DCSIMG
Stakeholder engagement - Annual Report 2015 - DSM

Stakeholder engagement

Taking part in strategic and proactive dialogue with key stakeholders helps DSM to deepen its insights into the drivers of its business and the needs of society across the world, and thus be ahead of competition in adjusting to changing demands.

In 2015, DSM reached out to its stakeholders – suppliers, customers, investors, employees, companies, governments, academia and civil society – to further align its strategy with their views. The company's stakeholder groups have been identified based on the influence they have on the company's operations, as well as whether they are significantly affected by them. The outcomes from the various stakeholder dialogues inform many aspects of DSM’s strategy such as risk management, business opportunities, and strategic objectives and ambitions.

The continuous dialogue DSM has with its stakeholders takes place through a variety of channels. A non-exhaustive overview of the ways in which it has engaged with each stakeholder group is provided on Stakeholders. DSM values engaging with its relevant stakeholders and maintains open discussions on topics relevant to its business activities and its role in society.

Materiality

For DSM, materiality is about identifying the People, Planet and Profit topics that are most relevant to the company’s stakeholders, and plotting them against the impact they have on its business. Business impact includes social, environmental and financial impact. DSM formally introduced its first materiality matrix in 2012. Since then, it has continuously assessed whether major changes to its material topics and matrix are needed by keeping up with societal debates and engaging in dialogue with international business organizations and other relevant stakeholders. DSM conducts media research and peer analyses as part of these efforts.

In 2015, DSM refreshed its materiality matrix based on a process that included the aforementioned media and peer analysis, and identified external trends and developments relevant to DSM’s external stakeholders and to the business. For the first time, DSM also aligned its materiality matrix refresh with its risk management process, and checked that risks identified in its Corporate Risk Assessment were reflected in the material topics. The topics were validated via internal stakeholder interviews, as well as a formal review process with the Sustainability Leadership Team – a group of senior managers with the role to champion sustainability within the company. The refreshed materiality matrix was signed off by the members of the Managing Board.

As a result of the materiality refresh in 2015, DSM added three new topics to its materiality matrix: Sharing economy, Responsible business practices and Transparency. The topic Human rights is now covered under Responsible business practices. Social media has been included in the management approach of the topic Advocacy & reputation. The results of the refreshed matrix highlight the ongoing, emerging and new topics that are most relevant for DSM to report to its stakeholders in 2015.

The 19 subjects have been clustered into four categories: Societal Shifts, Eco Limits, Business Enablers and Trust & Accountability. An explanation of all topics and reference to DSM’s management approach are described on the next pages.

Societal Shifts

Health & wellness

As a global societal megatrend, Health & wellness is consistently confirmed by DSM's stakeholders as an important topic for the world's growing population, and as an area of opportunity for the company. DSM is uniquely positioned to offer products and solutions which contribute to individual health and well-being, including the prevention and/or reduction of diseases and increasing quality of life through its solutions to improve health and healthy lifestyles.

Management approach. The topic Health & wellness underlies DSM's strategy. DSM manages its opportunities in this topic through its Nutrition cluster and the Emerging Business Area (EBA) DSM Biomedical. In the Performance Materials cluster the topic of health plays a role in marketing solvent-free products in close collaboration with its value chain partners. See 'Strategy 2018' on Nutrition and 'Review of business' from Review of business - Nutrition.

Malnutrition & nutrition security

Malnutrition & nutrition security continues to be a material topic that affects DSM’s stakeholders and the business. The effects of undernutrition on health and development (typically as a result of poverty) are pertinent to both the developing and developed world. DSM offers solutions to address this issue, which include increasing affordable access to sufficient, safe, and nutritious food to maintain a healthy and active life.

Management approach. DSM manages the topic of Malnutrition & nutrition security for the developing world through its cross-sector partnerships in nutrition; and for the developed world through its strategies within the business groups DSM Nutritional Products and DSM Food Specialties. See 'Cross-sector nutrition partnerships' on Cross-sector nutrition partnerships and 'Review of business – DSM Nutritional Products' and 'DSM Food Specialties' on DSM Nutritional Products and DSM Food Specialties respectively.

Emerging economies

Emerging economies remain a material topic for DSM and its stakeholders. The shifts in power and influence from developed to emerging economies in terms of political, social and economic considerations means that DSM monitors developments and manages its activities and operations in emerging economies such as China, India, Brazil and those in Africa.

Management approach. DSM manages Emerging economies through its strategic growth driver High Growth Economies. See 'High Growth Economies' on High Growth Economies. In addition, the company strategically partakes in acquisitions and partnerships in emerging economies that meet DSM's criteria. For example, in 2015 DSM participated in a joint venture with the Africa Improved Foods Ltd. consortium to address malnutrition in Rwanda. See 'Acquisitions & Partnerships' on Acquisitions & Partnerships and 'Review of business − DSM Nutritional Products' on DSM Nutritional Products.

Product & food safety

As a company that produces ingredients and solutions in health, nutrition and materials, Product & food safety ranks high in relevance for DSM and its stakeholders. Consumer trends show that a substantial majority of people are becoming more aware of and concerned about the source of what they are buying and eating, as well as aspects such as safe packaging and accurate labeling.

Management approach. For DSM, Product & food safety means having practices in place to ensure ingredient and substance quality, including the production, handling, preparation, storage and use of DSM solutions in ways that prevent risks to health and wellness. DSM manages the subject Product & food safety for its value chains through its People+ program and its Product Stewardship strategy. See 'People+ program' on People+, and 'Product Stewardship' on Product Stewardship.

Sharing economy

As opposed to the ownership economy, in a sharing economy physical assets are shared as services. For instance, a car owner may allow someone else to rent their vehicle during a period when they are not using it. In doing so, the owner prevents the car from being underutilized while simultaneously generating income. The Sharing economy was recognized by DSM’s stakeholders as a new and emerging topic that may impact the demand for DSM’s high-performance materials.

