Environmental information

EU Taxonomy

Regulation

The EU Taxonomy Regulation (EU 2020/852) entered into force on 12 July 2020, establishing criteria for environmentally sustainable economic activities related to six environmental objectives:

• Climate change mitigation (CCM)
• Climate change adaptation (CCA)
• Sustainable use and protection of water and marine resources (WTR)
• Transition to a circular economy (CE)
• Pollution prevention and control (PPC)
• Protection and restoration of biodiversity and ecosystems (BIO)

The Taxonomy Regulation requires companies subject to the obligation to publish non-financial information under the EU Accounting Directive on non-financial information by expanding the scope of content that needs to be disclosed by large companies in their management reports. It requires companies to disclose the proportion of their activities that qualify as environmentally sustainable.

Supplementing the Taxonomy regulation, the first delegated act concerning the technical screening criteria for economic activities with substantial contribution to climate change mitigation and adaptation (the Climate Delegated Act) was formally adopted on 4 June 2021. A delegated act specifying the content and presentation of information to be disclosed by companies in scope of the EU Taxonomy was formally adopted on 6 July 2021. A delegated act amending the Climate Delegated Act (covering the environmental objectives of climate change mitigation and adaptation) and an Environmental Delegated Act addressing the remaining four environmental objectives were published in 2023.

We welcome the implementation of the EU Taxonomy and have assessed its impact on our company in line with its overall objectives, albeit accepting that parts of the Taxonomy regulation are subject to interpretation, which may lead to variability in its application. Considering the level of complexity as well as the evolving character of the framework, we expect that Taxonomy reporting will develop over time. As such, we shall apply a conservative approach to, and interpretation of, the Taxonomy legislation until we believe it has sufficiently matured. We will periodically revalidate our methodology and our reported KPIs based on the evolution of the regulations and forthcoming guidance from, among others, the European Commission and the European Securities and Markets Authority (ESMA).

Disclosures

Under the Taxonomy regulation, dsm-firmenich is required to report on how much Turnover, Capital Expenditure (‘CapEx’) and Operating Expenses (‘OpEx’) are in scope of the Taxonomy Regulation (i.e., ‘Taxonomy-eligible activities’), and how much are aligned with the Taxonomy regulation (i.e., ‘Taxonomy-aligned activities’). In 2024, the required disclosures apply in full to all six environmental objectives. In this assessment, potential double-counting in the KPIs has been considered. As 2024 is the first year in which dsm-firmenich has to report under the Taxonomy regulation, no comparative information is provided. In addition, as dsm- firmenich does not carry out nuclear and fossil gas related activities, the standard template on the disclosure of these activities is not provided.

Turnover

Total turnover, as defined by the Taxonomy regulation, corresponds to the sales from continuing operations as reported on the basis of the income statements in the Consolidated Financial Statements. In 2024, dsm-firmenich only identified the Pharma business (part of the Business Unit Health, Nutrition & Care) as an eligible activity under the environmental objective pollution prevention and control.

Taxonomy-eligible turnover amounted to €363 million, or 2.8% of total turnover. Given the Pharma business is not considered material to dsm-firmenich’s business as well as a lack of evidence for alignment, no alignment was established for the taxonomy-eligible turnover and, hence, we disclose 0% alignment.

Capital Expenditure

Total CapEx is determined based on the 2024 additions to, and acquisitions of, property, plant and equipment, intangible assets, and additions to right-of-use assets. More specifically, total CapEx includes the following line items that can also be found in the Consolidated Financial Statements:

• Changes in the carrying amount of intangible assets (excluding goodwill) from ‘Capital expenditure’ and ‘Acquisitions’ (see also Note 8 Goodwill and intangible assets to the Consolidated Financial Statements) 
• Changes in the carrying amount of items of property, plant & equipment from ‘Capital expenditure’ and ‘Acquisitions’ (see also and Note 9 Property, plant and equipment to the Consolidated Financial Statements)
• Changes in the carrying amount of right-of- use assets from ‘New leases / terminations’ (see also and Note 9 Property, plant and equipment to the Consolidated Financial Statements)

In 2024, there were no acquisitions by dsm- firmenich. While dsm-firmenich did not identify any CapEx related to the Pharma business, which was identified as an eligible activity, Taxonomy-eligible CapEx also includes expenditures related to the purchase of output from Taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions, primarily relating to our office buildings. Taxonomy-eligible CapEx amounted to €209 million, or 20.3% of total CapEx.

