Foreword Management Board

Ladies and Gentlemen

An attitude of responsibility towards the use of resources, towards the environment and towards society is firmly rooted in the DNA of our enterprise. Now operating in the fourth generation, we carry our responsibility far beyond purely business and financial goals. We recognize that we can only assure the stability and performance of the Schmidt + Clemens Group if we act with farsightedness and make use of our leading position to achieve even greater sustainability. This aspiration manifests itself in our enterprise in a wide variety of ways. With our “Ambition 2020” strategy, we already laid down the fundamentals for a value-based organization some six years ago. Fixed elements of this concept include such things as respect, cultural diversity and a sense of responsibility.

We support the 17 sustainable development goals adopted by the United Nations in 2015 in its Agenda 2030, and have accordingly established responsibility for the environment, climate and society among the S+C corporate principles. As the world market leader with coil systems for use in applications in the petrochemical industry, we are already contributing to a better future through innovative materials, improved processes and optimized solutions. Collaborative relationships with our suppliers, the development of sustainable products, protection of the climate and the building of global partnerships are at the heart of our activities. To achieve these goals, we have developed a supplier code, further strengthened our innovativeness with our INNOVATION NOW. campaign, and expanded our research and development efforts. A further aspect of this all-embracing approach is credible, truthful and transparent communication. We are constantly striving to improve the energy efficiency of our S+C production sites worldwide.

It is already clear that our activities will be influenced even far more extensively by environmental and social factors than they are today. Whether climate change or the Coronavirus pandemic – current events are demonstrating just how closely interlinked the world is and how significant even small changes can be. We are facing great challenges. Therefore, we are working every day on moving a further step forward towards our goals. How much progress we have already made along this way can be seen in detail from our Sustainability Report, which we are now publishing here for the first time in this form.

As a family-owned business, the notion of sustainability holds a fixed place in the organization of S+C.

Economy, ecology, and social factors – they are the three keys to sustainable corporate management at S+C, and also the compass by which the whole organization of the enterprise is guided. Dominic Otte, Managing Director Production & Engineering/COO, allows us to take a look behind the scenes, and outlines the structures at S+C:

“The S+C value system is built on a strong foundation and a long history. We live today in a time of rapid change with a high level of dynamism. As a family-owned business, we are able to meet these challenges, but at the same time take a long view. After all, we are not out to double the value of the business within the space of the next three years, but to pass on a sound enterprise to the next generation. That is a good, enduring basis for sustainable development.

Our values are correspondingly firmly integrated in the strategic and operating business. S+C is the world market leader in coil systems for the petrochemical industry, and we also hold a key position in numerous other markets. That is only possible with an organization that is clearly defined and consistent from end to end. What that also means is that sustainability is an overall process, beginning with procurement, continuing with fair working conditions and also including long-term relationships with suppliers. In all areas of production, we are constantly optimising our processes, with the aim of using ever less resources and with a major focus on waste avoidance and material recycling.

In order to act sustainably, we have laid down fixed standards within our organization. One example of this is our value and appraisal system known as SCAMPI , in which our service orientation is also firmly anchored. The focus there is oncustomer relationships, with internal and external partners and their concerns standing at the center of our attention. It is also reflected in our sale and marketing activities, which are geared not to quick wins but to long-term relationships and partnerships. This aspiration is driven by a body of employees with a sense of proactive involvement and a commitment to constant further development.

A vehicle for the many ideas of our employees is our new “INNOVATION NOW.” portal. Here, whether products and services, processes, or matters of environmental protection or occupational health and safety are concerned – everything focuses on solutions aimed at optimizing our workplace still further and making it even more sustainable.

The seriousness of our commitment to protecting the environment even more strongly and building better working conditions is documented for the first time in this sustainability report. We have already achieved a great deal, but are still only just at the beginning. Sustained development is a task for the long term. We take up this challenge, and will not tire of striving for solutions for a better tomorrow. In the future, we will review what we have achieved together with our managers in an annual audit.”

S+C saves resources: on land, on sea, and in the air.

Statistically speaking, one ton of airfreight from Cologne/Germany to Kuala Lumpur in Malaysia generates almost 6.5 times as much CO₂ as transport would by ship. This is a magnitude that really makes you stop and think, and casts even more doubt on the need for such very much greater speed. “The last few years have seen a marked change in thinking at S+C. We have reduced our airfreight volume from 670 metric tons in 2014 to 170 tons in 2019, and so also minimized our carbon footprint,” Dirk Reimann, Head of Central Purchasing We also expect our suppliers to comply with print,” Dirk Reimann, Head of Central Purchasing & Logistics, points out.

