Control environment
The control environment is the combination 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 as to 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
Corbion’s Business Conduct Program combines the legal requirements of the countries where we operate and international standards, resulting in a framework that regulates how all Corbion employees interact with colleagues, business partners, governments, and communities. We translate these legal requirements and standards into our Code of Business Conduct, internal policies, and procedures to make them accessible to everyone. Often, we go beyond what is required by local legislation to create a single global integrity approach within Corbion.
The Executive Committee has overall responsibility for the Business Conduct Program and oversees its execution. To this end, they establish effective global business conduct governance and ensure allocation of appropriate resources for the upkeep and further development of the Business Conduct Program.
Corbion’s Legal & Compliance Department supports the execution of the Business Conduct Program as a second line of defense and, as such, has a coordinating role. The Legal & Compliance Department works closely with other departments (e.g., Risk Management, Internal Audit, HR, Finance, Customer Service, Procurement, Communications) and external stakeholders (e.g., law firms, consultants, compliance software providers) to enable the proper roll-out of the Business Conduct Program throughout the organization.
As a third line of defense, Internal Audit offers independent reviews. The business is in the front line and is responsible for the day-to-day execution of the risk management strategy and Business Conduct Program.
Each year, Corbion’s Compliance Officer reports to the Audit Committee of the Supervisory Board on the status of the Business Conduct Program. In the event of significant incidents, the Audit Committee is immediately informed by the Executive Committee.
Code of Business Conduct and policies
At the heart of our Business Conduct Program is the Corbion Code of Business Conduct. Our Code states the values and principles that guide our work at Corbion and sets out the expected standard of behavior for everyone working for Corbion. Our Code applies to all activities we perform on behalf of Corbion wherever they take place, and to everyone working for our company.
Guided by the principles of the UN Global Compact and the OECD Guidelines for Multinational Enterprises, our Code of Business Conduct describes principles with respect to personal and business conduct, asset protection, employment standards, and our commitment to sustainability.
Our Code is available in six languages and includes how Corbion’s values relate to our purpose and our commitment to sustainability.
Our Code serves as an umbrella for underlying policies which cover in more detail areas such as competition law, anti-bribery, anti-corruption, conflicts of interest, privacy, economic sanctions, and insider trading.
Corbion has a network of regional Business Conduct Coordinators who help embed the Code of Business Conduct and the underlying policies into local operations. Besides this, they are a local point of contact for management and employees.
Speak Up channels
Under the Corbion Speak Up Policy, Corbion employees can report misconduct and (potential) violations of laws, the Corbion Code of Business Conduct and underlying policies to their manager, their local HR contact, or the regional Business Conduct Coordinator.
Next to that, the Corbion Speak Up channels are available 24/7 to enable employees to report issues directly to the Business Conduct Committee, which is composed of the Chief Human Resources Officer, the VP Legal & Compliance, and the Senior Director Internal Audit. Corbion Speak Up channels include a toll-free phone number and a global webservice which are operated by an independent service provider to ensure the confidentiality of the report.
Any misconduct and (potential) violations can be reported anonymously. In 2019, Corbion launched its external Speak Up platform, a dedicated channel available to Corbion’s external stakeholders, including customers, suppliers, communities, distributors, and agents. The external Speak Up platform can be used to 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.
Breaches of the Code of Business Conduct may lead to disciplinary actions, including termination of employment. The outcome of the investigations as well as any disciplinary measures taken are documented accordingly and reported to the Executive Committee and Audit Committee twice a year.
Business Conduct training
Every year, all Corbion employees follow a mandatory training on our Code of Business Conduct. Employees receive training in their local language through an e-learning course or a classroom session. Course materials are updated yearly, based on the most relevant risks at the time of the release and on the topics which were brought up in Speak Up reports in the previous year. Corbion has a strict policy on attendance to the Code of Business Conduct training.