In 2024, dsm-firmenich did not establish alignment for the eligible CapEx, as the relevant activities are not considered material to dsm- firmenich’s total business, as well as a lack of evidence for alignment. Therefore, DSM discloses 0% alignment with respect to the CapEx KPI.

Operational Expenditure

Total OpEx, as defined by the Taxonomy regulation, includes direct non-capitalized costs that relate to research and development, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets. Applying this definition to dsm-firmenich, total OpEx consists of maintenance (including building renovations) and direct R&D costs, excluding costs and income related to bad debts, government grants, depreciation and amortization, and own work capitalized. This definition has been applied to the calculation of both numerator and denominator.

Taking into consideration the assessment of the limited contribution of the Pharma business to both the turnover KPI and the CapEx KPI, the eligible OpEx related to this business within dsm-firmenich’s business model is considered immaterial from an EU Taxonomy perspective. In addition, no other eligible activities have been identified for the OpEx KPI. As such, the numerator reflecting the eligible OpEx attributable to this business is considered negligible and dsm-firmenich discloses 0% eligible and aligned OpEx.

Climate change

Material impacts, risks and opportunities

Strategy

In 2024, we formalized our Climate Transition Action Plan (CTAP) for the first time to support the delivery of our broader climate agenda but more specifically our climate mitigation commitments. This plan, which will remain a living document and will be continually updated, was based on the guidance document from the CDP, CDP Technical Note: Reporting on Climate Transition Plans. It covers:

• Governance
• Strategy, including scenario analysis, financial planning, low-carbon initiatives, and policy engagement
• Risk management
• Metrics and targets, including accounting with verification

The document outlines our strategy to transition to a low-carbon business. The plan focuses on both climate mitigation and climate adaptation, aiming to reduce our carbon footprint and build resilience against climate-related risks. The document highlights our commitment to ambitious climate targets, including achieving net-zero emissions by 2045 and reducing Scope 1 & 2 emissions by 42% and cutting Scope 3 emissions by 25% by 2030 from a 2021 baseline. The plan also emphasizes the importance of collaboration with suppliers and customers to drive decarbonization across the value chain.

Governance is a key aspect, with the Board of Directors and the Executive Committee playing crucial roles in overseeing and implementing the sustainability strategy. The plan also details the company’s approach to assessing climate risks and opportunities, using climate scenarios to evaluate potential impacts on the business. Overall, the CTAP demonstrates our proactive approach to addressing climate change, along with our commitment to sustainability.

The CTAP is anchored in our company purpose of bringing progress to life by combining the essential, the desirable, and the sustainable. This means that, for us, sustainability never stands alone or on the sidelines. Instead, it sits at the heart of what we do and who we are. As such, our strategy is aligned with the delivery of our climate commitments, guided by the CTAP, and we do not envision a requirement to fundamentally change our business model or strategy to meet our 1.5°C aligned commitments, nor have we identified assets that are incompatible with a net-zero economy. We do not expect material impacts on our own workforce because of this.

However, the CTAP does not currently address any potential locked-in emissions. Nor do we disclose, or intend to disclose, any activities related to the alignment of economic activities with the EU Taxonomy Regulation, as this is not material to the company. dsm-firmenich is also not excluded from the EU Paris-Aligned Benchmarks. Further information about our CTAP can be found in Climate – Our net-zero roadmap and on our website.

