From the CEO
The purpose of this letter is not to cover all topics that are included in the comprehensive Environmental, Social, and Governance report that follows. I have taken the liberty of selecting a few highlights to discuss here.
AMG is deeply invested in the subject of Environmental, Social, and Governance (“ESG”), not by simply being compliant with regulations and best practices, but by what we do. AMG has been built to be a global leader in “critical” materials which are essential building blocks for containing and eventually reversing the growth of atmospheric CO2 levels. Clean Energy Materials rely heavily on critical materials which AMG produces in a sustainable and responsible manner. Critical materials are vital to the transition to clean energy and energy saving strategies, which, due to the demand shift, makes them “critical.” The International Energy Agency estimates that the pathway to the net zero carbon target implies a growth of critical materials from less than 10 million tons today to over 40 million tons in 2050.
COVID-19
We made the important decision to maintain critical operations during this unprecedented crisis because of the vital role our company plays in sustaining global infrastructure. Keeping our operations running meant modifying how we work to keep our employees, contractors, and visitors safe during a pandemic.
AMG operations drew upon worldwide guidance to develop location-specific programs that included educating personnel to recognize signs and symptoms of COVID-19 infection, implementing self-quarantine protocols, establishing temperature checks at every entrance, elevating workplace hygiene and cleaning protocols, social distancing, and enacting global travel restrictions.
I am happy to report that AMG employees around the world successfully adapted to and overcame the threat and turmoil imposed by the COVID-19 pandemic, with no COVID-19 caused fatalities and limited required hospitalizations. However, one cannot ignore the impacts COVID-19 has had beyond the walls of our workplace and the devastation it has wrought around the world. AMG is committed to supporting the families of our employees and the communities where we do business as we all continue along the road to recovery.
Health and Safety
Delivering to the world critical materials which are manufactured responsibly and safely is our priority and a “conditio sine qua non” as regard to our values. We are proud to report that in 2020 we continued to strongly outperform industry standards, both in Lost Time and Total Incident Rates.
|
AMG 2020 Results |
Industry Standard |
Lost Time Incident Rate |
0.62 |
2.7 |
Total Incident Rate |
1.05 |
4.4 |
This clearly demonstrates improvement in the reduction of workplace injuries. Although a worthy accomplishment, our safety target is obvious: ZERO incidents. In 2020, we proved this an obtainable target with 23 of our 33 sites (70%) reporting zero lost time injuries. With over 3,000 employees working at 33 sites in 15 countries these are remarkable results. Nobody in AMG questions the priority of working safely.
Each site is supported by a dedicated business-specific safety executive responsible for the development and deployment of site-specific environmental, health, safety, and sustainability (EH&SS) policies, procedures, and training to ensure every AMG employee is equipped with the knowledge and tools required to perform their jobs safely. With a direct line to the Vice President of EH&SS, who reports to the CEO, safety executives are further supported with access to additional resources and subject matter experts.
Diversity and Inclusion
At the end of 2020, the Management Board’s composition was 100 percent male and the Supervisory Board’s composition was 67 percent male and 33 percent female. Also, in 2020, we added a new metric to track: the percentage of Women in Management. Women held 21% of our management positions in 2020, which as a percentage exceeds the 19% total female population at AMG.
We are particularly encouraged by the progress we have made at one of our largest industrial sites, the global leader in catalyst recycling at the Ohio Vanadium production facility. At that facility, 41% of the managers are female.
We look forward to growing the number of women in leadership throughout AMG.
CO2 Emissions and AMG Enabled Reduction
Years ago, we started to measure the CO2 emission reduction impact AMG products have on the CO2 footprint of customers. In 2019, six products (Thermal Barrier Coatings, Titanium Alloys, Turbocharger wheel castings, natural graphite doped insulation materials, Ferrovanadium, and Aluminum alloys) went through a Life-Cycle Assessment (LCA) with the help of a qualified third party (ERM). We grouped these products in a virtual segment and named it Enabling CO2 Reduction Portfolio, or ECO2RP. In 2019, the six ECO2RP product lines enabled a CO2 reduction of 67.8 million tons.
