Sustainability Report Summary Ashland Inc. 2014
People • Products • Planet
Fiscal 2014 Sustainability Overview
Ashland Inc.
Chairman’s Message Welcome to Ashland’s 2014 Sustainability Report, which highlights the company’s progress over the past fiscal year toward being a better steward of our people, products and planet. Since joining Ashland in 2015, I have had an opportunity to visit a number of our offices, research centers and manufacturing sites around the world. During those local tours, I have heard a number of compelling examples of our employees’ commitment to delivering on Ashland’s brand promise – “With good chemistry great things happen” – against the backdrop of sustainability. “Good chemistry” can mean many things. It’s how Ashland teams work together to tackle tough challenges while finding new ways to operate more safely and sustainably. It’s how we collaborate with customers to deliver breakthrough products while reducing our environmental footprint. And it’s how we give back to the communities where our employees live and work by supporting a broad range of non-profit organizations, including those that promote environmental responsibility. One-third of Ashland’s annual corporate contributions target education programs, with a primary focus on science, technology, engineering and math.
Bill Wulfsohn Chairman and Chief Executive Officer
As a result of these concerted efforts, Ashland is making some “great things” happen in terms of sustainability. Here’s just a sampling of the progress made on some key metrics in fiscal 2014: • Safety: Our employees are working more safely than ever. Over the past five years, Ashland’s total recordable injury rate has improved by 61 percent. In 2014, we reported the lowest injury rate in our history. • Energy: Ashland’s direct energy consumption fell 10 percent. While a portion of this reduction was tied to the divestiture of Ashland Water Technologies, we also are benefitting from continued investment in a number of energy efficiency projects. • Emissions: Greenhouse gas emissions dropped more than 8 percent. Among the notable projects completed last year was the conversion of a 50-year-old, coal-fired boiler to natural gas at our manufacturing site in Calvert City, Ky. It’s Ashland’s largest plant, and the switch cut 69,000 tons of carbon dioxide equivalents per year while saving 2.2 million kilowatt hours of electricity. (Ashland now has just one remaining coal-burning facility, located in Jiangmen, China.) • Waste: We’re also doing a better job of recycling. For example, Valvoline has taken its waste reduction program to a new level. Several years after establishing a fairly robust recycling program, its operations team had succeeded in picking most of the “low hanging fruit.” The challenge then became how to capture the smaller opportunities that weren’t so apparent. Valvoline introduced a method called “5S” (Sort, Set in order, Shine, Standardize and Sustain) to manage smaller waste streams more effectively. As a result, Valvoline last year slashed its solid waste by 13 percent – or more than 1.1 million pounds. On a related note, Valvoline now operates four zero landfill facilities, with two more planned in 2015. We deliver on this commitment to sustainability through Ashland’s comprehensive Responsible Care® program, a global industry initiative to advance the safe and secure management of chemical products and operations. Within Ashland, this program includes a global management system, employee involvement at every level of the organization, continuous improvement toward our goal of operating with zero incidents and achieving 100 percent compliance, and reducing our environmental, health, safety and security impact. Last year, 37 Ashland sites were recognized for success in Responsible Care by the American Chemistry Council. The tenets of Responsible Care serve as the foundation for Ashland’s past, present and future. You will find many more details inside, but here are just a few of the steps Ashland has taken over the past year to build a legacy of meaningful contribution in the area of sustainability: • In Benicarlo, Spain, Ashland Performance Materials opened its second polyethylene terephthalate (PET) conversion facility. The facility has the capacity to process up to 5,000 tons of recycled PET materials per year, roughly equivalent to 500 million plastic water bottles. The recycled material will be used to make a variety of composite products, including kitchen countertops, bathtubs or even luxury boats.
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Oct. 1, 2013, to Sept. 30, 2014
Ashland Inc.
