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.

Key data

Key data1

2020	2019
People
Workforce at 31 December (headcount)	23,127	22,174
Female:male ratio2	29:71	28:72
Total employee benefit costs (in € million)	1,848	1,811
Frequency Index of Recordable Injuries (per 100 DSM employees and contractor employees)	0.24	0.28
Employee Engagement Index (in %)	76	74
Planet
Primary energy use (in PJ)	21.5	21.2
Energy Efficiency Improvement (in %, year-on-year)	5.7	2.3
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)	25	25
Water consumption (x million m3)	24	23
Brighter Living Solutions (as % of running business)	63	63
Profit (in € million)
Net sales from continuing operations	8,106	7,998
Adjusted EBITDA from continuing operations3	1,534	1,551
EBITDA from continuing operations	1,368	1,457
Adjusted operating profit from continuing operations (EBIT)3	929	989
Operating profit from continuing operations (EBIT)	662	872
Net profit for the year	508	764
Adjusted net operating free cash flow3	955	801
Capital expenditure, cash based	585	609
Dividend for DSM shareholders (based on profit appropriation)	420⁴	425
Net debt	2,577	1,144
Shareholders' equity	7,399	7,731
Total assets	14,364	13,443
Capital employed	10,560	9,311
Market capitalization at 31 December5	25,545	21,063
Per ordinary share in €
Net earnings	2.91	4.27
Dividend	2.40⁴	2.40
Financial ratios (%)
Sales to high-growth economies / net sales (continuing operations)	44	45
Innovation sales / net sales (continuing operations)	20	21
Adjusted EBITDA margin (continuing operations)3	18.9	19.4
Average working capital / annualized net sales (continuing operations)	22.3	21.2
ROCE (continuing operations)3	10.4	12.3
Gearing (net debt / equity plus net debt)	25.6	12.7
Equity / total assets	52.1	58.3
Cash provided by operating activities / Adjusted EBITDA3	90.5	82.2

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 the Alternative performance measures.
4 Subject to approval by the Annual General Meeting of Shareholders.

Source: Bloomberg.

Co-CEO letter

Dear Reader,

What a journey it has been since we started as Co-CEOs in February ! Never could we have imagined such a first year in our new role, but looking back we are very grateful and proud of how everyone at DSM stepped up to the challenge of coping with the COVID-19 pandemic. Despite this worldwide crisis, we stood by our customers at all times, delivered solid financial results and made important steps on our strategic journey. Yet what stands out most, and will help us going forward, is how vividly we all experienced the importance of our long-standing company culture, our values anchored in our Triple-P bottom line ambition (People, Planet, Profit) and being a purpose-led, performance-driven company. This is what gave us courage, across DSM, to act quickly and do the right things in these most unusual of circumstances.

Swift response to COVID-19 pandemic

The safety, health and well-being of our employees and partners is always our first priority. So when COVID-19 first emerged, we responded swiftly with a range of measures including preemptive travel restrictions, working from home where possible, digitalizing internal and external meetings, and intensifying hygiene and safety protocols. We ensured that our people and partners were safe, we kept our facilities and supply chains running, and we continued to serve our customers, reacting decisively in the spirit of 'One DSM'. These efforts have not gone unnoticed: our overall Net Promoter Score (NPS), which we use to track customer satisfaction, has reached an all-time high of +50.

For our Materials businesses that were most impacted by the lockdowns, swift actions were taken to manage down costs. At the same time, true to our spirit as a purpose-led company, DSM teams applied their scientific know-how, innovation capabilities and resources to help fight COVID-19 through various global and local initiatives. We learned how to produce viral testing equipment such as nose swabs, face masks and disinfectant to help address local shortages, and distributed immunity-optimizing dietary supplements to all our employees, their families, local front-line workers and local communities.

"We remained determined to keep delivering for our customers, something that would not have been possible without the passion, resourcefulness and commitment of our exceptional colleagues."

Solid 2020 financial performance

We delivered a solid full year financial performance in a challenging COVID-19 environment, led by good results in Nutrition and a strong recovery in Materials in the fourth quarter of the year. On a continuing operations basis, our group sales were up 1% and Adjusted EBITDA was down 1%. Nutrition sales were up 6%, and Adjusted EBITDA was up 7% despite significant negative foreign exchange effects. Materials saw a decline in sales and Adjusted EBITDA of 13% and 27% respectively. And we realized an Adjusted Net Operating Free Cash Flow from continuing and discontinued operations of €955 million, up 19%.

Overall, COVID-19 had a slightly negative effect on our sales (including Resins) as Materials saw a negative sales impact of around 10% on volumes in the year, due to reduced global demand in the second and third quarter. Nutrition saw an overall slightly positive sales impact from COVID-19, mainly due to very strong demand in Human Nutrition for immunity optimizing products.

Progress on People and Planet targets

On People, we saw a further improvement in the Frequency Index of DSM Recordable Injuries to 0.24 from 0.28 in 2019, achieving our target level of 0.25. We continue to strive to make our company fully incident- and injury-free. It was also encouraging to see that in such a challenging year we had a notable increase in Employee Engagement results (from 74% to 76%). And with regard to Inclusion & Diversity, the Executive Committee is now 57% female, the Supervisory Board is 42% female, and progress was made on improving the representation of women (21% female executives) and under-represented nationalities on executive level (30%). In order to increase further our focus on creating a work environment that works for all and drives our success, much was done in 2020, including crafting a new People & Organization Strategy, launching our Culture Compass, introducing a broader Inclusion & Diversity agenda including pillars on generations, disability and LGBTQ+, supported by several Employee Resource Groups, and encouraging a dialogue on hybrid workplaces post-pandemic as well as piloting new technology for career development.

On Planet, we are well on track with respect to our greenhouse gas (GHG) reduction, energy efficiency and purchased renewable electricity targets. We signedtwo new renewable energy Power Purchase Agreements (PPAs),covering approximately 25% of our current total annual electricity consumption and putting us firmly on course to achieve our target of 75% electricity from renewable resources. 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 are also proud to have received an A rating for our climate change strategy and an A- for our water stewardship from CDP, the non-profit global environmental disclosure platform.

In 2020, 63% of our sales (including Resins), came from products that have a better environmental and/or social impact than mainstream solutions. We call these our Brighter Living Solutions. Delivering value in all respects, including environmental and social positive impact, remains at the core of our innovation pipeline and is well aligned with customer aspirations.

"We continued to make good progress on the execution of our long-term strategic plan and delivering against our purpose-led sustainability ambitions in People and Planet."

Maintaining our growth strategy focused on Nutrition, Health and Sustainable Living

Our long-term strategic focus remains on Nutrition, Health and Sustainable Living. Our strategy aligns our unique competences and our purpose ('creating brighter lives for all') with our ambitions to address specific megatrends and targeted Sustainable Development Goals (SDGs). The world faces increasing challenges, and COVID-19 has demonstrated more than ever the importance of addressing these through the power of science and innovation. Our expertise is in the science of how nutritional ingredients can ensure better general health for people and animals ('Health through nutrition') as well as in how to enhance the health of the planet through sustainably produced food along with more circular and bio-based materials.

During 2020, we made good progress on our long-term strategic plan. We executed two change programs, 'Agility to Grow' and 'Fit for Growth', to support profitable growth through process simplification and improved alignment with market needs. We also enhanced our platform-based approach to driving innovation, resulting in a healthy pipeline of exciting new products and solutions such as Bovaer®, our feed additive proven to cut ruminant methane emissions by 30%, Veramaris® our algal-based omega-3, and fermentative Stevia through our Avansya partnership with Cargill. We completed three important acquisitions, namely CSK in Food Specialties, Glycom in Early Life Nutrition and the Erber businesses Biomin and Romer Labs in Animal and Human Nutrition, for a combined value of €1.7 billion. And in September, weannounced the divestment of our Resins & Functional Materials business and associated business to Covestro AG, a transaction we expect to close in the first half of 2021.

We are committed to deliver against current performance expectations while at the same time building the company for the future. So going forward, while ensuring the effective integration of recent acquisitions and the scaling of innovations, we will also start expanding our capabilities in Nutrition in the areas of Precision & Personalization, especially through enhanced digital and biosciences competencies. And to support these developments we will also make further adjustments to our organization, including having the right organizational culture to embrace this next phase.

Our Culture guided us through the storm

When nothing is 'as usual' and new answers are needed fast, the true culture of an organization comes to life, and this unprecedented year 2020 showed us the strength of our DSM culture. Anchored in our long history as a purpose-led company and our Triple P bottom line ambitions dating back to 2002, our values enabled everyone in the company to take responsibility and act fast, with safety as the top priority, living out a caring, courageous and collaborative spirit that quickly picked up the internal hashtag '#Together we stand strong'.

Thank you

We are incredibly grateful for the great company and purpose-led cultural legacy that we inherited from our predecessor Feike Sijbesma, a legacy linked to his amazing 30-year career in DSM, and in particular his 12-year tenure as CEO. And our final words are: Thank you! To our colleagues, thank you for your courage, your collaboration and your caring, which have been without measure through this incredibly challenging year, and you can be proud of how we held our course, all together. To our customers, suppliers and all those that trusted us to deliver even in the toughest of circumstances. And to our shareholders, for their ongoing trust and loyalty.

Stay safe and stay healthy!

Geraldine Matchett and Dimitri de Vreeze, Co-CEOs Royal DSM

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 and Sustainable Living contributes toward achieving the SDGs

Working on the SDGs through our Focus Domains

With our unique science-based competences, we have created a strong platform for growth and are ideally positioned to contribute to, and capture the growth opportunities offered by, the global megatrends and SDGs, with a particular focus on developing innovative solutions addressing our Focus Domains of Nutrition & Health, Climate & Energy, and Resources & Circularity. Our purpose-led, performance-driven strategy is based on the global megatrends and SDGs.

Our Brighter Living Agenda brings together many of our initiatives and creates an actionable framework. It comprises three pillars:

- Improve: we improve our own operations to do no harm. We optimize our own operational impact by continually raising safety standards, promoting health and well-being in our own workforce, reducing our emissions, increasing our use of renewable energy and unlocking more value from limited resources
- Enable: we enable our customers to have a positive impact by creating products and services that enable our customers and partners to deliver sustainable and healthy solutions for the planet and society
- Advocate: we advocate in our 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 three Focus Domains 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 Nutrition & Health

The link between adequate nutrition and health has never been clearer. For the first time in human history, diet-related non-communicable diseases (including diabetes, heart disease, stroke, and some cancers) have 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 2.3 billion adults and children are obese or overweight, more than 820 million people go to bed hungry each night, and approximately two billion suffer from hidden hunger.

Our Nutrition & Health Commitments

- Together with the United Nations World Food Programme, we will raise awareness of improved nutrition while continuing to develop new food solutions
- We take responsibility to control and minimize all possible safety risks and adverse effects that could be caused by (the substances present in) our products throughout the value chain
- Together with Generation Unlimited and Sight and Life Foundation, we will develop a business plan in Africa to reach one million smallholder farmers by transforming the food system, providing better nutrition, stimulating youth job creation and reducing reliance on food imports

The Brighter Living Agenda for Nutrition & Health

Improve

Enable

Advocate

By reducingoccupational safetyincidents and promotinghealthand well-being in our own workforce.

By enabling healthy diets for all, through solutions such as thesustainable production of animalproteins,plant-based choices,immunity-supporting solutions,andfood & beverage solutions.

Our biomedical solutions improve quality of life for surgical patients and improve people's health status.

Contributing to the Sustainable Development Goals

Our Nutrition & Health Focus Domain links to the following SDG targets:

For healthy diets within planetary boundaries, in partnerships to address sustainable and healthy nutrition through partners such as theWorld Business Council forSustainable Development's FReSHprogram and theWorld EconomicForum,and inpartnerships to fightmalnutrition,such as theUN WorldFood Programme,UNICEF,WorldVision andScaling Up Nutrition.

- Target 2.1 By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round
- Target 2.2 By 2030, end all forms of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant and lactating women and older persons
- Target 3.2 By 2030, end preventable deaths of newborns and children under 5 years of age, with all countries aiming to reduce neonatal mortality to at least as low as 12 per 1,000 live births and under-5 mortality to at least as low as 25 per 1,000 live births
- Target 3.4 By 2030, reduce by one-third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and well-being
- Target 3.9 By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination

SDG 7 and SDG 13 through Climate & Energy

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 on biodiversity by dramatically limiting greenhouse gas emissions, transitioning to renewable energy, and adopting low-carbon emission solutions and processes.

The transition to a low-carbon economy will also create business opportunities and drive growth for our innovative and sustainable solutions. We are enabling 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 Climate & Energy Commitments

- Our Science Based Targets comprising a scope 1 + 2 absolute reduction of 30% and a scope 3 intensity reduction of 28% by 2030 versus baseline 2016 toward our net zero emissions by 2050 commitment
- Supporting targets of an average annual energy efficiency improvement of >1% and 75% purchased electricity from renewable sources by 2030

We apply an internal carbon price of €50/t CO2eq on our key investments, acquisitions and in our management reporting

The Brighter Living Agenda for Climate & EnergyEnable

Improve

Advocate

Our long-term goal is net-zero emissions by 2050. To put us on track to achieve this, by 2030 we willreduce our own carbonfootprint and improve the resiliency of our assets and supply chains. Our approach to resiliency 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 improving thesustainability ofanimal farming and engineering solutions for mobility and solutions for renewable energy.

Contributing to the Sustainable Development Goals

For climate action and building the movement for a low-carbon, resilient economy through cross domain initiatives such as theWorldEconomic Forum andWorldBusiness Council for SustainableDevelopment,and leading climate platforms such as theCarbonPricing Leadership Coalition,RE100 andGCA.

- Target 7.2 By 2030, increase substantially the share of renewable energy in the global energy mix
- Target 7.3 By 2030, double the global rate of improvement in energy efficiency
- Target 13.2 Integrate climate change measures into national policies, strategies and planning
- Target 13.3 Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning

SDG 12 through Resources & Circularity

The world's resources are finite, and with a population projected to grow to9.7 billion people by 20501, some estimates suggest we will need the equivalent of four Planet Earths by then to sustain our current lifestyles2. In addition, over 30% of all food produced either lost or wasted, representing a hugedrain on natural resources3. New ways of achieving a balance between demand and supply have to be found, including approaches that are not based on single use and subsequent disposal. We are making important contributions to the development of a genuinely circular, bio-based economy founded on closed-loop solutions.

Our Resources & Circularity Commitments

- 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
- Sixty percent of the feedstock used in our Dyneema products will be bio-based by 2030
- 'Safe by design' is the leading principle in the development of new and better products and processes
- Eighty to ninety percent of our waste will be recycled by 2020
- We will at least maintain our water efficiency while we work toward defining a context-based water target
- We will improve our VOC emission efficiency by 50% by 2021 (vs. 2015)

1 Source:UN
2 Source: Accenture strategy research, 2017
3 Source:FAO

The Brighter Living Agenda for Resources & Circularity

Improve

Enable

Advocate

By unlocking more value from thelimited resources that are available.Water security and ourimpact onbiodiversity are important aspects of our continuous improvement mindset. We minimize the use ofsubstances of high 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 joint venturesVeramaris and Olatein, as well as bio-based and recycled-based solutions such as Akulon PA6 andbio-basedDyneema®.

Contributing to the Sustainable Development Goals

For the transition from a linear to a circular and bio-based economy through global platforms such as theWorld Business Council forSustainable Development,and circular economy platforms such asPlatform for Accelerating theCircular Economy,Circle Economy and theEllen MacArthurFoundation.

- Target 12.2 By 2030, achieve the sustainable management and efficient use of natural resources
- Target 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
- Target 12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimize their adverse impacts on human health and the environment
- Target 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse

Our contribution across the SDGs

Our purpose-led, performance driven strategy is based on global megatrends and the SDGs. We align our approach of our Focus Domains with five 'core' SDGs:SDG 2 and SDG 3 through Nutrition & Health,SDG 7 and SDG 13 through Climate & Energy andSDG 12 through Resources & Circularity. In addition to these 'core' SDGs, we believe that we can also Improve, Enable and Advocate to a varying extent across all the SDGs. Below we indicate our estimated contribution in respect of all the SDGs.

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

Improve	Enable	Advocate
●●	●	●●
●	●●●	●●●
●●	●●●	●●●
●	●	●●
●●	●	●●●
●	●●	●
●●●	●●●	●●●
●●	●	●●
●	●●	●●
●●	●	●●
●	●●	●●
●●	●●●	●●●
●●	●●	●●●
●	●●	●●
●	●●	●
●	●	●●
●●	●●	●●●

Improve: The impact within our own operations	Estimate of contribution
Enable: Products that enable our customers to deliver sustainable	● Minor
products for planet and society
●● Moderate
Advocate: Advocating for the future we believe in and acting on
our responsibilities	●●● Major

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 next 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

Businesses need to generate profitable growth while at the same time playing a positive role in the world.

We use our bright science to deliver positive transformations at scale for as many people as possible today and for generations to come, operating within the constraints of the world's finite resources. We aim to redefine how we live and work in order to create a fairer, more prosperous and more sustainable society.

We aspire to be a company for all, creating value for all our stakeholders - customers, employees, shareholders and society at large - and building a stronger legacy and a brighter future for generations to come.

We are already reaching more than 2.51 billion people worldwide

Acting on our purpose

We make change happen in three ways:

- Improve: we improve our own operations to do no harm; we optimize our own operational impact by continually raising safety standards, promoting health and well-being in our own workforce, reducing our emissions, increasing our use of renewable energy and unlocking more value from limited resources
- Enable: we enable our customers to have a positive impact by creating products and services that enable our customers and partners to deliver sustainable and healthy solutions for the planet and society
- Advocate: we advocate in our ecosystem for systemic change; we advocate for the future we believe in and we fully accept our responsibilities as a corporate member of society

Lives Reached is a measure of the number of consumers reached each year via products of customer 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

We recognize the growing influence of large companies in the global economy, and the increasing impact they are having on our world. With increased impact comes increased responsibility. 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 therefore take an integrated approach to our responsibilities.

During the course of 2020, by means of our integrated approach, we implemented a range of external and internal initiatives to further our purpose and make an impact at scale in our three Focus Domains Nutrition & Health, Climate & Energy, and Resources & Circularity that most closely align with five of the Sustainable Development Goals. An overview of these initiatives can be found inOur approach to the Sustainable Development Goals and throughout this report. Examples of our purpose-led solutions are provided in thecase study section.

Like many of our employees around the world, our senior management had to rely heavily on online communication as a result of the COVID-19 pandemic. This is how the vast majority of the DSM Executive Committee meetings took place in 2020 (clockwise from top left): Dimitri de Vreeze, Philip Eykerman, Geraldine Matchett, Chris Goppelsroeder, Helen Mets, Patricia Malarkey and Cristina Monteiro.

Strategy

At a glance

- +19% Adjusted net operating free cash flow growth versus 2019 and versus an average annual target of ~10%
- -1% Adjusted EBITDA from continuing operations versus 2019, with Nutrition +7% and Materials -27%
- 20% Innovation sales (continuing operations), in line with our ambition of ~20%
- ~18%1,2 GHG scope 1 + 2 reduction - cumulative structural improvement versus ~17% in 2019 (baseline 2016)
- 0.24 Frequency Index of Recordable Injuries versus 0.28 in 2019
- 76% Employee Engagement Index versus 74% in 2019

Long-term strategy

With our long-term strategy, we are continuing our evolution as a purpose-led, science-based company operating in the fields of Nutrition, Health and Sustainable Living. Our strong growth capacity is anchored in developing customer-centric, innovative solutions addressing Nutrition & Health, Climate & Energy, and Resources & Circularity. At the same time, we are increasing operational excellence, managing costs, and accelerating profit growth and cash generation. We will continue to make suitable acquisitions to strengthen and develop critical capabilities and to support organic growth, predominantly in Nutrition.

In Nutrition, we focus on human nutrition & health (specialty nutrition, nutritional ingredients, consumer-branded products, personalized nutrition), food & beverages (specialty food enzymes, cultures, probiotics, bio-preservation, hydrocolloids, sugar reduction, and savory taste solutions), personal care and aroma ingredients and animal nutrition & health (core vitamins, premix solutions, and specialty feed additive solutions, including mycotoxin risk management solutions and diagnostics).

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 25% versus the 2016 baseline.

In Materials, we will further develop into a resilient higher-growth, high-margin specialty business, and focus on three Sustainable Living growth-platforms Improved Health & Living, Green Products & Applications, and New Mobility & Connectivity.

By improving the impact of our own operations, enabling sustainable solutions for our customers, and advocating sustainable business models, we make a positive contribution toward achieving the Sustainable Development Goals while at the same time supporting our growth and profitability and improving our risk profile.

Mid-term targets and ambitions

We have set two ambitious targets for profit growth and cash generation to drive value creation for the period 2019-2021:

- A high single-digit percentage annual increase in Adjusted EBITDA
- An average annual increase of about 10% in Adjusted net operating free cash flow

We are committed to mid-single-digit organic sales growth. Key drivers to deliver this sustained growth are innovation, commercial synergies from our recent acquisitions on top of our underlying market growth, and the expansion of our customer-centric solution offerings.

We will continue to leverage our unique technology platforms to develop innovative and sustainable solutions in Nutrition & Health, Climate & Energy, and Resources & Circularity. We aim for 20% of our annual sales to come from innovation.

The following table describes our mid-term 2019-2021 financial targets and the ambitions that underpin them:

1 Based on 2018 underlying business defined as Sales and Adjusted EBITDA corrected for our best estimate of the temporary vitamin effect.
2 Adjusted net operating free cash flow is the cash flow from operating activities, corrected for the cash flow of the APM adjustments, minus the cash flow of capital expenditure and drawing rights.

Our cash allocation policy remains unchanged and has a clear order of priority for cash deployment:

- Disciplined capital expenditure for organic growth: approximately 6.5% of annual sales
- A stable, preferably rising dividend
- Disciplined M&A, predominantly in Nutrition
- 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.

We will target M&A predominantly in Nutrition, given this business's unique growth potential, resilience, strong leadership position and capacity for value creation.

Focus Domains

With our unique science-based competences, we have created a strong platform for growth and are ideally positioned to capture the growth opportunities offered by the global megatrends and Sustainable Development Goals (SDGs). In particular, we focus on developing innovative solutions centered on Nutrition & Health, Climate & Energy, and Resources & Circularity.

Nutrition & Health

The link between adequate nutrition and health has never been clearer. Diet-related non-communicable diseases (including diabetes, heart disease, stroke, and some cancers) have 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 2.3 billion adults and children are obese or overweight1, more than 820 million people go to bed hungry each night, and approximately two billion suffer from hidden hunger2.

With the world's growing and ageing population, the costs of healthcare systems as we know them today are becoming increasingly unsustainable for developed and developing countries alike.

Furthermore, the animal protein industry, which produces the animal-source foods critical for a healthy and balanced diet, is increasingly challenged to reduce its impact on the environment and to improve animal welfare, while at the same time driving down production costs.

Individuals and societies need solutions that offer preventive and sustainable 'health through nutrition', as well as solutions that enable the creation of an animal protein supply that can feed the world within planetary boundaries.

The COVID-19 health crisis throws all of these needs into yet sharper focus.

Climate & Energy

The stability of the world's climate is under threat. We have long believed there is an urgent need to take action to curb climate change and its irreversibly damaging effects by significantly limiting greenhouse gas emissions, transitioning to renewable energy, and adopting low-carbon emission solutions and processes. Partly as a result of the pandemic crisis in 2020, there is also an increasing realization that food systems and the climate crisis are intimately intertwined. Not only are food systems responsible for approximately a quarter of all global emissions3, it is also the sector of the economy that will be affected the quickest everywhere. We are seeing already today the catastrophic impact of climate change on food production in many countries, leading to increased hunger and social instability, and this will only increase. Yet many innovations exist that can meaningfully reduce the climate impact of food production, and these need to be scaled in an equitable way for both the farmers and consumers.