The Enabling CO2 Reduction Portfolio (“ECO2RP”)
In 2020, two new products joined ECO2RP through the LCA gate: glass coatings and certain heat treatment services. The total enabled CO2 reduction in 2020 was 56.6 million, the decrease compared to 2019 primarily due to the aerospace downturn. In 2020 the ECO2RP revenues added up to 23% of AMG’s total (compared to 8% in 2010); the ECO2RP gross profit was 28% (up from 5% in 2010). Presently, seven ECO2RP candidates are in the pipeline, which we call the ECO2RP “Lobby,” undergoing LCA in various stages. Some of the candidates have substantial CO2 reduction potential.
The International Energy Agency concludes that a very high percentage of the global CO2 reduction targets will have to come from technologies not yet proven. The ECO2RP Lobby is growing relentlessly, only held back by human and financial resources within a conservative risk management framework.
Changing Regulatory Universe
Over the years, the ability to enable our customers to reduce CO2 emissions has become the strategic cornerstone of AMG. We constantly search for additional product innovations that are “carbon negative” and meet our profitability criteria. Carbon negative equals the direct carbon footprint of the product adjusted for enabled CO2 reduction (verified by third-party LCAs).
The EU Taxonomy Regulation has embraced the concept of enabling activities. It states the following: “An economic activity shall qualify as contributing substantially to one or more of the environmental objectives set out in Article 9 by enabling other activities to make a substantial contribution.” In addition, the first environmental objective in Article 9 is climate change mitigation and the fourth objective is the transition to a circular economy, which aligns with our ongoing priorities to reduce CO2 emissions.
The conclusion is that the EU taxonomy fully embraces the concept of counting enabled CO2 reduction in the same way as the reduction of direct CO2 emissions. We believe that will have profound consequences for CO2 reduction (subject to, of course, impeccable third-party LCA verification).
Double Materiality
Let me close with a thought about double materiality - the idea that companies should identify and assess both financially material topics that influence enterprise value, as well as those that are material based on their outward impact on the economy, environment and people. For example, the figure above shows AMG’s position with respect to climate’s potential impact on enterprise value and its impact on climate. AMG’s impact on the climate measured by way of CO2 reduction is significant, and we are creating enterprise value through our R&D investments and innovative CO2-reducing products. We believe that if the double materiality approach is widely accepted, it will have profound consequences for both business and society.
Dr. Heinz C. Schimmelbusch
Chief Executive Officer
About AMG & Our Report
At AMG, we produce highly engineered specialty metal products as well as market-leading vacuum furnaces for specialized alloying applications and heat treatment services to the transportation, infrastructure, energy, and specialty metals and chemicals markets. Our headquarters is located in Amsterdam, Netherlands, and we are listed on the Amsterdam stock exchange. Our 2020 revenue totaled $937.1 million.
During 2020, which is the focus of this report, we operated in two divisions: AMG Critical Materials and AMG Technologies with more than 3,000 employees and 33 sites. Of the 33 sites, 26 are production facilities.
AMG Critical Materials develops and produces specialty metals, alloys, chemicals, and high performance materials. AMG Critical Materials is a significant producer of specialty metals such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys and powders, chromium metal, tantalum, antimony, lithium, natural graphite, and silicon metal for energy, aerospace, infrastructure, and specialty metal and chemicals applications. AMG Critical Materials has major production facilities in the UK, the US, Germany, France, China, and Brazil.
AMG Technologies AMG Technologies designs, engineers, and produces advanced vacuum furnace systems, operates vacuum heat treatment facilities, and develops titanium aluminides and titanium alloys, primarily for the aerospace and energy (including solar and nuclear) industries. Furnace systems produced by AMG Technologies include vacuum re-melting, vacuum induction melting, vacuum heat treatment, turbine blade coating, and sintering. AMG Technologies also provides vacuum casehardening with gas quenching heat treatment services on a tolling basis. AMG Technologies has production facilities that are located in Germany, France, Mexico, India, China, and the US.
