Royal DSM N : 2015 (PDF)

DSM at a glance

Nutrition

The Nutrition cluster comprises DSM Nutritional Products and DSM Food Specialties.These businesses serve the global industries for animal feed, food and beverage, pharmaceutical, infant nutrition, dietary supplements and personal care.

DSM Resins & Functional Materials is a global player in developing, manufacturing and marketing high-quality resins solutions for paints, industrial coatings and fiber-optic coatings. Continuous innovation means that customers can meet regulatory needs and respond better to consumer demands for more sustainable materials.

DSM Nutritional Products is one of the world's leading producers of essential nutrients such as vitamins, carotenoids, nutritional lipids and other ingredients to the feed, food, pharmaceutical and personal care industries. Among its customers are the world's largest food and beverage companies. DSM is uniquely positioned thanks to the combination of its broad portfolio of active ingredients, maximum differentiation through formulation, local presence, a global premix network, and a strong focus on innovation. DSM Nutritional Products consists of the following business units:

Animal Nutrition & Health addresses the nutritional additives segment of the global feed ingredients market. DSM is active in vitamins, feed enzymes, carotenoids, minerals and eubiotics.

Human Nutrition & Health primarily addresses the nutritional ingredients markets, but is also active in coloration and preservation in the global food ingredients market.

Personal Care focuses on active and performance ingredients such as vitamins, UV-filters and bio-actives for the skin care, sun care and hair care market segments.

DSM Food Specialties is a leading global supplier of food enzymes, cultures, yeast extracts, savory flavors, hydrocolloids and other specialty ingredients for the food and beverage industries. DSM Food Specialties' advanced ingredients make a considerable contribution to the success of the world's favorite brands for the dairy, baking, beverages and savory segments.

Innovation Center

DSM Innovation Center serves as an enabler and accelerator of innovation within DSM as well as providing support to the clusters. With its Emerging Business Areas, the Business Incubator and DSM Venturing & Licensing, the DSM Innovation Center has a general business development role, focusing on areas outside the current scope of the business groups.

DSM's Emerging Business Areas provide strong long-term growth platforms based on the company's core competences in life sciences and materials sciences. The company has three Emerging Business Areas:

DSM Biomedical supplies innovative biomedical materials that enable medical device manufacturers to make less-invasive devices. These can speed up recovery, shorten hospital stays and minimize reoperations, lowering health costs and helping people to lead longer, healthier and more active lives.

DSM Bio-based Products & Services is at the forefront of building a more sustainable, bio-based economy with solutions for clean fuel from agricultural residue and for renewable chemical building blocks such as bio-based succinic acid.

DSM Advanced Surfaces develops and provides solutions to increase the yield of solar materials - Same sun. More power™.

Partnerships

Performance Materials

The Performance Materials cluster consists of DSM Engineering Plastics, DSM Dyneema and DSM Resins & Functional Materials. These business groups are active in technologically sophisticated high-quality products and offer specialized value propositions. In future this cluster will be referred to as Materials.

DSM Engineering Plastics is a global player in developing, manufacturing and marketing specialty plastics used in components for the electrical and electronics, automotive, flexible food packaging and consumer goods industries.

DSM Dyneema is the inventor, manufacturer and marketer of Dyneema®, the world's strongest fiber™. This product, based on ultra high molecular weight polyethylene, is produced by means of DSM's proprietary processes. The Dyneema® brand enjoys very high recognition in the value chains served.

DSM Sinochem Pharmaceuticals (DSP), a 50-50 joint venture formed in 2011, is the global market leader in beta-lactam active pharmaceutical ingredients (APIs) such as semi-synthetic penicillins (SSPs) and semi-synthetic cephalosporins (SSCs), which represent the biggest class of APIs in anti-infectives. It is also a leader in other active ingredients such as nystatin and next generation statins.

Patheon (formerly reported as DPx Holdings) is a global leader in contract development and manufacturing services established in 2014 and 49%-owned by DSM, with customers across the pharmaceutical industry.

ChemicaInvest is a joint venture established in 2015 in which DSM has a 35% shareholding and comprises the former DSM Fibre Intermediates (caprolactam and acrylonitrile) and DSM Composite Resins businesses.

Driving Profitable Growth through science-based, sustainable solutions

Our purpose is to create brighter lives for people today and generations to come. We use our unique competences in health, nutrition and materials to create solutions that nourish, protect and improve performance.

DSM uses its Bright Science to create Brighter Living for people today and generations to come. Based on a deep understanding of key global trends that are driving societies, markets and customers, DSM creates solutions to some of the world's biggest challenges, thus adding to both its own and its customers' success.

DSM believes that its continued success will be driven by its ability to create shared value for all stakeholders, now and in the future.

It creates sustainable shared value by innovating in ways that allow its customers to provide solutions to the challenges facing society, the environment and end-users. In this way, DSM's customers derive value from being able to offer end-users improved products and services; society and the planet derive value from the impact of more sustainable, longer-lasting, safer, healthier and more nutritious alternatives; and, as a result, DSM and its shareholders derive value from stronger growth and profitability. Finally, DSM's employees feel engaged and motivated both through the contribution they make to a better world and the success this creates for the company in which they work. More information on how DSM creates value for its stakeholders can be found on page 22.

DSM - Bright Science. Brighter Living.™

Royal DSM is a global science-based company active in health, nutrition and materials. By connecting its unique competences in life sciences and materials sciences DSM is driving economic prosperity, environmental progress and social advances to create sustainable value for all stakeholders simultaneously. DSM delivers innovative solutions that nourish, protect and improve performance in global markets such as food and dietary supplements, personal care, feed, medical devices, automotive, paints, electrical and electronics, life protection, alternative energy and bio-based materials. DSM and its associated companies deliver annual net sales of about € 10 billion with approximately 25,000 employees. The company is listed on Euronext Amsterdam. More information can be found atwww.dsm.com.

© 2016 Royal DSM. All rights reserved.

Bright Science. Brighter Living. 2015

www.dsm.com

Table of contents

6	Key data	114	Supervisory Board and Managing Board Royal DSM
8	Letter from the CEO	116	What still went wrong in 2015
12	Report by the Managing Board	118	Information about the DSM share
12	Strategy 2010-2015, DSM in motion: driving focused
growth	122	Sustainability statements
17	Strategy 2018: Driving Profitable Growth
22	How DSM creates value for its stakeholders	124	Consolidated financial statements
24	Stakeholder engagement	124	Summary of significant accounting policies
39	People in 2015	130	Consolidated statements
47	Planet in 2015	137	Notes to the consolidated financial statements of Royal
55	Profit in 2015	DSM
60	DSM Code of Business Conduct
188	Parent company financial statements
64	Review of business in 2015	189	Notes to the parent company financial statements
66	Nutrition
74	Performance Materials	199	Other information
80	Innovation Center	199	Independent auditor's report
85	Corporate Activities	203	Independent auditor's assurance report
86	Partnerships	204	Profit appropriation
205	Special statutory rights
88	Financial and reporting policy	205	Important dates
88	Financial policy
89	Reporting policy	206	DSM figures: five-year summary
91	Corporate governance and risk management	209	Explanation of some concepts and ratios
91	Introduction
93	Dutch corporate governance code	212	List of abbreviations
93	Governance framework
96	Risk management
101	Statements of the Managing Board
102	Report by the Supervisory Board
102	Supervisory Board report
107	Remuneration policy for the Managing Board

Forward-looking statements

This document may contain forward-looking statements with respect to DSM's future (financial) performance and position. Such statements are based on current expectations, estimates and projections of DSM and information currently available to the company. Examples of forward-looking statements include statements made or implied about the company's strategy, estimates of sales growth, financial results, cost savings and future developments in its existing businesses as well as the impact of future acquisitions, and the company's financial position. These statements can be management estimates based on information provided by specialized agencies or advisors.

DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause the company's actual performance and position to differ materially from these statements. These factors include, but are not limited to, macro-economic, market and business trends and conditions, (low-cost) competition, legal claims, the company's ability to protect intellectual property, changes in legislation, changes in exchange and interest rates, changes in tax rates, pension costs, raw material and energy prices, employee costs, the implementation of the company's strategy, the company's ability to identify and complete acquisitions and to successfully integrate acquired companies, the company's ability to realize planned divestments, savings, restructuring or benefits, the company's ability to identify, develop and successfully commercialize new products, markets or technologies, economic and/or political changes and other developments in countries and markets in which DSM operates. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the 'Risk Management' chapter.

As a result, DSM's actual future performance, position and/or financial results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. DSM has no obligation to update the statements contained in this document, unless required by law. The English language version of this document is leading.

Key data

Key data1

People

Workforce at 31 December (headcount) Female/male ratio

Total employee benefits costs (in € million)

Frequency Index of recordable injuries (per 100 DSM employees and contractor employees) Employee engagement - favorable score (in %)

Planet

Energy use (in petajoules)

Greenhouse-gas emissions in CO2-equivalents (x million tons) Emission of volatile organic compounds (x 1000 tons)

COD (Chemical Oxygen Demand) discharges (x 1000 tons) Water use (x million m3)

ECO+ solutions as % of innovation pipeline ECO+ solutions as % of running business

Profit (in € million, unless otherwise indicated)

Net sales, continuing operations

Operating profit plus depreciation and amortization, continuing operations (EBITDA)3 Operating profit, continuing operations (EBIT)3

Net profit attributable to equity holders of Koninklijke DSM N.V.