Resources & Circularity

The world's resources are finite, and with a population projected to grow to 9.7 billion people by 20504, some estimates suggest we will need the equivalent of four Planet Earths by then to sustain our current lifestyles. In addition, over 30% of all food produced is currently either lost or wasted, representing a huge drain on natural resources5. New ways of achieving a balance between demand and supply have to be found, including approaches that are not based on single use and subsequent disposal. We are making important contributions to the development of a genuinely circular, bio-based economy founded on closed-loop solutions.

1 Source: IFPRI
2 Source: FAO
3 Source: IPCC report 2019
4 Source:UN
5 Source: Good Nutrition: Perspectives for the 21st Century. Eggersdorfer M. et al. Karger, Basel 2016

Nutrition strategy

Nutrition & Health builds on our unique 'global products, local solutions' business model. Our Nutrition & Health strategy focuses on strengthening and expanding this business model by further building our global products portfolio and advancing our solution-selling capabilities in our end-market-focused segments. In addition, developments in biosciences and the broad adoption of digital ways of life are opening new opportunities to add a third area of innovation-based growth to our business model in Precision & Personalization, a rapidly emerging market, in both Human and Animal Nutrition & Health. Overall, Nutrition & Health aims to mid-single-digit organic sales growth, an Adjusted EBITDA margin greater than 20%, and a high-single digit Adjusted EBITDA growth percentage.

Our business model for growth: global products, local solutions, Precision & Personalization

The basis: our unique and successful business model - global products, local solutions

With this business model, we have successfully built a unique, broad, highly integrated and profitable growth business that covers the food & beverages, specialty nutrition, animal feed and personal care end-markets. Our results are testament to the strength and uniqueness of this business model, delivering 6% organic growth and an increase in Adjusted EBITDA margin from 17% to 21 % during the period 2015-2020.

Our global product portfolio, which includes vitamins, nutritional lipids, carotenoids, minerals, eubiotics, enzymes and yeasts, as well as texturants, flavors and cultures, has expanded through innovation and acquisitions. Most recent additions have been human milk oligosaccharides (HMOs) through the Glycom acquisition and mycotoxin absorbers and eubiotics through the acquisition of Erber Group. Bovaer® and our partnerships Avansya and Veramaris have been added through our own innovation efforts.

Our end-market focus across all regions 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 Human Nutrition & Health and supporting species such as poultry and swine in Animal Nutrition & Health. These capabilities are complemented by a diverse and significant premix footprint, with superior formulations and delivery systems, meeting local needs for our customers.

Expanding our business model: Precision & Personalization

Consumer and customer-driven 'Precision & Personalization' in the domains of both Human Nutrition & Health and Animal Nutrition & Health is where we will expand our business model. Developments in data science & bioscience are opening up exciting new opportunities to address challenges in health and nutrition. Rapid advances in computational biology, gene technology, Artificial Intelligence and diagnostics are transforming our ability to understand and influence the interplay between health, nutrition and the environment in both human and animal biology at an individual level.

We see 'Precision' as a rapidly emerging market in its own right, enabling our customers to meet consumer demand for better health through improved diets and at the same time to produce food more sustainably, particularly in the animal space. We are well positioned to take a leading role in this development. We are an established authority in the field of nutritional science and biotechnology, and through our trusted company brand we have access to customers for and with whom we are already developing emerging Precision & Personalization solutions. This development also involves a natural evolution from delivering customized premixes to enabling the creation of personalized nutritional mixes. Building on these unique strengths, we will seek to work with an ecosystem of partners to create the appropriate digital solutions and interfaces. Offering leading solutions in this space allows us to leverage our unique nutritional science capabilities and multiply the relevance of our ingredients through unprecedented precision. A good example is our new US-based personalized nutrition venture, Hologram Sciences, Inc., which brings together all the necessary capabilities to develop end-to-end turnkey personalized nutrition solutions that are commercially validated with consumers.

Our focus in Animal Nutrition & Health

Operating in alignment with the UN's 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 lead a robust and achievable transformation worldwide, delivering 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 examples such as algal-based omega-3 for fish feed (Veramaris®), methane-reducing feed additives for cows (Bovaer®), mycotoxin risk management and our eubiotics portfolio, we are in the front line to address these challenges.

In addition, we continue to build specialist competences to pursue new health solutions and support 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 focus in Human Nutrition & Health

In Human Nutrition & Health, we will continue to develop from the role of ingredient supplier to that of a fully integrated provider of solutions. We combine our products with third-party ingredients to create specialty solutions for our customers that deliver specific health benefit claims, allowing our customers to focus fully on the branding and commercialization of their products. Key focus areas are:

Preventive health and immunity. COVID-19 has alerted the world to the importance of preventive health and especially immunity. Micronutrients ‒ such as vitamins C and D, omega-3s and probiotics, where we have leading positions ‒ play a key role in supporting immunity. We are building on this consumer need by launching market-ready solutions such as AMPLI D. Furthermore, we are continuing to invest in the business-to-consumer market to ensure the growth of our i-Health business.

Human milk oligosaccharides (HMOs). We are building an exciting innovation roadmap for next-generation HMOs to meet currently unmet needs in early life nutrition, dietary supplements, medical nutrition (e.g., to combat irritable bowel syndrome), and food & beverages. HMOs also have interesting potential applications in pet foods, and these are being explored within the framework of our Animal Nutrition & Health business.

Personalized nutrition: Personalized nutrition is developing rapidly and has the potential to become very significant. We have the building-blocks needed to provide science-based personalized nutrition. With the creation of the wholly owned venture Hologram Sciences, Inc., we aim to develop, and validate with consumers, integrated personalized nutrition solutions for our customers. The stand-alone set-up is designed to ensure agility and speed, while the arm's-length link to DSM allows to leverage DSM's access to market. Hologram Sciences, Inc. will work closely with leading start-ups in which we have already invested, such as Mixfit, 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 very low-income populations through various partnerships, such as with WFP, UNICEF and Africa Improved Foods (AIF).

We are also championing the purpose behind our products, which help address some of world's greatest nutritional challenges. Furthermore, we continue to sharpen our focus on customer-centricity and commercial excellence.

Our focus in Food & Beverages

The Food & Beverage market is subject to rapid change, driven by evolving consumer needs. 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 the Food & Beverage market, we are uniquely positioned to offer solutions that address health, taste and texture in an integrated way, with our:

- Unique and extensive portfolio of global products, ranging from dairy cultures and enzymes for applications across dairy, baking and beverages; coatings and preservation systems; yeast extracts and process flavors and texturizing hydrocolloids; to our vitamins, minerals and nutritional lipids
- Deep expertise in application in our core end-market segments

To strengthen this unique proposition in food & beverages, we will continue to:

- Deepen our integrated application know-how
- Broaden our global product portfolio
- Combine ingredient and application innovation
- Maximize opportunities for inorganic growth

An example of our ingredient and application innovation is CanolaPRO™, a sustainable plant-based protein source. This is a new building- block in our solutions offering for meat alternatives and dairy alternatives. Avansya, our partnership with Cargill to bring zero-calorie, cost-effective, non-artificial sweeteners to market at scale, is another such example of product innovation.

Materials strategy

Following the announcement of 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 businesses generated sales of approximately €1.5 billion in 2020, have a strong growth and earnings potential, and are positioned to deliver growth in the strategic area of Sustainable Living. We will continue to develop the Materials business into a more resilient, higher-growth, and high-margin specialty business. Focusing on three Sustainable Living growth platforms - Improved Health & Living, Green Products & Applications, and New Mobility & Connectivity - we aim for mid-single-digit organic sales growth, an Adjusted EBITDA margin greater than 20% and a high single-digit Adjusted EBITDA growth percentage.

Focus on three growth platforms

Our Materials platforms will capture more opportunities in Sustainable Living, propelled by the following growth drivers: winning segments, substitution, innovation and sustainability.

In Improved Health & Living, we are focusing in particular on the growing demand for healthcare, personal protective equipment and medical applications such as specialty materials for medical gowns, respiratory tubes and stents.

In Green Products & Applications, we are focusing on the increasing demand for bio-based, recycled-based, and fully recyclable solutions. The launch of bio-based Dyneema® in 2020 is a good example.

In New Mobility & Connectivity, we are targeting the transition from fossil fuel to electric automotive power and hydrogen-fueled cars. An example is our specialty material Xytron® PPS for high performance fuel cells. We are also addressing the growing need for materials that enable autonomous driving and the increased connectivity between products, devices and applications.

Innovation strategy

Innovation is what transforms our 'Bright Science' into 'Brighter Living'. We aim to develop innovative, sustainable solutions by leveraging our unique scientific competences and our profound understanding of:

- The science behind nutrition, and the capability to develop new nutritional ingredients with proven health benefits, supported by our state-of-the-art Biotechnology Centers, providing sustainable alternatives for chemical synthesis, as well as plant- and animal-derived ingredients
- Materials science and the capability to convert this into Sustainable Living applications, supported by access to global state-of-the art laboratories

Our sales growth is driven by our ability to continually deliver innovative and improved products and solutions to meet our customers' needs. Our innovations reflect our commitment to healthier and more sustainable outcomes and so help drive the performance of our Brighter Living Solutions portfolio.

Innovation sales have also improved our profitability, delivering higher margins than the average of our running business. Our innovation sales are defined as products and applications that have been introduced over the past five years. We aspire to maintain the contribution made by these 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. We will continue to invest in differentiating science and technology.

Driving the innovation pipeline through seven growth themes

We are adapting our innovation approach from being project-based to platform-based to deliver a business-anchored pipeline of innovations that is aligned with our future strategic needs and supports our growth ambitions. We have identified seven overarching growth themes that capture the major global societal, technological and environmental trends that inform our innovation platforms. In Nutrition & Health, we focus on four growth themes: Pathways, Proteins, Prevention and Precision. In Sustainable Living, we focus on three growth themes: Improved Health & Living. Green Products & Applications and New Mobility & Connectivity.

Innovation growth themes

This move from individual projects to innovation platforms provides focus, and links our existing portfolio with our future pipeline. When we look ahead to 2025 and beyond, our success will not be dependent on several large projects only. Instead, each innovation platform will have a clear pipeline of multiple projects at different stages of maturity.

In Nutrition & Health, 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 look to microorganisms to produce ingredients and intermediates; for example, the innovation platform of Sustainable Lipids, which includes algal-based omega-3 Veramaris® for more sustainable aquaculture
- Proteins: solutions that reduce the footprint of animal proteins and meet the growing demand for meat 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, HMOs) which all exist in nature 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 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 individual humans and animals; an example is our personalized nutrition platform, delivered through Hologram Sciences, Inc., which provides nutrition and coaching recommendations

In Sustainable Living, we focus on three growth themes: Improved Health & Living, Green Products & Applications and New Mobility & Connectivity as described in theMaterials strategy section.

Enabling programs for accelerated growth

Our enabling programs will underpin and facilitate our ambitions by focusing on key areas such as a performance-driven organization, leadership and people, culture, powered by digital and sustainability leadership across DSM.

Organization, leadership and people, and culture

We continue to develop our organization, leadership and people, and culture to enable continued performance. The extraordinary circumstances of 2020 - new leadership at the top; a pandemic disrupting our views about work, workplace and workforce; and a continued company transformation - called for anew People & Organization (P&O) strategy,The new P&O strategy is both a continuation and an evolution of our current strategy, with a focus on 'Creating a Flotilla Organization', 'Empowering Our Employees', 'Creating a Contemporary Workplace', and 'Resetting the Context for Leadership' - all anchored in our DSM Culture Compass.

The 5 key digital shifts taking place in the world around us are leveraged and scaled across our organization to solidify and optimize our core business but also to create new value streams:

- Building the right partnerships and ecosystems at scale to go beyond current business models; for example, personalized nutrition
- Using data and insights at scale in all functional domains to enlighten decision-making and boost top and bottom line
- Intensifying automation, eliminating all routine tasks, thus allowing the simplification of operating models and the acceleration of key processes
- Becoming truly agile, moving from a traditional waterfall organization to cross-functional teams empowered to take integrated decisions and operating in an iterative and adaptative manner
- Preparing for a future workforce that is fully digitally oriented and possesses advanced digital skills

Sustainability leadership

Sustainability is not only our core value and a key responsibility, it is increasingly an important business growth driver at DSM that is fully embedded in our strategy. By improving the impact of our own operations, enabling sustainable solutions for our customers and advocating sustainable business, we make a positive contribution toward achieving the Sustainable Development Goals. For more details on our initiatives and progress, seePeople andPlanet andOur approach to theSustainable Development Goals.

Report on progress in 2020

Our strategy served us very well in 2020. 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 nutrition portfolio, where appropriate.

Highlights:

- We completed the integration of two acquisitions (CSK and Glycom), and started the integration of Erber Group into DSM.
- These three acquisitions valued together at €1.7 billion further strengthen our 'global products, local solutions' business model as well as the Precision part of our business model by acquiring Romer Labs as part of the acquisition of Erber Group.
- We announced the divestment of our Resins & Functional Materials and associated businesses
- We executed two change programs, 'Agility to Grow' in Materials and 'Fit for Growth' in DSM Nutritional Products, to support profitable growth through process simplification and improved alignment with market needs
- Enhanced our platform-based approach to driving innovation, ensuring a healthy pipeline of new products and solutions
- Delivered against our purpose-led sustainability ambitions in people and planet

Progress in Sustainability: People and Planet

At DSM, sustainability is not only our core value and a key responsibility it is also an important 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. See below an overview of our progress on our key sustainability metrics:

1 These data are subject to the non-financial reporting policy.
2 We estimate that the effect of the underlying cumulative structural improvements in absolute GHG emissions was approximately 18% in 2020, versus the 2016 baseline. The total cumulative absolute reduction was 25%, versus the 2016 baseline.
3 For a small percentage of sales (<0.6 % 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 already ranked first out of 120 companies 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 Vigeo Eiris.

Planet

We further improved the environmental impact of our own operations and are well on track with respect to our greenhouse gas (GHG) reduction, energy efficiency and purchased renewable electricity targets.:

- The underlying structural improvement in absolute greenhouse gas reduction from operations in 2020 compared to the 2016 baseline is ~18%, versus our target of 30% by 2030
- Energy efficiency has improved by 5.7% compared to full year 2019 versus our >1% average annual ambition.
- 60% of purchased electricity came from renewable resources compared with 50% in 2019, 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 are also proud to be globally recognized for our leadership in Sustainability. Our climate change strategy received an A rating and an A- for our water stewardship from CDP, the global non-profit environmental disclosure platform.

We enabled our customers to deliver more sustainable solutions to their (end) consumers focusing on the domains of Nutrition & Health, Climate & Energy, and Resources & Circularity. Our purpose-led innovation pipeline is fully aligned with our five focus SDGs. Welaunched a newstrategic initiative to lead a robust transformation in sustainable animal proteinproduction worldwide, and we unveiled our 'Products with Purpose' brand strategy in human nutrition. Wehalved thecarbon footprint of Akulon® PA6,one of our key thermoplastic material products, and introduced bio-based Dyneema®.

More about our environmental performance can be found in thePlanet section.

People

As the pandemic unfolded in 2020, taking care of our people became more important than ever. The resilience, engagement and care demonstrated by all of our employees has humbled us this year. We undertook a wide range of initiatives designed to support the physical, mental and emotional wellbeing of our people. In addition, we continued to work on safety and the engagement of our employees and to champion inclusion and diversity.

In terms of metrics we further improved the Frequency Index of DSM Recordable Injuries to 0.24 from 0.28 in 2019, achieving our target level of 0.25. We continue to strive to make our company fully incident- and injury-free. It was also pleasing to see that in such a challenging year we had a notable increase in Employee Engagement results (from 74% to 76%). On Inclusion & Diversity, we have made some progress on gender, with an Executive Committee ratio of 57% female, a Supervisory Board ratio of 42% female, a ratio of 21% female executives and under-represented nationalities ratio on executive level (30%). In 2020, we have broadened our continued journey to include pillars on generations, disability and LGBTQ+, with all five pillars being supported by highly engaged employee resource groups including: Rainbow Group, supporting LGBTQ+ colleagues; the Valuable group, supporting colleagues with disabilities; and the Black Employee Network at DSM called BLEND.

In terms of Organization, Leadership and Culture, we took the first implementation steps for the new P&O strategy at the end of 2020: we invested in our unique culture, with the launch of our Culture Compass, we piloted a new technology for career development, and launched a Hybrid Workplace concept for our 'Next Normal' way of working.

More information can be found in thePeople section.

Brighter Living Solutions

In 2020, 63% of our total group sales (continuing and 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. In 2020 we were able to qualify several additional solutions. This increase was offset by the disqualification of two significant solutions as part of our annual review process. These disqualifications were the result of an improved mainstream reference and changed supplier impacts. To better measure the sustainability impact of our product portfolio, we trialed a new methodology aimed at increased transparency and granularity. The approach was developed in 2019 and trialed in 2020. The methodology will be further refined in 2021 based on the feedback from the trials.

Progress in Digitization & Digitalization

With 157 bots automating numerous processes and more than 50 data analytics use cases implemented, we have created a solid basis to scale the benefits of advanced analytics and automation. 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 and China by inviting employees to learn, ideate and try out digital approaches more and more often. In the second part of the year, we combined the Nutrition strategy with digital imperatives to form an integrated transformation program that will shape, over the coming years, the digital Nutrition of tomorrow.

Strategic priorities and key path forward

We are committed to deliver against current performance expectations. This means that we are focused on delivering growth, through being the partner of choice for our customers, bringing our innovations to market, and successfully integrating our recent acquisitions. At the same time, we will be building the company for the future. This also entails building new business models by scaling our capabilities in digital & bioscience and M&A. We will create a stronger brand focus on Health through Nutrition. Additionally, we will ensure we have the right organizational culture to embrace this next phase. All of this will require, as always, further adjustments to our organization - starting with the carve-out of our Resins & Performance Materials businesses

Strategic priorities

Case studies

Making animal farming more sustainable

If we hope to feed, sustainably and responsibly, the9.7 billion1 people who are expected to share our planet by 2050, the time to change is now. While plant-based proteins show increasing potential for helping to meet this need in a sustainable manner, they are not sufficient to fulfill it completely, and animal-based proteins retain an essential role in meeting global dietary requirements. We see many opportunities to improve and are therefore helping to make animal farming more sustainable so we can bring better food, nutrition and health to all, within planetary boundaries.

The need for sustainable animal protein production

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 role in those cultures.

However, rising demand for animal protein is driving up greenhouse gas emissions and piling pressure on natural resources. The sustainability of mainstream animal production is consequently coming under increasing scrutiny from the value chain, policy makers and associated stakeholders.

Continuing to operate as we have done in the past is not an option. All players involved in the production of animal protein need to be aware of the challenges we are facing. We must work together to solve them - applying new thinking, new technologies, and new business models in order to create a more sustainable industry for the whole planet.

Our solutions

We embed sustainability as a business driver and enable our customers and partners to deliver sustainable and healthy solutions for the planet and society. We are building a sustainable future in six key areas:

Source:UN

- 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

Our innovative science-based solutions enhance the animal nutrition value chain at every stage. This involves enabling farmers to develop practices that are both sustainable and economically viable. Here we highlight our contribution to one of these: reducing emissions from livestock.

Our impact: Reducing emissions from livestock

Creating a low-emissions future for animal farming

Animal farming accounts for 14.5% of all human-derived greenhouse gas (GHG) emissions. This figure is set to rise as demand for animal-source foods increases. It needs to be reduced rapidly to limit the rise in global temperatures to 1.5°C by 2050. The main sources of these emissions relate to animal feed, followed by methane naturally produced by cows, and then again by methane plus nitrous oxide emissions from manure.

Reducing emissions through nutrition

Reducing emissions entails, among other things, changes to farm infrastructures and husbandry practices, but improvements in nutrition are of pivotal importance. To be sustainable in the long term, animal farming has to reduce the emissions it produces, cutting levels of methane, nitrous oxide and ammonia, which drive up global warming and negatively impact biodiversity and water quality. Our innovative nutritional solutions targeting these emissions are Bovaer® (which reduces methane emissions from ruminants by at least 30%), VevoVitall® (which reduces ammonia emissions by up to 18% in swine), and our protease feed enzymes such as ProAct (to improve protein feed protein utilization in poultry and subsequently reduce nitrogen emissions to the environment).

Reducing nitrogen emissions with ProAct

ProAct increases the amount of digestible protein in feed, making it possible to reduce the overall protein content of feed. It improves the digestibility of proteins, thereby reducing nitrogen emissions to the environment by up to 17%.

ProAct also enables the use of more diverse feed raw materials and facilitates greater flexibility in feed formulation, reducing our reliance on soy and thereby helping to cut deforestation for soy cultivation. This equates to an average reduction of 8% (25kg) in the amount of soybean meal required per ton of broiler feed. If ProAct were to be used globally in broiler diets, it would permit the replacement of 7.2 million tons of soybean meal annually, corresponding to 9.0 million tons of soy, thereby reducing deforestation by 3.1 million hectares a year.

Effective measurement is essential to this undertaking, and so we have been developing an advanced sustainability service that enables farmers to see their own environmental footprint in its entirety and understand where changes need to be made for improvement. This service is backed up by science-based, cost-effective solutions to make the improvements a reality. Creating this transparency gives farmers options for reducing their emissions, differentiating themselves from less sustainable competitors and unlocking the real value of sustainable animal production.

Stronger together

We work closely with our customers and other partners in the value chain to make sustainable animal farming possible, and are always looking for ways to increase our positive impact together. For several years now, we have been helping our customers to calculate their carbon footprint (GHG emissions), working with them to reduce it over time by means of practical, proven nutritional solutions to ensure they reach their emissions reduction targets.

We have recently developed a new Animal Protein Sustainability Service (APS Service), which will allow us to holistically evaluate the full environmental footprint of our customers' animal protein production operations. The APS Service uses highly advanced Life Cycle Assessment (LCA) tools, modeling and benchmarking to produce a powerful business diagnostic for animal protein producers: a large footprint is often associated with inefficiencies in the farming system, and eliminating these can allow the farmer to capture financial value while reducing the farm's environmental footprint.

How we support the SDGs

SDG 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Our products contribute to delivering animal-source foods that are healthy, nutritious, affordable and sustainable by promoting animal health via targeted nutritional interventions.

SDG 3: Ensure healthy lives and promote well-being for all at all ages

By supporting the production of healthy, nutritious, affordable and sustainable animal-source foods, we improve the availability of protein, which is a critical macronutrient and an essential component of a balanced diet.

SDG 12: Ensure sustainable consumption and production patterns

Our products that increase the digestibility of feed help reduce the area of agricultural land needed to produce essential feed crops, giving farmers options for reducing their emissions and differentiating themselves from less sustainable competitors.

SDG 13: Take urgent action to combat climate change and its impacts

Our products that reduce the emissions to air, land and water that are associated with livestock production address climate change and its impacts.

Accelerating nutritional support for immunity

The global public health crisis triggered by COVID-19 has highlighted the need for easily accessible dietary solutions that support immune health. In 2020, our customers needed to go to market faster than ever before with reliable and effective formulations and applications, delivering different formats that could easily be integrated into consumers' dietary routines. With our end-to-end capabilities, such as customized premix solutions, regulatory support and Market-Ready Solutions, we succeeded in meeting this unprecedented need.

Worldwide problem

Market insights confirm that immunity became a leading consumer health concern in 2020, with 65% of people saying that they were either 'worried' or 'very worried' about their immune status. The health benefits of micronutrients are widely understood by consumers today. Micronutrients, such as vitamins, dietary minerals, omega-3 fatty acids and specific probiotic strains, play an important role in supporting the body's immune system. Recent scientific evidence underpins the particular role of vitamin D in supporting immune health and strongly indicates a relationship between vitamin D status in the blood and the likelihood or severity of a COVID-19 diagnosis.

