Non-financial reporting policy

Reporting policy and justification of choices made

In this Integrated Annual Report, we report for the calendar year 2021. The company reports on People, Planet and Profit information in such a Report on an annual basis. The previous DSM Integrated Annual Report was published on 2 March 2021. We publish our Report exclusively in a digital format. It is available as an online version and as a pdf.

In the Report by the Managing Board section, we explain our vision and policy with respect to sustainability practices and report on our activities in this field during 2021. In addition to disclosing data and developments in the categories of People, Planet and Profit, we also report on the global societal megatrends that drive our strategy, sustainability governance framework, stakeholder engagement activities, and management approach on material topics.

We are in favor of convergence in reporting standards and frameworks, moving to a single accepted non-financial reporting standard. Currently, we recognize and participate in a number of initiatives that are driving toward that goal.

We proactively seek out the views of key stakeholders on issues of material importance to the company and assess to what extent sustainability aspects become material to our company and our stakeholders. In the event that specific indicators become relevant to the company’s sustainability performance, appropriate actions are taken that allow the necessary data to be collected in order to disclose progress in the future.

The basis for the non-financial reporting in the Report by the Managing Board is Book 2 of the Dutch Civil Code. Non-financial reporting requirements are further defined in the EU Non-financial Reporting Directive (2014) and the EU Corporate Sustainability Reporting Directive (in effect as of 2023), including the EU Taxonomy (partially in effect as of 2022) and the proposed EU sustainability reporting standards (expected to be effective of 2023). It is also based on voluntary non-financial reporting guidelines such as:

Global Reporting Initiative (GRI)

This Report has been prepared in accordance with the GRI Standards: Comprehensive option. A detailed overview of how we report according to the GRI Standards comprehensive indicators, including a reference to relevant sections in this Report, is provided in the GRI Content Index.

UN Global Compact

We have been a signatory to the UN Global Compact since 2007 and commit to annually report on progress in implementing The Ten Principles of the UN Global Compact in the areas of human rights, child and forced labor, the environment and anti-corruption. This Report is our Communication on Progress 2021, submitted to the UN Global Compact office. Our Code of Business Conduct, our Sustainability, Human Resources, and Safety, Health and Environment (SHE) policies, and our Supplier Sustainability Program are the foundations on which we apply the standards of the Global Compact.

UN Sustainable Development Goals (SDGs)

We have also aligned our strategy with the Sustainable Development Goals (SDGs). We are familiar with the opportunities and responsibilities that the SDGs represent for our business. Based on our mapping, we believe that we contribute to all of them, and have chosen to focus on the goals which most closely align with our strategic ambitions. In this Report, we continue to include the SDGs into our reporting process, for example by mapping SDG reporting priorities in our value creation model, our material topics, and the solutions that we highlight.

The Taskforce on Climate-related Financial Disclosures

The recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD) are a set of voluntary, climate-related financial disclosures for use by companies to provide information to their stakeholders. This Report contains our TCFD-relevant disclosures on Governance, Strategy, Risk Management, and Metrics and Targets. For more information on how we report against the TCFD recommendations, see Note 3 Taskforce on Climate-related Financial Disclosures (TCFD) of the Sustainability statements.

Other reporting frameworks

We align with the recommendations of the International Integrated Reporting Council Framework where possible. The intention of the Framework is to provide additional guiding principles and content elements for an integrated report. We use this framework to present an integrated view of how the company creates value for stakeholders in People, Planet and Profit, as well as the interconnection between these three dimensions.

We map our disclosures to other standards and frameworks to support our stakeholders who are using these. You can find how our disclosures map to the Sustainability Accounting Standards Board framework and the WEF IBC metrics and disclosures in Note 4 SASB and WEF IBC mapping of the Sustainability statements.

Selection of topics

The topics covered in this Report were selected on the basis of our materiality analysis, which assessed the relevance and impact of selected topics for our company and various stakeholders. On the basis of the principle of materiality (using the GRI Standards), we distinguish between topics whose importance warrants publication in this Report (relevant to both DSM and stakeholders), and topics whose importance warrants publication on the company website only (topics important to either DSM or stakeholders). The sustainability data in the Integrated Annual Report is qualitative as well as quantitative — the qualitative information can also contain quantitative elements. The Materiality matrix and the process by which it is created is reported on in Stakeholders, with the management approach in Note 1 Management approach for material topics of the Sustainability statements. We report on External recognition in Stakeholders.