Cash provided by operating activities

Capital expenditure, cash based Dividend for DSM shareholders Net debt

Shareholders' equity Total assets

Capital employed, continuing operations Market capitalization at 31 December4

Per ordinary share in € Net earnings

Dividend

Ratios (%)

Sales to high growth economies / net sales Innovation sales / net sales

EBITDA / net sales (continuing operations)

Operating working capital / annualized fourth quarter net sales (continuing operations) ROCE (continuing operations)

Gearing (net debt / equity plus net debt) Equity / total assets

Cash provided by operating activities / EBITDA

20152

2014

• 1 For definitions see 'Explanation of some concepts and ratios' on page 209

• 2 Key data presented relate to total DSM (= continuing operations + discontinued operations), unless explicitly stated otherwise

• 3 Before exceptional items

• 4 Source: Bloomberg

• 5 Subject to approval by the Annual General Meeting of Shareholders

Letter from the CEO

Dear reader,

Over recent years we saw a multi-speed global economy, with marked differences in tempo across developing and already developed regions and markets, accompanied by currency volatility. In 2015, this picture shifted slightly; whilst the US economy remained dynamic and some key European

offers. In August, we announced the adjustment of our organizational and operating model, with the aim of creating a more agile, focused and cost-efficient organization, with a stronger business and market focus and globally leveraged support functions. This included the introduction of an Executive Committee to strengthen our management structure and enableeconomies made some - long anticipated - progress, the pace faster strategic alignment and operational execution in the day-of growth however slowed in a number of emerging economies. to-day running of our company.

The sudden and unexpected strengthening of the Swiss franc at

the beginning of 2015 impacted cost positions for products produced in Switzerland, whereas the weakening of the euro against the US dollar improved the Eurozone's competitive position. Several other currencies also made significant moves.

Creating a more agile, focused and cost-efficient organization is expected to result in structural savings of € 125-150 million compared to 2014, to be fully achieved by the end of 2017. These initiatives will result in a headcount reduction of 900-1,100

Prices for oil and its derivatives remained under heavy pressure. FTEs, of which approximately half in the Netherlands. DecisionsThe ongoing crisis in the Middle East led to heightened social and political tensions. This fractured and uncertain picture requires companies to be increasingly agile, with the capability to identify and act on relevant developments at an early stage.

affecting personnel are regrettable at all times and are only taken in the best interests of the company as a whole. We strive to provide all those concerned with an appropriate level of support and assistance in finding a new position.

Besides this DSM-wide adjustment, a specific program to

Last year was the final year of the implementation of our strategy improve operational performance in the Nutrition cluster has alsofor the 2010-2015 period, DSM in motion: driving focusedbeen announced, focused on productivity, growth and workinggrowth. By consistently focusing on our four growth drivers (High capital reduction, which target a further € 130-150 million in costGrowth Economies, Innovation, Sustainability and Acquisitions & Partnerships) we have transformed DSM into a more global, more innovative and more sustainable company with a streamlined, simplified and high-value portfolio of businesses. We have built a uniquely broad, customer-focused and global Nutrition business, upgraded our Performance Materials businesses, significantly increased the share of sustainable andsavings by 2018 and drive increasing growth in our Human Nutrition & Health business.

Whilst the Performance Materials cluster is already benefiting from the results of a similar program carried out in recent years, we will continue to identify and act on opportunities to implement further improvements in this cluster in the coming period.

innovative solutions as a proportion of our sales and established At our annual Capital Markets Day in November, we presentednew growth platforms with our Emerging Business Areas.

With the long-term megatrends that drive our company's business - Global Shifts and Digitization, Climate and Energy,

our company Strategy 2018: Driving Profitable Growth. With this new strategy we aim to capture the full potential of the portfolio we have created and translate this into improved financial results, focusing on organic sales growth, reducing costs and strict

and Health and Wellness - continuing to increase in significance, capital allocation. DSM is uniquely positioned to create value through science-

based sustainable solutions in health, nutrition and materials to help address the challenges our societies are facing.

During 2015, we took a further significant step in our strategicThe Nutrition and Performance Materials businesses offer great potential for growth through sustainable innovative solutions, benefiting from opportunities the global megatrends offer. They have clear business strategies in place to drive sales and out-transformation to a more resilient and focused portfolio with the grow their markets. We are executing cost-reduction andcreation of the ChemicaInvest partnership with CVC Capital Partners for the Polymer Intermediates and Composite Resins businesses in which DSM holds a 35% share. This follows on the divestment of the Base Chemicals businesses in 2010 and 2011 and the establishment of partnerships for the Pharmaefficiency programs with targeted overall savings of € 250-300 million in EBITDA by the end of 2018 and we have adjusted our top structure, organizational model and way of working to support the achievement of our newly-set targets.

activities in 2011 and 2014. Together with the value-contributing We have elected to set financial targets for a shorter strategic acquisitions we have made to strengthen our businesses during period up to 2018, reflecting our discipline and focus. We targetthe strategy period, we are confident that DSM's portfolio represents a good platform for profitable growth.

We are focused on translating the potential that has been created into improved financial performance. Much of our work in 2015 was on optimizing our operational performance and

a high single-digit annual percentage increase in EBITDA and a high double-digit annual basis point increase in Return on Capital Employed (ROCE).

We have furthermore sharpened our sustainability approach and set more ambitious targets for our environmental performance.

ensuring that in the coming strategic period we are in position to These include further improved greenhouse-gas efficiency (atcapture the full business benefits our strengthened portfolioleast 45% improvement by 2025 versus 20% achieved so far),

increased energy efficiency (over 10% improvement in the next 10 years) and a big step-up in the use of renewable electricity (50% by 2025), as well as continuing to drive the proportion of ECO+ and People+ solutions we provide to our customers. Moreover, we have key innovation projects in place to drive earnings growth beyond 2018.

6% and the EBITDA margin was lower at 16.6%, mainly caused by the appreciation of the Swiss franc and lower vitamin E pricing. EBITDA for Nutrition amounted to € 822 million in 2015, down 3% on the previous year for the same reasons.

In Performance Materials, we pursue a differentiated approach to our businesses and their segments, and have created a high-We expect to extract significant value from the Pharma and Bulk quality portfolio with a higher growth and returns profile. We tailorChemicals partnerships in the coming years, providing further financial headroom. We do not expect to engage in large

the approach our businesses take depending on the dynamics and potential of the market and segment in question, focusingacquisitions in the near future as we continue to integrate recent on maximized returns, growth or accelerated growth acquisitions, which have made a strong contribution to earnings. accordingly. During 2015, the cluster continued to upgrade its product portfolio towards innovative, more sustainable and

DSM achieved solid financial results in 2015, broadly in line with higher-margin solutions. Whilst organic growth for the clusterour expectations for the year. We delivered net sales of € 7.7 billion and an EBITDA (before exceptional items) of € 1,075 million. Whilst currency developments showed a mixed picture, they had an overall positive effect on our results. Organic sales growth for the year was 1%, with 3% growth in volumes and a 2% decline in price-mix as a result of lower raw material prices.

Our focus on emerging economies has taken the proportion of total sales generated in these countries to 44% at the end of 2015, up from 32% in 2010. The pace of growth slowed in a number of these economies in the year. The largest, the Chinese economy, continues to grow, if at lower absolute rates than in recent years. The fundamentals driving end-use markets relevant to DSM in China remain unchanged. In 2015, higher-margin innovation sales increased to 24% of total sales, fulfilling the strategic aspiration we set in 2010, when they made up 12% of sales. Innovation is also linked with our sustainability efforts. Our ECO+ solutions, which offer customers more value with less environmental impact than mainstream alternatives, now account for 57% of sales, ahead of the targets we set ourselves five years ago, when the proportion was 34%. We apply similar lifecycle assessments to the impact products have on peoples' lives with the People+ methodology we have developed, and use these insights in steering product innovation.

In Nutrition, we have built a unique, global and broad as well as customer-focused portfolio in nutritional ingredients and have increased our capability to offer full nutritional solutions, extending DSM's offering over the value chain. This resilience proved its worth for the cluster as headwinds that we had previously signaled indeed materialized in 2015, in particular price pressure in vitamin E, mainly in our animal nutrition business, and the unfavorable development of the Swiss franc, which considerably reduced the overall positive effect from the strengthening of the US dollar. Despite these headwinds, Animal Nutrition & Health had a very good year. Human Nutrition & Health, which continued to be confronted with ongoing weakness in the North American markets for dietary supplements and omega-3, did not perform as well as we would have liked. We have taken action to get back on the front foot and started to see the benefit of this in the second half of the year. In 2015, organic sales growth for the cluster was strong atwas down as a consequence of lower input prices on steady volumes, there was a step-up in both EBITDA (at € 384 million a 19% increase) and in the EBITDA margin, which was 15.2%, above the targets we had set.

Our Emerging Business Areas are promising platforms for growth outside the current scope of the business groups. The largest, DSM Biomedical, continued its development over the year and made a positive contribution to our EBITDA. In DSM Bio-based Products & Services, the start-up process for the Project LIBERTY facility to produce advanced cellulosic ethanol from crop residues, which we officially opened in the US in 2014 together with our partner POET, is progressing, although there are still some hurdles to overcome. DSM Advanced Surfaces provides solutions to boost the power solar panels produce and continued to strengthen its position in this market. When taken together, they already make a positive contribution to EBITDA, reducing the overall costs of the DSM Innovation Center.

Although business conditions in Bulk Chemicals remained tough, steps have been taken to improve the competitiveness of the ChemicaInvest businesses together with CVC.

Following the creation of the Pharma partnerships and therewith the completion of DSM's Pharma strategy, Stefan Doboczky left the company at the beginning of June. We would like to thank him for his contribution to DSM and wish him every success as CEO of Lenzing Group.

Safety and Health is of paramount importance to all of us at DSM Foods Ltd. joint venture to improve the nutritional status of theand we have set ourselves the ambition of having an injury and incident-free working environment. While we made progress in improving occupational safety in 2015, with a reduction in the

country's population and help address malnutrition.

We are pleased to report that we made further progress in ourFrequency Index of Recordable Injuries from 0.47 in 2014 to 0.41 efforts to reduce the company's environmental footprint, amonglast year, more incidents still occur than we would like, regrettably. Our focus on safety is unwavering and we strive to bring this number down further. For more information on these and other incidents, see 'What still went wrong' on page 116.