Travel restrictions, fewer in-person medical consultations and growing use of e-commerce channels consequently fueled consumer demand for immunity self-care products, as well as the need for assurance that existing dietary supplements of choice contained immunity-supporting ingredients.

In response to the outbreak of COVID-19, in 2020 33% of consumers took dietary supplements more frequently than before and 13% started taking them for the first time, immune health being their main motivator. The dietary supplement market grew by approximately 4.5% in 20201, whereby COVID-19 was a key driver, and revealed that consumers are shifting their nutritional preferences in the direction of healthier choices.

Our customers needed to innovate to meet this rapidly growing demand, delivering innovations to market in record time in order to meet a global public health need and at the same time capture valuable commercial opportunities.

Our solution

Our Market-Ready Solutions capabilities extend from brand idea to creating the final product on the shelf. What made customers choose our Market-Ready Solutions was the need to go to market fast. We have the capacity and expertise to accompany the customer at every step of the product development process from market research and product ideation to post-launch support, whether in the supplement, medical nutrition, pharma or food & beverages markets.

Our products, customized solutions and expert services have enabled many of our customers across the world to launch new immunity-supporting products in record time during the COVID-19 pandemic, drawing on our scientific expertise, high-quality ingredients and premix formulations.

Stronger together

Viktor Axelsen (VA) Health was among many customers to benefit from our Market-Ready Solutions and launch a comprehensive dietary supplements product line, including an immunity solution, in 2020. Find more detail on how we helped him to in this video.

Source: Euromonitor International Limited 2020©

Like many of our customers, Korea Eundan benefited from our speed of response in 2020.

"Korea Eundan has continued to work with DSM to promote the immune benefits of vitamin C in a variety of ways," says YoungJo Cho, CEO of Korea Eundan. "Especially during the COVID-19 pandemic, a steady supply of vitamin C could have been difficult to sustain. Fortunately, DSM Korea's quick forecast of consumer demand and support from its headquarters enabled Korea Eundan to keep up its supply of products to the market without much strain, further raising consumer confidence. As we have built a mutually beneficial partnership, I sincerely look forward to working and growing together with DSM in the years to come."

Our impact

Consumer studies we conducted in 2020 indicate that consumers around the globe are increasingly taking proactive measures to optimize their immune health, and are seeking affordable, accessible and reliable nutritional solutions to do so. At the same time, the rising average age of the world's population creates a growing population group that is especially vulnerable to infections, as the COVID-19 public health crisis has shown.

We saw this need in 2020 and helped our customers in the dietary supplements, food & beverages, medical nutrition and pharma sectors to enhance their leading brands as well as deliver new Market-Ready Solutions at unprecedented speed. Our sales from immunity-supporting ingredients exceeded EUR 1 billion in 2020. Versus the previous year, we outperformed the dietary supplements market by growing 14% vs 4.5% market growth, in the medical nutrition market by 34% vs. average annual market growth of 6-8%1, and in the pharma market by 13% vs. market growth of 2-5%2.

How we support the SDGs

SDG 3: Ensuring healthy lives and promoting well-being for all at all ages.

Our efforts in helping our customers to quickly launch effective immunity-supporting products, our comprehensive market-shaping activities, and our endeavors to raise awareness of the role that nutritional solutions may play in supporting our immune system all support SDG3.

1 Source:2014 Frost & Sullivan Global Medical Foods Market Forecast Report, United Nations, Department of Economic and SocialAffairs, Population Division (2017)
2 Source:IQVIA Midas

Tastier, more nutritious plant-based choices

There is a growing demand for plant-based alternatives alongside traditional meat and dairy products, as consumers search for foods that deliver an authentic eating experience without compromising on taste and texture. At the same time, the importance of a quality nutritional profile is attracting increasing recognition. To meet this need, in 2020 we launched two new portfolios of integrated solutions, one supporting the production of plant-based meat alternatives and the other of dairy alternatives. These innovative solutions are backed up by our expert product positioning services, which draw on unrivalled nutrition science and regulatory expertise.

The quest for appealing alternatives to traditional meat and dairy products

The world's growing population calls for a rethinking of today's food systems if we are to ensure healthy diets for all within planetary boundaries. Intrinsic to this requirement is the challenge of being able to provide enough quality proteins in a fair manner. Climate and nutrition scientists alike advise increasing the proportion of plant-based products for more balanced diets in support of healthy lifestyles. 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.

Consumers are therefore increasingly looking for appealing choices alongside the meat and dairy products that form a key part of many traditional diets. A recent DSM study attested that taste is still the overriding criterion for consumers. In fact, 62% of consumers choose taste over everything else when it comes to food products, and plant-based alternatives are noexception. At the same time, nearly 85% of participants reported being aware that they are missing out on vitamins and minerals when following 'elimination diets'.

Food & beverage producers are thus faced with the challenge of developing alternative products for this market that offer a comparable experience and taste to the traditional products they replace. Increasingly, consumer and societal expectations are set to move beyond taste and texture, as awareness grows concerning the importance of a quality nutritional profile.

Our unique portfolio allows us to create solutions that deliver authentic taste, texture and mouthfeel along with a preferred nutritional profile, at the same time enabling producers to manage levels of salt, sugar and gluten.

Our solutions

In the field of meat alternatives, we offer a range of solutions that deliver authentic meaty taste and create succulent, appealing 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.

Our enzymes, hydrocolloids and taste modulation solutions, meanwhile, create the smooth mouthfeel and tailored sweetness necessary for appealing plant-based beverages. In dairy alternatives, our new Delvo®Plant enzyme range complements our portfolio of solutions including hydrocolloids and taste modulators that help manufacturers develop and market premium dairy alternatives. The Delvo®Plant range not only contributes to the desired texture, but can also unlock glucose and/or maltose from starch bases, enabling manufacturers to create healthier alternative beverages with zero or reduced added sugar, offering sweetness profiles that can be tailored to meet local preferences.

Our Quali® vitamins and premix solutions improve the desired nutritional value of both meat and dairy alternatives, alongside our life's™OMEGA range of plant-based nutritional lipids.

These groundbreaking new portfolios will be complemented by CanolaPROTM, our unique protein based on non-genetically modified canola. Coming to market in 2022, CanolaPROTM is ideal for a range of applications including meat and dairy alternatives, beverages, baked goods, bars, and ready-to-drink and ready-to-mix applications. CanolaPROTM offers versatile texture benefits thanks to its solubility, also in combination with other proteins such as pea or fava, as well as being a nutritionally complete protein in its own right.

More information on our plant-based alternatives can be foundhere.

Our impact

The global plant-based product retail market value (meat alternatives and dairy alternatives) is set to jump from €21 billion in 2019 to ~€30 billion in 2024. However, the growing demand for plant-based products that meet today's evolving consumer expectations presents complex challenges for food & beverage manufacturers. With our comprehensive portfolio of solutions for plant-based meat and dairy alternatives, we can help food & beverage manufacturers deliver a specific sensory profile without compromising on health appeal, and our ingredients and know-how are already making many plant-based products in grocery-store chiller cabinets and well-known high-street chains tastier and more nutritious. Additional appealing choices help the food industry to sustainably meet the protein requirements of a growing population with new options alongside traditional products.

How we support the SDGs

SDG 12: Ensure sustainable consumption and production patterns.

With our unique portfolio of products for creating nutritious and delicious meat and dairy alternatives, we help ensure healthy lives and promote well-being for all ages while at the same time supporting sustainable consumption and production pattern.

Bio-based Dyneema® and the circular economy

In 2020, we introduced bio-based feedstock into the production of Dyneema®, the world's strongest fiber™. Dyneema® serves a wide range of applications, from ropes and lines to lightweight, high-performance fabrics for outdoor and sports use, such as cycling jerseys, tents and backpacks. Due to their extreme robustness, garments made with Dyneema® last longer than comparable traditional products, lengthening the cycle lifetime. Introducing bio-based feedstock allows us to reduce our use of fossil-based resources. Production of 1 metric ton of bio-based Dyneema® generates 5 metric tons less CO2eq than the same volume of fossil-based Dyneema®.

Reducing our dependency on fossil-based resources

The linear economy is not sustainable. Every year, the human race is currently consuming 1.7 times the amount of resources that the earth can replenish. This ratio is projected to grow from 1.7 to 3 by 2050. In addition, feedstocks have a major impact on carbon footprint: to enable the low-carbon economy necessary for combating climate change, it is essential to transition away from fossil feedstocks.

Introducing bio-based feedstock allows us to reduce our dependency on fossil-based resources. Production of 1 metric ton of bio-based Dyneema® generates 5 metric tons less CO2eq than the same volume of fossil-based Dyneema®. In addition, bio-based Dyneema® has the lowest carbon footprint per unit strength compared to other synthetic fibers. For example, compared to generic high-modulus polyethylene (HMPE) fibers, bio-based Dyneema® emits 29 metric tons less CO2 per metric ton of fiber produced. This is the amount of CO2 released by charging 3.7 million smartphones, or absorbed by growing 480 tree seedlings for 10 years.

Our solution

Customers, governments and end-users are increasingly demanding renewable and bio-based materials.The World Business Council for Sustainable Development (WBCSD) estimates that the economic opportunity for bio-based products to complement and/or replace conventional ones will be worth USD 7.7 trillion by 2030. Dyneema® is the first, and currently only, bio-based ultra-high-molecular-weight polyethylene (UHMWPE) fiber in the world. We aim for at least 60% of Dyneema® fiber feedstock to be bio-based by 2030.

Our impact

Through the mass balancing approach, bio-based Dyneema® fiber delivers the same consistent durability and performance, along with reduced environmental impact.

The fiber is certified according to the International Sustainability & Carbon Certification's globally recognized ISCC Plus, a certification system covering all sustainable feedstocks, including renewables. ISSC Plus certifies that the bio-based fiber originates from a transparent and traceable supply chain while guaranteeing that the amount of bio-based materials sold is not more than the amount sourced.

Stronger together

Bio-based Dyneema® is enhancing the sustainability performance of our customers, and of their customers in turn.Gleistein Ropes,an industrial company in Bremen (Germany) that has been manufacturing ropes since 1824, has switched its entire portfolio of products with Dyneema® to the bio-based offering.

Klaus Walther, Managing Director of Gleistein Ropes: "By completely switching our products made with Dyneema® to the new bio-based Dyneema® fibers, I anticipate that we will reduce our carbon footprint to the tune of around 1,000 mt CO2eq in the first year alone, which is equivalent to taking more than 210 passenger cars off the roads. Importantly, our customers will continue to enjoy exactly the same extremely high levels of performance they are accustomed to from conventional Dyneema® fibers. Naturally, we are proud to be taking on the pioneering role of being the world's first textile rope manufacturer to use sustainable raw materials for its entire portfolio of products made with Dyneema®. But we also hope that more companies will follow our example and join us in making a real contribution to climate protection and sustainability in our industry."

How we support the SGDs

SDG 12: Ensure sustainable consumption and production patterns

Bio-based Dyneema® enables the transition from a fossil resource to a renewable resource and reduces carbon footprint.

Dutch PPE solutions delivers blueprint for new businesses

During the COVID-19 crisis of 2020, we created a dedicated internal DSM startup and later partnered with VDL Groep (VDL), a Dutch, family-owned industrial conglomerate, to swiftly create a business supplying quality face masks and filter material to Dutch and EU markets. We will use this startup model to scale future innovative businesses.

Accelerating production to meet demand

The COVID-19 crisis highlighted the structural problem of worldwide reliance on long global supply chains, for the supply of critical personal protective equipment (PPE) such as face masks.

Global demand for medical face masks and critical filter material quickly exceeded supply when confronted with the pandemic. A shortage arose that endangered healthcare workers, the continuity of healthcare systems, and the overall response to the COVID-19 crisis. Meanwhile, the overstretched market conditions lead to price increases and low quality, inadequate equipment entering the market. To address the need for locally-produced, reliable, high-quality and responsibly-priced PPE, DSM and VDL's solution is to build local PPE manufacturing capability. Our entry into the PPE market is purpose-led, helping to address both an immediate societal requirement and a longer-term structural need.

The increased utilization of single-use PPE such as medical face masks creates significant sustainability challenges. Localizing production to end-use location is a first step, however, we and our joint venture partners aim to make sustainability a future development direction for our PPE activities - for example, by looking into the use of circular materials.

Our solution

The urgent need for locally-produced, reliable, high-quality and responsibly-priced PPE motivated us to apply our experience with startups in to quickly develop a new business and partnership, and to establish operations in theNetherlands. This and other recent experiences provided a blueprint for quickly establishing and scaling up innovative businesses in future.

A small, dedicated, and entrepreneurial team with a high degree of autonomy was created to set up the new venture, ensuring fast decision-making and execution. All team members devote more than 60% of their time to the venture and have short communication lines with each other with day-to-day business decision-making power. A venture board composed of senior DSM leaders convenes to decide on changes to business plans and to approve large investments. Funding requests are linked to business milestones such as having a CE-certified mask ready for commercial launch or having operations plans in place. The team is supported by a light, standalone sales, purchasing and accounting system, facilitating quick transactions and rapid progress.

Our impact

The first product to be manufactured was a Dutch-designed, FFP2 medical face mask for use in high-contamination risk environments such as intensive care units, with production in Helmond (Netherlands). The development of the masks relies on the production of the non-woven filter material, meltblown polypropylene (MBPP), which was in short supply during the first wave of the COVID-19 pandemic. To combat the shortage, we have started construction on an MBPP plant in Geleen (Netherlands). The establishment of the first permanent production facility of critical filter material in the Netherlands will provide greater resilience to possible future surges in demand for face masks and the underlying materials.

The healthcare providers will be prioritized to receive the product initially, and production will be extended as the market may demand to support professionals in other sectors such as public transport, schools and educational institutes, and private companies across Europe.

Dutch PPE Solutions has been created by means of a streamlined procedure for establishing ventures, in line with our strategy to deliver growth and value through innovation. The result is an organization that is built for speed, progressing from concept to production in approximately six months. Initial production of face masks began already in October 2020. The manufacturing facility for MBPP is expected to be fully operational in April 2021.

The establishment of the first permanent production facility for critical filter material in the Netherlands will provide greater resilience to possible future surges in demand for face masks and the underlying materials.

Stronger together

"During the past months," comments Willem van der Leegte, President and CEO of VDL Groep, "the Corona crisis has taught us that you can't tell a pandemic what to do and that it's important for continents to provide for their own needs. This means we owe it to ourselves to create certainties close to home. The realities of this pandemic means there is, and remains, a worldwide need for high quality face masks. I'm proud that DSM and VDL stepped up quickly to respond, enabled by fast decision making and short communication lines between our two companies which has accelerated our progress when it is needed most."

How we support the SDGs

SDG 3: Ensure healthy lives and promote well-being for all at all ages

The DSM / VDL Groep joint venture will strengthen the EU healthcare system's ability to respond to future waves of COVID-19 and similar viral pandemics.

SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation The DSM/ VDL Groep joint venture aims to restore PPE manufacturing and associated employment to the EU.

Purpose-led innovations drive team performance

Bringing together our complementary competences in Nutrition and Materials, we helped professional cycling team Team Sunweb (as of January 2021: Team DSM) to take it to the next level in 2020 by ensuring health through nutrition on the inside and protection on the outside. The Team wonmultiple stages of the Tour de France and dominated the podium of the Giro d'Italia in 2020,and is one of the top-ranked and most exciting young teams in professional road cycling.

Challenges in world cycling

While professional sport must be exciting and showcase the athletic abilities of its participants, it must also be as safe as possible for people and the environment. Although not a contact sport, professional cycling - with its high-speed crashes and limited possibilities for bodily protection - can place riders in considerable danger. According to ProCyclingStats, the Tour de France averaged 1.5 crashes per stage, while crashes in the one-day classics are even higher.

This demanding endurance sport places other stresses on the body, too, with riders exposed to all types of weather, including long periods of potentially harmful sunlight. Advanced protective riding apparel in combination with optimal nutrition can support performance in these conditions, and can also support immunity and recovery following injury.

Our solutions

Protective Dyneema® in cycling jerseys

Challenged to develop a fabric that delivers maximum protection without reducing comfort or adding weight and thus compromising performance, we created a Dyneema® fabric for the Team's cycling jersey and baselayer. Team Sunweb's partner in 2020, sportswear manufacturer Craft, developed a solution that provides effective protection against abrasions sustained at speeds of up to 60 km/h. Even at speeds higher than 60 km/h, the Dyneema® fibers help reduce the severity of any open wounds that may occur, shortening recovery times for injured riders.

Lightweight, breathable rain jacket

We also introduced a lightweight, breathable rain jacket with an environmentally friendly Arnitel® membrane. This polyester-based membrane is 100% fluorine-free, lowering its environmental impact by 70% compared to polytetrafluoroethylene (PTFE) membranes. It offers excellent protection from the rain and wind that often accompany cold weather.

Nutritional supplements supporting health and immunity

The Team's riders were provided with several DSM nutritional supplements supplied via their nutritional partner NAMEDSPORT> during 2020.

- Veg-Omega 3 fueled with our plant-based Life's™OMEGA is 85% more potent than fish oil; it improves muscle and nerve functions, protects against cardiovascular disease, and supports wound recovery
- To support gut health and immune response, the riders are also using Probiotics Sport by NAMEDSPORT>, incorporating lactic acid bacteria produced by DSM BioCare Copenhagen; one daily serving contains more than a dozen different strains of lactic acid bacteria
- NAMEDSPORT> supplies the team with soft vision gums fueled by FloraGLO® lutein and OPTISHARP® zeaxanthin from DSM; these nutritional supplements help protect the riders' eyes against blue light rays emitted by sunlight, to which they are extensively exposed when riding, while the use of vision gums improves riders' reaction time, which is a crucial consideration in cycling

Sun protection

Last but not least, the Team's riders benefited from using Millennials' sunscreen essence SPF 30 formula containing our PARSOL® SLX and PARSOL® Shield to protect them from exposure to the sun during their long hours in the saddle.

Read more about how we support Team DSMhere.

Our impact

So successful was our strategic partnership with Team Sunweb in 2020 that in December we announced we were taking it to a new level and that Team Sunweb would become Team DSM as of 1 January 2021. Team DSM will benefit from the full innovation power of DSM, with the latest breakthroughs in nutritional and material sciences enabling the riders to be thebest that they can be, inside and out. We will gain direct insights and feedback from some of the most demanding customers in the world - professional athletes - in order to better develop sustainable solutions that can help others remain healthy and strong and keep them performing safely for longer.

Building on half a decade of innovation collaboration, our partnership extends beyond the exchange of products and expertise alone. By becoming synonymous with such a young, successful, principled team, we hope to trigger wider action for more sustainable living and health through nutrition. This will help further our purpose to create brighter lives for all through our scientific and innovation power.

Working together will help deliver better health outcomes for people and for the planet, with our nutrition and sustainable living solutions benefiting Team DSM, our customers, and society as a whole.

Stronger together

"This is truly a dream. The involvement of DSM at this scale will definitely help us set new standards with the best nutrition and materials giving us a competitive edge inside and out. We have so much in common with DSM; a passion for innovation and sustainability, high ethical values and much more. The bike is a beautiful symbol of sustainable health and we are very keen to support DSM in ensuring more people recognize there are solutions to some of the world's biggest challenges. For a sports team like ours, having the chance to elevate our relevance from sporting excitement to contributing to big global themes is something we are very, very proud of and is definitely an ambition for all of us." Team DSM CEO Iwan Spekenbrink

How we support the SDGs

SDG 3: Ensure healthy lives and promote well-being at all ages

The insights from this partnership with professional athletes will guide our development of sustainable solutions that have the potential to help others remain strong, healthy and performing safely for longer.

SDG 12: Ensure sustainable consumption and production patterns

The Arnitel® rain jacket is based in a polyester-based membrane that is 100% fluorine-free, lowering its environmental impact by 70% compared to polytetrafluoroethylene (PTFE) membranes.

Moving forward, we will also work with BioRacer and Team DSM to integrate bio-based Dyneema® fibers into the cycling jersey fabric - contributing to a circular and low-carbon economy with reduced consumption of natural resources and lower environmental impact.

SDG 14: Life Below Water

The omega-3 for our plant-based Life's™OMEGA are derived from algae and not fish, which means no depletion of the oceans' fish supply.

Stakeholders

Our purpose can only be realized by working with our stakeholders1. Through empowering our employees, engaging with our customers and suppliers, and with the support of our investors, we will create a stronger legacy and brighter futures 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 120 nationalities1, working at more than 200 sites and offices in almost 50 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 deliver on our People & Organization (P&O) strategy, while developing a new expression of our culture and preparing our new P&O strategy. For information on how we engage our employees, seePeople.

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 customers, seeNutrition, Materials and Innovation. For information on how we engage with our customers, 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 39,000 suppliers. Our suppliers are important partners for achieving our purpose, and we work closely with them through our Sustainable Procurement Program, comprised of our supplier development and evaluation program, our scope 2 program and our scope 3 program. 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 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.

How we create value for our stakeholders

Our Value Creation model is based on the Integrated Reporting 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 how our Value Creation model and the definitions of the six capital, are provided in Explanation of some concepts and ratios.

Capital Inputs1

People

Planet

Profit

Our employees represent more than

We consume raw materials (includingWe employ shareholder equity and

120 nationalities in almost 50	renewable and recyclable materials),	borrowings to invest in partnerships
countries. We engage with our	energy from renewable and non-	and innovation. We purchase goods
stakeholders and partners to achieve	renewable sources and water.	and services that are used in our
our Purpose.	manufacturing assets.
23,127	21.5	€7,399
Employees	Primary energy use (PJ)	Shareholders' equity (million)
29:71	24	€3,586
Gender ratio (f:m)	Water withdrawal (non-once-	Borrowings (million)
through cooling, x 1,000 m3)
Inputs:	Inputs:	Inputs:
- Employees
- Training & development
- Stakeholder engagement &
Public-private partnerships

Philanthropy & sponsorship

- Raw materials (including bio-based and recycled-based materials)
- - Shareholders' equity
- - Borrowings
- - Partnerships
- Energy (including renewable sources)
- - Scientific environment and academic infrastructure
- Water

- Purchased goods & services
- Manufacturing footprint

Our Business Model

We are a purpose-led, performance-driven organization developing innovative solutions addressing Nutrition & Health, Climate & Energy, and Resources & Circularity. Our organizational and operating model is made up of market-facing business groups (clustered in three business segments) focused on the primary business functions, global support and functional excellence departments, and regional organizations. Our Brighter Living Solutions - solutions that are better than the mainstream reference solution for people and/or the planet - account for 63% of our net sales.

All data presented in the People and Planet columns are subject to the non-financial reporting policy. Data presented in the Profit column relates to continuing operations.

Percentage of net sales by end-use market (continuing operations)

12%

Food & Beverage

12%

Dietary Supplements

Automotive / Transport

Value Outcomes1

Early Life Nutrition

Electrical / Electronics

Personal Care

Medical Pharma

37%

Animal Nutrition

12%

Other

People

Planet

Profit

The safety of our employees is our highest priority. Investments in training and career development provides value for employees and

We work to reduce our environmentalWe aim to deliver a strong financial footprint and support the reduction of performance, enabling us to re-investthe footprints of our value chain partners. Our products enable thestakeholders. We aspire to pay a living transition to a more circular economywage to all our employees. Our products support improved nutrition and a more sustainable food system.

0.24

Frequency Index recordables

76%

Employee engagement

Outcomes:

- Safety & health
- Brighter Living Solutions
- Engaged workforce
- Skills & employability
- Employee benefits
- Improved nutrition

and contain safer ingredients and materials.

13.2

Scope 1 + 2 + 3 emissions (million tons CO2eq)

60%

Purchased renewable electricity

Outcomes:

- Reduced environmental footprint
- Brighter Living Solutions
- Enabling the transition to a more circular economy
- Safer ingredients & materials

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.

€1,534

Adjusted EBITDA from continuing operations (million)

€955

Adjusted net operating free cash flow (million)

Outcomes:

- 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

All data presented in the People and Planet columns relate are subject to the non-financial reporting policy.