Fiscal 2014 Sustainability Overview
• Ashland Specialty Ingredients, our largest commercial unit, recycles more than 20 metric tons of chemical waste each year. Besides providing a cost benefit to our plants, recycling eliminates the need to dispose of these chemicals after a single use. At the Ashland plant in Marl, Germany, waste is collected and sent to the on-site incinerator to produce steam that helps power our site and a number of neighboring facilities. • Valvoline’s world headquarters in Lexington, Ky., earned the U.S. Environmental Protection Agency’s ENERGY STAR certification for ranking among the top 25 percent of similar facilities nationwide for energy efficiency and for meeting strict energy performance levels set by EPA. This is our third ENERGY STAR site. Whether it’s helping school children plant trees in Mizewo, Poland, as part of an environmental education project; working with a local non-profit to provide clean drinking water to a school in Ahmedabad, India; or hosting an annual “Good Neighbor Night” for more than 1,800 residents in Calvert City to share information about our manufacturing plant and the products made there, Ashland is committed to helping protect our environment and enhance our local communities. Ashland has made good progress on its sustainability efforts, but we can – and will – do better. For example, although Ashland’s safety performance has improved dramatically since 2009, our goal is zero incidents. We believe all accidents are avoidable, and we’re working hard to instill this view into Ashland’s culture. On a broader scale, we are challenging our global business teams to find new ways to operate more sustainably. Our customers, employees and shareholders expect it, and we’re committed to doing so. As much as Ashland has evolved over the past decade – transforming itself from an oil refiner into a global leader in specialty chemicals and, in Valvoline, a premier consumer brand – the future is sure to bring more change. In the year ahead, we look forward to sharing more stories about how with good chemistry, Ashland is making great things happen for our employees, customers, shareholders and community partners. Thank you for your support.
William A. Wulfsohn Chairman and Chief Executive Officer
Products Quality Product Stewardship Sustainable Solutions
People Safety Community Diversity and Inclusion
Oct. 1, 2013, to Sept. 30, 2014
Planet Environment Responsible Care Compliance
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Fiscal 2014 Sustainability Overview
Ashland Inc.
This is how we work, every day, around the world Our vision
What we seek to become Our vision is to be viewed as the best specialty chemical company in the world.
Our mission
Why we are here We satisfy our customers by delivering results through quality chemical products and services. Our desire to grow drives our passion to win in the marketplace. With a unified, low-cost operating structure, we’ll remain competitive across every business and in every geographic region.
Our values
Who we are • We act with integrity and honesty. • We focus on customer and shareholder success and compete to win. • We recognize each person for the difference he or she makes. • We drive innovation and results by understanding the market and its opportunities.
Our operating principles
How we work • We operate in compliance with the law and adhere to high ethical standards. • We assess the impact on customers and society when making decisions. • We are externally focused. Our businesses are defined by markets. • We are process-centered. Out processes are designed to optimize global performance. • Ashland leaders are first responsible to Ashland and second to a business, resource group or process. • We are led by an Executive Committee that enforces our principles, sets our strategy and manages our capital. • We are united by our common vision, mission, values and reporting principles.
• We are committed to the values of responsibility, sustainability and transparency. • We create safe and health-conscious work environments, require compliance and embrace environmental stewardship.
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Oct. 1, 2013, to Sept. 30, 2014
Ashland Inc.
Fiscal 2014 Sustainability Overview
Ashland’s 2014 Corporate Sustainability Report The following summary report provides an overview of Ashland’ sustainability performance and efforts for fiscal year 2014. Ashland’s full corporate sustainability report is available online at ashland.com/sustainability. Please visit our online report for full information on the various ways Ashland is working toward being a better steward of our people, products and planet.
