The control environment is the set of standards, processes, culture and structures that provide the basis for carrying out internal control across the organization. The Executive Committee sets the tone at the top regarding the importance of internal control including expected standards of conduct. An important principle of the control environment is the commitment of the Executive Committee to integrity and ethical values, which is demonstrated by the programs mentioned below.
Business conduct / compliance
Business conduct program
Guided by the principles of the UN Global Compact and the OECD Guidelines for Multinational Enterprises, our Code of Business Conduct (which is available in six languages) describes principles with respect to personal and business conduct, asset protection, employment standards, and our commitment to sustainability and sets out the expected standard of behavior of all Corbion employees. This Code serves as an umbrella for underlying policies which cover in more detail areas such as competition law, anti-bribery, anti-corruption, conflict of interest, privacy, economic sanctions, and insider trading. Corbion has a network of regional Business Conduct Coordinators who support embedding of the Code of Business Conduct and the underlying policies in local operations. Besides this, they function as a local point of contact for management and staff. All Corbion employees need to follow annually a mandatory training (either through e-learning or class room training) with respect to the Code of Business Conduct. In addition, selected groups of employees need to follow every two years mandatory e-learning trainings with respect to anti-corruption and competition law. A breach of the Code of Business Conduct can lead to disciplinary actions, including termination of employment.
Under the Corbion Speak Up Policy, Corbion employees are able to report (potential) violations of the Code of Business Conduct to their manager or a Business Conduct Coordinator. Next to that, the Corbion Speak Up Line, which is available 24/7 and operated by an independent service provider, allows employees to report issues anonymously. In 2019, Corbion launched its External Speak Up Helpline which is a dedicated channel available to Corbion’s external stakeholders (such as customers, suppliers, communities, distributors, and agents) where they can raise concerns about (suspected) violations of the Corbion Code of Business Conduct, Corbion's Supplier Code, Corbion's Cane Sugar Code or any applicable laws. In 2019, 26 complaints with respect to the Code of Business Conduct were reported, of which 20 had merits. Appropriate measures have been taken by management.
Anti-bribery and anti-corruption
For Corbion as a listed company operating worldwide, compliance with anti-bribery and anti-corruption laws is key, given the consequences of non-compliance therewith. Our policy with respect to anti-bribery and anti-corruption is laid down in our Gifts, Entertainment, and Third-Party Payments Policy (which is available in six languages). This policy covers (i) prohibition of offering, authorizing, or accepting bribes, (ii) rules for how to deal with giving and receiving gifts and entertainment, and (iii) rules for how to deal with third-party payments (agents and distributors, facilitation payments, sponsorships, political contributions).
At Corbion, we are committed to maintaining good relations with our customers, suppliers, and other business partners. In this context we acknowledge the business custom of exchanging small gifts and invitations to dinners or social activities in order to initiate, develop, or sustain good business relations. All Corbion colleagues should however ensure that the gifts and entertainment that we offer or receive are not, or could not be perceived as, a bribe. All Corbion colleagues as well as our agents, distributors, and other representatives are prohibited from offering, authorizing, or accepting bribes of any kind. Any gifts and entertainment must be for legitimate business purposes, of a reasonable value, and appropriate to the business relationship, and be given or accepted at an appropriate time. If the nominal value of a gift exceeds a certain threshold, prior approval of the employee's manager is required. Prior management approval is always required for entertainment (with the exception of business meals) and travel and overnight accommodation.
Corbion has a procedure in place for engaging with agents and distributors. This means that due diligence questionnaires need to be filled out which are being assessed by the Legal & Compliance Department. Furthermore, higher management approval is required. The agent and distributor should sign an agency or distribution agreement and accept the Corbion anti-corruption/bribery clauses contained therein.
Part of the control environment is the definition by the Executive Committee of the risk appetite of the company. Our risk appetite is the amount of risk we are willing to accept to achieve our strategic goals. This requires adequate understanding and awareness of potential risks and their magnitude within the company. The level of risk appetite is set by the Executive Committee. Our risk appetite can be summarized as follows.
