Innovation Advancing Sustainability
Innovation Advancing Sustainability Corporate Social Responsibility Report
2010 – 2011
OCTAL Petrochemicals LLC FZC Prepared for OCTAL by Renewable Choice Energy
Table of Contents 1
Report Overview. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2
Innovation at a New Level. . . . . . . . . . . . . . . . . . . . . 14
3
Business Practices and Organization . . . . . . . . . . . . . . .
18
4
Sustained Environmental Leadership . . . . . . . . . . . . . . .
24
5
Employee Engagement . . . . . . . . . . . . . . . . . . . . . .
32
6
Mutually Beneficial Relationships—Community Involvement . . . .
38
7
2012 Performance Goals . . . . . . . . . . . . . . . . . . . . .
40
8
2010 – 2011 Performance Summary / Indicators Inventory. . . . . 42
9
Glossary of Terms. . . . . . . . . . . . . . . . . . . . . . . . . 44
10
Preparation / Contact Information. . . . . . . . . . . . . . . . . 46
Sec tion 1: rep ort overvie w
OCTAL is a global leader in the packaging industry that has seen remarkable success because of our commitment to sustainability.
From our inception, we have taken an aggressive, proactive approach to sustainability. We believe that we have a responsibility toward our customers, employees, and other stakeholders to embed sustainability at every level of our organization. We believe that it is our responsibility as a company to manufacture products that are safe and sustainable, while also growing our business to support our employees and the surrounding community. As a result, sustainability and transparency is not just talk, but an ongoing commitment to the way we do business at OCTAL.
We were founded in 2006 on the belief that
As a company, we aim to:
we could build a better company and make
Create a new paradigm for the packaging industry by using redesigned manufacturing processes and transparency to drive success.
a better product that is better for the
Place responsibility at the core of our business practices by reducing our carbon footprint, improving the environmental profile of our products, and creating a culture of innovation—advancing sustainability within our company.
environment. Our success is built on a unique innovation—a way of doing business that has significantly reduced the environmental impact of manufacturing PET resin and PET sheet. Our business operations have grown
Improve our workplace and the communities in which we operate by providing exceptional working conditions, honoring human dignity, and giving social and philanthropic support to the underprivileged. Demonstrate to other companies that sustainability can become a foundational business practice by providing leadership at a local, regional, and international level.
up around this product with these same principles of innovation and sustainability
O C TA L P e t r oc h e m i cal s L LC F ZC TC
founded in 2006 largest PET sheet manufacturer in the world 409 employees worldwide headquarters in Muscat, Oman production facilities in Salalah, Oman additional sales offices in US, UK, Germany, and China Oman’s largest non-oil exporter, moving over one million tons of PET per year $700M in revenues in 2011 with $1.5B predicted by end of 2012
in practice.
4
OCTAL at a glance
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
A Message from Our CEO
Why We Are Choosing to Report
OCTAL was established in 2006 to meet the converging trends in clear rigid packaging and environmental goals making PET the format of choice across a wide range of packaging applications for foods and consumer products.
As industry leaders in sustainability, the development and publishing of a Corporate Social Responsibility (CSR) Report was the proper next step for OCTAL. This report aligns with our goals to transform our company from merely a packaging company to a sustainable packaging company.
OCTAL has become the recognized leader in PET and the industry reference for superior product performance through continual investment and commitment to improve
our products and services. OCTAL is a technologydriven and knowledge-based company and is setting the global standards for sustainability and environmental innovation through the application of pioneering technology which meets customers’ demands for high quality, sustainable products. DPET™ by OCTAL is the first and only direct-to-sheet polyester sheet in the world manufactured with our patented technology. Our high performance DPET™ sheet and resin products offer improved waste and cost reduction benefits, increased productivity for thermoformers and unmatched environmental advantages. OCTAL continually strives to introduce more environmentally friendly production methods and to practice responsible stewardship of natural resources. When compared to traditional plants, OCTAL’s PET resin uses 38% less energy and DPET™ sheet uses 67% less energy. 100% of our energy needs are derived from clean burning natural gas. Our on-site high efficiency burners consume 20% less gas than traditional PET plants and our integrated facility recycles waste during the manufacturing process. Because of this OCTAL’s DPET™ branded PET sheet leads with the smallest carbon footprint of any comparable PET sheet available.
Several of our CSR initiatives were unstructured and undocumented. We have found that reporting has allowed us to use the CSR framework of environment, economy, and humanity to organize our CSR work groups and activities in a more productive way. Many of our customers have adopted a CSR framework for their businesses and were requesting the same from us as industry leaders. We are grateful to them for guiding us on this path. Our work in this area has just begun; our CSR activities continue to grow along the same trajectory as our production growth. However, it was important to OCTAL to report in order to have a baseline assessment from which to launch. This report allows us to examine where we are and where we will choose to go in the future.
At OCTAL, our commitment to ethical conduct and social responsibility is strongly aligned with our vision of being a leader in PET packaging. Our vision drives us to continuously challenge ourselves to deliver social, economic and environmental benefits to our stakeholders and to the communities in which we operate.
Nicholas P. Barakat Chief Executive Officer
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Corporate Values & Principles
Corporate Commitments
Our vision is to be the global leader in PET packaging. We know that this cannot be accomplished without excellent products that meet our customers’ demands. Our customers have come to expect high quality products of superior consistency that are made in a more sustainable way than other PET packaging.
We consider environmental performance integral to business performance. We have made significant investments and commitments to ensure that we become a leader in both product and environmental excellence.
We believe that the purpose of business is to create a better world. We have created a packaging material company that has responded to the growing consumer demand for something better.
T
8
O C TA L P e t r oc h e m i cal s L LC F T C
T
S U R
T
Lastly, OCTAL is committed to ethical conduct and social responsibility as inherent elements of our business model. Our commitment to our vision of becoming the global leader in PET packaging drives the people of OCTAL to challenge ourselves to deliver social, economic, and environmental benefits to our stakeholders and the communities in which we operate. We believe that when our customers are successful, we are successful.
Our understanding of the increasing importance of environmental efficiency underpins our process design. Our desire to be recognized as a leader in corporate responsibility in Oman and around the world has led us to develop this CSR report in accordance with guidelines established by the Global Reporting Initiative (GRI) and The Sustainability Consortium (TSC).
M EN
Our company operates on a platform of Knowledge, Commitment, and Trust as we have found that being transparent in all that we do builds credibility and reliability with our customers, our investors, and our employees.
C O M MIT
By anticipating and exceeding our customers’ requirements and optimizing the PET packaging value chain, OCTAL expects to significantly enhance the future of clear rigid packaging and achieve strong profitability, sustained growth, and superior returns for its customers and shareholders.
K N OW
L ED
GE
We are dedicated to conducting business in an ethical and responsible way and delivering social, economic, and environmental benefits to our stakeholders and to the communities in which we operate.
Specifically, we are committed to:
1
Conducting our business in a responsible and ethical manner, and adhering to strict legal and ethical guidelines.
2
Maintaining a positive relationship with stakeholders by taking seriously their input and feedback on issues of mutual importance.
3
Forging close and mutually beneficial relationships with the communities in which we operate.
4
Attracting, training, developing, and retaining quality employees who share and embrace OCTAL’s social and environmental values.
5
Providing a safe, secure, and professional environment for our employees that is conducive to the effective utilization of their skills and the realization of their potential.
6
Demonstrating recognition of and respect for the dignity of our employees who hail from a wide array of backgrounds, ethnicities, and beliefs.
7
Communicating information relating to operations that could have an impact on stakeholders in an open, timely, and accurate manner.
8
Continuing efforts to preserve the environment, leverage technology, and improve the lives of those we serve.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
About OCTAL OCTAL was established in 2006 to meet growing worldwide demand for polyethylene terephthalate or PET, the clear and lightweight plastic used internationally to package foods, beverages, personal care products, and other consumer items.
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O C TA L P e t r oc h e m i cal s L LC F T C
Affiliations OCTAL has emerged as an international leader in the production of PET, with innovative strategies that have set new standards and global benchmarks in PET packaging using patented technologies and proprietary processes. From the beginning, environmental sustainability was integral to OCTAL. OCTAL was the first company in the world to implement a two-stage system that produces PET from two reactors, resulting in a process that requires substantially less energy in comparison to traditional PET manufacturing. Additionally, OCTAL’s innovative process led to the development of DPET ™ sheet that has a much lower carbon footprint compared to any other virgin PET sheet and comparable to sheets containing significant quantities of post-consumer waste.
At our production facilities, strategically located in the port city of Salalah on the southern coast of the Sultanate of Oman, we derive our energy from clean burning natural gas and our on-site, high-efficiency burners consume up to 20% less gas than traditional PET plants. We also minimize our impact on local water resources by sourcing municipal wastewater for 100% of the water used in our operations. The water is then filtered through the same reverse-osmosis process and returned to the manufacturing system or used to irrigate our on-site green belt. Additional information about our environmental initiatives can be found in Section 4 of this Report.
OCTAL is a founding member of The Sustainability Consortium (TSC), an independent organization of diverse global participants working to build a scientific foundation to influence and improve consumer product sustainability. OCTAL is also an active member of the TSC Packaging Group that is developing tools to measure carbon impacts from food and consumer product packaging. OCTAL sponsored the Sustainable Packaging Symposium 2011, which was organized by the American Institute of Chemical Engineers and Greener Package.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Sec tion 2: Innovation at a Ne w Le v el
OCTAL has radically changed the rigid plastics marketplace. Our innovative process allows us to manufacture PET with 67% less energy than the average product available on the market today. This remarkable innovation has fueled our growth while creating a new paradigm in the packaging industry. Furthermore, these advancements only add to the long list of advantages to using PET for packaging products.
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
About PET 1 PET is a plastic from the polyester family that is derived from petrochemicals. Polyester is an affordable and highly consumed polymer. It is typically called polyester when used for fibers or fabrics and PET or PET resin when used in packaging.
PET is hygienic, strong, lightweight, shatterproof, effective in retaining freshness, free of Bisphenol-A (BPA), and readily recyclable. Health food agencies around the world have approved PET as safe for use with foods and beverages. PET was first synthesized in 1941 and is now one of the most widely used synthetic materials. PET pellets can be molded into a variety of forms and shapes. It is most commonly used to package carbonated soft drinks and water but may also be used for packaged produce, baked goods, salad dressings, yogurt containers, cooking oil, peanut butter, shampoo, liquid hand soap, mouthwash, take-out containers, and prepared food trays.
PET is unique in its value as a clear, rigid packaging material. It possesses an attractive combination of mechanical, optical, and environmental properties that make it the preferred material for liquids, food, and consumer product packaging. Although it is derived from petroleum, all plastics make up less than 4% of global petroleum usage annually. Additionally, the environmental impact of PET is favorable. As PET uses less material, it allows for more product to be delivered for less weight, resulting in less fuel consumption than other heavier packaging materials such as aluminum and glass. PET is the most recycled plastic worldwide, readily identified by the classification number “1.” It is highly sustainable because it can be recycled repeatedly and may be converted from packaging into carpet, clothing, auto parts, and construction materials, among other items. Each time a PET container is recycled, its original petroleum-based ingredients can be reused. In addition to being lightweight and recyclable, PET products generate lower levels of greenhouse gas (GHG) emissions, require less energy, and result in less production-based and post-consumer waste than other plastics, aluminum cans, and glass bottles. By producing recycled PET in place of virgin PET, additional energy can be saved (48 million BTUs and 3,000 pounds of GHG emissions per ton of PET).
