Good Governance and Energized Employees

For LANXESS, responsible corporate governance particularly implies compliance with legal and internal standards and ethical principles to which all employees must adhere. Our global compliance organization – comprising the Group Compliance Officer, the regional Compliance Officers, and a network of local Compliance Officers – supports all areas of the company in implementing appropriate measures to counter unlawful or unethical conduct within the LANXESS Group at an early stage and to prevent misconduct. The compliance organization is also available to all employees as a point of contact for any compliance-related issues. The direct reporting line from the Group Compliance Officer to the Board of Management guarantees that the Board of Management members receive regular information.

Our Corporate Policy lays out principles of responsible business operations and sustainable development and defines our general corporate philosophy and the expected conduct of all employees in relation to our stakeholders.

The LANXESS Code of Conduct, which is applicable throughout the Group, requires all our employees – across all organizational units, regions and hierarchy levels – to behave lawfully and with integrity. Through correct and proper conduct, each employee is responsible for helping to prevent harm to LANXESS and increase the company’s value over the long term. The code covers issues such as human rights, cartel and antitrust law, anti-corruption, data protection, occupational, product and plant safety, and environmental protection.

Other Group directives, such as the HSE directives and the guideline on incentives, define the specific application of regulations in the individual areas of compliance covered by the code and are binding for our staff throughout the Group. On the basis of these LANXESS directives, more detailed regulations that also take account of local requirements are defined at the operational level in standard operating procedures and process instructions etc. The applicable directives, standard operating procedures and guidelines are accessible to all employees. Employees are also regularly informed of new and updated regulations relevant to them. 

We demand the highest quality and safety from our products, services and actions, always considering the interests of customers, employees, suppliers and other business partners, shareholders and the public.

Throughout the world, we use a process-oriented, integrated management system that complies with the international standards ISO 9001 and ISO 14001 for quality and environmental management. This allows us to achieve our clearly defined goals efficiently, continuously improve our performance and further develop our company successfully and sustainably.

We see our employees as a source of value creation and creativity, and encourage their awareness and commitment to improvement.

Occupational health and safety are our top priority. We demand compliance with safety, health and environmental guidelines at our sites worldwide. We strengthen our employees' sense of responsibility for safety, health and the environment through communication, while motivating them to further their education and training in these areas.

We emphasize maximum safety within all of our operating plants, utilizing our uniform global standards for process and plant safety and regularly monitoring their compliance and effectiveness.

We recognize our responsibility for product safety as a continuous improvement for people and the environment. We monitor the health and ecological effects of raw materials and products worldwide. We support our customers in the safe and environmentally-friendly handling of our products and draw their attention to the risks associated with their use. We also demand responsible behavior from our suppliers and service providers.

We are committed to protecting the climate. Our goal is to minimize and avoid climate-damaging emissions as far as possible. To this end, we take into account the entire value chain from raw material use, energy generation and consumption as well as our own plant and synthesis processes through to the products, their transport and delivery as well as the recycling or disposal of products and raw materials.

We are committed to responsible and comprehensive environmental protection and continually work to improve our environmental performance. We research and develop environmentally-friendly products and processes to avoid potential environmental impacts. We report publicly on our progress in this area.

We strive for a successful partnership with our customers in accordance with our management guidelines. Our aim is to identify our customers' expectations at an early stage, react quickly to their needs and thus ensure their satisfaction on an ongoing basis. We see our suppliers and service providers as partners whose expertise and reliability are just as important to us in the selection process as compliance with our corporate principles.

We create trust in our business activities through open and respectful communication with our customers, employees, suppliers, shareholders and creditors, the authorities and the public.

Taxes play a crucial role in enabling governments to provide important societal services like health care, education, housing and infrastructure. While tax laws and implementation are the government’s responsibility, companies also play an important role as taxpayers. They must comply with the law, and also ensure responsible tax treatment. LANXESS believes that a responsible tax approach is an essential part of doing business sustainably in a robust, functioning society. We view the fulfillment of tax obligations as our commitment and obligation to society.

Our “Taxation at LANXESS” tax policy is based on the LANXESS Corporate Compliance Code and Code of Business Conduct. LANXESS has a robust governance framework based on the Articles of Incorporation, our Code of Conduct, our risk management system and our management framework, which includes Group requirements and directives. The LANXESS tax policy aligns with our normal business practices and reflects the geographical distribution of the company's activities. In 2017, the tax reform in the United States had an extraordinary impact on income tax in the AMERICAS region.

