SUSTAINABILITY REPORT 2012 CONTENTS INTRODUCTION 1 PRODUCT RESPONSIBILITY 28 Message from the Chairman 2 R&D Policy 29 Message from the CEO 3 Compliance with National and International Regulations 32 COMPANY PROFILE 5 Complaint Management 34 Overview / Ak-Kim in Brief 5 Customer Satisfaction 34 Brief History of Ak-Kim 6 Brands and Products 8 EMPLOYEES 35 Operational Structure 10 Human Resources Policy 35 Markets Served 11 Employee Profile 35 Operational and Financial Indicators 12 Labor Standards 39 Contribution to the Economy 13 Equal Career Opportunities 39 Recent Developments 14 Social Security 40 AWARDS AND CERTIFICATES 16 Social Benefits 41 About the Report 17 Trainings 41 Corporate Governance 19 Open Door Policy 42 Board of Directors 19 Employee Satisfaction 43 Approach to Sustainability 20 Occupational Health and Safety Policy 43 Board Members 20 Occupational Health and Safety Performance 44 VISION AND CORPORATE PRINCIPLES 21 ENVIRONMENT 46 APPROACH TO SUSTAINABILITY 22 Environmental Policy 47 Ak-Kim Management Systems 24 Management of Environmental Aspects 48 Approach to Management 25 COMMUNITY INVESTMENT 58 Human Rights 26 Anti-Corruption 26 Corporate Social Responsibility Projects 58 Sponsorships in 2012 59 GRI Sustainability Reporting Index 60 Introduction With the aim of achieving the Millennium Development Goals undersigned by the presidents and prime ministers of 189 countries and publicly announced in the year 2000, the United Nations invited private and public institutions all over the world to join the Global Compact. Designed to enable public and private institutions to implement “sustainability” and “corporate responsibility” operations in universally common standards and to achieve global improvements in the issues of human rights, labor, environment and anti-corruption, the Compact has been signed by more than 10,000 corporate participants and stakeholders in over 145 countries. The signatories publicly declare that they will voluntarily regard 10 principles of the Compact while establishing their operations and strategies and will share such initiatives with the public in a transparent way. In full awareness of the fact that in a world where globalization unite the fates of all human beings in all areas only transparent companies can succeed, Ak-Kim Kimya San. ve Tic. A.Ş. became a stakeholder of the Global Compact on December 13th, 2007. The Company proudly fulfills its responsibility of corporate citizenship and hereby presents its 3rd Communication of Progress to its stakeholders. This report contains information on the operations and performance of Ak-Kim Kimya San. ve Tic. A.Ş. in terms of the Global Compact. 1 Message from the Chairman Dear Stakeholders, We, as Ak-Kim, proudly present our 3rd Communication of Progress covering our operations performed in accordance with the Global Compact. Our report includes our Company’s approach to the Global Compact, our related operations, as well as our strategic goals for 2012-2017. Following our main sponsorship for the Marmara Environmental Monitoring (MAREM) project as a part of our activities for the “International Year of Chemistry” in 2011, we continued our support to the project in 2012 as well. We, as Ak-Kim, also maintained our support for the nature and sustainable resources with a variety of activities. In addition to these, our contributions to universities included sponsorships in the 10th Chemical Physics Congress of TOBB University of Economics and Technology, 26th National Chemistry Congress of Muğla University, and Business Trip event of Koç University. In full awareness of our responsibility as a pioneering institution in the Turkish chemicals industry, we continue intense efforts to expand environmental, social, and ethical operations and to encourage all stakeholders - from customers to business partners - to adopt this approach. We aim to maintain our commitment to achieving globally sustainable development in the coming years. Yours sincerely, ALİ R. DİNÇKÖK Chairman of the Board of Directors Managing Director’s Message Valued Stakeholders, As Ak-Kim, we are proud to present the “Third Progress Report” as part of our work within the United Nations Global Compact. We improved and updated our report during 2013, and expanded its scope in accordance with stakeholder expectations and international standards pursuant to the globally-accepted GRI Sustainability Reporting Guidelines. The report presents a transparent depiction of the environmental, social and economic initiatives and performance of Ak-Kim. We will continue to pursue the “Triple Responsibility” we committed to in 1993, and make the protection of human life, the environment, and natural resources a priority into all the stages of everything that we do. Ak-Kim’s periodical five-year Strategic Plan was revised for the 2012 - 2017 term by senior management with input from our employees, and we have