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Making sustainability
measurable

The European Union is introducing a new classification system with the EU taxonomy that defines environmentally sustainable business activities. Starting in 2022, companies will have to demonstrate how they take account of two environmental targets in their production technologies or investments, and a total of sixtargets starting in 2023. This does not only pertain to environmental but also to social issues. Symrise is well prepared for the complete taxonomy.

What does sustainability specifically mean in the context of economics – and what does it not? How can the company’s own activities be assessed to determine which investments, for example in new plants or products, are sustainable? Companies have been asking these questions for some time. The EU taxonomy – the term represents a uniform classification procedure – should be the answer. It is part of the “European Green Deal,” which aims to make the EU the world’s first carbon-neutral economy by 2050. It aims to direct private and public investments so that they finance the transformation to a sustainable economy.

For Symrise, the EU taxonomy is a good approach to this. “With its precise definitions, it provides a specific roadmap for how the European economy can become more sustainable,” says Bernhard Kott, Chief Sustainability Officer at Symrise. The development of the taxonomy is far from complete. So far, the EU has defined six overarching environmental targets, only the first two of which have been given precise criteria:

  1. Climate change mitigation
  2. Climate change adaptation
  3. The sustainable use and protection of water and marine resources
  4. The transition to a circular economy
  5. Pollution prevention and control
  6. The protection and restoration of biodiversity and ecosystems

Further environmental targets will follow in the coming years, as will a social taxonomy with targets in areas such as education and health. Only then all sustainability topics will be covered by the taxonomy, which Symrise summarizes under its pillars “footprint,” “sourcing,” “inno­vation” and “care.”

Taxonomy eligible versus taxonomy aligned

For the taxonomy, companies must first indicate whether they have taxonomy-eligible economic activities. “­Taxonomy eligible” means that the activity potentially contributes most to the achievement of the six environmental targets. It must then be verified whether these are actually taxonomy aligned – i. e., ecologically ­sustainable according to the criteria. To do this, they must comply with three central principles:

  1. Significant contribution: Companies must make a significant and measurable contribution to at least one of the environmental targets based on the specific criteria.
  2. Do no significant harm: The “Do no significant harm” principle (DNSH) applies to each target with regard to the five others – climate change mitigation, for example, should not be ensured at the expense of species preservation.
  3. Minimum social standards: Before the social taxonomy is adopted, it should be ensured that the taxonomy-eligible activities do not violate any minimum social standards – such as the OECD Guidelines for Multinational Enterprises or the UN Guiding Principles on Business and Human Rights.

Influence on Symrise

The EU taxonomy is burdensome for Symrise, but it fits the company’s activities. “Transparency is a matter of course for Symrise,” says Head of Sustainability Bernhard Kott. “We have been reporting on our sustainability performance for more than ten years in accordance with all relevant standards, which we see as a guideline and a learning field.” Symrise therefore considers a uniform definition of the conditions under which economic activities are considered sustainable to be useful and helpful. “For many years, experts have complained about the lack of clear definitions for sustainable action,” Kott says. “The taxonomy now creates more comparability. Good sustainability performance becomes more visible and greenwashing more difficult. We also see these regulations as an opportunity for development.”

Taxonomy eligible share Taxonomy aligned share
Sales 2 % 2 %
Capital expenditure (CapEx) 8 % 6 %
Operating expenses (OpEx) 3 % 3 %

EU taxonomy integration and results

The regulation lists only those activities that can potentially make the greatest contribution to the six EU environmental targets. Symrise carries 2 % in taxonomy-eligible sales or 8 % in taxonomy-eligible capital expenditures in the books. However, this says little about the sustainability of the Group. “We are more interested in the difference between taxonomy eligibility and alignment,” says Bernhard Kott: “If it is small, this indicates a comparatively high degree of environmental compatibility in business and investment activities.” One reason why this difference tends to be small at Symrise is that the company relies on the ISO 14001 standard for its environmental management system and uses SMETA, an audit standard from the Sedex organization, to demonstrate compliance with human rights, environment, health, occupational safety and business ethics requirements.

In the 2022 fiscal year, approximately 2 % of annual sales and 3 % of operating expenses at Symrise were taxonomy-eligible and aligned. Of the capital expenditures made (CapEx), 8 % were taxonomy-eligible and 6 % were taxonomy aligned (for detailed information, see Sustainability Record 2022). They all supported environmental target 1, “Climate change mitigation.” “Based on our deep integration of taxonomy standards in all areas, we try to make our activities as sustainably measurable and transparent as possible. This will also be reflected positively in the future,” Kott is certain. “In particular, the environmental targets of ‘Transition to a circular economy’ and ‘Protection and restoration of biodiversity and ecosystems’ are highly relevant to us.”

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