To support our business growth, create sustainable value for our customers, and maximize our positive impact on both People and Planet, our procurement teams join forces with our suppliers.
ESRS GOV-4 SBM-2 S2-2,3,4 G1-2
This serves as a roadmap to drive meaningful progress for all stakeholders in our upstream supply chains. By embedding responsible sourcing into our decision-making processes, we aim to operate in the most ethical, traceable, and sustainable value chains to achieve our purpose of bringing progress to life.
Our responsible sourcing framework consists of three layers and is supported by our overarching Supplier Engagement Program, known as Join Forces. This framework is implemented by our responsible sourcing team, which reports to the Chief Procurement Officer (CPO) and Chief Sustainability Officer (CSO) to ensure strong alignment with our Sustainability Group’s objectives and our sourcing decision-making process.
Supplier qualification
Our dsm-firmenich Responsible Sourcing standard, implemented in April 2024, is designed to engage suppliers as partners on our ambitious sustainability journey, starting with the qualification step. It complements our Supplier Code, offering clarity on our priorities and expectations for suppliers in terms of People and Planet performance. The Standard applies to all our suppliers that contribute to our value creation process. We request that our suppliers thoroughly review this document and comply with its requirements. While the Standard directly applies to our suppliers, we also expect them to extend similar standards throughout their own supply chains.
Our Responsible Sourcing framework
Supplier sustainability performance
The 'Supplier sustainability performance' pillar serves as the second layer in our framework. It involves collecting and analysing supplier data from third parties such as EcoVadis, SEDEX, Union for Ethical BioTrade (UEBT), and the Science-Based Targets Initiative (SBTi). Requirements and suggested improvements are defined in close collaboration between the responsible sourcing, procurement, and Business Unit teams.
In 2024, our focus was on equipping our procurement teams with enhanced sustainability knowledge, tools, and data to foster meaningful sustainability discussions with suppliers. A key initiative was the integration of Ecovadis’ sustainability ratings, our suppliers’ SBTi targets data, and risk management tools into our procurement analytics tool, enabling us to evaluate and compare suppliers based on environmental, social, and governance (ESG) data as well as business criteria.
Consolidating diverse data sources into a single platform, gives us a more comprehensive overview of suppliers' sustainability performance, ethical practices, and climate commitments. It also strengthens our procurement teams’ decision-making capabilities in supplier development and selection. This comprehensive approach has not only improved our risk management but has also ensured compliance with sustainability standards, thereby enhancing our company’s reputation, and reducing potential risks.
Average EcoVadis score of our rated supply chain partners
Spend covered with EcoVadis assessments
In 2024, we assessed 1,222 suppliers on their sustainability performance through EcoVadis, covering 68% of our spend with an average score of 59 points. 65% of suppliers who performed a reassessment showed an improved score compared to the previous year, reflecting our shared ambition for continuous improvement toward sustainable value creation.
We also coordinated 120 on-site supplier audits, in line with our annual risk-based audit plan, to get an independent verification of our suppliers’ adherence to laws and regulations. All corrective actions of the audit are checked for closure (with supporting evidence) through follow-up meetings with the supplier.
Additionally, we collect data from sustainability assessments to drive discussions on potential improvements. When the rationale for engagement is an overall score increase, we directly engage with the supplier, requesting them to complete corrective actions and resubmit their assessment. In cases where the rationale is more critical, such as severe deviations uncovered through a due diligence field assessment or third-party alert, we may extend the engagement with our suppliers in the field to our suppliers’ suppliers (and potentially beyond) – while considering their individual risks, perspectives, and impacts. In mid-2024, we also trained our entire procurement community through digital classrooms, teaching them how to effectively use this data in their daily operations. We further developed a responsible sourcing training program for new procurement employees, emphasizing the importance of sustainability from day one when engaging with suppliers. Our procurement teams completed the training equipped with access to the sustainability performance of their portfolio, communication kits for suppliers, and the knowledge needed to drive key discussions and align expectations with our partners.