All LANXESS employees and externals have access to our "Speak Up" system – an anonymous tool to report violations or potential violations to the Compliance Organization. All reports are investigated and, if necessary, appropriate action is taken. The reporting party and the employees affected by a report remain confidential.

LANXESS business partners can also contact the Compliance Organization, and may report violations of the LANXESS Code of Conduct or other misconduct on the part of LANXESS.

You can contact the Compliance Organization as follows:

LANXESS Compliance-Helpdesk:
compliance-helpdesk@lanxess.com (in German or English)

Speakup - Report violations
The reporting channels for your country can be found on the SpeakUp website. You can report violations in a secure and anonymous way by phone or in writing:

https://www.speakupfeedback.eu/web/lanxess

By signing the U.N. Global Compact, we have undertaken to actively counter all forms of corruption. This undertaking is also contained within the LANXESS Code of Conduct, wherein we make all employees aware of this topic. Our target is clear: no incidents. Prevention of corruption is part of our general compliance management system. Group-wide guidelines define organizational measures and regulations for setting up the compliance management system as well as responsibilities for implementation, support and continuous monitoring of the system. The respective site management, supported here too by our global compliance organization and by regional and local compliance officers, is responsible for preventing instances of corruption at all times.

A Group-wide standard provides clear guidance regarding incentives. Our employees are prohibited, either directly or in connection with their professional duties, from offering personal advantages to the employees of other companies – in particular when initiating, awarding or handling an order or assignment. Our employees are likewise prohibited from accepting such advantages or requesting them for themselves. If an employee is offered such gifts, they must immediately notify their supervisor or the compliance organization. Exceptions may be made for occasional, low-value gifts (e.g. promotional gifts).

LANXESS must not grant advantages of any kind to public servants or other officials in Germany or abroad. When commissioning service providers who have contact with officials on behalf of LANXESS, employees must likewise ensure compliance with the prohibition on corruption. It is one of LANXESS’s basic principles not to support any political parties or groups. LANXESS is involved in large industrial associations, which we regard as fundamental to representing our interests. We disclose contributions and spending on political activities transparently. Donations require approval from the Corporate Communications central function – depending on the value – or from the Chairman of the Board of Management of LANXESS AG, in both cases after prior consultation with the compliance organization.

To enhance our employees’ awareness of these rules of conduct, the issue of corruption is regularly covered by compliance training. In addition, we hold specific anti-corruption training aimed at exposed professional groups and countries. If there are indications of compliance violations, our employees and external third parties can contact the compliance organization – anonymously if they wish. Our Group-wide “SpeakUp” reporting system allows all employees or external third parties to report potential violations in writing or by telephone in over 20 languages and guarantees secure and anonymous communication between the compliance organization and the individuals making the reports.

The Corporate Audit function examines the implementation of and adherence to our compliance principles in the LANXESS Group. This also includes reviewing the measures to prevent corruption. The annual audit planning, which covers all business units, follows a risk-based approach, which also considers the exposure to corruption. Verified cases of fraudulent behavior on the part of LANXESS employees lead to appropriate disciplinary actions up to and including dismissal as well as consideration of further legal steps.

We also communicate our clear expectations for the prevention of corruption to our suppliers and service providers in our Business Partner Code of Conduct. It makes the clear demand that our suppliers must not engage in bribery, fraud or extortion. It is essential for us that they acknowledge the principles contained in the Business Partner Code of Conduct or have established their own comparable standards. If suppliers or service providers do not comply with these principles, this may lead to the termination of the contractual relationship.

To avoid conflicts of interest, all employees must separate their personal interests from those of the company. Our Code of Conduct clearly requires employees to disclose potential conflicts of interest, for example as a result of secondary employment or personal business relationships that could conflict with the interests of LANXESS. There were no verified conflicts of interest in the reporting year. We will not tolerate verified misconduct and it will result in appropriate disciplinary measures up to and including dismissal.

LANXESS complies with all applicable anti-money laundering and terrorist financing laws and regulations. We do not do business with partners that are subject to relevant sanctions, that engage in illegal business activities or whose funds are derived from illegitimate sources. To ensure this, LANXESS describes the requirements placed on our business partners in the Business Partner Code of Conduct and has established a Group-wide trade compliance management system.