Management approach. The Sharing economy is being monitored by DSM as an emerging topic for its Performance Materials businesses. It is also of consideration in how DSM will look at new business models within the circular economy, as sharing capital goods allows joint ownership of products such as cars, which will lead to a reduced demand for such products in the future. The demand for higher-quality, longer-lasting solutions that support the sharing economy will likely increase. DSM needs to prepare its Performance Materials businesses to provide solutions that allow for greater durability, reusability and recyclability. See 'Review of business - Performance Materials' on Review of business - Performance Materials.

Eco Limits

Climate change & renewable energy

Climate change & renewable energy ranks high in importance for both DSM and its stakeholders. This topic refers to the long-term shifts in weather patterns and extreme weather events due to human-induced alterations. It includes the composition of energy supply and emissions resulting from direct and indirect energy use.

Management approach. DSM’s approach to addressing climate change involves quantifying and tracking greenhouse-gas (GHG) emissions, as well as monitoring its energy consumption so as to be able to initiate projects to improve efficiency and reduce its footprint.

Where feasible, projects are initiated that benefit the environment, and also have other positive consequences, such as internal cost savings. DSM discloses its impact through the Carbon Disclosure Project.

Climate change is also an area of opportunity for DSM to offer products and solutions to help enable the transition to a low-carbon economy. DSM furthermore advocates climate action in support of this transition. For a detailed description of DSM’s management approach for Climate change & renewable energy, and 2015 performance, see 'Planet' on Climate change & renewable energy and 'Sustainability statements' on Sustainability statements − Planet, as well as 'Review of business' from Nutrition.

Sustainable & circular value chains

Sustainable & circular value chains remains a material topic for DSM's stakeholders as it is becoming ever clearer that real sustainability can only be achieved when all parts of the value chain work together. DSM's suppliers, customers and peers are also becoming increasingly aware of the importance of the circular economy as a concept which can improve the environmental impact of the value chain. For DSM, Sustainable & circular value chains mean low environmental and positive societal impact value chains for its product and system design, which emphasizes use and re-use of materials enabled by the circular economy. The circular economy helps DSM to overcome its impact in relation to resource constraints and move to lower-impact business models, and is most relevant for seeking opportunities within DSM’s Performance Materials businesses.

Management approach. DSM’s approach to Sustainable & circular value chains is through environmental and social Life Cycle Assessments (LCA) of its products and solutions, and collaborating with its partners in the value chain. See 'People+' and 'ECO+' on People+ and ECO+ and 'Planet' on Other emissions to air.

Water security

Water security is defined as the capacity of a population to safeguard sustainable access to adequate quantities of acceptable quality water for sustaining livelihoods, human well-being, and socio-economic development. Due to its effect on ecosystems services and political stability, it is a material topic for both DSM and its stakeholders around the world. DSM commits to the responsible use of water resources in light of the long-term decline in water supply as compared to water demand around the world.

Management approach. DSM has been a signatory to the UN CEO Water Mandate since 2009. In addition, it has voluntarily reported its water policy and performance via the Carbon Disclosure Project since 2011. For DSM’s performance in 2015 and its target on water for the period 2016-2020 see 'Planet' on Targets 2010-2015, and 'Sustainability statements' on Sustainability statements − Planet.

Sustainable animal protein

The topic Sustainable animal protein is an emerging topic of importance for DSM's stakeholders. With the world population set to reach nine billion by 2050, one of the biggest concerns for governments worldwide is food security at an affordable price. The demand for high-quality protein from diverse sources including meat, fish, eggs and dairy is also increasing. Added to that, the adverse effects of climate change on natural resources means that sustainable animal protein production is becoming an increasingly important subject for the world to feed a larger, more urban and richer population in the future without endangering fragile ecosystems. DSM is uniquely positioned to respond to this topic by making more efficient use of feed, providing alternatives to antibiotic growth promoters, improving animal health and welfare with the aid of micronutrients and reducing the environmental impact of animal farming in terms of, for example, GHG emissions, air quality in stables and land use.

Management approach. DSM manages its opportunities in Sustainable animal protein through its largest business group DSM Nutritional Products, contributing to reducing the environmental footprint of animal husbandry. See 'Review of business – DSM Nutritional Products' on DSM Nutritional Products. See also DSM's position paper on Sustainable animal protein production on its website.

Bio-based economy

A Bio-based economy remains an important topic to DSM's stakeholders as the world moves toward a low-carbon economy and away from a fossil-based economy. In a Bio-based economy, production will rely on the use of natural inputs as is the case with renewable energy, biofuels and bio-based chemicals. By ensuring the renewability of raw materials, a bio-based economy makes a circular economy possible. The EBA DSM Bio-based Products & Services focuses on pioneering advances in biomass conversion and seeks to demonstrate the commercial viability of renewable technologies in collaboration with strategic partners in the value chain.

Management approach. DSM manages the topic of Bio-based economy through the strategy and activities of its EBA DSM Bio-based Products & Services. See 'Review of business – DSM Bio-based Products & Services' on DSM Bio-based Products & Services.

Biodiversity

Biodiversity and healthy ecosystems are among the conditions necessary for a sustainable world. Biodiversity is the term given to the variety of life on earth and the natural patterns it forms. Changes can influence the supply of ecosystem services − the benefits people obtain from ecosystems. These include services such as food, water, and clean air; regulating services such as flood and disease control; cultural services such as spiritual, recreational and cultural benefits; and supporting services, such as nutrient cycles, that maintain the conditions for life on earth.

Management approach. DSM supports the ambitions of the Convention on Biological Diversity and actively contributes to the preservation of biodiversity wherever possible. The company does this by building awareness about natural capital, biodiversity and ecosystems; assessing and monitoring DSM’s impact on protected areas within its vicinity; developing impact assessments with stakeholders; and developing measures that help mitigate this impact. In 2015, DSM published a position paper on Biodiversity on its website. For further detailed information on DSM's approach to Biodiversity, see 'Planet' on Biodiversity.

