Reporting policy and justification of choices made
This is the first Integrated Annual Report of dsm-firmenich, which was formed by the merger between DSM and Firmenich. In this report, we report for the calendar year 2023. Our previous reports were the DSM Integrated Annual Report, published on 2 March 2023 and the Firmenich ESG Report, published on 12 September 2022.
We publish our Report exclusively in a digital format. It is available as an online version and as a pdf.
In the Management Report, we explain our vision and policy with respect to sustainability practices and report on our activities. We are in favor of convergence in reporting standards and frameworks, moving to globally accepted non-financial reporting standards. Currently, we recognize and participate in a number of initiatives that are driving toward that goal.
The basis for the non-financial reporting is the Swiss Code of Obligations – the Sustainability Report as described in Article 964b consists of all the information within the Sustainability section of this Report. Our double materiality approach and our disclosures in the Sustainability Statements use elements from the EU Corporate Sustainability Reporting Directive and European Sustainability Reporting Standards. However, they are not yet in compliance with these Standards, as they are only applicable for reporting over 2024 in 2025. We highlight areas of relevance to our company in the Sustainability Performance section, namely Climate and Nature, Nutrition and Health, and People. Our reporting is also based on voluntary non-financial reporting guidelines as follows.
Global Reporting Initiative
dsm-firmenich has reported in accordance with the Global Reporting Initiative (GRI) Standards for the period 1 January 2023 to 31 December 2023. A detailed overview of how we report according to the GRI Standards indicators, including a reference to relevant sections in this Report, is provided in the GRI Content Index. Due to the merger, many of the policies, procedures and metrics have not been integrated yet. As such, we are reporting an omission on information being unavailable or incomplete. This will be developed in the coming period, with further integration. Any gaps in the GRI disclosures in the GRI Content Index below are currently not available due to this reason. dsm-firmenich provides information on the Management of material topics (GRI 3-3) for the most material topics only. We do not provide detailed information on the Management of other topics as we do not believe they are material enough to do so. These topics are managed through our standard business processes and policies.
UN Sustainable Development Goals
We have also aligned our approach with the Sustainable Development Goals (SDGs). We are familiar with the opportunities and responsibilities that the SDGs represent for our business. We embrace all the SDGs, but we have chosen to highlight the goals which most closely align with our business activities, and our people and operations. In this Report, we include the SDGs in our reporting process, for example by mapping SDG reporting priorities in our value creation model, in Our approach to Sustainability, and in the solutions that we highlight.
The Taskforce on Climate-related Financial Disclosures
The recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD) are a set of climate-related financial disclosures for use by companies to provide information to their stakeholders which are mandatory under Swiss law. This Report contains our TCFD-relevant disclosures on Governance, Strategy, Risk Management, and Metrics and Targets. For information on how we report against the TCFD recommendations, see the Sustainability Statements.
Other reporting frameworks
We align with the recommendations of the International Integrated Reporting Council <IR> Framework where possible. The intention of the <IR> Framework is to provide additional guiding principles and content elements for an integrated report. We use this framework to present an integrated view of how the company creates value for stakeholders.
UN Global Compact
We are a signatory to the UN Global Compact (UNGC) and commit to annually report on progress in implementing The Ten Principles of the UNGC in the areas of human rights, child and forced labor, the environment and anti-corruption through the UNGC Communication on Progress (CoP) platform. Our Code of Business Ethics, our Supplier Code, and, until they are replaced with new Group policies, our legacy policies and procedures are the current foundations on which we apply the standards of the UNGC.
Selection of topics
The topics covered in this Report were selected on the basis of our materiality analysis, which assessed the relevance and impact of selected topics for our company and various stakeholders. The sustainability data in the Integrated Annual Report is qualitative as well as quantitative – the qualitative information can also contain quantitative elements. The Materiality matrix and the process by which it is created is reported on in Our approach to sustainability, with the management approach in the Sustainability statements.
Scope
The sustainability data in this Report cover all entities that belong to the scope of the Consolidated financial statements. As this is the first year of reporting for dsm-firmenich, no comparative data is available for 2022.
