For goals and planned key actions for 2024 and beyond, please refer to the full Combined Annual Report 2023.
Good governance creates a system of management and control that is accountable, transparent and geared to creating sustainable, long-term value. It therefore serves the needs of all stakeholders who are interested in or impacted by Borealis, including employees, customers, suppliers, governments, capital markets and the general public. The BMS documents Borealis’ approach to governance. Managing risks and opportunities is integral to the BMS, to ensure the Group continuously improves and identifies mitigating actions where needed.
The Group’s governance is supported by compliance with industry-accepted standards, such as ISO. Being certified to these standards provides independent confirmation that Borealis applies best practices in its daily activities.
Embedding ISO standards also requires Borealis to continuously improve, so it generates more value for customers and other stakeholders.
The Supervisory Board (SVB) of Borealis AG consists of five members representing Borealis’ shareholders, with three members from OMV and two from ADNOC. The members are elected by the Annual General Meeting, with the SVB then electing a chairperson and a vice chairperson. The SVB has two subcommittees, the Remuneration Committee and the Audit Committee.
The SVB supervises Borealis’ management, approves the Group’s strategy, business plan and policies, and appoints the members of the Executive Board, including the Chief Executive Officer (CEO). Furthermore, it exercises powers and authorities under Austrian law, in particular, the Austrian Stock Corporation Act (Aktiengesetz), the Articles of Association of Borealis AG and the Rules of Procedure. Under the Austrian Stock Corporation Act, SVB members must not:
SVB members must disclose potential conflicts of interest immediately to the chairperson of the SVB. Possible consequences, to be decided on a case-by-case basis, can vary from banning the individual from participation, abstention from voting, restrictions on information sharing and transferring the matter to the SVB’s subcommittees. In 2023, the SVB held five ordinary and one extraordinary meeting. Neither the SVB, the Executive Board nor the Audit Committee members held shares in Borealis or the majority of the shares in a holding company, thereby preventing any related conflicts of interest.
The Executive Board makes the decisions and takes the measures necessary to conduct Borealis’ business, under its own responsibility. The Executive Board consists of five members, one female (20%) and four males (80%), the members’ ages range from 48 to 60, with one member in the 30 to 50 age group (20%) and four (80%) above 50 years old. Two nationalities are represented on the Executive Board. 1)
The Executive Board’s tasks include, without limitation:
The Executive Board must also immediately inform the SVB and the shareholders of all situations which are of material importance for the Group’s profitability or liquidity.
Each Executive Board member shall disclose to the SVB and the other Executive Board members any material personal interests in transactions of the Company or Group companies, as well as any other conflicts of interests. Should any matter to be decided in an Executive Board meeting refer to an Executive Board member’s personal or economic interests, the relevant member is excluded from exercising their voting right and the matter shall be decided by the non-conflicted members.
The Executive Board meets at least 12 times a year, in an extended monthly meeting. The Executive Board also holds shorter, biweekly approval sessions and meets on an ad-hoc basis, if required.
1) The composition of the Executive Board changed with the resignation of Lucrèce Foufopoulos-De Ridder per December 31, 2023 and the appointment of Arnold Craig as of February 1, 2024. The Executive Board now consists of five males (100%), the members' ages range from 48–60, with one member in the 30 to 50 age group (20%) and four (80%) above 50 years old. Three nationalities are represented.
For more details, please refer to the full Combined Annual Report 2023.
The Supervisory Board has established Remuneration and Audit Committees and delegated the respective responsibilities to them.
The Remuneration Committee consists of at least three SVB members, with two being nominated by OMV and one by ADNOC. It assists the SVB in fulfilling its oversight responsibilities of certain matters concerning the Executive Board members, as outlined in the Remuneration Committee Charter. The Remuneration Committee is also responsible for approving remuneration processes for Borealis as a whole.
The Remuneration Committee is authorized to deal with all matters concerning the Executive Board members’ remuneration and employment contracts, taking into account input from shareholders and remuneration consultants. It is specifically authorized to approve, amend and terminate employment contracts with Executive Board members, as well as to decide on and approve:
The Remuneration Committee is also authorized to approve any remuneration project or program which proposes a major change to the Group’s remuneration principles, such as:
The Remuneration Committee held four ordinary meetings and one extraordinary meeting in 2023
The Audit Committee consists of at least three SVB members, who are appointed by the entire SVB. Each Audit Committee member must be independent, meaning that they cannot be a member of, or in any way take part in, Borealis’ day-to-day management.
The Audit Committee assists the SVB in fulfilling its oversight responsibilities, as outlined in the Audit Committee Charter. This includes monitoring:
The Audit Committee held three ordinary meetings in 2023.
