Royal DSM Integrated
Annual Report 2021
Creating brighter lives for all
NUTRITION
•
HEALTH
•
BIOSCIENCE
Royal DSM Integrated Annual Report 2021 1
3
4
Table of contents
Key data
Co-CEO letter
Our approach to the Sustainable Development
Goals
7
12
12
14
25
Report by the Managing Board
Purpose
Strategy
Case studies
Stakeholders
37
People
51
Planet
65
Profit
83
91
91
105
112
Review of business
Nutrition
Materials
Innovation
Corporate Activities
117
118
118
119
Reporting policies
Financial and reporting policies
Non-financial reporting policy
Corporate governance and risk management
122
Corporate governance
122
Dutch Corporate Governance Code
127
Governance framework
127
DSM Code of Business Conduct
132
Risk management
136
What still went wrong in 2021
144
Supervisory Board and Managing Board
Royal DSM
147
Statements of the Managing Board
149
150
151
159
175
180
Report by the Supervisory Board
Supervisory Board Report
Remuneration report 2021
Information on the DSM share
Sustainability statements
Notes to the Sustainability statements
186
197
197
205
Consolidated financial statements
Summary of significant accounting policies
Consolidated financial statements
Notes to the consolidated financial
statements of Royal DSM
211
Parent company financial statements 268
Notes to the parent company financial
statements
270
Other information
278
Independent auditor’s report
278
Assurance report of the independent auditor 289
Special statutory rights 293
Important dates 294
295
DSM figures: five-year summary
Explanation of some concepts and ratios
300
List of abbreviations
307
Royal DSM Integrated Annual Report 2021 2
Forward-looking statements
This document may contain forward-looking statements with respect to DSM's future performance and position. Such statements are
based on current expectations, estimates and projections by DSM and information currently available to the company. Examples of
forward-looking statements include statements made or implied about the company's strategy, estimates of sales growth, financial
results, cost savings and future developments in its existing businesses as well as the impact of future acquisitions, and the company's
financial position. These statements can be management estimates based on information provided by specialized agencies or advisors.
DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be
understood that many factors can cause the company's actual performance and position to differ materially from these statements. These
factors include, but are not limited to, macro-economic, market and business trends and conditions, competition, legal claims, the
company's ability to protect intellectual property, changes in legislation, changes in exchange and interest rates, changes in tax rates,
pension costs, raw material and energy prices, employee costs, the implementation of the company's strategy, the company's ability to
identify and complete acquisitions and to successfully integrate acquired companies, the company's ability to realize planned
divestments, savings, restructuring or benefits, the company's ability to identify, develop and successfully commercialize new products,
markets or technologies, economic and/or political changes and other developments in countries and markets in which DSM operates.
Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in
the 'Risk Management' section.
As a result, DSM's actual future performance, position and/or financial results may differ materially from the plans, goals and
expectations set forth in such forward-looking statements. DSM has no obligation to update the statements contained in this document,
unless required by law. The English-language version of this document is leading.
Royal DSM Integrated Annual Report 2021 3
Key data
Key data
1
2021
2020
People
Workforce at 31 December (headcount)
21,358
23,127
Female:male ratio²
30:70
29:71
Total employee benefit costs (in € million)
1,810
1,848
Frequency Index of Recordable Injuries (per 100 DSM employees and contractor employees)
0.22
0.24
Employee Engagement Index (in %)
76
76
Planet
Primary energy use (in PJ)
21.4
21.5
Energy Efficiency Improvement (in %, year-on-year)
6.0
5.7
Greenhouse gas emissions, market-based (scope 1 + 2, in CO₂ equivalents, x million tons)
1.2
1.2
Greenhouse gas scope 1 + 2 cumulative absolute reduction (in %, baseline 2016)
27
25
Water withdrawal for non-once-through-cooling (x million m³)
26
24
Brighter Living Solutions (as % of running business)
64
63
Profit (in € million)
Net sales from continuing operations
9,204
8,106
Adjusted EBITDA from continuing operations³
1,814
1,534
EBITDA from continuing operations
1,702
1,368
Adjusted operating profit from continuing operations (EBIT)³
1,139
929
Operating profit from continuing operations (EBIT)
1,021
662
Net profit for the year
1,680
508
Adjusted net operating free cash flow from continuing operations³
949
872
Capital expenditure, cash based
570
585
Dividend for DSM shareholders (based on profit appropriation)
438⁴
420
Net debt
1,014
2,577
Shareholders' equity
9,318
7,399
Total assets
16,013
14,346
Capital employed
11,012
10,557
Market capitalization at 31 December⁵
34,608
25,545
Per ordinary share in €
Net earnings
9.68
2.91
Dividend
2.50⁴
2.40
Financial ratios (%)
Sales to high-growth economies / net sales (continuing operations)
46
44
Innovation sales / net sales (continuing operations)
19
21
Adjusted EBITDA margin (continuing operations)³
19.7
18.9
Average working capital / annualized net sales (continuing operations)
20.2
22.3
ROCE (continuing operations)³
11.1
10.4
Gearing (net debt / equity plus net debt)
9.7
25.6
Equity / total assets
58.7
52.2
Cash provided by operating activities / Adjusted EBITDA³
77.5
90.5
1 For definitions, see Explanation of some concepts and ratios.
2 For the indexes based on age, nationalities, gender, inflow and outflow, the companies that are not integrated into the HR systems
(approx. 6% of the total workforce) are not taken into account.
3 In presenting and discussing DSM’s financial position, operating results and cash flows, DSM (like many other publicly
listed companies) uses certain Alternative performance measures (APMs) not defined by IFRS and referred to as ‘Adjusted’. These
APMs are used because they are an important measure of DSM’s business development and DSM’s management performance. A full
reconciliation of IFRS performance measures to the APMs is given in Note 2 of the Consolidated financial statements.
4 Subject to approval by the Annual General Meeting of Shareholders.
5 Source: Bloomberg.
Royal DSM Integrated Annual Report 2021 4
Co-CEO letter
Dear reader,
If 2020 had been an eventful year for us all worldwide, the level of challenge remained unchanged in 2021. At DSM, we dealt well
with the volatility of our operating environment in the face of the continuing COVID-19 pandemic, maintaining supplies to our
customers despite widespread supply chain and logistics disruptions. The spirit of ‘One DSM’ was stronger than ever. We are very
proud and thankful that all around the world, our employees demonstrated resilience, initiative, flexibility and teamwork in
dealing with this demanding environment and at the same time cared for the safety and well-being of colleagues, customers and
partners. And this was achieved in a year that was also full of important projects and changes linked to the further shaping of
DSM’s future.
Accelerating our strategic journey to become a focused Health, Nutrition & Bioscience company
In September 2021, we took an important strategic decision to focus our resources and capabilities to address the urgent societal
and environmental challenges linked to the way the world produces and consumes food. With a growing global population, the
world is facing multiple and interconnected food system challenges that impact the health and wellbeing of people, animals, and
the planet. Advances in digital technology and bioscience offer realistic, scalable solutions to tackle these challenges, creating
new markets and innovation opportunities. With our strong combination of scientific competences and a growing portfolio of
nutrition and health solutions, we are ideally positioned to capture these opportunities. Our Health, Nutrition & Bioscience
strategy is underpinned by our ‘global products, local solutions’ business model and complemented by our growing
competences in the rapidly emerging area of precision & personalization.
In view of our new strategic priorities, we simplified our operating structure and reorganized our Health, Nutrition & Bioscience
activities into three Business Groups as of 1 January 2022, each with clear opportunities to benefit the health of people and the
health of the planet, underpinning our growth plans. In line with our ambition to have a meaningful impact on improving the
world’s food systems, we are proud to have also announced a series of measurable new commitments related to Health for
People, Health for the Planet and Healthy Livelihoods, as we strongly believe that with capability also comes responsibility.
Our ambition to become the global leader in Health, Nutrition & Bioscience, and to contribute to the food system transformation,
requires huge efforts and therefore laser-like focus. This is why we took the carefully considered decision to review the strategic
options for both our Engineering Materials and Protective Materials businesses, including a possible change in ownership. We are
very proud of these two excellent Materials businesses, and they deserve the best possible environment in which to thrive and
help drive the important shifts to a bio-based and circular economy that will underpin their continued success.
Very good 2021 financial performance
We delivered a strong full-year financial performance as we continued to successfully navigate dynamic market conditions,
including global supply chain and logistics disruptions. Both Nutrition and Materials realized strong results, reflecting the quality
of these businesses. On a continuing operations basis, our group sales were up 14% and Adjusted EBITDA was up 18%. Nutrition
sales were up 10%, and Adjusted EBITDA was up 8% as the business demonstrated its operational performance and reliability as
a supplier throughout the year, strengthening its customer relationships. Materials saw an exceptionally strong performance,
with a recovery in Protective Materials and high demand for Engineering Materials leading to an increase in sales and Adjusted
EBITDA of 27% and 60% respectively. Inflationary pressures, especially toward the end of the year, required appropriate pricing
actions, of which the first positive effects were seen in the fourth quarter. Ultimately we realized an Adjusted Net Operating Free
Cash Flow from continuing operations of €949 million, up 9%.
Co-CEO letter
Royal DSM Integrated Annual Report 2021 5
Continuing progress on People and Planet targets
Our people showed remarkable resilience as we continued to adapt our ways of working to the COVID-19 pandemic
circumstances either by supporting remote and hybrid working or by establishing safe working environments in our
laboratories and plants. In line with our culture and our philosophy of hybrid working we will build a new, highly
sustainable, modern and inspiring head office in Maastricht (Netherlands). In terms of safety, we are pleased with an
improvement in the Frequency Index of DSM Recordable Injuries to 0.22 from 0.24 in 2020, achieving our target level of less
than 0.24. We continue to take action on our ambition to make our company fully incident- and injury-free. It was also
encouraging to see that in such an eventful year, overall employee engagement remained at the high level of 76% and
many associated indicators in the Employee Engagement Survey saw an increase. Looking at Inclusion & Diversity, the
Executive Committee is now 40% female, the Management Board and Supervisory Board are now both 50% female, and
progress was made on improving the representation of women (23% female executives) and under-represented
nationalities at executive level (31%). We developed new ambitious Inclusion & Diversity commitments for the period 2022–
2025.
On Planet, we remained well on track in terms of our greenhouse gas (GHG) emissions reduction, energy efficiency and
purchased renewable electricity targets in 2021. We also accelerated our Science Based Target for GHG emissions reduction from
30% to 50% by 2030. This step-up provides a firm foundation for DSM to achieve net-zero by 2050. We doubled our internal
carbon price from €50 to €100/t CO
2
eq and signed an additional power purchase agreement whereby all our electricity needs in
the USA became 100% renewable in 2021. We are therefore well positioned to exceed our target of meeting 75% of our global
electricity needs from renewable sources by 2030 and to reach 100% at the earliest possibility. We received a double A rating on
Climate and Water from CDP. And in 2021, an encouraging 64% of our total sales came from our Brighter Living Solutions –
products that have a better environmental and/or social impact than mainstream solutions.
Relentless execution of our strategy
Our strategy served us very well in 2021. It helped us to set our priorities in order to drive organic growth, especially in view of
the rapidly changing circumstances brought about by the COVID-19 pandemic. It also helped us make the right capital allocation
choices, including the selection of acquisition targets and the development of our Health, Nutrition & Bioscience portfolio.
We made four important acquisitions: Midori in Animal Nutrition & Health; First Choice Ingredients and Vestkorn Milling in Food
& Beverages; and the Flavor & Fragrance bio-based intermediates business of Amyris in Personal Care & Aroma. We progressed
as per plan with the integration of the Erber businesses, and we completed the sale of our Resins & Functional Materials and
associated businesses for an equity value of €1.6 billion.
We expanded our capabilities in the field of precision & personalization with, for example, the launch of the start-up Hologram
Sciences, a consumer-facing company providing consumers with personalized solutions to manage their health. Meanwhile, we
also launched Sustell™, an intelligent sustainability service that supports precision animal farming.
We also executed on our platform-based approach to driving innovation, resulting in good progress for our pipeline of exciting
new products and solutions. Bovaer®, our innovative feed ingredient for reducing enteric methane emissions in ruminants,
received market approval in Brazil and Chile and a positive EFSA opinion in the European Union. Bovaer® also formed the basis
of collaborations with New Zealand dairy co-operative Fonterra and with JBS, one of the world’s largest food companies. We also
announced plans to create large-scale production capacity for Bovaer® by constructing a new plant at our site in Dalry (UK), with
the support of Scottish Enterprise. Our EVERSWEET™ stevia sweetener was successfully launched by a number of customers, and
we made good progress with our omega-3-rich algal oil Veramaris®. We launched ampli-D®, our fast-acting form of vitamin D for
dietary supplements. We also laid the foundation stone of our future state-of-the-art Health & Nutrition Innovation Campus in
Kaiseraugst (Switzerland).
Thank you
The year 2021 saw the retirement of two important figures for DSM who have made a huge contribution to our company. Rob
Routs, Chair of our Supervisory Board since 2010, retired in May 2021. Under Rob’s guidance, DSM continued the bold and
progressive restructuring of its portfolio and its evolution into the purpose-led, performance-driven company it is today. Rob’s
successor is Thomas Leysen, who originally joined the Supervisory Board in 2020. Chris Goppelsroeder, President and CEO of DSM
Nutritional Products, retired in April 2021 after a long and successful career in the company during which he developed this
Co-CEO letter
Royal DSM Integrated Annual Report 2021 6
business into a world leader in health through nutrition. We would like to express our deep gratitude to both Rob and Chris, and
to wish them both the very best for the future.
Our new organization, which was announced in September, came into effect on 1 January 2022 and was accompanied by a
realignment of our leadership structure, with a new Executive Committee reflecting the establishment of three new Business
Groups. We are now ready for the next step in our strategic journey, accelerating the growth of our company in Health, Nutrition
& Bioscience. We would like to thank our employees for everything they achieved in 2021, and also to thank our customers,
suppliers and shareholders for their continued trust in us as reflected, for example, in our higher Customer NPS score. We look
forward to the next phase of our evolution with optimism and confidence, ready to address the challenges and seize the
opportunities that lie ahead.
Stay safe and stay healthy!
Geraldine Matchett and Dimitri de Vreeze, Co-CEOs Royal DSM
Royal DSM Integrated Annual Report 2021 7
Our approach to the Sustainable Development Goals
The UN Global Goals for Sustainable Development (SDGs)
In 2016, the United Nations launched the SDGs, a roadmap to a more
environmentally and socially conscious and responsible world by 2030.
At DSM, we believe that companies have a key role to play in achieving
the SDGs. We believe that our combination of Health, Nutrition &
Bioscience contributes toward achieving the SDGs.
Working on the SDGs
With our strong combination of scientific competences and our portfolio of health and nutrition solutions, we are ideally
positioned to contribute to, and capture the growth opportunities offered by the urgent societal and environmental
challenges linked to the way the world produces and consumes food. Our purpose-led, performance-driven strategy is
based on the global megatrends and the SDGs. In 2021, we announced our new Food System Commitments for 2030 that
demonstrate how we contribute to a positive impact on Health for People, Health for the Planet, and Healthy Livelihoods.
For more information on how we contribute to food systems transformation, please see the company website.
Our initiatives and actionable framework comprise three pillars:
- Improve: we improve our own operations to do no harm to people and planet. We optimize our own operational
impact by continually raising safety standards, promoting health and well-being in our own workforce, reducing
our emissions and improving our resilience, increasing our use of renewable energy, improving our water
consumption, and unlocking more value from limited resources
- Enable: we enable our customers and partners to have a positive impact by delivering products and solutions that
enable them to deliver sustainable and healthy solutions for the planet and society
- Advocate: we advocate in our business ecosystem for systemic change — we advocate for the future we believe in
and we fully accept our responsibilities as a corporate member of society
Our purpose and strategy align most closely with five of the SDGs, and we show here how we approach these core SDGs.
Information about our engagements can be found in the Sustainability statements and throughout this Report.
SDG 2 and SDG 3
Through our commitments, initiatives, and approach, we align closest with the following SDG targets – 2.1, 2.2, 2.3, 3.2, 3.4
and 3.9.
The link between adequate nutrition and health has never been clearer. Diet-related non-communicable diseases
(including diabetes, heart disease, stroke, and some cancers) has overtaken communicable diseases as the primary cause
of deaths worldwide. At the same time, malnutrition in its various forms affects more than 30% of the world’s population:
more than 2.2 billion adults and children are overweight of which 770 million are obese (Global Nutrition report 2021),
more than 820 million people go to bed hungry each night, and approximately two billion suffer from micronutrient
deficiencies, or hidden hunger.
Our approach to the Sustainable Development Goals
Royal DSM Integrated Annual Report 2021 8
Our Commitments
- We will help fill the micronutrient gap of 800 million people by 2030 through fortified staple foods and health
supplements that deliver a proven and cost-effective method of combating malnutrition, as well as empowering
consumers to achieve healthier diets
- We will support the immunity of 500 million people by 2030 by delivering essential vitamins, minerals and other
ingredients to consumers worldwide through high-performance dietary supplements
- Together with our partners we will support the livelihoods of 500,000 smallholder farmers across value chains by
2030 – we will achieve this by scaling up our innovative social enterprise model, Africa Improved Foods
Our initiatives
- We create awareness about the benefits of healthy diets and improved nutrition while continuing to develop new
food solutions together with our partners of the World Business Council for Sustainable Development, the World
Food Programme, World Vision, UNICEF, GAIN and Sun Business Network
- It is our responsibility to obtain comprehensive information on the safe use of our products, and to make
conscious choices in the substance we use and produce, taking into account the whole product life cycle.
Our approach
Improve
Enable
By reducing Occupational safety
incidents and promoting Health &
well-being in our own workforce,
including good workforce nutrition.
By supporting customers to enable
healthy and affordable food and
nutrition through solutions such as
the sustainable production of
animal proteins, plant-based
protein foods, fortified staples and
public health supplements,
immunity-supporting solutions,
and food & beverage solutions.
Our biomedical solutions improve
quality of life for surgical patients.
and improve people’s health status.
SDG 7 and SDG 13
Through our commitments, initiatives, and approach, we align closest with the following SDG targets – 7.2, 7.3, 12.2 and 12.3.
The stability of the world’s climate is under threat. We believe there is an urgent need to take action to curb climate
change and its irreversibly damaging effects by dramatically limiting greenhouse gas emissions, transitioning to renewable
energy, and adopting low-carbon emission solutions and processes. At the same time, it is also crucial to strengthen the
resilience and adaptive capacity of societies against intensifying climate hazards impacting people and the environment.
The food, agriculture and forestry sectors cause at least one quarter of the worlds greenhouse gas emissions (IPCC, 2021).
Agri-food also signifitancly impacts biodiversity loss at land and in the oceans. Transforming food systems from farm to
fork will therefore be key to reduce environmental impacts and mitigate climate change.
The transition to a low-carbon economy will also create business opportunities and drive growth for our innovative and
sustainable solutions. We contribute to the development of a low-carbon economy not just by reducing our own emissions
but also by developing solutions to help customers and consumers to cut theirs.
Our approach to the Sustainable Development Goals
Royal DSM Integrated Annual Report 2021 9
Our Commitments
- We commit to reaching net-zero emissions across our value chains by 2050 and to set us on this path, we work
with our Science Based Targets (SBT), comprising a scope 1 + 2 absolute reduction of 50% and a scope 3 intensity
reduction of 28% by 2030 versus baseline 2016
- We will enable double-digit on-farm livestock emission reductions by 2030
- We will reach 150 million people with nutritious, delicious, sustainable plant-based protein foods by 2030
- Our SBT are supported by targets of an average annual energy efficiency improvement of >1% and 75% purchased
electricity from renewable sources by 2030
Our initiatives
- We apply an internal carbon price of €100/t CO
2
eq on our key investments, acquisitions and in our management
reporting
Our approach
Improve
Enable
Advocate
Our long-term goal is net-zero
emissions by 2050. To put us on
track to achieve this, by 2030 we
will reduce our own carbon
footprint and improve the
resilience of our assets and supply
chains. Our approach to resilience
and adaptation, including physical
and transition risk assessments, is
summarized in Taskforce on
Climate-related Financial
Disclosures (TCFD).
By enabling the low-carbon
economy through solutions that
help customers cut emissions and
improve society’s ability to adapt to
climate change. These include
products with significantly lower
carbon footprints (such as
Akulon®), improving the
sustainability of animal farming
(such as Bovaer®, which reduces
methane emissions from cows by
30% or more) and advancing plant-
based protein options (such as
CanolaPRO®).
For accelerated climate action and
building the movement for a low-
carbon, resilient economy by
showcasing solutions and best
practices in key climate platforms
such as COP26 and through
collaboration with cross domain
initiatives such as the World
Economic Forum (WEF) and We
Mean Business, and leading climate
platforms such as the Carbon
Pricing Leadership Coalition (CPLC),
RE100 and GCA.
SDG 12
Through our commitments, initiatives, and approach, we align closest with the following SDG targets – 12.2, 12.3, 12.4 and
12.5.
As the world’s population grows, the demand for Earth’s resources will only continue to rise, and with a population
projected to grow to 9.7 billion people by 2050, some estimates suggest we will need the equivalent of three Planet Earths
by then to sustain our current lifestyles. In addition, over 30% of all food produced is either lost or wasted, representing a
huge drain on natural resources. Considering our global economy is only 8.6% circular and planetary boundaries are
crossed, we must move away from linear production and consumption systems and work together to build sustainable
food and production systems. We are making important contributions to the development of a circular, bio-based
economy founded on closed-loop solutions.
Our Commitments
- We will improve water withdrawal efficiency in water-stressed areas by 10% by 2030 versus 2020
- We will offer a full portfolio of alternatives that contain at least 25% recycled- and/or bio-based content by 2030
in our Engineering Materials business
- By 2030, at least 60% of Dyneema® fiber feedstock will be sourced from bio-based raw materials
Our approach to the Sustainable Development Goals
Royal DSM Integrated Annual Report 2021 10
- We will improve our volatile organic carbon (VOC) emission efficiency by 50% by 2021 (vs. 2015)
Our initiatives
- ‘Safe and sustainable by design’ is the leading principle in the development of new and better products and
processes
- We advocate for SDG 12.3 ‘Halving food loss and waste’ and we actively support our customers with reducing food
loss and waste reduction from farm to fork, for instance in the dairy, juice, meat and eggs value chains
Our approach
Improve
Enable
Advocate
By unlocking more value from the
limited available resources. Water
and our impact on biodiversity
are important aspects of our
continuous improvement
mindset. We minimize the use of
substances of concern where
possible.
By enabling our customers to
design safer and more circular end-
products, and minimize the use of
finite resources. These include our
solutions Veramaris® and
CanolaPRO®, as well as bio-based
and recycled-based solutions such
as Akulon® RePurposed and bio-
based Dyneema®.
For the transition from a linear to a
circular and bio-based economy
through global platforms such as
the World Business Council for
Sustainable Development (WBCSD),
and circular economy platforms
such as Platform for Accelerating
the Circular Economy (PACE), Circle
Economy and the Ellen MacArthur
Foundation.
Our approach to the Sustainable Development Goals
Royal DSM Integrated Annual Report 2021 11
Our contribution across the SDGs
Our purpose-led, performance-driven strategy is based on global megatrends and the SDGs. We align our approach with
five ‘core’ SDGs: SDG 2 and SDG 3, SDG 7 and SDG 13 and SDG 12. In addition to these ‘core’ SDGs, we believe that we can
also apply our Improve, Enable and Advocate approach to a varying extent across all the SDGs. Below we indicate our
estimated contribution in respect of all the SDGs.
Improve
Enable
Advocate
1
No Poverty
●●
●
●●
2
Zero Hunger
●
●●●
●●●
3
Good Health and Well-Being
●●
●●●
●●●
4
Quality Education
●
●
●●
5
Gender Equality
●●
●
●●●
6
Clean Water and Sanitation
●
●●
●
7
Affordable and Clean Energy
●●●
●
●●●
8
Decent Work and Economic Growth
●●
●
●●
9
Industry, Innovation and Infrastructure
●
●●
●●
10
Reduced Inequalities
●●
●●
●●
11
Sustainable Cities and Communities
●
●●
●●
12
Responsible Consumption and Production
●●
●●●
●●●
13
Climate Action
●●
●●
●●●
14
Life Below Water
●
●●
●●
15
Life on Land
●
●●
●●
16
Peace, Justice and Strong Institutions
●
●
●●
17
Partnerships for the Goals
●●
●●
●●●
Estimate of contribution
● Minor ●● Moderate ●●● Major
Improve: The impact within our own operations
Enable: Products that enable our customers to deliver sustainable products for planet and society
Advocate: Advocating for the future we believe in and acting on our responsibilities
Royal DSM Integrated Annual Report 2021 12
Report by the Managing Board
Purpose
For more than a decade, we have distinguished ourselves by embracing sustainability and providing value for all our
stakeholders across the three dimensions of People, Planet and Profit. We have taken a decisive step as a purpose-led
company, contributing to a brighter world for all with our science-based solutions. Our purpose is therefore fully anchored
in our long-term purpose-led, performance-driven Strategy.
Our purpose is to create brighter lives for all
As a global leader in the science behind better health and nutrition, we have the opportunity, capability, and therefore
responsibility to apply our resources and expertise where they can have the greatest impact. We use our bright science to
deliver positive transformations at scale and to create brighter lives for all.
We aspire to create value for all our stakeholders — customers, employees, shareholders and society at large — and to
build a stronger legacy and a brighter future for generations to come.
We are already reaching more than 2.5
1
billion people worldwide
Acting on our purpose
We make change happen in three ways:
- Improve: We improve our own operations to do no harm to people and planet. We optimize our own operational
impact by continually raising safety standards, promoting health and well-being in our workforce, reducing our
emissions, improving resilience, increasing our use of renewable energy, improving our water consumption, and
unlocking more value from limited resources
- Enable: We enable our customers and partners to have a positive impact by delivering products and solutions
that enable them to deliver sustainable and healthy solutions for the planet and society
- Advocate: We advocate in our business ecosystem for systemic change — we advocate for the future we believe in
and we fully accept our responsibilities as a corporate member of society
1 Lives Reached is a measure of the estimated number of consumers reached each year via products of customers and other third
parties which contain DSM products and solutions. This estimate is based on key market insights relating to market share, usage
patterns and product composition. Mathematical modeling is used to eliminate double counting. For more information, see Explanation
of some concepts and ratios.
Report by the Managing Board – Purpose
Royal DSM Integrated Annual Report 2021 13
We are convinced that the private sector as a whole needs to deliver value for all stakeholders — not just employees,
customers and shareholders, but the world’s communities and the individuals who live in them. We feel this responsibility
and therefore take an integrated approach to act upon our purpose by reducing our negative impact and increasing our
positive impact through the implementation of a range of internal and external initiatives. These include:
- increasing our Science Based Targets to deliver an absolute reduction of greenhouse gas (GHG) emissions from our
operations (scope 1 + 2) by 50% by 2030 versus our 2016 baseline, providing a firm foundation for DSM to achieve
net-zero by 2050
- making a set of measurable Food System Commitments covering Health for People, Health for the Planet, and
Healthy Livelihoods. These new commitments support our ambition to have a positive and meaningful impact on
the world’s food systems and contribute to the achievement of the UN Sustainable Development Goals 2, 3, 12 and
13
An overview of these initiatives can be found in Our approach to the Sustainable Development Goals and throughout this
Report. Examples of our purpose-led solutions are provided in the Case studies in this Report.
Royal DSM Integrated Annual Report 2021 14
Strategy
At a glance
- +13% Organic sales growth versus +2% in 2020
- +18% Adjusted EBITDA growth from continuing operations versus 2020, with Nutrition +8% and Materials +60%
- +9% Adjusted net operating free cash flow growth from continuing operations versus 2020
- ~23%
1,2
GHG scope 1 + 2 reduction – cumulative structural improvement (baseline 2016) versus ~18% in 2020
- 0.22 Frequency Index of Recordable Injuries versus 0.24 in 2020
- 76% Employee Engagement Index versus 76% in 2020
Strategy
Focus on Health, Nutrition & Bioscience
In September 2021, we announced our decision to accelerate our journey toward becoming a company focused on Health,
Nutrition & Bioscience, using our resources and capabilities to address the urgent societal and environmental challenges
linked to the way the world produces and consumes food.
In the face of multiple systemic and interconnected food system challenges that impact the health and well-being of
people, animals, and the planet, the Intergovernmental Panel on Climate Change (IPCC) Report of 2021 warns our world is
rapidly approaching critical and irreversible tipping points. Climate change is already creating considerable challenges for
food systems worldwide, while at the same time food production remains one of the largest contributors to environmental
degradation. Advances in digital technology and bioscience offer realistic scalable solutions to tackle these challenges,
creating new markets and innovation opportunities. With our strong combination of scientific competences and growing
1 All data presented in People and Planet are subject to the Non-financial reporting policy.
2 In total, our absolute reduction of scope 1 + 2 greenhouse gas emissions was 27% versus the 2016 baseline.
Report by the Managing Board – Strategy
Royal DSM Integrated Annual Report 2021 15
portfolio of nutrition and health solutions, we are ideally positioned to capture these opportunities and create value for
people and planet as well as our business.
We underpinned our transformation by creating three market-focused Business Groups in which we organize our Health,
Nutrition & Bioscience activities with effect from 1 January 2022:
- Animal Nutrition & Health
- Health, Nutrition & Care
- Food & Beverage
Each Business Group will have clear opportunities to benefit the health of people and the health of the planet,
underpinning our growth plans. Each will be much more closely aligned with its respective customers and, through the
integration of activities currently performed by DSM’s various scientific centers, will be fully equipped to rapidly develop
impactful, science-based innovations (for more detail, see Innovation). We will continue to make acquisitions that
strengthen and develop critical capabilities to support our organic growth.
At the same time, we have started a review of strategic options for our Materials businesses, including a possible change
of ownership. For more detail, see the section on Materials.
Our business model for growth: global products, local solutions, and precision & personalization
Our Health, Nutrition & Bioscience strategy is underpinned by our ‘global products, local solutions’ business model and
complemented by our growing competences in the rapidly emerging area of precision & personalization.
Our business model for growth: global products, local solutions, precision & personalization
Our leading, and growing, global product portfolio includes vitamins, nutritional lipids, carotenoids, minerals, eubiotics,
enzymes and yeasts, as well as texturants, flavors and cultures. Our acquisition of First Choice Ingredients in 2021 added
dairy-based savory flavorings for taste and functional solutions across a wide range of applications, while our acquisition
of the flavor and fragrance (F&F) bio-based intermediates business of Amyris, Inc. expanded our Aroma portfolio.
Bovaer® and our partnerships Avansya and Veramaris have recently been added through our own innovation efforts.
Report by the Managing Board – Strategy
Royal DSM Integrated Annual Report 2021 16
Delivering local solutions across all regions, our end-market focus allows us to better understand market needs,
enable solution selling, and open up innovation headroom – for example, more relevant solutions supporting early life
nutrition and dietary supplements in Health, Nutrition & Care. With a significant and diverse premix footprint, together
with superior formulations and delivery systems and increasing competences, in analytics and diagnostics, we are able to
develop innovative and sustainable local solutions for our customers around the world.
Drawing on our emerging capabilities in digitization, we are swiftly developing an additional dimension to our future
growth: precision & personalization. Developments in data science and bioscience are opening up exciting opportunities to
address challenges in health and nutrition. Leveraging our reputation, science-based competences and global customer
base, we seek to create digital solutions that deliver unprecedented levels of precision. This new standard in precision has
the capability to deliver more targeted and therefore, effective health solutions as well as measurable, sustainability
benefits. Examples of this approach include:
- Hologram Sciences, Inc., our personalized nutrition venture, which brings together all the necessary capabilities
to develop end-to-end turnkey solutions that are commercially validated with consumers
- Sustell™, a first-of-its-kind intelligent sustainability service that delivers accurate, simple and actionable farm-
level solutions to reduce the environmental footprint and improve the profitability of animal farming
- Verax™, a data-driven, blood-based, biomarker-screening service that uses analytics to deliver a deeper and
more accurate understanding of the health and performance of animals
Our focus in Animal Nutrition & Health
Addressing the United Nations Sustainable Development Goals 2 (Zero Hunger), 3 (Good Health and Well-Being), 12
(Responsible Consumption and Production), 13 (Climate Action), and 14 (Life Below Water), we have identified six
sustainability platforms that address the major challenges facing the animal farming industry today. Our ambition is to
radically improve the sustainability of animal farming worldwide, creating innovative and sustainable solutions that will
deliver significant value for our customers and at the same time for our company. These are:
- Improving the lifetime performance of farm animals
- Making efficient use of natural resources
- Reducing emissions from livestock
- Helping tackle antimicrobial resistance
- Reducing reliance on marine resources
- Improving the nutritional quality of meat, milk, fish and eggs, while reducing food loss and waste
With our unmatched portfolio of products and services, we are in a leading position to address these challenges through
solutions that include, for example:
- algal-based omega-3 for fish feed (Veramaris®)
- methane-reducing feed additives for cows (Bovaer®)
- mycotoxin absorbers to prevent fungal contamination in animal feed
- a comprehensive eubiotics portfolio to displace use of antibiotics as growth promoters
- data-driven decision-making tools for farmers, such as Sustell™, and for veterinarians and animal health
practitioners, such as Verax™
- We continue to build specialist competences to pursue new health solutions and support feed solutions for
additional species, improve the end-to-end experience for the customer, and invest in our direct business-to-
farmer and overall go-to-market capabilities.
Our new precision services business, meanwhile, aims to improve sustainability, animal health and welfare, and the
profitability of animal production. Precision services uses data analysis and advanced diagnostic tools to measure and
pinpoint specific nutritional, health and environmental issues to tackle challenges and offer bespoke solutions.
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Royal DSM Integrated Annual Report 2021 17
Our focus in Health, Nutrition & Care
In Health, Nutrition & Care, we address the United Nations Sustainable Development Goals 2 (Zero Hunger), 3 (Good Health
and Well-Being) and 12 (Sustainable Consumption and Production). As a leading provider of specialty nutritional and
personal care ingredients and biomedical materials focusing on immunity, gut, brain and skin health, and solutions for
orthopedics and cardiovascular, we aim to help keep the world’s growing population healthy. Founded on our innovative
and sustainability-focused competences, our role as a fully integrated provider of solutions allows our customers to focus
fully on the branding and commercialization of their products and creates opportunities for our own B2C business, i-
Health.
Some of the key innovation focus areas include:
- Preventive health and immunity through the provision of micronutrients such as vitamins C and D, and omega-3s,
together with innovative solutions that include our algal lipids and ampli-D®, our rapid-acting and high-potency
form of vitamin D
- Human milk oligosaccharides (HMOs), where we are building an exciting innovation roadmap to address currently
unmet needs in early life nutrition, dietary supplements and medical nutrition together with promising potential
applications in pet foods
- Personalized nutrition, which is a rapidly developing growth area spearheaded by our venture Hologram Sciences,
Inc., where we work closely with leading start-ups in which we have already invested, such as Tespo and AVA
In addition, we are continuing our long-term commitment to champion efforts to increase the availability of micronutrient-
rich food in countries with the world’s most vulnerable communities through various partnerships, such as with the United
Nations World Food Programme (WFP), UNICEF and World Vision, as well as our joint venture Africa Improved Foods (AIF).
Our focus in Food & Beverage
In Food & Beverage, we address the United Nations Sustainable Development Goals 2 (Zero Hunger), 3 (Good Health and
Well-Being) and 12 (Sustainable Consumption and Production). The food & beverage market is subject to rapid change,
driven by evolving consumer needs and expectations regarding delicious, nutritious and sustainable food choices. The
challenge for our customers, the food & beverage producers, is to anticipate these changes and respond by developing and
delivering on-trend, differentiating products faster than their competitors. Our customers are therefore seeking:
- products that deliver specific taste and texture attributes
- products that deliver improved nutritional value and the associated health benefits
- approaches that deliver more resource-efficient and sustainable food production
In this market, we are well positioned to offer sustainable solutions that address taste, texture and health in an integrated
way, with our unique and extensive portfolio of global products (comprising dairy cultures as well as enzymes for
applications across dairy, baking and beverages; coatings and preservation systems; yeast extracts, process flavors and
texturizing hydrocolloids; and vitamins, minerals and nutritional lipids) and our deep application expertise in our core
end-market segments, based on our extensive biotechnological competences.
To strengthen this proposition in Food & Beverage, we will continue to deepen our integrated application know-how,
broaden our global product portfolio, combine ingredient and application innovation, and maximize opportunities for
inorganic growth.
An example of our ingredient and application innovation is CanolaPRO®, a sustainable plant-based protein source based
on rapeseed. This innovation was reinforced in 2021 by our acquisition of Vestkorn Milling, a leading European producer of
pea- and bean-derived ingredients for plant-based protein products. This represents a new building-block in our portfolio
of solutions for meat and dairy alternatives.
Report by the Managing Board – Strategy
Royal DSM Integrated Annual Report 2021 18
Another example of product innovation is Avansya, our 50/50 partnership with Cargill to bring our great-tasting, zero-
calorie, cost-effective, non-artificial sweetener EVERSWEET™ to market at scale.
Our focus in Materials
Following the sale of our Resins & Functional Materials businesses to Covestro AG, our Materials activities now consist of
DSM Engineering Materials and DSM Protective Materials. These are both high-quality businesses with a strong growth and
earnings potential.
In view of our accelerated strategic journey to become a focused Health, Nutrition & Bioscience company, these two
excellent Materials businesses may not be able to achieve their full potential in driving the important industrial shift to a
bio-based and circular economy under our ownership. Going forward, the Materials Business Groups will therefore be
managed largely on a stand-alone basis. We are reviewing strategic options for both Materials businesses, including a
possible change of ownership.
Meanwhile, we will continue to develop our high-growth and high-margin specialty Materials businesses. These focus on
three growth platforms: Improved Health & Living, Green Products & Applications, and New Mobility & Connectivity.
Our focus in Innovation
Innovation is what transforms our ‘Bright Science’ into ‘Brighter Living’. We aim to develop novel, sustainable solutions by
leveraging an enterprise-wide approach that utilizes our unique scientific capabilities and our profound understanding of
health and nutrition for both people and animals. Supported by a global network of advanced centers of biotechnology
and chemistry as well as strategic partnerships, this enables us to develop breakthrough innovations with proven health
benefits.
Innovation sales – defined as products and applications that have been introduced during the previous five years – have
also improved our profitability, delivering higher margins than the average of our running business. We continuously
invest in innovation in order to maintain the contribution from resulting sales at around 20% of total sales, which we
consider to be a healthy proportion in view of the overall balance of our product portfolio and product life cycles.
Innovation as an enterprise-wide endeavor
Our long-term success requires us to be able to serve our customers with innovations that are grounded in market
insights and enabled by digital technology and bioscience as well as best-in class production and launch capabilities. In
order to achieve this, we regard innovation as an enterprise-wide endeavor whereby those who invent, make and sell have
a shared responsibility. This results in full alignment from ideation to commercialization and maximizes the opportunities
for our R&D to make a positive difference for people, planet, and profit. By encouraging an environment which supports
both the short-term needs of our businesses today, and the longer-term requirements for breakthrough advances in
science, we create an engine for growth, especially as we begin to realize the next frontier of our business model: precision
& personalization.
Driving our innovation pipeline through four growth themes
Our platform-based approach helps us to deliver a business-anchored pipeline of innovations that are aligned with our
future strategic needs and support our growth ambitions. We have four overarching growth themes that address major
global societal, technological, and environmental trends which in turn inform our innovation platforms.
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Royal DSM Integrated Annual Report 2021 19
Growth themes and innovation platforms
We focus on four growth themes – Pathways, Proteins, Prevention and Precision:
Pathways: using our base strength in chemistry and biotechnology to manufacture ingredients with a better environmental
footprint. Through our strengths and advances in biotechnology we can make innovative use of microorganisms to
produce ingredients and intermediates – for example, the innovation platform of Sustainable Lipids, which includes our
algal-based omega-3 Veramaris® for more sustainable aquaculture.
Proteins: solutions that reduce the footprint of animal protein production and meet the growing demand for meat, fish
and dairy alternatives – for example, the Animal Emission Reduction platform, which includes our feed additive Bovaer®,
which significantly reduces methane emissions from cattle, and plant-based specialty proteins such as CanolaPRO®.
Prevention: using our rich portfolio of active ingredients (e.g., vitamins, lipids, human milk oligosaccharides) to optimize
health and immunity. For example, as we learn more about how our ingredients modulate the gut microbiome, we
see potential to develop solutions that build resilience to stress and disease by improving the gut microflora in people
and animals. In the Animal Gut Health platform, for example, we have a full range of antibiotic alternatives that promote
animal health while tackling anti-microbial resistance (AMR).
Precision: digitally enabled new business models to enhance nutrition precision, ensuring the right nutrition to maximize
health for people and animals. An example is our personalized nutrition platform, delivered through Hologram Sciences,
Inc., which provides personalized nutrition and coaching recommendations for people.
Delivering a long-term, purpose-led, positive impact
Responsibility for our own footprint and care for our people
We are a global, purpose-led, performance-driven Health, Nutrition & Bioscience company. We take responsibility for our
own footprint and care for our people. Over the course of recent years, we have developed, and committed to, an
ambitious set of goals to reduce our emissions and improve the energy efficiency of our operations worldwide. Recently
we accelerated our validated Science Based Target for 2030 on greenhouse gas emissions (scope 1 + 2) versus baseline
2016, increasing our target level from 30% to 50%. At the same time, we reiterated our intention to source 75% of our
electricity from renewable energy sources by 2030.
Report by the Managing Board – Strategy
Royal DSM Integrated Annual Report 2021 20
Concurrently, we have long-held ambitious targets on employee engagement, safety and diversity, in recognition of our
respect for, and responsibility toward, our colleagues around the globe. Among these, we set ourselves the target to
achieve employee engagement of over 75% by the end of 2021. We also set ourselves the target to have 30% of our
executive roles fulfilled by females by the end of 2025.
As a company, we are committed to create brighter lives for all. Hence our focus on Brighter Living Solutions – products
and services that have a better environmental (ECO+) and/or social (People+) impact than mainstream solutions through
the entire life cycle, from raw materials to manufacturing, end-use and disposal.
For more details on our initiatives and progress, see People and Planet and Our approach to the Sustainable Development
Goals.
Making a positive impact on food systems
In 2021, we announced a series of new, quantifiable commitments aimed to address urgent societal and environmental
challenges linked to how the world produces and consumes food by 2030. We are one of the first companies in the
consumer ingredient sector to make our societal impact explicit through a set of measurable Food System Commitments.
These commitments cover three areas where we believe we can make the greatest positive impact together with our
business partners: Health for People, Health for Planet, and Healthy Livelihoods.
Through investment in our (bio)science-based innovations, extensive partnerships, and advocacy activities, we aim to help
deliver change to ensure accessible, affordable, healthy nutrition and healthy livelihoods within planetary boundaries. Our
new strategic Food System Commitments by 2030 are as follows:
People
- Enable the micronutrient gap to be closed for 800 million vulnerable people
- Support the immunity of 500 million people
Planet
- Enable double-digit on-farm livestock emission reductions
- Reach 150 million people with nutritious, sustainable plant-based protein foods
Livelihoods
- Support the livelihoods of 500,000 smallholder farmers across value chains, acting together with partners
These commitments support the UN Sustainable Development Goals 2, 3, 12 and 13. We are committed to continue to
obtain reasonable assurance on our impact reporting, including these new commitments, as we plan to report our
progress every year in our Integrated Annual Report.
Mid-term financial targets and cash allocation policy
We aim to deliver ambitious mid-term profit targets:
- Mid-single digit % organic sales growth
- An above 20% adjusted EBITDA margin
- High-single digit % adjusted EBITDA growth
The key drivers to deliver sustained organic sales growth are our innovation platforms, commercial synergies from recent
acquisitions which come on top of our underlying market growth, and the continued expansion of our customer-centric
solution offerings.
Our cash allocation policy has a clear order of priority for cash deployment:
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Royal DSM Integrated Annual Report 2021 21
- Disciplined capital expenditure for organic growth: approximately 6.5% of annual sales
- A stable, preferably rising dividend
- Disciplined M&A
- In the absence of value-creating M&A, capital to be returned to shareholders
We remain committed to maintaining a strong, investment-grade credit rating. With our dividend policy of a stable,
preferably rising dividend, we target an average payout of 40–50% of adjusted earnings.
Report on progress in 2021
Our strategy served us well in 2021. It helped us to set our priorities in order to drive organic growth, especially in view of
the changing circumstances brought about by the continuing COVID-19 pandemic. It also helped us make the right capital
allocation choices, including the selection of acquisition targets and the development of our Health, Nutrition &
Bioscience portfolio, where appropriate.
Highlights:
- We accelerated our journey toward becoming a focused Health, Nutrition & Bioscience company, started a review
of strategic options for our Materials businesses, including a possible change of ownership, simplified our
operating structure, reorganizing our activities into three Business Groups, and installed a new leadership
structure to reflect our strategic vision and new organizational structure
- We acquired the Flavor & Fragrance bio-based intermediates business of Amyris, Inc., Midori USA, Inc (eubiotics),
First Choice Ingredients, Inc. (savory flavorings), and Vestkorn Milling (plant-based proteins) and divested our
Resins & Functional Materials and associated businesses
- We made good progress on our platform-based approach to driving innovation, ensuring a healthy pipeline of
new products and solutions and made significant progress to capture the value from key innovations such as
Veramaris®, Bovaer®, EVERSWEET™ and ampli-D®
- We made progress on our purpose-led sustainability ambitions in People and Planet
- We announced a number of new Food System Commitments in support of the achievement of the UN Sustainable
Development Goals 2, 3, 12 and 13
- We launched Team DSM for the 2021 season onwards with the aim of galvanizing wider public action around the
importance of the health of people and of the planet, in line with our purpose-led, performance-driven strategy
Report by the Managing Board – Strategy
Royal DSM Integrated Annual Report 2021 22
Progress in Sustainability: People and Planet
At DSM, sustainability is not only our core value and a key responsibility; it is also a key business driver that is fully
engrained in our purpose, strategy, business and operations. Our approach for bringing about positive change is to
improve, enable and advocate. The below table provides an overview of our progress in terms of our key sustainability
metrics:
1 These data are subject to the Non-financial reporting policy.
2 Strengthened to 50% by 2030 in 2021.
3 We estimate that the effect of the underlying cumulative structural improvements in absolute GHG emissions was approximately 23%
in 2020, versus the 2016 baseline. The total cumulative absolute reduction was 27%, versus the 2016 baseline.
4 Survey of payroll employees in October 2021, excluding recent acquisitions and divestments.
5 Strengthened from <0.25 in 2021.
6 A new methodology, providing improved transparency and granularity while ensuring reporting against new and future requirements
of regulatory authorities will be applied as of January 2022 and will be provided at the publication of the half year results of 2022.
7 For a small percentage of sales (<0.7 % of sales) classified as Brighter Living Solutions, the environmental impact is considered ‘best
in class’ together with other solutions.
We have leading positions in important ESG indices for investors: we hold a platinum sustainability medal from EcoVadis
putting us in the top 1% of our industry, we are ranked among the leaders in our industry by Sustainalytics, have an AAA
rating from MSCI, have Prime Status with ISS-ESG, and have a leading position in the rankings of Moody's ESG (formerly
Vigeo Eiris).
Planet
On Planet, we accelerated our Science Based Target for greenhouse gas (GHG) reduction (scope 1 + 2) from 30% to 50% by 2030
versus baseline 2016. This step-up provides a firm foundation for DSM to achieve net-zero by 2050. Furthermore, we improved
the environmental impact of our own operation and remained well on track in terms of our GHG reduction, energy efficiency and
purchased renewable electricity targets in 2021.
- The underlying structural improvement in absolute greenhouse gas reduction from operations in 2021 compared
to the 2016 baseline is ~23%, versus our target of 50% by 2030
- Energy efficiency has improved by 6% compared to full year 2020 versus our >1% average annual ambition.
- 72% of purchased electricity came from renewable resources compared with 60% in 2020, firmly on course to
achieve our interim target of 75% by 2030 in the pursuit of 100%
This progress supports our commitment to a long-term pathway to work toward net-zero GHG emissions across our
operations and value chains by 2050. We doubled our internal carbon price from €50 to €100 per ton of CO
2
eq and signed an
additional power purchase agreement whereby all our electricity needs in the US became 100% renewable in 2021. We received a
double A rating on our Climate strategy and Water stewardship by CDP, the global non-profit environmental disclosure
platform.
Report by the Managing Board – Strategy
Royal DSM Integrated Annual Report 2021 23
We enabled our customers to deliver more sustainable solutions to their (end) consumers Our purpose-led innovation
pipeline is fully aligned with our five focus SDGs.
More about our environmental performance can be found in the Planet section.
People
Our People showed remarkable resilience as we continued to adapt our ways of working to the COVID-19 pandemic
circumstances either by supporting remote and hybrid working or by establishing safe working environments in our
laboratories and plants. In terms of safety we can be pleased with an improvement in the Frequency Index of DSM
Recordable Injuries to 0.22 from 0.24 in 2020, achieving our target level of less than 0.24. We continue to act on our
ambition to make our company fully incident- and injury-free. It was also encouraging to see that in such an eventful year,
overall employee engagement remained at the high level of 76% and many associated indicators in the Employee
Engagement Survey saw an increase. Looking at Inclusion & Diversity, the Executive Committee is now 40% female, the
Management Board and Supervisory Board are 50% female, and progress was made on improving the representation of
women (23% female executives) and under-represented nationalities at executive level (31%). We developed new ambitious
Inclusion and Diversity commitments for the period 2022–2025. More information can be found in the People section.
Brighter Living Solutions
In 2021, 64% of our net sales, including the sales of our discontinued operations, came from products that have a better
environmental (ECO+) and/or social (People+) impact than mainstream solutions. We call these our Brighter Living
Solutions (BLS). Discontinued operations were included until divestment date, and their exclusion negatively impacts the
overall KPI. Positive impact came from the assessment of our newly acquired HMO portfolio, and new significant
assessments in our Nutrition business.
Enabling increased Precision & Personalization
The year 2021 saw the full mobilization of our Digital Nutrition Acceleration (DNA) program. Digital is no longer merely an
enabler for our organization: it is also a strategic business driver, and the DNA program creates the digital foundation for
key precision & personalization initiatives such as:
- Hologram Sciences, Inc., our personalized nutrition venture, which brings together all the necessary capabilities to
develop end-to-end turnkey personalized nutrition solutions that are commercially validated with consumers
- Sustell™, a first-of-its-kind intelligent sustainability service that delivers accurate, simple and actionable farm-
level solutions to reduce the environmental footprint and improve the profitability of animal farming
- Verax™, a data-driven decision-making tool that helps veterinarians, nutritionists and operations make better
decisions about their animals' health
Another important milestone delivered as part of the DNA program in 2021 was the launch of a new customer-centric e-
commerce tool, which enabled 10% of DSM’s sales to be moved online in just a few months. We also launched the
Analytics Academy, defining and establishing our first communities of practice for Data Science, Data Engineering and
Cloud Engineering.
Our scaling-up of automation continued in 2021, with another 40 bots being delivered, bringing our total to more than 200
and enabling the automation of numerous processes in Finance, Human Resources and Purchasing. The pandemic
required us to accelerate the adoption of digital tools and practices among our workforce and laid down the key principles
of new ways of working that will thrive in the Next Normal. We piloted with success our digital mindset change program in
Latin America, the Netherlands and China by inviting employees to learn, ideate and try out digital approaches more and
more often.
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Royal DSM Integrated Annual Report 2021 24
Executive Committee. Top row: Dimitri de Vreeze, Geraldine Matchett and Patricia Malarkey. Bottom row: Philip Eykerman, Helen Mets and
Cristina Monteiro.
Royal DSM Integrated Annual Report 2021 25
Case studies
Responsible consumer choices with plant-based fish alternatives
Opportunities to make more responsible choices
Plant-based meat alternatives have transformed grocery store shelves and restaurant menus alike with a broad range of
meatless options that appeal to consumer demand for healthy and sustainable diets. Now, plant-based fish alternatives
are catching this wave.
There is a growing demand for plant-based alternatives alongside traditional meat, fish and dairy products, as consumers
search for foods that deliver an authentic eating experience without compromising on taste and texture. Whether for
personal, health or sustainability reasons, or from plain curiosity, more and more people are adding plant-based options
to their food choices and are adopting flexitarian, vegetarian, or vegan diets. At the same time, the importance of a quality
nutritional profile is attracting increasing recognition.
Case studies
Royal DSM Integrated Annual Report 2021 26
Today’s eco-conscious consumers are increasingly seeking opportunities to make responsible choices that help reduce the
impact on the planet’s limited resources. Plant-based fish alternatives are emerging as an appealing option for the rising
number of individuals adopting flexitarian, vegetarian and vegan lifestyles. Plant-based seafood is currently a small
fraction of the overall plant-based meat and seafood category, accounting for less than 1% of sales in the US. This market
is developing rapidly, however, and its potential presents a compelling prospect to manufacturers that have the capability
to formulate authentic, tasty and enticing plant-based fish-alternative products.
Consumers looking for plant-based alternatives to traditional fish products are concerned about the sustainability of the
planet, and especially the ecosystems of the ocean. To ensure that plant-based alternatives will resonate with eco-
conscious consumers, it is essential to offer comparable nutritional value while reproducing the nuanced flavors and
textures associated with fish and shellfish.
Delivering taste, texture and nutritional value
A 2020 report by the United Nations Food and Agriculture Organization (FAO) highlighted the fact that annual global per
capita fish consumption had more than doubled between 1961 and 2017. Meanwhile, in the past 35 years alone, the world’s
population has grown by more than 50%, according to FAO. Research shows that 84% of people in the UK – to give just one
country as an example – say that being environmentally friendly is important to them, and concerns over diminishing fish
resources are growing.
Consumers interested in plant-based alternatives are unwilling to compromise on sensory experience. Delivering attractive
taste, texture and mouthfeel is therefore essential. Manufacturers, however, face a serious challenge in trying to meet the
taste and sensory properties of traditional fish products. Most commercially available fish flavors are produced by
processing parts of fish or shellfish. These products consequently fail to meet vegetarian criteria and are not fully
sustainable (nor are they halal or kosher). A parallel consideration is the challenge of ensuring nutritional value in terms
of omega-3 content as well as vitamins and other micronutrients. Taste, texture and nutritional value all have to be
delivered in a single package.
Case studies
Royal DSM Integrated Annual Report 2021 27
Our solutions
In 2021, we launched Maxavor® Fish YE, a first-ever vegan, natural and 100% allergen-free flavor solution. Maxavor® Fish YE
has been designed to overcome common formulation challenges in the development of premium plant-based fish
alternatives, such as vegetarian fish nuggets and vegan fish sauce. It delivers an authentic fish taste, texture and
mouthfeel. It can also help to amplify flavor in actual fish-based products.
Maxavor® Fish YE is available in two profiles, depending on the application: one for rich and oily, dark-fleshed fish (e.g.,
plant-based canned tuna) and the other for white-fleshed fish (e.g., plant-based fish cakes). Maxavor® Fish YE won a
prestigious Food Ingredients Europe Innovation Award in November 2021, coming top of the ‘Plant-Based Innovation’
category.
life’s®OMEGA from DSM is used in plant-based and vegan food & beverage products ranging from margarine to plant-
based fish alternatives, as well as in dietary supplements. life’s®OMEGA is the only algal (plant-based) omega-3 DHA and
EPA alternative with significant levels of EPA and DHA. It delivers the features of marine-based EPA and DHA but with the
benefits of sustainable plant-based sourcing. life’sDHA® is already finding applications in meat and fish alternatives in
North America (EU approval for its use in meat and fish alternatives is pending at time of publication of this Report).
Our impact
Following its launch in March 2021, Maxavor® Fish YE is now being used in a number of vegan canned tuna products across
the US, the UK, the Netherlands and Asia. In South Africa, the Maxavor® Fish YE solution is being used in fishcakes, while in
New Zealand, Russia and Romania, it is being used to produce vegan oyster sauce.
In Latin America, another of our products – life’sDHA® – has been successfully used by one of the region’s leading
producers of plant-based products to improve the nutritional value of its new vegan tuna alternative.
Stronger together
Reading Scientific Services Ltd (RSSL), an independent applications laboratory, has been exploring the potential of
Maxavor® Fish YE. RSSL found it to be invaluable in terms of achieving an authentic flavor profile and helping to mask any
off notes from the base ingredients.
“For an upcoming tuna alternative, we saw a noticeable
improvement in the flavor profile when we included
Maxavor® Fish YE in the formulation.”
Carole Bingley, Senior Associate Principal Scientist, Reading Scientific Services Ltd
How we support the SDGs
SDG 12: Ensure sustainable consumption and production patterns
SDG 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development
The development of our portfolio of plant-based fish alternatives supports the attainment of UN Sustainable Development
Goals 12 and 14 by enabling the development of more sustainable consumer products that help protect the planet’s
limited resources. These products also support our Food System Commitment to reach 150 million people with nutritious,
sustainable, plant-based protein foods by 2030.
Case studies
Royal DSM Integrated Annual Report 2021 28
Combating mycotoxins to support animal farming and protect human
health
The damaging effects of mycotoxins
Mycotoxins are a group of more than 700 toxic compounds produced by naturally occurring fungi. These toxic compounds
can contaminate a wide range of staple commodities and feed raw materials. Failure to protect livestock against
mycotoxins may compromise animal welfare, reduce animal performance, and impair the quality of animal byproducts
(e.g., horn and hide).
Exposure of livestock to mycotoxins intensifies the usage of natural resources and causes an increase in greenhouse gas
emissions associated with reduced animal performance. Once mycotoxins are present in the feed, the animal redirects the
energy that should be used to achieve the maximum protein deposition in its body, milk or eggs to combating these toxic
compounds. This affects the sustainability and profitability of the entire value chain.
Mycotoxins can have diverse biological modes of action within an animal organism. Even a low level of contamination can
negatively influence the health status of livestock. The presence of more than one mycotoxin in a feed source multiplies
the damage that these compounds may cause. These include impairment of liver functionality, impairment of gut
Case studies
Royal DSM Integrated Annual Report 2021 29
functionality (leading to reduced absorption of nutrients), and a consequent increase in susceptibility to disease. The
presence of mycotoxins can also trigger fertility problems (in animals of both sexes), reduce uniformity within herds and
flocks, and impair the efficacy of vaccines.
Exposure to mycotoxins poses a threat not just to animals, but to humans, too. Consumption of mycotoxins found in a
wide range of plant- or animal-sourced foodstuffs can induce conditions such as liver, kidney and esophageal cancer,
gastrointestinal disturbances, and irritation of the skin.
A constant concern
Worldwide institutions such as the European Food Safety Authority (EFSA) and the World Health Organization (WHO)
recognize mycotoxins as harmful contaminants for both animals and humans, recommending that they should be
monitored and prevented in feed and food alike.
The warming of the climate encourages the development of mycotoxins. The combination of high temperatures and
rainfall encourages the occurrence of fungi, making the presence of mycotoxins in grains and raw materials a constant
concern.
Our solutions
For more than three decades, Biomin, acquired as part of our acquisition of Erber in 2020, has had a leading position in
the biotransformation of various mycotoxins – i.e., the process of rendering them biologically harmless. Biomin provides
high-quality global services to analyze mycotoxins, tools to interpret the risk of mycotoxin exposure, and solutions to
mitigate losses in the food value chain caused by mycotoxins.
Mycofix® is the DSM brand for Mycotoxin Risk Management solutions. The result of decades of specialist research and
development, the Mycofix® product line offers innovative solutions to better protect farm animals from mycotoxins and
help support sustainable business for livestock farmers. The feed additive ZENzyme®, which targets the mycotoxin
zearalenone, is one example from this portfolio.
Zearalenone is a mycotoxin that occurs in more than 60% of feed. It mainly affects the reproductive system, impairing the
fertility of breeder animals and their offspring. In 2021, we launched ZENzyme®, the first and only purified enzyme that
degrades zearalenone rapidly and completely. This innovation is the result of many years of research in the field of
mycotoxin enzymology and guarantees the complete biotransformation of zearalenone into non-toxic compounds. The use
of ZENzyme® ensures protection against zearalenone and enables breeding animals, as well as their offspring, to achieve
their full genetic potential.
Our impact
The Mycofix® portfolio from DSM represents the most state-of-the-art solution for protecting the health of livestock by
deactivating mycotoxins that contaminate feed. The safety and efficacy of Mycofix® are proven by seven EU authorizations
for substances that deactivate mycotoxins.
Stronger together
Vestjyllands Andel Pig Feed Cooperative is the third largest feed mill in Denmark, producing 500,000 tons of feed and
premix per year. Vestjyllands Andel has been using Mycofix® Plus since 2016, starting with an order of 10 tons and
increasing this volume to 144 tons by the end of 2021.
Case studies
Royal DSM Integrated Annual Report 2021 30
“Using Mycofix® Plus in the feed all year round helps
swine farmers to avoid health issues caused by the
presence of mycotoxins.”
Karsten Jørgensen, head of Krogsgaard Svineproduktion at Vestjyllands Andel Pig Feed Cooperative
How we support the SDGs
Our mycotoxin solutions support the attainment of UN Sustainable Development Goals 2, 3 and 12.
SDG 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
By combating the spread of mycotoxins in a warming climate, Mycofix® enables the production of more animal protein
with the same resources. It therefore contributes to the achievement of SDG 2.4, “By 2030, ensure sustainable food
production systems and implement resilient agricultural practices that increase productivity and production, that help
maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and
other disasters and that progressively improve land and soil quality.”
SDG 3: Ensure healthy lives and promote well-being for all at all ages
Mycofix® helps reduce the presence of harmful mycotoxins in animal-source foods consumed by humans, thus helping to
ensure healthy lives and promote well-being.
SDG 12: Ensure sustainable consumption and production patterns
Mycofix® contributes to sustainable consumption patterns by reducing food losses, supporting specifically the
achievement of SDG 12.3, “By 2030, halve per capita global food waste at the retail and consumer levels and reduce food
losses along production and supply chains, including post-harvest losses.”
Case studies
Royal DSM Integrated Annual Report 2021 31
Combating hidden hunger through rice fortification
Closing the micronutrient gap for 800 million people
Through our partnerships in the public and private sectors, we work to create affordable, aspirational and accessible
nutritional solutions that can help keep the world’s growing population healthy.
Two billion people worldwide currently suffer from a deficiency of key micronutrients, a condition known as hidden
hunger. Its effects can be devastating, leading to mental impairment, poor health (including stunting and wasting), low
productivity, and even death. Its adverse effects on child health and survival are particularly acute, resulting in serious
physical and cognitive consequences. Even mild to moderate deficiencies can affect a person’s well-being and
development. In addition to affecting human health, hidden hunger can curtail socioeconomic development, particularly in
low- and middle-income countries.
Case studies
Royal DSM Integrated Annual Report 2021 32
As part of our new strategic Food System Commitments, we have undertaken to enable the closure of this micronutrient
gap for 800 million people currently suffering from hidden hunger by 2030. The fortification of rice with essential
micronutrients is an element in this commitment. It is one of the most effective, safe and cost-efficient solutions to
address micronutrient deficiencies.
The rationale for fortifying rice
Rice is one of the most commonly eaten foods in the world, providing more than 20% of global calorie intake. White rice,
which is milled prior to cooking, is significantly more popular than brown or unmilled rice. Approximately 480 million
metric tons of milled rice is produced annually worldwide. As a staple food for over half the global population, rice offers a
good and affordable source of energy. However, rice itself does not contain significant amounts of most micronutrients.
Additionally, the milling process that produces the commonly-consumed white rice removes both the fat- and nutrient-
rich bran layers from the rice ears, further reducing the rice grains’ nutritional value. White rice is therefore a relatively
nutritionally poor staple.
The process for fortifying rice
Rice can be made more nutritious by adding vitamins, minerals and other micronutrients to replenish nutrient content lost
in the milling process and reinforce its nutritional value. Fortified rice can be adapted to meet specific nutritional needs
and can be made to resemble different rice varieties.
There are various methods to make rice more nutritious post-harvest, and DSM has developed a robust proprietary
technology in the form of hot or warm extrusion. This technology has been shown by numerous clinical studies to be
effective in helping to combat micronutrient deficiencies.
Broken rice grains are ground into rice flour, then mixed with water and the required nutrients to produce a dough. The
fortified dough is then passed through an extruder to produce the fortified kernels, which are then blended with regular
rice, typically at a dosage rate of approximately 1%. The temperature at which the extrusion takes place determines
whether it is described as hot or warm extrusion and has an influence on the firmness of the produced fortified kernels.
Our solutions
DSM is involved at every stage of the rice fortification value chain. Our activities range from engaging in joint advocacy
efforts together with partners and customers to encourage demand for fortified rice, through product innovation and
development, all the way to the provision of micronutrient fortificants and technical assistance.
A significant body of evidence demonstrates the role of rice fortification in reducing nutrient deficiencies and deficiency-
related diseases (e.g., anemia), improving cognition, and supporting immune function. We help private- and public-sector
allies – including brand owners, governments, non-governmental organizations (NGOs), UN agencies, donors and employers
– to develop and integrate nutritional interventions that help improve nutrition and strengthen immunity for at-risk
populations.
Case studies
Royal DSM Integrated Annual Report 2021 33
Extruded fortified rice kernels are produced in rice-producing and -exporting countries such as India, Thailand and Costa
Rica. These vitamin-enriched rice grains are generally then blended into unfortified, locally produced rice. We also support
local rice millers with our expertise in formulation, blending and quality control.
Fortified rice can now be found in many parts of the world. It features in public health programs such as school meals for
children, social safety nets and meals for workers, and is also available via commercial retail outlets.
Our impact
The DSM-WFP partnership has invested in activities to expand the production, availability and consumption of fortified rice
in 20 countries, reaching over 15 million people annually through social safety nets (SSNs).
More than 45 metric tons of fortified rice to date have been distributed through in-kind donations. The DSM-WFP
partnership has additionally helped more than 70 small and medium-sized enterprises (SMEs) in Bangladesh to build their
capacity for producing fortified rice, directly supporting local food producers and processors. As a result, more than 7
million people in Bangladesh now have access to fortified rice via social safety nets.
Stronger together
Our partnership with the United Nations World Food Programme (WFP), one of several current partnerships in the field of
food fortification, operates under the banner ‘Improving Nutrition, Improving Lives’. It aims to leverage multiple channels
to reach as many WFP beneficiaries and consumers as possible with affordable, high-quality fortified rice over the coming
years. These channels include WFP direct food distributions and social protection programs such as school feeding and
government food distribution schemes.
The DSM-WFP partnership draws on our respective organizations’ complementary competences and networks, bringing us
closer to our shared goal of ending hidden hunger and allowing us to achieve more together through co-creation than we
would be able to do alone. As DSM, we bring our scientific expertise and innovation capacity in developing nutrition
solutions and products, as well as our financial resources and private-sector network to the partnership. WFP brings its
extensive operational presence, its deep understanding of local contexts, its national and local networks, and its focus on
vulnerable populations in countries where vitamin and mineral deficiencies are most prevalent.
Ever since its inception in 2007, the DSM-WFP partnership has made significant contributions to ending malnutrition
worldwide. Scaling up rice fortification has been a key focus of the partnership since 2016.
Disclaimer: WFP does not endorse any product or service.
“The damaging effects of the COVID-19 pandemic have
made the need for such public health interventions
greater than ever.”
Allison Oman Lawi, Deputy Director Nutrition Division, United Nations World Food Programme
How we support the SD
Gs
Our partnership with the World Food Programme in the field of rice fortification supports the attainment of UN
Sustainable Development Goal 2.
SDG 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
Our partnership makes an important contribution to helping ensure that all people, in particular the poor and people in
vulnerable situations, including infants, have access to safe, nutritious and sufficient food all year round (SDG Target 2.1.).
It also contributes to achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5
years of age, and addresses the nutritional needs of adolescent girls, pregnant and lactating women and older persons
(SDG Target 2.2.).
Case studies
Royal DSM Integrated Annual Report 2021 34
Enabling a circular economy
We are enabling our customers to make planet-positive choices by increasingly designing bio-based and circular high-
performance materials. One example is Schneider Electric’s use of our recycled-based polymer Akulon® RePurposed in
their new range of Merten System M switches for smart, sustainable homes.
A world-wide problem
Society’s
consumption of the world’s resources has created a series of interconnected environmental challenges. These
include climate change, natural resource depletion, and pollution in air, earth, and water. Today, only 8.6% of the 100
billion tons
of minerals, fossil
fuels, metals, and biomass that enter the economy are reused. Should the global population
reach 9.6 billion by 2050, the equivalent of almost three planets could be required to provide the natural resources
needed to sustain current lifestyles.
For producers of high-performance materials, circularity presents both challenges and
opportunities. Companies in these
industries that can navigate growing consumer demand for circular products and maintain compliance with increasingly
stringent legislation can generate both economic and social value.
Case studies
Royal DSM Integrated Annual Report 2021 35
As creators of some of the world’s most advanced high-performance polymers, we are well positioned to drive circularity
across many markets and end-products. Our extensive track record in materials science, world-class R&D facilities, and a
global network of scientists means we can have a significant positive impact. As we are often active in the earlier stages of
commercial value chains, we can help define and advocate which raw materials should enter the economy, across a wide
range of industries. Enabling the use of recycled waste or bio-based materials as raw materials creates many new
possibilities for ourselves and our customers.
Our solutions
To help our customers to embrace the opportunities intrinsic in manufacturing circular products, we live by our
SimplyCircular™ agenda, which comprises three key pillars:
Sustainable sourcing. To minimize the use of fossil-based resources, we are transitioning to recycled- and bio-based
sourcing solutions founded on four feedstock systems: bio-based, biomass (waste) mass-balanced, mechanically recycled,
and chemically recycled mass-balanced.
Enabling circularity for our customers. We are creating bio- and/or recycled-based alternatives for our entire DSM
Engineering Materials portfolio. In 2021, this was already realized for Akulon®, Arnitel®, Stanyl® and EcoPaXX®, for which we
introduced mass-balanced alternatives. These alternatives have exactly the same functionality as products in our
conventional portfolio, do not require requalification, and are certified by third parties. Besides these mass-balanced
solutions, we already had bio-based and recycled-based solutions in our portfolio. EcoPaXX® (PA410) is a bio-based, high-
performance polyamide with the lowest carbon footprint among common polyamides. It can be used for a wide range of
applications, offering customers a low carbon footprint and a sustainable alternative to fossil-based materials. Discarded
fishing nets are used as a source for producing our recycled-based polyamide Akulon® RePurposed. We thereby contribute
to addressing the global issue of ocean pollution from plastics and actually re-use plastic waste as a valuable feedstock.
With Akulon® RePurposed, we offer our customers a recycled-based solution that comes with a lower carbon footprint and
drives circularity.
Simple solutions. Our easy-to-use solutions include: our Plastics Finder tool; application and product development
support; certified transparency and traceability; carbon footprint life cycle assessment (LCA) for every product; and
educational support on feedstock systems.
Our impact
In line with our SimplyCircular™ agenda, we have already delivered a series of tangible proof points that enable a circular
economy and minimize waste. These include:
- joint development of the world’s first recycled packaging for gluten-free bread for gluten-free bakery company Dr.
Schär
- our partnership with Sympatex Technologies to commercialize bio-based mass-balanced Arnitel® to manufacture
waterproof, windproof and breathable membranes for sports applications. The end-product contains more than
25% bio-based content by weight
Case studies
Royal DSM Integrated Annual Report 2021 36
Stronger together
We are committed to making these solutions science-based, sustainable, and scalable, and ensuring that they benefit
customers, end-users, and society at large. A case in point is our collaboration with Schneider Electric, the global leader in
the digital transformation of energy management and automation.
Together with DSM, Schneider Electric has developed a new range of Merten System M electric products such as switches,
sockets and frames and ELKO Plus switches – part of a new range designed for smart, sustainable homes. The switches are
the first in the world to be made of recycled ocean plastic, thanks to their use of Akulon® RePurposed – a product made
from abandoned or ‘ghost’ polyamide fishing nets collected from the Indian Ocean and the Arabian Sea. The carbon
footprint of this new Akulon® RePurposed compound is 82% lower than the traditional Nylon 6 used in similar products.
YiFu Qi, Executive Vice-President of Global Home and Distribution, Schneider Electric: “The collaboration between DSM and
Schneider Electric is a world first and a game-changer for the market. The challenge of weaning the world from our
addiction to plastic waste might seem insurmountable. But change is possible. The Merten System M recycled ocean
material range is just the first of a pipeline of sustainable solutions from Schneider Electric designed to help the
company’s customers achieve global net-zero goals. Using the right materials for the job from the outset is central to
creating a circular economy.”
“The collaboration between DSM and Schneider
Electric is a world first and a game changer for the
market.”
YiFu Qi, Executive Vice President of Global Home and Distribution, Schneider
How we support the SDGs
By enabling customers to make planet-positive choices, we are contributing to the UN Sustainable Development Goals 12
and 13.
SDG 12: Ensure sustainable consumption and production patterns
By making use of bio- and recycled-based feedstocks, we are supporting the transition from a linear, fossil-based
economy to a circular economy. This not only relieves the pressure on fossil feedstocks but also minimizes waste by re-
using it again as a valuable feedstock.
SDG 13: Take urgent action to combat climate change and its impacts
By reducing the carbon footprint of our products, we enable our customers to reduce the carbon footprint (CFP) of their
materials significantly, making a positive contribution to combat climate change. In addition, our bio- and recycled-based
solutions offer an opportunity to reduce CFP even further.
Royal DSM Integrated Annual Report 2021 37
Stakeholders
Our purpose can only be realized by working with our stakeholders. Through empowering our employees, engaging with
our customers and suppliers, and with the support of our investors, we will create a stronger legacy and a brighter future
for generations to come. We discuss topics that are relevant to our operations and our impact on society regularly with
our stakeholders. These conversations shape how we define and execute our strategy, including risk management,
materiality, and new business opportunities.
Our stakeholders
Employees
Our people are our most important asset, and our employees represent more than 110 nationalities
1
, working at more than
250 sites and offices in 55 countries worldwide. The safety, health and well-being of our people is our highest priority and
we aspire to provide an incident- and injury-free working environment for everyone, including our contractors. We
continued to invest in our approach on human rights, employee engagement and Inclusion & diversity, while we worked
on the execution of our People & Organization (P&O) strategy. For information on how we engage with our employees, see
People.
Customers
Our customers are key stakeholders. They drive our business and through our collaborations, we enable solutions that
help solve some of the world’s biggest problems. For information on our business and how we engage with our customers,
see Nutrition, Materials and Innovation. For information on our Net Promotor Score, see Customers.
Investors
Capital providers play a significant role in the success and prosperity of our company. They support us in our pursuit of a
long-term-oriented strategy which aims to continually create value for shareholders while offering a low-risk environment
for debt holders. For more information on how we communicate with investors, see Investors and elsewhere in this Report.
Suppliers
Our supply chain consists of more than 38,000 suppliers. Our suppliers are important partners for achieving our purpose,
and we work closely with them through our Sustainable Procurement Program, comprising our supplier development and
evaluation program, our scope 2 program, our scope 3 program and the procurement of renewable fuels. For more
information on how we work with our suppliers, see Suppliers.
Society
We engage with society at multiple levels — from local community initiatives to collaborations with universities and
research institutes. We work with NGOs and civil society toward solutions for societal issues, and advocate with
governments and society on important issues relating to the Sustainable Development Goals and the Paris Agreement. We
also engage in philanthropic and sponsorship activities comprising the in-kind contributions of our employee’s time and
expertise, as well as to the yearly amount of approximately €6 million for the coming period. As outlined in our Code of
Business Conduct, we do not make political donations. For more information on how we engage with these stakeholders,
see Society.
“We continue our support of the UN Global Compact and remain
committed to reporting our progress within this framework via this
Report.”
Geraldine Matchett and Dimitri de Vreeze, Co-CEOs, Royal DSM
1 All data presented in Stakeholders are subject to the Non-financial reporting policy.
Report by the Managing Board - Stakeholders
Royal DSM Integrated Annual Report 2021 38
How we create value for our stakeholders
Our Value Creation model illustrates our long-term value creation and is based on the Value creation and Capitals
concepts of the Integrated Reporting <IR> framework and gives an overview of how we create value for our stakeholders
based on six capital inputs: Human capital, Societal & relationship capital, Natural capital, Financial capital, Intellectual
capital and Manufactured capital. We cluster these six capitals into People, Planet and Profit.
We transform our capital inputs into value and positive impact through taking advantage of the opportunities and
minimizing the risks around the relevant megatrends in our business. A key part of our strategy, aside from our financial
targets, is to continuously strengthen our commitment to sustainability. Through our business model, business strategy
and purpose, we aim to have a positive impact for People, Planet and Profit, and deliver our share toward the Sustainable
Development Goals (SDGs).
More information on our Value Creation model and the definitions of the six capitals, are provided in Explanation of some
concepts and ratios.
Capital Inputs
2
People
Planet
Profit
Our employees represent more than
110 nationalities in 55 countries. We
engage with our stakeholders and
partners to achieve our Purpose.
We consume raw materials (including
renewable and recyclable materials),
energy from renewable and non-
renewable sources and water.
We employ shareholder equity and
borrowings to invest in partnerships
and innovation. We purchase goods
and services that are used in our
manufacturing assets.
21,358
Employees
21.4
Primary energy use (PJ)
€9,318
Shareholders’ equity (million)
30:70
Gender ratio (f:m)
26
Water withdrawal (non-once-
through cooling, x million m
3
)
€3,093
Borrowings (million)
Inputs:
Inputs:
Inputs:
- Employees
- Training & development
- Stakeholder engagement &
Public-private partnerships
- Philanthropy & sponsorship
- Raw materials (including bio-
based and recycled-based
materials)
- Energy (including renewable
sources)
- Water
- Shareholders’ equity
- Borrowings
- Partnerships
- Scientific environment and
academic infrastructure
- Purchased goods & services
- Manufacturing footprint
Our Business Model
We are a purpose-led, performance-driven organization developing innovative solutions to address the urgent societal
and environmental challenges linked to the way the world produces and consumes food. In 2021, our organizational and
operating model was made up of market-facing Business Groups (organized into clusters) focused on the primary business
functions. The Business Groups received services from global support and functional excellence departments and were
supported by the regional organizations. Our Brighter Living Solutions — solutions that are better than the mainstream
reference solution for people and/or the planet — account for 64% of our net sales.
2 All data presented in the People and Planet columns are subject to the Non-financial reporting policy.
Report by the Managing Board - Stakeholders
Royal DSM Integrated Annual Report 2021 39
Percentage of net sales by end-use market (continuing operations)
12%
12%
5%
5%
36%
Food & Beverage
Dietary Supplements
Early Life Nutrition
Personal Care
Animal Nutrition
7%
5%
6%
12%
Automotive / Transport
Electrical / Electronics
Medical Pharma
Other
Value Outcomes
3
People
Planet
Profit
The safety of our employees is our
highest priority. Investments in
training and career development
provides value for employees and
stakeholders. We aspire to pay a
living wage to all our employees. Our
products support improved nutrition
and a more sustainable food system.
We work to reduce our environmental
footprint and support the reduction
of the footprints of our value chain
partners. Our products enable the
transition to a more circular economy
and contain safer ingredients and
materials.
We aim to deliver a strong financial
performance, enabling us to re-invest
in our asset base, fund our purpose-
driven innovations, pay stable
(preferably rising) dividends and
provide good returns to our
bondholders. Our tax policy follows
the letter and spirit of the law.
0.22
Frequency Index recordables
12.9
Scope 1 + 2 + 3 emissions
(million tons CO
2
eq)
€1,814
Adjusted EBITDA from continuing
operations (million)
76%
Employee engagement
72%
Purchased renewable electricity
€949
Adjusted net operating free cash
flow from continuing operations
(million)
Outcomes:
Outcomes:
Outcomes:
- Safety & health
- Brighter Living Solutions
- Engaged workforce
- Skills & employability
- Employee benefits
- Improved nutrition
- Reduced environmental footprint
- Brighter Living Solutions
- Enabling the transition to a more
circular economy
- Safer ingredients & materials
- Financial performance (Adjusted
EBITDA and Adjusted net
operating free cash flow)
- Interest payments, capital gains /
losses and return on investment
- Total Shareholder Return,
including dividend
- Contribution to civil society via
wages, taxes and social security
including pensions
- Contribution to business success
for customers and suppliers
3 All data presented in the People and Planet columns are subject to the Non-financial reporting policy.
Report by the Managing Board - Stakeholders
Royal DSM Integrated Annual Report 2021 40
Impact and SDGs
People
Planet
Profit
- Better fed and healthier
individuals and communities
- More prosperous and resilient
employees for our company and
in our value chain
- More sustainable use of
resources, for our company and
in our value chain
- Products that contribute to safer,
healthier working & living
environments
- We are purpose-led,
performance-driven through
science-based sustainable
solutions
- Sustainable returns to investors
- Positive contributions to
economic growth in the countries
and markets in which we operate
Materiality
In order to assess material topics that are both of interest to society and have impact on our businesses, we annually
update our materiality analysis. In 2021, we conducted a full materiality analysis due to the divestment of Resins &
Functional Materials and associated businesses, and the accelerated strategic journey as announced in September 2021.
Our update in 2021 used the Materiality Matrix 2020 as its point of departure. A list of potential material topics was defined
using desk research into third-party publications, peer analysis, interviews with DSM business managers, and internal
documentation including the Corporate Risk Assessment 2020 and food systems reports. Feedback was received on the
proposed topics through an internal employee workshop with representatives from our Business Groups and functions,
and in an external stakeholder dialogue session with representatives from our customers, suppliers, peers, and investors.
The resulting matrix was compared with the Corporate Risk Assessment to make sure all relevant topics were captured
from a materiality and/or risk perspective. The matrix was reviewed and validated by the Executive Committee and finally,
approved by the Managing Board.
Changes in 2021
The 2021 matrix is based on the ‘double materiality’ concept – addressing both the impact of the company on the topic
and the impact of the topic on the company.
The matrix has changed to reflect our Health, Nutrition & Bioscience strategy, with an increased focus on nutrition- and
food-systems-related topics. This has resulted in the renaming of a number of topics. Two topics (Geopolitical shifts &
trade dynamics’ and ‘Advocacy, engagement & partnering’) have been moved into other material topics. One new topic has
been added – ‘Responsible Sourcing’. The focus domains have been replaced with the underlying topics:
- ‘Climate & Energy’ was replaced by ‘Carbon Footprint Reduction’ and ‘Climate Adaptation’
- ‘Nutrition & Health’ was replaced by ‘Food Security’, ‘Sustainable Agriculture’ and ‘Healthy Diets & Nutritious
Food’
- ‘Resources & Circularity’ was replaced by ‘Waste & Circularity’ and aspects of the existing topic of ‘Nature &
Biodiversity’
For more information on materiality, see Management approach for material topics.
Report by the Managing Board - Stakeholders
Royal DSM Integrated Annual Report 2021 41
Materiality matrix 2021
Collaborative platforms and networks
We collaborate with like-minded organizations through platforms and networks that contribute to our purpose of creating
brighter lives for all. These collaborations are chosen to amplify and accelerate our advocacy efforts in support of a
transition to more sustainable economic models on topics that align to our Focus Domains of Nutrition & Health, Climate
& Energy, and Resources & Circularity. Collaborative platforms and networks such as these can help formulate new
solutions, and measurement and performance methods, as well as roadmaps for business contributions toward achieving
the Sustainable Development Goals (SDGs). In this section, we describe some of the most significant initiatives. Due to the
ongoing impact of COVID-19, many of the major events of these platforms and networks, such as the WBCSD Council
meeting and the WEF Annual Meeting, were postponed or went completely virtual.
Supporting our stakeholders during COVID-19
In 2021, we continued to provide support and resources to internal and external stakeholders during the COVID-19
pandemic. Our in-house initiatives, including our ‘It’s OK’ campaign and #optimizeyourimmunity, are described in Health
& well-being.
APAC
In Singapore, we continued to support the Migrant Workers’ Centre, an NGO whose mission is to champion fair
employment. In Japan, we supported WFP’s COVID-19 pandemic emergency support in place of the ‘Walk the World’ event
that was canceled due to the pandemic. In India, in partnership with Medtronic, donations of medical equipment, such as
ventilators, were made to local hospitals. In the aftermath of a flood, and a corresponding increase in COVID-19 cases in
Henan province (China), we provided support to the affected communities.
Report by the Managing Board - Stakeholders
Royal DSM Integrated Annual Report 2021 42
Europe
In the Netherlands, our joint venture with VDL Group, Dutch PPE Solutions, began large-scale production of filtering
material made from bio-based feedstock in the form of used cooking oil. The plant provides the first fully locally-produced
face masks in the region.
Latin America
We provided support to the communities located around DSM facilities with donations of food, cleaning and personal
hygiene products and warm clothing. We also assisted institutions that offer assistance to socially vulnerable families,
children and teenagers, as well as homes for the elderly. In partnership with Holos, we supported conversations with
mental health professionals, and in partnership with the Secretary of Education and State Schools of Brazil, we hosted
online talks with public school students addressing the difficulties stemming from the pandemic.
North America
We continued to donate immunity boosting nutritional products as well as N95 masks to front line health care workers
and first responders in the communities around our facilities. We also continued to optimize the immunity of our own
colleagues through the continued distribution of nutritional products and offered mental and emotional health support to
them and their families.
Cross-domain initiatives
World Economic Forum (WEF)
We are a strategic partner of WEF. We actively participated in its virtual events throughout 2021 as well as the Forum’s
physical events during COP26 in Glasgow. In 2021, our Co-CEO Geraldine Matchett joined the International Business Council
(IBC). She remained a member of the Steering Committee of the Consumer Governors and the Food Security Stewards. Our
Co-CEO Dimitri de Vreeze is a member of the Steering Committee of the Chemical Governors and will in 2022 take over the
IBC membership from Ms. Matchett. Both spoke at various virtual events of the Forum.
We actively contributed to several initiatives in 2021, including the Alliance of CEO Climate Leaders, the CEO Action Group
for the European Green Deal, the Food Innovation Hub Europe, and we participated in a number of meetings with public
figures organized by WEF.
The SDG Tent
As WEF was not able to organize its Annual Meeting due to the COVID-19 pandemic, we joined forces with partners
including Salesforce, Procter & Gamble and Yara to continue the SDG Tent in online format, a venue for discussing
business engagement for achieving the SDGs Several successful events were hosted in the virtual SDG Tent, such as
Tackling the Triple Threat of Food Security, Economic, and Climate Crisis and Why Bold Food Systems Action is the Best
Vaccine Against Chaos.
World Business Council for Sustainable Development (WBCSD)
We are a member of WBCSD and participate in various working groups and coalitions. Our Co-CEO Geraldine Matchett is
member of WBCSD’s Executive Committee and is Commissioner in WBCSD’s Business Commission to Tackle Inequality
(BCTI). In addition to the areas mentioned below, we are also active within the WBCSD Climate Policy Working Group and
the Chemicals group (including the shared development of a Portfolio Sustainability Assessment methodology).
Food & Nature
DSM is Board Member of the Food & Nature Program and a founding member of the Food Reform for Sustainability and
Health (FReSH) project, with the aim to drive food system to support healthy people on a healthy planet. In 2021, we
helped to shape the ‘Business Declaration on Food System Transformation’, that was presented by WBCSD at the UN Food
System Summit. In December at the global Tokyo Nutrition for Growth Summit, WBCSD launched the ‘Responsible Business
Pledge’ that sets out the areas for quantified business commitments for better nutrition.
Circular Economy
Factor10 is WBCSD’s Circular Economy program that convenes more than 30 global companies to co-develop solutions to
accelerate the transition toward the circular economy. In 2021, we continued to co-lead the circular metrics workstream,
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Royal DSM Integrated Annual Report 2021 43
developing the circular transition framework enhanced with new metrics for water, financial performance, and a
bioeconomy guidance. Factor10 also launched version 2.0 of the Circular Transition Indicators and the accompanying
online tool, supporting companies in taking concrete actions toward their circularity ambitions.
Redefining Value
Redefining Value is WBCSD’s program supporting external disclosure and decision-making. In 2021, we collaborated on the
guide ‘Future-Proof Business’. We participated in the Shaping Sustainable Finance Policy Working Group, with a particular
focus on the engagements around the EU Sustainable Finance Agenda and the work of EFRAG related to developing
European Sustainability Reporting Standards, the IFRS Foundation establishment of the ISSB, and the alignment between
the two organizations.
Ban-Ki Moon Centre
The Ban Ki-moon Centre for Global Citizens (BKMC) is a Quasi-International Organization located in Vienna, Austria,
established in January 2018. The Centre is co-chaired by Ban Ki-moon, 8
th
Secretary-General of the UN, and by Heinz
Fischer 11
th
President of the Republic of Austria. Its mission is to foster leadership for the implementation of the
Sustainable Development Goals (SDGs) and the Paris Climate Agreement by inspiring current decision makers and
empowering the next generation of leaders. Mr. de Vreeze is on the Board of BKMC. We have supported the BKMC’s projects
in the fields relevant to our strategy in the years since it was established.
The European Chemical Industry Council (Cefic)
Cefic represents the voice of large, medium and small chemical companies across Europe. Mr. de Vreeze represents us in
Cefic’s Executive Committee and Board and chairs Cefic’s Sustainability Forum, through which he focuses on the
acceleration of Cefic’s sustainability journeys. In 2021, we actively contributed to various workstreams of the Sustainability
Forum, focusing on the development of indicators driving and monitoring the industry’s progress towards the SDGs in
general and the EU Green Deal in particular, and of a concept definition for innovation that is Safe and sustainable-by-
design. Our experts are also member of various other internal Cefic groups and, for example, actively contributed to
shaping Cefic’s view on the EU Sustainable Finance strategy.