The impact on EBITDA in millions of euros of a 1% change in net sales, costs, profit, and currency changes is reflected as follows.
Approx. EBITDA impact (millions of euros)
+1% / -1%
+1% / -1%
Operating costs (= selling expenses + R&D costs + G&A expenses)
+1% / -1%
+1% / -1%
+1% / -1%
As an integral part of the strategy review, the Executive Committee annually performs an entity-wide risk assessment to assess the strategic risks, with a mid-year update for significant changes. Furthermore, risk assessment is an integral part of the project stage-gate methodology applied at Corbion for strategic initiatives and related investments.
Derived from the strategic risks, the Executive Committee selects a number of key management activities with an increased focus in 2020 on further strengthening our control framework. This is discussed with the Audit Committee and the Supervisory Board.
Operations, reporting, and compliance risks are considered throughout the organization, with ownership lying with the line organization (first line of defense). Risk committees have been established to monitor specific risks to stay within Corbion’s risk appetite (Treasury Risk Committee, Commodity Pricing Risk Committee).
The financial reporting risks are assessed on a regular basis and the outcome of this assessment forms the input for the Corbion internal control framework on financial reporting (see paragraph Internal control systems). For more information on financial risk management and financial instruments see Note 26 of the Financial statements.
Key risk areas
The table below summarizes the top risks that have the focused attention of the Executive Committee to support the realization of the strategic targets. For each risk the table lists the potential impact as well as a summary of mitigation measures taken to address them. There may be other risks currently unknown to Corbion, or currently believed not to be material, which could ultimately have a major impact on Corbion's business, objectives, revenues, income, assets, liquidity, or capital resources.
Corbion top risks
Cause and potential impact
Algae Ingredients business development
Algae-based ingredients for food and feed offer a promising plant-based solution with a view to the increasing sustainability concerns and the potentially reduced availability of resources currently used.
Corbion’s strategy is to develop new algae-based solutions with strong partners who have the power to increase market adoption.
Business development underperformance
Business development is one of the key drivers of Corbion's Creating Sustainable Growth strategy. Corbion is investing in new platforms of growth such as PLA and FDCA, for which the pace of market adoption is inherently uncertain given the early development stage of these initiatives.
Corbion is following a disciplined investment approach to these major business development initiatives through actions like:
Business interruption due to new ERP platform
Corbion embarked on a multi year (2017 – 2021) project to replace the existing ERP systems by a new, global ERP platform (project CUBE, based on SAP S/4HANA). As this new system addresses nearly all of the core transactional processes, such transition if not prepared and/or managed well, could lead to major business interruptions.
Corbion considers project CUBE as one of the key initiatives for change management which will be implemented in the years to come. The project is staffed with dedicated experienced project management (resources from both internal and external system integrator), applies strict project governance procedures, and reports to an Executive Committee-led steering committee.
Inability to find, develop, and retain skilled talent
To execute the Creating Sustainable Growth strategy, Corbion requires a pool of skilled talent.
Corbion has robust compensation and performance management processes in place.
Raw material and energy price volatility and availability
Failure to manage the price volatility risk of raw materials, chemicals, and energy which cannot be directly passed on to customers due to market conditions or lack of contractual enforcement, may result in adversely impacted gross margins.
The inclusion of price formulas in contracts, frequent monitoring of key materials and energy impact. Overall raw material risks are mitigated by actively taking longer-term contract positions where necessary, by sourcing from different locations/key raw materials, and in the longer run, by considering alternative or second-generation feedstocks.
Changing customer behavior toward food and changing product regulations in all industries in which Corbion is active
Our industry is inherently subject to uncertainties including evolving diets, reflecting perceptions with respect to health and sustainability issues, and subsequent policy responses (regulations).
Corbion works closely with its customers to identify trends and develop the right portfolio of solutions to address evolving trends.