Acquisitions and divestments
The People data for newly acquired companies are reported from the first full month after the acquisition date. The Safety, Health and Environmental data for companies acquired in the:
- First half of a given year (‘year x’) are included in the reporting scope of the year after acquisition (‘year x+1’)
- Second half of a given year (‘year y’) are included in the reporting scope of the year following the first full year after acquisition (‘year y+2’)
Divested companies
Environmental data are reported until the moment control of the company is transferred, and social data until the end of the month in which control of the company is transferred. The date in which control of the company is transferred generally coincides with the date a divestment is closed, and control of the shares is transferred to the new owner.
Environmental methodology
Our progress on the key environmental performance indicators is collected and evaluated twice a year for all sites. The data are based on these sites’ own measurements and calculations, which in turn are founded on definitions, methods and procedures established at group level. Due to the merger, some of these may be based on definitions, methods and procedures defined prior to the merger.
The site managers of reporting units are responsible for the quality of the data. Data are collected using measurements and calculations in the production processes, information from external parties (e.g., on waste and external energy) and estimates based on expert knowledge. Reporting units have direct insight into their performance compared to previous years and are required to provide justifications for any deviations above the threshold. For most parameters, the threshold is set at 10%.
Scope 3 greenhouse gas emissions are calculated on the basis of activity data and emission factors (greenhouse gas emitted per unit of material or activity, usually kg, km or euro, depending on the category). Emission factors are obtained from a variety of sources, including suppliers, in-house LCA models and from industry databases. Emission factors are chosen that are considered most representative and reliable. Activity data is based on spend, volume, distance or number of employees, depending on the category. Data is on the basis of a 12-month timeframe and is obtained from a number of internal systems.
The year-on-year comparability of the data can be affected by changes in our portfolio as well as by improvements to measurement and recording systems at the various sites. As this is the first year of reporting, no comparative data is available, however, in subsequent year, whenever impact is relevant, this will be stated in the Report.
Social methodology
Social data are collected per Business Unit and consolidated at corporate level.
Metrics on workforce and workforce composition, and inflow and outflow are reported based on the year-end figures. Due to the merger, inflow and outflow is measured versus the first full month after the merger.
Employee engagement and the Inclusion index are measured via a survey that is conducted on an annual basis.
Safety and health metrics are reported on a 12-month rolling average. Divestments are included in the rolling average for the months prior to transfer of control of the company. Occupational health cases and training hours are reported on the basis of the year-end figures.
Sustainable Portfolio Steering
Due to the merger and ongoing integration activities, quantitative reporting on portfolio steering will be paused while a review of the methodology is undertaken. A qualitative update on the progress of this review will be provided in the meantime.
Food System Commitments
The Food System Commitments are a set of measurable commitments that make the company’s societal impact explicit. The Commitments are aimed at addressing urgent societal and environmental challenges linked to how the world produces and consumes food. They are grouped into the areas: Health for People, Health for Planet, Healthy Livelihoods.
Health for People
- Help close the micronutrient gap of 800 million vulnerable people by 2030
- Support the immunity of half a billion people by 2030
Health for Planet
- Enable double-digit on-farm livestock emission reduction by 2030
- Reach 150 million people with nutritious, delicious, sustainably produced plant-based foods by 2030
Healthy Livelihoods
- Support the livelihoods of 500,000 smallholder farmers by 2030
Our Basic Commitments are:
- Deforestation-free in our primary supply chains by 2030
- Good workforce nutrition for all employees by 2030
The impact of the Commitments is based on scientific or other third-party evidence demonstrating a link between the products and services provided by the company to its customers and the substantiated societal impact of the commitment. The calculation of the level of impact is based on estimates and assumptions. The required level of supporting evidence for estimates and assumptions is assessed using a risk-based approach, looking at objectivity, sensitivity, and the underlying basis of the estimate. The assessment and supporting evidence for the estimates and assumptions are documented and are updated annually.
In 2024, the Food Systems Commitments will be re-evaluated for their strategic fit with the company given the context of the merger.