agreed that the most outstanding issue among all was “sustainability.” We acted on this, and throughout 2012 we contributed to the implementation of efforts that will enhance the awareness and practice of sustainability in the chemical industry. Our support will continue to grow. The implementation involved projects within the company, and awareness campaigns and sponsorships outside the company. Ak-Kim’s commitment to sustainability meant that we would provide support to a variety of projects in this field. For example, during 2012 and 2013, we provided support to the Marmara Environmental Monitoring Project (MAREM), which is not only one of the longest marine monitoring projects in the world, but also aims to provide comprehensive insight into the level of pollution in the Marmara Sea. We were also a diamond sponsor of the IUPAC 44th World Chemistry Congress held in Istanbul in 2013. Sustainability has been a part of our everyday work at the company as well. The former Akal-4 factory site of 10,800 square meters was transformed into a storage facility at an investment cost of 3 million US dollars to ensure that storage and shipment activities at each and every Ak-Kim production facility is compliant, safe and effective, while reducing costs and mitigating logistics risks within the plant. Now, packaged chemical products manufactured and used at Ak-Kim are stored at our new facility and shipped from here when required. Furthermore, we established a continuous communication network with our dealers and started to organize events that will enhance communication and maximize Ak-Kim’s reputation. In celebration of our 35th year, we held a dealers summit in Cyprus in 2012, where dealers found the opportunity to spend time with sales teams, voicing their expectations. Based on the positive feedback we received after the event, we decided to hold regular summits to maintain strong working relationships, and to achieve efficiency and sustainability. The “R&D Restructuring” effort initiated in 2012 culminated in the revision of the existing R&D policy and the establishment of R&D Vision, Mission and Strategies. Adopting the vision to “Become a leading R&D center that produces knowhow,” we took a number of important steps. Our cutting-edge new R&D facility was commissioned in June 2013. The new facility was officially recognized as an R&D Center by the Ministry of Science, Industry and Technology on October 25, 2013. Our R&D efforts led to the development of 30 new products in the performance chemicals category as of September 2013. We will continue to develop new products in accordance with our targets for this year until the end of 2013. We remain committed to the support of the chemical industry of Turkey. Being well aware that we are among the pioneers of the chemical industry in Turkey, we will continue to lead the industry by example. Best regards, M. FATİH TANVERDİ Managing Director & Board Member COMPANY PROFILE: OVERVIEW / AK-KİM IN BRIEF As a subsidiary of Akkök Group - one of the most deep-rooted private sector institutions in Turkey - Ak-Kim Kimya San. ve Tic. A.Ş. produces inorganic and organic chemical agents, textile auxiliaries, pulp and paper chemicals, concrete agents, and construction chemicals in its two high-tech facilities established in Yalova and Çerkezköy on a total area of 295,776 square meters. As a result of its long-lasting and mutually respectful relationship with its suppliers and customers alike, Ak-Kim continuously improves its strong competitive capacity in the market. Thanks to its wide product range, the company provides raw materials for many vital sectors such as textiles, metals, food, cleaning, water treatment, paper, and pharmaceuticals. Ak-Kim operates in both domestic and international markets, providing a wide range of products. Domestic market shares of Ak-Kim products range from 30 to 100%. Amounting to 20% of the company’s total sales, export operations are performed in more than 55 countries in different regions. 5 BRIEF HISTORY OF AK-KİM 1977 1988 Ak-Kim Kimya San. ve Tic. A.Ş. was established and started production After operating in Çerkezköy for 5 years, due to changing and developing operations with sulphur dioxide. By the end of the year, its production conditions, the Textile Softener and Wetting Agent facility was moved capacity reached 1,000 tons. to the Textile Auxiliaries (Teksyar) facility built in Yalova in January 1988. 1979 1989 Çerkezköy Factory, in the Organized Industrial Zone was established. Aktem Distribution Company was established for more effective marketing of Ak-Kim products. 1980 1990 Çerkezköy facility that has a sodium metabisulphite production capacity of 1,100 tons / year started its operations in April. Ak-Kim started to produce dimethylformamide (DMF). 