Scope

The People and Brighter Living Solutions data in this Report cover all entities that belong to the scope of the Consolidated financial statements. Planet reporting covers manufacturing units where commercial production by DSM occurs.

Acquisitions and divestments

The People data for newly acquired companies are reported from the first full month after the acquisition date. The Safety, Health (People), Environment (Planet) and Brighter Living Solutions data for companies acquired in the:

• first half of a given year (‘year x’) are included in the reporting scope of the year after acquisition (‘year x+1’).
• second half of a given year (‘year y’) are included in the reporting scope of the year following the first full year after acquisition (‘year y + 2’).

Divested companies

Planet and Brighter Living Solutions (BLS) data are reported until the moment control of the company is transferred, and Safety, Health and People data until the end of the month in which control of the company is transferred. The date in which control of the company is transferred generally coincides with the date a divestment is closed, and control of the shares is transferred to the new owner.

People methodology

People data are collected per Business Group and consolidated at corporate level.

Metrics on workforce and workforce composition, and inflow and outflow are reported based on the year-end figures. Employee engagement and the Inclusion index are measured on an annual basis.

Safety and health metrics are reported on a 12-month rolling average. Divestments are included in the rolling average for the months prior to transfer of control of the company. Occupational health cases and training hours are reported in the year-end figures.

Planet methodology

Our progress on the key environmental performance indicators is collected and evaluated twice a year for all DSM sites. The data are based on these sites’ own measurements and calculations, which in turn are founded on definitions, methods and procedures established at corporate level. The site managers of reporting units are responsible for the quality of the data. Data are collected using measurements and calculations in the production processes, information from external parties (e.g., on waste and external energy) and estimates based on expert knowledge.

Reporting units have direct insight into their performance compared to previous years and are required to provide justifications for any deviations above the threshold. For most parameters, the threshold is set at 10%. The year-on-year comparability of the data can be affected by changes in our portfolio as well as by improvements to measurement and recording systems at the various sites. Whenever impact is relevant, this is stated in the Report. Details for the regions, as well as the methodology and calculations, are published on the company website, together with an explanation of the definitions used.

Brighter Living Solutions

Brighter Living Solutions (BLS) is DSM’s program for the development of sustainable, innovative solutions with environmental and/or social benefits, creating shared value for our stakeholders. Brighter Living Solutions are products, services and technologies that, considered over their life cycle, offer a superior environmental impact (ECO+) and/or a superior social impact (People+) when compared to the mainstream alternative for the same application. The impact of Brighter Living Solutions can be realized at any stage of the product life cycle, from raw materials through the manufacturing process to potential re-use and end-of-life disposal. We report twice a year the percentage of Brighter Living Solutions within the business portfolio.

The Mainstream Reference Solution (MRS) is the product or service with which the DSM solution is compared. The MRS is determined based on the marketing strategy. It is the competing dominant solution in the same application. It can be either a similar solution from another supplier or a solution using an alternative technology to fulfil the same function, or, if the solution and its application are new to the market, or the marketing strategy is focused on market growth, the solution should be compared with the benchmark situation without using the solution.

Within the BLS program, we conduct an annual ‘Product Category Sustainability Review’ for all product categories. This review identifies environmental and social impact differentiators and risks for each of our product categories and confirms the mainstream reference solution. To substantiate the identified differentiators comparative Life Cycle Assessments (LCAs) and/or expert opinions to determine whether a product has a superior performance and can be identified as a Brighter Living Solution. The Sustainability Assessments to support the qualification for Brighter Living Solutions are required to be made by internal Life Cycle Assessment (LCA) experts and reviewed using the four-eyes principle with at least one internal, independent senior LCA consultant. The financial data are validated with the Corporate Sustainability department and consolidated as DSM Brighter Living Solutions KPI performance and reviewed by Group Control & Accounting.