Company Profile Our Business Ashland Inc. is a global leader in providing specialty chemical solutions to customers in a wide range of consumer and industrial markets. Through our three business units – Ashland Specialty Ingredients, Ashland Performance Materials and Valvoline – we use good chemistry to make great things happen for customers in more than 100 countries. Our innovative products and services add value to a variety of things that touch people’s lives every day. Our chemistries help whiten your teeth, protect you from the sun and make your medicine work more effectively. We help provide more sustainable building products and energy sources. We help your vehicle run better and look good. Our ingredients can be found across a broad spectrum of applications, including architectural coatings, automotive, construction, energy, food and beverage, personal care and pharmaceutical. Ashland Specialty Ingredients
Ashland Performance Materials
Valvoline
Ashland Specialty Ingredients offers industry-leading products, technologies and resources for solving formulation and product-performance challenges. Specialty Ingredients uses natural, synthetic and semisynthetic polymers derived from plant and seed extracts, cellulose ethers and vinyl pyrrolidones, as well as acrylic and polyurethane-based adhesives. Key customers include pharmaceutical companies; makers of personal and home care products, food and beverages; manufacturers of paint, coatings and construction materials; packaging and converting markets; and oilfield service companies.
Ashland Performance Materials is the global leader in unsaturated polyester resins and vinyl ester resins. In addition, it offers leading chemical technologies in gelcoats, coatings and intermediates and solvents. Key customers include: manufacturers of residential and commercial building products; infrastructure engineers; wind blade and pipe manufacturers; vehicle manufacturers; and boatbuilders.
Valvoline is a leading, worldwide producer and distributor of premium-branded automotive, commercial and industrial lubricants, automotive chemicals and carcare products. The brand operates and franchises approximately 940 Valvoline Instant Oil ChangeSM centers in the United States. It also markets Valvoline™ lubricants and automotive chemicals; MaxLife™ lubricants for cars with higher mileage engines; NextGen™ motor oil, created recycled, re-refined base oil; and SynPower™ synthetic motor oil. Key customers include: retail auto parts stores and mass merchandisers who sell to consumers; installers, such as car dealers, repair shops and quick lubes; commercial fleets; and distributors.
Oct. 1, 2013, to Sept. 30, 2014
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Fiscal 2014 Sustainability Overview
Ashland Inc.
Environmental Performance At Ashland we are focused on reducing the environmental footprint of our global operations, while continuing to provide products and sustainable solutions that our customers require. To realize this goal, we have implemented environmental, health and safety management systems through our Responsible Care® initiative to ensure all Ashland operations achieve and maintain a high level of EHS performance. Total Energy Consumption Ashland uses The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard for guiding the reporting of energy and greenhouse gas emissions. For reporting purposes, we convert this number to gigajoules (GJ) for both our direct and indirect energy consumption. In 2014, Ashland total energy consumption decreased by 10 percent, which is due in part to the divestiture of the Ashland Water Technologies business.
Total Energy Million Gigajoules 18.00 17.50 17.00 16.50 16.00 15.50 15.00 14.50 FY12
Direct and Indirect Energy Consumption Direct energy consumption Direct energy consumption is the amount of primary energy combusted on site by Ashland. Direct energy sources include natural gas, coal, liquefied petroleum gas, diesel and fuel oils, and gasoline. In fiscal 2014, Ashland’s direct energy consumption decreased by approximately 10 percent.
FY13
FY14
Direct Energy Million Gigajoules 11.00 10.50 10.00 9.50 9.00 8.50 8.00 FY12
Indirect energy consumption Indirect energy refers to the energy consumed by Ashland that is generated by and purchased from external suppliers. Ashland consumes indirect energy through electricity and steam.
FY13
FY14
Indirect Energy Million Gigajoules 6.66 6.64 6.62 6.60 6.58 6.56 6.54 FY12
FY13
Greenhouse Gas Emissions Ashland’s greenhouse gases are the result of our consumption of direct and indirect energy sources.
FY14
GHG Emissions Thousand Metric Tons 1,600
In fiscal 2014, Ashland’s greenhouse-gas emissions decreased by approximately 8 percent. This reduction was primarily due to the conversion to natural gas from coal combustion in the boilers at our Calvert City, Ky., facility and the divestiture of Ashland Water Technologies. Converting from Coal to Natural Gas Ashland’s Calvert City, Ky., plant completed a project to install three natural gas-fired heat recovery steam generators. The conversion resulted in an annualized reduction of approximately 68,900 metric tons (CO2). 6
1,400 1,200 1,000
790
467
800
800 600 400
724
640
510
200 0 FY12
FY13 Direct
FY14
Indirect
Oct. 1, 2013, to Sept. 30, 2014
Ashland Inc. Water Reducing water use and improving water quality are important elements of environmental stewardship. Ashland’s manufacturing operations account for a majority of the company’s water footprint (96 percent). Ashland estimates that an additional 4 percent of water use comes from non-manufacturing sites. The reduction of total water usage in 2014 from 2013 was a result of the divestiture of Water Technologies.