Accounting for Sustainability (A4S)
A4S brings together leading CFOs to help embed the management of environmental and societal issues into business
processes and strategy, particularly through the finance function. Ms. Matchett is a signatory to the A4S CFO Statement of
Support for the TCFD recommendations and the A4S CFO net-zero Statement of Support.
In 2021, we participated in various virtual events and meetings. Toward the end of the year, two of our senior finance
leaders graduated from the A4S Academy, a program which provides an opportunity to senior finance leaders to broaden
their perspective on sustainability, the impact it has on business, and how companies can contribute. Two new finance
leaders have joined the next cohort. We contributed to the guide on ‘Enhancing Investor Engagement’ as well as a
roundtable accompanying this publication, and published a case study on managing ESG-related risks and opportunities.
Dutch Sustainable Growth Coalition (DSGC)
The DSGC is a CEO-led coalition of eight Dutch multinational corporations which aims to drive sustainable growth business
models that combine economic profitability with environmental and social progress and thus contribute to the
achievement of the SDGs. To accelerate this transition in the Netherlands and abroad, the coalition wants to lead the way
and pursues a strategy of Share - Shape - Activate.
In 2021, the DSGC published an open letter during the Dutch cabinet formation discussions emphasizing the importance of
innovation and sustainability for a better future and implementing the SDGs. In November, the Generational Leadership in
Action event was organized, involving the participation of students as well as CEOs. The students were challenged to work
on real-life case challenges from the DSGC companies.
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Royal DSM Integrated Annual Report 2021 44
Climate & Energy initiatives
Carbon Pricing Leadership Coalition (CPLC)
We continue to drive carbon pricing and share our experiences on the topic through the Carbon Pricing Leadership
Coalition. The CPLC’s long-term objective is for effective carbon pricing to be applied throughout the global economy. In
addition to facilitating leadership dialogues, the CPLC and its partner organizations are also mobilizing business support
to put an internal price on carbon. We apply an internal carbon price of €100 per ton of CO
2
eq
when reviewing large
investments and acquisitions, and we include this in internal management reporting by our Business Groups.
RE100
Our engagement with RE100, the world’s leading campaign to scale up the corporate sourcing of renewable power,
continued throughout 2021. In addition to peer exchange to advance the uptake of renewable electricity in China, we
participated in several learning events, conferences and advocacy opportunities in Europe, the US and China.
We Mean Business
We Mean Business activates hundreds of companies and investors to commit to low-carbon initiatives. In 2021, we worked
on several advocacy and communications activities in the context of COP26 that called on governments to urgently match
their ambition and policies to limit global temperature rise to 1.5°C above pre-industrial levels, and demonstrate the
private sector’s support for these efforts, along with the enabling solutions developed to date.
Global Center and Commission on Adaptation (GCA)
We continued our partnership with the GCA, particularly by lending our expertise in food security, and helping smallholder
farmers manage risks and climate shocks through Africa Improved Foods (AIF), but also by mobilizing the private sector to
adopt an integrated strategy to address climate adaptation alongside climate mitigation efforts.
Taskforce on Scaling up Voluntary Carbon Markets
We are a member of the Taskforce on Scaling up Voluntary Carbon Markets, a private sector-led initiative working to
improve the credibility and functionality of an effective and efficient voluntary carbon market to help meet the goals of
the Paris Agreement. The taskforce is providing insights and recommended actions for the most pressing pain-points
facing voluntary carbon markets.
Science Based Targets Initiative: Net-Zero Expert Advisory Group
We joined the Science Based Targets Initiative Net-Zero Standard Expert Advisory Group (EAG) in 2020. This group is at the
heart of the development process for a standard to guide the formulation and assessment of science-based net-zero
targets in the corporate sector. These targets are consistent with action needed to limit warming to 1.5°C while minimizing
trade-offs with other SDGs. The standard was launched in October 2021, and the work to refine it will continue with the
support of the EAG throughout 2022.
Resources & Circularity initiatives
Platform for Accelerating the Circular Economy (PACE)
PACE is part of the World Resource Institute's (WRI) Center for Sustainable Business. PACE is a public-private collaboration
platform that aims to catalyze global leadership from business, government, and civil society to accelerate the transition
to a circular economy. Mr. Dimitri de Vreeze represents DSM in the Global Leadership Group, which includes more than 80
CEOs, ministers and heads of international organizations. PACE catalyzes new projects and supports partner-led projects
to scale up circular economy action on plastics, electronics and capital equipment, food and agriculture, and textiles and
fashion. Other thematic touch points are Finance, Metrics and Innovation. PACE is leading the mapping and tracking
process for initiatives, including DSM initiatives, already in place that tackle specific Calls to Action.
Ellen MacArthur Foundation (EMF)
The EMF is an organization which supports the transition toward the circular economy. It does this by developing and
promoting the concept of a circular economy, working with business, policy makers and academics. In 2021, access to the
Foundation’s Network Workshops and online Annual Summit was available to our employees. We participated in the Ellen
MacArthur Foundation’s From Linear to Circular program, aimed at postgraduate students and professionals at the start of
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Royal DSM Integrated Annual Report 2021 45
their circular economy career. It includes webinars, networking sessions, a vibrant online community, and collaborative
team projects developed by the Foundation and members of the Ellen MacArthur Network. We also endorsed the Ellen
MacArthur Foundation biodiversity paper and provided input to the Big Food Redesign campaign supported by
communications activity across the Foundation’s channels.
Circle Economy
Circle Economy is a not-for-profit organization that works with a global community of businesses, cities and governments
to accelerate the transition to the circular economy through practical and scalable insights. In 2021, we were members of
the Circularity Gap Report Roundtable, which developed the 4
th
Circularity Gap Report. The Gap Report provides a framework
and fact base to measure and monitor progress in bridging the global circularity gap. The Gap Report Initiative will
continue to bring together global, cross-sector stakeholders from academia, businesses, NGOs and governments to input,
evaluate and endorse the annual Gap Report.
Champions 12.3
Our Co-CEO Ms. Geraldine Matchett is a member of Champions 12.3, a coalition of executives from governments,
businesses, international organizations, research institutions, farmer groups, and civil society dedicated to inspiring
ambition, mobilizing action, and accelerating progress toward achieving SDG Target 12.3 by 2030. An important and
promising angle addresses climate action through value chain collaboration. In 2021, we presented, together with
Wageningen University, actions against food waste to reduce greenhouse gas emission throughout the dairy value chain.
Nutrition & Health initiatives
The DSM Malnutrition Partnerships and Programs (MPP) team addresses malnutrition through public-private partnerships,
while strengthening our consumer-oriented new business model ‘Programs in Emerging Markets’. Through our
partnerships, we learn about effectively creating impact for vulnerable and last-mile population groups. These learnings
drive our innovation efforts to create new solutions that address the needs of consumers in emerging and previously
underserved markets. In addition, MPP offers opportunities for talent development through exchange programs. In 2021, 11
DSM employees worked as long-term secondees or on a (part-time, virtual) consultancy project for our partners, benefiting
from unique opportunities for personal and professional development.
UN World Food Programme (WFP)
The DSM-WFP partnership ‘Improving Nutrition, Improving Lives’, in place since 2007, aims to improve the nutritional value
of the food that WFP distributes. Together, we reached 30 million direct beneficiaries in 2020 (the most recent reporting
period) with food improved by the DSM-WFP partnership. We have made significant strides in the partnership’s efforts in
scaling up fortified rice, both through retail channels and in social safety nets. Specifically, the partnership contributed to
substantially scaling up the availability of fortified rice globally, from reaching 3.8 million in 2018 to 15 million people in
2020.
Equally important, the partnership programs create long-term systemic impact by raising awareness of the importance of
nutrition while continuing to develop new scientific and technical solutions. For example, in 2021, 11 so-called DSM X-
Changers worked on temporary assignments with WFP using their expertise in the fields of (social) marketing, business
case development, packaging, quality assurance and (sales) data analysis. Accordingly, within the current Memorandum of
Understanding for 2019–2021 (under renewal for 2022), the partnership is prioritizing rice fortification as a proven and cost-
effective solution for combating malnutrition, with our partnership’s activities supporting 15 countries globally.
Additionally, the humanitarian organization is moving toward cash-and-voucher systems as a long-term strategy. The
partnership continues to support WFP to empower consumers to improve their own nutrition and diets.
UNICEF
Since 2013, UNICEF, DSM, and Sight and Life have partnered to improve nutrition for women and children. Built on multiple
pillars, the partnership aims to expand the scientific evidence base and operational proof of viability of targeted
nutritional interventions; to increase awareness of the importance of good nutrition; and to make nutritious food products
accessible to those who need them most.
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Royal DSM Integrated Annual Report 2021 46
Creating enabling environment and scaling up micronutrient powder uptake
In Nigeria, the partnership focused on providing an enabling environment for the uptake of micronutrient powder (MNP)
and supported the Government of Nigeria in realizing its vision of scaling up the MNP program nationally from five to ten
states, reaching three million children aged 6–23 months suffering from malnutrition. The program added Multiple
Micronutrient Supplements (MMS) for pregnant and lactating women and integrated MNP guidelines into the national
standards in Nigeria. Additionally, the partnership resulted in increased commitment by both private and public actors in
Nigeria to improve the access to nutritious foods for young children, through engagement with the SUN Business Network.
The Social Movement on Nutrition program
The partnership expanded to India by supporting the UNICEF engagement of private-sector stakeholders as part of the
Indian government’s Social Movement on Nutrition program. The collaboration focuses on mobilizing the private sector
around nutrition literacy, through the platform Impact4Nutrition (I4N), which was established in March 2019. In 2021, the
platform, which won an internal UNICEF INSPIRE award and AVPN prize, has more than 200 companies on board.
Addressing agri-food business development
Furthermore, this partnership was expanded to address agri-food business development as part of an opportunity
identified by Generation Unlimited (GenU), within the United Nations Secretary General’s Youth 2030 Strategy. The key
objective of this expanded cross-sectoral partnership is to embed a longer-term vision for Sustainable Food Systems
(GenU SFS) in Africa; develop a business plan to attract young people to the agri-food value chain, in an effort to boost
youth employment in Africa; and build an enabling environment along the agri-food sector conducive to thriving,
sustainable and inclusive business.
World Vision International
Our partnership with World Vision and Sight and Life, with the slogan of ‘Joining Forces for Last-Mile Nutrition’, aims to
bring prosperity and good nutrition to the most vulnerable communities in the Global South. Leveraging the unique
capabilities and know-how of each partner, we design and implement sustainable market-based solutions that bridge the
gap between public and private efforts for improving nutrition and fostering local economic development. For example,
the partners worked on solutions for maize in Rwanda, eggs in Indonesia and Ethiopia, distribution channels in Brazil, and
MMS in the Philippines.
The maize value chain in Rwanda
In Rwanda, the partners enable transformation of the local maize value chain, ensuring a more efficient, inclusive and
sustainable supply chain. Partners work with and enable smallholder farmers through training and market access, while
working on improving the quality of, and access to, raw materials for Africa Improved Foods (AIF) in Rwanda. After positive
results of the initial pilot, the partners are now collaborating for scale-up. More than 31,000 children and almost 20,000
women benefit from AIF’s Super Cereal product as part of World Vision Rwanda’s COVID-19 response.
The EGGciting project
The EGGciting project in Indonesia focuses on eggs as an important source of nutrition and works to increase the
availability, accessibility, and consumption of eggs at the household level in Sulawesi (Indonesia). Partners address
bottlenecks in the supply chain and improve the quality of feed, while driving demand on the consumer side for improved
nutrition by use of social marketing that stimulates the consumption of eggs as a nutritious product.
Building on the success of the EGGciting Indonesia project, the partners brought the EGGciting model to three regions in
Ethiopia; Boset, Shaheme, and Bui. The program focuses on training small and medium poultry farmers in farm operation
and feed management for improved nutrition, safety, quality, sustainability, and livelihoods. Simultaneously, the program
aims to increase the accessibility to eggs and the understanding of their nutritional value, especially for women and
children.
Social distribution of nutrition in Brazil
In Brazil, market research to support the social distribution of nutritional products started in 2019. This pilot continued
throughout 2021 and is projected to transform the distribution of micronutrient-enriched products in Brazil by incubating
last-mile nutrition female entrepreneurs to serve populations living in vulnerable communities through a door-to-door
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Royal DSM Integrated Annual Report 2021 47
business model. In 2021, Products were formulated and designed and an initial group of 200 women participated in
workshops about nutrition and entrepreneurship.
MMS in the Philippines
In the Philippines, the partners launched a new program focusing on the MMS value chain for pregnant and lactating
women in the Albay, Camarines, and Zamboanga del Norte regions. The program builds on the momentum behind MMS
after its inclusion in WHO’s essential medicine list. It aims to increase the availability and access to MMS, ensure adequate
demand and use, and further encourage policy reform to include MMS.
Africa Improved Foods (AIF)
AIF is an African social enterprise that produces fortified foods made mainly from maize and soybean sourced from over
130,000 smallholder farmers in the region. These products include mineral- and vitamin-rich porridges and help meet the
nutritional needs of vulnerable population groups such as pregnant and breastfeeding mothers, older infants, and young
children. AIF addresses the food challenges facing Africa by building resilient food systems through sourcing,
manufacturing, and selling nutritious, affordable, and accessible products. AIF was launched in 2016 in Rwanda as a public-
private partnership between the Government of Rwanda and a consortium comprising DSM, the Dutch Development Bank
(FMO), DFID Impact Acceleration Facility managed by CDC Group plc (CDC), and the International Finance Corporation (IFC),
the private-sector arm of the World Bank Group.
A study executed by the University of Chicago shows that AIF delivers true value - improving the livelihoods of smallholder
farmers, employees and their families, improving food safety, reducing malnutrition and contributing to broader
development. The AIF intervention is expected to contribute over USD 1 billion to the regional economy over a 15-year
period.
AIF’s Kigali factory contributes to the local and regional economy
AIF’s mission is to produce high quality nutritious foods from local ingredients. Already working with 45,000 smallholder
farmers in Rwanda, to improve their productivity and quality and are scaling this further with partners. Focused on
developing robust value chains that address the challenges of climate change and employment creation in the African
food value chain.
AIF’s Kigali factory employs over 300 skilled workers with well-paid jobs. Regional procurement of goods and services (such
as transportation) has led to indirect economic development across East Africa. With a reach of over 1.6 million consumers
daily, AIF has proven that this model can be profitable while contributing to SDG 1 (No Poverty), SDG 2 (Zero Hunger) and
SDG 13 (Climate Action).
Positive results in 2021 despite the pandemic
Despite COVID-19, revenue grew to more than USD 60 million in 2021, as the need for humanitarian nutritious food supply
continues to be high. Business-to-consumer sales grew significantly as the Nootri brand (comprising a range of fortified
porridges) continued to gain popularity across East Africa. The year also marked the beginning of AIF’s new ambitious
growth strategy, with groundwork in Ethiopia and Kenya to accelerate and further scale up AIF's impact.
MANDI
In 2021, we continued to expand MANDI (Making A Nutritional Difference to India), a socio-commercial consumer products
business delivering local nutrition and home fortification solutions that are affordable and convenient. The range of home
fortification products involved, branded as NuShakti™, includes solutions for staples such as rice and wheat flour, as well
as fruit-flavored fortified beverage powder and vitamin enriched candies – all of which have a base immunity benefit. The
business aims to build education about the importance of health, nutrition and immunity, with the aim of tackling
widespread malnutrition in India. Since its start in the third quarter of 2019, the business has faced two rounds of
pandemic shutdowns for more than seven months, causing huge disruptions in systematic build-up. In 2021, Nu-Shakti™
products were distributed in four southern states in India in leading modern trade and grocery outlets.
Partners in Food Solutions (PFS)
PFS works to increase the growth and competitiveness of food companies in Africa. These aims are achieved by inspiring
business leaders and linking highly skilled corporate volunteers from a consortium of leading companies including DSM,
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Royal DSM Integrated Annual Report 2021 48
Cargill, General Mills, Hershey, Bühler, Ardent Mills, and J.M. Smucker Company with promising entrepreneurs and other
influencers in the food ecosystem. The seven corporate partners have empowered hundreds of entrepreneurs to work
toward stronger, more resilient food value chains across the African continent.
In 2021, DSM employees contributed over 1,240 volunteer hours, working with 52 African clients across 11 countries. By
sharing expertise, the volunteers were able to assist local entrepreneurs in growing their businesses and supporting a
supplier base of more than 102,600 farmers. In total, 62 DSM volunteers supported 67 service offerings to clients, of which
15 clients are owned or managed by women.
Scaling Up Nutrition (SUN)
The SUN Business Network (SBN) — co-hosted by the Global Alliance for Improved Nutrition (GAIN) and WFP — is the
private-sector branch of the SUN Movement. It aims to support businesses in growing the role they play in nutrition and to
support SUN countries in developing national business engagement strategies. The SBN is established in 18 countries and
supports the development of new networks in 26 countries. These include almost 1,400 companies, mostly small and
medium-sized enterprises. The global membership platform currently has 25 members, who have a combined workforce of
over 1.1 million employees. Our Honorary Chairman Mr. Feike Sijbesma is a member of the Lead Group of the SUN
Movement and Co-Chair of the Advisory Group of the Network. Our Vice President Malnutrition Partnerships and Programs
is on the Operations Committee of the SBN.
Supporting SBN projects in Africa
We supported several SBN projects focusing on Sub-Saharan Africa. Together with the SBN global team, we built on the
impact and energy of the first ever Nutrition Africa Investor Forum (NAIF) which reframed the dialogue around nutrition
and supported the Global Pitch Competition 2020. As an SBN global member, we support the implementation of SBN
principles, notably around workforce nutrition commitments; overweight, obesity and diet-related non-communicable
diseases; and the delivery of technical assistance to national SBNs and their members. We advocate for business to take a
leading role in these important issues and collaborate with SBN for stronger business accountability on nutrition and for
the adoption of SMART nutrition pledges by business (UN Food System Summit, Nutrition for Growth Summit).
Sight and Life
As a global leader in nutrition, the Sight and Life Foundation uses science to change the way nutrition is delivered to
people who need it most, specifically women and children.
With the support of DSM, Sight and Life delivers value by translating science into effective nutrition programming, building
public-private partnerships, and developing viable social business models for affordable and nutritious foods.
In 2021, Sight and Life launched the Nutrition in City Ecosystems (NICE) project, a Swiss consortium with the Swiss Tropical
and Public Health Institute, ETH Zürich, and Syngenta Foundation and supported by the Swiss Agency for Development and
Cooperation. NICE aims to increase long-term access to and demand for nutritious foods produced via local and
agroecological systems in Bangladesh, Kenya and Rwanda.
Through a long-term partnership with DSM and the World Food Programme, Sight and Life continues to create demand for
nutritious and affordable food for women in Ghana via the OBAASIMA seal. Together with DSM, Sight and Life increases
supply and demand for more and better eggs to populations at risk of nutritional deficiencies in Africa and Latin America.
This year also brought new publications and virtual events focused on key themes, including nutrient profiling, multiple
micronutrient supplementation, adolescent nutrition, food systems, and the impacts of climate change on nutrition,
sharing science-based evidence and expert knowledge. For more information, visit: sightandlife.org.
Other Initiatives
Catalyst
We continue to be an active Catalyst supporter. Our Honorary Chairman Mr. Feike Sijbesma continued his role on the
Board of Directors and our Co-CEO Ms. Geraldine Matchett her role on the European Advisory Board.
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Royal DSM Integrated Annual Report 2021 49
In 2021, via our sponsorship of Catalyst’s work on Women and The Future of Work (a long-term research-led program
focused on ensuring equity in future employability), we participated in regular expert group meetings, contributing to
research outcomes, and products developed by Catalyst for use by its supporters. We applied these products ourselves, for
example the Workplace Flexibility model, in shaping our approach to hybrid workplaces. DSM experts on Inclusion &
Diversity, and Hybrid Working spoke at a Catalyst event on ‘Developing Flexible & Inclusive Teams’.
We also continue to make good use of Catalyst’s broader resources, for example on Employee Resource Groups for the
development of our own approach, and the Catalyst Inclusive Leadership model within our ‘Leading Leaders’ training
program.
Valuable 500
The Valuable 500 is a global NGO aimed at unlocking the social and economic value of people living with disabilities
across the world. In 2021, our engagement with the Valuable 500 focused on their platform for companies looking to invest
in and improve their disability inclusion programs, by sharing knowledge and best practices with one another. Through
this collaboration, we defined new aspirations in the area for disability inclusion to increase the representation of people
with disabilities and to improve access to our buildings and digital infrastructure.
One Young World (OYW)
The One Young World Summit gathers 2,000 young leaders from more than 190 countries and all sectors, empowering
them to make lasting connections to generate positive change for sustainable development. In 2021, our 10
th
OYW
delegation comprised 20 colleagues representing all our businesses and regions. This delegation attended the Munich
Summit in July 2021 which had been delayed due to the pandemic. This year also featured the first workshop hosted by
DSM at OYW titled ‘Unleash your potential in a VUCA world’ to help participants discover about intrapreneurship and
partnerships, and kickstart purpose-led business projects.
Working on business development and internal engagement
The community of over 120 OYW alumni manages different business development and internal engagement projects for
sustainability. Projects implemented by previous delegations include a Personal Carbon Footprint Calculator, a learning
and development game called ‘The DSM Sustainable City™’, a project on Sustainable Packaging, and the Tomato Project (a
development project for fortified tomato sauce). The 2021 delegation is working on projects relating to fortified water, an
employee-funded foundation, modern slavery, and refugees with disabilities.
External recognitions
We are proud when our efforts receive positive recognition from others. Below is a selection of some awards and
recognitions that we received from NGOs and trade organizations, customers, suppliers and academia in 2021.
Asia Corporate Excellence & Sustainability Awards (ACES) conferred on DSM the ‘Asia’s Most Socially Responsible Company
of the Year’ award. ACES noted the role of sustainability in the company’s identity, strategy, business and operations.
EXAME magazine recognized DSM as one of the three most sustainable companies in Brazil in the EXAME ESG Guide and
one of the 67 most diverse companies in Brazil in the EXAME Diversity Guide.
New Jersey Business and Industry Association and New Jersey Business magazine presented DSM with an Outstanding
Employer of the Year award in recognition of our efforts in the area of social well-being, such as the launch of our new
Culture Compass.
Our sustainability initiatives were recognized in PWC’s book on Sustainability Transformation in Japan. This was also
featured in the Nikkei Newspaper.
DSM was selected as a winner in the Sustainable Business category at the Singapore APEX Corporate Sustainability Awards,
organized by the United Nations Global Compact Singapore chapter.
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Royal DSM Integrated Annual Report 2021 50
SSON Analytics included DSM in their Top 20 Most Admired Shared Services Organizations (SSOs) and Global Business
Services (GBS) benchmarking study 2021. This study provided valuable insights to how GBS are developing and allows
companies to understand what needs to be improved to drive a high-performing GBS organization.
At the 13
th
Special International Roundtable of Multinational Corporation Leaders, DSM received the Outstanding
Contribution Award in fighting COVID-19 in recognition of our efforts in this cause in China and globally.
ESG Ratings and Benchmarks
Sustainability is at the heart of our business. It is our core value: we see it as a key responsibility and an important
business driver. This is reflected by our inclusion in several Environmental, Social, Governance (ESG) Benchmarks and
Ratings, many of which rate us a (sector) leader.
Given the large number of prevailing ESG benchmarks, participating in each and every one of them is not feasible for any
company, so we annually review and prioritize our participation. We are in favor of further consolidation and
standardization of the ESG benchmarks as we believe this will encourage more companies to participate than is currently
the case.
Our annual review of the ESG benchmarks to participate in, is based on the following criteria:
- Recognition and use by our stakeholders, including our investors
- Transparency of methodology
- Primary reliance on publicly accessible information
- Avoidance of additional administrative work
- Provision of sufficient feedback to participating companies to enable them to make meaningful year-on-year
improvements
Our priorities in 2021, and the outcomes, are listed below.
We maintained a low-risk rating from ISS QualityScore throughout the year, including lowest risk (1 out of 10) in
Governance and Environment. In April, ISS ESG reconfirmed DSM as ‘Prime’ according to its rating methodology. Our rating
of B- puts us in the top decile relative to our industry group.
In September, EcoVadis awarded our company a Platinum CSR Rating. The Platinum rating places us in the top 1% of
companies assessed in our industry.
In October, MSCI’s rating of DSM was unchanged at ‘AAA’. The report noted a lower water risk, our carbon emission
reduction efforts and our program on product stewardship.
In October, we were again listed in the Vigeo Eiris Benelux, Europe, Eurozone and World indices. Vigeo Eris is now part of
Moody’s ESG Solutions.
In December, for our climate strategy, and water governance and strategy in 2021, we were assessed as double A by CDP.
We continued to be a constituent of the FTSE4Good Index. We have been listed on this index since 2004.
In January 2022, we were assessed by Sustainalytics regarding the risk of experiencing material financial impacts from ESG
factors, ranking in the top 4th percentile in our industry.
Royal DSM Integrated Annual Report 2021 51
People
At a glance
- 0.22 Frequency Index of Recordable Injuries, compared to 0.24 in 2020
- 76% Employee Engagement Index, compared to 76% in 2020
- 23% female executives, compared to 21% in 2020
- 30:70 female:male ratio
- 77% Inclusion Index, compared to 75% in 2020
- 100% of our employees were offered immunity-optimizing supplements
A year of continuous care for our people
With the COVID-19 pandemic continuing to affect many parts of the world, we made every effort to support the mental and
physical well-being of our people worldwide. Above all, we encouraged all our employees to get vaccinated against COVID-
19. In many regions, we also provided our employees with health screening and flu vaccinations. In addition, we extended
our #optimizeyourimmunity campaign which provided all our employees and their family members with a free selection of
immunity-optimizing micronutrient supplements.
In March 2021, we launched our ‘It’s OK’ campaign, which encouraged our employees to prioritize their mental and physical
well-being. The campaign platform provided supporting materials developed by people throughout the company to
improve mental and physical well-being, such as exercises, team activities and learnings, as well as resources providing
professional help. In addition, with much of our office-based workforce operating at least partly from home during the
year, we continued to put in place effective and inclusive hybrid working practices.
Delivering on our P&O strategy
Besides helping our people and organization to adapt to the effects of the pandemic, we also applied our efforts to
realizing our updated People & Organization (P&O) strategy, which had been launched at the end of 2020. This strategy is
composed of four pillars:
- Creating a flotilla-style organization
- Empowering our people
- Resetting the context for leadership
- Creating a contemporary workplace
Human rights, employee engagement and Inclusion & Diversity
We continued our strong commitment to human rights, employee engagement and Inclusion & Diversity. We took steps to
strengthen our human rights approach, including an analysis of our own operations. Furthermore, we strive to provide our
employees a working environment in which they can feel safe, valued, included and cared for. An engaged workforce, and
an inclusive and diverse workforce are key to enable us to achieve our company purpose.
Aligning our People approach with the Materiality matrix
Our approach to People aligns with several material topics:
- Occupational health, safety & well-being (addressed in Safety and Health & well-being)
- Human rights (addressed in Human rights)
- Talent attraction & development (addressed in Empowering our people and Resetting the leadership and culture
context)
- Employee inclusion & diversity (addressed in Inclusion & diversity)
Aligning our organization to focus on Health, Nutrition & Bioscience
With our accelerated strategy we have been reshaping our company into three new Business Groups, Food & Beverage,
Health, Nutrition & Care and Animal Nutrition & Health, which will bring us closer to our respective end-markets. This also
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 52
required adjusting our innovation structure to bringing scientific research and development closer to our customers,
enabling us to develop innovative solutions at speed. In view of these changes, we are also adjusting the set-up of global
support functions and our top leadership structure to reflect our future organization. As a result, the business-aligned
activities of the DSM Innovation Center were assigned to their respective Business Groups. In their new homes, these R&D
functions are fully equipped to deliver impactful innovations to the markets they serve.
We took important steps to redesign how our corporate functions – including Finance, Legal, People & Organization, Group
Communications & Branding, and Group Digital Services – are structured and how they operate. Our primary aim was to
strengthen and streamline functional excellence by creating a support model that more actively underpins our business
ambitions and enables us to add greater value for our customers, and for their customers in turn.
By late 2021, all our corporate functions had defined roadmaps for their transformation, drawing on the input of a range of
stakeholders, including employees. The new operating model and structures came into effect at the start of 2022. They will
be further embedded and implemented throughout the year. Employee representation bodies and the relevant works
councils were consulted as part of the redesign process.
In line with the set-up of our new organizational blueprint as a company focused on Health, Nutrition & Bioscience, the
P&O function also streamlined its set-up to reflect the business set-up. The design of the new target operating model for
P&O mirrors the set-up of the Business Groups and Innovation as well as the support functions. At the same time, the new
organizational design aims to enable a more fluid way of working, a better employee experience, and improved
development opportunities for employees in the function.
Safety, health & well-being
Safety
The safety, health and well-being of our employees has always been our top priority. The COVID-19 pandemic has further
underlined the importance to address and focus on safety, health and well-being together. We adapted our ways of
working to the constraints of the pandemic by supporting remote and hybrid working and continued to provide safe and
healthy working environments in our laboratories and plants.
We actively monitor occupational and process safety – the safety of our people and operations. We also support the health
and well-being of our employees through regional and global programs.
Aspiration
2021
2020
Occupational safety¹
Frequency Index REC
< 0.24 in
2021
0.22
0.24
Frequency Index LWC
0.12
0.09
.
Process safety
PSI Rate
< 0.15 in
2021
0.23
0.20
.
Occupational health cases
23
19
1 All data presented in People are subject to the Non-financial reporting policy.
Occupational safety
Occupational safety is the safety of our employees and contractors. In 2021, we continued our improvement programs for
sites and injury categories with the highest incident frequency. This has resulted in a further improvement of our incident
rate in 2021, exceeding our ambition. Our recently acquired sites contributed negatively to our incident rate, both
frequency as severity wise. Dedicated integration programs are running to improve the safety standards and culture on
this category of sites.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 53
Building on our strong safety foundation, as part of our DSM Responsible Care Plan update in 2021, we strengthened our
target level to <0.20 by no later than 2027. This target level is the next step in our ambition to make our company fully
incident- and injury-free, and will require us to consistently meet and exceed our current safety performance.
Frequency Index of Recordable Injuries
12 month moving average
Focus on our key initiatives driving success
We decreased with more than 60% the number of recordable incidents at the 12 sites that had the highest number of
recordable incidents in DSM in 2020. In addition, our global programs, including the ‘I Care, We Care’ campaign, the drive
for visible leadership, continuous attention for our top incident categories being hand & eye safety, and the ‘improved
learning from incidents’ initiative played a fundamental role in our safety improvement journey.
We strongly focused on enhancing our people’s capabilities and their leadership skills. In particular, we revamped a large
part of our competence training program to support enhanced virtual training, and we ran multiple leadership and
cultural development programs at sites around the world.
Contractor safety
For our contractors, the Frequency Index of all Recordable Injuries improved to 0.41 in 2021 (versus 0.47 in 2020). Better
supervision and increased attention to contractor selection, qualification, and training, which led to significant
improvements in some parts of the organization, will be rolled out further in 2022.
Focusing on SHE with passion and care
In our aspiration to become fully incident- and injury-free, we will continue to develop an engaged and disciplined SHE
culture by means of focused improvement programs locally as well as globally. We will strengthen the support to our sites
through more effective collaboration in the regions. In addition, we will give specific focus to ensuring best-in-class
integration of newly acquired sites.
Process safety
Process safety refers to the safe operational design of our facilities. In 2021, our Process Safety Rate increased from 0.20 to
0.23, above our target level of 0.15. The increased rate can be mainly attributed to the divestment of Resins & Functional
Materials and associated businesses, and the inclusion of new acquisitions. While we are disappointed with the
performance, we see that awareness of how to prevent small spills throughout the organization has increased.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 54
Frequency Index of Process Safety Incidents
In 2021, we carried out diligent follow-up of process safety incidents to ensure that we captured the lessons learned to
avoid reoccurrences. Furthermore, we undertook process safety index reduction programs focusing on flange and hose
management, overfill protection, manual valve operation, and safe ‘big bag’ and ‘intermediate bulk container’ (IBC)
handling. Together with our Life Saving Rules, these programs significantly contributed to preventing the most potentially
serious incidents.
Health & well-being
Occupational health
In line with our caring culture, we continuously strive to minimize exposure to potential health risks. The number of
occupational health incidents reported increased from 19 in 2020 to 23 in 2021. The increase is mainly related to 3 reported
mental health cases in 2021 versus 0 in 2020. The real number of mental health cases may be higher. Cases may develop
over a prolonged period of time, and causes may be present in both working and private life, with the work-related portion
going unacknowledged. Privacy concerns or cultural factors also influence employees’ willingness to report and discuss
personal health issues. We launched various mental health awareness campaigns in 2021 to increase employee awareness
and mental resilience and to increase transparency in the reporting of all these cases. The number of physical
occupational health incidents slightly increased from 19 in 2020 to 20 in 2021.
Industrial hygiene
Reconfirming the trend of the recent years, the majority of industrial hygiene-related incidents in 2021 concerned
ergonomic risk factors. We also recorded three cases of allergic reactions from contact with chemicals. In 2022, we will
launch improvement programs addressing both issues, with a focus on standardization, sharing of best practices,
workplace improvement initiatives, and enhancing industrial hygiene capabilities. In addition, these programs will have a
stronger focus on detailing the follow-up improvements.
Preventative measures for occupational illness
Beyond our dedicated health and safety awareness and behavior initiatives, we aim to prevent occupational illness
through the design of our products and processes, and by providing high-quality protective equipment. In addition, on-site
medical professionals offer primary care, as well as emergency preparedness and first aid.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 55
“I am very proud of our people who were so resilient and stayed so
committed during the numerous organizational changes we initiated
while having to manage all the implications of COVID-19 and often
having to work from home.”
Geraldine Matchett, Co-CEO and Executive Vice President People & Organization a.i.
Responding to the pandemic’s changing circumstances
Building on their work in 2020, our Global Response Team continued to help protect the health and safety of our people, in
close collaboration with DSM representatives from each country, while ensuring business continuity as much as possible.
These efforts involved coordinating an effective response to the pandemic, including establishing safe working practices.
During the year, we evolved our standardized global approach to pro-actively address the ever-changing circumstances of
the pandemic, taking into account the different dynamics in the countries in which we are active.
Prioritizing physical and mental health
Our COVID-19 Pulse Checks provided us with ongoing, up-to-date insights into how people felt during the pandemic. As a
result, we launched a global health and well-being campaign called ‘It’s OK’. The ‘It’s OK’ campaign encouraged people to
further prioritize their own health and well-being and brought together many already available regional resources to
enhance individual health and well-being into a single platform. The campaign platform – which was visited more than
23,000 times in the first seven months – contains many resources, including personal development courses, podcasts and
tips on how to work more healthily. It also links up all local employee-driven initiatives.
For example, a topic in the focus area of Workplace Well-being was on working off-screen. This module provided tips to
encourage employees to build off-screen time into their agendas, whether through off-screen (walking) meetings or
ensuring sufficient time between computer-based activities for walks, breaks and re-energizing. In the podcast series titled
LearnFM, guest speakers shared personal stories and practical information on health and well-being.
In 2022, we plan to regularly update the campaign platform and strengthen the link with existing local initiatives.
Continuing #optimizeyourimmunity
In 2021, we extended our #optimizeyourimmunity campaign. This campaign provides all our employees and their families
with a free selection of immunity-optimizing micronutrient supplements and education to overcome the challenging
pandemic period. In APAC and Latin America, ampli-D®, a ready-to-launch product which is three times faster and more
effective than traditional vitamin D, was distributed to employees working on site and from home. In the US and
Switzerland, all DSM employees working on site and in home offices were provided with d.velop™, the recently launched
product of Hologram Sciences. d.velop™ is a holistic immunity solution with an advanced vitamin D formula, diagnostic kit,
and digital support. For other European, Middle East and African workers, ampli-D® will be made available in 2022.
Ensuring COVID-19-safe work
Throughout 2021, we continued efforts to provide, often at regional level, solutions that help our employees manage the
impact of the pandemic on themselves and their families. In our operating facilities, measures were taken to reduce
COVID-19 risks. Additional costs that employees faced because of a lockdown or associated restrictions related to their
work were also addressed.
For employees whose roles allow working from home on a regular basis, support was provided to facilitate this. Efforts
were made to enhance awareness of occupational safety and healthcare aspects of the home office environment, for
example via a new e-learning for all Dutch colleagues, while support was provided in setting up a home workplace, for
instance by providing office furniture and equipment or local subsidies, led by the Total Rewards teams.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 56
Delivering on our P&O strategy
In 2021, we continued to execute our People & Organization (P&O) strategy, which was launched in the fourth quarter of
2020. In full alignment with our wider business ambitions, the P&O strategy guides the focus of our P&O function, helps
define our priorities when investing in our people, and helps to steer the company toward a better employee experience.
1 All data presented in People are subject to the Non-financial reporting policy.
2 Training hours includes developmental-focused trainings and our values trainings. It excludes compliance-related trainings.
As depicted below, our P&O strategy is centered around our Culture Compass. It has four focus areas, which aim to
enhance our approach to organization, people, workplace, and leadership. These areas are enabled by the right rewards
and our employee experience and analytics.
The four focus areas of our strategy
Creating a flotilla-style organization
In 2021, we made significant progress in evolving toward a flotilla-style organization, in which critical direction comes from
the center, surrounded by agile units that are empowered to achieve our common goals. We believe that embracing this
model, and integrating agile ways of working, will help us to drive efficiency and impact, and enable us to respond more
quickly to external forces.
Empowering our people
In a world characterized by high-paced change, digitalization, and business transformation, we aim to provide a
personalized and empowering environment that encourages all our people to take ownership of their performance,
development, and careers while continuing to deliver sustainable high impact as individuals. To this end, we are
developing a wide range of user-centric tools and solutions to help our people to grow, perform, and be at their best.
These tools enable our people to customize their own personalized learning and growth path within the DSM framework
and business context and allow individuals and teams to truly take charge of shaping their professional development and
growth.
In 2021, we improved and expanded the scope of our talent platform, offering a new and improved talent experience for
our people. By means of artificial intelligence (AI), the platform facilitates the matching of talents to opportunities and
developmental tools. In addition to identifying internal and external candidates for vacant positions, the functionalities
include individualized recommendations on projects and mentors that fit the employee’s profile, in line with their
individual career ambitions. As such, it allows the individual to shape their own career management.
Aspiration
2021
2020
Training¹
Training hours per employee²
8
6
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 57
We also invested in LinkedIn Learning to enable systematic and personalized online learning and people development.
This investment gives our employees access to a comprehensive digital learning library, with over 16,000 courses in seven
languages. In the first ten months of having LinkedIn Learning accessibility, our employees watched over 250,000 of the
digital library’s videos. These videos provided learnings relevant to specific employees and to DSM’s broader context.
Furthermore, we launched our ‘Learn Together, Grow Together’ campaign in late 2021 to further embed a learning culture
and mindset across DSM. Through a series of local and global initiatives, this campaign encourages employees to take
ownership for their development and personal growth. This activation is a crucial element in fully leveraging the tools we
launched and as such, ‘Learn Together, Grow Together’ will over the next few years visibly foster an environment where
employees feel empowered to deliver sustainable impact as individuals.
Creating a contemporary workplace
We accelerated the transition toward hybrid working in 2021, which combines both remote and office work. Choosing
hybrid work means teams are empowered to decide where, when, and how to deliver value. In practice, teams come
together and share responsibility for designing their working week based on the activities they must do – and how best to
do them. For employees based in plants or labs, where the nature of the work requires tasks to be undertaken on site, we
explore options for flexibility.
Our TeamPact App supports a tailored approach to team dynamics, where each employee’s personal circumstances are
considered. Through this interactive conversation tool, teams can agree where, when, and how they work to deliver on
their objectives. The application also prompts and guides teams to help them address obstacles and maximize the
benefits of hybrid working. Overall, by reducing commuting and business travel, we aim to empower our distributed
workforce and positively impact people, planet, and profit.
We furthermore started a pilot in the Netherlands with an attendance app (Mapiq) with the aim to help facilitate our
employees going back to the offices in compliance with the corona measures in the country. By informing our employees
of who will be in the office on a certain day, the app facilitates employee interactions, such as face to face meetings and
social engagements. The aim is to launch this app globally.
Beyond hybrid working, and to support the health and well-being of all our employees in the context of the pandemic and
shifting work practices, our regional teams organized a wide range of initiatives and programs that help to safeguard
physical and mental health. Among many of these initiatives, we made available health screenings and checks, offered
sports and yoga programs, ordered flu vaccinations, and secured oxygen concentrators for employees and their families in
India during a period of critical demand in early 2021.
In addition, we continued to put mental health at the center of all employee support efforts. Around the world, many of
our sites extended their employee assistance programs – involving webinars, counseling sessions, and the distribution of
self-help material – which offered emotional, psychological, and occupational support in local languages.
Resetting the leadership and culture context
Throughout 2021, we continued to integrate our new Culture Compass, in line with our aim to embed our culture across all
areas of our employee experience. For the first time, culture awareness and experience were measured within the
Employee Engagement Survey, scoring an overall 76%.
In 2021, the Culture Compass was successfully integrated into our Performance Management system, within an updated set
of behavioral indicators for all employee levels, which feed into individual ratings and subsequent rewards. Training and
guidance materials were provided to all people managers to implement the new approach.
As in previous years, continuing our regular performance and development evaluations was key to ensure we are a
performance-driven company and that we develop our people for roles today and into the future. In 2021, almost 15,000
employees had access to the global digital evaluation tool for performance reviews. All other employees participated in
performance evaluation on paper or by means of local systems.
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Royal DSM Integrated Annual Report 2021 58
We continued to mobilize a bottom-up approach to engaging employees with the new Culture Compass via a network of
over 100 employee volunteer Culture Conversation Champions. A Culture Hub site provided access to Culture assets and
resources in the different DSM languages, which were used by these Champions to facilitate local meetings,
communications, and events.
A new virtual program ‘Leading through Culture’ was designed to support people managers to bring culture change to their
own teams. The program received positive feedback, and over 50 programs were delivered by the end of 2021. Since its
launch, the program has been updated and is now included within business-owned change roadmaps to support culture
and behavior change, in line with DSM’s strategic acceleration.
Enabling our strategy
Modern, flexible rewards
In 2021, we continued to adapt the way we reward our people to better reflect and enable our key strategic drivers. More
flexible reward arrangements are needed to meet the diverse challenges and needs of our people and our businesses. In
view of this, our incentive programs were further streamlined and better aligned with the respective businesses. Following
the selection of a supporting platform in 2021, a pilot program will be launched in 2022 to help us boost our Recognition
Framework to make it more meaningful and tangible for employees. Based on the results of the pilot, including employee
feedback, a further roll-out will take place, facilitating a more tailored yet globally consistent approach to rewarding and
recognizing specific individual and team contributions.
Our global scale was leveraged as part of a multi-year project to procure employee benefits (such as insurance) and
manage the associated policies and services in a more coordinated way. Through this initiative, we improved the global
oversight, financing, terms and conditions of these benefits for the company and our employees. This foundation is
essential for us to offer more flexible rewards going forward. We plan to expand on these efforts in 2022 and beyond, to
ensure benefits continue to be a key offering, delivering value to our employees.
These initiatives demonstrate that our ambition is to take a more holistic approach toward total rewards. Current and
future employee perceptions and input also inform our direction. In the coming year, we aim to incorporate more
employee feedback in the design of our reward offerings, with the ultimate goal of strengthening our overall employee
value proposition and the employee experience. By adopting a more comprehensive and integrated view of rewards,
further embedding technologies in our processes, and incorporating employee as well as business perspectives, strategic
decisions will be based on more relevant input.
Employee Experience and Analytics
In 2021, we took important next steps toward professionalizing our approach to analytics and our understanding of the
employee experience – both of which will increasingly serve as critical drivers of how we work and deliver value for our
people and organization.
To ensure alignment on how we understand and drive employee experience forward, we designed our Employee
Experience Vision. While employee experience is personal, this Vision outlines our ambitions to create an environment in
which our employees feel taken care of, engaged, empowered, able to deliver, and able to grow. On top of this, it outlines a
set of key principles on how we want to get there, including but not limited to ensuring consistency and transparency in
how we communicate and act as an organization. The Vision will serve as a powerful foundation from which to develop our
employee experience efforts going forward.
Furthermore, to deliver on our ambition to become a truly data-driven P&O function, we made a significant investment in
increasing data transparency. In particular, we selected a new data and insights platform that integrates and structures
our most critical people and organization data. With intuitive, pre-built analytics, the platform delivers people and
organizational insights fast, allowing us to drive decision-making. In 2022, we will roll out this platform to our P&O
colleagues around the globe and leverage it as a catalyst to further embed data-driven decision-making into our ways of
working and continuously improve our data foundations.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 59
We aspire to become a more data-driven P&O function and employee-centric organization and have made this central to
our agenda. In the years ahead, we aim to further scale the impact and reach of our analytics and employee experience
efforts by:
- Further professionalizing the way we listen and respond to our employees’ needs and expectations
- Building capabilities in human-centered design across the organization
- Driving synergies between key processes, initiatives and technology by working in a more integrated, cross-
functional and harmonized way to drive forward our strategic agenda
Human rights
We strongly believe that it is our duty to respect internationally recognized human rights, including the rights of people
along our entire value chain. Human rights are integral to our purpose-led and performance-driven strategy. We believe
that the basic rights and freedoms to which all people are entitled should be understood, respected, and promoted by all
companies as the cornerstone of responsible business.
2021
2020
Gender pay gap¹ ²
7%
8%
.
Living wage
Employees below lower-bound
0%
-
Employees below higher-bound
< 0.1%
< 2%
1 Gender pay gap percentages are in favor of women. Percentage excludes Pentapharm (Switzerland & Brazil), Jiangshan, Twilmij and
Erber.
2 All data presented in People are subject to the Non-financial reporting policy.
Respecting human rights means that we follow international guidelines and implement the United Nations Guiding
Principles (UNGPs). We have further elaborated on this in our (revised) human rights policy, available on our company
website, in which we also set out our governance structure (DSM’s Human Rights Steering Committee and assignment of
the role of DSM’s Human Rights Lead) and our due diligence processes for identifying and mitigating risks. Grievances
relating to human rights are addressed according to the Code of Business Conduct and our whistleblower procedure, DSM
Alert.
Strengthening our human rights approach
In 2021, we took important steps to strengthen our approach to human rights, as well as to further embed this approach
throughout our operations. For example, we undertook an in-depth analysis of salient human rights issues in our own
operations and conducted a human rights impact assessment in India. Through this impact assessment, we were able to
identify key points for improvement for upholding human rights in India, as well as for our global approach to human
rights. Looking ahead, many of these points for improvement will be further included in national action plans as well as in
our global Human Rights Roadmap. Specifically, topics such as living wage and grievance mechanisms will be further
explored.
Through virtual learning sessions, DSM’s Managing Board and Executive Committee also received an in-depth training on
human rights. Tailored training will be provided to other targeted audiences throughout 2022.
A focus on salient issues
In 2021, we started to implement due diligence structurally as part of our human rights approach. This approach meant a
review and relaunch of our human rights policy, and a more elaborate and inclusive salience analysis of our potential
human rights risks. This analysis identifies the salient issues that have the potential for the most severe negative impact
through our activities or business relationships, and allows us to better prioritize and focus on the most severe potential
impacts. Our salient human rights issues are child labor, health and safety, living wage, forced labor, migrant workers,
harassment, land acquisition and resettlement, human rights defenders, and freedom of expression and rights issues from
industrial agriculture. These issues will be the focus points of our human rights work in the years to come and are
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 60
included in our human rights roadmap. We recognize that other human rights may become greater priorities over time,
and we will regularly review our focus areas.
Fair remuneration
DSM is committed to the principle of equal opportunities for all employees, which includes providing our employees with a
living wage. We align our calculations with the Anker methodology (Anker and Anker 2017). We also aim to reward our
employees for their overall contributions to the company, setting equal pay for men and women doing similar work that
requires equivalent qualifications and skills. Our Fair Remuneration Statement, available on our company website, further
elaborates on our position.
Gender pay gap and equal pay
We continue to use the GRI 405-2 topic disclosure as guidance for calculating our gender pay gap. Our 2021 results showed
a gender pay gap of 7% in favor of women, (female:male pay ratio of 107:100), a change of 7 percentage point compared to
2020, which is mainly due to changes in the average salary of both genders and headcount fluctuations in the 6 regions.
This ratio is based on validated employee base pay data for locations where we have significant operations and covers
approximately 66% of our global employee base. These operations include Brazil, China, India, the Netherlands,
Switzerland and the US, excluding our operations in Pentapharm (Switzerland and Brazil), Erber (all countries), Twilmij
(Netherlands) and Jiangshan (Jiangsu Province, China). The pay gap can primarily be attributed to a higher proportion of
male employees in lower-level positions, and it does not necessarily indicate if we pay men and women equally for doing
similar work.
We aim to make further progress in the area of equal pay. Throughout 2021, we continued our partnership with AnalitiQs to
develop an advanced analytical model that will allow us to investigate background variables in much greater depth and
obtain useful insights. We concluded that a more holistic approach to equal opportunities is needed to allow us to further
advance in this regard. This will also require cross-functional collaboration including linkages with data analytics and
diversity, equity and inclusion. In 2022, we will continue to further advance the use of the analytical model and renew our
focus on opportunities within the cross-functional approach.
Living wage
We are committed to paying a living wage to all our employees based on WageIndicator’s benchmark methodology. We
have started with our significant locations of operations (defined above). We aim to expand the number of countries
included in this analysis over the coming years. In 2021, we assessed wage levels against WageIndicator’s typical family
with higher-bound (our target level) and lower-bound (for comparative purposes) living wage figures. WageIndicator’s
methodology uses the following definitions:
- The typical family is defined as two adults with a number of children derived from the national fertility rate
- The employment rate is defined as one adult working full-time, while the employment rate of the other adult is
derived from the national employment rate
- The higher-bound uses prices (for housing, food and other indispensable goods or services) at the 50th percentile
(where 50% of people report higher prices), while the lower-bound uses prices at the 25th percentile (where 75%
of people report higher prices)
Based on our assessment, two employees (less than 0.1% of employees in scope) are paid below the higher-bound living
wage figures These employees left the company in 2021, so no corrective action can be taken in 2022. No employees were
paid below the typical family with lower-bound living wage figures.
Employee engagement
We strive to provide an employee experience where everyone can feel safe, valued and included, and where every
employee can offer their unique contribution. An engaged workforce is essential for our organization to have impact
and deliver on our purpose, and engaging with our employees in 2021, with the pandemic ongoing, was crucial. We did
so in a variety of ways, with online webcasts, virtual family days and employee events, regular newsletters and regional
events with our Co-CEOs, executive calls and annual conferences.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 61
Aspiration
2021 2020
Engagement Index¹
>75% by
2021 76% 76%
Participation Rate 92% 92%
1
All data presented in People are subject to the
Non-financial reporting
policy.
We monitor
our employee engagement and well-being through a variety of surveys and ‘check-ins’. In 2021, these included
our COVID-19 Pulse Checks (until March), and our Employee Engagement Survey (EES). Continuous listening to our
employees is core to shaping the DSM employee experience, providing insights that can quickly translate to actions and
impact. This strategy will provide insights that can be continuously translated into relevant insights and actions regarding
the employee experience and to inform better-quality decisions.
We also employed additional communication efforts to keep employees informed and engaged, including through our
internal news platform and by mobilizing our regional network of Engagement Champions to deploy engagement best
practices locally.
The Employee Engagement Survey
Our annual Employee Engagement Survey helps us understand how our employees feel at work and where we need to
improve our employee experience. The Survey reflects the views of our payroll employees (in October 2021) and excludes
recent acquisitions and divestments. The responses we receive enable us to initiate fruitful conversations and lead to
concrete positive changes in our workplace. The feedback we received in the 2020 Employee Engagement Survey, for
example, was reflected in our approach to hybrid working and a health & well-being campaign in 2021.
In 2021, managers whose team included five or more survey respondents were eligible to receive specific team reports
online; this amounted to more than 1950 managers (an increase of more than 150 compared to 2020). To help managers
share results with their teams, lead
conversations and agree actions, training and support were available from survey
champions as
well as P&O and communications colleagues. Furthermore, a global digital platform was set up with
concrete tips, tricks, and materials on how to continue the dialogue on engagement throughout the year as well as a link
to local champions to support that process.
How we measure Employee Engagement
We measure four engagement attributes: commitment, pride, advocacy, and satisfaction. The 2021 EES retained the
structure and content of the previous survey, comprising questions on safety, engagement, management, inclusion
and
other key themes, but we also
introduced three new questions that were specific to each Business Group. This meant our
Business Groups received more targeted insights into employee engagement as well as allowing us to identify topics that
we can
investigate further in future surveys.
The EES also offered space for employees to provide comments: more than 50,000 comments were received in 2021. In
approximately 70% of the comments, employees expressed positive feedback on the announced strategic direction of the
company, as well as their overall pride in working for DSM. Another key topic that emerged from the comments was related
to work-life balance, including the challenge of keeping this balanced in COVID-19 times while working from home.
Engagement levels remain high
In 2021, the survey was sent to all employees and was available in 23 languages. We saw a response rate of 92%, equal to
the highest recorded rate (in 2019
and 2020) since the first edition of the survey in 2007.
Overall employee engagement remained at the same level as 2020 at 76%, while many of our comparable questions and
indexes saw an
increase. We made progress in our 2020 focus areas: Talent rose from 67% in 2020 to 70% in 2021 (including
a 3% improvement on the question relating to learning and development opportunities, from 74% to 77%); and Inclusion
improved from
75% to 77%. We also maintained our Safety score at 93%. The Strategy question on employees’ views on the
company’s ‘promising future’ was 82%, indicating a positive reaction to, and support for, the acceleration of our strategic
journey.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 62
Above all, the results underline the positive effects of our active efforts to maintain high levels of engagement during the
pandemic through strong and clear communication, new work flexibility and more visible leadership. Our targeted
engagement improvement programs have also had a positive effect according to the responses received, with improved
engagement scores in the 25 sites with the lowest scores in the 2020 EES. These improved results were attributable to
three programs: Personal Development (focused on improving an individual’s development and making support more
accessible), Team Building (ranging from more frequent meetings, to socializing and improving communications), and
Reorganization (where structural changes to a team were implemented).
Identifying and addressing areas for improvement
While our Engagement Index remains at 76%, and the majority (77%) of the comments were positive, with broad support for
our strategic announcement, the survey highlighted a few key areas of concern. These included below-average scores in
‘career opportunities’ and some losses in Inclusion.
The combination of positive and sub-par scores, as well as the emerging themes of well-being and work-life balance which
emerged via employee comments, provided us with direction for the following focus areas:
- Managers: we will continue to build on positive behaviors, manage development initiatives, and support improved
processes for effective managing
- Talent: we will accelerate the focus on career development
- Inclusion: we will continue to build inclusion practices, paying attention to target groups covered by our five
Inclusion & Diversity (I&D) pillars, and identified by internal surveys such as EES or regional I&D Surveys
- Well-being: we will maintain focus on this area by integrating employee health & well-being programs
These areas are all addressed through our People & Organization strategy and our dedicated Inclusion & Diversity
strategy. In addition, we will continue to share regular, open, and transparent communications that inspire employees to
participate in the company’s transformation journey.
Inclusion & diversity
In 2021, we continued our efforts to ensure that all our people feel included and cared for. Fostering and maintaining an
inclusive and diverse workplace is key to helping our employees offer their best, most authentic contribution, and is a
prerequisite for delivering on our ambitions and accelerating our strategic transformation. We accelerated progress on
our five diversity pillars – Gender, Race, Ethnicity & National Identity, LGBTQ+, Disability and Generations - by identifying
three focus areas in which to apply our efforts: recruitment, development, and inclusion.
Aspiration
2021
2020
Inclusion index¹
77%
75%
.
Internationalization & diversity
Female executives
25% by 2021
23%
21%
Under-represented nationalities
35% by 2021
31%
30%
1 All data presented in People are subject to the Non-financial reporting policy.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 63
I&D Governance Framework
DSM’s Governance framework for Inclusion & Diversity ensures strong ownership and steering on the part of executive and
senior leadership, with operational responsibility shared between the business and regions.
In 2021, we further embedded the framework with our Co-CEOs sharing the Chair for the I&D Council, and each Executive
Committee member taking active sponsorship of one of the five pillars (depicted above). The direction of our I&D strategy,
along with our commitments, were discussed and agreed at the Executive Committee.
Our Inclusion & Diversity Council - which provides input to I&D strategy and drives program activation – is composed of
Regional Presidents, business leaders and Employee Resource Group leads. Additionally, each region has a nominated I&D
Lead to drive and coordinate locally relevant activities, with support from the corporate I&D team.
The focus areas for I&D: Recruitment, development and inclusion
A wide range of initiatives was undertaken within these three focus areas by our global Inclusion & Diversity (I&D) team, in
close collaboration with regional teams and Employee Resource Groups. These initiatives aim to diversify our current and
future talent pools, improve development opportunities for underrepresented groups, and ensure a psychologically safe
and inclusive working environment where all our colleagues can be their authentic selves. Our efforts are reflected in the
increase of our inclusion score (+2%), which is even more evident in our regions such as China (+5%) and Latin America
(+4%).
Expanding our I&D network
Since the launch of the new I&D strategy in 2020, our I&D network has expanded significantly through active Employee
Resource Groups and regional I&D teams. The numerous initiatives and events of this network contribute to positive
increases in inclusion scores. Examples of such initiatives include:
- I&D forums on gender, generation and LGBTQ+ in China
- Launch of a cross-organizational I&D working group in collaboration with the Dutch Embassy in Japan
- Implementation of women-enabling policies in India
- DSM Netherlands signed the Sociaal Economische Raad (SER) Diversity Charter
- Launch of a ‘Just About Inclusion’ initiative in Switzerland
- The development of a mentoring and sponsorship program for Black and African-American employees in North
America
- The development of a joint commitment to I&D with a network of suppliers in Latin America
Our performance on our I&D targets
In 2021, we realized a 2% increase in the percentage of executive women, from 21% to 23%, reflecting changes implemented
in our talent acquisition and recruitment processes, which included 50:50 gender-diverse shortlists and unconscious bias
awareness sessions for recruiters. We increased our percentage of under-represented executives from 30% to 31%. Despite
this, we underperformed against our 2021 targets for female (25%) and under-represented groups (35%) at executive levels.
Report by the Managing Board – People
Royal DSM Integrated Annual Report 2021 64
Several factors influenced this outcome, including the divestment of Resins & Functional Materials and associated
businesses, competition for high-profile candidates in a buoyant market, and the impact of ongoing DSM transformation
initiatives.
With the current targets expiring in 2021, our global I&D team worked closely with stakeholders to agree new ambitious
I&D commitments for the period 2022-2025. These include:
- 30% of our executives to be female by 2025
- 40% of our executives to be from currently under-represented nationalities by 2025
- Global business and functional Leadership Teams to be a minimum 30% diverse by gender and nationalities by
2025
In addition and in line with our broader commitments to the five pillars of I&D, the regions will take ownership for
achieving progress via locally-relevant programs, following our overall focus on recruitment, development and inclusion.
Regional I&D surveys, supported by the corporate team, were delivered in 2021, providing not only useful baseline data for
identifying priorities, but also offering employees the opportunity to self-identify on demographics that we cannot track
globally. This type of diversity data is collected and managed following all data privacy and GDPR guidelines, securing
employees’ anonymity.
On the basis of this insight, and local factors, regions are initiating programs such as improving access to employment for
people with disabilities, ensuring equality in policies and benefits for LGBTQ+ colleagues, and awareness and education
initiatives.
Finally, we will continue to invest in creating a culture where diversity thrives. In 2022 we launch a new inclusion program,
Brighter Together 2.0, for all teams. Ultimately DSM commits to workplaces where business goals are achieved with respect
for people’s dignity and their human rights.
Royal DSM Integrated Annual Report 2021 65
Planet
At a glance
- 27%
1
absolute reduction of scope 1 + 2 greenhouse gas emissions versus baseline 2016
- ~23% structural improvement of scope 1 + 2 greenhouse gas emissions versus baseline 2016
- 8% scope 3 greenhouse gas emissions intensity improvement versus baseline 2016
- 72% purchased electricity from renewable resources
- 6.0% energy efficiency improvement, year-on-year
- 7.8% water efficiency improvement in water-stressed sites versus 2020
We take our global environmental responsibilities very seriously. These extend beyond our own operations to include
those of our suppliers, customers and end-users. We fulfill our environmental responsibilities through our portfolio of
Brighter Living Solutions, our Safety, Health & Environmental (SHE) policy, and our position on issues such as product
stewardship and biodiversity. We focus on:
- Improving our own environmental footprint
- Enabling our customers to do the same through innovative solutions
- Advocating on our key environmental topics
At the end of 2021, our operations network spanned more than 100 commercial production facilities in 41 countries. Our
operational approach is guided by the DSM Responsible Care Plan, described below, and supports the Sustainable
Development Goals (SDGs), especially SDG 7 (Affordable and Clean Energy), SDG 12 (Responsible Consumption and
Production) and SDG 13 (Climate Action). Our Planet reporting addresses our performance on several material topics
identified in our Materiality matrix:
- Climate mitigation
- Climate adaptation
- Waste & circularity
- Nature & biodiversity
- Water stewardship
- Product stewardship
We made good progress on our environmental ambitions, as defined in our
Responsible Care Plan
The DSM Responsible Care Plan (DRCP) is aligned with our strategy. The DRCP defines our ambitions, targets and actions
in the Planet-related fields of environmental footprint, value chain sustainability and climate adaptation.
Our key targets are our Science Based Targets
The key targets in the DRCP are our Science Based Targets (SBT) that represent our contribution to climate change
mitigation. In 2021, we increased our ambition level based on our strong performance on greenhouse gas (GHG) emissions
reductions and to reflect the latest scientific insights from the Intergovernmental Panel on Climate Change (IPCC). Our SBT
are an absolute reduction of GHG emissions from our operations (scope 1 + 2) by 50% (strengthened from 30% in 2021) and
a value chain (scope 3) intensity reduction of 28%, both by 2030 versus our 2016 baseline. These are also the foundation
for our net-zero-by-2050 commitment. The independent Science Based Targets initiative reviewed and approved our
targets first in early 2019 and again for our step-up in ambition in 2021.
1 All data presented in Planet are subject to the Non-financial reporting policy.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 66
Our scope 1 + 2 target is supported by our renewable electricity target (75% of purchased electricity to be sourced from
renewables by 2030 and reaching 100% at the earliest possibility) and our annual average energy efficiency improvement
of at least 1% until 2030. Our scope 3 target is supported by the CO2REDUCE program.
Besides mitigating climate change, we are also working on climate adaptation. In 2020–2021, we conducted physical risk
assessments on our top 30 sites to improve the resilience of our assets against potential physical impacts of climate
change. In 2021, we also established and piloted a process in two Business Groups to identify and assess the potential
impacts of the different speeds of transition to a net-zero world. We will expand and continue this work iteratively in the
coming years. More information on our risk assessment is provided in Risk management.
Our other company targets are driving improvements in the areas of water, waste, other emissions and substances of
concern. We will continue to drive the various water improvement plans that we identified during the water risk
assessments in the past year. We committed to reduce our water intake in water-stressed areas. Furthermore, we continue
to enhance our insights and capabilities to steer waste reductions and we are further developing action plans for products
containing substances of very high concern. We regularly review progress on our plans and update our targets accordingly.
Our target setting process is underpinned by the plans and measures needed for their realization.
In 2021, we made good progress on the key objectives of the DRCP as reported elsewhere in this section. DRCP 2019–2021
was successfully delivered, with GHG emissions reductions ahead of plan and top-quartile safety performance. Our new
2022–2024 DRCP fully aligns with our updated strategy and reflects the industry’s standards and expectations. Our key
topics remain climate and safety, with other key topics of product stewardship, industrial hygiene, employee health & well-
being, water and waste and biodiversity. Due to decreased materiality to the company, topics that are more specifically
aimed at the chemical industry (e.g., volatile organic compounds and waste recycled) will be monitored, but no target level
is defined. Additional information about our Planet performance is provided in the five-year summary – sustainability
tables, our Value creation model and Stakeholder engagement.
Climate mitigation
In 2015, the Paris Agreement first established a common ambition to take urgent action on GHG emissions to limit
average temperature increases to well below 2°C. Later in 2018, the Intergovernmental Panel on Climate Change (IPCC)
provided a clear and compelling case to redouble efforts to limit warming to 1.5°C. Our fair share of this ambition
requires our emissions to reach net-zero by 2050 with a rapid acceleration of the rate of our emission reductions over the
coming decade — these are specified in our net-zero commitment and Science Based Targets (SBT).
Aspiration
2021
2020
Greenhouse gas scope 1 + 2 (market-based)¹
Absolute reduction (SBT) versus 2016
50% by 2030²
27%
Estimated structural improvement versus 2016
approx. 23%
Scope 1 + 2 emissions (million tons CO₂eq)
1.21
1.24
Corrected baseline (2016, in million tons CO₂eq)
1.66
1.65
.
Greenhouse gas scope 3
Intensity reduction (SBT versus 2016)
28% by 2030
8%
5%
Scope 3 emissions (million tons CO₂eq)
11.7
12.0
.
Energy
Purchased electricity from renewable sources
75% by 2030
72%
60%
Energy efficiency improvement year-on-year
> 1%
6.0%
5.7%
Primary energy use (PJ)
21.4
21.5
Final consumed energy (PJ)
18.8
18.2
1 All data presented in Planet are subject to the Non-financial reporting policy.
2 Target level strengthened in 2021 from 30% by 2030.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 67
Aligning our climate approach with science
We were one of the first companies to align our efforts with the latest science as presented in the IPCC Special Report
‘Global Warming of 1.5°C’ by setting a long-term pathway to reach net-zero GHG emissions across our operations and value
chains by 2050. Our Science Based Targets are the intermediate step to achieve this goal, supported by our ambitions
regarding renewable electricity and energy efficiency, and by working intensively with our key suppliers through our
CO2REDUCE program. This requires transforming our operations and value chains.
We are working with long-term innovation roadmaps that will bring us as close to zero emissions as possible in the
coming decades. This includes investments in a portfolio of solutions that can help our customers to do the same. We will
also eventually deploy permanent carbon removals to neutralize any residual emissions to reach our net-zero ambitions.
These removals will need to meet the highest quality criteria and social and environmental safeguards. Our net-zero
activities are guided by the SBTi NetZero Standard and Business Ambition for 1.5°C commitment framework.
“We continue to show good progress on our climate targets. Our
climate action plan identifies the key measures that are important
for DSM, including our emissions reduction programs for our own
operations and supply chain, and steps to improve our resilience.
Our Food System Commitments demonstrate the impact of our
products on society. Beyond our own value chain, accelerating global
climate action is a key pillar of our agenda.”
Dimitri de Vreeze, Co-CEO, Royal DSM
Business measures supporting our climate approach
In support of our ambition to substantially reduce our carbon footprint, we have introduced key measures which we apply
to all growth projects. Since 2019, business growth projects must either be GHG-neutral or else be compensated for within
the same business.
In addition, to encourage investments in low-carbon and carbon-free technologies, we use an internal carbon price (ICP)
in the valuations of key investment projects and in the Profit and Loss statements of the Business Groups for internal
management reporting. This increases the visibility of, and encourages accountability for, the impact of carbon emissions
on the business. In 2021, we increased the ICP from €50/t CO
2
eq to €100/t CO
2
eq to better reflect the updated insights into
the actual price of CO
2
to society. This price is also within the ranges of the scenarios we use for assessing climate
transition risks.
Ownership of climate actions is at Executive Committee level
The DSM climate action agenda brings together our key climate actions addressing the three
pillars of improve, enable and advocate. The progress of the agenda, including the
implementation of the Taskforce on Climate-related Financial Disclosures (TCFD)
recommendations, the GHG reduction program, our portfolio developments and efforts to
advocate for accelerated transition with partners, are managed and actively reviewed by the
Executive Committee several times a year.
Concrete actions within the agenda are owned by individual Executive Committee members
including the development of our internal carbon price, advancing our low-carbon portfolio,
oversight of our climate advocacy, and engagements with climate-focused investors. Through the agenda, we ensure that
the business opportunities related to mitigation and adaptation, and the identified transition and physical risks of climate
change, are addressed. Our climate change strategy received an A rating from CDP in 2021.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 68
Scope 1 + 2 GHG emissions
On track with our scope 1 + 2 target
We are well on track to deliver our increased ambition of 50% absolute reduction by 2030. Our scope 1 + 2 market-based
GHG emissions improved by 27% (compared to 25% in 2020) versus our corrected 2016 baseline. This was due to a
significant year-on-year GHG reduction at our existing sites, which compensated for the expected GHG increase from
inorganic growth. Total scope 1 + 2 emissions were 1.21 million tons of CO
2
eq in 2021, a decrease of nearly 40 kt CO
2
eq
compared to 2020. Our GHG efficiency (year-on-year) improved by 15% in 2021.
Scope 1 + 2 reductions versus corrected baseline
Correcting our baseline in 2021
Our baseline GHG emissions figure of 2016 was increased to 1.66 million tons of CO
2
eq, due to the inclusion of 14 acquired
sites in our reporting scope in the period 2017–2021, the divestment of Resins and Functional Materials and associated
businesses (pro-rata), and the impact of methodology changes. Four newly built sites were also added to the reporting
scope; however, as they were constructed after 2016, they have no impact on the baseline correction.
Royal DSM Integrated Annual Report 2021
69
2016 GHG Baseline correction
In thousand tons CO
2
eq
Our GHG reduction program
In order to achieve the targeted absolute GHG reduction by 2030, we continued our dedicated program to help our key
locations implement appropriate energy transition, including energy efficiency measures. We use performance
diagnostics as well as self-assessments that are carried out at key sites to identify GHG emission reduction
opportunities. The learnings from these sites are shared across all sites to enable further roll-out of improvement
projects.
As a result of our progress in these areas, the overall structural improvement in our scope 1 +2 GHG emissions increased
from ~18% to ~23% from 2020 to 2021.
Energy transition
Our greenhouse gas (GHG) emission reductions are driven by a rigorous energy transition program, consisting of the
following elements:
- Reduction of total energy consumption through energy efficiency improvement measures
- Energy transition to more energy from renewable sources, via increasing the amount of purchased and self-
generated renewable electricity, and the amount of consumed renewable fuel and heat
- Driving smart electrification, combined with energy efficiency improvements that enables a shift to the use of
electricity from renewable sources instead of fossil fuels
Examples of projects that we started or implemented in 2021 on these energy transition drivers are described below.
Energy efficiency improvements
Our energy efficiency improvement (on primary energy) was 6.0% versus 2020, above our target of an average annual
improvement of 1%. This is mainly due to a portfolio of rigorous energy saving projects and product volume and product
mix changes.
1,650
1,662
7
58
-53
Baseline in
2020
Acquisitions
Divestments
(pro-rata)
Methodology
changes
New Baseline
in 2021
Report by the Managing Board – Planet
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 70
Energy efficiency
2
Projects finalized in 2020 began delivering full benefits in 2021, adding up to approximately 20 kt of CO
2
eq reduction on the
2021 emissions. Most projects also deliver additional benefits such as cost savings or water savings. Examples of projects
resulting in lower energy use are improvements of steam and hot oil systems (such as leakage repairs, condensate return,
heat recovery on furnaces and insulation) at various locations (~6 kt CO
2
eq reduction); the replacement of steam-driven
chillers by electricity (partially renewable) operated in Jiangshan (Jiangsu province, China), contributing ~7 kt CO
2
eq; and
the replacement of low-efficiency chillers in León (Spain), contributing ~1 kt CO
2
eq reduction). Besides improving heating
and cooling equipment, we also increased the efficiency of our compressed air and nitrogen systems at various locations
through leakages repair and equipment upgrades. Another focus area is heat integration, which we applied on various
locations such as Lalden (Switzerland), Village-Neuf (France) and Dalry (UK).
In 2021, we further strengthened our approach to replace aged and low-efficiency cooling by state-of-the-art machines,
applying – ahead of local legislation – low global warming potential (GWP) refrigerants in, for example, Xinghuo (Shanghai
province, China), Jiangshan (Jiangsu province, China), Laiwu (Shandong province, China) and Seclin (France). We installed
solar panels at our location in El Salto (Mexico) to enable a local transition to renewable electricity. Besides improving the
efficiency of our equipment, we also apply innovative solutions with new technologies. An example is the installation of an
industrial heat pump in Exton (Pennsylvania, USA) where heat from a cooling machine is used to pre-heat boiler feed
water.
Renewable energy
We are a proud member of the Climate Group’s RE100, comprising leading companies that have committed to sourcing
100% of their electricity from renewable sources at the earliest possible opportunity. Our commitment is to source 75% of
our electricity from renewable sources by 2030 at the latest and 100% at the earliest possible opportunity.
2 All data presented in Planet are subject to the Non-financial reporting policy.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 71
Renewable Electricity
In 2021, we once again made significant steps toward achieving our purchased renewable electricity target. The percentage
of purchased electricity from renewable sources increased globally from 60% in 2020 to 72% in 2021, equaling a GHG
emission reduction year-on-year in purchased non-renewable electricity of 52 kt CO
2
eq.
Progress on purchased renewable electricity in Europe and North America
For our operations in Europe, we maintained 100% renewable electricity through existing agreements combined with pre-
production guarantees of origin (GOs) from the Power Purchase Agreement (PPA) in Spain. The wind park of the latter PPA
commenced operations in late 2021 while the solar assets are currently under construction. Furthermore, a new hydro
agreement for 2022 was concluded in Switzerland to replace a contract that terminated at the end of 2021.
In the US, a third PPA was concluded in 2021 adding to the two PPAs already in place. The first is already operational and
produces electricity from wind, while the assets for the other two are yet to be built and will provide solar-powered
electricity. The production from the first agreement combined with pre-production renewable energy certificates (RECs)
from the other agreements means we had 100% coverage (of continuing operations) of purchased electricity from
renewable sources in the US in 2021.
Progress on purchased renewable electricity in China
For 2021, we concluded two renewable electricity contracts in China. This provided 91% renewable electricity for Laiwu
(Shandong province, China), and 32% and 17% renewable electricity respectively for Jiangyin and Jiangshan (Jiangsu
province, China). In addition, we concluded purchasing agreements to provide renewable electricity in 2022 for all four
sites in Jiangsu province which will cover a significant portion of their demand.
Renewable electricity in the rest of the world
Besides Europe, North America and China, three-quarters of our purchased electricity in Brazil is from renewable sources,
and we have several local renewable electricity contracts at smaller sites around the world. The amount of non-renewable
electricity in the rest of the world represents less than 5% of our total purchased electricity.
Working on renewable heat
Besides taking significant steps to increase our amount of purchased renewable electricity, we also look for opportunities
for the broader use of renewable energy sources. Certain sites across DSM already recover waste streams for production of
renewable heat while others are in an exploratory phase. Besides the already concluded sustainable biomass
cogeneration project in Sisseln (Switzerland), our hydrocolloids site in Chifeng (Inner Mongolia, China) replaced its self-
produced steam based on coal with purchased steam produced from local biomass residues. The Chifeng biomass plant is
a cogeneration system that supplies steam to our DSM site and other industrial park users via a long-term contract with
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 72
ENN Energy, while the electricity is sold to the grid. By introducing this contract, Chifeng was able to avoid ~25 kt CO
2
eq in
2021 (its first fully operational year), of which around 9 kt CO
2
eq is a structural improvement from 2020 to 2021.
In alignment with external guidance and experts, we established the foundation for the sustainability criteria of our
purchased renewable fuels and heat. Use of biomass for thermal energy is guided by strict sustainability criteria, where
the primary focus is on the use of local waste and residues as feedstock for the (co)generation of energy (including
organic solid/liquid waste, agricultural residues and forestry management residues). Besides the feedstock used, we also
set criteria on carbon payback times, minimum GHG reduction potential and management of soil health, water and
biodiversity impacts. The new set of criteria aims to ensure that any step taken in this direction supports the responsible
transition toward decarbonized operations and to further expand sustainable renewable energy consumption in DSM.
Scope 3 GHG emissions
Our scope 3 emissions
Our absolute scope 3 GHG emissions amounted to 11.7 million tons of CO
2
eq in 2021, which is a decrease of 0.3 million tons
of CO
2
eq compared to reported emissions in 2020. This is an increase of 0.8 million tons compared to the previous year on
a like-for-like basis, taking the divestment of our Resins and Functional Materials and associated businesses into account.
The increase was primarily driven by more sourced volume (as a result of increased production volumes) in continued
operations resulting in an increase in emissions from Purchased Goods and Services.
The main scope 3 categories in the 2021 figures remain emissions from the categories Purchased Goods and Services and
End-of-Life Treatment of Sold Products, accounting for almost 90% of total scope 3 emissions. End-of-life emissions
increased slightly compared to 2020, due to increased sales volumes.
In 2021, one of the highlights in this area was the positive development at DSM Engineering Materials, which benefited
from high volumes with a greatly improved carbon footprint of caprolactam from our supplier Fibrant/HighSun.
Additionally, the supplier to our Nutrition business with the second-highest level of emissions made a significant
investment in order to reduce its emissions through the use of a catalytic conversion technology. The new installation
entered operation toward the end of 2021, resulting in some reduction in 2021, and will result in a further significant
reduction in emissions as of 2022.
Other scope 3 categories reported comparable figures in 2021 compared to 2020.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 73
Scope 3 GHG emissions
1
in CO
2
eq, million tons
1
Due to rounding, the numbers presented above may not add up to the total scope 3 emissions.
Science Based Targets
The Science Based Target defined scope 3 intensity, expressed in kg CO
2
eq/kg produced, decreased by an additional 3%
compared to 2020 largely due to the highlights described above.
In our Nutrition business, the inclusion of the learnings from the CO2REDUCE program into the supplier selection process
resulted in an improved emission profile and reductions for several key raw materials. Overall, the sourcing mix of raw
materials for the nutrition business showed an increased carbon intensity as other more advanced raw materials and
ingredients with a higher carbon footprint were also sourced.
Engaging with our suppliers through our CO2REDUCE program
In 2021, the supplier engagement program CO2REDUCE continued to build on agreed roadmaps and progressed as planned.
The focus was twofold.
Firstly, we obtained new insights, datapoints and reduction opportunities through our collaboration with suppliers for key
contributing raw materials. Together with our suppliers, reduction action plans were developed based on product carbon
footprint data. In 2021, we continued to explore new opportunities for scope 3 emissions reductions through multiple
supplier emissions plans.
Secondly, we identified low-carbon opportunities for several of our products using insights from the CO2REDUCE program
regarding supplier emission plans and the associated emissions reduction potential. This served as essential input into
the further development of our business strategy.
One of the ways to inspire suppliers in their reduction journey is through webinars on options for scope 3 emission
reductions. In 2021, we organized a webinar on energy efficiency with a full value chain approach. A supplier, a customer
and DSM shared their approach to energy efficiency with a group of Chinese suppliers active in the engagement program.
The webinar (in Mandarin) and the program were well received, and discussions were continued in the subsequent
supplier programs.
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Royal DSM Integrated Annual Report 2021 74
Calculation and tracking of our scope 3 emissions developed further in 2021 to efficiently harness and utilize the insights
gained in the program. Digitalization of the reporting enabled further transparency and better program steering. The
reported emissions reflect the latest insights and are based on an increased share of supplier-specific emissions instead
of using industry average figures.
We actively share our experiences from the CO2REDUCE program in peer-group platforms such as ‘Together for
Sustainability’. These platforms aim to define best practices in supplier engagement and scope 3 calculations within the
industry, while also serving as an inspiration to improve the program further.
For the third time in a row, we received a supplier engagement leadership award for our
CO2REDUCE program, which is a highly esteemed recognition both internally and externally.
Finally, we also develop products for the circular and bio-based economy that contribute to
further reducing our scope 3 emissions. See Stakeholder engagement and Renewable &
secondary raw materials for additional information.
Avoided emissions, supporting our customers with their emissions targets
Our products can enable our customers to transition to a low-carbon economy through an
inherently lower carbon footprint, or by helping our customers and end-users reduce their own
emissions. The latter are referred to as ‘Avoided emissions’ — emissions-related environmental
benefits that occur downstream in the use phase of our products. While avoided emissions do not count toward our own
Science Based Targets or net-zero target, they result in reduced emissions for others in our value chain.
Fruit juice production produces around 800 kg CO
2
eq per ton of juice produced. The challenge for juice processors is to
achieve high yields and ensure maximum throughput during peak season, despite the varying quality of raw materials. Our
Rapidase® range of fruit processing enzymes addresses these challenges, delivering a consistent, high-quality, crystal-
clear apple juice with a lower environmental impact. Our enzyme solutions portfolio Rapidase® Smart helps our customers
to reduce their GHG emissions by 50 kg of CO
2
eq per ton of juice produced. This contributed to approximately 37 kt of
CO
2
eq reduction in 2021.
Over 50% of emissions created globally during milk production come in the form of enteric methane, released into the
atmosphere through the burping of cows. Bovaer® suppresses the enzyme that triggers methane production in a cow’s
rumen; it is the most extensively studied and scientifically proven solution to the challenge of burped methane to date.
Just a quarter teaspoon of Bovaer® per cow per day consistently reduces enteric methane emission by approximately 30%
for dairy cows and even higher percentages (up to 90%) for beef cows. Methane is a GHG that is short-lived but 28 times
more potent than CO
2
. Bovaer® therefore contributes to a significant and immediate reduction of the environmental
footprint of meat, milk and dairy products. DSM has available initial commercial product volumes for near term market
development. In 2021, engineering for a new large plant for Bovaer® in Dalry (UK) has started to facilitate further scale up
in coming years.
Climate adaptation
The warming climate is already severely impacting people and the environment – from health hazards to disruptions in
water, food, and energy supplies, to damage and loss caused by floods, droughts, and other extreme and erratic weather
events. The consequences of climate change will only intensify over the next few decades due to the current and near-
term emissions, even if the world achieves the Paris Agreement goal of limiting the global average temperature increase
to 1.5°C.
As a complement to our efforts on climate change mitigation – reducing and stabilizing greenhouse gas emissions to fight
the cause of the problem – we also deploy an integrated strategy of climate adaptation measures. These measures reduce
the vulnerability of our assets and value chains to emerging climate-related physical risks and prepare us for a changing
business environment.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 75
Following a similar approach to our activities contributing to climate mitigation, our climate adaptation agenda is
organized to:
- improve our resilience and future-proof our business
- enable societies to adapt better to the adverse effects of climate change, particularly in the context of food
systems
- advocate for adaptation action, and better collaboration and sharing of information on climate risk between
actors in society
As an example of our recent actions, we conducted physical climate risk assessments in 2020—2021. This involved mapping
our top 30 sites for five emerging hazards and long-term impacts, using three climate scenarios and three-time horizons.
In 2021, we also established and piloted a process in two Business Groups to identify and assess the potential impacts of
the different speeds of transition to a net-zero world using the three scenarios used in the physical risk assessment. This
work will expand to further Business Groups and continue iteratively in the coming years. More information on our climate
risk assessments is provided in Risk management.
Waste & circularity
We are committed to securing the future availability of natural resources and unlocking more value from the limited
resources we have. We monitor and improve our own operational impact through resource efficiency improvements,
enabling our customers to deliver sustainable and circular solutions, and advocating for the transition to a circular, bio-
based economy.
Aspiration
2021
2020
Renewable & secondary raw materials¹
Renewable raw materials (% of spend)
15%
15%
.
Waste
Total process-related waste efficiency improvement
at least maintain
7.5%
11.8%²
Waste recycled
80-90% in 2021
86%
85%
Non-hazardous process-related waste (kt)
109
109²
Hazardous process-related waste (kt)
86³
81²
1 All data presented in Planet are subject to the Non-financial reporting policy.
2 The 2020 total process-related waste efficiency improvement, non-hazardous process-related waste and hazardous process-related
waste have been restated due to a correction in the calculations at multiple locations.
3 The net increase in hazardous process-related waste is due to the impact of acquisitions and divestments (~4 kt). Hazardous process-
related waste for our other locations remained in a similar range as 2020.
As the world’s population grows, the demand for Earth’s resources will only continue to rise. The United Nations has
calculated that to sustain our current lifestyles, the equivalent of three Planet Earths would be required by mid-century.
Considering our global economy is only 8.6% circular and that planetary boundaries are crossed, it is time to move away
from linear production and consumption systems and work together to build sustainable food and production systems.
Bridging the gap to a circular economy will support the health of the global population of tomorrow and improve
livelihoods and the natural environment. A circular economy for food mimics natural systems of regeneration so that
waste does not exist but is instead feedstock for another cycle.
We enable our customers to transition toward a circular and bio-based economy by focusing on five drivers:
- Reduce the use of critical resources throughout the value chain
- Replace scarce, hazardous, and potentially harmful resources with safe and renewable alternatives
- Extend the lifetime of products by means of improved durability or shelf-life
- Design for recyclability
- Recover waste streams by viewing waste as a resource
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 76
Renewable & secondary raw materials
We are accelerating our efforts to replace finite fossil resources with renewable (bio-based) raw materials, as well as
secondary (recycled) materials. Replacing finite resources with alternative renewable resources can also have
environmental co-benefits, such as reducing the carbon footprint of our solutions.
Our progress on renewable & secondary raw materials
The renewable raw materials we use include waste from agriculture, yeasts and enzymes, carbohydrates and natural oils,
and acids. In 2021, the share of our spend on renewable raw materials remained stable at approximately 15%. Overall
volumes of renewable raw materials increased, in line with organic growth.
More information on how we approach sustainable biomass is available in our position paper on Sustainable Biomass on
the company website.
DSM Engineering Materials partners with Sympatex Technologies to launch mass-balanced, bio-based Arnitel®
To address growing consumer and legislative demand for lower carbon footprint and more sustainable feedstock, the
sports and apparel value chain is increasingly integrating bio-based materials into its designs. By offering a new range of
mass-balanced, bio-based Arnitel®, DSM Engineering Materials is enabling Sympatex Technologies to meet these demands
and offer consumers more sustainable choices. The end-product contains more than 25% bio-based content by weight.
Mass-balance accounting is a well-known approach that has been designed to trace the flow of recycled- and/or bio-
based materials through a complex value chain. At all times, we ensure the transparency and traceability of our bio-
and/or recycled-based solutions through third-party sustainability certificates. More information on how we approach
mass-balance is available on our company website.
DSM Protective Materials and industry partners launch coalition to close the loop on Dyneema®
The cross-industry coalition, CirculariTeam®, consists of parties from across the value chain that use DSM’s Dyneema®, the
world’s strongest fiber™, in their products. CirculariTeam® aims to drive the transition toward renewable bio- and
recycled-based resources within its respective industry. This matches our vision and mission of enabling a circular
economy and keeping materials at their highest value for the longest possible time. CirculariTeam® has identified seven
focus areas: reverse logistics, recycle and reuse solutions, improved production efficiency (including waste reduction),
separation of waste into material components, design for circularity, regulation, and information-sharing.
DSM Protective Materials and SABIC, a global leader in the chemical industry, started a collaboration to create recycled-
based Dyneema®. Through a joint pilot with multiple CirculariTeam® members, the manufacturing and usage of Dyneema®
using mixed plastic waste as feedstock (via a mass-balance approach) was successfully demonstrated. This is an important
step toward the future goal of fully closing the loop by delivering Dyneema® made from ultra-high molecular weight
polyethylene waste. This collaboration underlines our efforts to accelerate the introduction of a circular economy for
materials.
DSM Protective Materials and Clariter partner to pursue chemical recycling solution for Dyneema®-based end-products
DSM Protective Materials is actively pursuing reuse and recycling solutions for end-of-life Dyneema®-based products. To
drive technical recycling solutions, DSM Protective Materials and Clariter partnered to test the feasibility of using
Dyneema® as a feedstock in Clariter’s chemical recycling process. Sample products made with Dyneema® were used in
Clariter’s tests at its pilot plant in Poland. The positive results confirm the technical viability of transforming Dyneema®-
based end-products into high-value, industrial-grade, product families (oils, waxes and solvents) via Clariter’s patented
three-step chemical recycling process. These can be further used as ingredients to manufacture new end- and consumer
products.
Waste
Our waste management approach consists of a continuous improvement cycle concerning our total process-related waste
produced and of driving more circular ways of waste treatment. Progress is steered as part of dedicated site improvements
programs.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 77
Our definition of waste recycled is the percentage of non-hazardous and hazardous process-related waste that is
recovered off-site or, if this is not possible, incinerated off-site with heat recovery. In total, this amounted to 169
3
kt out of
195 kt of total process-related waste in 2021. We pay careful attention to meeting local waste management legislation. As
of 2022, we will steer the journey on reducing our linear waste management further with a new target of 50% absolute
landfill reduction by 2030 versus 2020.
Waste breakdown by type and destination
in thousand tons
In the past year, we made good progress on both drivers, with a 7.5% of process-related waste efficiency improvement
from 2020 to 2021 and a percentage of waste recycled of 86% (our ambition level is in the range of 80–90%). This
improvement is mainly due to process improvements and waste reduction programs at our main locations. For example, in
Freeport (Texas, USA), a waste stream that was incinerated without heat recovery was diverted to incineration with heat
recovery and a recycling opportunity for methylene chloride was identified by working with different waste management
contractors. In Pecem (Brazil), a partnership was developed to allow composting of organic waste instead of landfilling it.
Our hazardous waste mainly consists of mixed chemicals and solvents. We follow the waste hierarchy to divert hazardous
waste from landfill, we minimize hazardous landfill as part of our SHE requirements, and 92% of our hazardous waste is
already recovered off-site or incinerated by means of heat recovery. Less than 2% of our hazardous process-related waste
is landfilled, due to specific regulatory constraints and countries with limited alternative means of disposal.