Successfully assimilating a high-performance culture will be crucial to realizing the full potential of our new operating model and our portfolio and to achieving our targets. During the year, we continued to implement the ONE DSM Culture Agenda in conjunction with our Leadership Model. We look to achieve aother things by improving our energy efficiency and greenhouse-gas efficiency by around 20%, as well as by reducing our absolute greenhouse-gas emissions (down by 75% versus 2008, with a big impact from the (partial) divestment of Polymer Intermediates). The new, sharpened targets we have set for the coming period will build on these achievements and continue to stretch the organization. We are proud to once again be named among the leaders in the Dow Jones Sustainability World Index. We also take pride in the external recognition, including awards, that our achievements in our integrated sustainability approachrepresentative balance in gender and also in nationality in DSM's continue to receive. Our integrated reporting continues to leadership group, in line with the geographical distribution of our develop; besides implementing G4, the fourth generation of business. The number of women in executive positions showed sustainability reporting guidelines from the Global Reportinga pleasing development, up three percentage points to 15% at the end of the year, with a significant increase in representation at all top levels across the organization. We did not make the same level of progress in increasing the proportion of non-European executives, however, and this has our attention.

Initiative, this report also follows the framework of the International Integrated Reporting Council. We remain committed to aligning our strategy and operations with the principles of the United Nations Global Compact, as well as contributing to the realization of the Global Goals for SustainableOverall, the company-wide Inclusion Index increased from 70% Development through our businesses and competences. to 72% at the end of the year, reflecting our efforts in this regard.

We have many reasons to be confident about our future at DSM

We held an Employee Engagement Pulse Survey last year, which thanks above all to the tremendous efforts of many people; our

78% of the employees completed. The overall Employee Engagement Index was 69% in 2015, down very slightly fromemployees, customers, shareholders, and suppliers and other partners, as well as civil society and the communities we engage

70% a year earlier. This is understandable given that the survey with. We extend our most sincere thanks and appreciation to allwas held after the announcement of the organizational adjustments and before the presentation of our updatedthose who have contributed to DSM's success.

strategy. Our resolve to see this rating improve is undiminished. At the start of an exciting and inspiring new period for DSM, we can be very proud that together we have made DSM a global

It was a significant year for the worldwide societal and sustainability agenda. The UN General Assembly agreed upon 17 Global Goals to be achieved by 2030 (the so-called Sustainable Development Goals), including eradicating hungercompany with a portfolio of high-quality businesses, well-positioned for growth. We apply our sustainable innovation to continually develop and bring to market improved products and solutions in health, nutrition and materials. Our focus for theand addressing climate change. Leaders from government, civil coming period is on improving financial returns while building for society and business also came together at the COP21 summit further growth in the future. Our ability to leverage unique

in Paris. Although there is still much to be gained, the

opportunities in our businesses for the benefit of People, Planetagreements and measures to tackle climate change on a global and Profit enables us to deliver on our mission of creatinglevel established there were unprecedented. The sense of urgency to develop and implement newer, more sustainable and impactful solutions at scale has never been more manifest. There is a crucial - and rewarding - contribution for businesses to make in helping to achieve this, which we at DSM champion.

In December, we signed an extension to our strategic partnership with the United Nations' World Food Programme (WFP) for another three years. It is a humbling and at the same time empowering feeling to realize that through this partnership, DSM now reaches over 25 million WFP beneficiaries annually with improved nutrition. DSM was also invited by the Government of Rwanda to participate in the Africa Improvedbrighter lives for people today and for generations to come.

Feike Sijbesma

CEO/Chairman Managing Board Royal DSM

The Global Agenda Means Business

The year 2015 may one day be regarded as a pivotal year in human history. The Sustainable Development Goals and the climate deal struck at COP21 in Paris make clear that humanity really means business with the global agenda.

It is also clear that businesses have a crucial role to play in creating the impact needed at scale to tackle these challenges. Companies have unrivalled skills and competences to address the challenges and at the same time open and develop profitable markets for their products and solutions.

The key is to collaborate across value chains and with governments, NGOs and civil society to focus these skills on sustainable solutions and thus really drive the development of effective, rewarding and intrinsically sustainable markets. Over many years, DSM has consistently made sustainability a real business driver, developing solutions, building partnerships and increasing its impact in key areas. The global agenda also means business for DSM.

Malnutrition and deficienciesLow-carbon economy

Effectively tackling climate change whilst at the same time achieving energy security for the world's population will require a global transition to the low-carbon economy; steps need to be taken urgently to meet the goals agreed at COP21 in Paris. This is accelerating the adoption of renewable energy sources and the use of chemicals and materials that are more sustainable in the transition from the fossil age to the (bio-) renewable age, as well as increasing attention for the circular economy concept. This presents opportunities for companies like DSM who have the ingenuity and ability to develop and deliver innovative solutions. DSM's businesses include activities in bioplastics, biofuels, light-weight materials and solar coatings as well as 'circular' technologies such as those for reusable Niaga® carpets.

Worldwide, two billion people are malnourished, half of whom go to bed hungry every day. While hunger predominantly affects people in the South and East, people the world over are affected by micronutrient deficiencies. This is due to factors including the lack of nutrient-rich options available, people's inability to access these options or their lack of popular appeal. DSM helps the food industry create products that are not only available and affordable but nutritious as well - and within the reach of increasing numbers of people around the globe. An example is the joint venture DSM established with SOBISCO in 2015 to produce and market fortified snacks in India. DSM furthermore partners with the UN World Food Programme and several other development agencies to reach those in direst need of nutrition interventions, as well as participating in many initiatives, including its own, to combat micronutrient deficiency around the world.

Report by the Managing Board

Strategy 2010-2015, DSM in motion: driving focused growth

Last year was the fifth and final year of the strategy DSM in motion: driving focused growth, which the company launched inSales in emerging economies amounted to 44% of total sales in 2015, up from 43% in 2014. Innovation sales, defined as sales from products and solutions introduced within the last five years, made up 24% of total sales in 2015 (2014: 18%).

2010 to become a global leader in health, nutrition and materials. DSM's Emerging Business Areas (EBAs) DSM Biomedical, DSMThis strategy has provided DSM with the framework to drive sustainable and profitable growth in the company's core activities.

In 2015, DSM's focus was on improving the operational performance of its Nutrition and Performance Materials businesses, while pursuing strategic actions for Polymer Intermediates and Composite Resins. These were delivered in March with the establishment of the ChemicaInvest partnership with CVC Capital Partners. In August, the company announced adjustments to its organizational and operating model to support its growth, creating a more agile, focused and cost-efficient organization. The final major development of the year was announced in November, when DSM presented its Strategy 2018: Driving Profitable Growth at its Capital Markets Day, details of which are given on page 17.

Results 2015

Financial results

DSM delivered solid results in 2015, posting net sales of € 7,722 million, up 10% on 2014 (€ 7,051 million). Overall organic sales growth for the year amounted to 1%, as a 3% increase in volumes, with strong growth in Nutrition, was largely off-set by 2% lower price/mix, due to lower input prices being partially passed on down the value chain in Performance Materials. Exchange rate fluctuations had a positive impact of 8%, while other effects such as acquisitions contributed 1%.

EBITDA, operating profit from continuing operations before depreciation and amortization (before exceptional items), grew by 4% or € 37 million, from € 1,038 million in 2014 to € 1,075 million in 2015. Nutrition EBITDA declined by 3% as good organic growth and the positive impact of the strengthened US dollar were more than offset by the negative impact of significantly lower vitamin E prices, the appreciation of the Swiss franc and the weakening of the Brazilian real. Cost savings and good margin management as well as support from lower input prices and currency effects led to a strong increase in EBITDA for Performance Materials of 19%. DSM's overall EBITDA margin (operating profit before depreciation and amortization as a percentage of net sales) was 13.9% (2014: 14.7%). In 2015, Return on Capital Employed (ROCE) was 7.6% compared to 8.2% in 2014.

Bio-based Products & Services and DSM Advanced Surfaces continued to make steady progress during the year. Collectively they made a positive EBITDA contribution, reducing the overall costs of the DSM Innovation Center.

Financial targets and aspirations as updated in 2013

Realization 2015

Profitability targets 2015

- EBITDA margin 14%-15%

- ROCE 11%-12%

13.9% 7.6%

Sales targets 2015

• - Organic sales growth 5%-7% annually

• - China sales towards USD 3 bn1

• - High growth economies sales about 45% of total sales

• - Innovation sales 20% of total sales

• - ECO+ sales towards 50% of total sales

1% USD ~1 bn

44% 24% 57%

Cluster targets 2015

-NutritionEBITDA margin 20%-23%

Organic sales growth GDP +2%

- Performance Materials EBITDA margin 13%-15%

Organic sales growth at double GDP

16.6% 6%

15.2% -4%

Aspiration regarding Emerging Business Areas for 2020

- EBA sales > € 1 bn

€ 155 m

1

The China sales target was set in 2010 and included the contributions of the Pharma, Base and Bulk Chemicals activities, which have since been (partially) divested

The DSM Managing Board (from left to right): Dimitri de Vreeze, Feike Sijbesma (CEO/Chairman), Geraldine Matchett (CFO) and Stephan Tanda

Sustainability results

Sustainability is DSM's core value as well as a business driver and enables the company to provide higher-margin products and solutions. DSM has successfully implemented its sustainability program and ECO+ solutions now make up 57% of DSM's total sales, exceeding the aspiration of towards 50%. ECO+ solutions also accounted for 91% of DSM's innovation pipeline in 2015, which exceeded the company's target of 80%.

DSM made further progress with its People+ strategy, which aims to deliver products that have a measurable positive impact on people's lives. Going forward, DSM will refer to its ECO+ and People+ solutions collectively as Brighter Living Solutions. DSM again featured among the chemical industry leaders in the Dow Jones Sustainability World Index in 2015. DSM improved its ranking and has returned to RobecoSAM Gold Class status for 2016.