1 http://www.petresin.org/index.asp
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C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
How OCTAL is Different
Our proprietary technology produces PET sheet directly from PET melt resin resulting in a final product of superior quality and higher consistency with a smaller carbon footprint.
The conventional manufacturing process for PET sheets involves nine steps from beginning to end and typically depends on up to five reactors for production.
Our values drive our company, and our unique process is the product of over $600 million in investments. These investments have paid off, however, in exponential financial growth and strengthened partner relationships. In 2011, we took our environmental commitments a step further by tracking and publically disclosing our waste, water, and carbon footprint. This analysis has allowed us to realize tangible cost savings and increased competitive advantage.
Our PET production relies on only two reactors, and our DPET™ process uses only three steps instead of nine.
OCTAL’s focus on PET responds to converging global trends of consumer lifestyles that increasingly demand convenience packaging and the industry’s growing need for environmentally friendly products and improved economics throughout the value chain. More information about our proprietary processes and improved carbon footprint may be found in Section 4 of this report. DPET ™ m a nufac turing process
POLYMERIZATION
CALENDAR SHEET
SHIP TO THERMOFORMER
con v ention a l PET m a nufac turing process
POLYMERIZATION
16
PELLETIZE & PACK
O C TA L P e t r oc h e m i cal s L LC F ZC
SOLID STATE POLYCONDENSATION
SHIP TO EXTRUDER
COMPACT
DRYING
EXTRUDE RESIN
CALENDAR SHEET
SHIP TO THERMOFORMER
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
Sec tion 3: Business Pr ac tices a nd Org a niz ation
OCTAL is an emerging global leader in the PET marketplace and the largest integrated PET sheet manufacturer in the world. Since our founding in 2006, we have increased revenues year-over-year and continue to grow our company at a rapid pace. In 2010, we increased our PET manufacturing capacity by 50,000 tons and we now look forward to exceeding 900,000 tons in annual capacity by 2012.
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Locations and Key Figures
UK Sales Office
OCTAL headquarters is located in the Sultanate of Oman, where the company was founded in 2006. As an Omani company, we are uniquely positioned to affect both the regional community and the international market. Our location in the port city of Salalah on the Indian Ocean, outside the Strait of Hormuz, provides us with ready access to international shipping lanes that circle the globe. We ship to over 40 countries with delivery times to most major ports within two weeks and utilize efficient repackaging and pallet-less shipping procedures that prevent product damage, improve shipping weight efficiency, and reduce contamination risk of the manufacturing facility from outside dust or debris.
GERMANY Sales Office
US Sales Office
CHINA Sales Office
40 0,0 0 0 tons PE
20
O C TA L P e t r oc h e m i cal s L LC F ZC
20
OTHER
LES
B Y R EG I ON
OTHER
32%
2%
USA
USA
09
LE SA
EUROPE
53%
EUROPE
45%
S BY R EG I ON
$50 0,0 0 0,0 0 0
sales in 2010
EUROPE
12
SA
33%
20
T capacity in 2012
Y R EG I O N LES B
53%
Salalah, Oman PET Manufacturing Complex
T capacity in 2010
927,0 0 0 tons PE
09
SA
OTHER
20
capital investm ent
20
$60 0,0 0 0,0 0 0
MUSCAT, OMAN Headquarters
2%
12
S
S ALE
B Y R EG I ON
OTHER
32% USA
33% USA
EUROPE
45%
35%
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
35%
Organizational Structure OCTAL is governed by a Board of Directors that is directly responsible for supervision of the Managing Director. The Board of Directors is composed of a Chairman, Vice-Chairman, the Managing Director, and 2 investors. Board members are selected through election by shareholders. OCTAL’s organization is divided into three primary structures: manufacturing, business, and administration. A copy of our organizational chart is included here for reference.
BOARD OF DIREC TORS
Name Title
Name Title
Name Title
MANAGING DIREC TOR
TREASURY
ACCOUNTING
EUROPE
ASIA / MIDDLE EAST & AFRIC A
NORTH AMERIC A
PACK AGING
MARKETING
SHEET
RESIN
L ATIN AMERIC A
SAL AL AH
PRODUC T DEVELOPMENT
CORPORATE PL ANNING
SHEET BUSINESS
EMEA
CORPORATE DEVELOPMENT
AMERIC A
O C TA L P e t r oc h e m i cal s L LC F T C
CORPORATE COMMUNIC ATIONS
L ATIN AMERIC A NEW PROJEC TS
22
HUMAN RESOURCES & ADMINISTRATION
MANUFAC TURING
RESIN BUSINESS
FINANCE
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
GOVERNMENT AFFAIRS
Product Safety & Consumer Relations We believe that the role of business is to create a better world and that our products fulfill a consumer demand. We also recognize that without our customers, our business would not thrive. Therefore, product safety and the relationships with our buyers and suppliers are of the utmost concern to us. PET is an exceptionally safe plastic. It has been cleared for food and beverage use by health agencies around the world including the US FDA, Health Canada, and the EU’s European Food Safety Authority, and has been used without adverse impact for more than 30 years.2 PET does not leach chemicals and specific grades of PET may be reheated safely in the microwave or oven. PET is a stable, inert, hygienic material that does not biologically or chemically degrade with age or repeated use. PET does not contain BPA or other endocrine disruptors, phthalates, dioxins, or chlorine. The safety of PET has been repeatedly demonstrated through extensive scientific studies and testing. OCTAL PET is considered safe for food packaging and personal product applications and meets all requirements for certification from all major consumer safety councils around the world.
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Product Certifications PET Resin »» USA FDA Regulations CFR 21—177.1630
»» EC Directive 2002/72/EC as amended 2009/975/ EC
»» EU Regulation 10/2011
»» EC Directive 94/62/EC
»» ISO 9001: 2008 & ISO 14001: 2004 Certification
»» UK Statutory Instrument 2003 (1941)
»» CONEG Regulations (USA / Canada)
»» German BfR Recommendation XVII & Dutch Warenwet Chapter I Plastics »» Health Canada
»» JHOSPA Approval (Japan Hygienic Olefin and Styrene Plastics Association) »» Chinese QS Registration »» REACH regulation EC/1907/2006 »» European Pharmacopoeia 6.3 chapter EP 3.1.15 »» Ministry of Health, Sultanate of Oman
DPET ™ Shee t »» USA FDA Regulations CFR 21—177.1630
»» ISO 9001: 2008 & ISO 14001: 2004 Certification
»» EU Regulation 10/2011
»» CONEG Regulations (USA / Canada)
2 http://www.petresin.org/safety_uses.asp
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
»» BRC Global Standard for Packaging and Packaging Material »» REACH regulation EC/1907/2006
Sec tion 4: Susta ined En viron m enta l Le a dership
OCTAL’s commitment to sustainability and innovation has led us to make significant investments to create and ensure continuous leadership in these critical areas. By applying the most advanced technologies, OCTAL has set new global benchmarks for both product and environmental excellence.
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
The Drive to Innovate While the unmatched efficiency achieved by DPET™ technology has led to a reduced environmental impact, it does not deliver significant economic benefits to OCTAL. The majority of the cost of plastic production stems from the acquisition of raw materials, meaning the reduced energy profile of OCTAL DPET™ delivers only modest cost savings to the company itself. Our commitment to sustainability is driven by the belief that environmental sensitivity and implementation of an environmental policy are keys for sustainable growth.
OCTAL DPET™ technology, first introduced in 2008, achieves considerable energy and emissions reductions through effectively consolidating the typical PET production process. In reducing the number of reactors from nine to two and eliminating five stages from the conventional sheet production process, OCTAL has set a new benchmark for efficiency in producing PET sheet and resin. In studies completed by third-party Renewable Choice Energy and Intertek Expert Services: »» OCTAL DPET™ sheet requires 64.5% less electricity and 28% less heat to product than conventional bottle grade PET sheet.
We are committed to minimizing the environmental impact of our day-to-day operations by integrating environmental management as a standard business practice across the organization. As our operations continue to expand, we will assert ourselves as one of the world’s most important plastics companies while maintaining our commitment to innovation, sustainability, and transparency.
»» OCTAL PET resin was shown to consume 63.3% less electricity and 22.7% less heat energy than conventional bottle grade PET resin. »» Between 2009 and 2010 alone, OCTAL achieved a 6% reduction in energy intensity through improved efficiency and increased scale of operations. »» Due to the characteristics of DPET™, OCTAL’s customers shaping and molding DPET™ into packaging products can use 6 – 12% less material by weight than competing products, leading to further reductions in the energy and GHG emissions required to make DPET™ products. »» OCTAL’s plant uses 67% less grid electricity to manufacture DPET™ sheet and 38% less grid electricity for resin.
3 2.5 2 SCOPE 3
1.5
SCOPE 2
1
SCOPE 1
0.5
APET SHEET source
O C TA L P e t r oc h e m i cal s L LC F ZC
»» Uses 67% less electricity than conventional PET plants »» Uses 100% recycled municipality wastewater »» 20% less natural gas usage than conventional resin plants »» Innovative production plant design reduces carbon emissions
DPET ™ has...
3.5
0
28
»» Smallest carbon footprint of any comparable PET sheet
4
(KG CO 2(E)/KG PRODUCED)
Our manufacturing standards and process efficiencies have resulted in net environmental impact reductions. As the first company in the world to implement the direct-to-sheet technology, OCTAL’s resin-making and DPET™ manufacturing processes require significantly less energy inputs than traditional PET manufacturing.
How OCTAL Leads Its Industry In Environmental Excellence
DPET™
Intertek Expert Services
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
25% lower carbon footprint than conventional APET 39% lower carbon footprint than conventional PLA 38% lower carbon footprint than conventional HIPS 38% lower carbon footprint than conventional PS 10% lower carbon footprint than conventional PVC 9% lower carbon footprint than conventional PP 20% lower carbon footprint than ‘non-Zero’ rPET at 50% 11% greater downgauging capacity compared to APET Equal carbon footprint to ‘Zero’ rPET at 45% source Intertek Expert Services Based on DPET™ shipped to Europe
Sustainability in Action
Our Production Facilities
From our founding, we have taken an aggressive, proactive approach to embedding sustainability within our company.
OCTAL’s purpose-designed production facility exceeds stringent environmental standards and is significantly more efficient than conventional virgin PET sheet and resin plants. Through the application of the most advanced technologies, OCTAL has set new global environmental benchmarks for both product and environmental excellence.
Our primary environmental objectives are to: »» Reduce energy consumption and improve energy efficiency in all our operations »» Reduce and recycle all types of waste throughout our manufacturing process »» Dispose of waste in an environmentally responsible manner »» Comply with legal regulations and achieve more than the established standard »» Develop the OCTAL campus green belt and promote green surroundings around the Omani plant »» Set targets that guide our efforts towards minimum environmental impact »» Pursue continual improvements in environmental performance »» Communicate our environmental policies to all employees and the public We believe in continuous improvement and transparency, and have engaged third-party sustainability experts to help us analyze, track, and disclose our environmental performance.