Nature & biodiversity
The complex web of life which makes up nature and biodiversity is vital for our Earth’s survival. Healthy ecosystems
supply us with oxygen, food, clean air and water, and a host of other ecosystem services that help mitigate the effects of
climate change by absorbing carbon. Like every business in the world, we depend on nature and ecosystem services. We
acknowledge our role to protect biodiversity, and fully support the ambitions of the UN Convention on Biological
Diversity.
3 All data presented in Planet are subject to the Non-financial reporting policy.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 78
1 All data presented in Planet are subject to the Non-financial reporting policy.
2 The 2020 VOC efficiency improvement and VOC amount have been restated due to a correction in the calculations at multiple locations.
3 The increase in VOC due to acquisitions was ~1.3 kt.
Biodiversity
Biodiversity loss is accelerating, and its key drivers are all connected with human activity. According to the
Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) Global Assessment, one million
of the eight million animal and plant species are now threatened with extinction. We address our impacts on biodiversity
and natural ecosystems through our DSM Responsible Care Plan, especially with our GHG emissions reduction, water
stewardship and waste management programs. In 2022, we will launch our new Responsible Care Plan, in which we will
also put more emphasis on deforestation-free supply chains for our primary raw materials.
Monitoring biodiversity across our value chain
To manage our own environmental footprint, we monitor areas of high biodiversity around our sites. In 2021, 28% of all our
production sites in scope were in or adjacent to protected areas or areas of high biodiversity. The increase is due to
acquisitions that were added to the reporting scope.
As we are exposed to biodiversity risks in our supply chain, we strive to responsibly source high-risk raw materials through
recognized certification schemes if available. These raw materials include palm oil derivatives, wood-based materials, fish
oils and sugar. We have committed to a deforestation-free primary supply chain by latest 2030 (Tier 1 supply chain for
deforestation-risk crops: sugarcane, direct soy & corn-based products, palm-oil derivatives). More information on how we
work with the sourcing of these raw materials can be found in Sustainable Biomass position paper and in our statement
on the responsible management of forest resources on the company website. Moving forward, we will continually evaluate
our impacts on biodiversity along our value chain, and have joined the Science-based Targets Network’s Corporate
Engagement Program, to co-develop and pilot test their guidance.
Supporting our customers on biodiversity
We enable our customers to develop more sustainable products through our Brighter Living Solutions. For example, just
one ton of our Veramaris® natural algal oil saves 60 tons of wild fish from having to be caught to produce salmon feed,
protecting marine biodiversity in our oceans.
Taking a position on biodiversity
Lastly, we advocate for biodiversity-promoting values worldwide. We are a member of One Planet Business for Biodiversity
(OP2B) which aims to scale up regenerative agriculture and restore ecosystems to prevent further biodiversity loss
through collective member actions. In 2021, OP2B launched the Regenerative Agriculture Framework. The framework
focusses on protecting and improving biodiversity around farms with a focus on crops, improving and preserving carbon
and water retention in soil, as well as leveraging the power of plants, livestock, and agricultural practices, while supporting
farmer livelihoods.
For more information, see our position paper on Biodiversity on the company website.
2021
2020
Protected Areas¹
Sites in or adjacent to protected areas
28%
27%
Sites in registered protected areas
3%
3%
.
VOC efficiency improvement versus 2015
50% by 2021
85%
80%²
Volatile Organic Compounds (VOC, x 1,000 tons)
4.1³
3.2²
Royal DSM Integrated Annual Report 2021 79
Report by the Managing Board – Planet
Other emissions to air
Our reporting on ‘Other emissions to air’ focuses on volatile organic compounds (VOCs), as these are the most significant
emissions in this area. We continue to report our nitrous oxide (NO
x
) and sulfur dioxide (SO
2
) emissions in the five-year
summary – sustainability tables and via the company website. However, these emissions are not material due to
improvement actions executed in the past.
We continue to work on our VOC emissions
Our objective is to continuously reduce our VOC emissions, aiming at a more than 50% efficiency improvement by 2021
versus 2015. In 2021, our VOC efficiency improved compared to 2020. This is mainly due to better understanding of VOC
generation, resulting in targeted process optimization. An example is the improvement program at our location in
Mairinque (Brazil), where studies were initiated in 2021 to better quantify and understand the mechanism of ethanol
creation during fermentation. Understanding this process will allow us to optimize the fermentation process parameters to
reduce ethanol creation and enable us to test more breakthrough solutions.
Our absolute VOC emissions increased compared to 2020. The inclusion of acquired sites in the reporting scope was not
compensated by the VOC improvements mentioned above. As this is the first year of reporting for acquisitions, they are
not included in the VOC efficiency improvement calculation.
Water stewardship
Fresh water is a finite natural resource that needs to be used and managed in a responsible and sustainable way. Water
risks are increasing due to climate change and increased urbanization, impacting food production, nature and
biodiversity. Our goal is to ensure the sustainable use of water in balance with the local context and to have safe,
available water for all.
Aspiration
2021
2020
Water Use (million m³)¹
Water withdrawal in water-stressed areas²
10.9³
10.5
Water withdrawal for non-OTC
26
24
Consumptive Use
5.3
4.4
.
Sustainable water management
Water withdrawal efficiency improvement
at least maintain
8.0%³
-⁴
Water withdrawal efficiency improvement – water-stress sites
versus 2020
10% by 2030
7.8%³
-⁴
.
Emissions to water
COD (kt)
2.0
2.0
1 All data presented in Planet are subject to the Non-financial reporting policy.
2 Water-stress is defined as the ratio of total water withdrawals to available renewable surface and groundwater supplies. We perform
water risk screening using WRI Aqueduct Tool and WWF Water Risk Filter to identify water stress sites, which are sites located in an area
with >40% water stress currently or in 2030.
3 Water withdrawal in water-stressed areas increased due to the inclusion of acquisitions. These acquired sites are not included in the
water efficiency indicators yet as there is no prior reference year available.
4 Water withdrawal efficiency improvement is based on an updated set of indicators and cannot be compared to previous years.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 80
Commitments, policy and governance
DSM is a signatory of the CEO Water Mandate, a UN Global Compact initiative to advance
water stewardship and drive progress on SDG 6 (Clean Water and Sanitation). We commit to
measuring, monitoring and reporting relevant performance indicators for water. We disclose
our progress via the CDP Water Security questionnaire. In 2021, our CDP Water Security rating
improved to an A, in recognition of our ongoing efforts in sustainable water management.
Water security is an integral part of our risk mitigation and environmental impact reduction
strategies. Our water policy is part of the SHE policy and specifies the goal, governance and
management standards on water management.
Impacts and dependencies
Water is not a primary ingredient in our products. Our primary water use is in utility systems, as a process medium and for
cleaning purposes. Water is also used in our upstream supply chain, for agriculture-related as well as industrial raw
materials.
A large proportion of our total water withdrawal (approximately 75%) is used for once-through cooling (OTC) purposes in
low water-stress areas. The risk exposure and environmental impact of OTC are limited. The other 25% of our water
withdrawal is for non-OTC purposes – this is the focus of our key performance indicators and targets on water. According
to our water risk screening in 2021, 35% of our non-OTC withdrawal is from a current water-stressed area, or a water-
stressed area in 2030.
“On World Water Day 2021, we published our updated water target
and explained why water has always been an important topic for
DSM. We are a signatory to the UN Global Compact CEO Water
Mandate and this Report represents our progress on water
stewardship.”
Dimitri de Vreeze, Co-CEO, Royal DSM
Water withdrawal
in million tons
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 81
Risk management
All sites with water withdrawal materiality and sites in water-stressed areas are required to conduct a site-level water risk
assessment (WRA). The frequency of the assessment is specified in DSM’s water management standard. In 2021, we
reached a WRA coverage of 97%, evaluating four sites newly identified to be in a water-stressed area based on the 2020
water risk screening. For one other site, the WRA was postponed to 2022, as part of the site’s overall SHE improvement
plan.
Water quality remains the most important water-related risk, often related to meeting business growth or increasingly
stringent regulatory requirements. For identified high risks, the site defines short-term measures to address the
immediate issue(s) and/or long-term measures including technical projects to reduce pollutant level at source or
upgrades of the wastewater treatment facility. For example, we are executing a capacity expansion project for the
wastewater treatment plant (WWTP) in Village-Neuf (France), including upgrades to add additional treatment steps.
In our value chain, we monitor the materiality of water for our suppliers and customers through value chain engagement
programs, such as Together for Sustainability (TfS).
Water-related targets
We strive to continuously improve water withdrawal efficiency for our production facilities. In early 2021, we announced a
context-based water reduction target to improve water withdrawal efficiency in water-stressed areas by 10% by 2030
versus 2020. We started a water reduction program covering 22 sites in an existing or future water-stressed area. Several
large sites in water-stressed areas have improved their site-level water balance in 2021, through better leakage detection
and prevention.
Some sites have also executed water reduction projects, often in close collaboration with energy reduction projects. For
example, in our Xinghuo site (Shanghai province, China), low efficiency (steam-driven) chillers were replaced by new
installations, saving 33,000 m
3
of water per year. At our site in Jingjiang (Jiangsu province, China), we installed a new
circulating water system for vacuum pumps, saving 100,000 m
3
water per year. Our site in Belvidere (New Jersey, USA)
installed a new cooling tower together with the replacement of more than 25-year-old chillers. The improved system
contributes to a water use reduction of approximately 4,000 m3 per year. These projects resulted in a 7.8% water
withdrawal efficiency improvement in water stressed areas in 2021 (versus 2020).
For effluent management, our sites set site-specific pollution reduction targets, based on business context and current
and future regulatory requirements.
Product stewardship
Product stewardship manages and minimizes the environmental, safety and health impacts of substances in our products
in line with international regulations from raw materials selection, production process, during use, until end-of-life. It is
about knowing the substances we use and produce, being able to explain why we use them, taking the appropriate risk
control measures, and sharing this information with relevant and interested stakeholders. We apply a risk-based
approach, using safer alternatives whenever feasible, and always when required.
Substances of concern
We apply a risk-based approach, using safer alternatives whenever feasible, and always when required. 'Substances of
concern’ are substances that fulfill certain regulatory criteria or are listed by recognized organizations for (potential)
serious health or environmental risks (such as REACH Substances of Very High Concern). The assessment of the presence
of these substances in our end products has been added as a minimum requirement in our new sustainable portfolio
steering program (Brighter Living Solutions +). In 2021, we assessed our full product portfolio and the result showed that
less than 0.5% of sales contain a substance of concern with a concentration >0.1%.
Regulatory developments
Product stewardship contributes to the value proposition of our business in a world characterized by increasing interest in
the health of people, animals, and the planet. It helps the business to be safe and sustainable and also helps mitigate
liabilities.
Report by the Managing Board – Planet
Royal DSM Integrated Annual Report 2021 82
In October 2020, the European Union published, as part of the European Green Deal, the Chemical Strategy for
Sustainability with the ambition to move to a toxic-free environment. A challenging regulatory agenda will be implemented
in the coming years. We support the starting-points of the strategy and as part of our advocacy efforts, we engage in
discussions to drive reasonable actions and timelines. Furthermore, we share our experiences to shape the concept of
‘safe and sustainable by design’.
Product stewardship roadmap 2021–2024
To future proof ourselves, the following five themes were identified:
- Further increase the awareness of product stewardship across the organization
- Improve our master data management
- Improve our use of digital tools
- Further embed ‘safe and sustainable by design’ principles
- Adjust our governance when needed
External and internal product stewardship awareness has accelerated due to the Chemical Strategy for Sustainability as
mentioned above. The need to improve the master data connection over the different functions and the use of digital
tools is essential and will be pursued in the coming years
Our businesses are now supported by a single, integrated product stewardship team, introduced with effect from 1 January
2022. A new product stewardship network will be installed, covering a broader spectrum of the value chain, to further roll
out our product stewardship roadmap.
For more information on product stewardship, see the company website.
Royal DSM Integrated Annual Report 2021 83
Profit
At a glance
- +42.8% Total shareholder return versus 2020
- +14% Sales from continuing operations versus 2020, with organic sales +8% in Nutrition and +28% in Materials
- +18% Adjusted EBITDA from continuing operations versus 2020, with Nutrition +8% and Materials +60%
- €949 million Adjusted net operating free cash flow from continuing operations, +9% versus 2020
- €858 million Adjusted Net profit from continuing operations, +21% versus 2020
- €2.50 Proposed dividend per ordinary share, an increase of €0.10 compared to 2020
Overall financial results
Strategy
DSM’s purpose-led, performance-driven strategy sees sustainability and innovation as key growth drivers of a long-term
focused plan, underpinned by ambitious targets across People, Planet and Profit.
In September 2021, DSM announced the acceleration of its strategic journey to become a focused Health, Nutrition &
Bioscience company organized, as from 1 January 2022, in three market-focused Business Groups. These will be much
closer aligned with their respective customers and, through the integration of activities previously performed by the DSM
Innovation Center, will be fully equipped to rapidly develop impactful science-based and market-ready solutions. This
structure will also allow DSM to leverage its strong combination of scientific competences and growing portfolio of
nutrition and health solutions, as well as harness the latest advancements in digital technology and bioscience.
As a Health, Nutrition & Bioscience company, DSM sees significant headroom for further growth and innovation by building
on its unique business model combining ‘global products’ and ‘local solutions’ and by adding a third dimension of
‘precision and personalization’ that captures emerging big data, digital and bioscience capabilities. In the new structure,
DSM is also ideally positioned to address the huge environmental and societal challenges which face the global food
systems.
DSM maintains ambitious mid-term profit targets as a Health, Nutrition & Bioscience company of mid-single digit %
organic sales growth, an above 20% Adjusted EBITDA margin, and high-single digit % Adjusted EBITDA growth, supported by
its strong innovation pipeline.
DSM also announced a review of strategic options for its Materials businesses in September 2021, including a possible
change of ownership. As from 1 January 2022 these high-quality businesses are managed largely on a stand-alone basis
and will continue their existing growth strategies focusing their innovations and business development on the increasing
demand for materials that protect the health of both people and planet by adding further bio-based and circular solutions
Financial results
This section includes an overview of the key financial metrics of the company in respect of its continuing operations
performance in 2021 and 2020, except where otherwise indicated.
The year 2021 was a transitional year in terms of the evolution of the COVID-19 pandemic, as global demand for goods and
services resumed, at pace, but also with a great deal of unpredictability. This put stress on global supply chains, logistics
and workforce availability which provided great challenges for economies around the world, giving rise to rapidly
accelerating inflationary pressures towards the end of the year. Within this context, Nutrition business conditions
remained robust during the year, and Materials saw a very strong recovery.
As a result, DSM delivered strong full year results in a challenging environment, and despite adverse foreign exchange
developments throughout most of the year. For continuing operations we reported an 18% rise in Adjusted EBITDA to
€1,814 million, driven by another very good performance in Nutrition, supported by continued innovation success and
Report by the Managing Board – Profit
Royal DSM Integrated Annual Report 2021 84
contributions from acquisitions, and a strong result in Materials, which compares with a prior year of weak industry
demand impacted by the pandemic. Adjusted net operating free cash flow from continuing operations increased by 9%,
compared to 2020, to €949 million.
Nutrition delivered a very good performance, with an 8% increase in its organic sales (all volume-driven) and Adjusted
EBITDA, highlighting an excellent operational performance and reliability as a supplier as we successfully navigated the
significant supply chain and logistic disruptions throughout the year. Pricing actions were taken during the last period to
begin to counter the rapidly rising inflationary pressures that emerged. Animal Nutrition & Health delivered 10% organic
sales growth owing to good demand in the underlying animal protein markets, further supported by higher stock levels at
customers because of concerns regarding supply chain uncertainty, together with growing inflationary pressures in the
fourth quarter. Human Nutrition & Health recorded 5% organic sales growth, building on last year’s strong volume growth
of 7%, as demand for immunity-optimizing products remained high and food services began to re-open around the world
boosting demand in Food & Beverages and Food Specialties. Personal Care & Aroma saw strong growth owing to a
recovery in sun and skin care, as travel restrictions eased, as well as strong demand for detergents and disinfectants.
Materials delivered a strong performance with a recovery in Protective Materials and elevated demand for Engineering
Materials owing to supply disruptions and raw materials shortages across the industry, leading to a 27% increase in sales
(driven equally by volumes and price) and a 60% improvement in adjusted EBITDA. DSM volumes compared to pre-covid
2019 were 6% higher, while markets continued to struggle with semiconductor shortages and supply chain disruptions
throughout 2021, highlighting our role in meeting market demand that could not be fulfilled by competitors due to force
majeure events.
Adjusted EBITDA margins for Nutrition were 20.6% in 2021, down slightly compared to prior year of 21% owing to
inflationary effects in the fourth quarter. Materials saw a strong recovery from weak market environment of 2020, with an
Adjusted EBITDA margin of 22.5% in 2021 compared to 17.9% in the prior year, owing to strong operational leverage.
Income statement and key data
x € million
2021
2020
Change
Continuing operations
Net sales
9,204
8,106
14%
Adjusted EBITDA
1,814
1,534
18%
EBITDA
1,702
1,368
24%
Adjusted operating profit
1,139
929
23%
Operating profit
1,021
662
54%
Adjusted net profit
858
711
21%
APM adjustments
231
(254)
-191%
Net profit from continuing operations
1,089
457
138%
Adjusted net operating free cash flow
949
872
9%
ROCE (in %)
11.1
10.4
Adjusted EBITDA margin (in %)
19.7
18.9
.
Total group
Net profit for the year
1,680
508
231%
Net profit available to equity holders of Koninklijke DSM N.V.
1,676
506
231%
Adjusted net operating free cash flow
941
955
-1%
Net sales and Adjusted EBITDA
At €9,204 million, net sales from continuing operations in 2021 were 14% higher than in 2020 (€8,106 million). Organic
growth in 2021 was 13%. Volume development was 10%, while price/mix had a 3% positive effect on growth compared to
2020. Exchange rate fluctuations had a negative impact of -2%, and acquisitions contributed another 3% to sales.
High-growth economies together currently represent 45% of our sales (47% when Africa is included), which is 3 percentage
points higher than in 2020. The share of sales in these economies as a proportion of our total sales gives us a well-
balanced global footprint.
Report by the Managing Board – Profit
Royal DSM Integrated Annual Report 2021 85
The Adjusted EBITDA (Adjusted operating profit before depreciation and amortization) from continuing operations
increased by 18%, or €280 million, from €1,534 million in 2020 to €1,814 million in 2021. Adjusted EBIT (Adjusted operating
profit) from continuing operations increased from €929 million in 2020 to €1,139 million in 2021, up 23%.
Net sales
Adjusted EBITDA
x € million
2021
2020
% change
2021
2020
% change
DSM, continuing operations
9,204
8,106
14%
1,814
1,534
18%
Nutrition
7,031
6,365
10%
1,447
1,338
8%
Materials
1,935
1,518
27%
435
272
60%
Innovation Center
168
184
-9%
26
21
24%
Corporate Activities
70
39
79%
(94)
(97)
-3%
Net profit
Adjusted net profit from continuing operations of €858 million was up by 21% versus 2020. Net profit available to equity
holders of DSM increased by €1,170 million to €1,676 million. Next to the improved adjusted net profit from continuing
operations of €147 million, this increase was mainly a result of the net book profit of €570 million on the sale of Resins &
Functional Materials and the net book profit of €303 million on the sale of DSM’s share in AOC Aliancys. Furthermore, this
included the lower other APM adjustments (down by €125 million, mainly due to lower impairments and acquisition costs).
Expressed per ordinary share, net earnings from continuing operations amounted to €6.26 in 2021 (2020: €2.64).
Financial income and expense increased by €39 million year on year to a net expense of €106 million. This was mainly
caused by the impact of the accounting for renewable energy contracts (a financial expense of €7 million in 2021,
compared to a financial income of €27 million in 2020).
The total effective tax rate over taxable result 2021 for continuing operations was 18.4% (2020: 17.9%). excluding APM
adjustments this was an increase from 18.5% to 19.2%. This increase was mainly due to uncertainties under local laws,
partly compensated by higher tax-exempt income in several countries and the higher tax rate in the Netherlands as of
2022.
Adjustments made in arriving at DSM’s Alternative performance measures (APM adjustments)
Total APM adjustments from continuing operations for the full year amounted to a profit of €231 million (2020: loss of
€254 million), consisting of a loss in EBITDA of €112 million (including restructuring costs of €92 million and
acquisition/divestment costs of €26 million), impairments of €6 million, a related tax benefit of €30 million, and a profit of
€319 million relating to associates and joint ventures (mainly the profit on the sale of DSM’s share in AOC of €303 million).
Report by the Managing Board – Profit
Royal DSM Integrated Annual Report 2021 86
Net sales by destination
in %
Net sales by origin
in %
Net sales by business segment
in %
Net sales by end-use market
in %
Adjusted EBITDA margin
Net sales bridge 2021
x € million in %
Report by the Managing Board – Profit
Royal DSM Integrated Annual Report 2021 87
Cash flow statement
x € million
2021¹
2020¹
Cash and cash equivalents at 1 January
871
800
Cash provided by operating activities
1,427
1,494
Cash from / (used in) investing activities
208
(1,482)
Cash from / (used in) financing activities
(984)
83
Effect of exchange differences
39
(24)
Cash and cash equivalents at 31 December
1,561
871
1 The cash flow statement includes an analysis of all cash flows, including those related to discontinued operations.
Cash provided by operating activities of €1,427 million mainly consists of the EBITDA for the year (€2,370 million), excluding
the book profit on the sale of Resins & Functional Materials before tax of €640 million (recognized under investing
activities). Overall, the full-year operating cash flow decreased by €67 million. This was driven by various items, including
increased working capital (see also Consolidated financial statements).
The cash from investing activities consisted mainly of the proceeds from the divestments (€1,791 million, mainly from the
divestments of Resins & Functional Materials and DSM’s share in AOC), partly offset by capital expenditures (-€570 million)
and acquisitions (-€704 million, mainly First Choice Ingredients and the Fragrance & Flavours business of Amyris).
The cash used in financing activities included the early redemption of the 2022 bond (-€500 million), dividend paid (-€266
million) and the repurchase of shares (-€165 million).
For the full cash flow statement, see the primary statement in the Consolidated financial statements.
Balance sheet
The balance sheet total (total assets) reached €16.0 billion at year-end (2020: €14.3 billion). Equity increased by €1,910
million, which was attributable to the net profit of €1.680 million, the exchange rate impact on foreign operations of
€474 million, offset partly by the dividend payments of -€424 million. Equity as a percentage of total assets increased from
52% to 59%.
Compared to year-end 2020, net debt decreased by €1,563 million to €1,014 million, mainly due to the divestments of
Resins & Functional Materials and DSM’s share in AOC, offset partly by the early redemption of the 2022 bond
(-€500 million). The gearing at year-end was 9.7%, which was considerably lower than the gearing of 25.6% at year-end
2020.
Capital expenditure on intangible assets and property, plant and equipment amounted to €608 million for continuing
operations in 2021 (€563 million on a cash basis), which was roughly the same as the level of amortization and
depreciation (excluding the depreciation on leases).
Total working capital from continuing operations amounted to €1,805 million compared to €1,591 million at year-end 2020.
This represents 18.7% as a percentage of annualized fourth-quarter 2021 sales (2020: 19.1%), which is below our aspiration
of 20%. Cash-wise, the operating working capital (OWC) from continuing operations increased €183 million compared to
last year, which is fully attributable to the increased sales. The OWC percentage decreased from 24.6% at year-end 2020 to
24.1% of annualized sales at year-end 2021.
Cash and cash equivalents came to €1,561 million at the end of the year; including current investments, this amounted to
€2,050 million (2020: €914 million). Besides the regular cash flow elements, this increase was mainly due to divestments
(€1,791 million), acquisitions (-€704 million), redemption of the 2022 bonds (-€500 million), the repurchase of shares
(-€165 million) and the paid dividend (-€266 million).
Report by the Managing Board – Profit
Royal DSM Integrated Annual Report 2021 88
Balance sheet profile
2021
2020
x € million
in %
x € million
in %
Intangible assets
5,310
33
4,440
31
Property, plant and equipment
3,957
25
3,775
26
Other non-current assets
617
4
711
5
Cash and cash equivalents
1,561
10
871
6
Other current assets
4,568
28
4,549
32
Total assets
16,013
100
14,346
100
Equity
9,397
59
7,487
52
Provisions
164
1
184
1
Other non-current liabilities
4,089
25
4,493
32
Other current liabilities
2,363
15
2,182
15
Total equity and liabilities
16,013
100
14,346
100
“Once again we delivered a performance in line with our ambitious
mid-term financial targets. An excellent operational performance
saw us successfully navigate challenging market conditions,
ensuring we met the expectations of our customers. We are well
positioned to counter the rising input costs that we saw at the end of
the year.”
Geraldine Matchett, Co-CEO, Royal DSM
Outlook 2022
DSM expects its Health, Nutrition & Bioscience activities to deliver a high-single digit Adjusted EBITDA increase. For the
Group, it expects a mid-single digit Adjusted EBITDA increase, with a high-single digit Adjusted Net Operating Free Cash
Flow increase. This outlook is based on DSM’s expectation of a stable Adjusted EBITDA in Materials following the strong
performance in 2021.
Report by the Managing Board – Profit
Royal DSM Integrated Annual Report 2021 89
Key business figures at a glance
Our activities are grouped in three clusters: Nutrition, Materials and Innovation Center. We report separately on Corporate
Activities. Results presented in this section (and elsewhere in this Report) relate to consolidated activities only (therefore
non-consolidated partnerships are excluded).
Net sales
x € million
2021
2020
Nutrition
7,031
6,365
Materials
1,935
1,518
Innovation Center
168
184
Corporate Activities
70
39
Total continuing operations
9,204
8,106
Discontinued operations
264
932
Total
9,468
9,038
Adjusted EBITDA
x € million
2021
2020
Nutrition
1,447
1,338
Materials
435
272
Innovation Center
26
21
Corporate Activities
(94)
(97)
Total continuing operations
1,814
1,534
Discontinued operations
28
116
Total
1,842
1,650
Adjusted EBITDA margin
in %
2021
2020
Nutrition
20.6
21.0
Materials
22.5
17.9
Total continuing operations
19.7
18.9
Discontinued operations
10.6
12.4
Total
19.5
18.3
Adjusted operating profit (EBIT)
x € million
2021
2020
Nutrition
940
919
Materials
331
168
Innovation Center
4
(17)
Corporate Activities
(136)
(141)
Total continuing operations
1,139
929
Discontinued operations
28
82
Total
1,167
1,011
Capital employed at 31 December
x € million
2021
2020
Nutrition
9,550
8,305
Materials
1,005
953
Innovation Center
407
436
Corporate Activities
(1)
-
Total continuing operations
10,961
9,694
Discontinued operations
51
863
Total
11,012
10,557
ROCE
in %
2021
2020
Nutrition
10.6
12.6
Materials
34.1
16.4
Total continuing operations
11.1
10.4
Discontinued operations
-
9.2
Total
11.1
10.3
Capital expenditure
x € million
2021
2020
Nutrition
488
441
Materials
65
63
Innovation Center
2
35
Corporate Activities
53
34
Total continuing operations
608
573
Discontinued operations
6
49
Total, accounting based
614
622
Non-cash items
(44)
(13)
Customer funding
-
(24)
Total, cash-based
570
585
In % of net sales
6.0
6.5
Report by the Managing Board – Profit
Royal DSM Integrated Annual Report 2021 90
R&D expenditure (including associated IP expenditure)
x € million
as % of net sales
2021
2020
2021
2020
Nutrition
257
241
3.7
3.8
Materials
79
73
4.1
4.8
Innovation Center
45
60
24.5
32.6
Corporate Activities
21
11
30.0
28.2
Total continuing operations
402
385
4.4
4.7
Discontinued operations
13
60
4.9
6.4
Total
415
445
4.4
4.9
Workforce at 31 December
headcount
2021
2020
Nutrition
16,091
15,838
Materials
2,885
2,857
Innovation Center
578
579
Corporate Activities
1,804
2,039
Total continuing operations
21,358
21,313
Discontinued operations
-
1,814
Total
21,358
23,127
Royal DSM Integrated Annual Report 2021 91
Review of business
Nutrition
At a glance
- €7,031 Net sales versus € 6,365 in 2020 (in millions)
- 20.6% Adjusted EBITDA margin versus 21% in 2020 and versus a >20% ambition
- >55 animal nutrition premix facilities and 15 human nutrition premix facilities
- >€1 billion of our sales in 2021 came from immunity-optimizing ingredients
- 70% reduction in land use with EVERSWEET™ stevia sweetener compared to bio-converted Reb M
- > 70% of our skin care portfolio is > 90% natural in origin
About DSM Nutrition
Our Nutrition business comprises DSM Nutritional Products and DSM Food Specialties. This cluster provides solutions that
benefit the health of people and the health of the planet. We are active across a wide range of sectors: animal nutrition &
health, food & beverages, pharmaceuticals, medical nutrition, early life nutrition, nutrition improvement, dietary
supplements, personalized nutrition and personal care.
We cover all stages of the associated value chains, producing pure active ingredients, incorporating them into
sophisticated forms and providing tailored premixes, functional solutions and branded consumer products. Our unique
portfolio of products and services is global and highly diversified, serving customers and other stakeholders locally across
an extensive range of end-markets worldwide.
With our ‘global products, local solutions’ business model, we have successfully built a broad, highly integrated and
profitable growth business. We are expanding our business model with leading precision & personalization propositions.
More detail on our business model can be found in Strategy.
On 1 January 2022, we reorganized our Nutrition business into three market-focused Business Groups: Food & Beverage,
Health, Nutrition & Care and Animal Nutrition & Health. These underpin our transformation to a Health, Nutrition &
Bioscience company as announced in September 2021. At the same time as announcing these changes, we also announced
a series of new quantifiable Food System Commitments. These underpin DSM’s overarching commitment to meaningfully
contribute to Health for People, Health for the Planet and Healthy Livelihoods and span all three new Business Groups.
Through investment in our (bio)science-based innovations, extensive partnerships, and advocacy activities, we aim to help
deliver change to ensure accessible, affordable, healthy nutrition and healthy livelihoods within planetary boundaries.
Trends
Our Nutrition business addresses significant trends that influence the health of people and of the planet. In Animal
Nutrition & Health, we address the growing requirement for the sustainable production of animal protein. In Human
Nutrition & Health, we address the growing demand for (personalized) health solutions, including the need to provide
delicious, nutritious and sustainable food and beverage choices for all.
Enabling the sustainable production of animal protein
Animal-based proteins are highly nutritious and form a key part of a balanced, healthy diet. Their consumption is also
central to many cultures, and animal-source foods and other animal-source products play an important socio-economic
Review of Business – Nutrition
Royal DSM Integrated Annual Report 2021 92
role in those cultures. However, livestock production comes at a cost. This cost is increasingly evident. Rising demand for
animal protein is driving up greenhouse gas (GHG) emissions and piling pressure on natural resources. In some cases, this
pressure has already transgressed accepted planetary boundaries. The planetary boundaries include the Earth’s tolerance
thresholds in terms of GHG emissions, biochemical flows, water quality and quantity, land use, and biodiversity. The agri-
food sector is one of the major contributors to global GHG emissions, and almost a third of wild fisheries are
overexploited. The sustainability of animal protein production is now front and center in the minds of many, with
widespread calls for change from the value chain, policy makers and associated stakeholders.
The world’s population is projected to reach 9.7 billion by 2050. At the same time, demand for healthier, balanced, and
more nutrient-dense diets is increasing — driven not only by the growth of the world’s population but also by changing
health awareness and consumer expectations. The possibilities afforded by a growing range of plant-based alternatives to
protein might go some way to filling this gap. However, demand is still likely to grow as many populations need to raise
their animal protein intake to attain a level of balanced, healthy nutrition. Enabling sustainable animal production is
therefore of paramount importance.
Our solutions
We strongly believe in and advocate for a radical transformation of animal farming and food systems to ensure a
sustainable future. We are convinced that the livestock industry can transform itself from within to deliver solutions to the
challenges facing society and the animal protein industry. We are well positioned to play a key role in this transformation.
That is why in Animal Nutrition & Health, we focus on the following six sustainability platforms to support our customer,
the livestock value chain and other stakeholders to address the environmental challenges facing our planet:
- Improving the lifetime performance of farm animals
- Making efficient use of natural resources
- Reducing emissions from livestock
- Helping tackle antimicrobial resistance
- Reducing our reliance on marine resources
- Improving the nutritional quality of meat, milk, fish and eggs while reducing food loss and waste
To tackle these challenges, we have an extensive existing portfolio structured into Essential Products and Performance
Solutions.
Our Essential Products provide our customers with the highest quality core vitamins, premixes and carotenoids that are
essential for life and lie at the heart of an animal’s healthy development, all delivered in the most flexible and tailored
way.
Covering enzymes, microbes and eubiotics, our Performance Solutions combat mycotoxins and tackle antimicrobial
resistance. They also optimize gut health, feed conversion and feed efficiency, thereby reducing emissions from livestock.
As a result, fewer natural resources, such as land and water, are needed for the production of animal protein production.
In addition to our Essential Products and Performance Solutions, we are also successfully rolling out our methane-
reducing feed additive for ruminants, Bovaer® and further extending our capabilities in precision nutrition, building on the
foundations of our globally recognized Optimum Vitamin Nutrition™ (OVN™) concept. More information on our solutions
for sustainable animal farming can be found in the case study in this Report.
The growing demand for (personalized) health solutions
Despite growing understanding of the central role of nutrition in supporting immune function and healthy growth and
development, the world continues to face a wide range of food-related health issues and challenges. In today’s world,
according to the 2020 Global Nutrition Report, “One in every nine people in the world is hungry, and one in every three is
overweight or obese. More and more countries experience the double burden of malnutrition, where undernutrition,
coexists with overweight, obesity and other diet-related non-communicable diseases (NCDs). The trend is clear: progress is
too slow to meet the global targets. Almost a quarter of all children under 5 years of age are stunted. At the same time,
Review of Business – Nutrition
Royal DSM Integrated Annual Report 2021 93
overweight and obesity are increasing rapidly in nearly every country in the world, with no signs of slowing.” A 2021 UN
report indicated that conflict, climate change and COVID-19 forced more people into hunger.
While many low- and middle-income countries are still grappling with fundamental problems of food and nutrition
security, the world’s food systems as a whole are coming under growing scrutiny. Food poverty exists in even the richest
countries of the world, as the continuing prevalence of food banks demonstrates. Governments, NGOs, academia and the
private sector worldwide need to develop evidence-based approaches that will deliver affordable, accessible and
nutritious diets for all people in all countries at all stages of the life cycle.
The crucial role of nutrition in supporting immune function was thrown into sharper perspective than ever during the
COVID-19 pandemic, accelerating the existing trend toward personalized health and nutrition. The pandemic
simultaneously accelerated the use of digital communications in delivering these solutions, as consumers increasingly
sought to boost their immune systems with the aid of fortified foods and dietary supplements researched and purchased
online.
There is growing interest worldwide in personalized nutrition — science-based, data-driven nutritional solutions tailored
to consumers' specific health goals and needs. Differences in age, genotype and health status mean that individuals can
react in very different ways to the same foods. Personalized nutrition allows individuals to make dietary choices tailored to
their specific needs, reducing their exposure to a wide range of non-communicable diseases and helping to lower
healthcare costs.
There is also a growing demand for plant-based alternatives alongside traditional meat, fish and dairy products, as
consumers search for foods that deliver an authentic eating experience without compromising on taste and texture.
Whether for personal, health or sustainability reasons, or from plain curiosity, more and more people are adding plant-
based options to their food choices and are adopting flexitarian, vegetarian, or vegan diets. At the same time, the
importance of a quality nutritional profile is attracting increasing recognition.
Our solutions
Our portfolio of nutritional ingredients covers a wide range of products essential for good nutrition, food enzymes,
nutritional lipids, carotenoids, cultures, human milk oligosaccharides (HMOs) and hydrocolloids. Our capabilities were
expanded in 2021 by the acquisition of First Choice Ingredients, a leading supplier of dairy-based savory flavorings, and
Vestkorn Milling, one of Europe's leading producers of pea- and bean-derived ingredients for plant-based protein
products. Our offering is driven by a mixture of in-house innovation (including partnerships) and targeted acquisitions. We
also develop, both in-house and in collaboration with partners, our own offerings in the fields of zero-calorie sweeteners
(EVERSWEET™), proteins, skin actives and sun filters.
As a global pioneer in the industrial production of vitamins, we cover the entire range of critical micronutrients, whose
efficacy continues to reveal itself in new ways. We have, for example, a new range of Market-Ready Solutions to enable our
customers to launch new immunity-supporting products in a matter of months. Rapidly evolving evidence suggests an
association between vitamin D levels and sensitivity to viral infections such as COVID-19. In 2021, we launched our
immunity-supporting solution ampli-D®, our fast-acting form of vitamin D for dietary supplements.
In the field of meat, fish and dairy alternatives, we offer a range of solutions for analogs that deliver proteins, authentic
taste and create succulent, chewy texture. At the same time, because our yeast extracts unlock full umami flavor,
producers can reduce the amount of added salt in their recipes, improving the health appeal, while our breadth of
vitamins and other micronutrients as well as nutrition science expertise helps producers to improve the nutritional profile
of their plant-based offerings. The case study in this Report provides more detail on how we enable tastier, more
nutritious plant-based choices for consumers.
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Royal DSM Integrated Annual Report 2021 94
Partnerships
We have many partnerships that support and accelerate innovation in Nutrition.
Animal Nutrition & Health
In Animal Nutrition & Health we have, for example:
- The world-leading Feed Enzymes Alliance of DSM and Novozymes, which brings together the complementary
competences and technologies of our two companies to deliver feed enzyme innovation to our customers
- Veramaris, our 50:50 joint venture with Evonik, which developed an algal oil rich in omega-3 fatty acids EPA and
DHA for aquaculture and pet food without using wild-caught fish
- Our 75:25 partnership Yimante (Hubei Province, China), with Nenter, which strengthens our position in vitamin E,
an essential ingredient in our animal nutrition premix solutions
Human Nutrition & Health
In Human Nutrition & Health, partnerships include, for example:
- Avansya, our partnership with Cargill to bring sustainably produced, great-tasting, zero-calorie, cost-effective
fermentation-produced sweeteners to market at scale
- Olatein, our partnership with Avril to produce the high-quality, nutritionally complete and sustainably sourced
rapeseed protein isolate CanolaPRO®
- Working with Panaceutics and Wellmetrix in the personalized nutrition area; we combine their competences with
our world-class nutrition science, products and solutions. We aim to be the partner of choice for dietary
supplements as well as food & beverage brand owners that wish to offer personalized and healthy nutrition
- Our partnerships with the World Food Programme (WFP), UNICEF and World Vision to combat hunger and
malnutrition
Nutrition performance 2021
Highlights 2021
- Acceleration of our long-term focused growth strategy, including ambitious new Food System Commitments
- Creation of our new Health, Nutrition & Bioscience organization, with three new Business Groups operational as
of 1 January 2022
- First steps in commercialization of Bovaer®, within the context of wider awareness of methane as a significant
greenhouse-gas contributor
- Expansion of portfolio for plant-based meat and dairy solutions: First Choice Ingredients, Vestkorn Milling,
CanolaPRO® facility
- Precision nutrition: Hologram Sciences™ (personalized dietary supplementation), Sustell™ and Verax
TM
(decision-
making tools for farming)
- Expansion of bio-based activities in Aroma Ingredients
- Expansion of animal gut health activities with the novel technology of Midori and the development of a new
generation of feed enzymes
Nutrition delivered a very good performance, with 8% volume-driven organic growth. This business cluster demonstrated
its superior operational performance and reliability as a supplier as it successfully navigated significant supply chain and
logistical disruptions that affected the market throughout the year, strengthening its customer relationships in the
process. A 4% contribution from acquisitions, offset by a 2% negative foreign exchange effect, led to a 10% increase in total
sales in 2021.
Nutrition reported 8% growth in Adjusted EBITDA largely related to increased volumes, with a 6% contribution from
acquisitions and a 4% negative foreign exchange effect. The Adjusted EBITDA margin of 20.6% was slightly down compared
to 2020 (21.0%), reflecting some inflationary cost effects toward the end of the year.
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Royal DSM Integrated Annual Report 2021 95
x € million
2021
2020
Net sales from continuing operations:
DSM Nutritional Products:
- Animal Nutrition & Health
3,502
3,025
- Human Nutrition & Health
2,207
2,143
- Personal Care & Aroma Ingredients
484
404
- Other¹
122
145
Total DSM Nutritional Products
6,315
5,717
DSM Food Specialties
716
648
Total Nutrition
7,031
6,365
Organic sales growth (in %)
8
6
Adjusted EBITDA
1,447
1,338
Adjusted operating profit
940
919
Capital expenditure
488
441
Capital employed at 31 December
9,550
8,305
ROCE (in %)
10.6
12.6
Adjusted EBITDA margin (in %)
20.6
21.0
R&D expenditure
257
241
Workforce at 31 December (headcount)
16,091
15,838
1 ‘Other’ covers pharma and custom manufacturing & services activities.
Net sales bridge 2021
x € million
“Our nutrition business made significant progress in 2021 in terms of
both operational performance and the acceleration of our strategic
journey. Core to this are our exciting innovation platforms that help
drive health for people and planet.”
Dimitri de Vreeze, Co-CEO, Royal DSM
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Royal DSM Integrated Annual Report 2021 96
Animal Nutrition & Health
Highlights 2021
- Delivered strong volume-led organic growth of 10%, with good underlying demand further supported by higher
customer inventory levels
- Acquired full ownership of Midori USA, Inc. (‘Midori’), a biotechnology start-up developing targeted eubiotics for
animals
- Strong demand from ruminants and poultry during second year of COVID-19 pandemic
- Growth of our swine business as Chinese swine value chain recovered from African Swine fever (ASF)
- First regulatory approval in Latin America and positive EFSA opinion in the EU for Bovaer® methane inhibitor
solution
- Announcement of plans to realize large-scale production of Bovaer® in Dalry (UK) by 2025
- Integration of Erber activities to help deliver leading sustainable animal farming solutions, Including food & feed
safety solutions
- Launch of decision-making tools Verax™ and Sustell™ to pinpoint health issues and deliver farm-precise
sustainability measurements
- Commitment to enable double-digit on-farm livestock emission reductions by 2030
About Animal Nutrition & Health
Animal Nutrition & Health serves the global feed industry with innovative and sustainable nutritional solutions. A pioneer
since the earliest days of feed additives, we draw on the latest science to provide a portfolio that runs from vitamins
through carotenoids to cutting-edge mycotoxin risk management solutions, feed safety diagnostic solutions, gut heath
technologies, and feed efficiency. We are now developing a new strand to our business that uses independent data
analysis and diagnostics to pinpoint on the one hand health issues and on the other environmental footprint, on a
completely bespoke basis.
We aim to make animal farming more sustainable by reducing greenhouse gas (GHG) emissions caused by animal farming
and the consequent pressure on the environment and biodiversity. At the same time, we strive to ensure that farmers can
earn a decent living and that people will have access to affordable proteins. Further information on our Animal Nutrition &
Health strategy and how we make animal farming more sustainable can be found in Strategy.
Animal Nutrition & Health performance
Animal Nutrition delivered exceptionally strong volume growth of 10%, with ongoing good demand in the underlying
animal protein markets. This volume growth was supported by customers increasing stock levels given widespread and
ongoing supply chain concerns. This stocking effect from customers was exacerbated in the fourth quarter by a sharp
increase in energy costs, heightening inflationary pressures.
All species performed well, especially ruminants and poultry, with swine in China fully recovering from the effects of
African Swine Fever and aquaculture showing improvement due to the gradual reopening of food services. Regionally,
China and Latin America were very strong.
Erber Group, a leader in mycotoxin management and eubiotics, delivered strong results in its full first year in DSM, with
€328 million sales and total Adjusted EBITDA of €86 million in 2021. The Erber Group activities are now fully integrated in
Animal Nutrition & Health.
Strong demand for poultry in second year of pandemic
The poultry industry faced multiple challenges in 2021. These included the continuing impact of COVID-19, which caused
labor shortages and logistical constraints and consequently drove up corn and soybean prices, and the occurrence of HPAI
(avian or bird influenza) throughout Europe and Asia. However, the year saw a gradual increase in demand as lockdowns
were lifted, economies began to recover, and activity picked up within the food service and hotel industries. The recovery
had a positive effect not only on poultry but on all the species we support. We continued to help our customers become
more sustainable during this challenging time.
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Royal DSM Integrated Annual Report 2021 97
Championing sustainability in egg production
Egg consumption played an important role in keeping the levels of immunity high among the population at large during
the second year of the pandemic. Pressure on the supply chain was significant, but we increased sales of key solutions
such as Hy•D®, vitamins and feed enzymes. At the same time, our partnership with the International Egg Commission
allowed us to communicate our sustainability message to most of the major players in the egg industry, positioning DSM
as the sustainability leader in this sector.
Response to African Swine Fever (ASF) drives growth
African Swine Fever (ASF) is one of the severest crises experienced by the swine/pork value chain in recent times. Our
portfolio of global products and local solutions enabled us to provide tailored support to our customers during the
recovery phase of 2021.
Managing ASF has required the entire swine industry to improve biosecurity, accelerate the adoption of technology, and
raise professional standards. Despite the smaller size of the overall herd (versus 2020), we benefited from the increased
demand for our solutions that these improvements generated.
Further development of sustainable aquaculture solutions
It is widely accepted that aquaculture has an important role to play in providing the world’s growing population with
protein, with demand for salmon and warm water fish being of pivotal importance. Any further growth of the aquaculture
sector must, however, be sustainable and must occur within the planetary boundaries.
During 2021, we further developed our aquaculture solutions in the area of enzymes for warm water species, expanded (via
the acquisition of Biomin) our health solutions for cold water and warm water species, and reframed the vitamin
requirements for aquaculture species in our Optimum Vitamin Nutrition™ guidelines. Raising our profile as partners in the
development of sustainable aquaculture, the aquaculture component of our ‘We Make it Possible’ initiative was also
launched.
Strong growth in beef, positive trend in dairy
Our activities in the beef sector continued to benefit from strong exports from Latin America during the year, especially to
China. Volume growth was accompanied by improvements in product quality, as farmers made increased use of our beta-
carotene to improve fertility rates in cows. There was also increased demand for two other of our products to improve
ruminant performance: CRINA® Ruminants (a precise blend of essential oils and nature-identical compounds) and
RONOZYME® Rumistar® (a first-of-its-kind feed enzyme that optimizes corn starch and fiber degradation in the rumen). In
the dairy sector, by contrast, consumption of dairy products fell during the year, while grain costs for farmers rose. Our
dairy business nevertheless increased, fueled by sales of Hy•D®, our pure and proprietary vitamin D3 metabolite that
improves calcium management and lifetime productivity in dairy cows.
First approvals for Bovaer® methane inhibitor solution
We received full regulatory approval from the Brazilian and Chilean authorities in 2021 to commercialize Bovaer® for
application in beef, dairy, sheep and goats. We completed the first step in the regulatory approval process in Europe by
receiving a positive EFSA opinion on the safety of Bovaer® for dairy cattle. We worked with partners from the dairy value
chain to prepare for the introduction of Bovaer® in further markets worldwide. These activities included trials to confirm
Bovaer®’s effectiveness in local farming systems and further build up practical farm experience.
In January 2021, we published the results of a trial that had been conducted at the Dairy Campus in Leeuwarden
(Netherlands) in cooperation with a consortium representing the Dutch dairy value chain. The results showed a reduction
in enteric methane emissions of 27–40% per cow, allowing Bovaer® to gain accreditation.
In Australia and New Zealand, we worked closely with industry and research institutes to develop a pasture-based
application model for Bovaer® (i.e. for cows not raised in feedlots). Work conducted at AgResearch and CSIRO successfully
investigated several forms and feeding models for Bovaer® in different pasture-feeding systems common in New Zealand
and Australia. Trials took place throughout 2021. We also signed a collaboration agreement with Fonterra to accelerate the
transition to lower-methane agriculture.
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At COP26 in Glasgow, we announced our plans to realize large-scale production capacity for Bovaer® with a new plant at
our site in Dalry (UK), supported by Scottish Enterprise. The new plant is scheduled to come on stream in 2025. As
emphasized by the First Minister of Scotland at the announcement, Scotland offers a welcoming and supportive
environment for innovation and production, and is leading the way for a net-zero future.
Commencement of vitamin E production by Yimante
Following an extensive upgrade to ensure compliance with our safety, health and environmental standards, production
commenced at our vitamin E plant in China, Yimante (owned 75/25 with Nenter). Operations started successfully in 2021.
With a gradual ramp-up, we reached our targeted utilization rate by the end of the year.
Integration of Biomin
Following our acquisition of activities from the Erber Group in 2020, we integrated Biomin into DSM during 2021.
The result of the Biomin integration is a single, expanded Animal Nutrition & Health business with the capacity and
capabilities to lead globally in facilitating sustainable animal protein production. This reconfigured business has an
unparalleled network of more than 55 premix and additives plants and a unique portfolio of highest-quality core vitamins,
premixes, carotenoids, feed enzymes, microbes and eubiotics to address the new challenges facing the animal farming
community. With scientific centers of excellence in Switzerland and Austria, and worldwide R&D capabilities and technical
expertise, this business combines global thought leadership with the advantages of local knowledge and connections.
Strong increase in sales of Veramaris® algal-based omega-3
Utilization of our Veramaris facility in Blair (Nebraska, USA) further ramped up during the year. Continuous yield and
potency improvements further enhanced the value of our Veramaris® algal oil, which is rich in both EPA and DHA omega-3
fatty acids. The uplift within the food service and hotel industries sector in 2021 helped generate a quarter-by-quarter
increase in sales of Veramaris®, which was reflected in a 150% rise in volume versus 2020 as we expanded into additional
geographies and channels, building our presence in petfood, warm water fish, shrimp and salmonids.
Enabling the replacement of antibiotic growth promoters (AGPs) in China
In view of the scale of the challenge of transitioning to AGP-free production, the Chinese Ministry adopted a two-phase
approach. During phase 1 (July – December 2020), the sale of feeds containing AGPs was still permitted. However, during
phase 2 (January – June 2021), the sale of feeds containing AGPs was prohibited, stimulating demand for alternative
nutritional solutions to manage animal gut health. Our solutions include Balancius®, which supports digestion and
gastrointestinal functionality and improves performance, and VevoVitall®, which combats the negative activity of micro-
organisms on feed.
Launch of Sustell™ and Verax™
In May 2021, we launched Sustell™ – an intelligent sustainability service that combines the most advanced environmental
foot printing calculation tool with expert sustainability, animal production and nutritional knowledge to create tailor-
made, practical solutions and business development projects that enhance the environmental sustainability and
profitability of animal farming. The launch of Sustell™ underlines our commitment to our strategic initiative ‘We Make It
Possible’, which has the objective to drive a robust and achievable global transformation toward sustainable animal
protein production.
In the US, we also introduced Verax™ – a data-driven, blood-based, biomarker-screening service that uses analytics to
deliver a deeper and more accurate understanding of the health and performance of animals. This innovative service gives
producers and feed integrators quick access to substantiated guidance to improve the nutrition, performance, and
sustainability of their operations.
Commitment to enable double-digit on-farm livestock emission reductions
Food systems and the climate crisis are intrinsically linked. Not only is food production and consumption responsible for
more than a quarter of all global emissions (IPCC report 2019); it is also highly sensitive to the disruption of the planet’s
natural ecosystems. Switching to more sustainable production of key animal proteins such as dairy, fish, meat and eggs is
essential in order to meet the nutritional needs of the growing global population. As part of our strategic Food System
Commitments, we commit to enable double-digit on-farm reduction of livestock emissions by 2030.
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Human Nutrition & Health
Highlights 2021
- Organic growth of 5%, following 7% growth in 2020, driven by good conditions in Food & Beverage, Pharma and
Dietary Supplements and despite difficult conditions in Early Life Nutrition
- Expanded offering in personalized nutrition with the launch of Hologram Sciences, Inc.
- Continued growth in dietary supplements and launch of fast-acting vitamin D form, ampli-D®
- Expansion of position in early life nutrition during Glycom’s first full year as a reporting entity
- Growth in Food & Beverage, driven by continuing consumer demand for healthy and environmentally sustainable
food choices
- Commitment to close the micronutrient gap for 800 million vulnerable people and support the immunity of half a
billion people by 2030
About Human Nutrition & Health
Human Nutrition & Health provides solutions for the early life nutrition, dietary supplement, pharmaceutical, medical
nutrition, nutrition improvement (for the most vulnerable) and food & beverage markets. We serve these industries with:
- a portfolio of high-quality products covering vitamins, nutritional lipids, minerals, carotenoids, nutraceuticals,
digestive enzymes, probiotics and prebiotics (incl. human milk oligosaccharides (HMOs), as well as active
pharmaceutical ingredients (APIs)
- a suite of customized solutions (premix, Market-Ready Solutions and personalized nutrition)
- a range of expert services (e.g., regulatory affairs and formulation expertise, and customized solutions)
Human Nutrition & Health performance
Human Nutrition delivered a good performance with 5% organic growth, of which 4% was volume-driven, building on last
year’s strong volume growth of 7%.
Hologram Sciences™, a new wholly-owned DSM company that reaches out directly to consumers, launched its first
personalized nutrition solution to North American customers.
Demand for Dietary Supplements remained favorable and showed good growth, as consumer awareness of the relevance
of immunity-optimizing products remained high. Pharma and Medical Nutrition recorded a very strong performance once
again.
ampli-D®, a new vitamin D dietary supplement, was commercialized during the year. This product contains a rapid-acting
and potent form of vitamin D, providing fast-working immunity support.
Early life nutrition (ELN) sales were soft as this business continued to be impacted by lower global birth rates exacerbated
by the COVID-19 pandemic. Our differentiated and value-added portfolio of ELN products provided good market access in
China at local Chinese ELN producers.
Glycom, the world’s largest supplier of human milk oligosaccharides (HMOs), made good progress in its full first year as
part of DSM, with sales supported by the successful launch of our new Culturelle® probiotic supplements with HMOs.
Organic sales in ELN applications were flat, but the business now sees activities at customers picking up as business
conditions have started to improve in the ELN market.
The Food & Beverage segment saw strong growth driven by continued elevated demand from at-home consumption and
the gradual reopening of economies.
Continued expansion along the value chain
A growing proportion of our revenue comes from expert services, such as regulatory affairs and formulation expertise, and
customized solutions. Our customized solutions — besides premixes — include Market-Ready Solutions that address
diverse health or lifestyle benefits. Our activities in the personalized nutrition sector, which is a key pillar in our nutrition
strategy, were strengthened by the launch of Hologram Sciences, Inc.
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Personalized nutrition: Launch of Hologram Sciences
Personalized nutrition is a key pillar in our Nutrition strategy. In 2021, we launched Hologram Sciences, Inc., a consumer-
facing company that will create brands targeting various health conditions. By combining health diagnostics, digital
coaching and personalized nutrition, Hologram Sciences brands will provide consumers with more holistic solutions to
manage their health.
Hologram Sciences will provide state-of-the-art consumer-facing personalized nutrition solutions that have been clinically
proven to address a variety of consumer health needs. An example is the 2021 launch of d.velop™, our immune support
package which provides consumers with our advanced vitamin D formula ampli-D®, a diagnostic kit, and digital support. As
solutions are validated in-market, they will become available to our customers. Hologram Sciences will also work to
incubate products with our customers and partners, based on the latest consumer insights.
Continued growth in dietary supplements
The continuation of the COVID-19 pandemic further intensified consumer focus on immunity and overall health,
highlighting the positive contribution that vitamin D and other vitamins and minerals can make to immune status in the
context of viral infections. Against this background, demand for dietary supplements grew, further supported by retail- and
government-led public health campaigns which maintained high consumer awareness of the relevance of immunity-
optimizing products.
We continued to help our dietary supplement customers around the world to launch new immunity-supporting products in
record time. Important achievements in this context in 2021 included:
- Rapid forecasting of consumer demand
- The launch in Australia of ampli-D®, our fast-acting form of vitamin D for dietary supplements. The availability of
ampli-D® in Australia, the first market for its launch, followed regulatory approval by Australia’s Therapeutic
Goods Administration (TGA) for its use in dietary supplements that do not require a doctor’s prescription. In
addition, we received a positive opinion for ampli-D® from the European Food Safety Authority (EFSA) – an
important milestone on the path to market authorization in the European Union
- Complete new range of Market-Ready Solutions
- Immunity probiotics
- Culturelle® immune defense product line for both adults and children
- Focus on e-commerce and direct-to-consumer channels to capitalize on the shift in consumer shopping behavior
Continued growth in Pharma and Medical Nutrition
Our activities in the pharmaceutical and medical nutrition sectors enjoyed strong growth in 2021. This was attributable to
three factors. In the first place, our expertise in supporting our customers’ global regulatory submissions facilitated their
growth plans and geographical expansion. Secondly, there was strong market demand for parenteral and enteral nutrition
to treat patients at their most vulnerable, including patients hospitalized due to COVID-19. Finally, there was a generally
heightened focus on the value of nutrition in medical treatment, which likewise fueled demand for our solutions.
Expansion of leadership position in Early life nutrition (ELN)
The Early life nutrition segment remained under pressure in 2021 due to low reported birthrates, a continuing trend
exacerbated by the effects of the COVID-19 pandemic. However, the acquisition of Glycom in 2020 has helped strengthen
our position in ELN, delivering more than 20 new customers for HMOs. Glycom is the world’s largest developer and
producer of human milk oligosaccharides (HMOs), which also have interesting potential applications within the dietary
supplement and pet food sectors. In 2021, we also made progress in obtaining Regulatory approval for HMOs in China, a
leading ELN market.
Growth in i-Health
Our i-Health products continued to see positive consumer response in the US and China thanks to increased interest in
self-care, immunity, and overall health and wellness. The Women’s Health portfolio, including the AZO® and Estroven®
brands, delivered growth due to impactful new communication campaigns and new product launches including AZO®
Women’s Dual Protection Probiotics, AZO® D-Mannose and Estroven® Complete. The AZO® brand was also launched in
China, with promising early results.
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Our Culturelle® probiotic range delivered consumption gains of approximately 10%, driven by a shift to larger pack sizes
and new innovative Culturelle® products covering consumer needs in adult irritable bowel syndrome (IBS), Women’s
Health, Kids’ Immunity and Kids’ Gummies. The brand was also recently launched in Brazil, where it started to gain traction
despite challenging market conditions caused by the COVID-19 pandemic.
Heightened focus on healthy choices drives growth in Food & Beverage
Consumer demand for healthy and environmentally sustainable food choices continued to drive growth in the food &
beverage sector. The lactose-free segment maintained its rapid growth trajectory, while our broad range of ingredients and
solutions supporting immunity, gut health, and healthy lifestyles also enjoyed good traction.
Nutrition Improvement
Through our partnerships in the public and private sectors, we continued our efforts to create affordable, aspirational and
accessible nutritional solutions that can help keep the world’s growing population healthy. As part of our new strategic
Food System Commitments, we undertook to enable by 2030 the closure of the micronutrient gap for 800 million of the 2
billion vulnerable people worldwide who currently suffer from micronutrient deficiencies. Rice fortification has a key role
to play in this initiative, as discussed in further detail in the case study in this Report.
‘Products with Purpose’
At Vitafoods Europe 2021, we presented a number of our purpose-led solutions linked to immunity, gut and brain health
and more. Taking center stage were our nutrient premixes and Market-Ready Solutions, including our algal-derived
life’s®OMEGA. We also demonstrated how brands can leverage the benefits of HMOs in the dietary supplement space, as
well as previewing our latest vitamin solution, V-Direct. Designed to help individuals optimize their health, V-Direct delivers
vitamin C and B-group vitamins to the microbiome in the small and large intestines, thus helping to boost gut health. Last
but not least, we presented our broad portfolio of solutions for the maintenance of a normal immune system, including
ampli-D®.
Personal Care & Aroma Ingredients
Highlights 2021
- Strong growth driven by recovery in sun and skin care and good demand for detergents and disinfectants
- Launched Resilient Beauty solutions and ingredients to deliver sustainable repair and self-care in the face of the
COVID-19 pandemic
- Acquired flavor and fragrance (F&F) bio-based intermediates business of Amyris, Inc., extending our portfolio for
F&F and cosmetics
About Personal Care & Aroma Ingredients
Personal Care & Aroma Ingredients offers solutions for customers in the personal care, home care, and fine fragrance
markets. Our extensive portfolio includes aroma ingredients such as biobased offerings for aroma, vitamins and natural
bio-actives, as well as UV filters, peptides and polymers. Our solutions support the health and beauty needs of an aging
population with various skin and hair types around the world, and address increasing concerns around global public
health issues such as air pollution and skin cancer.
Personal Care & Aroma Ingredients performance
Personal Care & Aroma Ingredients recorded strong volume and organic sales growth of 21% in 2021. Aroma Ingredients
saw continued good demand, with higher retail sales for detergents and disinfectants. Personal Care saw a strong recovery
in sun and skin care following the subdued conditions of 2020 that had resulted from lockdowns and travel restrictions. In
line with our Human Nutrition activities, the business saw a strong end to the year, with 34% volume-driven, organic sales
growth in the fourth quarter of 2021.
Successful move into Resilient Beauty solutions
Consumers are increasingly demanding finished products that deliver proven scientific benefits through incorporation of
well-known, safe and trusted ingredients. They are also increasingly seeking personalized solutions that support inclusion
& diversity by addressing factors such as lifestyle choices or individual needs in skin, sun or hair care products. At the
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same time, the search for more sustainable products is evolving from a niche interest to becoming a mainstream concern.
We responded to these consumer trends with new products and concepts such as our Resilient Beauty proposition.
Our Resilient Beauty solutions and ingredients are especially relevant given the stresses and strains of the COVID-19
pandemic. In 2021, we launched HYA-ACT™, a powerful range of three hyaluronic acid ingredients offering hydration and
anti-ageing benefits to promote both skin recovery and skin protection. The new HYA-ACT™ range complements other
recently launched market-ready formulation concepts such as the natural skin bioactive ingredient ALPAFLOR® ALP®-
SEBUM CB to offset issues caused by wearing face masks; STIMU-TEX® AS to relieve and soothe irritated skin; and
TILAMAR® PDO with NØØVISTA™, a high-quality microbiome-friendly, multifunctional natural ingredient designed to
reduce formulation complexity.
Acquisition of Amyris, Inc.’s bio-based flavor & fragrance intermediates business
At the end of March, our Aroma portfolio was expanded by the acquisition of the bio-based flavor & fragrance (F&F)
intermediates business of Amyris, Inc., comprising seven intermediate products. This acquisition further strengthened our
world-leading biotechnology base with F&F intermediate products and increased the scale of our biotechnology activities
in nutritional ingredients. It also broadened our offering in Aroma Ingredients with additional biotechnology-based
products and reinforced our sustainability profile.
Innovation in sustainable sun care
Our commitment to advancing innovation in sustainable sun care is reflected in both our products and our formulations.
In 2021, we launched PARSOL® EHT, a highly efficient, eco-friendly UVB filter that exemplifies our future-proof, eco-friendly
portfolio.
In 2021, we also announced our partnership with Albéa, the world’s leading cosmetic packaging supplier, to bring
sustainable packaging for our sun care formulation prototypes and achieve our vision of delivering a fully sustainable sun
care offering to our customers.
DSM Food Specialties
Highlights 2021
- Strong, broad-based growth, supported by re-opening of global economy
- Acquisition of First Choice Ingredients to further drive growth in biotech-based dairy flavors
- Increasing market traction for plant-based meat, fish and dairy alternatives
- Acquisition of Vestkorn Milling to further accelerate growth in plant-based proteins
- CanolaPRO® and EVERSWEET™ innovations making good progress
- Commitment to reach 150 million people with nutritious, sustainable plant-based protein foods by 2030
About DSM Food Specialties
DSM Food Specialties is a leading global supplier of specialty food enzymes, cultures, probiotics, bio-preservation,
texturizing hydrocolloids, sugar reduction, and savory taste solutions to customers in the food & beverage industry in dairy,
baking, beverages, and savory. Our ingredients and solutions are widely used to create a broad range of food products,
from grocery favorites such as yogurt, cheese and soups to specialized products including gluten-free bread and beer,
plant-based meat alternatives and dairy alternatives, lactose-free milk and dairy, and sugar-reduced foods and beverages.
Demand for our products is driven by five main market trends:
- enhanced taste and texture experience
- improved health and wellness
- sugar reduction
- more efficient and sustainable production
- reduction of food loss and waste
At the center of it all is the consumer, who increasingly seeks food that is healthy, eco-friendly, and made using
recognizable and trusted ingredients.
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With over 150 years’ experience in biosciences and fermentation, we aim to help our customers provide consumers with
delicious, nutritious, and high-quality food and beverage options, helping to make existing diets healthier and more
sustainable, and giving growing numbers of people around the world access to affordable, quality food.
DSM Food Specialties performance
Food Specialties delivered strong organic sales growth of 9%, driven by volumes in the year with good business conditions
in its key segments of dairy, baking, brewing and savory, supported by improving conditions in food services. The fourth
quarter saw a strong acceleration of volume growth, with 15% organic sales growth, partly driven by customers’ preference
for higher inventory levels owing to increased uncertainty around global supply chain and inflationary challenges.
Acquisition of First Choice Ingredients
In 2021, we acquired First Choice Ingredients, a leading supplier of dairy flavors. With headquarters in Germantown
(Wisconsin, USA) and three manufacturing facilities in the vicinity, First Choice Ingredients and its approximately 100
employees have built a leading position in the US taste market as a developer of clean-label, fermented and cultured
dairy flavors for taste and functional solutions across a wide range of applications.
Our acquisition of First Choice Ingredients will be highly synergetic for both companies. We will be able to further
accelerate the company’s growth by offering its products outside the US to our broad global customer base and
integrating its solutions into our full offering for Food & Beverage customers. Conversely, the acquisition gives First Choice
Ingredients access to our own world-leading biotechnology toolbox, fermentation know-how, and global customer
relationships.
Growth in fresh dairy and cheese
Health and well-being are a key growth driver across fresh dairy, and we maintained momentum in all categories during
2021. The lactose-free segment continues to grow significantly faster than traditional dairy worldwide, as a rising numbers
of consumers, especially in the 18–34 years age bracket, are turning to lactose-free options on account of their perceived
health appeal. There was good traction for our broad range of ingredients and solutions supporting immunity, gut health,
and healthy lifestyles, including our enzymes, cultures and probiotics, as well as vitamins and nutritional lipids from DSM’s
wider nutrition portfolio. The plant-based dairy alternatives market, in particular drinks (i.e., alternative milk), continues to
grow vigorously. Our Delvo®Plant portfolio of enzymes, which are part of our integrated solutions offering and help
alternative dairy producers tailor the taste and texture of their products, was shortlisted as a finalist at the prestigious
Food Ingredients Europe Innovation Awards.
In the cheese segment, we continued to grow and gain market share, thanks to a broadened and deepened portfolio
resulting from the successful integration of Royal CSK’s specialty dairy solutions business. Royal CSK was acquired at the
end of 2019 and fully integrated in the course of 2021. New product introductions also helped drive growth in this segment.
Baking and Beverages
Increased use of locally sourced grains and raw materials boosted interest in our baking enzyme portfolio, helping in the
global effort to protect against resource scarcity by enabling the use of locally grown crops and reducing reliance on
imported raw materials. Meanwhile, consumer demand for bread and baked goods with improved nutritional profiles and
health benefits continued to grow.
The beverages sector continues to seek a reduced environmental footprint and production efficiency improvements, while
satisfying fast-changing consumer demand for new experiences. Our enzymatic solutions help brewers to boost
efficiencies and at the same differentiate their offerings with new and preferred flavors in fast-growing categories
including craft, low- and no-alcohol beers, and in hard seltzers.
Continued growth of savory segment in market for plant-based, vegetarian and vegan options
There was strong demand for savory taste ingredients and further rapid evolution of the market for plant-based,
vegetarian and vegan options alongside traditional meat and dairy choices. This market continues to boom as increasing
numbers of consumers adopt a ‘flexitarian’ approach to meals. We further expanded our market reach with our
comprehensive portfolio of integrated solutions for plant-based meat and fish alternatives, leveraging our full range of
capabilities in taste, texture and health. There was a marked increase in the number of customers looking to fortify their
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products in support of improved nutritional claims. In November, our first-of-its-kind vegan fish flavor Maxavor® Fish YE
won a prestigious Food Ingredients Europe Innovation Award, coming top of the ‘Plant-Based Innovation’ category. For
more information on the rapidly growing plant-based fish alternatives segment, see the case study in this Report. As part
of our strategic Food System Commitments we are committing to reaching 150 million people with nutritious, sustainable
plant-based protein foods by 2030.
Demand for our core savory taste and flavor solutions based on our yeast extract and process flavor technology platforms
remained robust despite a challenging operating environment.
Accelerating growth in plant-based proteins
In December, we accelerated our growth in plant-based proteins through the acquisition of Vestkorn Milling. Employing 55
people and based in Tau on the south-west coast of Norway, Vestkorn Milling is one of Europe's leading producers of pea-
and bean-derived ingredients for plant-based protein products. The company is well positioned in the alternative protein
market, supplying proteins, starches and dietary fibers for plant-based foods, pet food and animal feed. Vestkorn Milling's
proteins, starches and dietary fibers are highly complementary to our own portfolio. The acquisition is a further step in our
strategy to build an alternative protein business and will provide synergy with our innovative CanolaPRO® rapeseed
protein isolate, which will commercially launch in 2022.
CanolaPRO® provides an excellent basis for meat and dairy alternatives as well as for sports nutrition applications,
offering versatile functional benefits in terms of taste and texture, as well as being a nutritionally complete protein. Having
established the Olatein joint venture to produce and bring CanolaPRO® to market with Avril in 2020, construction
continued on the state-of-the-art production facility at Dieppe (France) during 2021 in preparation for commercial
introduction by the end of 2022. Promising pre-commercial product development projects on multiple applications
including CanolaPRO®-based milk alternatives, creamy spreads, ice cream, ready-to-mix drinks, and protein bars are under
way with various food & beverage companies.
Fermentative Stevia gains traction
The Avansya partnership with Cargill for fermentative Stevia continued to build its sugar reduction business with the
sustainably produced EVERSWEET™ stevia sweetener. The global COVID-19 pandemic has increased societal awareness of
the need for more balanced food and nutrition for individuals and populations alike. Reduced and zero-sugar consumer
end-products incorporating EVERSWEET™ were successfully launched by customers across our target segments in 2021,
with further product development projects initiated. Meanwhile, EVERSWEET™ was approved for use in additional markets
in the Americas and Asia-Pacific, with further registrations in the European Union and elsewhere also underway.
Rebound in demand for hydrocolloids
Hydrocolloids are thickeners and stabilizers that dissolve, disperse or swell in water to provide a broad range of important
functionalities and physical attributes including gelling, texture, mouthfeel, viscosity and suspension. Our hydrocolloids
are primarily delivered in the form of plant-extracted pectin and fermentation-derived bio-gums. Both are used as gelling
and stabilizing agents in a variety of foods and beverages. Demand for our hydrocolloids rebounded well in 2021, driven by
a stabilization of the gellan gum / biogums market and strong demand for pectin, particularly outside of China. Interest
continues to grow in meat and dairy alternative applications for hydrocolloids, along with new areas such as soft-gel
capsules.
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Materials
At a glance
- €1,935 Net sales from continuing operations versus €1,518 in 2020 (in millions)
- 28% Organic sales development (continuing operations) versus -12% in 2020
- 22.5% Adjusted EBITDA margin (continuing operations) versus 17.9% in 2020
- 100% of Engineering Materials plants in Europe run fully on purchased electricity from renewable resources
- 100% of Engineering Materials portfolio to contain alternatives with >25% recycled and/or bio-based content by
weight in final product by 2030
- 2 kt CO
2
eq emissions were avoided in 2021 by using of bio-based feedstock for Dyneema®
"In a year of volatile market dynamics, our employees, together with
our customers and partners, have demonstrated remarkable
resilience and flexibility, resulting in strong business results and
growth in our Materials businesses."
Helen Mets, Executive Vice President DSM Materials and member of the DSM Executive Committee
About DSM Materials
Our Materials cluster comprises DSM Engineering Materials and DSM Protective Materials. The cluster produces a high-
quality portfolio of specialty materials for global end-markets including electrical components and electronics,
automotive, food packaging, medical, personal protection, commercial marine, and apparel. Through our advanced and
sustainable solutions, we are meeting demand for safer materials, greater efficiency and improved environmental
performance.
Sale of DSM Resins & Functional Materials
In 2021, we completed the sale of our Resins & Functional Materials and associated businesses to the specialty materials
player Covestro AG.
Review of strategic options for our Materials businesses
In September, we announced the acceleration of our strategic journey to become a focused Health, Nutrition & Bioscience
company. As a result, these two excellent Materials businesses may not be able to achieve their full potential in driving the
important industrial shift to a bio-based and circular economy under our ownership. In this context, we initiated a review
of strategic options for our Materials businesses, including a possible change of ownership. The Materials businesses will
therefore be managed largely on a stand-alone basis.
Meanwhile, we will continue to develop our high-growth and high-margin specialty Materials businesses. These focus on
three growth platforms: Improved Health & Living, Green Products & Applications, and New Mobility & Connectivity.
Trends
Addressing pressing global challenges
Our expertise in materials science, combined with our close connection with our customers, helps us develop engineering
thermoplastics and high-performance fibers used in products that are central to our everyday lives. These are found in the
automotive, construction, electronics, marine, medical equipment, packaging and sports sectors. Through our innovations,
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we address pressing global issues such as climate change and make a major contribution to the circular and bio-based
economy and improved health and well-being, especially in the areas of combating global warming, creating a circular
economy, and enhancing safety.
There is a recognized need to keep global warming below the critical threshold of 1.5˚C. This requires dramatically reducing
greenhouse gas (GHG) emissions. Customers and regulators alike are giving increasingly close attention to low carbon
footprint regulations, including, for example, the European Green Deal. At the same time, consumer pressure for stronger
action on climate is sharply on the rise.
We recognize our responsibility to help facilitate the creation of a circular economy. Across the globe, circular-economy
concepts such as bio-based materials, end-of-life material recovery and closed-loop solutions are hot topics in
sustainability dialogues. Pressure from consumers and regulators is stimulating the development of materials that can
drive the transition to a circular economy — materials that are bio-based, recycled-based, reusable and recyclable.
Safety remains an important consideration. People are increasingly aware of the importance of product safety, including
safe manufacturing and product stewardship. We offer solutions that eliminate or reduce the use of hazardous
substances.
Trends in automotive, electronics, medical and healthcare
An increasing range of applications rely on advanced and high-performance materials in the fields of automotive,
electronics and medical and healthcare applications:
- In automotive, society’s urgent requirement for sustainable transportation systems calls for higher-performing
materials that enable autonomous, lightweight and more energy-efficient automotive design
- In electronics, consumers are increasingly seeking ‘smart’, connected, customizable products that require high-
performance materials in order to enable device connectivity, convenience, and efficiency
- In medical and healthcare applications, there is increased demand for medical personal protective equipment
(PPE), driven by the effects of the COVID-19 pandemic
Resilience in the face of challenging market conditions
Macro-economic conditions remained challenging in the second year of the COVID-19 pandemic. Global supply chains were
very volatile, being significantly affected by supply disruptions and raw materials shortages across the industry.
Nevertheless we delivered a strong performance owing to a unique security of supply where competitors were frequently
confronted with force majeure situations, which resulted in DSM providing relief supplies to their customers.
Innovation & Sustainability
Our innovations are focused on delivering sustainable solutions to meet customer demands for a better environmental
footprint and the transition toward a circular and bio-based economy.
Accelerating sustainability value
In 2021, our Materials businesses took further important steps in implementing innovation programs to reduce the
environmental impact of their operations and to increase the sustainability value they deliver. In line with its commitment
to offer a full portfolio of alternatives that contain at least 25% recycled- and/or bio-based content by 2030, DSM
Engineering Materials made specific grades with this profile available for all major product lines in 2021. DSM Engineering
Materials accelerated its own carbon footprint and GHG reduction plans and goals during 2021, helping customers
futureproof their own portfolios while continuing to differentiate itself in the industry.
DSM Protective Materials, as part of its commitment to sourcing at least 60% of its raw materials from bio-based
feedstocks by 2030, made all new personal protection product offerings, as well as all its composite fabrics products for
Consumer & Professional Protection, available only in bio-based Dyneema®.
Review of Business – Materials
Royal DSM Integrated Annual Report 2021 107
Sustainable innovation through partnerships
It takes partnerships to help bring about a circular and bio-based economy. We have many partnerships and coalitions
that support and accelerate customer-driven sustainable innovation.
Examples of our progress through partnerships in 2021 include the following.
Together with Fibrant B.V., a supplier, DSM Engineering Materials announced a significant reduction of the greenhouse gas
(GHG) emissions of caprolactam and high-performance polyamide (PA6) production, resulting in a new generation of
caprolactam known as EcoLactam®. DSM Engineering Materials can now offer its Akulon® PA6 portfolio (produced in
Europe and containing EcoLactam®) as the lowest, best-in-class carbon footprint PA6 on the market.
Initiated by DSM Protective Materials in 2020, our cross-industry coalition of customers, waste processors and recycling
companies made significant advances in addressing the recycling of products made with Dyneema® fiber. Working
together with the CirculariTeam® members and our supplier SABIC, we produced recycled-based Dyneema® from mixed
plastic waste in a pilot project in both a sailing rope (for our customer Marlow Ropes) and a deep-sea trawl net
application (for our customer Gleistein), thus applying circular economy principles throughout the value chain.
Materials performance
Highlights 2021
- Strong recovery in 2021, led by good demand levels together with an excellent operational performance in
challenging conditions
- Announced review of strategic options for our Materials businesses in September 2021, including a possible
change of ownership
- Sale of DSM Resins & Functional Materials and associated businesses
- Acceleration of own carbon footprint and GHG emission reduction plans and goals in DSM Engineering Materials
- Strong progress toward bio-based and recycled-based alternatives and customer traction across our Materials
cluster
Materials financial results 2021
Materials delivered a strong performance, with a recovery in Protective Materials and a high demand for Engineering
Materials due to supply disruptions and industry-wide raw materials shortages. DSM Engineering Materials delivered an
excellent operational performance under these very difficult supply chain conditions. Whereas competitors were
frequently confronted with force majeure situations, our unique security of supply enabled us to provide supplies to their
customers as well as our own.
Volumes were up 6% versus pre-COVID-19 2019 while markets continued to struggle with semiconductor shortages and
supply chain disruptions throughout 2021. Materials experienced good pricing strength, making it possible to pass on
increased costs to customers.
Review of Business – Materials
Royal DSM Integrated Annual Report 2021 108
Materials realized very strong 60% Adjusted EBITDA growth, driven by strong volume growth. Adjusted EBITDA margins
recovered from 17.9% in 2020 to 22.5% in 2021 due to strong operational leverage.
x € million
2021
2020
Net sales from continuing operations:
DSM Engineering Materials
1,600
1,217
DSM Protective Materials
335
301
Total
1,935
1,518
Organic sales growth (in %, continuing operations)
28
(12)
Adjusted EBITDA from continuing operations
435
272
Adjusted operating profit from continuing operations
331
168
Capital expenditure
65
63
Capital employed at 31 December
1,005
953
ROCE (in %, continuing operations)
34.1
16.4
Adjusted EBITDA margin (in %)
22.5
17.9
R&D expenditure
79
73
Workforce at 31 December (headcount)
2,885
2,857
Net sales bridge 2021
X € million
DSM Engineering Materials
Highlights 2021
- Strong volume and price development in an environment of good demand recovery and supply chain uncertainty
- Made good progress on strategy to accelerate profitable growth and strengthened portfolio in medical and food
& water applications
- Accelerated own carbon footprint and GHG emissions reduction plans and goals
- Good progress on enabling shift toward higher-value, sustainable, bio- and recycled-based alternative materials
with an improved environmental footprint
About Engineering Materials
DSM Engineering Materials provides high performance specialty materials that address key market needs in automotive,
electronics and consumer goods. Besides serving these three main sectors, we offer sustainable engineering materials
also to specialized industries including water management, health/medical, electrical power distribution, food utensils
and multilayer flexible food packaging.
Review of Business – Materials
Royal DSM Integrated Annual Report 2021 109
Engineering Materials performance
DSM Engineering delivered an excellent operational result in challenging conditions marked by global supply chain
disruption and industry-wide raw material shortages.
Accelerating profitable topline growth
In 2021, we effectively applied our strategy focused on accelerating profitable topline growth while improving cost and
margin management. This strategy also involves further expanding and diversifying into high-growth, high-value markets
including medical and food & water.
A key highlight from 2021 exemplifying this diversification was the launch of a new family of medical-grade solutions
addressing growing customer demand for advanced material solutions. These solutions are intended for use in a broad
range of medical devices such as medical gowns, respiratory tubes and inhalers, and will help medical device
manufacturers improve the quality of care for patients around the world.
In food & water, we supply advanced materials for components in faucets, kitchen appliances, food dispensers and food
conveyor belts.
The quest for new and more sustainable forms of mobility, including electric vehicles, remained a key driver for our
business in 2021. We continued to shift our portfolio toward higher-value, specialty materials with advanced grades and
improved properties. For example, we increased our number of advanced grades offering high performance in areas as
diverse as heat resistance, thermal conductivity, electromagnetic interference shielding, electrical insulation performance,
halogen-free flame retardancy, and hydrolysis resistance.
Helping to shape the circular and bio-based economy
We accelerated our own carbon footprint and greenhouse gas (GHG) emission reduction plans and goals in 2021,
committing to the following objectives:
- Reducing total GHG emissions – including scope 1, 2 and 3 upstream – and the carbon footprint of our products
by 50% by 2030, from a 2016 baseline
- Using 100% renewable electricity in all our production sites by 2025
- Achieving net-zero scope 1 and 2 GHG emissions by 2040 on the way to net-zero across all value chains by 2050
By accelerating our sustainability ambitions, we will help customers future-proof their own portfolios and achieve their
sustainability targets, while continuing to differentiate ourselves in the industry.
In June, we announced that we had successfully halved the carbon footprint of Akulon® PA6 in Europe and were also
developing GHG reduction roadmaps for Stanyl® PA46 and Arnitel® TPC.
We made strong progress in helping our customers transition to a more circular and bio-based economy with our wide range
of circular and bio-based solutions.
An example is Akulon® RePurposed, which addresses the problem of abandoned and derelict fishing nets. We pioneered
an initiative whereby these nets are collected, sorted in South India, and recycled to create this polyamide. This solution is
widely used by leading manufacturers of automotive parts, consumer goods, electrical devices, and industrial equipment
to create world-class products. The creation of Akulon® RePurposed enables us to simultaneously reduce waste in the
oceans, recycle plastic waste washed up on beaches, and drive jobs for local communities. An example of the use of this
polyamide includes Schneider Electric’s Merten range of sockets and switches. More information on this collaboration can
be found in the case study in this Report.
To address growing demand for lower carbon footprint and the use of more sustainable feedstocks in the sports and
apparel value chain, we launched Arnitel® B-MB, a bio-based mass-balanced thermoplastic elastomer, in partnership with
Sympatex Technologies. By using Arnitel® B-MB to manufacture its waterproof, windproof, and breathable membranes for
sports applications, Sympatex can shift to a more sustainable, lower-carbon footprint solution without having to requalify
materials.
Review of Business – Materials
Royal DSM Integrated Annual Report 2021 110
DSM Protective Materials
Highlights 2021
- Good performance as demand improved versus a 2020 impacted by the effects of COVID-19
- Growing demand for bio-based Dyneema® across all markets
- Provided next-generation armor technology to protect the police force of São Paulo (Brazil)
About Protective Materials
DSM Protective Materials is the world’s only global and backward-integrated producer of ultra-high molecular weight
polyethylene (UHMWPE) products. Our premium product brand, Dyneema®, the world’s strongest fiber™, is 15 times
stronger than steel on a weight-for-weight basis, 40% stronger than aramid, yet light enough to float on water. These
characteristics make it suitable for a wide range of critical applications including personal protection, workwear, sports
apparel, outdoor equipment, ropes and slings, synthetic chains, and nets for the aquaculture and renewable energy
sectors.
In line with our commitment to protect people and the environment in which they live, DSM Protective Materials has
developed the first ever bio-based UHMWPE fiber. Sourced from renewable, bio-based feedstock through the mass-
balance approach, bio-based Dyneema® is our newest innovation in fiber technology – boasting the same performance
characteristics as conventional Dyneema® with a carbon footprint that is 90% lower than generic high modulus
polyethylene (HMPE).
Protective Materials performance
Volumes improved owing to good demand recovery, which together with pricing strength led to good results.
Growing demand for bio-based Dyneema®
Demand for bio-based Dyneema® continued to grow and gain traction across all markets during 2021. In addition to the
high interest for biobased Dyneema for lifting slings used in off shore windmill installation, growth was also driven by the
decision to include bio-based Dyneema® in two other segments. In Personal Protection, it was incorporated into all new
product offerings, while in Consumer & Professional Protection, all composite fabric products were transitioned to bio-
based Dyneema®. These changes resulted in the avoidance of approximately 2 kt CO
2
eq emissions in 2021.
The journey to making fully circular Dyneema®-based products
In 2021, the cross-industry coalition established the previous year to address the recycling of end-of-life Dyneema®-based
products made considerable progress. By working together with the CirculariTeam® members and our supplier SABIC, we
were able to produce recycled-based Dyneema® from mixed plastic waste as a pilot project in both a sailing rope (for
Marlow Ropes) and a pelagic trawl net application (for Gleistein). This not only contributes to preventing valuable plastic
from becoming waste and the avoidance of carbon emissions compared to incineration, but also helps preserve fossil
resources. This was an important milestone in our journey to making fully circular Dyneema® from HMPE post-production
and post-consumer waste.
Ropes with Dyneema® used to salvage the Ever Given from the Suez Canal
On 23 March 2021, the Ever Given, one of the world’s largest container ships at 400m in length, became wedged across the
Suez Canal after running aground amid high winds, disrupting global trade for almost six days. The ship was refloated after
a successful salvage operation involving various parties. Lankhorst's Lanko®Force ropes made with Dyneema® SK78 were
used by tugs from Suez Canal Authority in a joint operation together with Smit Lamnalco, Svitzer, and other stakeholders,
demonstrating the high performance and reliability of Lanko®Force ropes made with Dyneema®.
Protecting the São Paolo Police with next-generation Dyneema® UD
Together with body armor manufacturing partner MKU, we provided next-generation armor technology with Dyneema®
unidirectional (UD) material to protect the police force of São Paulo (Brazil). Numbering more than 100,000 officers, the
São Paulo Police is the first law enforcement agency in Brazil to initiate a tender for personal protective equipment based
on the latest National Institute of Justice 0101.06 standards for body armor, which provide compliance criteria for the
performance and testing of ballistic materials. The hybrid vest solution predominantly utilizes Dyneema® UD material to
deliver new levels of performance and protection while simultaneously enhancing user comfort and mobility.
Review of Business – Materials
Royal DSM Integrated Annual Report 2021 111
Dyneema® helps Team DSM cyclist to landmark victory
In April, Team DSM rider Lorena Wiebes won the first-ever Scheldeprijs road cycling race for women. She put on a powerful
sprint finish to cross the line first, having walked away from a serious crash with only minimal abrasions just weeks
previously thanks to the protection afforded by the Dyneema® in her cycling jersey. When combined with a protective base
layer, the Team DSM jersey offers cyclists effective abrasion protection at speeds up to 60 km/h, while also reducing the
severity of open wounds at even higher speeds.
Royal DSM Integrated Annual Report 2021 112
Innovation
At a glance
- 4 Innovation growth themes
- 4.4% R&D expenditure as a % of sales (continuing operations)
- 19% Innovation sales (continuing operations), in line with our ambition of ~20%
- >1,500 scientists
- 35 laboratories spread across 13 countries
- >100 scientific collaborations
About DSM Innovation Center
For the past decade, DSM Innovation Center has supported the creation of further opportunities for future earnings growth
through cultivating purpose-led innovation across DSM. During 2021, we re-set the foundations of an enterprise-wide
approach to innovation that focuses, simplifies, and accelerates our ability to create customer-focused, value-adding and
differentiating innovation by integrating much more closely with our future end-market orientation in Health, Nutrition &
Bioscience. Together, we:
- Ensure the quality of our scientific capabilities, including monitoring and ensuring access to early-stage
technologies with disruptive potential
- Partner with leading universities, public-private partnerships, and joint ventures
- Experiment with all possible innovation vehicles, such as R&D, external and internal venturing, and licensing
- Drive the development of a business-anchored innovation pipeline that supports our long-term growth ambitions
Accelerating innovation
Science & Technology
A global, purpose-led leader in bioscience
We see science as a crucial means by which we can support the sustainable transformation of the global food chain,
address climate change, and overcome resource scarcity through bio-based and circular solutions. Building on 150 years of
expertise, DSM today is a global, purpose-led leader in bioscience, developing a broad range of sustainable solutions for
the food, feed, personal care, pharma, nutrition, agriculture, and materials sectors. We are strongly committed to investing
in science as a fundamental driver of our future growth.
Making a difference, through bioscience
Our science-based solutions address many global societal challenges and reach billions of people worldwide. For instance,
with Maxilact®, a portfolio of acidic and neutral lactase enzymes, we help dairy-manufactures deliver lactose-free products
without compromising on taste, texture, and health. Not only does Maxilact® meet the needs of lactose-intolerant
customers worldwide, the natural sweetness it unlocks also enables up to 20% sugar reduction in all dairy products.