DSM's Employee Engagement Survey determines levels of engagement, measuring how employees score in terms of commitment, pride, advocacy and satisfaction expressed as an index. It is now carried out on a two-year cycle with a shorter Pulse survey held in the intervening year, which is what DSM held in 2015. This showed an Employee Engagement Index of 69% (2014: 70%), which is broadly in line with the global standard of 70%. For further details on the outcome of this survey and other people-related aspirations, see chapter 'People' on page 39.

Sustainability aspirations 2011-2015

Realization 2015

Dow Jones Sustainability Index Top ranking (RobecoSAM Gold Class)

Silver Class1

ECO+ (innovation)

At least 80% of pipeline is ECO+2 ECO+ (running business)

91%

From approximately 34% towards 50%

57%

Energy efficiency 20% improvement in 2020, compared to 2008

19%

Greenhouse-gas emissions 25% reduction (absolute) by 2020, compared to 2008

75% reduction3

Employee Engagement Survey Towards High Performance Norm4 Diversity5

69% favorable

Women in executive positions Under-represented nationalities in executive positions

15%

49%

People+5

DSM People LCA

Achieved

• 1 DSM has returned to Gold Class for 2016

• 2 See page 210 for a definition of ECO+

• 3 Reduction of total emissions (absolute) of 75% was mainly attributable to the deconsolidation of DSM Fibre Intermediates; the GHG efficiency, which accounts for

• changes in production volume, has improved by 20% in 2015 compared to 2008

• 4 The High Performance Norm (over 80% favorable) is the composite of the top 25% employee responses of the selected external benchmark organizations

• 5 See 'People+' and 'Inclusion & Diversity' in the chapter 'People' in 2015 on page

  39 and page 210 for a definition of People+

Growth Drivers

Over the last five years, DSM has utilized the strategic growth drivers High Growth Economies, Innovation, Sustainability and Acquisitions & Partnerships to leverage its unique position and capitalize on the business opportunities created by key global megatrends.

In doing so, DSM has successfully increased its global presence, became more innovative and more sustainable, and built a streamlined and simplified portfolio of high-value businesses.

High Growth Economies

One of the key elements of the company strategy has been the successful expansion of DSM's global presence to be better placed to capture opportunities arising from the megatrends in economies such as Brazil, Russia, India and China as well as in more mature economies of the West. The share of sales in these economies as a proportion of DSM's total sales has increased significantly, giving the company a well-balanced global footprint. In 2015, sales to emerging economies accounted for 44% of total sales. In 2010, this was 32%.

In China, domestic consumption is playing an increasingly important role in re-balancing the economy to the so-called 'New Normal'. During the year, there was a change in the pace of economic growth in the country, in particular in the second half of the year. Overcapacity, low global commodity prices and weak demand impacted industrial production. However, the fundamental drivers resulting from the megatrends remain as valid as ever. In terms of DSM's end-user segments, this could be seen in a noticeable slowdown in automotive and construction-related industries, whilst the service sector and food industry segments developed well. DSM's sales in China for its continuing operations came to € 937 million in 2015, up 12% from € 833 million in 2014. During the year DSM finalized the acquisition of vitamin C producer Aland and began the expansion of a site in Tongxiang with the aim of establishing a world-class development center for hydrocolloids including gellan gum.

DSM's business in India showed double-digit growth. DSM focuses in particular on locally made products for markets in the country, for example partnering with SOBISCO in the year to produce and market fortified biscuits and snacks.

Growth in Latin America was 11% in 2015, despite a very challenging overall economic picture in the region that has impacted consumption in various markets. DSM has established a robust platform in particular for its Animal Nutrition & Health business in the region and will leverage this as it expands the animal health capabilities it acquired with Tortuga outside Brazil.

Sales in Russia remained on par with 2014, despite the severe recession in the country, supported by particularly strongperformance in Animal Nutrition & Health, which also performed well in DSM's other key markets in the region.

With their rapidly expanding urban populations and burgeoning middle classes, it is clear that emerging economies will remain important growth engines for the world economy in the future. Moreover, increasing attention for environmental concerns and related legislation to tackle them presents further opportunities.

Over recent years it has become evident that rates of economic growth in these economies are both divergent and changeable. In future, DSM will refer to the economies themselves by the commonly-used term 'emerging economies' rather than 'high growth economies'. The capitalized term High Growth Economies relates specifically to DSM's strategic growth driver.

Innovation

DSM in motion: driving focused growth targeted an increase in the proportion of sales coming from innovative products and solutions from 16% in 2010 to 20% by 2015 (see page 209 for the definition of innovation sales). At the end of 2015, these products accounted for 24% of total sales. This was up from 18% in 2014, with the increase driven by both higher sales as well as by the deconsolidation of DSM Fibre Intermediates and DSM Composite Resins and their inherently more traditional portfolio in the year. In Nutrition this was 21% and in Performance Materials 29%.

Innovation sales play an important role in driving both top-line and bottom-line growth. Besides providing benefits to customers and end-users in terms of new or improved functionality, they also deliver margins that are on average higher than in the running business.

DSM looks to foster and sustain its innovation practices on anwith the vast pool of ideas, know-how and expertise that are available outside the company, DSM is better able to develop and discover solutions.

DSM collaborated in a number of R&D and innovation partnerships in 2015. For further details see 'Stakeholder engagement' on page 24 and 'Review of business - Innovationongoing basis. The DSM Innovation Center supports innovation Center' on page 81. by offering functional excellence to the company's established

Nutrition and Performance Materials businesses, as well as through venturing and its business incubator. At the same time it focuses on developing and extracting value from new growth platforms outside the current scope of DSM's business groups

Sustainability

In the realization of its 2010-2015 strategy DSM in motion: driving focused growth, the company continued to fulfill its responsibilities towards society while simultaneously developing

with its EBAs, which currently comprise DSM Biomedical, DSM sustainability into a strategic and successful growth driver. ForBio-based Products & Services and DSM Advanced Surfaces.

DSM has established best practices in innovation and manages its major innovation activities at a platform level within selectedDSM this means pursuing activities that create shared value for all DSM's stakeholders in the areas of People, Planet and Profit.

Sustainability is a key differentiator and a driver of value in DSM'sareas, including Food and Nutrition Security, Health, Sustainable markets. Using its strong science competences, the companyManufacturing and Energy Security. This platform-based approach to innovation under the direction of the Chiefaims to deliver profitable products and solutions that have a positive impact on society. DSM does this by embeddingTechnology Officer aims to develop larger initiatives and enables sustainability practices across the company. Sustainability playsthe company to increase the focus of its efforts and improve coordination. This structure provides the basis for an effectivea central role in innovation, new product and business development, operations and strategic decisions. Bymanagement of company-wide competence-building programs continuously developing innovative science-based products andin Research & Development (R&D).

R&D is instrumental to the realization of DSM's innovation strategy, and most of the expenditure in this area is directed toward business-focused programs.

R&D expenditure (including associated IP expenditure), continuing operations

x € million	2015	2014
Nutrition	223	206
Performance Materials	143	135
Innovation Center	82	82
Corporate Activities	16	28
Total	464	451
Total as % of net sales	6.0	6.4
Staff employed in R&D activities	2,036	2,089

The more than 2,000 internal scientists in DSM's science network are spread around the world. They cooperate extensively with external R&D institutions. Academic collaboration efforts are normally specific and bilateral, while DSM is also active in broader public-private partnerships that increase its scientific scope, such as the Bio-based Industries Consortium.

solutions that contribute to a brighter future, DSM is also creating a more sustainable and profitable future for itself.

ECO+

ECO+ is DSM's program for the development of sustainable, innovative products and solutions with environmental benefits. Products qualify as ECO+ when their environmental impact is lower than competing mainstream products that fulfill the same function. When considered over their entire life cycle, ECO+ solutions offer superior performance with a lower eco-footprint. The environmental benefits can be created at any stage of the product life cycle, from the raw materials through to manufacturing and potential re-use and end-of-life disposal. DSM uses comparative Life Cycle Assessments (LCAs) and/or expert opinions to determine whether a solution should be considered ECO+. For more information about the ECO+ program, see 'Planet' on page 53.

People+

People+ is DSM's program to develop solutions that measurably improve the lives of consumers, employees and communities across the value chains, better than competing alternatives in the market. People+, together with ECO+, makes DSM's 'Bright Science, Brighter Living™' mission more tangible. Applying and road-testing harmonized joint standards for product social metrics across all DSM business groups and regions has laid the foundations for DSM to also set targets for People+ products within its Brighter Living Solutions for the coming period. For more information about the People+ program, see 'People' onA crucial element of DSM's approach and an important business page 46. enabler is Open innovation. By combining its own capabilities

Acquisitions & Partnerships

During the 2010-2015 strategy period for DSM in Motion: driving focused growth, acquisitions have been a key vehicle for DSM to add new growth platforms, especially in emerging economies and in North America. The company also established a number of value-enhancing partnerships in this time, most notably for the Pharma activities in 2011 (DSP) and 2014 (Patheon), details of which can found in 'Review of business - Partnerships' on page 86.

The four most significant acquisitions during the period, which are all in the Nutrition cluster, have strengthened DSM's portfolio, boosted growth and already made strong contributions to earnings, with further potential for the future. Collectively, the Martek (2010), Ocean Nutrition Canada (2012), Tortuga (2012) and Fortitech (2012) businesses added € 210 million in EBITDA at the time of acquisition. DSM has since successfully grown this contribution by 11% per year and in 2015 these acquisitions delivered a total of over € 300 million in EBITDA. The profitability of Ocean Nutrition Canada has however declined somewhat over the period, impacted by a sharp increase in the price of fish oil and weakness in the US market for fish oil-based omega-3 dietary supplements.

Acquisitions & Partnerships in 2015

In 2015, DSM engaged in partnerships that serve clear strategic and financial objectives. These business partnerships sometimes involve long-term supply agreements and are material to DSM's business performance.

