Business groups are the main building blocks of DSM’s organization; they have integral long-term and short-term business responsibility and have at their disposal all functions that are crucial to their business success. The business groups within a specific cluster report to one and the same member of the Managing Board. This Board member manages the coherence of operations and the leveraging of resources within the cluster and is accountable for the overall performance of the cluster within limits defined by the collective responsibility of the total Managing Board for the management of the company. The clusters are the main entities for external strategic and financial reporting. In order to ensure sufficient independence with regard to financial management, the Chief Financial Officer (CFO) has no business groups reporting to her.
The following figure depicts DSM's overall governance framework and the most important governance elements and regulations at each level.
Shareholders
Articles of Association
Supervisory Board
• Regulations of the Supervisory Board • Charter of the Audit Committee • Charter of the Nomination Committee • Charter of the Remuneration Committee • Charter of the Corporate Social Responsibility
Committee
Managing Board / Corporate
• Regulations of the Managing Board
• Management Framework for the corporate level • DSM Code of Business Conduct
Operational units
Management Framework for operational units
Note: all internal regulations apply in addition to applicable national and international laws and regulations. In cases where internal regulations are incompatible with national or international laws and regulations, the latter prevail
For the sake of clarity, a short summary of the main aspects of the framework at Managing Board / corporate level and operational level is given here:
- The Managing Board adheres to the Regulations of the Managing Board.
- The Managing Board works according to the Management Framework for the corporate level. This implies among other
things that it adheres to the DSM Code of Business Conduct and applicable corporate policies and requirements.
- The Management Framework for the corporate level further provides a description of the most important (decision making) processes, responsibilities and 'rules of the game' at the Managing Board, functional and regional levels and includes the governance relations with the next-higher levels
(Supervisory Board and shareholders) and the operational units. In particular, the framework defines the roles of corporate staff departments, functional excellence departments and shared service departments as follows: - Corporate Staff departments: small, high level groups,
supporting the Managing Board and reporting directly to a Managing Board member (in most cases the CEO/ Chairman of the Managing Board or the CFO);
- Functional Excellence departments: groups in which expert capabilities in selected functions are concentrated and which are steered by Functional Excellence Advisory Boards, chaired by a Managing Board member; the Director of a Functional Excellence department reports to a Managing Board member; and
- Shared Service departments: groups in which selected service functions are leveraged and which are steered by Shared Service Boards, chaired by a business group director. The director of a Shared Service department reports to a Managing Board member, who is also a member of that Shared Service Board.
The company’s strategic direction and objectives are set in a Corporate Strategy Dialogue, which is held every five years. In 2010 such a Corporate Strategy Dialogue was held, resulting in the current strategy DSM in motion: driving focused growth. As part of this strategy, the regional functions have been further strengthened, especially in the high growth economies. Regional management reports directly to a Managing Board member. The operational units conduct their business within the parameters of the Management Framework for operational units. This implies among other things that they:
- comply with the DSM Code of Business Conduct; - establish the strategy and objectives of their business
according to the Business Strategy Dialogue, aligned with the Corporate Strategy Dialogue, in which process various scenarios and related risk profiles are investigated;
- implement risk management actions according to an Annual Risk Management Plan and in line with corporate policies and multi-year plans in several functional areas;
- comply with the Corporate Requirements and Directives; and - monitor the effectiveness of the risk management and internal
control system and regularly discuss the findings with the Managing Board.
On average once every three years, the operational units are audited by Corporate Operational Audit (COA). The director of COA reports to the Chairman of the Managing Board and has access to the external auditor and the Chairman of the Audit Committee of the Supervisory Board. Furthermore, the director of COA acts as the compliance officer with regard to inside information and is the chairman of the DSM Alert Committee, which is responsible for the DSM whistleblower policy, systems and processes.
In the Fraud Committee, relevant corporate functions participate under the chairmanship of the CFO. The objective of the committee is to ensure structural follow-up of fraud cases with the aim of reducing fraud risks.