In addition, selected groups of employees need to follow every two years mandatory e-learning trainings with respect to anti-corruption and competition law.
Compliance statement
Every year, at the time of the annual Code of Business Conduct training, employees confirm their compliance with the Code and underlying policies by signing a compliance statement.
In terms of our onboarding program, our standard employment contracts contain a clause with respect to adherence to the Code of Business Conduct. New hires, including interns and contingency workers, are introduced to our Code as soon as they join Corbion and are required to complete the Code of Business Conduct training in the first six weeks of employment.
Conflict of Interest Policy
The purpose of our Conflict of Interest Policy is to provide guidance in identifying and handling potential, perceived, and actual conflicts of interest within Corbion. Conflicts of interest arise when our personal activities or relationships influence or appear to influence our business decisions on behalf of Corbion. Conflicts of interest endanger the relationship Corbion has with its business partners and other stakeholders; they could harm the credibility of Corbion and ours, and even lead to loss of business and reputation.
In January of every year, the Supervisory Board and Executive Committee members as well as the direct reports of the Executive Committee, confirm their compliance with the Conflict of Interest Policy by signing a compliance statement. They also fill out a questionnaire with respect to related-party transactions.
Anti-bribery and anti-corruption
As a listed company operating worldwide, compliance with anti-bribery and anti-corruption laws is vital. Given its importance, compliance with our policy is overseen by the Executive Committee. Our policy with respect to anti-bribery and anti-corruption is laid down in our Gifts, Entertainment, and Third-Party Payments Policy. This policy is available in six languages and covers (i) the prohibition of offering, authorizing, or accepting bribes, (ii) rules on how to deal with giving and receiving gifts and entertainment, and (iii) rules on how to deal with third-party payments (agents and distributors, facilitation payments, sponsorships, political contributions).
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 reasonable value, 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 an anti-bribery and anti-corruption procedure in place to screen prospective agents and distributors, who are required to complete due-diligence questionnaires to be assessed by the Legal & Compliance Department and, in some cases, by an external party. Furthermore, higher-management approval is required prior to engagement. The agent or distributor is required to sign an agency or distribution agreement and accept the Corbion anti-corruption and anti-bribery clauses contained therein.
Economic sanctions
Corbion is committed to complying with economic sanctions laws and regulations. According to the Corbion Economic Sanctions Policy, prior to onboarding, each prospective business partner is subject to screening against applicable lists of restricted parties and sanctioned countries to ensure compliance with economic sanctions laws and regulations.
Alongside this pre-screening of business partners, Corbion has appropriate tools to ensure ongoing screening of all active business partners and to prevent shipment of our products to embargoed countries and regions. The list of embargoed countries and regions is reviewed every year and whenever a significant geopolitical event takes place.
Competition Law Policy
Corbion is committed to complying with competition laws. The Corbion Competition Law Policy provides an overview of the main competition rules and establishes procedures and guidelines which must be followed in dealings where competition laws may apply (e.g., contacts with competitors (either direct or through trade associations), the relationship with suppliers, distributors, and customers). The policy prohibits cartels, abuse of a dominant position, and the exchange of sensitive information with competitors. The policy is available in English.
Corbion has a procedure in place requiring sales colleagues to obtain prior approval from higher management and the Legal & Compliance Department for exclusivity/non-compete arrangements with customers and distributors.
Privacy and data protection
In light of the EU’s General Data Protection Regulation on data protection (GDPR), Corbion has created a robust privacy program in 2018. Following its initial implementation, Corbion has further developed and localized its privacy program to reflect newly enacted privacy regulations in the countries where we operate, such as the CCPA/CPRA in California, the LGPD in Brazil, the PDPA in Thailand, and the PIPL in China.
Enforcement actions
Corbion has not been the subject of any investigation into business conduct violations (e.g., competition, privacy, bribery) by competent governmental authorities to date.