The most significant partnership of 2015 was entered into in March, when DSM and CVC Capital Partners announced the establishment of a partnership comprising the DSM Fibre Intermediates and DSM Composite Resins businesses. The formation of ChemicaInvest, in which DSM has a 35% shareholding, was finalized at the end of July. The transaction delivered on the strategic actions DSM said it would pursue for the businesses in order to simplify its portfolio and reduce cyclicality in the Performance Materials cluster, whilst effectively maintaining DSM Engineering Plastics' backward integration through a long-term purchasing agreement. See also 'Review of business - Partnerships' on page 86.

DSM entered into or completed a number of other business-related acquisitions and partnerships during the year, details of which can be found in 'Review of business - Nutrition' on page 67, 'Review of business - Performance Materials' on page 75 and 'Review of business - Innovation Center' on page 81.

In the summer of 2015, Patheon filed a registration statement (Form S-1) with the US Securities and Exchange Commission (SEC), preparing itself for a public offering. To date, neither the timing of such a public offering, nor the number of shares, nor the price have been confirmed.

Strategy 2018: Driving Profitable Growth

Today, DSM is a more global, innovative and sustainable company than at any time in its history, with a portfolio ofportfolio by improving the company's financial results through organic sales growth, reducing costs, increasing productivity

businesses that are well positioned to fulfill their growth potential. and strict allocation of capital. DSM aims to step-up its financial results at the same time as pursuing its ambitions in sustainabilityOver the next three years, DSM's Strategy 2018: Driving Profitable Growth will focus on capturing the full potential of itsand its beneficial impact on people's lives, creating value in terms of People, Planet and Profit.

A number of fundamental global societal trends are affecting economies, people and markets across the world. The major driver behind these global trends is demographic change. The world population continues to grow towards an estimated ninedigit basis point annual ROCE growth, while maintaining a long-term view on further business growth.

DSM is confident that it has the right business strategies in placebillion in 2050. People are living longer and in the main becoming to meet the needs of its customers and succeed in its markets,increasingly wealthy and urbanized. These trends will furtherproviding innovative and sustainable solutions that will helpincrease the pressure on the planet's resources and on the food address the challenges − and opportunities − arising from thechain, while also stimulating new patterns of consumption and impacting the environment.

DSM addresses three key societal megatrends through itssocietal megatrends.

While the current significant macro-economic uncertainties are expected to persist for the foreseeable future, DSM hasstrategy and solutions, and therefore benefits from the increased developed favorable product offerings for the segments itattention they receive on a global scale. These are categorized as: Global Shifts and Digitization; Climate and Energy; and Health and Wellness (see next page). By focusing its uniqueoperates in and is well positioned to outpace market growth.

During the coming three years, DSM is executing cost reductioncapabilities in health, nutrition and materials on the opportunities and efficiency improvement programs with targeted overallthe megatrends present, DSM is better able to support its customers in developing science-based, sustainable solutions that meet current and future needs and profitably grow its business.

DSM's Strategy 2018: Driving Profitable Growth builds on thesavings of € 250-300 million by 2018 (of which € 25 million was achieved in 2015) and aims to enhance its financial performance through consistent improvements in capital efficiency. DSM furthermore aims to bring total working capital structurally below 20% of sales. Capital expenditure will primarily support growth areas, with approximately two-thirds being focused on theachievements of the previous strategic period. It recognizes that, Nutrition cluster. following a period of important portfolio transformation, the company will focus on ensuring that the potential of the current At the same time, DSM is stepping up its sustainabilitybusiness portfolio translates into improved financial results. Consequently, DSM does not expect to engage in large acquisitions in the near future and this focus is reflected in a shorter, three-year, strategic period with two headline financial targets: high single-digit annual EBITDA growth and high double-aspirations. Sustainability is a key driver for DSM's business in terms of commercial growth opportunities, and a focus area for reducing operating costs by decreasing the company's environmental footprint.

Megatrends more relevant than ever

Global Shifts and Digitization

Population growth and an accelerating shift of wealth, most notably in emerging economies, are creating a more urban, prosperous and connected world - as well as huge resource and cultural challenges. These changes are influencing global demand, the way people live and how they interact. Urbanization and prosperity are promoting dietary changes and increased spending on housing, transport, lifestyle and energy. New technology is impacting societies and their behavior, while 'big data' presents companies with new challenges as well as opportunities to optimize processes and to tailor solutions.

Climate and Energy

Scientists agree that climate change is influenced by human activity. Coordinated international efforts are urgently needed to reduce fossil-fuel dependencies and bring down levels of greenhouse-gas emissions in support of the COP21 objectives. This is accelerating the adoption of renewable energy and the use of more sustainable chemicals and materials in the transition to the (bio-) renewable age and the low-carbon economy. This will also increase attention for the circular economy concept. Besides the focus on bio-based materials and re-use, efficiency remains important as customers look to create more sustainable value chains with lower energy use, less waste and pollution and through higher yields.

Health and Wellness

A growing, aging and increasingly prosperous population seeks to improve its well-being and increase longevity. At the same time, people in the developing world, especially children below the age of three, continue to face a daily struggle for adequate nutrition. There is a growing need to address core health issues, whether through nutrition, medicines or lifestyle improvements, especially in emerging economies. In the West, healthcare costs are rising and access to quality nutrition is also growing in importance, with nutrition deficiencies on the rise. Demand is growing for safer and healthier solutions.

Safety remains of paramount importance and DSM aspires to further reduce injuries and incidents over time with the ultimate aim of providing an injury and incident-free workplace.

In support of its targets, DSM is adjusting its organizational and operating model and way of working, fostering a results-driven, high-performance culture. It has furthermore strengthened its top structure with the establishment of an Executive Committee, which enables more rapid strategic alignment and operational execution across the company.

As part of its strategic transformation and its move away from more commoditized and cyclical areas, DSM has established partnerships for its Pharma activities (DSM Sinochem Pharmaceuticals (DSP) for Anti-Infectives in 2011 and Patheon for contract development and manufacturing services in 2014) and for the remaining Bulk Chemical businesses in Polymer Intermediates and Composite Resins (ChemicaInvest in 2015). These partnerships have been created with a view to ultimately exiting these businesses and DSM expects to extract significant value from these partnerships in the coming years.

Nutrition

DSM is one of the world's leading producers of specialty nutritional ingredients. DSM's Nutrition cluster has unrivalled capabilities, with a global presence and an unparalleled network for local solutions as well as a complete portfolio of nutritional ingredients for food and feed and an extended offering over the value chain. This ranges from the production of active ingredients through their incorporation into sophisticated forms and tailored premixes, as well as nutrition end-products such as its i-Health range of dietary supplements.

The Nutrition cluster has clear strategies in place to drive both top and bottom-line growth across its businesses. Taken together, they can be summarized as:

(I)expanding proven and successful core competences, bringing them to more of the markets and territories it serves and maximizing their value;

(II) adding new products and solutions to its offerings, making full use of DSM's capabilities in sustainable innovation;

• (III) growing in underpenetrated categories and regions and accessing new segments; and

• (IV) developing new business models to complement its positions across its value chains.

The Animal Nutrition & Health business will further expand its unique global premix footprint. In addition, the business aims to grow through new solutions in feed enzymes and eubiotics that are tailored to meet the specific local needs of animal protein producers in the territories it serves. It will drive growth in underpenetrated species such as ruminants, aqua and pets as well as enter new customer segments with new channels.

After the recent slowdown in some of its end-markets, Human Nutrition & Health aspires to return to more vigorous growth through new initiatives focused on the expansion of its premixDSM Food Specialties aims to leverage its leading cultures and enzymes platform to drive further growth in attractive markets and segments, as well as through new products and solutions.

activities and new products and solutions, for example in dietary The business aims to further develop the positions it has built insupplements. DSM is paying particular attention to its Human Nutrition & Health operations in North America, where, following a recent reshuffle, it is resolved to deliver growth with disciplined sales and marketing execution.

savory ingredients.

These growth initiatives will be underpinned by reducing costs and increasing productivity across the cluster, driving cash generation and increasing capital efficiency. As part of the overall cost savings, a Nutrition-specific performance improvement program is being executed aimed at delivering cost savings ofleveraging existing assets to maximize returns in PA6 Polymers and Powder Coating Resins.

One of the key trends fuelling the cluster's above-market growth ambitions is substitution. Customers are increasingly looking to

€ 130-150 million by 2018. The program focuses on productivity, replace existing parts and materials with newer, moregrowth and working capital. Key contributions will come fromsustainable alternatives, for example replacing metals withpurchasing savings, reduced manufacturing costs and boosting lighter, high-performance plastics to reduce the weight ofproduction efficiencies. The program also includes specific streams aimed at further stimulating sales by creating a more efficient and effective sales organization, especially in Human Nutrition & Health.

vehicles or replacing solvent-based paints with those made using waterborne resins. Moreover, legislative bodies around the world are setting increasingly strict standards. These include curbs on the use of hazardous materials and more rigorous norms for vehicle emissions. This sharpening is by no meansThe Nutrition cluster aspires to a high single-digit EBITDA growth confined to the developed world; emerging economies are in and high double-digit basis point growth in ROCE in line with the some cases raising the bar faster than their western

overall targets for DSM, while aiming to achieve sales growthcounterparts. The combination of market pull and legislativeabove market average with EBITDA margins of 18-20% over the push will be a powerful driver for substitution. By continuing toperiod.

Materials

focus on developing and delivering innovative and more sustainable solutions, DSM is well positioned to capture above-market growth in its Materials cluster.

Over recent years, DSM has built an attractive portfolio with high- Materials will complement its top-line growth with further costquality earnings within its Materials cluster. Its businesses are well positioned to capitalize on the dynamics within their respective end-use markets. DSM will continue its strategy ofand capital discipline to ensure that this is also translated into its bottom-line results. Besides its contribution to the DSM-wide savings program in support functions and services, the clusterdifferentiation and tailored business approaches in the Materials will build upon the successful profit improvement programs it hascluster in the coming period. It will focus resources primarily on well-defined, higher-growth specialty segments, while

carried out and look for further savings and optimizations.