Impact and SDGs1

People

Planet

Profit

- Better fed and healthier individuals and communities
- More prosperous and resilient employees for our company and in our value chain

Materiality

- 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

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 2020, we conducted a light materiality analysis compared to the full analysis for Materiality Matrix 2019.

Our update in 2020 used the Materiality Matrix 2019 as its point of departure. An initial analysis was conducted through desk research into peers and other institutions to validate the topics from 2019 and to identify any potential new material topics. Direct feedback on the proposed topics was obtained through an employee workshop and a stakeholder dialogue. The results were reviewed and validated by the Executive Committee. 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. Finally, the matrix was reviewed and approved by the Managing Board.

Changes in 2020

Two new topics emerged as warranting their own place in the Materiality Matrix: 'Cybersecurity' and 'Consumer behavior & activism'. The topic 'Biodiversity' has been renamed 'Nature & biodiversity'. No topics have been deleted. The impact of COVID-19 on the Materiality Matrix was discussed extensively. The impact was seen across several of the material topics however, COVID-19 or Pandemics have not been included as a separate topic. This was consistent with the outcome of the Corporate Risk Assessment.

For more information on materiality, see Management approach for material topics.

All data presented in the People and Planet columns are subject to the non-financial reporting policy. Data presented in the Profit column relates to continuing operations.

Materiality matrix 2020

High

SocietalInterest

Low

EnvironmentSocial

Business and Governance

Nature biodive

Water security

& rsityCybersecConsumer behaOccupationalhealth & safety

& activismPro ste

Labor practices & human rights

Climate & EnergyResources & CircularityurityNutrition & HealthBusiness ethics & transparencyvior duct wardship

Geopolitical shifts& (trade) dynamicsInnovation

D tr

Internationalization &diversity

gital ansformationAdvocacy, engagement & partneringLeadership and development

Moderate

Signiﬁcant

Major

Business Impact

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 impact of COVID-19 in 2020, many of the major events of these platforms and networks, such as the WBCSD Council meeting and the One Young World summit, were postponed or went completely virtual.

Supporting our stakeholders during COVID-19

In 2020, we provided resources and know-how to support our internal and external stakeholders during the Corona crisis. Around the world, we made in-kind and cash donations for the provision of personal protective equipment, disinfectant, test kit equipment, and immunity-optimizing micro-nutrients to help ease the impact of COVID-19 through various local and global initiatives. We also implemented initiatives in-house such as the #optimizeyourimmunity campaign, which are described in more detail inSafety, health & well-being.

APAC

DSM Japan donated school meals and nutrition services as emergency relief via WFP to children who were impacted by school closures. In India, we partnered with the United Nations Development Program (UNDP) to co-fund and procure electronic ventilators for hospitals. Over 350 employees also contributed to the fund. DSM Singapore supported the Migrant Workers' Centre, a local NGO, with funds and nutritional supplements to support migrant workers and the volunteers at the Centre. Donations were also raised in Korea, Indonesia and the Philippines.

Europe

In the Netherlands, in a strategic cooperation with Auping and AFPRO filter, we manufactured face masks for healthcare workers. We manufactured 2.8 million nose swabs (sufficient to meet the country's testing needs for three months) and converted a manufacturing facility to produce disinfectant which was donated to Dutch hospitals. In Delft, we contributed expertise and facilities to support TNO, a Dutch research institute, to develop a fast test for COVID-19.

In the Rhine Valley region, our site in Grenzach (Germany) began small-scale manufacture of hand sanitizer that was used on site, donated to local healthcare institutions, and shared with neighboring companies. In Village-Neuf (France), donations of personal protective equipment and sanitizer were made to elderly care homes.

Latin America

In collaboration with some of our main customers, we provided at low, or no cost, 'DSM Baskets' containing food and hygiene items for people in need in Brazil. We also donated 70,000 fortified milk cans for social distribution in poor communities.

North America

We donated Immunity Stix, and masks to first responders, hospitals and veterans' homes, supporting front-line healthcare workers. Two of our Resins sites switched from the production of resins to the production of hand sanitizer. Donations of face shields and other equipment were made by many other DSM sites.

Cross-domain initiatives

World Economic Forum (WEF)

We are a strategic partner of WEF. We actively participated in the annual meeting in Davos in January 2020 as well as WEF's virtual events throughout 2020. In 2020, our Co-CEO Geraldine Matchett became a member of the Steering Committee of the Consumer Governors and the Food Security Stewards. She also co-chaired the Jobs Reset Summit. Our Co-CEO Dimitri de Vreeze also joined the Steering Committee of the Chemical Governors. Both spoke at various virtual events of the Forum.

We actively contributed to several initiatives in 2020, including the COVID Action Platform, the Stakeholder Principles in the COVID Era, the CEO Consumer Industry Action Group, the CEO Chemical Industry Action Group and the Food Action Alliance. Our VP Organizational Development & Culture joined the WEF Community of Chief Diversity & Inclusion Officers and participated in its roundtable events.

The SDG Tent

During the WEF Annual Meeting 2020, in collaboration with partners including Salesforce, Yara and Cargill, we continued the SDG Tent, a venue for discussing business engagement for achieving the SDGs. Several highly successful events were hosted at the SDG Tent.

World Business Council for Sustainable Development (WBCSD)

We are a member of WBCSD and participate in various working groups and coalitions. In 2020, our Co-CEO Geraldine Matchett was appointed to WBCSD's Executive Committee.

Food & Nature

We are a founding member of Food Reform for Sustainability and Health (FReSH) project and a Board member of the Food & Nature Program, with the aim to drive food system change. In November, the WBCSD Food and Nature Program published the 'Healthy & Sustainable Diets' Chapter of the new 'Food & Agriculture Roadmap'. This Roadmap builds on existing scientific and agri-food sector recommendations (from organizations including EAT-Lancet, FOLU, FABLE, WHO-FAO, and WRI), and comes up with calls to action for companies to support better consumption choices, produced in a socially and environmentally responsible manner.

Circular Economy

Factor10 is WBCSD's Circular Economy program and throughout the year, we continued to co-lead the circular metrics workstream, which launched a harmonized set of indicators for measuring circularity on company level at WEF in Davos. We also continued our participation in the circular bioeconomy workstream. In November, the Circular Bioeconomy report was published, highlighting the opportunities, industry conditions and enablers and trends, as well as corporate case studies including cases from DSM. We are piloting the online Circular Transition Indicator tool in the WBCSD Chemical Sector User group.

Redefining Value

Redefining Value is WBCSD's program supporting external disclosure and decision-making. Before her appointment to the WBCSD Executive Committee, Ms. Matchett was on this program's board. Early in the year, The Enterprise Risk Assessment project group published their reportAn enhanced assessment of risks impacting the Food & Agriculture sector.We joined the Company Book working group, a collaboration looking to build a company-centric solution for (non-financial) data collection and analytics for stakeholder interactions. We continued to participate in the Assess and Manage Performance project, exploring performance management practices that build long-term business success within a healthy, sustainable ecosystem.

Climate & Energy, and Vision 2050

We are also active within the WBCSD Climate Policy Working Group, the Climate & Energy Program, the Chemicals group, and the Vision 2050 Refresh project. WBCSD's Vision 2050 is a vision for the world of 2050 in which more than 9 billion people can live well, within planetary boundaries. It was first introduced in 2010. The 'refresh' of Vision 2050 aims to support businesses to accelerate the transformations needed, by providing a common narrative and resource to inform their strategic and sustainability agendas.

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 2020, we participated in various virtual events and meetings, including the participation of two of our senior finance leaders in 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. It enables participants toconnect with peers from other companies from a variety of industries to deepen their understanding and obtain practical insights into social and environmental risks and opportunities. We shared our approach on risk management, demonstrating how sustainability risks are embedded in our overall risk management approach in a webinar titled 'Lead the Way: Managing Future Uncertainty'.

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 Scale - Share - Shape.

In 2020, the Coalition issued a whitepaperInternal Transformation to a Purpose-Driven Organisation providing a roadmap for companies on how to undergo an internal transformation to become truly purpose-led. Together with the SDG Charter and CSR Netherlands, the DSGC urged the Dutch Government and EU Commission to aim for stringent Green Recovery policies to respond to the socioeconomic consequences of the COVID-19 pandemic.

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 (CPLC). 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, together with partners, is also mobilizing business support to put an internal price on carbon. We apply an internal carbon price of €50 per ton CO2eq when reviewing large investments and acquisitions, and we include this in internal management reporting by the business groups.

RE100

Our engagement with RE100, the world's leading campaign to scale up the corporate sourcing of renewable power, continued throughout 2020. We participated in the learning opportunities, conferences and advocacy opportunities offered to us in Europe, the US and China. In 2020, we were one of three shortlisted companies for Best Green Catalyst award for the RE100 Leadership Awards.

We Mean Business

We Mean Business activates hundreds of companies and investors to commit to low-carbon initiatives. Our Vice President Sustainability sits in the Business Advisory Board. In 2020, we worked on several advocacy and communications activities that called for governments to urgently match their ambition and policies to limit global temperature rise to 1.5°C above pre-industrial levels, couple COVID-19 recovery effort with climate action, and demonstrate the private sector's support for these efforts.

Global Center and Commission on Adaptation (GCA)

We have partnered with the Global Center on Adaptation (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 Net-Zero Expert Advisory Group in 2020. This group will develop a standard to guide the formulation and assessment of science-based net-zero targets in the corporate sector led by the Science Based Targets Initiative. The standard is expected to be the basis for driving the adoption of corporate net-zero targets that are consistent with action needed to limit warming to 1.5°C while minimizing trade-offs with other Sustainable Development Goals.

Resources & Circularity initiatives

Platform for Accelerating the Circular Economy (PACE)

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. Our Co-CEO Dimitri de Vreeze represents DSM on the Global Leadership Group, which includes over 40 CEOs, Ministers and heads of international organizations. In 2020, PACE engaged with its members to create circular economy action agendas focusing on four major material flows: plastics, electronics, food systems and textiles. We participated in interviews and supported the review of the action agendas for plastics, electronics and food systems.

Ellen MacArthur Foundation

The Ellen MacArthur Foundation works with and inspires business, academia, policymakers and institutions to re-think, re-design and build a positive future circular economy. In 2020, our employees attended the Foundation's Network Workshops and Annual Summit online. In addition, the Foundation offered a series of circular economy trainings (basic and advanced) and webinars which were made available to our employees. One of these webinars was about the importance of design choices for a circular economy and featured a speaker from DSM-Niaga. We also continued to take part in the sounding-board of the Foundation's circularity metrics work throughout the year, supporting the development and launch of their Circulytics 2.0 in November.

Circle Economy

In 2020, we continued our membership with Circle Economy, a social enterprise that emphasizes practical and scalable solutions in the transition toward a circular economy. Circle Economy launched its Circularity Gap Report for the Netherlands early in the year, which emphasized the role of the chemical sector to help accelerate the transition by using more alternative, regenerative sources for production. We continued our involvement in the Circularity Gap Report Roundtable to provide input for, and review the next version of, the Circularity Gap report, which is scheduled for publication in early 2021.

Champions 12.3

In 2020, our co-CEO Geraldine Matchett became 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 Sustainable Development Goal (SDG) Target 12.3 by 2030. SDG 12.3 calls for cutting in half per capita global food waste at the retail and consumer level, and reducing food losses along production and supply chains (including post-harvest losses) by 2030. Thecoalition also highlighted how DSM is using science to fight food loss and waste across the value chain with its solutions.

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 2020, three 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)

In place since 2007, the DSM-WFP partnership 'Improving Nutrition, Improving Lives' aims to improve the nutritional value of the food that WFP distributes. Together, we reached 30 million direct beneficiaries in 2019 (the most recent reporting period) with food improved by the DSM-WFP partnership. Many more were reached through the partnership's efforts in scaling up fortified rice both through retail channels and in social safety nets, with work underway to develop a framework to measure this reach. Equally importantly, the partnership programs create long-term systemic impact by raising awareness on the importance of nutrition while continuing to develop new scientific and technical solutions. Accordingly, within the current Memorandum of Understanding from 2019-2021, the partnership is prioritizing rice fortification as a proven and cost-effective solution for combating malnutrition, with our partnership's activities supporting 15 countriesglobally. Additionally, as the humanitarian organization is moving towards cash-and-voucher systems, the partnership is supporting WFP's Nutrition Division's retail strategy to empower consumers to improve their own nutrition and diets.

UNICEF

The DSM-UNICEF partnership has been in place since 2013. The partnership with UNICEF and Sight and Life supports the Government of Nigeria in realizing its vision of scaling up the micronutrient powder (MNP) program nationally, reaching people suffering from malnutrition. It has contributed to reaching over one million children with vital nutrients that have helped save many lives, and the goal is to further scale up the MNP program to reach two million children by the end of 2021. Meanwhile, the partners also collaborate to create an enabling environment for multiple micronutrient supplementation (MMS), a cost-effective solution to reduce maternal anemia and the risk of children being born underweight, too small, and too soon.

The Social Movement on Nutrition program

The partnership expanded to India by supporting the UNICEF engagement of private-sector stakeholders as part of the 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 2020, the platform, which won an internal UNICEF INSPIRE award, had more than 70 companies on board.

Addressing agri-food business development

Furthermore, this partnership is being expanded to address agri-food business development as one of the Global Breakthroughs identified by Generation Unlimited (GenU), a part of 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 and build an environment along the agri-food value chain conducive to thriving, sustainable and inclusive business. The partners will develop a business plan to attract young people and prepare them to contribute to sustainable food systems in a way that creates nutrition and food business at scale.

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 distribution channels in Brazil.

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 AIF in Rwanda. After positive results of the initial pilot, the partners are now collaborating for scale-up. AIF's Super Cereal product is now benefiting 31,600 children and 19,600 women as part of World Vision Rwanda's COVID-19 response.

The EGGciting project in Indonesia

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.

Social distribution of nutrition in Brazil

In Brazil, market research to support the social distribution of nutritional products started in 2019. This pilot is projected to transform the distribution of micronutrient-enriched products in Brazil by incubating last-mile nutrition (female) entrepreneurs who serve populations living in hard-to-reach areas. The goal is to improve the accessibility of nutritious products for peri-urban poor, while stimulating empowerment and income of (young) women.

Partners in Food Solutions

Partners in Food Solutions (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, 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 2020, DSM employees contributed almost 1,300 volunteer hours working with 46 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 85,000 farmers. In total, 57 DSM volunteers supported 59 service offerings to clients, of which 30 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 14 countries and supports the development of new networks in 12 countries. These include almost 1,000 companies, mostly small and medium-sized enterprises. The global membership platform currently has 23 members, who have a combined workforce of 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 Emerging Markets 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).

Africa Improved Foods

Africa Improved Foods (AIF) is an African social enterprise addressing the food challenges facing Africa by building resilient food systems by 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 of 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. AIF 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's Kigali factory contributes to the local and regional economy

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 contributes significant benefits to the African economy. 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 2020 despite the pandemic

In 2020, AIF concluded its third full year of business with a positive EBITDA result. Despite COVID-19, revenue is expected to grow slightly to just over USD 50 million as Super Cereal Plus sales maintained momentum. Business-to-consumer sales also grew significantly as the Nootri brand continues to gain popularity across East Africa. The year also marked the beginning of AIF's new ambitious growth strategy, with groundwork in Ethiopia and production of fortified porridges and cereals started at a new facility in Kenya.

MANDI

In 2020, 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 branded as Nu-ShaktiTM includes solutions for staples such as rice and wheat flour, as well as fruit-flavored fortified beverage powder. The business aims to build awareness and education about the importance of health, nutrition and immunity with the aim of tackling widespread malnutrition in India. In 2019, we started distributing through trade partners in modern and traditional retail channels in Tamil Nadu, a state in South India. In 2020, the COVID-19 disruption that began in March halted the expansion plans.

Sight and Life

As a global leader in nutrition, 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 to the nutrition community by translating science into effective nutrition programming, building public-private partnerships, and developing viable social business models for affordable and nutritious foods.

In 2020, Sight and Life delivered nutritious food during the COVID-19 pandemic in Rwanda, South Africa, and India. The egg hub social business model in Malawi, making eggs available and affordable to low-income households, proved successful and sustainable by producing 3.5 million eggs annually. Sight and Life secured a Grand Challenges India Award to innovate around egg powder, also supported by Children's Investment Fund Foundation in Ethiopia. Five companies now incorporate the OBAASIMA seal, aiming to create demand for nutritious and affordable food in Ghana. On the topic of workplace nutrition, IMPAct4Nutrition, a public-private platform, was honored with a UNICEF Global INSPIRE Award in 'Best Multistakeholder Engagement'. Sight and Life mentored young entrepreneurs to develop climate-smart nutrition and pandemic-proof innovations through Elevator Pitch Contests.

New publications focused on key themes, including multiple micronutrient supplementation (MMS), consumer insights, and take-home rations, sharing science-based evidence and expert knowledge. For more information, visit:sightandlife.org.

Initiatives complementing the Focus Domains

Catalyst

We continued to be a Global Supporter of Catalyst - the NGO accelerating women's progress in the workplace. Our Honorary Chairman Mr. Sijbesma continued his role on the Board of Directors and Ms. Matchett her role on the European Advisory Board.

In 2020, we continued to sponsor the Catalyst work program on Women and The Future of Work. This long-term program focuses on building more human-centric workplaces with strong social values, which are prepared for the impact of technology and rapid change, by ensuring equity in future employability. As part of this program we participated in, and contributed to, research activities and roundtable events.

We provided input to the 'How we Lead with Inclusion during the Crisis' reports. In addition, colleagues from our Inclusion & Diversity network participated in Catalyst virtual workshops on: 'Emotional Tax in the workplace', 'Driving Inclusion During the Disruption: The Strategic Advantage of ERGs (Employee Resource Group)', 'Unconscious Bias to Inclusive Leadership Virtual Workshop', 'Understanding Gender Equity Workshop', and International Women's Day 2020: Now Is The Moment To #BiasCorrect'. We also used Catalyst resources on 'Candid Conversations About Racism and Sexism in the Workplace' for internal program development.

Valuable 500

In 2020, DSM joined the Valuable 500 organization - a global NGO aimed at unlocking the social and economic value of people living with disabilities across the world. Ournew Inclusion & Diversity strategy incorporates a focus on Disability and a new Employee Resource Group (ERG) called 'The Valuable' group was established to represent the interests of DSM employees with disabilities. Valuable 500 resources and experts have supported the team to develop the agenda.

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 2020, our OYW delegation comprised 18 colleagues representing all our businesses and regions and is our 10th OYW delegation. This delegation will attend the Munich Summit which has been postponed to Spring 2021, due to the COVID-19 pandemic.

Working on business development and internal engagement

The community of over 120 OYW alumni (including our new 2020 cohort) manage different business development and internal engagement projects for sustainability. In 2020, the community launched a Personal Carbon Footprint Calculator, a learning & development game called 'The DSM Sustainable City' and a project on Sustainable Packaging, which has already resulted in some packaging substitutions resulting in reduced cost and waste. After two years of progress, the OYW 2018 'Tomato Project' has resulted in a commercial product in collaboration with Nurevas in Ghana and the Swiss Federal Institute of Technology in Zurich (Switzerland). Tomato sauce is for many African countries a widely used staple food. In this project, a tomato sauce was developed, fortified with a wide range of vitamins and minerals. The product will be introduced into the West African market early 2021.

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 2020.

Chemical Week gave DSM first place in the Best Sustainable Program category of the inaugural Chemical Week Sustainability Awards. The award recognized how DSM incorporated sustainability and circularity into the company DNA through our product portfolio and corporate strategy.

We were listed as one of the most sustainable companies in Brazil according to the Exame Sustainability Guide for our challenge to improve public health through nutrition.

General Motors (GM) recognized DSM Engineering Materials with a Supplier Quality Excellence Award in 2020. This is the fifth time in the past six years that DSM has received this award.

DSM China was selected for the third time as one of the 2020 Golden Bee CSR China Honor Roll companies by Golden Bee Think Tank and China Sustainability Tribune. The 15th International CSR Forum with the theme 'Responsibility Builds Corporate Resilience' was held in Beijing on 6 August.

The Tsukuba Plant of Japan Fine Coating (JFC) was selected as 'Model Plant' and 'Excellent Plant of Hazardous Material Safety' by the Japan Association for Safety of Hazardous Materials (JASHM) for its excellent safety record and outstanding safety behaviors. It also won the 'Ibaraki Prefectural Governor Award' from the Ibaraki Association for Safety of Hazardous Materials. As a result, the plant will be featured in JASHM's safety training videos.

SABRE Awards Latin America, one of the most recognized branding and communication awards in the world, recognized our 'Life In Our Hands' communication campaign as the best in the region in the Manufacturing Industry category.

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 2020, and the outcomes, are listed below.

In January, we were assessed by Sustainalytics as being at low risk of experiencing material financial impacts from ESG factors, ranking 1 out of 120 companies in the specialty chemicals industry. Sustainalytics noted our strong corporate governance performance resulting in a reduction in overall risk.

In March, EcoVadis awarded our company a Platinum CSR Rating. The Platinum rating places us in the top 1% of companies assessed in our industry.

We maintained the lowest risk rating (1 out of 10) from ISS QualityScore throughout the year. In May, 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 June, MSCI's rating of DSM was unchanged at 'AAA'. The report noted our increased focus on nutrition and health, our focus and investment in R&D, and our strong carbon mitigation strategy, including the link with executive compensation.

In October, we were again listed in the Vigeo Eiris Benelux, Europe, Eurozone and World indices and were reconfirmed as a constituent of the Ethibel Sustainability Index (ESI) Excellence Europe and the Ethibel Sustainability Index (ESI) Excellence Global.

We continued to be a constituent of the FTSE4Good Index. We have been listed on this index since 2004.

In December, for our climate strategy, and water governance and strategy in 2020, we were assessed as A and A-respectively by CDP.

People

At a glance

- 0.241 Frequency Index of Recordable Injuries, compared to 0.28 in 2019
- 76% Employee Engagement Index, compared to 74% in 2019
- 21% Female executives, compared to 20% in 2019
- 29:71 female:male ratio
- 75% Inclusion Index. compared to 72% in 2019
- 100% of our employees were offered immunity-optimizing supplements

A year shaped by COVID-19, transformation and a new People & Organization strategy

In 2020, as the COVID-19 pandemic unfolded, taking care of our people was more important than ever. Many of our efforts to support the mental and physical health and well-being of our employees, as well as our continued commitment to inclusion and diversity, human rights and employee engagement, are detailed later in the first part of this section. We continued to deliver on our People and Organization (P&O) strategy, and, in adapting ourselves to a significantly changed context, shaped a new P&O strategy for the coming period.

Focusing on our people through the pandemic

This extraordinary year required us to focus more than ever on our people, ensuring theirsafety. health and well-being,as well as engaging everyone within the context of the new normal we were faced with.

Inclusion was key to make sure everyone felt listened to and cared for, no matter what challenges they were faced with. New company leadership required and created an opportunity to shape the way the Co-CEOs would engage with people and lead. The combination of all these factors was expressed through a new Culture Compass, providing direction on who we are and what we stand for at DSM.

Delivering on our P&O strategy

While the pandemic brought a stronger focus on pillars such as Culture and Inclusion & Diversity, we continued our journey on all the other pillars of theP&O strategy as well. Changes to our organization including integrating three recent acquisitions and one announced divestment brought new challenges from a people perspective. Our businesses continued their customer and operating model journeys through programs such as Fit for Growth and Agility to Grow. We stepped up further in our ambitions forInclusion & Diversity and focused on employee development through the launch of new tools and programs across the company. As committed to in 2019, we also continued our investment inHumanrights,with significant steps taken in fair remuneration and living wage.