In 2010, OCTAL produced over 226kt of resin and more than 77kt of DPET™ sheet— 30
O C TA L P e t r oc h e m i cal s L LC F ZC
OCTAL’s state-of-the-art facility incorporates the latest in efficient building design and features high efficiency lighting, solar panels, and natural lighting to maximize visual comfort and minimize energy use. Motion detectors are used to control light sensors to save electricity. Water heater systems were changed to improve efficiency and adjustments are continuously made to production systems to do the same. We recently created a greenbelt on the plant’s premises in order to bring beauty to our facilities and our employees. We use treated wastewater to maintain this greenbelt in order to minimize water usage. Plans are currently underway to plant 75 palm trees and to expand and further develop the greenbelt. In response to the Omani Ministry’s request to boost awareness of Oman Environment Day, OCTAL removed all shrubs of Prosopis around our premises, as the shrub prevents local plants from growing, proving harmful to biodiversity.
a savings of nearly 80kt CO2e over conventional PET and resin. 80kt CO2e is equal to the emissions produced by flying a full airplane around the world more than 58 times!
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Our GHG Emissions
Scope 2 Emissions from the generation of purchased electricity by the company.
S
BR
EA
SI IS
35%
64%
O C TA L P e t r oc h e m i cal s L LC F T C
32,383
Mobile Combustion
510
Fugitive Emissions
702
Purchased Electricity
51,191
Scope 1 emissions
33,595
Scope 2 emissions
51,191
Total Scope 1 & 2 emissions
84,786
STATIONARY COMBUSTION
PURCHA SED ELEC TRICIT Y
32
Stationary Combustion
Scope 2
WN
O
N
In addition, Scope 3 emissions can be optionally added to account for indirect emissions generated by the supply chain. In the future, OCTAL hopes to include Scope 3 emissions in our GHG inventory process.
O KD
CO 2 e E m issions (m e tric tons)
Scope 1
Scope 1 Emissions from sources that are owned or controlled by the company.
EM
By conducting a rigorous GHG inventory, OCTAL has set emissions reduction targets, identified significant opportunities for reduction, and will be able to track progress over time.
Scope /Ac tivit y
The assessment of OCTAL GHG emissions breaks the company’s direct emissions into two categories:
C O R P O R AT E
In 2011, OCTAL conducted a corporate GHG inventory (Scope 1 & Scope 2) in accordance with the internationally recognized GHG Protocol.
M e a sured Direc t a nd Indirec t GHG E m issions
FUGITIVE EMISSIONS
1%
MOBILE COMBUSTION
0%
Signific a nt A ir E m issions
Ozone-deple ting Substa nces
A ir E m issions
Qua ntit y (mg)
Refriger a nt
kg
NO x
102,243
R-12
61.5
*Assumes 10%, emissions
CO
273
R-22
42.6
SO2
14
R-123
2.0
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
leakage rate of calculated by Renewable Choice Energy
Our Supply Chain
Our Waste
Reductions in emissions and energy-usage begin when inputs arrive at OCTAL’s campus and continue to be achieved through the delivery of DPET ™ to companies that mold and form sheet and resin into the products ultimately handled and used by consumers.
OCTAL has achieved additional GHG emissions reductions and cost-savings through eliminating waste and collecting and re-melting byproducts of the production process that were previously discarded. This material, known as side trim and lump waste, is collected, ground, and re-melted in order to create post-industrial recycled sheet. OCTAL has also taken steps to reduce other forms of waste, such as electricity and water. See the Waste Reduction graphic for more information.
Compared to standard PET production practices, sustainability performance is increased throughout virtually every step of the production process of packaging products made from OCTAL DPET™.
OCTAL has further minimized the energy required for (and GHG emissions produced by) our products by locating our primary facilities in the Salalah port and by adopting innovative packaging processes. We receive petrochemicals through a 1.6 kilometer underground pipeline—the first liquid chemical terminal built in Salalah. The proximity to the port helps reduce supply chain emissions both upstream and downstream of OCTAL and means the only meaningful transport that is controlled by OCTAL is executed through sea-freight, which produces just 3% and 16% of the emissions created by air and ground transportation, respectively. We have also taken steps to further reduce the emissions associated with shipping our product through sea freight. Over 70% of our DPET™ product is shipped without pallets, maximizing the amount of PET product per shipment and therefore reducing the number of trips and weight of each load.
EFFICIENCY IMPROVEMENT 2009 – 2010 60%
57%
50%
OCTAL’s integrated manufacturing facility collects and reintegrates 100% of its internally generated
40%
side trim and offers customers recycling of the skeletal waste generated during the thermoforming
30%
process. OCTAL has installed 20,000 tons of rPET production capacity.
20% From 2009 to 2010 OCTAL reduced
10%
10%
PTA and IPA waste by 57% per ton
6%
of production. * PTA and IPA waste was 31 MT in 2009 and 18MT in 2010.
0% IPA + PTA WASTE REDUCTION*
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WATER
ELECTRICITY
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Our Water Consumption OCTAL faces unique production challenges at our Omani facility. As a country, Oman has one of the highest levels of water scarcity in the world. As a result, businesses in Oman are faced with water-related issues that fall under the responsibility of the entire community to help manage.
Changes in the quantity or quality of water resources upstream of OCTAL’s operations could result in a direct increase to our operating costs. In order to understand and manage our water impact and related risks, the company conducted a water footprint in 2011. OCTAL has also taken steps to minimize our impact on local water resources through improved sourcing and treatment of the water that we use in our production process. OCTAL’s processes use 100% municipal wastewater. Eighty per cent of this water is recovered through reverse osmosis technology and sand filter treatment systems. The production facility’s own wastewater is also re-treated using aerobic digestion, and is either fed back into the manufacturing system or used for landscaping irrigation.
EFFICIENCY IMPROVEMENT 20 09 – 2010
We made significant gains in water efficiency between 2009 and 2010 by achieving a year-on-year intensity reduction of 9%. Water intensity, or the amount of product produced per quantity of water consumed, is one of the most relevant metrics that can be applied to businesses’ water impact, and allows an organization to understand its water use in the context of organic growth.
Sources of Withdr awa l
Qua ntit y (m 3)
Salalah Municipal
2,000
SSDC (Recycled Waste Water)
462,392
Re-Used from Internal Operations
56,655
Sources of Disch a rge
Qua ntit y (m 3)
Returned to Treatment Plant
11,137
Discharged to the Sea
135,620
Evaporated from Cooling Tower
368,310
Used for Plantation
5,980
by Renewable Choice Energy
Between 2009 and 2010 OCTAL’s total production output increased by 26% 1.55
2009
1.3
36
Water Withdr awa l a nd Disch a rge
Water audit completed and reported
1.4
2010
1.35
O C TA L P e t r oc h e m i cal s L LC F T C
1.4
1.45
1.5
1.55
1.6
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
while total water use decreased by 10%.
Sec tion 5: E m ploy ee Eng age m ent
At OCTAL, we believe that our employees are our most valuable asset. We recognize that without the hard work, innovation, and commitment of our employees, we cannot continue to succeed and grow. We strive to maintain a healthy and prosperous work environment by providing exceptional compensation and benefit packages, opportunities for advancement, and career development and training. The OCTAL team is made up of passionate individuals who are driven to make an impact in our industry and in the world. Our employees have the technical and leadership skills to help lead us into the future. 38
O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Several of the corporate commitments we have made pertain to our employees.
Employee Attraction, Development, and Retention
Specifically, OCTAL aims to:
At OCTAL, we recognize that our product can only be as good as the people producing it. Therefore, we place a special emphasis on attracting, developing, and retaining the most talented individuals we can.
»»Attract, train, develop, and retain quality employees who share and embrace our values »» Provide a safe, secure, and professional working environment »» Demonstrate recognition of and respect for a diverse workforce »»Communicate information to employees in an open, timely, and accurate manner
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O C TA L P e t r oc h e m i cal s L LC F ZC
Benefit s for Full Ti m e E m ploy ees »» Medical insurance for employees and their eligible family members »» 30 days paid annual leave »» Fully paid maternity leave for female employees »» Expatriate plans include relocation, family benefits, and housing allowance
OCTAL recruits from an international talent pool and our workforce represent 18 different nationalities including Omani, Indian, and Filipino. In support of the Omani National Population Strategy, we strive to hire Omani citizens whenever possible, ideally reaching 50% of our entire workforce by the end of 2014. We also provide specific training for Omani citizens as needed.
E m ploy ee N ation a lit y
Percent of Workforce
Indian
37%
Omani
27%
Filipino
22%
Pakistani
5%
Other
9%
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
Employee Recruitment & Retention In 2011, we added a significant number of new hires to our workforce, an increase of 4% over 2010. Our rate of turnover increased slightly (by .08%) in 2011. As a private sector employer in Oman and one of the largest employers in Salalah, we regularly encounter the challenges facing the Omani people. These challenges are complex and include: high rates of unemployment, a large youth population, overall population growth that exceeds economic growth, and a shortage of education, training resources, and employment opportunities for Omanis.
42
M en
Wo m en
Age 19 – 32
Age 33 – 45
Age 46 – 59
78
88%
12%
66%
29%
5%
Turnov er R ate
M en
Wo m en
Age 19 – 32
Age 33 – 45
Age 46 – 59
11.5%
91%
9%
48%
41%
11%
O C TA L P e t r oc h e m i cal s L LC F ZC
No. of Pa rticipa nt s
% of Pa rticipa nt s
No. of Hours
% of Hours
Resin
143
33%
2910
32%
Sheet
87
20%
1672
19%
Logistics
132
31%
3100
34%
Corporate
66
16%
1354
15%
To be launched in January 2012, the OCTAL Omani Nationals Technical Development Program will train 40 new Omani graduates in the petrochemicals industry. The program is 18 months in duration and includes the development of both behavioral and technical competencies.
Ne w Hires
This has led us to seek to employ expatriates in many of our positions. However, OCTAL supports the Omanization efforts of the Omani Ministry, an initiative to replace expatriates with Omani citizens in place since 1988. As a result, we have committed to providing excellent training to our workers to ensure that they have the skills necessary to manufacture OCTAL products. Over 40 training programs were implemented in 2011 for a total of 9036 training hours or 23 hours per employee per year.
depa rtm ent
Nearly all our employees also receive performance and career development reviews. In 2011, 84% of staff received this review: 83% of men and 95% of women. Additionally, OCTAL provides scholarships for career advancement at local universities to Omani employees for further education relevant to his or her position. Our commitment to education extends outside the walls of our production facility. We routinely provide school scholarships to the children of our employees. We have also partnered with local colleges to provide internships and trainee positions to local Omani students in the Salalah region and bring more talented Omani students into the industry. Going forward, we will implement an employee health and wellbeing program that will include counseling services, health information, and on site medical care. We will also offer educational forums to the community on major health and safety issues facing the Omani people.
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
The Work Environment OCTAL strives to provide a working environment that is safe, secure, and clean; that respects the general rights of the individual; and that is conducive to the effective utilization of skills and realization of the potential of each employee. Our production facility is a very clean environment that is well-maintained. In keeping with our values, employees are urged to recycle all their used PET bottles and to uphold a tidy work place that allows everyone to succeed. Access to our facilities is monitored to ensure everyone’s safety.