Inherent health and safety hazards in our operations and insufficient awareness of unsafe plant conditions can lead to injuries or casualties and, potentially, a temporary plant shutdown.
Safety is an integral part of new design and change in product formulations and production processes. A new policy focused on safety core beliefs, followed by participative workshops, and a program focused on life-changing safety rules, supported by e-learning and awareness campaigns have been rolled out. In 2020 Corbion will continue the awareness campaigns, in addition to the roll-out of the ISO 45001 safety standards. Next to this we will start a program with an external consultant to assess our safety culture to further strengthen our safety performance.
Food safety is of utmost importance to Corbion. Customers need to fully trust the safety of our products. Any issue can have significant impact on the reputation of the company and can result in significant costs of resolving the issue (for example, in case of a major recall).
Corbion established comprehensive quality assurance and control processes to ensure food safety and to track and trace our products in case of any issue. Every site is certified for food safety.
An external hazardous event (floods, riots, fires etc.) or internal disruption (e.g. availability of critical spare parts, global supply chain complexity etc.) may result in a significant period of plant shutdown or disruption and hence in delayed/non-delivery of our products to internal and/or external customers, ultimately leading to adverse financial and reputational consequences.
Business continuity and crisis management plans including contingency sourcing are in place with ongoing evaluation, based amongst other things on highly credible incident identifications for each site. Furthermore, appropriate customer and supplier agreements are in place to limit exposure whilst leveraging supplies. Finally, residual risks are adequately insured including assets and business continuity risks.
A breach of our IT security might lead to loss of information.
We have implemented an IT governance structure including a dedicated corporate information security officer and an information security governance board. The IT general control framework has been updated including amended IT policies. On a frequent basis we perform penetration tests, helping us to identify and correct potential IT security weaknesses. The outcome of these tests helps us to further strengthen our IT security levels. In addition, we reduce our risk exposure by continuously raising IT security awareness with our people (e.g. through e-learning, communications). In 2019 we continued to have a strong IT control environment with our focus on timely application of patches, full implementation of multi-factor authentication, running a Security Operating Center, and segmentation of Corbion’s IT network.
Confidential information leakage
Failure to protect sensitive information adequately due to limited physical protective measures, inadequate user behavior, or potential cyberattacks may result in loss of valuable or sensitive information such as trade secrets or intellectual property.
All mitigation actions mentioned above under Cybersecurity breach help keep our sensitive information confidential.
Non-compliance with applicable tax laws
Failure to timely detect and anticipate changes in a wide variety of tax laws or in the application thereof could adversely affect our ﬁnancial results.
An adequate quarterly reporting system is in place, we hold regular tax meetings, and review tax compliance of our operating companies. Our global tax control framework warrants compliance. Transfer pricing policy and documentation are in place as well. We seek the advice of external tax experts in compliance matters.
Non-compliance with legislative and regulatory environment
Failure to comply with (changing) laws and regulations in the markets we operate in. Lack of insight into and/or awareness of relevant laws and regulations and their requirements may result in suspension of activities, reputational damage, and exposure to criminal and financial lawsuits.
Global legal and regulatory compliance programs are in place, including related awareness trainings, and we monitor, review, and report on changes in laws and regulations. We seek the advice of external experts in compliance matters.
Volatility in currency exchange rates
Failure to manage volatility in the exchange rates of a number of currencies versus the euro, especially the US dollar, can have a significant impact on our financial results.
A hedging policy is in place to limit the impact of volatility in foreign exchange rates.
Non-compliance with International Financial Reporting Standards (IFRS)
Not informing our shareholders and other stakeholders in conformity with IFRS might lead to a lack of trust, reputation damage, a declining share price, and, possibly, legal claims.
Corporate accounting policies are maintained and made available via the Corbion intranet. Our global control framework includes financial reporting controls that warrant compliance with IFRS. For significant entities, the effectiveness is self-assessed every quarter.