We have leveraged our bioscience capabilities to develop human milk oligosaccharides (HMOs) identical to those provided
in mothers’ milk. Correct levels of supplementation can provide health benefits during childhood and beyond. In
particular, HMO supplements can support immunity and gut health, as well as cognitive development. Today, our HMO
portfolio enables sustainable, cost-effective solutions that can be easily incorporated into different food formulations with
less than one-tenth of the environmental impact of other, commonly applied methods.
Scientists and engineers from Veramaris, a joint-venture of DSM and Evonik, have pioneered a way to make marine algae a
high-quality and sustainable source of omega-3 for aquafeed. In fact, 1 kg of Veramaris® oil yields the same amount of
Review of Business - Innovation
Royal DSM Integrated Annual Report 2021 113
DHA and EPA omega-3 as 60 kg of wild-caught fish. With the world’s population set to reach 9.6 billion by 2050, the growing
demand for omega-3 fatty acids and protein has placed extreme pressure on wild fish stocks. Veramaris can play an
important role in meeting that demand, sustainably.
We continue to invest in science and, during 2021, we further strengthened our global network of world-class R&D through
the acquisition of First Choice Ingredients. We opened a new Analytical Center of Excellence in Tulln (Austria) and laid the
foundation stone of our future state-of-the-art Health & Nutrition Innovation Campus in Kaiseraugst (Switzerland). These
facilities will help us accelerate innovation in the field of bioscience with the application of digital technology in modern,
collaborative research workplaces, especially in support of the extension of our business model to personalization &
precision.
Our competences, science network and collaborative approach
Underpinning all of this is our unique set of scientific capabilities, which are key to our continued success and will remain
our foundation for growth. Our ongoing investment ensures that we have the right combination of skills, technologies and
partners to develop disruptive innovations to meet specific unmet market needs. At the end of 2021, we had 35
laboratories spread across 13 countries, and our science network comprises over 1,500 scientists employed by DSM,
including 20 professors and academic associates, distributed around the globe.
These employees co-operate with more than 100 organizations including academic, institutions and other R&D partners
worldwide, both in public-private partnerships and in academic collaborations such as with the Cape Peninsula University
of Technology in South Africa, Iowa State University in North America, and Wageningen University & Research in the
Netherlands.
Our open and collaborative approach increases our scientific scope and helps us make joint scientific contributions to
address significant scientific and societal challenges. We participate in more than 40 industry networks and more than 70
public-private partnerships (PPPs) relevant to our innovation growth themes.
Future-proofing our R&D and innovation efforts
To reinforce our worldwide position as a leader in bioscience and create greater value for DSM and society at large, we
continued to align our science and innovation organization with the changing needs of the market as well as with the
increasing speed of technological and scientific advances in the world.
During 2021, we designed a new science and innovation organization, effective from 1 January 2022, that better reflects our
future end-market organization in Health, Nutrition & Bioscience. This includes simplifying how we operate and integrating
our various R&D centers, including the Innovation Center, more closely with our Business Groups. With priority-setting and
resource allocation done by those closest to the customer, we will have full alignment from ideation to commercialization,
and the best opportunity for our R&D to make a difference. Above all, we have created an environment where our
scientists can thrive and focus on doing the right things faster and help realize our collective mission to help address
some of the world’s biggest challenges.
“By working together as a DSM-wide innovation force, we can create
even bigger impact for people, for planet and for our business.”
Patricia Malarkey, Chief Innovation Officer and member of the DSM Executive Committee
Digital transformation of our R&D capabilities
Advanced digital technologies are more and more critical for capturing new opportunities, and we continue to increase our
investments in the digital transformation of our science and innovation capabilities such as in artificial intelligence (AI),
big data, deep learning and modeling, as well as extending lab automation. These investments are accelerating our core
processes, increasing our operational efficiency, and improving the speed of our innovation processes and delivery.
Review of Business - Innovation
Royal DSM Integrated Annual Report 2021 114
For instance, together with Delft University of Technology (Netherlands), we started a research program in 2021 aimed at
long-term innovation in the field of e-biorefinery concepts. The goal is to develop new insights and methods for using
gases, such as carbon dioxide, hydrogen and carbon monoxide, as feedstocks for industrial fermentation processes,
preventing these gases from being released into the atmosphere. Another example is our translational science program,
which will see the creation of a dedicated unit in 2022 combining digital and analytics specialists who will work in cross-
functional teams drawn from across R&D, Innovation, Regulatory, IP, Marketing, Sales, and other functions, to work
collaboratively on data-driven, market-valued, customer-centric innovations.
R&D expenditure (including associated IP expenditure)
x € million
2021
2020
Nutrition
257
241
Materials
79
73
Innovation Center
45
60
Corporate Activities
21
11
Total continuing operations
402
385
Discontinued operations
13
60
Total
415
445
R&D expenditure as % of net sales (continuing operations)
4.4
4.7
Staff employed in R&D activities (continuing operations)
1,522
1,653
The Bright Science Awards
We continue to recognize, reward and nurture scientific talent outside DSM. Our Bright Science Awards programs reward
excellence in PhD research in areas of particular relevance to our strategy and helps participants make the vital
connection between scientific achievement and commercial and industrial success.
The Scientific Advisory Board
We regularly connect with our Scientific Advisory Board of internationally recognized experts from leading universities
around the world. The supervision of this Board changed significantly during 2021, working directly with our Chief
Innovation Officer to challenge and review our scientific work across the company, provide valuable perspectives and
insights, and give advice on trends and upcoming technologies. Following the acceleration of our strategic journey in 2021,
we made changes to the composition of the Scientific Advisory Board to better reflect our future as a focused Health,
Nutrition & Bioscience company. This process was ongoing at the end of the year with new appointments anticipated in
2022.
Member
Thomas Hankemeier (m)
Kirk Klasing (m)
Chris Voigt (m)
Background
Professor of Analytical Biosciences at the Leiden Academic Center for Drug Research at
Leiden University (Netherlands). Medical Delta Professor of Translational Epidemiology at
Erasmus MC, Rotterdam (Netherlands). Co-founder of MIMETAS, the first organ-on-a-chip
company. He has co-authored more than 320 publications and holds over 10 patents.
Nationality: German.
Distinguished Professor of Animal Biology in the Department of Animal Science at the
University of California, Davis (USA). He is an extensively published expert on poultry nutrition
and immunology, with more than 250 peer-reviewed publications, 10 edited books and nine
awards to his name for his work in animal biology. Nationality: American.
D.I.C. Wang Professor of Advanced Biotechnology in the Department of Biological Engineering
at Massachusetts Institute of Technology (USA). He is the co-director of the Synthetic Biology
Center at MIT and the co-founder of the MIT-Broad Foundry. He is also Editor-in-Chief of ACS
Synthetic Biology. Nationality: American.
Review of Business - Innovation
Royal DSM Integrated Annual Report 2021 115
Internal and external venturing
The Venturing and Innovation Business Building organization creates and develops new business and innovation
opportunities for DSM through (external) investments in start-ups across the globe, (internal) venture-building within DSM,
and innovation partnerships with other corporate entities.
External venturing
The DSM Venturing organization is focused on investing in new external ventures and supporting start-up companies
already in our investment portfolio. We made eight new investments in 2021, 13 follow-on investments in 12 portfolio
companies, and generated several leads for collaboration between start-ups and businesses at DSM. By the end of the
year, our portfolio included 38 start-ups (2020: 35). For more information, see the DSM Venturing website.
Internal venture-building
We evolved how we build and scale innovative ventures within DSM in 2021 by means of a revised venture-capital
approach with dedicated entrepreneurial teams, simple startup-style board governance, and milestone-based funding
rounds.
An example of this approach is the creation of Hologram Sciences, Inc. This venture incorporates our activities in
personalized nutrition in the US within the framework of our Human Nutrition & Health business. Hologram combines
proven science with new technology to create health diagnostics, digital coaching and personalized nutrition solutions
that help people optimize their health and well-being.
IP & Licensing
IP & Licensing is a global group of qualified IP professionals who protect DSM’s innovations by securing patents and
trademarks. This group also includes certified licensing professionals who offer expertise for intellectual property-
intensive deals across all DSM businesses, including joint development agreements, technology acquisitions and sales,
and in-, out- and cross-licensing deals. DSM filed 239 patents in 2021. This reflects our continued focus on innovation
projects with the highest potential for business impact.
DSM Innovation Center performance 2021
Sales were 9% lower compared to 2020, as DSM Biomedical continued to be impacted by the postponement of elective
surgeries due to the COVID-19 pandemic and by negative foreign exchange effects. Adjusted EBITDA was up versus 2020,
driven by higher technology licensing income.
x € million
2021
2020
Net sales from continuing operations
168
184
Organic sales growth (in %, continuing operations)
(4)
1
Adjusted EBITDA from continuing operations
26
21
Adjusted operating profit from continuing operations
4
(17)
Capital expenditure
2
35
Capital employed at 31 December
407
436
R&D expenditure
45
60
Workforce at 31 December (headcount)
578
579
DSM Biomedical
DSM Biomedical is committed to solving some of our world’s key healthcare challenges through sustainable science and is
a trusted partner to the global medical device and pharmaceutical industry, enhancing the quality and delivery of
healthcare through innovative and sustainable biomaterials. As of 1 January 2022, DSM Biomedical will be part of the
Health, Nutrition & Care Business Group.
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Royal DSM Integrated Annual Report 2021 116
Our top innovations and partnerships in 2021
In 2021, DSM Biomedical and Chemelot InSciTe research consortium started the first-in-human clinical trial for novel scoliosis
treatment. The research consortium, consisting of physicians and researchers from Maastricht UMC+ (Netherlands) and
Eindhoven University of Technology (Netherlands), works to reduce the severe complications scoliosis patients routinely
suffer from corrective surgery.
We added ComfortCoat® Single Layer coating to our expanding portfolio of innovative, next-generation hydrophilic
coatings. Our clinical partners in vascular interventions are achieving best-in-class particulate performance and significant
operational efficiencies, now in a more sustainable way.
Our customer Svelte Medical achieved premarket approval for its SLENDER IDS sirolimus-eluting coronary stent-on-a-wire
Integrated Delivery System, which contains DSM Biomedical’s polyester-amide (PEA)-based drug delivery material.
Coronary stenting has been established as the standard of care for keeping the heart’s coronary artery open and is saving
many lives.
Our innovations in both our polyurethanes and polyethylenes materials platforms have enabled our partners to
successfully progress through safety trials and to progress into human clinical trials for next-generation structural heart
devices (including transcatheter valve replacement).
DSM Bio-based Products & Services
DSM reached an agreement with International Flavors & Fragrances, Inc.’s (IFF) Health & Biosciences division in June 2021
for commercializing DSM’s advanced yeast technology for first-generation ethanol production. Under the terms of this
agreement, DSM’s eBoost® product line became part of IFF’s XCELIS® Ethanol Solutions platform, completing our licensing
strategy and subsequently the discontinuation of DSM Bio-based Products & Services.
DSM Advanced Solar
DSM successfully completed the sale of the coatings activities of DSM Advanced Solar to Covestro AG in April 2021 as part
of the sale of DSM Resins & Functional Materials and related businesses. This was followed by the successful sale of the
remaining DSM Advanced Solar activities to Worthen Industries, Inc. in June 2021.
Royal DSM Integrated Annual Report 2021 117
Corporate Activities
Any consolidated activities that are outside the three reporting clusters are reported as Corporate Activities. These
comprise operating and service activities, as well as a number of costs that cannot be allocated to the clusters. While this
segment reports net sales to third parties from its service units, it normally has a negative operating result.
Corporate Activities includes various holding companies, regional holdings and corporate overheads. The most significant
cost elements are corporate departments and the share-based compensation for the company.
Corporate Activities
x € million
2021
2020
Net sales from continuing operations
70
39
Adjusted EBITDA
(94)
(97)
Adjusted operating profit
(136)
(141)
Capital expenditure
53
34
R&D operating expenditure
21
11
Workforce at 31 December (headcount)
1,804
2,039
DSM Insurances
We retain a limited part of our material damage and business interruption and (product) liability risks via our captive
insurance company. In 2021, the total retained damages were €27 million.
Corporate Research
The function of the Corporate Research Program (CRP) is to develop key Science & Technology competences. Falling under
the responsibility of the Chief Technology Officer, the CRP typically funds competence development programs with a
longer time horizon than those run by the Business Groups. It also focuses on competences that have a broader relevance
for the company. The CRP additionally supports Science & Technology programs that are carried out with external parties
and programs covering relevant new trends.
Share-based payments
Executives participate in the Long-Term Incentive (LTI) scheme. This links their compensation to the long-term interests of
our company's stakeholders. It also provides a vehicle for the attraction and retention of suitable employees. As shares /
share units have become more prevalent in the market, we replaced stock options with shares / share units in 2017. This
resulted in better alignment with the LTI vehicle already in place for the Managing Board and the Executive Committee. The
use of shares / share units also targets yet closer alignment with the interests of our stakeholders. For detailed
information, see Note 27 of the Consolidated financial statements.
Royal DSM Integrated Annual Report 2021 118
Reporting policies
Financial and reporting policies
As a basis for, and contribution to, effective risk management and to ensure that we are able to pursue our strategies,
even during periods of economic downturn, DSM aims to retain a strong balance sheet and limit our financial risks.
Our strategy has ambitious targets, as outlined in Strategy. Within the context of this strategy, we aim to maintain a strong
investment grade and a strong long-term credit rating.
Most of our external funding needs are financed through long-term debt. Debt covenants are not included in the terms
and conditions of outstanding bonds and financing arrangements. We aim to spread the maturity profile of outstanding
bonds in order to have adequate financial flexibility.
An important element of our financial policy is the allocation of cash flow. We primarily allocate cash to investments
aimed at strengthening our business positions and securing stable, and preferably rising, dividend payments to our
shareholders. Remaining cash flow is used for acquisitions, targeting investments predominantly in Nutrition and in line
with our strategy. Share buy-backs will be considered in the absence of value-creating M&A opportunities.
Dividends are paid out in cash or in the form of ordinary shares at the option of the shareholders, with a maximum of 40%
of the total dividend amount available for stock dividend.
In order to cover our commitments under the dividend policy and under management and employee option and share
plans, we buy back shares insofar as this is necessary and feasible.
We continuously monitor and assess risks arising from currency exposures. It is our policy to hedge 100% of the currency
risks resulting from sales and purchases at the moment of recognition of trade receivables and payables. Additionally, we
may opt to hedge currency risks from firm commitments and forecast transactions. The currencies giving rise to these risks
are primarily the US Dollar, the Swiss Franc, the Brazilian Real and the Chinese Renminbi.
We acquire businesses and enter into partnerships that add value in terms of technological or market competences. In
addition, these businesses and partnerships are required to contribute to our cash earnings per share, as well as our
profitability, sustainability and growth requirements. In the case of small innovative growth acquisitions, we consider their
potential to contribute to these requirements in the future.
Our policies in the finance function are strongly oriented toward solidity and reliability of reporting, as well as the
protection of cash flows. The finance function also plays an important partner role to the business and supports business
steering.
For detailed information on our tax policies, see Taxation at DSM on the company website.
Royal DSM Integrated Annual Report 2021 119
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.
Reporting policies – Non-financial reporting policy
Royal DSM Integrated Annual Report 2021 120
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.
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
Reporting policies – Non-financial reporting policy
Royal DSM Integrated Annual Report 2021 121
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.
Royal DSM Integrated Annual Report 2021 122
Corporate governance and risk
management
Corporate governance
Koninklijke DSM N.V. (Royal DSM) is a company limited by shares listed on Euronext Amsterdam. It is managed by a
Managing Board together with an Executive Committee 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 company is governed by Dutch law and by its Articles of Association, which can be consulted on the company website.
The General Meeting of Shareholders decides on any amendment to the Articles of Association by an absolute majority of
the votes cast. A decision to amend the Articles of Association may only be taken at the proposal of the Managing Board,
subject to the approval of the Supervisory Board.
At DSM, we fully inform our stakeholders about our corporate objectives, the way our company is managed, and our
company’s performance. In doing so, we aim to pursue an open dialogue with our shareholders and other stakeholders.
Our company has an organizational structure built around Business Groups that are empowered to perform all short- and
long-term business functions. In this, they are assisted by support and corporate functions, as well as by regional
organizations.
Managing Board and Executive Committee
The Executive Committee was installed to enable faster strategic alignment and operational execution by increasing our
focus on the development of our business, innovation and people.
The Executive Committee comprises the Managing Board members as well as four senior executives with responsibility
respectively for DSM Food Specialties and Corporate Mergers & Acquisitions (Philip Eykerman), the DSM Materials cluster
(Helen Mets), the DSM Innovation Center (Patricia Malarkey), and People & Organization (Cristina Monteiro). Due to a
temporary leave of absence on the part of Cristina Monteiro as of 15 October 2021, Geraldine Matchett took over
responsibility for People & Organization on an ad interim basis. Upon the retirement of Chris Goppelsroeder as President
DSM Nutritional Products, Dimitri de Vreeze stepped into this role in his capacity as Chief Operating Officer as of 1 April
2021. The senior executives serving on the Executive Committee are appointed by the Co-CEOs after consultation with the
Supervisory Board. The Executive Committee focuses on topics such as our company’s overall strategy and direction,
review of business results, functional and regional strategies, budget-setting, and people and organization. The statutory
responsibilities of the Managing Board remain unchanged.
The Managing Board is ultimately responsible for our company’s strategy, portfolio management, the deployment of
human capital and financial capital resources, the risk management system, financial performance, and performance in
the area of sustainability. The Managing Board is thus also accountable to the Supervisory Board for our strategy and
management. Notwithstanding that accountability, the full Executive Committee attends the Supervisory Board meetings.
The Managing Board consists of two or more members, to be determined by the Supervisory Board. The Managing Board
currently consists of Co-CEOs Geraldine Matchett and Dimitri de Vreeze; more details can be found in Supervisory Board
and Managing Board Royal DSM. Since the introduction of the Dutch Corporate Governance Code in 2004, members of the
Managing Board have been appointed for a period of four years.
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Royal DSM Integrated Annual Report 2021 123
The members of the Managing Board are collectively responsible for the management of DSM. In addition to this collective
responsibility, Managing Board members have individual responsibility for certain tasks, businesses, functional areas and
regions. The distribution of these tasks is published on the company website.
The remuneration of Managing Board members is determined by the Supervisory Board based on the remuneration policy
approved by the General Meeting of Shareholders. The remuneration policy for the Managing Board can be found on the
company website.
The functioning of and decision-making within the Managing Board and the Executive Committee are governed by the
Regulations of the Managing Board, which are in accordance with the Dutch Corporate Governance Code and can be found
on the company website.
In 2021, the Managing Board and Executive Committee held 36 formal meetings. Due to the COVID-19 restrictions most of
these were held virtually. No Managing Board member had to be excused from meetings during the year. One Executive
Committee member was excused once for personal reasons. Another Executive Committee member was excused twice for
personal reasons and once on account of another commitment. A third Executive Committee member was also excused
once due to another commitment. In all cases the Executive Committee members gave advance input in writing or via
other members. The Executive Committee and Managing Board take the time for an evaluation at the end of every meeting.
This evaluation can be about topics that have been discussed during that meeting, but may also reflect on meeting
dynamics and individual or collective performance. Where possible, the Executive Committee also takes the opportunity to
organize informal moments such as a collective dinner at the end of a full-day meeting. Once a year, the Executive
Committee and Managing Board take the time to get together and discuss their performance as a team.
Supervisory Board
The Supervisory Board comprises at least five members. Its current composition can be found in Supervisory Board and
Managing Board Royal DSM. Supervisory Board members are appointed for a period of four years, after which they may be
reappointed for a further four years. A Supervisory Board member may subsequently be reappointed for a period of two
years, and this appointment may be extended by at most two years. For reappointments after an eight-year period,
reasons must be provided in the report by the Supervisory Board.
All current members of the Supervisory Board are independent in accordance with the Dutch Corporate Governance Code.
The remuneration of Supervisory Board members is determined by the General Meeting of Shareholders. The functioning
of and decision-making within the Supervisory Board are governed by the Regulations of the Supervisory Board, which are
in accordance with the Dutch Corporate Governance Code and can be found on the company website.
The Supervisory Board supervises the policy pursued by the Managing Board, the Managing Board’s performance of its
managerial duties, and the company’s general course of affairs, taking the interests of all the company’s stakeholders into
account. When the Executive Committee was established, the Supervisory Board also took on responsibility for ensuring
that the checks and balances that are part of the two-tier system are still given due consideration, paying specific
attention to the dynamics between Managing Board and Executive Committee. The Supervisory Board is enabled to do so
through the information provided by the Managing Board.
The annual financial statements are approved by the Supervisory Board and then submitted to the Annual General
Meeting of Shareholders (AGM) for adoption, accompanied by an explanation from the Supervisory Board as to how it
carried out its supervisory duties during the year under review.
In line with the Dutch Corporate Governance Code, the Supervisory Board sit variously on an Audit Committee, a
Nomination Committee, a Remuneration Committee, and a Sustainability Committee.
The task of these committees is to prepare the decision-making of the Supervisory Board. These committees are governed
by charters drawn up in line with the Dutch Corporate Governance Code. They can be found on the company website.
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Royal DSM Integrated Annual Report 2021 124
Diversity
At DSM, we strongly value diversity, and we endeavor to reflect this in our Board memberships. The Supervisory Board has
formulated diversity policies for the Supervisory Board, the Managing Board and the Executive Committee. These policies
seek a balanced composition of the respective body, taking into account gender, age, knowledge, experience, and
nationality / cultural background. In addition, for the composition of the Supervisory Board, the tenure structure is taken
into consideration.
In terms of gender diversity, we aim for at least 30% of the positions in our Supervisory Board, Managing Board and
Executive Committee to be held by women and at least 30% by men — percentages which reflect Dutch legislation. To
ensure a balanced composition in terms of nationality / cultural background, our aim is not to have more than 50% of the
members of our Supervisory Board or Executive Committee drawn from a single nationality. While a diverse composition in
terms of nationality / cultural background is also taken into account in the composition of the Managing Board, no
quantitative target is set here, given the relatively small number of Managing Board members.
Our diversity policies are implemented by applying them to nominations for (re)appointments of Supervisory Board and
Managing Board members as well as to appointments of Executive Committee members.
At the 2021 Annual General Meeting Frits van Paasschen, a Dutch-American national, was reappointed as member of the
Supervisory Board. This was on the basis of his broad experience as a global business leader in both consumer markets
and the service industry in various parts of the world, his deep understanding of the current trends that are impacting
business around the world, his insights into how digital technology is changing the global economy and disrupting
traditional business models, and his qualities as Supervisory Board member as demonstrated during his first term as
member of DSM’s Supervisory Board. With the reappointment of Frits van Paasschen, the Supervisory Board maintains a
strong profile in the areas of marketing and sales, emerging economies and digital.
John Ramsay, a British national, was reappointed as member of the Supervisory Board. This was on the basis of his
extensive knowledge and experience in the field of finance and accounting, built up in various parts of the world, his
extensive experience with managing global finance organizations, with external stakeholders and with mergers,
acquisitions and divestments, and his qualities as Supervisory Board member as demonstrated during his first term as
member of DSM’s Supervisory Board. With the reappointment of John Ramsay, the Supervisory Board maintains a strong
profile in the areas of finance, accounting, auditing, risk and compliance, as well as in the area of emerging economies.
Carla Mahieu, a Dutch national, was appointed as member of the Supervisory Board on the basis of her in depth
knowledge of and experience with people and organization management in an international business environment and in
the context of the strategy of the business at hand. With the appointment of Carla Mahieu, the Supervisory Board aims to
maintain its strong profile in the areas of people and organization.
Corien Wortmann-Kool, a Dutch national, was appointed on the basis of her broad background in public administration,
politics and business. She brings a wealth of experience with and knowledge of finance and economics at executive level,
as well as of the national and international societal and political context that companies operate in. With her experience
in the financial sector, Corien Wortmann-Kool will strengthen the Supervisory Board’s profile in the areas of finance,
accounting, audit and risk management. She will help maintain the Supervisory Board’s strong profile in the areas of
sustainability, governance, compliance and public affairs.
Also, at the 2021 Annual General Meeting Dimitri de Vreeze, a Dutch national, was reappointed as member of the Managing
Board on the basis of his managerial and leadership qualities as well as from his contribution to the Managing Board and
Executive Committee during his second tenure as a member of the Managing Board.
Both our Supervisory Board and our Managing Board were well balanced in 2021 in terms of gender in the period until the
2021 Annual General Meeting (AGM), comprising 37% and 50% women respectively, and after the AGM comprising 50% and
50% respectively, which is in line with Dutch legislation and with the company’s own diversity policy. The gender diversity
levels within our Supervisory Board and our Executive Committee exceed our target for at least 30% of these positions to
be held by women and at least 30% by men. The percentage of women in DSM’s Executive Committee is 66%. Furthermore,
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Royal DSM Integrated Annual Report 2021 125
the composition of both our Supervisory Board and our Executive Committee is in line with our target of not having more
than 50% of the members drawn from a single nationality.
General Meeting of Shareholders
The main powers of the General Meeting of Shareholders relate to:
- The appointment, suspension and dismissal of members of the Managing Board and the Supervisory Board
- Approval of the remuneration policy of the Managing Board
- Approval of the remuneration of the Supervisory Board
- The adoption of the annual financial statements and declaration of dividends on ordinary shares
- Release from liability of the members of the Managing Board and the Supervisory Board
- Issuance of shares or rights to shares, restriction or exclusion of pre-emptive rights of shareholders and
repurchase or cancellation of shares
- Amendments to the Articles of Association
- Decisions of the Managing Board that would entail a significant change to the identity or character of DSM or its
business
The Annual General Meeting (AGM) is held within six months of the end of the financial year in order to discuss and, if
applicable, adopt the Integrated Annual Report, the annual accounts, any appointments of members of the Managing
Board and the Supervisory Board, and any of the other topics mentioned above.
The AGM and, if necessary, other General Meetings of Shareholders are called by the Managing Board or the Supervisory
Board. The agenda and explanatory notes are published on the company website.
According to the Articles of Association, shareholders who, individually or jointly, represent at least 1% of the issued
capital have the right to request the Managing Board or the Supervisory Board to put items on the agenda. Such requests
need to be received in writing by the Chair of the Managing Board or the Chair of the Supervisory Board at least 60 days
before the date of the General Meeting of Shareholders.
The AGM was held on 6 May 2021. In view of the COVID-19 measures, the AGM was held virtually in compliance with the
Dutch Temporary Act COVID-19. Shareholders were given the opportunity to ask questions upfront and follow-on questions
during the meeting. All questions were addressed during the AGM and posted as Q&As on the company website. The
agenda was essentially similar to that of previous years. Additional topics were the remuneration report 2020 for an
advisory vote, the reappointment to the Managing Board of Dimitri de Vreeze, the reappointments to the Supervisory
Board of Frits van Paasschen and John Ramsay, as well as the appointments of Carla Mahieu and Corien Wortmann-Kool.
One agenda item relating to an amendment of the Articles of Association was amended prior to the meeting. All topics
were adopted by the General Meeting of Shareholders.
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Royal DSM Integrated Annual Report 2021 126
Control effectiveness and continuity assumption
The Statements of the Managing Board conform with the Dutch Corporate Governance Code best practice 1.4.3 on 'Board
Statements'.
At DSM, we visualize our control environment as a ‘house’ that includes the internal control process areas with control
measures related to strategic, operational, compliance and reporting risks. The elements of COSO (the Committee of
Sponsoring Organizations of the Treadway Commission) provide a framework for identifying company activities that are
carried out to ensure that the control environment is adequately structured. Finally, to make sure that full use is made of
learning opportunities, monitoring activities include the sharing of findings and experiences as well as the application of
control measures across the supporting pillars.
Our structure for managing risks is based on a three-lines model (see also Risk management). Line management within
the units acts as the first line. Group Risk Management acts as the second line together with other departments such as
DSM Operations & Responsible Care, assessing the effectiveness of risk management and internal control at both unit and
corporate level. Corporate Operational Audit (COA) acts as the third line. The scope and frequency of COA audits is
determined by ranking the auditable units according to the scale of their risk exposure, using a set of defined
characteristics.
COA assesses the operation of risk management framework of the units by performing risk-based audits. These audits
review the key processes and activities for the specific units. By means of these audits, COA closes the risk management
cycle and provides additional assurance to the Managing Board as to the effectiveness of the design and operation of the
risk management and internal control systems.
COA reports its audit results to the Managing Board and Executive Committee twice a year. COA also shares an overview
with the Audit Committee of the Supervisory Board and communicates the executive summary of each audit report to
Geraldine Matchett in her capacity as CFO and Co-CEO and to Dimitri de Vreeze in his capacity as Co-CEO.
In 2021, COA carried out 59 audits. Due to COVID-19 restrictions, most of the 2021 audits were executed remotely via video
calls using Microsoft Teams. We continued in 2021 with the use of smart glasses to be able to observe local situations in
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Royal DSM Integrated Annual Report 2021 127
plants, labs and offices. In general, audit findings are considered opportunities for improvement as part of a healthy
learning culture. In virtually all of the audited areas (e.g., Operations, IT, Finance, Cybersecurity, Safety, Health &
Environment (SHE), Quality, Commercial) the expected DSM standard was achieved. In the rare event of insufficient follow-
up on a finding, the Director of COA escalated that finding to the Co-CEOs.
Dutch Corporate Governance Code
DSM supports the Dutch Corporate Governance Code, which was most recently amended in 2016 and adopted by the
company with effect from the financial year 2017. We ensure our continued compliance with the Dutch Corporate
Governance Code. The Dutch Corporate Governance Code can be found on www.mccg.nl.
In line with the notion underlying the Dutch Corporate Governance Code we follow a multi-stakeholder approach. Our
stakeholders are those groups and individuals who, directly or indirectly, influence — or are influenced by — the
attainment of the company’s objectives. The Managing Board and Supervisory Board have the responsibility for weighing
up the interests of all stakeholders.
Long-term value creation is embedded in both our company’s purpose-led, performance-driven strategy and our company
culture: Our purpose is to create brighter lives for all. Sustainability is central to how we fulfill that mission, and to achieve
this, we consider People, Planet and Profit in all we do. We apply our company strategy to focus our resources and
capabilities to address the urgent societal and environmental challenges linked to the way the world produces and
consumes food. More information on how long-term value creation is fundamental to our strategy and culture can be
found in Strategy and People, as well as in How we create value for our stakeholders and in Our approach to the
Sustainable Development Goals.
Any proposed substantial change to our corporate governance structure and compliance with the Dutch Corporate
Governance Code should be submitted to the General Meeting of Shareholders for discussion under a separate agenda
item.
All documents related to the implementation of the Dutch Corporate Governance Code at DSM can be found in the
Corporate Governance section of the company website.
Governance framework
Organizational & operating model
Our Business Groups are the main building-blocks of the company’s organization. They have integral long-term and short-
term responsibility for business and have at their disposal all functions that are crucial to their business success. As the
company’s primary organizational and entrepreneurial building-blocks, our Business Groups focus on four primary
business functions: Innovation and R&D, Direct Sourcing, Manufacturing & Operations, and Marketing & Sales. Intra-
company product supplies are contracted by the Business Groups on an arm’s-length basis.
In 2021, similar to previous years, the Business Groups were organized into clusters, thus ensuring coherence of operations
and the leveraging of resources within each cluster. The clusters were the main organizational entities for external
strategic and financial reporting. This structure ensured flexibility, efficiency and speed of response to market changes. In
order to ensure sufficient independence regarding financial management, the CFO had, and still has, no Business Groups
reporting to her.
Our Business Groups received services from global support functions and functional excellence departments and were
supported by the regional organizations. This set-up enabled us to create a global, high-performing organization focused
on meeting its targets and achieving its ambitions. The support functions and functional excellence departments were
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Royal DSM Integrated Annual Report 2021 128
paid for their services by the users — the Business Groups and, to a lesser extent, other DSM units. Corporate departments
were paid from a corporate budget.
Support functions provided those services that can be delivered more efficiently (in terms of total cost of ownership) by
leveraging them across the company, thus capturing benefits of scale and delivering higher quality at lower cost, rather
than having them arranged in each Business Group separately. There are support functions in the areas of Finance, People
& Organization, Legal, Indirect Sourcing, Communications and ICT. Each support function reported to a Managing Board
member or a member of the Executive Committee.
Within support functions, centers of expertise provided specialist support, while shared service centers provided standard
transactional support. Business partnering is the concept that acts as the interface between the Business Groups and the
support functions. Business partners consequently have a second reporting line in the business. In order to ensure that
the functional policies sufficiently reflect regional requirements, the support functions work closely with the regional
organizations and integrate their advice.
Corporate functions (small, high-level groups) supporting the Managing Board and Executive Committee are also seen as
support functions. The corporate departments are: Corporate Strategy & Acquisitions, Corporate Operational Audit,
Corporate Risk Office, Corporate Sustainability, Corporate Investor Relations and Corporate Affairs.
Functional excellence departments are mandated by the Managing Board to help the businesses achieve excellence in
their respective fields. They cover the areas of Operations & Responsible Care, Marketing & Sales and Science &
Technology. Functional excellence departments support our businesses in improving their performance. They also provide
guidance in setting aspiration levels and targets.
Governance framework
The following figure depicts our company’s overall governance framework and the most important governance elements
and regulations at each level.
The Managing Board and Executive Committee adhere to the Regulations of the Managing Board. In addition, DSM has a
Management Framework in place which implies, among other things, that the units adhere to the DSM Code of Business
Conduct and applicable corporate policies and requirements.
The company’s strategic direction and objectives are set by the Managing Board. In September 2021 DSM presented the
acceleration of its strategic journey, including the announcement of its new Food System Commitments, for more detail,
see Strategy.
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Royal DSM Integrated Annual Report 2021 129
The units conduct their business within the boundaries of the Management Framework. This implies, among other things,
that they:
- Comply with the DSM Code of Business Conduct, Corporate Requirements and Directives
- Establish the strategy, objectives and operational targets of their business in line with the corporate strategy,
investigate various scenarios and related risk profiles, and report on the achievement of these objectives and targets
- Implement a risk management framework, which includes taking accountability for the identified risks and related
mitigation through annually signing the Letter of Representation
- Implement company-wide standards for support functions (systems, processes, vendors, etc.)
- Implement annual functional improvement plans
Independent audits for all operational units are conducted by the Corporate Operational Audit (COA) department. The
Director of COA reports to the CFO and has access to the Managing Board, the external auditor and the Audit Committee of
the Supervisory Board. Furthermore, the Director of COA acts as the compliance officer regarding inside information and is
also the secretary of the Disclosure Committee. The Director of COA additionally chairs the DSM Alert Committee, which is
responsible for our whistleblower policy, systems and processes.
Chaired by the CFO, the Disclosure Committee ensures the timely and accurate disclosure of share-price-sensitive
information related to the company and is responsible for the implementation of company rules on the holding and
execution of transactions in the company’s financial instruments, among other things.
A third committee at corporate level is the Fraud Committee, which was installed to ensure structural follow-up of fraud
cases with the aim of reducing fraud exposure. Relevant corporate functions participate in the Fraud Committee, which is
chaired by the Group Controller.
Sustainability Governance Framework
Managing Board
Sustainability falls under the responsibility of the Managing Board. Specific actions in our climate action agenda are
owned by members of the Managing Board and Executive Committee. In 2021, our Co-CEOs oversaw Sustainability as a key
responsibility and company value as well as a driver of business growth. They Co-Chair our Inclusion & Diversity Council,
and jointly oversaw our strategic partnership with the World Economic Forum.
In 2021, our Co-CEO Dimitri de Vreeze was responsible for Safety, Health and Environment (SHE) and supervised our
Sustainable Procurement Program and the sourcing of electricity from renewable sources in his responsibility for the
Sourcing function. He managed our engagement with organizations with a primary focus relating to climate. Within the
climate action agenda, he was responsible for the upgrading of our methodology for measuring the impact of our product
portfolio, for our climate advocacy efforts, and for reviewing our emissions reduction targets. He was also responsible for
overall supervision of the full climate action agenda.
Our Co-CEO Geraldine Matchett oversaw our engagement with organizations with a primary focus relating to nutrition and
malnutrition. She was responsible for integrating Sustainability into financial decision-making. She also oversaw our
efforts and commitment toward the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. Within
the climate action agenda, she was responsible for integrating climate risks into our risk management process, TCFD,
carbon pricing and developing our engagement with climate-focused investors.
Supervisory Board
Our Supervisory Board has its own Sustainability Committee to oversee progress against targets and to report on the
embedding of sustainability across the organization. For more details, see Supervisory Board Report.
Corporate governance and risk management – Governance framework
Royal DSM Integrated Annual Report 2021 130
External Sustainability Advisory Board
Comprising a diverse international group of thought leaders, DSM’s Sustainability Advisory Board acts as a sparring partner
for the Managing Board and senior executives, to help sharpen their focus on strategic issues, deepen their understanding
of external stakeholder needs, conduct advocacy and tackle specific issues as they arise.
The Sustainability Advisory Board met twice in 2021 together with the Managing Board and a number of senior executives.
Subjects addressed included business updates, with a focus on Africa, carbon offsetting, on-farm emissions reductions
and Sustell
TM
, the food systems transformations and our proteins innovation pipeline. Due to the virtual nature of these
meetings, this board was unable to include a site visit as part of the meeting. This board maintains a good balance of
knowledge and a diverse composition in terms of gender and nationality.
Sustainability Advisory Board
Member
Background
Robin Chase (f)
Co-founder and former CEO of Zipcar, co-founder of Veniam and the New Urban Mobility Alliance,
Board member of the World Resources Institute and Chair of Tucows. Serves as an informal
advisor to many cities, national governments, and transport agencies on urban transportation
planning and innovation. Nationality: American.
Ertharin Cousin (f)
CEO and Founder, Food Systems for the Future, Distinguished Fellow with The Chicago Council on
Global Affairs, Visiting Scholar at Stanford University, Robert von Weizsäcker Fellow at the Bosch
Academy, Senior Advisor ClimateWorks and a Board Member of Bayer S.A., Mondelez International
Corporation, and Camelot North America as well as a Trustee on the Rwanda- based
AKADEMIYA2063 Board of Directors. She served as the twelfth Executive Director of the United
Nations World Food Programme from 2012 to 2017 and as the US Ambassador for Food and
Agriculture. Nationality: American.
Paul Gilding (m)
Social entrepreneur, author and corporate strategy advisor. Fellow at the University of Cambridge
Institute for Sustainability Leadership (UK). Author of The Great Disruption (Bloomsbury, London,
2011). Executive director of Greenpeace International during the 1990s. Nationality: Australian.
David King (m)
Emeritus Professor of Chemistry, University of Cambridge; Founder and Chair of the Centre for
Climate Repair in the University; Chair of the Climate Crisis Advisory Group, an Affiliate Partner of
SYSTEMIQ Limited; Senior Strategy Advisor to the President of Rwanda; and founder member of
the Clean Growth Leadership Network; The British Foreign Secretary’s Special Representative on
Climate Change 2013–2017. Nationality: British.
Ndidi Nwuneli (f)
Social entrepreneur and Founder of LEAP Africa, Nourishing Africa and Changing Narratives Africa,
and co-founder of AACE Food Processing & Distribution Ltd. (AACE Foods), an indigenous agro-
processing company in Nigeria. She is also the managing partner of Sahel Consulting Agriculture &
Nutrition, which works across Africa, transforming the nutrition and agriculture landscapes via
innovative ecosystem solutions. She is the author of the book Food Entrepreneurs in Africa:
Scaling Resilient Agriculture Businesses (Routledge, 2021). Nationality: Nigerian.
Ye Qi (m)
Director of the Institute for Public Policy at Hong Kong University of Science and Technology, and
Cheung Kong Professor of Environmental Policy at Tsinghua University in Beijing (China). Before
joining Tsinghua, he taught at Beijing Normal University, and the University of California at
Berkeley (USA). Nationality: American.
Feike Sijbesma (m)
Honorary Chairman of Royal DSM since March 2020, and former CEO between 2007 and 2020. In
2020, he acted as the Special Corona Envoy for the Netherlands. He is Chairman of the Supervisory
Board of Royal Philips, non-executive Board member of Unilever and member of the Supervisory
Board of the Dutch Central Bank (DNB). He co-chairs the Global Centre for Adaptation together
with Ban Ki Moon and acts as an advocate and leader for business tackling climate change. As co-
chair of the WEF Climate Leaders and via his membership of the Board of Trustees of the WEF, he
also contributes to the expansion of Africa Improved Foods. Nationality: Dutch.
Corporate governance and risk management – Governance framework
Royal DSM Integrated Annual Report 2021 131
Global network
Sustainability Leadership Team
At corporate level, sustainability is steered by our Sustainability Leadership Team, a group of senior executives
representing the Business Groups and contributing corporate functions, which is chaired by the Vice President
Sustainability. He leads the Corporate Sustainability department and reports directly to the Co-CEOs. The Corporate
Sustainability staff functions as a business-oriented center of excellence and partner on sustainability, internally and
externally.
The Sustainability Leadership Team meets quarterly to monitor the progress of sustainability across the company, with
particular emphasis on steering our business and innovation portfolio in relation to key drivers. Regional operational
sustainability networks are in place in China, India, Latin America and North America.
Operations & Responsible Care
DSM Operations & Responsible Care has responsibility for all corporate issues related to Safety, Health and Environment
(SHE). This also includes security. The Senior Vice President DSM Operations & Responsible Care reports directly to the
Managing Board. SHE managers provide support at Business Group level. Our SHE Council, which includes all Business
Group SHE managers, is instrumental in sharing experiences and developing best practices and communications on SHE
issues.
People and Organization
Our Inclusion & Diversity (I&D) Council steers the overall I&D strategy and drives activation of our I&D program. Co-chaired
by the Co-CEOs, it comprises the regional presidents and Employee Resource Group leads. In addition, the five diversity
pillars are sponsored by Executive Board members.
The day-to-day responsibility for Human Rights at DSM sits with our Executive Vice President People & Organization, who
chairs our Human Rights Steering Committee. This committee is responsible for the strategy and framework for managing
human rights issues and is comprised of senior leaders from People & Organization, Sustainability, Legal, Procurement
and Operations. These departments are further represented in the human rights working group who are responsible for
the day-to-day implementation of our respect for human rights.
Taskforce on Climate-related Financial Disclosures
In her capacity as CFO, Ms. Matchett has appointed a finance executive to lead the efforts needed to address the
recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). Senior leaders from various disciplines
such as Finance, Risk Management, Sustainability, Insurances, Operations & Responsible Care and Sourcing worked on
various initiatives in 2021 to expand physical and transition risk assessments, as well as continuing to embed climate-
related risks into the overall risk management processes. For more information, see Note 3 Taskforce on Climate-related
Financial Disclosures (TCFD) of the Sustainability statements.
Royal DSM Integrated Annual Report 2021 132
DSM Code of Business Conduct
Introduction
The DSM Code of Business Conduct (‘the Code’) serves as an umbrella for several other DSM regulations and forms the
basis for our company’s ethical business behavior. Our purpose, our culture and our business principles are an integral
part of the Code. The business principles translate our purpose into important do's and don’ts to guide our business
operations and decisions in daily practice. In 2021, two new business principles were added to the Code. The business
principle on social media guides DSM employees to act as DSM ambassadors when using social media in relation to the
company. The business principle on quality is aimed at creating a positive customer experience by assuring quality of our
operations and traceability in our supply chain. All DSM employees are expected to follow the Code, which is available in
seven languages. The full text of the Code also appears on the company website. The Managing Board holds DSM’s unit
management accountable for compliance with the code.
DSM Code of Business Conduct and values training program
Training and awareness
The DSM values training program contains several e-learning courses to explain the Code and a number of its business
principles in more detail. These courses are aimed at raising awareness of ethical business behavior and are assigned to
all employees or, in the case of certain subjects, to specific target audiences. All courses are available in at least six
languages, unless indicated otherwise. When we acquire a business, integration and compliance plans are rolled out to
make sure new employees are trained accordingly.
A review team, chaired by the Vice President Risk Management & Internal Control, monitors the internal and external
developments around corporate ethics to promote and safeguard the company’s values and reputation. The review team
also monitors implementation of the DSM values training program (see table Implementation of the DSM values). At year-
end, most employees had completed or refreshed their training (excluding employees of some recently acquired
businesses). Our learning management system also has an external portal to enable relevant contractors and other third
parties to follow courses of the DSM values training program.
The DSM values training program covers the three dimensions of People, Planet and Profit. An overview of the courses and
the changes in 2021 is listed below, as well as a number of important implementation measures.
Corporate governance and risk management – DSM Code of Business Conduct
Royal DSM Integrated Annual Report 2021 133
People
The Life Saving Rules specify the 12 most important rules that must be followed by all our employees to prevent incidents.
The Respectful Behavior e-learning emphasizes the importance of inclusion and diversity, and promotes respectful
behavior as well as active bystander behavior. It is meant to foster effective employee relations, communications, and
non-discriminatory practices, and to prevent inappropriate behavior, including sexual harassment.
The DSM Binding Corporate Rules for Data Privacy prescribe mandatory Data Privacy training for employees who regularly
work with personal data from employees and business partners. This is provided by the General Data Protection
Regulation (GDPR) overview e-learning, which is rolled out to a large target audience including all employees working in
the functions People & Organization, Marketing & Sales and Purchasing. In addition to this, concise e-learnings are in
place to train all our employees on the consequences of the GDPR and the importance of prompt data breach notification.
Planet
The Basic Course Responsible Care addresses the elements of the Responsible Care Program: Safety, Health, and
Environment; Product stewardship; Security; and Sustainability.
Profit
The e-learning course Global Competition Law Principles and Practices addresses the main principles of anti-trust
legislation. Relevant employees annually confirm their compliance with the rules via a Competition Law Compliance
Statement. In this statement, they confirm that they are not aware of any violation of competition laws by DSM. For a
smaller group of employees, mandatory Competition Law classroom trainings on specific topics are organized. Alleged
breaches, if any, are reported to, and discussed with, Group Legal Affairs. In 2021, no breaches were reported.
The course for Global Trade Controls (available in English) explains the most important aspects of international trade
legislation. Compliance with trade controls is embedded in our systems and processes. Company master data is screened
to check customers and suppliers against embargoes and lists of sanctioned parties.
The Anti-Bribery & Corruption (ABC) e-learning provides training on the most important features of bribery and corrupt
behavior. In addition, the DSM ABC Policy and Compliance Manual (available in English and Chinese) is shared with
selected employees in commercial and business roles, who must also follow ABC classroom training (integrated into the
Competition Law classroom program).
The DSM Security e-learning covers our seven Key Security Behaviors. To complete this e-learning, employees are required
to read and sign off on the DSM Code of Conduct for Information Security. The Cyber Fraud Awareness e-learning is an
additional training to increase awareness among all employees regarding prevalent types of cybercrime. Furthermore,
global as well as targeted phishing tests are regularly carried out to ensure that our people stay alert.
We also have rules to prevent misuse of inside information on the holding of or trading in DSM financial instruments, such
as shares and other securities, and where applicable the holding of or trading in financial instruments of other companies.
These rules apply to all relevant employees, including the Executive Committee, the Managing Board, and the Supervisory
Board.
Value chain
The business principles most relevant to our supply chain are brought together in the Supplier Code of Conduct and are
also structured along the three dimensions of People, Planet and Profit. The Supplier Code of Conduct, available on the
company website, is signed off by suppliers in framework contracts, confirming their commitment to sustainability, among
other things.
For our distributor and agent framework contracts, the Anti-Bribery & Corruption Policy is translated into terms and
conditions to ensure ethical business conduct when these parties act on behalf of DSM or deal with DSM products further
down the value chain.
Corporate governance and risk management – DSM Code of Business Conduct
Royal DSM Integrated Annual Report 2021 134
Consequence management
We apply zero-tolerance consequence management to violations of the Code. Under our whistleblower procedure (DSM
Alert), most (potential) violations are reported to and dealt with by local line management. Where this is not considered
appropriate, complaints can directly be made to the DSM Alert Officer. In both cases, consequence management practices
(such as official warning, temporary suspension, dismissal) are in place for substantiated violations to support compliance
with the Code. The DSM Alert Officer reports to the Managing Board and also reports independently to the Audit
Committee of the Supervisory Board twice a year. Any individual not employed by DSM who might wish to voice a concern
regarding violations of the Code may also contact the DSM Alert Officer via the company website.
In 2021, 23 Alert cases (reports of potential violations of the Code) were received by the DSM Alert Officer, three of which
were reported by an external party. This is at a level comparable with previous years. Four of these were potential bribery
and corruption cases. After investigation, one of these four Alert cases was substantiated and consequence management
was applied.
The table below gives an overview of all reported substantiated violations of the Code (including Alert cases), with a
breakdown by the People, Planet and Profit dimensions and region. Proven violations result in dismissal or other forms of
consequence management. In line with this policy, 45 employees were dismissed in 2021 because of breaches of the Code,
legal or local company regulations. In addition, 89 employees received another form of consequence management. Over
the years, the number of violations has remained about the same. In 2021, a slight increase in the reporting of dismissal
cases and a slight decrease in other kinds of consequence management cases was seen.
People
Most of the cases in the People dimension relate to violations of the Life Saving Rules. Inappropriate or disrespectful
behavior that does not contribute to a psychologically safe and healthy working environment (discrimination, sexual and
other kinds of harassment) is also reported in this dimension. Health and safety are priorities for the company and
incident-reporting channels are well known.
Planet
There were 6 violations of the Code reported in the Planet dimension in 2021. All these cases concerned a failure to strictly
observe our procedures.
Profit
Most of the cases in the Profit dimension relate to fraud and conflict of interest
Corporate governance and risk management – DSM Code of Business Conduct
Royal DSM Integrated Annual Report 2021 135
Implementation of the DSM values training program
2021
2020
% of targeted employees trained
General
Code of Business Conduct
97%
95%
People
Life Saving Rules
99%
98%
Respectful Behavior
98%
96%
GDPR overview
99%
95%
Planet
Basic Course Responsible Care
99%
97%
Profit
Global Trade Controls
98%
95%
Anti-Bribery & Corruption
98%
94%
Security
96%
96%
Cyber Fraud Awareness
98%
98%
.
DSM Annual Competition Law Statement
% of people having signed the statement
100%
100%
Violations of the Code
2021
2020
Number of dismissals / other consequence management
45 / 91
37 / 121
Triple P breakdown
People
30 / 73
29 / 102
Planet
0 / 6
0 / 5
Profit
15 / 12
8 / 14
Regional breakdown
Europe & Africa
12 / 37
13 / 52
Americas
26 / 42
20 / 55
Asia–Pacific
7 / 12
4 / 14
TOTAL
136
158
Alert cases (whistleblower procedure)
2021
2020
Number substantiated / not substantiated / under investigation
7 /15 / 1
9 / 9 /4¹
Triple P breakdown
People
6 / 11 / 1
7 / 7 / 2
Planet
0 / 0 / 0
1 / 0 / 0
Profit
1 / 4 / 0
1 / 2 / 2
Regional breakdown
Europe & Africa
1 / 4 / 0
1 / 3 / 2
Americas
4 / 9 / 1
5 / 3 / 0
Asia–Pacific
2 / 2 / 0
3 / 3 / 2
TOTAL
23
22
1 The four Alert cases 'under investigation' in 2020 were resolved in 2021: two were substantiated, two were not substantiated.
Royal DSM Integrated Annual Report 2021 136
Risk management
DSM risk management framework
A well-embedded risk management framework and accompanying organization are in place. The framework is based on
COSO Enterprise Risk Management and this section is structured accordingly (see DSM Risk Management Cycle below). For
each of the five COSO components (dark blue boxes) the implementation within DSM (light blue boxes) is explained,
starting with Governance & Culture (in a clockwise direction).
Governance and culture
Risk management responsibilities
The Managing Board is accountable for the management of all risks associated with our company’s strategy and business
objectives. To this end an appropriate risk management system is in place.
It is the responsibility of the Business Groups, support functions, functional excellence departments and regions within
DSM (the units) to set up, operate, maintain and monitor an appropriate risk management system within their area of
responsibility.
We apply elements of the Three Lines Model to manage risks effectively.
First line: the responsibility for identifying, assessing and managing risks, including control execution, lies with the
individual units.
Second line: Group Risk Management (GRM) designs, implements and maintains the overall risk management framework
for the company. GRM also supports the first line in risk identification, assessment and management by designing and
Royal DSM Integrated Annual Report 2021 137
Corporate Governance and risk management – Risk management
developing standards, systems and tools. Within GRM there is an independent department testing the effectiveness of the
Internal Control Framework.
Besides GRM, there are also other departments acting as a second line, for instance, DSM Operations & Responsible Care
covering Manufacturing, Supply Chain, SHE and Security.
Third line: Corporate Operational Audit (COA) conducts independent operational audits of all units on behalf of the
Managing Board.
GRM and COA report directly to the CFO/Co-CEO, and COA has direct access to the COO/Co-CEO as well as to the Audit
Committee of the Supervisory Board.
Code of Business Conduct
The Code of Business Conduct comprises our purpose, our culture, and our business principles, which form the basis for
risk management. Our culture is directly related to our purpose of creating brighter lives for all. All our employees receive
regular training on the Code of Business Conduct and on detailed aspects of relevant business principles.
Strategy and objective-setting
The Managing Board supported by the Executive Committee establishes the company strategy and business objectives.
Risk appetite
The risk appetite defines the level of risk the company is prepared to take in the different risk categories, being strategic,
operational, financial, compliance, and reputational risks. The risk appetite supports priority-setting in risk responses. The
Executive Committee decides on the risk appetite, which is reviewed annually. In 2021, our risk appetite was updated. The
category of reputational risks was added and the criteria to rate the risk appetite were changed in order to give better
guidance to the units for decision making (see figure below).
DSM’s risk appetite
Corporate Requirements
The Corporate Requirements are our internal rules and regulations, which are defined and maintained by the support
functions and GRM. In line with the Code of Business Conduct and the risk appetite, the Corporate Requirements provide:
- Risk-based guidance for managing common business and process risks (‘common controls for common risks’)
- Standards and practices to increase the efficiency of our main business processes and functions
The Corporate Requirements are mandatory for all units, and management is responsible to implement these as and when
applicable.
Corporate Governance and risk management – Risk management
Royal DSM Integrated Annual Report 2021 138
Performance
Risk management is designed to create and preserve value. Important elements are identifying, assessing and responding
to risks that may impact the achievement of our company strategy and business objectives and the execution of control
activities. This part of the risk management framework focuses on practices that support the organization in making
decisions.
Risk identification, assessments and response
Risk assessments are performed at various levels in the organization. We take a standard but flexible approach to risk
assessments:
- Risk assessment planning
- Preparation
- Risk identification and clustering
- Risk rating
- Evaluation and risk response
Both short-term risks (up to and including three years) and emerging risks (3–30 years) in the risk categories strategic,
operational, financial, compliance, and reputational are the focus of our risk assessments. A Risk Assessment Manual and
training is available to give guidance and continuously improve the effectiveness of our risk assessment process.
Corporate Risk Assessment
We periodically conduct a Corporate Risk Assessment (CRA), which is the responsibility of the Managing Board. As part of
this assessment, the Executive Committee reviews and agrees on the short-term top risks as well as emerging risks. The
Executive Committee also agrees on how to mitigate and monitor these.
Unit Risk Assessments
The DSM units conduct various types of risk assessments:
- Business Risk Assessments focus on risks that could jeopardize the attainment of our strategic goals and
business objectives
- Process Risk Assessments are intended to make our processes more robust and fraud-proof
- Project Risk Assessments focus on specific projects and are updated throughout project execution to secure
successful delivery of project objectives and value creation for the company
In addition to the above, specific risk assessments may be performed for areas such as Safety, Health, Environment,
Climate and (Cyber)security.
Most risk assessments are carried out by cross-functional teams. These teams include experienced facilitators as well as
experts, who can challenge assumptions in order to help improve the quality of these risk assessments.
Control activities
Control activities are integrated in our business processes, and are executed by the first line. They are preventive or
detective and may encompass a range of manual and (semi-)automated controls such as policies, procedures,
authorizations, verifications and business performance reviews. We apply a standard approach for user access
management, including privileged users, as well as Segregation of Duties (SoD) management. These controls also help us
to avoid fraud and reputational damage, and support the Statements of the Managing Board.
The Internal Control Framework (ICF) aims to ensure reliable financial reporting, mitigate fraud risks and safeguard our
assets. It defines the standard set of key controls that must be performed by the first line. The internal control department
within GRM owns the ICF.
Corporate Governance and risk management – Risk management
Royal DSM Integrated Annual Report 2021 139
Review and revision
Internal Control review
The testing of the effectiveness of the key controls as included in our Internal Control Framework (ICF) is performed by the
Internal Control department within GRM. This is one of the pillars of our House of Control supporting the Statements of the
Managing Board.
COA audits
COA, as the third line, conducts independent operational audits based on the mandatory guidance of ‘The Institute of
Internal Auditors’ to provide additional assurance to the Managing Board that significant risks are being managed and
controlled effectively, efficiently and sustainably. Some of these audits are unannounced. The scope and frequency of COA
audits is set according to the ranking of the auditable units in terms of the magnitude of risk, based on a number of
defined characteristics. This program is agreed by the Executive Committee and the Audit Committee of the Supervisory
Board.
Enhancement of the risk management system
During 2021, the following main improvements were made to our risk management framework:
- Group Risk Management was extended with the expertise areas Information Security Risk Management and
Sustainability Risk Management
- Our Code of Business Conduct was extended with the business principles Quality and Social media, and the
corresponding training has been updated accordingly
- Our Corporate Requirements regarding privacy and personal data processing were updated
- The approach for determining the risk appetite was updated. The category of reputational risks was added and
the criteria to rate the risk appetite have been changed in order to give better guidance to the units for decision
making
- The risk assessment process was improved, addressing both internal and external risk factors in a more
structured way
- The roles, responsibilities and processes to manage Segregation of Duties (SoD) conflicts were strengthened,
supported by new tooling
- The automation level of internal controls was increased, improving the efficiency and effectiveness of control
execution and testing
Information, communication and reporting
Communication channels
We strive for an open communication culture and have various channels for communicating risk information both
internally and externally. These channels enable our organization to provide relevant information for decision-making.
Corporate Governance and risk management – Risk management
Royal DSM Integrated Annual Report 2021 140
Risk management is an intrinsic part of doing business, so normal business discussions regularly address this topic. In
addition, to ensure that specific risks receive sufficient attention, we have installed the following consultation and
communication structures:
- Global Fraud Committee
- Global Issue Committee
- Cybersecurity Governance Board
- Ethics Board for People Data
- Human Rights Steering Committee
- Privacy Council
- Alert Committee
- Disclosure Committee
- Values Training Review Team
- Value Assurance Reviews
- Risk Management Committees in the various units
- Dedicated discussions with the Executive Committee on the Corporate Risk Assessment and the outcome of the
Letter of Representation process
Letter of Representation
The Letter of Representation (LoR) is a biannual process whereby DSM’s units provide a comprehensive overview of
incidents and risks to the Managing Board. The units report their identified short-term and emerging risks according to five
categories: strategic, operational, financial, compliance, and reputational. The LoR also documents the mitigation actions
defined in respect of these risks. A formal sign-off by each unit director is required. The output of the LoR process is
discussed in the Executive Committee as well as the Audit Committee of the Supervisory Board. The material incidents are
reported in the section What still went wrong in 2021.
Top and emerging risks
The output of the Corporate Risk Assessment process — being top risks and emerging risks — is discussed in the Audit
Committee of the Supervisory Board and reported below.
Our risk profile
The risk management activities as performed by the first line as well as the reviews/audits conducted by the second and
third line in 2021 did not indicate any material failings in the design and effectiveness of our risk management and
internal control system. This is the basis for the Statements of the Managing Board and for the risk disclosures below.
Top risks and related mitigating actions
Below, the five most important risks are listed that might prevent us from achieving the targets defined in our strategy,
along with the mitigating actions we are taking to further reduce our exposure. These risks are labeled as top risks as the
exposure on DSM’s EBITDA is an indicative €30 million or more, or because they have a major non-financial impact such as
on reputation.
Market environment
There is a risk that we may not meet our strategic targets in the event of not being able to respond fast enough to the
volatile economic environment or to increasing competition, especially from low-cost/margin players.
To address this risk, several improvement projects were implemented in 2020 to create a more agile organization. In 2021,
macro-economic conditions continued to be challenging, with high logistic costs, as well as increasing energy prices in
Europe. Despite these headwinds, we continued to show resilience, serving our customers and delivering solid financial
results.
Corporate Governance and risk management – Risk management
Royal DSM Integrated Annual Report 2021 141
Nevertheless, with increasing inflation and uncertain market developments there is a risk that sales volumes and margins
could be negatively impacted.
Further mitigations: To distinguish ourselves from our competitors, we continue to create value for our customers through
innovative products and services. In addition, in 2021 we revised the organizational structure of DSM, creating three
Business Groups more closely aligned with the end markets we serve. We also adjusted the operating model for science
and innovation to bring innovation closer to the Business Groups, and the set-up of all enabling functions has been
revisited to better support business priorities.
Talents
There is a risk that we might not be able to attract, retain and develop the talents required to transform our company and
deliver on our strategy. To enable continued strong performance, our P&O strategy has been fully aligned with our
business priorities, and it is centered around our Culture Compass. It has four focus areas, addressing organization,
people, workplace, and leadership and it is supported by modern, flexible rewards.
We want to provide an environment where everyone can feel safe, valued and included and where everyone can
contribute. Our Inclusion & Diversity strategy therefore consists of initiatives to diversify our current and future talent
pools. And, as an engaged workforce is essential, we increased our efforts to connect with our employees in different ways
throughout the pandemic. We monitor employee engagement and well-being through different surveys.
Further mitigations: A new data platform will provide new people and organization insights that will serve as a base for
future decision-making.
Purpose-driven growth
As we move further into new business areas – such as gut health, precision & personalization - there is increased
uncertainty around time-to-market and peak sales of our innovation projects, impacting our organic growth.
Several strategic projects progressed well in 2021, such as the launch of the decision-making tools Verax
TM
and Sustell
TM
,
the regulatory approval for Bovaer®, our methane inhibitor solution, the launch of Hologram Sciences Inc., the
introduction of a fast-acting vitamin D form ampli-D®, the expansion of the portfolio of Market-Ready Solutions, the
capacity expansion and growing market reach for Veramaris®, our algal-based omega-3, the construction of a production
facility for CanolaPRO®, a rapeseed protein isolate, and the development of the market for EVERSWEET
TM
, our fermentative
Stevia sweetener. Despite the progress that has been made so far and having processes in place to manage and monitor
further progress of innovation projects, the contribution to organic sales growth remains a risk.
Further mitigations: We are aligning our science and innovation organization with our new end-market organization. We
will also continue to increase our investments in the digital transformation of our science and innovation capabilities such
as artificial intelligence (AI), big data, deep learning and modelling as well as extending lab automation.
Cyber threats
In an increasingly digital world, DSM is subject to cybersecurity attacks which, if successful, could lead to a loss of
intellectual property, discontinuity of operations, or otherwise have a negative impact on the company.
To address this risk, we continued throughout 2021 to implement our multi-year cybersecurity programs that cover the
domains of information technology, operations technology, and R&D laboratory systems. We have updated our maturity
assessment to provide us with insights for further improvements.
Since the ‘human firewall’ remains critically important, we continued to raise employee awareness via e-learnings,
awareness campaigns and regular phishing tests, either on a global scale or for specific target groups.
Despite our progress in this area, the risk remains due to a growing number of digital initiatives driven by our strategy, and
increasing external cyber threats.
Corporate Governance and risk management – Risk management
Royal DSM Integrated Annual Report 2021 142
Further mitigations: Using as input the results from the maturity assessment, the Cyber Security Governance Board has
defined the One DSM Cyber Security Program. Through this program we are implementing an overarching framework to
manage cybersecurity risks on a global level, covering the domains of information technology, operations technology, and
R&D laboratory systems.
Product quality
A food safety incident may arise due to (alleged) acts or omissions of DSM, our suppliers or other value chain partners and
may have severe consequences for the health of consumers and negative financial and reputational impact for DSM. To
reduce this risk, four initiatives were deployed over the last couple of years to complement our quality management
systems: 1) growing as a learning organization, 2) high quality risk assessments, 3) improving standards, and 4) mindset
and behavior. While the quality of our products is a constant focus, the risk of a quality incident remains.
With the shift to new markets and new product offerings, the importance of product quality increases further, whereas the
risk of quality defects cannot be fully excluded.
Further mitigations: In addition to already high standards and corporate requirements with regards to quality, we are
launching a program across our operations to further strengthen our quality procedures, building on our experiences from
putting safety as first priority.
Emerging risks
The following emerging risks have been identified by the Executive Committee.
Climate physical risks
We may not be able to respond fast enough to the physical impacts of climate change on our operations, value chains and
end-markets.
Climate transition risks
We may not be able to respond fast enough to the changes related to the transition to a net-zero world and the impact
these will have on our operations, value chain and end-markets
Risk of increasing polarization in the world
This could lead to new legislation and new regulations that have a negative impact for our company (such as increasing
taxation, trade barriers, sanctions and embargoes, and labor costs).
Environmental, Social and Governance (ESG) reporting risk
With ESG performance becoming more important and with increasing disclosure requirements, we might not be able to
address all of these developments timely.
Climate-related risks
In 2020, we performed a desk study on physical risks for our sites that could lead to material financial impact in case of a
prolonged shutdown. We mapped five emerging hazards (flooding, cyclones, wildfire, extreme heat, and water scarcity)
against three IPCC climate temperature scenarios (RCP 2.6, RCP 4.5, and RCP 8.5), using three different time horizons
(present, 2030, and 2040/2050). These scenarios were supplemented with additional data.
In 2021, the results from that study were validated with these sites in order to understand our risk exposure and resilience
taking into account local circumstances and existing mitigations. The validations demonstrated that we already have
mitigations in place for several of the risks identified through the desk study. We have concluded that water scarcity is the
most material risk and needs to be actively monitored and managed. All sites with an increased water risk profile were
already in scope of our water stewardship program.
Royal DSM Integrated Annual Report 2021 143
Corporate Governance and risk management – Risk management
In parallel, we piloted a transition risk assessment approach in two different businesses, one from the Materials cluster
and one from the Nutrition cluster, covering more than a third of total sales. Using external data sources, such as
International Energy Agency - World Energy Outlook, World Bank, and sector-specific sources such as the FAIRR initiative,
we built forward-looking scenarios aligned with the IPCC temperature models and time horizons used for the physical risk
assessments. Scenarios are evolving depending on external data availability and by adding parameters relevant for the
businesses under review. Through the assessments both risks and opportunities are captured. The scope is not limited to
our own operations but includes the full value chain impact on our business.
At this moment, no material short-term climate risks have been identified through specific climate risk assessments or
regular risk assessments. Physical and transition risks are seen as emerging, with transition risks still expected to
materialize this decade. Various climate-related opportunities are foreseen to have a meaningful contribution as well,
such as methane reducing ruminant solution Bovaer®. The material risks identified through the climate risk assessments
were integrated and are managed as part of our regular risk management processes.
We will continue to expand and update our physical risk assessments for our own operations as well as the rest of our
value chains.
With the help of external parties, we are also exploring different approaches to assess vulnerabilities caused by climate
change and increase our resilience. This will address both our own sites and our end-markets. Furthermore, we will roll
out the transition risk assessments in the remaining businesses and continue to update our scenarios to reflect latest
external insights.
COVID-19 related risks
In 2021, we continued to respond swiftly to the impacts of the pandemic. We ensured that people were safe and continued
to serve our customers. Our financial performance was solid in 2021 and COVID-19 has demonstrated the relevance of our
strategic focus on Health, Nutrition & Bioscience. Hence, COVID-19 was not considered a top risk, but the effects of the
pandemic have been factored into the assessment of all other risks. This was consistent with the outcome of the
Materiality matrix assessment.
In 2021, we focused on keeping our employees engaged, as working remotely was the standard for most of our office
workers during a significant part of the year. For those workers whose activities had to be carried out within an operational
setting, measures were put in place to ensure that these working environments were COVID-19-secure. Special attention
was paid to mental wellness and increasing resilience, see People.
Other important risks
There are also more generic business risks, such as business continuity, sourcing, intellectual property, tax, and business
process risks. Our risk management system is set up to adequately monitor and respond to these risks.
Royal DSM Integrated Annual Report 2021 144
What still went wrong in 2021
The year 2021 presented us with many challenges as well as opportunities. The ongoing effects of the COVID-19 pandemic
continued to place additional and unexpected demands upon our company and our people worldwide. At the same time,
this was a pivotal year in DSM’s transformation with the sale of our Resins & Functional Materials business and associated
businesses, the integration of three acquired companies, and the establishment of three new Business Groups as we fully
focus on becoming a Health, Nutrition & Bioscience company.
Despite the challenging circumstances, we applied our high standards with our usual rigor. Possible breaches of the DSM
Code of Business Conduct were investigated and, if any form of infringement was found to have occurred, consequence
management was applied (see DSM Code of Business Conduct for further information). Here we share the most significant
incidents of 2021 across all three dimensions of People, Planet and Profit and not relating solely to breaches of the DSM
Code of Business Conduct. This overview includes incidents with a financial impact as well as incidents regarding health,
safety, environment, security and fraud, in all of which areas we have a low risk appetite.
In line with our reporting policy, this overview includes not only incidents but also some serious near-misses. Near-misses
are cases that did not result in injury, illness or serious damage but which could have done so. Even when a crisis is
averted, it is our responsibility to learn from it and do better in future. We have a process in place to collect information
about incidents and serious near-misses as presented in this overview, using various sources including our internal Letter
of Representation, and our reporting system for SHE and Security incidents.
Preventing incidents from reoccurring requires us to understand each incident to the best of our ability. When an incident
occurs, our first priority is to take care of any injuries and repair any damage. We investigate every recordable incident
using a fixed root cause analysis method and we trigger global improvement cycles, see Safety, health & well-being. We
adjust requirements and processes and apply consequence management as needed.
People
Incidents involving falls
At DSM Nutritional Products in Lalden (Switzerland), an operator was stretching in the attempt to close a valve. He lost
balance, falling to the ground and dislocating his shoulder.
At DSM’s joint venture Yimante in Jingzhou (Hubei Province, China), an employee fell from height in a washing tower and
suffered multiple rib fractures.
Incidents during process interruptions and maintenance work
At DSM Nutritional Products in Jiangshan (Jiangsu Province, China), an employee carrying out maintenance work on a
vacuum pump lost the tip of a finger when the vacuum pump piston unexpectedly moved.
At DSM Nutritional Products in Jiangshan (Jiangsu Province, China), an employee conducting maintenance work was hit by
the end cover of an air compressor which was still under pressure and broke his thigh.
At DSM Nutritional Products in Belvidere (New Jersey, USA), an employee lost the tip of a finger during the reinstallation of
a piece of equipment.
At DSM Food Specialties in Yantai (Shandong Province, China), an employee lost a finger and the tip of another finger while
he was trying to remove a blockage in a feeding pipeline.
At DSM Engineering Materials in Emmen (Netherlands), an employee injured the tip of a finger while removing polymer
wires from the cutter of an extruder.
At DSM Nutritional Products in El Salto (Mexico), an operator suffered a head injury that required stitches when he was hit
by a tool while starting up a blender. From the incident investigation we learned that the DSM safety rules and controls
What still went wrong in 2021
Royal DSM Integrated Annual Report 2021 145
had been violated multiple times. Consequence management was applied, and organizational and procedural changes
were implemented.
Incidents due to flash fires / explosions
At DSM Nutritional Products in Ambernath (India), a flash fire occurred at the dosing point where two employees were
manually filling a reactor. The employees sustained first-degree burns to their hands and heads.
At DSM Nutritional Products in Mairinque (Brazil), a flash fire occurred during a normal restart procedure after a power
shutdown. An employee sustained first- and second-degree burns to the upper body and there was material damage to
the equipment.
At DSM’s joint venture Yimante in Jingzhou (Hubei province, China), an employee sustained second-degree burns to his
face when a flash fire occurred while he was cleaning a tank.
At DSM Nutritional Products in Sisseln (Switzerland), a small fire occurred in a formulation unit. causing the suspension of
a production line for a few weeks. There were no personal injuries.
At DSM Nutritional Products in Kingstree (South Carolina, USA), a process interruption caused plugging in a feed line.
During the restart of the process an internal ignition led to an explosion. There were no personal injuries.
At DSM’s joint venture Yimante in Jingzhou (Hubei province, China), an implosion damaged a product storage tank causing
a loss of production of multiple days. There were no personal injuries.
At DSM Nutritional Products in Esbjerg (Denmark), a runaway reaction occurred when a bacteria-containing product stream
was being sterilized, damaging two valves in the production installation. There were no personal injuries.
Other health and safety incidents
At DSM’s joint venture Olatein in Dieppe (France), a contractor working at height dropped a wooden board that fell six
meters, hitting another contractor’s foot. The contractor suffered a fracture of his big toe.
At DSM Food Specialties in Delft (Netherlands), two employees entered a production room filled with a mist. One
experienced irritation to the eyes and the other irritation to the cheek.
At DSM Food Specialties in Yantai (Shandong Province, China), an employee fractured a toe when a poorly loaded pallet he
was moving tilted, and his foot got stuck between the pallet and the floor.
At DSM Nutritional Products in Schenectady (New York, USA), an employee reported discomfort in his left knee after
repetitively moving 50 kg drums onto a pallet. He was reassigned to physically less-demanding tasks.
At DSM Food Specialties in Wuxi (Jiangsu Province, China), a pallet slipped off a truck to the ground as unloading
commenced, leading to a severe blow to the waist area of the truck driver, who suffered multiple fractured vertebrae.
At DSM Nutritional Products in São Paulo (Brazil), an employee was hit by a truck while making a business trip in a
company car.
Incidents involving personal data
Unauthorized persons accessed the Office365 email account of an employee of one of our strategic IT partners. After a day,
the employee noticed unusual behavior in the email account and alerted the DSM IT Security team. In the timeframe
between the attack and its detection, a phishing mail was sent to a number of employees from the corrupted email
account. Corrective and mitigating measures were immediately taken that stopped the attack the same day. No similar
instances have been noticed since. The incident was reported to the Dutch Data Protection Authority.
What still went wrong in 2021
Royal DSM Integrated Annual Report 2021 146
Security incidents
While transporting for DSM Food Specialties in Mexico, a truck carrying DSM products was hijacked by armed thieves. The
driver was threatened with firearms and required to hand over the vehicle and its consignment. The driver was released
unharmed after the assault.
Planet
There were no serious reportable Planet incidents this year.
Profit
At DSM Food Specialties in Delft (Netherlands), the mechanical breakdown of a centrifuge led to a loss of production of
more than a week.
At DSM Engineering Materials, two raw material suppliers declared force majeure, leading to a loss of production of
multiple days at DSM.
At DSM Food Specialties in Delft (Netherlands), parts of equipment were incorrectly replaced during a maintenance stop,
leading to a delay in restarting the production.
At Group Business Services (Latin America), irregularities in the purchasing process were detected, pointing to a fraud case
in which multiple fraudsters were involved. Relevant processes and controls were reviewed and updated.
At DSM Nutritional Products in Freeport (Texas, USA), production needed to be stopped as a result of exceptionally low
temperatures in February. The freezing of equipment, a power outage and material damage caused a loss of production of
several days.
At DSM Nutritional Products in North America, a supplier delivered raw material which affected product quality and
necessitated a product replacement in the case of one customer.
At DSM Nutritional Products, two suppliers of the same raw material declared force majeure, impacting the supply to
multiple DSM sites, leading to a loss of margin.
Before the completion of the divestment of DSM Resins & Functional Materials in the first quarter of 2021, two suppliers
declared force majeure, leading to a loss of production at multiple DSM sites.
Royal DSM Integrated Annual Report 2021 147
Supervisory Board and Managing Board Royal DSM
Supervisory Board
Thomas Leysen (1960, m), Chair
First appointed: 2020. End of current term: 2024.
Nationality: Belgian. Nomination Committee (Chair),
Remuneration Committee (member). Last position held:
CEO of Umicore; Supervisory directorships/other
positions: Chair of the Board of Umicore; Chair of the
Board of Mediahuis; Chair of the Belgian Corporate
Governance Commission; Chair of the King Baudouin
Foundation (until 31 December 2021).
John Ramsay (1957, m), Deputy Chair
First appointed: 2017. End of current term: 2025.
Nationality: British. Audit Committee (Chair),
Remuneration Committee (member). Last position held:
Chief Financial Officer (CFO) and interim CEO of
Syngenta AG. Supervisory directorships/other positions:
Non-executive director of RHI Magnesita N.V., non-
executive director of Croda International PLC.
Eileen Kennedy (1947, f)
First appointed: 2012. End of current term: 2022.
Nationality: American. Sustainability Committee (Chair),
Nomination Committee (member). Position: Professor of
Nutrition, Friedman School of Nutrition Science and
Policy at Tufts University in Boston (USA); Supervisory
directorships/other positions: Member, Board of
Directors, Sight and Life Foundation.
Carla Mahieu (1959, f)
First appointed: 2021. End of current term: 2025.
Nationality: Dutch. Remuneration Committee (Chair).
Last position held: Global Head of Human Resources
and Member of the Management Board of Aegon N.V.;
Supervisory directorships/other positions: Non-
executive member of the Board of VodafoneZiggo Group
B.V. Netherlands; non-executive member of the Board of
Arcadis; non-executive member of Stichting Continuïteit
PostNL.
Erica Mann (1958, f)
First appointed: 2019. End of current term: 2023.
Nationality: Australian. Sustainability Committee
(member), Audit Committee (member). Last position
held: Member of the Board of Management of the Bayer
Group and Global President of Bayer’s Consumer Health
Division. Supervisory directorships/other positions: Non-
executive member of the Board of Perrigo; non-
executive member of the Board of Kellogg Company;
non-executive member of the Board of Blackmores.
Frits Dirk van Paasschen (1961, m)
First appointed: 2017. End of current term: 2025.
Nationality: Dutch and American. Remuneration
Committee (member), Sustainability Committee
(member). Last position held: CEO Starwood Hotels and
Resorts. Supervisory directorships/other positions: Non-
executive Board member Williams Sonoma (USA); Board
member Sonder; Board member Crown Proptech
Acquisitions; Chair Board of Convene; Board member of
CitizenM Hotels (NL); Board member JCrew group;
Advisor to private equity firm TPG, The Red Sea Project,
the Indian School of Hospitality; CEO practice at Russell
Reynolds; CEO and Founder of The Disruptor's Feast
Advisory.
Pradeep Pant (1953, m)
First appointed: 2016. End of current term: 2024.
Nationality: Singaporean. Audit Committee (member),
Nomination Committee (member). Last position held:
EVP and President APAC and EMEA of Mondelez
International. Supervisory directorships/other positions:
Honorary Council Member of Food Industry Asia; non-
executive Director of Max India Ltd., MAX Life Insurance
Co Ltd. (India), Antara Senior Living Ltd. (India) and NIVA
BUPA Health Insurance Co. Ltd. (India); Chair of the
Board of Blaine and Clyde Investments Pte Ltd. Asia
Sustainable Foods; President of Pant Consulting Pte Ltd.
Corien Wortmann-Kool (1959, f)
First appointed: 2021. End of current term: 2025.
Nationality: Dutch. Audit Committee (member),
Sustainability Committee (member). Position: Chair of
the Board of ABP Pension Fund. Supervisory
directorships/other positions: Vice-Chair of the
Supervisory Board of Aegon N.V.; Chair of the Board of
Save the Children (NL); Advisory Board Member of the
Impact Economy Foundation; Member of the Capital
Markets Advisory Board of the Dutch Financial Markets
Authority.
Royal DSM Integrated Annual Report 2021 148
Managing Board
Geraldine Matchett (1972, f), Co-CEO
Position: Co-CEO & CFO since February 2020; member of the Managing Board since August 2014 and
CFO since December 2014. End of current term: 2022. Nationality: British, French, Swiss. Supervisory
directorships/other positions held: Non-executive Director of ABB; Board member of Catalyst Europe;
Member of the HRH the Prince of Wales’ A4S (Accounting 4 Sustainability) CFO Leadership Network;
Board member of FCLTGlobal; Executive Committee Member of the World Business Council for
Sustainable Development (WBCSD); Member of the Foundation Board of IMD Business School.
e-mail: geraldine.matchett@dsm.com
Dimitri de Vreeze (1967, m), Co-CEO
Position: Co-CEO & COO since February 2020; member of the Managing Board since September 2013.
End of current term: 2025. Nationality: Dutch. Supervisory directorships/other positions held:
Chairman Supervisory Board DSM Netherlands; Member Executive Committee and Board member of
Cefic (European Chemical Industry Council) and Chair Sustainability Advisory Forum; Board member
‘Fonds voor de topsport’ (NOC*NSF; Dutch Olympic Committee Fund for top sport); member
Supervisory Board Sanquin; Chairman Young Captain Foundation; Chair of the ALV United World
College Maastricht.
e-mail: dimitri.vreeze-de@dsm.com
Royal DSM Integrated Annual Report 2021 149
Statements of the Managing Board
The Managing Board is responsible for the design and operation of the company’s internal risk management and control
systems. In discharging this responsibility, the Managing Board has made a systematic assessment of the effectiveness of
the design and operation of the internal control and risk management systems.
On the basis of this report and in accordance with best practice 1.4.3 of the Dutch Corporate Governance Code of
December 2016, and Article 5:25c of the Financial Supervision Act, the aforementioned assessment and the current state of
affairs, to the best of its knowledge and belief, the Managing Board confirms that:
- DSM’s internal risk management and control systems provide reasonable assurance that financial reporting does
not contain any material inaccuracies
- There have been no material failings in the effectiveness of the internal risk management and control systems of
the company
- There are no material risks or uncertainties that could reasonably be expected to have a material adverse effect
on the continuity of DSM’s operations in the coming twelve months
- There is a reasonable expectation that DSM will be able to continue its operations and meet its liabilities for at
least twelve months, therefore it is appropriate to adopt the going concern basis in preparing the financial
reporting
It should be noted that the above does not imply that these systems and procedures provide absolute assurance as to the
realization of operational and strategic business objectives, or that they can prevent all misstatements, inaccuracies,
errors, fraud and non-compliances with legislation, rules and regulations. Nor can they provide certainty that we will
achieve our objectives.
In view of all of the above, the Managing Board confirms that, to the best of its knowledge and belief, the financial
statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the company, and that
the management report includes a fair review of the position at the balance sheet date and the development and
performance of the business during the financial year 2021, together with a description of the principal risks and
uncertainties that the company faces.
Heerlen, 1 March 2022
The Managing Board
Geraldine Matchett, Co-CEO
Dimitri de Vreeze, Co-CEO
Royal DSM Integrated Annual Report 2021 150
Report by the Supervisory Board
Introduction by the Chair
Dear reader,
The resilience that DSM had demonstrated during 2020 in the face of the COVID-19 pandemic was shown once more in
2021. My colleagues and I on the Supervisory Board witnessed the company’s care for its employees, its commitment to its
customers, and its determination to keep creating brighter lives for all. In the process, DSM delivered another excellent
operating result – a considerable achievement in a demanding and sometimes difficult operating environment.
It is against this background that I would like to thank my predecessor Rob Routs, who first joined the Supervisory Board
in April 2010 and was appointed Chair in May 2011. Rob retired as Chair and member of the Supervisory Board at the close
of the Annual General Meeting of Shareholders on 6 May 2021. Under his guidance, DSM continued its evolution into the
purpose-led, performance-driven company it is today. We all owe a profound debt of gratitude to Rob for his deep
insights, wise counsel and unfailing collegiality over the course of 11 years of service. We wish him every success for the
future.
For my part, I am proud to have the opportunity to follow in Rob’s footsteps as the company tackles some of the biggest
challenges facing our world today. I would like to thank my colleagues on the Supervisory Board for their confidence in
electing me as Chair, and I pledge to serve DSM to the utmost of my abilities. Since joining the Supervisory Board in May
2020, I have seen what a remarkable company DSM is – genuinely purpose-led and performance-driven in everything it
does.
Despite the challenges created by the continuing pandemic in 2021, it was a pleasure for me to work with my colleagues on
the Supervisory Board, and of course also with the Co-CEOs and the Executive Committee, throughout the year. Our
interactions are characterized by an open style which encourages everyone to contribute their experience and expertise
and, equally, allows everyone to raise challenges where these might be appropriate. I valued the regular interactions with
our Co-CEOs Geraldine Matchett and Dimitri de Vreeze and also the direct and transparent interaction between the
Supervisory Board and the Executive Committee.
Most of our meetings were, of necessity, virtual, but it was possible for me and my new Supervisory Board colleagues Carla
Mahieu and Corien Wortmann-Kool to arrange visits to the Brightlands Campus in Geleen (Netherlands) as well as to the
DSM site in Delft (Netherlands), during which we had the chance to visit the DSM Biotech Center.
In October, the Supervisory Board and Executive Committee also benefited from a site visit to DSM Austria GmbH –
founded in 2021 after the 2020 acquisition of Erber Group, including Biomin and Romer Labs. We saw at first hand how the
acquisition has further strengthened DSM’s position in mycotoxin risk management and as a leading provider of
sustainable feed and animal health solutions. It was an impressive experience, revealing a close congruence between the
cultures of DSM and Erber. Interactions with our new colleagues were open and honest and it was good to see that the
integration was well on track.
In September, DSM announced its strategic decision to focus its resources and capabilities to address the urgent societal
and environmental challenges linked to the way the world produces and consumes food. This led to the decision to
simplify the company’s operating structure and reorganize its Health, Nutrition & Bioscience activities into three Business
Groups, each with clear opportunities to benefit the health of people, the health of the planet and healthy livelihoods
while supporting our growth plans. At the same time, we confirmed we had started a review of strategic options for our
Materials businesses.
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 151
I am excited at the opportunities for our three new market-focused Business Groups – Food & Beverage; Health, Nutrition
& Care; and Animal Nutrition & Health – which commenced active operation with effect from 1 January 2022. Each Business
Group will be closely aligned with its respective customers and equipped to develop impactful, science-based, market-
ready innovation at speed. I am also delighted that we took the bold step to define a range of specific and measurable
Food System Commitments, along with accelerated sustainability targets. All these measures, which have the full support
of the Supervisory Board, will help DSM to continue to live out its mantra of ‘doing well by doing good.’
As we look back on a year that brought challenges for so many people worldwide, I am pleased that our commitment to
Safety, Health and Environment remained as strong as ever, delivering positive results across our global operations. I am
glad to report that in 2021 our Frequency Index of Recordable Injuries improved to 0.22, versus a target of <0.24.
It only remains for me to thank our Co-CEOs, our Executive Committee and my colleagues on the Supervisory Board for
their service to DSM in 2021, our employees for all their hard work and commitment, and also the many stakeholders who
continue to place their trust in our company. We can look back on 2021 with satisfaction; and can look forward to 2022 with
a strengthened sense of purpose. I am excited at the opportunities for our three market-focused Business Groups.
Thomas Leysen, Chair of the Supervisory Board
Supervisory Board Report
This Report provides further information on the way the Supervisory Board performed its duties in 2021. These include
supervising the policy pursued by the Managing Board, the Managing Board’s performance of its managerial duties, and
the general course of affairs within our company and its businesses, as well as assisting the Managing Board with advice,
either upon request or proactively. Finally, these duties also include assessing the Managing Board’s performance and
ensuring that their remuneration is in line with that performance and that it provides the appropriate incentives. Since the
inception of an Executive Committee, the Supervisory Board has also been responsible for ensuring that the checks and
balances that are part of the two-tier governance system are still taken into account, paying specific attention to the
dynamics between the Managing Board and the Executive Committee.
The responsibility of supervising the policy pursued by the Managing Board includes evaluating the way the Managing
Board implements DSM’s strategy for long-term value creation and promotes a culture aimed at creating value. In the
performance of its duties, the Managing Board and Supervisory Board act in accordance with the interests of the company
and weigh up the interests of all stakeholders, in line with DSM’s multi stakeholder approach. This is all described in the
sections Strategy, People and Corporate governance and risk management.
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 152
Composition of the Supervisory Board
The composition of DSM’s Supervisory Board is diverse in gender, nationality, background, knowledge and experience. The
Board comprises four men and four women. Two members are Dutch, one American, one Dutch-American, one British, one
Singaporean, one Australian and one Belgian. The Board’s current members are Thomas Leysen (Chair), John Ramsay
(Deputy Chair), Eileen Kennedy, Carla Mahieu, Erica Mann, Frits van Paasschen, Pradeep Pant and Corien Wortmann-Kool.
For detailed information on their backgrounds, see the company website and Supervisory Board and Managing Board
Royal DSM.
Following best practice 2.1.10 of the Dutch Corporate Governance Code, the Supervisory Board establishes that its members
are able to act critically and independently of one another, the Managing Board and any particular interests involved. To
safeguard this, the Supervisory Board is composed in such a way that all its members are independent in the meaning of
best practice 2.1.8 of the Dutch Corporate Governance Code.
The targeted profile of the Supervisory Board is reflected in its regulations, which are published on the company website
under ‘Corporate Governance’. The Supervisory Board has four committees to cover key areas in greater detail: Audit,
Nominations (to the Supervisory Board and Managing Board), Remuneration (of the Supervisory Board and Managing
Board) and Sustainability. Information on these committees is given elsewhere in this section. The charters of the
committees are published on the company website under ‘Corporate Governance’.
Relationship and stakeholder management
In performing its duties, the Supervisory Board acts in accordance with the interests of the company and the business
connected with it, taking into consideration the interests of the company’s stakeholders. The Chair of the Supervisory
Board is in regular close contact with the Co-CEOs, as is the Chair of the Audit Committee with the CFO.
Furthermore, the Supervisory Board regularly interacts with members of the Executive Committee, who attend Supervisory
Board meetings and participate in the yearly site visit of the Supervisory Board.