Risk appetite
Part of the control environment is defining the risk appetite of the company by the Executive Committee. Our risk appetite is the level of risk we are willing to accept to achieve our strategic goals. This requires adequate understanding and awareness of potential risks and their impact on the company. The level of risk appetite is set by the Executive Committee. Our risk appetite can be summarized as follows.
Risk appetite
A 1% change in net sales, costs, profit, or currency rates can have the following impact on EBITDA (in millions of euros).
xmillion EUR | Change | Approx. EBITDA impact |
Net sales | +1% | 5.8 |
Gross profit | +1% | 3.8 |
Operating costs (= selling expenses + R&D costs + G&A expenses) | +1% | (1.9) |
USD* | +1% | 2.0 |
JPY* | +1% | 0.3 |
THB* | +1% | (0.3) |
BRL* | +1% | 0.0 |
- * +1% meaning 1% appreciation of currency against Euro
Risk assessment
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.
Based on the strategic risks, the Executive Committee selects a number of key management activities with an increased focus 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 these assessments forms the input for the Corbion internal control framework for financial reporting (see section Internal control systems). For more information on financial risk management and financial instruments see Note 27 of the Financial statements.
Key risk areas
The table that follows 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 minimize the risk. 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
Risk event | Cause and potential impact | Mitigation actions |
Strategic risks | ||
Capacity | Demand is inherently uncertain in specific markets Corbion is operating in, especially when in early stage of development. Adding production capacity is a lengthy and costly process. Mismatches between demand and supply could result in shortage or excess. | With sophisticated demand forecasting and sales & operations planning, Corbion optimizes the allocation of products to ensure we can meet our customer needs. Long-term sales and operations planning is used to support capacity decisions. |
Climate change | Climate change could affect Corbion in all areas of business through transition and physical risks. Transition risks include, amongst others carbon pricing, changing consumer behavior, and changing regulations, while physical risks manifest through increased intensity and frequency of extreme weather events and chronic climate changes. Climate risk has an increasing impact on the likelihood of several other risks (e.g., business continuity, raw material availability and price volatility, regulations, customer behavior). | Transitional risks are addressed through our strategy development process, using scenario analysis and monitoring developments and emerging risks and opportunities. Physical risks are addressed through mitigating actions as mentioned in this table for the relevant risk affected by climate change. |
Competition | With global imbalances of lactic acid demand versus supply, the likelihood of new market entrants (in case of undercapacity) or price competition (in case of overcapacity) exists. | By investing in R&D, Corbion intends to keep its competitive edge. The new circular lactic acid production technology underscores the innovative strength of Corbion. In 2020, Corbion made the decision to build the first industrial-scale plant with this new technology in Thailand, resulting in reduced production costs (completed by the end of 2023). |
Business development underperformance | Business development is one of the key drivers of Corbion’s Advance 2025 strategy. Corbion is investing in new platforms of growth such as PLA and Algae, 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 such as: |
Business interruption due to new ERP platform | Corbion embarked on a multi-year (2017 - 2024) 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 is implemented over a multi-year period. The project is staffed with dedicated experienced project management (resources from both internal and external system integrator), follows strict project governance procedures, and reports to an Executive Committee-led steering committee. |
Inability to find, develop, and retain skilled talent | To execute the Advance 2025 strategy and investment program, Corbion requires a pool of skilled talent. | Corbion has robust talent acquisition processes, promoting the company’s values and sustainability strategy, which is attractive to potential candidates. Corbion offers competitive compensation packages and has comprehensive talent management processes in place including performance management and succession planning to ensure a strong pool of talent for key positions. |
Raw material, energy, and carbon price volatility and availability | Failure to manage the price volatility risk of raw materials, chemicals, energy, and carbon which cannot be directly passed on to customers due to market conditions or lack of contractual enforcement, may result in adversely impacted profitability and gross margins. | Our global procurement organization, with dedicated finance support, has developed adequate measures to secure contract positions and obtain financial instruments to minimize or delay exposure to cost fluctuations due to changing raw material prices that might impact our profitability and margins negatively. These measures include early warnings of possible impact on our organization and our customers. Also, the trade in and availability of CO2-emission rights are actively managed. |