Preparing our future P&O strategy

The extraordinary circumstances of 2020 - new leadership at the top; a pandemic disrupting our views about work, workplace and workforce; and a continued company transformation - called for anew P&O strategy,which was shaped in the second half of 2020 and launched toward the end of the year. The new strategy is both a continuation and an evolution of our current strategy, with a focus on 'Creating a Flotilla Organization', 'Empowering Our Employees', 'Creating a Contemporary Workplace', and 'Resetting the Context for Leadership' - all anchored in our DSM Culture Compass. The first steps for this new strategy started at the end of 2020, with the launch of the Culture Compass, the pilot of a new technology for career development, and the launch of a concept of Hybrid Workplace for our 'Next Normal' way of working.

Aligning our People approach with the Materiality Matrix

Our approach to People aligns with a number of material topics:

- Occupational health & safety (addressed inSafety, health & well-being)
- Labor practices & human rights (addressed inHuman rights)

1 All data presented in People are subject to the non-financial reporting policy.

- Leadership & development (addressed inDelivering on the six levers of our strategy)
- Internationalization & diversity (addressed inInclusion & Diversity)

Focusing on our people through the pandemic

Safety, health & well-being

The health, safety and well-being of our employees has always been our number one priority. In 2020, as the pandemic unfolded, we were able to leverage and build on our strong foundations. Many of our office-based employees around the world worked from home for large parts of the year, while - with notable exceptions in some regions - our operations and research & development colleagues largely continued to work from laboratories and plants in adjusted, safe conditions.

We actively monitor occupational safety 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	2020	2019
Occupational safety1
- Frequency Index REC	0.25 in 2020	0.24	0.28
- Frequency Index LWC	0.09	0.09
Process safety
- PSI Rate	0.15 in 2020	0.20	0.23
Occupational health cases	19	16

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 2020, we were able to build on the robust practices put in place in previous years. We saw a further improvement in the Frequency Index of all DSM Recordable Injuries to 0.24 from 0.28 in 2019, achieving our target level of 0.25.

Frequency Index of Recordable Injuries 12 month moving average

Rate for Lost Workday Cases (LWC), DSM-own

REC-rate, DSM all 0.5

0.4

0.3

DSM Target REC-rate All 2020: 0.25

0.2

0.1

0.0

01/16

07/16

01/17

07/17

01/18

07/18

01/19

07/19

01/20

07/20

A focus on key sites was key to progress

Our focus on sites with the highest numbers of recordable injuries continued to deliver results, and we saw incident rates decrease by 40% compared to 2019 at these sites. Many key elements of our safety program contributed to this progress, such as the 'I Care, We Care' campaign, the drive for visible leadership, the enhancement of key capabilities and the constant attention on hand safety (our top incident category). We also continued to reinforce the importance of the Life Saving Rules in our safety approach. The Frequency Index of Lost Workday Cases for our employees remained at 0.09.

Contractor safety

For our contractors, the Frequency Index of all Recordable Injuries remained relatively stable at 0.47 in 2020 (from 0.45 in 2019).This was despite better supervision and increased attention to contractor selection, qualification and training, which led to significant improvements in the parts of the organization where incident rates where the highest.

A commitment to continuous safety improvement

While the progress on the Recordable Injury rate and the impact of our focus programs are promising, we will continue to strive to make our company fully incident and injury free. To this end, we will drive our standardization and digital capabilities, for example, through the use of comprehensive safety dashboards that leverage data to identify key focus areas and implement improvements at all levels. In addition, we continue to develop our automated processes to learn from our growing databases. Furthermore, by improving our transparency we can better execute our safety programs all over the world.

Another key pillar of our journey on digital safety is our growing library of online training programs. This resource was particularly valuable in 2020, when COVID-19 restrictions limited our in-person training programs.

Process safety

Process safety refers to the safe operation of our facilities. In 2020, our Process Safety Rate improved from 0.23 to 0.20, but we missed our target of 0.15. The reduced rate can be attributed to, for example, the asset improvement programs that began in 2019, now taking effect. We also paid special attention to sites where the most incidents occurred in the past: this resulted in an approximately 60% reduction (compared to 2019) of small product leakages, which account for the majority of reported incidents.

Frequency Index of Process Safety Incidents

12-month moving averageTarget 2020

0.4

0.3

0.28

0.2

0.1

0.0

2016

2017

2018

2019

2020

We carry out diligent follow-up procedures to ensure that we learn lessons from process incidents. This, alongside our employees' growing understanding of and compliance with our Life Saving Rules, is helping to prevent the most potentially serious incidents.

Health and well-being

Our health management system is based on prevention, primary care and the promotion of good health. The COVID-19 pandemic brought new direct and indirect challenges in ensuring the health and well-being of our employees. In line with local risks and conditions, as well as the guidance and legislations of regional and national authorities, we scaled up our response to the pandemic and put in place a wide range of COVID-19-related practical initiatives and educational programs to protect the health and well-being of our employees and their families. Early in 2020, we installed a Global Response Team to COVID-19 in order to install relevant safety and health measures throughout the company. Through this approach, we were able to facilitate the rapid deployment of regional learnings globally, and we were able to rapidly respond to the evolving situation.

"As the pandemic unfolded in 2020, taking care of our people was more important than ever. We undertook a wide range of initiatives designed to support the physical, mental and emotional well-being of our people. I am proud of the resilience, engagement and care demonstrated by all of our employees this year - and we are committed to continue our focus on 'People' through our unique culture of care, courage and collaboration."

Cristina Monteiro, Executive Vice President People & Organization and member of the DSM Executive Committee

Monitoring well-being through the pandemic

We calibrated our response to the pandemic by carefully monitoring how our employees were coping with the situation. Starting in April, we conducted COVID-19 Pulse Checks every two weeks, which provided us with ongoing, up-to-date insights into how people felt about the pandemic and which highlighted any areas of concern. This was a central element of our efforts to deliver a healthy and inspiring work environment, even as our working practices changed and our people navigated the difficulties of the pandemic.

Our Pulse surveys have shown that employees value the flexibility offered by home working and question the need to go into the office when doing so has no added value for their work output. This was confirmed by feedback from our focus group on the 'Next Normal'. COVID-19 has also affected employee sentiment around trust and job security, as exemplified by an increase in Employee Engagement Survey respondents indicating they want to stay at DSM.

#Optimizeyourimmunity

Starting in April, we provided all our employees - as well as some of their family members - with a free selection of immune-optimizing micronutrient supplements as part of the #optimizeyourimmunity initiative. The supplement selection was regionally adapted based on local legislation, and contained vitamin C, vitamin D, omega-3 and zinc, among other micronutrients. In addition, we implemented a series of regional webinars to educate employees on the importance of immunity in fighting pathogens such as microbes and viruses.

COVID-safe work and workplaces

Furthermore, as well as requiring our employees to work from home when stipulated by regional rules or guidance, we adapted many of our workplaces and behaviors to minimize the risk of spreading the corona virus. Daily temperature checks, entrance- and exit-door hand sanitization, one-way corridors, the prioritization of hand hygiene, social distancing, and the avoidance of non-essential travel were among these many precautionary measures. All these measures aligned with local and regional guidance and legislation.

The agreed terms and conditions for our employees in 2020 remained in force during the pandemic. Regular annual cycles were processed, whereby all salary increases, individual merit increases and incentive schemes were implemented without reservation. Measures were taken to support employees who faced additional costs as a consequence of the lockdown (for example, travel costs in locations where public transport was suspended during lockdown). In addition, in recognition of the enormous effort employees undertook to continue delivering for our company under sometimes difficult circumstances, a special bonus was awarded to all our employees.

Supporting our employees' physical and mental health and well-being

Many of our initiatives to safeguard and protect the physical health and well-being of our employees were organized by our regional teams. For example, we made advanced health screenings and checks available to employees, offered flu vaccinations, installed a global 24/7 hotline and delivered kits containing reusable masks, sanitizing gel and soap, as well as educational materials, to employees and their families.

In addition, the COVID-19 pandemic increased our focus on the mental health and well-being of our employees throughout the year. Many of our sites put in place a variety of employee assistance programs - involving webinars, private counseling, educational campaigns, and the distribution of self-help material - which offered emotional, psychological and occupational support. In addition, these assistance programs featured online learning and development initiatives to enable flexible and convenient personal growth during the pandemic.

Preventative measures for occupational illness

Beyond our pandemic-related efforts and initiatives, we aim to prevent occupational illness through the design of our processes and products and by providing proper protective equipment. On-site medical professionals offer primary care including emergency preparedness and first aid. We continuously promote good health via a wide range of activities, following an approach based on global campaigning and local implementation.

We recorded 19 occupational health incidents in 2020, a slight increase over 2019. These were mainly categorized as ergonomic issues and allergic reactions. We aim to cut down the number of such cases and are exploring the benefits of ergonomic aids. We also aim to strengthen the understanding and deployment of global health standards for workplace assessments on, for example, chemical exposure and noise management.

Employee engagement

As a responsible organization, we work hard to offer 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 a year such as 2020 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, and executive calls and annual conference.

Aspiration	2020	2019
Engagement Index1	75% by 2020	76%	74%
Participation Rate	92%	92%

All data presented in People are subject to the non-financial reporting policy.

To measure our success and better understand how and where we can improve - as well as to track the impact of internal and external forces and changes - we monitor our employee engagement and well-being through a variety of surveys and 'check-ins'. In 2020, these included our coronavirus Pulse Checks, our Employee Engagement Survey (EES), a specific integration survey following our acquisition of Erber Group, a recurring Fit for Growth follow-up survey, and an inclusion survey in Latin America. Data from all these surveys enables us to continue to improve our employee experience.

Further to this, we employed additional communication efforts to keep employees informed and engaged. These included chat sessions with the Co-CEOs and regional, virtual discussion sessions in conjunction with the Culture launch, also with the involvement of the Co-CEOs.

The Employee Engagement Survey

Our annual Employee Engagement Survey generates high-quality information that helps us understand how our employees feel at work, where we need to improve our employee experience and what solutions we can implement. The responses we receive enable us to initiate fruitful conversations and lead to concrete positive changes in our workplace.

In 2020, managers whose team included five or more survey respondents were eligible to receive specific team reports online; this amounted to more than 1,900 managers (an increase of 470 compared to 2019). To help managers share results with their teams, lead conversations and agree actions, training and support were available from local engagement champions as well as P&O and communications colleagues.

How we measure Employee Engagement

We measure four engagement attributes: commitment, pride, advocacy and satisfaction. The 2020 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: 39,400 comments were received in 2020.

Engagement levels remain high

In 2020, the survey was sent to all employees (excluding contractors) and was available in 22 languages. We saw a response rate of 92%, equal to the highest recorded rate (in 2019) since the first edition of the survey in 2007.

Overall employee engagement increased by two percentage points to 76%, and all our comparable questions and indexes saw an increase. We made progress in our 2019 focus areas: Talent rose from 63% in 2019 to 67% in 2020 (including an improvement on the question relating to learning and development opportunities from 68% to 74%); and Inclusion from 72% to 75%. We also improved our already high Safety score (from 91% to 93%). The Strategy question on employees' perspectives of the company's 'promising future' increased from 79% to 81%.

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 received responses, with improved scores seen in some of the units that previously received low scores.

Identifying and addressing areas for improvement

Based on the survey results, our overall focus areas for 2021 are Talent, Inclusion, Well-being and Management.

With regard to Talent, despite improved scores in 2020, we must continue to apply our efforts in several key areas. These include meeting our employees' career development and learning expectations, continuing to build an inclusive work environment, safeguarding employee well-being through 'Next Normal' working patterns and integrating people-centric management and leadership practices.

In the area of Inclusion, we will continue to work on creating inclusive environments and creating stronger trust that diverse perspectives are valued for women in senior management positions. The continued activation of our Inclusion and Diversity Strategy plans, including 'Brighter Together', support for employee resource group (ERG)-led programs, and embedding 'Next Normal' rituals for inclusive working, will be part of this continued inclusion effort.

For Well-being, the 'Next Normal' working patterns, combined with ongoing COVID-19 health uncertainties require a responsive focus on employee well-being. In this area, we plan to further investigate well-being issues (included for example in the COVID-19 pulse survey) and the setup of a 'Sustainable Performance' program.

Finally, in the Management focus area, the results in 2020 indicate the positive effects of manager-focused development. Building on this foundation, we will work to embed good practices into DSM people management everywhere. In this way, we will continue to roll out management skills in areas such as feedback, 'courageous conversations', and team development, and use the change in performance management behaviors to accelerate a positive company culture.

Inclusion & Diversity

In 2020, our employees faced new challenges such as working from home, combining work with caregiving or homeschooling, and managing their own and their family's health. Ensuring that all our people felt included and cared for became more of a priority than ever. Fostering and maintaining an inclusive and diverse workplace is key to helping our employees offer their best, most authentic contribution, and is, therefore, a prerequisite to delivering on our strategic goals. While shifting social forces brought Inclusion & Diversity to the top of social and corporate agendas over the course of 2020, we began work on a new Inclusion & Diversity strategy in January, involving the input and support from global employee focus groups, senior leaders and external partners.

2020	2019
Inclusion index1	75%	72%

All data presented in People are subject to the non-financial reporting policy.

A new Inclusion & Diversity strategy with a new governance framework

Launched in October, the strategy broadens the scope of our existing Inclusion & Diversity focus. In addition to gender and internationalization, the new Inclusion & Diversity strategy now also includes the focus areas of disability, generations and LGBTQ+. As such, three new Employee Resource Groups (ERGs) were established: Generations (age), BLEND (race, ethnicity and national identity) and Valuable (disability), supplementing our existing ERGs WIN (women and gender) and Rainbow (LGBTQ+).

To support our new Inclusion & Diversity strategy, a new governance framework was established. It follows a business- and region-led approach and provides a seat at the table for all the global leads of the five ERGs. Each of the focus areas has an Executive Committee sponsor, while the revised Inclusion & Diversity Council is chaired by the Co-CEOs.

Alongside these activities, we continued to focus on existing Inclusion & Diversity commitments and targets. By the end of 2021 our targets are 25% women and 35% under-represented nationalities on executive level. Embedding these targets into people and organization change decisions will ensure we hardwire diversity into the DSM of the future. In 2020, we improved our Inclusion Index from 72% in 2019 to 75% in 2020.

External relations and support

DSM works with a broad range of external partners - including non-profit organizations, industry peers and public institutions - to build inclusive and diverse workplaces. Most notably, these includeCatalyst,World Economic Forum,Workplace Pride,and theValuable 500.

Developing a new expression of our company culture

In 2020, the impact of COVID-19, the appointment of our new Co-CEOs, global social movements demanding a more equal society and a generational shift toward more human, empathetic workplaces, among other contributing factors, led us to re-examine our organizational culture and its role in supporting our purpose and ambitions. Through contributions from across our organization, we defined and launched our Culture Compass.

Purpose-led, Performance-driven

Our Culture Compass steers our purpose-led journey

The Compass is a navigational tool that helps us steer our company to where we aspire to be, while reflecting our purpose-led and performance-driven strategy. Our purpose ('Creating brighter lives for all') is at the center. In particular, we deliver performance by being more of who we are (courageous, caring and collaborative), and by making decisions every day that show what we stand for (taking responsibility, championing sustainability, and delivering value).

Activating our Compass

In 2020, we activated the principles of our culture in our organization by building a network of Culture Champions and actively involving employees in the translation of core elements to themselves and their daily work. The Culture Compass was launched via several webcasts for executives and for employees, and as of 2021, we will focus on anchoring the core values of the Compass into our key People processes.

Delivering on our P&O strategy

Delivering on the six levers of our strategy

The 2020 pandemic brought a strong focus to two of the key pillars of the 2018 P&O strategy: Culture, and Inclusion and Diversity. However, throughout the year, we continued to deliver on all of the six strategic levers: Operating model, Customer-centricity, Internationalization & diversity, Leadership & development, Team by team and Culture / The DSM Ways of Working.

Aspiration	2020	2019
Internationalization & diversity1
Female executives	25% by 2021	21%	20%
Under-represented nationalities	35% by 2021	30%	31%
Training
Training hours per employee	6	8

All data presented in People are subject to the non-financial reporting policy.

Welcoming our colleagues from recent acquisitions into DSM

In 2020, in line with our ambition to strengthen our growth in the health and nutrition markets, we worked on the integration of three new businesses, thereby welcoming more than 1,700 new employees. These businesses share our purpose-led approach, and our new colleagues will bring complementary expertise and important values. More information on these acquisitions can be found inNutrition.

The three-phase approach with Royal CSK

Ouracquisition of dairy solutions provider CSK in late 2019 saw around 160 colleagues join our workforce. We share a strong cultural affinity, which has helped the integration process progress smoothly. The integration process was split into three phases. First, the CSK organization was integrated into the DSM Food Specialties structure. The second phase involved connecting CSK's sites to the DSM operations network. The final phase was completed with the harmonization of compensation and benefits. In 2021, we will focus on further onboarding our new colleagues and finalizing the remaining minor changes to organizational structures, allowing us to focus on seizing the commercial and sustainability opportunities ahead.

A smooth transition with Glycom

Glycom, a human milk oligosaccharides company,brought 143 new colleagues to DSM. Glycom's well-established culture of responsibility, innovation and safety fits well with our values at DSM. During the course of the integration project, a new management team was established, and an Innovation and Business Development department was set up. Furthermore, the integration project allowed a number of business support teams including Legal, Finance, Operations, IT, P&O and IP to make a smooth transition to our organization. Any remaining or ongoing activities in 2021 will be overseen by the functions that are already fully integrated.

A shared commitment to onboard Erber Group

More than 1,400 employees in over 40 countries joined DSM as a result of ouracquisition of Austrian-based Erber Group in late 2020. The acquisition comprised the specialty animal nutrition and health business, Biomin, and food and feed diagnostic solutions business, Romer Labs. We established an integration project team covering a range of businesses and functions. The team's first focus was on implementing working teams, gaining a joint understanding on the businesses and functions, and establishing our ways of working and an initial 100-day plan. For 2021, the focus will be on establishing an Operations team, defining an integrated way of working for support functions as well as identifying the best approach for a joint go-to-market team.

Optimizing our Operating Model

As described by ourvalue creation model,our operating model is composed of our market-facing business groups, which are grouped in clusters, as well as our global support and functional excellence departments, and our regional organizations. In 2020, in line with the turbulence of the markets we operate in, we developed and optimized our operating model, leveraging internal synergies and connecting digitally with customers. These organizational adjustments will help our teams and people work effectively and efficiently.

Demonstrating our Nutrition is Fit for Growth

In 2020, DSM Nutritional Products launched the Fit for Growth program. By simplifying our operating model and further improving business steering, the program aimed to further enhance our abilities to serve customers and respond to the needs of the respective end-markets. At the same time, it applied a differentiated go-to-market approach to better capture commercial opportunities and prepare us for continuously changing market dynamics.

Our Materials Cluster shows its Agility to Grow

Designed in late 2019, and launched in 2020, our Materials cluster's Agility to Grow program has sought to drive efficiency, effectiveness and productivity by leveraging synergies across our business groups to deliver an organization that responds quickly and flexibly to evolving market conditions. The program focuses on seizing opportunities across three functional workstreams: Procurement, Operations and Innovation.

Evolving to serve our customers

Many of the wider developments in 2020 underlined that, in a fast-changing world, it is more important than ever to put customers first. Nevertheless, travel restrictions and social distancing measures relating to the pandemic meant that many of our conventional ways of connecting to customers were impossible. As such, our teams and people around the world adapted to the circumstances and connected to our customers in new, digital ways. Our overall Net Promotor Score of 50 for 2020 compared to 41 in 2019, shows that our customers appreciated our efforts to connect digitally and to listen to their needs.

Indeed, our service to customers was underpinned by our efforts to build and maintain resilient and agile teams. For much of 2020, many of our office-based teams around the world interacted digitally and operated remotely, while our operations and research teams mainly continued to work on site

Reinforcing Leadership and development, Team by team

In 2020, management styles were also adapted, with online team-building activities being encouraged and organized around the world. At the same time, we also moved many of our people development programs and initiatives online.

As part of our efforts to drive the effectiveness of our teams and better serve our customers, we launched Feedback Empowers. This global initiative aims to build feedback into our daily processes and make it part of our daily behavior, in order to accelerate change and growth across DSM, and drive the impact of our people. Feedback Empowers involves virtual classrooms, digital toolkits with useful tips, and other resources designed to improve employees' feedback skills. Global champions drive the initiative and proactively engage with employees and managers.

Regular performance and development evaluations play an important role in ensuring we are performance-driven and develop our people for roles today and into the future. In 2020, 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.

Driving Internationalization and diversity

To serve our diverse markets and customers, our talent base must also be global and diverse. In 2020, we continued to focus on increasing the representation of women and under-represented nationalities, as well as on fostering an inclusive environment.

At the end of 2020, 21% of DSM's executives are female. This is 1% higher than in 2019 but still lower than our target of 25%. In addition, 30% of our executives come from under-represented nationalities, which is below the level of 2019 and below our target of 35%. Moving forward, we will continue to work on improving the representation of women and under-represented nationalities within our executive population within the framework of our Inclusion & Diversity strategy. The diversity of our Executive Committee and Supervisory Board is described in Corporate governance.

In 2020, Equileap ranked us second of 100 Dutch listed companies for gender equality. Our position was due to our Executive Board and Supervisory Board ratio (57% and 42% female respectively) exceeding Dutch legislative requirements of 30%, our strategy to close the gender pay gap, and our commitment to the United Nations Women's Empowerment Principles.

Human rights

Our responsibilities around people extend beyond the health and safety of our employees. It is also our duty to protect human rights, which are integral to our purpose-led and performance-driven strategy. As such, we respect internationally recognized human rights in all our operations and throughout our value chain. 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 socially responsible business.

2020	2019
Gender pay gap1,2	8%	9%
Employees below a living wage	< 2%	-

1 Gender pay gap percentages are in favor of women.
2 All data presented in People are subject to the non-financial reporting policy.

We apply the International Labour Standards of the International Labour Organisation and we have been a signatory to the UN Global Compact since 2007. We respect the role of works councils and collective bargaining, and we work with these groups in the countries and regions where they are present. We promote employee empowerment and human rights protection, and we maintain dialogs with employees and representative bodies to enable this.

OurHuman rights position paper,available on our company website, sets out our governance structure, 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.

To embed an integrated approach on human rights, we have established a Human Rights Steering Committee: a representation and joint effort of People & Organization, Sustainability, Legal, Procurement and Operations. Each of these departments is further represented in the human rights working group.

Human rights in our own operations

Our approach to due diligence

In 2020, we further rolled out our new due diligence approach, launched in 2019, which we use to assess to what extent our actual practice is consistent with our internal policies. This Human Rights Impact Assessment allows us to define our salient human rights areas and how we can further identify business opportunities. This due diligence process contains four elements: country risk profiles, interviews with internal and external stakeholders, workforce data analyses and an employee survey.

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 2017b). 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. OurFair Remuneration Statement,available on our website, further elaborates our position on equal pay.

Gender pay gap and equal pay

We use the GRI 405-2 reporting requirements as guidance for calculating our gender pay gap. In 2020, we extended the scope of our analysis with the addition of India. The 2020 results showed a gender pay gap of 8% in favor of women, (female:male pay ratio of 108:100), a change of one percentage point compared to 2019, which is mainly due to scope change. This ratio is based on validated employee base pay data for locations where we have significant operations (defined as Brazil, China, India, the Netherlands, Switzerland and the US, excluding Pentapharm [Switzerland and Brazil] and Jiangshan [Jiangsu Province, China]) and covers approximately 66% of our global employee base. The pay gap can primarily be attributed to a higher proportion of male employees in lower-level positions.

We aim to make further progress in the area of equal pay. In 2020, we partnered with AnalitiQs to develop an advanced analytical model that will allow us to investigate background variables in much greater depth and obtain useful insights. Analysis and validation on gender pay gap and equal pay will continue in 2021.