The Supervisory Board interacts with our employees on various occasions and in various contexts. The Supervisory Board
regularly receives information on relevant topics from senior leaders and experts in the company during committee
meetings, full Supervisory Board meetings, annual site visits, and also as part of their ongoing professional education. In
September 2021, we announced our strategic decision to focus our resources and capabilities to address the urgent
societal and environmental challenges linked to the way the world produces and consumes food. The Supervisory Board
was involved early on in this strategic process to contribute to the decisions and engage with the various topics. In
addition, the Supervisory Board was involved in discussions around merger & acquisition (M&A) opportunities, such as the
acquisition of First Choice Ingredients and the flavor and fragrance bio-based intermediates business of Amyris Inc., as
well as large innovation projects resulting in the development of products such as Bovaer®, Veramaris®, EVERSWEET™ and
CanolaPRO®. The Supervisory Board also performed a post-investment review of our second-generation bio-ethanol plant
in Emmetsburg (Iowa, USA). During its annual site visit, the Supervisory Board actively takes the opportunity to interact
with employees at different levels, from the shop floor to senior leadership, thus collecting valuable information and
insights from various sources across the company.
Direct, one-to-one contact between Supervisory Board members and Managing Board and Executive Committee members
generally follows naturally from topics discussed in the meetings of the Supervisory Board. These discussions draw on the
expertise of individual Supervisory Board members, whose advice is sought on a wide range of specialist topics as
required. Supervisory Board members also have direct contact with other employees in the course of the aforementioned
site visits and specifically arranged meetings. The full Supervisory Board reviewed the company’s new Food System
Commitments together with members of the company’s Sustainability department, and Eileen Kennedy had further in-
depth discussions with the Senior Vice President Corporate & Nutrition Strategy. The Audit Committee discussed our
efforts in the area of cybersecurity, and Pradeep Pant, who is based in Singapore and has extensive knowledge of and
experience with Asian markets, continued to be in regular contact with our senior management in that region.
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 153
In 2021, due to the continued COVID-19 pandemic, most of the meetings were held virtually and face-to-face meetings
could only be arranged on a few occasions. Examples of the meetings and visits that could take place include the
introductory visits of Thomas Leysen, Carla Mahieu and Corien Wortmann-Kool to the DSM site in Delft (Netherlands),
during which the DSM Biotech Center was visited; their visit to the Brightlands Campus in Geleen (Netherlands); and the
annual site visit of the full Supervisory Board, together with the Executive Committee, to DSM Austria GmbH – founded in
2021 after the acquisition of Erber Group, including Biomin and Romer Labs. Due to COVID-19-related travel restrictions,
Erica Mann participated virtually during this site visit to Austria.
The Supervisory Board takes an active interest in maintaining a good understanding of our stakeholders and their
positions on various topics related to the company’s areas of business. This includes the perceptions of our shareholders.
The Supervisory Board is informed of the position of other DSM stakeholders by the Managing Board. In addition, the
Supervisory Board collects such information through its own network.
DSM Supervisory Board: key data and attendance records
Thomas
Leysen (C)
John
Ramsay (DC)
Eileen
Kennedy
Carla
Mahieu
Erica
Mann
Frits van
Paasschen
Pradeep
Pant
Corien
Wortmann-
Kool
Diversity
Year of birth
1960
1957
1947
1959
1958
1961
1953
1959
Gender
Male
Male
Female
Female
Female
Male
Male
Female
Geography
Europe
Europe
North
America
Europe
Oceania
Europe /
North America
Asia
Europe
Tenure
Initial appointment
2020
2017
2012
2021
2019
2017
2016
2021
Latest reappointment
n.a.
2021
2020
n.a.
n.a.
2021
2020
n.a.
End of current term
2024
2025
2022
2025
2023
2025
2024
2025
Reappointment possible?
Y
Y
Y
Y
Y
Y
Y
Y
Attendance
Committee memberships
NomCo (C)
RemCo
AC (C)
RemCo
SustCo (C)
NomCo
RemCo (C)
AC
SustCo
RemCo
SustCo
AC
NomCo
AC
SustCo
Attendance of
SB meetings
1
100%
100%
100%
100%
90%
2
100%
100%
100%
Attendance of Committee
meetings
NomCo
100%
RemCo
100%
AC
100%
RemCo
100%
NomCo
100%
SustCo
100%
RemCo
100%
AC
83%
2
SustCo
100%
RemCo
100%
SustCo
100%
AC
100%
NomCo
100%
AC
100%
SustCo
100%
1 ‘Attendance’ refers to the one physical Supervisory Board (SB) meeting and nine virtual meetings held in 2021. In addition to these
meetings, there were also four virtual SB meetings in 2021 for which the decision-making had been mandated by the SB to the Chair of
the Board and the Chair of the Audit Committee, who both participated in these calls.
2 Erica Mann missed the Supervisory Board call and Audit call in July due to other previously scheduled commitments. She gave advance
input in writing or via other members.
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 154
DSM Supervisory Board: key competences
Thomas
Leysen (C)
John
Ramsay (DC)
Eileen
Kennedy
Carla
Mahieu
Erica
Mann
Frits van
Paasschen
Pradeep
Pant
Corien
Wortmann-
Kool
Competences
General Management
x
x
x
x
x
x
Finance/Accounting/Auditing
x
x
x
Strategy
x
x
x
x
x
x
x
x
Risk
x
x
x
Marketing & Sales
x
x
x
x
Operations & Manufacturing
x
x
R&D/Innovation/Technology
x
x
Safety
x
x
Sustainability & Environment
x
x
x
x
x
Emerging Economies
x
x
x
x
People & Organization
x
x
x
x
IT/Digital
x
x
Governance/Compliance/Legal
Affairs
x
x
x
x
x
x
Public
Affairs
x x x x
DSM’s businesses x x x x
Supervision and advice
The Supervisory Board performs its duties of supervising and advising the Managing Board with respect both to recurring
standard agenda items for Supervisory Board meetings and to specific topics that become relevant at any given point in
time.
Besides Safety, which is always the first topic on the agenda of every Supervisory Board meeting, the most prominent
regular agenda item is an update on business performance, financials, treasury and investor relations topics. As part of
this agenda item, the Supervisory Board tracks the company’s financial performance, approves the annual Finance and
Capital Expenditure Plan, is updated on capital markets expectations and deliberates on any additional treasury topics as
needed. In 2021, the Supervisory Board also discussed and approved the usual share buy-back programs to cover
commitments under share-based compensation plans and the stock dividend. In addition, the early redemption of a €500
million bond was discussed and approved.
Strategy is a key topic on the Supervisory Board’s agenda. In 2021, the Supervisory Board was actively involved in the
discussions on our decision to accelerate the company’s strategic journey, including the reorganization of the company
into a focused Health, Nutrition & Bioscience company and the start of the review of strategic options for our Materials
businesses. The Supervisory Board also extensively discussed DSM’s new Food System Commitments.
The Supervisory Board was also actively involved in the process of reviewing several potential M&A targets, which led in
2021 to the acquisition of the flavor and fragrance bio-based intermediates business of Amyris Inc. as well as the
acquisition of First Choice Ingredients, a leading supplier of dairy-based savory flavorings. The Supervisory Board also
discussed the company’s precision & personalization activities and performed a deep dive on DSM’s production site in
Lalden (Switzerland) as well as a post-investment review on BP&S/POET. Also, DSM’s key innovation projects were
discussed with the Supervisory Board.
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 155
Site visits
Every year, the Supervisory Board visits DSM sites in a particular region. This fosters interaction with employees across
different areas of the company and provides Supervisory Board members with opportunities for continuing education. This
year’s visit was fully dedicated to DSM Austria GmbH – founded in 2021 after the acquisition of Erber Group, including
Biomin and Romer Labs. The visit deepened the Supervisory Board’s understanding of DSM’s specialty Animal Nutrition &
Health business, and more specifically its capabilities in mycotoxin risk management, gut health performance
management, and food and feed safety diagnostics.
The site visit started in Tulln, where the Managing Director of Biomin welcomed the Supervisory Board to its Campus, the
global hotspot in mycotoxin research. The Supervisory Board was presented with an overview of Biomin’s research
activities, followed by a tour through the company’s research facilities. Mycotoxin risk management includes creating
awareness of, and offering unique and specific solutions for, mycotoxin deactivation. Biomin is also a major producer of
phytogenic and probiotic feed alternatives to antibiotics, which strengthens DSM’s position in the rapidly growing global
eubiotics market for improving animal gut health. The tour continued with the opening of the new Analytical Center of
Excellence Laboratory in Tulln which will be used to conduct nutritional analysis to help boost the nutrition, health and
sustainability of livestock. Thereafter, the Supervisory Board received a presentation on Romer Labs, which is at the
forefront of diagnostic technology, with innovative testing solutions for the analysis of mycotoxins in feed and food, food
allergens and pathogens as well as veterinary drug residues. Romer Labs possesses accredited full-service labs in Austria,
the UK, the US and Singapore.
The Supervisory Board and Executive Committee visit the Biomin laboratories in Tulln (Austria).
After the visit to the Campus in Tulln, the Supervisory Board travelled to Getzersdorf, where they received various
presentations on Specialty Animal Nutrition & Health, the history of Erber, and the company’s integration into DSM after
the acquisition. The Supervisory Board received a tour through the Erber building, which was built according to geomantic
and Feng Shui principles, being the first platinum LEED-certified building in Austria. Together with all the employees in
Getzersdorf, the Supervisory Board attended the grand opening of DSM Austria, in the presence of the governor of Lower
Austria, Johanna Mikl-Leitner and the Dutch ambassador to Austria, H.E. Aldrik Gierveld. The next day, a reception was
organized at the residence of the Dutch ambassador to Austria to discuss DSM’s and Austria’s activities in the area of
agriculture.
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 156
During various occasions throughout the visit, the members of the Supervisory Board interacted with DSM Austria’s
employees to get to know each other and ask questions. Employees and Supervisory Board members alike were impressed
by the positive and transparent atmosphere. An evening was spent with local executives discussing the execution of DSM’s
strategy, its culture, and its approach to talent development, along with the further developments within DSM Animal
Nutrition & Health. Finally, the Supervisory Board meeting of the following day gave the Supervisory Board the opportunity
to share its impressions with the Executive Committee members who also participated in the site visit.
Supervisory Board meetings and performance evaluation
In 2021, the Supervisory Board held its five regular meetings and one regular call in the presence of the Managing Board
and Executive Committee, as well as three additional calls also in the presence of the Managing Board and Executive
Committee members. There were also four Supervisory Board calls in 2021 for which the decision-making had been
mandated by the Supervisory Board to the Chair of the Board and the Chair of the Audit Committee, who both attended
these calls. The Supervisory Board had one additional call to decide and approve on the appointment of Thomas Leysen
as new Chair of the Supervisory Board at the close of the Annual General Meeting of Shareholders in 2021. On one date, a
member was excused due to conflicting commitments. All meetings but one took place virtually as a result of the COVID-19
restrictions. The additional calls were needed to discuss and approve the acceleration of DSM’s strategic journey and the
announcement of our new Food System Commitments. The additional calls were also needed to discuss and approve
possible acquisitions. Information on attendance of Board and Committee meetings can be found in the table in this
Supervisory Board Report.
The Supervisory Board also convenes in the absence of the Managing Board, which usually happens either before or after
a meeting.
An evaluation of the Supervisory Board is performed once every three years by an external advisor; the last took place in
2019. In the other two years, including 2021, the evaluation of the Supervisory Board is performed by means of a self-
assessment consisting of a written survey, followed by in-depth, one-on-one interviews between the Chair and individual
Supervisory Board members. Furthermore, the Deputy Chair interacted with all Supervisory Board members to assess the
performance of the Chair. The outcome of the evaluation was presented to, and discussed with, the Supervisory Board in
December, in the absence of the Managing Board.
The overall feedback from the evaluation in 2021 was again positive and the members feel that the Board functions well.
The quality of the discussions, which include constructive challenging, were appreciated. The Supervisory Board members
also praised the smooth transition to the new Chair of the Board, and all members strongly value the composition of the
Supervisory Board in all its dimensions. Despite the fact that the members of the Supervisory Board miss the moments of
personal interactions in the context of face-to-face meetings, there is a sense of collegiality and mutual trust. Some points
for improvement were noted, whereby the Supervisory Board asked to spend even more time on deep dives into DSM’s
various businesses as well as to increase time on post-acquisition and post-investment reviews. The Supervisory Board
also wants to spend more time on self-education, outside its regular meetings.
While the Managing Board’s performance is (indirectly) also assessed as part of the evaluation, this happens throughout
the year as part of the discussions on succession planning in the Nomination Committee. This applies particularly when
the performance appraisals of Managing Board members are discussed, as well as their performance versus their
individual targets in the Remuneration Committee. The Nomination and Remuneration Committees report back on these
discussions to the Supervisory Board.
Committees
The Supervisory Board has four committees to cover key areas in greater detail: Nomination, Remuneration, Sustainability
and Audit. These are described in more detail below.
Royal DSM Integrated Annual Report 2021 157
Report by the Supervisory Board – Supervisory Board Report
Board nominations
The Nomination Committee comprises Thomas Leysen (Chair), Eileen Kennedy and Pradeep Pant. The Chair of the
Remuneration Committee has a standing invitation to the Nomination Committee and participated in all five meetings.
Geraldine Matchett, Dimitri de Vreeze and Cristina Monteiro, Executive Vice President People & Organization, were also
involved in this Committee’s discussions. The Committee met five times in 2021. The recommendations of all Nomination
Committee meetings were shared with the entire Supervisory Board. This feedback included advice and recommendations
regarding topics to be approved by the full Supervisory Board. The Supervisory Board also has access to all the meeting
materials posted for the Nomination Committee meetings.
In 2021, discussions in this committee focused on succession planning for the Managing Board, the Executive Committee,
and the Supervisory Board. With respect to the Executive Committee, the discussions focused on the replacement of
Cristina Monteiro, who, as of 15 October took a temporary leave of absence due to family circumstances. It was decided
that Geraldine Matchett, Co-CEO DSM, would assume the role of Executive Vice President People & Organization, ad
interim, supported by CEO.works, led by Hein Knaapen, safeguarding the continuity of critical initiatives such as the roll-
out of the P&O strategy and the further shaping of an inclusive and diverse culture while focusing on talent development
and the talent pipeline.
As in other years, the Supervisory Board established that the composition of the Managing Board is, and will remain,
diverse in nationality, gender, background, expertise and experience, and that it provides a good foundation to support all
Business Groups in achieving their targets and thus delivering on the company strategy. For detailed background
information on the Managing Board members, see the company website under Corporate Governance and in the Managing
Board section of this Report.
Taking into account the Supervisory Board profile as laid down in the Supervisory Board regulations, the Nomination
Committee continued discussions on the overall composition of the Supervisory Board and discussed succession planning
for the Supervisory Board. At the 2021 Annual General Meeting of Shareholders, Carla Mahieu and Corien Wortmann-Kool
were appointed to the Supervisory Board. Frits van Paasschen and John Ramsay were reappointed as members of the
Supervisory Board. In addition, in view of Rob Routs stepping down as Chair of the Board with effect from the Annual
General Meeting of Shareholders on 6 May 2021, Thomas Leysen was appointed by the Supervisory Board as his successor.
In 2021, the Nomination Committee also discussed several profiles that could potentially replace Eileen Kennedy when she
is to step down as member of the Supervisory Board at the 2022 Annual General Meeting of Shareholders.
Board remuneration
The Remuneration Committee had five meetings in 2021. Carla Mahieu (Chair), Thomas Leysen, John Ramsay and Frits van
Paasschen are members of this committee. Recommendations of the Remuneration Committee meetings were shared with
the full Supervisory Board and were used to determine the final remuneration of the members of the Managing Board. The
Supervisory Board also has access to all the meeting materials provided for the Remuneration Committee meetings. For
more information on the remuneration policy, see the company website. For the implementation of that policy in 2021, see
the Renumeration report 2021.
Discussions focused on the performance and the related remuneration of the members of the Managing Board, in respect
of both company and individual performance in 2021. The majority of discussion time in 2021 was spent on remuneration
topics related to the Short-Term Incentive (STI) and Long-Term Incentive (LTI) scorecard. Attention was given both to the
setting of targets for 2021 and to first estimates of performance against those targets, gender pay gap, equal pay, and next
steps to be taken in the Remuneration Report in terms of disclosures. Initial discussions also took place on possible
amendments to the company’s remuneration policy. The performance and remuneration of the Executive Committee
members were also shared with the Remuneration Committee. Geraldine Matchett, Dimitri de Vreeze and Cristina Monteiro
were also partly involved in these discussions.
Sustainability
The Sustainability Committee prepares the Supervisory Board’s discussions on sustainability topics. The Sustainability
Committee met four times in 2021. This Committee comprises Eileen Kennedy (Chair), Erica Mann, Frits van Paasschen and
Corien Wortmann-Kool. The Chair of the Supervisory Board has a standing invitation and participated in all meetings. The
recommendations of these meetings were shared and discussed with the entire Supervisory Board during its meetings
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 158
with the Managing Board. The Supervisory Board has access to all the meeting materials provided for the Sustainability
Committee meetings. The feedback from the Committee to the full Board included advice and recommendations regarding
topics to be approved by the Supervisory Board, in particular the sustainability reporting in this Report. Taking into
consideration the draft Assurance report of the independent auditor on the Sustainability Information by KPMG, the full
Supervisory Board approved the reporting against these topics on 1 March 2022. The assurance report was finalized by
KPMG after the approval of the Supervisory Board. The Sustainability Information complies with the Standards of the
Global Reporting Initiative and our internal reporting criteria, which are included in this Report, and is also aligned with
the international Integrated Reporting Council <IR> Framework where possible.
During the year, recurring topics were the company’s performance against its People and Planet aspirations, with a focus
on safety, emissions reduction, Brighter Living Solutions, and Inclusion & Diversity. Through these discussions, the
Sustainability Committee followed up on the progress made with the implementation of the sustainability and safety
aspirations set as part of the company’s strategy. Safety was extensively addressed, including an increased focus on the
implementation of DSM’s Life Saving Rules at newly acquired sites. In addition, the Sustainability Committee extensively
discussed the company’s new Food System Commitments as well as the implementation of a water target. The
Sustainability Committee also performed a deep dive on our ESG KPIs, Precision Solutions, and the new sustainable
portfolio steering methodology for Brighter Living Solutions. In terms of Inclusion & Diversity, the Sustainability Committee
reviewed and discussed the company’s performance as well as our long-term strategic ambitions.
Financials and auditing
The activities of the Supervisory Board in the area of financials and auditing are prepared by the Audit Committee. The
Audit Committee met six times in 2021. John Ramsay (Chair), Pradeep Pant, Erica Mann and Corien Wortmann-Kool are
members of the Audit Committee. All Supervisory Board members have a standing invitation to attend Audit Committee
meetings. In 2021, most of them used this standing invitation for the two conference calls in which the financial
developments and interim results for the first and third quarter were discussed, as these are not followed by a full
Supervisory Board meeting. The Chair of the Supervisory Board participated in all meetings and calls. The highlights of all
Audit Committee meetings were shared with the full Supervisory Board. This feedback included advice and
recommendations regarding topics to be approved by the full Supervisory Board. In 2021, these included the approval of
the 2021 COA Audit plan and the proposed reappointment of the external auditor (approved by the 2021 Annual General
Meeting of Shareholders). All Supervisory Board members have access to all the meeting materials posted for the Audit
Committee meetings.
Our external auditor KPMG, Geraldine Matchett in her capacity as CFO, and the Senior Vice President Group Controller
participated in all the meetings of the Audit Committee. So did Dimitri de Vreeze in his capacity as Co-CEO, along with the
managers responsible for internal audit, risk management and compliance, with the exception of the two meetings in
which the financial developments and interim results for the first and third quarter were discussed. Four times a year, the
Audit Committee meets with the external auditor without the Managing Board being present.
The Committee had in-depth discussions of the company’s financials: the Finance plan, the Capital Expenditure plan,
dividend proposals, the financial statements, and accounting policy changes. The discussions of internal risk management
and control systems included the Internal Control Framework, compliance with recommendations and observations made
by internal and external auditors, and the role and functioning of COA. This included the endorsement of COA’s proposed
audit plan for 2022, which was subsequently approved by the full Board, as well as the COA Vision 2023 document. As part
of the Corporate Risk Assessment, the company’s main risks and their mitigation were discussed. The Committee also
discussed and evaluated cases submitted under the company whistleblower policy (DSM Alert), fraud cases, on-going
litigation, and privacy compliance. Another recurring topic is our cybersecurity resilience, about which the Audit Committee
is informed through a dashboard, as well as information on running cybersecurity programs and cybersecurity governance.
In addition, the Audit Committee discussed the progress of the update of the Internal Control Framework.
Discussions were held with KPMG about the audit plan, management letter, audit report and financial statements for 2021,
including managerial judgments and key accounting estimates. In its management letter, KPMG shared the outcome of its
evaluation of the company’s procedures and system of internal controls to the extent necessary within the scope of the
audit of the financial statements. The observations of KPMG were presented along the pillars that support our in-control
statement with a continued focus on the Internal Control Framework pillar (for the Statements of the Managing Board, and
Report by the Supervisory Board – Supervisory Board Report
Royal DSM Integrated Annual Report 2021 159
for a visualization of our control environment see Corporate governance). KPMG confirmed that DSM continued the journey
of improving its Internal Control Framework. At the same time it also encouraged DSM to continue further improving,
specifically in the area of documentation of controls. The management letter contained constructive recommendations to
continue to monitor whether the organization is able to keep up with the rapid changes that the company is going
through.
Finally, in 2021, the Audit Committee formally evaluated the external auditor, and discussed the reappointment of KPMG.
The proposal to reappoint KPMG is based on the Audit Committee’s own assessment of KPMG, on discussions with KPMG in
the absence of management, and on the outcome of an evaluation among DSM executives.
Financial statements 2021
The Report by the Managing Board and the financial statements for 2021 were submitted by the Managing Board to the
Supervisory Board, in accordance with the provisions of Article 30 of the Articles of Association, and were subsequently
approved by the Supervisory Board on 1 March 2022. The financial statements were audited by KPMG, who issued an
unqualified opinion (see the Independent auditor’s report). The Supervisory Board established that the external auditor
was independent of DSM.
The Supervisory Board will submit the 2021 financial statements to the 2022 Annual General Meeting of Shareholders, and
will propose that the shareholders adopt them and release the Managing Board from all liability in respect of its
managerial activities and release the Supervisory Board from all liability in respect of its supervision of the Managing
Board. The profit appropriation as proposed by the Managing Board and approved by the Supervisory Board is presented
in the Profit section of this Report.
Remuneration report 2021
Introduction by the Chair of the Remuneration Committee
The COVID-19 pandemic once again had a significant impact on the daily life of our employees as well as our businesses in
2021. The number one priority remained as always to safeguard the safety, health and well-being of our employees. In
January 2021, we paid a special COVID-19 bonus to our employees around the globe in recognition of their continuous
efforts to keep the business on track during the pandemic. In all our operating facilities, measures were taken to reduce
COVID-19 risks. Building on experiences gained in the course of the pandemic, DSM introduced a hybrid working concept,
allowing for new, innovative ways of working. Support was provided in setting up safe and suitable workplaces at home,
deploying initiatives to ensure compliance with occupational healthcare considerations when working from home.
Our businesses showed a strong financial performance in 2021 in dynamic market conditions, and we remained well on
track on our People and Planet objectives. Good end-user demand drove the continued positive momentum of our
Nutrition business while our Materials business recorded a very strong recovery from the impact of the COVID-19
pandemic. By actively managing the volatile dynamics of the global supply chain we remained able to meet the needs of
our customers. Nutrition recorded strong organic sales growth, driven by very strong volumes in Animal Nutrition and
Personal Care. Human Nutrition and Food Specialties recorded further good organic growth, building upon their strong
performances in the prior year. Organic sales growth in Materials was close to 30% on the back of exceptional strong sales
supported by supply disruptions and material shortages in the industry. Furthermore, Materials delivered a strong
operational performance, successfully navigating global supply chain challenges as well as the disruptions caused by the
semiconductor shortages impacting the automotive industry. In 2021, the divestment of our Resins & Functional Materials
and associated businesses was successfully completed.
In September, we announced our intention to accelerate our strategic journey to become a company focused on Health,
Nutrition & Bioscience, better placed to deploy our resources and capabilities to addressing the urgent societal and
environmental challenges linked to the way the world produces and consumes food. The health and well-being of people,
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 160
animals, and the planet are impacted by multiple systemic and interconnected food system challenges. DSM is well
positioned to respond to these challenges, using advances in digital technology and bioscience that offer realistic scalable
solutions to innovate and to create new markets. As a global leader, we have the opportunity, capability and therefore
responsibility to apply our resources and expertise where these can have the greatest impact. By focusing exclusively on
our activities in Health, Nutrition & Bioscience, we will be able to operate with greater agility and impact and meet the
growing need for better and more sustainable food systems. Within this context, we are unlikely to be able to maximize the
Materials businesses’ full potential to drive the important industrial shift to a bio-based and circular economy. We are
therefore reviewing strategic options for both Materials businesses, including a possible change of ownership.
In view of this, we have simplified the operating structure with effect from 1 January 2022. At the heart of our strategic
direction is the creation of three market-focused Business Groups: Food & Beverage, Animal Nutrition & Health, and
Human Nutrition & Care. Each Business Group will be much more closely aligned with its respective customers and
(through the integration of research & development activities previously performed by the DSM Innovation Center) will be
fully equipped to rapidly develop impactful, science-based, market-ready innovations. Our Business Groups are supported
by global enabling functions. These functions have reviewed their operating model, focusing on their core role, aiming for
simplification, and optimizing the use of digital technologies to maximize their contribution to achieving the three
Business Groups’ objectives.
Related to the strategic direction, we announced a series of new quantifiable commitments designed by 2030 help to
address urgent societal and environmental challenges linked to how the world produces and consumes food. In doing so,
we are one of the first companies in the consumer ingredient sector to make its societal impact explicit through a set of
measurable Food System Commitments. Besides this, we announced that we will accelerate our greenhouse gas (GHG)
emissions reduction target versus 2016, providing a firm foundation for the company to achieve net-zero by 2050.
In last year’s Remuneration report, we announced a review of the Remuneration Policy for the Managing Board,
considering the new strategic direction as well as the challenge of attracting senior international business leaders from a
remuneration perspective. It was decided to take sufficient time for this review in consideration of the strategic update,
the organizational restructuring, and our new quantifiable commitment to address challenges of the world’s food systems,
while allowing sufficient time to consult our main stakeholders.
The 2021 remuneration reported herein is fully aligned with the deployment of DSM’s strategic objectives. In addition, we
continued in 2021 to deliver improvements in customer-centricity, large innovation projects, integrating acquired
businesses, cost control and operational excellence, resulting in sound results, which are reflected in the remuneration as
presented in this report.
The Supervisory Board has taken a balanced approach toward the remuneration of the Managing Board. Whereas no base
salary increase was applied for the Managing Board and the Executive Committee in 2020, the Supervisory Board decided
to adjust base salaries for the Managing Board considering that our Co-CEOs’ remuneration, at the beginning of their
tenure, was positioned below the level of the previous CEO and clearly below the median of the peer group. After careful
consideration of the impact of the pandemic, the Supervisory Board decided not to take any other remuneration measures
in 2021.
I would like to thank my predecessor Pauline van der Meer Mohr who joined DSM’s Supervisory Board in 2011 and chaired
the Remuneration Committee since 2016. As member of the Supervisory Board, Pauline made many outstanding
contributions to the transformation of the company, for which DSM is very grateful. As Chair of the Remuneration
Committee, Pauline has been leading the way in establishing a balanced remuneration policy in line with DSM’s purpose
and strategy, reflecting both financial and non-financial targets while meeting new governance requirements. I like to
express my deep appreciation for Pauline’s professional and sound judgement and organizational savviness in this field. It
is my privilege to take over from her and to build on the strong foundation which was put place under her leadership. We
wish Pauline every success with her next endeavors.
This Remuneration report provides a summary of the remuneration policy for the Managing Board of Koninklijke DSM N.V.
and the Supervisory Board of Koninklijke DSM N.V. respectively, as well as an overview of the remuneration of the
members of the Managing Board and the Supervisory Board in the financial year 2021. The full remuneration policy as
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 161
approved by the AGM in 2019 is published on the company website. This report is prepared in accordance with the relevant
parts of Section 135 Book 2 of the Dutch Civil Code.
Carla Mahieu
Chair, Remuneration Committee
Remuneration of the Managing Board of Koninklijke DSM N.V. 2021
Summary of the remuneration policy Managing Board of Koninklijke DSM N.V.
The remuneration policy of the Managing Board is designed to attract and retain qualified leaders who can shape our
purpose-led, performance-driven strategy, engage our people and other stakeholders, and ultimately achieve results –
putting customers first and delivering on our company’s promises. The policy provides clear focus: improving company
performance and enhancing purpose-led, long-term value creation across multiple dimensions (People: individual and
societal; Planet: ecological and sustainability; and Profit: economic and financial) while recognizing the interests of all our
stakeholders (especially our customers, employees and shareholders, as well as society at large).
Remuneration is linked to company and individual performance. Based on the company’s short- and long-term strategic
objectives as well as our business drivers, results are measured on the basis of specified targets, balancing short- and
long-term outcomes, serving the interests of all our stakeholders. To be competitive and to ensure alignment internally,
Total Direct Remuneration offered by DSM approaches – from below – the median of a predefined peer group. Reward
levels are benchmarked against the Dutch/European labor market peer group, while the design of various reward
components is reviewed against the broader perspective of best market practices.
Labor market peer group
European industry peers:
Dutch AEX-listed peers:
- Clariant AG
- Koninklijke Ahold Delhaize N.V.
- Covestro AG
- Akzo Nobel N.V.
- Evonik Industries AG
- ASML Holding N.V.
- Givaudan SA
- Heineken N.V.
- Johnson Matthey Plc
- Koninklijke KPN N.V.
- LANXESS AG
- Koninklijke Philips N.V.
- Lonza Group AG
- Randstad N.V.
- Solvay SA
- Wolters Kluwer N.V.
The full version of the remuneration policy of the Managing Board Koninklijke DSM N.V., as approved by the 2019 AGM, is
available on the company website. The following table specifies the elements of the remuneration policy, describing their
purpose, design and link to our company strategy, as well as their potential value.
Purpose
Design and link to strategy
Value
Goal
The goal of DSM's remuneration policy for the Managing Board is to offer an on-target total remuneration package
approaching – from below – the median of the labor market peer group.
Total Direct Compensation
Is the basis for benchmark
efforts, i.e., the reference to
the labor market peer group.
Includes base salary and variable income. Variable
income concerns the performance-related Short-
Term Incentive (STI) and the STI deferral & matching
plan, as well as the Long-Term Incentive plan (LTI). In
addition, Managing Board members are entitled to
certain benefits.
Value of each respective item is
included hereafter.
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 162
Purpose
Design and link to strategy
Value
Base salary
Basic pay for doing the job.
Aims to provide a fair and competitive basis for the
total pay level in order to attract and retain qualified
leaders. Annual review based on the market
movement for executives based in the Netherlands
and peer companies. Regular in-depth benchmark.
Base salaries at DSM approach
– from below – the median of
the labor market peer group.
Short-Term Incentive (STI)
Incentive aligning short-term
business objectives and
business drivers with
strategic company objectives.
Driving pay for performance.
The Supervisory Board sets goals and targets for the
respective performance year and determines the
extent to which these have been achieved. By
ensuring that strategic objectives are properly
reflected in stretching yet achievable targets, the
realization of strategic business objectives is
addressed. Half of the at-target STI is linked to
financial objectives; the other half is tied to
sustainability aspirations and individual goals.
On-target performance: 50% of
annual base salary. Maximum
opportunity capped at 100%.
Threshold: no STI pay-out in
case the target for Adjusted
EBITDA is not achieved to the
level of at least 75%.
STI deferral & matching
Ensures that longer-term
considerations are
sufficiently considered in
pursuing short-term
objectives.
Conversion of STI into shares, with a 1:1 company
match delivered in Performance Share Units (PSUs).
The PSUs vest upon the realization of predefined
goals (same as LTI program), observing a three-year
vesting period. By linking the vesting of the PSUs to
the targets of the LTI program, it is ensured that
decisions regarding short-term results are aligned
with long-term value creation.
Mandatory conversion: 25% of
STI achieved; voluntary
conversion: 0–25%, with
incremental steps of 5%.
Maximum number of matching
PSUs to vest is equal to number
of PSUs granted.
Long-Term Incentive (LTI)
Focus on long-term value
creation. Designed to ensure
that decisions made are in
the long-term interests of all
stakeholders and to ensure
that interests of the Managing
Board and the company
stakeholders are aligned.
PSUs are awarded every year, to be converted into
shares upon realization of predefined targets,
observing a three-year vesting period. A five-year
holding period (starting at grant date) applies.
Performance goals are based on company strategy,
driving long-term value creation. Half of the target
LTI is linked to financial goals; the other half is linked
to sustainability aspirations. Performance is
measured over three financial years, starting with the
year of grant.
Based on face value, the at-
target grant equals 100% of
base salary; the number of PSUs
granted equals the maximum to
vest (i.e., 150% of base salary).
Therefore, the maximum vesting
opportunity is 100% of the
number of PSUs granted.
Shareholding requirement
Aligning reward to the
interests of stakeholders and
emphasizing confidence in
performance and strategy.
Managing Board members are expected to build up a
shareholding in the company; the minimum
shareholding requirement must be accrued in four
years. Considered are shares privately purchased and
vested shares granted under DSM share-based
compensation plans.
The minimum share-holding
requirement is 300% of annual
base salary for both Co-CEOs
and 200% for other Managing
Board members.
Pension and other benefits
Post-retirement remuneration
contributing to the
competitiveness of the
overall package. Together
with other benefits, creates
alignment with market
practice.
Mandatory enrollment in basic pension plan as
applicable to all DSM employees in the Netherlands
(Collective Defined Contribution). In addition, a
company-paid contribution to allow participation in
the so-called Net Pension Plan under conditions as
applicable to Netherlands-based employees
(Individual Defined Contribution).
Other benefits include sick pay (aligned with
Netherlands-based employees) and a company car.
Pension scheme aligned with
plans in place for employees in
the Netherlands.
Other benefits aligned with
market practice.
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 163
Purpose
Design and link to strategy
Value
Goal- and target-setting
Goal- and target-setting are
key to drive pay for
performance aligned with
Company strategy and to
ensure that decisions made
and results delivered are
aligned with the interests of
DSM's stakeholders.
The Supervisory Board sets goals, their respective
weight and targets (i.e., metric to be achieved) for the
respective performance year under the STI and LTI
scheme, considering:
- Company strategy
- Focus on long-term value creation
- Historical performance, business outlook, and
circumstances and priorities
- Stakeholder expectations
- At target level, there is a 50:50 split between
financial goals and sustainability/individual
goals.
Targets must be stretching yet
achievable.
The company website contains an overview of the main terms and conditions of employment of both Co-CEOs.
Total remuneration of the Managing Board 2021
Introduction
Actual remuneration for 2021 is fully aligned with the remuneration policy, which complies with EU requirements and
Dutch legislation.
2021 was the first full year in which Geraldine Matchett and Dimitri de Vreeze were in charge as Co-CEOs. A comparison
with 2020 is somewhat distorted, because the remuneration for that year was partly based on their capacity as a Member
of the Managing Board and partly in their capacity as Co-CEOs.
Base salary
As already reported in the 2020 Remuneration report, a quick scan was conducted early 2021, benchmarking DSM’s position
within the labor market peer group as defined within the Remuneration Policy of the Managing Board of Koninklijke DSM
N.V. Whereas the policy is to approach the median from below, the benchmark showed that DSM had dropped to the
lowest position in the peer group as far as targeted total Direct Compensation (annual base salary plus targeted Short-
Term Incentive plus targeted Long-Term Incentive) is concerned. As a first step to close the gap, the Supervisory Board
decided to adjust annual base salary of the Co-CEOs to € 1,003,625 on annual basis per 15 February 2021. This adjustment
reflects the fact that the annual base salary of the Co-CEOs was initially set below the level of their predecessor and
considers the market movement of the peer group. After this adjustment and compared to the quick scan mentioned, the
Co-CEOs’ base salary moved toward the 25
th
percentile of the labor market peer group, whereas target Total Direct
Compensation still remains below the 25
th
percentile.
Fixed annual base salary
in €
15 February 2021
15 February 2020
Geraldine Matchett
1,003,625
925,000
Dimitri de Vreeze
1,003,625
925,000
Goals and targets incentive programs
Our purpose as company is to create brighter lives for all. We are therefore in business to generate profitable growth while
at the same time contributing to a better world. Our focus in 2021 was on developing innovative solutions addressing our
three focus domains: Nutrition & Health, Climate & Energy, and Resources & Circularity. Our initiatives within these focus
domains were brought together in the three pillars of our Brighter Living Agenda:
- improving our own operations (for example, by reducing our emissions)
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 164
- enabling our customers to deliver healthy and sustainable solutions by developing and providing products that,
from a Triple-P perspective, stand out against mainstream products
- accepting and acting on our responsibilities as a corporate member of society
Our focus shifted in light of the strategic update announced in September 2021. With a growing global population, the
world is facing multiple systemic and interconnected food system challenges that impact the health and well-being of
people, animals and the planet. DSM has the capability and therefore the responsibility to make a meaningful impact on
the world’s food systems. Helping to bring about a positive transformation in global food systems also creates attractive
new market opportunities for our company. With this new strategic focus, we are therefore staying true to our purpose of
creating brighter lives for all.
Related to this framework, a broader set of key performance indicators (KPIs) was defined, some of them feature in our
incentive programs. Added to this are financial targets that reflect our financial performance, since contributing to brighter
lives goes hand in hand with profitable growth. The design of our Short- and Long-Term incentive plans emphasizes the
importance of building long-term growth opportunities. Targets on energy efficiency and greenhouse gas (GHG) emission
reduction and building our portfolio of Brighter Living Solutions underpin our commitment to contribute to a better world,
while at the same time generating profitable growth in line with our key strategic goals (Adjusted EBITDA and Adjusted net
operating free cash flow) and safeguarding employee safety and engagement (definitions are provided in the respective
paragraph).
A comprehensive scenario analysis was initially conducted when the revised Remuneration policy was prepared. The analysis
confirmed that neither the structure of the incentive schemes nor the nature of the goals would result in inappropriate pay-
out levels. DSM’s Remuneration policy is designed in the interest of long-term value creation, as is confirmed by a range of
factors, including:
- the pay mix: the target value of the LTI has twice the target value of the STI
- the mandatory re-investment of any STI achieved in LTI and the vesting of the match provided on such
investments is subject to targets with a long-term horizon
- the targets set for the STI or underlying the LTI grants are consistent with DSM’s longer-term strategic financial
and sustainability objectives
By this means, the structure of the policy is designed to ensure that the pursuit of short-term objectives does not prevail
over the delivery of long-term results.
Short-Term Incentive (STI)
This report includes the STI achievement for 2021, payable in April 2022, and based on the base salary paid in 2021. Targets
were set ahead of the STI cycle, in accordance with the Remuneration policy and with reference to the prior year, the
budgets and the business plans for the performance year, ensuring that achievement of the threshold, target or maximum
pay-out out are appropriately challenging.
Definitions of goals set for 2021 STI (total at-target weight is 50% of annual base salary):
- Adjusted EBITDA (weighting 12.5%): sum of the operating profit plus depreciation and amortization, adjusted for
material items of profit/loss following acquisitions/divestments, restructurings and other circumstances deemed
necessary
- Adjusted net operating free cash flow (10%): cash flow from operating activities, corrected for the cash flow of the
Alternative Performance Measures (APM) adjustments, minus the cash flow of Capital expenditures and drawing
rights
- Net sales growth (2.5%): net organic sales growth
- Brighter Living Solutions (BLS) (5%): 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.
- Safety (5%): based on the Frequency Index for recordable injuries
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 165
- Employee Engagement (5%): based on the High-Performance Norm in the industry
- Individual goals (10%): in 2021 the Managing Board / Executive Committee shared two team targets
The financial measures reflect our strategic growth ambitions while the targets related to Brighter Living Solutions,
Employee Engagement and Safety relate to our Sustainability Commitments.
Within DSM’s STI scheme, pay-out brackets are defined, considering the nature of the goal. A minimum threshold is set for
each goal; an achievement below this threshold results in no pay-out with respect to that target. Over-performance results
in a pay-out exceeding 100% where the maximum achievement is capped at 200% of the ‘at-target’ weighting of the
respective goal. Goals, targets and pay-out schedules were defined at the beginning of the year, with defined brackets
between ‘threshold’ and ‘maximum’. The following table provides an overview of the realization of the 2021 STI targets.
2021 STI achievement
Weight
in % of
base salary
Target definition
Achievement
Performance
achieved
Pay-out
in % of
base salary
Pay-out
Threshold¹
Target
Maximum²
Adjusted EBITDA
12.5%
≤ €1,635m
€1,725m
> €1,770m
€1,814
200%
25%
€248,451
Adjusted net operating free cash
flow
10.0%
≤ €795m
€850m
> €905m
€949
200%
20%
€198,761
Net sales growth
2.5%
≤ 2.0%
4.0%
> 6.0%
13%
200%
5%
€49,690
Brighter Living Solutions
5.0%
≤ 57.0%
62.0%
> 68.0%
64%
100%
5%
€49,690
Safety
5.0%
≥0.26
0.24
≤ 0.21
0.22
150%
7.5%
€74,535
Employee Engagement
5.0%
≤ 70.5%
75.0%
> 79.5%
75.3%
100%
5%
€49,690
Individual value adding goals³
(Between 0 and 200% of target)
10.0%
150%
15%
€149,071
Total STI achieved over
performance year 2021
82.5%
€819,888
1 If threshold not achieved, no pay-out on respective goal.
2 If achievement at maximum or above, pay-out capped at 200% of weighted target.
3 In 2021, the Managing Board members had two strategic objectives related to the strategic transformation.
We delivered a strong performance as we continued to successfully navigate dynamic market conditions. Good end-user
demand further boosted our sales, resulting in an organic sales growth of 13%. The net sales growth target was fully
realized and capped at the maximum achievement of 200% (2020 achievement: 0%). The strong sales paired with
exceptional operational excellence, translated into a step-up of 18% in Adjusted EBITDA, resulting in maximum
achievement (2020 achievement: 0%). The Adjusted net operating free cash flow also improved by 9% compared to 2020,
again resulting in maximum achievement. Following the carve out of our Resins & Functional Materials and associated
businesses, the composition of our portfolio changed considerably. Continued innovations contributed to an at-target
achievement of the BLS-target; 64% (against 63% in 2020) of our products qualify as outstanding compared to mainstream
solutions. Our safety performance continued to improve as well in 2021. Compared to 2020, the Frequency Index improved
from 0.24 to 0.22, resulting in an achievement of 150% of target. The simplification of our organizational structure and the
redesign of the operating model of all our enabling functions as well as the strategic repositioning of our Materials’
business had a significant impact on our employees. Nonetheless, we are proud that the Employee Engagement Score was
maintained at the targeted level.
The combined realization resulted in a 2021 STI pay-out as included in the below overview (note: the 2020 STI was pro-rata
linked to the base salary as respectively Member of the Managing Board and as Co-CEO).
Short-Term Incentive
in €
2021
2020
Geraldine Matchett
819,888
545,249
Dimitri de Vreeze
819,888
545,249
Short-Term Incentive deferral & matching (STI)
In addition to the mandatory deferral (25% of STI achieved), the Managing Board members decided to convert another 25%
(maximum possible) of their STI into shares. This means that the Co-CEOs converted 50% of their STI into this long-term
incentive, demonstrating their trust in the company strategy and their focus on the long term. A 1:1 grant of PSUs was
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 166
implemented, as included in the following table. The 2021 grant was based on the STI achieved during 2020 and therefore
on the 2020 terms and conditions partly tied to remuneration as Member of the Managing Board and partly as Co-CEO.
Grant of PSUs under the STI deferral & matching scheme
Number of PSUs
2021 grant
(vesting 2024)
2020 grant
(vesting 2023)
Geraldine Matchett
1,850
1,558
Dimitri de Vreeze
1,850
1,632
Long-Term Incentive (LTI)
2021 and 2022 grant
In 2021, 10,000 Performance Shares Units (PSUs) were granted (on 31 March) to each of the Co-CEOs (2020: 12,500). The
grant is based on the annual base salary applicable on the grant date and the average share price in January of the year of
grant. The 2022 grant (to be implemented 31 March) equals 8,500 PSUs for each Co-CEO. Any grant equals the maximum
number of PSUs that may vest. The fact that the number of PSUs granted in 2021 and 2022 is lower compared to the
foregoing year is a result of the share price appreciation.
Goal setting
Targets were set ahead of the LTI cycle, in accordance with the remuneration policy, ensuring that achievement of
threshold, target or maximum vesting is challenging. The following goals were set for the LTI grants:
– Total Shareholder Return — TSR (weighting 25%): sum of capital gain and dividends paid, representing the total return
to shareholders; the relative ranking (within the peer group) reflects the overall performance relative to our peers
– Return on Capital Employed — ROCE (25%): operating profit as percentage of weighted average capital employed
– Energy Efficiency Improvement — EEI (25%): the reduction of the amount of energy used per unit product (known as
energy efficiency) on a three-year rolling average basis
– Greenhouse Gas Emissions — GHGE (25%): as of the 2019 grant: absolute reduction of greenhouse gas emissions in
kilotons over performance; the target up to and including the 2018 grant is based on the reduction of greenhouse gas
emissions per unit of product
Vesting 2018 grant
The performance period of the PSUs granted in 2018 was completed by year-end 2020: the actual vesting was on 31 March
2021. This concerns the PSUs granted under the Long-Term Incentive plan as well as the PSUs granted under the STI
deferral & matching plan. The following vesting schemes applied.
TSR¹
ROCE
EEI
GHGE Efficiency improvement
Rank
% of PSUs
granted
that vest²
ROCE ultimo
performance
period
% of PSUs
granted
that vest²
EEI%
(over a 3-year
period)
% of PSUs
granted
that vest²
GHGE Efficiency
improvement %
(over a 3-year
period)
% of PSUs
granted
that vest²
1
100
≥15.75
100
≥4.00
100
≥8.75
100
2
97
15.25 - <15.75
83
3.25 - <4.00
83
8.25 - <8.75
83
3
93
14.25 - <15.25
67
2.75 - <3.25
67
7.75 - <8.25
67
4
87
13.75 - <14.25
50
2.50 - <2.75
50
7.25 - <7.75
50
5
80
13.25 - <13.75
33
2.25 - <2.50
33
6.75 - <7.25
33
6
73
<13.25
-
2.00 - <2.25
17
6.25 - <6.75
17
7
67
<2.00
-
<6.25
-
8
50
9
33
10–15
-
1 Peer group 2018 grant includes AkzoNobel, Arkema, BASF, Chr. Hanssen, Clariant, Croda International, DuPont/IFF, Evonik, Givaudan,
Kerry, LANXESS, Lonza, Novozymes, Solvay.
2 Any PSU grant concerns the maximum number that may vest, 100% vesting included in this table means that the target has been
achieved to the maximum level.
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 167
A strong share price appreciation resulted in the second rank on the relative Total Shareholder Return goal (same score
applied for the 2017 grant that vested in 2020), resulting in an achievement of 145%; i.e., the vesting of 97% of the PSUs
initially granted linked to this goal. The ROCE reported over 2020 of 10.3% is substantially below target on the back of
several acquisitions in the period 2018-2020. When adjusted for these acquisitions, the ROCE improved to 12.2%, still below
target. As the threshold was not achieved, no PSUs tied to this goal vested. On Energy Efficiency DSM realized an
improvement of 9% over the performance period. During the 3-year performance period total GHG emissions were reduced
by 30%. As a result, the vesting related to both sustainability goals was at maximum level. The below table provides an
overview of the number of PSUs granted in 2018 that vested (i.e., converted to unconditional shares) on 31 March 2021. In
total, 74.2% of the PSUs granted in 2018 vested (note: in 2020, 90.8% of the PSUs granted in 2017 vested). Since the number
of PSUs granted equals the maximum number to vest, the vesting equals 111.3% of the targeted grant (136.3% in 2020).
PSUs granted in 2018 vested in 2021
Numbers of PSUs
vested¹
LTI
STI deferral &
matching scheme
Geraldine Matchett
8,162
2,800
Dimitri de Vreeze
8,162
2,800
1 At vesting, a sell-to-cover applied: out of the vested shares, a number of shares are sold at vesting date to cover taxes due.
Pension and other benefits
Participation in the basic pension plan provided by the Dutch pension fund (Stichting Pensioenfonds DSM Nederland –
PDN) to all DSM employees in the Netherlands is mandatory for the Managing Board. Regarding pensionable salary not
covered by the basic pension plan, a company-paid pension contribution as determined by the Supervisory Board applies.
This contribution can be used by Managing Board members to participate in the so-called Net Pension Plan under
conditions applicable to all participating DSM employees. The company provides accident insurance cover, a company car,
and a fixed representation allowance in line with market practice.
Total remuneration
Actual total remuneration for 2021 is fully aligned with the remuneration policy. The following table provides an overview
of the total remuneration expense for the company in relation to the Managing Board in accordance with IFRS rules (these
costs are not necessarily equal to compensation paid or the cash out for DSM).
Total remuneration expense for the Managing Board in accordance with IFRS definitions
x € thousand
Fixed
Variable compensation
Fixed
Fixed
Total
Proportion fixed
/ variable
remuneration
Base salary /
fees
Short-term
incentive
Share-based
compensation¹
Pension
expenditure
Other items²
2021
2020
2021
2020
2021³
2020³
2021
2020
2021
2020
2021
2020
2021
2020
Geraldine Matchett
994
889
820
545
903
987
153
148
17
26
2,887
2,595
40:60
41:59
Dimitri de Vreeze
994
889
820
545
903
986
180
172
46
47
2,943
2,639
41:59
42:58
Total
1,988
1,778
1,640
1,090
1,806
1,973
333
320
63
73
5,830
5,234
41:59
41:59
1 Share-based compensation represents the expense of Performance Share Units (PSUs) awarded. These costs are considered over the vesting period and
therefore cover several years. Against the opening price at vesting date (i.e., 31 March 2021), the 2021 vesting (the Co-CEOs together) represented the value
of € 3.2 million (2020 €3.7 million), subject to a sell to cover.
2 Fringe benefits, such as company car and allowances.
3 Share-based compensation for 2021 concerns the grants in 2018 (partial), 2019, 2020 and 2021 (partial), share-based compensation for 2020 concerns the
grants in 2017 (partial), 2018, 2019 and 2020 (partial).
In line with the outstanding company performance, the STI achieved over 2021 compared to 2020 went up, whereas the
cost of Share based compensation (LTI) decreased due to the valuation and composition of the underlying series. Also
considering the base salary adjustment, total remuneration expenses incurred in 2021 went up to € 5,830 million.
Equity-based compensation
Main characteristics
The main conditions of the share-based compensation are:
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 168
- Vehicle
Performance Share Units (PSUs), converted to shares at vesting
- Grant date
Last trading day in March
- Vesting period
Three years, starting at Grant date
- Vesting conditions
Realization predefined performance goals and in service at vesting date
- Performance period
Three performance years, starting 1 January in the year of grant
- Holding period
Five years, starting at Grant date
- Lock-up period
Blocking period chosen by incumbent; may result in tax discount
Outstanding Performance Share Units
The table below provides an overview of outstanding PSUs (granted under the LTI and STI deferral & matching scheme
respectively).
Outstanding PSUs
Year of issue
Outstanding
at 31 Dec.
2020
In 2021
Outstanding at 31
Dec. 2021
Share price
at date of
grant (€)
Granted
Vested
Forfeited / expired
Geraldine Matchett
2018
13,800
-
(10,962)
(2,838)
-
80.04
2019
15,052
-
-
-
15,052
97.74
2020
14,058
-
-
-
14,058
105.00
2021
-
11,850
-
-
11,850
147.40
Total
42,910
11,850
(10,962)
(2,838)
40,960
Retained shares originated from PSUs
51,594
.
Dimitri de Vreeze
2018
13,800
-
(10,962)
(2,838)
-
80.04
2019
14,974
-
-
-
14,974
97.74
2020
14,132
-
-
-
14,132
105.00
2021
-
11,850
-
-
11,850
147.40
Total
42,906
11,850
(10,962)
(2,838)
40,956
Retained shares originated from PSUs
42,722
Upon expiration of their term, Dimitri de Vreeze exercised in 2021 the legacy stock options initially granted to him in 2013
(prior to his first appointment as a Managing Board member). During 2021, he exercised 6,000 stock options; the shares
obtained were sold for an average share price of €150.47.
Outstanding stock options
Year of
issue
Outstanding at
31 Dec. 2020
In 2021
Outstanding at
31 Dec. 2021
Average share
price at
exercise (€)
Exercise
price (€)
Expiry date
Exercised
Forfeited /
expired
Dimitri de Vreeze
2013
6,000
(6,000)
-
-
150.47
48.91
7 May 2021
Total
6,000
(6,000)
-
-
Of which vested
6,000
-
For employee information, as required by section 383d Book 2 of the Dutch Civil Code, reference is made to Note 27 Share-
based compensation. On 31 December 2021, 1,665,073 (2020: 2,460,656) of the total number of treasury shares outstanding
were held for servicing equity-based remuneration plans.
Shareholding obligation
In addition to the performance shares held on the basis of vested grants under the DSM Stock Incentive Plan, the Co-CEOs
have invested in DSM shares. These shares were bought through private transactions with private funds (including shares
purchased through STI deferral). The below table provides an overview of the number of shares held at year-end. The Co-
CEOs significantly exceed the shareholding obligation (300% of base salary).
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 169
Ordinary shares
purchased with
private money
Holdings from
vested PSUs
Total Ordinary shares
purchased with
private money
Holdings from
vested PSUs
Total
Geraldine
Matchett 16,736 51,594 68,330 14,886 44,990 59,876
Dimitri de Vreeze 25,839 42,722 68,561 23,989 36,927 60,916
Total holdings 42,575 94,316 136,891 38,875 81,917 120,792
Company performance versus remuneration over time
Five-year review of company performance and Managing Board remuneration
The following table provides an overview of the development of the remuneration of the members of the Managing Board
over the past five years, the development of company performance, and the average remuneration of other employees
(excluding the Managing Board members). Total remuneration for Managing Board members consists of the remuneration
expenses calculated in accordance with IFRS as included in the annual reports of the relevant years. The table provides an
overview of company performance based on Adjusted EBITDA, share price (year-average) and the reduction of greenhouse
gas emissions.
Typically, the share of total remuneration that is at risk varies for different employee segments and geographies, due to
the impact of incentive schemes. While the percentage of variable pay as a percentage of total remuneration is highest for
the Co-CEOs (at target 150%), it may be limited or nil for other employee segments or in certain countries (also because of
collective agreements). Based on performance, the results of the respective incentive schemes (and therefore the impact
on total remuneration) varies over time. The average remuneration of all other employees (excluding the Managing Board)
is influenced not only by factors such as differences in the pay mix, or changes in exchange rates, but also by factors
related to the composition of the employee population such as the impact of acquisitions and divestments, restructuring,
and in- and outflow of personnel.
5-year overview of the year-on year-change of remuneration and company performance
2021
2020
2019
2018
2017
Average
Managing Board remuneration
Geraldine Matchett
Base salary
994
889
630
614
598
745
11.8%
41.1%
2.6%
2.7%
1.4%
11.9%
Total remuneration
2,887
2,595
2,182
2,269
1,855
2,358
11.3%
18.9%
-3.8%
22.3%
12.0%
12.1%
Dimitri de Vreeze
Base salary
994
889
630
614
598
745
11.8%
41.1%
2.6%
2.7%
1.4%
11.9%
Total remuneration
2,943
2,639
2,175
2,188
1,749
2,339
11.5%
21.3%
-0.6%
25.1%
3.9%
12.2%
Company performance
Adjusted EBITDA¹
1,814
1,534
1,551
1,532
1,445
1,575
18.3%
-1.1%
11.8%²
6.0%
14.5%
9.9%
Year-average share price (€)
164.86
123.70
103.44
84.00
66.79
108.56
33.3%
19.6%
23.1%
25.8%
24.4%
25.2%
Greenhouse gas emission improvement
14.8%
8.5%
12.7%
9.3%
4.1%
9.9%
Average employee remuneration
Average remuneration employees global
86,860
84,169
84,320
84,500
85,841
85,138
3.2%
-0.2%
-0.2%
-1.6%
0.9%
0.4%
1
Adjusted EBITDA as of 2019 reflects Adjusted EBITDA from Continuing Operations as per current scope. The Adjusted EBITDA for 2017 and
2018 reflects the Total Group.
2 EBITDA change versus a pro forma restated 2018 Adjusted EBITDA updated for Continuing Operations. EBITDA change versus 2018
reported Adjusted EBITDA 1.2%.
DSM’s performance in 2021 improved compared to 2020. Over the last five years, the performance in terms of Adjusted
EBITDA, share price appreciation and greenhouse gas emissions has been outstanding. The development of the share price
(as included in the table) as well as the dividends paid over the years subscribe to this. Whereas the Managing Board
31 December 2021
31 December 2020
Managing Board holdings of DSM shares
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 170
remuneration expenses increased in 2020 as a consequence of the CEO change, the change in 2021 is merely driven by the
improved business performance, resulting in a higher STI. This demonstrates that total Co-CEO remuneration fluctuates in
accordance with the fluctuations in the Short-Term Incentive and the cost of the share-based compensation. Since for
employees globally a lesser portion of their total remuneration is variable, the year-to-year change of the average
remuneration of our employees globally (which includes all employee costs as included in Note 5 of the Consolidated
Financial Statements) shows less fluctuations. In addition, the average remuneration of all employees is impacted by
merger & acquisition activities and restructuring of our operations, while the adjustments of exchange rates also had an
impact. Furthermore, the year-on-year change of the average employee cost globally, are influenced by the fact that the
composition of the underlying employee population changes from year to year as a consequence of factors including
retirements, new hires and restructurings.
Pay ratio
The pay ratio is calculated at 31 December 2021 and is based on the average remuneration expense reported for each Co-
CEO and the total average employee cost. Intercompany comparisons must be made with caution, as differences in the
composition of the workforce, the geographical spread or in pay structures may occur. The pay ratio will differ from year to
year, since the variable pay (as a percentage of annual base salary) will differ from year to year based on company results.
Given that their pay is to a larger extent at risk, such fluctuations have a higher impact at Managing Board or executive
level, compared to the average variable pay of the employee group (limited or no variable pay component). The ratio will
furthermore be influenced by differences in pay structures between regions, acquisitions/divestments and foreign
exchange rates.
The Monitoring Committee Dutch Corporate Governance Code recommends a definition that considers ‘the hiring of
external employees’ pro-rated, insofar as they are hired for at least three months during the financial year and whereby
the average annual remuneration of the employees is determined by dividing the total wage costs in the financial year (as
included in the consolidated annual accounts on an IFRS basis) by the average number of FTEs during the financial year.
Until now, DSM calculated average annual employee remuneration based on headcount. As of 2021, this has been changed
to FTE (the table below shows the impact over the last years). The calculation does not yet include ‘the hiring of external
employees’, as the current data architecture does not allow a trustworthy combination of external employees (in FTE) and
cost involved. Adjustments will be made to meet the criteria in due course.
2021
2020
2019
2018
2017
CEO Pay ratio based on headcount
34
33
41
40
32
CEO Pay ratio based on FTE
34
31
40
40
31
At DSM, we believe that the remuneration throughout the organization should be based on the same principles and values
but should also consider local regulations and practices. That means that we aim for a consistent global approach
(median of the market reference) and consider local circumstances. This may, for example, result in a different pay mix
between countries or for employee segments without jeopardizing our principles and values. That is how we built and
internally align our remuneration policies, including the Remuneration policy for the Managing Board. Ratios do not
necessarily provide a reflection of such considerations, as they ignore, among other things, the typical differences between
fixed and variable pay in geographies and/or employee segments and are influenced by changing currency conversion
rates as well as being vulnerable to M&A activities.
Due to the CEO change, the pay ratio dropped in 2020, since the remuneration package was set lower compared to the
outgoing CEO, while equity-based compensation included series granted in the Co-CEOs’ previous role. The 2021 ratio of
total remuneration, including annual base salary, STI, LTI and other benefits such as pension (as reported in this
Remuneration report) versus the average remuneration of total employees globally is 34:1 (2020: 31:1) for each of the Co-
CEOs. As explained herein, the increase is merely a consequence of the higher Short-Term incentive over 2021 related to
the outstanding results.
Underlying data for the pay ratio calculation can be retrieved from the table DSM’s remuneration expense for the
Managing Board (including table notes) in the section Total remuneration of this Remuneration report, as well as from the
table Geographical information in Note 4 Segment information, and from the table Employee benefit costs in Note 5 Net
sales and costs (continuing operations) to the consolidated financial statements.
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 171
Retrospect and outlook
Whereas the overall remuneration expenses in 2020 dropped compared to 2019 as a consequence of the CEO change, the
remuneration expense in 2021 increased compared to 2020. In this respect, it is to be considered that (until 15 February
2021) the base salary of the Co-CEOs was positioned below base salary of the outgoing CEO, whereas the share units
granted to the Co-CEOs in 2018 and vesting in 2021 concerned a grant based on their base salary as Managing Board
members (this effect will also occur in 2022).
Considering the strategic update provided in 2021 and the pending review of the Remuneration policy, the Supervisory
Board has decided that the goals underlying the Short- and Long-Term Incentive schemes will not be adjusted for 2022.
This review was initiated in view of, among other factors, a quick scan conducted early in 2021 and benchmarking DSM’s
position within the labor market peer group as defined within the Remuneration policy. The scan showed that DSM had
dropped to the lowest position in the peer group as far as targeted total Direct Compensation (annual base salary plus
targeted Short-Term Incentive plus targeted Long-Term Incentive) is concerned and was far from approaching the median
from below as set out in the Remuneration policy. Although DSM in general has a compelling proposition to attract talent,
the company faces more and more difficulties in attracting and retaining senior leaders (one or two reporting levels below
the Executive Committee). This is due to the fact that the remuneration of the Managing Board sets a ceiling especially
with regard to Short- and Long-Term Incentives. Together with the fact that the Managing Board’s targeted Total Direct
Remuneration is positioned below the 25
th
percentile of the labor market peer group, action was required. In the
meantime, a policy review project has started. This was necessary on the one hand to further align actual remuneration of
the Managing Board with the market and on the other hand to enable DSM to submit compelling and competitive
remuneration propositions to attract and retain senior talents that will help shape the company’s future success. The
review project is well under way. In the course of 2022, we will consult with investors and proxy advisors to explore views
and opinions.
Remuneration of the Supervisory Board of Koninklijke DSM N.V. 2021
Summary of the Remuneration policy Supervisory Board of Koninklijke DSM N.V.
The Remuneration policy is designed to engage qualified leaders with the right balance of personal skills, competences
and experience required to oversee the execution of the company’s strategy, its performance and its creation of long-term
value, recognizing the interests of all stakeholders. In line with the Dutch Corporate Governance Code, the remuneration is
not linked to company and individual performance. As a reference, the remuneration of the Supervisory Board is
benchmarked to market practice, predominantly against AEX companies, given the company’s country of domicile. The
total fixed remuneration should approach the median of the reference market. The full version of the remuneration policy
for the Supervisory Board of Koninklijke DSM N.V. as approved by the 2019 AGM is available on the company website.
The table below summarizes the key elements of the remuneration policy, describing purpose, design and (potential)
value.
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 172
Purpose
Design
Value
Fixed fee
Basic pay for doing the
job
Reward Supervisory Board members and incentivize
them to utilize their skills and competences to the
maximum extent possible in executing their tasks.
The reward reflects the nature of responsibilities, the
time spent, and aims to provide a fair and
competitive pay level to engage qualified leaders.
Review: in principle, every three years, based on in-
depth benchmarking.
Approaching the median of the
market reference (predominantly
AEX companies).
Position and annual fee:
- Chair €105,000
- Deputy Chair €75,000
- Member €70,000
- Chair Audit Committee €18,500
- Member Audit Committee €12,000
- Chair other Committees €14,000
- Member other Committees €8,500
Intercontinental travel fee
Fixed amount representing time commitment related
to intercontinental travel.
€5,000 for each time it is required
to travel outside the continent of
residence.
Expenses
Expenses incurred in fulfilling duties are reimbursed.
To be paid upon submission of a statement of
expenses, partially covered by a fixed allowance.
Depending on level of expenses.
Fixed per annum: €1,250.
Shareholding requirement
In line with Dutch Corporate Governance Code, no
mandatory shareholding requirement. Supervisory
Board members are encouraged to invest in privately
owned DSM shares.
Not applicable.
Benefits and loans
Supervisory Board members are not entitled to
participate in any benefits program offered to
employees. Loans will not be provided.
Not applicable.
Total remuneration 2021
Committee overview
The Supervisory Board members are assigned to the various committees.
Committee overview
Audit
Nomination
Remuneration
Sustainability
Thomas Leysen (Chair as of 6 May 2021)
Chair
Member
John Ramsay (Deputy Chair as of 6 May 2021)
Chair
Member
Rob Routs (Chair until 6 May 2021)
Chair
Member
Pauline van der Meer Mohr (Deputy Chair until 6 May 2021)
Member
Chair
Eileen Kennedy
Member
Chair
Carla Mahieu (as of 6 May 2021)
Chair
Erica Mann
Member
Member
Frits van Paasschen
Member
Member
Pradeep Pant
Member
Member
Corien Wortmann-Kool (as of 6 May 2021)
Member
Member
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 173
Total Remuneration
The table provides an overview of total remuneration provided in 2021.
Remuneration of Supervisory Board Members
in €
Fixed
Total remuneration
Portion
fixed/variable
compensation
Annual fee
Committee fee
Other costs¹
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Thomas Leysen, Chair as of 6 May 2021
90,417
40,833
21,667
11,958
1,250
729
113,334
53,520
100:0
100:0
John Ramsay, Dep. Chair as of 6 May 2021
72,917
70,000
27,000
27,000
1,250
1,250
101,167
98,250
100:0
100:0
Rob Routs, Chair until 6 May 2021
43,750
105,000
9,375
22,500
521
1,250
53,646
128,750
100:0
100:0
Pauline van der Meer Mohr, Dep. Chair
until 6 May 2021
31,250
75,000
9,375
22,500
521
1,250
41,146
98,750
100:0
100:0
Eileen Kennedy, Member
70,000
70,000
22,500
22,500
6,250
6,250
98,750
98,750
100:0
100:0
Carla Mahieu, Member as of 6 May 2021
40,833
-
8,167
-
729
-
49,729
-
100:0
n.a.
Erica Mann, Member
70,000
70,000
20,500
20,500
1,250
6,250
91,750
96,750
100:0
100:0
Frits van Paasschen, Member
70,000
70,000
18,458
20,500
11,250
6,250
99,708
96,750
100:0
100:0
Pradeep Pant, Member
70,000
70,000
20,500
20,500
11,250
6,250
101,750
96,750
100:0
100:0
Corien Wortmann-Kool, Member as of 6
May 2021
40,833
-
11,958
-
729
-
53,520
-
100:0
n.a.
Victoria Haynes, Member until 8 May 2020
-
29,167
-
8,542
-
521
-
38,230
n.a.
100:0
Total
600,000
600,000
169,500
176,500
35,000
30,000
804,500
806,500
100:0
100:0
1 Involves International travel fee, expenses allowance and expenses exceeding expenses allowance.
In line with the remuneration policy, variable compensation does not apply, and Supervisory Board members do not
participate in any pension scheme. No extraordinary items apply. The total remuneration of the Supervisory Board is at the
same level as was the case during 2020. Note that in both years most meetings were virtual, resulting in relatively low
travel costs (included in ‘Other costs’.)
Benefits and loans
Members of the Supervisory Board are not eligible for any benefit programs offered by the company (or any beneficiary) to
its employees, nor are any loans provided.
Equity-based compensation
As confirmed in the remuneration policy, Supervisory Board members do not receive any equity-based compensation. They
are, however, encouraged to hold privately owned shares in DSM. At year-end 2021, Thomas Leysen held 5,035 shares (2020:
5,035) and John Ramsay held 1,068 shares (2020: 1,057). No other Supervisory Board members held company shares at year-
end 2021.
Remuneration over time
The below table provides an overview of the total remuneration of the Supervisory Board members over a five-year period.
A comparison of the development of total remuneration compared to company performance is not provided, as the
Supervisory Board's total remuneration is not linked to company performance (Dutch Corporate Governance Code and
remuneration policy of the Supervisory Board Koninklijke DSM N.V.).
5-year overview of the Supervisory Board remuneration
2021 2020 2019 2018 2017
5-years
average¹
Thomas Leysen, Chair as of 6 May 2021 113,334 53,520 - - -
John Ramsay, Dep. Chair as of 6 May 2021 101,167 98,250 97,000 82,450 51,605
Rob Routs, Chair until 6 May 2021 53,646 128,750 123,125 107,250 107,250
Pauline van der Meer Mohr, Dep. Chair until 6 May 2021 41,146 98,750 95,208 82,250 82,250
Eileen Kennedy, Member 98,750 98,750 110,292 90,250 94,250 98,458
Carla Mahieu, Member as of 6 May 2021 49,729 - - - -
Erica Mann, Member 91,750 96,750 67,251 - -
Frits van Paasschen, Member 99,708 96,750 114,125 102,250 68,270
Pradeep Pant, Member 101,750 96,750 109,125 98,250 102,250 101,625
Corien Wortmann-Kool, Member as of 6 May 2021
53,520 - - - -
1
Average only calculated if the respective Supervisory Board member was engaged during five whole years.
Report by the Supervisory Board – Remuneration report 2021
Royal DSM Integrated Annual Report 2021 174
Closing remarks and shareholder vote
The 2019 AGM approved the remuneration policy for the Supervisory Board of Koninklijke DSM N.V. (98.45% in favor) as
well as the remuneration policy for the Managing Board of Koninklijke DSM N.V. (97.48% in favor). The total remuneration
delivered in 2021 is aligned with the respective remuneration policies: no deviations or derogations applied. As in 2020, no
revision or claw-back of any incentives occurred in 2021.
The remuneration for the financial year 2021, as described in this report, is subject to an advisory vote at the 2022 AGM.
Questions raised in the 2021 AGM regarding remuneration items were addressed in the respective meeting (reference is
made to the Q&A document and minutes of that meeting, posted on the company website). As a result, there were no
specifics raised that needed to be addressed in this Remuneration report.
Heerlen, 1 March 2022
The Supervisory Board
Thomas Leysen, Chair
John Ramsay, Deputy Chair
Eileen Kennedy
Carla Mahieu
Erica Mann
Frits van Paasschen
Pradeep Pant
Corien Wortmann-Kool
Royal DSM Integrated Annual Report 2021 175
Information on the DSM share
Shares and listings
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 (DR ISIN US7802491081), with four ADRs representing the value of one ordinary DSM
share.
Besides the ordinary shares, 44.04 million Cumulative Preference Shares A (cumprefs A) are in issue, which are not listed
on the stock exchange; these have been placed with institutional investors. The cumprefs A have the same voting rights as
ordinary shares, as their nominal value of €1.50 per share is equal to the nominal value of the ordinary shares.
The dividend percentage of the cumprefs A is based upon the dividend yield of the ordinary shares (dividend as a
percentage of the average share price). This percentage may be increased or decreased by a mark-up or discount of no
more than one hundred (100) basis points, to be determined by the Managing Board in consultation with the Supervisory
Board. The basis of computation of the dividend on the Cumulative Preference Shares is €5.2942.
Transfer of the cumprefs A requires the approval of the Managing Board, unless the shareholder is obliged by law to
transfer his shares to a previous shareholder.
The average number of ordinary shares outstanding in 2021 was 172,647,995. All shares in issue are fully paid. On 31
December 2021, the company had 172,968,730 ordinary shares outstanding.
Issue of shares
The issue of shares takes place by a decision of the Managing Board. The decision is subject to the approval of the
Supervisory Board. The scope of this power of the Managing Board shall be determined by a resolution of the General
Meeting of Shareholders and shall relate to at most all unissued shares of the authorized capital, as applicable now or at
any time in the future. In the Annual General Meeting of Shareholders of 6 May 2021 this power was extended up to and
including 6 November 2022, on the understanding that this authorization of the Managing Board is limited to a number of
ordinary shares with a nominal value amounting to 10% of the issued capital at the time of issue, and to an additional 10%
of the issued capital at the time of issue in connection with a rights issue. The issue price will be determined by the
Managing Board and shall as much as possible be calculated on the basis of the trading prices of ordinary shares on the
Euronext Amsterdam Stock Exchange.
Distribution of shares
Under the Dutch Financial Markets Supervision Act, shareholdings of 3% or more in any Dutch company must be disclosed
to the Netherlands Authority for the Financial Markets (AFM). According to the register kept by the AFM, the following
shareholders had disclosed that they have a direct or indirect (potential) interest between 3% and 10% in DSM's total
share capital on 31 December 2021:
- ASR Nederland N.V.
- BlackRock, Inc.
- Capital Research and Management Company
- NN Group N.V.
- Rabo Participaties B.V.
Information on the DSM share
Royal DSM Integrated Annual Report 2021 176
Repurchase of own shares
The company may acquire paid-up own shares by virtue of a decision of the Managing Board, provided that the par value
of the acquired shares in its capital amounts to no more than one tenth of the issued capital. Such a decision is subject to
the approval of the Supervisory Board. In the Annual General Meeting of Shareholders of 6 May 2021, the Managing Board
was authorized to acquire own shares for a period of 18 months from said date (i.e., up to and including 6 November 2022),
up to a maximum of 10% of the issued capital, provided that the company will hold no more shares in stock than at
maximum 10% of the issued capital.
On 29 April 2021, DSM announced it had canceled 6.6 million ordinary shares, thereby concluding the reduction in share
capital following the share buyback program executed in the period 1 April 2019 to February 2020. 6,638,971 ordinary shares
held in treasury since the execution of the share buyback program have been canceled. The total number of issued shares
is therefore reduced to 218,826,029 (previously 225,465,000), consisting of 174,786,029 ordinary shares and 44,040,000
Cumulative Preference Shares A. In accordance with regulatory requirements, DSM has notified the Dutch Authority for the
Financial Markets (AFM) of the change in its issued share capital.
In 2021, DSM repurchased 1,050,000 of its own shares for a total consideration of €165 million for the purpose of covering
the company’s commitments under existing share-based compensation plans and shares for stock dividend.
Development of the number of ordinary DSM shares
2021
2020
Issued
Repurchased
Outstanding
Outstanding
Balance at 1 January
181,425,000
9,205,661
172,219,339
172,448,755
Changes:
Cancellation of issued shares
(6,638,971)
(6,638,971)
-
-
Reissue of shares in connection with
share-based payment plans
-
(803,049)
803,049
1,460,174
Repurchase of shares
-
1,050,000
(1,050,000)
(2,876,035)
Bearer share certificates that have become void
-
7,466
(7,466)
-
Dividend in the form of ordinary shares
-
(1,003,808)
1,003,808
1,186,445
Balance at 31 December
174,786,029
1,817,299
172,968,730
172,219,339
DSM share prices on Euronext Amsterdam
(€ per ordinary share):
- Highest closing price
199.40
148.55
- Lowest closing price
136.55
87.52
- At 31 December
198.00
140.80
Market capitalization at 31 December (€ million)¹
34,608
25,545
1 Source: Bloomberg.
Information on the DSM share
Royal DSM Integrated Annual Report 2021 177
Geographical spread of DSM shares outstanding
in % (excl. cumprefs A)
2021
2020
North America
35
39
United Kingdom
17
16
France
13
12
Netherlands
11
10
Nordic
7
6
Switzerland
6
5
Germany
5
4
Asia Pacific
4
4
Other countries
2
4
DSM Share price development versus AEX and Dow Jones Euro StoXX Chemical Index
rebased versus DSM share price
in €
Trading volume ordinary DSM shares 2021
x million shares as reported by Euronext Amsterdam
Information on the DSM share
Royal DSM Integrated Annual Report 2021 178
Article 10 of Directive 2004/25
With regard to the information referred to in the Resolution of article 10 of the EC Directive pertaining to a takeover bid
which is required to be provided according to Dutch law, the following can be reported:
- Information on major shareholdings can be found above (Distribution of shares)
- There are no special statutory rights attached to the shares of the company
- There are no restrictions on the voting rights of the company’s shares. When convening a General Meeting of
Shareholders, the Managing Board is entitled to determine a registration date in accordance with the relevant
provisions of the Dutch Civil Code
- The applicable provisions regarding the appointment and dismissal of members of the Managing Board and the
Supervisory Board and amendments to the Articles of Association can be found in the section Corporate
governance and risk management
- The powers of the Managing Board regarding the issue and repurchase of shares in the company can be found in
the sections Issue of shares and Repurchase of own shares above
- Other information can be found in the 'Notes to the consolidated financial statements' (16 Equity, 19 Borrowings,
27 Share-based compensation)
Dividend on ordinary shares
DSM's dividend policy is to provide a stable and preferably rising dividend. DSM proposes to increase the total dividend on
ordinary shares by €0.10 to €2.50 per ordinary share for 2021.
This will be proposed to the Annual General Meeting of Shareholders to be held on 10 May 2022. An interim dividend of
€0.80 per ordinary share having been paid in August 2021, the final dividend would then amount to €1.70 per ordinary
share.
The dividend will be payable in cash or in the form of ordinary shares at the option of the shareholder, with a maximum of
40% of the dividend amount available for stock dividend. If more than 40% of the total dividend is requested by the
shareholders to be paid out in shares, those shareholders who have chosen to receive their dividend in shares will receive
their stock dividend on a pro-rata basis, the remainder being paid out in cash. Dividend in cash will be paid after
deduction of 15% Dutch dividend withholding tax. The ex-dividend date is 12 May 2022.
Dividend per ordinary DSM share in €
2021 dividend is subject to approval by Annual General Meeting of Shareholders
Information on the DSM share
Royal DSM Integrated Annual Report 2021 179
Dividend on Cumulative Preference Shares A
The Cumulative Preference Shares A are, in accordance with article 32, section 3, of the Articles of Association, entitled to a
dividend for the financial year 2021 which is equivalent to the dividend yield of the ordinary shares over 2021, which will be
— if the dividend proposal on ordinary shares will be adopted by the AGM on 10 May 2022 — about 1.52%. This percentage
may be increased or decreased by a mark-up or discount of no more than one hundred (100) basis points, to be
determined by the Managing Board in consultation with the Supervisory Board.
The Managing Board in consultation with the Supervisory Board has decided to use the maximum mark-up within their
discretionary option (100 basis points) and to set the dividend percentage on the Cumulative Preference Shares A at 2.52%
(2020: 2.94%).
As the basis for the computation of the dividend on the Cumulative Preference Shares A amounts to €5.2942 per share, the
total dividend for 2021 amounts to €0.1334 per share.
An interim dividend of €0.05 per Cumulative Preference Share A having been paid in August 2021, the final dividend thus
amounts to €0.0834 per Cumulative Preference Share A.
Bearer shares
On 27 April 2006, all bearer shares (‘aandelen aan toonder’) in DSM’s issued share capital were converted into registered
shares (‘aandelen op naam’) (pursuant to an amendment of the Articles of Association made at the time). In order to
exercise the rights vested in the shares, holders of former bearer shares were required to hand in their bearer share
certificates (‘aandeelbewijzen’) to DSM.
Pursuant to an amendment of Section 2:82 of the Dutch Civil Code (DCC) in 2019, DSM shareholders who still have not
handed in their bearer share certificates will lose any entitlement to exchange their bearer share certificates for a
replacement share as per 2 January 2026.
In accordance with Section 2:391(2) DCC, DSM hereby gives notice of the following:
(i) A shareholder may not exercise the rights vested in a share until after he/she has handed in his/her bearer share
certificates to DSM.
(ii) A bearer share certificate which was not handed in to DSM on or before 31 December 2020 has become void and the
share represented by the bearer share certificate has been acquired by DSM for no consideration, irrespective of whether
DSM's Articles of Association allow the acquisition of its own shares. Section 2:98a (3) DCC does not apply to this
acquisition. DSM shall be registered as the shareholder thereof in DSM’s shareholders register. DSM shall hold the shares
until the end of the period mentioned in (iii) below.
(iii) A shareholder who hands in a bearer share certificate to DSM no later than five years after the acquisition mentioned
in (ii) above, therefore no later than 1 January 2026, is entitled to receive from DSM a replacement registered share
provided that this share is registered in DSM’s shareholders register in the name of a central securities depository, and
DSM will instruct the shareholder’s bank to credit the share in a securities account in the name of holder of the bearer
share certificate.
The procedure described above follows from Section 2:82(3) up to and including (9) DCC, whose provisions apply.
Royal DSM Integrated Annual Report 2021 180
Sustainability statements
Stakeholder engagement
In the following pages, we present some examples of how we engage with external stakeholders, including the partners in
our value chain. For an overview of all our stakeholders, see Stakeholders. For information on how we engage with our
employees, see People. For historical information on our sustainability performance, please see the five-year summary –
sustainability tables and the company website.
Customers
Our customers are the key stakeholders for our business, and we engage with them closely through our Business Groups.
The ongoing COVID-19 pandemic and external developments has challenged the traditional approaches for customer
interaction. Despite this, we aspire to continually strengthen our relationship and intimacy with them.
Measuring customer loyalty with our Net Promotor Score
Customer loyalty and satisfaction starts with understanding our customers, their needs and their journey when interacting
with us. Against the backdrop of the disruptions caused by COVID-19, we continued to invest in strengthening our customer
relationships. We measure customer loyalty and satisfaction through the Net Promoter Score (NPS) methodology (both
relational and transactional) — the voice of the customer. This enables us to continuously improve our product and service
offering toward our customers.
In 2021, our NPS improved to 51 (2020: 50, 2016: 38) as a result of the strong collaboration and strengthened relationships
throughout the year. This is the sixth consecutive year-on-year improvement where our sales, service and business teams
have been able to manage the close customer relation so important for the success of our business.
For information on how we engage with our customers through our business, see Nutrition, Materials and Innovation.
Suppliers
The DSM Sustainable Procurement Program
As sustainability is a fundamental and integral part of our way of doing business, we must ensure that, working jointly
with our suppliers, we deliver on our promise to reduce our environmental footprint and improve lives for people today
and generations to come through our activities, products, solutions and innovations.
Our Sustainable Procurement Program comprises the following elements:
- Supplier development and evaluation program, in which we focus on assessing, auditing and further improving our
suppliers’ sustainability performance by actively developing and following up on corrective actions
- Our Scope 2 program for reducing greenhouse gas emissions from purchased electricity
- Our Scope 3 program for reducing greenhouse gas emissions throughout our value chain, where we are working
together with our suppliers on our collective carbon footprint and emissions
- A sustainable decarbonization of heat via the procurement of renewable fuels
Supplier Sustainability Evaluation
2021
2020
Spend coverage SCoC
95%
93%
EcoVadis assessments
411
351
Together for Sustainability audits
8
14
Spend on local suppliers¹
62%
-
1 For continuing operations only. Local supplier is defined where the supplier country is equal to the purchasing location’s country.
Royal DSM Integrated Annual Report 2021 181
Sustainability statements
The business principles most relevant for the supply chain are brought together in the Supplier Code of Conduct (SCoC)
and structured along the three sustainability dimensions of People, Planet and Profit. The Supplier Code of Conduct
(available on the DSM Supplier Website in eight languages) forms the basis on how we choose to do business and interact
with our suppliers.
In 2021, we met our target level of 95% of our supplier spend covered by the SCoC. Through Together for Sustainability
assessments and audits, we check that suppliers act in compliance with our norms and values. When suppliers cannot
meet our expectations, we will work with them to define and execute an improvement plan.
Assessing sustainability in our supply chain
At DSM, we understand that connecting across complex value chains is not easy and requires strong collaboration. That is
why we are a member of the Together for Sustainability (TfS) initiative. TfS aims to develop and implement a global
supplier engagement program that assesses and improves sustainability practices in both environmental and social terms.
This network grew further in 2021 by new members and celebrated its ten-year anniversary in 2021. We are active in
several workstreams within TfS. More information about this program can be found on our company website.
In 2021, we continued our focus on driving improvement to support sustainability development in the value chain. Although
value chains are complex and continued to be affected by COVID-19, sustainability development was kept in focus. We
assessed 411 suppliers in 2021 through TfS, of which 373 were re-assessments, and. 65% of our re-assessed suppliers
received an improved sustainability score, compared to 60% last year, which indicates that our suppliers are further
engaging in sustainability.
On-site audits were heavily impacted by contact and travel restrictions in various regions on the globe throughout the year
because of COVID-19. We performed fewer face-to-face audits in the more traditional manner while taking care of
COVID-19 precautions. In 2020, we had piloted the first virtual audits through the TfS platform. The virtual audit used
technology to conduct the audit, assessment, inspection, and oversight from a remote location. In evaluation, the virtual
audit was perceived as comparable to a physical audit. However, the virtual aspect lacked typical physical experiences
such as the perception of odor, or direct human interactions with the company. We consider that this type of audit is most
suitable for follow-up audits and we do not consider this type of audit to be suitable for all suppliers. Technical
capabilities as well as reliable, fast internet connections are essential to execute a successful virtual audit. Through TfS, we
are exploring the further use of virtual audits besides the regular audits.
Capabilities to enhance and drive sustainability
Close collaboration with our strategic supply partners is key to bring our sustainability to the next level. Building
capabilities and driving sustainability is closely connected to having subject-matter trainings available both for suppliers
and our employees. We are actively contributing through assessments and audits, while participating in TfS workstreams
to shape future supplier demands. Lastly, integrating sustainability as part of day-to-day business is expedited by having
accessibility to all relevant data while on the job.
We played an active role in several workstreams in the TfS-initiative, such as governance & partnerships. Here, new
memberships and the sharing of best practice across TfS are addressed. Besides this, we shared our view and experience
regarding scope 3 program development in the newly inaugurated workstream on scope 3.
We actively support and utilize training opportunities given by the TfS initiative for our supply base as well as for our
sourcing community. Three supplier training webinars designed to fit the time zones of North America, Latin America and
Europe were shared in local languages. The aim of the webinars was to provide a deeper understanding of the TfS program,
equip our suppliers with the understanding of how to utilize the Corrective Action Plan Tool and the action points
following an assessment. The webinars attracted a high level of participation.
Further internal trainings in sustainability continued to be provided to our sourcing community. Three trainings were
offered on the use of practical tools for integrating sustainability into the daily work of sourcing professionals, specifically
on sustainable procurement, assessments and audits, and scope 3. These trainings are mandatory to relevant sourcing
roles and aim to equip our colleagues with the necessary understanding to engage in relevant sustainability conversations
with our suppliers.
Royal DSM Integrated Annual Report 2021 182
Sustainability statements
To improve steering of sustainability in our supply chain, we launched a first prototype of a fully automated internal
dashboard combining all available assessments and audits per strategic supplier. This increased transparency permits the
tracking of supplier sustainability status and developments. The improved data accessibility will enable better
incorporation of sustainability considerations into sourcing strategies and supplier selection.
Since 2021, the concept of sustainable tender has been included in all strategic sourcing projects within global logistics
and packaging. With sustainable tender in the supplier selection process, we will be able to identify sustainable solutions
from our suppliers, differentiate suppliers in terms of sustainable behavior, and influence the supply market.
Stakeholder engagement
In addition to working with our suppliers, we also work with external partners to enhance collaboration in the supply
chain. These partners include Roundtable for Sustainable Palm Oil (RSPO), Friends of the Sea, and the Marine Stewardship
Council.
Taking steps toward sustainable palm oil derivatives
We are actively taking steps to reduce deforestation by sourcing ingredients such as palm oil derivatives in a more
sustainable way. For example, we are a member of the RSPO — a not-for-profit, multi-stakeholder organization aimed at
making sustainable palm oil the market norm. We aim to have RSPO certification for all of our major production sites that
use palm oil derivatives. Through our company, DSM Nutritional Products, we are a member of RSPO. DSM Food Specialties
and DSM Nutritional Products met their objective to use 100% RSPO certified sustainable palm oil products using RSPO
‘Mass Balance’, ‘Segregated’ and ‘Book and Claim’ supply chain models by 2021. For more information on our use of palm
oil, see the company website.
Responsibly sourced marine resources
Protecting our marine environment is important to us as a company. We are committed to the responsible and sustainable
use of natural marine resources. We have ‘Friends of the Sea’ certification for all our fish oil purchases. This helps ensure
that the fisheries involved in providing fish oil to produce our omega-3 product range are sustainable. Furthermore, we
had already successfully attained 100% Marine Stewardship Council (MSC) certification for all our tuna oil suppliers in
2020. We are proud to partner with the MSC, the global gold standard for certification and eco-labeling of seafood, to offer
MEG-3® tuna DHA oils and powders that are MSC Chain of Custody (CoC) certified. This certification guarantees ‘ocean to
purchase’ traceability throughout the entire supply chain, providing assurance that our tuna DHA products can be easily
traced to certified fisheries.
The BICEPS network
Our Global Logistics and Packaging team has connected with other shippers and industry bodies to advocate sustainability
in the international transport market. Together, we formed the BICEPS Network, a network with the aim to reduce the CO
2
emissions of the carriers. This led to an internationally verified rating system that provides an industry-recognized
sustainability ranking of shipping lines and enables us to reward sustainable behavior.
Supplier projects
As part of our drive to foster better business through our supplier projects, our Procurement organization engages in
proactive dialogue with suppliers to move the business agenda forward. In this context, DSM Sourcing pursues initiatives
to create joint value, awareness and engagement regarding innovation, greenhouse gas emissions reduction and
renewable electricity projects.