Changing customer behavior toward food and changing product regulations in the 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. |
Operations risks | ||
Safety incidents | Inherent health and safety hazards in our operations and insufficient awareness of unsafe operational conditions can lead to injuries or casualties and, potentially, a temporary plant shutdown. | Safety is an integral part of new design and changes in product formulations and production processes. Corbion fosters an open and transparent culture by encouraging all employees to report, amongst others, all near misses and events in order to continuously improve our safety and environmental performance. |
Food safety | Food safety is of utmost importance to Corbion. Customers need to fully trust the safety of our products. Any issue can have a 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 has comprehensive quality assurance and control processes in place to ensure food safety and to track and trace our products in case of any issue. Every site is certified for food safety. |
Business interruption | An external hazardous event (e.g., floods, riots, fires) or internal disruptions (e.g., availability of critical spare parts, global supply chain complexity) 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. Climate-change-related events may increase the risk of business or supply chain interruption. | Business continuity and crisis management plans including contingency sourcing are in place with ongoing evaluation, based amongst others on incident identifications for each site. An integrated Business Continuity Management system is being set up including a business continuity/crisis training program for management. |
Cybersecurity breach | A breach of our IT security might lead to loss of information, business disruption, or unauthorized access to or corruption of our data and systems. | 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 to include 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). |
Compliance risks | ||
Non-compliance with legislative and regulatory environment | Failure to comply with (changing) laws and regulations in the markets we operate in and/or 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. |
Reporting risks | ||
Sustainability reporting | There is an increasing number of new, existing, and emerging regulations concerning climate change and other sustainability-related disclosures. These regulations or initiatives can be either voluntary or obligatory and can be aimed at investors or required by governing bodies. This includes, but is not limited to, the EU Taxonomy, CSRD, TCFD, TNFD, IFRS/ISSB prototype standards, science-based targets, and CDP. Failure to report sufficient information might potentially lead to a lack of trust, reputational damage, loss of customers, and legal claims. | Corbion aims to be a frontrunner in sustainable business practices. To communicate this effectively and reliably there is a need for adequate disclosures. We are therefore constantly monitoring developments in this field and try to anticipate upcoming regulation. Through timely integration of standards and collection of data we are able to keep up with the required disclosures and provide investors and other stakeholders with the information they need. |
Risk event | Cause and potential impact | Mitigation actions |
|---|---|---|
Strategic risks | ||
Capacity | Demand is inherently uncertain in specific markets Corbion is operating in, especially when in early stage of development. Adding production capacity is a lengthy and costly process. Mismatches between demand and supply could result in shortage or excess. | With sophisticated demand forecasting and sales & operations planning, Corbion optimizes the allocation of products to ensure we can meet our customer needs. Long-term sales and operations planning is used to support capacity decisions. |
Climate change | Climate change could affect Corbion in all areas of business through transition and physical risks. Transition risks include, amongst others carbon pricing, changing consumer behavior, and changing regulations, while physical risks manifest through increased intensity and frequency of extreme weather events and chronic climate changes. Climate risk has an increasing impact on the likelihood of several other risks (e.g., business continuity, raw material availability and price volatility, regulations, customer behavior). | Transitional risks are addressed through our strategy development process, using scenario analysis and monitoring developments and emerging risks and opportunities. Physical risks are addressed through mitigating actions as mentioned in this table for the relevant risk affected by climate change. |
Competition | With global imbalances of lactic acid demand versus supply, the likelihood of new market entrants (in case of undercapacity) or price competition (in case of overcapacity) exists. | By investing in R&D, Corbion intends to keep its competitive edge. The new circular lactic acid production technology underscores the innovative strength of Corbion. In 2020, Corbion made the decision to build the first industrial-scale plant with this new technology in Thailand, resulting in reduced production costs (completed by the end of 2023). |