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O C TA L P e t r oc h e m i cal s L LC F T C
We share a common sense of purpose at OCTAL. We all know that we manufacture one of the finest products in the market and each of us does our best to share this with our customers so that they can also reap the benefits of our creation. We place an emphasis on learning and development, as evidenced by our significant investments in training and performance management systems. Our staff report that they learn new things every day, supported by leadership of our management team. Our environment is multi-cultural, with employees from all over the world. Together, we share one common goal and demonstrate mutual respect for each other. We celebrate our successes and enjoy each other’s company at local festivals and during special times. We comply with all labor laws in the countries in which we operate and do not tolerate discrimination, child labor, or compulsory labor of any kind.
OCTAL is strongly committed to an operational environment in which all employees are encouraged to pursue opportunities for learning and professional growth and to draw on its intellectual resources as well as external sources in seeking those opportunities.
Our Diverse Workforce The OCTAL workforce is a diverse one, with employees hailing from varying nationalities, speaking a variety of languages, and observing a diversity of beliefs. OCTAL strives to treat each employee with respect and dignity, regardless of our differences. Age Group
% of Workforce
19 – 32
49%
33 – 45
41%
46 – 59
10%
The vast majority of the OCTAL workforce is male and 8% of our workers are women. In general, women are underrepresented in the Omani workforce, making up 17% of the total workers. OCTAL is working to improve its gender ratio and opportunities for Omani women.
Educational opportunities have increased significantly for women in Oman since the 1970s and now enrollment numbers of boys and girls are equal; however, women still experience social and enrollment pressures to study “gender appropriate” fields such as humanities instead of pursuing technical or scientific studies.3 While gender bias and disparate pay are prohibited in the workplace, women have historically found it difficult to receive promotions. The Omani Ministry of National Economy has published objectives for improving women’s access to education (and the obliteration of female illiteracy) as well as gender equality and the advancement of women’s involvement in Omani society. In order to continue to improve in this area, OCTAL will strive to prioritize the recruitment, hiring, and education of women, particularly in technical roles. OCTAL’s workforce also tends to include primarily younger people, which is not surprising given the Omani population and our efforts to connect with new graduates through Omani colleges. However, we could improve the diversity of our workforce by hiring more workers of advanced age. OCTAL recognizes and respects the religious differences of our employees. Oman is a mostly Muslim country and so we provide for the religious requirements and customs of our Muslim employees. We also acknowledge that not all of our employees practice Islam, and are sensitive to maintaining a workplace that is inclusive of all creeds and beliefs, particularly as we continue to expand into diverse markets around the world.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Transparent Communication The qualities of transparency and openness are woven into the corporate culture of OCTAL. We believe that transparency allows us to create a roadmap on which to set and achieve our goals. A platform of Knowledge, Commitment, Trust defines our workplace. Our leaders have an open attitude towards transparency and push our employees to become innovators themselves so that environmental sustainability is the first thing we think of, not an afterthought. Our CEO meets monthly with small groups of 20 employees at a time to have an open discussion and brainstorm new ideas. Innovation advances sustainability within OCTAL.
“Being transparent in all that we do builds credibility and reliability with both our customers and our employees.” Merlyn Rodrigues, Corporate Communications
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O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Sec tion 6: M utua lly Beneficia l Rel ationship s— Co m m unit y In volve m ent
At OCTAL we continuously challenge ourselves to deliver social, economic, and environmental benefits to all our stakeholders and to the communities in which we operate.
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Philanthropy Corporate giving and sponsorship is a cornerstone of our CSR practices. Here are examples of our philanthropic efforts in 2011: Supp ort for Loc a l A rtist s OCTAL provided financial support to Omani photographer Abdullah Al Shuhi by purchasing 125 copies each of his books Oman: The Big Picture and Oman: Living Traditions. Al Shuhi’s books are comprised of traditional photos of the Omani people and landscape. We provide these books as gifts for OCTAL guests.
Socie t y of E a rly Intervention for Children with Disa bilities OCTAL donated funds to this important charity and displayed the artwork of children with disabilities on our company greeting cards.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Filipino T y phoon OCTAL matched all funds raised via an employee driven fundraiser for the Philippines Red Cross typhoon relief effort.
Community and Public Relations
Looking Ahead
An ongoing, positive relationship with the communities in which we operate is critical to OCTAL’s continual success. We rely on our local communities to provide our future employees, to become our future customers, and to provide positive press and support to our company.
The following community service programs are planned for 2012 – 2013:
Therefore, whenever possible, we engage in community relationships that are mutually beneficial. Here is a sample of the many ways we positively interface with our local communities:
»» Whenever possible, OCTAL relies on local real estate companies to house visitors, guests, and expatriates, which provides economic support to the local community. »» Our investment in our wastewater treatment plant for our operations is a responsible decision that relieves the community of the burden of treating our facility waste water. »» We have worked to substitute 100% of resin imports into Oman, which has helped local businesses cut costs and save working capital.
»» Implementation of a recycling program where OCTAL will provide a local school with bins for PET recycling along with volunteers to help renovate the school in return for recycled PET that will be reused in our operations. »» Investing in the development of a canteen waste program where excess food from our on-site cafeteria will be converted into more renewable products, i.e. natural biogas or organic fertilizer, etc.
»» We have developed a Joint Emergency Committee with other companies in the region to discuss safety and environmental topics that affect us. We have also promoted shared understanding of the Emergency Response Procedures of these companies and the roles that we all play in assisting one another during an emergency. »» More than 10% of our purchasing is done through local suppliers. »» We sponsored and participated in a beach clean-up in Salalah as part of the nationwide clean-up campaign organized by the Clean Up Oman Group, an Omanbased nonprofit organization that urges Oman residents to keep their country clean and preserve their natural environment. »» We have sponsored vocational training for 15 local female graduates in the field of cosmetology and hairdressing aimed at empowering women from low-income families to establish their own small business enterprises.
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Sec tion 7: 2012 Perfor m a nce Goa ls
While we are pleased with the progress we have made so far in our CSR efforts, we know that this report merely provides us with a baseline from which to plan our future endeavors. The following are our performance goals for CSR over the next 1 – 3 years.
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O C TA L P e t r oc h e m i cal s L LC F ZC
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Labor Practices
Supply Chain
short ter m goa ls
short ter m goa ls
»» Develop internal communications plan to help improve employee relations and information sharing.
»» Create a supplier Code of Conduct. long ter m goa ls
long ter m goa ls
»» Implement sustainable activities in supply chain.
»» Conduct employee survey.
»» Conduct human rights screenings of suppliers.
»» Create feedback forums. »» Standardize and restructure performance appraisal, compensation, and benefit systems. »» Increasing funding for education. »» Expand recruitment pool of women and other minorities. »» Increase Omanization rate.
Health & Safety short ter m goa ls »» Develop health & wellbeing program for employees, their families, and the community. long ter m goa ls »» Expand and develop health & safety committee. »» Provide incentives for health and wellbeing. »» Financially sponsor safety and health organizations.
Environment short ter m goa ls »» Canteen waste donation program. »» On-site PET recycling program. long ter m goa ls »» Expand school recycling programs to include schools in the Dhofar region.
Education long ter m goa ls »» Sponsor and increase number of scholarships for engineering students. »» Host Salalah career fair. »» Partner with other regional players to provide community training programs for computer literacy, English, and educational gaps.
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C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
Local Community
Philanthropy
short ter m goa ls
short ter m goa ls
»» Sponsor local festivals.
»» Donate compensatory devices to the Oman Association for Disabled.
»» Offer health and safety education to community. long ter m goa ls »» Donate trees to schools for reforestation programs. »» Provide employee incentives for volunteerism. »» Sponsor the expansion of Al Waf’aa Center in Salalah for children with disabilities.
Microfinance short ter m goa ls »» Donate to Omran’s Intajee Project 2012.
long ter m goa ls »» Support agencies that provide assistance to underprivileged families. »» Donate computers to schools. »» Lead donation efforts during Ramadan to collect toys and other items for underprivileged children.
Stakeholder Engagement short ter m goa ls »» Form a CSR committee within OCTAL.
long ter m goa ls
»» Propose the formation of a community CSR forum.
»» Sponsor microfinance opportunities for women in the Dhofar region.
long ter m goa ls
»» Develop a sustainable tourism program.
»» Partner with Ministry of Environment to sponsor educational programs for the region.
»» Support unemployed youth through micro-entrepreneurship programs.
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C o r po p o r at e S Soc o c i al a l R e s po p o n s i b i l i t y R e po p o r t 2 010 – 2 011
2010 – 2011 Performance Summary GRI Indicators Inventory
58
Reference No.
Indic ator
Page No.
EC6
Policies, practices, and proportion of local spending
54 – 57
EC8
Development of infrastructure investments and services
54 – 57
EN8
Total water withdrawal by source
37
EN16
Total GHG emissions
32
EN18
Initiatives to reduce emissions and reductions achieved
30
EN19
Emissions of ozone-depleting substances
33
EN20
NO, SO, and other significant air emissions by type
33
LA1
Total workforce by type, region, gender
41; 45
LA2
Total number of new hires and employee turnover by age, gender, region
42
LA3
Benefits for full time employees
41
LA10
Average hours of training PEPY by gender and employee category
43
LA12
Percentage of employees receiving performance and career development review, by gender
43
HR6
Child labor
44
HR7
Compulsory labor
44
O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Glossary of Terms CO2: Carbon dioxide, one of the primary greenhouse gases responsible for climate change. Corporate Social Responsibility (CSR): A business approach that creates long-term consumer and employee value by adopting a strategy that balances the business’ impact on people, planet, and profits. Global Reporting Initiative (GRI): The GRI is a non-profit organization that promotes economic, environmental, and social sustainability. GRI provides all companies and organizations with a comprehensive sustainability reporting framework that is widely used around the world. Greenhouse Gas (GHG) Inventory: A greenhouse gas inventory is a tool commonly employed to help stakeholders understand, track, and reduce the carbon or greenhouse gas impact of an organization. GHG Protocol: The most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. The GHG Protocol is a decade-long partnership between the World Resources Institute and the World Business Council for Sustainable Development and works with businesses, governments, and environmental groups around the world to build a new generation of credible and effective programs for tackling climate change. Polyethylene Terephthalate (PET): A clear, lightweight plastic resin used internationally to package foods, beverages, personal care products, and other consumer items. PET is produced in pellet, fiber, and sheet form.
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
This report was prepared for OCTAL with the support of consultants from Renewable Choice Energy, located in Boulder, Colorado. For questions about this report or more information, please contact: Mohammed Razeem Project Engineer, Sustainability OCTAL Petrochemicals LLC FZC 4965 Preston Park Blvd. Suite 100 Plano, TX 75093 USA 972.985.4377 [email protected]
HEADQUARTERS P.O. Box 3786, Muscat 112, Sultanate of Oman. P: +968 22 030 700 F: +968 22 030 799 PET MANUFACTURING COMPLEX P.O. Box 383, Salalah 217, Sultanate of Oman. P: +968 23 217 500 F: +968 23 217 506 CUSTOMER SUPPORT USA P: +1 (972) 985 4370 F: +1 (972) 985 4371 CHINA P: +86 21 6487 5387 F: +86 21 6468 6772 UK P: +44 79 5614 6641 OMAN P: +968 23 217 500 F: +968 23 217 506 GERMANY P: +49 160 947 93121 REACH US BY E-MAIL info@octal .com
www.octal.com
2010 – 2011
OCTAL Petrochemicals LLC FZC Prepared for OCTAL by Renewable Choice Energy
Table of Contents 1
Report Overview. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2
Innovation at a New Level. . . . . . . . . . . . . . . . . . . . . 14
3
Business Practices and Organization . . . . . . . . . . . . . . .