For S+C, operating globally means that sustainability does not end at the gateway from the headquarters site. One of the ongoing challenges is to integrate the international operating locations and sales partners into a comprehensive, harmonized logistical process and regularly adjust the supply chains. “The logistics industry is altogether in a process of change. Digital transport platforms, new strong competitors, autonomous driving and sustainable solutions are generating strong momentum. We therefore have to continually review our requirements and try out new possibilities so as not to leave any potential for sustainable development unused,” Reimann continues.

Measured by our own standards.
We also expect our suppliers to comply with sustainable development standards. Our certified freight forwarders are actively working on further reducing the level of CO₂ output arising from shipping. In some cases, they have already switched successfully to the use of biofuel. We also pay attention to ensuring that shipping lines comply with the sulfur emission limits stipulated by the International Marine Organization (IMO).

Road transport is mostly handled by modern trucks that meet the EURO 6 standard. Freightforwarders and carriers working with S+C for the first time are audited in respect of environmental certification and sustainable development programs. One of the declared goals is to ensure that as many freight journeys as possible are CO₂ - neutral. At the present time, more than 70 percent of the contracted freight forwarders are certified to ISO 14001 or equivalent standards. Dirk Reimann is a firm believer in the S+C strategy: “Logistics is an important lever where sustainability is concerned. We are well aware that more environmental protection can give rise to increased costs or reduced flexibility. However, we try to keep these effects as low as possible through new processes or by consolidating shipments.

Always keeping track.
Sustainability also plays a dominant role in the internal logistics. For the most part, renewable raw materials are used as packaging material, and wherever possible, plastic or metal containers are constantly reused. Crate stores, for example, mean that wooden crates can be reused. Crate stores, for example, mean that wooden crates can be reused. “Our crate markings manage without additional foil. We print everything directly onto weatherproof foil paper. This allows us to avoid additional waste,” Dirk Reimann states. “Sustainability is very much a matter of detail, and for us, only making electricity savings is not sufficient.”

Innovative components in industrial furnace construction are good from the economics of operation and more importantly from the environment perspective.

The requirements that industrial furnaces are expected to fulfill are ever more demanding. Increased performance, higher temperatures and rising demands in terms of product quality – the direction is clear. In situations of this kind,environmental aspects can  easily be pushed into the background. However, that need not be the case, as is demonstrated by a project at S+C:

The company’s Special Products division convinced a furnace operator to switch fromwater-cooled furnace rolls to dry rolls made from Centralloy® 60 HT R. This patented special alloy from S+C is suitable for applications up to a service temperature of 1250°C. The improved alloy functionality enables extension in roll life, improved wear resistance as well as reduced energy consumption. Water-cooled rolls lead to major loss of heat, which has to be compensated by using additional fossil energy as fuel. This not only results into a high rise of energy costs but also causes release of large volume of greenhou- se gas i. e. CO₂. A detailed analysis of the change in furnace rolls from water-cooled to dry ones reveals the full scale of the savings. The annual natural gas consumption fell by around 35 percent, which also means a cut in the energy costs of around a third, for the complete furnace installation with a capacity of 4 million tons per year. Even after taking the higher procurement costs of the dry rolls into account, the savings amount to between 1.8 and 2.5 million dollars per year. Add the fact that the Centralloy® 60 HT R rollers are able to increase the service life by up to 125 percent, i. e. to more than double it, also makes the cost calculation interesting from the maintenance point of view. Dry rolls present a positive picture in all aspects: the raw material consumption is already lower at the production stage than is the case for conventional watercooled rolls, and they have the further benefit of lower energy input. Moreover, this is not only good for the environment, but also from the economic standpoint.

“This project is a typical example of our regular day-to-day business. The optimization of heatresistant components for longer service life and greater sustainability is one of the principal demands of today’s customers, in relation to both: new plants and the revamping of existing ones. When advising customers, our core task is to take into due account all the key aspects involved, such as application temperatures, furnace atmospheres, heating/cooling rates, product quality, anticipated service life and choice of materials. We are also certified to ISO 50001:2018 for energy management systems. This means that energy savings potential must already be identified and acted on in the manufacturing plant – all with the goal of achieving a more sustainable production, which also includes recycling. For the benefit of our customers, we are able to take back used highgrade steel components from them and return them to the material recycling process,” explains Axel Korb, Product Manager with responsibility for Industrial Furnace Construction in the Special Product Sales team. This enables an efficient circular economy for all stakeholders.

With new monitoring tools, the Research & Development Services Team (RDS) sets new standards in non-destructive material testing.