Business development underperformance | Business development is one of the key drivers of Corbion’s Advance 2025 strategy. Corbion is investing in new platforms of growth such as PLA and Algae, 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 such as: |
Business interruption due to new ERP platform | Corbion embarked on a multi-year (2017 - 2024) 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 is implemented over a multi-year period. The project is staffed with dedicated experienced project management (resources from both internal and external system integrator), follows strict project governance procedures, and reports to an Executive Committee-led steering committee. |
Inability to find, develop, and retain skilled talent | To execute the Advance 2025 strategy and investment program, Corbion requires a pool of skilled talent. | Corbion has robust talent acquisition processes, promoting the company’s values and sustainability strategy, which is attractive to potential candidates. Corbion offers competitive compensation packages and has comprehensive talent management processes in place including performance management and succession planning to ensure a strong pool of talent for key positions. |
Raw material, energy, and carbon price volatility and availability | Failure to manage the price volatility risk of raw materials, chemicals, energy, and carbon which cannot be directly passed on to customers due to market conditions or lack of contractual enforcement, may result in adversely impacted profitability and gross margins. | Our global procurement organization, with dedicated finance support, has developed adequate measures to secure contract positions and obtain financial instruments to minimize or delay exposure to cost fluctuations due to changing raw material prices that might impact our profitability and margins negatively. These measures include early warnings of possible impact on our organization and our customers. Also, the trade in and availability of CO2-emission rights are actively managed. |
Changing customer behavior toward food and changing product regulations in the 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. |
Operations risks | ||
Safety incidents | Inherent health and safety hazards in our operations and insufficient awareness of unsafe operational conditions can lead to injuries or casualties and, potentially, a temporary plant shutdown. | Safety is an integral part of new design and changes in product formulations and production processes. Corbion fosters an open and transparent culture by encouraging all employees to report, amongst others, all near misses and events in order to continuously improve our safety and environmental performance. |
Food safety | Food safety is of utmost importance to Corbion. Customers need to fully trust the safety of our products. Any issue can have a 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 has comprehensive quality assurance and control processes in place to ensure food safety and to track and trace our products in case of any issue. Every site is certified for food safety. |
Business interruption | An external hazardous event (e.g., floods, riots, fires) or internal disruptions (e.g., availability of critical spare parts, global supply chain complexity) 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. Climate-change-related events may increase the risk of business or supply chain interruption. | Business continuity and crisis management plans including contingency sourcing are in place with ongoing evaluation, based amongst others on incident identifications for each site. An integrated Business Continuity Management system is being set up including a business continuity/crisis training program for management. |
Cybersecurity breach | A breach of our IT security might lead to loss of information, business disruption, or unauthorized access to or corruption of our data and systems. | 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 to include 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). |
Compliance risks | ||
Non-compliance with legislative and regulatory environment | Failure to comply with (changing) laws and regulations in the markets we operate in and/or 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. |
Reporting risks | ||
Sustainability reporting | There is an increasing number of new, existing, and emerging regulations concerning climate change and other sustainability-related disclosures. These regulations or initiatives can be either voluntary or obligatory and can be aimed at investors or required by governing bodies. This includes, but is not limited to, the EU Taxonomy, CSRD, TCFD, TNFD, IFRS/ISSB prototype standards, science-based targets, and CDP. Failure to report sufficient information might potentially lead to a lack of trust, reputational damage, loss of customers, and legal claims. | Corbion aims to be a frontrunner in sustainable business practices. To communicate this effectively and reliably there is a need for adequate disclosures. We are therefore constantly monitoring developments in this field and try to anticipate upcoming regulation. Through timely integration of standards and collection of data we are able to keep up with the required disclosures and provide investors and other stakeholders with the information they need. |