In aspiring to a high single-digit EBITDA growth and high double- above-market average sales growth with EBITDA margins ofdigit basis point growth in ROCE, the Materials cluster is in line with the new group targets, while aiming to achieve

>15% over the period.

Innovation

Innovation is what turns DSM's 'Bright Science' into 'Brighter

Advanced Surfaces, which offers yield-boosting solutions for solar energy.

Living'. It is about discovering and integrating the best, the most Taken together, these EBAs were already EBITDA positive insustainable and commercially viable solutions to meet market needs and to drive profitable growth. Continually providing innovative and improved products and solutions does not just drive top-line sales growth. Innovation sales have also

2015 and DSM aspires to further grow the annual contribution they make to the company's profit to € 30-40 million by 2018. With the annual cost of innovation support running at around € 15-20 million, DSM's Innovation Center is expected to showcontributed to DSM's EBITDA growth, providing higher margins EBITDA break-even in 2016. than the average of its running business.

Stepping up sustainability aspirations

DSM has successfully increased the proportion of innovative products and services it provides to customers. Innovation sales, Sustainability has become a key differentiator and business defined as products and applications that have been introduced driver in DSM's markets and helps guide the activities of the over the last five years, accounted for 24% of total sales in 2015. business groups as well as the company's operations, strategicDSM aspires to maintain a level of around 20% going forward.

actions and decisions. By continuously developing innovativeDSM considers this to be a healthy proportion with a view to the science-based products and solutions that make a realoverall balance of its product portfolio and product life cycles.

contribution to a brighter future for people around the world,Since this is a rolling target, maintaining this level will by definition DSM is also creating a more sustainable and profitable future forbe stretching.

itself.

Besides supporting innovation in the company's core

DSM has successfully embedded sustainability into its businessbusinesses, the DSM Innovation Center also aims to develop its activities. ECO+ products now account for 57% of sales (seeEmerging Business Areas (EBAs) established over the last five years. These are new and promising growth platforms outside the scope of the company's business groups. They comprise DSM Biomedical, focused on innovative materials for medicalpage 209 for a full definition of ECO+) and 91% of the innovation pipeline. With People+, the company has established a similar methodology supported by Life Cycle Assessments to measure and quantifiably improve the social impact of its products (seedevices; DSM Bio-based Products & Services, which focuses on page 209 for a full definition of People+). From 2016, DSM willclean energy from crop residues as well as bio-chemicals with enzymes and yeasts for biomass conversion; and DSMcollectively refer to its ECO+ and People+ products as Brighter Living Solutions.

For the coming period, DSM is stepping up its aspirations once operational execution on finance, business, innovation, strategyagain. DSM will increase the proportion of Brighter Living Solutions to 65% of sales by 2020 (2015: 60%). It will improve its greenhouse-gas efficiency − in other words, reduce its relative emissions − by 45% by 2025, compared to the reference year 2008 (2015: 20%). This will be supported by energy efficiency improvements of >1% per year and by sourcing at least 50% of its electricity from renewable sources by 2025. Increasing greenhouse-gas efficiency will also drive down costs. To support this targeted improvement and foster an appropriate sense of urgency to achieve these changes, DSM will apply an internal carbon price of € 50 per ton CO2-equivalent to large investment decisions. In addition, the company works with suppliers and customers to improve the overall footprint of the value chains in which it operates.

There is a strong link between DSM's competences and business plans with key items on the global sustainable development agenda, namely malnutrition, and climate change and energy. DSM is in a position to be able to make a contribution to addressing these topics through its businesses. By developing innovative business solutions and engaging its value chains, networks and partnerships, DSM is driving sustainable markets that can have a beneficial impact at scale for all participants. At the end of 2015, DSM reaffirmed its strategic partnership with the UN World Food Programme, which currently reaches more than 25 million beneficiaries perand people.

The members of the Executive Committee are the Managing Board members Feike Sijbesma (CEO/Chairman), Geraldine Matchett (CFO), Stephan Tanda (Nutrition) and Dimitri de Vreeze (Materials), as well as Chris Goppelsroeder (Nutritional Products), Philip Eykerman (Strategy and M&A), Peter Vrijsen (People & Organization) and Rob van Leen (R&D and Innovation)

Furthermore, the company is establishing a new way of working, driving a change in mindset and culture aimed at establishing DSM as a results-driven, high-performance organization, both in terms of top-line and bottom-line growth and talent development.

DSM began adjusting its organizational and operating model in 2015 and is optimizing cross-company supporting functions in areas including HR, Indirect Sourcing, Communications, Finance, Legal and ICT, thus freeing up capacity at its business groups to focus on their primary functions: Innovation and R&D, Direct Sourcing, Manufacturing & Operations and Marketing & Sales. By globally leveraging its support functions and shared services organization as well as improving the ability of functional excellence departments to support the business groups, DSM aims to achieve structural cost savings of € 125-150 million versus 2014. These savings are targeted to be achieved by the end of 2017.

Building for earnings growth beyond 2018

DSM has set itself strategic targets for the period to 2018. Thisyear with improved nutrition, extending the partnership to 2018. shorter three-year period is intended to channel the

Organization and culture

DSM is adjusting its organizational and operating model to support the company's growth, creating a more agile, focused and cost-efficient organization, with a stronger business and market focus and globally leveraged support functions. Theorganization's focus and forcefully drive achievement of the step-up in financial performance at which the company aims. At the same time, DSM is also preparing for longer-term growth; its business cycles are typically longer than the three-year period to 2018. The company has a range of key business and innovation projects across the clusters that will drive earnings growth beyond 2018 and will continue to develop more initiatives in lightorganizational adjustments DSM is implementing are intended to of market dynamics. achieve far more than cost savings alone. DSM has strengthened its management structure by establishing an Executive Committee, which enables faster alignment and

How DSM creates value for its stakeholders

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DSM's strategy is aimed at driving profitable growth through science-based, sustainable solutions based on the defining megatrends of our time. By using its unique competences in health, nutrition and materials, DSM is fostering economic prosperity, environmental progress and social advances to create value for all stakeholders simultaneously.

The diagram on the left is based on the International Integrated Reporting Council's () framework and gives a schematic overview of the value DSM creates over time based on six capitals. These are: human capital; societal & relationship capital; natural capital; financial capital; intellectual capital; and manufactured capital. Descriptions of how these capitals apply to DSM are given below left.

DSM employs these capital inputs in its business in the execution of its strategy and in the fulfilment of its mission to create brighter lives for people today and for generations to come. The company's organizational and operating model is made up of market-facing business groups focused on the primary business functions (Innovation and R&D, Direct Sourcing, Manufacturing & Operations and Marketing & Sales), global support and functional excellence departments and regional organizations. It uses these to minimize and mitigate risks and take advantage of the opportunities the megatrends provide, thereby transforming the capital inputs into value outcomes aimed at having the most beneficial impact possible.

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Since 2002, DSM has established a track-record in Triple P reporting, disclosing its performance in terms of People, Planet and Profit. For the purposes of comparability, the six capitals as defined in the framework continue to be clustered under People (comprising the human and societal & relationship capitals), Planet (natural capital) and Profit (financial, intellectual and manufactured capitals).

Specific performance indicators relating to the capitals are provided throughout this Integrated Annual Report (hereafter referred to as the Report).

Stakeholder engagement

Taking part in strategic and proactive dialogue with keykeeping up with societal debates and engaging in dialogue with international business organizations and other relevant stakeholders. DSM conducts media research and peer analysesstakeholders helps DSM to deepen its insights into the drivers of as part of these efforts. its business and the needs of society across the world, and thus

be ahead of competition in adjusting to changing demands.

In 2015, DSM reached out to its stakeholders - suppliers, customers, investors, employees, companies, governments,In 2015, DSM refreshed its materiality matrix based on a process that included the aforementioned media and peer analysis, and identified external trends and developments relevant to DSM's external stakeholders and to the business. For the first time,academia and civil society - to further align its strategy with their DSM also aligned its materiality matrix refresh with its riskviews. The company's stakeholder groups have been identifiedmanagement process, and checked that risks identified in itsbased on the influence they have on the company's operations, Corporate Risk Assessment were reflected in the material topics.

as well as whether they are significantly affected by them. The outcomes from the various stakeholder dialogues inform manyThe topics were validated via internal stakeholder interviews, as well as a formal review process with the Sustainability Leadershipaspects of DSM's strategy such as risk management, business Team - a group of senior managers with the role to championopportunities, and strategic objectives and ambitions.

The continuous dialogue DSM has with its stakeholders takes place through a variety of channels. A non-exhaustive overviewsustainability within the company. The refreshed materiality matrix was signed off by the members of the Managing Board.

As a result of the materiality refresh in 2015, DSM added threeof the ways in which it has engaged with each stakeholder group new topics to its materiality matrix: Sharing economy,is provided on page 29. DSM values engaging with its relevantResponsible business practices and Transparency. The topicstakeholders and maintains open discussions on topics relevant Human rights is now covered under Responsible businessto its business activities and its role in society.

