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SECTION 172 STATEMENT

The revised UK Corporate Governance Code (‘2018 Code’) was published in July 2018 and applies to accounting periods beginning on or after January 1, 2019. The Companies (Miscellaneous Reporting) Regulations 2018 (‘2018 MRR’) require directors to explain how they considered the interests of key stakeholders and the broader matters set out in section 172(1) (A) to (F) of the Companies Act 2006 (‘S172’) when performing their duty to promote the success of the Company under S172. This includes considering the interest of other stakeholders which will have an impact on the long-term success of the company. The board welcomes the direction of the UK Financial Reporting Council (the ‘FRC’). This S172 statement, which is reported for the first time, explains how the directors:

  • have engaged with employees, suppliers, customers and others; and
  • have had regard to employee interests, the need to foster the company’s business relationships with suppliers, customers and other, and the effect of that regards, including on the principal decisions taken by the company during the financial year.

The S172 statement focuses on matters of strategic importance, and the level of information disclosed is consistent with the size and the complexity of the business.

When making decisions, each Director ensures that he/she acts in the way he/she considers, in good faith, would most likely promote the Company’s success for the benefit of its members as a whole, and in doing so have regard (among other matters) to:

S172(1) (A) “The likely consequences of any decision in the long term”:

The company’s operations, including it’s sales, manufacturing and investment plans for the year, are set out through the annual budget. This is prepared by the company’s senior leadership team and approved by the board of the ultimate parent company and is aligned with the long-term plans for the Site within the context of the overall group strategy.

In addition to reporting on the financials through the monthly management accounts, the board of directors is kept informed of operational matters through monthly reports compiled by the senior leadership team. This report includes, but is not limited to, manufacturing performance, safety statistics and quality metrics.

The board takes a view on long-term decisions based on commercial enquiries, research and development activities and thereafter the appropriate financial and analytical modelling, which it receives in the form of detailed proposals presented by the senior leadership team to the board and subsequently to the ultimate parent company.  This could include, but not be limited to, new product development, acquisition opportunities and strategic partnerships.

S172(1) (B) “The interests of the company’s employees”:

The directors recognise that the companies employees are fundamental and core to our business and delivery of our strategic ambitions. The success of our business depends on attracting, retaining and motivating employees. From ensuring that we remain a responsible employer, from pay and benefits to our health, safety and workplace environment, the directors factor the implications of decisions on employees and the wider workforce, where relevant and feasible.

The board of directors support significant levels of investment in training, online learning, paid-for external development, and the hosting of internal learning events. This sits alongside a generous benefits package which includes pension contributions above the statutory minimum requirement and an annual bonus scheme.

The board of directors recognises the importance of having a diverse workforce that both reflects the company’s global supply chain network, and which strengthens its business growth. The business is committed to promoting fairness and equality in the workplace which it demonstrates through a number of policies, including: Equal Opportunities Policy; Flexible Working Policy; Parental Leave Policy; and Maternity, Paternity and Adoption Policies.

S172(1) (C) “The need to foster the company’s business relationships with suppliers, customers and others”:

Delivering our strategy requires strong mutually beneficial relationships with suppliers, customers, local and national government, regulators and other associated stakeholders. 

Moreover, the directors receive information updates on a variety of topics that indicate and inform how these stakeholders have been engaged. These range from information provided from the supply chain function (on suppliers related to items such as sourcing project updates and supplier contract management topics) to information provided by the commercial and development teams (on customers related to items such as business strategies, on-going manufacturing campaigns and investment or divestment proposals).

In its relationship with suppliers, the company strives to maintain a reputation for fairness and high standards through striving for contracts that provide mutual benefit, and ensuring that suppliers are paid on time.

The company has a zero-tolerance to human trafficking and slavery and expects its suppliers to take the same approach. The board of directors has approved the publication of the company’s Modern Slavery Act statement and will support the senior leadership team in its review of its policies and procedures to ensure continued compliance.

In its relationship with customers, feedback can be collated by the several teams and fed back to the directors, mainly by the Commercial Directors, whose primary focus is customer engagement, management and communication. Specifically with regard to contract manufacturing agreements, our customers have a direct contribution toward the supply chain, technical development and quality parameters of our finished products, integration of customer feedback is a key input for our site operations.

S172(1) (D) “The impact of the company’s operations on the community and the environment”:

The directors recognise that the business has a significant responsibility when it comes to its relationship with the environment. The site is Top-Tier COMAH (Seveso III) compliant, has a broad environmental permit and similarly has extensive consents in place to allow us to handle a broad range of substances at a range of scales. A key consideration for the business in this respect is with regards to its chemical substance waste management. The site has direct pipeline access to one of the largest municipal liquid aqueous waste disposal facilities in Europe, and works closely with its sister company Fine Environmental Services Limited, who operate one of only three, third party licensed, high temperature thermal oxidisers for incineration of other waste streams. The business continues to work with its regulators in maintaining compliance and striving for best practice where environmental impact is concerned.

S172(1) (E) “The desirability of the company maintaining a reputation for high standards of business conduct”:

The directors recognise that the business operates within an industry where a high degree of emphasis is placed on ensuring business decisions are economically, environmentally and socially responsible. The company periodically reviews its policies and principles, as set out in the company Staff Handbook and other guiding documentation, to ensure that these high standards are maintained.  This, complemented by the ways the board is informed and monitors compliance with relevant governance standards help assure its decisions are taken and that the company acts in a way that promotes high standards of business conduct.

