Sustainable Portfolio Steering
More than a decade of positive impact
At DSM, sustainability is a core value and key business driver of the company. We deliver science-based, sustainable, and scalable solutions that address the challenges of our world today. In 2010, we introduced our Eco+ indicator to measure and steer the environmental performance of our products and innovations. We were a founding member of the Roundtable for Social Metrics, a methodology that we implemented as People+ in 2016, the year that our Brighter Living Solutions (BLS) key performance indicator (KPI) was introduced.
The commonality between these elements is that the insights from our product impact studies have shown us where to make further progress and apply our scientific competences. We have thus been able to steer and constantly improve the sustainability performance of our products for our customers and end-consumers. Externally, we contributed to a sector-wide framework developed by the World Business Council for Sustainable Development (WBCSD) to execute Portfolio Sustainability Assessments (PSA).
The area of impact measurement is constantly evolving and receives increased attention and scrutiny from internal and external stakeholders. This is evident from the increased attention that legislators provide to product performance impact. Building on the success of our previous impact measurement program, we foresaw the need to renew our methodology to improve transparency and prepare us for upcoming reporting requirements.
Measuring the sustainability performance of our products through BLS+
For our renewed methodology, we established 11 sustainable impact drivers against which our solutions are assessed to create insight into their sustainability profiles. This is a holistic assessment covering themes that impact people, livelihoods, and the planet. It can therefore be applied across our entire portfolio to increase the transparency of our reporting.
The solutions that are designated as Brighter Living Solutions Plus (BLS+) need to deliver a sustainability benefit while doing no significant harm to people or planet. These products pass our internal minimum performance requirements, deliver a recognized benefit to one or more of the 11 impact drivers, and have no recognized, urgent negative impacts across the other impact drivers. The 11 drivers enable us to align the impact of our products more closely with the Sustainable Development Goals.
“The improved BLS+ indicator builds on our decade-long experience in impact measurement and provides deep insights into the sustainability performance of our product portfolio.”
By first looking at the performance of each product individually, we have better data availability, can better identify steering levers to further improve our portfolio, and can provide an appropriate representation of the sustainable performance of our entire portfolio. If a benefit is expected to outperform the market, a full comparative life cycle analysis is required, providing additional quantitative evidence to further substantiate the assessment of the product.
Key changes from BLS to BLS+
The key changes to the updated BLS+ methodology are the following:
- A minimum performance level is established for all products linked to Product Stewardship criteria
- The assessment approach is more holistic, structured, and comprehensive, ensuring transparency of impact on People, Planet and Livelihoods
- The initial qualitative assessment is based on DSM stand-alone product performance, identifying whether the product delivers sustainability benefits and causes no significant harm, as recognized by stakeholders
- To achieve the Outperforming category, a full comparative life cycle is required in addition to the qualitative base assessment, providing additional quantitative evidence
Moving from BLS to BLS+
To effectively steer the portfolio, we identified the need to differentiate performance levels across the portfolio. The outcome of the new assessment places a product into one of three performance categories: ‘Outperforming’, ‘Performing’ or ‘In Transition’.
There will be a changeover period during which all existing assessments based on the former BLS methodology will be updated to the new BLS+ methodology. As part of the changeover, all products with valid assessments and which were identified as BLS based on a comparative:
- Life cycle analysis will be classified as Outperforming
- Expert opinion will be classified as Performing
The three performance categories will be used for internal steering and target-setting; however, external disclosure will be on the BLS+ indicator, combining Performing and Outperforming. The BLS+ indicator represents the third-party net sales related to the sum of the products that are defined as Outperforming and Performing, as a ratio of total third-party net sales.
In addition to reclassifying the assessments that were valid under the old methodology, we will also apply the new methodology to the remainder of the unassessed portfolio. This may lead to products qualifying under the new BLS+ indicator which were not qualified under the previous BLS indicator – products that deliver a clear health or environmental footprint benefit, recognized by stakeholders in the value chain, yet where that benefit is considered on a par with a key competitor.
BLS+ 2022 Performance review
The 2022 reporting for BLS+ excludes Materials, as the updated methodology was presented after the announcements of the intention to divest the Materials businesses. This gives a more representative picture of our performance today and in the future. The performance of the Materials businesses was on average slightly higher than the total DSM performance. Furthermore, the 2022 performance includes acquisitions in line with our non-financial reporting policy, which has a significant impact on the indicator. These actions were also performed on the 2021 BLS indicator to define a baseline for the conversion to the BLS+ indicator in 2022.
For 2022, we performed a high-level review of the existing BLS assessments to ensure the validity of our conclusions, which resulted in some disqualifications, and we put a significant effort in further evaluation of the portfolio according to the BLS+ methodology. These new assessments had an impact of 11% on the overall portfolio performance.
Brighter Living Solutions Plus (BLS+) is DSM’s program for the development of sustainable, innovative solutions with environmental and/or social benefits, creating shared value for our stakeholders. BLS+ are products, services and technologies that, considered over their life cycle, offer a benefit recognized by key stakeholders, underpinned with substantiating evidence, whilst having no urgent negative signals. Three performance levels are defined, where the product is:
- ‘Outperforming’ its peers within the market
- ‘Performing’ within the market
- ‘In Transition’, to identify products that either do not meet the DSM minimum requirements, or where an urgent negative signal has been identified
More information and definitions can be found on the company website.