Supplier engagement is important to us. During 2021, in-depth discussions took place as part of our scope 3 supplier
engagement program, CO2REDUCE, which addressed well over 50 suppliers across all businesses. More information on this
program can be found in Scope 3 emissions.
In addition, we presented our sustainability story during company-wide events of some of our strategic suppliers, such as
during the launch of a supplier’s sustainability program. These presentations demonstrated to a wider company audience
the necessity and pull for sustainability from a customer’s perspective. We received positive feedback, helping to drive
further engagement with these suppliers.
Royal DSM Integrated Annual Report 2021 183
Sustainability statements
Every year, the DSM Procurement community presents awards to teams who have developed successful projects in various
categories, with sustainability as a key selection criterion. The case outcomes should positively contribute to the
commercial results of a DSM business unit or service unit and be exemplary in adjacent fields such as sustainability,
digitization, or innovation. In 2021, more than 45 entries participated in the award. The winner was the Global steam trap
monitoring initiative, which realized energy savings and CO
2
reductions through online and wireless monitoring of the
steam traps in our facilities. Our key supplier, Emerson Automation Solutions, applied the results by means of their
developed technology and capabilities for global roll-out.
In 2021, hybrid working and the ongoing COVID-19 pandemic led to a permanent shift toward working from home. Our
employees require ergonomic furniture and IT accessories in their homes to prevent long-term occupational injuries and
allow for more efficient and convenient day-to-day work. We designed an effective sourcing strategy based on a
sustainable tendering process with clear additional requirements regarding self-service capability, customized support,
and digital solutions. The contracted supplier also provided a sustainable solution for our ‘old’ DSM furniture through
refurbishing and re-use. Digital tooling enabled employees to order their tailored home-workplace package online. This
program was rolled out in the Netherlands, Switzerland and the United States.
Investors
We value the essential contribution our capital providers make to our success and prosperity, allowing us to pursue a
long-term oriented, purpose-led, performance-driven strategy. This should also lead to a continuous increase of the
company’s valuation for the benefit of its shareholders and provide a low risk profile for our debt holders. We see the
focus of our capital providers increasingly moving beyond returns on financial capital and including considerations of
environmental, human and social impact in their decisions.
Transparent communication with financial markets
We ensure that accurate financial and relevant non-financial information is communicated to the financial markets in a
transparent and simultaneous way. All information is made easily accessible to the public via the company website.
Besides the Annual General Meeting of Shareholders, we also reach out to the financial markets through events such as
our Investor Days, participation in (virtual) investor conferences and by organizing (virtual) roadshows. We actively seek
engagement with financial advisors who cover DSM on behalf of their financial market clients, such as brokers, credit
rating agencies, proxy advisors, shareholder representative organizations, and ESG (Environment, Social, Governance)
rating agencies.
Feedback from the financial markets is periodically discussed and assessed by the Managing Board and the Supervisory
Board. We highly value the insights gained through these engagements.
We engage with our investors and their representatives on topics such as the SDGs, climate change, biodiversity,
governance, sustainability in supply chain management, human rights, inclusion and diversity, and responsible taxation.
Updating investors on our strategic progress
During 2021, we continued to update the market on our progress against our strategic targets and sustainability ambitions
and the progress of our large sustainability-driven innovation projects.
We focused our reporting on giving full integrated disclosure on financial and non-financial performance at half-year and
full year, while limiting first-quarter and third-quarter reporting to a trading update. This reflects the consideration of
long-term value drivers which are critical to the success of our company.
Due to COVID-19, the financial markets continued to be impacted by uncertainty and volatility during 2021. We intensified
direct virtual contact with our investors in order to keep them all informed about business conditions how we were
managing COVID-19, and its effects on our operations.
At our half-year reporting, we made a deeper dive into how we can make farming more sustainable. In September, we
presented the re-alignment of our organization as a Health, Nutrition & Bioscience company and outlined how we can
Royal DSM Integrated Annual Report 2021 184
Sustainability statements
make a positive impact on planet, people and livelihoods via our Food System Commitments, which are linked to the UN
Sustainable Development Goals.
In 2021, our Investor Relations program was ranked number one in its sector by Institutional Investor Research and
received highest recognition for its investor communication, responsiveness to the capital markets, business and market
know-how, authority and credibility, virtual roadshow program, virtual investor event and quality of earning calls.
Engaging with the market about purpose and ESG
Purpose and profit go hand in hand at DSM, which has been demonstrated by a continuing strong performance in terms of
both financial and non-financial metrics. In 2021, we actively advocated purpose-driven entrepreneurship among our
shareholders. We engaged with investors, including pension funds, to discuss their responsibility in long-term value
creation for their customers, but also for the society and the environment their participants live in. We actively
participated in investor initiatives including the World Business Council for Sustainable Development (WBCSD), Future-
Proof Business and the FCLT (Focusing Capital to the Long Term), in their ‘Multi-stakeholder in practice’ project,
encouraging a longer-term focus in business and investment decision-making.
We are committed to staying ahead in sustainability reporting and ensuring we report against new and future
requirements of regulating authorities including the EU Sustainable Finance Action Plan, EU Green deal, EU Taxonomy, EU
Corporate Sustainability Reporting Directive and Sustainable Finance Disclosure Regulation (SFDR). We emphasize the
need to make reporting metrics uniform, comparable and auditable.
We continued our engagement with leading ESG Ratings and Benchmarks advisors to the financial sector, including
Sustainalytics, MSCI, Moody’s-Vigeo and ISS-ESG.
In 2021, we saw an increased focus in our engagement dialogues on nature and biodiversity, as well as social topics
including human rights, inclusion and diversity.
We again saw the number of direct engagements between investors and DSM on ESG topics, including SDG impact, increase
in 2021. ESG has become part of the regular agenda of our investor meetings. Being recognized as a leader in sustainability
and at the same time showing continued good financial progress, we were frequently invited for in-depth engagement
calls and meetings on how to include — and compare — important non-financial parameters in our investor’s investment
processes.
At the end of 2021, 87% of our shares held by institutional investors were held by signatories of the Principles for
Responsible Investment (PRI investors) and 17% of our outstanding shares at institutional investors were in dedicated
sustainability funds.
Society
We engage with society at multiple levels — from local community initiatives to collaborations with universities and
research institutes. Due to the ongoing effects of the pandemic, many of our regular engagements were postponed, or
moved online, such as our annual Earth Day activities. We continue to engage in philanthropic and sponsorship activities
to the average yearly amount of approximately €6 million, as well as the in-kind contributions of our employees’ hours
and expertise.
Supporting personal development and communities in need in Brazil
Our partnership with the Municipal Department of Education of Mairinque offered young people insights into their
professional future, and provided relevant skills training. The Gastromotiva partnership provides students with
professional training to become entrepreneurs or chefs. We continued to support communities in need through our
volunteer programs and donations of food items, hygiene products and other essential items.
Maintaining engagement on malnutrition and schooling in China
For the 14
th
year, the DSM Bright Experience campaign was held in China to raise funds and increase awareness on
eradicating malnutrition and hunger in China. It was held jointly with UN WFP and China Foundation for Poverty Alleviation
Royal DSM Integrated Annual Report 2021 185
Sustainability statements
(CFPA). Our support of the DSM Hope School in Lintao (Gansu province) continued, with scholarships awarded to 155
students to support their study and home life.
Advocating on nutrition in Japan
In the context of the Tokyo Nutrition for Growth Summit (N4G) 2021, we hosted a number of online events on the
importance of nutrition. At the 3
rd
DSM Japan Sustainability Forum, we hosted an online event titled ‘Sustainable Food
System, Nutrition and Health – Creating Healthy Planet for Healthy People’. Later in the year, together with the Ajinomoto
Group, the effectiveness of school meals for improving children’s nutrition was discussed, and what role the private sector,
together with regional governments and international organizations, can play in supporting school meal programs.
Addressing vitamin D deficiency in India
The campaign ‘Boost your ImmuniD’ was launched in India to underline the need for adequate levels of vitamin D. Despite
being a sun-rich country, 80% of India’s population face vitamin D deficiency. The campaign highlighted the role of vitamin
D for good health and immune function.
Supporting safety, health and well-being in the Netherlands
In the province of Limburg (Netherlands), DSM and regional stakeholders launched the regional Food Boost Challenge
platform to engage young people on the subject of healthy nutrition and lifestyle choices. After the flooding in the same
province, we offered shelter to impacted employees in our headquarters.
Highlighting nutrition and sustainability in Singapore
The inaugural event of the Bright Science & Technology Hub brought our customers, government agencies and food-tech
start-ups together to discuss trends and breakthroughs in nutrition, sustainability and technology. Through the DSM SMU-X
(Singapore Management University) Sustainability Challenge, students were given the opportunity to explore supply chain
and consumer-side challenges in nutrition and sustainability through real-world business challenges.
Addressing food and the future in Switzerland
At a seminar organized by the Dutch Embassy in Basel (Switzerland) on food loss and waste, we looked into how food- and
feed-additives can improve the sustainability of the dairy industry. On Zukunftstag (‘Future Day’), we opened our Swiss
offices to our employees’ children, allowing them to see at first hand what we do and what drives us.
Engaging on community and climate in the US
In 2021, we were active in addressing issues concerning child care through editorials and congressional briefings, and
championed inclusion & diversity through our leadership roles in the National Diversity Council. We continue to support
the Union Country College Foundation Close the Gap initiative, which is being replicated to support other communities. We
participated in Congressional Meetings to support climate change mitigation and a price on carbon legislation.
Furthermore, we lead numerous business coalitions to support climate change mitigation actions. Through our DSM North
America Employee Relief Fund, we also provided financial support to dozens of our colleagues who suffered property
damage as a result of climate-induced natural disasters such as hurricanes, floods, blizzards and fires.
Royal DSM Integrated Annual Report 2021 186
Notes to the Sustainability statements
1 Management approach for material topics
In the following sections, we elaborate on the material topics defined in the Materiality matrix and describe how we
manage these topics.
Environment
Climate mitigation
This topic addresses reducing energy use and greenhouse gas emissions in our own operations, increasing the share of
energy coming from renewable sources and developing solutions to support our customers in reducing carbon footprint
across their value chains to enable the transition to a low carbon economy.
Management approach: We manage this topic by improving our own carbon footprint, enabling our customers through
innovative solutions and advocating actions toward a low-carbon future. We publicly disclose our impact and strategy via
this Report, CDP and others. Through our Food System Commitments, we commit to enable on-farm livestock emissions
reductions.
For information on this topic, see:
Our approach to the Sustainable Development Goals
Strategy
Collaborative platforms and networks
Climate mitigation
Review of business
Climate adaptation
This topic addresses preparing for the physical and transition risks and opportunities associated with changing climate
by ensuring operational procedures are flexible and resilient.
Management approach: We manage this topic through identifying our exposure to climate risks through our physical and
transition risk assessments. The outcome of these assessments is reviewed and validated with our businesses, sites and
other relevant functions. We publicly disclose our impact and strategy via this Report, CDP and others.
For information on this topic, see:
Our approach to the Sustainable Development Goals
Strategy
Collaborative platforms and networks
Climate adaptation
Review of business
Waste & circularity
This topic covers reducing waste in our operations and across value chain partners by enabling closed loop solutions
with a focus on renewable and bio-based materials.
Management approach: We manage this topic by improving the value extracted from the limited resources that are
available, enabling the transition to a circular and bio-based economy through our solutions and advocating a shift away
from a linear to a circular and bio-based economy.
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 187
For information on this topic, see:
Our approach to the Sustainable Development Goals
Strategy
Collaborative platforms and networks
Waste & circularity
Planet
Review of business
Nature & biodiversity
Nature & biodiversity refers to the protection of natural capital and ecosystems, including the variety and variability of
life on earth and addressing issues such as land degradation, nature loss and ocean pollution.
Management approach: Nature & biodiversity is a global issue that is locally relevant, and that potentially has impact on
our operational locations. The DSM Responsible Care Plan defines how we monitor and assess the impact of our
operations on these locations. We support the ambitions of the Convention on Biological Diversity and we continue to
explore the role the Natural Capital Protocol can play in supporting our decision making. Through our Food System
Commitments, we commit to reach people with nutritious, delicious, sustainably produced plant-based foods.
Our position paper on Biodiversity can be found on the company website.
For information on this topic, see:
Nature & biodiversity
Biodiversity position paper
Water stewardship
Water is essential to life and all ecosystems. As water is becoming a scarcer resource, both the quality and quantity of
available water constitute a global issue that has local consequences that may extend from water scarcity to floods and
storms.
Management approach: We are committed to the sustainable use of water. Our approach is defined in the DSM
Responsible Care Plan, with the ambition to improve our water withdrawal efficiency in water-stressed areas. Water is not
a primary ingredient in our products, and we believe that water risks are local by nature, so we focus on local water risk
assessments and thorough follow-up on these. We are a signatory to the UN Global Compact CEO Water Mandate and
disclose our water management and strategy via CDP.
For information on this topic, see:
Water stewardship
Social
Food security
This topic is part of the transition to sustainable food systems within planetary boundaries that is needed to secure the
future availability of food. It includes developing sustainable solutions that will contribute to enabling to feed and
nurture the growing global population.
Management approach: We manage this topic by enabling healthy food systems through our Nutrition businesses, which
target health and well-being. We advocate for a change in food systems within planetary boundaries. Through our Food
System Commitments, we commit to help close the micronutrient gap of vulnerable people
For information on this topic, see:
Our approach to the Sustainable Development Goals
Strategy
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 188
Collaborative platforms & networks
Review of business
Sustainable agriculture
This topic is part of the transition to sustainable food systems within planetary boundaries that is needed to secure the
future availability of food. It covers working closely with farmers to improve the sustainable standards of food
production and protect their livelihoods.
Management approach: We manage this topic by enabling healthy food systems through our Nutrition businesses, which
target sustainable agriculture. We advocate for a change in food systems within planetary boundaries. Through our Food
System Commitments, we commit to enable on-farm livestock emissions reductions and to support the livelihoods of
smallholder farmers.
For information on this topic, see:
Our approach to the Sustainable Development Goals
Strategy
Collaborative platforms & networks
Review of business
Healthy diets & nutritious food
This topic is part of the transition to sustainable food systems within planetary boundaries that is needed to secure the
future availability of food. It addresses providing solutions that contribute to good nutrition and healthy diets for all.
This includes enabling affordable nutrition and ensuring tasty and delicious food is available and low in elements
contributing to non-communicable diseases.
Management approach: We manage this topic by enabling healthy food systems through our Nutrition businesses, which
target sustainable agriculture. We advocate for a change in food systems within planetary boundaries. Through our Food
System Commitments, we commit to supporting the immunity of people and reaching people with nutritious, delicious,
sustainably produced plant-based foods.
For information on this topic, see:
Our approach to the Sustainable Development Goals
Strategy
Collaborative platforms & networks
Review of business
Talent attraction & development
This topic refers to the continuous development of employees’ skills through training and development programs, and
the company’s ability to attract and retain talent in order to execute the business strategy.
Management approach: Talent attraction & development fuels the growth of our employees and leaders, which in turn
enables our overall growth as an organization. Through our People & Organization strategy, we aim to reset the context for
leadership to create an inspiring, empowering and inclusive environment for our people and our business, and to
empower our people with the tools and an environment that enables them to take ownership of their performance,
development and careers.
For information on this topic, see:
Delivering on our P&O strategy
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 189
Occupational health, safety & well-being
Occupational health, safety & well-being addresses the company’s ability to create and maintain a safe and healthy
workplace environment that is free of injuries, fatalities, and illness (both chronic and acute), and to take care of our
employees’ well-being at work.
Management approach: The occupational health, safety and well-being of all our employees and contractors is our highest
priority. Our approach to safety is defined in the DSM Responsible Care Plan and is spearheaded by our Life Saving Rules.
We apply an occupational health model whereby we strive to minimize exposure to potential health risks.
For information on this topic, see:
Safety
Health & well-being
Human rights
This topic encompasses decent working conditions for DSM employees, suppliers and other partners across the value
chain. It addresses subjects including freedom of association, non-discrimination, the prohibition of child labor and
forced labor, and fair compensation.
Management approach: DSM has installed a cross-functional Human Rights Steering Committee and working group to
manage our approach toward human rights, which is defined in our position paper. Our whistleblower policy (DSM Alert) is
available for employees and external stakeholders to report potential violations of human rights.
For information on this topic, see:
Human rights
DSM Code of Business Conduct
Suppliers
Human Rights position paper
Whistleblower policy – DSM Alert
Employee inclusion & diversity
This topic revolves around equal opportunities, in particular ensuring that our company culture and hiring and
promotion practices embrace the building of an inclusive and diverse workforce that reflects the makeup of local talent
pools and its customer base.
Management approach: We focus our activities on increasing the representation of women and the under-represented
nationality diversity of our executive population and management pipeline. We have five diversity pillars – Gender, Race,
Ethnicity & National Identity, LGBTQ+, Disability and Generations - which are supported by Employee Resource Groups. Our
focus areas are in recruitment, development, and inclusion. Employee inclusion & diversity is addressed through our
Inclusion & Diversity (I&D) network, led by our I&D Council. Our employees are trained on Respectful behavior to
emphasize the importance of inclusiveness and diversity and to prevent inappropriate behavior including sexual
harassment.
For information on this topic, see:
Inclusion & Diversity
Delivering on our P&O strategy
DSM Code of Business Conduct
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 190
Business & Governance
Sustainable innovation
This topic refers to the company’s technology capabilities and research & development investments to develop
innovative, sustainable solutions.
Management approach: Our innovation and research & development capabilities support us in achieving our growth
targets. Through collaborations and partnerships, we bring new thinking and new solutions into the company. Through our
venturing activities, we invest in emerging innovative companies around the world. We aim to maintain innovation sales at
a level of around 20%.
For information on this topic, see:
Innovation
Business ethics & transparency
This topic addresses the company’s approach to and public disclosure on ethical and fair business conduct, corporate
governance and compliance. This includes taxation, privacy, bioethics, fraud, bribery & corruption, and fiduciary
responsibilities.
Management approach: We take our responsibilities as a business seriously. Our approach to ethics and transparency is
led by the DSM Code of Business Conduct and our Supplier Code of Conduct. Our whistleblower policy (DSM Alert) supports
our employees and third parties in expressing their concerns about suspected misbehavior. DSM’s tax position is
consistent with the normal course of our business operations and reflects the corporate strategy as well as the geographic
spread of our activities. It is available through our position paper. We transparently report on our business through this
Report and our public statements.
For information on this topic, see:
DSM Code of Business Conduct
Corporate governance and risk management
DSM Alert policy
Taxation position paper
Cybersecurity
Preventing fraud and the unauthorized access to our networks, IT systems and data, while ensuring company and
employee data protection.
Management approach: Cybersecurity is managed by Operations & Responsible Care. Awareness on cybersecurity is
addressed through the Security e-learning covering our key security behaviors and the Cyber Fraud Awareness e-learning.
Global, as well as targeted, phishing tests are regularly carried out to ensure our people stay alert.
For information on this topic, see:
Sustainability Governance Framework
DSM Code of Business Conduct
Digital transformation
Digital transformation refers to the application of digital technologies to all aspects of business and society.
Management approach: Our Data Analytics Center of Excellence and Digital Acceleration Group will support us in the
acceleration of digital insights and solutions. Digital solutions also support and strengthen our customer relationships. We
monitor and mitigate potential risks relating to digital through Group Risk Management. Our Information Security Office
and Privacy Policy guide our approach toward the security of information assets.
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 191
For information on this topic, see:
People
Risk management
Product stewardship
Product stewardship manages and minimizes the environmental, safety and health impacts of substances in our products
in line with international regulations from raw materials selection, production process, during use, until end-of-life. It is
about knowing the substances we use and produce, being able to explain why we use them, taking the appropriate risk
control measures, and sharing this information with relevant and interested stakeholders.
Management approach: Our product stewardship statement describes our approach on this topic. We assess our products
and report on the process of substances of concern in our sales. We take a risk-based approach to product stewardship
and will use alternatives where feasible, and always where required. We also see the opportunities for safer products with
fewer or no hazardous properties in the circular economy.
For information on this topic, see:
Product stewardship
Product stewardship on the company website
Consumer behavior & activism
Addressing changes in consumer behavior and awareness by manufacturing products that consider future needs of
society and the environment.
Management approach: Consumer behavior & activism can be both a risk and an opportunity to the company. We
recognize shifts in business models, industry and end-consumer behavior, and the ability to respond to changes in our
emerging risks. We have shifted our innovation approach to be platform based, and have identified four growth themes
that align to our future strategic needs and support our growth ambitions. These themes align to major global societal,
technological and environmental trends.
For information on this topic, see:
Our focus in innovation
Innovation
Risk management
2 EU Taxonomy
The EU Taxonomy
The 2018 EU action plan on financing sustainable growth sets out an EU strategy for sustainable finance with the aim of
redirecting capital flows. In this plan, an EU classification system was established to determine which economic activities
qualify as sustainable. This sustainability classification system is generally referred to as the EU Taxonomy and it is part of
the EU's overall efforts to reach the objectives of the European Green Deal and make Europe climate-neutral by 2050.
The EU Taxonomy entered into force on 12 July 2020, establishing criteria for environmentally sustainable economic
activities related to six environmental objectives. The taxonomy regulation also amended the EU Accounting Directive
(2013/34/EU) on non-financial information by expanding the scope of content that needs to be disclosed by large
companies in the Management Report. It requires companies to disclose the proportion of their activities that qualify as
environmentally sustainable.
The disclosure requirements are set out in a Delegated Act under Article 8(4) of the Taxonomy Regulation (published 6 July
2021). These disclosure requirements will be fully in force for reporting year 2022, and limited disclosures are requested for
2021. For the reporting period 2021, companies shall provide information on the proportion of taxonomy-eligible and
taxonomy non-eligible economic activities in their total activities using the KPIs turnover, capital expenditure, and
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 192
operational expenditure, as well as qualitative information. Therefore, we have assessed our economic activities for
eligibility in relation to the first two environmental objectives per the EU Taxonomy. Furthermore, we assessed if we have
information available to provide disclosures on the proportions using the financial KPIs.
The first Delegated Act with climate objectives aims to identify those industries that can make the largest contribution
toward a carbon-neutral society. These include energy, selected manufacturing activities, transport and buildings. As a
Health, Nutrition & Bioscience company, we concluded that the majority of our core economic activities are not covered by
the Climate Delegated Act, and consequently, we are not in the primary scope of industries that are relevant to the two
climate-related objectives.
The outcome of the below assessment indicates the parts of our current activities that are in scope for the first two
environmental objectives that relate to climate mitigation and climate adaptation.
Our eligibility for the first two environmental objectives
Based on the standard table as provided in the EU taxonomy, DSM reports the following for 2021:
(in € million)
NACE-codes
Taxonomy Activity
Turnover¹
CAPEX
OPEX
Category
A1 Eligible
and Aligned
n.a. in 2021
n.a. in 2021
n.a. in 2021
n.a. in 2021
n.a. in 2021
A2 Eligible
20.16 - Production
of Primary Plastics
3.17 Production of
Primary Plastics
1,600 (17%)
-²
-²
Transition
Total
Eligible Activities
1,600 (17%)
-²
-²
BNon-Eligible
Non-eligible
activities
7,604 (83%)
-
-
A + B Total
Total economic
activities
9,204 (100%)
1,036³
-⁴
1 Based on continuing operations as reported on the face of the income statement in the financial statements
2 The initial legislative texts only included criteria for ‘aligned CAPEX and OPEX’. On 2 February 2022, the Commission published more
guidance on eligible CAPEX and OPEX. We will assess the impact in 2022 and re-evaluate our future disclosures.
3 Total CAPEX is determined based on the 2021 additions to property, plant and equipment, intangible assets, and additions to right-of-
use assets. See Note 8 and Note 9 in the Consolidated financial statements.
4 We cannot provide total OPEX as defined by the EU taxonomy as this information cannot be made available at the required
aggregation level at this stage.
We welcome the implementation of the EU Taxonomy and we have assessed its impact on our company in line with its
overall objectives, albeit accepting that parts of the Taxonomy Regulation are subject to interpretation, which may lead to
variety in its application. Considering the level of complexity as well as the evolving character of the framework, we expect
that Taxonomy reporting will develop over time. We will periodically revalidate our methodology and our reported KPIs
based on the evolution of the regulations and forthcoming guidance from, amongst others, the European Commission and
the European Securities and Markets Authority (ESMA).
More information on our strategy and sustainability commitments can be found in the sections on Delivering a long-term,
purpose-led, positive impact, and the DSM Responsible Care Plan. For more information on our climate risk assessment,
our ambitions and actions, including our path to reduce emissions by 2030 please refer to Climate adaptation and
Climate-related risks.
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
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 193
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.
Governance
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.
Strategy
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
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 194
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 CO
2
eq 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.
4 SASB and WEF IBC mapping
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’s Chemicals Standard and the WEF IBC
Stakeholder Capitalism metrics and disclosures below. SASB disclosures that are considered ‘not material’ have been
omitted from the table.
Topic
Reference
Location and WEF IBC notes
Governing purpose
WEF IBC: Setting Purpose
Purpose
Quality of governing body
WEF IBC: Governance Body Composition
Governance framework
Stakeholder engagement
WEF IBC: Material issues impacting
stakeholders
Materiality
Management approach for material
topics
Ethical behavior
WEF IBC: Anti-Corruption
Code of Business Conduct
WEF IBC: Protected ethics advice and reporting
mechanisms
Code of Business Conduct
Risk and opportunity
oversight
WEF IBC: Integrating risk and opportunity into
business process
Risk management
Nutrition
Materials
Innovation
Climate change
WEF IBC: Greenhouse Gas (GHG) emissions
SASB: RT-CH-110a.1
SASB: RT-CH-110a.2
Scope 1 + 2 GHG emissions
Scope 3 GHG emissions
WEF IBC: TCFD Implementation
Taskforce for Climate-related Financial
Disclosures (TCFD)
Nature loss
WEF IBC: Land use and ecological sensitivity
Nature & biodiversity – only % of sites
in or adjacent to protected sites is
reported. IUCN Red List species is
currently unknown.
Freshwater availability
WEF IBC: Water consumption and withdrawal
in water-stressed areas
SASB: RT-CH-140a.1
SASB: RT-CH-140a.3
Water stewardship – water stress is
only measured for ‘non-OTC’ water
withdrawal.
Air quality
SASB: RT-CH-120a.1
Other emissions to air
Energy management
SASB: RT-CH-130a.1
Energy transition
Waste management
SASB: RT-CH-150a.1
Waste
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 195
Topic
Reference
Location and WEF IBC notes
Safety & environmental
stewardship of chemicals
SASB: RT-CH-410b.1
SASB: RT-CH-410b.2
Product stewardship
Product stewardship on the company
website
Genetically modified
organisms
SASB: RT-CH-410c.1
Position paper on Industrial
biotechnology on the company website
Dignity and equality
WEF IBC: Diversity and inclusion (%)
Inclusion & diversity
WEF IBC: Pay equality (%)
Human rights
Position paper on fair remuneration on
the company website
Gender pay gap is reported at company
level. Additional analysis and
validation is ongoing.
WEF IBC: Wage level (%)
Human rights
Position paper on fair remuneration on
the company website
DSM focuses on living wage instead of
minimum wage.
WEF IBC: Risk for incidents of child, forced, or
compulsory labor
DSM figures: five-year summary –
People
We have found no instances of child
labor within DSM, and child and forced
labor are part of the Code of Business
Conduct. Risk assessment is in
progress for the Supply Chain. It is
included in the Supplier Code of
Conduct.
Health & well-being
WEF IBC: Health and safety (%)
SASB: RT-CH-320a.1
SASB: RT-CH-320a.2
Safety
Health & well-being
We do not report on absenteeism.
Skills for the future
WEF IBC: Training provided (#, $)
Inclusion & diversity
We report on employee level only, as
we do not consider it material to our
management approach on training to
break this number down.
Safety incidents and
response
SASB: RT-CH-540a.1
SASB: RT-CH-540a.2
Safety, health & well-being
Employment and wealth
generation
WEF IBC: Absolute number and rate of
employment
DSM figures: five-year summary –
People
We do not provide a breakdown using
multiple angles as we do not consider
it material to do so.
WEF IBC: Economic Contribution
Taxation position paper on the
company website
Notes to the Sustainability statements
Royal DSM Integrated Annual Report 2021 196
Topic
Reference
Location and WEF IBC notes
We do not report on the financial
contributions received from
governments.
WEF IBC: Financial Investment Contribution
Strategy at a glance
Key business figures at a glance
Information on the DSM share
Innovation in better
products and services
WEF IBC: Total R&D Expenses ($)
Innovation
Community and social
vitality
WEF IBC: Total tax paid
Taxation position paper on the
company website
Royal DSM Integrated Annual Report 2021 197
Consolidated financial statements
Summary of significant accounting policies
Basis of preparation
DSM’s consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and the provisions of section 362-8 of Book 2 of the Dutch Civil Code.
The accounting policies applied by DSM comply with IFRS and the pronouncements of the International Financial
Reporting Interpretation Committee (IFRIC) effective at 31 December 2021.
The impact of the IBOR reform (phase 1, effective as of 2020, and phase 2, effective as of 2021) on the operations and
results of DSM is not material. Furthermore, other new or amended standards that are effective from 1 January 2021 do not
have a material effect on DSM’s consolidated financial statements. In addition, new or amended standards effective after 1
January 2022 were neither adopted early, nor expected to have significant impact.
Consolidation including joint arrangements
The consolidated financial statements comprise the financial statements of Royal DSM and its subsidiaries (together ‘DSM’
or ‘group’). As a parent company, DSM is exposed, or has a right, to the variable returns from its involvement with its
subsidiaries and has the ability to affect the returns through its power over the subsidiary. The financial data of
subsidiaries are fully consolidated. Non-controlling interests in the group's equity and profit and loss are stated
separately. Subsidiaries are consolidated from the acquisition date until the date on which DSM ceases to have control.
From the acquisition date onwards, all intra-group balances and transactions and unrealized profits or losses from intra-
group transactions are eliminated, with one exception: unrealized losses are not eliminated if there is evidence of an
impairment of the asset transferred. In such cases, an impairment of the asset is recognized.
A joint arrangement is an entity in which DSM holds an interest and which is jointly controlled by DSM and one or more
other venturers under a contractual arrangement. A joint arrangement can either be a joint venture where DSM and the
other partner(s) have rights to the net assets of the arrangement, or a joint operation where DSM and the partner(s) have
rights to the assets, and obligations for the liabilities of the arrangement. For joint ventures, the investment in the net
assets is recognized and accounted for in accordance with the equity method. For a joint operation, assets, liabilities,
revenues and expenses are recognized in the financial statements of DSM in accordance with the contractual entitlement
or obligations of DSM.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, including liabilities incurred, measured at acquisition date fair value, and the
amount of any non-controlling interest in the acquiree. Acquisition costs incurred are expensed.
As of the acquisition date, identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree
are recognized separately from goodwill. Identifiable assets acquired and the liabilities assumed are measured at
acquisition date fair value. For each business combination, DSM elects whether it measures the non-controlling interest in
the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Any contingent
consideration payable is measured at fair value at the acquisition date.
For business combinations with the acquisition date in the prior reporting period, comparative information is revised in
case adjustments are made during the measurement period to the provisional amounts, determined as part of the
purchase price allocation (PPA), based on information available at the acquisition date.
Segmentation
Segment information is presented in respect of the group’s reportable operating segments, about which separate financial
information is available that is regularly evaluated by the chief operating decision maker. DSM has determined that
Nutrition, Materials and the Innovation Center represent reportable segments in addition to Corporate Activities. The
Consolidated financial statements – Summary of significant accounting policies
Royal DSM Integrated Annual Report 2021 198
Managing Board decides how to allocate resources and assesses the performance of the clusters. Cluster performance is
reported and reviewed down to the level of Adjusted EBITDA. The clusters are organized in accordance with the type of
products produced and the nature of the markets served. The same accounting policies that are applied for the
consolidated financial statements of DSM are also applied for the operating segments. Prices for transactions between
segments are determined on an arm’s length basis. Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can reasonably and consistently be allocated. Selected information on a
country and regional basis is provided in addition to the information about operating segments.
Foreign currency translation
The presentation currency of the group is the euro.
Each entity of the group records transactions and balance sheet items in its functional currency. Transactions
denominated in a currency other than the functional currency are recorded at the spot exchange rates prevailing at the
date of the transactions. Monetary assets and liabilities denominated in a currency other than the functional currency of
the entity are translated at the closing rates. Exchange differences resulting from the settlement of these transactions and
from the translation of monetary items are recognized in the income statement.
Non-monetary assets that are measured on the basis of historical costs denominated in a currency other than the
functional currency continue to be translated against the rate at initial recognition and will not result in exchange
differences.
On consolidation, the balance sheets of subsidiaries that do not have the euro as their functional currency are translated
into euros at the closing rate. The income statements of these entities are translated into euros at the average rates for
the relevant period. Goodwill paid on acquisition is recorded in the functional currency of the acquired entity. Exchange
differences arising from the translation of the net investment in entities with a functional currency other than the euro are
recorded in Other comprehensive income. The same applies to exchange differences arising from borrowings and other
financial instruments insofar as those instruments hedge the currency risk related to the net investment. On disposal of
an entity with a functional currency other than the euro, the cumulative exchange differences relating to the translation of
the net investment are recognized in profit or loss.
Distinction between current and non-current
An asset (liability) is classified as current when it is expected to be realized (settled) within 12 months after the balance
sheet date.
Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when DSM has a
legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the
liability simultaneously.
Intangible assets
Goodwill represents the excess of the cost of an acquisition over DSM’s share in the net fair value of the identifiable assets
and liabilities of an acquired subsidiary, joint venture or associate. Goodwill paid on acquisition of subsidiaries is included
in intangible assets. Goodwill paid on acquisition of joint ventures or associates is included in the carrying amount of
these entities. Goodwill recognized as an intangible asset is not amortized but tested for impairment annually, and when
there are indications that the carrying amount may exceed the recoverable amount. A gain or loss on the disposal of an
entity includes the carrying amount of goodwill relating to the entity sold.
Intangible assets acquired in a business combination are recognized at fair value on the date of acquisition and
subsequently amortized over their expected useful lives, which vary from 4 to 20 years.
Separately acquired licenses, patents, drawing rights and application software are carried at historical cost less straight-
line amortization and less any impairment losses. The expected useful lives vary from 4 to 15 years. Costs of software
maintenance are expensed when incurred. Capital expenditure that is directly related to the development of application
software is recognized as an intangible asset and amortized over its estimated useful life (5 to 8 years).
Consolidated financial statements – Summary of significant accounting policies
Royal DSM Integrated Annual Report 2021 199
Research costs are expensed when incurred. Development expenditure is capitalized if the recognition criteria are met and
if it is demonstrated that it is technically feasible to complete the asset; that the entity intends to complete the asset; that
the entity is able to sell the asset; that the asset is capable of generating future economic benefits; that adequate
resources are available to complete the asset; and that the expenditure attributable to the asset can be reliably measured.
Development expenditure is amortized over the asset’s useful life. Development projects under construction are included
under ‘Development projects’.
Property, plant and equipment
Property, plant and equipment are measured at cost less depreciation calculated on a straight-line basis and less any
impairment losses. Interest during construction is capitalized when it meets the criteria of a qualifying asset. Expenditures
relating to major scheduled turnarounds are capitalized and depreciated over the period up to the next turnaround.
Property, plant and equipment are systematically depreciated over their estimated useful lives. The estimated remaining
lives of assets are reviewed every year, taking account of commercial and technological obsolescence as well as normal
wear and tear. The initially assumed expected useful lives are in principle as follows: for buildings 10–50 years; for plant
and machinery 5–15 years; for other equipment 4–10 years. Land is not depreciated.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use or the sale of the asset. Any gain or loss arising on derecognition of the asset is
recorded in profit or loss.
Leases
DSM recognizes a lease liability and a corresponding right-of-use asset at the commencement date of a lease. The lease
liability is initially measured at the present value of the remaining lease payments that are not paid at the commencement
date. In general, DSM splits the contractual consideration into a lease and a non-lease component based on their relative
stand-alone prices. For vehicle leases, however, DSM applies the practical expedient not to make this split but rather
accounts for the fixed consideration as a single lease component. If available, DSM applies the implicit interest rate in the
contract to discount the remaining lease payments; only else, DSM uses the applicable incremental borrowing rate as the
discount rate. In determining the incremental borrowing rate, DSM applies the practical expedient to use a single discount
rate to portfolios of leases with reasonably similar characteristics. Over time, the lease liability is increased by the interest
expense related to the unwinding of the lease liability and decreased by the lease payments made. The lease liability is
remeasured when DSM reassesses or modifies the contractual terms and conditions, including indexation.
The corresponding right-of-use assets are measured at cost less any depreciation on a straight-line basis over the
expected lease term, less any impairment losses, and adjusted for remeasurements of the lease liability. In line with the
initially assumed expected useful life of the corresponding asset class within Property, plant and equipment, the minimum
expected lease term for building leases is in principle 10 years. However, the contractual terms or specific circumstances
could require applying the shorter non-cancellable period in determining the expected lease term. For vehicle leases, the
expected lease term is set equal to the contractual term (4–5 years).
Payments related to short-term leases (leases with a term shorter than 12 months) are recognized on a straight-line basis
in profit or loss.
Impairment of non-financial assets
When there are indications that the carrying amount of a non-financial asset (an intangible asset or an item of property,
plant and equipment) may exceed the estimated recoverable amount (the higher of its value in use and fair value less
costs to sell), the possible existence of an impairment loss is investigated. If an asset does not generate largely
independent cash flows, the recoverable amount is determined for the cash generating unit (CGU) to which the asset
belongs. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market interest rates and the risks specific to the asset.
When the recoverable amount of a non-financial asset is less than its carrying amount, the carrying amount is impaired to
its recoverable amount and an impairment charge is recognized in profit or loss. An impairment loss is reversed when
Consolidated financial statements – Summary of significant accounting policies
Royal DSM Integrated Annual Report 2021 200
there has been a change in estimate that is relevant for the determination of the asset’s recoverable amount since the last
impairment loss was recognized. Impairment losses for goodwill are never reversed.
Associates and joint ventures
An associate is an entity over which DSM has significant influence but no control or joint control, usually evidenced by a
shareholding that entitles DSM to between 20% and 50% of the voting rights. A joint venture is an entity over which DSM
has joint control and is entitled to its share of the net assets and liabilities. Investments in associates and joint ventures
are accounted for by the equity method, which involves recognition in the income statement of DSM’s share of the
associate’s or joint venture’s profit or loss for the year determined in accordance with the accounting policies of DSM. Any
other results at DSM in relation to associated companies are recognized under Other results related to associates and
joint ventures. DSM’s interest in an associate or joint venture is carried in the balance sheet at its share in the net assets
of the associate or joint venture together with goodwill paid on acquisition, less any impairment loss.
When DSM’s share in the loss of an associate or joint venture exceeds the carrying amount of that entity, the carrying
amount is reduced to zero. No further losses are recognized, unless DSM has responsibility for obligations relating to the
entity.
Financial instruments
Financial instruments are contractual rights and obligations resulting in an inflow or outflow of financial assets or the
issue of equity instruments. They are initially measured at fair value plus any directly attributable transaction costs.
Transaction costs for financial instruments assigned to the category ‘At fair value through profit and loss’ are recognized
directly in the income statement. Subsequent measurement is based on the classification of financial instruments defined
in IFRS 9.
Non-derivative financial instruments
DSM initially recognizes financial assets and financial liabilities on the date when DSM becomes a party to the contractual
provisions of the instrument. DSM derecognizes a financial asset when the contractual rights to the cash flows from the
asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction in which substantially all
the risks and rewards of ownership of the financial asset are transferred. DSM derecognizes a financial liability when its
contractual obligations are discharged or canceled, or expire.
Other financial assets
Other financial assets comprise loans to associates and joint ventures, other participating interests and other receivables.
DSM’s business model objective for loans is ‘held-to-collect contractual cash flows only’. Held to collect loans, other
receivables and other deferred items, for which the contractual cash flows consist solely of principal and interest, are
measured at amortized cost, using the effective interest method, which generally corresponds to the nominal value, less
an adjustment for expected credit loss. Upon disposal of these assets the gain or loss is recognized in profit or loss.
Other receivables, for which the contractual cash flows are not solely principal and interest, are recognized at fair value,
with changes in fair value recognized in profit or loss.
Other participating interests comprise equity interests in entities in which DSM has no significant influence; these are
accounted for as assets at fair value through profit or loss, or DSM uses the irrevocable election to present the fair value
changes in other comprehensive income (Fair value reserve) instead of profit or loss. These fair value changes in OCI will
not be recycled through profit and loss upon disposal of the interest. All dividends received will be presented in profit or
loss.
Expected credit loss
All financial assets measured at amortized cost include an allowance for expected credit loss as of the date of initial
recognition of the asset. Expected credit losses are measured as the present value of the difference between the cash
flows due to DSM, and the cash flows that DSM expects to receive. Expected credit losses, are reassessed over time and
recognized in the income statement. Loss allowances for trade receivables are always measured at lifetime expected credit
loss.
Consolidated financial statements – Summary of significant accounting policies
Royal DSM Integrated Annual Report 2021 201
Inventories
Inventories are stated at the lower of cost and net realizable value. The first in, first out (FIFO) method of valuation is used
unless the nature of the inventories requires the use of a different cost formula, in which case the weighted average cost
method is used. The cost of intermediates and finished goods includes directly attributable costs and related production
overhead expenses. Net realizable value is determined as the estimated selling price in the ordinary course of business,
less the estimated costs of completion and the estimated costs necessary to make the sale. Products whose
manufacturing cost cannot be calculated because of joint cost components are stated at net realizable value after
deduction of a margin for selling and distribution efforts.
Current receivables
Current receivables, which include trade receivables, income tax receivables and other current receivables, for which the
contractual cash flows are solely principal and interest are initially recognized at fair value plus any directly attributable
transaction costs.
Subsequent to initial recognition, they are measured at amortized cost using the effective interest method, which generally
corresponds to nominal value, less an adjustment for expected credit loss.
Current investments
Current investments are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at amortized cost using the effective interest method. Deposits with banks with a
maturity between 3 and 12 months are classified as current investments.
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and in hand and deposits held at call with banks with a maturity of less
than three months at inception. Bank overdrafts are included in current liabilities. Included in cash and cash equivalents
are investments in money market funds that do not meet the SPPI (Solely Payments of Principal & Interest) criterion but
are held to meet short-term cash demand. Cash and cash equivalents are measured at fair value through profit and loss,
or amortized cost.
Non-current assets and disposal groups held for sale
Non-current assets and disposal groups (assets and liabilities relating to an activity that is to be sold) are classified as
‘held for sale’ if their carrying amount is to be recovered principally through a sales transaction rather than through
continuing use. The reclassification takes place when the assets are available for immediate sale and the sale is highly
probable. These conditions are usually met as from the date on which a letter of intent or agreement to sell is ready for
signing. Non-current assets and disposal groups held for sale are measured at the lower of carrying amount and fair value
less costs to sell. Non-current assets held for sale are not depreciated or amortized. For transparency, non-current assets
and disposal groups that will contribute to joint ventures are reported separately from other assets and liabilities held for
sale.
Discontinued operations
Discontinued operations comprise those activities that were disposed of during the period or which were classified as held
for sale at the end of the period and represent a separate major line of business or geographical area that can be clearly
distinguished for operational and financial reporting purposes.
Royal DSM Shareholders’ equity
DSM’s ordinary shares and Cumulative Preference Shares are classified as Royal DSM Shareholders’ equity. This is the case
for the latter, as there is no mandatory redemption, and distributions to the shareholders are at the discretion of DSM. The
price paid for repurchased DSM shares (treasury shares) is deducted from Royal DSM Shareholders’ equity until the shares
are canceled or reissued. Treasury shares are presented in the treasury share reserve. When treasury shares are sold or
reissued, the amount received is recognized as an increase in equity. Dividend to be distributed to holders of Cumulative
Preference Shares is recognized as a liability when the Supervisory Board approves the proposal for profit distribution.
Dividend to be distributed to holders of ordinary shares is recognized as a liability when the Annual General Meeting of
Shareholders approves the profit appropriation.
Consolidated financial statements – Summary of significant accounting policies
Royal DSM Integrated Annual Report 2021 202
Provisions
Provisions are recognized when all of the following conditions are met: (1) there is a present legal or constructive
obligation as a result of past events, (2) it is probable that a transfer of economic benefits will settle the obligation, and (3)
a reliable estimate can be made of the amount of the obligation.
The probable amount required to settle long-term obligations is discounted if the effect of discounting is material. Where
discounting is used, the increase in the provision due to the passage of time is recognized as financial expense.
Borrowings
Borrowings are not held for trading and are initially recognized at fair value of the proceeds received, net of transaction
costs. Subsequently, borrowings are stated at amortized cost using the effective interest method. Measurement at
amortized cost includes any discount or premium on the borrowing. Interest expenses are recorded as financial expense
in profit or loss.
If the interest rate risk relating to a long-term borrowing is hedged through a fair value hedge, and the hedge is effective,
the carrying amount of the long-term loan is adjusted for changes in fair value of the interest component of the hedged
loan.
Other liabilities
Other liabilities are measured at amortized cost, which generally corresponds to the nominal value, or at fair value
through profit and loss. The latter is mainly applied to acquisition-related liabilities.
Revenue for contracts with customers
Revenue from contracts with customers is recognized by identifying the contract and its performance obligations as well
as determination and allocation of the transaction price to these performance obligations. At DSM, revenue related to the
sale of goods is recognized in the income statement when the performance obligation is satisfied. This is at the point in
time when transfer of control of the goods passes to the buyer. Revenue recognized is measured at the fair value of the
contractual transaction price allocated to the performance obligation that is satisfied.
Income coming from the rendering of services is recognized when the service, i.e., the performance obligation, has been
performed. The revenue recognized is measured at the fair value of the contractual transaction price allocated to the
performance obligation that is satisfied.
Net sales represent the invoice value less estimated rebates, cash discounts, and indirect taxes.
Income related to the sale or licensing of technologies or technological expertise is recognized in the income statement
either at a point in time or over time, depending on when the contractually identified performance obligations are
satisfied. Performance obligations related to license income include the transfer of rights and obligations associated with
those technologies. License income is reported in Net sales when the income is part of the ordinary and recurring
activities of the business and, if this is not the case, it is reported in Other operating income.
Interest income is recognized on a time-proportionate basis using the effective interest method.
Dividend income is recognized when the right to receive payment is established.
Government grants
Government grants are recognized at their fair value if there is reasonable assurance that the grant will be received and all
related conditions will be complied with. Cost grants are recognized as income over the periods necessary to match the
grant on a systematic basis to the cost that it is intended to compensate. If the grant is an investment grant, its fair value
is initially recognized as deferred income in Other non-current liabilities and then released to profit or loss over the
expected useful life of the relevant asset.
Share-based compensation
Performance shares and restricted share units are granted free of charge to eligible staff and generally vest after three
years on the achievement of previously determined target vesting conditions. The cost of performance share units and
Consolidated financial statements – Summary of significant accounting policies
Royal DSM Integrated Annual Report 2021 203
restricted share units is measured by reference to the fair value of the DSM shares on the date on which the performance
share units and restricted share units were granted and is recognized in profit or loss (Employee benefit costs) during the
vesting period, together with a corresponding increase in equity. Vesting conditions other than market conditions are
taken into account by adjusting the number of equity instruments, so that the amount recognized during the vesting
period in employee benefit costs is based on the number of equity instruments that eventually vest.
The costs of option plans are measured by reference to the fair value of the options on the date on which the options are
granted. The fair value is determined using the Black-Scholes model, taking into account market conditions linked to the
price of the DSM share. The costs of these options are recognized in profit or loss (Employee benefit costs) during the
vesting period, together with a corresponding increase in Equity in the case of equity-settled options or Other non-current
liabilities in the case of cash-settled options. No expense is recognized for options that do not ultimately vest, except for
options where vesting is conditional upon a market condition.
Emission rights
DSM is subject to legislation encouraging reductions in greenhouse gas emissions and has been awarded emission rights
(principally CO
2
emission rights) in a number of jurisdictions. Emission rights are reserved for meeting delivery obligations
and are recognized at cost. Revenue is recognized when surplus emission rights are sold to third parties. When actual
emissions exceed the emission rights available to DSM, a liability is recognized for the expected additional costs.
Alternative performance measures (APMs)
DSM uses Alternative performance measures to present and discuss DSM’s financial results. To arrive at these APMs,
adjustments are made for material items of income and expense arising from circumstances such as acquisitions and
divestments, restructuring, impairments and other events.
Other APM adjusting events include site closure costs, environmental cleaning, litigation settlements or other non-
operational (contractual) arrangements. Other than items related to acquisition and integration costs incurred in the first
year from the acquisition date (including non-recurring inventory value adjustments) as well as adjustments due to
previously recognized APM adjusting events, the threshold is €10 million.
Income tax
Income tax expense is recognized in the income statement except to the extent that it relates to an item recognized
directly in Other comprehensive income or Shareholders’ equity.
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted at the
balance sheet date, and any adjustment to tax payable with respect to previous years. The current tax position also
reflects any uncertainty related to income taxes. Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the
carrying amount of assets and liabilities and their tax base. Deferred tax assets and liabilities are measured at the tax
rates that have been enacted or substantially enacted at the balance sheet date, and reflect any uncertainty related to
income taxes and are expected to apply when the related deferred tax assets are realized or the deferred tax liabilities are
settled. Deferred tax assets, including assets arising from losses carried forward and tax credits, are reassessed over time
and recognized to the extent that it is probable that future taxable profits will be available against which the deductible
temporary differences and unused tax losses can be utilized. Deferred tax assets and liabilities are stated at nominal
value.
Deferred taxes are not provided for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred tax assets and deferred
tax liabilities are offset and presented net when there is a legally enforceable right to offset, and the assets and liabilities
relate to income taxes levied by the same taxation authority.
Consolidated financial statements – Summary of significant accounting policies
Royal DSM Integrated Annual Report 2021 204
Derivatives
Derivatives are measured at fair value at initial recognition and subsequent changes are recognized in profit or loss,
unless hedge accounting is applied.
Hedging
DSM uses derivatives such as foreign currency forward contracts and interest rate swaps to hedge risks associated with
foreign currency and interest rate fluctuations. In addition, DSM may use commodity swap or forward contracts to hedge
risks associated with exposure to fluctuations in commodity prices.
Derivatives used as hedge instrument are recognized in the balance sheet at fair value and changes in fair value are
recognized in profit or loss unless cash flow hedge accounting or net investment hedge accounting is applied.
Cash flow hedge
Changes in the fair value of derivatives designated and qualifying as cash flow hedges are recognized in Other
comprehensive income (Hedging reserve) to the extent that the hedge is effective. Upon recognition of the related asset or
liability, the cumulative gain or loss is transferred from the hedging reserve and included in the carrying amount of the
hedged item if it is a non-financial asset or liability. Any ineffective portion of the changes of the fair value of the
derivative is recognized immediately in profit and loss. If the forecast transaction is no longer expected to occur, the
hedge no longer meets the criteria for hedge accounting, the hedging instrument expires or is sold, terminated or
exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is
no longer expected to occur, then the amount accumulated in equity is reclassified to profit or loss. If the hedged item is a
financial asset or liability, the gain or loss is transferred to profit or loss.
Net investment hedge
Changes in the fair value of derivatives designated and qualifying as net investment hedges are recognized in Other
comprehensive income (Translation reserve) to the extent that the hedge is effective and the change in fair value is
caused by changes in currency exchange rates. Accumulated gains and losses are released from Other comprehensive
income and are included in profit or loss when the net investment is disposed of.
Fair value hedge
Changes in the fair value of derivatives designated and qualifying as fair value hedges are immediately recognized in the
income statement, together with any changes in the fair value of the hedged assets or liabilities attributable to the hedged
risk.
Pensions and other post-employment benefits
For DSM’s defined contribution plans, the obligations are limited to the payment of contributions, which are recognized as
Employee benefit costs.
For defined benefit plans, the aggregate of the value of the defined benefit obligation and the fair value of plan assets for
each plan is recognized as a net defined benefit liability or asset. Defined benefit obligations are determined using the
projected unit credit method. Plan assets are recognized at fair value. If the fair value of plan assets exceeds the present
value of the defined benefit obligation, a net asset is only recognized to the extent that the asset is available for refunds
to the employer or for reductions in future contributions to the plan. Defined benefit pension costs consist of three
elements: service costs, net interest, and remeasurements. Service costs are part of Employee benefit costs and consist of
current service costs. Past service costs and results of plan settlements are included in Other operating income or
expense. Net interest is part of Financial income and expense and is determined on the basis of the value of the net
defined benefit asset or liability at the start of the year, and on the interest on high-quality corporate bonds.
Remeasurements are actuarial gains and losses, the return (or interest cost) on net plan assets (or liabilities) excluding
amounts included in net interest and changes in the effect of the asset ceiling. These remeasurements are recognized in
Other comprehensive income as they occur and are not recycled through profit or loss at a later stage.
Royal DSM Integrated Annual Report 2021 205
Consolidated financial statements
Consolidated income statement
x € million
Notes
2021
2020
Continuing operations
Net sales
5
9,204
8,106
Cost of sales
5
(6,040)
(5,330)
Gross margin
3,164
2,776
Marketing and sales
5
(1,270)
(1,149)
Research and development
5
(323)
(398)
General and administrative
5
(517)
(469)
Other operating income
5
95
102
Other operating expense
5
(128)
(200)
Operating profit
1,021
662
Financial income
6
24
44
Financial expense
6
(130)
(111)
Profit before income tax expense
915
595
Income tax expense
7
(168)
(106)
Share of the profit of associates and joint ventures
10
16
(64)
Other results related to associates and joint ventures
10
326
32
Net profit from continuing operations
1,089
457
Net profit from discontinued operations
3
591
51
Net profit for the year
1,680
508
Of which:
- Attributable to non-controlling interests
17
4
2
- Dividend on Cumulative Preference Shares
16
6
7
- Available to holders of ordinary shares
16
1,670
499
Earnings per share (EPS) total (in €):
2
- Net basic EPS
9.68
2.91
- Net diluted EPS
9.63
2.89
Earnings per share (EPS) continuing operations (in €):
2
- Net basic EPS
6.26
2.64
- Net diluted EPS
6.23
2.62
The accompanying notes are an integral part of these consolidated financial statements.
See Note 2 Alternative performance measures for the reconciliation to Adjusted EBITDA of €1,814 million (2020: €1,534
million) and other adjusted IFRS performance measures.
Consolidated financial statements
Royal DSM Integrated Annual Report 2021 206
Consolidated statement of comprehensive income
x € million
Notes
2021
2020
Net profit for the year
1,680
508
Other comprehensive income
Remeasurements of defined benefit pension plans
24
153
(24)
Fair value changes in Other participating interests
11
46
106
Exchange differences on translation of foreign operations relating to the non-
controlling interests
17
8
(4)
Tax related items that will not be reclassified to profit or loss
(20)
(4)
Items that will not be reclassified to profit or loss
187
74
.
Exchange differences on translation of foreign operations
16
- Change for the year
478
(451)
- Reclassification adjustment to the income statement
(13)
-
Hedging reserve
16
- Change for the year
(24)
40
- Reclassification adjustment to the income statement
7
20
Equity accounted investees - share of Other comprehensive income
1
(2)
Tax related items that may subsequently be reclassified to profit or loss
7
(4)
Items that may subsequently be reclassified to profit or loss
456
(397)
.
Total comprehensive income
2,323
185
Of which:
- Attributable to non-controlling interests
17
12
(2)
- Available to equity holders of Koninklijke DSM N.V.
16
2,311
187
Consolidated financial statements
Royal DSM Integrated Annual Report 2021 207
Consolidated balance sheet at 31 December
x € million
Notes
2021
2020
Assets
Intangible assets
8
5,310
4,440
Property, plant and equipment
9
3,957
3,775
Deferred tax assets
7
203
240
Prepaid pension costs
24
75
2
Share in associates and joint ventures
10
64
93
Derivatives
23
48
61
Other financial assets
11
227
315
Non-current assets
9,884
8,926
Inventories
12
2,297
1,879
Trade receivables
13
1,603
1,391
Income tax receivables
13
61
32
Other current receivables
13
32
60
Derivatives
23
30
48
Current investments
14
489
43
Cash and cash equivalents
15
1,561
871
Assets held for sale
3
56
1,096
Current assets
6,129
5,420
Total
16,013
14,346
.
Equity and liabilities
Shareholders' equity
9,318
7,399
Non-controlling interests
17
79
88
Equity
16
9,397
7,487
Deferred tax liabilities
7
485
431
Employee benefit liabilities
24
323
414
Provisions
18
96
123
Borrowings
19
2,989
3,484
Derivatives
23
9
1
Other non-current liabilities
20
283
163
Non-current liabilities
4,185
4,616
Employee benefit liabilities
24
21
42
Provisions
18
68
61
Borrowings
19
104
102
Derivatives
23
40
13
Trade payables
21
1,571
1,218
Income tax payables
21
77
45
Other current liabilities
21
540
508
Liabilities held for sale
3
10
254
Current liabilities
2,431
2,243
Total
16,013
14,346
Consolidated financial statements
Royal DSM Integrated Annual Report 2021 208
Consolidated statement of changes in equity (Note 16)
x € million
Share
capital
Share
premium
Treasury
shares
Other
reserves
Retained
earnings
Total
Non-
controlling
interests
Total
Equity
Balance at 1 January 2020
338
489
(905)
96
7,713
7,731
104
7,835
Dividend
-
-
-
-
(423)
(423)
(6)
(429)
Options / performance shares granted
-
-
-
29
-
29
-
29
Options / performance shares vested /
canceled
-
-
-
(39)
39
-
-
-
Reissued shares
-
-
238
-
(32)
206
-
206
Acquisition of NCI without a change in
control
-
-
-
-
(22)
(22)
(10)
(32)
Acquisition (divestment) of subsidiary with
NCI
-
-
-
-
-
-
(1)
(1)
Repurchase of shares
-
-
(309)
-
-
(309)
-
(309)
Transfer
-
-
-
(30)
30
-
-
-
Other
-
-
-
(3)
3
-
3
3
Total comprehensive income
-
-
-
(296)
483
187
(2)
185
Balance at 31 December 2020
338
489
(976)
(243)
7,791
7,399
88
7,487
.
Dividend
-
-
-
-
(421)
(421)
(3)
(424)
Options / performance shares granted
-
-
-
22
-
22
-
22
Options / performance shares vested /
canceled
-
-
-
(24)
24
-
-
-
Cancellation of shares
(10)
(18)
746
-
(718)
-
-
-
Reissued shares
-
-
218
-
(25)
193
-
193
Acquisition of NCI without a change in
control
-
-
-
-
(20)
(20)
7
(13)
Acquisition (divestment) of subsidiary with
NCI
-
-
-
-
-
-
(24)
(24)
Repurchase of shares
-
-
(165)
-
-
(165)
-
(165)
Transfer
-
-
-
(101)
101
-
-
-
Other
-
-
-
1
(2)
(1)
(1)
(2)
Total comprehensive income
-
-
-
501
1,810
2,311
12
2,323
Balance at 31 December 2021
328
471
(177)
156
8,540
9,318
79
9,397
Consolidated financial statements
Royal DSM Integrated Annual Report 2021 209
Consolidated cash flow statement (Note 26)
x € million
2021
2020
Operating activities
Net profit for the year
1,680
508
Share of the profit of associates and joint ventures (including discontinued operations)¹
(342)
32
Income tax (including discontinued operations)¹
245
129
Profit before income tax expense (including discontinued operations)¹
1,583
669
Financial income and expense (including discontinued operations)¹
106
67
Operating profit (including discontinued operations)¹
1,689
736
Depreciation, amortization and impairments (including discontinued operations)¹
681
740
EBITDA (including discontinued operations)¹
2,370
1,476
Adjustments for:
- (Gain) or loss from disposals
(649)
4
- Acquisition / divestment related in EBITDA
22
55
- Change in provisions
(20)
10
- Defined benefit plans
(39)
(13)
Adjustments for EBITDA
(686)
56
Income tax received
23
11
Income tax paid
(156)
(135)
Share-based compensation
22
29
Other
(2)
32
Adjustments for non-EBITDA
(113)
(63)
Operating cash flow before changes in working capital
1,571
1,469
Changes in operating working capital:
Inventories
(323)
(36)
Trade receivables
(194)
(4)
Trade payables
334
48
Changes in inventories, trade receivables and trade payables
(183)
8
Changes in non-operating working capital
39
17
Changes in working capital
(144)
25
Cash provided by operating activities
1,427
1,494
1 The Consolidated cash flow statement includes an analysis of all cash flows in total, therefore including both continuing and
discontinued operations. For the amounts related to discontinued operations split by activities and a reconciliation of profit from
continuing operations to total, including discontinued operations, see Note 3 Change in the scope of the consolidation.
Consolidated financial statements
Royal DSM Integrated Annual Report 2021 210
Consolidated cash flow statement (Note 26) continued
x € million
2021
2020
Cash provided by operating activities
1,427
1,494
Investing activities
Capital expenditure for:¹
- Intangible assets
(137)
(151)
- Property, plant and equipment
(433)
(458)
Payments regarding drawing rights
(7)
(17)
Proceeds from disposal of property, plant and equipment
27
1
Acquisition of subsidiaries and associates
(704)
(1,533)
Disposal of subsidiaries, businesses and associates
1,791
(2)
Additions to fixed-term deposits
(2,070)
(468)
Withdrawal from fixed-term deposits
1,625
1,114
Interest received
5
8
Other financial assets:
- Capital payments and acquisitions
(43)
(20)
- Dividends received
12
5
- Additions to loans granted
(10)
(9)
- Repayment of loans granted
29
1
- Proceeds from disposals
123
47
Cash from / (used in) investing activities
208
(1,482)
Financing activities
Contributions from Non-controlling interests
3
3
Acquisition of Non-controlling interests
(13)
(33)
Loans taken up
37
1,123
Repayment of loans
(513)
(268)
Payments of lease liabilities
(54)
(55)
Change in debt to credit institutions
12
(95)
Dividend paid
(266)
(289)
Interest paid
(65)
(54)
Proceeds from reissued treasury shares
34
63
Repurchase of shares
(165)
(309)
Other
6
(3)
Cash (used in) / from financing activities
(984)
83
Change in cash and cash equivalents
651
95
Cash and cash equivalents at 1 January
871
800
Exchange differences relating to cash held
39
(24)
Cash and cash equivalents at 31 December
1,561
871
1 In 2021, there was no customer funding of capital expenditures (in 2020 an amount of €24 million included in capital expenditure was
funded by customers); all lease payments are recognized as cash used in financing activities.
Royal DSM Integrated Annual Report 2021 211
Notes to the consolidated financial statements of
Royal DSM
1 General information
Unless stated otherwise, all amounts are in € million.
A list of DSM participations has been filed with the Chamber of Commerce (Netherlands) and is available from the
company upon request. The list can also be downloaded from the company website.
The preparation of financial statements requires estimates and judgments that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial
statements.
In addition to DSM’s significant accounting policies in the previous section, the policies that management considers to be
the most important for the presentation of the financial position and results of DSM’s operations are further discussed in
the relevant Notes. The same holds for the issues that require management judgments or estimates about matters that
are inherently uncertain. Management cautions that future events often vary from forecasts and that estimates routinely
require adjustment. Areas of judgment that have the most significant effect on the amounts recognized in the financial
statements relate to the categorization of material items in profit or loss as ‘APM adjustments’, therefore impacting the
alternative performance measures, and the identification of cash generating units (CGUs), impacting goodwill impairment
testing.
Key assumptions and estimates that need to be made by management relate to the useful lives of non-current assets
(Notes 8 and 9), the establishment of provisions for restructuring costs, environmental costs (Note 18) and retirement and
other post-employment benefits (Note 24), the recognition and measurement of income taxes (Note 7), the determination
of fair values for financial instruments (Note 23) and for share-based compensation (Note 27). The uncertainty concerning
the actual outflows of provisions relates to both the amounts and the timing of potential future events.
Furthermore, impairment testing of goodwill, intangible assets and development projects requires judgments by
management. Apart from the determination of CGUs, the estimation of future cashflows, growth rates, discount rates and
fair values minus costs of disposal require judgement as well (Notes 2, 8, 9 and 10). Significant judgment is also required
for the determination of the fair value of assets acquired, and liabilities assumed in business combinations (Note 3) and
for the valuation of drawing rights (Note 8). For drawing rights, the most important judgments relate to the estimation of
the required maintenance and replacement outlays. Estimates are based on historical quoted market prices, experience
and assumptions that are considered reasonable under the circumstances.
For lease contracts under IFRS 16 that include renewal options, determining the lease term involves judgment based on
the underlying asset class, past practices and current business outlooks. The assessment of these renewal options affects
the lease term of these contracts and, in turn, the recognized lease liabilities and the corresponding right-of-use assets.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 212
Exchange rates
The currency exchange rates that were used in preparing the consolidated financial statements are listed below for the
most important currencies.
1 euro =
Exchange rate at
balance sheet date
Average exchange rate
2021
2020
2021
2020
US dollar
1.13
1.23
1.18
1.14
Swiss franc
1.03
1.08
1.08
1.07
Brazilian real
6.31
6.37
6.38
5.88
Chinese renminbi
7.19
8.02
7.63
7.87
Presentation of Consolidated income statement
DSM presents expenses in the Consolidated income statement in accordance with their function. This allows the
presentation of gross margin on the face of the income statement, which is a widely used performance measure in the
industry. The composition of the costs allocated to the individual functions is explained below.
Cost of sales encompasses all manufacturing costs (including raw materials, employee benefits, and depreciation and
amortization) related to goods and services captured in net sales. These are measured at their actual cost based on FIFO,
or weighted average cost.
Marketing & Sales relates to the selling and marketing of goods and services, and also includes all costs that are directly
related to the sale of goods, but are not originated by the manufacturing of the goods (e.g., outbound freight).
Research & Development consists of:
- Research, which is defined as original and planned investigation undertaken with the prospect of gaining new
scientific or technical knowledge and understanding
- Development, which is defined as the application of research findings or other knowledge to a plan or design for
the production of new or substantially improved materials, devices, products, processes, systems or services
before the start of commercial production or use that do not meet the accounting requirements for capitalization.
General and administrative relates to the strategic and governance role of the general management of the company as
well as the representation of DSM as a whole in the financial, political or business community. It also relates to business
support activities of staff departments that are not directly related to the other functional areas.
2 Alternative performance measures
In presenting and discussing DSM’s financial position, operating results and net results, management uses certain
Alternative performance measures not defined by IFRS. These Alternative performance measures (APMs) should not be
viewed in isolation as alternatives to the equivalent IFRS measures and should be used as supplementary information in
conjunction with the most directly comparable IFRS measures. Alternative performance measures do not have
standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other
companies.
To provide clear reporting on the developments of the business, APM adjustments, which represent material items of
income or expense, are made. These adjustments impact the EBIT(DA), operating profit, net profit, ROCE, cash provided by
operating activities and EPS. A reconciliation of the Alternative performance measures to the most directly comparable
IFRS measures can be found in the table Alternative performance measures.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 213
The APM adjustments to net profit, as included in the APMs, can be specified as follows:
2021
The APM adjustments in 2021 are listed below:
- Acquisition and divestment costs of €26 million relate mainly to the acquisition and integration of Erber and First
Choice Ingredients
- Restructuring costs of €92 million relate mainly to restructuring projects, following the new strategy and the
restructuring project at Materials, including the redundancy schemes associated with the dismissal of employees and
costs of termination of contracts
- APM adjustments to the result from associates and joint ventures are a profit of €319 million and relate mainly to the
book profit of €303 million on the sale of DSM’s share of AOC Aliancys and a profit of €13 million on a higher earn-out
relating to previous divestments
2020
The APM adjustments in 2020 are listed below:
- Acquisition and divestment costs of €52 million relate mainly to the acquisition of Glycom, CSK and Erber Group
- Restructuring costs of €103 million relate to restructuring projects (mainly Fit for Growth within Nutrition and Agile to
grow within Materials) together with the redundancy schemes associated with the dismissal of employees and costs of
termination of contracts
- Impairments of property, plant and equipment (PPE) and intangible assets of €101 million and the other APM
adjustment of €11 million relate to an impairment of €56 million of DSM Bio-based Products & Services, owing to an
expected subdued market outlook for biofuels which led to insufficient expected future cash flows and an impairment
of €56 million relating to DSM Advanced Solar on its solar assets following the sale to Covestro AG
- APM adjustments to the result from associates and joint ventures of €41 million relate mainly to the joint venture
POET-DSM, following the decision to mothball the second-generation bio-ethanol plant in Emmetsburg (Iowa, USA),
and includes DSM's equity-accounted share in the impairment loss recognized by the joint venture (€74 million), the
impairment of the associated intangible assets (€11 million) and the related tax benefit (-€28 million)
2021
2020
APM Adjustments (continuing operations)
- Acquisitions/divestments
26
52
- Restructuring
92
103
- Other
(6)
11
- Impairments of PPE and intangible assets
6
101
- Income tax related to adjustments
(30)
(54)
- Adjustments to result from associates and joint ventures
(319)
41
Total APM adjustments (income)/expense
(231)
254
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 214
Alternative performance measures (continuing operations)
2021
2020
Operating profit
1,021
662
Depreciation, amortization and impairments
681
706
EBITDA
1,702
1,368
APM adjustments to EBITDA:
- Acquisitions/divestments
26
52
- Restructuring
92
103
- Other
(6)
11
Total APM adjustments
112
166
Adjusted EBITDA
1,814
1,534
Operating profit
1,021
662
APM adjustments to Operating profit:
- APM adjustments to EBITDA
112
166
- Impairments of PPE and Intangible assets
6
101
Total APM adjustments
118
267
Adjusted operating profit
1,139
929
Net profit from continuing operations
1,089
457
APM adjustments to:
- Operating profit
118
267
- Result relating to associates/joint ventures
(319)
41
Income tax related to APM adjustments
(30)
(54)
Total APM adjustments
(231)
254
Adjusted net profit from continuing operations
858
711
Profit attributable to non-controlling interests
(3)
2
Dividend on Cumulative Preference Shares
(6)
(7)
.
Adjusted net profit from continuing operations available to holders of ordinary shares
849
706
Below table reflects the earnings per share (EPS) related to continuing operations and to total earnings including
discontinued operations.
2021
2020
Continuing
operations
Total
Continuing
operations
Total
Earnings per share (EPS)
Average number of ordinary shares outstanding (x 1,000)
172,648
171,536
Effect of dilution due to share options (x 1,000)
747
896
Adjusted average number of ordinary shares outstanding (x
1,000)
173,395
172,432
.
x € million
Net profit available to holders of ordinary shares
1,080
1,670
452
499
Adjusted net profit available to holders of ordinary shares
849
869
706
760
.
in €
Net basic EPS
6.26
9.68
2.64
2.91
Net diluted EPS
6.23
9.63
2.62
2.89
Adjusted net basic EPS
4.92
5.03
4.12
4.43
Adjusted net diluted EPS
4.90
5.01
4.09
4.41
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 215
Alternative performance measures
2021
2,020
Capital employed
Intangible assets
5,310
4,440
Property, plant and equipment
3,957
3,775
Investment grants / drawing rights
(111)
(112)
Inventories
2,297
1,879
Current receivables
1,696
1,483
Current liabilities
(2,188)
(1,771)
Capital employed at 31 December
10,961
9,694
Average capital employed
Capital employed at 1 January
9,694
8,428
Capital employed at 31 March
10,033
8,422
Capital employed at 30 June
10,064
9,024
Capital employed at 30 September
10,414
9,018
Capital employed at 31 December
10,961
9,694
Average capital employed
10,233
8,918
Adjusted operating profit, continuing operations
1,139
929
ROCE in %, continuing operations
11.1
10.4
Cash provided by operating activities
1,427
1,494
Cash impact APM adjustments
91
87
Capital expenditure
(570)
(609)
Payments regarding drawing rights
(7)
(17)
Adjusted net operating free cash flow
941
955
Adjusted net operating free cash flow, continuing operations
949
872
3 Change in the scope of the consolidation
Acquisitions
In 2021, DSM acquired businesses for a total consideration of €757 million (in 2020: €1,579 million).
Amyris F&F bio-based intermediates business
On 31 March 2021, DSM Nutritional Products acquired the flavor and fragrance (F&F) bio-based intermediates business of
Amyris, Inc., which extends DSM's offerings in aroma ingredients with bio-based ingredients for the flavor and fragrance
and cosmetics industries, for an upfront consideration of €128 million. Amyris will share in the EBITDA growth over the
period 2021–2024 of certain activities (mainly products just launched and under development), which is estimated to result
in a total earn-out amount in the range of €85–€128 million.
In accordance with IFRS 3 (Business Combinations), the purchase price was allocated to identifiable assets and liabilities
acquired, resulting in a tax-deductible goodwill amount of €29 million and technology intangible assets of €167 million.
The acquisition of the F&F bio-based business contributed €14 million to net sales, -€3 million to operating profit and €5
million to Adjusted EBITDA during a period of nine months in 2021. If the acquisition had occurred on 1 January 2021,
additional net sales would have been approximately €19 million, operating profit -€4 million and Adjusted EBITDA €7
million.
Midori USA
On 26 July 2021, DSM Nutritional Products acquired the remaining 63.5% stake in Midori USA, Inc., a biotechnology start-up
with a novel precision platform developing breakthrough targeted eubiotics that improve the health and reduce the
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 216
environmental impact of animals, in a step acquisition for a cash consideration of €52 million. Contributing the fair value
of the previously held equity interest to this transaction of €22 million brings the total consideration to €74 million.
In accordance with IFRS 3, the purchase price was allocated to identifiable assets and liabilities acquired, resulting in a
non-tax-deductible goodwill amount of €55 million and technology intangible assets of €30 million.
The acquisition of Midori did not contribute to net sales; operating profit amounted to -€1 million and Adjusted EBITDA -€1
million during a period of five months in 2021. If the acquisition had occurred on 1 January 2021, operating profit would
have been -€3 million and Adjusted EBITDA -€2 million.
First Choice Ingredients
On 18 October 2021, DSM Food Specialties acquired 100% of the shares of First Choice Ingredients, Inc. in Germantown
(Wisconsin, USA), a company developing, producing and marketing clean label dairy-based flavor solutions obtained
through fermentative processes, for a cash consideration of €394 million.
In accordance with IFRS 3, the purchase price was provisionally allocated to identifiable assets and liabilities acquired and
is based on a draft initial purchase price allocation prepared by an independent valuator. Completion of the independent
valuation process is expected in 2022. Main intangibles provisionally recognized are customer relationships for about €100
million and technology for €83 million. The acquisition is expected to result in tax-deductible goodwill to the amount of
€190 million.
The acquisition of First Choice Ingredients contributed €13 million to net sales, €1 million to operating profit and €4 million
to Adjusted EBITDA during a period of three months in 2021. If the acquisition had occurred on 1 January 2021, additional
net sales would have been €64 million, operating profit €7 million and Adjusted EBITDA €19 million.
Vestkorn Milling
On 16 December 2021, DSM Food Specialties acquired a 100% interest in Vestkorn Milling, headquartered in Tau, Norway.
Vestkorn Milling is a producer and supplier of plant-based proteins, fibers, starches and cereals used in food and pet food
products. The consideration consists of an upfront cash payment of €42 million and an additional earn-out amount
between €15 and €43 million, depending on the gross profit of the acquired business over the period 2022–2024, to be paid
out in 2025.
In accordance with IFRS 3, the purchase price was provisionally allocated to identifiable assets and liabilities acquired,
pending completion of an independent valuation process. The provisional non-tax-deductible goodwill amounts to €71
million.
The acquisition of Vestkorn Milling did not yet contribute to net sales and Adjusted EBITDA in 2021. If the acquisition had
occurred on 1 January 2021, additional net sales would have been €27 million, operating profit €1 million and Adjusted
EBITDA €2 million.
Finalization PPA Erber
In the reporting year, the Purchase Price Allocation (PPA) related to the Erber acquisition in 2020 was finalized, resulting in
an additional allocation of €37 million to intangible assets, mainly for customer relations and technology, a decrease of
the goodwill amount by -€51 million and an increase of other net assets by €14 million. The comparative information for
the reference year has been adjusted for these measurement period adjustments. As the impact on the profit and loss
account is negligible, no comparative information has been adjusted.
Valuation techniques intangible assets
Part of a Purchase Price Allocation is the recognition of intangible assets which are recognized apart from goodwill. The
valuation techniques DSM used for measuring the fair value of these intangible assets in 2021 were as follows:
The acquired technology was valued by applying the multi-period excess earnings method (MEEM) considering the present
value of net cash flows expected to be generated by the technology and customer relationships; or by applying the relief-
from-royalty method, an income approach whereby the value of an asset is estimated by capitalizing the royalties saved as
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 217
a result of owning the asset; or by applying the replacement cost approach, measuring the cost necessary to
(hypothetically) recreate these intangible assets.
The fair values of customer relationships and supply agreements were determined by applying the MEEM or via the
replacement cost approach.
Databases were valued applying the relief-from-royalty method.
Summary acquisitions in 2021
The accounting of the acquisitions upon closing impacted DSM’s consolidated balance sheet 2021 as shown in below table
(measured at the date of acquisition).
Amyris
F&F
Midori
USA
First Choice
Ingredients
(provisional)
Vestkorn
Milling
(provisional)
Other
acquisitions
Total
Book
value
Fair
value
Book
value
Fair
value
Book
value
Fair
value
Book
value
Fair
value
Book
value
Fair
value
Book
value
Fair
value
Assets
Intangible assets
-
167
-
30
-
183
-
-
1
13
1
393
Property, plant and equipment
-
-
-
-
5
5
7
7
-
-
12
12
Other non-current assets
-
-
-
-
-
-
-
-
(2)
(2)
(2)
(2)
Inventories
1
1
-
-
10
12
6
6
-
-
17
19
Receivables
1
1
-
-
9
9
4
4
-
-
14
14
Cash and cash equivalents
-
-
-
-
6
6
1
1
-
-
7
7
Total assets
2
169
-
30
30
215
18
18
(1)
11
49
443
Liabilities
Non-current liabilities
-
-
-
8
-
-
4
4
-
-
4
12
Current liabilities
-
-
3
3
11
11
11
11
1
1
26
26
Total liabilities
-
-
3
11
11
11
15
15
1
1
30
38
Net assets
2
169
(3)
19
19
204
3
3
(2)
10
19
405
Acquisition price (in cash)
128
52
394
42
8
624
Fair value of associate contributed
-
22
-
-
1
23
Acquisition price (payable)
70
-
-
32
8
110
Consideration
198
74
394
74
17
757
Goodwill
29
55
190
71
7
352
Acquisition costs recognized in APM adjustments
(1)
-
(4)
(1)
(15)
(21)
Divestments
In the reporting year, DSM divested certain businesses in the segments Materials and Innovation for a total consideration
of €1,609 million.
Resins & Functional Materials and associated businesses (RFM)
On 1 April 2021, DSM completed the divestment of the Resins & Functional Materials and associated businesses (together
‘RFM’) to Covestro AG. Prior to this divestment, DSM reclassified the results of these businesses (the ‘disposal group’) to
‘discontinued operations’, and reclassified all related assets and liabilities as held for sale on 30 September 2020.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 218
Summary divestments 2021
See below table for the book result of the divestments that took place in 2021.
x € million
RFM
business
Other
Total
Assets
Intangible assets
(439)
-
(439)
Property, plant and equipment
(361)
-
(361)
Other non-current assets
(10)
-
(10)
Inventories
(122)
(4)
(126)
Receivables
(192)
(4)
(196)
Cash and cash equivalents
(76)
-
(76)
Total assets
(1,200)
(8)
(1,208)
Liabilities
Provisions
(17)
-
(17)
Non-current liabilities
(18)
-
(18)
Current liabilities
(180)
(1)
(181)
Total liabilities
(215)
(1)
(216)
.
Net assets
(985)
(7)
(992)
Non-controlling interest
(23)
-
(23)
Net assets DSM shareholders
(962)
(7)
(969)
.
Consideration (net of selling costs, translation differences
and net debt)
1,602
7
1,609
.
Book result 2021
640
-
640
Income tax
(70)
-
(70)
Net book result
570
-
570
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 219
Impact on comprehensive income
The impact of the business that has been presented as discontinued operations in the income statement and statement of
comprehensive income, is presented in the below tables.
2021
2020
Continuing
operations
Discontinued
operations
Total
Continuing
operations
Discontinued
operations
Total
Net sales
9,204
264
9,468
8,106
932
9,038
Adjusted EBITDA
1,814
28
1,842
1,534
116
1,650
EBITDA
1,702
668
2,370
1,368
108
1,476
Total expenses
8,183
(404)
7,779
7,444
858
8,302
Adjusted operating profit
1,139
28
1,167
929
82
1,011
Operating profit
1,021
668
1,689
662
74
736
Financial income and expense
(106)
-
(106)
(67)
-
(67)
Profit before income tax expense
915
668
1,583
595
74
669
Income tax expense
(168)
(77)
(245)
(106)
(23)
(129)
Results related to associates and
joint ventures
342
-
342
(32)
-
(32)
Net profit for the year
1,089
591
1,680
457
51
508
Of which:
- Attributable to non-controlling
interests
3
1
4
(2)
4
2
- Dividend on Cumulative Preference
Shares
6
-
6
7
-
7
- Available to holders of ordinary
shares
1,080
590
1,670
452
47
499
Earnings per share (EPS)
- Net basic EPS
6.26
3.42
9.68
2.64
0.27
2.91
- Net diluted EPS
6.23
3.40
9.63
2.62
0.27
2.89
The Operating profit in Discontinued operations amounting to €668 million comprises the regular activities of the RFM
business in the first quarter of the reporting year (€28 million) and the book profit on the sale of the RFM business on 1
April 2021 (€640 million).
2021
2020
Net profit from discontinued operations
591
51
Other comprehensive income
Remeasurements of defined benefit pension plans
-
(1)
Tax related items that will not be reclassified to profit or loss
-
-
Items that will not be reclassified to profit or loss
-
(1)
.
Exchange differences on translation of foreign operations
- Change for the year
4
(4)
Hedging reserve
- Change for the year
-
1
Tax related items that may subsequently be reclassified to profit or loss
-
-
Items that may subsequently be reclassified to profit or loss
4
(3)
.
Total comprehensive income discontinued operations
595
47
Of which:
- Attributable to non-controlling interests
3
4
- Available to equity holders of Koninklijke DSM N.V.
592
43
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 220
Impact on cash flow statement
The impact of the business that has been included as discontinued operations in the cash flow statement is shown in the
following table.
2021
2020
Net cash provided by / (used in):
- Operating activities
(1)
134
- Investing activities
1,404
(47)
Net change in cash and cash equivalents
1,403
87
See also Note 26 Notes to the cash flow statement.
Assets and liabilities held for sale
DSM is committed to the sale of its Pentapharm business, and therefore classified end of 2021 the assets and liabilities as
held for sale.
Impact on balance sheet
The impact of the reclassification of these activities on the DSM consolidated balance sheet is presented in the following
table.
x € million
2021
Assets
Non-current assets
Property, plant and equipment
27
Current assets
Inventories
23
Receivables
6
Total assets
56
Liabilities
Non-current liabilities
5
Current liabilities
5
Total liabilities
10
Net assets
46
Other changes
In 2021, the following changes in DSM’s share in subsidiaries occurred without impacting the classification of the
participations.
2021
2020
DSM Rainbow (Inner Mongolia) Biotechnology Co., Ltd.
100.0%
65.2%
See also Note 16 Equity.
4 Segment information
In 2021, DSM’s reportable operating segments were Nutrition, Materials and the Innovation Center, as mentioned in Note 1
General information. DSM has segmented its operations by business activity from which revenues are earned and
expenses incurred. These operating results are regularly reviewed by the entity’s chief operating decision maker (CODM) to
make decisions about resources to be allocated to the operating segment and assess its performance. DSM uses Adjusted
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 221
EBITDA as the main indicator to evaluate the consolidated performance as well as the performance per operating segment.
Discrete financial information is available for each identified operating segment.
The accounting policies of the operating segments are the same as those described in the Summary of significant
accounting policies. Transactions between segments are generally executed at market-based prices. Interest income,
interest expense, and income tax expense or income are not allocated to segments as these amounts are not included in
the measure of segment profit or loss reviewed by the CODM, or otherwise regularly provided to the CODM.
Our operating segment Nutrition serves the global industries for animal feed, food & beverage, pharmaceuticals, infant
nutrition, dietary supplements, and personal care. It does so by the production of pure active ingredients, their
incorporation into sophisticated forms, and the provision of tailored premixes and forward solutions.
Our operating segment Materials is a global player in specialty plastics, which are used in components for the electrical
and electronics, automotive, flexible food-packaging, and consumer goods industries. Furthermore, Materials is a global
player in providing innovative and sustainable ultra-strong, ultra-light Dyneema® fiber and fabrics.
Our operating segment Innovation Center focuses on innovation and the growth of DSM’s existing core business through
adjacent technologies via its Corporate Research Program as well as through the company’s venturing and licensing
activities. Additionally, it identifies and invests in new and innovative growth options. The Innovation Center is responsible
for developing and extracting value from DSM’s Emerging Business Areas.
Any consolidated activities outside the three reportable operating segments above are reported as the reportable segment
‘Corporate Activities’. These mainly comprise operating and service activities as well as several costs that cannot be
allocated to the operating segments.
DSM does not have a single external customer that represents 10% or more of total sales.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 222
Geographical information
Nether-
lands
Switzer-
land
Rest of
Europe
North
America
Latin
America
China
Rest of
Asia
Rest of
the world
Total
2020
Net sales by origin
In € million
1,515
2,260
1,042
1,380
608
885
336
80
8,106
In %
19
28
13
17
7
11
4
1
100
Net sales by destination
In € million
407
214
2,125
1,791
1,045
991
1,268
265
8,106
In %
5
3
26
22
13
12
16
3
100
Workforce at year-end (headcount)¹
3,858
2,129
4,384
3,185
2,243
5,025
1,996
307
23,127
Average workforce (FTE)¹
3,708
2,135
3,625
3,195
2,108
4,950
1,803
291
21,815
Intangible assets and Property, plant and
equipment
Capital expenditure
110
159
114
76
15
93
4
2
573
Carrying amount
1,614
1,452
2,097
1,742
282
810
188
30
8,215
Total assets (including assets held for sale)
4,084
2,125
2,676
2,552
776
1,382
639
112
14,346
.
2021
Net sales by origin
In € million
1,860
2,370
1,336
1,310
666
1,177
387
98
9,204
In %
20
26
15
14
7
13
4
1
100
Net sales by destination
In € million
374
163
2,644
1,916
1,198
1,187
1,438
284
9,204
In %
4
2
28
21
13
13
16
3
100
Workforce at year-end (headcount)
3,006
2,174
4,161
3,018
2,290
4,704
1,709
296
21,358
Average workforce (FTE)¹
3,040
2,099
4,065
2,971
2,255
4,768
1,771
299
21,268
Intangible assets and Property, plant and
equipment
Capital expenditure
108
147
162
87
20
77
5
2
608
Carrying amount
1,990
1,733
2,073
2,201
291
836
113
30
9,267
Total assets (including assets held for sale)
4,566
2,593
2,738
3,116
864
1,459
576
101
16,013
1
Refers to total group, including discontinued operations.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 223
Business segments
2021
Nutrition
Materials
Innovation
Center
Corporate
Activities
Eliminations
Total
Financial performance
Net sales
7,031
1,935
168
70
-
9,204
Supplies to other clusters
46
12
18
(76)
-
Supplies
7,077
1,947
186
70
(76)
9,204
.
Adjusted EBITDA¹
1,447
435
26
(94)
-
1,814
EBITDA
1,396
414
17
(125)
-
1,702
Adjusted operating profit¹
940
331
4
(136)
-
1,139
Operating profit
889
310
(10)
(168)
-
1,021
Depreciation and amortization
484
100
23
39
-
646
Impairments
22
3
10
-
-
35
- of which included in APM adjustments
-
-
6
-
-
6
Additions to provisions
8
16
15
32
-
71
Result related to associates and joint ventures
(3)
-
1
344
-
342
R&D costs²
194
59
39
31
-
323
Employee benefit costs
1,233
253
65
259
-
1,810
Financial position
Total assets
11,002
1,570
566
2,819
56³
16,013
Total liabilities
2,744
495
63
3,304
10³
6,616
Capital employed at year-end
9,550
1,005
407
(1)
-
10,961
Capital expenditure
488
65
2
53
-
608
Share in equity of associates and joint ventures
38
3
1
22
-
64
Adjusted EBITDA margin (in %)
20.6
22.5
-
-
-
19.7
Workforce
Average in fte
15,623
2,815
498
1,902
430³
21,268
Year-end (headcount)
16,091
2,885
578
1,804
21,358
1 See Note 2 Alternative performance measures for the reconciliation to Adjusted EBITDA of €1,814 million (2020: €1,534 million) and other
IFRS performance measures.
2 R&D costs relate to the functional area Research & Development and exclude R&D costs included in the functional areas Cost of sales
and Marketing & Sales as well as R&D expenditure capitalized.
3 The figures presented under ‘eliminations’ relate to the assets and liabilities reclassified as held for sale and the workforce for the
discontinued operations.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 224
Business segments
2020
Nutrition
Materials
Innovation
Center
Corporate
Activities
Eliminations
Total
Financial performance
Net sales
6,365
1,518
184
39
-
8,106
Supplies to other clusters
53
8
21
(82)
-
Supplies
6,418
1,526
205
39
(82)
8,106
.