This is our third standalone Annual Sustainability Report, and it covers the 2020 calendar year. This report is written in accordance with the Global Reporting Initiative Standards at the core level. We also report on corporate responsibility practices in our annual UN Global Compact Communication on Progress. AMG does not include minority-held entities in the boundaries of this report.
Sustainability Strategy & Governance
AMG endorses and supports the definition of corporate social responsibility as set by the World Business Council for Sustainable Development: “…the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.” For AMG and its affiliated companies, this definition translates into four main sustainable development objectives that the Company has formulated in line with its financial objectives, technological capabilities, and its leading position in the global metallurgical industry. These objectives are:
- To provide safe working conditions for our employees and be responsible stewards of the environment;
- To meet or exceed regulatory standards by engaging in ethical business practices;
- To be a valued member of the local economy, community, and society by contributing to solutions to address some of the fundamental environmental and social challenges facing society today; and
- To target industrial activities which either contribute to the reduction of greenhouse gas levels through the circular economy or by arriving at technologies which enable our business partners to reduce greenhouse gas levels and quantify the success of these endeavors.
The Supervisory Board and the AMG Management Board are guided by these objectives when defining and implementing the Company’s strategic objectives.
The Management Board members are collectively responsible for building a culture within AMG focused on long-term value creation. Each Management Board member has the responsibility to serve the best interests of the Company and its stakeholders.
The Supervisory Board oversees the Management Board’s implementation of the long-term value-creation strategy of AMG. The Supervisory Board regularly discusses the strategy, implementation of the strategy, and principal risks associated with the strategy.
The Vice President of Sustainability, Environment, Health, and Safety is responsible for the overall sustainability strategy for the organization and reports results to the Management Board on a regular basis.
Stakeholder Engagement & Materiality
AMG conducts materiality assessments to advance its sustainability program by identifying environmental, social, governance, and product-related impacts, risks, and opportunities that are most critical to AMG’s business and stakeholders. The results of these materiality assessments informed the content of this report, including specific topics and metrics to track and disclose. AMG’s list of material issues was developed primarily through two exercises: desktop research including peer benchmarking and stakeholder interviews.
- Desktop Research: A third-party consulting partner reviewed publicly available information, such as relevant Global Reporting Initiative and Sustainability Accounting Standards Board standards and conducted benchmarking of several peer companies using publicly available sustainability reports and websites. This information was used to develop a list of relevant sustainability topics to guide stakeholder interviews.
- Stakeholder Interviews: The third-party consulting partner also interviewed AMG executives, including AMG’s Chief Executive Officer, Chief Operations Officer, Chief Financial Officer, and Vice President of Sustainability, Environment, Health, and Safety. Insights were gathered on sustainability impacts, risks, and opportunities across AMG’s value chain. These internal stakeholders vetted the list of sustainability topics developed from the desktop research for relevance and significance given their understanding of corporate risk formed through the ongoing company-wide risk assessment process. The list of sustainability topics was narrowed down to a priority list of material sustainability topics for AMG.