S172(1) (F) “The need to act fairly as between members of the company”:

The directors consider which course of action best enables delivery of our strategy through the long-term, taking into consideration the impact on stakeholders. In doing so, our directors act fairly as between the Company’s members but are not required to balance the Company’s interest with those of other stakeholders, and this can sometimes mean that certain stakeholder interests may not be fully aligned.

Modern Slavery

Introduction

Fine Organics’ will not tolerate forced, bonded or compulsory labour, human trafficking and other kinds of slavery or servitude within its own organisation or within its supply chain.

This statement sets out Fine Organics' actions to understand all potential modern slavery risks related to our business and to put in place steps that are aimed at ensuring that there isn’t any slavery or human trafficking in our business nor in our supply chain.

This statement relates to actions and activities during the financial year 1 January to 31 December 2018.

As part of the global Chemical Industry, we recognise that we have a responsibility to take a robust approach to slavery and human trafficking.

The organisation is absolutely committed to preventing slavery and human trafficking in its corporate activities, and to ensure that its supply chains are free from slavery and human trafficking.

Organisational structure and supply chains

This statement covers the activities of Fine Organics who are a leading European contract manufacturer of high-quality fine chemicals.

Countries of operation and supply

The organisation currently operates in the following countries:

  • The United Kingdom

Our Supply Chain

  • Our Supply Chains include suppliers of raw materials from across the globe, suppliers of engineering parts and services from the UK and Europe, suppliers of professional services from the UK, Europe and the rest of the world.  We are reviewing the risks that these supply chains can present.

We expect our suppliers and contractors to demonstrate a zero tolerance approach to exploitation.  To this end, we will be inserting a clause into our contracts requiring that they will comply with the provisions of the Act and granting us with the right to terminate in the event of their failure to do so.

Responsibility for the organisation's anti-slavery initiatives is as follows:

  • Policies: The Board of Fine Organics is responsible for ensuring this policy is implemented.  The Supply Chain Manager and the HR Director are responsible for monitoring the compliance of this policy.
  • Investigations/due diligence: The Supply Chain Manager is responsible for ensuring suppliers comply with this policy and for investigating any suspected instances of slavery or human trafficking.  The HR Director is responsible for ensuring employment practices in Fine Organics comply with this policy and for investigating any suspected instances of slavery or human trafficking.
  • Training: The Commercial, Supply Chain and HR department have been trained in their responsibilities under this policy.

Relevant policies

The organisation operates the following policies and takes the following steps to prevent slavery and human trafficking in its operations:

  • Whistleblowing policy

The organisation encourages all its employees, customers and other business partners to report any concerns related to the direct activities, or the supply chains of, the organisation. This includes any circumstances that may give rise to an enhanced risk of slavery or human trafficking. Fine Organics’ whistleblowing procedure is designed to make it easy for workers to make disclosures, without fear of retaliation.

  • Staff Handbook

Fine Organics’ values and behaviours as laid out in the Staff Handbook make clear to employees the actions and behaviour expected of them when representing the organisation. The organisation strives to maintain the highest standards of employee conduct and ethical behaviour when operating abroad and managing its supply chain.

  • Supplier code of conduct

Fine Organics’ is committed to ensuring that our suppliers adhere to the highest standards of ethics. Suppliers are required to demonstrate that they provide safe working conditions where necessary, treat workers with dignity and respect, and act ethically and within the law in their use of labour. We work with our suppliers to ensure they meet the standards of the code and improve worker's working conditions as appropriate. However, serious violations of the organisation's supplier code of conduct will lead to the termination of the business relationship. 

  • Agency workers policy

The organisation uses only specified, reputable employment agencies to source labour and always verifies the practices of any new agency it is using before accepting workers from that agency. 

Due diligence

The organisation undertakes due diligence when considering taking on new suppliers, and regularly reviews its existing suppliers. The organisation's due diligence and reviews include:

  1. mapping the supply chain broadly to assess a particular product or geographical risks of modern slavery and human trafficking;
  2. evaluating modern slavery and human trafficking risks of each new supplier as part of our assessment.

Over the next few years we will;

  1. Conduct supplier audits or assessments where we have assessed the need for a greater degree of focus on slavery and human trafficking;
  2. Participate in industry appropriate collaborative initiatives focused on human rights in general, and slavery and human trafficking in particular;
  3. Assess whether ethical supplier databases could be used to strengthen our compliance, 
  4. Invoke sanctions against suppliers that fail to improve their performance in line with an action plan or seriously violate our supplier code of conduct, including the termination of the business relationship.

Performance indicators

The organisation has reviewed its key performance indicators (KPIs) in light of the introduction of the Modern Slavery Act 2015. As a result, the organisation:

  • Requires the Commercial, Supply Chain and HR teams to be trained on modern slavery;
  • Has developed a system for supply chain verification, whereby the organisation evaluates potential suppliers before they enter the supply chain;

Training

All staff working in Commercial, HR and Supply Chain have been trained on the Modern Slavery Policy.

Awareness-raising programme

As well as training staff, the organisation will be raising awareness of modern slavery issues by putting up posters across the organisation's premises, circulating a series of emails to staff and including information in the Company Newsletter.

The communication explains to staff:

  • the basic principles of the Modern Slavery Act 2015;
  • how Fine Organics can identify and prevent slavery and human trafficking;
  • what employees can do to flag up potential slavery or human trafficking issues to the relevant parties within the organisation; and
  • what external help is available, for example through the Modern Slavery Helpline.

Board approval

This statement has been approved by the organisation's board of directors, who will review and update it annually.