18
4
Sustained Environmental Leadership . . . . . . . . . . . . . . .
24
5
Employee Engagement . . . . . . . . . . . . . . . . . . . . . .
32
6
Mutually Beneficial Relationships—Community Involvement . . . .
38
7
2012 Performance Goals . . . . . . . . . . . . . . . . . . . . .
40
8
2010 – 2011 Performance Summary / Indicators Inventory. . . . . 42
9
Glossary of Terms. . . . . . . . . . . . . . . . . . . . . . . . . 44
10
Preparation / Contact Information. . . . . . . . . . . . . . . . . 46
Sec tion 1: rep ort overvie w
OCTAL is a global leader in the packaging industry that has seen remarkable success because of our commitment to sustainability.
From our inception, we have taken an aggressive, proactive approach to sustainability. We believe that we have a responsibility toward our customers, employees, and other stakeholders to embed sustainability at every level of our organization. We believe that it is our responsibility as a company to manufacture products that are safe and sustainable, while also growing our business to support our employees and the surrounding community. As a result, sustainability and transparency is not just talk, but an ongoing commitment to the way we do business at OCTAL.
We were founded in 2006 on the belief that
As a company, we aim to:
we could build a better company and make
Create a new paradigm for the packaging industry by using redesigned manufacturing processes and transparency to drive success.
a better product that is better for the
Place responsibility at the core of our business practices by reducing our carbon footprint, improving the environmental profile of our products, and creating a culture of innovation—advancing sustainability within our company.
environment. Our success is built on a unique innovation—a way of doing business that has significantly reduced the environmental impact of manufacturing PET resin and PET sheet. Our business operations have grown
Improve our workplace and the communities in which we operate by providing exceptional working conditions, honoring human dignity, and giving social and philanthropic support to the underprivileged. Demonstrate to other companies that sustainability can become a foundational business practice by providing leadership at a local, regional, and international level.
up around this product with these same principles of innovation and sustainability
O C TA L P e t r oc h e m i cal s L LC F ZC TC
founded in 2006 largest PET sheet manufacturer in the world 409 employees worldwide headquarters in Muscat, Oman production facilities in Salalah, Oman additional sales offices in US, UK, Germany, and China Oman’s largest non-oil exporter, moving over one million tons of PET per year $700M in revenues in 2011 with $1.5B predicted by end of 2012
in practice.
4
OCTAL at a glance
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
A Message from Our CEO
Why We Are Choosing to Report
OCTAL was established in 2006 to meet the converging trends in clear rigid packaging and environmental goals making PET the format of choice across a wide range of packaging applications for foods and consumer products.
As industry leaders in sustainability, the development and publishing of a Corporate Social Responsibility (CSR) Report was the proper next step for OCTAL. This report aligns with our goals to transform our company from merely a packaging company to a sustainable packaging company.
OCTAL has become the recognized leader in PET and the industry reference for superior product performance through continual investment and commitment to improve
our products and services. OCTAL is a technologydriven and knowledge-based company and is setting the global standards for sustainability and environmental innovation through the application of pioneering technology which meets customers’ demands for high quality, sustainable products. DPET™ by OCTAL is the first and only direct-to-sheet polyester sheet in the world manufactured with our patented technology. Our high performance DPET™ sheet and resin products offer improved waste and cost reduction benefits, increased productivity for thermoformers and unmatched environmental advantages. OCTAL continually strives to introduce more environmentally friendly production methods and to practice responsible stewardship of natural resources. When compared to traditional plants, OCTAL’s PET resin uses 38% less energy and DPET™ sheet uses 67% less energy. 100% of our energy needs are derived from clean burning natural gas. Our on-site high efficiency burners consume 20% less gas than traditional PET plants and our integrated facility recycles waste during the manufacturing process. Because of this OCTAL’s DPET™ branded PET sheet leads with the smallest carbon footprint of any comparable PET sheet available.
Several of our CSR initiatives were unstructured and undocumented. We have found that reporting has allowed us to use the CSR framework of environment, economy, and humanity to organize our CSR work groups and activities in a more productive way. Many of our customers have adopted a CSR framework for their businesses and were requesting the same from us as industry leaders. We are grateful to them for guiding us on this path. Our work in this area has just begun; our CSR activities continue to grow along the same trajectory as our production growth. However, it was important to OCTAL to report in order to have a baseline assessment from which to launch. This report allows us to examine where we are and where we will choose to go in the future.
At OCTAL, our commitment to ethical conduct and social responsibility is strongly aligned with our vision of being a leader in PET packaging. Our vision drives us to continuously challenge ourselves to deliver social, economic and environmental benefits to our stakeholders and to the communities in which we operate.
Nicholas P. Barakat Chief Executive Officer
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O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Corporate Values & Principles
Corporate Commitments
Our vision is to be the global leader in PET packaging. We know that this cannot be accomplished without excellent products that meet our customers’ demands. Our customers have come to expect high quality products of superior consistency that are made in a more sustainable way than other PET packaging.
We consider environmental performance integral to business performance. We have made significant investments and commitments to ensure that we become a leader in both product and environmental excellence.
We believe that the purpose of business is to create a better world. We have created a packaging material company that has responded to the growing consumer demand for something better.
T
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O C TA L P e t r oc h e m i cal s L LC F T C
T
S U R
T
Lastly, OCTAL is committed to ethical conduct and social responsibility as inherent elements of our business model. Our commitment to our vision of becoming the global leader in PET packaging drives the people of OCTAL to challenge ourselves to deliver social, economic, and environmental benefits to our stakeholders and the communities in which we operate. We believe that when our customers are successful, we are successful.
Our understanding of the increasing importance of environmental efficiency underpins our process design. Our desire to be recognized as a leader in corporate responsibility in Oman and around the world has led us to develop this CSR report in accordance with guidelines established by the Global Reporting Initiative (GRI) and The Sustainability Consortium (TSC).
M EN
Our company operates on a platform of Knowledge, Commitment, and Trust as we have found that being transparent in all that we do builds credibility and reliability with our customers, our investors, and our employees.
C O M MIT
By anticipating and exceeding our customers’ requirements and optimizing the PET packaging value chain, OCTAL expects to significantly enhance the future of clear rigid packaging and achieve strong profitability, sustained growth, and superior returns for its customers and shareholders.
K N OW
L ED
GE
We are dedicated to conducting business in an ethical and responsible way and delivering social, economic, and environmental benefits to our stakeholders and to the communities in which we operate.
Specifically, we are committed to:
1
Conducting our business in a responsible and ethical manner, and adhering to strict legal and ethical guidelines.
2
Maintaining a positive relationship with stakeholders by taking seriously their input and feedback on issues of mutual importance.
3
Forging close and mutually beneficial relationships with the communities in which we operate.
4
Attracting, training, developing, and retaining quality employees who share and embrace OCTAL’s social and environmental values.
5
Providing a safe, secure, and professional environment for our employees that is conducive to the effective utilization of their skills and the realization of their potential.
6
Demonstrating recognition of and respect for the dignity of our employees who hail from a wide array of backgrounds, ethnicities, and beliefs.
7
Communicating information relating to operations that could have an impact on stakeholders in an open, timely, and accurate manner.
8
Continuing efforts to preserve the environment, leverage technology, and improve the lives of those we serve.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
About OCTAL OCTAL was established in 2006 to meet growing worldwide demand for polyethylene terephthalate or PET, the clear and lightweight plastic used internationally to package foods, beverages, personal care products, and other consumer items.
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O C TA L P e t r oc h e m i cal s L LC F T C
Affiliations OCTAL has emerged as an international leader in the production of PET, with innovative strategies that have set new standards and global benchmarks in PET packaging using patented technologies and proprietary processes. From the beginning, environmental sustainability was integral to OCTAL. OCTAL was the first company in the world to implement a two-stage system that produces PET from two reactors, resulting in a process that requires substantially less energy in comparison to traditional PET manufacturing. Additionally, OCTAL’s innovative process led to the development of DPET ™ sheet that has a much lower carbon footprint compared to any other virgin PET sheet and comparable to sheets containing significant quantities of post-consumer waste.
At our production facilities, strategically located in the port city of Salalah on the southern coast of the Sultanate of Oman, we derive our energy from clean burning natural gas and our on-site, high-efficiency burners consume up to 20% less gas than traditional PET plants. We also minimize our impact on local water resources by sourcing municipal wastewater for 100% of the water used in our operations. The water is then filtered through the same reverse-osmosis process and returned to the manufacturing system or used to irrigate our on-site green belt. Additional information about our environmental initiatives can be found in Section 4 of this Report.
OCTAL is a founding member of The Sustainability Consortium (TSC), an independent organization of diverse global participants working to build a scientific foundation to influence and improve consumer product sustainability. OCTAL is also an active member of the TSC Packaging Group that is developing tools to measure carbon impacts from food and consumer product packaging. OCTAL sponsored the Sustainable Packaging Symposium 2011, which was organized by the American Institute of Chemical Engineers and Greener Package.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Sec tion 2: Innovation at a Ne w Le v el
OCTAL has radically changed the rigid plastics marketplace. Our innovative process allows us to manufacture PET with 67% less energy than the average product available on the market today. This remarkable innovation has fueled our growth while creating a new paradigm in the packaging industry. Furthermore, these advancements only add to the long list of advantages to using PET for packaging products.
12
O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
About PET 1 PET is a plastic from the polyester family that is derived from petrochemicals. Polyester is an affordable and highly consumed polymer. It is typically called polyester when used for fibers or fabrics and PET or PET resin when used in packaging.
PET is hygienic, strong, lightweight, shatterproof, effective in retaining freshness, free of Bisphenol-A (BPA), and readily recyclable. Health food agencies around the world have approved PET as safe for use with foods and beverages. PET was first synthesized in 1941 and is now one of the most widely used synthetic materials. PET pellets can be molded into a variety of forms and shapes. It is most commonly used to package carbonated soft drinks and water but may also be used for packaged produce, baked goods, salad dressings, yogurt containers, cooking oil, peanut butter, shampoo, liquid hand soap, mouthwash, take-out containers, and prepared food trays.
PET is unique in its value as a clear, rigid packaging material. It possesses an attractive combination of mechanical, optical, and environmental properties that make it the preferred material for liquids, food, and consumer product packaging. Although it is derived from petroleum, all plastics make up less than 4% of global petroleum usage annually. Additionally, the environmental impact of PET is favorable. As PET uses less material, it allows for more product to be delivered for less weight, resulting in less fuel consumption than other heavier packaging materials such as aluminum and glass. PET is the most recycled plastic worldwide, readily identified by the classification number “1.” It is highly sustainable because it can be recycled repeatedly and may be converted from packaging into carpet, clothing, auto parts, and construction materials, among other items. Each time a PET container is recycled, its original petroleum-based ingredients can be reused. In addition to being lightweight and recyclable, PET products generate lower levels of greenhouse gas (GHG) emissions, require less energy, and result in less production-based and post-consumer waste than other plastics, aluminum cans, and glass bottles. By producing recycled PET in place of virgin PET, additional energy can be saved (48 million BTUs and 3,000 pounds of GHG emissions per ton of PET).