1981 1992 Ak-Kim started to produce persulphate, which is a very significant Ak-Kim put the Chlorine-Alkaline Facility into operation in order to include chemical for domestic industry, in its Çerkezköy facility. chlorine, sodium hydroxide, sodium hypochloride, and hydrochloric acid into its product range. 1982 1993 Textile Softener and Wetting Agent facility was established and started its productions in Çerkezköy. Demand from textile factories was met Ak-Kim undersigned the Responsible Care Program and became one of with palette and liquid forms. the first Turkish companies to implement it. 1984 1995 Ak-Kim started to produce sodiumthiosulphate and Ferric III chloride. Ak-Kim was certified with ISO 9001:1994 Quality Management System. 1986 Ak-Kim started production of dimethylacetamide (DMAC). 1998 2010 The Company was selected the “Best Supplier of the Year” by Beksa. At the “Petkim Quality Day and 45th Anniversary” event, Ak-Kim received Ak-Kim Hydrogen Peroxide facility started production. “The Best Performing Supplier of 2009” award in “Localization” category. In parallel with the change in the corporate identity, the Company logo 2002 was renewed. The new logo as a whole demonstrated the change as well Attaching great importance to technology since its inception, Ak-Kim as the dynamic and energetic structure of Ak-Kim whereas its multicolor started to export its know-how and technology. design symbolized the diverse product range and creativity. 2004 2011 Ak-Kim was certified with ISO 14001:1996 Environmental Management With an additional investment, Ak-Kim increased the production capacity of System. sodium metabisulphite from 80 tons / day to 200 tons / day. A new sodium metabisulphite facility was established with the capacity of 40,000 tons / year. 2005 Production capacity of sodium hypochloride and hydrochloric acid facilities Ak-Kim started to produce pulp & paper chemicals. was increased. As a result of R&D operations, more than 80 new products were launched. Ak-Kim attended the ITMA Fair as the first of its international 2006 experiences. Material Safety Data Sheets of 160 products were updated. As another important step in expanding the product range, Ak-Kim Kapachim / Greece hydrochloric acid production facility was completed Sodium Percarbonate (SPC) facility became operational in November and delivered. Quality, Environment, and Occupational Health and Safety 2006. (ISO 9001-14001 and OHSAS 18001) Management System Certificates were updated. Ak-Kim Çerkezköy persulphate facility obtained “Environmental 2007 License”. Ak-Kim R&D Vision, Mission, and Strategies were set. As an indicator of its approach to sustainability and corporate citizenship, 2012 Ak-Kim signed the United Nations Global Compact. The Company started to produce concrete admixtures. Adwan-Algeria chlorine alkaline facility was put into operation and a new Engineering and Procurement Service Contract was signed with the same 2009 company for building a Ferric 3 chloride facility with a production capacity Ak-Kim was certified with OHSAS 18001:2007 Occupational Health and of 90 tons / day. “MCAA facility modernization” was completed and put Safety Management System. The Company received “The Best Supplier” into operation. Logistics and Storage Center was established. award from Cargill. Quality Control Lab was modernized. BRANDS AND PRODUCTS Ak-Kim performs its production processes in factories that run in full compliance with international quality standards and achieve an annual capacity of 600,000 tons. The Company is the first in Turkey to produce more than 500 different chemicals (including but not limited to sodium metabisulphate, ammonium persulphate, potassium persulphate, monochloric acetic acid, dimethylacethamide, hydrogen peroxide, and sodium percarbonate) that require advanced technology and have importance in domestic industry solely based upon the expertise of its own engineering team. Products Basic Chemicals Hydrogen Peroxide Facility Chlorine-Alkaline Facility Organic Facilities Persulphate Facilities Salt Facilities Hydrogen Peroxide Hydrochloric Acid Acetic Acid Ammonium Persulphate Monochloro Acetic Acid Sodium Percarbonate Chlorine Dimethylacetamide Potassium Persulphate Sodium Metabisulphite Sodium Hydroxide Dimethylformamide Sodium Persulphate Sodium Thiosulphate (Caustic Soda) Mono-Di-Tri Methylamine Trimethylaminehydrochloride Sodium Hypochloride Performance Chemicals Textile Chemicals Cement Grinding, Concrete Admixtures Pulp & Paper and Water Treatment and Construction Chemicals Finishing Agents Waste Water Treatment Chemicals Dye and Printing Auxiliaries Concrete Admixtures Ferric-3 Chloride Spinning and Conning Oils Concrete Auxiliaries Pool Chemicals Pretreatment Auxiliaries Cement Grinding Chemicals Drinking Water Treatment Chemicals Washing Agents Carbon Fiber Reinforcing Systems Geothermal Chemicals Softeners Shotcrete Admixtures Paper Chemicals Boiler and Cooling Tower Treatment Chemicals Polyaluminium Chloride Chemical Cleaners Reverse Osmosis Chemicals