Material issues were considered across AMG’s value chain:
Value Chain
The priority list of material sustainability topics for AMG include:
Material Topic |
Definition |
Environment |
|
Air Emissions |
Generation and management of air emissions (e.g., GHG, particulates, SO2, NOx, etc.) from company operations and their potential impacts on ecosystems and human health; this includes compliance with applicable regulations. |
Energy |
Management of the Company's energy consumption and associated costs through the design of operational processes, procurement practices, etc. |
Resource Efficiency |
Use of efficient production techniques and creation of resource-efficient products. Responsible use of raw materials and inputs. Recycling input materials and recycling of by-products when possible. |
Wastewater |
Management of wastewater generated from company operations and impacts on local water resources, including compliance with all applicable regulations. |
Water |
Management of water withdrawals and consumption from company operations in the context of competing demands for water resources. |
Social |
|
Health & Safety |
Protection of employees, contractors, and visitors from occupational injuries and illnesses through design of safe operations and work practices, employee wellbeing initiatives, training programs, robust safety management systems, and culture, including compliance with health and safety regulations. |
Diversity & Inclusion |
A diverse, equitable, and inclusive workplace, accepting of and providing equal opportunity to all employees regardless of race, ethnicity, gender, age, education, ability/disability, sexual orientation, religious affiliation, veteran and disabled veteran status, experience, and thought. |
Community Engagement |
Hiring of employees from the local region and providing fair wages and competitive benefits, and influencing other local businesses to do the same. Providing community support through pro bono services or volunteering; cooperating with public and private institutions to promote social programs. |
Governance |
|
Business Ethics |
Prevention of unethical or illegal behavior involving a company employee or agent, in particular with respect to how the Company works with suppliers, customers, and other business partners in developing and marketing products and driving business growth and profitability (e.g., no bribery, collusion, anti-trust, monopoly practices, etc.). |
Compliance |
Operating in accordance with regulations across a full range of functional areas. |
Risk Management |
Proactive consideration of risk factors and opportunities, including resilience and sustainability, in business decisions; taking effective steps to mitigate risks and to capitalize on opportunities to protect and enhance the business and its assets. |
Products |
|
Customer Environmental Impacts |
Designing and marketing sustainable products that minimize environmental impacts during the product-use phase and that meet evolving customer needs. |
Product Innovation |
Development of innovative new products and services to improve customer experience and performance, supporting AMG’s top-line growth and differentiation. |
Product Quality & Safety |
Management of product design and production to ensure products meet specifications and customer expectations. Creations of products that are safe for their intended and likely uses. |
Throughout this report, we detail our management approach and key metrics for measuring performance across our material topics.
External Initiatives
Extractive Industries Transparency Initiative
AMG continues its support of the Extractive Industries Transparency Initiative (EITI), a global initiative to improve governance in resource-rich countries through the verification and full publication of Company payments and government revenues from oil, gas, and mining. EITI works to build multi-stakeholder partnerships in developing countries to increase the accountability of governments. Over 30 countries have now committed to the EITI principles and criteria. As of today, AMG has one extractive operation in an EITI-implementing country: Mozambique.
United Nations Global Compact
AMG is an active participant in the United Nations Global Compact. The Global Compact is a strategic policy initiative for businesses that, like AMG, are dedicated to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, the environment, and anti-corruption. In 2009, the AMG Management Board approved its commitment to the Global Compact and its intent to support the 10 principles. AMG reaffirms its support and submits its Communication on Progress annually.
GRI Content Index
General Disclosures
GRI STANDARD | DISCLOSURE | LOCATION / DIRECT ANSWER | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ORGANIZATIONAL PROFILE | |||||||||||||||
GRI 102: General Disclosures | 102-1 Name of the organization | AMG ADVANCED METALLURGICAL GROUP N.V. | |||||||||||||
102-2 Activities, brands, products and services | About AMG & Our Report, AMG Value Chain | ||||||||||||||
102-3 Location of headquarters | Amsterdam, Netherlands | ||||||||||||||
102-4 Location of operations | About AMG & Our Report | ||||||||||||||
102-5 Ownership and legal form | AMG is a publicly traded company under the Euronext: AMG | ||||||||||||||
102-6 Markets served | About AMG & Our Report, AMG Market Focus | ||||||||||||||
102-7 Scale of the organization | About AMG & Our Report, AMG 2020 Annual Report, pages 6–7, 44 | ||||||||||||||
102-8 Information on employees and other workers | About AMG & Our Report, Diversity & Inclusion, AMG 2020 Annual Report, page 47 Employees by Region table included below.
