Economic Performance | 103-1, 103-2, 103-3

Management Approach 2016 (Disclosure 103-1, 103-2, 103-3)

Strong economic performance is a key prerequisite for our future viability for ourselves, our customers and our investors. It enables us to make investments in new technologies and growth markets as well as in a wide variety of sustainability projects – ranging from the expansion of our approach to responsible sourcing to innovative and sustainable project solutions. We substantially expanded our competencies in the past years and tapped into new growth fields. Now we must focus on connecting these new application areas with the traditional ones. That is why we are pushing interconnectedness across all levels – with our customers, suppliers and even within the company. We also managed to expand our market position in every region and have further built upon the extensive trust that customers have for us. Here, we always keep the twin ideals of sustainability and economic success in view. At the same time, we bolstered our portfolio, both in terms of content and regions, so that we can better react to the political and economic uncertainties in some countries. Last, but not least, we strengthened our innovative abilities via cooperation within the company and with external partners.

We combine commercial success with sustainability by constantly ensuring that every step in the value chain relates back to what we are doing. This starts with the raw materials. We source them from around the world and often from less developed nations. Take vanilla, for example. Here, we ensure that the farmers are paid a fair price for their goods and that environmental aspects are considered in the growing process. We also ensure that absolutely no child labor occurs. Over the past ten years, we have been committed to improving education and health care in Madagascar, where our vanilla is grown. We have established production facilities there that meet the environmental standards of the developed world. Our local business activity contributes to the livelihood of nearly 50,000 people. Something similar has just been implemented in the Amazon region in Brazil. We established a site in the rainforest that researches new, sustainable raw materials for perfumes in close cooperation with Brazil’s top cosmetics manufacturer Natura. At the same time, many families in the region are benefiting from our commitments there.

With our products, we provide flavor and fragrance experiences that contribute to health and well-being. Our flavors, substances, perfume oils and sensory solutions are often central functional components for our customers’ end products. The challenge is to develop products that meet the various demands and expectations of our customer base and, at the same time, are capable of generating long-lasting added value for our customers and society as a whole. In the process we actively support the achievement of the goals of health and well-being, sustainable consumption (SDG 12) and climate protection (SDG 13).

The three segments at Symrise each manage their own research and development (R&D) activities due to the varying requirements of their respective markets and customers. At the same time, technologies, processes and findings are made available to all segments in order to achieve synergies. Multiple R&D centers around the world ensure that the regional activities of the segments are optimally supported.

Our R&D strategy aims to connect the individual components of product development, such as market and consumer research, R&D and creation, throughout the Group. All research activities consider relevant customer, market and sustainability aspects. Through the close linkup of R&D with marketing and business units, purchasing and manufacturing, product development, quality assurance and regulatory issues, we check early on to see whether new products and technologies can be implemented and if they are profitable in addition to assessing their sustainability aspects.

Innovative and sustainable solutions for products are something we can achieve by focusing on green chemistry, natural raw materials, efficient use of resources in production, progressive technology and intelligent networking. We create a customized sustainability concept for each strategic product group. With our Product Sustainability Scorecard, we can capture the impact of each individual ingredient of our products along the value chain. As a result, we enable our customers to select the most environmentally friendly path compared with available alternatives.

The proportion of natural raw materials in our portfolio has grown further, in particular from our acquisition of Diana. We are, however, not pursuing a complete changeover to natural raw materials. In many cases, this would have complex social and ecological repercussions. For one thing, producing synthetic ingredients generally requires less energy and water than growing, harvesting and transporting their natural equivalents. And, furthermore, the enhanced use of natural raw materials often results in competition with food production for farmland and results in a situation where monocultures pose a threat to biodiversity. Taking menthol as an example, the synthetic variant (in use at Symrise for over 30 years) has a CO2 footprint some ten times below the level of menthol derived from natural peppermint.