Risk management

We address climate change risk through a comprehensive programme designed to minimise our impact on climate change and move to a low carbon economy:

• We are fully committed to excellence in climate action and are implementing an ambitious agenda to take action for the environment across our operations and beyond. We have built our climate action agenda on ambitious GHG emission reduction targets. Givaudan’s targets have been approved by the independent Science Based Targets initiative in alignment with the global effort to limit climate change.
• We continue to work to reduce the environmental impact of our activities. Our expertise in green chemistry and techniques such as biocatalysis enables us to make products high in purity and yield, using less energy and fewer hazardous materials. We will continue to develop our capabilities in this area and seek to apply them at every opportunity in the future.
• Outside Givaudan, we involve our supply chain, from the raw material suppliers to indirect materials and service providers, in efforts to reduce their GHG emissions.
• Our innovation teams are also working on ‘side-stream valuation’, enabling us to use a larger part of the existing raw materials or re-use ‘food waste’ from our partners’ facilities. This saves on energy to create raw materials and reduces the risk of sufficient supply, as Givaudan can ‘do more with less’.
• Our Water Stewardship programme ensures water risks are managed and monitored, and we are placing priority on places where water challenges are expected. In these areas we carry out risk assessments to develop water mitigation action plans, including efficiency improvements and water reuse opportunities.

Givaudan addresses this risk through a number of processes including structural architectural measures, behavioural measures and business continuity planning.

Givaudan’s procurement function has a process to monitor and manage supply chain risks arising from raw materials. Moreover, supply and price volatility are monitored through a cross-functional risk management process which is integrated with global supply chain management and enables us to mitigate raw materials sourcing risks.

Our Environment, Health and Safety (EHS) function regularly carries out comprehensive risk assessments at our production and major commercial sites. To facilitate the management of specific EHS risks, the team has developed visual risk portfolios that show mitigation measures and progress on improvement actions. The internal EHS auditing process was reviewed and adapted to cover also technical aspects besides the EHS Management System part.

Givaudan’s growth path of organic expansion and acquisitions inevitably involves some essential large-scale projects. EHS, as a full team member, is involved from the beginning of each project to assess and minimise risks. Our EHS teams support the design of all new building activities so that, in EHS terms, the plants we build today use learnings from the past and are fit for the future. In 2019, a number of new technologies for environmental protection in the area of odour emissions control were successfully tested on our sites.

In addition to continuously adapting its information and network systems, Givaudan focuses on extensive awareness programmes for all employees as critical stakeholders in the protection of the digital space. We continually monitor cybersecurity risks.

Financial risk management is carried out by a team within the central treasury department under the risk management policies which are approved by the Board of Directors. We have clearly defined policies in relation to the management of financial risks applicable to all Group companies:

• Our centres of expertise at Group level oversee the execution of the financial risk management policies, and we maintain a broad network of financing sources, including bank financing and debt capital markets in different geographies. We also have close collaboration within the various internal stakeholders to ensure the appropriate level of understanding and management of financial risks related to clients.
• In addition, we use financial derivatives to hedge the Group’s key financial risks, most notably Foreign Exchange and Interest Rate Risk.​

• Our product safety and quality programmes are designed to ensure that all products are safe for consumer use both in terms of our traditional flavours and fragrance arena and in adjacent spaces such as active cosmetics, botanicals, preservatives, colourings and naturals. At the core of the programmes is a systematic evaluation of all ingredients for both human and environmental safety, as required, prior to their inclusion in our raw material palette. Products are created to comply with all appropriate end consumer product safety regulations in the markets in which they will be sold. Our global IT systems control product formulations in order to ensure that raw materials are used as intended when products are manufactured in our production facilities, which are certified to internationally recognised quality standards.
• In addition, Givaudan supports, and in many cases leads, industry-wide programmes of the respective industry associations (the International Fragrance Association and the International Organization of the Flavor Industry) for ensuring the safe use of flavours and fragrances in consumer products.

The Corporate Ethics & Compliance function undertakes regular assessments of Givaudan’s legal and compliance risks at local and global levels and addresses any issues with the Executive Committee and the Audit Committee. Non-compliant behaviour is investigated and sanctioned in accordance with established procedures.