Sustainable Development 2010 - Fibre2Fashion · 6.5 Company financial statements ... was cited in 2010 for the third year in a row by the Dow Jones ... A responsible chemical company,

Sustainable Development 2010Extract of the Registration Document

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This is a free translation in English of Rhodia’s Document de Référence (the “Registration Document”), filed by Rhodia with the French Autorité

des Marchés Financiers on March 23, 2011 and is provided solely for the convenience of English speaking readers. In the present Registration

Document, “Company” refers to Rhodia S.A., “Group” or “Rhodia” refers to Rhodia S.A. and all of its subsidiaries.

Keys facts about Rhodia 3

Profile 4

Key Figures 10

Group activities 13

2.1 Presentation of the Business Clusters 15

2.2 Tangible assets of the Group 37

2.3 Innovation 38

2.4 Investments 41

Sustainable Development 43

3.1 Sustainable development policy 44

3.2 Environmental Responsibility 59

3.3 Corporate Social Responsibility 72

3.4 Responsibility towards communities 87

3.5 Review report by one of the Statutory Auditors on a selection of environmental and safety indicators 91

Corporate Governance 93

4.1 Composition of the Administrative and Management Bodies 94

4.2 Operation of Administrative and Management Bodies 102

4.3 Compensation 109

Risk Management 119

5.1 Comprehensive risk management and internal control system 120

5.2 Management of the main risk factors of the Group 125

5.3 Statutory Auditors’ report prepared in accordance with article L.225-235 of the French Commercial Code on the report prepared by the Chairman of the Board of Directors of Rhodia S.A. 140

5.4 Risk coverage and insurance 142

Financial and accounting information 143

6.1 Analysis of 2010 Results 144

6.2 Analysis of Rhodia S.A.’s Results 157

6.3 Subsequent Events, Trends and 2011 Outlook 161

6.4 Financial statements 165

6.5 Company financial statements for the year ended December 31, 2010 239

Additional information 267

7.1 History of the Group 268

7.2 Legal structure of the Group 268

7.3 Capital and shareholders 270

7.4 Excerpt from the Company’s bylaws 281

7.5 Related party transactions 284

7.6 Information available to the public 286

7.7 Auditors 289

7.8 Certification by the person responsible for the Registration Document 290

Glossary 291

Correlation tables 299

Reconciliation table (referring to financial and management reports) 299

Correspondence table (to the sections of Annex I of the Commission Regulation no. 809/2004) 301

Correlation table of the report of the Chairman of the Board of Directors required under article L.225-37 of the French Commercial Code 305

List of reports 306

Table of contents 307

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Registration Document Rhodia 2010 43The symbol placed at the end of a word directs the reader to the glossary on page 291 and seq.

3.1 Sustainable development policy 443.1.1 Sustainable development

at the heart of corporate culture 44

3.1.2 External commitments expressing Rhodia’s ambition 49

3.1.3 Governance in line with best practices 52

3.1.4 An approach integrated into the Group’s key processes 57

3.2 Environmental Responsibility 593.2.1 Health, safety, environment policy 60

3.2.2 Environmental footprint 62

3.2.3 Responsible product management 70

3.3 Corporate Social Responsibility 723.3.1 Change in Staff and Employment:

Major Trends 74

3.3.2 Monitoring Personal Health and Safety 75

3.3.3 Diversity, an asset to be promoted 78

3.3.4 Developing skills and encouraging employee transfers 79

3.3.5 Developing a rich and balanced corporate dialogue 83

3.3.6 Sharing the fruits of growth: employee shareholder programs 85

3.4 Responsibility towards communities 873.4.1 Controlling facilities-related

industrial risks 87

3.4.2 Strengthening exchanges and dialogue with local stakeholders 90

3.5 Review report by one of the Statutory Auditors on a selection of environmental and safety indicators 91

3Sustainable Development

Registration Document Rhodia 201044 www.rhodia.com

Sustainable Development3 Sustainable development policy

Rhodia is convinced that the players in the field of Chemistry have to actively promote the principles of sustainable development . The continued existence of their activity depends on their ability to anticipate and integrate societal and regulatory demands in a responsible manner. More and more, our industry is evaluated on its capacity to hold a transparent dialogue with stakeholders while integrating their expectations, ensuring the safety of operators and end users, diminishing the impact of its activity on the environment and better managing natural resources. Rhodia realized these stakes early on and integrated them into its management process and strategy.

The sustainable development process is part of the extension of a policy initiated thirty years ago in the area of Health, Safety and the Environment, which Rhodia has continued to reinforce over the years. This choice now translates into an affirmed policy of social and environmental responsibility, strong commitments to all stakeholders and constant improvement, with results measured each year based on precise indicators.

“Chemistry is our world, responsibility is our way:” The slogan of the Group expresses its intention of carrying out its work as a chemical

company in an increasingly more responsible way. This high level of demand and the results obtained in social and environmental performance have led to the Group’s ranking among the best enterprises worldwide in the field of occupational safety, and it was cited in 2010 for the third year in a row by the Dow Jones Sustainability Index(1), the leading extra-financial index in the world. Rhodia was also cited in the first European extra-financial indexes, Aspi Eurozone®(2) and the Ethibel Index(3).

Note that the individual activity of the listed company Rhodia S.A. as a financial holding company (directly or indirectly holding all of the equity interests forming the Rhodia Group) is not likely to result in any notable social or environmental consequences. It does not engage directly in any operational or industrial activities. Moreover, the Group had PricewaterhouseCoopers review its Responsible Care® (RC) reporting for 2010, as it did in 2009.

Since the Responsible Care® information reporting system is well-developed within the Group and its internal control (DRC 06 procedure) is well-structured, the level of verification requested of PricewaterhouseCoopers by the Group is moderate assurance on data (see Chapter 3.5 of this Registration Document).

(1) The Dow Jones Sustainability Index is the leading extra-financial index that evaluates the performance of the 2500 leading capitalizations worldwide annually with

regards to sustainable development. Only the 250 highest performing enterprises become members of the index. Out of the 90 chemical enterprises evaluated, nine

of them, including Rhodia, were selected.

(2) The Aspi Eurozone® Index is composed of 120 listed companies in the Euro Zone with the best social and environmental performance. The values are selected

based on Vigeo ratings.

(3) The Ethibel Pioneer & Excellence Index® is composed of about 280 values of listed companies in Europe, North America and Asia Pacific. The enterprises selected,

based on Vigeo ratings, have superior performances on average in the area of social and environmental responsibility and comply with the ethical criteria

established by the independent organization, the Ethibel Forum.

3.1 Sustainable development policy

A responsible chemical company, aware of the expectations and needs of its social, societal, economic and natural environment, Rhodia committed more than ten years ago to a sustainable development path, making this issue one of its priorities, and integrating its commitment to sustainable development into its processes. The Group’s sustainable development policy is based on:

1 strong commitments to the internal and external constituents of its environment;

1 an approach to constant improvement in which all employees partake;

1 strategic orientations based on a culture and commitment to responsible development.

3.1.1.1 An historical culture of safetyIts culture of safety and tradition of social dialogue have positioned Rhodia, from the beginning, as a cutting-edge player in Social and Environmental Responsibility (RSE ). Since the 1970s, the Group has been developing a proactive policy in the fields of Health, Safety and the Environment (HSE ), integrated into its management system, SIMSER+ . Early on, the Group also affirmed its intent to create an open social dialogue with its partners, by creating a forum for European dialogue and negotiating trade union law agreements.

Gradually, the new environmental and societal concerns led the Group to expand its field of responsibility.

3.1.1 SUSTAINABLE DEVELOPMENT AT THE HEART OF CORPORATE CULTURE



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Sustainable development policy

Thus, beginning in the late 1990s, Rhodia, sensitive to the issues raised in Kyoto, resolutely committed to the path of sustainable development : the Group was one of the very first to adopt the Kyoto Protocol , making firm commitments to reduce its emission of greenhouse gases. Rhodia also adheres to the initiatives taken by the sector and the industrial milieu intended to develop responsible practices for reducing the impact of its activities (Responsible Care ). In 2002, while facing a difficult period, Rhodia decided to make its approach to sustainable development a tool for its renewal. The establishment of a dedicated Department anchored the approach

to responsibility in the entire Group. From then on, while ensuring its recovery, Rhodia reinforced its actions to integrate sustainable development in its daily managerial processes and to mobilize its personnel around this objective.

To serve this ambition, in 2004 the Group initiated the Rhodia Way® , a process of progress based on a framework of reference, committing itself through measurable objectives to its six internal and external stakeholders .

Key dates

1987 Signing of the “chemistry industry’s commitment to progress,” a sector-specific initiative internationally known under the name Responsible Care® that seeks to promote respect for the environment and personal safety and health

1990 Worldwide deployment of the HSE management system (SIMSER+ )

1992 First Environment Report made available to the Stockholders

1999 Implementation of the first Rhodia project for reducing emissions into the air (N2O ) at the Chalampé site in France

2000 First Sustainable Development Report

2002 Creation of a Sustainable Development Department, represented on the Executive Committee

2003 Adherence to the UN Global compact. Through this charter, Rhodia agrees to promote and enforce ten major principles concerning human rights, working conditions, respect for the environment, and the fight against corruption

2004 Signing of the Diversity Charter in FranceLaunch of the elaboration of the Group’s sustainable development approach: Rhodia Way®

2005 Signing of the Global Social and Environmental Responsibility Agreement with the ICEM (International Federation of Chemical, Energy, Mine and General Workers Unions). See the Agreement at www.rhodia.com

2006 Signing of the Responsible Care® Global Charter. A global initiative of the chemical industry (International Council of Chemical Associations), the objective of the Global Commitment Charter for Progress goes beyond the principles of Responsible Care® concerning health, safety and environmental performance. Improved management of product cycles (Product Stewardship ), greater transparency with respect to stakeholders , as well as the evaluation and publication of environmental performance are among the key criteria of this charter, which identifies the conditions for responsible chemistryRhodia World Convention, bringing together 350 leaders, presentation of RSE as a component in the renewal of the Group.

2007 Worldwide deployment of the Rhodia Way® framework and first annual self-evaluationFirst evaluation mission in China validating the correct application in the field for the ICEM global agreement

2008 Renewal of the ICEM agreement for a three-year period after amending the text and including it in the Rhodia Way® approach. Second evaluation mission of the application of the ICEM agreement in Brazil

2009 Creation of a Global Safety Panel within the framework of the ICEM global agreementThird evaluation mission of the application of the ICEM agreement in the United States

2010 First evaluation mission of the Global Safety Panel in the United StatesFourth evaluation mission of the application of the agreement in South Korea

2011 Renewal of the agreement with ICEM for an additional five years following the amendments to the text of the agreement, including the “Global Safety Panel” that monitors the Group’s safety policies and results worldwide and establishes monitoring indicators to follow the situation regarding the utilization and the subcontracting policy of the Group

3.1.1.2 Rhodia Way® : tool for driving performance

Deployed throughout the Group since 2007, the Rhodia Way® approach constantly aims to better integrate responsibility criteria in the Group’s conduct. Designed as a performance support, it guides

Rhodia in its strategic orientations, as well as in its management practices. The goal of this approach is to achieve an optimal level of responsible practices in relation to its stakeholders . Thus, commitments, objectives and paths of progress have been identified for each of them based on international frameworks, the best practices identified in the sector, and conditions in the field.



The Rhodia Way® Framework: a performance management tool

As an analysis and evaluation tool, the Rhodia Way® framework was designed from the beginning to facilitate the implementation of good practices compared to other systems.

Its means of development and deployment promote the involvement of all players in the enterprise, at all levels, in units and in cross-disciplinary functions.

The implementation of the Rhodia Way® depends on:

1 major involvement of employees in the practice assessment, objective definition and implementation phases;

1 incorporation of the framework in the management process (Management Book);

1 application of tools and methods to determine the level of RSE maturity of the plans and define improvement plans as time goes on;

1 self-assessment by teams on the advances in their practices with regards to the objectives defined by the framework.

Since the launch of the framework, four self-evaluations involving all Group entities have been conducted.

Ambitious and pragmatic, the framework provides for an update in its commitments and practices in 2011 with the ISO 26000 guidelines published in November 2010. This international standard was developed using a multi-stakeholder approach, with the participation of experts from more than 90 countries and 40 international organizations, covering different aspects of societal responsibility.

A framework built by employees for employees

2004 - 2005 CONSTRUCTION 2006 IMPLEMENTATION 2007 DEPLOYMENT SINCE 2008 CONSOLIDATION

60 managers

(10 per stakeholder)developed a pilot version

of the reference framework

Global pilote phase 10 champions:

90 local representatives

Sustainable development

department:

Creation of the Rhodia Way® awards

Rhodia Way® in brief

Objective:

To drive behaviour towards compliance withe the commitments made by the Group to its stakeholders .

6 stakeholders :

1 21 commitments .

1 44 target practices.

1 4 levels performance.

1 1 self-assessment methodology based on a grid and a scoring system.

1 Mobilization internally of 100 representatives and Rhodia Way® champions worldwide.



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Registration Document Rhodia 2010

The stages in continual improvement

Customers

Stakeholders

Intr

oduc

tion

Dep

loym

ent

Mat

urit

y

Per

form

ance

Employees

Environment

Investors

Suppliers

Communities

1 2 3 4

Rhodia Way® gives the managers of Rhodia’s various sites, GBUs and functions the means to self-assess the performance of their entities at four levels: launch, deployment, maturity and performance.

Breakdown of commitments by stakeholder

Translate our CSR commitments into our customers relations

Innovate while integrating CSR

Manage product-related risks

Translate our CSR commitments into our customers relations

Innovate while integrating CSR

Manage product-related risksCustomers

Guarantee employee health and safety

Develop employability

Guarantee employee health and safety

Develop employabilityEmployees

Promote environmental management

Conserve natural resources

Limit the impacts on the environment, conserve biodiversity

Promote environmental management

Conserve natural resources

Limit the impacts on the environment, conserve biodiversityEnvironment

Generate value in a responsible manner

Manage risks globally

Spread the news about good practice in management and

governance and ensure it is adhered to

Communicate transparently

Generate value in a responsible manner

Manage risks globally

Spread the news about good practice in management and

governance and ensure it is adhered to

Communicate transparently

Investors

Def ine CSR prerequisites and integrate them in the supplier

selection process

Assess buyers’ performance in terms of CSR

Manage and assess suppliers, optimize relations

Def ine CSR prerequisites and integrate them in the supplier

selection process

Assess buyers’ performance in terms of CSR

Manage and assess suppliers, optimize relations

Suppliers

Manage risks relating to the presence of manufacturing sites

Ensure lasting integration locally of manufacturing sites

Manage the risks in the logistics chain

Manage risks relating to the presence of manufacturing sites

Ensure lasting integration locally of manufacturing sites

Manage the risks in the logistics chainCommunities



For the fourth consecutive year, the entities in the Group have evaluated their practices in accordance with the Rhodia Way® framework.

From industrial sites and business units to research centers and functional departments related to purchasing, finance, legal and public affairs, all of the Group’s entities evaluated their practices in 2010 in relation to social and environmental responsibility. The objective of this approach was for each entity to define itself in relation to Rhodia Way® objectives, and then create a progress plan.

The results of this fourth assessment confirm the progress made and that the Group’s entities are moving in the right direction. Of the six fields of study (customers, personnel, environment, investors, suppliers and communities), the responsibility profile was balanced overall and continually improving. The evaluation involved 92.6% of the Group’s staff. Each GBU tracks its responsibility profile based on this evaluation and defines a progress plan. The progress of these plans will be analyzed in the next evaluation, which is scheduled for December 2011.

2010 Assessment: progression of the Sustainable Development approach

Customers

Employees

Environment

Investors

Suppliers

Communities

2007 2008 2009 2010

0.0

1.00.5

2.0

3.0

4.0



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2010 Rhodia Way® Awards: awards designed to motivate

Rewarding the best sustainable development practices is a tradition at Rhodia.

Created in 2008, the Rhodia Way® Awards recognize the best practices in the field that are in line with the commitments promoted by the Rhodia Way® Framework.

2010 Assessment

1 240 projects submitted.

1 More than 2000 employees involved worldwide, from the GBUs and Functions.

1 107 projects selected as finalists.

1 6 prize winners.

3.1.2 EXTERNAL COMMITMENTS EXPRESSING RHODIA’S AMBITION

As a responsible chemical company, Rhodia engaged, very early on, in three major initiatives for sustainable development , committing it globally to its external partners. The Group designed these agreements as supports for motivating its progress and actively contributed to their promotion and enhancement. These voluntary commitments allowed it to maintain its continual improvement approach within the framework of ever stricter demands in the regulatory, economic, social and societal environment.

3.1.2.1 Responsible Care® : the chemical industry’s commitment to the community

A global initiative from the chemical industry, Responsible Care® has, since 1987, committed the sector to continuous improvement of its HSE policy and the safety of its products, throughout their life cycles. Responsible Care® is implemented in 53 countries and, in many cases, exceeds local legal standards. Established in 2006 to

strengthen this program, the Responsible Care® Global Charter lays down the following conditions for responsible chemistry:

1 improved management of product life cycles;

1 greater transparency towards stakeholders ;

1 evaluation and publication of environmental performance.

Active in the implementation of these initiatives, Rhodia has presided over the Responsible Care® commitment implementation group of the CEFIC (European Chemical Industry Council) since 2007 and the Industrial Safety Commission of the UIC (Union of Chemical Industries) since 2008.

A demanding tool for progress

In conformity with its initial commitment to Responsible Care® upon launch in 1987, which was renewed in 2006 within the framework of the Global Charter, Rhodia has established a policy, based on a global management system, of continual progress in the following areas: health, safety of people and property, the environment, transportation, and product security and safety.

Prize winners

Stakeholders Projects and Creations Receiving Awards

Customers Ethylene Oxide for Biobased SLESRhodia offers its customers ethylene oxide extracted from a plant raw material, sugar cane, which thus replaces oil.

Personnel Continual Improvement ApproachOn the Chalampé, France site, the continual improvement approach involves all of the personnel in concrete actions in the field (safety, labor conditions, consumption).

