A Message from our President & CEO
Dear Stakeholders,
At Element Solutions, we frequently talk about the power of “focus.” Picking the needle-moving activities and prioritizing them at the expense of other activities. When you combine focus with great people and aligned incentives, magic happens. Nowhere is that more evident than in ESG at ESI. Since we picked up the pen to write our first ESG report in late 2020, this company has taken tremendous strides. We have improved ESG data transparency, set ambitious goals, and made meaningful progress against those goals. This is a case study for how ESG reporting can be impactful. Due to its low-energy and low-discharge manufacturing, our company inherently is more environmentally sustainable than the average in our industry, but the reporting added focus and clarified opportunities for improvement. The need for goals gave us the impetus to set ambitious targets. Combined with the “Elements of our Culture” which encourage us to accept challenges, make commitments and care about our communities and the world at large, we were on our way.
It has not been an easy two years from a global macro perspective. However, with our key strategies well-identified – including “Enabling Sustainability” – the company has been able to manage through short-term volatility steadily without losing sight of our long-term opportunities. Our culture demands we deliver on our commitments – this is true in all market environments and of all types of commitments. ESG is no exception. In 2022, we delivered on our sustainable development priorities, including the announcement of our ambitious Sustainability Goals, supporting many of the United Nations Sustainable Development Goals, and the release of our first TCFD Index related to climate risk management. Whether it was the reinforced support behind our customers’ sustainability solutions or our continued responsible sourcing practices while navigating raw material shortages, we trafficked at the intersection of sustainability and customer value propositions. I am grateful to all our employees who allowed us to execute on our vision.
In 2022, we progressed against our long-term Sustainability Goals to improve our impact on the environment and the quality of our company:
- Sustainable Chemistry: We reached a milestone this year in terms of revenues from sustainable chemistry. In 2022, our net sales from sustainable chemistry totaled ~$700 million. We are well on our way to our 2030 goal of $1 billion.
- Energy Use & Emissions: In 2022, we improved the foundation for our program around emissions reduction. We incorporated our recent acquisitions into our baseline and began to work with a third-party expert to expand our decarbonization approach and execution plan.
- Occupational Health & Safety: In 2022, we hosted another annual global safety day and have enhanced safety training and observation rates around the world. We experienced a modestly lower total recordable incident rate (TRIR) this year as compared to 2021 and are actively working on specific initiatives to further improve this result.
- Diversity, Equity & Inclusion (DE&I): In 2022, we achieved our first goal on our journey to becoming a more inclusive and diverse global organization – 90% of our U.S. employees completed our DE&I training and 100% of our U.S. managers benefitted from a more in-depth inclusion program.
We work very closely with our customers to contribute to a sustainable supply chain that supports responsible manufacturing and human rights. We do this by focusing on providing new and innovative products to the market that improve environmental stewardship. Our products help reduce environmental impact by enabling green products or improving process efficiency, removing hazardous chemicals through green chemistry initiatives or supporting a circular economy through product and package recycling.
We are proving at ESI that improving from an ESG perspective is a long-term value driver. We have substantial, profitable commercial opportunities associated with improving our customers’ environmental impacts. These are driving us towards our target of $1 billion of sustainability-related sales by 2030. We continue to innovate in this area and introduced several exciting capabilities in 2022. Some of the greatest breakthroughs are in our water treatment business with the launch of ShadowZD, a near-zero discharge system allowing nearly 99% of processed water to be re-used during direct metallization processes. This innovation allows customers in our core circuitry business to metalize circuit boards using less than 1% of the water they would have used in prior processes. Given a large portion of the printed-circuit fabrication industry is located in water-stressed areas, particularly in China, this is a great opportunity to help our customers and the planet. We have innovated new equipment processes for existing customers in the industrial solutions business as well. Along the way, our installed base of ancillary water treatment equipment continues to prevent pollution and provide value through metals reclaim.
We have many other examples of sustainable chemistry in other businesses. Our solutions allow the automotive industry to move away from Hexavalent Chromium, which continues to gain traction with leading OEMs. Our direct metallization process minimizes the use of Formaldehyde and other hazardous materials while also reducing water and power consumption and waste generation. This process remains the industry standard. The list is long and growing.
It has been rewarding to see all of this internal progress recognized by third parties. Our improved ESG transparency and reporting have translated into strong recognition in our industry. We are proud of our EcoVadis medal for the second year in a row, improving to a Gold medal in 2022 from Silver in 2021. We were also included for a second time on Newsweek’s list of America’s Most Responsible Companies.
All of this contributes to a more engaged and satisfied workforce despite an increasingly challenging backdrop. In our 2022 engagement survey, we saw an 82% response rate with higher scores reflecting more positive sentiment on 97% of the questions as compared to 2020. We care about and invest in our people and their communities. Since our 2020 ESG report, we have donated over $1.6 million with the ESI Foundation either matching employee donations or giving to causes they select. Our people are the most critical ingredient in our formulas, and therefore our sustainability strategy demands that we attract, develop and nurture a diverse, high-performance team. We are proud of our progress in this area, but there is more we can -- and will -- accomplish.
As we look to 2023 and beyond, we are excited to continue to engage with our customers, employees and other stakeholders on our sustainability journey. We are committed to delivering progress against our ambitious Sustainability Goals every year, adapting to the ever-evolving technology needs of our industry, and providing high-quality disclosures as reporting standards continue to evolve. We look forward to continuing this discussion and invite you to read the exciting detail of our progress and initiatives in this new report.
Benjamin Gliklich
President & CEO