To ensure sound governance and continuous improvement in key ESG areas, Borealis has set up cross-functional committees, councils and other functions, which are overseen by Executive Board members.
The Internal Audit Coordination Forum is headed by the Director Internal Audit. It coordinates and aligns the approach for audits and issues a consolidated audit program. The Forum decides on the timing and sequence of audits in the locations and the resources assigned to them.
The permanent members of the Forum are:
The Ethics Council is sponsored by the CEO and the General Counsel and chaired by the Group Compliance & Ethics Officer. It consists of senior leaders or senior representatives from Legal, Internal Audit, HSE and People & Culture, as well as from each business group. The Council aligns the Group’s approach to ethics and provides updates on compliance and ethics matters, to ensure consistent Group-wide ethical standards. It also has the exclusive right to decide on important ethics-related matters, such as disciplinary actions, high-value sponsorships and conflicts of interest, which are binding for the Group.
The Group’s Compliance & Ethics function has both preventative and controlling roles. It looks to prevent infringements of laws, ethical principles and compliance matters, and to mitigate risk, react to issues and implement lessons learned. The function is headed by the Group Compliance & Ethics Officer, who reports to the VP Legal & Compliance and also has a reporting line to the Audit Committee, which receives an annual report on compliance and ethics issues. In addition, Group Compliance & Ethics provides regular ethics-related information and updates to the CEO and the Audit Committee. This includes major new projects, substantiated unethical conduct, updates on training conducted and any other major developments.
The Group Compliance & Ethics Officer is supported by a team of compliance managers and a network of more than 60 Ethics Ambassadors. The Ethics Ambassador network is a key tool for promoting and strengthening Borealis’ ethics culture. The network has global coverage, with one ambassador at almost every location and across all hierarchy levels.
Borealis’ Group Compliance & Ethics function regularly exchanges information with its counterparts at the Group’s owners, OMV and ADNOC. The function also consistently seeks guidance and advice from the Executive Board and the Audit Committee, to further enhance the effectiveness of the Compliance Management System.
The Responsible Care® Committee was renamed to Sustainability & Responsible Care Committee in 2023, following the broadening of its remit to reflect the wider context of sustainability-related topics. The Committee is sponsored by the CEO and the Director Sustainability & Public Affairs became its chair in 2023. Its permanent members include all of the Executive Board members and the VP HSEQ. The Committee’s responsibilities include overseeing the implementation of the Group’s Responsible Care Policy. Borealis has committed itself to advancing sustainable development, assessing the positive and negative consequences of its activities on People, Planet and Profit, and taking responsible decisions. The Responsible Care Policy sets the guiding principles for implementing these standards.
The Committee now also covers ESG governance, target setting and performance management of ESG-related indicators, as well as the implementation of the sustainability elements of the Strategy 2030. In addition, it monitors new ESG-related regulatory requirements (such as the EU taxonomy, Corporate Sustainability Reporting Directive and European Sustainability Reporting Standards) and decides on the implementation approach.
In 2022, Borealis established a Climate Strategy Coordination Team to drive its transformation to a net-zero business. The team is led by the Director Sustainability & Public Affairs, with the CEO as sponsor and the Executive Board as its Steering Committee. As sustainability is a core part of the Group Strategy, the topic is integrated into almost all areas of the organization. The team is therefore cross-functional and brings together expertise and initiatives from throughout the Group in a focused way. The approach also fosters transparency and ownership, to enable Borealis to effectively execute its climate strategy. The Climate Strategy Coordination Team regularly reports progress to the Sustainability & Responsible Care Committee.
The Product Stewardship Council is responsible for managing product safety aspects. It is chaired by the VP HSEQ and brings together experts from across the Group, including areas such as Product Stewardship, Sustainability & Public Affairs, Ethics, Innovation & Technology and operations, as well as all of Borealis’ business sectors. This range of competencies ensures holistic risk assessments that consider market needs, legal and technological requirements and stakeholder views. The Council meets monthly and reports to the Sustainability & Responsible Care Committee. It defines and executes the Group’s strategy for dealing with hazardous substances and identifying and addressing the biggest risks and opportunities that result from using or substituting hazardous substances. The team’s decisions impact the innovation project portfolio, the Borealis Banned Substances List and existing uses of substances.
The Quality Committee comprises all the Executive Board members. It is sponsored by the CEO and chaired by the VP HSEQ. The Committee sets the Group’s quality management priorities and drives implementation of all quality management programs and initiatives. It also evaluates the BMS’s effectiveness and efficiency each year during the management review and develops continuous improvement actions. In particular, the Committee discusses market requirements, customer feedback and changes to industry standards as input for improvement programs.
