Sustainability Report 2021

Mica supply chain

TAG overview

Mica is an important raw material for our effect pigments, which are used in automotive, cosmetic and industrial coatings as well as plastics. We procure the majority of our mica from the Indian states of Jharkhand and Bihar. We have taken special measures to comply with high social and environmental standards in our mica supply chain.

Our approach to responsibility in the mica supply chain

By procuring mica from the Indian states of Jharkhand and Bihar, where political instability, poverty and child labor are widespread, we are supporting this region by safeguarding local employment and livelihoods. We source the raw material only from suppliers acting in formal working environments and monitor compliance with our standards, including the prohibition of child labor.

Our mica suppliers are informed of our standards and have confirmed that they adhere to the principles of our Human Rights Charter as well as the requirements of our Responsible Sourcing Principles. In the event of non-compliance with our standards, we work with suppliers to ensure the appropriate implementation of corrective measures.

We do not tolerate child labor and contractually prohibit our suppliers from employing children. If one of our suppliers were found to be using child labor, our company would terminate the business relationship immediately. We are driving initiatives and taking measures to improve the conditions of mica sourcing based on our high standards. We continuously review our monitoring processes to improve their effectiveness.

Roles and responsibilities

Group Procurement has overall responsibility for sourcing mica. A steering committee is in place to involve the relevant functions and inform the respective Board members about significant developments.

We have established direct business relationships with suppliers that handle the mica supply chain in India. Our procurement unit is in direct contact with suppliers to reiterate the importance we place on ethical, social and environmental standards.

Our commitment: Compliance with guidelines and standards

As a signatory to the United Nations Global Compact, we are actively involved in working to abolish child labor. Our Human Rights Charter underscores this commitment. In our Responsible Sourcing Principles, we set out our expectations for our suppliers in terms of sustainability and human rights, including prohibition of child labor. Our Responsible Sourcing Principles are also an integral part of our supplier contracts.

Auditing our mica supply chain

We have implemented a series of oversight mechanisms using a system that monitors and audits conformity with our social and environmental standards. In addition to visits by employees of our company, regular inspections are conducted by third parties, who conduct comprehensive announced audits as well as frequent, unannounced verification visits.

External audits

Environmental Resources Management (ERM), a leading global provider of environmental, health, safety, risk, and social consulting services, conducts external audits of mines and processing plants, investigating working conditions as well as environmental, health and safety issues. The audit reports document any identified shortcomings in this respect and propose corrective actions. Our employees in Kolkata (India) and Darmstadt (Germany) take action to address any identified issues. If the corrective measures are not respected, we may suspend or even terminate our business relationship.

Unannounced inspections

Since 2013, IGEP Consult, an Indian non-governmental organization, has conducted regular unannounced inspections to review labor standards throughout our supply chain. During these visits, IGEP officials monitor occupational safety as well as compliance with laws preventing child labor. In 2021, its inspections focused on medical check-ups for workers as well as the implementation of health and risk assessment concepts and safety training. In addition, IGEP has revised and improved the escalation process: Biweekly review meetings are now held with representatives of our company to assess suppliers. These meetings help identify any required actions, which our sourcing teams then discuss and implement with our suppliers. Our suppliers have successfully improved the working conditions on the sites.

Evaluating and tracking mica sources

We use a tracking system to help ensure that the mica we purchase is derived from sources qualified by our company and to monitor their productivity. Based on written records of the daily extraction quantities, we review the volumes of mica reported and supplied to the processing facilities.

Our processes undergo constant review and improvement. We are also evaluating other sources for mica in accordance with our quality, social and environmental standards both in India and in other regions. In 2021, we obtained a considerable amount of our mica from Brazil, where we have also established oversight mechanisms to monitor and audit adherence to these standards. In addition, we manufacture effect pigments based on synthetic substrates as an alternative to pigments based on natural mica.

Community outreach in the mica supply chain

We are working to improve the living conditions of the families in mica mining areas. Our educational efforts in Jharkhand include funding three schools with nearly 500 students as well as five vocational training centers, all run by our local partner, the NGO IGEP. At a fourth school operated by one of our mica suppliers, we provide scholarships for 200 children out of 450 enrolled at the school.

In addition to our support for education, we are also helping to improve access to healthcare. We are fully funding an IGEP-operated health center that serves approximately 20,000 residents in the local region.

Stronger together: Joint action in the mica supply chain

We are also a founding member of the multi-stakeholder group Responsible Mica Initiative (RMI). In 2021, we retained the presidency of the organization. The initiative aims to eradicate child labor and unacceptable working conditions in the Indian mica supply chain by joining forces across industries.

During the reporting year, we continued to support the RMI’s work on its three main program pillars:

  • Responsible workplace standards: In 2021, the RMI developed and issued an updated version of the workplace standards, supplemented by training for local mica processors.
  • Community empowerment: Building on the first community empowerment program in 2018, the RMI has expanded its programs to cover 130 villages, reaching more than 11,000 households in 2021. The goal is to address the root causes of child labor and improve livelihoods within the local community.
  • Advocacy: Through continuous advocacy work, the RMI is recognized as an important partner for drafting future policies to help ensure sustainable mica mining, while eradicating the root causes of child labor.
People or organizations that have a legitimate interest in a company, entitling them to make justified demands. Stakeholders include people such as employees, business partners, neighbors in the vicinity of our sites, and shareholders.

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