We integrated our responsible sourcing targets – on EcoVadis coverage, EcoVadis average scores, SBTi coverage (see Fighting climate change) and training of underperforming suppliers on human rights (see Workers in the value chain) – into every procurement employee’s annual performance review. This strategic alignment ensures sustainability is integrated into business decisions.
As part of our sustainability commitments, we monitor and encourage supplier diversity and inclusion where possible. In 2024, we continued with two initiatives to drive positive change through our purchasing power:
- A U.S. Supplier Diversity program: for women-owned businesses and ethnic minority-owned businesses
- Our Inclusive Sensory Panels program: hiring blind and visually impaired professionals through external agencies in China, Mexico, UK, Switzerland, India, South Africa, and Singapore
Due diligence and Sustainability at Source
We drive further transformation and positive change through collaborations at the source, particularly in value chains with increased exposure to sustainability risks. This reflects our belief that driving sustainability requires action across the entire value chain and demands resources and expertise from us, our customers, and our suppliers. These collaborations result in initiatives such as Sustainability at Source projects, upstream due diligence exercises, supporting suppliers in obtaining third-party verification (e.g., raw material certification), and implementing traceability tools and processes. Typically, Sustainability at Source projects, arising from these collaborations, last three years and aim to contribute to:
- Social impact: (e.g., women’s empowerment, human rights, living wages, and Diversity, Equity & Inclusion (DE&I))
- Climate and environmental improvement: (e.g., sustainable farming practices, regenerative agriculture, biodiversity conservation, and responsible water consumption)
In 2024, we focused on strengthening our company’s due diligence framework and governance, which has been reviewed by a third party. Following a review of current practices, the framework was assessed against established standards, including the UN Guiding Principles for Business and Human Rights and the OECD Guidelines for Responsible Business Conduct. Additionally, our due diligence efforts align with the UN Sustainable Development Goals by promoting sustainable, inclusive, and equitable economic growth. This framework encompasses our upstream activities and covers both direct and indirect business partners. For more information on our due diligence activities, please refer to the section on Workers in the value chain. A detailed example of how we perform due diligence is available in Our Story on driving positive social impact within our pink pepper supply chains.
Accelerating climate action
To contribute to our net-zero journey, we invite our suppliers to set SBTi-aligned targets. Our suppliers’ efforts to meet their own SBTi targets will support our commitment to achieving net-zero emissions by 2045. To date, 27.9% of our spend is with suppliers who have validated SBTi targets, compared to 17% in 2023.
Additionally, suppliers that contribute significantly to our Scope 3 emissions are asked to share their Product Carbon Footprint (PCF) data with us and to develop a product roadmap aligned with our near-term target of a 25% reduction in greenhouse gas (GHG) emissions by 2030, compared to 2021. As a member of the World Business Council for Sustainable Development (WBCSD), Partnership for Carbon Transparency (PACT) initiative, we strongly encourage our suppliers to develop PACT-compliant PCFs.
In the second half of 2024, we ran a pilot on the above program with strategic suppliers to exchange feedback, best practices, and identify improvements. This pilot successfully resulted in obtaining GHG emission data from key materials that we source, increasing the share of primary emission data from our sourced volumes to 7.5%. Additionally, we ensure our suppliers have access to necessary resources, – primarily in the form of online educational materials – to help them improve their performance independently. Read more on our ambitions to fight climate change in Climate.
Share of suppliers by spend with SBTi-validated targets
Our Joining Forces program for suppliers and stakeholders
We recognize that sustainability is a complex challenge that cannot be tackled alone. As our environmental data reveals, over 90% of our Group’s emissions come from upstream value chain partners. Due to the complexity of global supply chains, we rely on our partners to identify and address any adverse societal impacts that may arise from our operations.
In that view, we launched our Supplier Engagement program: ‘Joining Forces for Responsible Sourcing in 2024’. On April 16, we connected – both in our Swiss headquarters and virtually – with 700 suppliers, partners, and colleagues from approximately 40 countries, representing around 30% of our spend.