The EVP Base Chemicals and Operations chairs the Group-level Process Safety Committee. The Committee’s members are directors and departmental leaders from all the relevant operational streams: Group HSEQ, Manufacturing Excellence, Operations Polyolefins, Operations Base Chemicals and Project & Expert Support. Each production location also has its own HSE Assurance Team, chaired by a nominee appointed by local management. Its members come from different areas within the location, to ensure cross-learning and a link to Group developments.
Borealis’ corporate governance model is based on its company values (We Care, We are Curious and We Progress™) and is supported by five governance principles:
The BMS is the Group’s governance framework. It applies to all Borealis entities, subsidiaries and affiliates, and defines Borealis’ standards and ways of working.
The Group BMS contains all Group-controlled documents and is steered by the Group’s values, mission and vision, the governance principles described above, and the need to define clear roles and responsibilities for each employee. Borealis’ locations also have Local Management Systems (LBMS), which apply at a particular location. Together, the Group BMS and LBMS establish the basic rules of compliance for Borealis.
The BMS is set up as a layered pyramid of documents, with the hierarchy containing the following categories:
Controlled documents in the LBMS are revised at least every five years. Any new Group regulation or change to an existing regulation requires Borealis’ involvement and approval before it becomes obligatory. Approvals need to be given by the document issuer, document owner and document approver related to the subject covered by the document. This ensures Borealis maintains its independence as a company.
The Authority Schedule defines how Borealis delegates authority in all business and functional areas and establishes the approval levels for senior management within key processes. The Authority Schedule is a controlled document in the BMS and any material change to it must be approved by the CEO as the document owner, the CFO as the document issuer, the Executive Board and subsequently by the SVB.
Compliance with the BMS is monitored at multiple levels and by various stakeholders:
Borealis has a system of internal controls, which is in line with EU regulations and owned by the CEO and senior management. These controls assess the robustness of the Group’s systems and processes, and support the monitoring, management and reporting of related risks. Internal controls are defined for core processes and require control owners to complete self-assessments.
Borealis’ Internal Audit function follows the Institute of Internal Auditors’ guidelines. In 2023, Internal Audit performed more than 20 audits, special investigations and internal control reviews for key processes. The 2023 audits encompassed: compliance; operations; strategic and financial topics including risk management, ethics and management control; sustainability; circularity; inventory management; information technology and security management; procurement; strategy execution; project management and audits of joint ventures; and innovation. Internal Audit also conducted prevention, risk management and process safety-related audits at Borealis’ locations.
Borealis’ risk management approach is based on the core objectives of identifying, assessing and managing risks that could impact its economic performance, the environment or society, as well as understanding how the explicit consideration of risk may affect the Group’s strategy and performance. Risk management is therefore designed to enrich dialogue with internal and external stakeholders and contributes to achieving Borealis’ long-term strategy and short-term goals, as well supporting its sustainability journey.
Enterprise Risk Management (ERM) also enhances Borealis’ enterprise resilience, which is the ability to anticipate and respond to change. The Treasury & Funding department drives the Group-wide ERM process, which identifies, assesses and reports both financial and non-financial risks. Borealis continuously updates the ERM process, to ensure compliance with developing regulatory reporting standards. The process also helps the Group to assess business opportunities systematically, by considering financial, market, operational, tactical, strategic and reputational risks.
Borealis’ objective is to deliver value through risk-based management and decision-making, by establishing sound risk management practices in all of its business areas and locations. The Group’s approach is based on a “three lines model”, where the first line is business management, the second line is risk management, and the third line is Internal Audit. Ultimately, each Borealis employee is responsible for managing risk within their own areas of activity.
The CFO owns the Risk Management Policy, ensures compliance with it and is responsible for the Group-wide implementation and execution of sound risk assessment practices. The CFO also chairs the Risk Coach Network, which comprises senior representatives from across the Group.
The Group’s risk management process ensures that all parts of Borealis routinely identify and assess their risks, and develop and implement appropriate mitigating actions. Business units and functions are provided with risk assessment guidelines, procedures and tools, which cover all key risk elements within their business areas. The guidelines allow Borealis to map the risks in its risk landscape, based on their potential business impact and the probability of the risk occurring. The common risk categories are defined in the Risk Management Policy.
Key risks across the Group are periodically discussed at a Group-wide level and consolidated to produce the Group’s overall risk landscape, which is owned by the Executive Board. At least twice a year, the Executive Board reviews the key risks, validates the Group’s risk tolerance levels and risk appetite, monitors the implementation of mitigating actions and ensures that they are integrated into strategic planning. The process starts with risk identification, followed by analysis, evaluation, treatment, reporting and review, through to continuous monitoring of changes to the risk profile.
