2.2. Sustainable Portfolio Management

Solvay’s Sustainable Portfolio Management (SPM) focuses on sustainable business solutions. The SPM methodology is designed to boost Solvay’s business performance and deliver higher growth by letting decision-makers know how Solvay’s products contribute to sustainability, considering two factors:

1. the environmental footprint related to their production, and associated risks and opportunities,
2. how their applications create benefits or challenges from a market perspective, based on a qualitative assessment.

With SPM, decision-makers can detect sustainability risks and opportunities along the entire value chain (cradle-to-grave), develop action plans, and deliver innovative solutions that balance economic, social, and environmental values. SPM assessments are completely reviewed every year in order to capture the most recent signals from the market in a dynamic perspective.

* Scope: Consistent with financial reporting

Sustainability integrated in the management processes

The Corporate Sustainable Development function manages the SPM methodology. SPM is deployed in close cooperation with Business Units and Functions in key processes: Strategy, Research and Innovation, Capital Expenditures, Marketing and Sales, and Mergers and Acquisitions. The SPM methodology is part of the Solvay Way framework and helps measure how well Global Business Units and Corporate Functions have integrated sustainability into their business practices.

• The SPM profile is an integral part of the strategic discussions between Global Business Units and the Executive Committee.
• Mergers and Acquisition (M&A) projects are also evaluated using SPM to see if the investment is feasible in the light of Sustainable Portfolio targets.
• Investment decisions (capital expenditure above €10 million and acquisitions) made by the Executive Committee or the Board of Directors include a sustainability challenge that encompasses an exhaustive SPM analysis of the potential investment.
• All Research and Innovation projects are evaluated using SPM.
• In Marketing and Sales, SPM makes it possible to engage customers on fact-based sustainability topics aimed at differentiating and creating value for Solvay and the customer, such as climate change action, renewable energy, recycling, and air quality.

Towards a reference framework for active portfolio management

Solvay co-chairs two coalitions that are instrumental in setting the industry reference framework for active portfolio management:

• The World Business Council of Sustainable Development’s Portfolio Sustainability Assessment initiative sets a high standard and gives industries a common framework for its implementation, detailing a specific methodology for the chemical industry. The SPM methodology is aligned with the WBCSD framework. This alignment will be further enhanced by minor improvements in the SPM methodology in 2018. Benchmarking and the sharing of best practices among peers make the SPM methodology more robust and lead to better decision-making.
• The SPM guide has incorporated the Natural Capital Protocol referential in recognition of its robust and pragmatic approach to portfolio sustainability assessment.