Impact, risk and opportunity management

Identifying IROs

Scenario analysis

In line with TCFD, we use climate scenarios to assess risks and opportunities for our business, over various 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 assessing climate risks and opportunities

For physical climate risk assessments, including climate change adaptation, we use desk studies for a high-level screening of physical hazards – for example, heatwaves, drought, flooding, precipitation, high winds or wildfire (RCP 4.5, RCP 8.5). This gives us the major impact factors for our portfolio. We conduct on-site deep dives to obtain a more detailed understanding of actual risks for our assets. These consider the specifics of the site, using local “climate event site scenarios” over short-, medium- and long-term time horizons. See Climate change adaptation for our progress in 2024.

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, see Risk management over sustainability reporting.

Resilience Analysis

Managing the impact of climate change is integral to our business strategy and not simply about resilience to its effects. We have performed scenario analysis and risk assessments as previously disclosed, but not a resilience analysis attached to our strategy and business model, nor do we intend to do so.

Policies

We have a structured process regarding our policies, standards, and requirements which is detailed in our Group Policy Framework. The following are summaries of our key policy documents relating to Climate change with the most senior level that is accountable for implementation of the policy referenced.

Climate and Nature Approach

This is an internal document that outlines our sustainability strategy, focusing on integrating climate action, nature conservation, and resource management into our business operations and supply chains. The approach emphasizes accelerating climate action through emission reductions and the use of renewable energy, safeguarding nature and biodiversity by responsible sourcing and ecosystem protection, and conserving resources through water stewardship and waste management. It sets out specific requirements employees must follow, ensuring accountability at all levels of our organization and engaging with external partners to advance environmental stewardship.

The Climate and Nature Approach document highlights our commitment to sustainability by embedding climate and nature considerations into all aspects of our operations. This includes setting ambitious targets for reducing emissions, increasing the use of renewable energy, and promoting responsible sourcing practices to prevent deforestation. Additionally, this approach involves active engagement with stakeholders such as governments, NGOs, and local communities, to drive collective action and achieve broader environmental goals. The overarching aim is to create a positive impact on the planet while maintaining transparency and accountability through regular reporting and continuous improvement.

We ensure accountability at the highest level of the organization. The Board of Directors has the highest level of authority on matters related to Sustainability. Our Climate and Nature agenda is reviewed by the Sustainability Committee and the execution of the agenda is delegated to the Executive Committee. This includes strategy, targets, and target delivery, as well as the management of principal risks related to Climate and Nature. The Committees’ responsibilities also include reviewing the effectiveness of our risk management and internal control processes. The day-to-day responsibility for our Climate and Nature agenda sits with the Chief Sustainability Officer (CSO), who periodically updates these Committees.

Group Standard Business Continuity Management

The internal Group Standard Business Continuity Management outlines the framework for ensuring the continuity of our critical processes and activities during disruptions. This Standard emphasizes the importance of resilience and proactive measures to anticipate and prevent disruptions, as well as quick restoration of operations when needed. The document highlights the roles and responsibilities within the Business Continuity Management (BCM) Program, including the involvement of various teams such as the Group Risk Center of Expertise, Global Crisis Response Team, and local BCM teams.

It also underscores the need for regular reviews, audits, and testing exercises to ensure the BCM Program’s effectiveness. While the document focuses on business continuity, it indirectly supports climate resilience by promoting risk awareness, horizon scanning, and the implementation of mitigation actions to protect against potential climate-related disruptions. The Group Risk Center of Expertise is responsible for this Standard, together with related Group Guidelines, and defines and supports the implementation of the Program.

In alignment with the BCM Program, our Business Unit/Business Partner leadership team defines priorities, assigns proper resources, and monitors implementation of the Program at their Business Unit/Business Partner. Any incident, if escalated as a ‘crisis’, is reported to, and managed by, the Global Crisis Response Team (GRT), as described in the Global Crisis Response Plan.

Responsible Sourcing standard

The Responsible Sourcing standard outlines our commitment to sustainability, emphasizing the importance of responsible sourcing practices to minimize environmental impact. The document highlights our dedication to fighting climate change by aligning with the Paris Climate Agreement and setting a target to achieve a 25% absolute reduction in Scope 3 GHG emissions by 2030.