Fiscal 2014 Sustainability Overview Total Water Usage Million Cubic Meters 22.5
22
21.5
21
20.5
20
19.5 FY12
Hazardous Waste Ashland has extensive global programs for waste minimization, recycling and treatment or disposal of generated wastes. We manage our hazardous waste in accordance with governmental regulations and our internal policies and procedures.
FY13
FY14
Total Hazardous Waste Metric Tons 10,500 10,000 9,500
When it comes to waste management, Ashland looks for innovative ways to manage an age-old problem. Ashland has for many years focused on a waste management hierarchy to reduce, reuse, recycle and recover waste streams.
9,000 8,500 8,000 FY12
FY13
FY14
Taking Waste Minimization to the Next Level Valvoline has established a comprehensive program to reduce waste in all phases of its operations. Through the implementation of the workplace organization method called “5S” (Sort, Set in Order, Shine, Standardize, and Sustain), the operating facilities can manage the smaller difficult waste streams more effectively. The program was so successful that in its first year of implementation in 2013, it reduced solid waste by 33 percent. In 2014, Valvoline reduced its solid waste by 13 percent or 1.14 million pounds.
Zero Landfills Our Valvoline business has made tremendous strides in reducing waste from its operations. Currently, Valvoline has four zero Landfill facilities (College Park, Ga.; Nobelsville, Ind.; Rochester, Pa.; and Dordrecht, The Netherlands). Two more facilities are planned for 2015. Taking Waste to Product In 2014, Ashland Performance Materials (APM) opened its second PET conversion facility in Benicarlo, Spain. This new facility will allow Ashland to develop better performing products for its customers, and it reinforces the importance of sustainability to Ashland. When fully operational, the facility will process up to 5,000 tons of recycled PET materials, which is equivalent to half a billion water bottles per year. The recycled materials will be used to manufacture a variety of products, including kitchen counter tops, bath tubs or even a yacht. Annually, APM processes in excess of 14.2 million pounds of industrial-grade PET for the manufacture of composite materials.
Oct. 1, 2013, to Sept. 30, 2014
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Fiscal 2014 Sustainability Overview
Ashland Inc.
Safety Performance Commitment to Safety Ashland’s highest priority is the safety and health of employees, customers and the communities where we live and operate. We believe all incidents are preventable, and preventing workplace incidents is an integral part of our business strategy. Of 86 locations, 22 went without a lost-time injury in fiscal 2014.
Workforce Profile Ashland reported approximately 11,000 employees as of fiscal year-end 2014. Of these, approximately 94.7 percent were fulltime employees. Approximately 12 percent of our operations are covered by collective bargaining agreements. Ashland Employees by Region Latin America 3% Asia Pacific 13%
EMEA 17%
Injuries and Illnesses For 2014, our recordable occupational injury and illness rate of 1.01 is our best performance to date and a performance improvement of 61 percent since 2009. Although we are pleased with the performance improvement, Ashland remains focused on continuously reducing workplace injuries.
North America 67%
Zero Incident Culture Cultivating a safety culture is intentional at Ashland and is best shown by our commitment to a Zero Incident Culture (ZIC). ZIC begins with the beliefs, values and actions of Ashland’s leaders demonstrating zero incidents are possible. It means developing processes that promote compliance and allow employees to choose to be safe.