1 http://www.petresin.org/index.asp
14
O C TA L P e t r oc h e m i cal s L LC F ZC
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
How OCTAL is Different
Our proprietary technology produces PET sheet directly from PET melt resin resulting in a final product of superior quality and higher consistency with a smaller carbon footprint.
The conventional manufacturing process for PET sheets involves nine steps from beginning to end and typically depends on up to five reactors for production.
Our values drive our company, and our unique process is the product of over $600 million in investments. These investments have paid off, however, in exponential financial growth and strengthened partner relationships. In 2011, we took our environmental commitments a step further by tracking and publically disclosing our waste, water, and carbon footprint. This analysis has allowed us to realize tangible cost savings and increased competitive advantage.
Our PET production relies on only two reactors, and our DPET™ process uses only three steps instead of nine.
OCTAL’s focus on PET responds to converging global trends of consumer lifestyles that increasingly demand convenience packaging and the industry’s growing need for environmentally friendly products and improved economics throughout the value chain. More information about our proprietary processes and improved carbon footprint may be found in Section 4 of this report. DPET ™ m a nufac turing process
POLYMERIZATION
CALENDAR SHEET
SHIP TO THERMOFORMER
con v ention a l PET m a nufac turing process
POLYMERIZATION
16
PELLETIZE & PACK
O C TA L P e t r oc h e m i cal s L LC F ZC
SOLID STATE POLYCONDENSATION
SHIP TO EXTRUDER
COMPACT
DRYING
EXTRUDE RESIN
CALENDAR SHEET
SHIP TO THERMOFORMER
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
Sec tion 3: Business Pr ac tices a nd Org a niz ation
OCTAL is an emerging global leader in the PET marketplace and the largest integrated PET sheet manufacturer in the world. Since our founding in 2006, we have increased revenues year-over-year and continue to grow our company at a rapid pace. In 2010, we increased our PET manufacturing capacity by 50,000 tons and we now look forward to exceeding 900,000 tons in annual capacity by 2012.
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O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Locations and Key Figures
UK Sales Office
OCTAL headquarters is located in the Sultanate of Oman, where the company was founded in 2006. As an Omani company, we are uniquely positioned to affect both the regional community and the international market. Our location in the port city of Salalah on the Indian Ocean, outside the Strait of Hormuz, provides us with ready access to international shipping lanes that circle the globe. We ship to over 40 countries with delivery times to most major ports within two weeks and utilize efficient repackaging and pallet-less shipping procedures that prevent product damage, improve shipping weight efficiency, and reduce contamination risk of the manufacturing facility from outside dust or debris.
GERMANY Sales Office
US Sales Office
CHINA Sales Office
40 0,0 0 0 tons PE
20
O C TA L P e t r oc h e m i cal s L LC F ZC
20
OTHER
LES
B Y R EG I ON
OTHER
32%
2%
USA
USA
09
LE SA
EUROPE
53%
EUROPE
45%
S BY R EG I ON
$50 0,0 0 0,0 0 0
sales in 2010
EUROPE
12
SA
33%
20
T capacity in 2012
Y R EG I O N LES B
53%
Salalah, Oman PET Manufacturing Complex
T capacity in 2010
927,0 0 0 tons PE
09
SA
OTHER
20
capital investm ent
20
$60 0,0 0 0,0 0 0
MUSCAT, OMAN Headquarters
2%
12
S
S ALE
B Y R EG I ON
OTHER
32% USA
33% USA
EUROPE
45%
35%
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
35%
Organizational Structure OCTAL is governed by a Board of Directors that is directly responsible for supervision of the Managing Director. The Board of Directors is composed of a Chairman, Vice-Chairman, the Managing Director, and 2 investors. Board members are selected through election by shareholders. OCTAL’s organization is divided into three primary structures: manufacturing, business, and administration. A copy of our organizational chart is included here for reference.
BOARD OF DIREC TORS
Name Title
Name Title
Name Title
MANAGING DIREC TOR
TREASURY
ACCOUNTING
EUROPE
ASIA / MIDDLE EAST & AFRIC A
NORTH AMERIC A
PACK AGING
MARKETING
SHEET
RESIN
L ATIN AMERIC A
SAL AL AH
PRODUC T DEVELOPMENT
CORPORATE PL ANNING
SHEET BUSINESS
EMEA
CORPORATE DEVELOPMENT
AMERIC A
O C TA L P e t r oc h e m i cal s L LC F T C
CORPORATE COMMUNIC ATIONS
L ATIN AMERIC A NEW PROJEC TS
22
HUMAN RESOURCES & ADMINISTRATION
MANUFAC TURING
RESIN BUSINESS
FINANCE
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
GOVERNMENT AFFAIRS
Product Safety & Consumer Relations We believe that the role of business is to create a better world and that our products fulfill a consumer demand. We also recognize that without our customers, our business would not thrive. Therefore, product safety and the relationships with our buyers and suppliers are of the utmost concern to us. PET is an exceptionally safe plastic. It has been cleared for food and beverage use by health agencies around the world including the US FDA, Health Canada, and the EU’s European Food Safety Authority, and has been used without adverse impact for more than 30 years.2 PET does not leach chemicals and specific grades of PET may be reheated safely in the microwave or oven. PET is a stable, inert, hygienic material that does not biologically or chemically degrade with age or repeated use. PET does not contain BPA or other endocrine disruptors, phthalates, dioxins, or chlorine. The safety of PET has been repeatedly demonstrated through extensive scientific studies and testing. OCTAL PET is considered safe for food packaging and personal product applications and meets all requirements for certification from all major consumer safety councils around the world.
24
O C TA L P e t r oc h e m i cal s L LC F T C
Product Certifications PET Resin »» USA FDA Regulations CFR 21—177.1630
»» EC Directive 2002/72/EC as amended 2009/975/ EC
»» EU Regulation 10/2011
»» EC Directive 94/62/EC
»» ISO 9001: 2008 & ISO 14001: 2004 Certification
»» UK Statutory Instrument 2003 (1941)
»» CONEG Regulations (USA / Canada)
»» German BfR Recommendation XVII & Dutch Warenwet Chapter I Plastics »» Health Canada
»» JHOSPA Approval (Japan Hygienic Olefin and Styrene Plastics Association) »» Chinese QS Registration »» REACH regulation EC/1907/2006 »» European Pharmacopoeia 6.3 chapter EP 3.1.15 »» Ministry of Health, Sultanate of Oman
DPET ™ Shee t »» USA FDA Regulations CFR 21—177.1630
»» ISO 9001: 2008 & ISO 14001: 2004 Certification
»» EU Regulation 10/2011
»» CONEG Regulations (USA / Canada)
2 http://www.petresin.org/safety_uses.asp
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
»» BRC Global Standard for Packaging and Packaging Material »» REACH regulation EC/1907/2006
Sec tion 4: Susta ined En viron m enta l Le a dership
OCTAL’s commitment to sustainability and innovation has led us to make significant investments to create and ensure continuous leadership in these critical areas. By applying the most advanced technologies, OCTAL has set new global benchmarks for both product and environmental excellence.
26
O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
The Drive to Innovate While the unmatched efficiency achieved by DPET™ technology has led to a reduced environmental impact, it does not deliver significant economic benefits to OCTAL. The majority of the cost of plastic production stems from the acquisition of raw materials, meaning the reduced energy profile of OCTAL DPET™ delivers only modest cost savings to the company itself. Our commitment to sustainability is driven by the belief that environmental sensitivity and implementation of an environmental policy are keys for sustainable growth.
OCTAL DPET™ technology, first introduced in 2008, achieves considerable energy and emissions reductions through effectively consolidating the typical PET production process. In reducing the number of reactors from nine to two and eliminating five stages from the conventional sheet production process, OCTAL has set a new benchmark for efficiency in producing PET sheet and resin. In studies completed by third-party Renewable Choice Energy and Intertek Expert Services: »» OCTAL DPET™ sheet requires 64.5% less electricity and 28% less heat to product than conventional bottle grade PET sheet.
We are committed to minimizing the environmental impact of our day-to-day operations by integrating environmental management as a standard business practice across the organization. As our operations continue to expand, we will assert ourselves as one of the world’s most important plastics companies while maintaining our commitment to innovation, sustainability, and transparency.
»» OCTAL PET resin was shown to consume 63.3% less electricity and 22.7% less heat energy than conventional bottle grade PET resin. »» Between 2009 and 2010 alone, OCTAL achieved a 6% reduction in energy intensity through improved efficiency and increased scale of operations. »» Due to the characteristics of DPET™, OCTAL’s customers shaping and molding DPET™ into packaging products can use 6 – 12% less material by weight than competing products, leading to further reductions in the energy and GHG emissions required to make DPET™ products. »» OCTAL’s plant uses 67% less grid electricity to manufacture DPET™ sheet and 38% less grid electricity for resin.
3 2.5 2 SCOPE 3
1.5
SCOPE 2
1
SCOPE 1
0.5
APET SHEET source
O C TA L P e t r oc h e m i cal s L LC F ZC
»» Uses 67% less electricity than conventional PET plants »» Uses 100% recycled municipality wastewater »» 20% less natural gas usage than conventional resin plants »» Innovative production plant design reduces carbon emissions
DPET ™ has...
3.5
0
28
»» Smallest carbon footprint of any comparable PET sheet
4
(KG CO 2(E)/KG PRODUCED)
Our manufacturing standards and process efficiencies have resulted in net environmental impact reductions. As the first company in the world to implement the direct-to-sheet technology, OCTAL’s resin-making and DPET™ manufacturing processes require significantly less energy inputs than traditional PET manufacturing.
How OCTAL Leads Its Industry In Environmental Excellence
DPET™
Intertek Expert Services
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
25% lower carbon footprint than conventional APET 39% lower carbon footprint than conventional PLA 38% lower carbon footprint than conventional HIPS 38% lower carbon footprint than conventional PS 10% lower carbon footprint than conventional PVC 9% lower carbon footprint than conventional PP 20% lower carbon footprint than ‘non-Zero’ rPET at 50% 11% greater downgauging capacity compared to APET Equal carbon footprint to ‘Zero’ rPET at 45% source Intertek Expert Services Based on DPET™ shipped to Europe
Sustainability in Action
Our Production Facilities
From our founding, we have taken an aggressive, proactive approach to embedding sustainability within our company.
OCTAL’s purpose-designed production facility exceeds stringent environmental standards and is significantly more efficient than conventional virgin PET sheet and resin plants. Through the application of the most advanced technologies, OCTAL has set new global environmental benchmarks for both product and environmental excellence.
Our primary environmental objectives are to: »» Reduce energy consumption and improve energy efficiency in all our operations »» Reduce and recycle all types of waste throughout our manufacturing process »» Dispose of waste in an environmentally responsible manner »» Comply with legal regulations and achieve more than the established standard »» Develop the OCTAL campus green belt and promote green surroundings around the Omani plant »» Set targets that guide our efforts towards minimum environmental impact »» Pursue continual improvements in environmental performance »» Communicate our environmental policies to all employees and the public We believe in continuous improvement and transparency, and have engaged third-party sustainability experts to help us analyze, track, and disclose our environmental performance.