Materiality

For DSM, materiality is about identifying the People, Planet and Profit topics that are most relevant to the company'spractices. Social media has been included in the management approach of the topic Advocacy & reputation. The results of the refreshed matrix highlight the ongoing, emerging and new topics that are most relevant for DSM to report to its stakeholders in 2015.

stakeholders, and plotting them against the impact they have on The 19 subjects have been clustered into four categories: its business. Business impact includes social, environmental and Societal Shifts, Eco Limits, Business Enablers and Trust &financial impact. DSM formally introduced its first materialityAccountability. An explanation of all topics and reference tomatrix in 2012. Since then, it has continuously assessed whether DSM's management approach are described on the next pages. major changes to its material topics and matrix are needed by

Materiality matrix 2015

High interest

Societal interest

Interest

Business impact

Societal Shifts

• 1 Health & wellness

• 4 Malnutrition & nutrition security

• 8 Emerging economies

• 11 Product & food safety

• 19 Sharing economy

  Eco Limits

• 2 Climate change & renewable energy

• 3 Sustainable & circular value chains

• 7 Water security

• 10 Sustainable animal protein

• 13 Bio-based economy

• 14 Biodiversity

• 9 Open innovation

• 15 Careers & employment

• 16 Advocacy & reputation

• 18 Trade barriers

• 5 Responsible business practices

• 6 Transparency

• 12 Tax

• 17 Bioethics

Priority

Top Priority

Societal Shifts

Health & wellnessProduct & food safety

As a company that produces ingredients and solutions in health, nutrition and materials, Product & food safety ranks high in

As a global societal megatrend, Health & wellness is consistently relevance for DSM and its stakeholders. Consumer trends showconfirmed by DSM's stakeholders as an important topic for thethat a substantial majority of people are becoming more awareworld's growing population, and as an area of opportunity for the of and concerned about the source of what they are buying andcompany. DSM is uniquely positioned to offer products and solutions which contribute to individual health and well-being, including the prevention and/or reduction of diseases and increasing quality of life through its solutions to improve health and healthy lifestyles.

Management approach. The topic Health & wellness underlies DSM's strategy. DSM manages its opportunities in this topic through its Nutrition cluster and the Emerging Business Areaeating, as well as aspects such as safe packaging and accurate labeling.

Management approach. For DSM, Product & food safety means having practices in place to ensure ingredient and substance quality, including the production, handling, preparation, storage and use of DSM solutions in ways that prevent risks to health and wellness. DSM manages the subject Product & food safety for its value chains through its People+ program and its Product

(EBA) DSM Biomedical. In the Performance Materials cluster the Stewardship strategy. See 'People+ program' on page 46, topic of health plays a role in marketing solvent-free products in and 'Product Stewardship' on page 54.

close collaboration with its value chain partners. See 'Strategy

2018' on page 18 and 'Review of business' from page 67.

Malnutrition & nutrition security

Malnutrition & nutrition security continues to be a material topic that affects DSM's stakeholders and the business. The effects

Sharing economy

As opposed to the ownership economy, in a sharing economy physical assets are shared as services. For instance, a car owner may allow someone else to rent their vehicle during a period when they are not using it. In doing so, the owner prevents theof undernutrition on health and development (typically as a result car from being underutilized while simultaneously generatingof poverty) are pertinent to both the developing and developedincome. The Sharing economy was recognized by DSM'sworld. DSM offers solutions to address this issue, which include stakeholders as a new and emerging topic that may impact theincreasing affordable access to sufficient, safe, and nutritious food to maintain a healthy and active life.

demand for DSM's high-performance materials.

Management approach. The Sharing economy is beingManagement approach. DSM manages the topic of Malnutrition monitored by DSM as an emerging topic for its Performance

& nutrition security for the developing world through its cross-sector partnerships in nutrition; and for the developed worldMaterials businesses. It is also of consideration in how DSM will look at new business models within the circular economy, asthrough its strategies within the business groups DSM Nutritional sharing capital goods allows joint ownership of products such Products and DSM Food Specialties. See 'Cross-sector nutrition as cars, which will lead to a reduced demand for such products

partnerships' on page 36 and 'Review of business - DSM Nutritional Products' and 'DSM Food Specialties' on page 69 and page 72 respectively.

Emerging economies

Emerging economies remain a material topic for DSM and its stakeholders. The shifts in power and influence from developedin the future. The demand for higher-quality, longer-lasting solutions that support the sharing economy will likely increase. DSM needs to prepare its Performance Materials businesses to provide solutions that allow for greater durability, reusability and recyclability. See 'Review of business - Performance Materials' on page 75.

to emerging economies in terms of political, social and economic Eco Limits considerations means that DSM monitors developments and

manages its activities and operations in emerging economies such as China, India, Brazil and those in Africa.

Management approach. DSM manages Emerging economies

Climate change & renewable energy

Climate change & renewable energy ranks high in importance for both DSM and its stakeholders. This topic refers to the long-term shifts in weather patterns and extreme weather events due to

through its strategic growth driver High Growth Economies. See human-induced alterations. It includes the composition of 'High Growth Economies' on page 14. In addition, the company energy supply and emissions resulting from direct and indirectstrategically partakes in acquisitions and partnerships in emerging economies that meet DSM's criteria. For example, inenergy use.

2015 DSM participated in a joint venture with the Africa Improved Management approach. DSM's approach to addressing climateFoods Ltd. consortium to address malnutrition in Rwanda. See 'Acquisitions & Partnerships' on page 16 and 'Review of business − DSM Nutritional Products' on page 69.

change involves quantifying and tracking greenhouse-gas (GHG) emissions, as well as monitoring its energy consumption so as to be able to initiate projects to improve efficiency and reduce its footprint.

Open innovation is the future

The Chemelot Institute for Science & Technology (InSciTe) is a public-private institute for biomedical materials and bio-based materials founded by DSM, Maastricht University and University Medical Center, Eindhoven University of Technology and the Provincie Limburg. Managing Director Emiel Staring explains how InSciTe uses open innovation to help DSM - among others - bring new ideas to market faster and with a greater chance of commercial success.

"Our mission at InSciTe is to make materials smarter by enabling top scientists and ambitious entrepreneurs to address the societal challenges and economic opportunities of sustainable healthcare and sustainable bio-based production.

InSciTe is a unique institute. We have our own facilities, where people from different organizations and fields of expertise come together and collaborate at the workbench. They aren't in their own labs and then having project meetings to exchange updates, they are working side-by-side. This really is new. It allows us to increase the level of interaction and exchange, thereby accelerating the pace at which innovations can be brought to market.

We are here to 'de-risk' R&D and innovation efforts; pooling resources and linking competences in our unique setting enables participants to lower their financial outlay and risks while at the same time increasing the probability of success. It's about more than the science, it's also about ensuring that the science can make an impact on the market.

Open innovation is the future. I strongly believe that sharing know-how and knowledge has a multiplier effect and I encourage DSM - and all our other participants - to open up further. Trust is the basis of open innovation, and it goes without saying that we have very clear protocols and assurances on who owns project outcomes and intellectual property."

Where feasible, projects are initiated that benefit the environment, and also have other positive consequences, such as internal cost savings. DSM discloses its impact through the Carbon Disclosure Project.

Climate change is also an area of opportunity for DSM to offer products and solutions to help enable the transition to a low-carbon economy. DSM furthermore advocates climate action in support of this transition. For a detailed description of DSM's management approach for Climate change & renewable energy, and 2015 performance, see 'Planet' on page 49 and 'Sustainability statements' on page 123, as well as 'Review of business' from page 67.

Sustainable & circular value chains

Sustainable & circular value chains remains a material topic for DSM's stakeholders as it is becoming ever clearer that real sustainability can only be achieved when all parts of the value chain work together. DSM's suppliers, customers and peers are also becoming increasingly aware of the importance of the circular economy as a concept which can improve the environmental impact of the value chain. For DSM, Sustainable & circular value chains mean low environmental and positive societal impact value chains for its product and system design, which emphasizes use and re-use of materials enabled by the circular economy. The circular economy helps DSM to overcome its impact in relation to resource constraints and move to lower-impact business models, and is most relevant for seeking opportunities within DSM's Performance Materials businesses.

Management approach. DSM's approach to Sustainable & circular value chains is through environmental and social Life Cycle Assessments (LCA) of its products and solutions, and collaborating with its partners in the value chain. See 'People+' and 'ECO+' on page 46 and page 53 and 'Planet' on page 52.

Water security

Water security is defined as the capacity of a population to safeguard sustainable access to adequate quantities of acceptable quality water for sustaining livelihoods, human well-being, and socio-economic development. Due to its effect on ecosystems services and political stability, it is a material topic for both DSM and its stakeholders around the world. DSM commits to the responsible use of water resources in light of the long-term decline in water supply as compared to water demand around the world.

Management approach. DSM has been a signatory to the UN CEO Water Mandate since 2009. In addition, it has voluntarily reported its water policy and performance via the Carbon Disclosure Project since 2011. For DSM's performance in 2015 and its target on water for the period 2016-2020 see 'Planet' on page 47, and 'Sustainability statements' on page 123.

Sustainable animal protein

The topic Sustainable animal protein is an emerging topic of importance for DSM's stakeholders. With the world populationManagement approach. DSM supports the ambitions of the Convention on Biological Diversity and actively contributes to the preservation of biodiversity wherever possible. The companyset to reach nine billion by 2050, one of the biggest concerns for does this by building awareness about natural capital,governments worldwide is food security at an affordable price. The demand for high-quality protein from diverse sourcesbiodiversity and ecosystems; assessing and monitoring DSM's impact on protected areas within its vicinity; developing impactincluding meat, fish, eggs and dairy is also increasing. Added to assessments with stakeholders; and developing measures that that, the adverse effects of climate change on natural resources help mitigate this impact. In 2015, DSM published a positionmeans that sustainable animal protein production is becoming an increasingly important subject for the world to feed a larger, more urban and richer population in the future without endangering fragile ecosystems. DSM is uniquely positioned to respond to this topic by making more efficient use of feed, providing alternatives to antibiotic growth promoters, improving animal health and welfare with the aid of micronutrients andpaper on Biodiversity on itswebsite. For further detailed information on DSM's approach to Biodiversity, see 'Planet' on page 52.

Business Enablers

Open innovation

reducing the environmental impact of animal farming in terms of, Open innovation is an important element of DSM's approach to for example, GHG emissions, air quality in stables and land use. innovation and a business enabler. By combining its own capabilities with the vast pool of ideas, know-how and expertiseManagement approach. DSM manages its opportunities in Sustainable animal protein through its largest business group DSM Nutritional Products, contributing to reducing the environmental footprint of animal husbandry. See 'Review of business - DSM Nutritional Products' on page 69. See alsothat are available outside the company, DSM is better able to discover and develop solutions. Open innovation is of particular importance to DSM's suppliers, customers and partners, as it helps to contribute to their and the company's profitable growth.