|
||||||||||||||
102-9 Supply chain | Stakeholder Engagement & Materiality | ||||||||||||||
102-10 Significant changes to the organization and its supply chain | There were no significant changes to the organization or supply chain. | ||||||||||||||
102-11 Precautionary Principle or approach | AMG’s approach to risk management approach follows with the precautionary principle. | ||||||||||||||
102-12 External initiatives | External Initiatives | ||||||||||||||
STRATEGY | |||||||||||||||
102-14 Statement from senior decision-maker | CEO Letter | ||||||||||||||
ETHICS & INTEGRITY | |||||||||||||||
102-16 Values, principles, standards and norms of behavior | CEO Letter, Business Ethics, Risk Management | ||||||||||||||
102-17 Mechanisms for advice and concerns about ethics | Business Ethics, Compliance | ||||||||||||||
GOVERNANCE | |||||||||||||||
102-18 Governance structure | Sustainability Strategy & Governance, Corporate Governance | ||||||||||||||
102-39 Compensation Ratio | Business Ethics | ||||||||||||||
STAKEHOLDER ENGAGEMENT | |||||||||||||||
102-40 List of stakeholder groups | Stakeholder Engagement & Materiality | ||||||||||||||
102-41 Collective bargaining agreements | Percent of AMG employees covered by collective bargaining agreements:
AMG Critical Materials: 67% |
||||||||||||||
102-42 Identifying and selecting stakeholders | Stakeholder Engagement & Materiality | ||||||||||||||
102-43 Approach to stakeholder engagement | Stakeholder Engagement & Materiality | ||||||||||||||
102-44 Key topics and concerns raised | Stakeholder Engagement & Materiality | ||||||||||||||
REPORTING PRACTICES | |||||||||||||||
102-45 Entities included in the consolidated financial statements | AMG 2020 Annual Report, page 68 | ||||||||||||||
102-46 Defining report content and topic Boundaries | Stakeholder Engagement & Materiality | ||||||||||||||
102-47 List of material topics | Stakeholder Engagement & Materiality | ||||||||||||||
102-48 Restatements of information | Beginning in 2019, AMG has included mobile combustion emissions and refrigerant emissions in its Scope 1 GHG emissions results, which provides a more detailed understanding of our GHG footprint. Our 2019 and 2020 data includes full calendar year results from all 33 sites. | ||||||||||||||
102-49 Changes in reporting | In 2020, AMG improved upon our data collection tool by adding a new metric, GRI 405-1—Women in Management. | ||||||||||||||
102-50 Reporting period | Calendar year 2020. | ||||||||||||||
102-51 Date of most recent report | This is AMG’s third sustainability report. | ||||||||||||||
102-52 Reporting cycle | Annual | ||||||||||||||
102-53 Contact point for questions regarding the report | George Parthmer, Vice President of Sustainability, Environment, Health and Safety, global.sustainability@amg-nv.com | ||||||||||||||
102-54 Claims of reporting in accordance with the GRI Standards | This report conforms to the GRI Standards at the core level. | ||||||||||||||
102-55 GRI content index | This table | ||||||||||||||
102-56 External assurance | AMG did not seek external assurance on the 2020 sustainability report. |
Specific Disclosures
GRI STANDARD | DISCLOSURE | LOCATION / DIRECT ANSWER |
---|---|---|
ECONOMIC | ||
ANTI-CORRUPTION | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Business Ethics | |
103-3 Evaluation of the management approach | Business Ethics | |
GRI 205: Anti-corruption | 205-2 Communication and training about anti-corruption policies and procedures | Business Ethics, Sustainability Performance Dashboard |
ENVIRONMENTAL | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Environment | |
103-3 Evaluation of the management approach | Environment | |
RESOURCE EFFICIENCY | ||
GRI 301: Materials | Indicator: Percent of Revenue for ECO2RP |
Resource Efficiency, Customer Environmental Impacts, Sustainability Performance Dashboard |
ENERGY | ||
GRI 302: Energy | 302-1 Energy consumption within the organization | Energy, Sustainability Performance Dashboard |