Suppliers are required to implement environmental management systems, reduce raw material consumption, and source at least 50% of their electricity from renewable sources by 2025. Additionally, the document stresses the importance of protecting nature and ecosystems, ensuring that commodities are not linked to deforestation or land degradation, and complying with the EU Deforestation Regulation.

Our leadership is committed to responsible sourcing practices and will provide the necessary resources to ensure compliance with our standards. The day-to-day responsibility for responsible sourcing sits with our Chief Procurement Officer (CPO), who provides periodic updates and reports to our Executive Committee.

Group Policy Operations

The Group Policy Operations is a document with broad application but contains elements specific to climate mitigation and adaptation. It emphasizes the importance of sustainability in our operations. It highlights our commitment to minimizing environmental impact by adhering to science-based target directives and other external sustainability requirements. The policy mandates the development and execution of improvement roadmaps to achieve key sustainability and environmental KPIs, ensuring that operations are conducted in a sustainable manner throughout the product lifecycle. This includes providing and utilizing data and insights on key sustainability and environmental metrics in line with company standards.

Operations is the responsibility of line management and the Business Units, supported by different Requirements, Standards, and Best Practices defined by Group Operational Excellence in collaboration with the Business Units. Group Operational Excellence is the owner of the Group Policy Operations and related Group Standards and supports the Business Units and their sites with Continuous Improvement, Manufacturing Excellence, transformation in Operations, competence development, OT and sustainable operations.

Group Policy Safety, Health & Environment

The Safety, Health & Environment Policy Statement outlines our commitment to environmental sustainability and climate action. It emphasizes the importance of operating within planetary boundaries and complying with relevant environmental legislation. The policy highlights our dedication to environmental restoration and protection, aiming to reduce the environmental footprint of our activities, products, and services through efficient use of resources and the minimization of emissions and waste. Additionally, it mentions the development of multi-year programs focusing on major environmental topics and sustainable resource management, ensuring continuous improvement of operational systems and standards.

In addition to our policies on Scope 1 & 2 and energy management, included in internal requirements and standards, we are renewing our environmental and sustainable operations standard. This document provides guidance on how to manage improvement roadmaps and renewable energy at our locations.

SHE is a line management responsibility and is supported at Group and regional level by the SHE organization. The Group sets the strategy in collaboration with the businesses, and the Regional SHE organization provide SHE leadership, expertise with proximity, and support to operationalize SHE across the organization. Business Units and Business Partner functions allocate adequate and qualified resources, with defined roles and responsibilities, at both management and site levels to enable compliance to the policy.

Actions and resources

In addition to the detailed narrative in the Planet – Climate section, the following further information is provided relating to actions and resources.

Scope 1 & 2

To deliver on our Scope 1 & 2 target of reducing absolute emissions by 42% from a 2021 baseline, we have developed a rigorous and continuous process of identifying and implementing new initiatives to lower our own emissions. This has been extremely successful over the past few years. It builds on two parallel activities:

• The identification of site improvement opportunities (e.g., site deep dives and energy scans)
• Reviewing the deployment of sustainable technologies (e.g., energy dashboarding and monitoring, and heat pumps)

These activities culminate twice a year in a detailed, bottom-up Scope 1 & 2 GHG roadmap. This is organized by site, by Business Unit and Group level, and evaluates the gaps and resources necessary to close those gaps. Implementation is reviewed throughout the year and built into the annual financial planning and capex allocation cycle. To achieve our current results and continue to progress toward our targets, the roadmap consists of two pillars:

• Reducing our energy consumption through energy efficiency measures
• Transitioning toward renewable energy over time with an initial focus on increasing the amount of purchased renewable electricity

Energy efficiency improvements arise from the development and implementation of multi-year project plans that are continuously improved to generate maximum savings per investment, thereby supporting business resilience. Energy efficiency projects may be wide-ranging in nature: from process optimization, ensuring that basics (such as insulation or heat recovery) are in place, and implementing best-available techniques in support of innovation and the implementation of digital solutions. Examples are given in the diagram below.