Total Recordable Injury Rate 1.15 1.1 1.05 1 0.95 0.9 2011
2012
2013
2014
Responsible Care As a member of the American Chemistry Council (ACC), Ashland participates in the Responsible Care® program for all our U.S. and many of our international operations. Responsible Care is the chemical industry’s unique, global initiative that drives continual improvement in health, safety and environmental performance, together with open and transparent communication with stakeholders, Ashland is committed to Responsible Care and strives for zero incidents, no injuries, and no harm to the environment. We publicly report our global environmental, health, and safety performance to ensure transparency in our progress. As an indication of our commitment to Responsible Care, we have obtained third-party certification to RC14001, which included the internationally recognized ISO 14001 certification and adds additional health, safety and security requirements. Currently, Ashland has 46 international sites participating on a group RC14001 certification, and we are working toward certifying all our manufacturing locations. Also, as part of our commitment to health and safety, 16 of our sites have obtained an additional OHSAS 18001 certification, an international health and safety management system.
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Oct. 1, 2013, to Sept. 30, 2014
Ashland Inc.
Fiscal 2014 Sustainability Overview
Engaging the Community We reach out as a company, employee teams and individuals – listening, caring and giving to build stronger communities around the world. Through our Responsible Care Program, we proactively engage with our communities through transparency and two-way communications. We take our role as environmental stewards seriously. We partner with local, state and national organizations to improve quality of life. We are “community builders,” and we’re committed to making the world a better place to live.
Our Employees in Action Here are just a few examples of how we demonstrate community commitment. Habitat for Humanity in Guatemala For the past five years, Valvoline and Lubricantes Internacionales de Guatemala, Central America, have supported Habitat for Humanity’s development project, Humanity Guatemala. Needed funds are raised through support of the golf tournament, “Open para la Humanidad,” which means “open for humanity.” Beyond the homes themselves, Habitat also helps future homeowners through a training program that covers topics such as financial education, construction, healthy cooking and hygiene. The program is supported by national and international volunteers.
COSI on Wheels: It’s Simply Chemistry Ashland is proud of its continuing support of the Columbus, Ohio-based Center of Science and Industry “traveling show,” better known as COSI on Wheels: It’s Simply Chemistry. COSI takes the program into Kentucky, Indiana, Ohio and West Virginia schools, giving up to 500 students at a time the opportunity to take part in fun, hands-on science activities. In addition, we host the COSI Academy, an event that introduces students to our scientists and science-related careers.
Miszewo Open House As part of our commitment to safety and the environment, our manufacturing facility in Miszewo, Poland, hosted an open house for students and their teacher from a local primary school. The children eagerly toured the plant, and observed various manufacturing processes. They also tried on various safety equipment and learned about work place safety. After the safety training session, they also learned about ways the plant protects the environment and how they help local neighbors.
Oct. 1, 2013, to Sept. 30, 2014
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Fiscal 2014 Sustainability Overview
Ashland Inc.
Delaware Nature Society For the past two years, we’ve teamed up with the Delaware Nature Society (DNS) in presenting its watershed education programming, which connects students to nature through hands-on learning experiences. Based on sound science, DNS programming teaches students how to measure and understand water quality. It is part of the curriculum in school districts the DNS partners with, and we collaborate with the DNS in activities aimed at helping students understand the value of clean water and ways in which to protect the valuable resource. In addition, our employees partner with DNS by participating in annual events such as the Red Clay Creek Clean-up.
Khushi Family Clinic Valvoline India opened the Valvoline Khushi Family Clinic in Kanpur, Uttar Pradesh India, to provide services to truck drivers, mechanics and thier families at subsidized prices, and gives back to the community that uses Valvoline. The clinic has a team of two doctors, two counselors and five outreach workers, who not only help the families of the drivers and mechanics, but also manage various satellite clinics to create awareness and conduct health checkup camps.
Calvert City observes Good Neighbor Night For the past 25 years, employees representing Ashland’s Calvert City, Ky., facility have been meeting up with area residents for Good Neighbor Night (GNN). It’s the forum Calvert City uses to present environmental performance data to the public and to share information about its products. GNN also allows community members to express concerns and ask questions. Ashland hosts the annual event, in partnership with 13 other area industrial plants. Approximately 1,800 community residents attend the event, which ranks as Calvert City’s primary community outreach initiative.