In 2010, OCTAL produced over 226kt of resin and more than 77kt of DPET™ sheet— 30
O C TA L P e t r oc h e m i cal s L LC F ZC
OCTAL’s state-of-the-art facility incorporates the latest in efficient building design and features high efficiency lighting, solar panels, and natural lighting to maximize visual comfort and minimize energy use. Motion detectors are used to control light sensors to save electricity. Water heater systems were changed to improve efficiency and adjustments are continuously made to production systems to do the same. We recently created a greenbelt on the plant’s premises in order to bring beauty to our facilities and our employees. We use treated wastewater to maintain this greenbelt in order to minimize water usage. Plans are currently underway to plant 75 palm trees and to expand and further develop the greenbelt. In response to the Omani Ministry’s request to boost awareness of Oman Environment Day, OCTAL removed all shrubs of Prosopis around our premises, as the shrub prevents local plants from growing, proving harmful to biodiversity.
a savings of nearly 80kt CO2e over conventional PET and resin. 80kt CO2e is equal to the emissions produced by flying a full airplane around the world more than 58 times!
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Our GHG Emissions
Scope 2 Emissions from the generation of purchased electricity by the company.
S
BR
EA
SI IS
35%
64%
O C TA L P e t r oc h e m i cal s L LC F T C
32,383
Mobile Combustion
510
Fugitive Emissions
702
Purchased Electricity
51,191
Scope 1 emissions
33,595
Scope 2 emissions
51,191
Total Scope 1 & 2 emissions
84,786
STATIONARY COMBUSTION
PURCHA SED ELEC TRICIT Y
32
Stationary Combustion
Scope 2
WN
O
N
In addition, Scope 3 emissions can be optionally added to account for indirect emissions generated by the supply chain. In the future, OCTAL hopes to include Scope 3 emissions in our GHG inventory process.
O KD
CO 2 e E m issions (m e tric tons)
Scope 1
Scope 1 Emissions from sources that are owned or controlled by the company.
EM
By conducting a rigorous GHG inventory, OCTAL has set emissions reduction targets, identified significant opportunities for reduction, and will be able to track progress over time.
Scope /Ac tivit y
The assessment of OCTAL GHG emissions breaks the company’s direct emissions into two categories:
C O R P O R AT E
In 2011, OCTAL conducted a corporate GHG inventory (Scope 1 & Scope 2) in accordance with the internationally recognized GHG Protocol.
M e a sured Direc t a nd Indirec t GHG E m issions
FUGITIVE EMISSIONS
1%
MOBILE COMBUSTION
0%
Signific a nt A ir E m issions
Ozone-deple ting Substa nces
A ir E m issions
Qua ntit y (mg)
Refriger a nt
kg
NO x
102,243
R-12
61.5
*Assumes 10%, emissions
CO
273
R-22
42.6
SO2
14
R-123
2.0
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
leakage rate of calculated by Renewable Choice Energy
Our Supply Chain
Our Waste
Reductions in emissions and energy-usage begin when inputs arrive at OCTAL’s campus and continue to be achieved through the delivery of DPET ™ to companies that mold and form sheet and resin into the products ultimately handled and used by consumers.
OCTAL has achieved additional GHG emissions reductions and cost-savings through eliminating waste and collecting and re-melting byproducts of the production process that were previously discarded. This material, known as side trim and lump waste, is collected, ground, and re-melted in order to create post-industrial recycled sheet. OCTAL has also taken steps to reduce other forms of waste, such as electricity and water. See the Waste Reduction graphic for more information.
Compared to standard PET production practices, sustainability performance is increased throughout virtually every step of the production process of packaging products made from OCTAL DPET™.
OCTAL has further minimized the energy required for (and GHG emissions produced by) our products by locating our primary facilities in the Salalah port and by adopting innovative packaging processes. We receive petrochemicals through a 1.6 kilometer underground pipeline—the first liquid chemical terminal built in Salalah. The proximity to the port helps reduce supply chain emissions both upstream and downstream of OCTAL and means the only meaningful transport that is controlled by OCTAL is executed through sea-freight, which produces just 3% and 16% of the emissions created by air and ground transportation, respectively. We have also taken steps to further reduce the emissions associated with shipping our product through sea freight. Over 70% of our DPET™ product is shipped without pallets, maximizing the amount of PET product per shipment and therefore reducing the number of trips and weight of each load.
EFFICIENCY IMPROVEMENT 2009 – 2010 60%
57%
50%
OCTAL’s integrated manufacturing facility collects and reintegrates 100% of its internally generated
40%
side trim and offers customers recycling of the skeletal waste generated during the thermoforming
30%
process. OCTAL has installed 20,000 tons of rPET production capacity.
20% From 2009 to 2010 OCTAL reduced
10%
10%
PTA and IPA waste by 57% per ton
6%
of production. * PTA and IPA waste was 31 MT in 2009 and 18MT in 2010.
0% IPA + PTA WASTE REDUCTION*
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O C TA L P e t r oc h e m i cal s L LC F ZC
WATER
ELECTRICITY
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Our Water Consumption OCTAL faces unique production challenges at our Omani facility. As a country, Oman has one of the highest levels of water scarcity in the world. As a result, businesses in Oman are faced with water-related issues that fall under the responsibility of the entire community to help manage.
Changes in the quantity or quality of water resources upstream of OCTAL’s operations could result in a direct increase to our operating costs. In order to understand and manage our water impact and related risks, the company conducted a water footprint in 2011. OCTAL has also taken steps to minimize our impact on local water resources through improved sourcing and treatment of the water that we use in our production process. OCTAL’s processes use 100% municipal wastewater. Eighty per cent of this water is recovered through reverse osmosis technology and sand filter treatment systems. The production facility’s own wastewater is also re-treated using aerobic digestion, and is either fed back into the manufacturing system or used for landscaping irrigation.
EFFICIENCY IMPROVEMENT 20 09 – 2010
We made significant gains in water efficiency between 2009 and 2010 by achieving a year-on-year intensity reduction of 9%. Water intensity, or the amount of product produced per quantity of water consumed, is one of the most relevant metrics that can be applied to businesses’ water impact, and allows an organization to understand its water use in the context of organic growth.
Sources of Withdr awa l
Qua ntit y (m 3)
Salalah Municipal
2,000
SSDC (Recycled Waste Water)
462,392
Re-Used from Internal Operations
56,655
Sources of Disch a rge
Qua ntit y (m 3)
Returned to Treatment Plant
11,137
Discharged to the Sea
135,620
Evaporated from Cooling Tower
368,310
Used for Plantation
5,980
by Renewable Choice Energy
Between 2009 and 2010 OCTAL’s total production output increased by 26% 1.55
2009
1.3
36
Water Withdr awa l a nd Disch a rge
Water audit completed and reported
1.4
2010
1.35
O C TA L P e t r oc h e m i cal s L LC F T C
1.4
1.45
1.5
1.55
1.6
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
while total water use decreased by 10%.
Sec tion 5: E m ploy ee Eng age m ent
At OCTAL, we believe that our employees are our most valuable asset. We recognize that without the hard work, innovation, and commitment of our employees, we cannot continue to succeed and grow. We strive to maintain a healthy and prosperous work environment by providing exceptional compensation and benefit packages, opportunities for advancement, and career development and training. The OCTAL team is made up of passionate individuals who are driven to make an impact in our industry and in the world. Our employees have the technical and leadership skills to help lead us into the future. 38
O C TA L P e t r oc h e m i cal s L LC F T C
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Several of the corporate commitments we have made pertain to our employees.
Employee Attraction, Development, and Retention
Specifically, OCTAL aims to:
At OCTAL, we recognize that our product can only be as good as the people producing it. Therefore, we place a special emphasis on attracting, developing, and retaining the most talented individuals we can.
»»Attract, train, develop, and retain quality employees who share and embrace our values »» Provide a safe, secure, and professional working environment »» Demonstrate recognition of and respect for a diverse workforce »»Communicate information to employees in an open, timely, and accurate manner
40
O C TA L P e t r oc h e m i cal s L LC F ZC
Benefit s for Full Ti m e E m ploy ees »» Medical insurance for employees and their eligible family members »» 30 days paid annual leave »» Fully paid maternity leave for female employees »» Expatriate plans include relocation, family benefits, and housing allowance
OCTAL recruits from an international talent pool and our workforce represent 18 different nationalities including Omani, Indian, and Filipino. In support of the Omani National Population Strategy, we strive to hire Omani citizens whenever possible, ideally reaching 50% of our entire workforce by the end of 2014. We also provide specific training for Omani citizens as needed.
E m ploy ee N ation a lit y
Percent of Workforce
Indian
37%
Omani
27%
Filipino
22%
Pakistani
5%
Other
9%
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
Employee Recruitment & Retention In 2011, we added a significant number of new hires to our workforce, an increase of 4% over 2010. Our rate of turnover increased slightly (by .08%) in 2011. As a private sector employer in Oman and one of the largest employers in Salalah, we regularly encounter the challenges facing the Omani people. These challenges are complex and include: high rates of unemployment, a large youth population, overall population growth that exceeds economic growth, and a shortage of education, training resources, and employment opportunities for Omanis.
42
M en
Wo m en
Age 19 – 32
Age 33 – 45
Age 46 – 59
78
88%
12%
66%
29%
5%
Turnov er R ate
M en
Wo m en
Age 19 – 32
Age 33 – 45
Age 46 – 59
11.5%
91%
9%
48%
41%
11%
O C TA L P e t r oc h e m i cal s L LC F ZC
No. of Pa rticipa nt s
% of Pa rticipa nt s
No. of Hours
% of Hours
Resin
143
33%
2910
32%
Sheet
87
20%
1672
19%
Logistics
132
31%
3100
34%
Corporate
66
16%
1354
15%
To be launched in January 2012, the OCTAL Omani Nationals Technical Development Program will train 40 new Omani graduates in the petrochemicals industry. The program is 18 months in duration and includes the development of both behavioral and technical competencies.
Ne w Hires
This has led us to seek to employ expatriates in many of our positions. However, OCTAL supports the Omanization efforts of the Omani Ministry, an initiative to replace expatriates with Omani citizens in place since 1988. As a result, we have committed to providing excellent training to our workers to ensure that they have the skills necessary to manufacture OCTAL products. Over 40 training programs were implemented in 2011 for a total of 9036 training hours or 23 hours per employee per year.
depa rtm ent
Nearly all our employees also receive performance and career development reviews. In 2011, 84% of staff received this review: 83% of men and 95% of women. Additionally, OCTAL provides scholarships for career advancement at local universities to Omani employees for further education relevant to his or her position. Our commitment to education extends outside the walls of our production facility. We routinely provide school scholarships to the children of our employees. We have also partnered with local colleges to provide internships and trainee positions to local Omani students in the Salalah region and bring more talented Omani students into the industry. Going forward, we will implement an employee health and wellbeing program that will include counseling services, health information, and on site medical care. We will also offer educational forums to the community on major health and safety issues facing the Omani people.
C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
The Work Environment OCTAL strives to provide a working environment that is safe, secure, and clean; that respects the general rights of the individual; and that is conducive to the effective utilization of skills and realization of the potential of each employee. Our production facility is a very clean environment that is well-maintained. In keeping with our values, employees are urged to recycle all their used PET bottles and to uphold a tidy work place that allows everyone to succeed. Access to our facilities is monitored to ensure everyone’s safety.