The implementation of roadmap projects that reduce GHG emissions is supported by a yearly ring-fenced capex budget. Based on our 2030 Scope 1 & 2 GHG roadmap, we estimate an average investment of €10–25 million per year for the period 2025–2030 to achieve our ambition. Investments are selected in such a way as to also bring about reductions in opex, and a review process aims at minimizing the investments while maximizing cost savings together with GHG savings.

Renewable electricity

Alongside the summary of our recent success relating to our renewable electricity strategy, the following paragraphs expand on the narrative in Planet – Toward renewable energy.

North America

All claims in North America correspond to long-term virtual power purchase agreements (VPPAs). Besides the already-active wind park, a solar park became operational in 2024, while another is still under construction. The production from the first two agreements and the pre-production Energy Attributes Certificates (EACs) from the asset under construction provided 100% purchased renewable electricity for our sites in the United States and Canada.

Europe

In Europe, we powered our sites with 100% renewable electricity via a combination of contracts: long-term wind and solar VPPAs in Spain and the Netherlands; pre-production EACs from another solar asset constructed under the VPPA in Spain; hydro-blocks in Switzerland; and several green-tariff agreements.

China

In 2024, we purchased 65% of our electricity in China from national renewable sources while concluding several long-term contracts. We entered long-term renewable electricity contracts for three sites in the province of Shanghai, two sites in the province of Jiangsu, and a site in Jilin province. Additionally, short-term contracts (e.g., Sichuan province) were concluded, as well as a long-term agreement for our site in Inner Mongolia, starting in 2025. Due to challenging policies in some provinces, we purchased fewer unbundled EACs for 2024.

Scope 3 upstream

Detailed in our CTAP are the levers we have identified as part of the Scope 3 emission reduction road mapping process. In addition to the identification of Scope 3 levers (which are detailed in the diagram below) and the supporting set of initiatives, our efforts are further supported by a commitment to transparency and accountability. We report on all relevant Scope 3 categories. We have also harmonized and developed a unified company methodology across all categories. We have worked on automating our Scope 3 calculation flows accordingly and have designed and implemented process controls across our material categories to ensure robust reporting. These efforts improve process flow, enhance data quality and accuracy, and qualify the reporting for reasonable assurance.

We participate in consortia such as the Partnership for Carbon Transparency program (PACT) which aim to facilitate and streamline data exchange between suppliers and customers along the full value chain. Moreover, we are actively evaluating various digital tools for environmental data exchange to increase the primary data share in emission reporting.

Avoided emissions

We are also 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 3, but 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. We are an active participant in the WBCSD working group, further shaping eligibility criteria and calculation guidelines of avoided emissions.

Metrics and targets

Our primary targets are our Science Based Targets (SBTs). Our performance against these targets can be found in Climate – Progress. Our targets, and the CTAP which includes the plans on how we intend to deliver them, are designed to cover the full scope of our impact on the climate and the impact of the climate on us. As such, this includes both our own operational control but also far up- and downstream in our value chains.

Our Scope 1 & 2 emissions arise primarily in our manufacturing sites, pre-mix sites, distribution centers, offices, labs and research sites due to activities such as the combustion of fuel (e.g., for process heating) and purchasing electricity. Scope 1 & 2 represents less than 10% of our footprint, and significant effort has gone into reducing our emissions and transitioning from purchased electricity to renewable sources.