Contributions The creation of good chemistry extends beyond the workplace into our communities. Approximately one-third of our annual corporate contributions target education-related activities, with a primary focus on science, technology, engineering and mathematics (STEM) initiatives. We have a proactive, outcome-driven, corporate contributions program that partners with select organizations to help us achieve impact within our focus areas. In 2014, we contributed $853,755 in cash and in-kind donations.
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Oct. 1, 2013, to Sept. 30, 2014
Ashland Inc.
Fiscal 2014 Sustainability Overview
Performance Data Economic Performance Sales Operating income EBITDA Adjusted EBDITA Income from continuing operations Net income Diluted earnings per share • Income from continuing operations • Income (loss) from discontinued operations • Net income Cash flows from operating activities from continuing operations Additions to property, plant, equipment Number of shareholders Environmental Stewardship Total energy consumption • Electricity (gigajoules) • Natural gas (gigajoules) • Other fuels (gigajoules) Greenhouse (gas emissions) • Scope 1 (MT CO2 eq. emitted) • Scope 2 (MT CO2 eq. emitted) Toxic release inventory (million pounds) Hazardous waste disposal ( Metric Tons) Water withdrawal (million cubic meters) Social Responsibility Total employees at year end Safety performance • Employee recordable injury rate • Employee lost-time incident rate • Employee fatalities Philanthropy • Cash and in-kind donations (USD)
Oct. 1, 2013, to Sept. 30, 2014
2014
2013
2012
$6,121 $46 $568 $1,078 $72 $233
$7,813 $1,241 $1,662 $1,242 $677 $683
$8,206 $302 $714 $1359 $38 $26
$0.93 $2.07 $3.00 $580
$8.50 $0.07 $8.57 $791
$0.48 (0.15) $0.33 $385
$248 13,600
$314 14,200
$298 14,900
4,360,000 7,550,000 1,552,800
4,240,000 8,362,000 1,746,500
4,110,000 8,510,000 2,330,000
510,000 800,000 22.39 9,258 20.5
640,000 790,000 20.19 11,938 21.8
724,000 467,000 22.03 10,341 22.2
11,000
14,600
14,600
1.01 0.38 0
1.03 0.47 0
1.1 0.44 0
$853,755
$937,312
$806,202
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Global headquarters Ashland Inc. 50 East RiverCenter Blvd. P.O. Box 391 Covington, KY 41012-0391 +1 859 815 3333 Asia Pacific Shanghai, China +86 21 2402 4888 Europe, Middle East, Africa Barendrecht, Netherlands +31 10 497 5000 Schaffhausen, Switzerland +41 52 560 55 00 Central, South America São Paulo, Brazil +55 11 3089 9220 ashland.com
® Registered trademark, Ashland or its subsidiaries, registered in various countries ™ Trademark, Ashland or its subsidiaries, registered in various countries * Trademark owned by a third party © 2015, Ashland PC-13322
All statements, information and data presented herein are believed to be accurate and reliable, but are not to be taken as a guarantee, an express warranty, or an implied warranty of merchantability or fitness for a particular purpose, or representation, express or implied, for which Ashland Inc. and its subsidiaries assume legal responsibility.
Infinite possibilities At Ashland, we are passionate about the possibilities created through good chemistry. We believe chemistry is about innovative, differentiated science — and about the way people come together to solve problems. From the speed at which a call or email is returned to the lengths to which we go to develop solutions that solve a specific customer need, good chemistry is what makes Ashland different and what makes us better. That’s why Ashland is one of the world’s leading specialty chemical companies. In more than 100 countries, we provide specialty chemicals, technologies and insights to help customers create new and improved products for today and sustainable solutions for tomorrow. People encounter our chemistries in a wide variety of markets and applications, including architectural coatings, automotive, construction, energy, personal care and pharmaceutical. Through our deep industry knowledge and customer-focused innovation, we make great things happen every day. Visit ashland.com to learn more.