LANXESS aims to be a sustainable chemicals company with long-term success driven by the personal commitment of each individual employee and by high-performing, diverse teams. Our goal is to enable our employees to shape their professional lives actively and to create a safe, productive and motivating environment. This makes us attractive to applicants of all ages and skill levels and enables us to counter demographic change and the shortage of skilled workers while also promoting a diverse workforce in which everybody feels included.

An HR strategy based on four pillars helps us to achieve our goal. We are continuously enhancing this in order to appropriately support our employees at all times in the diverse and sometimes complex change processes at LANXESS.

Information on life and work at LANXESS can also be found in our “Working at LANXESS” Background Paper.

We regard diversity as a strategic advantage. Therefore, we aim to enhance diversity at LANXESS and use its positive effects for our company and employees. An appreciative culture that is open equally to all people helps us to become more innovative and efficient and to attract and retain promising talents. Recognizing and appreciating diversity is therefore ingrained in our values, our guiding principles as well as our leadership principles.

In addition, gender diversity remains an important focus topic – with the clear target of increasing the proportion of women in the company. We sent an important signal in the reporting year with our commitment to the Women’s Empowerment Principles (WEP), a joint initiative by U.N. Women and U.N. Global Compact. The seven principles to empower women in the workplace provide clear guidelines for how employers can promote gender equality. These include equal pay for equal work, gender-specific measures for the promotion of women and zero tolerance for sexual harassment in the workplace.

The German Act on Equal Participation of Women and Men in Executive Positions in the Private and the Public Sector commits us to set targets in Germany for aspects such as the proportion of women at the two management levels below the Board of Management and to determine the target date for attainment of the proportion of women.

We have also set further targets above and beyond the legal requirements: Among other things, we want the proportion of women in management positions to be at least 30 % by the end of 2030.

Networks can make an important contribution to the promotion of diversity, equal opportunities and inclu-sion. WInX – our global “Women Initiative LANXESS” – connects women LANXESS across national borders. As part of this initiative, participants were able to network at virtual, hybrid and in-person events around the world. With a “Male Ally Workshop,” the German women’s network showed that the engagement of male employees is also important for gender diversity and equality. The workshop gave rise to the "HeForWinX" network group for men who are committed to supporting the women’s network in the future.

The significant development toward an employees’ market and the demographic challenges make recruiting an important strategic issue. Specialized LANXESS recruitment teams work in the U.S., China, India and Europe. In order to approach interesting candidates in both an active and a targeted manner, we have our own pool of active sourcing specialists.

Our recruitment process is highly digitalized. The software platform covers all processes from onboarding to the signing of employment contracts. It helps to make approaching and acquiring new talent standardized, transparent and candidate-focused.

We continue to invest in a clear employer brand in order to highlight the advantages of LANXESS as a global and socially responsible employer. Our employer brand centers on authenticity and diversity. We communicate this brand via social media, where we share a mix of company, product and HR information in order to spark enthusiasm for our company among talented people from various functions.

Our international graduate trainee program is a fundamental tool for securing talent in Germany. Exceptionally well qualified master’s graduates are prepared for challenging specialist and managerial tasks and can gather valuable experience in Germany and abroad. In addition to an engineering orientation, LANXESS also offers attractive areas of activity for economics graduates. Our young talent receive diverse practical learning opportunities as well as targeted training and opportunities for internal networking.

Training young people has always been hugely important to us, both in order to safeguard the company’s future and as part of our social responsibility. Vocational training is the basis of our strategy of developing specialist staff for the German sites from within our own ranks.  

It is our aim to retain at least 80% of our apprentices after successful completion of their training.

Training will remain a key pillar of our HR policy in the years ahead. We are importantly demonstrating this with new, modern offerings. For example, we initiated various special campaigns to recruit apprentices. Candidates were able to sample working in LANXESS workshops at the “Technik Check” event and then complete the hiring process within a day. For the first time in a pilot project in 2022, two apprentices were hired as part-time industrial management assistants. This offering is aimed at people who cannot take on a full – time apprenticeship – e.g. because they have children or act as a relative’s career. The apprenticeship can be completed at a reduced 30 hours a week, without the duration of the apprenticeship increasing.