Business Enablers

Open innovation

Open innovation is the future

The Chemelot Institute for Science & Technology (InSciTe) is a public-private institute for biomedical materials and bio-based materials founded by DSM, Maastricht University and University Medical Center, Eindhoven University of Technology and the Provincie Limburg. Managing Director Emiel Staring explains how InSciTe uses open innovation to help DSM – among others – bring new ideas to market faster and with a greater chance of commercial success.
Read more >

Open innovation is an important element of DSM's approach to innovation and a business enabler. By combining its own capabilities with the vast pool of ideas, know-how and expertise that are available outside the company, DSM is better able to discover and develop solutions. Open innovation is of particular importance to DSM's suppliers, customers and partners, as it helps to contribute to their and the company's profitable growth.

Management approach. DSM actively manages an Open innovation policy and collaborates with suppliers, customers and academic institutions in the name of innovation. See 'Review of business − Innovation Center' on Review of business - Innovation Center and 'Stakeholders' on Stakeholders.

Careers & employment

The topic of Careers & employment is important to DSM and its stakeholders − both within and outside of the company. DSM aims to provide rewarding career opportunities, engaged staff, a healthy work-life balance and a diverse workforce where individual differences are respected.

Management approach. DSM’s approach to addressing careers & employment, includes managing the topics Safety and Health, ONE DSM Culture Agenda, Talent Development & Attraction, Mentoring, Organizational Learning and compliance with the International Labour Standards of the International Labour Organization (ILO). See 'People' on International Labour Standards.

Advocacy & reputation

For DSM, Advocacy & reputation means supporting the company's sustainable business interests and core values. DSM interacts with government, policymakers, industry associations and societal interest groups on areas of mutual interest to create a receptive environment for its solutions. It encourages legislators to promote competitiveness, sustainability and innovation. DSM’s reputation underpins its license to operate with stakeholders both within and outside its direct value chains.

Management approach. DSM considers dialogues with government authorities a constructive part of the legislative decision-making process. It manages its relationship with government authorities through a global network of regional public affairs professionals. DSM is committed to acting responsibly and transparently when it comes to sharing its expertise with policymakers and government authorities in all markets and is registered in the EU Transparency register. In addition, the company works with progressive business coalitions, societal interest groups and international institutions on various topics including nutrition, innovation, climate and energy. It also supports public-private collaboration as an essential part of its engagement. The company adopts a structured approach to issue management in which cross-disciplinary teams identify, monitor and where necessary instigate actions on key issues for the company and its businesses. Alongside daily business practices, DSM's reputation is bolstered by its stakeholder outreach and engagement as well as by social media and campaigns such as 'Science can change the world' to promote science with a societal impact. For more information on how DSM engages with these groups, see 'Stakeholders' on Stakeholders.

Trade barriers

Compliance with trade controls remains a material topic for DSM. Within this topic the company has to deal with legislation on strategic goods, sanctions and embargoes, sanctioned parties, restricted chemicals and technology controls. DSM actively follows the international geopolitical developments and the consequences for the trade barriers it has to cope with. During 2015, legitimate trade with embargoed countries was severely affected by the financial restrictions on facilitating the receipt of payments by financial institutions.

Management approach. Compliance with trade controls legislation is embedded in the DSM Code of Business Conduct. DSM has standard business processes in place to guarantee compliance with these subjects. Corporate Requirements on Trade Controls Compliance came into force per 1 January 2015 and have been implemented. Trade Controls Compliance Managers have been appointed within the company to ensure compliance in the businesses. Reporting, training and risk assessment guidance are in place. See also 'Code of Business Conduct' on Business principles.

Trust & Accountability

Responsible business practices

Responsible business practices is important for both DSM and its stakeholders and provides DSM with a license to operate in its dynamic and international environment. A company that abides by ethical codes of behavior is able to draw more customers, attract and retain employees, and engage investors. For DSM, Responsible business practices includes a wide category of subjects related to doing responsible business as mentioned in DSM’s Code of Business Conduct and Supplier Code of Conduct; topics include: human rights, Safety, Health and Environment (SHE) practices, governance & compliance, competition law, trade controls and anti-bribery & corruption measures.

Management approach. See 'Corporate governance' on Introduction and 'DSM Code of Business Conduct' on DSM Code of Business Conduct.

Transparency

The topic of Transparency is a new topic identified as being material for DSM in 2015 by its stakeholders. For DSM, this means functional transparency of information to meet the needs of different types of stakeholders including (but not limited to) employees, customers, investors, governments, civil society and local communities. Examples of topics include tax payments, disclosures on the environmental and social impacts of DSM’s solutions and remuneration of the Managing Board.

Management approach. DSM has published an Integrated Annual Report since 2010, with the objective to link its financial performance with its sustainability performance. Through integrated reporting and application of compulsory and voluntary reporting frameworks and guidelines, DSM aspires to report transparently to its relevant stakeholders about how it creates value on the dimensions People, Planet and Profit. In China, DSM has published a Corporate Social Responsibility report on an annual basis since 2007. In 2015, DSM China was recognized by the Shanghai Municipal Commission of Commerce and the Shanghai Association of Foreign Investment for its continued transparency of information. For DSM’s performance, see 'Consolidated financial statements' on Consolidated financial statements and 'Sustainability statements' on Sustainability statements.

Tax

In recent years, fair share tax contribution has become a prominent societal issue. DSM believes that a responsible approach to tax is an integral aspect of sustainable business. DSM views the fulfilment of its tax obligations as part of the process of creating long-term value for all stakeholders.

Management approach. DSM’s tax position is consistent with the normal course of its business operations and reflects the corporate strategy as well as the geographic spread of its activities. It strives to be compliant with the letter and spirit of national and international rules, regulations and best-practice guidelines (such as the OECD Guidelines for Multinational Enterprises) and is in line with the arm’s length principle.

DSM supports the idea of a global solution for fair tax policies and systems. Thus, DSM closely monitors and provides input on the OECD initiative on Base Erosion & Profit Shifting. The company is transparent towards tax authorities in all the countries in which it operates and works closely together with them to determine the amount of tax due.