Depending on the steam cracker furnace at hand, an unscheduled shutdown can cost thousands of euros an hour due to maintenance work, production downtimes and many other cost factors. As such, every unplanned stoppage can be a financial and business disaster for the operator. And the problem can have even much more far-reaching consequences for the environment.

With its new CMT, or Condition Monitoring Tool, S+C can offer its customers the innovative possibility to monitor the aging condition of the plant in a nondestructive manner and hence significantly diminish the many and varied risks of unforeseen shutdowns. The condition of steam cracker coils can be checked by CMT at regular intervals with no need for any destructive testing. A detailed evaluation for each tube section generates certainty and allows the exchange of components as required, on the basis of the actual material condition. With regard to reformer components, so-called zero or baseline measurements are used. Initial measurement is performed on newly manufactured components, which enables plant operators to conduct comparative measuring during service and thus make deductions concerning the state of the furnace.

Effective and targeted.
The new, extended monitoring process using CMT embodies the many years of experience of the RDS-Team. As well as nondestructive testing, numerous destructive material tests have been carried out. More than 400 investigations of exservice material have also supplied valuable data on the most important causes of damage in the customer process. These monitoring bases and the detailed evaluation of our customers’ operating data ensure that we can offer a holistic hardware and process optimization with a clear focus on efficiency through higher yields or fuel savings while reducing CO₂ emissions. Plant availability can thus be increased and the tube systems can confidently be used as long and safely as possible.

“Environmental protection is a major factor in the field of monitoring. When we speak of plant availability, we also always have resources and energy efficiency in mind. Every optimization process is therefore also a step towards enhanced sustainability,” says Dr. Dietlinde Jakobi, Corporate Director Sales | Research & Development | Services.

Focus on environmentally friendly technologies.

The Research & Development Services Team (or “RDS Team” for short) at S+C develops products and services designed for greater sustainability.

Development work is as central to S+C as is high-alloyed steel itself. Over 120 patents are a clear indication of the innovative spirit that pervades the company. This is all made possible by a team that is able to think outside the box and asks the right   questions. A key goal of our development efforts is to reduce harmful impacts on the environment through the use of innovative product solutions. To achieve this, our experts not only immerse themselves deeply in product development, but also concern themselves with production processes and the materials used. Regarding these points we clearly benefit from our close links to the market. Our profound understanding of the product applications generates added value when it comes to application safety, resource efficiency and environmental compatibility.

A good example of development work at S+C is its Centralloy® HT E material. Specifically developed for steam cracker applications, it reduces coke formation through a protective aluminum oxide layer. This constitutes sustainability in a number of ways, as the service life of the tubes is increased and plant shutdowns for tube decoking are reduced.

Furthermore, the patented SCOPE® internal profile technology improves heat transfer and causes a balanced temperature profile in the gas. This increases the product yield while leaving the energy input unchanged. The resulting lower tube wall temperatures have a further positive effect on the durability of the tubes.

Combining these two technologies, as SCOPE® fusion HT E, results in a distinct advantage regarding energy efficiency and durability. The qualities of SCOPE® fusion HT E were subjected to extensive testing within the framework of the EU-funded IMPROOF project, which was concluded in November 2020. As a technology supplier, S+C was part of a large consortium incorporating universities, engineering companies and end users. After laboratory-scale trials, an end user’s steam cracker was equipped with SCOPE® fusion HT E Coils.
The result left no room for doubt. Compared to standard materials, S+C’s technology significantly reduces the greenhouse gas effects, while at the same time raising the efficiency of the cracker.

Benefits from our largeresearch network.

For the RDS Team, collaborating with external research experts is an important aspect of the development work and technical customer service. In the last few years, efforts have been successful in building an international network of more than 30 partners to enable enhanced knowledge transfer. These applied research cooperations, as well as the regular participation in fairs and conferences, contribute, among other things, to shorter development cycles and the market release of more environmentally friendly
and market oriented technologies. The current R&D projects, e.g. for steam reformers or in the field of industrial furnace construction, also aim at an increased efficiency and a higher creep strength enabling a longer product service life.

In S+C’s own in-house Innovation Center, test castings are carried out under realistic conditions on a small scale and large parts of the material development can be carried out digitally using modern simulation software. This enables a reduction in time-to-market and saves valuable resources in the development process. The S+C simulation capabilities were recently presented at the Materials Technology Institute (MTI) TAC meeting. The results from the IMPROOF project were presented at another lecture held jointly with Ghent University in a workshop connected to the Ethylene Producers Conference.

S+C Facilities goes for sustainable and durable infrastructure.

