GRI 201: Economic performance
Explanation of the material topic and its boundary
Economic performance refers to our ability to operate a profitable business model for the long-term viability of the Company. Our 2020 strategy of “Responsible growth. Shared success.” focuses on this economic performance, which is the short- to long-term measure of Givaudan’s success. The strategy also regards economic success as being inseparable from high standards in environmental and social stewardship.
Within Givaudan, this means ensuring that our business is financially sustainable in the short- and long-term. Outside of Givaudan, this means supporting our customers’ own market expansion plans and providing them with growth opportunities through the use of our products. We are also working in partnership with producers and suppliers to transform the way we source: we look to secure supply and create new value to be shared by all stakeholders in our supply chains.
For Givaudan, being a responsible and sustainable company means securing our long-term economic growth, positively impacting the environment and society, all while meeting stakeholders’ expectations. We strive to go beyond responsible growth and benefits for our shareholders though: we target long-term success for our customers, consumers, society and the planet. This is also our approach to promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
Our value added is defined as the economic value created by the activities of our business and its employees. This value is distributed to our operating costs including the supply chain, employees through wages and benefits, providers of capital and governments via paid taxes.
Our 2020 strategy “Responsible growth. Shared success.” contributes to our ability to increase this value. Its three pillars – growing with our customers, delivering with excellence, and partnering for shared success – together with ambitious financial targets, guide us in transforming resources into value for our stakeholders through sustainable and responsible growth.
Growing with our customers involves focusing on high growth markets, looking to meet increased consumer demand around nutrition and healthier lifestyles and by putting customers at the heart of what we do by providing customer preferred products. Integrated solutions allow us to grow our business through ways going beyond our core flavour and fragrance capabilities.
This is completed by our approach to delivering with excellence in both execution through our Givaudan Business Solutions and in operations as well as Information Management & Technology.
Partnering for shared success is linked to how our strong partnerships enable value creation for the Company and our key stakeholders. We have forged new partnerships with innovators, employees and suppliers, and with communities in which we operate, positioning ourselves as partner of choice.
Givaudan completed the year with good business momentum and with the project pipeline and win rates being sustained at high levels. This good growth was achieved across all product segments and geographies, with our key strategic focus areas of Naturals, Health and well-being, Active Beauty, Integrated solutions and local and regional customers delivering strong growth, complemented by the recent acquisitions.
The Company continues to implement price increases in collaboration with its customers to fully compensate for the increase in input costs.
Direct economic value generated and distributed
Givaudan’s economic value retained of CHF 174 million is the direct economic value generated of CHF 6,244 million less economic value distributed to stakeholders through operating costs, employee wages and benefits, payments to providers of capitals and payments to governments.
Financial implications and other risks and opportunities due to climate change
We address risk associated with climate change risks through a comprehensive programme. We look to minimise our contribution to climate change and promote transition to a low carbon economy.
We are fully committed to excellence in climate action and our ambitious agenda aims at taking action for the environment across our operations and beyond. This agenda is based on ambitious GHG emission reduction targets and our own targets have been approved by the independent Science Based Targets initiative in alignment with the global effort to limit climate change.
We continue to reduce the environmental impact of our activities. Our expertise in green chemistry and techniques such as biocatalysis enable us to make products high in purity and yield, using less energy and fewer hazardous materials. We continue to develop our capabilities in this area and seek to apply them wherever we can. Our innovation teams are also working on side-stream valuation, which enables us to use a larger part of existing raw materials or re-use food waste from our partners’ facilities. This allows us to create raw materials with less energy and reduces the risk of insufficient supply – it allows Givaudan to do more with less.
Our Water Stewardship Programme ensures water risks are managed and monitored, and we prioritise places where water challenges are expected. We carry out risk assessments in these areas to develop water mitigation action plans at our manufacturing operations, which include efficiency improvements and water reuse opportunities.
Defined benefit plan obligations and other retirement plans
The Group operates a number of defined benefit and defined contribution plans throughout the world, the assets of which are generally held in separate trustee-administered funds. The pension plans are generally funded by payments from employees and by the relevant Group companies, taking account of the recommendations of independent qualified actuaries. The most significant plans are held in Switzerland, the United States of America and the United Kingdom.
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