44
O C TA L P e t r oc h e m i cal s L LC F T C
We share a common sense of purpose at OCTAL. We all know that we manufacture one of the finest products in the market and each of us does our best to share this with our customers so that they can also reap the benefits of our creation. We place an emphasis on learning and development, as evidenced by our significant investments in training and performance management systems. Our staff report that they learn new things every day, supported by leadership of our management team. Our environment is multi-cultural, with employees from all over the world. Together, we share one common goal and demonstrate mutual respect for each other. We celebrate our successes and enjoy each other’s company at local festivals and during special times. We comply with all labor laws in the countries in which we operate and do not tolerate discrimination, child labor, or compulsory labor of any kind.
OCTAL is strongly committed to an operational environment in which all employees are encouraged to pursue opportunities for learning and professional growth and to draw on its intellectual resources as well as external sources in seeking those opportunities.
Our Diverse Workforce The OCTAL workforce is a diverse one, with employees hailing from varying nationalities, speaking a variety of languages, and observing a diversity of beliefs. OCTAL strives to treat each employee with respect and dignity, regardless of our differences. Age Group
% of Workforce
19 – 32
49%
33 – 45
41%
46 – 59
10%
The vast majority of the OCTAL workforce is male and 8% of our workers are women. In general, women are underrepresented in the Omani workforce, making up 17% of the total workers. OCTAL is working to improve its gender ratio and opportunities for Omani women.
Educational opportunities have increased significantly for women in Oman since the 1970s and now enrollment numbers of boys and girls are equal; however, women still experience social and enrollment pressures to study “gender appropriate” fields such as humanities instead of pursuing technical or scientific studies.3 While gender bias and disparate pay are prohibited in the workplace, women have historically found it difficult to receive promotions. The Omani Ministry of National Economy has published objectives for improving women’s access to education (and the obliteration of female illiteracy) as well as gender equality and the advancement of women’s involvement in Omani society. In order to continue to improve in this area, OCTAL will strive to prioritize the recruitment, hiring, and education of women, particularly in technical roles. OCTAL’s workforce also tends to include primarily younger people, which is not surprising given the Omani population and our efforts to connect with new graduates through Omani colleges. However, we could improve the diversity of our workforce by hiring more workers of advanced age. OCTAL recognizes and respects the religious differences of our employees. Oman is a mostly Muslim country and so we provide for the religious requirements and customs of our Muslim employees. We also acknowledge that not all of our employees practice Islam, and are sensitive to maintaining a workplace that is inclusive of all creeds and beliefs, particularly as we continue to expand into diverse markets around the world.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Transparent Communication The qualities of transparency and openness are woven into the corporate culture of OCTAL. We believe that transparency allows us to create a roadmap on which to set and achieve our goals. A platform of Knowledge, Commitment, Trust defines our workplace. Our leaders have an open attitude towards transparency and push our employees to become innovators themselves so that environmental sustainability is the first thing we think of, not an afterthought. Our CEO meets monthly with small groups of 20 employees at a time to have an open discussion and brainstorm new ideas. Innovation advances sustainability within OCTAL.
“Being transparent in all that we do builds credibility and reliability with both our customers and our employees.” Merlyn Rodrigues, Corporate Communications
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Sec tion 6: M utua lly Beneficia l Rel ationship s— Co m m unit y In volve m ent
At OCTAL we continuously challenge ourselves to deliver social, economic, and environmental benefits to all our stakeholders and to the communities in which we operate.
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Philanthropy Corporate giving and sponsorship is a cornerstone of our CSR practices. Here are examples of our philanthropic efforts in 2011: Supp ort for Loc a l A rtist s OCTAL provided financial support to Omani photographer Abdullah Al Shuhi by purchasing 125 copies each of his books Oman: The Big Picture and Oman: Living Traditions. Al Shuhi’s books are comprised of traditional photos of the Omani people and landscape. We provide these books as gifts for OCTAL guests.
Socie t y of E a rly Intervention for Children with Disa bilities OCTAL donated funds to this important charity and displayed the artwork of children with disabilities on our company greeting cards.
C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Filipino T y phoon OCTAL matched all funds raised via an employee driven fundraiser for the Philippines Red Cross typhoon relief effort.
Community and Public Relations
Looking Ahead
An ongoing, positive relationship with the communities in which we operate is critical to OCTAL’s continual success. We rely on our local communities to provide our future employees, to become our future customers, and to provide positive press and support to our company.
The following community service programs are planned for 2012 – 2013:
Therefore, whenever possible, we engage in community relationships that are mutually beneficial. Here is a sample of the many ways we positively interface with our local communities:
»» Whenever possible, OCTAL relies on local real estate companies to house visitors, guests, and expatriates, which provides economic support to the local community. »» Our investment in our wastewater treatment plant for our operations is a responsible decision that relieves the community of the burden of treating our facility waste water. »» We have worked to substitute 100% of resin imports into Oman, which has helped local businesses cut costs and save working capital.
»» Implementation of a recycling program where OCTAL will provide a local school with bins for PET recycling along with volunteers to help renovate the school in return for recycled PET that will be reused in our operations. »» Investing in the development of a canteen waste program where excess food from our on-site cafeteria will be converted into more renewable products, i.e. natural biogas or organic fertilizer, etc.
»» We have developed a Joint Emergency Committee with other companies in the region to discuss safety and environmental topics that affect us. We have also promoted shared understanding of the Emergency Response Procedures of these companies and the roles that we all play in assisting one another during an emergency. »» More than 10% of our purchasing is done through local suppliers. »» We sponsored and participated in a beach clean-up in Salalah as part of the nationwide clean-up campaign organized by the Clean Up Oman Group, an Omanbased nonprofit organization that urges Oman residents to keep their country clean and preserve their natural environment. »» We have sponsored vocational training for 15 local female graduates in the field of cosmetology and hairdressing aimed at empowering women from low-income families to establish their own small business enterprises.
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Sec tion 7: 2012 Perfor m a nce Goa ls
While we are pleased with the progress we have made so far in our CSR efforts, we know that this report merely provides us with a baseline from which to plan our future endeavors. The following are our performance goals for CSR over the next 1 – 3 years.
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Labor Practices
Supply Chain
short ter m goa ls
short ter m goa ls
»» Develop internal communications plan to help improve employee relations and information sharing.
»» Create a supplier Code of Conduct. long ter m goa ls
long ter m goa ls
»» Implement sustainable activities in supply chain.
»» Conduct employee survey.
»» Conduct human rights screenings of suppliers.
»» Create feedback forums. »» Standardize and restructure performance appraisal, compensation, and benefit systems. »» Increasing funding for education. »» Expand recruitment pool of women and other minorities. »» Increase Omanization rate.
Health & Safety short ter m goa ls »» Develop health & wellbeing program for employees, their families, and the community. long ter m goa ls »» Expand and develop health & safety committee. »» Provide incentives for health and wellbeing. »» Financially sponsor safety and health organizations.
Environment short ter m goa ls »» Canteen waste donation program. »» On-site PET recycling program. long ter m goa ls »» Expand school recycling programs to include schools in the Dhofar region.
Education long ter m goa ls »» Sponsor and increase number of scholarships for engineering students. »» Host Salalah career fair. »» Partner with other regional players to provide community training programs for computer literacy, English, and educational gaps.
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C o r po r at e Soc i al R e s po n s i b i l i t y R e po r t 2 010 – 2 011
Local Community
Philanthropy
short ter m goa ls
short ter m goa ls
»» Sponsor local festivals.
»» Donate compensatory devices to the Oman Association for Disabled.
»» Offer health and safety education to community. long ter m goa ls »» Donate trees to schools for reforestation programs. »» Provide employee incentives for volunteerism. »» Sponsor the expansion of Al Waf’aa Center in Salalah for children with disabilities.
Microfinance short ter m goa ls »» Donate to Omran’s Intajee Project 2012.
long ter m goa ls »» Support agencies that provide assistance to underprivileged families. »» Donate computers to schools. »» Lead donation efforts during Ramadan to collect toys and other items for underprivileged children.
Stakeholder Engagement short ter m goa ls »» Form a CSR committee within OCTAL.
long ter m goa ls
»» Propose the formation of a community CSR forum.
»» Sponsor microfinance opportunities for women in the Dhofar region.
long ter m goa ls
»» Develop a sustainable tourism program.
»» Partner with Ministry of Environment to sponsor educational programs for the region.
»» Support unemployed youth through micro-entrepreneurship programs.
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C o r po p o r at e S Soc o c i al a l R e s po p o n s i b i l i t y R e po p o r t 2 010 – 2 011
2010 – 2011 Performance Summary GRI Indicators Inventory
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Reference No.
Indic ator
Page No.
EC6
Policies, practices, and proportion of local spending
54 – 57
EC8
Development of infrastructure investments and services
54 – 57
EN8
Total water withdrawal by source
37
EN16
Total GHG emissions
32
EN18
Initiatives to reduce emissions and reductions achieved
30
EN19
Emissions of ozone-depleting substances
33
EN20
NO, SO, and other significant air emissions by type
33
LA1
Total workforce by type, region, gender
41; 45
LA2
Total number of new hires and employee turnover by age, gender, region
42
LA3
Benefits for full time employees
41
LA10
Average hours of training PEPY by gender and employee category
43
LA12
Percentage of employees receiving performance and career development review, by gender
43
HR6
Child labor
44
HR7
Compulsory labor
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C o r p o r at e S o c i a l R e s p o n s i b i l i t y R e p o r t 2 010 – 2 011
Glossary of Terms CO2: Carbon dioxide, one of the primary greenhouse gases responsible for climate change. Corporate Social Responsibility (CSR): A business approach that creates long-term consumer and employee value by adopting a strategy that balances the business’ impact on people, planet, and profits. Global Reporting Initiative (GRI): The GRI is a non-profit organization that promotes economic, environmental, and social sustainability. GRI provides all companies and organizations with a comprehensive sustainability reporting framework that is widely used around the world. Greenhouse Gas (GHG) Inventory: A greenhouse gas inventory is a tool commonly employed to help stakeholders understand, track, and reduce the carbon or greenhouse gas impact of an organization. GHG Protocol: The most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. The GHG Protocol is a decade-long partnership between the World Resources Institute and the World Business Council for Sustainable Development and works with businesses, governments, and environmental groups around the world to build a new generation of credible and effective programs for tackling climate change. Polyethylene Terephthalate (PET): A clear, lightweight plastic resin used internationally to package foods, beverages, personal care products, and other consumer items. PET is produced in pellet, fiber, and sheet form.
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This report was prepared for OCTAL with the support of consultants from Renewable Choice Energy, located in Boulder, Colorado. For questions about this report or more information, please contact: Mohammed Razeem Project Engineer, Sustainability OCTAL Petrochemicals LLC FZC 4965 Preston Park Blvd. Suite 100 Plano, TX 75093 USA 972.985.4377 [email protected]
HEADQUARTERS P.O. Box 3786, Muscat 112, Sultanate of Oman. P: +968 22 030 700 F: +968 22 030 799 PET MANUFACTURING COMPLEX P.O. Box 383, Salalah 217, Sultanate of Oman. P: +968 23 217 500 F: +968 23 217 506 CUSTOMER SUPPORT USA P: +1 (972) 985 4370 F: +1 (972) 985 4371 CHINA P: +86 21 6487 5387 F: +86 21 6468 6772 UK P: +44 79 5614 6641 OMAN P: +968 23 217 500 F: +968 23 217 506 GERMANY P: +49 160 947 93121 REACH US BY E-MAIL info@octal .com
www.octal.com