S+C invests around 50,000 euros annually in environmental projects at the Group headquarters site in Lindlar, Germany. These have included, for example, the renaturation of former works waste tips and raising the rate of recycling for used furnace linings and slag by up to 50 percent. A special focus is on the use of water, which is essential in the production of special steel. In cooperation with the regional authorities, the quality of nearby bodies of water is subjected to close monitoring. To protect the groundwater, all materials used in coverings and coatings of the works buildings and foundations must be of types that are approved for use under the German Water Resources Act. “We are altogether very careful in our use of water. We have effluent treatment plants in operation, we use waste water for flushing the disposal pipes, and we have installed a resource-saving recycling system for the cooling water,” says Jan Timmermann, Head of Central Services, Maintenance/Facilities.

An internal waste disposal system is already firmly established which separates waste and, where possible, processes it further in a waste treatment unit. This process has enabled the volume of waste to be continuously reduced since 2015. “The recovery of reusable valuable materials is of major importance. For example, we filter metal shavings from the deep-hole drilling shop for further processing,” Timmermann explains. The same attention is also paid to emissions. Dust is already extracted at the machine and transported to a central filter unit so as to minimize the emissions occurring during the casting process. In some cases, even the dust is recycled. At all the plants in Germany and Spain, the casting machines are provided with special protection in the form of housings. These reduce the noise emissions by up to 40 percent, the energy consumption by 20 percent and the release of dust by 60 percent.

Each investment is reviewed for sustainability.
In order to further reduce the consumption of electricity, gas and pressurized air, the S+C energy management team identifies the possible optimization potential with the aid of monitoring tools and regular energy audits. Numerous individual projects have been carried out in the past few months alone.These included the changeover to energy-saving LED lighting systems in the Kaiserau plant, the installation of heat recovery equipment and modern heating technology, as well as screw compressors for the generation of pressurized air. At the present time, further investments are planned in energy-saving technology to the tune of around 100,000 euros.

All new building and construction projects are carried out in close consultation with the relevant authorities and institutions and in all cases with a focus on the use of environmentally friendly and long-life building materials. “We strive to keep the ecological footprint at all our sites as small as possible. We therefore plan with careful consideration and always pay attention, even at the tendering phase, to renewable energy factors and technologies of the future, such as electric charging stations,” Jan Timmermann states.

Corporate Social Responsibility, or CSR for short, has become increasingly prominent in recent years and is often listed among the central corporate goals. In an interview, Jan Schmidt-Krayer, the Managing Partner/CEO of S+C, reveals his viewpoint.

Social responsibility has become a trend issue. What is your view of it?
Jan Schmidt-Krayer: With a corporate history going back 140 years, we have a strong lead as far as social responsibility is concerned. We would not be where we are today without the responsible corporate leadership of my forbears. They also saw themselves as a motor for social developments and demonstrated their creative powers far beyond the region. We are consciously continuing along this path today. 

What should we understand by that?
JSK: Our primary goal is bringing economic, ecological and social aspects into harmony. In that configuration, a central position is held by our employees. Without them, the success of S+C would be unthinkable. And we are strongly aware of that. We show our recognition with framework conditions that create value and with the assumption of social responsibility. Our aim is to set the course for a livable future and offer our employees a meaningful work environment.

With what measures do you meet this aspiration?
JSK: We have positioned ourselves broadly and see CSR as a way of safeguarding the future. It encompasses flexible work times, further training programs, short communication channels and also a living feedback culture, to give just a few examples. Work that is highly regarded is the antidote to inner resignation. This has now been functioning well for four generations, and we can build on a high sense of identification on the part of our coworkers.

What is your approach to the subject of CSR outside of the works premises?
JSK: Naturally, employer quality is very important to us, but that does not mean that our commitment ends at the factory gate. We have strong ties to the region, and we correspondingly support local projects, including educational activities and amateur sport, as well as charitable measures such as the TAFEL, a foodbank organization. But local is not enough. We operate throughout the world, and must therefore fill our values with content also beyond our national borders. Fair trading relations, a responsible purchasing policy and support for international projects – every element counts. We try to move as much as we can.

How highly do you value communication as an element in the context of social responsibility?
JSK: Communication is one of the primary pillars of CSR. We have to give expression to our values, both internally and externally. Open and truthful communication provides us with a basis on which we can actively integrate our customers, the company and our employees into our value system and so help to accelerate change processes. CSR must be dynamic. We as a business enterprise have the opportunity to set milestones, whether in relation to energy consumption or the installation of charging stations for electric vehicles. We are determined to make use of this lead.