Adjusted EBITDA¹
1,338
272
21
(97)
-
1,534
EBITDA
1,211
249
6
(98)
-
1,368
Adjusted operating profit¹
919
168
(17)
(141)
-
929
Operating profit
792
145
(133)
(142)
-
662
Depreciation and amortization
407
99
38
43
-
587
Impairments
13
4
101
1
-
119
- of which included in APM adjustments
-
-
101
-
-
101
Additions to provisions
70
19
8
7
-
104
Results related to associates and joint ventures
(1)
-
(84)
53
-
(32)
R&D costs²
169
60
145
24
-
398
Employee benefit costs
1,102
226
83
273
-
1,684
Financial position
Total assets
9,477
1,035
599
2,139
1,096³
14,346
Total liabilities
2,451
379
37
3,738
254³
6,859
Capital employed at year-end
8,305
953
436
-
-
9,694
Capital expenditure
441
63
35
34
-
573
Share in equity of associates and joint ventures
30
3
2
58
-
93
Adjusted EBITDA margin (in %)
21.0
17.9
18.9
Workforce
Average in fte
14,535
2,852
613
2,012
1,803³
21,815
Year-end (headcount)
15,838
2,857
579
2,039
1,814³
23,127
1 See Note 2 Alternative performance measures for the reconciliation to Adjusted EBITDA of €1,534 million and other IFRS performance
measures.
2 R&D costs relate to the functional area Research & Development and exclude R&D costs included in the functional areas Cost of sales
and Marketing & Sales as well as R&D expenditure capitalized.
3 The figures presented under ‘eliminations’ relate to the assets and liabilities reclassified as held for sale and the workforce for the
discontinued operations.
5 Net sales and costs (continuing operations)
Net sales
2021
2020
Goods sold
8,992
7,931
Services rendered
197
158
Royalties
15
17
Total
9,204
8,106
Fulfillment of the performance obligations related to goods sold is measured using the commercial shipment terms as an
indicator for the transfer of control. Fulfillment of the performance obligations for services rendered is identified
according to the individual contract. The payment terms are determined per business segment on a customer basis. DSM
has neither specific obligations for returns or refunds, nor specific warranties or other related obligations.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 225
Disaggregation of net sales
2021
2020
Nutrition
- Animal Nutrition & Health
3,502
3,025
- Human Nutrition & Health
2,207
2,143
- Personal Care & Aroma Ingredients
484
404
- Other
122
145
DSM Nutritional Products
6,315
5,717
DSM Food Specialties
716
648
Total Nutrition
7,031
6,365
Materials
DSM Engineering Materials
1,600
1,217
DSM Protective Materials
335
301
Total Materials
1,935
1,518
Innovation Center
168
184
Corporate Activities
70
39
Total
9,204
8,106
Total costs
In 2021, total operating costs amounted to €8.2 billion, €0.8 billion higher than in 2020, when these costs stood at €7.4
billion. Total operating costs in 2021 included Cost of sales amounting to €6.0 billion (2020: €5.3 billion); gross margin as a
percentage of net sales stood at 34% (2020: 34%).
Employee benefit costs
2021
2020
Wages and salaries
1,494
1,373
Social security costs
178
164
Pension costs (see also Note 24)
116
118
Share-based compensation (see also Note 27)
22
29
Total
1,810
1,684
Depreciation, amortization and impairments
2021
2020
Amortization of intangible assets
221
193
Depreciation of property, plant and equipment owned
374
344
Depreciation of right-of-use assets
51
50
Impairment losses
35
119
Total
681
706
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 226
Other operating income
2021
2020
Release of provisions
24
11
Gain on sale of assets and activities
13
-
Insurance benefits
11
29
Amendments / settlements to pension plans
9
-
Earn-out payments and other settlements
2
7
Legal and other settlements
2
23
Sundry
34
32
Total
95
102
Other operating expense
2021
2020
Additions to provisions
67
93
Exchange differences
7
18
Acquisitions / Disposals
25
55
Sundry
29
34
Total
128
200
6 Financial income and expense
2021
2020
Financial income
Interest income
3
17
Fair value change in derivatives
10
27
Sundry
11
-
Total financial income
24
44
Financial expense
Interest expense
(91)
(90)
Interest relating to lease liabilities
(5)
(6)
Interest relating to defined benefit plans
(2)
(4)
Fair value change in derivatives
(17)
-
Capitalized interest during construction
4
6
Exchange differences
-
(4)
Unwinding of discounted payables
(16)
(4)
Sundry
(3)
(9)
Total financial expense
(130)
(111)
Financial income and expense
(106)
(67)
In 2021, the interest rate applied in the capitalization of interest during construction was 3% for the first 6 months and
2.5% for the last 6 months (2020: 3%).
Financial income and expense remained roughly stable excluding the impact of the fair value change in derivatives.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 227
7 Income tax
The income tax expense on continuing operations was €168 million, which represents an effective income tax rate of 18.4%
(2020: €106 million, representing an effective income tax rate of 17.9%). The amount excludes tax expense from
discontinued operations of €77 million (2020: €23 million) and can be broken down as follows.
2021
2020
Current tax expense:
- Current year
(120)
(155)
- Prior-year adjustments
1
8
- Tax credits compensated
4
4
- Non-recoverable withholding tax
(7)
(2)
Total current tax expense
(122)
(145)
Deferred tax expense:
- Originating from temporary differences and their reversal
(3)
47
- Prior-year adjustments
5
(5)
- Change in tax rate
4
(2)
- Changes arising from write-down of deferred tax assets
(18)
(3)
- Changes in previously and newly recognized tax losses and tax credits
(21)
(7)
- Other changes in tax losses and tax credits
(13)
9
Total deferred tax expense
(46)
39
Total tax expense
(168)
(106)
Of which related to:
- Taxable result excl. APM adjustments
(198)
(160)
- APM adjustments
30
54
The relationship between the income tax rate in the Netherlands and the effective tax rate on the taxable result can be
explained as follows.
Effective tax rate
In %
2021
2020
Domestic income tax rate
25.0
25.0
Tax effects of:
- Deviating rates
(4.9)
(5.2)
- Change in tax rates
(0.4)
0.2
- Tax-exempt income and non-deductible expense
(3.1)
(2.4)
- Other effects
2.6
0.9
Effective tax rate taxable result, excl. APM adjustments
19.2
18.5
APM adjustments (see Note 2)
(0.8)
(0.6)
Total effective tax rate
18.4
17.9
The total effective tax rate on the taxable result in 2021 was 18.4% (2020: 17.9%), excluding APM adjustments this was 19.2%
(2020: 18.5%).
The effective tax rate in 2021 was positively impacted by the geographical spread and the tax-exempt income under local
tax law in various countries.
The increase of the effective tax rate excluding APM adjustments was mainly due to uncertainties under local laws, partly
compensated by higher tax-exempt income in several countries and the higher tax rate in the Netherlands as of 2022.
The balance of the deferred tax assets and deferred tax liabilities increased by €91 million owing to the changes presented
in the following table.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 228
Deferred tax assets and liabilities
2021
2020
Balance at 1 January
Deferred tax assets
240
217
Deferred tax liabilities
(431)
(296)
Total
(191)
(79)
Changes:
- Income tax income / (expense) in income statement
(77)
45
- Income tax: change in tax percentage
4
(4)
- Income tax: tax result share in associates
-
22
Total income statement
(73)
63
- Income tax expense in OCI
(13)
(1)
- Acquisitions and disposals
(7)
(185)
- Consolidation changes
(3)
-
- Exchange differences
(11)
11
- Reclassification to held for sale
9
(2)
- Transfer
7
2
Balance at 31 December
(282)
(191)
Of which:
- Deferred tax assets
203
240
- Deferred tax liabilities
(485)
(431)
In various countries, DSM has taken standpoints regarding its tax position which may at any time be challenged, or have
already been challenged, by the tax authorities, because the authorities in question interpret the law differently. These
uncertainties are taken into account in determining the probability of realization of deferred tax assets and liabilities.
The deferred tax assets and liabilities relate to the following balance sheet items.
Deferred tax assets and liabilities by balance sheet item
2021
2020
Deferred tax
assets
Deferred tax
liabilities
Deferred tax
assets
Deferred tax
liabilities
Intangible assets
19
(368)
22
(348)
Property, plant and equipment
19
(175)
27
(173)
Right-of-use assets
-
(38)
-
(44)
Financial assets
33
(25)
28
(15)
Inventories
56
(39)
51
(42)
Receivables
6
(22)
14
(24)
Lease liabilities non-current
31
-
33
-
Other non-current liabilities
16
(2)
12
(2)
Non-current provisions
70
-
94
(4)
Other current liabilities
83
(4)
66
(6)
Lease liabilities current
11
-
10
-
344
(673)
357
(658)
Tax losses carried forward
47
110
Set-off
(188)
188
(227)
227
Total
203
(485)
240
(431)
No deferred tax assets were recognized for loss carryforwards amounting to €203 million (2020: €267 million). Unrecognized
loss carryforwards amounting to €98 million will expire in the years up to and including 2026 (2020: €134 million up to and
including 2025), €37 million between 2027 and 2031 (2020: €71 million between 2026 and 2030) and the remaining €68
million in 2032 and beyond (2020: €62 million between 2031 and beyond). In addition, an amount of €23 million (2020: €15
million) of withholding taxes were unrecognized.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 229
The valuation of deferred tax assets depends on the probability of the reversal of temporary differences and the utilization
of tax loss carryforwards, tax credits and withholding tax. Deferred tax assets are recognized for future tax benefits arising
from temporary differences and for tax loss carryforwards to the extent that the tax benefits are probable. As of 1 January
2022, tax losses may be carried forward indefinitely in the Netherlands, and loss compensation is allowed up to €1 million
a year. Above €1 million, losses can be compensated only for 50%. DSM has to assess the likelihood that deferred tax
assets will be recovered from future taxable profits. Deferred tax assets are reduced if, and to the extent that, it is not
probable that all or some portion of the deferred tax assets will be realized. In the event that actual future results differ
from estimates, and depending on tax strategies that DSM may be able to implement, changes to the measurement of
deferred taxes could be required, which could have an impact on the company's financial position and profit for the year.
8 Intangible assets
Goodwill
Licenses
and patents
Under
construction
Development
projects
Other
Total
Balance at 1 January 2020
Cost
2,301
216
71
338
1,966
4,892
Amortization and impairment losses
18
116
-
71
1,172
1,377
Carrying amount
2,283
100
71
267
794
3,515
Changes in carrying amount:
- Capital expenditure
-
1
77
42
43
163
- Put into operation
-
11
(59)
-
48
-
- Acquisitions
729
3
36
34
870
1,672
- Amortization
-
(13)
-
(35)
(152)
(200)
- Impairment losses
(20)
(14)
-
(74)
(2)
(110)
- Exchange differences
(138)
(2)
-
-
(28)
(168)
- Reclassification to held for sale
(387)
(3)
(1)
(28)
(18)
(437)
- Other
-
(2)
(9)
17
(1)
5
184
(19)
44
(44)
760
925
Balance at 31 December 2020
Cost
2,487
202
115
380
2,654
5,838
Amortization and impairment losses
20
121
-
157
1,100
1,398
Carrying amount
2,467
81
115
223
1,554
4,440
.
Changes in carrying amount:
- Capital expenditure
-
1
85
48
3
137
- Drawing rights
-
-
-
-
21
21
- Put into operation
-
-
(45)
-
45
-
- Acquisitions
352
12
-
-
381
745
- Amortization
-
(15)
-
(28)
(178)
(221)
- Impairment losses
(5)
(1)
-
(11)
(2)
(19)
- Exchange differences
138
6
1
7
49
201
- Reclassification to held for sale
(1)
-
-
(1)
-
(2)
- Transfers
-
31
-
-
(31)
-
- Other
-
-
-
2
6
8
484
34
41
17
294
870
Balance at 31 December 2021
Cost
2,965
236
156
414
3,148
6,919
Amortization and impairment losses
14
121
-
174
1,300
1,609
Carrying amount
2,951
115
156
240
1,848
5,310
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 230
The amortization of intangible assets is included in Cost of sales, Marketing & Sales, Research & Development and General
& Administrative expenses.
Over the past few years, DSM has acquired several entities in business combinations that have been accounted for by the
acquisition method, resulting in recognition of goodwill and other intangible assets. The amounts assigned to the acquired
assets and liabilities are based on assumptions and estimates about their fair values. In making these estimates,
management consults independent, qualified appraisers if appropriate.
The impairment losses in 2020 related mainly to impairments of intangible assets relating to DSM Bio-based Products &
Services and DSM Advanced Solar. For further information, see also Note 2 Alternative performance measures.
The breakdown of the carrying amount of goodwill at year-end 2021 is as follows.
Goodwill per acquisition
Acquisition
2021
2020
Cash generating unit
Functional
Currency
Year of
acquisition
Erber Group
470
470
DSM Nutritional Products
EUR
2020
Martek
410
378
DSM Nutritional Products
USD
2011
Glycom
345
344
DSM Nutritional Products
DKK
2020
Fortitech
307
283
DSM Nutritional Products
USD
2012
Ocean Nutrition Canada
207
190
DSM Nutritional Products
CAD
2012
First Choice Ingredients¹
194
-
DSM Food Specialties
USD
2021
Andre Pectin
147
131
DSM Food Specialties
CNY
2019
Kensey Nash
143
132
DSM Biomedical
USD
2012
The Polymer Technology Group
77
71
DSM Biomedical
USD
2008
Yimante
74
66
DSM Nutritional Products
CNY
2019
Vestkorn Milling¹
70
-
DSM Food Specialties
NOK
2021
Tortuga
62
62
DSM Nutritional Products
BRL
2013
Midori
58
-
DSM Nutritional Products
USD
2021
Other acquisitions
387
340
Total
2,951
2,467
1 Based on provisional PPA, see Note 3 Change in the scope of the consolidation.
Goodwill per Cash generating unit
Cash generating unit
2021
2020
DSM Nutritional Products
2,145
1,970
DSM Food Specialties
511¹
227
DSM Biomedical
224
203
DSM Protective Materials
43
40
DSM Engineering Materials
28
27
Total
2,951
2,467
1 Contains provisional PPA, see Note 3 Change in the scope of the consolidation.
The annual impairment tests of goodwill are performed in the fourth quarter. The recoverable amount of the Cash
generating units (CGUs) is based on a value-in-use calculation. DSM Nutritional Products and DSM Food Specialties are the
CGUs to which a significant amount of goodwill is allocated.
The cash flow projections are derived from DSM’s business plan as adopted by the Managing Board and updated
periodically for example when the strategy is updated. Mature businesses come to a terminal value after five years. The
terminal value growth rate is determined with the assumption of limited inflationary growth. For emerging businesses, an
explicit forecast period of ten years is used with the same assumption for growth in the terminal value. The key
assumptions in the cash flow projections relate to the market growth for the CGUs and the related revenue projections,
EBITDA developments, and the rates used for discounting cash flows.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 231
Key assumptions for goodwill impairment tests
2021
2020
Forecast period (years)
- Mature business
5
5
- Emerging business
10
10
Terminal value growth
1%
1%
Pre-tax discount rate
- DSM Nutritional Products
8.6%
9.1%
- DSM Food Specialties
9.0%
-
Organic sales growth
DSM Nutritional Products
- Year 1—5
4-7%
4-7%
DSM Food Specialties
- Year 1—5
4-6%
-
For DSM Nutritional Products the growth assumptions are based on the growth of the global food and feed markets, for
DSM Food Specialties on the growth assumptions of the global food and beverage market. A sensitivity test was performed
on the impairment tests of the CGUs and showed that the conclusions of these tests would not have been different if a
reasonable possible adverse change in key parameters had been assumed.
The market capitalization of DSM at 31 December 2021 amounted to €34,608 million (31 December 2020: €25,545 million)
and was clearly above the carrying amount of net assets, thus providing an additional indication that goodwill was not
impaired.
Development costs
The carrying amount of development costs at 31 December 2021 included €121 million (2020: €136 million), relating mainly
to strategic projects which are not being amortized yet. The recoverable amount of these projects was estimated based on
the present value of the future cash flows expected to be derived from the projects (value-in-use).
Other intangible assets
2021
2020
Cost
Amortization
Carrying
amount
Of which
acquisition-
related
Of which
acquisition-
related
Application software
356
(274)
82
35
25
Marketing-related
117
(52)
65
65
70
Customer-related
1,130
(468)
662
662
656
Technology-based
886
(161)
725
724
457
Drawing rights
272
(110)
162
-
-
Other
387
(235)
152
68
115
Total
3,148
(1,300)
1,848
1,554
1,323
Total 2020
2,654
(1,100)
1,554
1,323
Other intangible assets include (partially provisional) customer relationships, which were obtained during the acquisition
of Erber Group and Glycom in 2020, as well as CSK in 2019 and Fortitech in 2012. Technology-based intangibles were mainly
obtained via the acquisition of Erber Group and Glycom in 2020 and F&F Amyris and FCI in 2021. Intangible assets are
amortized on a straight-line basis and subject to impairment trigger testing. There are no intangible assets with an
indefinite useful life (same as in 2020).
Other intangible assets also include drawing rights contracts with Fibrant. Fibrant will continue to supply at least 80% of
DSM Engineering Materials’ caprolactam needs in Europe and North America for 15 years (2015–2030) via a drawing rights
contract, effectively maintaining DSM Engineering Materials’ backward integration. Initially the fair value of this contract
has been recognized as an intangible asset by DSM Engineering Materials; for subsequent measurement, the initial fair
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 232
value is the deemed cost of the asset, which is subject to straight-line amortization. In 2021, an amount of €21 million was
added due to a change in the projected deemed costs and a corresponding amount was added to the liability to Fibrant. At
the end of 2021, the drawing rights had a carrying amount of €162 million (2020: €156 million), a remaining useful life of 9
years, and an amount of €58 million was still payable to Fibrant for the acquisition of the drawing rights (2020: €39
million).
9 Property, plant and equipment
Composition of Property, plant and equipment
2021
2020
Property, plant and equipment owned
3,769
3,567
Right-of-use assets
188
208
Total
3,957
3,775
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 233
Property, plant and equipment owned
Land and
buildings
Plant and
machinery
Other
equipment
Under
construction
Not used for
operating
activities
Total
Balance at 1 January 2020
Cost
2,232
5,019
235
664
12
8,162
Depreciation and impairments
1,021
3,151
175
1
6
4,354
Carrying amount at 1 January 2020
1,211
1,868
60
663
6
3,808
Changes in carrying amount:
- Capital expenditure
10
58
5
386
-
459
- Put into operation
84
350
15
(449)
-
-
- Acquisitions
95
90
10
8
2
205
- Disposals
-
(1)
-
-
-
(1)
- Depreciation
(81)
(269)
(20)
-
-
(370)
- Impairment losses
(4)
(12)
(1)
(3)
-
(20)
- Exchange differences
(53)
(82)
(3)
(22)
-
(160)
- Reclassification to held for sale
(103)
(177)
(12)
(57)
-
(349)
- Other changes
(1)
(1)
-
(3)
-
(5)
(53)
(44)
(6)
(140)
2
(241)
Balance at 31 December 2020
Cost
2,099
4,781
192
527
8
7,607
Depreciation and impairments
941
2,957
138
4
-
4,040
Carrying amount at 31 December 2020
1,158
1,824
54
523
8
3,567
.
Changes in carrying amount:
- Capital expenditure
7
52
4
414
-
477
- Put into operation
61
312
17
(390)
-
-
- Acquisitions
5
7
-
-
-
12
- Disposals and deconsolidations
(22)
(16)
-
-
-
(38)
- Depreciation
(78)
(277)
(19)
-
-
(374)
- Impairment losses
(3)
(11)
(2)
2
-
(14)
- Exchange differences
54
108
3
20
-
185
- Reclassification to held for sale
(17)
(13)
(1)
(2)
-
(33)
- Transfer to RoU assets
(5)
-
-
-
-
(5)
- Other changes
2
(6)
-
(4)
-
(8)
4
156
2
40
-
202
Balance at 31 December 2021
Cost
2,108
5,490
219
564
8
8,389
Depreciation and impairments
946
3,510
163
1
-
4,620
Carrying amount at 31 December 2021
1,162
1,980
56
563
8
3,769
In 2021, impairment losses of €14 million (2020: €20 million) were recognized on Property, plant and equipment. See also
Note 2 Alternative performance measures.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 234
Right-of-use assets
Land and
buildings
Plant and
machinery
Other
equipment
Vehicles
Other
Total
Balance at 1 January 2020
160
8
33
29
2
232
Changes in carrying amount:
New leases / terminations
10
-
-
11
-
21
Remeasurements
12
-
2
(1)
-
13
Acquisitions
8
-
-
1
-
9
Depreciation
(33)
(1)
(3)
(14)
-
(51)
Exchange rate differences
(9)
-
(1)
(2)
-
(12)
Reclassification to held for sale
(1)
-
-
(3)
-
(4)
(13)
(1)
(2)
(8)
-
(24)
Balance at 31 December 2020
Cost
199
9
37
39
3
287
Depreciation and impairments
(52)
(2)
(6)
(18)
(1)
(79)
Carrying amount at 31 December 2020
147
7
31
21
2
208
.
Changes in carrying amount:
New leases / terminations
6
1
-
10
-
17
Remeasurements
(1)
1
2
-
-
2
Depreciation
(33)
(1)
(4)
(12)
(1)
(51)
Impairment losses
(2)
-
-
-
-
(2)
Transfer from PPE
5
-
-
-
-
5
Exchange rate differences
7
1
1
1
-
10
Reclassification to held for sale
-
(1)
-
-
-
(1)
(18)
1
(1)
(1)
(1)
(20)
Balance at 31 December 2021
129
8
30
20
1
188
Cost
210
11
39
39
2
301
Depreciation and impairments
(81)
(3)
(9)
(19)
(1)
(113)
Carrying amount
129
8
30
20
1
188
For the disclosures on the lease liabilities that correspond with the right-of-use assets, see Note 19 Borrowings.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 235
10 Associates and joint arrangements
Associates and joint ventures
The following table analyses, in aggregate, the carrying amount and share of profit and other results of associates and
joint ventures.
2021
2020
Associates
Joint ventures
Total
Total
Balance at 1 January
89
4
93
155
- Share of the profit of associates and joint ventures
15
-
15
(71)
- Other comprehensive income
4
-
4
(6)
- Capital payments
2
3
5
8
- Dividends received
(9)
(1)
(10)
(1)
- Acquisitions
-
-
-
1
- Consolidation changes
(17)
-
(17)
-
- Disposals
(34)
-
(34)
-
- Fair value adjustments
10
(2)
8
-
- Other
(1)
1
-
7
Balance at 31 December
59
5
64
93
On 27 July 2021, DSM acquired in a step acquisition the remaining shares of Midori USA, Inc. (see also Note 3 Change in the
scope of the consolidation). Before the acquisition, DSM accounted for its 36.5% stake as an associate and applied equity
accounting. This previously held equity interest was recognized at a book value of €12 million and was revalued to its fair
value of €22 million on acquisition date. The fair value step-up of €10 million was recognized in the income statement in
Other results related to associates and joint ventures.
On 15 October 2021, CVC Capital Partners sold its AOC specialty resins business, in which DSM is a minority shareholder, to
an affiliate of Lone Star Funds. Before the sale, DSM accounted for its share in AOC as an associate. DSM received an
amount of €337 million in cash for its entire shareholding and recognized a book profit of €303 million, which is included
under ‘Other results related to associates and joint ventures’ in the income statement.
Joint operations
The operations Veramaris (2017) and Avansya (2019) are accounted for in accordance with IFRS 11 for joint operations. DSM
therefore recognizes their amounts for the assets, liabilities, revenues and expenses in accordance with the contractual
entitlement and obligations of DSM.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 236
11 Other financial assets
Loans
associates and
joint ventures
Other
participating
interests
Other
receivables
Other
Total
Balance at 1 January 2020
3
150
103
7
263
Changes:
- Charged to the income statement
-
-
-
(2)
(2)
- Acquisitions
-
-
-
4
4
- Disposals
-
(47)
-
-
(47)
- Capital payments
-
11
-
-
11
- Loans granted / prepayments
1
-
8
-
9
- Repayments
-
-
(5)
4
(1)
- Exchange differences
-
-
(10)
-
(10)
- Transfers
-
-
(7)
(4)
(11)
- Changes in fair value
-
106
-
-
106
- Other
-
(1)
(6)
-
(7)
Balance at 31 December 2020
4
219
83
9
315
.
Changes:
- Charged to the income statement
-
-
(14)
(2)
(16)
- Disposals
-
(123)
-
-
(123)
- Capital payments
-
35
-
-
35
- Loans granted / prepayments
-
-
10
-
10
- Repayments / (receipts)
-
-
(31)
1
(30)
- Exchange differences
-
-
3
-
3
- Transfers
(3)
14
(20)
(4)
(13)
- Changes in fair value
-
46
-
-
46
Balance at 31 December 2021
1
191
31
4
227
‘Disposals’ includes the divestment of part of DSM’s minority share in Amyris, Inc. (€105 million) and other participating
interests held by DSM Venturing (€18 million).
‘Changes in fair value’ consists mainly of the value increase of our minority share in Amyris, Inc. (€68 million) and the fair
value adjustment of DSM’s share in BCPE Max Dutch JVCo B.V. (-€36 million). These changes are posted to the Fair value
reserve in Other comprehensive income.
12 Inventories
2021
2020
Raw materials and consumables
621
491
Intermediates and finished goods
1,758
1,467
2,379
1,958
Adjustments to lower net realizable value
(82)
(79)
Total
2,297
1,879
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 237
Changes in the adjustment to net realizable value
2021
2020
Balance at 1 January
(79)
(81)
Additions charged to income statement
(20)
(18)
Utilization / reversals
20
18
Exchange differences
(3)
3
Acquisition
-
(2)
Reclassification to held for sale
-
1
Balance at 31 December
(82)
(79)
The carrying amount of inventories adjusted to net realizable value was €310 million (2020: €263 million).
13 Current receivables
Information about the expected credit loss that relates to trade accounts receivable resulting in a loss allowance is
included under Credit risk in Note 23 Financial instruments and risks.
Deferred items comprised €39 million (2020: €50 million) in prepaid expenses that include advance payments for any
expenditure that would have otherwise been made during the next 12 months.
14 Current investments
2021
2020
Trade receivables
Trade accounts receivable
1,391
1,183
Other trade receivables
189
180
Deferred items
34
45
Receivables from associates
12
11
1,626
1,419
Expected credit loss
(23)
(28)
Total Trade receivables
1,603
1,391
Income tax receivable
61
32
Other current receivables
Other taxes and social security contributions
20
26
Employee-related receivables
-
2
Acquisition-/disposal- related receivables
2
4
Loans
-
16
Other receivables
5
7
Deferred items
5
5
Total Other current receivables
32
60
Total current receivables
1,696
1,483
2021
2020
Fixed term deposits
489
43
Total
489
43
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 238
All fixed-term deposits have been placed with institutions with a high credit rating in line with our counterparty policy. The
purpose of the deposits is either to meet short-term cash commitments, or to manage liquidity to such extent that yields
are optimized while allowing DSM sufficient freedom in fulfilling its (strategic) goals.
In 2021, fixed deposits increased due to the proceeds from the sale of our Resins & Functional Materials and associated
businesses to Covestro AG, completed in April 2021.
For more information regarding the counterparty policy, see Note 23 Financial instruments and risks.
15 Cash and cash equivalents
Deposits will be classified as ‘cash equivalent’ if held at banks with a maturity of less than three months at inception.
Deposits will be classified as ‘current investments’ if the maturity is more than three months but less than or equal to one
year. The purpose of the deposits is either to meet short-term cash commitments, or to manage liquidity to such extent,
that yields are optimized, while allowing DSM sufficient freedom in fulfilling its (strategic) goals.
Cash at year-end 2021 was not being used as collateral and therefore was not restricted (same as in 2020).
In a few countries, DSM faces cross-border foreign exchange controls and/or other legal restrictions that limit its ability to
make these balances available at short notice for general use by the group. The amount of cash held in these countries
was €87 million at year-end 2021 (2020: €128 million). The cash will generally be invested or held in the relevant country
and, given the other liquidity resources available to the group, does not significantly affect the ability of the group to meet
its obligations.
16 Equity
2021
2020
Balance at 1 January
7,487
7,835
Net profit for the year
1,680
508
Other comprehensive income
643
(323)
Options / share units granted
22
29
Dividend
(424)
(429)
Proceeds from reissue of ordinary shares
193
206
Acquisition of NCI without a change in control
(13)
(32)
Acquisition (divestment) of subsidiary with NCI
(24)
(1)
Repurchase of shares
(165)
(309)
Other changes
(2)
3
Balance at 31 December
9,397
7,487
‘Acquisition of NCI without a change in control’ in 2021 relates to the purchase of the remaining 35% non-controlling
interest in DSM Rainbow (Inner Mongolia) Biotechnology Co., Ltd. See Note 17 Non-controlling interests.
2021
2020
Deposits
318
28
Cash at bank and in hand
1,243
836
Payments in transit
-
5
Bills of exchange
-
2
Total
1,561
871
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 239
Dividend
For the year 2021, the following dividends were proposed by the Managing Board.
2021
2020
Per cumulative preference share A: €0.13 (2020: €0.16)
6
7
Per ordinary share: €2.50 (2020: €2.40)
432
413
Total
438
420
The proposed final dividend on ordinary shares is subject to approval by the Annual General Meeting of Shareholders and
has not been deducted from Equity.
For a description of the rules of profit appropriation and of the statutory rights attached to Cumulative Preference Shares
A and B, see Note 6 Shareholders’ equity to the Parent company financial statements.
Share capital
On 31 December 2021, the authorized capital amounted to €1,125 million (2020: €1,125 million), distributed over 330,960,000
ordinary shares, 44,040,000 Cumulative Preference Shares A and 375,000,000 Cumulative Preference Shares B. All shares
have a nominal value of €1.50 each. The outstanding shares are entitled to one vote per share at the General Meeting of
Shareholders. All rights attached to the Company’s shares held by the Group (treasury shares) are suspended until those
shares are reissued.
Every year the Managing Board, with the approval of the Supervisory Board, shall decide which part of the profit shall be
set aside. Out of the profit remaining, a dividend based on EURIBOR plus a premium at the company’s discretion, shall be
distributed insofar as possible on the Cumulative Preference Shares B. From the amount remaining of the profit, a
dividend shall be distributed insofar as possible on the Cumulative Preference Shares A, the percentage based on the
effective return on government loans, increased by a mark-up to be determined at the company’s discretion. If, for any
financial year, the distributions on the Cumulative Preference Shares B and A cannot be effected or cannot be fully
effected because the profit after reservation does not suffice, the deficit shall be distributed to the debit of the following
financial years. In that case, each time as much as possible, the overdue dividend, augmented by the dividend for the last
expired financial year, shall be distributed, first on Cumulative Preference Shares B and next on Cumulative Preference
Shares A. The remaining profit shall be put at the disposal of the General Meeting of Shareholders.
In the period from April 2019 until June 2020, DSM repurchased 6,638,971 shares with the stated intention to reduce its
issued share capital. On 29 April 2021, DSM announced this share cancellation, resulting in a decrease of the number of
issued ordinary shares from 181,425,000 to 174,786,029.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 240
The changes in the number of issued and outstanding shares in 2020 and 2021 are shown in the following table.
Overview of shares
Issued shares
Issued shares
Treasury shares
Ordinary
Cum. Pref. A
Ordinary
Balance at 1 January 2020
181,425,000
44,040,000
8,976,245
Reissue of shares in connection with share-based
payments
(1,460,174)
Repurchase of shares
2,876,035
Dividend in the form of ordinary shares
(1,186,445)
Balance at 31 December 2020
181,425,000
44,040,000
9,205,661
Number of treasury shares at 31 December 2020
(9,205,661)
Number of shares outstanding at 31 December 2020
172,219,339
44,040,000
.
Balance at 1 January 2021
181,425,000
44,040,000
9,205,661
Cancellation of issued shares
(6,638,971)
(6,638,971)
Reissue of shares in connection with share-based
payments
(803,049)
Repurchase of shares
1,050,000
Bearer share certificates that have become void
7,466
Dividend in the form of ordinary shares
(1,003,808)
Balance at 31 December 2021
174,786,029
44,040,000
1,817,299
Number of treasury shares at 31 December 2021
(1,817,299)
Number of shares outstanding at 31 December 2021
172,968,730
44,040,000
The average number of ordinary shares outstanding in 2021 was 172,647,995 (2020: 171,535,921). All shares issued are fully
paid.
The Cumulative Preference Shares A have been classified as equity, because there is no mandatory redemption and
distributions to the shareholders are at the discretion of DSM.
On 31 December 2021, no Cumulative Preference Shares B were outstanding (same as 2020).
Share premium
Of the total share premium of €471 million (2020: €489 million), an amount of €89 million (2020: €91 million) can be
regarded as entirely free of tax.
Treasury shares
In 2021, DSM repurchased 1.1 million shares for an amount of €165 million to cover commitments for stock dividend. DSM
did not repurchase any shares in 2021 to fulfill its obligations under share-based compensation plans. Furthermore,
6,638,971 ordinary shares held in treasury since the execution of the share buyback program earmarked for capital
reduction were canceled.
At 31 December 2021, DSM possessed 1,817,299 (2020: 9,205,661) ordinary shares with a nominal value of €3 million, or 0.83%
(2020: 4.08%) of the share capital. The average purchase price of the ordinary treasury shares as at 31 December 2021 was
€97.50 (2020: €105.98). At 31 December 2021, 1,665,073 (2020: 2,460,656) of the total number of treasury shares outstanding
were held for servicing share-option rights and share plans, 152,226 (2020: 106,034) shares for stock dividend, and no more
shares (2020: 6,638,971) were earmarked for capital reduction.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 241
Other reserves in Shareholders’ equity
Translation
reserve
Hedging
reserve
Reserve for
share-based
compensation
Fair
value
reserve
Total
Balance at 1 January 2020
162
(122)
51
5
96
Changes:
Fair-value changes of derivatives
-
40
-
-
40
Release to income statement
-
20
-
-
20
Fair-value changes of other financial assets
-
-
-
106
106
Exchange differences
(451)
-
-
-
(451)
Options and performance shares granted
-
-
29
-
29
Options and performance shares exercised/canceled
-
-
(39)
-
(39)
Transfer to retained earnings
-
-
-
(30)
(30)
Changes in joint ventures and associates
(2)
-
-
-
(2)
Income tax
2
(6)
-
(8)
(12)
Total changes
(451)
54
(10)
68
(339)
Balance at 31 December 2020
(289)
(68)
41
73
(243)
.
Changes:
Fair-value changes of derivatives
-
(24)
-
-
(24)
Release to income statement
(13)
7
-
-
(6)
Fair-value changes of other financial assets
-
-
-
46
46
Exchange differences
478
-
-
-
478
Options and performance shares granted
-
-
22
-
22
Options and performance shares exercised/canceled
-
-
(24)
-
(24)
Transfer to retained earnings
-
-
-
(101)
(101)
Changes in joint ventures and associates
1
-
-
-
1
Income tax
-
8
-
(1)
7
Total changes
466
(9)
(2)
(56)
399
Balance at 31 December 2021
177
(77)
39
17
156
The increase in the Translation reserve in 2021 is mainly caused by a weakening of the euro against the US dollar, Chinese
renminbi and Swiss Franc. As a consequence, the total value of the subsidiaries increased, which led to a positive
exchange difference of €478 million.
The Translation reserve, Hedging reserve and Fair value reserve (partly) are legal reserves in accordance with Dutch law
and cannot be distributed to shareholders. Additional information is provided in Note 6 Shareholders' equity to the Parent
company financial statements.
In the reporting year, DSM sold part of its shares in Amyris, Inc., which is accounted for as an Other participating interest.
The related accumulated fair value increase of €93 million up to the date of sale has been transferred within equity from
the Fair value reserve to Retained earnings.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 242
17 Non-controlling interests
2021
2020
Andre Pectin
Yimante
Other
Total
% of non-controlling interest
25%
25%
Balance at 1 January
35
21
32
88
104
Changes:
- Share of profit/charged to income statement
4
1
(1)
4
2
- Acquisitions
-
-
-
-
(1)
- Divestments
-
-
(23)
(23)
-
- Other consolidation changes
-
-
2
2
(10)
- Capital payments
-
-
3
3
3
- Dividend paid
(2)
-
(1)
(3)
(6)
- Exchange differences
5
2
1
8
(4)
Total changes
7
3
(19)
(9)
(16)
Balance at 31 December
42
24
13
79
88
‘Divestments’ relates to the derecognition of the non-controlling interest in DSM Eternal Resins Co. Ltd. (€13 million), DSM
Resins Far East Ltd. (€7 million) and Japan Fine Coatings Co. Ltd. (€3 million) following the divestment of the RFM business.
Not fully-owned subsidiaries on a 100% basis
2021
2020
Andre Pectin
Yimante
Other
Total
Assets
Intangible assets
61
24
19
104
117
Property, plant and equipment
45
133
150
328
320
Other non-current assets
2
25
43
70
56
Inventories
37
9
16
62
70
Receivables
38
30
35
103
110
Cash and cash equivalents
9
11
29
49
49
Total assets
192
232
292
716
722
.
Liabilities
Provisions (non-current)
14
-
-
14
16
Borrowings (non-current)
-
101
71
172
110
Other non-current liabilities
-
1
1
2
17
Borrowings and derivatives (current)
-
-
67
67
100
Other current liabilities
10
33
75
118
136
Total liabilities
24
135
214
373
379
Net assets (100% basis)
168
97
78
343
343
Net sales
76
5
108
189
206
Net profit for the year
14
3
(11)
6
12
Cash provided by / (used in) operating
activities
(36)
(11)
(12)
(59)
(29)
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 243
18 Provisions
Restructuring
costs and
termination
benefits
Environmental
costs
Other long-
term
employee
benefits
Other
provisions
Total
Balance at 1 January 2020
31
59
41
37
168
Of which current
21
13
4
10
48
Changes:
- Additions
86
3
3
12
104
- Releases
(7)
(16)
-
(5)
(28)
- Uses
(62)
(7)
(2)
(4)
(75)
- Reclassification to held for sale
-
-
(4)
-
(4)
- Acquisitions
2
1
3
15
21
- Other change
-
-
-
(2)
(2)
Total changes
19
(19)
-
16
16
Balance at 31 December 2020
50
40
41
53
184
Of which current
42
7
5
7
61
.
Changes:
- Additions
56
-
6
9
71
- Releases
(10)
-
-
(12)
(22)
- Uses
(43)
(3)
(6)
(17)
(69)
- Other change
-
-
(1)
1
-
Total changes
3
(3)
(1)
(19)
(20)
Balance at 31 December 2021
53
37
40
34
164
Of which current
49
4
5
10
68
In cases where the effect of the time value of money is material, provisions are measured at the present value of the
expenditures expected to be required to settle the obligation. The discount rate used increased from 0.7% to 1.3%. The
balance of provisions measured at present value increased by less than €1 million in 2021 in view of the passage of time
(same as in 2020).
The provisions for restructuring costs and termination benefits mainly relate to the costs of redundancy schemes
connected to the dismissal of employees and costs of termination of contracts. These provisions have an average life of 1
to 3 years.
During 2021, a restructuring program was launched for the Materials cluster. A provision of €16 million was recognized for
this program, of which €6 million was used during the year.
Furthermore, a restructuring program following up on the new strategy of DSM was launched at the end of 2021. A
provision of €28 million was recognized for this program, of which €3 million was used during the year.
The other additions to the provisions for restructuring costs and termination benefits in 2021 relate mainly to the various
smaller restructuring projects (same as in 2020).
The provisions for environmental costs relate to soil clean-up obligations, among other things. These provisions have an
average life of around 10 years.
The provisions for other long-term employee benefits relate mainly to length-of-service and end-of-service payments. The
average life of this provision is estimated to be between 10 and 12 years.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 244
Several items have been combined under Other provisions, for example, demolition costs, onerous contracts and legal
claims. These provisions have an average life of 1 to 10 years.
19 Borrowings
2021
2020
Total
Of which
current
Total
Of which
current
Debenture loans
2,739
-
3,237
-
Private loans
116
13
81
2
Lease liabilities
195
48
215
47
Credit institutions
43
43
53
53
Total
3,093
104
3,586
102
In agreements governing loans with a residual amount at year-end 2021 of €2,739 million (31 December 2020: €3,237
million), negative pledge clauses have been included that restrict the provision of security.
The documentation of the €500 million bond issued in March 2014, the €500 million bond issued in April 2015, the €750
million bond issued in September 2016, and both €500 million bonds issued in June 2020 include a change-of-control
clause. This clause allows the bond investors to request repayment at par if 50% or more of the DSM shares are controlled
by a third party and if the company is downgraded below investment grade (< BBB-). DSM’s credit rating has been kept
stable throughout 2021 and is set-out as follows: Moody’s: “A3”/stable outlook and S&P: “A-”/stable outlook. At 31
December 2021, there was €1,043 million in borrowings outstanding with a remaining term of more than 5 years (at 31
December 2020, €1,813 million).
In June 2021, DSM exercised its right to redeem early, in full and at the make-whole redemption amount, the €500 million
bond issued on 24 September 2015 and with scheduled maturity of 26 September 2022. The make-whole redemption
amount was €1,033.91 per €1,000 in principal amount of notes inclusive of accrued and unpaid interest up to, but
excluding, the make-whole redemption date falling on 18 June 2021.
The schedule of repayment of borrowings is as follows.
Borrowings by maturity
2021
2020
2021
-
102
2022
104
553
2023
73
37
2024
549
546
2025 and 2026
1,324
1,304
After 2026
1,043
1,044
Total
3,093
3,586
A breakdown by currency is given in the following table.
Borrowings by currency
2021
2020
EUR
2,864
3,351
CNY
93
80
USD
80
88
BRL
10
11
TWD
-
12
Other
46
44
Total
3,093
3,586
On balance, total borrowings decreased by €493 million due to the following changes.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 245
Movements of borrowings
2021
2020
Balance at 1 January
3,586
2,653
Loans taken up
37
1,123
Repayments
(513)
(268)
Unwinding (interest)
7
7
Acquisitions/consolidation changes
11
205
Disposals
(30)
-
Reclassification to held for sale
-
(4)
Changes in debt to credit institutions
12
(95)
New lease arrangements (incl. remeasurements)
19
34
Payment of lease liabilities
(54)
(55)
Exchange differences
18
(14)
Balance at 31 December
3,093
3,586
The average effective interest rate on the portfolio of borrowings outstanding in 2021, including hedge instruments related
to these borrowings, amounted to 1.86% (2020: 1.78%).
A breakdown of debenture loans is given below.
Debenture loans
Nominal amount
2021
2020
EUR loan
2.38%
2014—2024
500
499
499
EUR loan
1.00%
2015—2025
500
499
498
EUR loan
1.38%
2015—2022
500
-
500
EUR loan
0.75%
2016—2026
750
749
748
EUR loan
0.25%
2020—2028
500
498
497
EUR loan
0.625%
2020—2032
500
495
495
Total
3,250
2,739
3,237
All debenture loans have a fixed interest rate and are listed on the AEX.
- The 2.375% EUR bond 2014–2024 of €500 million was pre-hedged by means of forward starting swaps, resulting in
an effective interest rate for this bond of 3.97%, including the settlement of the pre-hedge
- The 1% EUR bond 2015–2025 of €500 million was pre-hedged by means of forward starting swaps, resulting in an
effective interest rate for this bond at 3.65%, including the settlement of the pre-hedge
- The 1.375% EUR bond 2015–2022 of €500 million had an effective interest rate of 1.40% and was early redeemed
during 2021, as is mentioned above
- The 0.75% EUR bond 2016–2026 of €750 million was pre-hedged by means of a collar resulting in an effective
interest rate for this bond of 1.08%, including the settlement of the pre-hedge
- The 0.25% EUR bond 2020–2028 of €500 million has an effective interest rate of 0.29%
- The 0.625% EUR bond 2020–2032 of €500 million has an effective interest rate of 0.70%
A breakdown of private loans is given below.
Private loans
2021
2020
CNY loan
73
57
Other loans
43
24
Total
116
81
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 246
A breakdown of the lease liabilities is given below.
Lease liabilities by maturity
2021
2020
2021
-
47
2022
47
38
2023
38
32
2024
30
27
2025
22
20
2026
16
14
After 2026
60
58
Total undiscounted lease liabilities at 31 December
213
236
Lease liabilities included in the Balance Sheet at 31 December
195
215
Current
48
47
Non-current
147
168
In addition to the contractual lease commitments, DSM has identified explicit renewal options available to DSM, which are
currently not reasonably certain to be exercised and are therefore not included in the measurement of the lease.
The associated future lease payments which are uncommitted and optional for DSM, are estimated around €79 million
(undiscounted; 2020: €78 million).
The interest expense on the lease liabilities was €5 million (2020: €6 million) and the total repayments of the lease
liabilities amounted to €54 million in 2021 (2020: €55 million). These cash flows are reported as financing cash flows.
DSM’s policy regarding financial-risk management is described in Note 23 Financial instruments and risks.
20 Other non-current liabilities
The increase in the Other non-current liabilities mainly relates to earn-out agreements regarding the acquisitions of the
Amyris F&F bio-based intermediates business and Vestkorn Milling. See also Note 3 Change in the scope of the
consolidation.
2021
2020
Investment grants / customer funding
62
76
Deferred items
24
24
Drawing rights
49
36
Acquisition related liabilities
146
22
Other non-current liabilities
2
5
Total
283
163
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 247
21 Current liabilities
2021
2020
Trade payables
Received in advance
10
11
Trade accounts payable
1,550
1,200
Notes and cheques due
4
2
Owing to associates and joint ventures
7
5
Total Trade payables
1,571
1,218
Income tax payable
77
45
Other current liabilities
Other taxes and social security contributions
60
47
Interest
20
22
Pensions
2
2
Investment creditors
145
98
Employee-related liabilities
302
266
Payables associates and joint ventures relating to cash facility
1
2
Acquisition / divestment related liabilities
10
71
Total Other current liabilities
540
508
Total current liabilities
2,188
1,771
Included in trade accounts payable are amounts due to suppliers which could be part of a supply chain finance
arrangement between the supplier and a third-party bank. DSM suppliers have the option to enter into such supply chain
finance arrangements with third party banks, which provides them with the option of earlier payment based on terms
linked to DSM’s investment grade credit rating. If a supplier chooses to participate in such an arrangement, this does not
impact the classification of the trade payable for DSM as these supply chain finance arrangements are concluded between
the banks and the suppliers and do not alter the payment conditions between the supplier and DSM. Therefore, these
amounts remain classified as trade payables.
22 Contingent liabilities and other financial obligations
The contingent liabilities and other financial obligations in the following table are not recognized in the balance sheet.
2021
2020
Guarantee obligations on behalf of associates and third parties
206
196
Outstanding orders for projects under construction
11
30
Other
108
82
Total
325
308
Guarantee obligations are principally related to VAT and duties on the one hand and to financing obligations of associated
companies or related third parties on the other. Guarantee obligations will only lead to a cash outflow when called upon.
At year-end, no obligations had been called upon. Most of the outstanding orders for projects under construction will be
completed in 2022. Other relates mainly to contingent liabilities in contracts for catalysts.
Litigation
DSM has a process in place to monitor legal claims periodically and systematically.
DSM is involved in several legal proceedings, most of which are related to the ordinary course of business. DSM does not
expect these proceedings to result in liabilities that have a material effect on the company's financial position. In cases
Royal DSM Integrated Annual Report 2021 248
Notes to the consolidated financial statements of Royal DSM
where it is probable that the outcome of the proceedings will be unfavorable, and the financial outcome can be measured
reliably, a provision has been recognized in the financial statements and disclosed in Note 18 Provisions.
In 2015, an award was issued against DSM Sinochem Pharmaceuticals India Private Ltd. (DSP India) in a protracted
arbitration case in India going back to 2004 involving a joint venture that DSP India had formed with Hindustan Antibiotics
Ltd., which suspended its operations in 2003. DSP India (renamed to Centrient Pharmaceuticals after divestment by DSM in
2018) is covered by an indemnity from Koninklijke DSM N.V. for this case. In 2015, DSP India made an application with the
Civil Court in Pune (India) to set aside the arbitral award. The award amounts to INR 127.5 crore (approximately €15 million
as at year-end 2021) excluding interest of 12% per year as of 2004. In 2019, DSM provided the Bombay High Court a bank
guarantee of INR 150 crore (approximately €18 million as at year-end 2021). At the end of 2021, the application proceedings
were still pending. DSM has always viewed this case as unfounded and is of the opinion that the likelihood of the award
being ultimately set aside is high. Therefore, no liability is recognized in respect of this case.
In 2019, Brazilian tax authorities disagreed with certain tax treatment as applied by the company in 2014–2016, which would
have an effect on such prior year income tax returns of around BRL 65 million (approximately €10 million as at year-end
2021), including penalties and interest. DSM views this case as unfounded and considers that the possibility of winning this
case is high, as confirmed by external legal counsel. Therefore, no liability relating to this case is recognized. During 2021
no relevant developments took place that alter this view.
23 Financial instruments and risks
Policies on financial risks
As an international company, DSM is exposed to financial risks in the normal course of business. A major objective of our
group policy is to minimize the impact of market, liquidity and credit risk on the value of the company and its profitability.
In order to achieve this, a systematic financial and risk management system has been established. For the purpose of
securing compliance with the risk management policies, an internal control framework has been implemented, and the
controls are monitored and tested periodically.
The derivatives contracts used by DSM are entered into exclusively in connection with the corresponding underlying
transaction (hedged item) relating to normal operating business. The instruments used are customary products, such as
currency swaps, cross-currency interest rate swaps, collars, forward exchange contracts and interest rate swaps.
An important element of DSM’s financial policy and capital management is the allocation of cash flow. DSM primarily
allocates cash flow to investments aimed at strengthening its business positions and securing the dividend payment to its
shareholders. The remaining cash flow is further used for acquisitions and partnerships that strengthen DSM’s
competences and market positions. The net debt to equity ratio (gearing) is 9.7 (2020: 25.6), see also Note 25 Net debt.
Liquidity risk
Liquidity risk is the financial risk that an entity does not have and/or cannot access enough liquid cash and/or assets to
meet its obligations. This can happen if the entity’s credit rating falls, or when it experiences sudden unexpected cash
outflows or an unexpected drop in cash inflows, or some other event that causes counterparties to avoid trading with or
lending to the entity. Additionally, an entity can be indirectly exposed to market liquidity risk, if the financial markets on
which it depends are subject to loss of liquidity.
The primary objective of liquidity management is to optimize the corporate cash position, among other things, by securing
availability of sufficient liquidity for execution of payments by DSM entities, at the right time and the right place.
At 31 December 2021, DSM had cash and cash equivalents of €1,561 million (2020: €871 million).
At the end of 2021, DSM had one committed credit facility amounting to €1.0 billion, maturing on 28 May 2025. The
agreement for the committed credit facility has neither financial covenants nor material adverse changes clauses. The
committed credit facility links the interest rate to DSM’s greenhouse gas (GHG) emission reduction. At year-end 2021, no
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 249
loans had been taken up under the committed credit facilities. The committed credit facilities contracted in 2020 were
canceled in 2021.
Furthermore, DSM has a commercial paper program amounting to €2.0 billion (2020: €2.0 billion). The company will use the
commercial paper program to a total of not more than €1.0 billion (2020: €1.0 billion). At 31 December 2021, €0 million had
been issued as commercial paper (2020: €0 million).
DSM has no derivative contracts to manage currency risk or interest rate risk outstanding under which margin calls by the
counterparty would be permitted.
Floating-rate and fixed-rate borrowings and monetary liabilities analyzed by maturity are summarized in the following
table. Borrowings excluding credit institutions are shown after taking into account related interest rate derivatives in
designated hedging relationships. DSM manages financial liabilities and related derivative contracts on the basis of the
remaining contractual maturities of these instruments. The remaining maturities presented in the following table provide
an overview of the timing of the cash flows related to these instruments. Financial assets are not linked to financial
liabilities in order to meet cash outflows on these liabilities.
Financial liabilities
Carrying
amount
Within 1
year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
After 5
years
2020
Borrowings
3,586
102
553
37
546
535
1,813
Monetary liabilities
1,851
1,787
21
5
5
5
28
Guarantees
196
-
-
-
-
-
196
Derivatives
14
13
1
-
-
-
-
Interest payments
168
34
34
27
27
15
31
Cash at redemption¹
13
2
2
2
2
1
4
Total
5,828
1,938
611
71
580
556
2,072
.
2021
Borrowings
3,093
104
73
549
553
771
1,043
Monetary liabilities
2,399
2,188
67
37
57
18
32
Guarantees
206
-
-
-
-
-
206
Derivatives
49
40
7
2
-
-
-
Interest payments
127
27
27
27
15
10
21
Cash at redemption¹
11
2
2
2
1
1
3
Total
5,885
2,361
176
617
626
800
1,305
1 Difference between nominal redemption and amortized costs.
The following table reflects the exposure of the derivatives to liquidity risk. It contains the cash flows from derivatives with
positive fair values and from derivatives with negative fair values to have a complete overview of the derivatives related
cash flows. The amounts are gross and undiscounted.
Derivatives cash flow
2021
2022
2023
2024
2025
2026
Total
2020
Inflow
1,881
57
103
39
14
2,094
Outflow
(1,842)
(54)
(101)
(36)
(13)
(2,046)
2021
Inflow
2,092
107
39
8
13
2,259
Outflow
(2,109)
(112)
(39)
(9)
(13)
(2,282)
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 250
Market risk
Market risk can be subdivided into interest rate risk, currency risk and price risk.
Interest rate risk
Interest rate risk is the risk that adverse movements of interest rates lead to high costs on interest-bearing debt or assets,
which negatively impact the company’s capability to honor its commitments. DSM’s interest rate risk policy is aimed at
minimizing the interest rate risks associated with the financing of the company and thus at the same time optimizing the
net interest costs. This policy translates into a certain desired profile of fixed-interest and floating-interest positions,
including cash and cash equivalents, with the floating-interest position not exceeding 60% of net debt.
At 31 December 2021, there was a CNY 166 million credit facility held by DSM Inner Mongolia Rainbow, based on floating
rate SHIBOR (2020: CNY 180 million). There were no outstanding fixed-floating interest rate swaps (end of 2020 none).
The following analysis of the sensitivity of borrowings, assets and related derivatives to interest rate movements assumes
an instantaneous 1% change in interest rates for all maturities from their level on 31 December 2021, with all other
variables held constant. A 1% reduction in interest rates would result in a €18 million pre-tax loss in the income statement
and equity on the basis of the composition of financial instruments on 31 December 2021, as floating-rate borrowings are
more than compensated for by floating-rate assets (mainly cash). The opposite applies in the case of a 1% increase in
interest rates. The sensitivity of financial instruments with a floating interest rate on 31 December 2021 to changes in
interest rates is set out in the following table.
For more information regarding fixed or floating interest, see Note 19 Borrowings.
Sensitivity to change in interest rate
2021
2020
Carrying
amount
Sensitivity
Carrying
amount
Sensitivity
+1%
(1%)
+1%
(1%)
Loans to associates and joint ventures
1
-
-
4
-
-
Current investments
489
5
(5)
43
-
-
Cash and cash equivalents
1,561
16
(16)
871
9
(9)
Short-term borrowings
(104)
(1)
1
(102)
(1)
1
Long-term borrowings
(2,989)
(2)
2
(3,484)
(2)
2
Currency risk
Currency risk is the risk that adverse movements of foreign currencies negatively impact the results of operations and the
financial condition of the company, for example due to losses on assets or liabilities in foreign currencies. It is DSM’s
policy to hedge 100% of the currency risks resulting from sales and purchases at the moment of recognition of the
receivables and payables. This is realized by transferring at spot rates the respective exposures to the group, which are,
consequently (on a netted basis), hedged externally.
In addition, operating companies may — under strict conditions — opt for hedging currency risks from firm commitments
and forecast transactions. The currencies giving rise to these risks are primarily USD, CHF and JPY. The risks arising from
currency exposures are regularly reviewed and hedged when appropriate. DSM uses currency forward contracts, spot
contracts, and average-rate currency forwards and options to hedge the exposure to fluctuations in foreign exchange
rates. At year-end, these instruments had remaining maturities of less than one year. For the hedging of currency risks
from firm commitments and forecast transaction cash flows, hedge accounting is applied. Hedge accounting is not applied
for hedges of recognized trade receivables and trade payables hedged with short-term derivatives.
To hedge intercompany loans, receivables and payables denominated in currencies other than the functional currency of
the subsidiaries, DSM uses currency swaps or forward contracts.
The following analysis of the sensitivity of net borrowings and derivative financial instruments to currency movements
against the euro assumes a 10% change in all foreign currency rates against the euro from their level on 31 December 2021,
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 251
with all other variables held constant. A +10% change indicates a strengthening of the foreign currencies against the euro.
A -10% change represents a weakening of the foreign currencies against the euro.
Sensitivity to change in exchange rate
2021
2020
Carrying
amount
Sensitivity
Carrying
amount
Sensitivity
+10%
(10%)
+10%
(10%)
Loans to associates and joint ventures
1
-
-
4
-
-
Current investments
489
2
(2)
43
1
(1)
Cash and cash equivalents
1,561
24
(24)
871
25
(25)
Short-term borrowings (excluding lease liabilities)
(57)
(2)
2
(55)
(4)
4
Long-term borrowings (excluding lease liabilities)
(2,841)
(7)
7
(3,316)
(5)
5
Lease liabilities
(195)
(14)
14
(215)
(15)
15
Currency forward contracts
(11)
8
(8)
9
17
(17)
Currency forwards related to net investments in foreign entities¹
-
(8)
8
-
(13)
13
Average-rate forwards used for economic hedging²
(10)
22
(22)
35
19
(19)
Other derivatives
50
3
(3)
51
4
(4)
1 Fair-value change reported in Translation reserve.
2 Fair-value change reported in Hedging reserve.
Sensitivity changes on these positions will generally be recognized in profit or loss or in the translation reserve in equity,
with the exception of the instruments for which cash flow hedge accounting or net-investment hedge accounting is
applied.
In case of a strengthening or weakening of the euro against USD, CHF and CNY (being the key currencies), this would affect
the translation of financial instruments denominated in these currencies taking into account the effect of hedge
accounting and assuming all other variables being constant.
Profit or loss
Equity
Strengthening
Weakening
Strengthening
Weakening
EUR
USD (10% movement)
(140)
140
(277)
277
CHF (10% movement)
10
(10)
(231)
231
CNY (10% movement)
(17)
17
(95)
95
Price risk
Financial instruments that are subject to changes in stock exchange prices or indexes are subject to a price risk. At year-
end 2021, mainly other participating interests are subject to price risks.
Credit risk
Credit risk is the risk that a (commercial or financial) counterparty may not be able to honor a financial commitment
according to the contractual agreement with DSM. The company manages the credit risk to which it is exposed by applying
credit limits per institution and by dealing exclusively with institutions that have a high credit rating.
At the balance sheet date, there were no significant concentrations of credit risks.
For all financial assets measured at amortized cost, the estimation of the loss allowance for doubtful accounts receivable
is based on an expected credit loss (ECL) model.
For trade receivables, DSM uses an allowance matrix to measure the lifetime ECL for trade receivables. The loss rates
depend among other things on the specified aging categories and are based on historical write-off percentages, taking
market developments into account.
For other financial assets, DSM applies an ECL model that reflects the size and significance of DSM’s exposure to credit
loss. The ECL is based on the allocation of a credit risk grade which is based on data that is determined to be predictive of
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 252
the risk of loss (including but not limited to external ratings, audited financial statements, management accounts and cash
flow projections and available press information about customers) and applying experienced credit judgement. Credit risk
grades are defined using qualitative and quantitative factors that are indicative of the risk of default and are aligned to
external credit rating definitions from Moody’s.
Risk of default is herewith considered as the risk of bankruptcy, or any legal impediment to the timely payment of either
interest and/or principal, as well as missed or delayed disbursement of either interest and/or principal.
The loss allowance on non-current financial assets that has been taken into consideration at the end of 2021 was
nil (2020: €5 million).
With regard to treasury activities (for example cash, cash equivalents and derivatives held with banks or financial
institutions) it is ensured that financial transactions are only concluded with counterparties that have at least a Moody’s
credit rating of A3 for long-term instruments. At Business Group level, outstanding receivables are continuously monitored
by management. Appropriate allowances are made for any credit risks that have been identified in line with the expected
credit loss policy.
The development of the outstanding receivables per aging category is as follows.
2021
2020
Neither past due nor impaired
1,070
924
1–29 days overdue
179
165
30–89 days overdue
118
70
90 days or more overdue
24
24
Total
1,391
1,183
The table below provides information about the credit risk exposure per aging category and the ECL for trade accounts
receivable of €23 million at 31 December 2021 (31 December 2020: €28 million), see Note 13 Current receivables.
2021
2020
Weighted
average
loss rate
Gross
carrying
amount
Expected
credit loss
Weighted
average
loss rate
Gross
carrying
amount
Expected
credit loss
Neither past due nor impaired
0.3%
1,070
(3)
0.4%
924
(4)
1–29 days overdue
1.0%
179
(2)
1.0%
165
(2)
30–89 days overdue
4.0%
118
(5)
6.0%
70
(4)
90 days or more overdue
55.0%
24
(13)
75.0%
24
(18)
Total
1,391
(23)
1,183
(28)
The changes in the expected credit loss for trade accounts receivable are as follows.
2021
2020
Balance at 1 January
(28)
(17)
Net remeasurement of expected credit loss
2
(6)
Deductions
2
1
Acquisitions
-
(9)
Reclassification to held for sale
-
2
Disposals
1
-
Exchange differences
-
1
Balance at 31 December
(23)
(28)
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 253
The maximum exposure to credit risk is represented by the carrying amounts of financial assets that are recognized in the
balance sheet, including derivative financial instruments. DSM has International Swaps and Derivatives Association (ISDA)
agreements in place with its financial counterparties that allow for the netting of exposures in case of a default of either
party, but do not meet the criteria for offsetting in the balance sheet. The following table presents the carrying amounts of
the derivative financial instruments subject to these agreements. No significant agreements or financial instruments were
available at the reporting date that would reduce the maximum exposure to credit risk.
Exposure to credit risk related to derivatives
2021
2020
Receivables from derivatives presented in the balance sheet
78
109
Related amounts not offset in the balance sheet
(14)
(10)
Net amount
64
99
.
Liabilities from derivatives presented in the balance sheet
(49)
(14)
Related amounts not offset in the balance sheet
14
10
Net amount
(35)
(4)
Information about financial assets is presented in Note 10 Associates and joint arrangements, Note 11 Other financial
assets, Note 13 Current receivables, Note 14 Current investments, Note 15 Cash and cash equivalents and Note 23 Financial
instruments and risks.
DSM's policy is to grant corporate guarantees for credit support of subsidiaries and associates, to get access to credit
facilities which are necessary for their operating working capital needs and which cannot be funded by the corporate cash
pools and/or for bank guarantees needed for local governmental requirements. Information on guarantees is presented in
Note 22 Contingent liabilities and other financial obligations.
Hedge accounting
DSM uses derivative financial instruments to manage financial risks relating to business operations and does not enter
into speculative derivative positions. The purpose of cash flow hedges is to minimize the risk of volatility of future cash
flows. These may result from a recognized asset or liability or a forecast transaction that is considered highly probable
(firm commitment). DSM determines the existence of an economic relationship between the hedging instrument and
hedging item based on currency, amount and timing of their respective cash-flows. The hedge ratio is dependent on the
risk analysis related to the specific cash flow, and can vary from 50% to 100%. Changes in fair value as a result of changes
in interest (for cash flows hedges) or as a result of changes in exchange rate (for firm commitment hedges) are recognized
in Other comprehensive income (Hedging reserve), and ineffectiveness (mainly as a result of changes in timing of the
hedged transactions) will be recognized in the income statement. As soon as the forecast transaction is realized (the
underlying hedged item materializes), the amount recognized in the Other comprehensive income will be reclassified to
the income statement. In case the hedged future transaction is a non-financial asset or liability, the gain or loss
recognized in Other comprehensive income will be included in the cost of acquisition of the asset or liability.
The purpose of a hedge of a net investment is to reduce the foreign currency translation risk of an investment in a
company whose functional currency is not the euro. Changes in fair value are recognized in Other comprehensive income
(Translation reserve), and ineffectiveness will be recognized in the income statement. The amount recognized in Other
comprehensive income will be reclassified to the income statement, upon divestment of the respective foreign subsidiary.
The purpose of a fair value hedge is to hedge the fair value of assets or liabilities reflected on the balance sheet. Changes
of fair value in hedging instruments, as well as hedged items, will be recognized in the income statement.
Cash flow hedges
In 2021, DSM hedged USD 572 million (2020: USD 575 million) of its 2022 projected net cash flow in USD against the EUR by
means of average-rate currency forward contracts at an average exchange rate of USD 1.20 per EUR for the four quarters of
2022. Each quarter, the relevant hedges for that quarter will be settled and recognized in the income statement. In 2021,
DSM also hedged JPY 6,771 million (2020: JPY 7,213 million) of its 2022 projected net cash flow in JPY against the EUR by
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 254
means of average-rate currency forward contracts at an average exchange rate of JPY 130.25 per EUR for the four quarters
of 2022. DSM also hedged the projected CHF obligations against the EUR, namely CHF 375 million (2020: CHF 361 million) at
an average exchange rate of CHF 1.08 per EUR. These hedges have fixed the exchange rate for part of the USD and JPY
receipts and CHF payments in 2022. Cash flow hedge accounting is applied for these hedges. As a result of similar hedges
concluded in 2020 for the year 2021, €16 million positive (2020: €3 million positive) was recognized in the 2021 operating
profit of the segments involved in accordance with the realization of the expected cash flows. There was no ineffectiveness
in relation to these hedges.
Net investment hedges
The partial hedging of the currency risk associated with the translation of DSM’s CHF-denominated investments was
continued for an amount of CHF 80 million (2020: CHF 135 million). There was no material ineffectiveness in relation to
these hedges.
Cash flow hedges
Net investment hedges
Foreign currency risk
Foreign exchange - denominated
debt (CHF currency)
Inventory
purchases
Other¹
Assets
Liabilities
2020
Nominal amount hedged item
28
223
-
125
Carrying amount assets
-
35
-
-
Carrying amount liabilities
-
-
-
-
Line item balance sheet
Derivatives
Derivatives
Derivatives
Derivatives
Change in the value of the hedging
instrument
1
37
-
1
Costs of hedging recognized in OCI
1
40
-
-
Reclassified from hedging reserve to
income statement
(9)
(3)
-
-
Line item income statement
Cost of sales
Sales
Finex²
Finex²
.
2021
Nominal amount hedged item
23
184
-
77
Carrying amount assets
5
-
-
-
Carrying amount liabilities
-
(10)
-
-
Line item balance sheet
Derivatives
Derivatives
Derivatives
Derivatives
Change in the value of the hedging
instrument
(5)
45
-
-
Costs of hedging recognized in OCI
(5)
29
-
1
Reclassified from hedging reserve to
income statement
9
(16)
-
-
Line item income statement
Cost of sales
Sales
Finex²
Finex²
1 Forward contracts, sales, receivables and borrowings.
2 Financial income and expense.
For movements in Hedging or Translation reserve, see also Note 16 Equity.
Fair value of financial instruments
The following methods and assumptions were used to determine the fair value of financial instruments: cash, current
investments, current receivables, current borrowings (excluding current portion of long-term instruments) and other
current liabilities are stated at carrying amount, which approximates fair value in view of the short maturity of these
instruments. The fair value of derivatives and long-term instruments are based on calculations, quoted market prices or
quotes obtained from intermediaries.
The portfolio of derivatives consists of average-rate forward contracts that are valued against average foreign exchange
forward rates obtained from Bloomberg and other derivatives that are valued using a discounted cash flow model,
applicable market yield curves and foreign exchange spot rates. Inputs for the fair value calculations represent observable
market data that are obtained from external sources that are deemed to be independent and reliable.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 255
DSM uses the following hierarchy for determining the fair value of financial instruments:
- Level 1: quoted prices in active markets for identical assets or liabilities
- Level 2: other techniques for which all inputs that have a significant effect on the fair value are observable, either
directly or indirectly
- Level 3: techniques that use inputs that have a significant effect on the fair value that are not based on
observable market data
- The following table shows the carrying amounts and fair values of financial assets and financial liabilities,
including their levels in the fair value hierarchy
Fair value of financial instruments
Carrying amount
Fair Value
Amort.
Cost
Fair value
hedging
instr.
FVTPL
FVOCI
Total
Level 1
Level 2
Level 3
Total
Assets 2020
Non-current derivatives
-
10
51
-
61
-
61
-
61
Other participating interests
-
-
-
219
219
121
36
62
219
Non-current loans to associates and JVs
4
-
-
-
4
-
4
-
4
Other non-current receivables
85
-
-
-
85
-
-
85
85
Trade receivables
1,391
-
-
-
1,391
-
-
1,391
1,391
Other current receivables
60
-
-
-
60
-
-
60
60
Current derivatives
-
48
-
-
48
-
48
-
48
Current investments
43
-
-
-
43
-
-
43
43
Cash and cash equivalents
871
-
-
-
871
-
-
871
871
Liabilities 2020
Non-current borrowings
(3,484)
-
-
-
(3,484)
(3,474)
-
(168)
(3,642)
Non-current derivatives
-
(1)
-
-
(1)
-
(1)
-
(1)
Other non-current liabilities
(163)
-
-
-
(163)
(141)
-
(22)
(163)
Current borrowings
(102)
-
-
-
(102)
(55)
-
(47)
(102)
Current derivatives
-
(13)
-
-
(13)
-
(13)
-
(13)
Trade payables
(1,218)
-
-
-
(1,218)
-
-
(1,218)
(1,218)
Other current liabilities
(508)
-
-
-
(508)
-
-
(508)
(508)
.
Assets 2021
Non-current derivatives
-
1
47
-
48
-
48
-
48
Other participating interests
-
-
-
191
191
86
44
61
191
Non-current loans to associates and JVs
1
-
-
-
1
-
1
-
1
Other non-current receivables
31
-
-
-
31
-
-
31
31
Trade receivables
1,603
-
-
-
1,603
-
-
1,603
1,603
Other current receivables
32
-
-
-
32
-
-
32
32
Current derivatives
-
30
-
-
30
-
30
-
30
Current investments
489
-
-
-
489
-
-
489
489
Cash and cash equivalents
1,541
-
20
-
1,561
20
-
1,541
1,561
Liabilities 2021
Non-current borrowings
(2,989)
-
-
-
(2,989)
(2,920)
-
(147)
(3,067)
Non-current derivatives
-
(9)
-
-
(9)
-
(9)
-
(9)
Other non-current liabilities
(137)
-
(146)
-
(283)
(137)
-
(146)
(283)
Current borrowings
(104)
-
-
-
(104)
(56)
-
(48)
(104)
Current derivatives
-
(40)
-
-
(40)
-
(40)
-
(40)
Trade payables
(1,571)
-
-
-
(1,571)
-
-
(1,571)
(1,571)
Other current liabilities
(540)
-
-
-
(540)
-
-
(540)
(540)
During the year there were no material transfers between individual levels of the fair value hierarchy.
Notional value of derivative financial instruments
2021
2020
Non-
current
Current
Total
Non-
current
Current
Total
Cross-currency interest rate swaps
(170)
(90)
(260)
(201)
(152)
(353)
Forward exchange contracts, currency
options, currency swaps
(3)
(2,019)
(2,022)
(2)
(1,691)
(1,693)
Other derivatives
39
16
55
46
(28)
18
Total
(134)
(2,093)
(2,227)
(157)
(1,871)
(2,028)
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 256
24 Post-employment benefits
The group operates a number of defined benefit plans and defined contribution plans throughout the world, the assets of
which are generally held in separately administered funds. The pension plans are generally funded by payments from
employees and from the relevant group companies. The group also provides certain additional healthcare benefits to
retired employees in the US.
Post-employment benefits are employee benefits (other than termination benefits and short-term employee benefits) that
are payable after the completion of employment. The defined benefit obligation is valued using the projected unit credit
method as prescribed under IAS 19 ‘Employee Benefits’. Post-employment benefit accounting is intended to reflect the
recognition of post-employment benefits over the employee’s approximate service period, based on the terms of the plans
and the investment and funding. The accounting requires management to make assumptions regarding variables such as
discount rate, future salary increases, life expectancy, and future healthcare costs. Management consults with external
actuaries regarding these assumptions at least annually for significant plans.
Changes in these key assumptions can have a significant impact on the projected defined benefit obligations, funding
requirements and periodic costs incurred.
The charges for pension costs recognized in the income statement (Note 5 Net sales and costs (continuing operations))
relate to the following.
Pension costs
2021
2020
Defined benefit plans:
- Current service costs pension plans
35
36
- Other post-employment benefits
3
3
Defined contribution plans
78
79
Total pension costs included in employee benefit costs
116
118
- Pension costs included in Other operating (income) /
expense
(9)
-
Total in operating profit, continuing operations
107
118
Pension costs included in Financial income and expense
2
4
Total continuing operations
109
122
Discontinued operations
3
14
Total
112
136
Of which:
- Defined contribution plans
81
92
- Defined benefit plans
31
44
For 2022, costs for the defined benefit plans relating to pensions are expected to be €40 million (2021: €42 million).
Changes in Employee benefit net liabilities recognized in the balance sheet are shown in the following overview.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 257
Employee benefit net liabilities
2021
2020
Balance at 1 January
454
454
Changes:
- Balance of actuarial (gains)/losses
(153)
23
- Employee benefit costs
30
45
- Contributions by employer
(66)
(54)
- Acquisition and disposals
-
4
- Exchange differences
(1)
(2)
- Other
5
-
- Reclassification from/to held for sale
-
(16)
Total changes
(185)
-
Balance at 31 December
269
454
The Employee benefit net liabilities of €269 million (2020: €454 million) consist of €251 million related to pensions (2020:
€434 million), €5 million related to healthcare and other costs (2020: €5 million) and €13 million related to other post-
employment benefits (2020: €15 million). See also the table below.
Net assets/liabilities
2021
2020
Major plans:
Present value of funded obligations
(1,810)
(1,756)
Fair value of plan assets
1,887
1,676
Net
77
(80)
Present value of unfunded obligations
(325)
(354)
Net (liabilities) / net assets major plans
(248)
(434)
Net (liabilities) / net assets other plans
(21)
(20)
Total (net liabilities) / net assets
(269)
(454)
Of which:
-
Liabilities (Employee benefit liabilities)
(344)
(456)
Assets (Prepaid pension costs)
75
2
Pensions
The DSM group companies have various pension plans, which are geared to the local regulations and practices in the
countries in which they operate. As these plans are designed to comply with the statutory framework, tax legislation, local
customs and economic situation of the countries concerned, it follows that the nature of the plans varies from country to
country. The plans are based on local legal and contractual obligations.
DSM's current policy is to offer defined contribution retirement benefit plans to new employees wherever possible.
However, DSM still has a (small) number of defined benefit pension and healthcare schemes from the past or in countries
where legislation does not allow us to offer a defined contribution scheme. Generally, these schemes have been funded
through external trusts or foundations, where DSM faces the potential risk of funding shortfalls. The most significant
defined benefit schemes are:
- Pension Plan at DSM Nutritional Products AG in Switzerland (DNP AG)
- DSM UK Pension Scheme in the UK
- Consolidated Pension Plan of DSM North America, Inc. in the US
- Pension Plan at DSM Nutritional Products GmbH in Germany (DNP GmbH)
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 258
For each plan, the following characteristics are relevant:
DNP AG Pension Plan in Switzerland
The DNP AG Pension Plan is a typical Swiss Cash Balance plan. For accounting purposes, this plan is qualified as a defined
benefit plan. It is a contribution-based plan. There is no promise of indexation for on-going pensions. The Swiss state
minimal requirements for occupational benefit plans have however to be respected; the Minimum Guaranteed Interest
Return that needs to be applied on the cash balance accounts according to the Swiss BVG legislation was 1.0% for 2021
(2020: 1.0%). The actual return that was granted to the cash balance accounts in 2021 was 4.5% (4.0% in 2020). There is also
a minimal conversion rate applicable. The weighted average duration of the defined benefit obligation is 14.9 years (2020:
16.4 years) which could be seen as an indication of the maturity profile of the scheme.
The pension plan is managed and controlled by a DSM company pension fund. The Board of Trustees consists of
representatives of the employer and the employees who have an independent role. The plan assets are collectively
invested (no individual investment choice). The current (estimated) funding level, based on local standards, is 124% (2020:
117%), which is above the legally required minimum funding level and also above the long-term buffer target.
DSM UK Pension Scheme
The DSM UK Pension Scheme was closed as of 30 September 2016 for all pension accruals. An unconditional indexation
policy is applicable for the vested pension rights. The weighted average duration of the defined benefit obligation is 18.9
years (2020: 19.8 years), which could be seen as an indication of the maturity profile of the scheme.
The pension plan is managed and controlled by a DSM company pension fund. The Board of Trustees consists of
representatives of the employer and the employees who have an independent role. There are two company guarantees in
place: (1) a guarantee from DNP AG (capped at GBP 14 million) related to the 2012 valuation, and (2) a guarantee from Royal
DSM (capped at GBP 11 million) related to arrangements with respect to former UK divestments. There is a long-term de-
risking strategy for the DSM UK Pension Scheme in place with the objective to align the company’s intentions and the
Trustees responsibility with respect to this plan. The current funding level, based on local standards, is estimated at 101%
(2020: 99%).
Consolidated Plan in the US
The Consolidated Plan in the US has been closed to new entrants since 2014. As of 31 December 2016, the plan was closed
for pension accrual of the non-unionized employees and as a result of the DRF divestment in 2021, it was fully frozen for
all unionized employees as well.
There is no indexation applicable for the vested pension rights. The weighted average duration of the defined obligations
is 11.8 years (2020: 12.5 years), which could be seen as an indication of the maturity profile of the scheme.
The pension plan is managed and controlled by a DSM company pension fund. The Board of Trustees consists of
representatives of the employer and the employees, who have an independent role.
The internal funding policy of this plan is based on IFRS valuation. This implies a stricter funding policy than the minimum
requirements on local funding. The current IFRS funding level is 107% (2020: 101%) and the funding on local standards
(Pension Protection Act) will be substantially higher. The minimum required funding level on local standards is 80% on the
basis of this Act, so this plan is well funded.
DNP GmbH Pension Plan in Germany
The DNP GmbH Pension Plan in Germany has been closed to new entrants as of 31 December 2008. The accrual is still
applicable for employees who have been participating in the plan since 2008. The pension plan is a final-pay pension plan
(averaged over the last 12 months prior to retirement) and service-related benefit. The liability is on the balance sheet of
DSM Nutritional Products GmbH. No assets are allocated to this liability. All reimbursements will be paid out by the local
company. The weighted average duration of the defined benefit obligation is 14.5 years (2020: 14.9 years), which could be
seen as an indication of the maturity profile of the scheme.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 259
The most important unfunded plans are in Germany, for which the associated liability amounts to €316 million (2020: €345
million).
The changes in the present value of the defined benefit obligations and in the fair value of plan assets of the major plans
are listed below.
Present value of defined benefit obligations
2021
2020
Balance at 1 January
2,110
2,079
Changes:
-
- Service costs
35
36
- Interest costs
13
18
- Contributions
16
15
- Actuarial (gains)/losses
(52)
114
- Past service costs
(11)
-
- Exchange differences
94
(30)
- Disbursements
(72)
(77)
- Settlements
-
(31)
- Reclassification to held for sale
-
(16)
- Other
2
2
Total changes
25
31
Balance at 31 December
2,135
2,110
Fair value of plan assets
2021
2020
Balance at 1 January
1,676
1,644
Changes:
-
- Interest income on plan assets
11
15
- Actuarial gains/(losses)
101
89
Actual return on plan assets
112
104
- Contributions by employer
47
41
- Contributions by employees
16
15
- Disbursement
(60)
(63)
- Acquisition / Divestment
(1)
-
- Settlements
-
(31)
- Exchange differences
97
(30)
- Transfer to contribution plan
-
(4)
Total changes
211
32
Balance at 31 December
1,887
1,676
The fair value of the plan assets consists of 96% of quoted assets (2020: 96%).
The actuarial gains/losses as included in the previous tables can be specified as follows.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 260
Remeasurement effects as included in Other comprehensive income
2021
2020
Defined benefit obligation major pension plans
Actuarial (gain)/loss due to experience
68
9
Actuarial (gain)/loss due to demographic assumption
changes
(62)
3
Actuarial (gain)/loss due to financial assumption changes
(58)
102
Total
(52)
114
Plan assets major pension plans
Change in irrecoverable surplus other than interest
-
(2)
Return on plan assets (greater) / less than discount rate
(101)
(89)
Total
(101)
(91)
Actuarial (gain)/loss major plans
(153)
23
Actuarial (gain)/loss other plans
-
-
Total actuarial (gain)/loss
(153)
23
The major categories of pension-plan assets as a percentage of total plan assets are as follows.
Pension-plan assets by category
2021
2020
Bonds¹
46%
45%
Equities¹
26%
29%
Property funds
20%
17%
Other
8%
9%
1 With quoted market price in active market
The pension-plan assets include neither ordinary DSM shares nor property occupied by DSM.
In 2022, DSM is expected to contribute €34 million (actual 2021: €47 million) to its major defined benefit plans.
The main actuarial assumptions for the year (weighted averages) are:
Actuarial assumptions for major plans outside the Netherlands
2021
2020
Discount rate
0.85%
0.53%
Price inflation
1.49%
1.42%
Salary increase
2.06%
2.07%
Pension increase
0.84-
3.15%
0.75-
2.50%
Year-end amounts for the current and previous periods are as follows.
Major defined benefit plans per year
2021
2020
2019
2018
2017
Defined benefit obligations
(2,135)
(2,110)
(2,079)
(1,808)
(1,675)
Plan assets
1,887
1,676
1,644
1,370
1,301
Funded status of asset/(liability)
(248)
(434)
(435)
(438)
(374)
Experience adjustments on plan assets, gain/(loss)
101
89
192
(94)
115
Experience adjustments on plan liabilities, gain/(loss)
(68)
(9)
(36)
(35)
(24)
Gain/(loss) on liabilities due to changes in assumptions
120
(105)
(180)
52
(21)
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 261
Sensitivities of significant actuarial assumptions
The discount rate, the future increase in wages and salaries and the pension increase rate were identified as significant
actuarial assumptions. The following impacts on the defined benefit obligation are to be expected.
- A 0.25% increase/decrease in the discount rate would lead to a decrease/increase of 3.5% (2020: 3.9%) in the
defined benefit obligation
- A 0.25% increase/decrease in the expected increase in salaries/wages would lead to an increase/decrease of
0.3% (2020: 0.3%) in the defined benefit obligation
- A 0.25% increase/decrease in the expected rate of pension increase would lead to an increase/decrease of less
than 1.0% (2020: 1.0%) in the defined benefit obligation
The sensitivity analysis is based on realistically possible changes as at the end of the reporting year. Each change in a
significant actuarial assumption was analyzed separately as part of the test. Interdependencies were not taken into
account.
Healthcare and other costs
In some countries, particularly the US, group companies provide retired employees and their surviving dependents with
post-employment benefits other than pensions, mainly allowances for healthcare expenses and life-insurance premiums.
Some of these are unfunded; in these cases, approved expense claims are reimbursed out of the financial resources of the
group companies concerned. These plans are not sufficiently material to warrant the individual disclosures required by
IAS 19.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 262
25 Net debt
The development of the components of net debt is as follows.
Cash and
cash
equivalents
Current
investments
Non-current
borrowings
Current
borrowings
Credit
institutions
Derivatives
Total
800
688
(2,464)
(57)
(132)
21
(1,144)
1,494
-
(8)
-
-
90
1,576
(1,482)
(646)
(125)
(63)
(17)
-
(2,333)
-
-
142
(142)
-
-
-
705
-
(1,011)
211
95
-
-
(289)
-
-
-
-
-
(289)
(54)
-
-
-
-
-
(54)
63
-
-
-
-
-
63
-
-
(34)
-
-
-
(34)
(309)
-
-
-
-
-
(309)
-
-
-
-
-
-
-
(33)
-
-
-
-
-
(33)
83
-
(903)
69
95
-
(656)
(24)
1
14
-
1
(16)
(24)
-
-
2
2
-
-
4
71
(645)
(1,020)
8
79
74
(1,433)
871
43
(3,484)
(49)
(53)
95
(2,577)
Change from operating activities
1,427
-
(7)
-
-
(66)
1,354
Change from investing activities
208
445
(3)
(2)
24
-
672
Reclassification from non-current to current
-
-
516
(516)
-
-
-
Transfers
(522)
-
24
506
(12)
4
-
Dividend
(266)
-
-
-
-
-
(266)
Interest
(65)
-
-
-
-
-
(65)
Proceeds from reissued shares
34
-
-
-
-
-
34
New/unwinding leases
-
-
(19)
-
-
-
(19)
Repurchase of shares
(165)
-
-
-
-
-
(165)
Derivatives
-
-
-
-
-
-
-
Other
-
-
-
-
-
(4)
(4)
Change from financing activities
(984)
-
521
(10)
(12)
-
(485)
Exchange differences
39
1
(16)
-
(2)
-
22
Total changes
690
446
495
(12)
10
(66)
1,563
Balance at 31 December 2021
1,561
489
(2,989)
(61)
(43)
29
(1,014)
In 2021, the gearing (net debt / equity plus net debt) was 9.7% (in 2020: 25.6%)
26 Notes to the cash flow statement
The cash flow statement provides an explanation of the changes in cash and cash equivalents. It is prepared on the basis
of a comparison of the balance sheets at 1 January and 31 December. Changes that do not involve cash flows, such as
changes in exchange rates, amortization, depreciation, impairment losses and transfers to other balance sheet items, are
eliminated.
Changes in working capital due to the acquisition or disposal of consolidated companies are included under Investing
activities.
The Consolidated cash flow statement includes an analysis of all cash flows in total, therefore including both continuing
and discontinued operations. For the amounts related to discontinued operations split by activities and a reconciliation of
results from continuing operations to total, see Note 3 Change in the scope of the consolidation.
Most of the changes in the cash flow statement can be traced back to the detailed statements of changes for the balance
sheet items concerned. For those balance sheet items for which no detailed statement of changes is included, the table
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 263
below shows the link between the change according to the balance sheet and the change according to the cash flow
statement.
Change in operating working capital
2021
2020
Operating working capital
Balance at 1 January
2,052
2,266
Balance at 31 December
2,329
2,052
Balance sheet change
277
(214)
Adjustments:
- Exchange differences
(108)
146
- Changes in consolidation (including acquisitions and disposals)
99
(96)
- Transfers/non-cash value adjustments
(85)
156
Total change in operating working capital according to the cash flow statement
183
(8)
In 2021, the operating working capital continuing operations was €2,329 million (2020: €2,052 million), which amounts to
24.1% of annualized fourth-quarter net sales (2020: 24.6% continuing operations).
The disposal of subsidiaries, businesses and associates of €1,791 million consists of the cash impact of the divestment of
Resins & Functional Materials (RFM) for €1,444 million, the sale of DSM’s share in AOC for €337 million, various earn-out
payment receipts of €46 million and other, including costs of €3 million. Next to that, the divestment of RFM resulted in a
tax expense of €70 million, of which €33 million was paid in 2021.
27 Share-based compensation
The Royal DSM Restricted- and Performance Share Unit Plan provides rules for the grant of Restricted Share Units (RSU)
and Performance Share Units (PSU) to eligible employees. The effective date of any grant of share units is the last trading
day at the Amsterdam Stock Exchange in March.
The number of share units to be granted is based on the face value of the DSM share. The grant value (depending on job
level) to eligible employees will be divided by the average share price in January. As a result, the number of share units to
be granted annually will fluctuate with the share price development. The grant concerns the maximum number of
Restricted Share Units (RSUs) and Performance Share Units (PSUs) that may vest.
RSUs and PSUs are subject to a vesting period of 3 years starting at the grant date. Vesting of RSUs is subject to continued
employment until the vesting date (‘time vesting’). In addition, vesting of PSUs is also subject to the achievement of
predefined performance targets at the end of the vesting period. The PSUs granted in 2021 are subject to the realization of
four equally weighted goals:
- Relative Total Shareholder Return (TSR) performance versus a peer group
- Return on Capital Employed (ROCE) growth
- Energy Efficiency Improvement (EEI)
- Greenhouse Gas Emissions (GHGE) reduction
Non-vested share units will be forfeited. If employment is terminated prior to the vesting date, specific rules regarding
vesting and forfeitures apply.
Prior to 2017, stock options were granted to eligible executives. Stock options have a term of 8 years and are subject to a
vesting period of 3 years. All outstanding stock options are vested.
Share units and stock options are settled by delivery of DSM shares.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 264
Overview of stock options
Year of grant Outstanding
at 31 Dec. 2020
In 2021 Outstanding
at 31 Dec. 2021
Fair value
on grant
date (€)
Exercise
price (€)
Expiry date
Exercised Average
price (€)
Forfeited/
expired
2013 85,250 (85,250) 149.54 - - 9.23 48.91 7 May 2021
2014 137,625 (85,585) 177.30 (2,500) 49,540 10.66 52.00 9 May 2022
2015 312,400 (65,050) 170.47 (2,500) 244,850 9.89 50.98 5 May 2023
2016 531,645 (107,945) 173.20 (2,500) 421,200 9.36 52.57 3 May 2024
2021 Total 1,066,920 (343,830) 167.84 (7,500) 715,590
Of which vested 1,066,920 715,590
at 31 Dec. 2019 at 31 Dec. 2020
2020 Total 1,642,380 (575,460) 120.94 - 1,066,920
Of which vested 1,642,380 1,066,920
Overview of share units
1
Year of issue Outstanding at
31 Dec. 2020
Adjustment
PSUs to
at-target grant
In 2021 Outstanding at
31 Dec. 2021
Share price
at date of
grant (€)
Expiry date
Granted
Vested Forfeited/
expired
2
2018 203,139 (30,999) - (168,727) (3,413) - 80.04 31 Mar 2021
2019 267,934 (79,211) - (20,859) (10,286) 157,578 97.74 31 Mar 2022
2020 219,278 (65,565) - (16,293) (9,783) 127,637 103.50 31 Mar 2023
2021 - - 114,894 (1,758) (3,941) 109,195 144.30 31 Mar 2024
2021 Total 690,351 (175,775) 114,894 (207,637) (27,423) 394,410
at 31 Dec. 2019 at 31 Dec. 2020
2020 Total 885,643 - 232,714 (336,097) (91,909) 690,351
1 This table also forms part of the Remuneration report 2021 as
included in the Supervisory Board Report.