Environment Acetone Loss ReductionThe teams on the Serpukhov (Russia) site successfully launched a program to reduce the loss of acetone in the air.

Investors Carbon Assessment at French Production SitesEvaluations of the environmental footprint were conducted at all French sites to optimize their direct and indirect emissions.

Suppliers RSE Evaluation of Suppliers in AsiaThe Purchasing Department deployed a training program for its Asian suppliers regarding the stakes in sustainable development .

Communities Inclusion of Disabled WorkersHuman Resources in Brazil has been implementing a program for integrating disabled workers into factory positions for the past two years.



In particular, the Group has developed a specific tool for managing the safety of its employees and its sites, as well as for reducing its impact on the environment. A reference tool for HSE management, SIMSER+ (1) is Rhodia’s safety and environment, occupational health and transportation management system for sites with more than 100 people. For sites with fewer than 100 people, 3RHSE brings together all the rules and recommendations in the area of HSE .

In 2011, this system evolved with the implementation of a single HSE framework (RCMS) comprising 115 requirements deriving from its two previous frameworks: SIMSER and 3RHSE. In line with the objectives of the enterprise project, it now includes an evaluation by the operating managers of its implementation. Taking the application of HSE principles into account on a daily basis promotes the sustainable performance of the Group in this area.

Within the framework of the Global Charter, the improvement of the product life cycle is another priority area for the Group, implemented in partnership with its customers and suppliers. Rhodia favors product management based on analysis of risks and the life cycle, documented with solid scientific information.

With a 100% reporting rate, the fact that the Responsible Care® Global Charter is adhered to is confirmed by all Rhodia entities worldwide. Rhodia has also excelled in the area of HSE audits, with 98% of its sites audited according to its frameworks of reference (3RHSE and/or SIMSER+ ) in less than 3 years. Similarly, the level of functions evaluated in less than 5 years in terms of health risks and safety was maintained at the same excellent level in 2010 as in 2009, with a realization of 91%.

Group investments at the worldwide level in the areas of health, safety and the environment rose to €61.7 million in 2010, of which €30.2 million was for safety and health and €31.5 million was for the environment.

The nine commitments of the Responsible Care® global charter

1 Adopts the Responsible Care® core principles.

1 Implement fundamental features of national Responsible Care® programs.

1 Commit resolutely to sustainable development .

1 Continually improve and report performance.

1 Enhance product management – Product Stewardship .

1 Support and facilitate the expansion of Responsible Care® all along the chemical industry’s value chain.

1 Actively support global and national Responsible Care® governance processes.

1 Address stakeholders’ expectations about chemical industry activities and products.

1 Provide appropriate resources to effectively implement Responsible Care® .

3.1.2.2 The Global Compact: human rights

Established in 1999 on the initiative of the former UN Secretary-General, Kofi Annan, the Global Compact aims to ensure that heads of companies promote and comply with the major principles concerning human rights, working conditions, respect for the environment and anti-corruption. Rhodia renews its commitment to these principles every year. Respect for this commitment is part of the social and environmental responsibility agreement with the ICEM and, therefore, is one of the criteria for the Group to be evaluated by its social partners.

The ten principles of the Global Compact

Human rights

1 Businesses should support and respect the protection of internationally proclaimed human rights; and

1 ensure that they are not involved in human rights abuses.

Labor

1 Businesses should uphold and respect the freedom of association and the effective recognition of the right to collective bargaining, as well as the:

− elimination of all forms of forced or compulsory labor,

− effective abolition of child labor, and

− elimination of discrimination in the fields of employment and occupation.

The Environment

Businesses should:

1 support a precautionary approach to environmental challenges;

1 undertake initiatives to promote greater environmental responsibility;

1 encourage the development and diffusion of environmental-friendly technologies.

Anti-Corruption

To act against corruption in all its forms, including the extortion of funds and bribery.

(1) The Rhodia management system was certified in 2005 by the DP2i office as being in conformity with the OHSAS 18001 standard concerning the safety personnel,

and the ISO 14001 standard for the environment.



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3.1.2.3 ICEM : A global commitment to social and environmental responsibility

On February 1, 2005, the Rhodia Group executed a global social and environmental responsibility agreement with the largest international union federation, the International Federation of Chemical Energy Mine and General Workers Union (ICEM ). The ICEM represents more than 20 million workers in 470 unions in 132 countries.

The first of its kind in the chemicals sector, this agreement, renewed every three years, organizes a permanent framework for dialogue on compliance with the international social standards defined by the International Labor Organization (ILO), the principles of the Global Compact of which Rhodia is a signatory, and a set of commitments proper to the Group, covering the fields of:

1 occupational health and safety;

1 mobility and employability;

1 social protection;

1 relationships with suppliers and subcontractors;

1 control of risks related to business lines and respect for the environment;

1 social dialogue;

1 civil dialogue; and

1 right to question.

In 2006, the first assessment conducted with the ICEM validated the realization of the commitments made to ensure the dissemination of information on this agreement, such as: the translation of the text into the five main languages of the Group; the distribution of the text on the Intranet site; and dissemination to the Group Committee as well as to the European Enterprise Committee.

In early 2008, Rhodia and the ICEM renewed the agreement for an additional three year period. The text was amended and reinforced with new commitments, including:

1 integration of the agreement into the Rhodia Way® approach to responsibility;

1 the involvement of the ICEM in the follow-up and annual assessment of Rhodia Way® ;

1 the commitment to create in 2009 of a common forum for dialogue devoted to questions of Safety: The Global Safety Panel, whose objective is the joint follow-up on the safety policy of the Group on the worldwide level;

1 the creation of an annual evaluation mission regarding the proper implementation of the agreement and the Rhodia Way® approach.

In early 2011, Rhodia and the ICEM renewed their agreement for an additional five years. In addition to this five year extension, which had previously been three years, the main amendments to the text of the agreement are:

1 the integration of the “Global Safety Panel” into the agreement, an entity created in 2009 to promote shared dialogue and comprised of ICEM members representing each of the Group’s different zones, in addition to the members of Rhodia’s General Management team and a delegation of ICEM representatives;

1 the adoption of monitoring indicators to follow the Group’s employment practices and subcontracting policies.

Commitments evaluated in the field every year

Every year since 2007, the representatives of Rhodia and the ICEM have evaluated, at one site, compliance with the Group’s commitments in terms of: HSE , compensation levels, training policy, rate of inclusion of women in management, control of suppliers and subcontractors, and social dialogue.

In 2007, the first assessment was conducted in China by a delegation composed of members of the ICEM and the Group’s General Management. The visit to two sites and a meeting with their management as well as employee representatives enabled the proper application of the agreement to be established.

The successive annual assessments as well as the conclusions of the evaluation conducted in China have been presented to the employee representative bodies within the Group (European Works Council).

Between 2008 and 2010, the assessments were conducted successively in Brazil (2008), the United States (2009), South Korea and China (2010).

In October 2010, in conformity with its commitments, the Dialogue on Safety brought together the representatives of Rhodia and the ICEM at the Baton Rouge site in the United States. Rhodia presented the methods for implementation and the results of its safety policy and the ICEM was able to concretely verify on site the implementation of the Group’s commitment in this area.

The agreement may be downloaded from the Sustainability section of Rhodia’s website: www.rhodia.com



3.1.3 GOVERNANCE IN LINE WITH BEST PRACTICES

Directors

Jean-Pierre CLAMADIEU

Patrick BUFFET***

Aldo CARDOSO***

Pascal COLOMBANI***

Laurence DANON***

Michel de FABIANI*** (Lead Independent Director)

Jacques KHELIFF

Olivier LEGRAIN***

Francis MER***

Yves René NANOT

Henri POUPART-LAFARGE***

3.1.3.1 The governance bodiesRhodia’s governance is conducted transparently and is subject to strict internal and external controls. The Group endeavors to comply with the most stringent practices and recommendations governing public listed companies. Its governance principles conform strictly to the AFEP-MEDEF Code* and its internal control processes conform to the very stringent COSO framework**.

Setting the example, Rhodia’s administration and management contribute actively in complying with and promoting Rhodia’s approach to responsibility. The strong representation of independent members on the Board of Directors (8 out of 11) demonstrates its commitment to evolve in a transparent and controlled manner.

* The AFEP-MEDEF Code is available on the MEDEF site (www.medef.fr).

** Committee of Sponsoring Organization of the Treadway Commission.

*** Independent directors. In conformity with the internal regulations and the AFEP-MEDEF Code, the annual evaluation of the independence of the directors was

conducted by the Board of Directors, upon the proposal of the Compensation, Appointments and Governance Committee, at its meeting of January 19, 2011.

The Group Management: composition, missions and activities of the Governance bodies

Board of DirectorsAudit and Risks Committee

Compensation, Appointments and Governance Committee

Strategy and Sustainable Development Committee

Figures 11 members(1), of which 8 are independent8 meetings in 201095% participation rate

3 members, all independent8 meetings in 2010100% participation rate



Missions Determines the broad strategic, economic, financial and technological orientations of the Company

Monitors the effectiveness of the Group’s internal audit and risk management systems

Sets compensation of company directors and officers (mandataires sociaux)Searches for new directorsFollow-ups on application of the AFEP-MEDEF Code

Examines significant strategic operationsExamines the Group’s strategy as well as the strategy of the businesses that comprise itExamines the RSE policy and Group commitments

Composition 1 executive director1 director representing employee shareholders8 independent directors, of which 1 is also the Lead Independent Director(2)

1 non-independent director

(1) Conditions for being a Director: Hold a minimum of 100 shares, length of appointment: 4 years.

Staggered renewals over two consecutive years. A non-executive director cannot remain in office for more than 12 years.

(2) Modalities: According to the internal regulations updated on November 3, 2009, the Lead Independent Director is appointed by the Board of Directors on the

proposal of the Compensation, Appointments and Governance Committee.



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The General Management

Missions

The Executive Committee (since July 1, 2010)

The Executive Committee defines Rhodia’s strategy (strategic vision, business portfolio) and ensures that it is implemented properly. It makes the core decisions regarding the allocation of the Group’s resources. It sets policies, standards, codes and conduct for the Group applicable to all employees and ensures that Rhodia operates as a unified Group. It makes commitments with respect to shareholders and the Board of Directors and oversees that such commitments are upheld.

The Management Committee The Management Committee is a forum for sharing information, exchanging ideas and aligning views among the Executive Committee, the GBUs, the Functional General Managers, the Zone Managers and the Manager of Rhodia Business Services.

For more information, see Chapter 4.

3.1.3.2 Risk management and internal control

Rhodia manages risks responsibly mainly to, in particular, reinforce the protection of its employees, the environment, its customers and suppliers, and to preserve the assets of the enterprise.

Rigorous Systems in conformity with the most demanding practices

The risk management process is designed to:

1 identify and evaluate the main risk that might prevent the various entities of the Group from reaching their goals,

1 ensure that these risks are addressed.

In 2009, to improve the global vision of the risks to which the Group is exposed, an Enterprise Risk Management (ERM) methodology was developed by the Risk Department. It was introduced in each GBU, Zone and Function.

Internal control contributes to the management of the Group’s activities, effectiveness of operations and efficient use of resources. Rhodia’s internal control system falls in line with the framework of reference published by the AMF in January 2007 (and revised in 2010) and is consistent with the COSO framework.

The players involved

The risk management and internal control system involves all of the Group’s governance bodies as well as its Enterprises and Departments.

In 2009, the Group reinforced this system by creating a Risk Committee and a Risk Management Department.

See Chapter 5 of this Registration Document.

The General Management

The General Management in its role as business manager

Is the principal player in defining the principles and implementing risk management and internal control procedures.

The Risk Committee Validates the principal orientations of the Company and the organization chosen.Makes key decisions as to what is an acceptable risk and the resources dedicated to risk management.Reviews the progress of the work and the corrective measures taken.Assures the application of the internal control standards of the Group.

The Operational and Functional Departments

The GBU and Function General Management

Are responsible for the risk management relevant to their areas.

The Corporate Process Owners (CPO):Department Managers

Are responsible for designing, developing, communicating and monitoring each of their processes.Are the guarantors of the application of the sub-processes and the internal control processes of their Departments.

The Corporate Process Managers (CPM) Are in charge of the key sub-processes and rely on their knowledge of the processes to identify and evaluate risks.Design monitoring procedures and activities adapted to these risks and introduce them to the entire Group, relying on their network of Local Process Owners (LPOs).

The Operational PersonnelAre in charge of the implementation and proper operation of the processes and controls defined by the CPMs.



The Risk Management Provides methodological Risk Management support to the GBUs and Departments and assists in deploying it.Consolidates the main risks at the level of the Group by using a common standard.Assures the review of these risks and the action plans designed by the GBUs and Departments.Provides methodological support to the CPOs and CPMs in designing and introducing the internal control system adapted to the risks of each process.Makes sure that the organization allows for the separation of tasks.

The Internal Audit Department Reviews the operations and procedures and recommends improvements related to internal control within the frame of reference of the Group.Has global responsibility for the internal control evaluation process.

The Board of Directors

The Board of Directors, together with its Audit and Risk Committee

Monitors the way financial information is presented.Monitors the effectiveness of the internal audit and risk management systems of the Group.Monitors and reviews the independence of the statutory audit of the accounts.

3.1.3.3 Ethics and compliance with processes: An absolute requirement

The functioning of the Group and its practices are defined, delimited and governed by rules of ethics and conduct as well as common

procedures worldwide, imposed on all personnel. Rigorously applying these rules is required on a permanent basis. The policies on conduct, good practices and the frameworks of reference of the Group are explained in detail in several documents that are widely distributed and available on the Group’s Intranet.

Tools Objectives Targets Method of Distribution Perimeter of Responsibility Functioning

Control of Operating Risks

Management Book Formalizes the Group’s momemtum through the managerial processes.

All managers Worldwide distribution to all functional and operational entities of the Group and available online on the Intranet

Provides a framework for employees by:- describing Rhodia’s

identity and ambition,- presenting the Group’s

organization and the responsibilities of the large stakeholders ,

- clarifying the Group’s corporate governance (relevant bodies, policies, approval procedures, and red lines )

Placed under the responsibility of the Human Ressources Department, each process describes the goals to be reached, the sub-processes, the related risks, the red lines and the rules to be followed as well as the audit standard(s).

The Rhodia Way® Standard:

Promotes progress in responsibility of the Group through commitments and a standard

All personnel Worldwide distribution to all functional and operational entities of the Group through the Management Book and the Intranet.

Requires all personnel to make progress in their practices vis-à-vis the stakeholders .

Requires managers to proceed with a self-evaluation of their unit each year.

The Internal Audit Charter for the Group

Defines the rights and obligations of the auditing and audited entities. All personnel

Worldwide distribution to all functional and operational entities in the Group via the Intranet.



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Management of legal and financial risks

Compliance Policy To draw up the Group’s ethical principles

All employees Worldwide via the Group’s Intranet site

- purchasing and sale of shares (insider trading)

- Protection of sensitive information

-Protection of legal entity-Conflicts of interests-Use of communication networks- Respect for free competition

-Good business practices- Prevention of the risk of corruption, a responsible influence

Fraud reporting procedure To detail fraudulent conduct and actions affecting the finances of the entities or the Group

Financial managers or directors

Worldwide via the Group’s Intranet site

Finance functions : accounts, finance, cash flow

The Finance Managers or Directors inform the Group Financial Controller and the Internal Audit Director of cases of fraud, using an appropriate form

Whistleblowing To ensure breaches of accounting and financial rules are identified

All employees Worldwide via the Group’s Intranet site

Any employee who detects a breach of the accounting and financial rules is invited to report this (anonymously if they so wish) to an Ethics Committee by letter or e-mail

Ethical code for financial managers

Specifies the conduct expected of the main people responsible for the Finance function

Financial managers

Circulation to the relevant managers by letter

Finance functions : accounts, finance, cash flow

The code is signed by the managers, who make a personal commitment to adhere to it

Financial control To guarantee the publication and presentation of financial information in compliance with the applicable accounting rules

Employees in the Finance function

Worldwide via Intranet to the relevant managers

Creation undating and circulation of several tools: - A Group reporting guide specifying the accounting principles to be applied in the context of consolidation- Procedures which are act as a general framework for those in the Finance function- Instruction notes, sent out before the end of each quarter, to update accounting rules or on points of improvement



3.1.3.4 Public affairs: active involvement in the issues present in the sector

In the various zones where it operates, Rhodia promotes and defends its positions via a constructive dialogue with the public powers. The mission of the Group’s public affairs representatives is to inform the regulatory bodies of Rhodia’s positions and to contribute to their decision-making processes by providing the necessary pieces of information requested.

A worldwide, consistent and transparent organization

Rhodia promotes and defends its positions before national or international public authorities through several channels:

1 a network of spokespersons located near national and international decision making centers;

1 an office in Paris;

1 a delegation to European Affairs in Brussels;

1 a network of regional correspondents in Brazil, China, South Korea and the United States of America.

This network approach allows Rhodia to provide the public authorities with consistent, updated information on key topics, such as:

1 sustainable development ;

1 environment, climate;

1 safety, health;

1 energy, raw materials;

1 competitiveness.

Active participation in national and international professional organizations:

1 Union of Chemical Industries (UIC ) in France, AFEP-MEDEF;

1 CEFIC and Business Europe in Brussels;

1 ACC in the United States of America;

1 ABIQUIM in Brazil; ECFIC and AICM in China;

1 ICCA.

Rhodia contributes actively to the definition of the public positions of these professional organizations and participates in various focus groups and think tanks, such as EPE (Enterprise for the Environment) and the Cercle de l’Industrie in France.

Responsible lobbying

Integrated into the Rhodia Way® approach, relations with the public sector are strictly in compliance with Rhodia’s rules on responsible lobbying, as set forth in the Management Book’s “Code of Good Conduct”. Rhodia also ensures that the professional associations of which it is a member adhere to the same sort of rules.

Among the very first industrial enterprises to voluntarily register with the European registry of lobbyists, opened in Brussels in 2008, Rhodia declares its annual budget devoted to public affairs and describes the details of its dedicated organization. Recognized as a responsible stakeholder, the Group thus benefits from better access to consultations organized by public authorities within the framework of the development of their regulations.

European Registry of Lobbyists https://webgate.ec.europa.eu/transparency/regrin/welcome.do.


Management commitment in subsidiary companies

To make the management of subsidiary companies responsible for the accuracy of published information concerning the activity and its results

The Vice Presidents or General Managers of the various consolidated legal entities

Electronic reporting tool Once a year, the legal representatives of the subsidiary companies answer a questionnaire containing about 50 points related to internal auditing. They take responsibility for compliance with and application of procedures and controls in their area of authority*

* Commitment signed in 2011 regarding information published in 2010 falling within their perimeters.

See Chapters 5.1 and 5.2 of this Registration Document.



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Taking public stances

Issues Positions

Fight Against Climate Change Strongly involved in the establishment of a global carbon market (IETA).Contributes to discussions relating to the implementation of the European Energy Climate Package (ETS Directive).Benchmarks, CDM .Support for various legislation promoting low carbon technologies.Contribution made in the preparation for the Cancun Conference.

Taking Account of the Chemical Industry’s Positions

Contributes to efforts to obtain a continuation of the Kyoto process in Cancun, taking into account the stakes of industrial competitiveness and the situation of the sectors most exposed to the risks of fugitive emissions of carbon.Involved in the follow-up on the conclusions of the High Level Group Chemicals, organized by the European Commission, in particular relating to the competitiveness of the chemical industry and the follow-up on a European industrial policy.Participation in the work for launching the Strategic Committee for the Chemical Industry and Materials in France.

Taking account of the Commercial, Industrial and Sustainable Development Positions

Rhodia speaks out on various subjects such as international trade legislation (rare earth export quotas, customs surcharges for yellow phosphorus, fiberglass anti-dumping), environmental standards for automobiles (CO2

emissions, green tires, vehicle weight, airbags).Rhodia has also continued its support of the United States’ efforts to promote better access to rail transport (Antitrust Enforcement Act).Rhodia has contributed to the ICCA definition of nanomaterials.Rhodia has supported the efforts of the CEFIC and the UIC for compliance with the REACH schedules (December 2010).

3.1.4 AN APPROACH INTEGRATED INTO THE GROUP’S KEY PROCESSES

3.1.4.1 R&D: responsibility in action from the beginning of the project and onwards

Integrated very early on in the Group’s research process, the analysis of the economic life cycle and environmental or carbon footprint analysis consists of evaluating, from the initial stages of the innovation, the economic and environmental impact once it is introduced in the Group’s factories or the customers’ facilities. The methodology selected, based on ISO 14040 -44 standards as well as on a sustainable development indicator, assists in evaluating and prioritizing the projects. If the analysis shows deterioration in terms

of the environmental and human impact, the project is terminated. This analysis also permits the selection of certain technical options compared to other less favorable ones. This indicator comprises several criteria: the impact of the raw materials used the rate of use of non-renewable energies, effluents in the air and water, and toxicity to humans and the environment.

Analysis of the life cycle (or carbon footprint) is a standardized method for evaluating inputs, outputs and potential environmental impacts of a system of products during its life cycle.

See Chapter 2.3 of this Registration Document.



3.1.4.2 Purchasing: pursuing the integration of suppliers into the RSE processThe Purchasing Department is continuing to establish lasting, responsible relations with its suppliers, through information, exchanges, training, evaluation and innovative actions in conformity with the principles of social and environmental responsibility established by the Rhodia Way® .

Accordingly, the involvement of suppliers in the Rhodia Way® has been increasing regularly since 2008:

2008 Definition of unified operating practices in line with Rhodia’s objectives of continual improvement and sustainable development .Training of all buyers and integration of RSE requirements in the core of the purchasing process (selection and evaluation of suppliers, etc.).

2009 Use of a “decision grid” with the Purchasing teams, a methodology based on 5 principles, namely specific RSE performance criteria in selecting suppliers representing sales of more than €500,000 during the term of the contract.Evaluation of the performance of the 200 largest suppliers for Rhodia, based particularly on RSE selection criteria.Annual evaluation of the overall purchasing system and the principles in the Rhodia Way® process.

2010 Reiteration of safety rules in service provision and industrial supply orders.Implementation of the progress plan for suppliers that ranked below the requirements defined by Rhodia.Revamping of the training regarding RSE impacts in the purchasing process as an e-learning program.Signing of the Good Practices Charter and establishment of mediation for resolving any disputes.

2011/2012 Reinforcing the consideration of RSE impacts by buyers in the implementation of their processes and based on the new training module revised in 2010.Continuing the organization of supplier events, particularly targeting sustainable development and innovation.Supplier satisfaction measurement project following a pilot study in 2010.

2010 Assessment: clear increase in the power of responsible practices

For all bids, the suppliers are qualified, selected and evaluated in accordance with the same methodology in all geographic zones. This method allows us to assign a specific, global score (from 1 to 4) in five main areas: Competitiveness, quality and safety, product and services risks, innovation and strategic relationship. The RSE axis is based on questionnaires or audits specific to each field of activity (raw materials, packing, logistics, etc.) and touches on the following four themes: Labor relations and corporate practices, health and safety policy, commercial practices and environmental policy. An RSE score lower than 3 eliminates the bidder at the selection level.

The evaluation of 17 sustainable purchasing practices – including 4 Rhodia Way® practices – shows a constant progression in the evolution of these practices since 2007 by reaching a level of 3 (out of 4) in 2010.

Examples of actions with CSR impacts

In Brazil, the manufacture of woven wire made use of special additives and a long decantation phase that was not very profitable and generated large amounts of waste (85%). Concerned with its environmental footprint, Rhodia was able to develop an innovative process in partnership with a new supplier. This process allowed the reintroduction of waste as an additive in the manufacturing process and eliminated the long decantation phase:

1 a strong example of partnership and innovation between Rhodia and one of its suppliers;

1 a large reduction in the production of waste and related costs of destruction;

1 improvement in the profitability of the process;

1 overall reduction in costs;

1 positive impact in terms of the environment.

Rhodia’s voluntary commitment to its suppliers by the signing of the Good Practices Charter

Rhodia is one of the first 22 enterprises that signed the Good Practices Charter on February 11, 2010, in Bercy (France) under the aegis of Mrs. Christine Lagarde, the French Minister of the Economy, Industry and Employment. This charter is a voluntary commitment to promote responsible, sustainable relations with suppliers. It establishes 10 clear commitments enabling the construction of a framework of mutual confidence and a balanced relationship between the suppliers and Rhodia (particularly with small and medium-sized companies) in the knowledge of and respect for their respective rights and duties. Rhodia also designated a mediator (and correspondent for small and medium-sized companies) who can be contacted by suppliers in the case of conflicts or disputes (for details, see the Rhodia.com Internet site).



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Environmental Responsibility

3.2 Environmental Responsibility

The preservation of the natural environment in which its activities are located is an essential axis in the Group’s sustainable development policy: it is one of its firm commitments in its Rhodia Way® approach.

As a responsible chemical company, Rhodia makes significant investments in health, safety and the environment to control the risks linked to its activity and to improve its environmental footprint, particularly its emissions into the air, water and soil.

These objectives are taken into consideration very early on, at the research and development level, which includes, among its missions, designing products and processes with less impact on the environment and that are more energy efficient. Implemented throughout the entire process, beginning from Rhodia’s laboratories and ending at its customers’ sites, product risk management aims to limit incidents and accidents that impact the environment.

By equipping itself with an ambitious environmental plan by 2015, Rhodia confirms its intention of staying in the lead in its sector with respect to RSE matters. The plan selected is oriented around two major strategic axes: management of risks linked to accidental emissions and reduction of the Group’s environmental footprint.

With regard to the management of risks of accidental emissions, emphasis will be placed on prevention by reinforcing our risk analysis methods.

The reduction of the environmental footprint remains a priority and the goals set for 2010 were largely exceeded. To capitalize on its results – among the best in its sector – Rhodia has resolved to continue its rate of progress on seven priority indicators (see table below), by renewing its goals of reducing impacts by 2015, a challenge of great scope in the context of growth of production. At the same time, Rhodia is strengthening its system with two new indicators regarding the impact of activities on natural resources –

energy efficiency and water consumption - and adding a new axis to work on biodiversity, including measurement of the impact on aquatic life.

Once again, Rhodia is demonstrating its desire to anticipate long-term trends by currently addressing the issue of the increasing scarcity of water and fossil fuel. On the first point, the objective is to reduce water consumption by 10% at all sites combined over the next five years. With respect to energy efficiency, the goal is to decrease the Group’s consumption of non-renewable resources (-1.5% a year in the consumption of energy per ton of product). Joint actions between the industrial management and the research and development management have been brought to study processes and technologies adapted to the new concerns.

The protection of the biodiversity of natural aquatic milieu integrated into the Rhodia Way® framework requires impact studies and a disclosure obligation going beyond the regulatory obligations at the 22 sites involved (sites not integrated into a wastewater network shared with other industrial or community sites).

Rhodia’s environmental policy is evolving to anticipate and meet ever more demanding regulations. It’s also a question, for the Group, of raising its position as a responsible chemical company that commits it to holding itself at the best technological level and to mobilizing its internal resources to conserve its degree of advancement. This approach is one of the pillars of its competitiveness, a factor for strategic differentiation at a time when industrialists, pushed by consumers, are integrating respect for and preservation of the environment into their main purchasing criteria.

KEEPING TRACK OF THE ENVIRONMENTAL FOOTPRINT: THE 7 AXES FOR PROGRESS IN THE ENVIRONMENTAL PLAN

UP TO 2015

Indicators and Objective of Reducing Impact 2005-2015* Impacts Measured

Emission of greenhouse gases: -66% Accidental emissions of greenhouse gases

AIR

Effect on soil: Acidification of the air : -40% Emissions of nitrogen oxide (NOx ) and sulfur dioxides (SOx)

Impact on tropospheric ozone: -20% Emissions of VOC (volatile organic compounds)

Impact on water, eutrophication : -40% Emissions of nitrogen and phosphorus

WATERDeterioration of the aquatic milieu: -40% The Chemical Oxygen Demand (COD ) of the milieu

Indicators and Objective of Reducing Impact 2010-2015* Impacts Measured

Consumption of water related to activity: -10% Efforts to reduce consumption

New indicators

Consumption of energy related to activity: -8% Efforts to reduce energy consumption

Biodiversity: Deployment of ecotoxicity measurements Concerning emissions at 22 targeted sites**

* The 2015 target takes an estimate of absolute emissions associated with development projects into account in the framework of the enterprise project.

** Not integrated into a wastewater network shared with other industrial or community sites.


Sustainable Development3 Environmental Responsibility

3.2.1 HEALTH, SAFETY, ENVIRONMENT POLICY

Controlling the environmental footprint of its activities is an important issue for a chemical group. Rhodia devotes large investments to it. Due to the continual improvements made to its tools and processes, the Group is positioned at a very high level of performance for the safety of its installations. Every year, it also succeeds in further reducing the volumes of its emissions of gas, water and waste as well as their impact on the environment. Affirming these constant efforts for more than twenty years, the environmental performance indicators this year again recorded noteworthy progress in all fields.

Rhodia developed its own system for managing the safety of its employees and its sites and the reduction of its impact on the

environment (SIMSER+ : Rhodia’s own system integrating the management of safety, the environment, industrial health and transportation for sites with more than 100 people, and 3RHSE – Rhodia’s rules and recommendations for health, safety and the environment - for sites with less than 100 people).

Rhodia’s management system was certified in 2005 by the DP2i office as being in compliance with the OHSAS 18001 standard regarding human safety and ISO 14001 standard regarding the environment.

FOLLOW-UP ON HSE SITE AUDITS

Current 2010 Perimeter

2008 2009 2010

Rate of sites audited according to the 3RHSE and/or SIMSER+ frameworks within less than 3 years 100% 98% 97%

With 97% of its sites audited according to its frameworks of reference (3RHSE and/or SIMSER+ ) in the past three years, Rhodia’s performance has been excellent.

HSE INVESTMENTS

(in millions of euros/global basis)

€31.5M

ENVIRONMENTINVESTMENTS, OF WHICH:

€16.6M

Air

€2.7M

Waste

€9.8M

Water€2.4M

Remediation or dismantling of plantsand buildings, improving visualand audible impact of sites

HEALTH/SAFETY,INVESTMENTS

€30.2M

The investments in the environment totaled €31.5 million in 2010 (compared to €30 million in 2009). They are as follows:

1 air: €16.6 million (52.7%);

1 water: €9.8 million (31.2%);

1 waste: €2.7 million (8.5%);

1 dismantling of workshops, soil, environmental noise and site esthetics: €2.4 million (7.6%).

Moreover, expenditures on site rehabilitation amounted to €28.9 million in 2010.



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Environmental Management

FOLLOW-UP ON ENVIRONMENTAL ANALYSES


2008 2009 2010

Rate of realization of analysis of environmental aspects conducted or reviewed within less than 5 years 86% 87% 87%

The analyses are based on a rigorous identification of hazards and a precise evaluation of risks and potential impacts of the Group’s activities on the environment. In 2010, an environmental study was adapted, conducted or reviewed in 87% of the installations within less than 5 years, compared to 90% in 2007, 86% in 2008 and 87% in 2009.

The environmental impact studies performed by the Group showed the absence, in 2010, of significant environmental consequences from its activity.

Regular compliance studies are conducted on the Group’s sites, leading to corrective measures, and regulatory monitoring enables the necessary studies to be oriented toward responding to new requirements.

FOLLOW-UP ON ACCIDENTS/INCIDENTS IMPACTING THE ENVIRONMENT


2008 2009 2010

Accidents with chronic emissions measured:

Level 4 52 41 32

Level 3 26 55 53

Accidents with accidental and significant emissions:

Level 4 0 14 3

Level 3 0 7 3

TOTALS 78 117 91

Starting in 2007, worldwide reporting of accidents / incidents that impacted the environment (loss of containment, emissions into the water, air and soil) was established and an environmental control indicator (ECI) was constructed to describe these accidents. This indicator and the associated action plans permitted the sites to improve control of their emissions.

The incidents and accidents (down compared to 2009) and their impact on the environment are analyzed and corrective actions are taken to avoid their recurrence. No significant environmental accident was reported in 2010.



3.2.2 ENVIRONMENTAL FOOTPRINT

Generally, the 2010 data presented in this section and the following section (3.2.3 concerning the impacts on the air and water) show an increase in draw-offs and impacts compared to 2009, attributable in part to the economic recovery. The elements for comparison between 2010 and 2008 (similar years in terms of production volume) enable us to evaluate the intrinsic progress made by the Group.

3.2.2.1 EnergyEnergy Services is in charge of supplying energy to the Group, as well as managing Rhodia’s projects in reducing greenhouse gas emissions, pursuant to Rhodia’s commitment to combat global warming. In the energy sector, Energy Services directly manages energy purchases for the Group in France and for the account of third party industrialists representing 35% of the natural gas and 50% of the electricity purchased. In France, Energy Services is the second largest industrial purchaser of gas and ranks among the ten largest purchasers of electricity.

Energy Services’ mission is also to optimize the energy production assets of the Group. In this framework, it instituted energy efficiency actions focused on improving the operation of cogenerating plants (industrial tools enabling the production of both thermal energy and electricity through gas turbines).

At the global level, Rhodia uses less than 2% of coal in producing heat and electricity, thus reducing its carbon footprint.

Furthermore, Energy Services is a founding member of Exeltium, the consortium of electro-intensive industrial consumers for the purchase of electricity in France. Rhodia has been purchasing electricity from Exeltium since May 2010 at prices based on the costs of nuclear investment via a long-term electricity purchasing agreement (see Chapter 2.1.5 of this Registration Document).

BREAKDOWN OF ENERGY SOURCES

(results in tons of oil equivalent – TOE )

(Prior years unchanged – data for the year with a historic perimeter )

2008 2009 2010

Fossil fuels 1,051,379 956,692 978,143

Electric energy 548,083 403,445 442,748

Thermal energy (steam) 224,820 188,218 241,681

TOTAL TOE (net of intragroup transfers) 1,824,282 1,548,354 1,662,788

2010 BREAKDOWN

978,143 TOE

Fossil fuel

Thermal energy (steam)241,681 TOE

Electricity442,748 TOE

For 2010, the Group’s energy consumption expressed in TOE went back up 7%. Compared to 2008 (with a Group perimeter as of December 31, 2010), energy efficiency improved 1%, obtained following the 2009 launch of a structured approach to optimization of consumption by production tools. For the coming period (2010 – 2015), the Group has set an objective for improving energy efficiency by 1.5% a year.



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3.2.2.2 Air

Since 2007, indirect CO2 emissions related to the purchase of

electricity have been restated by the application of national emission coefficients(1) instead of the global coefficient adopted by Rhodia. The Group’s total greenhouse gas emissions in 2010, after restatement, amounted to 4.5 million tons of CO2

equivalent compared to 5.3 million tons in 2009.

The 2010 emission level is down 15.2% compared to 2009. Rhodia monetized a part of these reductions through sales of:

1 carbon credits (CER (2)) coming from the Clean Development Mechanism (CDM );

1 carbon credits (ERU(3)) originating from Joint Implementation projects (JI ).

The decrease in the Group’s emissions in 2010 compared to 2009 is related primarily to a supplemental investment made at the Chalampé site in France, intended to improve the destruction of nitrous oxide (N2O

) at the site, as the installation in 1998 was not capable of treating all the flows of N2O

coming from the adipic acid production plant. It more than compensates for the increases in emissions resulting from the increase in production as a result of the economic recovery.

(1) Source: IEA (International Energy Agency).(2) Certified Emission Reduction Unit.

(3) Emission Reduction Unit.

EFFECTS AT ALTITUDE: GREENHOUSE GASES (ACCORDING TO THE CATEGORIES IN THE KYOTO PROTOCOL )

(expressed in tons of CO2

equivalent)

(Prior years unchanged – data for the year with an historic perimeter)

2008 * 2009 * 2009 *

CO2 * 4,011,038 3,578,782 3,878,152

SF6

- - -

Methane 10,462 4,993 4,251

PFC 86,450 25,058 11,050

N2O 1,805,638 1,681,776 589,296

HFC 76,709 15,578 7,846

Gases other than Kyoto 573,789 28,756 33,865

TOTAL GREENHOUSE GASES FOLLOWED BY THE RHODIA GROUP 6,564,086 5,334,942 4,524,460

* After restatement (replacement of the coefficient used worldwide by Rhodia with national coefficients for electricity).

EFFECTS AT ALTITUDE: GREENHOUSE GASES

Greenhouse gas effect (excluding transfers)(results in tons)

(Prior years unchanged – data for the year on a historical basis )

2008 2009 2010

CO2 linked to chemical process 115,092 177,773 253,182

CO2 energy* 4,264,540 3,523,658 3,779,018

Other gases in CO2

equivalent 2,553,048 1,756,160 646,308

Of which, N2O

1,805,638 1,681,776 589,296

TOTAL CO2

NET OF INTRAGROUP TRANSFERS 6,564,086 5,334,942 4,524,460

* Fossil fuel and substitute fuel, electricity and steam (not net of intra-Rhodia transfers) without change of country coefficients.

Atmospheric emissions are the subject of regulatory changes, and the requirements in this area are now higher and more controlled. These emissions affect two levels:

1 in the air, with accidental greenhouse gas emissions or gases affecting the ozone layer;

1 on the ground, with accidental emissions of volatile organic compounds (VOC ) or acidification of the air (NOx and SOx ), which affect health and the environment.



Rhodia tracks its emissions of greenhouse gases covered by the Kyoto Protocol , as well as its emissions of other gases responsible for the greenhouse effect not covered by this Protocol.

Rhodia Group Greenhouse Gas Emissions (in millions of tons)

(on a historical basis )

0

5

10

15

20

25

30

35

40

22.5

8.4 6.6 5.34.5 Mt

1990 2000 2005 06 07 08 09 2010

Start of Group’s voluntary initiativeto reduce GHGs

Implementation of the Kyoto Protocol and quotas market

Data prior to 2000 has been recalculated

1997

39 Mt of GHGs

avoided in 2010

43.5Mt

Rhodia has reduced its greenhouse gas emissions 80% since 2005, following the investments made in 2006 at the Osnan site in South Korea and the Paulinia site in Brazil, then in France at the Salindres

site in 2008 and the Chalampé site in 2009. Since 2007, these installations have allowed the Group to monetize approximately 13.5 Mt of CERs a year.

EFFECTS ON THE GROUND: IMPACT ON TROPOSPHERIC OZONE:

(results in tons)

(Prior years unchanged – data for the year on a historical basis )

2008 2009 2010

Volatile Organic Compounds (VOC ) 5,275 5,097 4,106

With regard to VOC s (volatile organic compounds), total accidental emissions have decreased 19% in 2010 compared to 2009 (-1,000 tons). This decline, due primarily to the cessation of activities at the Valencia site in Venezuela in May 2010, occurred after the progress recorded at several sites belonging to the Acetow GBU with the recovery of acetone used as a solvent (Serpukhov in Russia, Santo

André in Brazil, Freiburg in Germany) and by the destruction/thermal oxydation of VOC at the Saint-Fons and Salindres sites in France.

Thus, in late 2010, Rhodia had reduced its volatile organic compound (VOC ) emissions 35% compared to 2005 with a Group perimeter as of December 31, 2010.

EFFECTS ON THE GROUND: ACIDIFICATION OF THE AIR

(in tons) on a historical basis

0

5,000

10,000

15,000

20,000

25,000 23,044

17,94615,166

11,345

15,915

11,899

5,0983,822 4,016

20092008 2010

Total SOx + NOx NOx (excluding N2O)SOx



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The gas emissions responsible for the acidification of the air (SOx + NOx (1)) increased 780 tons in 2010 compared to 2009 (+4.9%).

In comparison to 2008, these emissions are down 31% due to the start-ups of SOx abatement units at the Houston site in the United States (Eco Services) and NOx abatement units at the Chalampé site in France (Polymers & Intermediates).

This progress should continue in 2011 with the use of the SOx abatement unit for the full year at the Baton Rouge site in the United States (Eco Services), put into service in November 2010.

Rhodia Eco Services collects used sulfuric acid from refineries, where it is used as a catalyst in the production of alkylate, an essential component in high-octane gasoline. During the refining process, the sulfuric acid accumulates impurities which decreases its catalytic capacity. Rhodia Eco Services purifies the used sulfuric acid in high-temperature furnaces powered by natural gas, then returns it to the refineries where it can be reused.

Thus, in late 2010, Rhodia lowered its emissions of gases responsible for the acidification of the air by 42% compared to 2005, determined over a Group perimeter as of December 31, 2010.

(1) NOx is also a precursor, by reaction with VOCs, of tropospheric pollution (ozone).

EFFECTS AT ALTITUDE IMPACT ON THE OZONE LAYER

ODS coefficient on a historical basis

0

10

20

30

40

50

60

70 65

4 3

ODS

20092008 2010

The 1987 Montreal Protocol, an international agreement intended to reduce emissions of ozone depleting substances, required the elimination of the use of CFC , halons and any other ODS (Ozone Depleting Substance) since these substances have the short – or long – term effect of destroying the stratospheric ozone.

In 2010 Rhodia’s emissions of these substances amounted to 3 tons, largely similar to the amount of emissions in 2009, after the sharp drop in 2008 due to an investment in the Salindres site in France.

Other emissions(in tons)

On a historical basis

2008 2009 2010

Dust 541 575 660

Hx 65 48 33



3.2.2.3 Water

Water draw-offs

DISTRIBUTION OF WATER DRAW-OFFS

(in thousands of m3)

11,951Drinking water

140,304Ground water

Surface water 194,665

(results in thousands of m3)

(On a historical basis )

2008 2009 2010

Drinking Water 12,676 10,946 11,951

Ground water 171,313 144,591 140,304

Surface water 211,959 165,928 194,665

TOTAL 395,948 321,466 346,920

The draw-offs of surface water, ground water and municipal water, used primarily for cooling installations, increased 8% in 2010 compared to 2009 (25.5 million cubic meters). This increase is due mainly to draw-offs of surface water and, to a lesser extent, draw-offs of municipal water. Ground water draw-offs are down by 3%.

Draw-offs declined 3% in 2010 compared to 2008 (determined over a Group perimeter as of December 31, 2010) due to optimization plans launched within the framework of SIMSER+ and Rhodia Way® .

Although the Rhodia’s draw-offs of water in 2010 rose to approximately 347 million cubic meters, nearly 820 million cubic meters of water were recycled in 2010 in closed-loop air cooling towers that the Group has on its sites and thus were not additionally drawn off for the cooling needs of its processes.

DISTRIBUTION OF WATER DRAW-OFFS FROM SITES

IN WATER-STRESSED ZONES

(in thousands of m3)

6,464North America

Europe1,445

Asia Pacific1,196

Latin America 747

(results in thousands of m3)


2008 2009 2010

North America 6,099 5,786 6,464

Latin America 1,404 1,182 747

Pacific Asia 1,031 894 1,196

Europe 1,501 1,155 1,445

TOTAL 10,035 9,017 9,852

The Rhodia sites in water-stressed zones were inventoried and a map of their draw-offs was prepared. Rhodia has 19 sites operating in these zones (i.e., less than 30% of its industrial sites). This inventory will allow Rhodia to establish actions intended to limit its draw-offs. The water draw-offs in water-stressed zones increased 9% in 2010 compared to 2009 (+835,000 cubic meters), due to the return of the increase in activity, primarily at the amorphous silica production plants.

Aqueous waste

The legislation in certain countries where Rhodia operates requires, when applying for an operating permit, information on the “impacts on flora and fauna” in relation to the materials used or products manufactured. Accordingly, in France, the potential impacts with regard to ZNIEFs (national inventory of natural zones of ecological, faunistic and floristic interest) and ZICOs (Zones Important to the Conservation of Birds) are evaluated.

The main physical-chemical parameters that are monitored are the chemical oxygen demand (COD ), nitrogen (N) and phosphorus (P) emissions contributing to the eutrophication of waters , hazardous substances (organohalogen compounds and heavy metals), suspended matter, the pH and the temperature.



3


Ecotoxicity measurements on aqueous effluents were conducted at several sites (particularly in France) and measurements of biotic indexes were made at the receiving milieu in question. IBGN (Global Normalized Organics Index) and IBD (Diatom Biological Index) type biotic indexes were conducted in the past few years at several sites in France, principally as a voluntary procedure, to reinforce the

conclusions of the latest regulatory aqueous waste impact study at the sites (Collonges, Melle and Salindres). Their results reinforced the “no impact” conclusion on aquatic life as a result of aqueous waste. This approach will be instituted in the framework for the 2010-2015 plan for all 22 sites not integrated into a wastewater network shared with other industrial or community sites.

(results in tons)

(on a historical basis )

2008 2009 2010

Chemical oxygen demand (COD ) 8,868 7,148 9,138

Suspended matter (SM ) 2,626 2,008 1,848

Soluble salts 257,625 184,654 211,086

Absorbable organohalogens (AOx ) 20 12 78

Heavy metals (in copper equivalent) 3 3 3

In 2010, the Chemical Oxygen Demand (COD ) of emissions from the Group rose 28% compared to 2009 (+2000 tons), returning to the COD level of 2008. Although certain sites, such as Vernon in the United States (Novecare), have improved compared to 2008 (-400 tons) due to the optimization of treatment facilities, others have seen their performance at other sites has deteriorated due to an unfavorable product mix (+450 tons at the Santo André Novecare site in Brazil). Improvement measures have been identified at the sites contributing the most.

In late 2010, Rhodia lowered the Chemical Oxygen Demand of its aqueous waste by 30% compared to 2005, determined over a Group perimeter as of December 31, 2010.

IMPACT ON WATER, EUTROPHICATION

(in tons) on a historical Basis

0

500

1,000

1,500

2,000

2,500

3,000

3,5003,080

1,921

2,3232,742

1,672

2,017

338 250 306

20092008 2010

Total Phosphorus (P)Nitrogen (N)

IMPACT ON WATER, DETERIORATION OF THE AQUATIC MILIEU

(in tons) on a historical basis

0

5,000

10,000

15,000 13,389

10,289

8,868

7,148

9,138

20092006 2007 2008 2010



IMPACT ON WATER, HEAVY METAL WASTE

(results in tons of copper equivalent)


2008 2009 2010

Arsenic 0.069 0.075 0.074

Cadmium 0.008 0.010 0.016

Chromium 0.364 0.210 0.256

Copper 2.178 1.946 2.390

Lead 0.029 0.027 0.098

Mercury 0.018 0.002 0.005

Nickel 0.470 0.240 0.138

Zinc 0.361 0.212 0.265

TOTAL 3.497 2.721 3.243

Lastly, heavy metal waste, representing 3.2 tons of copper equivalent, increased 19% in 2010, rising to 2008 levels.

3.2.2.4 WasteRecycling, reuse and recovery of energy during incineration are the techniques used at the Group sites to minimize waste.

BREAKDOWN OF WASTE BY CATEGORY

(results in tons)


2008 2009 2010

Sanitary Landfills (SL )

Waste classified as hazardous, placed in SL s 20,490 8,460 7,210

Of which, hazardous waste from demolition - 189 432

Waste classified as non-hazardous, placed in SL s 39,323 25,650 28,736

Of which, hazardous waste from demolition - 5,119 11,786

Mining type waste (gypsum, carbonate, etc.) 485 142 16

Incineration

Waste incinerated by Rhodia 225,976 172,333 211,568

Of which, waste incinerated by Rhodia with valorization of the heat 153,219 114,637 145,019

Rate of incineration with valorization of the heat (internal and external) 68% 67% 70%

Nitrogen and phosphorus waste, responsible for the eutrophication phenomenon in rivers and water reservoirs, have increased by 400 tons in 2010 compared to 2009 (+21%). In comparison to 2008 (over a Group perimeter as of December 31, 2010), this waste decreased 15%, owing mainly to the ammonium nitrate valorization

project implemented at the La Rochelle site in France (Rare Earth Systems).

Thus, in late 2010, Rhodia lowered its aqueous nitrogen and phosphorus waste by 54% compared to 2005, determined over a Group perimeter as of December 31, 2010.



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Actions to reduce the impact of soil pollution

The Group’s policy aims to heighten awareness of the impact of its activities on the soils at polluted sites in order to provide the most appropriate treatments (particularly as concerns the case of “historic pollution” or sites that have been shut down) and to at least maintain the state of the land as “compatible with industrial usage.” These actions consist primarily in containment, in-situ treatment, incineration or placement at disposal points for polluted soil, pumping and treatment of ground water bodies, or simple monitoring.

As of December 31, 2010, Rhodia’s environmental provisions amounted to €271 million, enabling it to cover the updated value of all expenditures that could reasonably be estimated over the required time period, which may go beyond 2020 or even 2050

for some sites where the situation justifies it. Disbursements, which amounted to €28.9 million in 2010, cover the expenses of studies and realization of operations to control impacts or restore sites, as well as the operating costs for treatment facilities with historic pollution, both on its closed sites as well as on those in operation in Europe, North American and Latin America.

The following worksites or studies were created in 2010: a pilot study regarding the treatment of dumps in Wattrelos (France) with IRZ (In-Site Remediation Zone) technology; remediation of a zone polluted with PCBs in New Brunswick (United States); finalization of in-situ bioremediation treatment of polluted land in Cubatao (Brazil); and pumping of pollution from a groundwater body in Paulinia (Brazil).

In 2010, 70% of the waste was therefore valorized with heat recovery during the incineration phases.

Selective sorting done on an ongoing basis at all of Rhodia’s industrial sites and research centers permits reusing a portion of raw materials and packaging.

VALORIZATION OF MATERIALS AND LAND FARMING

(Results in Tons)


2008 2009 2010

Valorization of materials 86,069 50,006 38,885

Land farming 29,981 29,351 23,188

(in tons)

38,885Valorization of materials

Land farming23,188



3.2.3 RESPONSIBLE PRODUCT MANAGEMENT

Control of the Health, Safety and Environmental aspects throughout the entire product life cycle, from their design to the end of their product lives, is part of Rhodia’s Product Stewardship process. For each product, a Material Safety Data Sheet (MSDS ) in North America or a Safety Data Sheet (FDS) in Europe is created providing necessary information regarding health, safety, the environment or transportation.

The Product Stewardship processThe FDSs must be updated at least every three years according to the Group’s rules. They are then sent to customers and research and production teams, which are informed of the various dangers in relation to the specific stages.

In 2010, the goal of a three-year review of the FDSs and MSDSs was exceeded at the worldwide level.

In 2008, the operational deployment in Europe of an integrated database (Compo EHS database) that facilitates tracking of all compositions created and placed on the market (raw materials and products), represented a major advance in the Product Stewardship program. This new approach to trackability and meeting regulatory requirements, will now permit Rhodia to offer its customers a continual qualitative update of the information that the Group makes available to them. This deployment continued in 2009 in China and South Korea and served as a support for the deployment in progress of the new ESH SDS module to steer the regulatory compliance of FDSs intended to meet the GHS(1)/CLP(2) and REACH regulations (multilingual, classification of hazards, semi-automatic output based on data from EHS Compo(3), integration of exposure scenarios).

In 2010, the deployment objectives in Europe (FDS in the REACH and GHS / CLP format) and in Brazil (FDS in the GHS format) were achieved despite the late publication (summer 2010) of various standards and methodological guides by ECHA and/or the competent authorities.

The CMR “Red Line ”: Rhodia’s voluntary commitment at the worldwide levelIn the framework of its Management Book (an internal control tool presented in Chapter 5.1.2.1 of this Registration Document), the Group implemented a specific procedure in 2006 concerning CMR (carcinogenic, mutagenic, reprotoxic) substances (all products marketed, CMR 1 and 2 of the European Union(4) and Groups 1 and 2A of the CIRC (International Cancer Research Center)

classification at the global level. This “red line ” instituted for all Group sites requires an inventory of Rhodia CMR products, the systematic search for replacement products and the management of the risks inherent in these products.

Rhodia CMR substances on the market

NUMBER OF CMR SUBSTANCES PUT ON THE MARKET

(Worldwide)

2004 2005 2006 2007 2008 2009 2010

777788

20

In 2006, the inventory permitted identification of 5 Rhodia CMR substances on the market alone or as a component contributing to the CMR classification of a product. During the same year, in compliance with its Responsible Care® commitment, the Group decided to self-classify 3 additional substances, bringing to 8 the number of CMR substances identified by the Group at the global level within the context of its internal policy.

In 2007, in application of the red line , replacement and risk controls studies were performed for 6 out of the 8 substances identified on site at Rhodia’s customers. The Group also shut down production and marketing of one substance, reducing to 7 the number of Rhodia CMR substances on the global market, alone or as components.

In 2009, the number of Rhodia CMR substances on the market was still 7. Replacement studies were conducted or updated for all 7 substances.

In 2010, the number of CMR substances on the market was still 7. Analyses of additional risks were updated for two of these substances to confirm control of the risk to its customers or in its workshops.

(1) Globally Harmonized System of Classification and Labeling of Chemicals (UN GHS).

(2) Globally Harmonized System of Classification and Labeling of Chemicals (UN GHS).

(3) Classification, Labeling and Packaging of substances and mixtures (Regulation (EC) No 1272/2008).

(4) CMR 1A & 1B according to the European regulation, CLP.



3


Rhodia CMR substances used in preparations:

FOLLOW-UP ON THE USE OF CMR SUBSTANCES AT OUR SITES


2008 2009 2010

Number of uses of CMR s (categories CE 1, 2, IARC 1 and 2a) on the sites 540 637 641

Number of activities involved 862 1,084 1,112

% of evidence of non-replacement or redirected replacement 98% 98% 99%

% of in-depth evaluations performed 98% 99% 99%

% of CMR files created 98% 97% 99%

In late December 2010, at all of the Group sites, about 640 uses(1) for CMR s (categories 1 and 2 of the European Union, IARC (CIRC) 1 and 2A) were declared for less than 140 CMR substances used pure or contained in preparations.

Inventory of substances subject to the REACH regulation within the European perimeter (including the CMRs )In 2008, Rhodia pre-registered 736 substances (first stage in the implementation of REACH taking place from June to December 2008). In 2009, the substances pre-registered by Mc Intyre were added. Among these approximately 800 substances, Rhodia registered 77 substances in the 1st band of tonnage (subject to registration before December 1, 2010), including the CMR substances. These CMR substances corresponded to:

1 3 of the 7 CMR substances identified in the “red line ” at the level of finished products placed on the market;

1 6 imported substances used as raw materials and therefore not marketed among the Rhodia finished products.

At the end of 2010, ECHA published the number of substances registered (approximately 3,400), including about 400 CMR substances, or a ratio of 12%.

These CMR substances will be gradually subject to authorization.

Internal organization to comply with the REACH and CLP regulationsIn early 2008, Rhodia established a worldwide “project” organization to organize the work into networks among the Rhodia GBUs (Product Stewardship teams, business and industrial), the Support Departments as shared service (Information System, Legal,

Purchasing, R&D, Finance, Industrial – DRC/HSE ) and the team of experts in Toxicology, Ecotoxicology and Regulation of the DRC.

This project is handled by:

1 a monthly steering committee bringing together the REACH leaders in GBUs and Support Departments;

1 a quarterly meeting with the GBU Managers and the Support Departments, which defines:

− the policy, rules (for example, capitalization of expenditures) and long-term vision, and

− the implementation of REACH and CLP within Rhodia, particularly in terms of costs and resources.

In 2008, the progress on the REACH project was highlighted by:

1 the ongoing inventory of substances subject to pre-registration and the implementation of tracking tools for substances produced and imported into Europe by Rhodia;

1 the continuation of the REACH action plan with Rhodia’s raw materials suppliers, to ensure the pre-registration thereof;

1 the installation of information tools (IUCLID5, REACH IT, etc.) developed by the ECHA ;

1 evaluation of the “strictly controlled conditions” status of isolated intermediates in the first band of tonnage (subject to registration prior to December 1, 2010). These evaluations allow, on the one hand, a demonstration that the production and use of these intermediates are controlled by an HSE management system and, on the other hand, that exposures are controlled by Rhodia with regard to health and the environment; and

1 the pre-registration of all substances manufactured or imported by Rhodia and contained in Rhodia products marketed in the European Economic Zone, or a total of 736 substances that it intends to register.

(1) A CMR used several times at the same site is counted only once. The same CMR used at several sites is counted several times.


Sustainable Development3 Corporate Social Responsibility

Very strong mobilization again marked 2009 and 2010, in particular through:

1 the finalization of the “strictly controlled conditions” status of isolated intermediates in the first band of tonnage (subject to registration prior to December 1, 2010);

1 the participation in consortia or SIEFs (jointly with other producers and importers of identical substances) to exchange data and to prepare for the registration of substances in the first band of tonnage (subject to registration prior to December 1, 2010);

1 the evaluation of exposures and risks (exposure scenarios, Chemical Safety Report) and the definition of measures permitting control of risks with regard to the Health of the users and the protection of the Environment (Risk Management Measures);

1 the preparation of Classification, Labeling, Packing of the GHS and the CLP regulation. To facilitate the deployment of the GHS system in the Group and the implementation of the CLP, the DRC developed information sharing tools and a worldwide project group to avoid the Zones producing contradictory classifications in various countries for the same product;

1 the preparation of Safety Data Sheets for finished products meeting the requirements of the REACH and CLP regulations (classification, labeling, exposure scenarios, etc.) applicable as of December 1, 2010;

and in particular the registration with ECHA of all substances in the first band of tonnage and notification of the classification and the labeling for the substances produced, imported and placed on the European market.

3.3 Corporate Social Responsibility

In 2010, Rhodia initiated an ambitious corporate-wide project with an affirmed objective: to become one of the champions of profitable and responsible growth. Its strategy is based on a reconfigured organization and increased mobility of its teams.

Creating the conditions for this mobilization is the main objective of Rhodia’s human resources policy: during 2011, this will involve assisting and supporting employees in understanding and integrating new issues, giving them the tools to develop the know-how and the flexibility required by growing markets and anticipating the Group’s needs for skills on a global scale.

In addition to these requisites, Rhodia needs to remain attractive to its current and future employees by developing skills, professional fulfillment and the quality of the work environment.

Implementing the corporate planThe implementation of the new corporate plan implies that each employee will participate daily in the development process of his GBU or Department. To do this, several behavioral principles have been identified as key to the strategy’s success (see inset 1 below). The mission of human resources is to assist and support the managers in implementing these new behaviors and in managing the changes to which they lead. Thus, in 2010, managers received training on the changes required by the new corporate plan. The new focuses and principles have been formally set out in the Management Book, a reference document that specifies the scopes of activities and the limits of each function. A behavioral component will also be introduced during the evaluation interviews for managers in 2011.

This is how the new corporate culture, based on the autonomy and the accountability of each of its participants, will unfold.

Supporting the Group’s growthOne of the major challenges for Human Resources is to significantly expand the skills available in order to support the rate of development established by the Rhodia strategy. Everywhere, and particularly in emerging countries, the growth dynamic is already impacting the recruiting, training and integration policy. Thus, the number of hires doubled in 2010, returning to pre-crisis levels. The number of hours per employee devoted to training has increased appreciably and new programs focus on the development of key skills for achieving the Group’s ambitions: marketing, sales know-how and management of key accounts. Group-wide programs concerning leadership, values, Rhodia’s culture and the Rhodia Way® foster the feeling of belonging and the appropriation of values worldwide.

In such a context, job planning management is another major issue, particularly in emerging markets. To handle this planning, Human Resources benefits from its strengthened proximity to the management of the GBUs. Now that Human Resources is integrated within Business Units, it is better able to identify the local and sectoral needs of the activities and to anticipate them more specifically in the long-term. In 2011, particular attention will be paid to the Asia Zone, with the establishment of a sourcing, training and mobility policy tailored to the specific nature of this very competitive market in which most of Rhodia’s GBUs are active.



3

Corporate Social Responsibility

As a core part of this planning, businesses have been structured as Group-wide corporate families to ensure a comprehensive view of needs as well as to promote mobility and the creation of personalized career paths within the Group.

Establishing itself as a responsible and attractive employerEven though the Group is transforming its organization, the basics of its culture have not changed. As a responsible producer of chemical products, Rhodia has made a certain number of commitments to its employees as part of its Rhodia Way® framework. Individual development, the establishment of career paths that promote the employability of everyone, well-being at work and, finally, the quality of the social dialogue are the components of Rhodia’s culture.

In 2010, the Group signed a number of innovative agreements concerning working conditions. In France, an agreement aimed at reducing the severity of working conditions was signed. In China, the Group plans to test negotiations training for managers and unions at two pilot sites in 2011 in order to respond to the new requirements of the authorities.

Rhodia is also continuing its joint efforts with the ICEM in evaluating site by site the application of its commitments concerning respect for Human Rights and labor laws, Social and Environmental Responsibility and safety. In 2010, the first Dialogue on Safety initiated in 2009 was held in the United States at the Baton Rouge site.

This desire to involve employees rigorously, transparently and responsibly is one the distinctive features and strengths of the Rhodia group. A rate of job turnover that is lower than the market rate and the success of employee shareholding plans affirm the employees’ attachment to the Group. In 2010, the capital increase offered to employees (see Chapter 3.3.6 of this Registration Document) mobilized almost one employee out of two worldwide, with strong participation in Brazil (79.1%), South Korea (61.58%), and France (60.37%). This success reflects the quality of the social climate and attests to the motivation of employees to invest in their company.

The 5 major principles of the Human Resources policy:

1 motivating and fair compensation and benefits policy making it possible to attract and retain talent at all levels of the organization;

1 performance management for fact-based and transparent evaluation of performance and skills with the objective of professional recognition and development;

1 an individual development policy making it possible to identify and manage talent at all levels of the Company, involving managers in developing their employees’ skills and building careers that encourage transversality within the Group;

1 a policy of corporate dialogue making it possible to develop locally conditions for constructive, quality consensus and close communication at each site, encouraging “active listening”, the guarantee of a good quality of life at work;

1 a strong contribution to developing the Rhodia culture by managing the right balance between the Group’s core values and local variations, especially by building a wealth of strong trust throughout the organization.

7 key behaviors for growth:

1 take responsibilities and assume them;

1 delegate and develop;

1 encourage and challenge;

1 act like an entrepreneur and maintain group unity;

1 establish a transparent dialogue and encourage feedback;

1 free yourself from pre-established patterns of thought and make decisions based on the facts;

1 accept errors and learn from failures.



3.3.1 CHANGE IN STAFF AND EMPLOYMENT: MAJOR TRENDS

As of December 31, 2010, the Group had 14,129 employees(1) worldwide for all of its activities. After a sharp 6.6% decrease in employees in 2009, due to the difficulties the Group experienced as a result of the global economic crisis, Rhodia’s workforce stabilized in 2010 at less than 0.3% on a constant basis.

In 2010, 59% of hires were made in Asia and in Latin America. In all, the portion of Rhodia staff in these two regions continues to increase with an average workforce of 42% in 2010 as in 2009; this change over the past ten years reflects the Group’s development strategy in these regions of the world. The average workforce in Europe and North America was 58% in 2010, including 46% in Europe and 12% in North America.

The age pyramid is balanced with an average age of 42 and with a younger population in Asia and in Latin America. Overall, 14% of employees are over the age of 55. The average age for women is 40 and the average age for men is 43.

The tables below indicate the total number of employees (open-ended contracts and fixed-term contracts) “used”, excluding temporary staff, which are analyzed separately. This data is presented based on a historical scope of consolidation as of December 31 of each year:

CHANGE IN TOTAL STAFF

2008 2009 2010

Change in staff 14,353 13,581 14,129

(1) Corresponds to “used” employees, that is employees working at the sites (employees on the payroll – long-term absences – expatriated employees + impatriated

employees).

STATEMENT OF JOBS CREATED/ELIMINATED EXCLUDING EFFECTS OF A CHANGE IN THE SCOPE OF CONSOLIDATION

2008 2009 2010

Recruits Departures Recruits Departures Recruits Departures

North America 110 156 95 158 139 110

Latin America 201 297 152 320 341 405

Asia Pacific 243 237 129 479 283 286

Europe 246 591 103 481 295 301

TOTAL 800 1,281 479 1,438 1,058 1,102

CHANGE IN TOTAL STAFF BY GEOGRAPHICAL ZONE

2008 2009 2010

France 31% 32% 31%

Europe excluding France 15% 14% 13%

North America 11% 12% 12%

Latin America 21% 21% 20%

Asia Pacific 22% 21% 24%

31%France

13%Europe excluding France

12%North America

Asia Pacific24%

Latin America 20%



3


BREAKDOWN OF TOTAL STAFFING BY AGE AS OF DECEMBER 31, 2010

BREAKDOWN OF TOTAL MANAGER AND NON-MANAGER

STAFF BY GEOGRAPHICAL ZONE

Zone Manager Non-Manager Total

North America 3.7% 8.3% 12.0%

Latin America 3.1% 16.8% 19.9%

Asia Pacific 3.8% 19.1% 22.9%

Europe 11.1% 34.1% 45.2%

TOTAL 21.7% 78.3% 100.0%

BREAKDOWN OF TOTAL MANAGER STAFF BY GENDER

Women Men Total

Total Managers 27.5% 72.5% 100.0%

Including Directors 11.8% 88.2% 100.0%

Including Other Managers 29.0% 71.0% 100.0%

In 2010, 21.7% of employees had manager status; of this number, 27.5% are women (stable compared to 2009). Among the managers, 280 are senior executives, including 11.8% women, up 9% since 2007. Overall, women represent 23.3% of the Group’s workforce.

BREAKDOWN OF THE AVERAGE NUMBER OF TEMPORARY

PERSONNEL

2008 2009 2010

North America 7.3 36.8 36.2

Latin America 130.1 34.3 61.0

Asia Pacific 202.3 80.0 70.3

Europe 261.1 91.3 252.3

TOTAL 600.8 242.4 419.8

Concerning temporary personnel, resumed growth in the countries affected by the crisis in 2009 led to a sharp increase in this type of contract, increasing the worldwide workforce to 420 at the end of 2010, compared to 242 at the end of 2009. The breakdown at the end of 2010 is 68.7% in Europe and North America and 31.3% in Asia and Latin America.

3.3.2 MONITORING PERSONAL HEALTH AND SAFETY

The health and safety of its employees is an absolute priority for any chemical company. The quality of working conditions and control of risks associated with the activity are daily concerns for Rhodia and have been incorporated, since the Group was founded, in a management system recognized as one of the most successful in the sector. With less than one accident with work disruption per million hours worked, employees and subcontractors combined, Rhodia has ranked among the world’s top chemical companies(1) in occupational safety for the past five years.

The Group is continuing its efforts within the context of ongoing improvements. The safety plan sets as an objective, over the next 5

years, to remain below the level of one accident per million hours worked with or without a work disruption for Rhodia personnel, temporary workers and third parties working at Rhodia sites (TF2 rate).

Furthermore, it intends to continue the efforts made on reducing the number of serious accidents (refer to the discussion on the “restated severity rate” after the table on accident rates). The safety plan also provides for a vast awareness/action program known as “Vigilance” that will be rolled out in France in the next two years. The program’s objective is to promote prudent and responsible behaviors among operations personnel, instill a sense of responsibility and analyze individual gestures and actions made on the work sites.

(1) Ernst&Young study - February 2009 – based on data published by the companies.

< 18 years 18-24

years

25-34

years

35-44

years

45-54

years

> 55 years

13.97%

28.52%31.28%

21.41%

4.67%

0.15%



Rhodia uses a number of methods (mostly behavioral) to encourage its employees to implement good safety practices. In 2010, 90% of employees were involved in a progress campaign related to health,

safety or environment. Rhodia is also developing campaigns in the field of Human and Organizational Factors in Safety (HOFS) and hired a HOFS contact person.

Rhodia’s efforts in the fields of health, safety and environment are also illustrated by a very concrete commitment on the part of managers in the field. “Safety” inspections performed by the members of the Group’s Executive Committee and “Safety” inspections by upper management (“VSH”), performed by the members of the Management Committees of the Global Business Units (GBU) of Rhodia, help raise awareness and motivate the teams. The average number of Safety inspections by members of the Management Committees of the GBUs was 9.5 in 2010 (compared to 7.5 in 2009).

Health: a voluntary prevention approachBeyond industrial risk, Rhodia also works to reduce the risks of products to which its employees may be exposed. Thus, since 2006, with regard to a “red line” in its Management Book (refer

to Chapter 5.1.2.1 of this Registration Document), the Group is pursuing a voluntary worldwide process to limit CMR products (carcinogenic, mutagenic and toxic to reproduction) through a routine search for substitute products and management of specific risks (see Chapter 3.2.3 of this Registration Document).

In 2010, the Group identified 33 occupational diseases recognized or likely to be recognized as such, all sites combined (compared to 48 in 2009). These diseases were all located in France. These diseases are for the most part the result of past exposures, primarily to asbestos (79%), prior to the creation of Rhodia. The latency time for asbestos diseases is generally long between initial exposure and the first clinical X-ray manifestations (most often between 30 and 40 years). In many cases, the Rhodia Group nevertheless assumes all the consequences of these illnesses.

MANAGEMENT SAFETY INSPECTIONS

Management safety inspections

Current scope of consolidation 2010

2008 2009 2010

Number of safety inspections performed during the year by a member of the GBU Management Committee 7.6 7.5 9.5

Safety: an absolute requirement rooted in the processesThe result of 30 years of safety culture, solidified in the field by continuous vigilance, the Group’s performance relies on routine preventive procedures concerning the health of its own employees including third parties working at its sites, as well as the communities surrounding these sites.

EMPLOYEE INVOLVEMENT

0

20

40

60

80

100

77%

90% 90%

20092008 2010



3


Results approaching excellenceAs part of its responsible approach, Rhodia is developing increasingly precise indicators to track more closely the severity of accidents and the profiles of the populations concerned.

An illustration of our desire to deal consistently with all individuals concerned by HSE problems, the overall frequency rates developed

since 2006 take into account all the people working at our sites: Rhodia employees, temporary personnel and subcontractors.

Beginning in 2007, Rhodia decided to present more precise results (2 figures after the decimal point) which will allow for better evaluation of the progress made concerning its Safety indicators (data provided on the basis of the historical scope of consolidation).

ACCIDENT RATES

0.0

0.5

1.0

1.51.5

1.43

1.18 1.181.09

0.7 0.670.59 0.62

0.72

20092006 2007 2008 2010

TF2 Global(3)TF1 Global

In terms of

occupational

safety, Rhodia

ranks among the

best worldwide

in the chemical

industry*.

* Ernst & Young study - February 2009 - based on data published by the companies.

2005 2006 2007 2008 2009 2010

TF1 Personnel working at a Rhodia site(1) 0.9 0.7 0.67 0.59 0.62 0.72

TF2 Personnel working at a Rhodia site(2) 2.1 1.5 1.43 1.18 1.18 1.09

TF1 Rhodia personnel(3) 0.8 0.5 0.50 0.63 0.60 0.71

TF2 Rhodia personnel(4) 1.8 1.1 1.18 0.91 1.04 1.18

TG Personnel Rhodia(5) 0.05 0.04 0.05 0.05 0.05 0.042

Occupational diseases for Rhodia personnel 41 57(6) 53(5) 69(5) 48(5) 33(5)

TF1 Temporary workers(7) 1.4 1.7 2.57 1.05 0 5.21

TF2 Temporary workers(8) 2.3 2.3 3.22 2.11 0 5.21

TF1 Outside contractors(9) 1.1 1.2 0.82 0.46 0.71 0.44

TF2 Outside contractors(10) 3,0 2.6 1.79 1.68 1.65 0.61

Number of deaths of Rhodia personnel, outside contractors and temporary workers 0 0 1 0 0 1

(1) Frequency rate of accidents leading to a work disruption for one full day (or more), in addition to the day of the accident, for Rhodia personnel, temporary workers

and contractors not belonging to the Group working at Rhodia sites, measured in number of accidents occurring per million work hours.

(2) Frequency rate of accidents leading to a work disruption or not for Rhodia personnel, temporary workers and contractors not belonging to the Group working at

Rhodia sites, measured in number of accidents occurring per million work hours.

(3) Frequency rate of accidents leading to a complete disruption for one full day (or more), in addition to the day of the accident, for Rhodia personnel, measured in

number of accidents occurring per million work hours.

(4) Frequency rate of accidents leading to a work disruption or not for Rhodia personnel, measured in accidents occurring per million work hours.

(5) Severity rate of accidents with work disruption for Rhodia personnel, measured in number of days lost per thousand work hours.

(6) Severity rate of accidents with work disruption for Rhodia personnel, measured in number of days lost per thousand work hours.

(7) Frequency rate of accidents leading to a work disruption for one full day (or more), in addition to the day of the accident, for temporary personnel employed by the

Rhodia group sites, measured in number of accidents occurring per million work hours.

(8) Frequency rate of accidents leading to a work disruption or not for temporary workers employed by the sites of the Rhodia group, measured in number of accidents

occurring per million work hours.

(9) Frequency rate of accidents leading to a work disruption for contractors not belonging to the Rhodia group but working at Rhodia sites, measured in number of

accidents occurring per million work hours.

(10) Frequency rate of accidents leading to a work disruption or not for contractors not belonging to the Rhodia group but working at Rhodia sites, measured in number

of accidents occurring per million work hours.



Frequency rate TF1 (accidents with work disruption for all people working at Group sites), which is the only one widely reported by all industrial companies, has been below 1 for five years now, a level that ranks Rhodia among the best worldwide(1) in the chemical industry in terms of occupational safety. In 2010, this rate was 0.72, a slight deterioration compared to the rate for 2009 (0.62).

Frequency rate TF2 (accidents with or without work disruption) held steady at an excellent level for chemical and petrochemical companies with a value of 1.09, a level never before achieved.

The Group nevertheless regrets to report accidents with irreversible injuries, which led it to implement and monitor a specific “restated severity rate,” enabling better management of the “Individual Workplace Safety” process.” Implemented in 2007, this trend indicator shows the same level of severity at the end of 2010 as in 2009 (which was down significantly compared to 2008) regardless of the number of accidents, which increased slightly over the same

period. The perspective gained after three years of monitoring this indicator and the lessons drawn from it have allowed specifically for justifying the implementation of an awareness/action program known as Vigilance, whose objective is to promote prudent and responsible behavior by operations personnel in their daily tasks. This program is under development in France.

Lastly, Rhodia regrets the occurrence of a fatal accident in India at a site undergoing demolition involving a person employed by an outside contractor.

Hygiene, health and safety investments in 2010Investments in hygiene, health and safety for the entire Group amounted to €30.2 million in 2010 compared to €21.9 million in 2009.

(1) Ernst &Young study- February 2009 – according to data published by the companies.

3.3.3 DIVERSITY, AN ASSET TO BE PROMOTED

Initiated long ago, Rhodia’s diversity policy targets two objectives: encouraging the fair advancement of all employees within the organization and making sure that management and its teams reflect the Group’s profile and values: international, with a strong presence in growth markets, and aware of its social responsibilities. Human Resources strives, in particular, to increase the number of employees from emerging countries in upper management through the detection of potential, training and mobility. Increasing the number of Asian managers is one of the priorities for the coming years.

At the same time, Rhodia wants to guarantee its employees equal opportunities both when they are hired and as they pursue their careers in the Group. Preventing discrimination is a constant objective that is expressed in the special attention paid to the careers of women in the Group, to development of the skills of seniors and to the inclusion of disabled workers. Social action is one of the commitments that promotes diversity: so Rhodia is involved in policies to integrate youths from disadvantaged backgrounds.

A growing diversity of international profilesAs the Group confirms its position as an international player, the percentage of its international managers has increased steadily. As of December 31, 2010, 43.2% of managers were of a nationality other than French. Rhodia encourages this evolution by initiating training programs aimed at making the Group more attractive to talent from developing countries. Thus, Rhodia has supported for the past four years a recruitment program for “Chinese engineers” in partnership with ParisTech*. Thanks to scholarships awarded by Rhodia, Chinese students come to France to complete their studies at one of the

11 ParisTech schools. In addition to funding their studies in France, Rhodia takes on the role of trainer and offers these young scholarship recipients internships during their second and third years. One of them recently joined the Group as a Research and Development engineer for the Engineering Plastics market.

Non-discrimination, a strengthened commitmentIn the countries where it operates, Rhodia goes to great lengths to ensure its employees equal advancement by setting up anti-discrimination mechanisms.

For example, in France, the Group signed the Diversity Charter in October 2004. It is thus one of the 60 major French companies committed to promoting diversity in all its forms. In 2008, Rhodia took a major step forward in its policy against discrimination in hiring practices by incorporating this objective in its management practices. Since July 2008, professionals in the Human Resources department and Managers have a guide to practices and tools to adopt to guarantee real equal opportunity. Diversity training is also given to operational managers who hire employees: the issues are explained along with the necessity of applying exemplary practices.

In the United Kingdom, Rhodia has applied the Equality Act since October 2010. The Group thus guarantees all its applicants and employees equal opportunities regardless of their age, disability, gender, origin, religion or beliefs, sexual orientation, civil status by protecting them from any form of discrimination.

* Institut des sciences et technologies de Paris.



3


Inclusion of disabled workers, a voluntary processIn partnership with the Agefiph** Rhodia conducted a Disability Diagnostic, at the end of 2008, at several of its sites in France. This audit confirmed the Group’s desire to conduct a more proactive campaign in favor of hiring people with reduced work capacity. Negotiations with labor and management were initiated during the first quarter of 2001 with the goal of reaching a company-wide agreement on the subject.

In Brazil in 2007, Rhodia launched a program to integrate disabled workers, taking the disability into account in the recruitment and training process. This process includes the identification of the jobs most adapted to disabilities, the personalized support of the employees concerned and specific actions intended for their supervision. Disabled workers represent 5% of the employees hired in Brazil in 2010.

Implementation of a Seniors policy in FranceRecognized as key experts in their field of activity, experienced employees can transfer their knowledge, their inter-personal skills and even their self-fulfillment skills to younger employees, thereby contributing to the continuity of the practices and values specific to the Group.

The recruiting, retention and motivation of “seniors” throughout their career is one of the focuses of the management policy of Human Resources. Formalized in the agreement relating to the second half of the career of Group employees, signed with the unions on

December 15, 2009, these commitments were implemented in 2010 at the French sites.

Work-study, a preferred path for the integration of youthsA key for employment and a veritable asset for the Company, work-study is a modern response tailored to the training and qualification of youths.

Rhodia offers work-study training for levels CAP to Bac+5, within its different professional networks and for all these businesses. The positions to be filled are located throughout France. A reflection of the popularity of this type of contract in the Group, the number of young work-study recruits increased from 82 in 2009 to 123 in 2010, 70 of whom are under an apprenticeship contract and 53 of whom are under a professional contract. As of December 31, 2010, Rhodia had a total of 157 work-study employees at its French sites.

Promoting the employability of youths from disadvantaged neighborhoodsIn France, Rhodia signed in 2008 a national commitment agreement for the integration of youths from disadvantaged neighborhoods as part of the “Espoir Banlieues” plan (youths under the age of 26 residing in a Sensitive Urban Area and Urban Social Cohesion Contract). The Group thus confirms its desire to offer them opportunities to learn about the Company, for professional training and employment by offering them internships, work-study programs and fixed-term and opened-ended employment contracts.

** Association de Gestion du Fonds pour l’Insertion des Personnes Handicapées (Association to promote the Insertion of Disabled Individuals into the Workforce).

3.3.4 DEVELOPING SKILLS AND ENCOURAGING EMPLOYEE TRANSFERS

Developing skills is one of the pillars of job planning management. This policy consists of identifying the Group’s needs by professional families, early on as possible, via several key processes. This data is supplemented by detailed knowledge of the skills acquired or to be developed by each of our employees and their desires for advancement.

The annual performance and development interview

The Annual Performance and Development Interview (APDI) is the fundamental procedure for assessing the match between skills and anticipated needs. The APDI has been implemented with 100% of the Group’s executives and approximately 70% of non-executive employees. The ultimate objective is to cover 100% of the staff worldwide.

% APDR* deployment in 2010

0

20

40

60

80

100

Groupexecutives

Groupnon-executives

Long term objective: 100% coverage of

the global workforce



During this interview, managers and employees analyze their behavioral and technical skills in order to identify their strong points and areas for improvement. This analysis allows reflection concerning professional advancement and makes it possible to determine the development necessary for individual performance for the current or future position. This development plan may be based on a set of actions: in-house or external coaching, attendance at conferences, training activities, etc. The individual training activities selected enhance the overall training process. If professional advancement is considered, the employee is included in the Group’s transfer and career management process.

3.3.4.1 Transfer management policy and process

The challenge of the transfer policy is to encourage in-house transfers of employees while capitalizing on local employees’ expertise and skills. Its implementation is based on coordinated international management of the different professional families.

Led by the Group Human Resources network, the transfer process is applied in each country for positions created locally. For international positions – essentially concerning executives – transfers are organized by geographic zone. At the same time, through the “career opportunities” section on the Intranet, employees can learn about and apply for positions to be filled.

The transfer process is based on two tools widely disseminated within the Group:

1 the Progression, Development and Succession Plan (PSDP), intended to anticipate changes and replacements to be made. Implemented worldwide according to a very strict annual schedule, the PSDP is intended for all managers and allows them to develop succession plans on the basis of individual advancement plans;

1 job and skills management planning involves all job categories. It involves a collective approach that translates, particularly in France, into agreements with the social partners.

The performance of the transfer process is currently measured by in-house and geographic transfer criteria.

In-house transfers

In 2010, in-house transfers within the Group, all populations combined, amounted to around 11%. Most of the in-house transfers were concentrated in France (37% of transfers), in Brazil (30% of transfers) and in the United States (16% of transfers); 14% of the Group’s managers benefited from a lateral transfer or a promotion, and 3.5% of the Group’s managers were involved in an international transfer.

Group executive officers

who received a sideways

transfer or a promotion

14%

3,5%

Group executive officers

who received transfer

or a promotion

overseas

International transfers

A large number of transfers were made in 2010 due to the change in organization, both with respect to new jobs abroad and to employees returning to their home country. Transfers will increase in 2011.

As of December 31, 2010, 100 managers of the Group were given geographic transfers. Rhodia also has 14 Volunteers for International Experience (VIE). VIE contracts were very popular in 2010, and the trend will continue in 2011 with five VIE departures already planned between January and April 2011.

2008 2009 2010

Number of expatriates, “opportunity assignments” and short-term assignments 114 106 100

Number of Volunteers for International Experience 5 6 14



3


BREAKDOWN OF EMPLOYEES RECEIVING INTERNATIONAL TRANSFERS BY GEOGRAPHICAL ZONE AS OF 12/31/2010

46%Asia

North America16%

Latin America7%

Europe31%

ZoneExpatriates

MILD* Opportunity +** Short-term Assignments Total

Asia 30 14 2 46

Europe 15 13 3 31

Latin America 7 0 0 7

North America 5 10 1 16

TOTAL 57 37 6 100

* MILD: “Mission Internationale Longue Durée” – Long-term International Assignment. The expatriation assignment consists of a long-term international experience

of 18 months to 5 years. The terms and conditions include a “Home Country” option, which makes it possible to maintain a standard of living comparable to that

of the home country.

** “Opportunity +” allows Rhodia employees to go abroad more easily. It is a long-term international experience lasting 18 months to 5 years. The “Opportunity+”

option offers employment and compensation conditions similar to those of a local employee. The local compensation follows the practices of the host country and,

in principle, all of the compensation is paid in the host country. This policy is also offered to employees who have limited professional experience (3-5 years) to

whom Rhodia offers a position in another country.

3.3.4.2 Training management policy and process

Rhodia’s training policy aims to provide the 13,496 (excluding Feixiang) active employees of the Group with the same number of hours of training regardless of their position and their geographic location.

The training management system is sustained by the APDI process and by annual “Group Training Guidelines.”

Group Training Guidelines

The “Training Guidelines” provide the Group’s general framework for preparing individual and collective training plans targeting the development of skills and the employability of Rhodia’s employees.

As part of the new organization, the 2011 training guidelines include:

1 the issues specific to each of the professional families;

1 the issues specific to each of the 11 GBUs;

1 the Group-wide issues for fostering the development of a Rhodia culture focused on operational excellence, behavioral excellence and business expertise.

The individual and collective training is organized in all the countries and at the Corporate level according to four objectives:

1 better knowledge of Rhodia: its values, its culture, its organization, its processes;

1 developing managerial and personal skills;

1 developing leadership skills;

1 developing business skills through tailored responses to the issues specific to the professional families.

All of the individual needs expressed during evaluation meetings are consolidated at the level of each country, then prioritized in the general framework provided by the Group Training guidelines. This process makes it possible to set up training plans specific to each country. Their proper implementation is a pledge to each employee’s successful individual development, success that contributes to the Group’s overall growth.

Performance of the Rhodia Training process is currently measured by different indicators, the changes of which are shown in the following tables:



A training policy suited to the new issues

A strengthened training budget

In 2009, the economic crisis and the inherent cost reduction efforts led Rhodia to reduce its training budget; however, it continued its efforts by strengthening in-house training.

In 2010, in a more favorable context, Rhodia once again made sizeable investments in training to round out the offering of in-house programs with outside programs making it possible to respond to the issues of operational excellence necessary to the Group’s new growth dynamic. In 2010, the investment in training was on average €380 per employee, subsidies included.

On average, employees had 32 hours of training, up 18% compared to 2009. This training involved 85% of employees in 2010 (compared to 80% in 2009).

In-house training, a continued priority

Rhodia chose to continue in-house training as the principal mode of transferring and developing the knowledge within its organization. Of the 32 hours of training per employee in 2010, more than 15 hours were in-house, or 47% of the volume of hours. In 2010, the Group confirmed the importance of in-house training while at the same time strengthening the quality of the offering through outside training reserved for acquiring new skills or supplementing the in-house programs.

Thus, in 2010, the Purchasing professional group chose in-house training to strengthen the technical skills of its purchasing agents through the apprenticeship of new tools and new negotiation methodologies. The “negotiation excellence” program was launched with the support of an outside organization to establish the content and train the international in-house trainers. At the end of 2010, these employees had trained 60 purchasing agents in Europe, Asia, the United States and Brazil. The ten sessions scheduled in 2011 will make it possible to train all of the employees in the department.

Establishment of e-learning

To round out its training offering, Rhodia launched a pilot e-learning program in 2010. E-learning is already being used in some fields

such as language learning. It is also widely used in certain countries, like in the United States, where more than 34% of training hours were devoted to e-learning in 2010. Nevertheless, e-learning is not used the same way everywhere in the world for technical and cultural reasons. The objective of this project is to look into the technical, organizational and thematic methods promoting a worldwide approach.

Two focuses were identified in 2010:

1 immediate and homogeneous access to information regardless of the location. In 2010, three modules were developed in-house and placed online in order to help all employees familiarize themselves with the economic indicators essential to understanding the Company’s results;

1 an alternative method for presenting information that is sometimes difficult to access: in France, the training on the new European legislation on labeling chemical products was dispensed via e-learning tutorials. Assisted by experts trained in the exercise, more than 1,600 employees completed this module.

In 2010, e-learning represented 9% of training hours.

Programs focused on excellence

Accelerating understanding of the Group and integration

In 2010, the Rhodia integration program involved more than 100 new hires in all the countries. Dispensed over 3 days, this module offers an overview of Rhodia and allows the participants to develop relationships within the Company.

Intended to strengthen the culture of responsibility of all employees, the new “Acting Responsibly” program began at the end of 2009, with a special focus on the industrial population. Relying on a network of in-house trainers, the program is currently being used in France and in the United States and already has already reached more than 2,210 employees out of 4,000 targeted. In 2011, this program will be deployed in Asia and Latin America.

TRAINING INVESMENT PER PERSON

(€/person)

357

290

186

380

20092007 2008 20100

50

100

150

200

250

300

350

400

AVERAGE NUMBER OF TRAINING HOURS

(per year per employee)

25

30

35

27

32

2009 2010

(of which15hrs/employee internally)

(of which 16hrs/employee internally)



3


Strengthening managerial skills

Several programs seek to strengthen employees’ personal and managerial skills in order to improve their effectiveness in their day to day role. In 2010:

1 The Group continued to strengthen the financial knowledge of its employees. In addition to the e-learning modules on economic indicators, face-to-face programs (training conducted by an individual) were offered in France, Brazil and China with more than 175 people trained.

1 The “Train the Trainers” program aimed at strengthening the instructional skills of in-house trainers was continued in 2010. A total of 159 members of Rhodia’s training community took part in the sessions organized at the Group’s different sites.

1 In France, the “management workshops” program was launched with 260 employees in management positions. These workshops seek to strengthen their position as full-fledged members of the chain of command and, in particular, their role as communication relay to the teams. They also offer the managers tips on understanding their environment and improving communication skills. In 2010, 182 employees took this module.

Strengthening leadership skills

1 The Corporate program intended to develop leadership skills was taken by 107 leaders of the Group. At the same time the Group launched a new program to support the management teams of the Global Business Units and of the departments in support of the Group’s new ambition: 107 leaders divided into 3 sessions

took this new module; the 5 new sessions planned in 2011 will involve around 200 invited leaders.

1 “Impact and influence” is one of the behavioral skills that is a pillar of the Group’s growth ambition. The training offering was expanded with programs intended to strengthen this skill individually and collectively. In 2010, 110 employees from all the businesses took this training.

Strengthening business expertise

1 The Finance group successfully extended its “University.” Completely managed in-house, the purpose of this training is to generalize and improve understanding of financial subjects and accelerate the integration of new arrivals in the Finance group. Deployed in each of the Zones for a full week, it brought together 200 participants in 2010.

1 A special effort was made by the IT Department to improve the rate and the quality of use of the IT applications serving as support for the transactions carried out by Rhodia’s different businesses. Approximately one hundred in-house trainers were identified, and a training catalogue was put online. It currently offers 94 modules, which represent a volume of 75 hours of training.

1 One priority identified is to strengthen the “Key Account Managers” strategy, operations and negotiations skills. A program lasting for two 2.5-day sessions was developed with an outside organization, then validated by a panel of experts representing the different Global Business Units of the Group.

3.3.5 DEVELOPING A RICH AND BALANCED CORPORATE DIALOGUE

Regular dialogue with corporate partners, present at most of Rhodia’s sites around the world, is an integral part of the Rhodia culture. The Group’s Management is mindful of keeping personnel representatives informed in complete transparency with the intention that together, everyone can better prepare for economic, social and organizational changes. This approach allows each of the parties – the Group and its corporate partners – to fulfill their responsibilities and encourages their joint commitment to protect employees’ interests.

Corporate dialogue, the basis for corporate cultureThis culture of corporate dialogue was solidified in 2004 with the signing of an agreement establishing a Strategic Dialogue Body (SDB). This body brings together the Chairman and Chief Executive Officer of Rhodia and, to the extent necessary, the members of the Executive Committee, with the French union coordinators and the secretaries of European Works Councils and of the France Group Committee. This body, which has met fourteen times since its

creation, is a major venue for exchanges concerning the Group’s strategy.

In 2005, Rhodia strengthened this approach by signing the first worldwide Social and Environmental Responsibility agreement of the sector with the International Federation of Industry Employees (Fédération Internationale des Salariés du Secteur – ICEM ) (see 3.1.2.3 of this Registration Document). This agreement was updated and renewed in 2008(1). Every year, the members of the ICEM and representatives of Rhodia’s Management Committee visit different Group sites to evaluate them: in 2010, the Group traveled to China and South Korea (following China in 2007, Brazil in 2008 and the United States in 2009).

2011 also witnessed the implementation of the agreement signed in 2009 creating a body specializing in work safety, the joint Rhodia-ICEM “Global Safety Panel.” Within the framework of this agreement, a visit was made to the Baton Rouge plant in the United States in October 2010.

(1) Refer to section 3.1.2.3 – ICEM : A worldwide commitment to social and environmental responsibility.



Collective agreements signed in 2010This corporate dialogue is also illustrated by the density of negotiations of collective agreements concerning employees.

In France, the following were signed at the Group level in 2010:

1 an employee incentive plan linked to achievement of EBITDA ;

1 two amendments to the Group Savings Plan allowing a capital increase reserved for employees(1);

1 an agreement concerning the assessment and analysis of psychosocial risks. This agreement allowed the joint Health Safety Environment body to work on developing an initial action plan. This agreement legitimized Rhodia’s inclusion on the Labor Ministry’s list of best French companies;

1 an agreement concerning shift work employees. This innovative agreement, aimed at reducing the difficult work conditions of shift work, contains various action plans and creates a temporary early retirement system for employees who have worked shifts for many years (over 22 years);

1 a framework agreement concerning personnel management. Initially signed in 2007 by two labor organizations (CGT/ CFDT), this Personnel Management agreement (Gestion Prévisionnelle des Emplois et Compétences – GPEC) with a term of three years (2010-2012) was renegotiated and signed by three labor organizations (CFDT/ CFE-CGC/ CGT);

1 an agreement relating to the mandatory annual negotiations. This employee agreement signed, for the first time in Rhodia’s existence, by all the labor organizations, once again ranked Rhodia’s pay raise budget among the highest in the industry in France for 2011.

More generally, the work method implemented in France in 2009 with the personnel representatives was progressively broadened to all the establishments in 2010. It consists in the joint determination of a social agenda scheduling the topics to be dealt with during routine weekly meetings.

In Poland, an agreement concerning the 2011 wage policy was signed quickly even though negotiations generally continue through the first quarter of the following year. This was the result of cooperative negotiations between management and personnel representatives that were begun in the fourth quarter of 2010.

In the United Kingdom, during the consolidation of the Leeds and Halifax sites, the quality of the local and national dialogue

was enhanced by the relationships established on the Pension Committee, which has met regularly since 2003. The compromise agreement on the general transfer conditions was signed under good conditions, following discussions at the national level and changes concerning the eligible retirement age made during the year by the management.

In Italy, in response to a growing backlog of orders and within the framework of a responsible attitude toward corporate dialogue, an agreement increasing productive activity was signed. This agreement includes flexibility in the event the order backlog returns to a normal level.

In Brazil, incentive agreements tied to profits at each site were signed with the local unions.

In Venezuela, the Acetow plant was closed under good management-labor conditions after obtaining the approval of the very influential local union.

In South Korea, wage negotiations take place regularly at the two industrial sites (Onsan and Incheon) with local union representatives.

Including productive corporate dialogue meetings:

In Russia, a meeting was organized between the President of the workers’ union and the Director of Human Resources of Acetow in April 2010. In October 2010, a meeting was held in Freiburg with the Freiburg works council, the Russian works council and the Acetow Management in order to get a better understanding of the systems of mutual industrial relations between Germany and Russia.

In the United States, meals (e.g.: barbecues, picnics, etc.), Thanksgiving and Christmas parties and vacations are organized for employees and their families at certain sites, HSE (Health, Safety, Environment) good practices awareness days are also organized.

In China, an attitude concerning corporate dialogue is one of the best ways to cooperate with the local authority and the unions. To comply with the regulations and ensure that the employees benefit from certain advantages, Rhodia encourages them to attend all types of activities (seminars, safety days, etc.). The Group goes to great lengths to stay current with the changes in the market while at the same time working closely with the unions to give employees pay raises.

In India and Thailand, the Group organizes activities for staff, such as safety days during which Rhodia trains its employees and their families in good HSE practices (fire prevention, first aid, evacuation drills, etc.).

(1) See section 3.3.6 – Sharing the fruits of growth: employee shareholder programs.



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3.3.6 SHARING THE FRUITS OF GROWTH: EMPLOYEE SHAREHOLDER PROGRAMS

The Group’s policy with regard to employee shareholding is based on three priorities:

1 involving employees more closely in the Group’s performance;

1 allowing employees to save under preferential conditions;

1 increasing the portion of Rhodia’s capital held by employees.

Established several years ago, the employee shareholding policy has demonstrated that each new operation plays a unifying role with respect to the corporate strategy. These regular operations help develop a shareholder frame of mind in employees who are motivated by their dual contribution as employees and investors, thus giving them a better understanding of the Company’s priorities.

In 2010, the capital increase for employees was subscribed by one out of two employees, even more in the growth zones. This exceptional participation rate testifies to the confidence of employees around the world in Rhodia’s strategy and its prospects for growth. It confirms the relevance of a human resources policy that places a premium on transparency, openness and accountability.

The drivers of employee shareholder programsRhodia has set up a number of programs to support the development of employee share ownership:

1 a fund invested in Rhodia shares in the Group Savings Plan (PEG) benefitting from matching employer contributions (see below);

1 the establishment in 2007 of a worldwide program of free grants of shares through which Group employees were granted 15 shares each, amounting to 0.2% of the capital;

1 capital increases in 2006 and 2010 (see the details of the Avenir 2010 operation below),

The Group also maintains close relations with Rhodia Alliance, Rhodia’s employee shareholders’ association, which indicates the importance that the Group assigns to its employee shareholders.

The Group Savings Plan (PEG)

The Group Savings Plan gives the employees of the Group’s companies who enroll in this plan the right to make voluntary contributions and to invest their profit-sharing or incentive earnings. The Group Savings Plan offers access to different company mutual funds (FCPE). Some serve as supports for capital increases reserved for employees of the Group who are enrolled in this Group Savings Plan, these mutual funds then being invested in Rhodia shares.

The rules of the FCPEs invested in Rhodia shares provide that their Supervisory Boards will exercise the voting rights attached to the Rhodia shares held by each of these FCPEs.

In accordance with the legal requirements, Rhodia offered an FCPE to its employees in 2010. For its first year, this FCPE achieved a certain amount of success with net assets of approximately €2 million.

The capital increase reserved for employees: Avenir 2010

In June 2010, Rhodia offered a capital increase reserved for employees. This operation, called Avenir 2010, included:

1 three million new shares reserved for employees with preferential purchasing conditions;

1 the possibility of purchasing Rhodia shares at a reduced price while benefiting from solid guarantees;

1 two offers: a “standard offer” and a “leveraged offer.”

This new capital increase reserved for employees is consistent with the logic of mobilizing all employees around the Group’s new organization.

Carried out in 13 countries and in 9 languages, Avenir 2010 met with strong support: around 6,000 employees of the Group subscribed to the offer, or a worldwide participation rate of 44.72%. For the first time, countries like India and China took part in the capital increase with participation rates comparable to the other countries, which represents a true success, given the novel nature of this type of operation in these countries. The strongest participation rates were found in Brazil (79.1%), South Korea (61.58%) and France (60.37%).



Rhodia received the “International Employee Shareholder Award” organized by the French Federation of Employee Shareholders and Former Employees (Fédération Française des Associations d’Actionnaires Salariés et Anciens Salariés – FAS) in recognition of its active policy with respect to international employee shareholding. The FAS stressed in particular Rhodia’s desire to tailor its policies to the specific requirements of the countries concerned, to encourage its international development and to strengthen communication and education concerning these subjects for all the employees of the Group.

The success of Avenir 2010 illustrates a strong commitment on the part of employees and demonstrates their confidence in and their attachment to the Group. This positive signal testifies to a good social climate and an ambition that is shared by management and employees. This result is all the more remarkable since it comes at a time of global crisis and uncertainty concerning the financial markets.

Following the Avenir 2010 operation, the Group’s employees held 6.5% of Rhodia’s capital compared to 3.7% previously. Management is considering setting up programs of this type on a regular basis.

RATE OF PARTICIPATION BY COUNTRY

United Kingdom Germany Brazil China South Korea Spain United States

13.49% 27.81% 79.10% 11.87% 61.58% 5.71% 12.67%

France India Italy Japan Poland Singapore

60.37% 33.71% 6.85% 41.17% 10.85% 24.36%

Ownership of Rhodia’s capital by employee shareholdersAs of December 31, 2010, the total number of shares held by employees of the Group, as per article L.225-102 of the French Commercial Code, breaks down as follows:

FCPE Rhodia 2000 1,010,000

FCPE Actions Rhodia 735,181

FCPE Rhodia International 63,337

FCPE Avenir 2006 1,253,591

FCPE Aspire 2006 257,076

FCPE International Aspire 2006 60,128

FCPE Avenir 2006 22,735

FCPE Zukunft 2006 51,910

Avenir 2010 2,185,196

International Aspire 2010 415,388

Shares held directly by the employees through the FCPE 374,967

TOTAL SHARES HELD BY EMPLOYEES REPRESENTING 6.15% OF RHODIA’S CAPITAL 6,429,509

Employee shareholders have held more than 3% of the Company’s capital since 2006.

Jacques Khéliff was appointed director representing the employee shareholders by the Shareholders’ Meeting held on May 20, 2009 following an election that involved all of the Rhodia shareholders worldwide.



3

Responsibility towards communities

3.4 Responsibility towards communities

Controlling the risks connected with its operations and integrating its activity locally are Rhodia’s main commitments toward the communities that live near its sites. The Group works constantly to improve the safety of its processes, products and methods, particularly through increasingly detailed reporting tools. Anticipating crisis situations and transport safety are the main focuses of our prevention

policy. Our risk control approach is also backed by transparent and regular communication with the local communities. Thanks to our tradition of dialogue and openness, we have established relationships of trust with civil society, solidified all over the world by Rhodia’s recognition as a responsible player in local development.

3.4.1 CONTROLLING FACILITIES-RELATED INDUSTRIAL RISKS

An absolute obligation, controlling industrial risks requires rigorous prevention procedures and the establishment of emergency procedures making it possible to closely contain any crisis situation.

Evaluating risks associated with facilities and processesControlling Rhodia’s industrial risks is based on a precise evaluation of existing risks. To this end, there is a safety audit program for all Group facilities. These extremely detailed “Safety Procedure”

audits evaluate the potential risks associated with both products and processes and are reviewed every five years. This program relies on a network of process safety experts supported by process managers responsible for validating the transition from one phase of a project to another, both in terms of production as well as safety. The objective of these procedures is to prepare the prevention and protection measures required for all sites and facilities and to analyze all processes in action in order to evaluate the risks by detecting key parameters.

TRACKING OF PROCESS SAFETY AUDITS


2008(1) 2009(1) 2010(1)

Performance rate of “process safety” audits performed or revised within the last 5 years 89% 83% 87%

Performance rate of “Seveso process safety” audits performed within the last 5 years 99% 98% 98%

(1) Indicator based on the cumulative percentages of coverage of each plant.

Rhodia’s goal is to perform or to have reviewed a safety audit tailored to its risks for each facility, within the last five years.

An analysis of process safety risks was performed at 87% of the facilities within the last five years. The analysis focused in particular on Seveso or similar facilities (for countries outside the European Union), for which a coverage rate of 98.1%(1) was achieved.

As of December 31, 2010, Rhodia has identified 28 “high or low tier” Seveso or comparable sites worldwide (including 13 in Europe), likely to present risk for the health or safety of the neighboring populations and for the environment due to a danger of explosion or emissions of harmful products.

(1) Indicator based on the cumulative percentages of coverage of each plant.


Sustainable Development3 Responsibility towards communities

PROCESS ACCIDENTS


2008 2009 2010

Number of Process accidents (level C) 0 0 0

Number of Process accidents (level H) 3 2 3

Number of Process accidents (level M) 48 53 45

Number of Process accidents (level L) 324 267 178

Improved process safety is consistent with the continuous progress approach and is an on-going objective at the Group’s sites.

All accidental events originating in a malfunction connected with a process are recorded and analyzed. Rhodia tracks the number of these “accidents” all over the world and classifies them by level of severity: C (catastrophic), H (high), M (average), L (low).

In 2010, and for the second consecutive year, there were no category C (catastrophic) events.

Additionally, the number of level H (high) accidents is low and has been relatively constant from year to year for the last six years.

Finally, in order to improve the safety of its processes, in Rhodia debuted a reporting system for level L (low) accidents. Raising the

awareness of the main players concerning this new reporting level made it possible to improve its exhaustiveness in 2008, which explains the increase in the number of accidents of this category compared to 2007. The results for 2009 and 2010 confirm a clear improvement trend. An analysis of their main causes reveals areas for work, particularly action in the field of Human and Organizational Factors in Safety (HOFS) dovetailing in this sense with the “Vigilance” program (Refer to Chapter 3.3.4 of this Registration Document).

Finally, in France, efforts concerning risk analysis continued with the pursuit of the preparation of files for the Technological Risk Prevention Plans (TRPP) pursuant to the law of the same name of July 30, 2003. Thus, at the end of 2010, all 8 TRPPs were prescribed by the Prefects.

Defining emergency plans for managing any type of accident

EMERGENCY PLAN


2008 2009 2010

Rate for sites with an emergency plan tested* within the last 3 years (*general and/or partial test) 98% 98% 98%

Rate for sites that revised their emergency plan with the last 3 years 95% 97% 97%

Rhodia’s objective is to produce an emergency plan tailored to the risks identified for each entity and each activity. Rhodia makes significant accident prevention efforts with a goal of “zero accidents.” Nevertheless, since zero risk does not exist, the Group prepares itself for different types of accidental situations, whether these situations are associated with industry, transport or products. Given the variety of risks, the Group has established emergency plans at different levels of the organization: Group, country, GBUs and industrial sites. The emergency plans define the roles of each entity according to the type of crisis encountered and specify how the different entities are to coordinate with each other to ensure effective management. The objective is for each GBU to establish (or revise) an emergency plan suited to its activities.

Since employee preparedness for emergency response is indispensable for acquiring good reflexes and acting proactively, training was dispensed, particularly in the main countries where the Group has an industrial presence. These worldwide crisis management training programs emphasize the importance of coordination, cohesion and mobilization of expertise (inside and outside the Group), as well as the different stages of crisis situations.

In 2010, 98% of the entities tested their emergency plan within the last 3 years (97% had revised their emergency plan within the last 3 years). This achievement, confirming the progress made last year, demonstrates that this practice is now permanently established in almost all of the Group’s operating entities.



3

Responsibility towards communities

Concerning transport, the change in the number of accidents was as follows:

TRANSPORT ACCIDENTS


2008 2009 2010

Number of Transport accidents (level C) 0 0 0

Number of Transport accidents (level H) 2 5 4

Number of Transport accidents (level M) 20 19 18

Number of Transport incidents (level L) 79 51 74

More specifically concerning transport accidents:

1 63% of accidents are still due to events occurring during transport, which is why carrier awareness actions will be continued in 2011;

1 37% of accidents occur during loading or unloading operations, which is why procedures are reviewed at sites to try to remedy these malfunctions.

Rhodia pays special attention to the choice of its carriers, based on data from the European Chemical Industry Council (CEFIC ). In addition, as part of the Group’s Sustainable Development approach, the Purchasing Department has implemented and expanded the use of a sustainable development and corporate and environmental responsibility evaluation questionnaire for carriers during the new supplier selection stage. Lastly, an annual performance evaluation process is being implemented worldwide (see Chapter 3.1.4.2 of this Registration Document).

The following actions, initiated a few years ago, were continued in 2010 in the field of transport:

1 pursuant to international transport regulations, Rhodia sites have implemented transport security plans for high consequence dangerous goods and certain destinations considered risky. “Security” means the measures or precautions to be taken to minimize theft or the improper use of dangerous goods that could endanger people, goods or the environment;

1 following the commitment made by Rhodia in 2003 to fight terrorism as part of the voluntary US C-TPAT (Customs Trade Partnership against Terrorism), the US-Customs & Border Protection agency conducted an audit in 2006 of three of Rhodia’s French sites. The inspectors estimated that certain

good practices implemented at these sites could be considered examples that should be emulated. In 2007, they awarded Rhodia Inc. the highest level of achievement (Tier III). Following the audits performed by U.S. Customs in India and the United States, the three-year “recertification” by U.S. Customs confirmed this Tier III level;

1 Rhodia Operations in France became involved in the European Union’s Authorized Economic Operator (AEO) program in 2010;

1 100% of the Rhodia sites that ship goods to the United States had an extensive transport safety plan in keeping with C-TPAT in 2010;

1 a Quality, Safety, Health, Environment and Transport Safety and Security agreement was drafted by the Rhodia Group and signed by all of the carriers working under contract with the Group in France. This agreement is being extended to Europe, where 80% of carriers have now signed it;

1 an international emergency information number operational 24 hours a day, 365 days a year was implemented in early 2010 in order to respond to any requests from customers, local authorities, etc. It enables the Group to have knowledge very quickly of events (such as transport accidents) and to react as fast as possible to provide expertise and assistance to the caller.

Additionally, in some countries, Rhodia must satisfy regulatory security requirements necessitated by the measures set in place to fight against possible terrorist action. These requirements, which involve the security of these countries, are covered by the laws of these countries concerning the protection of secrecy. They also allow better cooperation and more effective protection with the official services responsible for the protection of people and property.


Sustainable Development3 Responsibility towards communities

3.4.2 STRENGTHENING EXCHANGES AND DIALOGUE WITH LOCAL STAKEHOLDERS

Wherever its sites are located, Rhodia intends to develop relationships of trust with the local communities based on constructive dialogue and transparent communication concerning industrial risks. As a player involved in the life of the neighboring communities, Rhodia also intends to meet its economic and social responsibilities toward civil society.

Proactive information and communicationAs part of its industrial risk control policy, the Group also makes efforts to explain its actions outside of the Group. Opening up sites such as during open house days in France, as well as participating in local information and consensus-building committees (CLIC in France, Community Consultation Committees in the United States, etc.) contribute to information and dialogue with the neighboring populations of Rhodia sites, elected officials and associations.

In 2009, Rhodia continued the application in France of the “emergency communication” initiative launched by the Union of Chemical Industries (UIC ) and the Ministry of Ecology, Energy, Sustainable Development and Territorial Development. This initiative aims to quickly report even minor incidents occurring at the Group’s production sites or during transport of its products. Applicable to all Rhodia production units in France, this proactive communication initiative strengthens the dialogue the Group maintains with neighboring populations, the local media, elected officials and other interested parties .

Involvement in local lifeThe Group encourages the initiatives of its GBUs, sites or employees that seek to translate Rhodia’s civic values into action. Helping the

disadvantaged, encouraging the training and the integration of youths and protecting the environment are all philanthropic activities that are part of the commitments formalized in the Rhodia Way® framework. Everywhere, Rhodia and its companies support local solidarity causes, whenever possible, through donations or volunteer efforts by its employees in charitable organizations (in Asia helping children in orphanages or supporting education, in North America efforts to help non-governmental humanitarian service agencies, etc.)

In Brazil, the Rhodia Foundation (Instituto Rhodia), which acts as an independent organization, has been developing social and environmental projects on a national scale since 2007. From 2007-2013, the Foundation had funding from Rhodia amounting to USD 1 million (€735,000). Part of this endowment comes from the value created by the greenhouse gas emissions reduction project at the Paulinia site in Brazil.

The Foundation is developing a program called Alquimia Jovem (Young Alchemy) focused on educating disadvantaged or socially marginalized youths and involves more than 80 youths between the ages of 12 and 16 living near the Paulinia research center. Twice a week, these youths practice a sports activity (soccer, basketball, volleyball) and participate in exchanges on different issues (health, environment, drugs, career counseling, etc.). In 2008 and 2009, the Foundation also supported the Museu de Arte Jovem (program bringing art and youth together) through the Memoria Local Na Escola project. The objective is to get children and teachers to reflect on the history of their community and to bring old and young together. Other programs also intended for the schools seek to provide modern teaching materials to teachers. For more information, see the dedicated web site (only available in Portuguese) at www.institutorhodia.com.br.



3

Review report by one of the Statutory Auditors on a selection of environmental and safety indicators

3.5 Review report by one of the Statutory Auditors on a selection of environmental and safety indicators

Further to your request and in our capacity as Rhodia’s Statutory Auditor, we have carried out a review for the purpose of enabling us to express moderate assurance on a selection of environmental and safety indicators listed below, based on historical Group structure for 2010 (all sites that belonged to Rhodia in 2010) and presented in sections 3.2.2 and 3.3.2 of the Registration Document:

1 Air: greenhouse gases expressed in CO2 equivalent, acidification (nitrogen and sulphur oxides) and tropospheric ozone (volatile organic compounds);

1 Water: water withdrawals, eutrophication (nitrogen and phosphorus) and damage to the aquatic environment (chemical oxygen demand and suspended solids);

1 Safety: Rhodia personnel (TF1 , TF2 , TG and deaths), contractors (TF1 , TF2 and deaths) and temporary staff (TF1 , TF2 and deaths), all personnel (Rhodia, contractors and temporary: TF1 and TF2 ).

The data are prepared under the responsibility of Rhodia’s Senior Management in accordance with the Responsible Care® reporting procedures (DRC 06 and the related glossary, DRC 06-01), which are available for consultation at corporate headquarters.

Our responsibility is to express a conclusion on the data based on our review.

Nature and scope of our workWe conducted our work in accordance with professional standards applicable in France.

We carried out the procedures described below to obtain moderate assurance that no material irregularities exist with regard to the data. We did not perform all of the procedures required to obtain reasonable assurance (a higher level of assurance would have required more extensive work).

Our work was conducted at corporate headquarters and at six major sites worldwide, representing six operating units, selected on the basis of 2009 data (main contributors to environmental indicators or sites not visited in previous years):

1 Chalampé (France);

1 Zhangjiagang (Chine);

1 Freiburg Acetow (Germany);

1 Cincinatti (United States);

1 Baton Rouge (United States);

1 St Fons Chimie (France).

Our work was conducted between December 2010 and the end of January 2011.

Environmental data for the units visited cover, for each indicator, the following percentages of the total figures published by the Rhodia Group:

Greenhouse gases (CO2

equivalent, after elimination of intra-Group transfers) 2010 43%

Acidification (nitrogen and sulphur oxide emissions) 2010 49%

Tropospheric ozone (VOC emissions) 2010 37%

Water sampling 2010 54%

Eutrophication (nitrogen and phosphorus emissions) 2010 54%

Damage to the aquatic environment: DCO 2010 emissions 42%

Damage to the aquatic environment: suspended solids 2010 23%

This is a free translation into English of the review report by one of the Statutory Auditors issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.


Sustainable Development3 Review report by one of the Statutory Auditors on a selection of environmental and safety indicators

At corporate headquarters and prior to the site visits:

1 Assessment of the reporting procedures in terms of their relevance, reliability, objectivity and understandability.

During site visits:

1 we checked that the Group reporting rules were properly applied, particularly the definitions relating to the Responsible Care® indicators within the scope of this report;

Concerning environmental and safety indicators:

1 we reviewed the calculation methods used to determine Responsible Care® reporting data, in particular for consistency and reliability;

1 we compared, on a test basis, the data entered in the reporting system by the operating units with information obtained from a wide range of sources (including self-assessments, reports prepared for government agencies, reports by outside organizations drawn up in the context of local regulations, internal control documents, invoices and management reporting data);

1 we performed an analytic review of the raw data used to calculate the 2010 indicators, compared with data for the previous year;

1 where discrepancies were identified, we determined the correct value based on discussions with the operating unit and Corporate Responsible Care® team, and checked that the necessary adjustments had been made in the operating unit’s reporting datasheet.

After the site visits, at corporate headquarters:

For the sites visited:

1 we checked that the data reviewed for the operating units visited had been properly included in the consolidated data produced by the reporting managers in the Corporate Responsible Care® Department.

For the sites that were not visited:

1 we reviewed, on a test basis, the work carried out by the reporting managers to follow-up and explain the discrepancies between 2009 and 2010 data;

1 we reviewed, on a test basis, the consistency checks made by the reporting managers;

1 we reviewed, on a test basis, the significant corrections made by non-visited sites after discussions with the reporting managers.

We were assisted in our work by experts from our Sustainable Development Department.

ConclusionBased on our work, no material irregularities came to light causing us to believe that environmental and safety data described in the first paragraph above do not comply, in all material respects, with the Group’s Responsible Care® reporting procedures applicable in 2010.

Neuilly-sur-Seine, February 03, 2011

PricewaterhouseCoopers Audit

Christian Perrier Sylvain Lambert

Statutory Auditor Sustainable Development Department

Partner Partner

For each safety indicator, data for the units visited cover the following percentages of total hours worked used to calculate frequency and severity rates:

Rhodia personnel 17%

Contract employees 11%

Temporary staff 12%

All personnel (Rhodia, contract, temporary) 15%

291

Glossary

Glossary

AIR ACIDIFICATION

Pollution caused mainly by emissions into the air of SO2 and NOx which, once oxidized and hydrolyzed, are converted to nitric and sulfuric acids and return to earth when it rains.

AOx

Organic compounds present in halogenated water that are absorbed on activated carbon.

CARBON MARKET

The carbon market consists of all the mechanisms for trading in greenhouse gas emission reduction credits, known as carbon credits.

CDM

Clean Development Mechanism is a financing mechanism for projects established by the Kyoto Protocol enabling industrialized countries to make investments aimed at reducing its greenhouse gas emissions in a developing country.

CEFIC

European Chemical Industry Council, whose mission is to promote and continuously improve the activities of the European chemical industry, including health, safety and environmental performance.

CER

Certified Emission Reduction - carbon emission credit Unit of value of the Kyoto Protocol representing 1 ton of CO2

equivalent. CERs are issued under the framework of the emissions reduction project.

CFC

Chlorofluorocarbons.

CMR

Carcinogenic, Mutagenic or toxic for Reproduction.

CO2

Carbon dioxide.

COD

Chemical Oxygen Demand. Assesses the amount of oxygen consumed in the destruction of chemical compounds and which is therefore not available to aquatic fauna and flora.

Registration Document Rhodia 2010The symbol placed at the end of a word directs the reader to the glossary on page 291 and seq.


Glossary

CSR

Corporate Social Responsibility.

CURRENT BASIS

Basis at December 31 of the year under consideration.

DNA

Adiponitrile.

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization.

ECHA

European Chemicals Agency, based in Helsinki (Finland).

EMI

Environmental Management Indicator.

EUA

European Union allowances – Carbon credits issued by the European Union Member States and used in the European Union Emissions Trading Scheme (EU ETS).

GHG

Greenhouse gas.

Hx

Halogen hydracids.

HCFC

Hydrochlorofluorocarbons.

HISTORICAL BASIS

The historical basis for a year N corresponds to the sites owned by Rhodia during that year N. The pro rata temporis rule is applied to sites bought or sold during the year.

HMDA

Hexamethylenediamine.

HSE

Health Safety Environment.

293Registration Document Rhodia 2010

Glossary

ICEM

The International Federation of Chemical, Energy, Mine and General Workers’ Unions represents more than 20 million workers in 470 trade unions in 132 countries.

IN SITU

“In situ” can refer to where a clean up or remediation of a polluted site is performed using and simulating the natural processes in the soil, contrary to “ex situ” where contaminated soil is excavated and cleaned elsewhere, off site.

ISO 14001

International standard ISO 14001 was drawn up in September 1996 under the aegis of the ISO. It lays down the requirements relating to an environmental management system that allow companies to formulate their own policy and objectives while taking account of the statutory requirements and information relating to significant environmental impact.

ISO 14040

Standard ISO 14040:2006 specifies the principles and the framework for life cycle assessment (also known as life cycle analysis).

ISO 26000

International standard currently being drawn up on social responsibility. This standard is the subject of discussions categorized by topic and by working group (NGOs, companies, governments, standards organizations, etc.). ISO 26000 will incorporate elements of the ISO 9001 (quality management) and ISO 14001 (environmental management) standards. However, it will only contain guidelines and will not involve certification.

JI

Under the Kyoto Protocol, “joint implementation” (JI) allows developed countries to make investments between one another with the aim of reducing greenhouse gas emissions outside their national boundaries and thus benefit from the emission credits generated by the reductions obtained.

KYOTO PROTOCOL/QUOTAS MARKET

To reach the reduction targets set by the Kyoto Protocol, each European country has drawn up a National Quota Allocation Plan, setting the targets that the liable companies must not exceed over the 2008-2012 period.Various solutions are proposed: reducing emissions so as not to exceed the allocated ceiling, obtaining additional credits or, likewise, buying quotas from more efficient emitters on the European exchange market for greenhouse gas emissions.

MSDS (MATERIAL SAFETY DATA SHEET)

In the United States of America, this is the equivalent of the European SDS (Safety Data Sheet).

N2O

Nitrous oxide.

NOx

Nitrogen oxides (excluding N2O) mainly arising from the combustion of fossil fuels.

OHSAS 18001

Globally recognized reference framework for health management and safety in the workplace systems.

The symbol placed at the end of a word directs the reader to the glossary on page 291 and seq.


Glossary

PFC

Perfluorocarbons.

PRODUCT STEWARDSHIP

A responsible approach in managing risks throughout the entire life cycle of a product beginning at the design stage to the end of life.

REACH (REGISTRATION, EVALUATION AND AUTHORIZATION OF CHEMICALS)

European directive on chemical substances which came into force on June 1, 2007, and obliges companies manufacturing, importing and using chemical products to register them, evaluate the risks associated with their use and take the necessary measures to manage any risks identified. Several product categories have been defined, allowing more or less time for registration. More information on www.echa.europa.eu.

RED LINE

Red lines are Rhodia’s in-house unequivocal rules that must be applied regardless of the circumstances in order to limit major risks to the Group. Few in number, they have been designed to be clear and simple to apply. They define the limits of employees’ autonomy.

RESPONSIBLE CARE®

Launched by the ICCA (International Council of Chemical Associations) in 1985, the Responsible Care® program commits its adherents to exceeding the legal requirements on sustainable development criteria and the environment in particular. This was strengthened in 2006 by the Responsible Care® global charter. Rhodia has adhered to these initiatives from the outset. From 2007, Rhodia has chaired the CEFIC Responsible Care® strategy implementation group (CEFIC = European Chemical Industry Council). After audit, the Responsible Care® Global Charter has been confirmed to be in use in all Rhodia sites.

RHODIA/ICEM CORPORATE SOCIAL RESPONSIBILITY GLOBAL AGREEMENT

In 2005, Rhodia signed a corporate responsibility agreement with the ICEM (International Federation of Chemical, Energy, Mine and General Workers’ Unions) which was renewed and strengthened in 2008 and 2011. This agreement mainly commits the group to ensure compliance with basic social rights on all its sites, and covers areas such as social dialogue, health, and safety. Since then, Rhodia’s social and environmental practices have been subject to annual evaluation by the ICEM.

RHODIA WAY®

The Group’s sustainable development approach. The Rhodia Way® is based on a reference framework of responsibilities that express the Group’s commitments to its six stakeholders. Rolled out in 2007, this reference framework enables all the Rhodia entities to carry out self-assessment of their practices, as part of a continuous improvement dynamic.

SDS

European Safety Data Sheet. This is given out to customers and to Rhodia’s Research and production centers. It informs them about each stage in processing, potential dangers in terms of health, safety, the environment and transport. This sheet is updated every three years.

SEVESO (DIRECTIVE)

A European Union policy to prevent chemical risks, set out in the European directive on the control of major accident hazards involving dangerous substances, adopted in 1982 as the “Seveso I” directive and replaced in 1996 by the “Seveso II” directive.

295

Glossary

SF6

Sulfur hexafluoride.

SIMSER+

Simser+ is a global management system developed by Rhodia addressing issues related to hygiene, health, safety and the environment both at its sites and during transport within the context of continuous improvement and in accordance with ISO standard 14001 and OHSAS standard 18001.

SL

Sanitary Landfills.

SO2/SOx

Sulfur oxides produced by combustion of fossil fuels, gases or carbon.

STAKEHOLDERS

The environment and all individuals or groups who contribute to the economic life of the company (employees, customers, suppliers, shareholders), who monitor the company (trade unions, NGOs), or who are to a greater or lesser degree directly influenced by it (civil society, local communities, etc.).

SS

Suspended solids.

SUSTAINABLE DEVELOPMENT

“Development which meets the needs of the present without compromising the ability of future generations to meet their own needs”. Report by the UN Commission on Environment and Development (Bruntland Commission), “Our Common Future ”, 1987.

TF1

Frequency rate for accidents resulting in lost working time of one full day (or more) in addition to the day of the accident, measured in number of accidents occurring per million working hours.

TF2

Frequency rate for accidents that may or may not result in lost working time, measured in number of accidents occurring per million working hours.

TG

Degree of seriousness of accidents with lost working time measured in number of days lost per thousand working hours.

TOE

Tons of Oil Equivalent.

Registration Document Rhodia 2010The symbol placed at the end of a word directs the reader to the glossary on page 291 and seq.


Glossary

UIC

French Union of Chemical Industries.The UIC is the professional organization for all chemical companies operating in France, to whom it offers opportunities for discussions and meetings. It helps them in their developments, represents them and defends them in the various areas where it operates.

VOC

Volatile Organic Compounds. Organic products which, in tandem with nitrogen oxides, generate ozone in the troposphere, harmful to the respiratory system.

WATER EUTROPHICATION

Phenomenon in which over-fertilization of some continental or coastal waters occurs. This happens when an ecosystem becomes increasingly rich in nutritive salts, especially nitrates and phosphates, which encourage vegetal growth. The result is reduced oxygen content and damage to the environmental balance.

Photos creditsFront cover: Ryan McVay / Westend61 / Getty

Inside cover pages: Tsekhmister - Dreamstime ; Photothèque Rhodia : Getty Images, Janin A., Hautecoeur L., Corbis, Getty Images/Tetra Images.

www.rhodia.com>

SUSTAINABLE DEVELOPMENT DEPARTMENT

Cœur Défense - 110, esplanade Charles de Gaulle

F-92931 Paris La Défense Cedex

Tel: + 33(0) 1 53 56 64 64

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