Koninklijke DSM N.V. (Royal DSM) is a company limited by shares listed on Euronext Amsterdam, with a Managing Board and an independent Supervisory Board. Members of the Managing Board and the Supervisory Board are appointed (and, if necessary, dismissed) by the General Meeting of Shareholders.
The Managing Board is responsible for the company's strategy, its portfolio policy, the deployment of human and capital resources, the company’s risk management system, the company's financial performance and its performance in the area of sustainability.
Dutch corporate governance code
DSM supports the Dutch corporate governance code adopted in 2003 and amended in 2008, which can be found on www.commissiecorporategovernance.nl.
DSM confirms that it applies all of the code’s 113 Best Practices.
With respect to the appointment of members of the Managing Board for a period of at most four years (Best Practice II.1.1) it should be noted that DSM has adhered to this Best Practice since the introduction of the corporate governance code in 2004.
Since DSM respects agreements made before the introduction of said code, the current chairman of the Managing Board will remain appointed for an indefinite period.
With respect to the Dutch corporate governance code it should be noted that any substantial change in the corporate governance structure of the company and in the company's compliance with the code shall be submitted to the General Meeting of Shareholders for discussion under a separate agenda item.
All documents related to the implementation at DSM of the Dutch corporate governance code can be found in the Governance section of the company's website.
Business groups are the main building blocks of DSM’s organization; they have integral long-term and short-term business responsibility and have at their disposal all functions that are crucial to their business success. The business groups within a specific cluster report to one and the same member of the Managing Board. This Board member manages the coherence of operations and the leveraging of resources within the cluster and is accountable for the overall performance of the cluster within limits defined by the collective responsibility of the total Managing Board for the management of the company. The clusters are the main entities for external strategic and financial reporting. In order to ensure sufficient independence with regard to financial management, the Chief Financial Officer (CFO) has no business groups reporting to her.
The above figure depicts DSM's overall governance framework and the most important governance elements and regulations at each level.
Sustainability governance framework
Being both a core value and a business driver for the company, sustainability falls under the responsibility of the Managing Board. CEO/Chairman of the Managing Board Feike Sijbesma is the primary point of contact, overseeing the topics of sustainability as business growth driver, as well as climate change, while also managing DSM’s engagement with the United Nations and the strategic partnership with the World Economic Forum. Mr. Sijbesma furthermore heads the ONE DSM Culture Agenda.
The Managing Board is responsible for risk management within DSM. With the support of the Corporate Risk Management department, which reports directly to the CFO, the Managing Board has designed and implemented a well-embedded risk management system and organization in all company units. Risk management at DSM is based upon the COSO-ERM framework, as depicted in the figure below, and this section is structured accordingly.
A full description of DSM’s risk management system and process together with a description of the identified risks is available on the company’s website. These descriptions are to be considered an integral part of this Report.
DSM Code of Business Conduct
The DSM Code of Business Conduct ('the Code'), as introduced and rolled out from 2010, contains the company’s business principles across the three dimensions of People (11 principles), Planet (5 principles), and Profit (15 principles). These principles translate DSM’s mission and core value − sustainability − into daily practice across its business operations. All DSM employees are expected to act in accordance with the Code, and the Managing Board holds DSM’s unit management accountable for compliance with the Code. The Code is now available to employees in 19 languages and the full text of the Code can be found on the company's website.
The Code serves as an umbrella for several other DSM regulations and together form the basis for the company's ethical business behavior. These regulations are often supported by e-learning programs to train relevant people within the company.
What still went wrong in 2016
Although DSM strives to improve its performance in all areas of its operations, sometimes things can still go wrong.
This chapter summarizes the most important incidents in 2015, across the three dimensions of People, Planet and Profit. DSM endeavors to remedy the outcome of incidents and prevent these from recurring, as well as to identify and learn from business developments that have not progressed as planned. To this end, DSM investigates the root cause of any serious occurrence and takes steps to close the loop to eliminate the cause and start the improvement cycle. DSM subsequently communicates measures as appropriate, including applying stricter requirements or operating procedures if called for.
An example relates to hand injuries. Hand injuries are among the most common industrial injuries and regrettably there were three such incidents involving DSM employees during the year (details below). The company took specific action to raise awareness about the importance of hand protection in the workplace and the importance of applying the company's Life Saving Rules in this respect.
Info about the DSM share
Ordinary shares in Koninklijke DSM N.V. are listed on the Euronext stock exchange in Amsterdam, (Netherlands) (Stock code 00982, ISIN code NL0000009827). Options on ordinary DSM shares are traded on the European Option Exchange in Amsterdam (Euronext.liffe). In the US a sponsored unlisted American Depositary Receipts (ADR) program is offered by Deutsche Bank Trust Co. Americas (Cusip 780249108), with four ADRs representing the value of one ordinary DSM share.