DSM Integrated Annual Report 2021

3 Taskforce on Climate-related Financial Disclosures (TCFD)

The TCFD recommendations are a set of voluntary, climate-related financial disclosures for use by companies to provide information to their stakeholders. We were among the first companies to commit to implementing, as fully as practicable, these recommendations as outlined in the TCFD’s implementation path. The recommendations are structured around four elements — Governance, Strategy, Risk Management, and Metrics and Targets. This Report includes various disclosures relevant for the TCFD recommendations. To highlight this, for each TCFD theme reference is made to relevant sections.


Sustainability, including climate-related risks & opportunities, is a direct responsibility of the Managing Board. The Managing Board is supported in this by advice from our external Sustainability Advisory Board and reports on progress to the Supervisory Board, via its Sustainability Committee.

Our approach toward assessing and managing climate-related risks and opportunities is steered by our climate action agenda, containing key actions and deliverables that are owned by members of the Managing Board and Executive Committee. The Responsible Care Plan and our greenhouse gas (GHG) reduction program translate the climate action agenda into concrete operational programs managed by Operations & Responsible Care, Sourcing and business management. All of these are regularly discussed and reviewed during the MB/EC meetings.


Climate change creates both risks and opportunities for us, and we expect climate mitigation to have a bigger impact on the company than climate adaptation. At this moment, no material short-term climate risks are identified. Physical and transition risks are considered as emerging risks, while transition risks are expected to materialize later this decade.

We reduce our exposure to transition risks such as carbon pricing and changing legislation through actively reducing GHG emissions from our own operations and in our value chain. Projects to underpin our Science Based Targets and net-zero by 2050 commitment are ongoing.

Our innovations seek to offer solutions to address changes coming from the shift to a low-carbon society, which contribute to the mitigation of transition risks and support us in capturing growth opportunities. For example, food systems face considerable challenges from climate change, while at the same time food production is a major contributor to GHG emissions. With innovations including our methane-reducing ruminant solution Bovaer®, and plant-based alternatives, we offer solutions addressing transition opportunities and create value for people, planet and our business.

The impact of physical risks on our top 30 sites was assessed and we concluded that water scarcity is the most material risk which needs to be actively monitored and managed. All sites with an increased water risk profile were already in scope of our water stewardship program. To determine the impact of physical risks on upstream and downstream activities, further assessments are planned.

Risk Management

We are implementing an approach using scenario analysis to better understand the risks and opportunities related to climate change.

Physical risks were assessed for our sites that could lead to material financial impact in case of a prolonged shutdown. Risks were assessed for five hazards using three time horizons and three scenarios. Our understanding of our risk exposure was improved by means of a desk study, supported by an external consultant. The study took into account local circumstances and existing mitigations.

For the transition risk assessments, scenarios were created using external data sources and aligned with the scenarios used for the physical risk assessments. Two pilots were completed, and we will continue to conduct further transition risk assessments while updating and expanding the scenarios in use.

The emerging climate-related risks, which were identified through climate risk assessments or via other means, are managed as part of our regular risk management processes.

Targets and Metrics

Our long-term goal is to reach net-zero GHG emissions across our value chains by 2050. To set us on this path, we work with Science Based Targets (SBT), which are our key environmental targets in the Responsible Care Plan. Our SBT are supported by supplementary targets and programs. Our SBT consist of an absolute reduction of 50% on scope 1 + 2 emissions and a scope 3 intensity reduction of 28%, both by 2030 and versus our 2016 baseline. Furthermore, we also report on related metrics such as Brighter Living Solutions, avoided emissions, climate adaptation efforts, and water stewardship.

We apply a carbon price of €100/t CO2eq in our large investment decisions and in the Profit & Loss statements of the Business Groups for internal management reporting. We require all business growth projects to be carbon neutral, or else compensated for in the same business.

Climate-related metrics form part of the Long-Term Incentives of the Managing Board and executives.

Greenhouse gas
Taskforce on Climate-related Financial Disclosures