Twice a year, the Executive Board reports to the SVB on the consolidated Group risk landscape, including the status of mitigating actions. The SVB reviews the effectiveness of Borealis’ risk management practices and processes, the Group’s risk exposure and the effectiveness of its mitigating actions. The key risks of each business unit and function are owned by their respective EVPs and/or VPs/Directors. They are responsible for continually identifying potential risks and opportunities within their area. The VP Treasury & Funding supports the Group-wide adoption of comprehensive and effective risk management processes and practices, and is responsible for providing training or risk management briefings for senior management, facilitating the risk management process and supporting the Audit Committee in reviewing Borealis’ risk landscape and risk mitigation activities.
Immediate risk escalation is a key element of Borealis’ continuous risk management process, to ensure the Group reacts promptly to any sudden increase in risk exposure. Risk owners are required to report to the relevant EVP when they identify major increases in the business impact or probability of a particular risk, whether caused by internal or external factors. The EVP then reviews the new risk and decides whether escalation to the Executive Board is necessary, to facilitate immediate reprioritization of the mitigation actions. The Executive Board regularly discusses and addresses high-risk issues.
ESG Risk Assessment
In addition to the Group’s regular ERM process, the Sustainability Department has developed a Group-wide assessment process for sustainability risks and opportunities.
During 2023, OMV kicked off an OMV Group-wide ESG risk assessment, alongside a refreshed materiality assessment. This project will be finalized during 2024, with updates of the BMS process and instruction documents and integration into the ERM system.
ESG risks and opportunities for the most relevant Borealis business areas have been identified and qualitatively and quantitatively assessed in terms of their probability, time horizon (short-term, mid-term, long-term), financial impact (high, severe, major, significant, considerable, moderate, minor, negligible) and classified according to the NaDiVeG and TCFD frameworks.
Borealis’ expert departments also identified risks and opportunities, by monitoring the external environment through continuous stakeholder dialogue, desk research of industry reports, peer analysis and topic-related studies.
Over time, around 10% of the documents in the Group BMS had become outdated, mostly as they did not properly address the changes in Borealis’ ownership. In 2023, the Group Quality Team organized an initiative to confirm the owners and issuers of the 600 documents in the Group BMS and guided them to review and republish their documents.
By the end of August 2023, all documents in the Group BMS were accurately published. New booklets were also created for document issuers and owners, revisiting their roles and responsibilities in the BMS.
In addition, the Group Quality Team worked with the OMV Governance Team to reformulate how OMV Regulations are incorporated into the BMS. As of September 1, 2023, new or updated OMV Regulations are introduced to the BMS as externally controlled information, and Borealis conducts and documents a gap assessment regarding future compliance before the Regulation is introduced.
In 2023, Borealis concluded the three-year cycle of ISO certifications for the relevant standards in scope, namely ISO 9001 (Quality), ISO 14001 (Environment), ISO 45001 (Safety) and ISO 50001 (Energy). The Group completed successful surveillance audits, which reported zero major findings.
For IATF 16949, the specific standard for automotive businesses, Borealis successfully completed the first surveillance audit in seven locations and effectively onboarded Taylorsville (US) into the corporate certification scheme.
Enhancing the Quality System through Internal Audit’s internal management system audits are a key mechanism for detecting nonconformities and identifying potential areas of improvement in the Integrated Management System. Borealis takes a multidisciplinary approach, to meet the requirements of ISO 9001, ISO 45001, ISO 14001, ISO 50001 and IATF 16949.
Many professionals across different areas of Borealis’ organization volunteer to act as internal auditors. They are trained and qualified according to defined requirements, to perform auditing work. Group Quality’s Auditors Pool comprises around 125 qualified auditors across the different locations.
From Q3 2022 to Q2 2023, Borealis planned and conducted ten internal system audits at Group level and around 50 audits at the locations. The findings and observations are documented in the tool Synergi and there were lessons learned in every cycle, confirming effective gap closing. In 2023, zero major nonconformities were reported, demonstrating that the Group’s robust internal system audit program ensures the BMS remains compliant and up to date.
Selling in the Indian market can require the Group to meet very specific regulatory requirements. During 2023, Borealis and Borouge have been running a project to obtain the necessary certifications, in close cooperation with the Bureau of Indian Standards (BIS). Borealis’ sites at Porvoo (Finland), Stenungsund (Sweden), Antwerp (Belgium) and Schwechat (Austria), plus the DYM SOLUTION CO., LTD (South Korea), are in scope to become BIS PE certified, which will allow the Group to continue to sell in India under new regulations.
Through collaboration with Product Management, Legal, Group and local leadership, and Borouge, Group Quality supported the planning and successful realization of the audits in Stenungsund and Porvoo in 2023. Audits at the remaining sites in scope are planned for Q1 2024.
For 2024 and beyond, the Group’s governance objectives are to:
