dsm-firmenich has brought together two companies that are both industry leaders in their commitment to ambitious climate change mitigation targets but also their unrelenting drive to deliver against these targets. During 2023, we continued to successfully execute against the individual plans of the two companies and built on our combined expertise to develop plans for 2024 and beyond. In early 2024, we submitted our dsm-firmenich net-zero science-based targets for validation by the Science Based Targets initiative (SBTi), aiming to achieve net-zero by 2045, aligned with the ambition of keeping global warming below 1.5°C.
We take our global environmental responsibilities very seriously both in our own operations and in our broader value chains as a significant part of our emissions are either upstream or downstream of our operations. In 2023, we delivered:
Our climate approach
At dsm-firmenich our climate approach is focused on both climate change mitigation and climate adaptation in both our own operations and our value chain, as indicated in the figure below.
Our climate mitigation activities, guided by the latest 1.5°C global warming science, includes:
- The reduction of direct emissions in own operations (Scope 1 and 2) through operational efficiency improvements and our renewable electricity transition strategy
- The reduction of indirect emissions in our value chain by driving Scope 3 improvements through engaging and collaboration with our suppliers and driving additional value chain improvements
- Collaborating with our customers to avoid emissions in their own operations through the products and services we offer
- Ultimately, in alignment with SBTi standards, using carbon removal technologies to deliver our net-zero target
With respect to climate adaptation, a risk-based approach helps us identify and access risks and opportunities and therefore where we need to build further resilience into our own operations and value chain.
Climate change mitigation
In 2015, the Paris Agreement first established a common ambition to take urgent action on greenhouse gas (GHG) emissions to limit average temperature increases to well below 2°C. Later in 2018, the Intergovernmental Panel on Climate Change (IPCC) provided a clear and compelling case to redouble efforts to limit warming to 1.5°C. Our fair share of this ambition resulted in our objective to achieve net-zero by 2045 (subject to SBTi validation) by rapidly accelerating the rate of our emission reductions over the coming decade.
Our key climate targets for both legacy companies are our Science Based Targets
Until they are replaced by dsm-firmenich targets, the existing Science Based Targets (SBTs) from both legacy companies describe our key climate targets and our contribution to climate change mitigation. Both legacy companies have validated near-term SBTs, developed in line with levels prescribed by the special report of the IPCC on the impacts of global warming of 1.5°C. Additionally, former Firmenich also achieved validation of its net-zero SBTs in 2022, further highlighting our ambition to be leaders in the climate change agenda.
The SBTs from former Firmenich include a 55% reduction in our absolute Scope 1 and 2 emissions by 2030 versus 2017 and a Scope 3 commitment of engaging 80% of suppliers by 2026 to validate their own SBTs. SBTs exist also for the former DRT business (acquired by Firmenich in 2020), and they include a 54% reduction in our absolute Scope 1 and 2 emissions by 2030 versus 2020 and a Scope 3 commitment of engaging 80% of suppliers by 2027.
Former DSM’s SBTs are an absolute reduction of GHG emissions from own operations (Scope 1 and 2) by 59% (increased in 2022 from previous ambition of 50%) and a value chain (Scope 3) intensity reduction of 28%, both by 2030 versus a 2016 baseline.
In January 2024, dsm-firmenich submitted to the SBTi for validation an update to the near and long-term science-based targets following the Net-Zero Standard. This is aimed at harmonizing the varied legacy targets and to reconfirm our ambition of being a climate leader. With this new commitment, we aim to reach net-zero emission in our direct operations and value chain (i.e., Scope 1, 2, and 3) by 2045. This SBTi’s Corporate net-zero Standard implies a minimum 90% decarbonization and the use of high-quality offsets for up to 10% of base year emissions. Additionally, aligned with our historic approach, we have committed to new harmonized and simplified near-term targets, aiming to achieve an absolute emission reduction of 42% for Scope 1 and 2, and 25% for Scope 3, by 2030 from a 2021 baseline, without the use of carbon offsets. Within Scope 2, we have also built on our ambition to be a front runner in the transformation to renewable electricity (RE) and have set a new target to reach 100% purchased RE by 2025.
Ownership of climate actions is at Executive Committee level
The dsm-firmenich climate agenda and transition plan bring together all our key climate actions. Progress of the agenda, including the implementation of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations, the GHG reduction program, our portfolio development and efforts to advocate accelerated transition with partners, are managed and actively reviewed by the Executive Committee as well as the Sustainability Committee of the Board of Directors at various moments during the year.
Aligning our climate approach with science
Meeting our long-term ambition to reach net-zero GHG emissions aligned with climate science will require us to structurally reduce emissions across our operations and value chains by at least 90% in absolute terms by our target date of 2045. To neutralize any residual emissions in 2045, up to a maximum of 10% as prescribed by the Net-Zero Standard, we may deploy permanent carbon removal solutions to bring us to net-zero. These removals will need to meet the highest quality criteria and social and environmental safeguards. Our updated near-term 2030 targets are the intermediate step to achieve this goal, supported by our ambitions regarding renewable electricity and energy efficiency, and by working intensively with our key suppliers to reduce our large Scope 3 footprint. Our ability to meet these targets will require us to transform our own operations and value chains.
We acknowledge the challenge we have set by aligning with a science-based approach and are working with long-term innovation roadmaps that will bring us as close as possible to zero emissions in the coming decades. These investments will support us on our own emission reduction journey through developments in terms of processes, solutions and materials but will also deliver a portfolio of solutions that can help avoid emissions through reductions in our customers’ operations and value chains. In parallel, we are also exploring high-impact instruments for additional contributions to accelerate the global net-zero transition beyond our own value chain – for example, high-quality carbon credits. In alignment with the current SBTi standards, any contributions related to carbon credits or avoided emissions within our value chains are not claimed against our own emissions.
Scope 1 and 2
In 2023, our Scope 1 and 2 market-based GHG emissions amounted to 915 kt CO2e, with 606 kt CO2e related to Scope 1 emissions and 309 kt CO2e related to Scope 2 emissions.
To achieve our current results and continue to progress toward our targets, we have developed a roadmap consisting of mainly three improvement pillars:
- Reduce our energy consumption through energy efficiency measures
- Transition toward renewable electricity
- Transition toward renewable heat, using renewable fuel sources and the electrification of our heat demand
Energy efficiency improvements result from the development and implementation of multi-year project plans that are continuously improved in order to generate maximum savings per investment, thereby also supporting business resilience. Energy efficiency projects can be of a wide-ranging in nature: from process optimization, ensuring basics in place (such as insulation or heat recovery) and implementing best-available techniques in support of innovation and the implementation of digital solutions.
Contributing to 2023 results, many projects were implemented in several sites in 2022–2023, such as:
- Generation of flash steam in the powerplant in Grenzach (Germany) saving ~2 kt CO2e
- Implementation of steam trap monitoring technology, allowing us to identify in real time leaking or malfunctioning steam traps, in Sisseln (Switzerland), Village-Neuf (France), Dalry (United Kingdom) and Kingstree (USA), saving approximately 4 kt CO2e
- Reduction of power signal quality losses in Chifeng (Inner Mongolia, China) and Tongxiang (Zhejiang province, China) saving close to 1 kt CO2e
- Recovery of boiler waste heat in Gujarat (India), saving ~200 t CO2e
The 2023 results were also impacted by reduced production volumes, and plant closures. The fire incident at our Pinova site in Brunswick (Georgia, USA) was not included in our emissions as no guidance relating to the inclusion or calculation of such as incident is available.
Our 2023 delivered program consists of more than 50 projects that will mostly contribute to the reduction of our Scope 1 and 2 emissions in 2024 and beyond. They also cover a wide range of sites and technologies, examples are improvement of the steam distribution in Yimante (Hubei province, China), Delft (Netherlands) or La Plaine (Switzerland) the generation of steam out of reaction heat losses in Lalden (Switzerland).
Energy and electricity
We are a member of RE100, the Climate Group’s initiative comprising leading companies that have committed to obtaining 100% electricity from renewable sources as early as possible. Our new commitment is to purchase 100% of our electricity from renewable sources by 2025. In 2023, we realized 88% purchased renewable electricity, well on track to achieve our target.
Purchased renewable electricity in Europe and North America
For our operations in Europe, we maintained 100% renewable electricity through existing agreements, pre-production guarantees of origin (GOs) from the Power Purchase Agreement (PPA) in Spain, and fewer separate GOs. In the Netherlands, we have two PPAs with wind parks that are in operation.
The PPA in Spain combines three assets of which the wind park and one solar park are operational while another solar asset is under construction.
In the US, we have concluded three PPAs. The first is operational and produces electricity from wind, while the assets for the other two are under construction and will provide solar-powered electricity. The production from the first agreement and the pre-production renewable energy certificates (RECs) from the two other agreements provided 100% purchased electricity from renewable sources in the US and Canada in 2023. We were able to identify and implement merger synergies in PPAs in North America and Europe.
Progress on purchased renewable electricity in China
For 2023, we purchased 44% of our electricity from renewable sources. In addition, we concluded several five-year agreements that will further improve the amount of renewable electricity from 2024 onwards.
Renewable electricity in the rest of the world
Besides Europe, North America and China, 93% of our purchased electricity in Brazil is from renewable sources, and we have several local renewable electricity contracts at smaller sites around the world. The amount of non-renewable electricity in the rest of the world represents less than 1% of our total purchased electricity.
Working on the decarbonization of heat
We also continue to use renewable sources for steam and heat, including the biomass cogeneration plant in Sisseln (Switzerland), purchased steam from local biomass residues in Chifeng (Inner Mongolia, China), purchasing by-product heat from a neighboring company in Yimante (Hubei province, China), combination of biomass from a local reforestation and bio-based by-products in Vielle Saint Girons (France), as well as use of forestry residues and by-products in Castets (France). The focus on low-carbon heat solutions has become more prominent in our GHG reduction program; we are working to optimize the use of waste streams and collaborating with external providers to explore opportunities. See below overview of renewable heat/low-carbon fuels initiatives that are currently in place in several of our sites across the globe.
dsm-firmenich sites using renewable or low-carbon steam
Scope 3
Our commitment to sustainability extends across the entire Scope 3 value chain and we are pleased to report progress in reducing greenhouse gas emissions beyond our own operations. Our absolute Scope 3 GHG emissions across both legacy companies amount to 9,996 kt CO2e.
Scope 3 emissions by category (aggregated)2
(x 1,000 tonnes)
The Scope 3 results are presented for dsm-firmenich; however, the legacy companies have different targets and scopes, thus progress is reported separately for each legacy company. During the year, we began aligning the Scope 3 accounting approaches, and developing integrated Scope 3 reduction roadmaps.
Currently, we report against the multiple SBTs within the company that have been validated by SBTi. We have submitted our combined, accelerated absolute reduction target, which is based on a harmonized baseline and improved accuracy, with a significant improvement of volume coverage. Further Scope 3 emissions reductions are expected following the development and implementation of our roadmap. In the meantime, the following Scope 3 progress can be shared for each legacy company and its SBT:
Value chain engagement initiatives and progress
Our value chain engagement initiatives include targeted sustainability workshops, joint goal-setting sessions, and ongoing collaboration to identify and implement emission reduction strategies in the value chain together with our suppliers and customers.
Upstream
Our programs across both legacy companies are being combined and will form part of our integrated business reduction roadmaps. These roadmaps will be the foundation for our absolute Scope 3 emissions reduction targets that are aligned with SBTi’s guidance and Corporate net-zero Standard, and which were submitted for validation by SBTi in January 2024. The existing roadmaps for the main seven value chains in former DSM have been developed with over 100 opportunities for reduction identified, and more than 100 suppliers being engaged for delivering reductions, covering 30 purchasing categories.
Additionally, according to former Firmenich’s 2022 CDP supplier statistics, 85% of requested suppliers are reporting operational emissions and 69% of requested suppliers are reporting active targets and engaging their own suppliers. The supplier statistics also indicated that 19% of requested suppliers have validated near-term SBTi targets compared to 16.8% of former Firmenich’s raw material suppliers in total.
We have committed to Scope 3 upstream action plan to step our Scope 3 decarbonization efforts, driven by the world’s largest CEO-led climate Alliance – the Alliance of CEO Climate Leaders – to scale collaborative action across value chains and drive above-average impact.
Downstream
We share our carbon footprint through Environmental Product Declarations (EPDs), Imp’Act Card™ and Ecotools for our businesses. These cover our main product forms.
In ANH we have 58 EPDs in the new marketing format which are accessible for customers via the digital portal. We share most relevant information at the ingredient level through Imp’Act Card™ in HNC, which our help our customers drive their sustainability journey. At P&B, we recognize the imperative to reduce carbon emissions, and this commitment extends throughout our entire value chain – from sourcing ingredients to delivering perfumes to clients and consumers. For example, in Ingredients, we explore new innovations, such as the low-carbon bio-based alternative, Dihydroestragol RC. We also foster partnerships, such as the joint development agreement signed in August 2023 with Bloom Renewables, aimed at expanding biomass feedstock sourcing and accelerating the development of key low-carbon bio-based ingredients. Our dedication to sustainability goes beyond the ingredients and into our product range also at TTH. We actively engage in eco-designing fragrances and flavour solutions with low carbon emissions, utilizing our digitally integrated tool, EcoScent Compass® and EcoFood Compass®.
Avoided emissions
At dsm-firmenich, we put the primary focus of our climate agenda on the reduction of our own GHG emissions in Scope 1, 2 and Scope 3, following the SBTi. In doing so, we also contribute to the reduction of the Scope 3 GHG emissions of our customers further down the value chains, supporting their net-zero journey.
As a key supplier in nutrition, health and beauty, we see the opportunity to partner with our customers in each of the industry sectors, to help transform the value chain with products that can help tackle the most urgent, sector-specific climate challenges. Before looking at any downstream impacts, we support our customers with their emission targets by providing them with products with an improved carbon footprint. We do so by setting ambitious corporate climate targets and implementing emission reduction roadmaps in our own operations as well as our value chains. In addition to this, we are giving increased attention to identifying, developing and strengthening the products that can create impact through avoided emissions. These are emissions that are not part of our own Scope 1, 2 or Scope 3, but which can be reduced due to our unique product performance. The ways avoided emissions are realized are driven by the global challenges in the business context in the specific sectors we serve and how our products can best help address them in their market applications. We use Life Cycle Assessment (LCA) studies to quantify and substantiate the benefits of avoided emissions enabled by our products, when sufficient reliable data is available.
Our performance solutions, including feed enzymes, eubiotics and mycotoxin deactivators improve animal performance and feed efficiency and reduce waste, thereby reducing emissions related to animal protein production. Farmers can accurately and credibly quantify their own environmental footprint reductions associated with these solutions by means of their primary farm and feed data, using our intelligent sustainability service, Sustell™. LCA studies carried out with Sustell™ show that applying our feed enzyme solutions Ronozyme® HiPhos and Ronozyme®WX products in representative pig diets in Spain reduced the carbon footprint of pig production by up to 7%. If applied to all Spanish pork production, approximately 1,200 kt CO2e emissions could be avoided.
Our innovative waterless formulations for scalp and hair care provide the same level of performance that consumers expect from liquid formats, while significantly reducing their environmental impact, by transporting less water and minimizing packaging. Compared to a standard liquid shampoo, a powder shampoo with dsm-firmenich ingredients requires the transportation of 91% less water, thereby saving 42% of GHG emissions along the supply chain, considering that the use and manufacturing stages are equivalent.
Brewers Clarex® is an enzymatic solution that prevents chill haze formation while maintaining the quality of beer. The efficiency of the brewery process as well as it’s eco-footprint can be improved by using enzymes to replace traditional treatments in the production process. Our Brewers Clarex® solution helped our customers to reduce their GHG emissions by approximately 120 kt of CO2e in 2023. This happens without any impact on the desired properties of the end-product.
Climate adaptation and transition plans
Climate-related risks such as heatwaves, drought and water stress may impact our sites and our value chain. As a complement to our efforts on climate change mitigation – reducing and stabilizing greenhouse gas emissions to combat the root cause of climate change– we also assess the vulnerability of our assets and value chains. We are mapping the impact of physical climate change, both upstream (suppliers, agricultural commodities) and downstream (end-market). We also assess risks and opportunities related to the transition to the net-zero economy for our business.
Scenario analysis
In line with TCFD, we use climate scenarios to assess risk and opportunities for our business, over different time horizons, up to 2050. The scope is not limited to our own operations but includes the impact along the full value chain. Scenarios are based on IPCC temperature models – the Representative Concentration Pathways (RCP):
- 1.5°C (RCP 2.6)
- 2°C (RCP 4.5)
- 3+°C (RCP 8.5)
For transition to a net-zero world, we enrich the IPCC scenarios with forward-looking business context (e.g., regulations on land and or water use, eco-footprint of products, shifts in consumption patterns).
Approach to assess climate risks & opportunities
- For physical climate risk assessments, we use desk studies for a high-level screening of physical hazards – extreme heat, drought/water scarcity, flooding/precipitation, high winds, wildfire (RCP 4.5, RCP 8.5). This provides us with the major impact factors for our portfolio. We do onsite deep dives to obtain a more detailed understanding of the actual risks for our assets.
- For transition climate risk assessments, we organize separate sessions, with input from experts and senior management, to assess risks and opportunities for each scenario.
The material risks identified through the physical and transition climate risk assessments are integrated and managed as part of our regular risk management processes. For more information on our risk management process, see Risk Management.
Physical and transition climate risks assessments
Own operations
Our physical climate risk assessment journey started in 2020, where we screened 19 sites that are part of dsm-firmenich today. We identified flooding and water scarcity as the highest impact factors. The journey continued at former Firmenich in 2022 with a desk study, screening 46 operational sites. This study highlighted heat stress, extreme precipitation, and drought as the primary hazards. We are using the results to improve the business continuity planning of our sites and the water stewardship program (see Nature).
In 2022-2023 we completed nine on-site deep dives to understand the (future) climate risks in more detail. For example, the Grenzach (Germany) site assessment showed that 1) increased precipitation could lead to site drainage issues and that 2) increase of drought conditions (not predicted in the desk study) will limit ground water availability and hamper discharge of cooling water to the river Rhine.
In 2022, we performed transition climate risk assessments for the three business groups of DSM (ANH, HNC and F&B, now part of TTH). Risks & opportunities with the highest impact were related to policy and legal (carbon pricing, emission regulations, animal farming practices) as well as market (demand for renewable energy/sustainable raw materials, carbon footprint, dietary shifts).
Value chain
We employed desk studies to screen the impact of physical hazards on our value chain:
- In 2022, study of a case for one of our downstream markets for ANH, the Brazilian dairy market
- In 2023, screening of 150 main suppliers’ manufacturing sites
- In 2023, investigation of the climate change impacts on main agricultural commodities: pine, orange, lavender, vanilla, clove and maltodextrin (corn/potatoes)
The exercise run at agricultural level highlighted three take-aways:
- Almost one third of our screened supplies (in volume consumed) are already affected by climate change and the risk will intensify by 2030, and under the worst scenario (RCP 8.5), 40% of our screened supplies (in volume consumed) will be considered at risk in 2030
- Most of the seven crop-sourcing areas are becoming more at risk, but potatoes, lavender and corn will deteriorate the most
- Climate risk varies from crop to crop as this is intrinsic to the individual crop cycle, e.g., corn will be hit by drought, impacting the flowering and grain production, while pine trees will be mainly impacted by wildfires and storms
On these screened commodities, we had the opportunity to go deeper with our procurement team so they can take informed decisions for their strategy and reach out to our suppliers.