Living wage

We are committed to paying a living wage to all our employees based on WageIndicator's benchmark methodology. We will use a phased approach, beginning with locations where we have significant operations (defined above) and over the next few years we aim to broaden the scope with more countries. In 2020, we assessed wage levels against WageIndicator's typical family with higher bound living wage figures. Based on this assessment, less than 2% of employees in scope (approximately 200 people) are paid below the higher bound living wage figures; we will make the necessary changes in 2021 to ensure fair remuneration. In parallel, we will conduct an in-depth analysis to further investigate the root-cause.

Addressing human rights in our supply chain

Our Sustainable Procurement Program (SPP) handles potential labor and human rights issues that reside beyond our own operations. We assess suppliers for possible human rights violations through sustainability assessments and audits from 'Together for Sustainability' and EcoVadis. Details about SPP and our management of human rights issues can be found in Suppliers, and in ourModern Slavery Statement,which is updated annually, is available online. In 2021, we will focus on identifying specific risk areas throughout the whole supply chain.

Preparing the future People & Organization strategy

Over the past few years, we have demonstrated a strong focus on performance in line with our strategy. At the same time, a series of internal and external forces, trends and themes have emerged, requiring new approaches from a People & Organization (P&O) perspective. In early 2020, we began designing a new P&O strategy with input from across our organization.

Launched in the fourth quarter of 2020, the new P&O strategy will guide the focus of our P&O function in the coming years, define the investments in people by the Executive Committee, and help steer the company toward a better employee experience.

The evolution of our business, the profound changes brought about by the pandemic, and a renewed leadership with changes in DSM's Co-CEOs and Executive Committee have largely influenced the path forward for our P&O strategy.

Building on the People dimension of Triple P

Building on many of the elements and foundations of our previous strategy, the new strategy will involve a renewed focus on 'People' - a focus that is at least as strong as that for 'Profit' and 'Planet'.

Four focus areas, anchored in DSM's Culture Compass

The new strategy has our Culture Compass at its center and aims to enhance our approach to Organization, People, Workplace and Leadership, enabled by the right rewards.

Creating a flotilla-style organization

The pace and depth of change we are faced with requires us to create a flotilla-style organization, with critical direction coming from the center, surrounded by agile units who are empowered to achieve our common goals. We aim to fuel our talent pool in equally agile ways, through a more liquid workforce that replaces an exclusive direct employment model.

Empowering our people

In a world characterized by high-pace change, digitalization, and business transformation, we aim to provide a personalized and empowering environment for all our people to take ownership of their performance, development and careers while continuing to develop sustainable high impact as individuals.

To this end, in 2020 we introduced, among other initiatives, a new software platform offering a new and improved talent experience for our people. By leveraging artificial intelligence technology, it facilitates the exchange of talents internally and externally.

The chosen platform supports our forward-looking approach to recruitment and career planning. It places greater emphasis on current skills, rather than past education or experience, and mitigates the impact of unconscious bias, enabling the complete masking of profiles.

Based on the learnings of a pilot involving 2,600 employees in four countries in the second half of 2020, we plan on further refining our approach to be able to expand our efforts and geographical scope in 2021.

Creating a contemporary workplace

The 2020 pandemic has led us to reevaluate our understanding on work and the workplace, and led us to design a future vision of a more contemporary workplace, with an inclusive environment where diversity thrives.

In 2020, we installed a dedicated, cross-functional global taskforce to develop directional guidance for our post-pandemic work practices, which resulted in a commitment to a 'Next Normal' built on the concept of the Hybrid Workplace.

The Hybrid Workplace capitalizes on the benefits of working from a mix of home, offices, and other workspaces - while respecting local rules and regulations that may affect certain employees. Our teams will define their own working arrangement based on their collective tasks, and personal situations, in collaboration with line management. We also ask our people to think more responsibly about when and why they travel, so that they can champion sustainability.

To ensure we get the best from this balance, and that everyone feels included and able to make an impact, we will launch new working 'Rituals' in 2021. These will be accompanied by regional policies to optimize local implementation, along with other initiatives to create a more modern and inclusive workplace.

Resetting the context for leadership

The new context and way of working we aspire to demand that we develop our leaders as coaches who create the inspiring, empowering and inclusive environment needed for our people and our business to grow and to be successful. In 2020, we began developing a 'Leading through Culture' program for all DSM people managers, helping our leaders to develop a deeper understanding of how culture is brought to life, team by team. The program will be further developed and rolled out in 2021.

Enabling our focus areas with modern, flexible rewards

We aim to change the way we reward our people to best reflect and enable our key strategic pillars. More flexible reward systems are needed to meet the diverse challenges and needs of our people and businesses. In 2020, we launched a new Recognition Framework that supports our people with a range of tools to recognize and emphasize key behaviors and accomplishments.

Planet

At a glance

- 25%1 absolute reduction of scope 1 + 2 greenhouse gas emissions versus baseline 2016
- ~18% structural improvement of scope 1 + 2 greenhouse gas emissions versus baseline 2016
- 5% scope 3 greenhouse gas emissions intensity improvement versus baseline 2016
- 60% purchased electricity from renewable resources
- 5.7% energy efficiency improvement, year-on-year
- 4.8% water efficiency improvement, year-on-year

Acting on our responsibilities in terms of environmental stewardship

We take our global environmental and social 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

Our operational footprint and approach to reporting

Our operations network spans more than 110 commercial production facilities in 40 countries. Our operational approach is led 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), among others.

We report our environmental performance according to the relevant material topics

Our Planet reporting addresses our performance on several material topics identified in ourMateriality matrix refresh:

Our environmental ambitions are 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 fields of safety, health, environmental footprint, value chain sustainability, climate adaptation and security.

Our key targets are our Science Based Targets

The key targets in the DRCP are our Science Based Targets, comprising a greenhouse gas (GHG) scope 1 + 2 emission absolute reduction of 30% and a GHG scope 3 intensity reduction of 28% by 2030 versus our 2016 baseline. These were reviewed and approved by the Science Based Targets initiative in early 2019 and are the foundation for achieving our net zero by 2050 commitment.

All data presented in Planet are subject to the non-financial reporting policy.

Our scope 1 + 2 target is supported by our renewable electricity target (75% of purchased electricity to be sourced from renewables by 2030) and our annual average energy efficiency improvement of at least 1% until 2030. Our scope 3 target is supported by the CO2REDUCE program.

Next to mitigating climate change, we are also working on climate adaptation. To improve the resilience of our assets against potential physical impacts of climate change, we conducted physical risk assessments in 2020. This involved mapping high-risk areas and our top 30 sites for five emerging hazards and long-term impacts using two time horizons and three climate scenarios. More information on our physical risk assessment is provided in Risk management.

Our targets on water, waste, emissions and substances of very high concern

Our other company targets are driving improvements in the areas of water, waste, other emissions and substances of high concern.

We will continue to drive the different water-related improvements that we identified during the water risk assessments in the past year, while shaping even more context-based water improvement plans for 2021 onwards. Furthermore, we continue to enhance our insights and capabilities to steer volatile organic compounds and waste improvements and we will develop action plans for all products containing substances of very high concern.

In 2020, we made good progress on the key objectives of the DRCP. Additional information about our Planet performance is provided in the Sustainability statements, ourvalue creation model andStakeholder engagement.

Climate & Energy

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 the 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 our rate of emission reductions over the coming decade. These are defined by our net-zero commitment and Science Based Targets.

Aspiration	2020	2019
Greenhouse gas (GHG)1
GHG emissions scope 1 + 2 absolute reduction versus 2016	30% in 2030	25%	25%
GHG emissions scope 1 + 2 estimated structural improvement versus 2016	approx. 18%	approx. 17%
GHG emissions scope 3 intensity reduction	28% by 2030	5%	-
GHG emissions scope 1 + 2 market-based (million tons)	1.24	1.17
GHG emissions scope 3 (million tons)	12.0	11.6
Energy
Primary energy use (PJ)	21.5	21.2
Final consumed energy (PJ)	18.2	17.4
Energy efficiency improvement year-on-year	>1%	5.7%	2.3%
Purchased electricity from renewable sources	75% by 2030	60%	50%

1 All Climate & Energy data are subject to the non-financial reporting policy.

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. OurScience Based Targets are our foundation to achieve this goal, supported by our ambitions on renewable electricity and energy efficiency, and working intensively with our key suppliers through our CO2REDUCE program. Throughout 2020 and continuing into 2021, we are working with long-term innovation roadmaps to map pathways toward net-zero emissions in the coming decades.

As a complement to our efforts on climate change mitigation, we also work on an integrated strategy of climate adaptation measures to improve the resilience of our assets and supply chains against potential physical impacts of climate change.

"DSM is leading by example. We were one of the first companies in our industry to commit to net zero emissions by 2050, as well as defining the pathway to firmly set us on this course. Our Science Based Targets define our important mid-term step for 2030. I am immensely proud of the fast progress against our targets. We also continue to challenge, support and innovate with suppliers and customers to reduce their climate impact."

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 of €50/t CO2eq 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 on the business.

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 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. 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 2020.

"CDP awarded DSM Leadership status and an A score for its CDP climate change disclosure. This places DSM in the top 8% of participating companies in Europe. Companies reaching the Leadership level represent best practice through their comprehensive disclosure of environmental data, thorough awareness of risks, demonstration of strong governance and management of those risks, and implementation of market-leading best practices."

Maxfield Weiss, Director of Corporate Engagement at CDP Europe

Scope 1 + 2 GHG emissions

On track with our scope 1 + 2 target

We are well on track towards delivering 30% absolute reduction by 2030. Our scope 1 + 2 market-based GHG emissions improved 25%1 compared to our corrected 2016 baseline. Total scope 1 + 2 emissions were 1.24 million tons CO2eq in 2020. This is an increase compared to 2019 and is mainly due to inorganic growth and higher production volumes of key products in 2020. Our GHG efficiency (year-on-year) improved 8.6% in 2020.

All Climate & Energy data are subject to the non-financial reporting policy.

Scope 1 + 2 emissions and reductions versus corrected baseline1

Baseline 2016 (corrected)

Scope 1 + 2 emissions (million tons)Absolute reduction versus baselineStructural improvement versus baseline

2.0 28%

1.65

2016

2017

2018

2019

2020

Absolute reduction and structural improvement were reported as of 2018.

Correcting our baseline in 2020

Our baseline GHG emissions figure of 2016 was increased to 1.65 million tons CO2eq, due to the inclusion of eight acquired sites in our reporting scope for the period 2017-2020 and the impact of methodology changes. Three newly built sites were also added to the reporting scope, however as they were constructed after 2016, have no impact on the baseline correction.

Our GHG reduction program

In order to achieve the targeted absolute GHG reduction by 2030, we have continued our dedicated program to help our key locations implement appropriate energy transition and energy efficiency measures. We are using 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 is shared across all sites to enable further roll out of improvement projects.

Supported by a dedicated corporate budget that is available to our business groups, we executed a variety of GHG reduction projects in 2020. The execution of the 2020 program will have an impact of approximately 20-25 kt CO2eq or approximately 1.5% on our GHG reductions. The projects range from relatively easy-to-implement modifications in operations, such as improving the insulation around hot parts, to installing advanced energy metering systems, up to the installation of best available technologies (for example, heating and cooling equipment). The contribution to our GHG reductions, due to the step-up in renewably sourced electricity that was made in Europe and North America in 2020, was offset by the current growth in non-renewably sourced electricity in China. This growth in China was due to the impact of acquisitions as well as organic growth in our China sites. In the coming years, in line with developing infrastructure, we will be actively pursuing opportunities for renewable electricity in China as well.

As a result of the above, the overall structural improvement increased from 17% to 18% from 2019 to 2020.

Energy transition

Energy efficiency improvements

Our energy efficiency improvement (on primary energy) was 5.7%1 versus 2019, above our target of an average annual improvement of 1%. This is mainly due to improvements in the production process during the scaling up of one of our new ventures. These improvements resulting in much lower energy use per ton produced. Excluding this effect, the energy

All data presented in Planet are subject to the non-financial reporting policy.

efficiency improvement was 1.9%, which was mainly due to our GHG reduction program and general efficiency improvements.

Projects executed in 2019 began delivering results in 2020, adding up to approximately 26 kt CO2eq reduction on the 2020 emissions. Examples of projects resulting in lower energy use are the replacement of chillers for building cooling in Greenville (North Carolina, USA) with a state-of-the-art version with much lower energy consumption, contributing approximately 2.7 kt CO2eq. In Jiangshan (Jiangsu Province, China), the installation of a membrane filtration system to pre-concentrate a product solution, significantly reducing the amount of required steam, contributed about 6 kt CO2eq. In Lalden (Switzerland), several smaller projects, such as returning condensate and continuous monitoring of steam leakages resulted in energy efficiency improvement and approximately 2 kt CO2eq reduction.

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 latest by 2030 and 100% at the earliest possible opportunity.

In 2020, we once again made significant steps towards our purchased renewable electricity target. The percentage of purchased electricity from renewable sources increased globally from 50% in 2019 to 60% in 2020. The CO2eq reduction due to this increase was offset by a lower demand in renewable electricity in high-emission regions and by the current growth in non-renewable electricity in China.

Progress on purchased renewable electricity in Europe

For our operations in Europe, we concluded a new Power Purchase Agreement (PPA) to source renewable electricity from one wind farm and two solar power plants in Spain, which will commence production in 2022-2023. In the Netherlands, our portfolio of agreements continued to provide 100% purchased electricity from wind parks to all locations. All other sites in Europe were also using 100% renewable electricity due to existing agreements combined with pre-production guarantees of origin (GOs) from the new PPA.

Progress on purchased renewable electricity in North America

Two PPAs are in place in the US, one for electricity generated from wind, while the assets for the second one are 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 second agreement means we have around two-thirds coverage of purchased electricity from renewable resources in North America in 2020, in line with 2019. The agreement for additional renewable electricity production announced in 2019 plus additional expected progress will lift this percentage toward 100% in 2021.

Working on renewable energy for heat and steam

Next to significant steps taken to increase the ratio of purchased renewable electricity, we also look for opportunities for the broader use of renewable energy sources. Sites across DSM already recover waste streams for production of renewable energy while others are in an exploratory phase. For example, an anaerobic digestor in Jiangshan (Jiangsu Province, China) enables the production of biogas from wastewater. At the end of 2020, Chifeng (Inner Mongolia, China) purchased steam produced from biomass residues. The biomass cogeneration plant in Sisseln (Switzerland) reached full year capacity in 2020, enabling a further reduction in GHG emissions of 6 kt CO2eq versus 2019.

In 2020, we continued to make progress in order to expand the portfolio of purchased renewable fuels in a responsible way. We worked throughout 2020 with a cross-functional team to establish comprehensive sustainability criteria for our purchased biomass-based fuels and heat. Pilot work started in 2020 and will continue during 2021. The new framework 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 12 million tons1 CO2eq in 2020. Despite implemented reductions, total emissions increased by 0.4 million tons compared to 2019 (11.6 million tons), with the largest increase from emissions from Purchased goods and services. This was mainly due to an increase in total purchasing volume and a shift in raw material mix toward more carbon-intense raw materials compared to 2019. The main scope 3 categories in the 2020 figures remain Purchased goods and services and End-of-life treatment of sold products. End-of-life emissions remained stable compared to 2019 due to a restated value for 2019 to correct for an error in units. Due to rounding, total 2019 scope 3 emissions remain at 11.6 million tons despite the restatement on End-of-life emissions.

Other scope 3 categories reported comparable figures in 2020 compared to 2019. The scope 3 categories Business travel and Employee commuting reported a reduction compared to 2019 due to reduced travel and increased working from home as a consequence of the COVID-19 pandemic.

Scope 3 GHG emissions1 in CO2eq, million tons

Purchased goods and services

End-of-life treatment

Other upstream categoriesInvestments

Other downstream categories

Due to rounding, the numbers presented above may not add up to the total scope 3 emissions.

We have seen considerable development regarding the performance of our main scope-3-contributing suppliers. Our highest-contributing supplier has already shown a decrease in emissions as a consequence of reduction measures taken in past years which now have been included in this year's reporting. Furthermore, they announced an investment to further reduce their emissions in 2021. The second largest contributing supplier re-assessed their emissions and identified strongly increased emissions. As a consequence, they have started an investment to reduce their emissions drastically in the coming years.

All data presented in Planet are subject to the non-financial reporting policy.

Science Based Targets

In March 2019, our new Science Based Target was approved, including an intensity reduction target of 28% per unit of product produced in 2030 versus the base year of 2016 for scope 3 emissions. This year will be the first year reporting on the scope 3 intensity development.

The intensity development improved by 5% compared to the baseline in 2016. Baseline adjustments were made reflecting the new data insights and supplier-specific information.

Our emissions intensity deteriorated year-on-year. A change in product mix due to COVID-19 and the absolute emissions from raw materials was not offset by the improvements realized by our suppliers.

Engaging with our suppliers through our CO2REDUCE program

Our company-wide supplier engagement program CO2REDUCE continued at full force in 2020 and made good progress. We explored new means to support our supply base in emission reduction and improved our insights and data quality in the reported emissions.

The program continued using last year's successfully developed roadmaps for our businesses, in which collaboration with key suppliers is fundamental. As a consequence, CO2REDUCE is well established in our businesses and we expanded the reach to more targeted suppliers that contribute the highest GHG emissions in our value chain.

Collaborating with our suppliers on scope 3 reductions

In our supplier engagement program, we apply a collaborative approach together with a given supplier whereby we aim to understand the supplier's existing reduction ambitions and efforts, and develop a supplier action plan for reduction based on a common 'reduction' starting point. This typically involves the exchange of life cycle assessment data to establish the specific situation of a supplier. We have been successful in this approach, as multiple supplier action plans have been developed that have improved our insights in emissions while relationships with suppliers have been strengthened with a clear focus on next implementation steps for GHG reduction.

We greatly improved at tracking supplier developments and determining their realized reductions. This required an extension to the existing methodology and adjustment of the relevant IT systems. In the 2020 reported emissions, multiple supplier specific emissions were used in the calculations instead of using industry average figures.

An example is thehalving of the carbon footprint of our polyamide Akulon® PA6 as a consequence of the committed reductions at our key supplier. To reflect this very promising development, this supplier specific reduction has been included in the CO2REDUCE reporting and will give a more realistic reflection of emissions development already in 2020 and years to come.

Sharing lessons learned on scope 3 emissions

To catalyze additional emission reductions through the use of renewable electricity in our supply base, we invited more than 40 participants from key suppliers to join a webinar on the transition from fossil-based to renewable electricity. We shared our lessons learned in this field and invited expert consultants to present the wider solution landscape and to accommodate an easy follow-up. The feedback of suppliers was overwhelmingly positive and thewebinar serieswas nominated for the RE100 leadership awards for Best Green Catalyst.

The area of scope 3 emissions is a relatively new field that is in development and we regard it as our responsibility to actively support and share our experiences from the CO2REDUCE program in peer group platforms like Together for Sustainability. These platforms aim to define best practices on supplier engagement and scope 3 calculations within the industry. Our Supplier Engagement Rating on climate was given an A rating by CDP in 2020.

Finally, we also develop products for the circular and bio-based economy that contribute to further reducing our scope 3 emissions. SeeStakeholder engagement andResources & Circularity 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 clients and end-users reduce their own emissions. The latter are referred to as 'Avoidedemissions' - 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.

For example, animal farming accounts for 14.5% of all human-derived greenhouse gas (GHG) emissions. This contribution needs to be rapidly reduced to help limit the rise in global temperatures to 1.5°C. The farming industry is highly variable in its approach to transitioning to a low-carbon future so our Animal Nutrition & Health business provides innovative, customer tailored solutions to enable GHG reductions within animal production systems.

One of our solutions (approximately 1% of our poultry business) utilizes a combination of vitamins, enzymes, and eubiotics. This combination provides substantial greenhouse gas emission reductions in broiler production, where benefits related to animal health and digestion are realized. This performance improvement reduces the carbon footprint of produced poultry by more than 8% compared to non-use. In 2020, this enabled avoided GHG emissions of approximately 1,200 kt CO2eq.

Similarly, within pig production an example product combination (approximately 13% of our sales in this segment), leads to a reduction in emissions associated with animal feed production and animal waste when compared to non-use. The avoided emissions associated with this solution in 2020 were approximately 100 kt CO2eq.

Our feed additives are also used in dairy cattle feed, improving animal health and milk production efficiency. An example solution (representing less than 1% of dairy sales) reduces the carbon footprint of milk by 9%. This is associated with approximately 70 kt CO2eq of avoided emissions in this application.

Other emissions to air

Aspiration	2020	2019
VOC efficiency improvement versus 20151	continuous improvement	74%	74%2
VOC (x 1,000 tons)	3.53	2.7

1 All data presented in Planet are subject to the non-financial reporting policy.
2 The 2019 VOC efficiency improvement has been restated due to a correction in the calculations for one location
3 The increase in emissions in 2020 is due to the inclusion of acquired sites, which do not contribute to efficiency improvement calculations in the year of addition

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 (NOx) and sulfur dioxide (SO2) emissions in the Sustainability statements and via thecompany 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, resulting in a more than 50% efficiency improvement by 2021 - an increase on our previous aspiration of 40% for the three emissions by 2020. In 2020, our VOC efficiency remained stable versus 2019. Smaller improvements were offset by negative production effects, while the majority of the larger abatement projects have been executed in previous years. Our absolute VOC emissions increased due to the inclusion of acquired sites in the reporting scope. As this is the first year of reporting for these sites, they do not contribute to the VOC efficiency improvement.

In Yantai (Shandong Province, China), ethanol emissions were reduced by more than 50% compared to 2019 due to the implementation of several process improvements, improving staff awareness and monitoring. This improvement does not contribute to the year-on-year VOC efficiency improvement result because it is only the first year of reporting for Yantai, but it does contribute to the overall company VOC level in 2020.

Resources & Circularity

Resources & Circularity is one of our Focus Domains. We are committed to securing the future availability of natural resources and unlocking more value from the limited resources we have, by monitoring and improving 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.

With the global population expected to reach more than 9.7 billion by 20501, the demand for Earth's resources will only continue to rise. The UN has calculated that in order to sustain our current lifestyles, the equivalent of three planets would be required by mid-century. This makes sense, considering our global economy is only 8.6% circular. In other words, just 8.6% of the 92.8 billion tons of minerals, fossil fuels, metals and biomass that enter the economy are re-used annually, and the trend is negative - the gap is not closing.

We enable our customers to transition toward a circular & 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

We report our performance on Resources & Circularity based on Renewable & secondary raw materials (addressing the first two drivers above) and Waste (addressing the last driver above).

Aspiration	2020	2019
Renewable & secondary raw materials1
Renewable raw materials (% of spend)	15.2%	14.7%
Waste
Waste recycled	80-90% in 2020	85%	86%2
Total process-related waste efficiency improvement	at least maintain	6.3%	2.8%
Non-hazardous process-related waste (kt)	130	1072
Hazardous process-related waste (kt)	75	85
Non-process related waste (kt)	10	5

1 All data presented in Planet are subject to the non-financial reporting policy.
2 The 2019 non-hazardous waste and waste recycled have been restated due to a correction in the calculations at one location.

Renewable & secondary raw materials

As part of our focus on Resources & Circularity, we are accelerating our efforts to replace finite fossil resources with regenerative, 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 raw materials

The renewable raw materials we use include waste from agriculture, yeasts and enzymes, carbohydrates and natural oils, and acids. In 2020, the share of our spend on renewable raw materials increased to 15.2%2 from 14.7% in 2019. The percentage increase is due to an increase in spend on enzymes, gelatins and other food additives.

1 Source:UN
2 All data presented in Planet are subject to the non-financial reporting policy.

Launching a bio-based alternative for Dyneema®

In 2020, our materials businesses again took big steps forward in driving the transition toward a circular and bio-based economy through the launch of new bio-based and recycled-based innovations. For example, DSM Protective Materials launched its bio-based Dyneema®, which is based on renewable ethylene derived from bio-based feedstock (residue of the wood pulping process). The unique properties of Dyneema® are maintained, enabling customers to adopt a more sustainable solution without compromising process efficiency or final product performance.