2 Restricted and Performance Share Units may partly vest upon termination of employment in connection with, for example, divestments, retirement or early
retirement.
Whereas the grant of PSUs to members of the Managing Board and the Executive Committee is based on the maximum
number to vest, the grant to other eligible employees is – as of 2021 – based on the ‘at-target’ grant level (in previous
years this was the ‘maximum number’ that could vest). An ‘at-target’ grant level includes RSUs as well as PSUs. In the
future this may, upon vesting and depending on the achievement of underlying goals, result in a performance correction,
i.e., the forfeiture of outstanding PSUs (if performance goals are not or only partly achieved) or in an additional number of
PSUs to vest (if performance goals are overachieved).
The change in plan (the switch to an ‘at-target’ grant) was applied retroactively for the grants made in previous years. As a
result of this, the table above includes a one-off correction of outstanding PSUs for grants in previous years. For 2018 the
number in the respective column represents the net balance of the correction of the number of outstanding share units
resulting from the shift to an ‘at-target’ grant (-59,233 PSUs) and the impact of a performance correction (28,234) as the
achievement of the performance goals exceeded target. For 2019 and 2020 the balance only contains the correction
following the shift to an ‘at-target’ grant. The shift towards a grant on ‘at-target’ level did not impact the valuation of the
outstanding share units nor the share-based compensation in the income statement.
Certain employees in the Netherlands are entitled to employee stock options, to be granted on the first day on which the
DSM stock is quoted ex-dividend following the Annual General Meeting of Shareholders. The opening price of the DSM
stock on that day is the exercise price of such stock options. Employee stock options can immediately be exercised and
have a term of five years.
Overview of stock options for employees
Year of grant Outstanding at
31 Dec. 2020
In 2021 Outstanding at
31 Dec. 2021
Fair value
on grant
date (€)
Exercise
price (€)
Exercise
period until
Granted
Exercised Average
price
(€)
Forfeited/
expired
2016 22,045 - (21,820) 147.31 (225) - 4.38 52.57 May 2021
2017 47,450 - (18,455) 158.76 (250) 28,745 6.14 67.33 May 2022
2018 96,335 - (34,030) 159.85 (750) 61,555 8.50 85.00 May 2023
2019 163,400 - (59,835) 160.81 (1,050) 102,515 8.88 98.00 May 2024
2020 117,890 - (44,970) 160.75 (1,380) 71,540 10.26 112.00 May 2025
2021 Total 447,120 - (179,110) 158.75 (3,655) 264,355
at 31 Dec. 2019 at 31 Dec. 2020
2020 Total 637,810 190,630 (367,525) 130.61 (13,795) 447,120
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 265
Measurement of fair value
The costs of share units are measured by reference to the fair value of the DSM share at the date on which the share units
are granted, ex-dividend as the share units do not accumulate dividend during the three-year vesting period.
The costs of option plans are measured by reference to the fair value of the options at the date on which the options are
granted. The fair value is determined using the Black-Scholes model, taking into account market conditions linked to the
price of the DSM share. Stock-price volatility is determined on the basis of historical volatilities of the DSM share price
measured each month over a period equal to the expected option life. The costs of these options are recognized in the
income statement (Employee benefit costs).
Assumptions determining fair value
The following assumptions were used to determine the fair value at grant date.
Plan assumptions
2021 2020
Share units
Risk-free rate -0.60% -0.69%
Expected share life in years 3 3
Nominal share life in years 3 3
Share price in € 144.30 103.50
Expected dividend in € 7.20 7.20
Fair value of share granted in € 137.10 96.30
Employee options
Risk-free rate - -0.74%
Expected option life in years - 2.5
Nominal option life in years - 5
Share price in € - 112.10
Exercise price in € - 112.10
Volatility - 20.0%
Expected dividend - 2.14%
Fair value of option granted in € - 10.26
An amount of €22 million is included in the costs for wages and salaries for share-based compensation (2020: €29 million).
The following table specifies the share-based compensation.
Share-based compensation
2021 2020
Employee stock options - 2
Other stock options 2 -
Share units 16 19
Performance shares 4 8
Total expense 22 29
28 Related parties
Koninklijke DSM N.V. is the group holding company that is listed on the Euronext Amsterdam stock exchange. The financial
statements of the company are included in the section Parent company financial statements.
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 266
In the ordinary course of business, DSM buys and sells goods and services from/to various related parties in which DSM
has significant influence. Transactions are conducted under terms and conditions that are equivalent to those that apply
to arm’s length transactions.
Transactions and relationships with related parties are reported in the table below.
Transactions with related parties
Associates and joint ventures
2021
2020
Sales to
13
9
Purchases from
87
51
Loans to
1
4
Receivables from
15
44
Payables to
7
5
Interest from
1
1
Commitments to
4
3
Transactions with joint ventures are immaterial.
DSM may issue guarantees as credit enhancement of associates to acquire bank facilities for these associates. DSM has
provided guarantees to third parties for debts of associates and to a third party (a former associate) for an amount of €81
million (2020: €78 million).
Other related-parties disclosures relate entirely to key management of DSM, being represented by the company’s
Managing Board, Executive Committee and the Supervisory Board. For further details about their remuneration, see Note 12
Remuneration of Managing Board and Supervisory Board to the Parent company financial statements.
29 Service fees paid to external auditors
The service fees recognized in the financial statements 2021 for the services of KPMG amounted to €5.8 million (2020: €5.7
million). The amounts per service category are shown in the following table.
Total service fee
Of which
KPMG
KPMG
KPMG NL
KPMG NL
2021
2020
2021
2020
Audit of the Group financial statements
4.5
4.5
3.0
3.0
Audit of other (statutory) financial statements
0.7
0.6
0.1
-
Other assurance services
0.6
0.6
0.6
0.6
Total assurance services
5.8
5.7
3.7
3.6
The service fees mentioned in the table for the audit of the financial statements 2021 (2020) relate to the total fees for the
audit of the financial statements 2021 (2020), irrespective of whether the activities have been performed during the
financial year 2021 (2020).
KPMG did not provide any non-assurance services in 2021 (2020: similar). The other assurance services rendered by KPMG
in 2021 include assurance engagements on non-financial information, and on internal controls of DSM Pension Services,
assurance engagements on government grants and regulatory filings, as well as agreed-upon procedures on certain
information for the Remuneration Committee of Royal DSM and the pension fund and their external auditor.
Royal DSM Integrated Annual Report 2021 267
30 Events after the balance sheet date
Following DSM’s announcement concerning its accelerated strategic journey to become a company focused on Health,
Nutrition & Bioscience on 14 September 2021, DSM changed its organizational structure with effect from 1 January 2022.
This change resulted in three new Business Groups: Food & Beverage (F&B), Health, Nutrition & Care (HNC), and Animal
Nutrition & Health (ANH).
Notes to the consolidated financial statements of Royal DSM
Royal DSM Integrated Annual Report 2021 268
Parent company financial statements
Balance sheet at 31 December of Koninklijke DSM N.V. before profit appropriation
x € million
Notes
2021
2020
Assets
Intangible assets
2
464
825
Financial assets
3
13,789
12,016
Deferred tax assets
4
97
132
Other deferred items
2
2
Non-current assets
14,352
12,975
Receivables
5
77
63
Cash and cash equivalents
1
-
Current assets
78
63
Total
14,430
13,038
.
Shareholders' equity and liabilities
Share capital
6
328
338
Share premium
6
471
489
Treasury shares
6
(177)
(976)
Legal reserves
6
460
(14)
Other reserves, incl. retained earnings
6
6,700
7,196
Undistributed results:
6
- Net profit for the year
6
1,676
506
- Less: interim dividend
6
(140)
(140)
Shareholders' equity
6
9,318
7,399
Borrowings
7
2,739
3,237
Other non-current liabilities
8
8
Non-current liabilities
2,747
3,245
Current liabilities
Other current liabilities
8
2,365
2,394
Current liabilities
2,365
2,394
Total
14,430
13,038
The accompanying notes are an integral part of these parent company financial statements.
Parent company financial statements
Royal DSM Integrated Annual Report 2021 269
Income statement of Koninklijke DSM N.V.
x € million
Notes
2021
2020
Other income
1
18
20
Cost of outsourced work and other external costs
(21)
(17)
Wages and salaries
10
(5)
(9)
Other movements in the value of intangible assets
(5)
-
Other operating expense
(1)
(2)
Total operating expenses
(32)
(28)
Operating profit
(14)
(8)
Financial expense
11
(106)
(95)
Profit before income tax
(120)
(103)
Income tax
4
(3)
24
Share of the profit of subsidiaries
3
1,784
585
Profit after income tax
1,661
506
Income from receivables attributable to non-current assets and from investments
15
-
Net profit available to equity holders of Koninklijke DSM N.V.
1,676
506
Royal DSM Integrated Annual Report 2021 270
Notes to the parent company financial statements
1 General
Unless stated otherwise, all amounts are in € million.
Summary of the accounting policies
These separate financial statements have been prepared in accordance with Title 9, Book 2 of the Dutch Civil Code. The
accounting policies used are the same as those used in the consolidated EU-IFRS financial statements, in accordance with
the provisions of article 362-8 of Book 2 of the Dutch Civil Code.
In these separate financial statements, investments in subsidiaries are accounted for using the net asset value, with
separate presentation of the goodwill component under intangible fixed assets. Results on transactions involving the
transfer of assets and liabilities between the Company and its participating interests and mutually between participating
interests themselves, are eliminated to the extent that they can be considered as not realized. For an appropriate
interpretation of these statutory financial statements, the separate financial statements should be read in conjunction
with the consolidated financial statements.
Participating interests with a negative net asset value are valued at nil. This measurement also covers any receivables
provided to the participating interests that are, in substance, an extension of the net investment. In particular, this relates
to loans for which settlement is neither planned nor likely to occur in the foreseeable future. A share in the profits of the
participating interest in subsequent years will only be recognised if and to the extent that the cumulative unrecognised
share of loss has been absorbed. If the Company fully or partially guarantees the debts of the relevant participating
interest, or if has the constructive obligation to enable the participating interest to pay its debts (for its share therein),
then a provision is recognised accordingly to the amount of the estimated payments by the Company on behalf of the
participating interest.
Information on the use of financial instruments and on related risks for the group is provided in Note 23 of the
consolidated financial statements. The Company makes use of the option to eliminate intragroup expected credit losses
against the book value of loans and receivables from the Company to participating interests, instead of elimination against
the equity value / net asset value of the participating interests.
Other income consists mainly of the charge out of the parent company related corporate overhead and services to the
group companies, which is fully realized in the Netherlands.
Statutory and fiscal seat
The statutory seat of Koninklijke DSM N.V. is Het Overloon 1, Heerlen (Netherlands). A list of Koninklijke DSM N.V.’s
participations has been filed with the Chamber of Commerce (Netherlands) and is available from the company upon
request, as well as on the company website. DSM is registered in the Dutch Commercial Register under number 14022069.
The company forms a fiscal unity for corporate income tax and VAT purposes together with the group companies in the
Netherlands. Each of the companies recognizes the portion of corporate income tax that the relevant company would owe
as an independent tax payer, taking into account the tax liabilities applicable to the company.
Finalization PPA Erber
In the reporting year, the Purchase Price Allocation (PPA) related to the Erber acquisition in 2020 was finalized, resulting in
a decrease of the goodwill amount by -€46 million, representing 90% of the total goodwill adjustment of -€51 million, an
increase of share in subsidiaries by €40 million and a decrease of other current liabilities of -€6 million. The comparative
information for the reference year has been revised for these PPA adjustments. As the impact on the profit and loss
account is negligible, no comparative information has been adjusted, see Note 3 Change in the scope of the consolidation
to the 'Consolidated financial statements'.
Notes to the parent company financial statements
Royal DSM Integrated Annual Report 2021 271
2 Intangible assets
The carrying amount of intangible assets comprises goodwill on the acquisition of the Erber Group in 2020 (€423 million),
Crina in 2006 (€9 million) and Pentapharm in 2007 (€32 million). The disposal of subsidiaries relates to the goodwill on
NeoResins (€358 million), that was derecognized as part of the divestment of the Resins & Functional Materials (together
‘RFM’) and associated businesses, see Note 3 Change in the scope of the consolidation to the 'Consolidated financial
statements'. For full information on these assets including the discussion of the related impairment tests, see Note 8
Intangible assets to the ‘Consolidated financial statements’.
Intangible assets of Koninklijke DSM N.V.
Goodwill
Under
construction
Other
Total
Balance at 1 January 2020
Cost
402
4
88
494
Amortization and impairment losses
-
-
(66)
(66)
Carrying amount
402
4
22
428
Changes in carrying amount:
- Acquisition
423
-
-
423
- Intragroup transfer
-
(4)
(22)
(26)
Balance at 31 December 2020
Cost
825
-
-
825
Amortization and impairment losses
-
-
-
-
Carrying amount
825
-
-
825
.
Changes in carrying amount:
- Exchange rate difference
2
-
-
2
- Disposal subsidiaries
(358)
-
-
(358)
- Impairment
(5)
-
-
(5)
Balance at 31 December 2021
464
-
-
464
Cost
469
-
-
469
Amortization and impairment losses
5
-
-
5
Carrying amount
464
-
-
464
Notes to the parent company financial statements
Royal DSM Integrated Annual Report 2021 272
3 Financial assets
Share in
Subsidiaries
Other
participating
interests
Receivables
Total
Balance at 1 January 2020
10,686
36
25
10,747
Changes:
- Share in profit
585
-
-
585
- Charged to income statement
-
-
-
- Dividend received
(227)
-
-
(227)
- Capital payments
715
-
-
715
- Acquisition of subsidiaries
432
-
-
432
- Net actuarial gains/(losses)
(19)
-
-
(19)
- Change in Fair value reserve
93
5
-
98
- Change in Hedging reserve
31
-
-
31
- Exchange differences
(453)
-
-
(453)
- Intra-group transfers
130
-
-
130
- Other
(20)
-
(3)
(23)
Balance at 31 December 2020
11,953
41
22
12,016
.
Changes:
- Share in profit
1,784
-
-
1,784
- Dividend received
(385)
-
-
(385)
- Disposal of subsidiaries
(239)
-
-
(239)
- Net actuarial gains/(losses)
132
-
-
132
- Change in Fair value reserve
81
(36)
-
45
- Change in Hedging reserve
(33)
-
-
(33)
- Exchange differences
479
-
-
479
- Intra-group transfers
32
-
-
32
- Other
(20)
-
(22)
(42)
Balance at 31 December 2021
13,784
5
-
13,789
The disposal of subsidiaries relates to the divestment of the RFM business. The change in the fair value for Other
participating interests relates to the fair value adjustment of DSM’s share in BCPE Max Dutch JVCo B.V. The decrease in
receivables relates to collected earn-out receivables.
4 Deferred tax assets
The deferred tax asset of €97 million relates to net operating losses and temporary differences in the Dutch fiscal unity, of
which €56 million is recoverable within 1 year. The decrease of the deferred tax asset in 2021 relates mainly to reversal of
temporary differences and uncertainties under local law. The decrease in the effective tax rate from 23.3% in 2020 to 2.5%
in 2021 was mainly due to tax exempt income related to the divestment of the RFM business, partly compensated by non-
deductible costs and uncertainties under local law.
5 Receivables
2021
2020
Receivables from subsidiaries
58
49
Other receivables
19
14
Total
77
63
The carrying values of the receivables are a reasonable approximation of their respective fair values, given the short
Notes to the parent company financial statements
Royal DSM Integrated Annual Report 2021 273
maturities of the positions and the fact that allowances for doubtful debts have been recognized, if necessary. All
receivables have an estimated maturity shorter than one year.
The Receivables from subsidiaries of €58 million (2020: €49 million) mainly include receivables relating to the Dutch fiscal
unity.
6 Shareholders’ equity
x € million
Share
capital
Share
prem.
Treas.
shares
Legal reserves
Other reserves
Undistri
buted
results
Total
share-
holder
equity
Trans-
lation
res.
Capital
dev.
costs
Part.
inte-
rest
Reval.
reserve
Hedg.
reserve
Fair
value
res.
Share-
based
comp.
Ret.
Earn.
Balance at 31 December
2019
338
489
(905)
162
267
116
5
(122)
-
51
6,711
619
7,731
Added to other reserves
-
-
-
-
-
-
-
-
-
-
619
(619)
-
Net profit
-
-
-
-
-
-
-
-
-
-
-
506
506
Dividend
-
-
-
-
-
-
-
-
-
-
(283)
(140)
(423)
Reissued shares
-
-
238
-
-
-
-
-
-
-
(32)
-
206
Acquisition of NCI without a
change in control
-
-
-
-
-
-
-
-
-
-
(22)
-
(22)
Repurchase of shares
-
-
(309)
-
-
-
-
-
-
-
-
-
(309)
Fair value changes of
derivatives
-
-
-
-
-
-
-
40
-
-
-
-
40
Release to income
statement
-
-
-
-
-
-
-
20
-
-
-
-
20
Fair value changes of other
financial assets
-
-
-
-
-
-
-
-
106
-
-
-
106
Transfer fair value reserve
-
-
-
-
-
-
(5)
-
5
-
-
-
-
Exchange differences
-
-
-
(451)
-
-
-
-
-
-
-
-
(451)
Options and performance
shares granted
-
-
-
-
-
-
-
-
-
29
-
-
29
Options and performance
shares exercised/canceled
-
-
-
-
-
-
-
-
-
(39)
39
-
-
Transfer to retained
earnings
-
-
-
-
(44)
4
-
-
(30)
-
70
-
-
Changes in joint ventures
and associates
-
-
-
(2)
-
-
-
-
-
-
-
-
(2)
Income tax
-
-
-
2
-
-
-
(6)
(8)
-
-
-
(12)
Remeasurements of defined
benefit pension plans
-
-
-
-
-
-
-
-
-
-
(20)
-
(20)
Balance at 31 December
2020
338
489
(976)
(289)
223
120
-
(68)
73
41
7,082
366
7,399
.
Added to other reserves
-
-
-
-
-
-
-
-
-
-
366
(366)
-
Net profit
-
-
-
-
-
-
-
-
-
-
-
1,676
1,676
Dividend
-
-
-
-
-
-
-
-
-
-
(281)
(140)
(421)
Reissued shares
-
-
218
-
-
-
-
-
-
-
(25)
-
193
Acquisition of NCI without a
change in control
-
-
-
-
-
-
-
-
-
-
(20)
-
(20)
Cancellation of treasury
shares
(10)
(18)
746
-
-
-
-
-
-
-
(718)
-
-
Repurchase of shares
-
-
(165)
-
-
-
-
-
-
-
-
-
(165)
Fair value changes of
derivatives
-
-
-
-
-
-
-
(24)
-
-
-
-
(24)
Release to income
statement
-
-
-
(13)
-
-
-
7
-
-
-
-
(6)
Fair value changes of other
financial assets
-
-
-
-
-
-
-
-
46
-
-
-
46
Transfer fair value reserve
-
-
-
-
-
-
-
-
(8)
-
8
-
-
Exchange differences
-
-
-
478
-
-
-
-
-
-
-
-
478
Options and performance
shares granted
-
-
-
-
-
-
-
-
-
22
-
-
22
Options and performance
shares exercised/canceled
-
-
-
-
-
-
-
-
-
(24)
24
-
-
Transfer to retained
earnings
-
-
-
-
16
1
-
-
(93)
-
76
-
-
Changes in joint ventures
and associates
-
-
-
1
-
-
-
-
-
-
-
-
1
Income tax
-
-
-
-
-
-
-
8
(1)
-
-
-
7
Remeasurements of defined
benefit pension plans
-
-
-
-
-
-
-
-
-
-
132
-
132
Balance at 31 December
2021
328
471
(177)
177
239
121
-
(77)
17
39
6,644
1,536
9,318
Notes to the parent company financial statements
Royal DSM Integrated Annual Report 2021 274
For details see the consolidated statement of changes in Note 16 Equity to the ‘Consolidated financial statements’.
Legal reserves
In Shareholders’ equity, a total amount of €460 million (2020: -€14 million) is included for legal reserves required by Dutch
law. The translation reserve relates to exchange gains and losses arising from the translation of the functional currency of
foreign operations to the reporting currency of Koninklijke DSM N.V. Further, a legal reserve is recorded for capitalized
development costs. The legal reserve for participating interests is recorded to the extent that there are limitations for
Koninklijke DSM N.V. to arrange profit distributions from its participating interests. The hedging reserve relates to cash flow
hedge accounting. The negative hedge reserve of -€77 million (2020: -€68 million) as part of the legal reserve should be
deducted from the freely distributable reserve. In addition, a revaluation reserve has been included for fair value changes
of unquoted equity instruments of participating interests with no frequent notations owned by DSM; debit balances are
recorded as part of Other reserves, which are considered freely distributable reserves.
Other reserves
The Other reserves comprise a Fair value reserve for fair value changes of unquoted equity instruments of participating
interests with frequent notations, debit balances of the legal reserve for fair value changes of unquoted equity
instruments of participating interests owned by DSM, and a Reserve for share-based compensation.
In the ‘Consolidated financial statements’, the Other reserves consist of the Translation reserve, Fair value reserve,
Hedging reserve and Reserve for share-based compensation. See Note 16 Equity to the ‘Consolidated financial statements’.
Profit appropriation
According to article 32 of the Articles of Association of Koninklijke DSM N.V. and with the approval of the Supervisory Board,
every year the Managing Board determines the portion of the net profit to be appropriated to the reserves. For the year
2021, the net profit is €1,676 million (2020: €506 million) and the amount to be appropriated to the reserves has been
established at €1,238 million (2020: €86 million). From the subsequent balance of the net profit of €438 million (2020: €420
million), dividend is first distributed on the Cumulative Preference Shares B. At the end of 2021, no Cumulative Preference
Shares B were in issue (same as for 2020). Subsequently, 2.52% (2020: 2.94%) dividend is distributed on the Cumulative
Preference Shares A, based on a share price of €5.29 (2020: €5.29) per Cumulative Preference Share A. For 2021, this
distribution amounts to €0.13 (2020: €0.16) per share, which is €6 million in total. An interim dividend of €0.05 per
Cumulative Preference Share A paid in August 2021, the final dividend will then amount to €0.08 per Cumulative Preference
Share A.
The profit remaining after distribution of these dividends on the Cumulative Preference Shares A of €432 million
(2020: €413 million) will be put at the disposal of the Annual General Meeting of Shareholders in accordance with the
provisions of Article 32, section 5 of the Articles of Association.
The Managing Board proposes a dividend on ordinary shares outstanding for the year 2021 of €2.50 (2020: €2.40) per share.
With an interim dividend of €0.80 (2020: €0.80) per ordinary share paid in August 2021, the final dividend will then amount
to €1.70 (2020: €1.60) per ordinary share.
If the Annual General Meeting of Shareholders makes a decision in accordance with the proposal, the net profit will be
appropriated as follows.
in € million
2021
2020
Net profit for the year
1,676
506
Profit appropriation:
- To be added to the reserves
1,238
86
- Dividend on Cumulative Preference Shares A
6
7
- Interim dividend on ordinary shares
138
137
- Final dividend distributable on ordinary shares
294
276
Notes to the parent company financial statements
Royal DSM Integrated Annual Report 2021 275
7 Borrowings
2021
2020
Total
Of which
current
Total
Of which
current
Debenture loans
2,739
-
3,237
-
Total
2,739
-
3,237
-
At 31 December 2021, there were five debenture loans (€2,739 million, maturing in 2024, 2025, 2026 and from 2026 through
2032). During 2021, the debenture loan in the amount of €500 million originally maturing in 2022, was early redeemed.
The repayment schedule for borrowings is as follows.
Borrowings by maturity
In agreements governing loans with a residual amount at year-end 2021 of €2,739 million (31 December 2020: €3,237
million), clauses have been included which restrict the provision of security. More information on borrowings is provided
in Note 19 Borrowings to the 'Consolidated financial statements'.
8 Other current liabilities
2021
2020
Liabilities to subsidiaries
2,347
2,308
Other liabilities
18
86
Total
2,365
2,394
The Liabilities to subsidiaries concern mainly the current account toward the DSM internal financing company. These
liabilities carry a short-term maturity and are interest-bearing. The increase of this current account in 2021 is mainly
caused by changing financing needs.
The carrying values of the recorded liabilities are a reasonable approximation of their respective fair values, given the
short maturities of the positions. The decrease in the other liabilities relates mainly to the payment of the deferred
consideration for the Erber Group acquisition. All liabilities have an estimated maturity shorter than one year.
9 Contingent liabilities
Guarantee obligations on behalf of affiliated companies and third parties amounted to €628 million (31 December 2020:
€521 million). Koninklijke DSM N.V. has declared in writing that it accepts several liabilities for debts arising from acts in
law of a number of consolidated companies (including relating to the Dutch fiscal unity for income tax and VAT). These
debts are included in the consolidated balance sheet.
2021
2020
2022
-
500
2023
-
-
2024
499
499
2025 and 2026
1,248
1,246
After 2026
992
992
Total
2,739
3,237
Notes to the parent company financial statements
Royal DSM Integrated Annual Report 2021 276
10 Personnel
During the 2021 financial year, the average number of staff employed by DSM N.V. amounted to 2 employees (2020: 2). Both
were employed inside the Netherlands.
11 Financial expense
Financial expense of €106 million (2020: net €95 million) mainly consists of the interest costs on bonds issued and the
counterpart of the net investment hedge. See also Note 19 Borrowings and Note 23 Financial instruments and risks to the
‘Consolidated financial statements’.
12 Remuneration of Managing Board and Supervisory Board
Disclosure of the total board remuneration is based on section 383 book 2 of the Dutch Civil Code. Furthermore, the
members of the Executive Committee (which includes the Managing Board) and the Supervisory Board meet the definition
of key management personnel as defined in IAS 24 ‘Related Parties’. IAS 24 requires disclosure of the total of short-term
employee benefits (salary and Short-Term incentive), post-employment (pension expenditure) and other long-term
benefits (none), termination benefits and share-based payment cost (share-based compensation), which are reported in
the table below.
Key management personnel compensation and total board remuneration
2021
2020
Salary
4,443
5,145
Short-Term incentive
3,474
2,679
Pension expenditure
801
956
Share-based compensation
3,774
7,526
Other
2,216
3,628
Total key management personnel compensation
14,708
19,934
Of which: Managing Board remuneration¹
5,830
12,096
.
Supervisory Board remuneration
805
806
1 See Remuneration report 2021.
The difference in total key management personnel compensation is determined by changes in the composition of the
Executive Committee, resulting in lower amounts on salary and pension contribution in 2021 while the higher STI over 2021
represents the development of the business performance. The 2020 total compensation includes the impact of the CEO
change in 2020 (share-based compensation and an amount subject to article 32bb of the Dutch Wage Tax Act).
Notes to the parent company financial statements
Royal DSM Integrated Annual Report 2021 277
Heerlen, 1 March 2022
Managing Board,
Geraldine Matchett, Co-CEO
Dimitri de Vreeze, Co-CEO
Heerlen, 1 March 2022
Supervisory Board,
Thomas Leysen, Chair
John Ramsay, Deputy Chair
Eileen Kennedy
Carla Mahieu
Erica Mann
Frits van Paasschen
Pradeep Pant
Corien Wortmann-Kool
Royal DSM Integrated Annual Report 2021 278
Other information
Independent auditor’s report
To: the Annual General Meeting of Shareholders and the Supervisory Board of Koninklijke DSM N.V.
Report on the audit of the financial statements 2021 included in the
Integrated Annual Report
Our opinion
In our opinion:
- the accompanying consolidated financial statements give a true and fair view of the financial position of
Koninklijke DSM N.V. (hereafter: Royal DSM) as at 31 December 2021 and of its result and its cash flows for the year
then ended, in accordance with International Financial Reporting Standards as adopted by the European Union
(EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
- the accompanying parent company financial statements give a true and fair view of the financial position of Royal
DSM as at 31 December 2021 and of its result for the year then ended in accordance with Part 9 of Book 2 of the
Dutch Civil Code.
What we have audited
We have audited the financial statements 2021 of Royal DSM based in Heerlen. The financial statements include the
consolidated financial statements and the parent company financial statements.
The consolidated financial statements comprise:
1 the consolidated balance sheet as at 31 December 2021;
2 the following consolidated statements for 2021: the income statement, the statements of comprehensive income,
changes in equity and cash flows; and
3 the notes comprising a summary of the significant accounting policies and other explanatory information.
The parent company financial statements comprise:
1 the parent company balance sheet as at 31 December 2021;
2 the parent company income statement for 2021; and
3 the notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities
under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section
of our report.
We are independent of Royal DSM in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij
assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and
other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening
gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
Royal DSM Integrated Annual Report 2021 279
Our audit procedures were determined in the context of our audit of the financial statements as a whole. Our observations
in respect of going concern, fraud and non-compliance with laws and regulations, climate and the key audit matters
should be viewed in that context and not as separate opinions or conclusions.
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Audit approach
Summary
Materiality
- Materiality of EUR 45 million
- 4.8% of normalized profit before income tax expense
Group audit
- Audit coverage of 79% of total assets
- Audit coverage of 76% of net sales
Going concern and Fraud/Noclar
- Going concern: no significant going concern risks identified
- Fraud & Non-compliance with laws and regulations (Noclar): we identified management override of controls
and revenue recognition, laid down in the auditing standards, as the presumed fraud risks.
Climate-related risks
- Royal DSM’s strategy, risk assessment and possible future effects of climate change have been disclosed.
- We have considered the impact of climate-related risks on our identification and assessment of risks of
material misstatement in the financial statements.
Key audit matters
- Accounting for acquisitions of Amyris’ Flavour & Fragrance business and First Choice Ingredients.
- Divestment of Resins and Functional Materials and associated businesses.
Opinion
Unqualified
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole at
EUR 45 million (2020: EUR 45 million). The materiality is determined with reference to profit before income tax expense,
normalized for acquisition/divestment related expenses to arrive at a normalized level, resulting in a percentage of 4.8%
(2020: 5.9%). We consider this normalized profit before income tax expense as the most appropriate benchmark following
our analysis of the common information needs of users of the financial statements. For 2021 and 2020, this benchmark has
been influenced by the divestment of the Resins and Functional Materials and associated businesses. Although included in
net profit for the year, the results of these businesses and related activities, including the result from the disposal in 2021,
have been presented separate from continuing operations, and are no longer part of (normalized) profit before income tax
expense. In addition, the appropriateness of the materiality was assessed by comparing the amount to consolidated net
Other Information – Independent auditor’s report
Royal DSM Integrated Annual Report 2021 280
Total assets
70%
9%
21%
Audit of the complete
reporting package
Specified audit procedures
Central procedures remaining
components
Total net sales
57%
19%
24%
Audit of the complete
reporting package
Specified audit procedures
Central procedures remaining
components
Other Information – Independent auditor’s report
sales of which it represents 0.5% (2020: 0.6%). We have also taken into account misstatements and/or possible
misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.
We agreed with the Supervisory Board that misstatements identified during our audit in excess of EUR 2 million would be
reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
Royal DSM is at the head of a group of components. The financial information of this group is included in the financial
statements of Royal DSM.
Because we are ultimately responsible for the auditor’s report, we are also responsible for directing, supervising and
performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be
carried out for components reporting for group audit purposes. Decisive were the size and/or the risk profile of the
components or operations. Based on our risk assessment, we selected 23 components (2020: 26 components) to perform
audits for group reporting purposes on a complete set of financial information. In addition, we selected 13 components
(2020: 16 components) to perform specified audit procedures for group reporting purposes on specific items of financial
information.
This resulted in a coverage of 76% (2020: 73%) of total net sales and 79% (2020: 79%) of total assets. The remaining 24% of
total net sales (2020: 27%) and 21% of total assets (2020: 21%) is represented by a significant number of components
(‘Remaining components’), none of which individually represent more than 3% of total net sales and 2% of total assets.
For these remaining components, we performed among others analytical procedures to validate our assessment that there
are no risks of material misstatement within these components.
Our procedures as described above can be summarized as follows:
Royal DSM Integrated Annual Report 2021 281
We have:
- performed audit procedures at group level in respect of areas such as the annual goodwill impairment tests,
other asset impairment (trigger) assessments, income tax for the Dutch fiscal unities, acquisitions of subsidiaries,
accounting for divestments, restructuring provisions, treasury and shared service centers; and
- used the work of local KPMG (‘component auditors’) when auditing financial information or performing specified
audit procedures at component level.
The group audit team has set materiality levels for the components, which ranged from EUR 5 million to EUR 12.5 million
(2020: EUR 2 million to EUR 12.5 million), based on the mix of size and risk profile of the respective components.
The group audit team provided detailed instructions to all Business Group and component auditors part of the group
audit, covering the significant audit areas, including the relevant risks of material misstatement, and the information
required to be reported back to the group audit team.
The group audit team scheduled (virtual) site visit meetings with local component auditors and local component
management in the United States of America, Switzerland, Austria, China and the shared service center in India to review
selected component auditor documentation. In view of restrictions due to the Covid-19 pandemic, travelling to component
audit teams was not always practicable, and we only visited in person the component auditors and Royal DSM’s locations
in the United States of America and Austria.
As a result, we have requested selected component auditors to provide us with remote access to audit workpapers to
perform these evaluations. In addition, due to the inability to arrange in-person meetings with component auditors and
local management, we have increased the use of alternative methods of communication with them, including issuing
additional written instructions, exchange of emails and virtual meetings.
Virtual meetings were held with all component auditors that participated in the group audit. During these (virtual) visits
and meetings, we discussed the audit approach and the audit findings and observations reported to the group audit team.
By performing the procedures mentioned above at group components, together with additional procedures at group level,
we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide
an opinion about the financial statements.
Audit response to going concern – no significant going concern risks identified
The Managing Board has performed its going concern assessment and has not identified any significant going concern
risks. To assess management’s assessment, we have performed, among other things, the following procedures:
- we considered whether the Managing Board’s assessment of the going concern risks includes all relevant
information of which we are aware as a result of our audit;
- we inspected the financing agreements for terms or conditions that could lead to significant going concern risks;
- we analyzed the operating results forecast and the related cash flows compared to the previous financial year,
developments in the business sector and any information of which we are aware as a result of our audit;
- we analyzed the company’s financial position as at year-end and compared it to the previous financial year in
terms of indicators that could identify significant going concern risks.
The outcome of our risk assessment procedures did not give reason to perform additional audit procedures on
management’s going concern assessment.
Audit response to the risk of fraud and non-compliance with laws and regulations
In the chapter “Corporate governance and risk management” of the Integrated Annual Report, the Managing Board
describes its procedures in respect of the risks of fraud and non-compliance with laws and regulations. In the chapter
“Supervisory Board Report”, the supervisory board reflects on this.
Other Information – Independent auditor’s report
Royal DSM Integrated Annual Report 2021 282
As part of our audit, we have gained insights into Royal DSM and its business environment, and evaluated the design and
implementation of Royal DSM’s risk assessment in relation to fraud and non-compliance. Our procedures included, among
other things, assessing Royal DSM’s code of business conduct, alert cases (whistleblowing procedures), compliance
policies and its procedures to investigate indications of possible fraud and non-compliance. Furthermore, we performed
relevant inquiries with the Managing Board, Supervisory Board and other relevant functions, such as the Corporate
Operational Audit department, Legal Counsel and Fraud Committee. As part of our audit procedures, we:
- assessed other positions held by Managing Board members and Executive Committee members and paid special
attention to procedures and governance in view of possible conflicts of interest;
- evaluated indications of possible fraud and non-compliance;
- evaluated correspondence with supervisory authorities and regulators as well as legal confirmation letters.
In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks that are
applicable to Royal DSM and identified the following areas as those most likely to have a material effect on the financial
statements:
- Health and safety regulation (reflecting the nature of Royal DSM’s production and distribution processes);
- Environmental regulation (reflecting the environmental clean-up responsibilities related to mainly Royal DSM’s
former production and distribution processes);
- Competition legislation (reflecting Royal DSM’s operations across the world and potential investigations by
national competition authorities);
- Employment legislation (reflecting Royal DSM’s significant and geographically diverse work force);
- Consumer product law relating to product safety (reflecting the nature of Royal DSM’s diverse product base).
We, together with our forensics specialists, evaluated the fraud and non-compliance risk factors to consider whether those
factors indicate a risk of material misstatement in the financial statements.
Based on the above and the auditing standards, we identified the following fraud risks that are relevant to our audit,
including the relevant presumed risks laid down in the auditing standards, and responded as follows:
Management override of controls (a presumed risk)
Risk:
- Fraud risk related to management override and alteration of (financial) results to meet external expectations, to
maintain/increase current stock price and to meet bonus targets.
Responses:
- We evaluated the design and the implementation of internal controls that mitigate fraud risks with respect to
journal entries.
- We performed data analyses on high-risk journal entries and evaluated key estimates and judgements for bias by
management, such as estimates relating to impairment testing of goodwill and development projects, accounting
for retirement and other post-employment benefits and accounting for acquisitions, including retrospective
reviews of prior year's estimates. Where we identified instances of unexpected journal entries or other risks
through our data analytics, we performed additional audit procedures to address each identified risk. These
procedures also included testing of transactions back to source information.
- We incorporated elements of unpredictability in our audit, including revising our selection criteria in our data
analyses of high-risk journal entries and in performing data analytics procedures such as risk assessment
analytics in the sales process to identify possible increased fraud risks.
Other Information – Independent auditor’s report
Royal DSM Integrated Annual Report 2021 283
Revenue recognition (a presumed risk)
Risk:
- Fraudulent revenue recognition on sales cut-off around the end of the reporting period is an inherent risk within
Royal DSM.
Responses:
- In addition to the procedures already mentioned above, we evaluated the design and the implementation of
internal controls that mitigate fraud risks with respect to revenue recognition.
- Depending on local facts and circumstances our component auditors identified either revenue recognized before
or subsequent to year-end as the period associated with the fraud risk.
- To assess whether revenue was recognized in the appropriate period, for selected sales transactions recognized
around year-end we inspected agreements with the customers and shipping documents.
- Further, we inspected selected credit notes issued around year-end to assess whether revenue was recognized in
the correct reporting period.
Our procedures to address the identified risks of fraud did not result in a key audit matter.
We communicated our risk assessment, audit responses and results to the Managing Board and the Supervisory Board.
Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-compliance that are
considered material for our audit.
Audit response to climate-related risks
The Managing Board is responsible for preparing the financial statements in accordance with the applicable financial
reporting framework, including considering whether the implications from climate-related risks and commitments have
been appropriately accounted for and disclosed. The Managing Board has performed its analysis of the impact of climate-
related risks on Royal DSM’s business and operations going forward. In the ‘Climate-related risks’ chapter, included in the
‘Corporate Governance and risk management’ section, the Managing Board concluded that currently no material short-
term climate risks have been identified through specific climate risk assessments or regular risk assessments.
The evaluation of the effectiveness of Royal DSM’s strategy against internal or external goals set is not in scope of our
audit of the financial statements. As part of our audit we consider potential effects of climate-related risks on the
accounts and disclosures, including estimates and judgements in the current year’s financial statements to determine
whether the financial statements are free from material misstatements. This includes discussion with the Managing Board
and the Supervisory Board of Royal DSM’s strategy in relation to climate change, and inspecting minutes and external
communications for significant climate related commitments, strategies and plans made by management.
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are
not a comprehensive reflection of all matters discussed.
Compared to last year the key audit matter with respect to the impairment of cash generating units is not included, as this
specifically relates to the impairments that were recorded in the financial year 2020.
Other Information – Independent auditor’s report
Royal DSM Integrated Annual Report 2021 284
Accounting for acquisitions of Amyris’ Flavour & Fragrance business and First Choice
Ingredients
Description
As disclosed in Note 3 to the financial statements, during 2021, Royal DSM completed the acquisitions of Amyris’ Flavour
& Fragrance business and First Choice Ingredients. The acquisitions involved a total consideration of EUR 592 million
and had an aggregated impact on Goodwill and Intangible assets of EUR 219 million and EUR 350 million, respectively.
The acquisitions were significant to our audit due to the financial impact and complexity of purchase price accounting
including related judgements and assumptions used in the determination of the fair values of assets acquired and
liabilities assumed.
Our response
We inspected the agreements and other documents underlying the acquisitions to gain an understanding of the
contractual terms and conditions to assess the consideration and the acquired identifiable assets and liabilities. We
obtained the reports from the external valuation experts engaged by Royal DSM to assist management with the
purchase price accounting and the identification of identifiable assets and liabilities in the respective business
combinations. We involved valuation specialists to evaluate management’s valuation models, and assumptions used
such as growth rates and discount rates to arrive at the fair value of assets and liabilities recognized in the purchase
price allocation. Our assessment of key assumptions used by management included a comparison with available
external information such as market indices and financial metrics of peer companies.
Finally, we assessed the adequacy of the presentation and disclosure (Note 3) of the acquisitions in the financial
statements.
Our observation
We consider that the outcome of the purchase price accounting is reasonable. The acquisitions are adequately
disclosed in Note 3 to the financial statements.
Other Information –
Independent auditor’s report
Royal DSM Integrated Annual Report 2021 285
Divestment of Resins and Functional Materials and associated businesses
Description
As disclosed in Note 3 to the financial statements, on 1 April 2021, Royal DSM completed the sale of its Resins and
Functional Materials and associated businesses (‘RFM business’) to Covestro for a consideration of EUR 1.6 billion. The
net book result on the transaction amounts to EUR 570 million.
The divestment is significant to our audit due to the amounts involved and its impact on the financial statements.
Furthermore, the transaction is non-routine and involves a certain level of management judgement in calculating the
capital gain tax that is part of the net book result.
Our response
We inspected the contractual agreements and other relevant documents underlying the divestment in order to
understand key terms and conditions and to assess the accounting impact. We verified that the deconsolidation of the
RFM business has been recorded at the date of disposal. As part of our audit procedures we assessed the book result by
vouching the sales price to the contractual agreement, the cash receipts to bank statements, the net asset values that
have been de-consolidated to underlying accounting records and allocated transaction costs to underlying supporting
documentation such as invoices and contractual agreements.
In relation to the capital gain tax, we inspected documentation underlying the determination of the capital gain such as
the relevant income tax return and assessed the underlying assumptions and calculations. Furthermore, we have
involved our KPMG tax specialists.
Finally, we assessed the adequacy of the presentation as discontinued operations and the disclosure (Note 3) of the
divestment in the financial statements.
Our observation
We consider that the net book result, as well as the presentation of the results as those from discontinuing operations,
are adequately reflected and disclosed in Note 3 to the financial statements.
Other Information – Independent auditor’s report
Royal DSM Integrated Annual Report 2021 286
Report on the other information included in the Integrated Annual Report
In addition to the financial statements and our auditor’s report thereon, the Integrated Annual Report contains other
information.
Based on the following procedures performed, we conclude that the other information:
- is consistent with the financial statements and does not contain material misstatements; and
- contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the report by the Managing
Board and other information.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the
financial statements or otherwise, we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the
Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of the
financial statements.
The Managing Board is responsible for the preparation of the other information, including the information as required by
Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the Annual General Meeting of Shareholders as auditor of Royal DSM on 7 May 2014, as of the audit
for the year 2015 and have operated as statutory auditor ever since that financial year.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific
requirements regarding statutory audits of public-interest entities.
European Single Electronic Format (ESEF)
Royal DSM has prepared its Integrated Annual Report in ESEF. The requirements for this format are set out in the
Commission Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a
single electronic reporting format (these requirements are hereinafter referred to as: the RTS on ESEF).
In our opinion, the Integrated Annual Report prepared in the XHTML format, including the partially tagged consolidated
financial statements as included in the reporting package by Royal DSM, has been prepared in all material respects in
accordance with the RTS on ESEF.
The Managing Board is responsible for preparing the Integrated Annual Report including the financial statements in
accordance with the RTS on ESEF, whereby the Managing Board combines the various components into a single reporting
package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting
package, is in accordance with the RTS on ESEF.
Our procedures taking into consideration Alert 43 of NBA (the Netherlands Institute of Chartered Accountants), included
amongst others:
Other Information –
Independent auditor’s report
Royal DSM Integrated Annual Report 2021 287
- obtaining an understanding of the Royal DSM's financial reporting process, including the preparation of the
reporting package;
- obtaining the reporting package and performing validations to determine whether the reporting package
containing the Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in
accordance with the technical specifications as included in the RTS on ESEF;
- examining the information related to the consolidated financial statements in the reporting package to determine
whether all required tagging has been applied and whether these are in accordance with the RTS on ESEF.
Description of responsibilities regarding the financial statements
Responsibilities of the Managing Board and the Supervisory Board for the financial statements
The Managing Board is responsible for the preparation and fair presentation of the financial statements in accordance
with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Managing Board is responsible for such
internal control as management determines is necessary to enable the preparation of the financial statements that are
free from material misstatement, whether due to fraud or error. In that respect the Managing Board, under supervision of
the Supervisory Board, is responsible for the prevention and detection of fraud and non-compliance with laws and
regulations, including determining measures to resolve the consequences of it and to prevent recurrence.
As part of the preparation of the financial statements, the Managing Board is responsible for assessing the Royal DSM’s
ability to continue as a going concern. Based on the financial reporting frameworks mentioned, the Managing Board
should prepare the financial statements using the going concern basis of accounting unless the Managing Board either
intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Managing Board
should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going
concern in the financial statements.
The Supervisory Board is responsible for overseeing the Royal DSM’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate
audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all
material errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The
materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified
misstatements on our opinion.
A further description of our responsibilities for the audit of the financial statements is included in appendix of this
auditor's report. This description forms part of our auditor’s report.
Amstelveen, 1 March 2022
KPMG Accountants N.V.
P.J. Groenland – van der Linden RA
Appendix:
Description of our responsibilities for the audit of the financial statements
Other Information – Independent auditor’s report
Royal DSM Integrated Annual Report 2021 288
Appendix
Description of our responsibilities for the audit of the financial statements
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in
accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included
among others:
- identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or
error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than the risk resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
- obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Royal
DSM’s internal control;
- evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Managing Board;
- concluding on the appropriateness of the Managing Board’s use of the going concern basis of accounting, and
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on Royal DSM’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause a company to cease to continue as a going concern;
- evaluating the overall presentation, structure and content of the financial statements, including the disclosures;
and
- evaluating whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
We are solely responsible for the opinion and therefore responsible to obtain sufficient appropriate audit evidence
regarding the financial information of the entities or business activities within the group to express an opinion on the
financial statements. In this respect we are also responsible for directing, supervising and performing the group audit.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant findings in internal control that we identify during our audit. In this
respect we also submit an additional report to the Supervisory Board in accordance with Article 11 of the EU Regulation on
specific requirements regarding statutory audits of public-interest entities. The information included in this additional
report is consistent with our audit opinion in this auditor’s report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were
of most significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating
the matter is in the public interest.
Other Information –
Independent auditor’s report
Royal DSM Integrated Annual Report 2021 289
Assurance report of the independent auditor
To: the Annual General Meeting of Shareholders and the Supervisory Board of Koninklijke DSM N.V.
Report on the audit of the Sustainability information 2021 included in the
Integrated Annual Report
Our opinion
We have audited the sustainability information in the sections ‘Key data’, ’Co-CEO letter, ‘Our approach to the Sustainable
Development Goals’, ‘Report by the Managing Board, consisting of the chapters Purpose, Strategy, Case studies,
Stakeholders, People and Planet’, the ‘Non-financial reporting policy’, the 'Sustainability Statements' (excluding section ‘2.
EU Taxonomy’ of the ‘Notes to the Sustainability statements’) and the ‘Sustainability tables’, as included in the Integrated
Annual Report for the year 2021 (hereafter: the ‘Sustainability Information’) of Koninklijke DSM N.V. (hereafter 'Royal DSM'),
based in Heerlen, the Netherlands. An audit is aimed to obtain reasonable assurance.
In our opinion, the Sustainability Information is prepared, in all material respects, in accordance with the GRI
Sustainability Reporting Standards and Royal DSM's internally developed supplemental reporting criteria as disclosed in
the section Non-financial reporting policy included in the chapter ‘Reporting policies’ of the Integrated Annual Report.
Basis for our opinion
We have conducted our audit on the Sustainability Information in accordance with Dutch law, including Dutch Standard
3810N 'Assurance-opdrachten inzake maatschappelijke verslagen' (Assurance engagements relating to sustainability
reports), which is a specified Dutch standard that is based on the International Standard on Assurance Engagements (ISAE)
3000 'Assurance Engagements Other than Audits or Reviews of Historical Financial Information'. Our responsibilities in this
regard are further described in the ‘Our responsibilities for the audit of the Sustainability Information’ section of our
report.
We are independent of Royal DSM in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij
assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence).
Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of
Ethics).
We believe the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Reporting criteria
The Sustainability Information needs to be read and understood together with the reporting criteria. Royal DSM is solely
responsible for selecting and applying these reporting criteria, taking into account applicable law and regulations related
to reporting.
The reporting criteria used for the preparation of the Sustainability Information are the GRI Sustainability Reporting
Standards and Royal DSM's internally developed supplemental reporting criteria as disclosed in the section Non-financial
reporting policy included in the chapter ‘Reporting policies’ of the Integrated Annual Report.
The GRI Sustainability Reporting Standards are the most widely adopted global standards for sustainability reporting and
are used by Royal DSM for reporting publicly on its economic, environmental and social sustainability indicators.
Other Information – Assurance report of the independent auditor
Royal DSM Integrated Annual Report 2021 290
Materiality
Based on our professional judgement we determined materiality levels for each relevant part of the Sustainability
Information as included in the Integrated Annual Report. When evaluating our materiality levels, we have taken into
account quantitative and qualitative considerations as well as the relevance of information for both stakeholders and
Royal DSM.
Scope of the group audit
Royal DSM is the head of a group of components. The Sustainability Information incorporates the consolidated
information of this group of components.
Our group audit procedures consisted of audit procedures at corporate and component level. Our selection of
components in scope of our audit procedures is primarily based on the component's individual contribution to the
consolidated Sustainability Information. Furthermore, our selection of components considered relevant reporting risks and
geographical spread.
By performing our procedures at corporate and component level, we have been able to obtain sufficient and appropriate
audit evidence about Royal DSM's reported Sustainability Information to provide an opinion about the Sustainability
Information
Our key audit matter
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Sustainability Information. We have communicated the key audit matter to the Managing Board and the Supervisory Board.
The key audit matter is not a comprehensive reflection of all matters discussed.
This key audit matter was addressed in the context of our audit of the Sustainability Information as a whole and we do not
provide a separate opinion on this matter.
The sustainability indicator on Royal DSM's solutions labeled as Brighter Living Solutions was determined to be a key audit
matter as the assessment is inherently subject to assumptions and management judgement, whereas the determination of
other important sustainability indicators on Safety, Health and Environment and Human Resources require such
judgement to a lesser extent.
Brighter Living Solutions
Description
Royal DSM reports on Brighter Living Solutions ("BLS”), which are products and services that have specific
environmental or social benefits compared to mainstream reference solutions.
The indicator is defined as net sales from BLS as a percentage of total net sales of Royal DSM. BLS was significant to our
audit since we identified that it serves as a material indicator for Royal DSM to report on the environmental and social
impact of its solutions and because the assessment of solutions to qualify as BLS is inherently subject to assumptions
and judgement
Our response
We obtained an understanding of the reporting process, the applicable definitions and reporting criteria and we have
evaluated the design and implementation of relevant internal controls. We inquired Royal DSM’s staff members involved
in the BLS assessment process to understand the application of these definitions and reporting criteria and we
challenged the underlying evidence, such as the life cycle assessments and expert opinions for solutions classified as
BLS and assessed the calculation of the BLS percentage. Finally, we assessed whether the reporting criteria,
assumptions and definitions are adequately disclosed in the Integrated Annual Report and on Royal DSM’s website.
Other Information – Assurance report of the independent auditor
Royal DSM Integrated Annual Report 2021 291
Our observation
We consider that the definitions and criteria for BLS as described in Royal DSM's internally developed supplemental
reporting criteria, as disclosed in the section Non-financial reporting policy included in the chapter ‘Reporting policies’
of the Integrated Annual Report are appropriately applied and that the assumptions are adequately explained. We also
consider the disclosure on BLS as being adequate.
Limitations to the scope of our audit
The Sustainability Information includes prospective information such as ambitions, strategy, plans, expectations and
estimates. Inherently the actual future results are uncertain. We do not provide any assurance on the assumptions and
achievability of prospective information included in the aforementioned sections of the Integrated Annual Report.
References to external sources or websites in the Integrated Annual Report are not part of the Integrated Annual Report
itself nor the Sustainability Information as audited by us. Therefore, we do not provide assurance on this information.
Our opinion is not modified in respect to these matters.
Responsibilities of the Managing Board and the Supervisory Board for the Sustainability
Information
The Managing Board of Royal DSM is responsible for the preparation of the Sustainability Information in accordance with
the GRI Sustainability Reporting Standards and Royal DSM's internally developed supplemental reporting criteria as
disclosed in the section Non-financial reporting policy included in the chapter ‘Reporting policies’ of the Integrated Annual
Report, including the identification of stakeholders and the definition of material matters. The choices made by the
Managing Board regarding the scope of the Sustainability Information and the reporting policy are summarized in the
section 'Non-financial reporting policy' of the Integrated Annual Report.
Furthermore, the Managing Board is responsible for such internal control as it determines is necessary to enable the
preparation of the Sustainability Information that is free from material misstatements, whether due to fraud or error.
The Supervisory Board is, amongst other things, responsible for overseeing Royal DSM's sustainability reporting process.
Our responsibilities for the audit of the Sustainability Information
Our responsibility is to plan and perform our audit engagement in a manner that allows us to obtain sufficient and
appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected all
material misstatements due to fraud or error.
Misstatements can arise from fraud or errors and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the decisions of users taken on the basis of the Sustainability Information. The
materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified
misstatements on our opinion.
We apply the ‘Nadere Voorschriften Kwaliteitssystemen’ (Regulations for Quality management systems) and accordingly
maintain a comprehensive system of quality control including documented policies and procedures regarding compliance
with ethical requirements, professional standards and applicable legal and regulatory requirements.
We have exercised professional judgement and have maintained professional skepticism throughout the audit, in
accordance with the Dutch Standard 3810N, ethical requirements and independence requirements.
Other Information – Assurance report of the independent auditor
Royal DSM Integrated Annual Report 2021 292
Our audit included among others:
- Performing an analysis of the external environment and obtaining an understanding of relevant social themes
and issues, and the characteristics of Royal DSM;
- Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures
in the Sustainability Information. This includes the evaluation of the results of the stakeholders' dialogue and the
reasonableness of estimates made by management of Royal DSM;
- Obtaining an understanding of the systems and processes for collecting, reporting and consolidating the
Sustainability Information, including obtaining an understanding of internal control relevant to our audit, but not
for the purpose of expressing an opinion on the effectiveness of Royal DSM's internal control;
- Evaluating the procedures performed by Royal DSM’s Corporate Operational Audit department;
- Identifying and assessing the risks if the Sustainability Information is misleading or unbalanced, or contains
material misstatements, whether due to errors or fraud. Designing and performing further audit procedures
responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk that the Sustainability Information is misleading or unbalanced, or the risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from errors. Fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. These further
procedures included among others:
- Inquiry with management and relevant staff of Royal DSM at corporate and component level responsible for
the sustainability strategy, policies and results;
- Inquiry with relevant staff of Royal DSM responsible for providing the information for, carrying out internal
control procedures on, and consolidating the data in the Sustainability Information;
- Determining the nature and extent of the audit procedures at corporate and component level. For this, the
nature, size and/or risk profile of these components were decisive. Based thereon we selected the
components to visit. In view of restrictions on the movement of people across borders, and also within
significantly affected countries, due to the Covid-19 pandemic, we considered how to make appropriate
changes to the audit plan. Due to the aforementioned restrictions, travelling generally was not practicable in
the current environment and we conducted our visits remotely for components where travel was not
possible. The visits were aimed at, on a component level, validating source data and evaluating the design,
implementation and operation of controls and validation procedures;
- Obtaining supporting information that the Sustainability Information reconciles with underlying records of
Royal DSM;
- Evaluating relevant internal and external documentation, on a test basis, to determine the reliability of the
information in the Sustainability Information; and
- Performing an analytical review of the data and trends.
- Evaluating the consistency of the Sustainability Information with the information in the Integrated Annual Report
which is not included in the scope of our audit;
- Evaluating the overall presentation, structure and content of the Sustainability Information; and
- Considering whether the Sustainability Information as a whole, including the disclosures, reflects the purpose of
the reporting criteria used.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit
and significant findings, including any significant findings in internal control that we identify during our audit.
Amstelveen, 1 March 2022
KPMG Accountants N.V.
P.J. Groenland – van der Linden RA
Royal DSM Integrated Annual Report 2021 293
Special statutory rights
DSM Preference Shares Foundation
The DSM Preference Shares Foundation was established in 1989.
By virtue of DSM’s Articles of Association, 375,000,000 Cumulative Preference Shares B can be issued. The listing prospectus
of 1989 stated that if, without the approval of the Managing Board and Supervisory Board, either a bid is made for the
ordinary shares or a significant participation in ordinary shares is built up, or such an event is likely to occur, then these
Preference Shares B may be issued, which shall have the same voting rights as the ordinary shares.
Under an agreement entered into in 1999, and subsequently amended, between the DSM Preference Shares Foundation
and DSM, the Foundation has the right to acquire such Preference Shares (call option) to a maximum corresponding to
100% of the capital issued in any form other than Preference Shares B, less one.
The objective of the Foundation is to promote the interest of DSM, and the enterprise maintained by DSM and all parties
connected therewith, whereby influences that would threaten the continuity, independence or identity, contrary to the
aforementioned interests, are resisted to the maximum extent possible.
The purpose of the agreement with the Foundation is, among other things, for the Foundation to allow DSM the
opportunity to determine its position, for example with regard to a possible bidder for DSM shares or a party or parties
tempting to obtain (de facto) control, to examine any plans in detail and, to the extent applicable, to look for (better)
alternatives. Preference Shares B will not be outstanding longer than necessary. As soon as there are no longer any
reasons for the Preference Shares B to remain outstanding, the Managing Board will convene a General Meeting of
Shareholders and recommend the cancellation of the Preference Shares B that are still outstanding.
The Foundation acquired no Preference Shares B in 2021.
The DSM Preference Shares Foundation is an independent legal entity within the meaning of article 5:71, first paragraph,
under c of the Dutch Act on Financial Supervision (Wet op het financieel toezicht).
On 31 December 2021, the Board of the Foundation was composed as follows:
Gerard Kleisterlee, Chair
Cees Maas, Deputy Chair
Bas Kortmann
Royal DSM Integrated Annual Report 2021 294
Important dates
Annual General Meeting of Shareholders
The Annual General Meeting of Shareholders is to be held on
Tuesday, 10 May 2022 at 14:00 hours CET.
Important dates
Publication of first-quarter
results
Tuesday, 3 May 2022
Ex-dividend quotation
Thursday, 12 May 2022
Publication of second-quarter
results
Tuesday, 2 August 2022
Publication of third-quarter
results
Tuesday, 1 November 2022
Royal DSM Integrated Annual Report 2021 295
DSM figures: five-year summary
All figures are including discontinued operations unless stated otherwise, see also Note 3 Change in the scope of the
consolidation.
Balance sheet
x € million
2021
2020
2019
2018
2017
Assets
Intangible assets
5,310
4,440
3,515
3,090
3,058
Property, plant and equipment
3,957
3,775
4,040
3,511
3,313
Deferred tax assets
203
240
217
248
281
Share in associates and joint ventures
64
93
155
205
227
Derivatives
48
61
27
14
16
Other financial assets
302
317
265
263
475
Non-current assets
9,884
8,926
8,219
7,331
7,370
Inventories
2,297
1,879
2,019
1,993
1,848
Current receivables
1,696
1,483
1,698
1,738
1,690
Derivatives
30
48
19
21
41
Current investments
489
43
688
1,277
954
Cash and cash equivalents
1,561
871
800
1,281
899
Assets held for sale
56
1,096
-
-
-
Current assets
6,129
5,420
5,224
6,310
5,432
Total assets
16,013
14,346
13,443
13,641
12,802
.
Equity and liabilities
Shareholders' equity
9,318
7,399
7,731
7,782
6,962
Non-controlling interests
79
88
104
33
103
Equity
9,397
7,487
7,835
7,815
7,065
Deferred tax liabilities
485
431
296
254
259
Employee benefit liabilities
323
414
413
413
356
Provisions
96
123
120
116
151
Borrowings
2,989
3,484
2,464
2,272
2,551
Derivatives
9
1
7
3
4
Other non-current liabilities
283
163
145
197
188
Non-current liabilities
4,185
4,616
3,445
3,255
3,509
Employee benefits liabilities
21
42
43
46
39
Provisions
68
61
48
37
53
Borrowings
104
102
189
380
77
Derivatives
40
13
18
51
20
Current liabilities
2,188
1,771
1,865
2,057
2,039
Liabilities held for sale
10
254
-
-
-
Current liabilities
2,431
2,243
2,163
2,571
2,228
Total equity and liabilities
16,013
14,346
13,443
13,641
12,802
DSM figures: 5-year summary
Royal DSM Integrated Annual Report 2021 296
Income statement
x € million
2021
2020
2019
2018
2017
Net sales
9,468
9,038
9,010
8,852¹
8,632
Net sales from continuing operations
9,204
8,106
7,998
-
-
Adjusted EBITDA²
1,842
1,650
1,684
1,532¹
1,445
EBITDA
2,370
1,476
1,586
1,754
1,348
Adjusted operating profit (EBIT)²
1,167
1,011
1,075
1,055¹
957
Operating profit (EBIT)
1,689
736
954
1,245
846
Operating profit (EBIT) from continuing operations
1,021
662
872
-
-
Financial income and expense
(106)
(67)
(92)
(101)
(104)
Income tax expense
(245)
(129)
(152)
(194)
(115)
Share of the profit of associates and joint ventures
342
(32)
54
129
1,154
Net profit for the year
1,680
508
764
1,079
1,781
Net profit attributable to non-controlling interests
4
2
6
2
12
Net profit available to equity holders of Koninklijke DSM N.V.
1,676
506
758
1,077
1,769
Dividend on Cumulative Preference Shares
(6)
(7)
(8)
(8)
(8)
Net profit available to holders of ordinary shares
1,670
499
750
1,069
1,761
.
Key figures and financial ratios
Capital employed
11,012
10,557
9,311
8,181
7,766
Capital expenditure:
- Intangible assets and Property, plant and equipment
614
622
623
653
586
- Acquisitions
757
1,579
585
50
264
Disposals
1,941
46
44
335
1,546
Depreciation, amortization and impairments
681
740
632
509
502
Net debt
(1,014)
(2,577)
(1,144)
(113)
(742)
Dividend
438
420
425
412
331
.
Workforce at 31 December, headcount
21,358
23,127
22,174
20,977
21,054
Employee benefit costs (x € million)
1,810
1,848
1,811
1,753
1,768
.
Financial ratios²
ROCE in %
11.0
10.3
12.0
13.3¹
12.3
Net sales / average capital employed
0.89
0.92
1.01
1.11¹
1.11
Current assets / current liabilities
2.52
2.42
2.42
2.45
2.44
Equity / total assets
0.59
0.52
0.58
0.57
0.55
Gearing (net debt / equity plus net debt)
0.10
0.26
0.13
0.01
0.10
Adjusted EBIT / net sales in %
12.4
11.2
11.9
11.9¹
11.1
Net profit / average Shareholders' equity available to
20.5
6.8
10.0
24.7
28.0
Adjusted EBITDA / financial income and expense
17.4
24.6
18.3
15.2¹
13.9
1 2018 adjusted for the temporary vitamin effect for comparison reasons of €415 million in sales, €290 million in adjusted EBITDA and
€290 million in adjusted operating profit, including associated ratios.
2 In presenting and discussing DSM’s financial position, operating results and cash flows, DSM uses certain Alternative performance
measures (APMs) not defined by IFRS. These APMs are used because they are an important measure of DSM’s business development
and DSM’s management performance. A full reconciliation of IFRS performance measures to the APMs is given in Note 2 Alternative
performance measures.
DSM figures: 5-year summary
Royal DSM Integrated Annual Report 2021 297
Information about ordinary DSM shares
per ordinary share in €
2021
2020
2019
2018
2017
Adjusted net profit
5.03
4.43
4.64
5.84
3.92
Net profit
9.68
2.91
4.27
6.10
10.07
Operating cash flow
8.23
8.67
7.84
7.89
5.65
.
Dividend:
2.50
2.40
2.40
2.30
1.85
- Interim dividend
0.80
0.80
0.77
0.77
0.58
- Final dividend
1.70
1.60
1.63
1.53
1.27
.
Pay-out including dividend on Cumulative Preference Shares
50
55
52
40
48
Dividend yield (dividend as % of average price of an ordinary
DSM share)
2.7
1.9
2.3
2.7
2.8
.
Share prices on Euronext Amsterdam (closing price):
- Highest price
199.40
148.55
117.90
92.98
81.66
- Lowest price
136.55
87.52
69.54
68.98
57.20
- At 31 December
198.00
140.80
116.10
71.44
79.67
.
Number of ordinary shares outstanding (x 1,000):
- At 31 December
172,969
172,219
172,449
175,651
174,643
- Average
172,648
171,536
175,731
175,323
174,795
.
Daily trading volumes on Euronext Amsterdam:
- Average
331
518
635
732
676
- Lowest
31
64
75
130
238
- Highest
914
1,900
2,242
2,617
2,110
DSM figures: 5-year summary
Royal DSM Integrated Annual Report 2021 298
Sustainability tables
All figures are including discontinued operations unless stated otherwise, see also the Non-financial reporting policy.
People
2021
2020
2019
2018
2017
Workforce¹ ²
21,358
23,127
22,174
20,977
21,054
Female:male ratio
30:70
29:71
28:72
28:72
27:73
.
% by age category
<26 years³
5
5
5
5
6
26–35 years
27
26
26
25
26
36–45 years
29
29
29
30
28
46–55 years
24
25
25
26
25
>55
15
15
15
14
15
% under-represented nationalities
Executives
31
30
31
31
-
Management
43
42
44
43
-
Other
57
58
59
59
-
% female
Executives
23
21
20
19
17
Management
32
30
29
28
27
Other
30
29
28
28
28
% executive hires
Under-represented nationalities
43
65
55
61
-
Female
57
26
32
61
43
% new hires by region
Netherlands
10
11
11
13
11
Rest of Europe
27
25
24
22
26
North America
21
19
22
25
20
China
14
15
18
16
16
Rest of Asia–Pacific
12
11
12
9
11
Rest of the world
16
19
13
15
15
.
Total number new hires (excluding acquisitions)
2,489
1,729
2,372
3,005
2,203
Acquisitions
93
1,539
1,161
80
247
.
Outflow of employees
Voluntary resignations
1,362
1,052
1,118
1,098
766
Total outflow (excluding divestments)
2,439
2,336
2,352
2,868
1,943
Divestments
1,912
-
-
357
42
Voluntary resignations (% total workforce)
6.7
4.8
5.4
5.3
4.1
Total turnover (% total workforce)
11.9
10.6
11.2
13.9
10.2
.
Development training in hours per employee
8
6
8
6⁴
Net sales per employee (x €1,000)
445
414
421
429⁵
420
.
Safety
Frequency Index of Recordable Injuries (per 100 DSM employees
and contractor employees)
0.22
0.24
0.28
0.33
0.36
1
All data presented in the Sustainability Statements are subject to the Non-financial reporting policy.
2 For the indexes based on age, nationalities, gender, inflow and outflow, the companies that are not integrated into the HR systems
(approximately 5% of the total workforce) are not taken into account.
3 We do not employ people younger than 15 under DSM contract. We require our suppliers to not use forced labor or child labor
according to our Supplier Code of Conduct.
4 In 2018, development training hours per employee were measured using a new standard with stricter definitions. Figures of previous
years cannot be recalculated according to the new definitions, which means there are no relevant figures available for previous years.
5 Net sales per employee is for total DSM (= continuing and discontinued operations).
6 Excluding the temporary vitamin effect in 2018, see Profit in Integrated Annual Report 2019.
DSM figures: 5-year summary
Royal DSM Integrated Annual Report 2021 299
Brighter Living Solutions
2021
2020
2019
2018
2017
Brighter Living Solutions sales as % of net sales¹
64²
63
63
62³
62
1 All data presented in the Sustainability Statements are subject to the Non-financial reporting policy.
2 For a small percentage of sales (less than 0.7% of sales) classified as BLS, the environmental impact is considered ‘best in class’
together with other solutions.
3 Excluding the temporary vitamin effect in 2018, see Profit in Integrated Annual Report 2019.
Planet
2021
2020
2019
2018
2017
Energy and greenhouse gas¹
Primary energy use (in PJ)
21.4
21.5
21.2
20.8
23.6
Energy efficiency improvement (%, year-on-year)
6.0
5.7
2.3
1.4
0.7
Greenhouse gas emissions scope 1 + 2, market-based
(in CO₂ equivalents x million tons)
1.21
1.24
1.17
1.23
1.50
Greenhouse gas emissions scope 1 + 2, location-based
(in CO₂ equivalents x million tons)
1.46
1.43
1.38
1.38
1.57
Total biogenic CO₂ emissions from combustion of biofuels
(x million tons)
0.063
0.046²
-
-
-
Electricity purchased from renewable resources (%)
72
60
50
41
21
Total purchased renewable electricity (GWh)
961
748
632
446
229
.
Emissions to air
Volatile Organic Compounds (x 1,000 tons)
4.1
3.2
3
2.7
4.9
6.6
Nitrogen oxide (NOₓ (x 1,000 tons)
0.4
0.3
0.4
0.5
0.7
Sulfur dioxide (SO₂) (x 1,000 tons)
0.01
0.02
0.06
0.09
0.28
.
Discharges to water and landfill
Chemical Oxygen Demand discharges to surface waters (x 1,000 tons)
2.0
2.0
2.1
2.2
2.5
Waste recycled (in %)
86
85
86
83
84
(Landfilling) Non-hazardous waste (x 1,000 tons)
17
17
15
18
16
Total process-related waste (x 1,000 tons)
195
190³
192
177
-
.
Water
Water withdrawal for non-once-through cooling (x million m³)
26
24
23
22
23
Total water withdrawal, including once-through cooling (x million m³)
106
108
111
114
114
.
Raw materials
Renewable raw materials (in %)
15
15
15
14
15
.
Biodiversity
Sites in or adjacent to protected areas (in %)
28
27
25⁴
-
-
.
Fines (in €)
141,000⁵
26,000
115,100
23,500
128,400
Non-monetary sanctions
5
18
2
6
4
Environmental incidents
73
79
60
71
101
Environmental complaints
39
51
58
53
35
1 All data presented in the Sustainability Statements are subject to the Non-financial reporting policy.
2 The total biogenic CO
2
emissions from combustion of biofuels is available as of 2020.
3 The 2020 figure has been restated. See Planet section (Other emissions to air and Waste) for details.
4 In 2019, Sites in or adjacent to protected areas was measured against a stricter definition. The figures of previous years could not be
recalculated against the stricter definition, which means there are no relevant figures available for previous years.
5 The increase in environmental fines in 2021 is due to under-performance on energy reductions at one site in the Netherlands with an
addendum to the Dutch energy efficiency covenant (addendum Meerjarenafspraak Energie-efficiëntie ETS ondernemingen,
MEE-convenant).
Royal DSM Integrated Annual Report 2021 300
Explanation of some concepts and
ratios
General
Biosciences
1
Biosciences are any of the sciences that deal with living organisms.
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.
More information and definitions can be found on the company website.
Eubiotics
The general term ‘Eubiotics’, is related to the Greek term ‘Eubiosis’ and relates to feed ingredients that support an optimal
balance of microbiota in the gastrointestinal tract of livestock animals. They promote efficient gut performance so as to
produce well-nourished animals that get the most from their feed, while at the same time sustaining their health and
welfare and protecting the environment.
Integrated Reporting <IR> Framework – Value Creation model
The Value Creation diagram is based on the International Integrated Reporting Council's Integrated Reporting <IR>
framework and gives an overview of how we create value for our stakeholders based on six capital inputs.
Human capital (People)
We employ skilled and talented people from diverse backgrounds. We strive to provide employees with a safe and
inspiring workplace as well as with the tools and training they need to be effective and to develop their abilities. We
reward employees with competitive benefit packages.
Societal & relationship capital (People)
We engage with various stakeholders to ensure close alignment between our aims and societal needs. We generate value
for stakeholders outside our direct value chains of employees, suppliers, customers and end-users; these include
employees’ families, governments, local communities and civil society.
Natural capital (Planet)
We recognize that the world is an interconnected system of resources. This represents a responsibility and a business
opportunity. We aim to improve the environmental impact of our supply chain, operations and products and services,
while developing innovative solutions that deliver sustainability benefits to customers and beyond.
Financial capital (Profit)
Providers of capital – shareholders and bondholders, banks and the financial markets – supply funds that we use in our
business to create value, driving growth and delivering sustainable returns.
1 Source: The Free Dictionary
Royal DSM Integrated Annual Report 2021 301
Explanation of some concepts and ratios
Intellectual capital (Profit)
We manufacture and distribute high-quality products and services safely, efficiently and responsibly, and strive to develop
valuable, collaborative and long-term relationships with customers and suppliers. We pursue open innovation, connecting
and collaborating with partners and investing in start-ups.
Manufactured capital (Profit)
We have unique competences in Health, Nutrition & Bioscience and connect these to deliver innovative solutions that
nourish, protect and improve performance.
People
Equal pay and gender pay gap
Equal pay is a legal requirement for men and women to be paid the same for performing the same or similar work or work
that has been rated as being of equal value (by job evaluation). The gender pay gap zooms in on the difference between
what men typically earn overall in an organization compared to women, irrespective of their role or seniority.
Frequency Index (FI)
The Frequency Index is a way to measure safety performance. The number of accidents of a particular category per 100
employees per year. DSM reports frequency indexes in the areas of Lost Workday Cases, Process Safety Incidents and
Recordable injuries.
Inclusion Index
The Inclusion Index is a subset of items in the Employee Engagement (Pulse) Survey to specifically measure Inclusion.
Inclusion is: “A working environment where all employees are a full and equal member of a team; where diverse
perspectives are valued, and investment is made in their development; where people are respected and able to contribute
as they are and not having to conform; where they can reach their potential, and where they can speak up without fear of
retribution.”
Lives Reached
Lives Reached is a measure of consumers already reached through consumer products of third parties containing DSM
products and solutions. This measure addresses key end-markets representing approximately 25% of DSM’s total sales.
These end-markets cover our business segments — Nutrition, Materials and Innovation Center.
The number of Lives Reached is calculated for each market separately and then aggregated. As a business-to-business
company, our products reach end-consumers via third parties, so calculations per market are performed at global level.
Consumer touch points are assumed to be unrelated, and overlap is eliminated using statistical methods (De Morgan’s Law
and Probability Theory — Independence). The actual overlap may be larger or smaller than calculated based on this
assumption.
Key assumptions are used to perform these calculations and include DSM’s market share, total consumer markets, share
of wallet and consumer consumption behavior. These assumptions are made based on external market data where
available, supplemented with market and business intelligence insights.
For more information on Lives Reached, see the company website.
Living wage
The remuneration received for a standard working time by an employee in a particular place sufficient to afford a decent
standard of living for the employee and his/her family. Elements of a decent standard of living include food, water,
housing, education, healthcare, transport, clothing, and other essential needs, including provision for unexpected events.
LWC rate DSM-own
The Lost Workday Case (LWC) rate DSM-own is the number of lost workday cases per 100 DSM employees in the past 12
months: LWC rate = 100 * (number of LWCs (past 12 months) / average effective manpower (past 12 months)).
Explanation of some concepts and ratios
Royal DSM Integrated Annual Report 2021 302
Occupational Health Case
This refers to any abnormal condition or disorder requiring medical treatment — other than one resulting directly from an
accident — caused by, or mainly caused by, repeated exposure to work-related factors.
PSI rate
The PSI rate is the number of Process Safety Incidents per 100 DSM employees and contractor employees in the past 12
months: PSI rate = 100 * (number of PSIs (past 12 months) / average effective manpower including contractor employees
(past 12 months)).
REC rate DSM-all
The REC rate DSM-all is the number of recordable injuries per 100 DSM employees and contractor employees in the past 12
months: REC rate = 100 * (number of RECs (past 12 months) / average effective manpower including contractor employees
(past 12 months)).
Safety, Health and Environment (SHE)
DSM’s policy is to maintain business activities and produce products that do not adversely affect safety or health, and that
fit with the concept of sustainable development. The company does this by setting the following objectives: to provide an
injury-free and incident-free workplace; to prevent all work-related disabilities or health problems; to control and
minimize the risks associated with DSM’s products for their whole life cycle and to choose production processes and
products such that the use of raw materials and energy is minimized; to evaluate and improve DSM’s practices, processes
and products continuously in order to make them safe and acceptable to its employees, the customers, the public and the
environment.
United Nations Global Compact
A strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten
universally accepted principles in the areas of human rights, labor, environment and anti-corruption.
United Nations’ Universal Declaration of Human Rights
On 10 December 1948, the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of
Human Rights. Following this historic act, the Assembly called upon all Member countries to publicize the text of the
Declaration and “to cause it to be disseminated, displayed, read and expounded principally in schools and other
educational institutions, without distinction based on the political status of countries or territories.”
Planet
Biofuel
A fuel which is derived from renewable organic resources, as distinct from one which is derived from non-renewable
resources such as crude oil and natural gas.
Carbon footprint
The total set of direct and indirect greenhouse gas emissions expressed as CO
2
eq.
Carbon price
The price that is paid to emit one ton CO
2
eq into the atmosphere. DSM implements an internal carbon price of
€100/t CO
2
eq.
Circular economy
Circular economy refers to an economy that is restorative and in which materials flows are of two types: biological
nutrients, designed to re-enter the biosphere safely, and technical nutrients, which are designed to circulate at high
quality without entering the biosphere throughout their entire lifecycle.
CO
2
Carbon dioxide, a gas that naturally occurs in the atmosphere. It is part of the natural carbon cycle through photosynthesis
and respiration. It is also generated as a by-product of combustion. Carbon dioxide is a greenhouse gas.
Explanation of some concepts and ratios
Royal DSM Integrated Annual Report 2021 303
Chemical Oxygen Demand (COD)
COD is an indicator of the degree of pollution of waste water by organic substances.
Eco-efficiency
Eco-efficiency is a concept (created in 1992 by the WBCSD) that refers to the creation of more goods and services while
using less resources and creating less waste and pollution throughout their entire life cycle. In the context of DSM’s SHE
targets, eco-efficiency relates specifically to the reduction of emissions and energy and water consumption, relative to the
production volumes of DSM’s plants.
Energy
Primary energy is energy that has not yet been subjected to a human engineered conversion process. It is the energy
contained in unprocessed fuels.
Final (consumed) energy is the energy that is consumed by end-users. The difference between primary energy and final
consumed energy is caused by the conversion process between the two as well as any transmission losses.
Essential for life
Essential for life refers to substances that have a proven beneficial nutritional or pharmaceutical effect when used at the
officially recommended dose.
Greenhouse gas emissions (GHG)
DSM applies the Greenhouse Gas Protocol, which defines GHG as “atmospheric gases that absorb and emit radiation within
the thermal infrared range and that contribute to the greenhouse effect and global climate change.” We report GHGs
based on their global warming potential over 100 years in carbon dioxide equivalent (CO
2
eq).
Scope 1: Direct GHG emissions
Direct GHG emissions occur from sources that are owned or controlled by the company (i.e., emissions from combustion in
owned or controlled boilers, furnaces, vehicles, etc.).
Scope 2: Indirect GHG emissions
Indirect GHG emissions relate to the generation of purchased energy (i.e., electricity, heat or cooling) consumed by the
company. Purchased energy is defined as energy that is purchased or otherwise brought into the organizational boundary
of the company. Scope 2 emissions physically occur at the facility where the energy is generated.
Scope 3: Value chain emissions
Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting
company, including both upstream and downstream emissions.
Location-based emissions
Reflects the average GHG emissions intensity of grids on which electricity consumption occurs (using mostly national grid-
average emission factor data). Corresponding emission factor: in most cases, the country emission factor.
Market-based emissions
Reflects GHG emissions from electricity supplies that companies have purposely chosen (or their lack of choice) and
contracted. Corresponding emission factors:
- Supplier specific emission factor (provided by the supplier)
- Residual emission factor (country-based grid factor, corrected for allocated purchased electricity from renewable
resources)
Greenhouse gas emissions (GHG) efficiency improvement
The GHGE efficiency improvement is the amount of GHG emissions per unit of output (specific emissions) in a given year
compared to the specific emissions in the prior year.
Explanation of some concepts and ratios
Royal DSM Integrated Annual Report 2021 304
GRI
The Global Reporting Initiative (GRI) has developed Sustainability Reporting Guidelines that strive to increase the
transparency and accountability of economic, environmental, and social performance. The GRI was established in 1997 in
partnership with the UN Environment Programme. It is an international, multi-stakeholder and independent institution
whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. These Guidelines are
for voluntary use by organizations for reporting on the economic, environmental, and social dimensions of their activities,
products and services.
Guarantee of origin (GO)
A guarantee of origin is defined in EU Directive 2009/28/EC as “an electronic document which has the sole function of
providing proof to a final customer that a given share or quantity of energy was produced from renewable sources as
required by Article 3(6) of Directive 2003/54/EC.” The requirements of a GO are explained in Article 15 of the same
Directive.
Levelized Cost of Energy (LCOE)
LCOE is a figure used to compare the average cost of energy coming from different sources. It measures the cost of energy
production over the lifetime of an asset like a photovoltaic panel.
Loss of Primary Containment (LOPC)
Loss of Primary Containment is an unplanned or uncontrolled release of material from the container that is in direct
contact with the material.
Mass-balance
Mass-balance accounting is a well-known approach that has been designed to trace the flow of materials through a
complex value chain. The mass-balance approach provides a set of rules for how to allocate the bio-based and/or
recycled content to different products to be able to claim and market the content as ‘bio’-based or ‘recycled’-based.
Mycotoxins
Mycotoxins are toxic compounds that are naturally produced by certain types of molds (fungi). Molds that can produce
mycotoxins grow on numerous foodstuffs such as cereals, dried fruits, nuts and spices.
Net-zero emissions
The Intergovernmental Panel on Climate Change states: “Net-zero emissions are achieved when anthropogenic emissions
of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period. Where multiple
greenhouse gases are involved, the quantification of net-zero emissions depends on the climate metric chosen to
compare emissions of different gases (such as global warming potential, global temperature change potential, and others,
as well as the chosen time horizon)”.
NO
x
Nitrogen oxides. These gases are released mainly during combustion.
Renewable resource
A natural resource which is replenished by natural processes at a rate comparable to, or faster than, its rate of
consumption by humans or other users. The term covers perpetual resources such as solar radiation, tides, winds and
hydroelectricity as well as fuels derived from organic matter (bio-based fuels).
SO
2
Sulfur dioxide. This gas is formed during the combustion of fossil fuels.
VOC
Volatile organic compounds. The term covers a wide range of chemical compounds, such as organic solvents, some of
which can be harmful.
Explanation of some concepts and ratios
Royal DSM Integrated Annual Report 2021 305
Water use and water consumption
Water use includes water used for ‘once-through cooling’ that is returned to the original water source after use. Water
consumption is the portion of water used that is not returned to the original water source after being withdrawn.
Profit
General
In calculating financial profitability ratios, use is made of the average of the opening and closing values of balance sheet
items in the year under review.
The financial indicators per ordinary share are calculated on the basis of the average number of ordinary shares
outstanding (average daily number). In calculating Shareholders’ equity per ordinary share, however, the number of shares
outstanding at year-end is used.
In calculating the figures per ordinary share and the ‘net profit as a percentage of average Shareholders’ equity available
to holders of ordinary shares’, the amounts available to the holders of Cumulative Preference Shares are deducted from
the profits and from Shareholders’ equity.
Adjusted net operating free cash flow
The cash flow from operating activities, corrected for the cash flow of the APM adjustments (see Note 2 to the
Consolidated financial statements on Alternative performance measures), minus the cash flow of capital expenditures and
drawing rights.
Capital employed
The total of the carrying amount of intangible assets and property, plant and equipment, inventories, trade receivables
and other receivables, less trade payables, other current liabilities, investment grants and customer funding.
Capital expenditure
This includes all investments in intangible assets and property, plant and equipment.
Disposals
This includes the disposal of intangible assets and property, plant and equipment as well as the disposal of participating
interests and other securities.
Earnings before interest, tax, depreciation and amortization (EBITDA)
EBITDA is the sum of operating profit plus depreciation and amortization. Adjusted EBITDA is the EBITDA adjusted for
material items of profit or loss coming from acquisitions/divestments, restructuring and other circumstances that
management deem it necessary to adjust in order to provide clear reporting on the development of the business.
Earnings per ordinary share
Net profit attributable to equity holders of Koninklijke DSM N.V. minus dividend on Cumulative Preference Shares, divided
by the average number of ordinary shares outstanding.
High-growth economies
High-growth economies relate to the following regions: Latin America, Middle East, Asia (excluding Japan) and Eastern
Europe.
Innovation sales
Innovation sales are defined as sales from products and applications that have been introduced in the last five years.
Net debt
Net debt is the total of current and non-current borrowings less cash and cash equivalents, current investments and the
net position of derivatives.
Explanation of some concepts and ratios
Royal DSM Integrated Annual Report 2021 306
Operating working capital
The total of inventories and trade receivables, less trade payables. See also Working capital.
Organic sales growth
Organic sales growth is the total impact of volume and price/mix. Impact of acquisitions and divestments as well as
currency impact are excluded.
Return on capital employed (ROCE)
Adjusted operating profit from continuing operations as a percentage of average capital employed.
Total shareholder return (TSR)
Total shareholder return is capital gain plus dividend paid.
Working capital
The total of inventories and current receivables, less current payables. See also Operating working capital.
Royal DSM Integrated Annual Report 2021 307
List of abbreviations
ADR
American Depositary Receipts
IFRIC
International Financial Reporting Interpretation
AFM
The Dutch Authority for the Financial Markets
Committee
APM
Alternative performance measures
IFRS
International Financial Reporting Standards
CDP
The new name for the Carbon Disclosure Project
IPCC
Intergovernmental Panel on Climate Change
Cefic
Conseil Européen des Fédérations de l'Industrie
LCA
Life Cycle Assessment
Chimique (European Chemical Industry Council)
LoR
Letter of Representation
CGU
Cash Generating Unit
LTI
Long-Term Incentive
COA
Corporate Operational Audit department
LWC
Lost Workday Case
COD
Chemical Oxygen Demand
NCI
Non-controlling interests
CPLC
Carbon Pricing Leadership Coalition
NGO
Non-Governmental Organization
CRA
Corporate Risk Assessment
NPS
Net Promoter Score
CRP
Corporate Research Program
OCI
Other Comprehensive Income
CSIRO
The Commonwealth Scientific and Industrial Research
PDN
Stichting Pensioenfonds DSM Nederland
Organisation
PPA
Purchase Price Allocation; also Power Purchase
CSR
Corporate Social Responsibility
Agreement
DHA
Docosahexaenoic Acid
PPE
Personal Protective Equipment; also Property, Plant
DNP
DSM Nutritional Products
and Equipment
DSGC
Dutch Sustainable Growth Coalition
PSI
Process Safety Incident
DSP
DSM Sinochem Pharmaceuticals
R&D
Research & Development
EBIT
Earnings Before Interest and Taxes (Operating Profit)
REACH
Registration, Evaluation, Authorisation and Chemicals
EBITDA
Earnings Before Interest, Taxes, Depreciation and
Restriction of Chemicals
Amortization
RFM
Resins & Functional Materials and associated businesses
EEI
Energy Efficiency Improvement
ROCE
Return on Capital Employed
EFRAG
European Financial Reporting Advisory Group
SDG
Sustainable Development Goal
EPA
Eicosapentaenoic Acid
SHE
Safety, Health and Environment
EPS
Earnings per share
SHIBOR
Shanghai Interbank Offered Rate
EVP
Executive Vice President
STI
Short-Term Incentive
FIFO
First in, first out
SUN
Scaling Up Nutrition Movement
FTE
Full-time equivalent
TCFD
Taskforce on Climate-related Financial Disclosures
FVTPL
Fair value through profit and loss
TSR
Total Shareholder Return
FVOCI
Fair value other comprehensive income
UHMWPE
Ultra-high-molecular-weight polyethylene
GHG
Greenhouse gas
UN
United Nations
GHGE
Greenhouse gas emissions
VOC
Volatile Organic Compound
GRI
Global Reporting Initiative
WBCSD
World Business Council for Sustainable
HMPE
High modulus polyethylene
Development
IAS
International Accounting Standards
WEF
World Economic Forum
ICF
Internal Control Framework
WFP
United Nations World Food Programme
https://annualreport.dsm.com/ar2021/
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2022 Royal DSM All rights reserved
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