Scope 3 emissions, which account for most of our Group GHG footprint, are the result of the emission footprint of our upstream supply chain producing the goods and services we require to manufacture our products. Other sources include in- and out-bound logistics, operational waste, and the emissions that are downstream in the use of our products. Almost all the 15 Scope 3 categories are used in the calculation of our GHG inventory, in accordance with the GHG protocol. Category 13: Downstream leased assets and Category 14: Franchises are deemed immaterial based on the Guidance for Accounting & Reporting Corporate Emissions in the Chemical Sector Value Chain for Scope 3 reporting, as published by the WBCSD. The following four emissions categories are relevant to the near-term SBTi targets (covering 73% of Scope 3 emissions):

• Category 1: Purchased goods and services
• Category 3: Fuel and energy-related activities
• Category 4: Upstream transportation and distribution
• Category 5: Waste generated in operations

We take accountability for our role in our industry’s decarbonization and have ambitious targets that have been validated by SBTi. We will continuously monitor our progress to ensure our actions align with our commitment and will engage our suppliers to shoulder their responsibilities and set SBTI targets as well. We are actively working toward primary activity-based data for driving actionable insights. We believe that Scope 3 emission reduction is a challenge that requires cross-collaboration both within and outside the organization and requires business integration. Our teams across multiple functions, and our businesses work collectively, with common goals. As emission reduction opportunities and potential are closely linked with the product strategies of individual Business Units, our main levers for Scope 3 reduction are clustered around:

• Product/market portfolio optimization and product innovation
• Supplier optimization
• Operations optimization

Carbon credits and carbon pricing

We do not currently implement materially relevant GHG removals or mitigation projects or finance climate change mitigation activities through carbon credits. However, to progress our Nature agenda, we engage in beyond-value-chain mitigation projects with the Livelihoods Funds. These generate a limited amount of carbon credits each year. No carbon credits generated were retired in 2024. Projects within the company should, at minimum, not increase GHG emissions (among other things, by assessing Best Available Techniques with respect to energy consumption/GHG footprint minimization). In the event this is not (economically) feasible, the absolute emissions growth should be compensated by measures in the same Business Unit (within a three-year timeframe). Given this mechanism, we do not consider a carbon price to be material at this time.

Energy

Greenhouse gas emissions

Pollution

Material impacts, risks and opportunities

Impact, risk and opportunity management

Policies

Product stewardship is a guiding principle at dsm-firmenich, anchored in our Code of Business Ethics and in the Group Policy Safety, Health and Environment (SHE). It is an integral part of the Group SHE requirements.

The SHE Policy addresses the safety of our products including substances known as ‘substances of concern’.¹ More information on this policy can be found in the Climate change policies section.

The SHE policy applies to all dsm-firmenich entities worldwide, as well as our contractors and supply chain partners. Our Executive Committee is fully committed to the implementation of the SHE policy and its requirements.

Our product stewardship contributes to our business value proposition in a world that is increasingly interested in nutrition, health, and beauty. We strive to apply high standards in producing essential and desirable products that are safe² and healthy for people, animals and the planet. We support our customers to do the same. We carefully manage the impact of all the substances we use and produce following a risk-based approach, using alternatives whenever feasible, and always when required. Every product must be safe in its production, application, and until end of life.

Actions and resources

In 2024 we focused on product stewardship, and on our product data landscape. Given the complexity, timing and starting points for reporting (for example, we do not make assumptions), we report on what we know regarding substances of concern and substances of very high concern.

The harmonization of data and the identification and closure of gaps will gradually take place in the coming two years, with highest priority being assigned to finished products, followed by purchased raw materials and intermediates. We also serve our customers with tailored information on request. In the longer term, migrating to one product data platform will facilitate our product stewardship actions, target-setting, and monitoring of improvements.

Metrics and targets

Substances of concern and substances of very high concern

We actively monitor and manage the impact of substances of concern that are currently used in our portfolio. Due to the complex integrated data landscape, we have not yet been able to set quantitative ambitions. In 2024, our product safety and digital teams worked on a program definition for developing a roadmap for substances of (very high) concern. This is planned to continue in 2025. In the meantime, we are driving continuous improvements of our portfolio.

The assessment of the presence and quantity of SOC and SVHC is based on sales volume (in kg) and composition information from the two main product data platforms of the company. All components with a CAS number, equal or above 0.1% in the product sold were checked against ATP 19 of Annex VI of CLP – Regulation (EC) No 1272/2008 and ECHA candidate list (June 2024).

Over 2024, 117 ktonnes of substances of concern were present in our finished products. The estimated quantity per main hazard class is presented in the accompanying table.

Pollution of air, water, and soil

While this sub-topic was assessed to be not material, the following data are provided to meet the needs of ratings, rankings and other stakeholders.

Air emissions decreased year-on-year mainly as a result of the reorganization of industrial assets and operational improvements. At the end of 2024, an internal steering target was set to reduce the intensity of phosphorous and nitrogen emissions in areas with a high water pollution index.

Water and marine resources

Material impacts, risks and opportunities

Impacts, risk and opportunity management

Policies

To ensure our business not only aligns with our purpose and values, but also that we achieve progress on water issues, we adhere to several key requirements.

Accountability is maintained at the highest organizational levels, with our Sustainability Committee and Executive Committee overseeing our Climate and Nature agenda, including strategy, targets, and risk management. We also integrate climate and nature goals across all functional teams and include related risks and opportunities in our company-wide processes, reporting them in our Report.

We align with Group policies, continuously improve reporting systems, set ambitious targets, and transparently monitor progress. Employees are engaged and trained in Climate and Nature activities, and we partner with various entities to advance environmental stewardship. We foster a culture of excellence through science, research, and benchmarking, while actively monitoring and responding to external issues and public concerns.

Water is crucial for human and community development, playing a vital role in business manufacturing processes and supporting raw material suppliers. Its importance cannot be overstated: access to clean water, sanitation, and hygiene is essential for the health of people and ecosystems, the sustainability of communities, and the growth of the economy.

However, the world faces increasing pressure on its water catchments. Climate change, rising demand for freshwater, and deteriorating water quality are formidable challenges. To address these issues, collaboration with local communities, regulators, and organizations is crucial. Our Code of Business Ethics describes our commitment to use water responsibly and our Climate and Nature approach (see Climate change – Policies for more information) describes our approach to water stewardship. These documents do not currently address water in the context of product design.

We are committed to taking decisive actions to safeguard water resources. Within our operations, we strive to continuously reduce water consumption and withdrawal, particularly in high-risk areas. We ensure that our wastewater is treated in accordance with local laws, often exceeding minimum requirements to minimize our impact on freshwater ecosystems. Additionally, we are dedicated to improving the quality of our waste water to further protect water quality.

Our overall commitment extends beyond our immediate operations. We regularly assess the future availability of water in high-risk catchments and evaluate the environmental and social risks associated with our water usage. By actively participating in initiatives and forming partnerships, we aim to drive significant progress in water stewardship, ensuring a sustainable future for all.

Actions and resources

At the end of 2024, the implementation of our water policy was further reinforced by the development of a company steering KPI for water of a 10% water intensity reduction in water-stressed areas from 2023 to 2030.

To enable the company to reach this new target, the same principles as for our Scope 1 & 2 GHG roadmap development are applied:

• We identify site improvement opportunities by performing site assessments with water experts
• We deploy sustainable technologies (e.g., dashboarding and monitoring)

The resulting roadmap will be continually improved to ensure that the best solutions are implemented with a view to the local water challenges. These solutions include water efficiency measures such as leakage reduction or cooling tower optimizations and to a lesser extent water reuse options (e.g., implementing more closed loop systems, wastewater effluent recovery). The resources needed to achieve these water improvements can be handled within our regular operational improvement programs.

Concrete actions to reduce our water consumption are also being conducted and will be further reinforced under the drive of the new target. Recent successes include reducing water withdrawal by more than 20% at our sites in Village-Neuf (France) and Yimante (Hubei province, China) between 2022 and 2024 as a result of several operational improvements. Yimante implemented awareness campaigns and performance tracking, a steam condensate recovery project, the reuse of low-concentration wastewater instead of tap water, and fixed a pipeline leak. Village-Neuf, meanwhile, implemented a condensate recovery process, optimized cooling water and vacuum pump operations, and made several other improvements thanks to its continuous improvement methodology.