The event began with a thought-provoking conversation between our CEO, CSO, and CPO on the importance of sustainability, its integration within our organization, and the business necessity it presents. We then heard from a key customer, who emphasized the importance of collaboration within supply chains. The event concluded with three break-out sessions focused on climate, human rights, and sustainability assessments, each designed to engage our suppliers in the collective achievement of our sustainability ambitions and targets. Representatives from the UN, EcoVadis and a large climate engagement consultancy joined the workshops.
The event received overwhelmingly positive feedback from our suppliers, with our suppliers’ understanding of our expectations and requirements increasing by 40%.
We also hosted the second dsm-firmenich edition of our internal Procurement Awards to recognize and celebrate outstanding initiatives within our procurement team. These awards highlight exceptional projects that align with our procurement priorities: EBITDA improvement, cash optimization, Catalyst for Growth (C4G) mindset, responsible sourcing, and capabilities. This year’s winners showcased exemplary cross-functional collaboration and innovation, delivering significant impacts across various Business Units and Business Partners.
One of the standout initiatives from our 2024 Procurement Awards was the project focused on securing sustainably certified geranium bourbon oil for a major fragrance launch. Our procurement and responsible sourcing teams collaborated to identify and validate a new supplier in a high-risk region. The project not only enhanced supply chain stability but also reinforced our commitment to ethical and sustainable sourcing, positioning us for continued success in the market.
Exceptional supplier performance with respect to sustainability is encouraged and rewarded by dsm-firmenich. We remain eager to learn from and co-develop solutions with our suppliers, and we are committed to rewarding those who proactively support us in derisking our supply chains and driving positive impact.
In line with this ambition, we organized our very first dsm-firmenich Supplier Sustainability Awards at the end of 2024. Our Procurement team invited suppliers to submit initiatives related to our three focal points – People, Planet, and Progress – with a jury drawn from our responsible sourcing and Procurement LTs selecting the winner.
We are proud to announce VERGER as the recipient of the award for their outstanding Fair for Life Certification initiative. This initiative focuses on empowering farmers, promoting fair wages, and fostering sustainable farming practices. VERGER’s commitment to ethical business practices and community development has set a high standard in the industry and aligns perfectly with our values of social responsibility and environmental stewardship. Their innovative approach not only enhances the livelihoods of marginalized producers but also contributes significantly to environmental conservation.
“Receiving dsm-firmenich’s first-ever Supplier Sustainability Award is an extraordinary milestone for VERGER. Their willingness to embrace the inherent complexities of raw materials and collaborate with suppliers exemplifies how natural sourcing is not just a transaction. We are grateful for this partnership and energized by the opportunities ahead.”
Nuwan Delage
Managing Director, VERGER
Leveraging the power of partnerships
As with our approach to supplier engagement, we firmly believe in collaborating with like-minded institutions to drive impactful change across value chains and industries.
To achieve this at scale, we work closely with sector initiatives and participate in industry initiatives, platforms and discussions. We are an active partner in strategic responsible sourcing coalitions such as Together for Sustainability (TfS). This industry-leading initiative encourages members to share supply chain scores, enabling us to leverage insights gathered by others to improve our understanding of our supply chain’s sustainability performance.
We are committed to various sustainability initiatives at the supply chain level to create collective impact at scale. For example, we are involved in The Sustainable Vanilla Initiative (SVI), a voluntary industry group focused on ensuring the long-term, stable supply of high-quality vanilla produced in a socially, environmentally, and economically sustainable way.
Additionally, we are an impact sponsor of the United Nations Global Compact (UNGC) Decent Work Platform, which aims to build consensus within the business community on key principles of decent work.
Our team was also actively involved in various conferences across the year, including speaking engagements at the 2024 UEBT Annual Summit, the 47th Annual Conference of the International Federation of Essential Oils and Aroma Trades (IFEAT), and the 2nd European Supply Chain Decarbonization Summit on end-to-end transparency of emissions across the supply chain.