Outside Germany, we offer apprenticeship programs in several European countries, as well as Canada, Brazil and India, for example, in order to cover our requirement for young talent in those countries. In addition to our regular apprenticeship activities, we cooperated with the Iochpe Foundation in Brazil for the second time. Through this cooperation, we again enabled ten young people from disadvantaged backgrounds to take part in a nine-month training course at our production site in Porto Feliz. In India, the government supports an apprenticeship program to give more young people the opportunity to acquire qualifications required to work in the chemical industry.

Our remuneration policy offers fair and competitive remuneration worldwide, chiefly based on relevant external benchmarks, level of professional experience and quality of work, regardless of the gender of the employees. We regularly reassess the fixed annual salary of our nonpay-scale employees on the basis of these factors in our annual salary review. Salary increases for our pay-scale employees follow the applicable collective agreements, likewise regardless of gender. The remuneration ratio of women and men is reviewed regularly and analyzed including other factors.

The difference between the average remuneration for men and women at LANXESS is less than ± 6% for all individual levels. These salary differences are influenced by further, non-gender-specific variables – such as professional experience, salary differences due to geography or function, or differing work histories. When the wage gap is broken down by age group – as a proxy variable for professional experience – the difference between men and women is usually even smaller. The goal of our HR policy is to have no differences in pay on the basis of gender. Our Diversity & Inclusion measures also contribute to this.

As part of the transparent remuneration in line with market conditions, LANXESS offers its employees bonus systems geared toward the company’s long-term success.

The central performance-based compensation component is the Annual Performance Payment (APP), which we provide above the pay scale and in most countries within the pay scale on top of fixed pay. This bonus payment is linked to our key controlling indicator, so requires the Group’s attainment of a defined EBITDA target. Further individual targets in areas such as safety and sustainability additionally apply to top management. 

With the Individual Performance Payment (IPP), managers can also reward employees’ extraordinary individual achievements during the year in a prompt and unbureaucratic way.

In addition, we offer a long-term incentive program for our managers in Germany. There are similar programs in the U.S. and India. The Long-Term Stock Performance Plan (LTSP) consists of four tranches commenced each year and tracks the performance of the LANXESS share compared with the FTSEurofirst 300 Eurozone Chemicals Index, over a period of four years in each case. In addition, there is a Share Ownership Guideline for the Board of Management and our top-level managers. This guideline emphasizes trust in the strategy and long-term success of LANXESS.

Another core element of our offering is the company pension plan for plugging potential gaps in provision in old age. The design of the company pension plan differs from country to country depending on the state pension system. LANXESS’s pension commitments often go beyond what is required by law. They are funded by employer and/ or employee contributions. In Germany, employees can voluntarily increase their pension and receive an additional grant from LANXESS.

In addition to fair monetary remuneration, flexible working conditions and benefits are becoming increasingly important. As components of total remuneration at LANXESS, they make a material contribution to the wellbeing and productivity of our workforce. It is important to us that the benefits granted support our corporate targets, values and culture and address the relevant needs of our employees. When designing these benefits, we often go further than the respective statutory framework. In addition, we always aim to account for individual needs and life situations in the best possible manner.

In line with our office-based employees’ desire for more flexible working and working-time models as well as greater transparency regarding existing options, we introduced and communicated global flexibility principles in 2018 under the heading “Xwork – Flexible Work.” A significant aspect of this flexibility for our office-based employees is the ability to work remotely.

The “flexitime” model derived for Germany from the Xwork principles aims to enable employees in senior management to work part-time in an intelligent way. In the Flexi-95 model, the level of employment is reduced to 95% with a corresponding adjustment to remuneration, meaning that a full-time worker is entitled to 13 extra days off per year. Corresponding models with levels of employment of 90% and 85% are also possible.

The legally defined framework for maternity rights and parental leave taken for granted in Germany and similar models in the European Union are by no means standard worldwide. Therefore, at our sites outside Europe, we are assessing whether we can introduce or expand countryspecific models for our employees. In Brazil and the U.S., for example, we offer parental leave programs that go beyond the respective legal requirements and allow our employees to spend time with their children on full pay.

Against a backdrop of demographic change, care is a major issue in Germany. The centerpiece of the LANXESS care model is caregiver leave, which allows our employees to reduce their working hours by more than their pay during the care period and to work off the hours commensurate with the pay they received after their return. 

