource efficiency, greenhouse gas emissions, or water demand during each phase of a product’s life cycle and measure the associated possible impacts on the environment.
- Benchmarking: The procurement and technology organization screens Sika’s supplier base and the market in general for alternative or more efficient raw materials.
- Technology comparison: Based on the life cycle approach for raw materials, Sika compares the effectiveness and efficiency of competing technologies to Sika’s existing technology base.
Furthermore, Sika monitors and evaluates the effectiveness of its management approach according to target achievement.