To be a leader in climate action it’s important to lead by example. That’s why DSM closely manages their absolute Greenhouse Gas (GHG) emission reduction; GHG efficiency; and energy efficiency.
At DSM Animal Nutrition & Health, they are committed to making animal farming more sustainable across their business as well as that of their suppliers and value chain partners.
To ensure that action is taking place now to safeguard our environment, planet, and future generations, they have multiple programs working with different partners and stakeholders.
DSM is one into their sustainability initiative #WeMakeItPossible in which they support the United Nations Sustainable Development Goals via 6 sustainability platforms. They have recently announced 3 major measurable commitments focused on people, planet, and livelihood to address food security, climate change, and health.
DSM aims to reduce its indirect value chain emissions (Scope 3) by 28% per ton of product produced in the same period. By reducing carbon emissions (for example by sourcing renewable instead of fossil-based electricity) it’s possible to future-proof a business. This is a topic that DSM has embraced for years. It is increasingly valued by the customers, and now they are asking their suppliers to do the same.
One way of making a huge environmental impact is for companies to switch from traditional fossil-based electricity to renewable electricity to reduce their carbon footprint. To give an idea of the feasibility, DSM increased the amount of purchased electricity from renewable sources globally from neglectable in 2015 to 50% in 2019 (and they have a target of 75% by 2030).
The cost difference between fossil-based and renewable electricity can be limited, or even be in favor of renewable electricity, and it’s possible to start making a real and significant impact on the emissions almost immediately. They regularly organize workshops for suppliers that have shown a willingness to make the move to renewable electricity.
In 2018 DSM targeted a 30% absolute reduction of the company’s direct GHG emissions (Scope 1) and emissions from their purchased energy (Scope 2) by 2030*.
In August 2021 they raised the bar further by aiming to halve DSM’s Scope 1 and 2 emissions by 2030 by targeting a 50% absolute reduction of the company’s direct GHG emissions (Scope 1) and emissions from their purchased energy (Scope 2) by 2030*.
Reduction in its indirect value chain emissions (Scope 3) by 28% per ton of product covers everything from purchased services and goods like raw materials; to transportation and distribution; as well as the waste generated in operation. The targets have been validated by the Science Based Targets initiative (SBTi) as being aligned with the Paris climate agreement. Science-based targets show companies how much and how quickly they need to reduce their greenhouse gas (GHG) emissions to prevent the worst effects of climate change.
DSM has also set a long-term target to reach net-zero emissions before 2050.
Furthermore, as an essential complement to their efforts to cut emissions, they also apply an integrated strategy of climate adaptation measures. For example, to improve the resilience of their assets and supply chains against potential physical impacts of climate change, they are developing their physical risk assessment. This involves mapping high-risk areas and major sites for emerging hazards and long-term impacts using different time horizons and climate scenarios.
DSM reports on the climate actions through CDP (formerly the Carbon Disclosure Project), and they have committed to reporting this information in mainstream reports as part of fiduciary duty implementing the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD).
Ultimately, together with their value chain partners, they are committed to eliminating the carbon footprint
They are now targeting 200-plus companies through a major supplier engagement program called CO2REDUCE which will enable them to reduce their own emissions, including switching to renewable electricity. As a result, they have already co-developed more than 25 GHG-reduction roadmaps with their suppliers and counting.
DSM ensures that all new investments by their businesses are carbon neutral.
In 2018, DSM concluded a new €1 billion Revolving Credit Facility with their long-term banking partners that link the interest rate payable to GHG emission reductions, underscoring the importance of sustainability in everything they do – including corporate finance.
Renewable energy
In line with Sustainable Development Goal 7 (affordable and clean energy for all) they are committed to responsible, efficient use of energy. They depend on the availability of renewable electricity via the grid or local electricity production. They work closely with authorities and other companies to scale up the supply of renewable electricity on the grid, including their own on-site solar fields at several sites.
DSM is also a signatory of the Climate Group’s Renewable Energy 100 (RE100)initiative, which brings together the world’s leading companies committed to sourcing 100% of their electricity from renewable sources at the earliest possible opportunity. The intermediate target they set for 2030 is for 75% of purchased electricity to be obtained from renewable sources.
Buying renewable power
In 2020, DSM continued to make good progress toward the target of purchasing renewable electricity. The percentage of purchased electricity from renewable sources increased globally from 50% in 2019 to 60% in 2020. In the Netherlands, their portfolio of agreements continued to provide 100% purchased electricity from wind parks to all locations. All other sites in Europe are also using 100% renewable electricity due to other existing agreements. In North America also, they have around two-thirds coverage of purchased electricity from renewable resources and this is likely to increase toward 100% in 2021.
The biomass cogeneration plant at our DSM Nutritional Products site in Sisseln (Switzerland) replaced the site’s old natural gas-fired cogeneration plant and is the first major success in this area. Their partners, ENGIE and EWZ, own, operate, and maintain the biomass plant, which started production in early 2019. The biomass cogeneration plant in Sisseln (Switzerland) reached full-year capacity in 2020. The replacement results in a 50 kt CO2eq reduction per year (of which about 80% is for them and 20% for the other partners).
Their sites in Jiangshan (Jiangsu Province, China), the anaerobic digestor enables the production of biogas from wastewater, and in Chifeng (Inner Mongolia, China) uses purchased steam produced from biomass residues.
Internal Carbon Price
To encourage investments in low-carbon and carbon-free technologies, DSM uses an internal carbon price in the valuations of key investment projects and in the Profit and Loss statements of the business groups for internal management reporting. Since 2019, business growth projects must either be GHG-neutral or else be compensated for within the same business. This increases the visibility of and encourages accountability for, the impact of carbon on the business. In 2021, DSM increased the ICP from €50/t CO2eq to €100/t CO2eq to better reflect the updated insights on the actual price of CO2 to society. This price is also within the ranges of the scenarios they use for assessing climate transition risks.
DSM is one of the few companies to achieve an ‘A’ rating from the CDP (formerly the Carbon Disclosure Project).
DSM continues to scrutinize and improve every stage of its product lifecycle. That means designing products using new carbon-friendly techniques and materials; and manufacturing them in a more sustainable way. In fact, supported by a dedicated global team, their manufacturing sites are continually implementing carbon footprint-reduction and energy efficiency measures.
