Non-financial reporting policy
Reporting policy and justification of choices made
In this Integrated Annual Report, we report for the calendar year 2022. We report 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 2022. 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 2022. 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 globally accepted non-financial reporting standards. 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 2024), including the EU Taxonomy (partially in effect as of 2022) and the proposed EU Sustainability Reporting Standards (in effect as of 2024). It is also based on voluntary non-financial reporting guidelines such as:
Global Reporting Initiative (GRI)
DSM has reported in accordance with the GRI Standards for the period January 1, 2022 to December 31, 2022. A detailed overview of how we report according to the GRI Standards indicators, including a reference to relevant sections in this Report, is provided in the GRI Content Index. In 2022, DSM changed from the GRI Standards (2016) to the GRI Standards (2021). This change is reflected in the GRI table. DSM provides information on the Management of material topics (GRI 3-3) for its most material topics only. DSM does not provide detailed information on the Management of other topics as the company does not believe they are material enough to do so.
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 <IR> Framework where possible. The intention of the <IR> 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.
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. 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.
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 Plus (BLS+) 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, Quality and Health & well-being (People), Environment (Planet) and BLS+ 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 BLS+ data are reported until the moment control of the company is transferred, and People data until the end of the month in which control of the company is transferred. As the updated BLS+ methodology was presented after the announcements of the intention to divest the Materials businesses, these businesses have been excluded from the BLS+ methodology. 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 on the basis of 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.
Sustainable Portfolio Steering/Brighter Living Solutions Plus (BLS+)
DSM applies a Sustainable Portfolio Steering methodology to identify, and further develop sustainable, innovative solutions that deliver sustainability benefits within the value chain, whilst having no recognized, measurable, urgent negative performance signals.
BLS+ methodology
Those products that clearly create sustainable value for our stakeholders are identified as BLS+, and are assessed by a standardized, holistic product assessment across 11 impact drivers related to social and environmental impacts.
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’, with better comparative performance to the mainstream reference solution within the market
- ‘Performing’, by providing recognized benefits 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, or products that have not yet been assessed.
In addition to the regular product sustainability assessment, any ‘Outperforming’ classification must be substantiated with a full comparative life cycle assessment versus the Mainstream Reference Solution (MRS).
A sustainability benefit is a positive performance on one of the 11 impact drivers. Do no significant harm means that the product has no urgent, negative signals. These signals are relevant negative performance impacts in any of the 11 impact drivers, which are expected to manifest within the next 3 years. Applying the Sustainable Portfolio Steering methodology requires judgment or assumptions by management, in particular within the processes related to PSA, LCA and the selection of MRS.
Mainstream Reference Solution (MRS)
The MRS is the product or service with which the DSM solution is compared and 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.
Product Category Sustainability Review
As part of the Sustainable Portfolio Steering methodology, we conduct an annual ‘Product Category Sustainability Review’ for all product categories. This review identifies the validity of environmental and social impact differentiators and risks for each of our product categories and confirms the mainstream reference solution where applicable. The Product Sustainability Assessments (PSA) to support the qualification for BLS+ are required to be made by internal Life Cycle Assessment (LCA) or sustainability experts and are critically reviewed using the four-eyes principle by at least one competent independent reviewer.
BLS+ reporting
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. The percentage of BLS+ is reported twice per year within the business portfolio. The financial data are validated by the finance function, consolidated by the Corporate Sustainability department as the DSM BLS+ KPI, and reviewed by Group Control & Accounting.
All legacy products under the former BLS methodology will be reevaluated during a change-over period. In the intervening period, these products will be classified as Outperforming (where an LCA is available) or Performing (where an expert opinion is available). These products are not screened for negative urgent signals.
Food System Commitments
The Food System Commitments are a set of measurable commitments that make the company’s societal impact explicit. The commitments are aimed at addressing urgent societal and environmental challenges linked to how the world produces and consumes food. The Commitments are grouped into the areas: Health for People, Health for Planet, Healthy Livelihoods.
Health for People
- Help close the micronutrient gap of 800 million vulnerable people by 2030
- Support the immunity of half a billion people by 2030
Health for Planet
- Enable double-digit on-farm livestock emission reduction by 2030
- Reach 150 million people with nutritious, delicious, sustainably produced plant-based foods by 2030
Healthy Livelihoods
- Support the livelihoods of 500,000 smallholder farmers by 2030
Our Basic Commitments are Deforestation-free in our primary supply chains by 2030 and Good workforce nutrition for all employees by 2030.
The impact of the commitments is based on scientific or other third-party evidence demonstrating a link between the products and services provided by DSM to its customers and the substantiated societal impact of the commitment. The calculation of the level of impact is based on estimates and assumptions. The required level of supporting evidence for estimates and assumptions is assessed using a risk-based approach, looking at objectivity, sensitivity, and the underlying basis of the estimate. The assessment and supporting evidence for the estimates and assumptions are documented and are updated annually.
More information on the Food Systems Commitments can be found on the company website.