DSM’s contribution to society includes the provision of employment to more than 20,000 people around the world. In addition to corporate income taxes, the company pays many other taxes including payroll taxes and social security contributions on the wages of its employees, value added taxes, customs duties, property taxes, etc. All these taxes are a significant source of funding of public services by governmental institutions at several levels worldwide. DSM sees it as its responsibility to contribute to this.

DSM’s Managing Board is responsible for establishing the approach to taxation under the supervision of the Audit Committee of the Supervisory Board. Proper organization, procedures and processes are in place at DSM between Group Taxation, the business, and other support functions and functional excellence departments. The aim is to create a strong interconnection in order to keep everyone aware of relevant tax legislation and to ensure compliance. Compliance with both direct and indirect tax matters is monitored through a Tax Control Framework in order to achieve an effective, efficient and transparent tax function. The Tax Control Framework is a tax risk management and control system, which ensures that Group Taxation is aware of the worldwide tax risks for the company. Group Taxation possesses sufficient insights to adequately manage these risks. The key stakeholders in the Tax Control Framework are well-established and include the Supervisory Board, Managing Board, Executive Committee, Group Taxation, business, external auditors, as well as the tax authorities in countries where DSM is operating. For further detailed information see ‘Taxation at DSM' on the company's website.

Bioethics

Bioethics relates to responsible practice concerning the environmental, ethical and moral implications of new genetically modified organisms, biological discoveries and biomedical advances, as in the fields of genetic engineering and drug research. Biotechnology is a field of applied biology that involves the use of cells and proteins derived from these cells in bioprocesses for a broad range of applications such as pharmaceuticals, food, agricultural products, bio-based chemicals and materials, as well as fuels. Genetically Modified Micro-organisms (GMMs) are organisms with genetic material that has been altered via biotechnological means that are industrially used by definition in contained use (closed steel vessels). DSM’s latest consultations with stakeholders show that the debate now focuses on the role GMMs can play in nourishing the world's population by 2050. New or unfamiliar technologies like genetic modification often raise concerns in society about their possible implications for public health or the environment, and may trigger ethical discussions. DSM is aware that consumer acceptance of new technologies cannot be taken for granted, and so makes addressing safety and other concerns a top priority.

Management approach. DSM manages the topic of Bioethics by continuously engaging in an open dialogue on the benefits and risks with its stakeholders, including the scientific community, industry, NGOs, governments and the general public. The company adheres to applicable regulations and legislation and applies the highest standards. It is transparent about its practices and uses science-based safety assessments, thus enabling the competent authorities to assess and approve its use of innovative strain development technologies and the resulting GMMs, which are for contained use in its production processes. DSM believes biotechnology can offer unique solutions to global challenges related to a growing and aging population and the depletion of fossil resources. See DSM's position paper on biotechnology on the company's website.

Stakeholders

DSM engages in an ongoing dialogue with its key stakeholders to share thoughts and views, and to deepen the company’s insights in order to respond to their needs and create shared value. More information on how DSM engages with its employees on topics such as safety and health, talent development and labor rights can be found in 'People' on People in 2015. For more information on how DSM engages with civil society on topics such as human rights, see Human rights. DSM’s engagement with customers and suppliers is described in the following section 'Partners in the value chain'. A model of how DSM creates value for its stakeholders through its capital inputs and value outcomes can be found on How DSM creates value for its stakeholders.

Table 1: Stakeholders

Stakeholders
Stakeholder group
How DSM engages
Examples 2015
Employees − create value for DSM's stakeholders by helping them provide solutions to some of the world’s greatest challenges
Surveys, engagement events, intranet, internal campaigns
- In October, DSM employees answered the Employee Engagement Pulse Survey with a response rate of 78% and an engagement score of 69%. Local management teams will work with employees to improve on focus areas, such as valuing employees’ diverse perspectives more.
- DSM's young professionals network, DSM NEXT is committed to share knowledge and gain insight into DSM’s businesses through many activities. In 2015, this included site visits, workshops, and webinars.
Investors - DSM aims to provide an attractive financial return to its shareholders
Annual General Meeting, Capital Markets Day, conference calls, road shows, investor indices (e.g. DJSI), surveys
- In November, DSM organized a Capital Markets Day for financial analysts to discuss strategic progress and the improvement of financial performance.
- DSM defined a renewable energy strategy for its operations in the next strategic period taking into account concerns from Eumedion and VBDO. DSM also participates annually in socially responsible investment indices such as DJSI, FTSE4Good and Sustainalytics.
Science research institutes - DSM openly cooperates with renowned universities and science institutes
Financial support, knowledge & research, sharing facilities, lectures
- Led by the Circularity Center, DSM, together with Lankhorst Ropes, Van Gansewinkel and the Port of Rotterdam, investigated end-of-life solutions for maritime ropes, fishing nets and gloves made with Dyneema®.
- Founded by DSM with Dutch universities and Provincie Limburg, the Chemelot Institute for Science & Technology (InSciTe) opened a biomedical facility at Brightlands Chemelot Campus in September. This collaborative workspace will advance proven biomedical concepts to clinical applications through open innovation.
NGOs and civil society - DSM works together with other organizations to jointly find solutions to societal challenges
Meetings, discussion panels, philanthropic events
- DSM’s involvement in Climate Week NYC included an event on nutrition and the Sustainable Development Goals hosted by GAIN, SUN Business Network and Devex. DSM CEO/Chairman of the Managing Board Feike Sijbesma took part in a panel discussion on ways to create successful multi-stakeholder partnerships.
- Through its co-chair advisory role in the SUN Business Network, DSM’s advocacy helped lead to 186 companies making public commitments to improving nutrition and tracking progress annually.
Communities - a good relationship with parties that are geographically close to DSM's operations is important to maintain the company's license to operate
Open days, news bulletins, social media, education, support through local initiatives
- DSM Food Specialties in Delft (Netherlands) publishes a twice-yearly news bulletin which keeps the community up to date on developments at the site.
- In India, DSM partners with a local community radio station to raise awareness of health issues among adolescents and couples in Gurgaon. The region also provides educational support to girls living close to DSM facilities.
Governments - DSM engages with governments individually, as part of a coalition or through its memberships in relevant trade associations
Meetings with officials, publications, position papers on DSM website, case studies, letters, reviewing proposed legislation, engagements in trade associations
- DSM led an initiative in which 78 companies formed a coalition and signed a joint letter urging the world’s leaders to reach an ambitious climate deal at COP21 in Paris.
- DSM formed an ad hoc coalition with industry peers on the topic of the circular economy. A position paper was sent to a wide range of stakeholders in Brussels (Belgium) to encourage the European Commission to design an ambitious circular economy legislative package.

Partners in the value chain

Customers

DSM embraces customer centricity in its focus on excellence in marketing and sales. The company is committed to becoming a part of the top quartile of customer-centric companies and has developed a roadmap to continuously improve its marketing and sales capabilities. This roadmap includes how DSM engages with its customers, taking into consideration digitization and new ways of connecting; measuring and tracking performance in customer loyalty and complaints; and business development projects with new and existing customers.

Engaging with customers

The digital world plays an increasingly important role for DSM in engaging with its customers and other relevant stakeholders. With over 90% of business-to-business decision makers orientating themselves online before making a purchase decision, DSM aims to provide its customers with good online experiences. By improving search engines with relevant keywords, for example, DSM has been able to bring additional traffic to specific market and product websites. A further example is a new online health benefit platform ‘Improve your digestion’ launched by DSM Nutritional Products in 2015, which provides a unique range of solutions for customers to create customized products to support different requirements for digestive health. DSM also engages with its customers through more traditional means. In 2015 this included participation in 360 technical seminars and congresses to discuss industry challenges and possible solutions with customers and thought leaders, and a presence at more than 400 tradeshows and exhibitions to showcase DSM’s solutions for its markets.

A growing number of companies connect their brand to their bottom line, as evidence shows a compelling link between strong brands and market performance. DSM considers its brand an important business asset and aspires to be a company with a strong brand and reputation for providing innovative and sustainable solutions that fulfill the needs of the market. DSM's brand value as assessed by Brand Finance has grown consistently over the last five years and in 2015 increased by 20% to €729 million (2014: €607 million).

Customer loyalty

DSM uses the Net Promoter Score® (NPS), a customer interaction cycle that has become the lead performance indicator for loyalty and advocacy tracking to measure its performance with customers. NPS equips the company with the processes to drive customer centricity across the business. DSM is a frontrunner in using the NPS methodology in its sector. The essence of the NPS methodology is to create a closed loop to continuously improve the customer experience. DSM has developed a tailored NPS program that is used by all its business groups. In 2015, DSM finalized the implementation of NPS as the lead performance indicator of customer centricity in the organization, and maintained a high overall score for DSM of 35, remaining amongst the leading companies in its sector.

Business development projects

DSM’s business development approach is to work with partners within and across its value chains to focus on solutions that address societal challenges collectively, leading to shared value creation for all parties involved. Collaboration is an effective way to drive DSM’s sustainability agenda and to come up with innovative solutions that benefit business and society. An example of this are lines made with Dyneema® to replace steel wire rope for use in heavy lifting and towing. Developed in close partnership with its customer Samson, the new solution leads to faster, more efficient rigging and the reduction of health, safety, security and environment issues.

In 2015, DSM further developed its approach with existing customers through its customer executive sponsorship program, which was launched in 2014. This program, which links senior executives to key DSM accounts, invites customers to have open discussions with DSM’s top management in order to maintain strong relationships and enable the fulfilment of both companies' business and social responsibility visions. An example of how this program resulted in a strategic project with a customer is DSM’s partnership with MedDay to produce pharmaceutical grade D-Biotin for use in the treatment of progressive multiple sclerosis. The partnership covers the manufacturing and exclusive supply by DSM for MedDay’s lead product, which is currently being investigated in a series of clinical trials.

Close collaboration with customers allows DSM to tackle societal issues, such as climate change. Making carbon footprint declarations available to customers, as well as their customers in turn, provides transparency with respect to emissions and aids in efforts by DSM’s customers to reduce carbon emissions across their own value chain. For example, DSM Engineering Plastics makes the carbon footprint of a number of main compounds available in a database that customers can access.

DSM also engages with customers and organizations across multiple sectors to combat malnutrition and to find solutions to treat diseases. As a strategic partner in the supply of micronutrient powders and supplements, DSM not only distributes these products through its partnerships (such as the UN World Food Programme), but also through other commercial channels. For example, the South African Department of Health distributes DSM’s Mi-Vitamin™ and i-care™ ranges for use by patients in its national health system. In Asia, DSM focused its product and business development on consumers to develop fortified rice kernels with the look and taste of normal rice. DSM can now bring this concept to a wider market and contribute to addressing micronutrient deficiencies with this solution.

Customer complaints

In 2015, DSM continued its integrated complaint management process, which stimulates relevant continuous improvements in products, processes and services for the benefit of customers. As a learning and customer centric organization, DSM sees every customer complaint as an opportunity to further improve on the solutions it provides, as well as the corresponding processes. For this, DSM recognizes the importance of an effective customer dialogue.

An example of DSM’s open handling of complaints is by DSM Food Specialties, concerning the specifications of one of DSM's preservation ingredients for a large beverage producing company. DSM’s efforts to solve the issues through open communication and the optimization of quality test methods led to nomination by this beverage producer as a top-10 preferred supplier in 2015. The customer team was awarded a 'Hall of Fame' award and valued by the customer for their open and positive attitude and support.

Another example is at DSM Nutritional Products, which has found that its average investigation response time for product-related complaints can be reduced by 38%. This business has set targets for its operational teams to drive swifter responses and these are followed up on a weekly basis. Complaint investigators give incoming complaints their highest priority, and start immediate actions together with customer service agents and account managers. Close and active communication with customers enables DSM to better understand the issues and their impact for the customer, as well as to come up with satisfactory solutions.

Suppliers

DSM needs to be smart in how it engages with its 40,000 suppliers. DSM does this through a Supplier Sustainability Program (SSP), which is implemented through annual Supplier Sustainability Plans and Sustainability Roadmaps. Progress towards targets is shared on a monthly basis within Sourcing and on a quarterly basis with the Managing Board. The Supplier Sustainability Plan 2015 addressed a number of relevant topics for the materiality matrix: Sustainable & circular value chains, Bio-based economy, Responsible business practices and Climate change & renewable energy.

DSM Supplier Sustainability Program
Supplier Sustainability Program (SSP) strategy

In 2015, DSM assessed the maturity level of its SSP along four dimensions: Strategy/Plan; Supply Risk & Opportunity; People, Infrastructure & Measurements; and Processes. The maturity assessment was used to indicate areas of improvement to meet the ambition level for 2020. The SSP was also benchmarked against the practices of other leading sustainable companies. The results of the benchmark and the maturity assessment were incorporated in the Sustainable Purchasing Roadmap 2016-2020, which aims to anchor sustainability even more firmly in DSM’s daily sourcing activities. More information about the maturity assessment of DSM's SSP can be found on the company's website.

Internal skills and capabilities

Good progress was made in 2015 in internal capability building. By the end of 2015, more than 300 employees in the sourcing community had participated in sustainability trainings. These trainings underpin the importance of sustainability, and provide practical tools to make it an integral part of daily work in sourcing. DSM once again organized an internal Strategic Sourcing Award and Key Supplier Management Award in 2015, in which sustainability was a key criterion for selecting the winners in both categories.

Collaboration

DSM works with external partners to enhance collaboration in the supply chain. These include the Roundtable for Sustainable Palm Oil (RSPO), Together for Sustainability (TfS) and Solidaridad. DSM joined RSPO as it is conscious of potential risks to the environment, human rights and labor practices in the palm oil supply chain, and palm oil is an ingredient that is used, albeit on a very limited scale, in DSM’s human nutrition activities. DSM has been sourcing sustainable palm oil derivatives for the DSM Nutritional Products Human Nutrition & Health business since 2014. Two key production sites were awarded RSPO Mass Balance Certification in 2015 and the ambition is for all remaining sites to achieve the same certification by 2017. DSM also anticipated and reacted to questions from the World Wide Fund for Nature (WWF) and SOMO on the use of palm oil and mica respectively in DSM processes or products, sharing information openly and transparently.

Compliance

DSM uses its Supplier Code of Conduct (SCoC) and carries out assessments and audits to check suppliers' compliance with the norms and values for doing business with DSM. In cases where risks or breaches are identified, DSM engages with the supplier to set up and execute an improvement plan. Should the breach or non-conformity persist, DSM will take measures to mitigate the risks or ultimately terminate the relationship with the supplier in question. The proportion of DSM's spend covered by its SCoC remained at a high level of 95% in 2015.

DSM focuses on approximately 1,000 critical suppliers. Critical suppliers include those that are providing critical components, are located in potentially high-risk countries, supply a high volume of products or services, are non-substitutable, or have the potential to create shared value in areas of innovation and sustainability.

In 2015, DSM began actively collaborating with TfS. The purpose of this initiative is to develop and implement a global assessment and audit program to screen and improve sustainability practices within chemical industry supply chains. DSM benefits from access to the higher standard and the larger number of assessments and audits which are executed by other TfS members and shared on the TfS platform. Since the start of the initiative, the collective (potential) supply base of the TfS members has been rated by 4,600 EcoVadis assessments and 446 TfS audits. In 2015, a total of 2,580 sustainability assessments were shared among TfS members and 179 new TfS audit reports were received by the initiative.

Table 2: Supplier Sustainability Program results

Supplier Sustainability Program results
2015
2014
2013
 
Target
Achieved
Leverage TfS pool1
Target
Achieved
Target
Achieved
Spend coverage SCoC
91%
95%
-
91%
94%
91%
95%
Sustainability assessments
200
252
690
59
41
-
3
Sustainability audits2
20
10
27
40
42
40
40
Quality audits
-
251
-
-
294
-
299
Solutions
30
46
-
30
30
30
31
1 Total number of DSM suppliers assessed by TfS members
2 The lower target set for Sustainability audits in 2015 resulted from DSM’s membership of TfS

Using this collaborative approach in 2015, DSM was able to screen more than 3,300 suppliers from its total base in 2015, of which 2% were identified as ‘risk suppliers’ with regard to environment, impact on society, human rights and labor conditions. In line with internal follow-up guidelines, investigations were initiated with these suppliers. In one case this resulted in an audit in 2015. The assessments that were performed by other TfS members will be followed up in due course. DSM was able to screen 6% of new suppliers with regard to their environmental performance, impact on society, human rights and labor practices.

In 2015, sustainability compliance was also integrated into the standard supply risk management approach and the new supplier onboarding process. While compliance remains the cornerstone for DSM to achieve a sustainable supply base, procurement activities will increasingly focus on so-called ‘better business’.

Better business

As part of its drive to foster better business through its supplier solution projects, Sourcing engages in proactive dialogue with suppliers in order to drive the business agenda on topics such as climate change, food & nutrition security, health and the circular economy. In this context, Sourcing pursues initiatives to create joint value, awareness and engagement in areas related to ECO+ and People+.

China Triple P Project

DSM has run the ‘China Triple P Supplier Engagement and Capability Building’ project since 2013. The project, which aims to engage suppliers to jointly create a more sustainable supply chain in China, is run in partnership with Solidaridad, a global non-governmental organization specialized in sustainability audits. Participating Chinese suppliers are provided with the knowledge, experience and tools to set up their own supplier sustainability programs.

Phase 2 of the project was successfully executed from July 2014 to August 2015. Sustainability, productivity and human rights experts organized workshops and offered in-house technical support to factories interested in making genuine improvements. The project supported DSM’s suppliers with their own SHE programs, energy efficiency improvements and footprint reductions, as well as communications between employees and management. In this phase, approximately each €1,000 invested by DSM triggered initiatives that resulted in an estimated €60,000 in efficiency improvements at the participating suppliers. The five participating suppliers completed 38 improvement projects.

"We are very honored to be part of the China Triple P Project. With the help of DSM, we have improved a lot in safety, environment, and health. We will keep up the good work and continue to work with DSM on sustainability." – Song Xiang Zhe, General Manager Hebei Chengxin Co., Ltd.

ECO+

As part of its ECO+ approach, DSM continued to engage in joint initiatives with suppliers that led to environmental benefits in the value chain, such as projects in packaging, logistics, and reduction in raw materials and carbon emissions. Via the CO2 Emission Reduction Initiative, the physical distribution team investigates suppliers’ footprints in road transportation, marine and packaging to explore opportunities for improvement. This is a continuation of the Green Tender Initiative that began in 2012 with the aim of achieving a 20% reduction in emissions associated with logistics and packaging. Since 2012, over 25% of global spend on physical distribution has been covered by the Green Tender Initiative. The cumulative CO2 emission reduction per unit of measure compared to 2010 reached 14% at the end of 2015.

DSM considers GHG impact in its global sourcing selection process. Based on the insights of an LCA for supply of nitrogen, DSM understands the impact of scope 2 and 3 GHG emissions for each supply option. This has enabled a sourcing process that includes supply guarantee, quality and cost, as well as GHG impact. For example, the DSM Dyneema plant in Heerlen (Netherlands) will annually reduce 42% of its GHG emissions associated with nitrogen supply.

In another initiative, DSM scientists and suppliers facilitated by Sourcing delivered a process improvement for the production of vitamin E. This resulted in the use of fewer raw materials, which enabled DSM to annually reduce 800 tons of CO2-equivalent emissions and improved the commercial agreement with the supplier, demonstrating that sustainability can be a real business driver for DSM. In 2015, Sourcing also helped shape DSM's Renewable energy strategy. See 'Planet' on Climate change & renewable energy.

People+

Suppliers play an important role in achieving DSM's People+ ambitions. DSM actively engages with its suppliers to build their capabilities, enhance working conditions and make safety improvements, an example of which is the China Triple P project described above. DSM is also keen to improve the working conditions of its own employees and the surrounding community. In North America, DSM Nutritional Products collaborated with one of its suppliers on Safety, Health, Environment and Quality to improve working conditions for its employees.

In China, DSM and catering service supplier Sodexo worked together on several programs to improve the provision of healthy meals and waste management, which was welcomed by DSM employees. In the Netherlands, DSM and an energy supplier provided the Ronald McDonald House for the families of seriously ill children in Maastricht with solar electricity. These savings on the energy bill mean that more can be spent on providing care and support to families with hospitalized children.

Collaboration in the value chain

DSM’s ECO+ and People+ programs are instrumental for identifying and marketing DSM’s sustainable solutions, and also support engagement with key external stakeholders, such as suppliers, customers, NGOs and sector associations. Discussing today’s environmental and societal challenges and possible solutions brings in new perspectives and opportunities to the existing dialogues with business partners. Collaboration in the value chain has contributed to new innovations, value proposition development, advancement of sustainability metrics and to DSM being given preferred business partner status.

In 2015, DSM and Nestlé joined forces to measure the environmental, social and health impacts of a fortified milk product in the Asian market. The project resulted in insights and recommendations for the development of products with a better sustainability impact and for integrating sustainability into innovation and communication.

"The collaboration supports a mutual cross-fertilization of ways of working in the area of sustainability and innovation, beneficial for the early identification of new opportunities as well as mitigation of areas of risk." – Anne Roulin, Global R&D Sustainability Manager Nestlé

In another collaboration to tackle health issues, reducing salt intake has been identified as an important and cost-effective measure to improve public health outcomes. Unilever and DSM collaborated on a modeling case study to assess the public health benefit from salt reduction in soup. The study demonstrated that small actions, such as reducing salt in soup, can make a difference to human health.

A further example is a cooperation between DSM and Praxis. Praxis is one of the biggest DIY chains in the Netherlands. In October 2015, DSM and Praxis together launched a new high-performance paint for which DSM provided Decovery®, a bio-based component, which has no toxic emissions. This collaboration and joint marketing effort are new means to support DSM’s market development.

Collaborative platforms and networks

DSM collaborates with like-minded peers from other sectors to create social and environmental measurement and performance standards. Together with cross-sector companies and business organizations, DSM has been an advocate on urgent themes like climate change, nutrition and the pricing of externalities.

World Economic Forum (WEF)

DSM is a strategic partner of the WEF and is involved in initiatives including the New Vision on Agriculture platform and the Global Agenda Council on Food & Nutrition Security. At the Annual Meeting of the WEF in Davos (Switzerland) in 2015, DSM sponsored the UN World Food Programme (WFP) tent as in previous years, and organized events and discussions on hunger, malnutrition and climate change. The company was also represented at various regional meetings, including the Annual Meeting of the New Champions in Dalian (China).

World Business Council for Sustainable Development (WBCSD)

DSM is a member of the WBCSD, a business platform aiming to develop solutions that contribute to environmental and social challenges. DSM takes a leading role in various projects. The company co-chairs the ‘Reaching Full Potential’ project to develop guidance on assessing the social impact of chemical projects in the value chain. This working group builds on experiences from DSM’s People+ program and the Roundtable for Product Social Metrics. It is also active in the chemical sector working groups on the Low Carbon Technology Partnerships Initiative Framework and Low Carbon Transport Fuels. In November DSM announced, alongside AkzoNobel, Evonik, Solvay, and Mitsubishi Chemicals, a commitment to reduce emissions within the chemical industry by an additional 1.4 gigatons of CO2-equivalents by 2030 through advanced innovation and faster deployment of solutions at scale. DSM is closely involved in setting new standards for valuation methodologies in the multi-industry working groups ‘Natural Capital’ and ‘Social Capital’, bringing in its experiences with ECO+, People+ and internal valuation pilots.

Accounting for Sustainability (A4S)

DSM's CFO Geraldine Matchett takes an active role in the A4S Chief Financial Officer Leadership Network, launched by HRH The Prince of Wales in December 2013. The Network brings together leading CFOs from large businesses seeking to embed the management of environmental and social issues into business processes and strategy. DSM shares its own experiences and case studies on integrating People, Planet and Profit so that practical guidance can be provided for the finance and accounting community. Building on its 2014 contribution to the A4S guides 'CAPEX: a practical guide to embedding sustainability into capital investment appraisal' and 'Enhancing investor engagement', DSM participated in the project 'Integrated Management reporting' in 2015. This project focuses on embedding environmental and social considerations into management reporting to enhance business decision making. Learnings from the Network's activities have led to further integration of sustainability considerations into DSM's business processes. For example, as a result of participation in the CAPEX project, DSM is starting to address specific criteria related to the environment and people for large capital investment projects.

DSM's CFO Geraldine Matchett and HRH The Prince of Wales

Valuing natural and social capital

DSM supports the movement towards greater transparency through valuing environmental and social impacts. In 2014, DSM signed a Green Deal with the Dutch Government, which is a collaboration on transparency of natural and social capital. An initiative of the nature conservation organization IUCN Netherlands, MVO Nederland and True Price, its purpose is to share and develop knowledge on the topic. In line with this commitment, DSM has been exploring the valuation of positive and negative environmental impacts at a product level. Over 2014 and 2015, DSM extended its study to valuing social impacts, with the product OatWell® from DSM Nutritional Products. DSM will use this case study to officially pilot test the Natural Capital Protocol in 2016. See also 'Review of business – DSM Nutritional Products' on DSM Nutritional Products.

Dutch Sustainable Growth Coalition (DSGC)

The DSGC brings together a group of large Dutch multinational enterprises: AkzoNobel, DSM, Friesland Campina, Heineken, KLM, Philips, Shell and Unilever. They are recognized for their leading role in sustainable business development and seek to develop innovative strategies, business models and products that overcome societal challenges. In December 2015, the DSGC published its fourth report, which focused on the circular economy. DSM contributed product cases including its joint venture on the Niaga® technology, an innovation that enables the industry to close the carpet materials loop through repeated recycling and re-use of materials.

Global Goals Charter

In the Netherlands, DSM partnered with Worldconnectors, True Price and others to found the Global Goals Charter, a platform with over 70 signatories representing business, public sector and civil society including, among others, UNICEF NL and Oxfam NL. In September 2014, DSM kicked off the 'Charter on the role of business, civil society and cross-sector partnerships in the post-2015 development agenda'. The charter describes what signatories can do to contribute and commits them to take joint action by creating partnerships. DSM will continue to play a leading role in the platform while evaluating the various new methods being introduced to demonstrate impact on the Global Goals for Sustainable Development.

Cross-sector nutrition partnerships

As a leading micronutrient provider, DSM develops innovative solutions for improved nutrition. In order for these solutions to have the broadest reach, DSM works with partner organizations that have direct access to beneficiaries. DSM’s nutrition partnerships focus on the following objectives: wider base of scientific evidence and endorsement; increased market for nutrition products; and improved employee engagement. Besides financial contributions, DSM also commits to contributing its time, technical assistance, products and volunteers. DSM’s main partners are described below. For a more extensive list and description of DSM’s other nutrition platforms and partnerships, see the company's website.

Philanthropy and sponsorships

DSM supports causes and initiatives that relate to its mission of using Bright Science to create Brighter Living. It does so by providing products, expertise and funding. In 2015, DSM donated more than €3.5 million to a range of initiatives. DSM makes no political donations, as outlined in its Code of Business Conduct. See the company's website.

China

As a global partner of the WFP, DSM in China has been taking part in the Walk the World fundraising event since 2007. With a theme of “Hunger is Solvable: Bright Experience”, this year’s event in September attracted 2,000 DSM employees and their families, as well as partners at 13 sites in 12 cities. Employees from DSM joined with WFP and China Foundation for Poverty Alleviation (CFPA) staff to raise funds.

Donations were given to WFP’s School Feeding Programmes worldwide and the CFPA’s school meal program in impoverished areas of China. In all, DSM and its partners were able to provide more than 50,000 nutritious meals with milk and eggs to children in poor areas of Yunnan and Sichuan provinces.

"In China, people in less-developed areas still need help; hunger and malnutrition remain key issues. As one of the global leaders in health and nutrition, we at DSM are responsible for leveraging our unique scientific expertise to develop micronutrient innovations to help address the issue.” – Weiming Jiang, Regional President DSM China

Europe

Fundraising in support of the Nepal earthquake relief effort raised over €145,000 from DSM employees (of which €50,000 was matched by DSM) for nutrition programming by WFP. In addition, DSM donated €50,000 for emergency assistance by the Dutch Red Cross in Nepal. In December, DSM also supported the Dutch Red Cross in the national annual fundraising campaign Serious Request 2015. Together with its employees, the company raised over €125,000 for the campaign in support of education for children from conflict areas.

Sight & Life

Through its continued support of the now independent (since 2015), non-profit humanitarian nutrition foundation Sight & Life (which became independent in 2015), DSM contributes to the body of knowledge and awareness of malnutrition & nutrition security. Sight & Life’s main research topics are in the field of implementation science and leadership capacity development in nutrition.

External recognition

People at DSM are proud when DSM's sustainability and innovation efforts, either as a company or individual products and solutions, are recognized by the outside world. A selection of some of the awards and other forms of recognition that DSM received from non-governmental and trade organizations, customers, suppliers and the academic world in 2015 can be found in the table below. Other awards and external recognition for the business groups can be found in 'Review of business' from Review of business - Nutrition.