Only by constantly investing in training our employees and imparting clear, globally binding values and standards can we as a company keep on using the opportunities of changing markets successfully. Wide-ranging leadership and HR development tools enable and motivate our employees to act on the basis of our values, rethink issues, implement them quickly and devise solutions in a team. We also provide additional opportunities to best support our managers and employees in economically challenging times, for example through social learning and dialog formats, team workshops and digital learning.

Strategic manager development also plays a central role. Our development programs promote the key skills that managers need in a constantly changing business world. We provide both in-person and virtual management development programs, as this hybrid format ensures an optimum combination of effective training and flexibility, with a mix of face-to-face contact and digital learning. The aim of the programs is to embed our leadership principles more deeply worldwide and to strengthen our leadership culture. Depending on the experience of the participants, basic leadership techniques are conveyed, refreshed and translated into individual measures. Since management practice differs depending on the country and cultural environment, our training programs also take cultural differences into account and include the requirements of digital management.

With our global, cross-divisional and cross-hierarchical “compass,” and “eXplorer” talent programs, we support particularly high-performing employees, retain them within the company and identify suitable successors for key positions at an early stage. “Compass” for employees at the start of their career offers guidance for their future career path. The format encourages practical development measures. The core element is a Development Center. “eXplorer” is aimed at employees who have the potential to develop toward major leadership roles at LANXESS in the next few years. Key topics include dealing with complexity, new forms of collaboration and digital and agile leadership principles.

Our occupational health management (OHM) aims to create a safe and healthy working environment, raise all employees' awareness of their own health, and motivate them to take responsibility for their own health-related behavior in their professional and private lives.

In Germany, occupational health management (OHM)
works in three action areas:
› Company integration management (CIM) for employees with long-term illnesses
› Division-specific OHM with structured management approach for plants and departments
› Occupational health promotion with offerings for all employees

We also promote wide-ranging measures to promote employee health and wellbeing at our international sites. In addition to the physical aspects, the topic of mental health is continuously growing in importance. Findings from neuroscience show that mindfulness-based stress reduction can protect against the effects of chronic stress and improve wellbeing as well as teamwork. Mindfulness is likewise of great importance for the safety culture.

We address the topic of occupational safety with our global safety initiative Xact. It pursues the goal of gradually lifting the safety culture of LANXESS to a higher level. Starting with top management, all employees are expected to work together to improve safety in the Group. We are doing this because we firmly believe that all industrial accidents are avoidable. As a specific target for occupational safety, we aim to reduce the lost time injury frequency rate (LTIFR, known as MAQ [“accidents per million hours worked”] in Germany) by more than half by the end of 2025 compared to the reference year of 2016 (LTIFR 2.0). The work of the Xact team is focused on stabilizing and fostering a positive culture of safety and greater alignment toward behavior-based safety.

We also want to reach an improved shared understanding of occupational safety with service providers who perform technical services for us, as well as including them in our safety culture. For instance, our partners must demonstrate that they maintain their own safety management system and have carried out all safety training that is required of all employees who work for us. Regardless of this, we provide personal safety briefings for employees of our partner companies.

Dialog with chemicals social partners – works councils, trade unions and employer associations alike – as a principle of consultation in action is the global practice at LANXESS. As part of this, we also respect the freedom of association of our employees in accordance with the International Labour Organization (ILO) and the Global Compact and comply with collective bargaining agreements. We regularly seek dialog with employee representative committees in Germany, Europe and worldwide, provide information on our corporate objectives and involve employee representatives in organizational changes at an early stage.

In 2020, we came to an agreement with the Central Works Council and the German Mining, Chemical and Energy Industrial Union (IGBCE) on jointly designing the work of the future. A key element of the agreement is the regular communication between the parties on the design of the digitalization process at LANXESS.This dialog was continued in 2022, with regard to both the challenging economic situation and the further digitalization and introduction of new IT systems.

Fair dealings with employee representatives and trade unions are also a top priority for us outside Europe. At all our sites, we comply with International Labour Organization (ILO) standards with respect to our employees’ freedom of association. Where possible and in compliance with local laws and regulations, this includes regular exchange between local management and tradeunion representatives as well as binding, collectively agreed-upon regulations on remuneration and working conditions.