Assurance report of the independent auditor
To: the Board of Directors of Saudi Basic Industries Corporation
We have reviewed the data and the accompanying disclosures for the following indicators (hereafter ‘the sustainability indicators’) in the Sustainability Report 2019 of Saudi Basic Industries Corporation (hereafter ‘SABIC’) based in Riyadh, Saudi Arabia.
The total absolute values and the intensity values (per metric ton of product sales) at corporate level of the Environmental Footprint indicators:
- Greenhouse gas emissions (p. 21, 39)
- Energy consumption (p. 21, 40)
- Water usage (p. 21, 41)
- Material loss (p. 21, 42)
The total percentages at corporate level of the Environmental Footprint indicators:
- Flaring reduction compared to 2010 (p. 21, 38)
- CO₂ utilization (p. 21, 38)
The corporate values of the Ethics and Integrity indicators:
- Compliance concerns raised (p. 19, 21)
- Incidents closed (p. 19, 21)
- Violations found and addressed (p. 19, 21)
- Code of Ethics training completion (p. 19, 21)
The corporate values of the Environmental, Health, Safety and Security indicators:
- EHSS rate (p. 21, 47, 49)
- Total Recordable Incident Rate (p. 21, 48)
- Occupational Illness Rate (p. 21, 48)
- Fatalities (p. 21)
- Process safety Total Incident Rate (p. 21, 48)
- Hazardous substances released (p. 21, 51)
The data for the indicators included in the scope of our engagement are marked in the Sustainability Report 2019 with an asterisk (*).
A review is aimed at obtaining a limited level of assurance.
Based on the procedures performed nothing has come to our attention that causes us to believe that the sustainability indicators are not, in all material respects, prepared in accordance with the reporting criteria as included in the section ‘Reporting Frameworks’ on page 82 of the Sustainability Report 2019.
Basis for our conclusion
We have performed our review in accordance with Dutch law, including Dutch Standard 3000A ‘Assuranceopdrachten anders dan opdrachten tot controle of beoordeling van historische financiële informatie (attest-opdrachten)’ (assurance engagements other than audits or reviews of historical financial information (attestation engagements)). Our responsibilities in this regard are further described in the ‘Auditor’s responsibilities’ section of our report.
We are independent of SABIC in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence). Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
We believe the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
The sustainability indicators need to be read and understood together with the reporting criteria.
SABIC is solely responsible for selecting and applying these reporting criteria, taking into account applicable law and regulations related to reporting.
The reporting criteria used for the preparation of the sustainability indicators are the applied internally developed reporting criteria as disclosed in the section ‘Reporting Frameworks’ on page 82 of the Sustainability Report 2019.
Scope of the group review
SABIC is the parent company of a group of entities. The sustainability indicators incorporate the consolidated indicators of this group of entities to the extent as specified in the section ‘Reporting period, scope, and boundaries’ on page 82 in the Sustainability Report 2019.
Our group review procedures consisted of both review procedures at corporate (consolidated) level and at site level. Our selection of sites in scope of our review procedures is primarily based on the site’s individual contribution to the consolidated indicators. Furthermore, our selection of sites considered relevant reporting risks and geographical spread.
By performing our review procedures at site level, together with additional review procedures at corporate level, we have been able to obtain sufficient and appropriate assurance evidence about the group’s sustainability indicators to provide a conclusion about the sustainability indicators.
Limitations to the scope
The sustainability indicators include prospective information such as ambitions, strategy, plans, expectations and risk assessments. Inherent to prospective information, the actual future results are uncertain. We do not provide any assurance on the assumptions and achievability of prospective information in the sustainability indicators.
The references to external sources or websites related to the sustainability indicators are not part of the sustainability indicators as reviewed by us. We therefore do not provide assurance on this information.
Responsibilities of the Board of Directors and those Charged with Governance
The Board of Directors of SABIC is responsible for the preparation of the sustainability indicators in accordance with the internally developed reporting criteria as included in the section ‘Reporting Frameworks’ on page 82, including the identification of stakeholders and the definition of material matters.
Furthermore, the Board of Directors is also responsible for such internal control as it determines is necessary to enable the preparation of the sustainability indicators is free from material misstatement, whether due to fraud or error.
Those charged with Governance are responsible for overseeing the reporting process of SABIC.
Our responsibility is to plan and perform our review in a manner that allows us to obtain sufficient and appropriate assurance evidence for our conclusion.
Procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of information and vary in nature and timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.
We apply the ‘Nadere Voorschriften Kwaliteitssystemen’ (NVKS, Regulations for Quality management systems) and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
We have exercised professional judgement and have maintained professional skepticism throughout the review, in accordance with the Dutch Standard 3000A, ethical requirements and independence requirements.
Our review included among others:
- Considering the internal control relevant to the review in order to select assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing a conclusion on the effectiveness of the company’s internal control;
- Performing an analysis of the external environment and obtaining an understanding of relevant social themes and issues, and the characteristics of SABIC;
- Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in the sustainability indicators. This includes the evaluation of the results of stakeholder dialogue and the reasonableness of estimates made by the Board of Directors;
- Obtaining an understanding of the reporting processes for the sustainability indicators, including obtaining a general understanding of internal control relevant to our review;
- Identifying areas of the sustainability indicators where a material misstatement, whether due to fraud or error, are most likely to occur, designing and performing assurance procedures responsive to these areas, and obtaining assurance information that is sufficient and appropriate to provide a basis for our conclusion. These procedures included, among others:
- Interviewing management and relevant staff at corporate level responsible for the sustainability strategy, policy and results;
- Interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and consolidating the data in the sustainability indicators;
- Determining the nature and extent of the review procedures for the group components and locations. For this, the nature, extent and/or risk profile of these components are decisive. Based thereon we selected the components and locations to visit. The visits to 6 production sites in the Kingdom of Saudi Arabia, Europe, United States of America and India are aimed at, on a local level, validating source data and evaluating the design and implementation of internal controls and validation procedures;
- Obtaining assurance information that the sustainability indicators reconcile with underlying records of SABIC;
- Reviewing, on a limited test basis, relevant internal and external documentation;
- Performing an analytical review of data and trends;
- Evaluating the consistency of the sustainability indicators with the information in the Sustainability Report 2019 which is not included in the scope of our review;
- Evaluating the presentation, structure and content of the sustainability indicators;
- Considering whether the sustainability indicators as a whole, including the disclosures, reflect the purpose of the reporting criteria used.
- We have communicated to the Board of Directors of SABIC regarding, among other matters, the planned scope and timing of the review and significant findings that we identify during our review.
Amstelveen, The Netherlands, March 31, 2020
Part of KPMG Advisory N.V.
D. A.C.A.J. Landesz Campen RA