Sustainability Governance Framework Managing Board
Being both a core value and a business driver for the company, Sustainability falls under the responsibility of the Managing Board, with CEO Feike Sijbesma as the primary point of contact. Other members of the Managing Board also chair sustainability areas and initiatives. Mr. Sijbesma furthermore oversees the Inclusion & Diversity strategy. Managing Board member Stephan Tanda is the primary point of contact for DSM’s partnership with the World Food Programme and other sustainability issues in relation to nutrition. Managing Board member Stefan Doboczky is responsible for Safety, Health and Environment.
Supervisory Board
DSM’s Supervisory Board also recognizes sustainability as a strategic value driver for the company and has appointed its own Corporate Social Responsibility Committee to oversee progress against targets and report on the embedding of sustainability across the organization. For more details see the Supervisory Board report on page 104.
At a corporate level, sustainability is organized across a network of senior executives and employees. They are supported by the Corporate Sustainability department, which is under the responsibility of the Vice President Sustainability and Public-
Private Partnerships, who reports directly to Feike Sijbesma, the Chairman of the Managing Board. The aim of the corporate sustainability network is to support the business in achieving its sustainability aspirations.
DSM also has a dedicated Corporate Operations & Responsible Care department, which, among other areas, is responsible for all corporate issues related to Safety, Health and Environment (SHE). The Vice President Corporate Operations & Responsible Care reports directly to Managing Board member Stefan Doboczky.
External Sustainability Advisory Board
DSM’s Sustainability Advisory Board has been set up as a sparring partner for the Managing Board and high-level executives in the company. It supports DSM in deepening its understanding of stakeholder needs and strategic issues such as the bio-based economy and malnutrition, sharpening its focus, conducting advocacy efforts and handling dilemmas. The board comprises a diverse international group of thought leaders on key sustainability topics. The company's external
Sustainability Advisory Board met twice in 2014: once in the Netherlands and once in Brazil, where they discussed subjects such as DSM's energy approach, sustainable animal protein and business solutions for societal needs together with the Managing Board and the Supervisory Board.
Global network
An internal network of corporate staff members and business managers dedicated to sustainability, known as Sustainability Champions, support line management in all business and functional groups and at the DSM Innovation Center. At the same time, SHE managers provide support at business group level. The DSM SHE Council, which includes all business group SHE managers, is instrumental in sharing experiences and developing practices and communications on SHE issues. DSM has set up internal regional sustainability networks in China, India and Latin America.
Sustainability Advisory Board
Member Background
Amir Dossal (m) Chairman of the Global Partnerships Forum, a platform for innovation and entrepreneurship through multi-stakeholder partnerships. From 1999 to 2010, he was executive director, United Nations Office for Partnerships in New York. Nationality: British.
Paul Gilding (m) Independent writer and corporate advisor on sustainability. Fellow at University of Cambridge Institute for Sustainability Leadership (CISL). In 2011 he published his book “The Great Disruption”. In the 1990s, he was executive director of Greenpeace International. Nationality: Australian.
Pamela Hartigan (f) Director of the Skoll Centre for Social Entrepreneurship at Saïd Business School in Oxford, Associate Professor at Columbia Business School and founding partner of Volans Ventures. Nationality: American. David King (m) Special representative for climate change of the current UK coalition government. From 2008 to 2012, he served as the founding director of the Smith School of Enterprise and the Environment at the University of Oxford. Nationality: British.
Ye Qi (m) Cheung Kong professor of Environmental Policy and director of Brooking-Tsinghua Center for Public
Policy at Tsinghua University in Beijing. Before he joined Tsinghua, he taught at Beijing Normal University, and the University of California at Berkeley. Nationality: American.
Josette Sheeran (f) President and CEO of Asia Society. She has also served as vice chairman of the World Economic Forum. From 2007 to 2012, Sheeran was executive director of the United Nations World Food Programme (WFP). Nationality: American.