Bio-based and recycle-based raw materials in DSM Engineering Materials

By working together with strategic partners, DSM Engineering Materials launched a new recycled-based alternative for high-performance polyamide (PA6), Akulon® CRC-MB, which is used in the automotive, electronics and packaging industries. This polyamide is used for instance to produce a new multi-layer food packaging film in collaboration with SABIC, Cepsa, Fibrant, and film-manufacturer Viscofan. The development of this packaging material underlines a strong commitment from us to work closely with our value chain partners to lead the transition toward more circular and sustainable materials.

DSM announced a new strategic partnership with Neste, whereby DSM Engineering Materials will start replacing a significant proportion of the fossil feedstock used to date in the manufacture of our high performance polymers portfolio with feedstock produced from recycled waste plastics and/or 100% bio-based hydrocarbons. Neste produces its bio-based hydrocarbons entirely from renewable raw materials, such as waste and residue oils and fats. For the production of waste-plastic-derived feedstock, Neste focuses on plastics that cannot be mechanically recycled and have previously been directed to incineration and landfilling.

More information on how we approach sustainable biomass is available in our position paper on Sustainable Biomass on thecompany website.

Waste

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 1751 kt out of 205 kt of total process-related waste. We pay careful attention to meeting local waste management legislation. We aim to maintain our percentage of recycled waste in the range of 80-90%, which was achieved in 2020.

Waste breakdown by type and destination in thousand tons

Off-site incineration with heat recovery

Off-site incineration without heat recovery

Landfill

Off-site recovery

150

100

Non-hazardous	Hazardous	Non-process-related
process-related waste	process-related waste	waste

All data presented in Planet are subject to the non-financial reporting policy.

Managing our waste streams

Besides measuring our percentage of recycled waste, we also pay attention to reducing our total amount of process-related waste. In 2020, our total process-related waste efficiency improvement was 6.3%. This is mainly due to significant process improvements at our acquired sites and new ventures. Specific waste reduction programs were run at our main locations such as Dalry (United Kingdom), where calcium was used to restore and rebuild soil profiles.

Water security

Fresh water is a finite natural resource that needs to be used and managed in a responsible and sustainable way. Water security is an integral part of our risk mitigation and environmental impact reduction strategies, closely connected to Climate & Energy and Resources & Circularity. At the company level, we commit to measuring, monitoring and reporting relevant performance indicators for water. We disclose the progress of our water stewardship program, via the CDP Water Security questionnaire.

DSM is a signatory of the CEO Water Mandate, a UN Global Compact initiative that mobilizes business leaders to advance in water stewardship and drive progress on SDG 6 (Clean Water and Sanitation). This commitment is translated to our global policy on water, the Water Management Standard, which applies to all our facilities worldwide, enabling the sites to implement relevant measures in line with the Alliance for Water Stewardship (AWS) Standards, the WBCSD guide to circular water management and other industry best practices. In 2020, our CDP Water Security rating improved to an A- for our water governance and management strategy.

Aspiration	2020	2019
Water Use (million m3)1
Water withdrawal for once-through cooling (OTC)	85	89
Water withdrawal for non-OTC	24	23
- surface water	4.8	4.0
- potable (tap) water	13.6	12.1
- ground water	5.2	6.0
Consumptive Use	4.4	5.3
Sustainable water management
Water risk assessments	100% in 2020	100%	100%
Closure of high-risk related actions	90% in 2020	97%	39%
Water withdrawal efficiency improvement	at least maintain	4.8%	3.5%2
Emissions to water
COD (kt)	2.0	2.1

1 All data presented in Planet are subject to the non-financial reporting policy.
2 The 2019 water withdrawal efficiency improvement has been restated due to a correction in the calculations at one location.

The sustainable use of water

As a global sustainability leader, we follow the latest scientific insights on global water crisis, with increasing extreme weather events and water shortage potentially impacting our customers, our employees, and our own business continuity. For climate adaption, our physical risks scan provided important insights into the business impacts of different climate change scenarios. For water stress, our water stewardship approach reflects our sector materiality for risk exposure and impacts we can make. The main user of freshwater is agriculture, which is an indirect part of our value chain.

Water use in our products and processes

Water is not a primary ingredient in our products. Our primary water use is for the utility systems, in steam consumption and cooling processes. In addition to this, high quality freshwater is needed for a variety of our production processes, as a production medium and as a cleaning agent to meet the desired product hygiene and quality standards. For our direct operations, we strive to use water in balance with the context of the respective catchments. In our value chain, we monitor the materiality on water for our suppliers and customers through value chain engagement programs, such as Together for Sustainability (TfS).

"Water stress will continue to increase around the world. Building on our current water efficiency targets, we will define a contextual water reduction target to address water stress in our own operations. This report represents our progress on water toward the UN Global Compact CEO Water Mandate."

Dimitri de Vreeze, Co-CEO, Royal DSM

Water relevance is context-based

Water is a local topic that needs to be managed in the context of a given catchment and its water challenges. Our water stewardship program is tailored to our specific impacts and dependencies on water and informed by local catchment contexts to maximize our positive impacts in a cost-effective way.

The context of once-through cooling and water consumption

A large proportion of our total water withdrawal (75%1) is used for once-through cooling (OTC) purposes in low water-stress areas. For this type of water withdrawal, both risk exposure and environmental impacts are limited. For this reason, we report and monitor 'non-OTC Water Withdrawal' separately, to provide a metric that reflects our water intensity in a contextual way. We have a target in place to continuously improve water efficiency using this metric.

In addition to water withdrawal, we report and monitor our consumptive use, defined as the difference between water withdrawal and water discharge. Our consumptive use is primarily a result of evaporative cooling and is positively correlated to energy efficiency. For this reason, our GHG reduction program delivers co-benefits on water consumption through improving energy efficiency. For example, in 2019, we replaced several chillers and their associated cooling towers at our site in Belvidere (New Jersey, USA). The project reduced the water consumption for cooling on site by 50%. This also had a positive effect of approximately 3 kt on their greenhouse gas emissions.

Water withdrawal and water stress in million tons

Water withdrawal for once-through cooling(OTC) Water withdrawal - for non OTCCurrent water stressLow water stressAdditional future water stressOut of scope¹

Water withdrawal

84.7

1 'Out of scope' includes discontinued operations, sites with minimal withdrawal (<10.000m3/year) and sites with limited operational control
1 All data presented in Planet are subject to the non-financial reporting policy.

We expect water stress to increase

Water stress is expected to worsen in many parts of the world, as a result of factors including urbanization and population growth, increasing food production, changing consumption patterns, industrialization, water pollution, and climate change. Water stress is defined as the ratio of total water withdrawals to available renewable surface and groundwater supplies. It is a parameter that varies depending on the hydrological water balance in the catchment and the demand for water in the local community. The level of water stress changes over time influenced by the changing climate but also by societal developments.

To further contextualize our water footprint and incorporate climate adaptation developments, we perform our water stress mapping with the water risk tools from the World Resource Institute (WRI) and the World Wildlife Fund (WWF) to identify water stress sites, where water stress is greater than 40%. This mapping is based on our current footprint combined with a 2030 'business as usual' scenario. The 'business as usual' scenario represents a world with stable economic development and steadily rising global carbon emissions, with global mean temperatures increasing by 2.6-4.8°C relative to 1986-2005 levels. We monitor the water withdrawal and consumptive use for these locations closely.

Water risk mitigations and effluent management

Over the period 2018-2020, we conducted site-level water risk assessments (WRA) for 100%1 of water stress sites and sites with water-withdrawal materiality. The WRA provides detailed insights on the water challenges locally including the impacts and likelihood of a given risk, as a basis for the prioritization of risk mitigation measures. Updates to the water stress mapping will also identify new water stress sites that will be in scope for WRA.

Addressing mitigating measures for water risks

For the high risks identified, the sites define and implement relevant mitigating measures. Globally, 39 high-risk-mitigation measures (referred to as 'high-risk actions') were defined. The majority of the high risks identified relate to water quality, such as constraints in the wastewater treatment facilities related to business growth and/or increasingly stringent regulatory requirements on wastewater discharge.

Of these high-risk actions, 97% were implemented in 2020 exceeding our target of 90%. The mitigation measures include short-term actions to improve operational controls on site, or have documented commitments for longer-term projects in place, such as several large capital expenditures to upgrade and expand waste water treatment facilities. Longer-term commitments will be followed up with relevant site management processes and will be monitored centrally. Water risk management will remain a key instrument for our water stewardship program to monitor local water challenges and improve (contextual) effluent management.

Water risk types and completion in %

QualityQuantityRegulatoryReputational

All data presented in Planet are subject to the non-financial reporting policy.

Moving toward a context-based water reduction target

Building on the current continuous improvement targets for water efficiency, we aim to define a context-based water reduction target in response to the emerging availability risks in water-stressed regions.

In 2020, a water impact assessment was conducted on key water stress sites to evaluate water reduction options and potential impacts operationally and financially. Besides providing the necessary insights to define a relevant and impactful target, the impact assessment raised awareness of water stress, strengthened water stewardship practices, including measurements and monitoring, and identified water recycling and reuse possibilities for the sites in water-stressed regions.

The context-based reduction target as of 2021 will set the direction for improvements for the longer term and be complementary to our continuing efforts to manage water quality through a risk-based approach.

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 including mitigating 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.

2020	2019
Protected Areas1
Sites in or adjacent to protected areas	27%	25%
Sites in registered protected area	3%	3%

All data presented in Planet are subject to the non-financial reporting policy.

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 ourResponsible Care Plan, especially with our GHG reduction, water stewardship and waste management programs.

Monitoring biodiversity across our value chain

To improve our operational footprint, we monitor areas of high biodiversity value around our sites. In 2020, 27% of all our production sites in scope were adjacent to protected areas and 3% contained portions of registered protected areas. As we are exposed to biodiversity risks in our supply chain, we strive to responsibly source high-risk raw materials through recognized certification schemes. These raw materials include palm oil derivatives, wood-based materials, fish oils and sugar. More information on how we work with the sourcing of these raw materials can be found in Suppliers and in our statement on the responsible management of forest resources on thecompany 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 for setting science-based targets in the future.

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. This year, we put our name behind Business for Nature's 'call to action' for governments to set more ambitious policies to reverse nature loss in this decade. We are also 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.

For more information, see our position paper on Biodiversity on thecompany website.

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.

Assessing our exposure to Substances of Very High Concern

In 2020, we finalized the assessment of our full product portfolio to identify products with more than 0.1% Substances of Very High Concern (SVHC), excluding substances in products that are considered 'essential for life'. We applied a broad set of criteria to identify SVHC. These include CMR (Carcinogenic, Mutagenic or Reprotoxic), PBT (= Persistent, Bio-accumulative and Toxic) and vPvB (very Persistent very Bio-accumulative), respiratory sensitizers, endocrine disrupting chemicals, and suspected CMRs.

Less than five percent1 of our total sales comes from products that contain more than 0.1% SVHC. The assessments for these products include action plans such as replacement possibilities and additional risk-reduction measures. Two substances are responsible for more than half of this percentage, and are classified as suspected CMR (by inhalation). These two substances are embedded in a chemical structure and cannot become available for exposure by inhalation.

Gaining insights into product stewardship

The project provided new insights in and better understanding of (the substances in) our products and processes, which in turn was used as input for our product stewardship roadmap beyond 2020. Global chemical legislation is rapidly expanding and the public is becoming increasingly sensitized to the subject of chemicals. We observe a shift from risk- to hazard-based thinking. With these challenges in product stewardship, we defined five themes to work on:

- Further increase the awareness across the organization
- Improve our master data management
- Improve our use of digitalization tools
- Further implement 'safe & sustainable by design' principles
- Adjust our governance when needed

Updating product registries in REACH

As a participant of the voluntary program of the European chemical industry association to improve the quality of the REACH dossiers, we proceeded with the update of the REACH dossiers, in which we were the lead registrant in 2020. The European database is seen as an important source of information on health and environmental hazards, generated with the implementation of REACH in Europe a decade ago. For more information on product stewardship, see thecompanywebsite.

All data presented in Planet are subject to the non-financial reporting policy.

Profit

At a glance

- +24% Total shareholder return versus 2019
- +1% Sales from continuing operations versus 2019, with organic sales +6% in Nutrition and -12% in Materials
- -1% Adjusted EBITDA from continuing operations versus 2019, with Nutrition +7% and Materials -27%
- €955 million Adjusted net operating free cash flow, +19% versus 2019
- €457 million Net profit from continuing operations, -34% versus 2019
- €2.40 Proposed dividend stable per ordinary share

Overall financial results

Strategy

At our Virtual Investor Event in November 2020, we reiterated our purpose-led, performance-driven growth strategy. Sustainability and innovation are key growth drivers of DSM's long-term focused strategic plan, and are underpinned by ambitious targets across People, Planet and Profit. In markets related to Nutrition, Health and Sustainable Living, DSM is well positioned to use its capabilities to create a positive impact and deliver value for all the company's stakeholders.

In Nutrition, we see significant headroom for business growth and innovation. The success of Nutrition's unique business model combining 'global products' and 'local solutions' is evident from its track record of 6% organic sales growth and a 10% Adjusted EBITDA growth CAGR 2015-2020. Recent acquisitions such as CSK, Glycom and Erber Group further strengthened our value proposition to customers. Going forward, Nutrition will maintain strong growth by building on its 'global products, local solutions' business model. In addition, we will add a third leg through driving Precision & Personalization, by building on our big data, digital and bioscience capabilities.

In Materials, we have strong growth and earnings potential, and are well positioned in the strategic area of Sustainable Living. Following the announcement of the sale of our Resins & Functional Materials businesses to Covestro AG, Materials' activities now consist of DSM Engineering Materials and DSM Protective Materials. We will continue to develop these into a more resilient, higher-growth, and high-margin specialty business. Their combined offering addresses the increasing demand for materials that protect the health of both people and planet by adding further bio-based and circular solutions.

Overall, we aim to deliver mid-single digit percentage organic sales growth, an above 20% Adjusted EBITDA margin, and high-single digit percentage Adjusted EBITDA growth on a mid-term basis in both Nutrition and Materials, supported by our strong innovation pipeline.

Financial results

This section includes an overview of the key financial metrics of the company in respect of our continued operations performance in 2020 and 2019, except where otherwise indicated.

In 2020, the COVID-19 pandemic led to unprecedented global challenges. We took very prompt action to ensure the health and safety of our employees and partners, while keeping operations running to maintain continuity of supply to our customers. Overall, the pandemic had a slightly negative effect on Group sales, as Materials saw a negative sales impact of around 10% on volumes over the course of the year, due to reduced global demand in the second and third quarters. Nutrition saw an overall slightly positive sales impact from the effects of COVID-19, mainly due to very strong demand in Human Nutrition for immunity-optimizing products.

Overall, we delivered solid financial results in this challenging environment and despite significant foreign exchange effects. We reported €1,534 million in Adjusted EBITDA, 1% down compared to 2019. We achieved good results in Nutrition, while Materials was significantly impacted by COVID-19.

The Adjusted EBITDA in the businesses was also supported by the contribution of our innovation pipeline, our recent acquisitions, and our continued focus on cost reduction and operational efficiency, including prompt actions to minimize capex and operating costs in Materials in order to mitigate the effects of the pandemic. Adjusted net operating free cash flow from continuing operations increased by 18% compared to 2019 to €872 million.

Compared to 2019, Nutrition delivered above-market sales growth, with organic sales up 6% and a corresponding Adjusted EBITDA growth of 7%. Nutrition sales saw a slightly positive impact from the effects of COVID-19 overall. Human Nutrition & Health experienced a strong increase in demand for immunity-optimizing products. Animal Nutrition & Health witnessed good demand growth, but experienced some volatility in sales performance during the second and third quarters due to stocking effects at customers resulting from the supply chain uncertainty caused by COVID-19. Food Specialties saw good demand for packaged food applications driven by higher at-home consumption. Personal Care was weak due to lower demand for sun care and cosmetics, while Aroma Ingredients saw good demand for detergents and disinfectants.

The performance of our Materials cluster was significantly impacted by COVID-19, resulting in -6% volume development in 2020. Demand declined abruptly at the end of the first quarter. Following a slow recovery over the summer, Materials saw a strong improvement from September onwards, especially in Engineering Materials, directly related to demand for automotive.

The Adjusted EBITDA margins were 21.0% and 17.9% for Nutrition and Materials respectively, in line with our strategic ambitions. In Nutrition, the Adjusted EBITDA margin was up to 21.0% versus 20.7% in the same period last year, owing to strong sales in Human Nutrition & Health. In Materials, the Adjusted EBITDA margin was 17.9% compared to 21.3% in 2019, owing to the impact of COVID-19.

Income statement and key data

x € million	2020	2019	Change
Net sales from continuing operations	8,106	7,998	1%
Adjusted EBITDA from continuing operations	1,534	1,551	-1%
EBITDA from continuing operations	1,368	1,457	-6%
Adjusted operating profit from continuing operations	929	989	-6%
Operating profit from continuing operations	662	872	-24%
Adjusted net profit from continuing operations	711	752	-5%
APM adjustments from continuing operations	(254)	(63)	303%
Net profit from continuing operations	457	689	-34%
Net profit from discontinued operations	51	75	-32%
Net profit for the year	508	764	-34%
Net profit available to equity holders of Koninklijke DSM N.V.	506	758	-33%
ROCE (in %, continuing operations)	10.4	12.3
Adjusted EBITDA margin (in %, continuing operations)	18.9	19.4
Adjusted net operating free cash flow	955	801

Net sales and Adjusted EBITDA

At €8,106 million, net sales from continuing operations in 2020 were 1% higher than in 2019 (€7,998 million). Organic growth in 2020 was 2%. Volume development was 3%, while price/mix had a 1% negative effect on growth compared to 2019. Exchange rate fluctuations had a negative impact of 3%, and acquisitions contributed another 2% to sales.

High-growth economies together currently represent 43% of our sales (44% when Africa is included), which is slightly lower than in 2019. The share of sales in these economies as a proportion of our total sales gives us a well-balanced global footprint.

The Adjusted EBITDA (Adjusted operating profit before depreciation and amortization) from continuing operations decreased by 1%, or €17 million, from €1,551 million in 2019 to €1,534 million in 2020. Adjusted EBIT (Adjusted operating profit) from continuing operations decreased from €989 million in 2019 to €929 million in 2020, down 6%.

Net sales	Adjusted EBITDA
x € million	2020	2019	% change	2020	2019	% change
DSM, continuing operations	8,106	7,998	1%	1,534	1,551	-1%
Nutrition	6,365	6,028	6%	1,338	1,250	7%
Materials	1,518	1,744	-13%	272	372	-27%
Innovation Center	184	184	0%	21	26	-19%
Corporate Activities	39	42	-7%	(97)	(97)	0%

Net profit

Adjusted net profit from continuing operations of €711 million was down by 5% versus 2019. Net profit available to equity holders of DSM decreased by €252 million to €506 million. This decrease was mainly a result of the higher APM adjustments (up by €191 million, mainly due to restructurings and impairments). Expressed per ordinary share, net earnings from continuing operations amounted to €2.64 in 2020 (2019: €3.85).

Financial income and expense decreased by €25 million year on year to €67 million. This was mainly caused by the impact of the accounting for certain renewable energy contracts and lower interest margins and lower cash balances compared to the previous year.

The reported effective tax rate over taxable result excluding APM adjustments 2020 for continuing operations was 18.5% (2019: 19.1%). This decrease was mainly due to the one-time impact on the deferred tax position caused by the increase of the tax rate in Switzerland in 2019.

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 loss of €254 million (2019: loss of €63 million), consisting of a loss in EBITDA of €166 million (including restructuring costs of €103 million and acquisition/divestment costs of €52 million), impairments of €101 million, a related tax benefit of €54 million, and a loss of €41 million relating to associates and joint ventures (mainly the impairment of the POET-DSM joint venture).

Net sales by destination in %

Net sales by origin in %

The Netherlands

Switzerland

Rest of Europe

Latin America

Rest of Asia

North America

China

Rest of the world

The NetherlandsRest of EuropeLatin AmericaRest of AsiaSwitzerland

North America

China

Rest of the world

3 4

Net sales by business segment in %

NutritionInnovation CenterMaterialsCorporate Activities

2020 2019

Net sales by end-use market in %

Food & Beverages

Early Life Nutrition

Animal Nutrition

Electrical/electronicsDietary Supplements

Personal Care

Automotive/transport

Medical Pharma

Other

20196 5

Net sales bridge 2020 x € million

Adjusted EBITDA margin in %

2019

2020

-1%

21.0

21.3

20.7

Full year 2019

VolumePrice/ mixOtherFull year 2020

Nutrition

Materials

Total

Cash flow statement

x € million	2020¹	2019
Cash and cash equivalents at 1 January	800	1,281
Cash provided by operating activities	1,494	1,385
Cash from / (used in) investing activities	(1,482)	(525)
Cash from / (used in) financing activities	83	(1,332)
Effect of exchange differences	(24)	(9)
Cash and cash equivalents at 31 December	871	800

The cash flow statement includes an analysis of all cash flows, including those related to discontinued operations

Cash provided by operating activities of €1,494 million mainly consists of the EBITDA for the year (€1,476 million). Our focus on cash flow resulted in a full-year operating cash flow that was €109 million higher than last year. This was driven by various items, including improved working capital performance, lower costs for defined benefit plans and higher customer funding (see also Consolidated financial statements).

The cash used in investing activities included capital expenditure (-€609 million) and acquisitions (-€1,533 million, including Erber Group and Glycom), partly offset by the withdrawal from fixed-term deposits (€646 million).

The cash from financing activities consisted mainly of the new corporate bonds (€991 million), partly offset by dividend paid (€289 million), the repurchase of shares (€309 million) and repayment of loans (€268 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 €14.4 billion at year-end (2019: €13.4 billion). Equity decreased by €348 million, which was fully attributable to the exchange rate impact on foreign operations of €451 million. Equity as a percentage of total assets decreased from 58% to 52%.

Compared to year-end 2019, net debt increased by €1,433 million to €2,577 million, mainly due to the acquisitions of Glycom and Erber Group. The gearing at year-end was 25.6%, which is roughly double the gearing of 12.7% at year-end 2019.

Capital expenditure on intangible assets and property, plant and equipment amounted to €573 million for continuing operations in 2020 (€533 million on a cash basis), which was roughly the same as the level of amortization and depreciation.

Total working capital from continuing operations amounted to €1,580 million compared to €1,743 million at year-end 2019. This represents 19.0% as a percentage of annualized fourth-quarter 2020 sales (2019: 22.5%), which is below our aspiration of 20%. Cash-wise, the operating working capital (OWC) from continuing operations was comparable to last year (a decrease of €8 million). The OWC percentage decreased from 27.6% at year-end 2019 to 24.6% of annualized sales at year-end 2020.

Cash and cash equivalents came to €871 million at the end of the year; including current investments, this amounted to €914 million (2019: €1,488 million). Besides the regular cash flow elements, this decrease was mainly due to acquisitions (€1,533 million), the new bonds (€991 million) and the repurchase of shares (€309 million).

Balance sheet profile

2020	2019
x € million	in %	x € million	in %
Intangible assets	4,455	31	3,515	26
Property, plant and equipment	3,774	26	4,040	30
Other non-current assets	710	5	664	5
Cash and cash equivalents	871	6	800	6
Other current assets	4,554	32	4,424	33
Total assets	14,364	100	13,443	100
Equity	7,487	52	7,835	58
Provisions	184	1	168	1
Other non-current liabilities	4,490	32	3,325	25
Other current liabilities	2,203	15	2,115	16
Total equity and liabilities	14,364	100	13,443	100

Outlook 2021

DSM expects to deliver an Adjusted EBITDA increase in Nutrition at the upper end of its mid-term strategic ambition of high-single digit growth. Together with continued recovery in Materials, DSM expects an Adjusted EBITDA growth rate for the Group moving into double digits, with a continued good Adjusted net operating free cash flow.