Metrics and targets

Our new voluntary water target, aiming to reduce our water intensity in water-stressed areas by 10% between 2023 and 2030, will be implemented as of 2025.

This target has been defined considering external developments around water stewardship, including:

• The importance of reducing water withdrawal, and aligning with, among other things, the SBTN framework development
• The importance of focusing on areas with the highest water stress, as described by, for example, WRI and WWF

This target encompasses all dsm-firmenich sites that are located in a water-stressed area and is measured based on the reported water withdrawal of associated sites (in 1000m³) and production volumes (in tons). Progress will be monitored and reviewed regularly. Beyond this target, we report and track other water-related metrics as defined in our Reporting Standard for Environmental Sustainability. Our primary data source relies on flowmeter readings and bills from third parties for both water withdrawal and discharge. All water-material sites use direct measurements for water withdrawal and discharge.

Water withdrawal

Water withdrawal is the sum of all water drawn into the site from all sources for any use over the course of the reporting period. It includes, but is not limited to, the below six categories:

• Fresh surface water – once-through cooling (OTC)
• Fresh surface water – non-OTC
• Fresh ground water
• Brackish water/sea water
• Water (third-party source)
• Water from processing raw materials
• Material collected rainwater

Once-through cooling refers to the continuous flow of water used only for cooling purposes which is returned to the same source immediately after use. As we do not systematically reuse or recycle water, nor do we store water, these indicators are considered not material.

Water discharge

Water discharge is the sum of liquid effluents and other water leaving the boundaries of the organization (or facility) and released to surface water, groundwater, or third parties over the course of the reporting period. This includes all water leaving the company boundary. The destination can be:

• Water discharge, fresh surface water – OTC and water discharge, fresh surface water – non-OTC
• Brackish water/sea water
• Groundwater
• Third-party destinations

Water consumption

Water consumption is the amount of water drawn into the boundaries of the organization (or facility) and not discharged back to the water environment or a third party over the course of the reporting period. It includes the water incorporated into products, crops or waste, evaporated or transpired, consumed by humans or livestock, or stocked on site in a controlled manner which is unusable and therefore not released back to the environment. Water consumption can be metered or calculated by subtracting the total water discharge from the company boundary from the total water withdrawn into the company boundary during the reporting period.

Our approach to defining water-stress locations is based on WRI Aqueduct (v4.0 – World Resources Institute) freshwater data. Following an extraction of the database based on our locations, we retain those with ‘Extremely High’ or ‘High’ risks based on the time horizon of today or by 2030 using the scenario ‘Business as usual’.

Water stress: distribution of our sites linked to water-stressed areas

Water use

Total water withdrawal decreased slightly by 1%. However, when excluding once-through cooling, the reduction was 17%. Significant progress was made in water-stressed areas. These achievements are attributed to both the reorganization of industrial assets and operational improvements.

Resource use and circular economy

While this Standard has been assessed as not material, these data are provided to meet the needs of ratings, rankings, and other stakeholders. As no material IROs were identified, no screening or consultations were performed.

Following on from the legacy targets to reduce waste to landfill, significant landfill reduction was achieved in 2024 with a 15% reduction compared to 2023. Many sites contributed to this substantial progress, reflecting the global effort to reduce waste, such as through material reuse or more efficient processes, finding alternatives to landfilling and promoting waste recycling. In addition, we strictly limit the landfilling of hazardous waste, leading to 86% of our sites reporting no hazardous waste to landfill.

1 Where defined as substances that either fulfil certain regulatory criteria (e.g., carcinogenic – category 1B) or are listed by recognized organizations, for their (potential) serious health or environmental risk.

2 Where ‘safe’ is defined as "in all we do, we follow high standards and regulatory requirements, so our products are not likely to harm the health of people, animals, or the environment under the conditions of use and disposal"