302-2 Energy consumption outside of the organization | Energy, Sustainability Performance Dashboard | |
WATER | ||
GRI 303: Water | 303-4 Water discharge | Water |
303-5 Water consumption | Water, Sustainability Performance Dashboard | |
EMISSIONS | ||
GRI 305: Emissions | 305-1 Direct (Scope 1) GHG emissions | Air Emissions, Sustainability Performance Dashboard |
305-2 Indirect (Scope 2) GHG emissions | Air Emissions, Sustainability Performance Dashboard | |
305-4 GHG emissions intensity | Air Emissions | |
305-5 Reduction of GHG emissions | Air Emissions | |
305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions | Air Emissions, Sustainability Performance Dashboard | |
WASTE | ||
GRI 306: Waste | 306-3 Waste generated | Sustainability Performance Dashboard |
306-4 Waste diverted from disposal | Sustainability Performance Dashboard | |
306-5 Waste directed to disposal | Sustainability Performance Dashboard | |
ENVIRONMENTAL COMPLIANCE | ||
GRI 307: Environmental Compliance | 307-1 Non-compliance with envrionmental laws and regulations | Sustainability Performance Dashboard |
SOCIAL | ||
HEALTH & SAFETY | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Health & Safety | |
103-3 Evaluation of the management approach | Health & Safety | |
GRI 403: Occupational Health & Safety | 403-5 Worker training on occupational health and safety | Health & Safety |
403-9 Work-related injuries | Health & Safety, Sustainability Performance Dashboard | |
403-10 Work-related ill health | Health & Safety, Sustainability Performance Dashboard | |
Indicator: Number of OHSAS 18001 & ISO 45001 Certified Facilities | Health & Safety, Sustainability Performance Dashboard | |
DIVERSITY & EQUAL OPPORTUNITY | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Diversity & Inclusion | |
103-3 Evaluation of the management approach | Diversity & Inclusion | |
GRI 405: Diversity and Equal Opportunity | 405-1 Diversity of governance bodies and employees | Diversity & Inclusion, Sustainability Performance Dashboard |
LOCAL COMMUNITIES | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Community Engagement | |
103-3 Evaluation of the management approach | Community Engagement | |
GRI 413: Local Communities | 413-2 Operations with significant actual and potential negative impacts on local communities | Wastewater |
AMG Indicator | Indicator: Sites Where AMG Encourages Local Hiring Practices | Sustainability Performance Dashboard |
RISK MANAGEMENT (INCLUDING SUPPLY CHAIN RISK) | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Risk Management | |
103-3 Evaluation of the management approach | Risk Management | |
GRI 414: Supplier Social Assessment | 414-1 New suppliers that were screened using social criteria | Supplier Conduct Charter |
AMG Indicator | Indicator: Hours Invested in Risk Management Meetings | Risk Management, Sustainability Performance Dashboard |
CUSTOMER ENVIRONMENTAL IMPACTS | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Customer Environmental Impacts | |
103-3 Evaluation of the management approach | Customer Environmental Impacts | |
AMG Indicator | Indicator: CO2 Emissions Avoided | Customer Environmental Impacts, Sustainability Performance Dashboard |
PRODUCT INNOVATION | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Product Innovation | |
103-3 Evaluation of the management approach | Product Innovation | |
AMG Indicator | Indicator: Percent of Revenue for ECO2RP | Resource Efficiency, Customer Environmental Impacts, Sustainability Performance Dashboard |
PRODUCT QUALITY & SAFETY | ||
GRI 103: Management Approach | 103-1 Explanation of the material topic and its Boundary | Stakeholder Engagement & Materiality |
103-2 The management approach and its components | Product Quality & Safety | |
103-3 Evaluation of the management approach | Product Quality & Safety | |
AMG Indicator | Indicator: Number of ISO 9001 certified facilities | Product Quality & Safety, Sustainability Performance Dashboard |