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).

x € million	2020	2019
Nutrition	6,365	6,028
Materials	1,518	1,744
Innovation Center	184	184
Corporate Activities	39	42
Total continuing operations	8,106	7,998
Discontinued operations	932	1,012
Total	9,038	9,010

x € million	2020	2019
Nutrition	1,338	1,250
Materials	272	372
Innovation Center	21	26
Corporate Activities	(97)	(97)
Total continuing operations	1,534	1,551
Discontinued operations	116	133
Total	1,650	1,684

in %	2020	2019
Nutrition	21.0	20.7
Materials	17.9	21.3
Total continuing operations	18.9	19.4
Discontinued operations	12.4	13.1
Total	18.3	18.7

x € million	2020	2019
Nutrition	441	420
Materials	63	84
Innovation Center	35	30
Corporate Activities	34	30
Total continuing operations	573	564
Discontinued operations	49	59
Total, accounting based	622	623
Non-cash items	(13)	4
Customer funding	(24)	(18)
Total, cash-based	585	609
In % of net sales	6.5	6.8

Net sales	Adjusted operating profit (EBIT)
Adjusted EBITDA	Capital employed at 31 December
Adjusted EBITDA margin	ROCE
Capital expenditure
Royal DSM Integrated Annual Report 2020

x € million	2020	2019
Nutrition	919	881
Materials	168	270
Innovation Center	(17)	(12)
Corporate Activities	(141)	(150)
Total continuing operations	929	989
Discontinued operations	82	86
Total	1,011	1,075

x € million	2020	2019
Nutrition	8,308	6,731
Materials	953	1,060
Innovation Center	436	599
Corporate Activities	-	38
Total continuing operations	9,697	8,428
Discontinued operations	863	883
Total	10,560	9,311

in %	2020	2019
Nutrition	12.6	13.9
Materials	16.4	25.0
Total continuing operations	10.4	12.3
Discontinued operations	9.2	9.6
Total	10.3	12.0

R&D expenditure (including associated IP expenditure)

x € million	as % of net sales
2020	2019	2020	2019
Nutrition	234	218	3.7	3.6
Materials	73	73	4.8	4.2
Innovation Center	60	57	32.6	31.0
Corporate Activities	11	13	28.2	31.0
Total continuing operations	378	361	4.7	4.5
Discontinued operations	60	55	6.4	5.4
Total	438	416	4.8	4.6

Workforce at 31 December

headcount	2020	2019
Nutrition	15,838	14,599
Materials	2,857	2,951
Innovation Center	579	683
Corporate Activities	2,039	2,087
Total continuing operations	21,313	20,320
Discontinued operations	1,814	1,854
Total	23,127	22,174

Review of business

Nutrition

At a glance

- €6,365 Net sales versus € 6,028 in 2019 (in millions)
- 21.0% Adjusted EBITDA margin versus 20.7% in 2019 and versus a >20% ambition
- 50 animal nutrition premix facilities and 15 human nutrition premix facilities
- > €1 billion of our sales in 2020 came from immunity-optimizing ingredients
- #1 supplier of energy-saving enzyme solutions to the global brewing industry
- > 70% of our skin care portfolio is > 90% natural in origin

About DSM Nutrition

Our Nutrition cluster comprises DSM Nutritional Products, DSM Food Specialties and DSM Hydrocolloids. This cluster provides solutions for animal precision nutrition and feed, food & beverages, pharmaceuticals, medical nutrition, early life nutrition, nutrition improvement, dietary supplements, personalized nutrition and personal care. We are active at all stages of the associated value chains, producing pure active ingredients, incorporating them into sophisticated forms and providing tailored premixes, forward 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 unique, broad, highly integrated and profitable growth business. Our results are testament to the strength and uniqueness of this business model, delivering 6% organic growth and an increase in Adjusted EBITDA margin from 17% to 21% during the period 2015-2019. We are expanding our business model with leading Precision & Personalization propositions in this rapidly emerging market. More detail on our Nutrition & Health business model can be found inStrategy.

Trends

Our Nutrition business addresses two significant trends: in animal nutrition and health, the urgent need to enable the sustainable production of animal protein, and in human nutrition and health, the growing demand for (personalized) health solutions.

Enabling the sustainable production of animal protein

The world's population is projected to reach 9.7 billion by 205031. 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. Even with calls for a more balanced consumption of animal protein and replacement by vegetable alternatives, 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.

Source:UN.

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 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 limits of greenhouse gas (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, and calls for change from the value chain, policy makers and associated stakeholders are widespread.

Our solutions

We strongly believe in sustainable animal farming and food systems, and that the livestock industry can transform itself from within to deliver solutions to the challenges facing society and the animal protein industry. We want 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 of carotenoids, feed enzymes and vitamin portfolio. For example, our enzymes help animals digest more efficiently and extract more nutritional value from the feed. They therefore still grow well even when consuming less. As a result, fewer natural resources, such as land and water, are needed for animal protein production. We are also 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 thiscase study.

The growing demand for (personalized) health solutions

Despite the increasing attention being given to 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. Today, 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. Not one country is on course to meet all ten of the 2025 global nutrition targets and just 8 of 194 countries are on track to meet four targets. Almost a quarter of all children under 5 years of age are stunted. At the same time, overweight and obesity are increasing rapidly in nearly every country in the world, with no signs of slowing."

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 attests. 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.

There is a growing demand for plant-based alternatives alongside traditional meat 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.

There is also 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.

Our solutions

We have expanded our existing portfolio of nutritional ingredients (such as food enzymes, nutritional lipids, carotenoids and cultures) through for example our 2020 acquisition of Glycom, the world's leading supplier of human milk oligosaccharides (HMOs) and our acquisition of capabilities in hydrocolloids between 2017 and 2019. Our offering in probiotics and prebiotics is driven by a mixture of in-house innovation (including partnerships) and targeted acquisitions. We also develop in-house and together with partners our own offerings in the fields of sugar-free sweeteners (EVERSWEET™), 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 (MRS) to enable our customers to launch new immunity-supporting products in a matter of months. Another example of an immunity-supporting solution is Ampli-D. Fast-evolving evidence suggests an association More information on how we accelerated the launch of nutritional solutions supporting immunity can be found in thiscase study.between vitamin D status and sensitivity to viral infections like COVID-19 incidence and severity. However, it can take up to several months for a person to reach an optimal vitamin D status. Ampli-D helps raise vitamin D levels three to five times faster, compared to vitamin D3.

In the field of meat alternatives, we offer a range of solutions for meat analogs that deliver proteins, authentic meaty 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. In thiscase study on meat and dairyalternatives you can find more detail on how we enable tastier, more nutritious plant-based choices for consumers.

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 competencies and technologies of our two companies to deliver feed enzyme innovation to our customers
- Veramaris, our 50:50 joint venture with Evonik, 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 sweeteners to market faster

- 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
- The collaboration with METEX NØØVISTA, with whom we launched a bio-sourced form of cosmetic grade 1,3-propanediol (PDO), a multifunctional ingredient sourced entirely from non-GMO feedstocks

Nutrition performance 2020

Highlights 2020

- Completed change program 'Fit for Growth' which positioned us closer to our customers, while further reducing internal costs and complexities
- Expanded our specialty nutrition portfolio through three acquisitions - CSK, Glycom and Erber Group- for a combined outlay of around €1.7 billion
- Continued to advance our innovation projects including Bovaer®, Avansya, and Veramaris, while expanding our innovation pipeline with new programs such as Ampli-D™ and CanolaPRO®
- Refocused our innovation approach centered around four growth platforms: Pathways, Proteins, Prevention and Precision
- Updated the long-term strategic plan, including new opportunities in the 'Health through Nutrition' space for precision feeding in Animal Nutrition and personalization in Human Nutrition.

DSM Nutrition delivered a good performance in 2020, with 6% organic sales growth mainly volume driven. Together with the +3% contribution of the recent acquisitions (CSK, Glycom and Erber Group) and the -3% foreign exchange effect, total sales were up 6%.

Nutrition reported 7% growth in Adjusted EBITDA, supported by higher volumes, with the contribution from the acquisitions (+4%) being offset by a negative foreign exchange effect (-4%). The Adjusted EBITDA margin was up at 21.0% versus 20.7% last year owing to strong sales in Human Nutrition.

x € million	2020	2019
Net sales from continuing operations:
DSM Nutritional Products:
- Animal Nutrition & Health	3,025	2,892
- Human Nutrition & Health	2,143	2,046
- Personal Care & Aroma Ingredients	404	425
- Other1	145	93
Total DSM Nutritional Products	5,717	5,456
DSM Food Specialties	648	572
Total Nutrition	6,365	6,028
Organic sales growth (in %)	6	2
Adjusted EBITDA	1,338	1,250
Adjusted operating profit	919	881
Capital expenditure	441	420
Capital employed at 31 December	8,308	6,731
ROCE (in %)	12.6	13.9
Adjusted EBITDA margin (in %)	21.0	20.7
R&D expenditure	234	218
Workforce at 31 December (headcount)	15,838	14,599

'Other' covers pharma and custom manufacturing & services activities.

Net sales bridge 2020 x € million

1%	-3%
5%	3%	6,365
6,028
Full year 2019	Volume	Price/	FX	Other	Full year 2020
mix

DSM Nutritional Products

DSM Nutritional Products consists of Animal Nutrition & Health, Human Nutrition & Health, and Personal Care & Aroma Ingredients.

DSM Nutritional Products saw a slightly positive impact from COVID-19 overall. Human Nutrition saw a strong increase in demand for immunity-optimizing products. In Animal Nutrition, overall demand growth was good but COVID-19 impacted sales over the quarters due to stocking effects at customers. Personal Care was weak due to lower demand for sun care and cosmetics, while Aroma Ingredients saw good demand for detergents and disinfectants.

Fit for Growth

Early in the year we launched the Fit for Growth program in DSM Nutritional Products. By simplifying the operating model and further improving business steering, the program was designed to better serve customers and respond to the differentiated needs of their respective end-markets. At the same time, it created a more efficient organization, which helped us to adjust to a more challenging environment. The new organizational structure is in place and we are working on further building out our specialty business.

Health & Nutrition Campus

In November, we announced the construction of the state-of-the-art DSM Nutritional Products Health & Nutrition Campus, which includes a new innovation building in Kaiseraugst (Switzerland). Accelerating innovation in the field of nutrition, health and bioscience, this innovation hub will provide modern research laboratories and collaborative workplaces to maximize interaction and the agility between our scientific competences and business units to further boost our customer-centricity for joint solution development. The Campus represents our long-term commitment to enforce DSM's position as an end-to-end partner in the nutrition and health markets.

"2020 marked the fifth year in a row that we grew Sales and Adjusted EBITDA in line with our long-term objectives. On top of that, we made good strategic progress towards commercialization of our key innovation projects in both Animal and Human Nutrition & Health."

Chris Goppelsroeder, President & CEO DSM Nutritional Products and member of the DSM Executive Committee

Animal Nutrition & Health

Highlights 2020

- Delivered 8% organic growth, supported by good sales in poultry and pork and a good performance in ruminant and aquaculture.
- Uninterrupted supply during the COVID-19 pandemic supported by our well distributed global premix supply network
- Acquisition of Erber Group's Biomin and Romer Labs, expanding our range of higher value-add specialty solutions and access to diagnostics technology
- Opening of our seventh Animal Nutrition & Health premix plant and upgrading of our Vitamin E Yimante (partnership with Nenter) site in China
- Ramping of output of Veramaris facility in Blair (Nebraska, USA) and expansion into shrimp feed and pet food
- Launch of strategic initiative 'We Make It Possible' to lead transformation in sustainable animal protein production worldwide

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 unique portfolio that runs from vitamins through carotenoids to cutting-edge mycotoxin risk management solutions, feed safety diagnostic solutions, eubiotics, and feed enzymes. We aim to make animal farming more sustainable by reducing GHG emissions and the pressure on the environment. At the same time, we strive to ensure that farmers can earn a decent living and that people will have access to affordable proteins. For more information on our Animal Nutrition & Health strategy and how we make animal farming more sustainable can be found in theNutrition strategy section.

Animal Nutrition & Health performance

Animal Nutrition delivered 8% organic growth, equally driven by volume and price. The first quarter saw a strong COVID-19 accelerated purchasing effect that faded through the second and third quarters as customers unwound their inventories. In the fourth quarter, volumes were normalized at 5%.

Poultry saw good sales growth overall with increased demand as the COVID-19 lockdowns triggered higher demand for easy-to-prepare proteins. This growth was partly offset by softening demand in some emerging economies due to a general loss of household income. Pork saw good demand with production in China picking up as the effects of African Swine Fever recede and the steady rebuilding of the swine population continues with increased professionalization of farming. Together with regulatory changes in China that require the reduction of the use of antibiotics in animal feed, these developments strengthen our value proposition in the Chinese market with its higher value-added nutrition and gut health solutions.

While global beef and aquaculture demand were in general soft due to their significant exposure to food service channels, We performed well in these categories. We saw good sales growth in ruminants as Brazilian beef exports remained strong and demand for farmed salmonids was solid. Pet food saw strong demand throughout the year.

Erber Group, which was consolidated from the fourth quarter of 2019, made a strong contribution in its first quarter within DSM, realizing €81 million sales, with a total Adjusted EBITDA of €18 million.

Chicken and eggs: an important protein source during COVID-19

Our close collaboration with our poultry customers around the world to protect the supply of key micronutrients and nutritional additives to broiler flocks resulted in a good performance for the year. Eggs played an important role in providing consumers with quality protein during COVID-19. Our partnership with the International Egg Commission (IEC) led to the development of working groups on sustainability and egg nutrition in 2020. This approach delivered improved annual sales of our egg solutions.

Successful navigation of African Swine Fever (ASF) crisis

African Swine Fever (ASF) is one of the severest crises experienced by animal farming in recent times. We navigated it well during 2020, thanks to our integrated and diversified business model. Managing ASF has called for improved biosecurity,the accelerated adoption of technology, and an increased level of professionalization across the entire pork industry. DSM is benefiting from these industry developments, not only in China but also in other countries, such as Vietnam and the Philippines.

Drive for more sustainable aquaculture and growing interest for sustainability in pet food

The drive for more sustainable aquaculture continues, and we are well placed to capitalize on this with our purpose-led innovation activities and our nutritional products and solutions portfolio.

Ruminants: focus on feed efficiency and immunity

The year 2020 was marked by a strong focus on raw material utilization and feed efficiency in beef production in the US and Brazil; significant engagement from dairy producers in the areas of lifetime performance, immunity and fertility programs in Europe, the US, Brazil and East Asia; and growing uptake for our rumen performance solutions addressing antimicrobial resistance in Europe, South America and China.

Expansion of production in China

In November, we announced the opening of our seventh Animal Nutrition & Health premix plant in China, situated in Baishazhou Industrial Park, Hengyang City (Hunan Province, China). This latest facility brings together our advanced processes and innovative solutions to promote sustainable animal protein production in the Chinese market. The opening of the new plant also marked the official launch of the first DSM Vitamins Academy. Serving as a new platform for market outreach and education, the Academy will share the latest scientific research and practices with players across the animal feed and husbandry value chain.

The vitamin E plant owned by the DSM-Nenter joint venture (Yimante) in China started production at the end of December 2020. Output is planned to gradually ramp up during the course of 2021.

Acquisition of Biomin and Romer Labs

On 1 October 2020, we acquired Erber Group's Biomin and Romer Labs. Erber Group's specialty animal nutrition and health business, Biomin, specializes primarily in mycotoxin risk management and gut health performance management, while the Romer Labs business focuses on food and feed safety diagnostic solutions. The acquisition expands our range of higher value-add specialty solutions and further strengthens our expertise and reputation as a leading provider of animal health and nutrition solutions for farm productivity and sustainability, with an emphasis on emissions reduction, feed consumption efficiency, and better use of water and land.

Ramping up production of Veramaris® algal-based omega-3

We had commenced commercial-scale production of algal-based omega-3 at our Veramaris facility in Blair (Nebraska, USA) in 2019. Our proprietary technology delivers a breakthrough in the cultivation of marine algae naturally rich in EPA and DHA omega-3, facilitating production on an unprecedented scale. In 2020, we started to generate sales and began ramping up output from this facility. We additionally started work on incorporating Veramaris® into feed for additional species such as shrimp, as well as into pet food. Veramaris was chosen as the omega-3 partner by Feed-X, the feed innovation accelerator founded by the World Wildlife Fund (WWF) which aims to see 10% of the global feed industry adopt alternative feed ingredients into value chains.

Combating emissions from ruminants with Bovaer®

We commenced the process of registering our Bovaer® methane inhibitor solution in Europe, entering into dialogue with the European Food Safety Authority (EFSA) subsequent to the submission of the registration dossier in 2019. Bovaer® is the most extensively studied and scientifically proven solution to the challenge of enteric (burped) methane from ruminants to date. We were pleased that at the end of 2020, a two-year large-scale trial in beef cattle in Alberta (Canada) successfully demonstrated that Bovaer® can be included in commercial feedlot diets to reduce methane emissions by up to 80%, without negative effects on animal health and performance. Over the past ten years, 35 on-farm beef and dairy trials have been conducted across the globe, delivering convincing data from over 10,000 animals and in the context of various feeding systems. A further positive development was the announcement of the collaboration agreement with VALIO to significantly reduce the carbon footprint of dairy production in Finland.

Enabling the replacement of antibiotic growth promoters (AGPs)

Balancius™, developed together with our long-term alliance partner Novozymes, is an innovation that helps farmers tackle the issue of antimicrobial resistance (AMR). Balancius™ supports digestion and gastrointestinal functionality and improves animal performance. In 2020, the Chinese Ministry of Agriculture, for example, introduced legislation to withdraw antibiotic feed additives as growth promoters. This move was positive for innovations such as Balancius™, but also for our existing eubiotics solutions, such as VevoVitall®, which combats the negative activity of micro-organisms on feed.

Development of Sustainability Service and Precision Nutrition platform

Effective measurement at farm level is essential to enable farmers to work on sustainability topics. The same applies for Precision Nutrition; helping farmers to improve the efficiency and effectiveness of their farm practices. To this end, in 2020, we started developing a service that enables farmers to see their own environmental footprint in its entirety. Providing this level of transparency will create opportunities for farmers to reduce emissions and differentiate themselves from less sustainable competitors. Additionally, we made good progress in advancing our Precision Nutrition platform in poultry in the USA to facilitate diagnostic testing to address health challenges.

Human Nutrition & Health

Highlights 2020

- Dietary Supplements and Pharma recorded a very strong performance
- Uninterrupted supply during the COVID-19 pandemic
- Rise in demand for immunity-optimizing ingredients stimulated by COVID-19
- Acquisition of Glycom A/S, the world's leading supplier of human milk oligosaccharides
- Full integration of personalized nutrition platform AVA and start of Hologram Sciences Inc. venture
- Launch of enhanced purpose-led brand strategy designed to support continuing growth trajectory based on high-quality products, customized solutions and expert services

About Human Nutrition and Health

Human Nutrition & Health provides solutions for early life nutrition, dietary supplement, pharmaceutical, medical nutrition, nutrition improvement and food & beverage markets. We serve these industries with:

- a portfolio of high-quality products (vitamins, nutritional lipids, minerals, carotenoids, human milk oligosaccharides (HMOs), nutraceuticals, digestive enzymes, probiotics and prebiotics, as well as active pharmaceutical ingredients (APIs)
- a suite of customized solutions (premix, Market-Ready Solutions and personalized nutrition)
- a range of expert services

Human Nutrition & Health performance

Human Nutrition delivered 5% organic growth, with volumes up 7%. Dietary Supplements and Pharma recorded a very strong performance throughout the year, as COVID-19 drove strong consumer demand for immunity-optimizing products. The Food & Beverages segment also performed well with the strong demand for packaged food recorded in the first two quarters normalizing in the second half. Early Life Nutrition sales were soft especially due to weak market conditions in China, the biggest market for infant formula.

Prices significantly improved as the lower vitamin C price effect faded during the year, while Early Life Nutrition saw lower contractual prices in 2020.

Total sales were equal to the organic growth at 5%, as the -2% foreign exchange effect fully offset the +2% contribution from the Glycom acquisition.

Glycom, the world's largest developer and producer of human milk oligosaccharides (HMOs), which was consolidated as of 1 April 2020, delivered €43 million sales with an Adjusted EBITDA of €21 million.

These results reflected ongoing soft market conditions in Early Life Nutrition, with COVID-19 also impacting Glycom's development work at customers. The work on its second and third generation HMOs continued at pace, with Glycom strengthening its innovation pipeline and reinforcing its industry leadership in early life nutrition.

Expansion along the value chain

A growing proportion of our revenue now comes from expert services, especially for the pharma market, and customized solutions. Our customized solutions - besides premixes - include Market-Ready Solutions (MRS) that address diverse health or lifestyle benefits. They also include the personalized nutrition sector, a key pillar in our nutrition strategy.

Growth in dietary supplements

The COVID-19 pandemic increased consumer focus on immunity and overall health, heightening awareness of the health benefits associated with brands and intensifying the significance of e-commerce. Additionally, a fast-evolving body of evidence suggests an association between vitamin D status and sensitivity to viral infections like COVID-19 incidence and severity. As a result, the health benefit categories that grew most due to COVID-19 were immunity and mental well-being. We were well prepared to meet this rise in demand, helping our dietary supplement customers around the world to launch new immunity-supporting products in record time. Important achievements in this context in 2020 included:

- Rapid forecasting of consumer demand to enable our customers to keep up their supply of products to their markets. Compliance with unprecedented demand peaks, at times up to 30% in a month
- Specific ingredients to enhance our customers' existing product ranges with immunity offerings including Ampli-D, our three to five times faster-acting vitamin D
- Complete new range of Market-Ready Solutions to enable our customers to launch new immunity-supporting products in a matter of months
- Immunity Probiotics Market-Ready Solution range via our BioCare Copenhagen organization for our customers focusing on the pharmacy channel
- Global launch of Culturelle® immune defense product line for both adults and children and the launch of the Culturelle® brand in the Brazil market
- Focus on e-commerce and direct-to-consumer channels to capitalize on the shift in consumer shopping behavior

Pharma and Medical Nutrition growth

Our growth in the pharmaceutical sector came from implementing our value selling strategy, while big steps were made in operational and regulatory excellence. We continued to outperform the medical nutrition market driven by premix growth and our immunity supporting ingredients.

Acquisition of Glycom in Early Life Nutrition

In February 2020, we announced the acquisition of Glycom A/S ('Glycom'), the world's leading supplier of human milk oligosaccharides (HMOs). This acquisition expanded our leadership position in the early life nutrition space. There is also significant interest in the use of HMOs as a dietary supplement and potentially in food & beverage applications. Glycom is a major pioneer in HMOs, with a rich, science-backed product pipeline (GlyCare™) and the only fully integrated HMO production facility in the world. The GlyCare portfolio currently comprises six HMOs that are commercially available across 165 countries. The exciting potential of cross-innovation outside Early Life Nutrition was highlighted in 2020 through the launch by DSM's i-Health business of a new Culturelle® product range containing HMOs to support a healthy gut microbiome and helping the management of irritable bowel syndrome.

Food & Beverage supported by increased focus on health

We have developed and launched concepts supporting immune health, meeting the demand for food and beverages designed to support immunity, that have grown in popularity. An increased focus on health is triggering a windfall in consumer health and wellness spending, and has positively impacted our growth.

Personalized nutrition: Integration of AVA and start new Hologram Sciences venture

At the end of 2019, we acquired AVA, a personalized nutrition platform, to further expand our offering and meet growing consumer demand in the Dietary Supplement space. During 2020, AVA was integrated into our new US-based personalized nutrition venture - Hologram Sciences, Inc. - bringing together all of the necessary capabilities needed to develop end-to-end turnkey personalized nutrition solutions that are commercially validated with consumers.

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Koninklijke DSM NV published this content on 01 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 March 2021 08:34:03 UTC.

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