DSM's position paper on Sustainable animal protein production Management approach. DSM actively manages an Openonits website.

Bio-based economy

A Bio-based economy remains an important topic to DSM's stakeholders as the world moves toward a low-carbon economy and away from a fossil-based economy. In a Bio-based economy, production will rely on the use of natural inputs as is the case with renewable energy, biofuels and bio-based chemicals. By ensuring the renewability of raw materials, a bio-based economy makes a circular economy possible. The EBA DSM Bio-based Products & Services focuses on pioneering advances in biomass conversion and seeks to demonstrate the commercial viability of renewable technologies in collaboration with strategic partners in the value chain.

Management approach. DSM manages the topic of Bio-basedinnovation policy and collaborates with suppliers, customers and academic institutions in the name of innovation. See 'Review of business − Innovation Center' on page 81 and 'Stakeholders' on page 29.

Careers & employment

The topic of Careers & employment is important to DSM and its stakeholders − both within and outside of the company. DSM aims to provide rewarding career opportunities, engaged staff, a healthy work-life balance and a diverse workforce where individual differences are respected.

Management approach. DSM's approach to addressing careers & employment, includes managing the topics Safety and Health, ONE DSM Culture Agenda, Talent Development & Attraction, Mentoring, Organizational Learning and compliance with theeconomy through the strategy and activities of its EBA DSM Bio- International Labour Standards of the International Labour based Products & Services. See 'Review of business - DSM Bio- Organization (ILO). See 'People' on page 46.

based Products & Services' on page 82.

Biodiversity

Biodiversity and healthy ecosystems are among the conditions

Advocacy & reputation

For DSM, Advocacy & reputation means supporting the company's sustainable business interests and core values. DSMnecessary for a sustainable world. Biodiversity is the term given interacts with government, policymakers, industry associationsto the variety of life on earth and the natural patterns it forms. Changes can influence the supply of ecosystem services − theand societal interest groups on areas of mutual interest to create a receptive environment for its solutions. It encouragesbenefits people obtain from ecosystems. These include services legislators to promote competitiveness, sustainability andsuch as food, water, and clean air; regulating services such as flood and disease control; cultural services such as spiritual, recreational and cultural benefits; and supporting services, such as nutrient cycles, that maintain the conditions for life on earth.

innovation. DSM's reputation underpins its license to operate with stakeholders both within and outside its direct value chains.

Management approach. DSM considers dialogues with government authorities a constructive part of the legislative decision-making process. It manages its relationship with

government authorities through a global network of regional public affairs professionals. DSM is committed to acting responsibly and transparently when it comes to sharing its expertise with policymakers and government authorities in all markets and is registered in the EU Transparency register. In addition, the company works with progressive business coalitions, societal interest groups and international institutions on various topics including nutrition, innovation, climate and energy. It also supports public-private collaboration as an essential part of its engagement. The company adopts a structured approach to issue management in which cross-disciplinary teams identify, monitor and where necessary instigate actions on key issues for the company and its businesses. Alongside daily business practices, DSM's reputation is bolstered by its stakeholder outreach and engagement as well as by social media and campaigns such as 'Science can change the world' to promote science with acompetition law, trade controls and anti-bribery & corruption measures.

Management approach. See 'Corporate governance' on page 91 and 'DSM Code of Business Conduct' on page 60.

Transparency

The topic of Transparency is a new topic identified as being material for DSM in 2015 by its stakeholders. For DSM, this means functional transparency of information to meet the needs of different types of stakeholders including (but not limited to) employees, customers, investors, governments, civil society and local communities. Examples of topics include tax payments, disclosures on the environmental and social impacts of DSM's solutions and remuneration of the Managing Board.

Management approach. DSM has published an Integratedsocietal impact. For more information on how DSM engages with Annual Report since 2010, with the objective to link its financialthese groups, see 'Stakeholders' on page 29.

Trade barriers

Compliance with trade controls remains a material topic for DSM. Within this topic the company has to deal with legislation on strategic goods, sanctions and embargoes, sanctioned parties, restricted chemicals and technology controls. DSM actively follows the international geopolitical developments and the consequences for the trade barriers it has to cope with. During 2015, legitimate trade with embargoed countries was severely affected by the financial restrictions on facilitating the receipt of payments by financial institutions.

performance with its sustainability performance. Through integrated reporting and application of compulsory and voluntary reporting frameworks and guidelines, DSM aspires to report transparently to its relevant stakeholders about how it creates value on the dimensions People, Planet and Profit. In China, DSM has published a Corporate Social Responsibility report on an annual basis since 2007. In 2015, DSM China was recognized by the Shanghai Municipal Commission of Commerce and the Shanghai Association of Foreign Investment for its continued transparency of information. For DSM's performance, see 'Consolidated financial statements' on page 124 and 'Sustainability statements' on page 122.

Management approach. Compliance with trade controls

Tax

legislation is embedded in the DSM Code of Business Conduct. In recent years, fair share tax contribution has become aDSM has standard business processes in place to guarantee compliance with these subjects. Corporate Requirements onprominent societal issue. DSM believes that a responsible approach to tax is an integral aspect of sustainable business.

Trade Controls Compliance came into force per 1 January 2015 DSM views the fulfilment of its tax obligations as part of theand have been implemented. Trade Controls Compliance Managers have been appointed within the company to ensure compliance in the businesses. Reporting, training and risk assessment guidance are in place. See also 'Code of Business Conduct' on page 60.

Trust & Accountability

Responsible business practices

Responsible business practices is important for both DSM and its stakeholders and provides DSM with a license to operate in its dynamic and international environment. A company that abides by ethical codes of behavior is able to draw moreprocess of creating long-term value for all stakeholders.

Management approach. DSM's tax position is consistent with the normal course of its business operations and reflects the corporate strategy as well as the geographic spread of its activities. It strives to be compliant with the letter and spirit of national and international rules, regulations and best-practice guidelines (such as theOECD Guidelines for MultinationalEnterprises) and is in line with the arm's length principle.

DSM supports the idea of a global solution for fair tax policies and systems. Thus, DSM closely monitors and provides input on the OECD initiative on Base Erosion & Profit Shifting. Thecustomers, attract and retain employees, and engage investors. company is transparent towards tax authorities in all theFor DSM, Responsible business practices includes a wide category of subjects related to doing responsible business as mentioned in DSM's Code of Business Conduct and Supplier Code of Conduct; topics include: human rights, Safety, Health and Environment (SHE) practices, governance & compliance,countries in which it operates and works closely together with them to determine the amount of tax due.

DSM's contribution to society includes the provision of employment to more than 20,000 people around the world. In addition to corporate income taxes, the company pays many

other taxes including payroll taxes and social security

Management approach. DSM manages the topic of Bioethics bycontributions on the wages of its employees, value added taxes, continuously engaging in an open dialogue on the benefits andcustoms duties, property taxes, etc. All these taxes are arisks with its stakeholders, including the scientific community,significant source of funding of public services by governmental industry, NGOs, governments and the general public. Theinstitutions at several levels worldwide. DSM sees it as its responsibility to contribute to this.

DSM's Managing Board is responsible for establishing the approach to taxation under the supervision of the Audit Committee of the Supervisory Board. Proper organization,company adheres to applicable regulations and legislation and applies the highest standards. It is transparent about its practices and uses science-based safety assessments, thus enabling the competent authorities to assess and approve its use of innovative strain development technologies and the resulting GMMs, which are for contained use in its productionprocedures and processes are in place at DSM between Group processes. DSM believes biotechnology can offer uniqueTaxation, the business, and other support functions andsolutions to global challenges related to a growing and agingfunctional excellence departments. The aim is to create a strong population and the depletion of fossil resources. See DSM's interconnection in order to keep everyone aware of relevant tax position paper on biotechnology onthe company's website. legislation and to ensure compliance. Compliance with both

direct and indirect tax matters is monitored through a Tax Control Framework in order to achieve an effective, efficient and

Stakeholders

transparent tax function. The Tax Control Framework is a tax risk DSM engages in an ongoing dialogue with its key stakeholdersmanagement and control system, which ensures that Group Taxation is aware of the worldwide tax risks for the company. Group Taxation possesses sufficient insights to adequately manage these risks. The key stakeholders in the Tax Control Framework are well-established and include the Supervisoryto share thoughts and views, and to deepen the company's insights in order to respond to their needs and create shared value. More information on how DSM engages with its employees on topics such as safety and health, talent development and labor rights can be found in 'People' on pageBoard, Managing Board, Executive Committee, Group Taxation, 39. For more information on how DSM engages with civilbusiness, external auditors, as well as the tax authorities in countries where DSM is operating. For further detailed information see 'Taxation at DSM' on the company'swebsite.

Bioethics

Bioethics relates to responsible practice concerning the environmental, ethical and moral implications of new genetically modified organisms, biological discoveries and biomedical advances, as in the fields of genetic engineering and drug research. Biotechnology is a field of applied biology that involves the use of cells and proteins derived from these cells in bioprocesses for a broad range of applications such as pharmaceuticals, food, agricultural products, bio-based chemicals and materials, as well as fuels. Genetically Modified Micro-organisms (GMMs) are organisms with genetic material that has been altered via biotechnological means that are industrially used by definition in contained use (closed steel vessels). DSM's latest consultations with stakeholders show that the debate now focuses on the role GMMs can play in nourishing the world's population by 2050. New or unfamiliar technologies like genetic modification often raise concerns in society about their possible implications for public health or the environment, and may trigger ethical discussions. DSM is aware that consumer acceptance of new technologies cannot be taken for granted, and so makes addressing safety and other concerns a top priority.

society on topics such as human rights, see page 46. DSM's engagement with customers and suppliers is described in the following section 'Partners in the value chain'. A model of how DSM creates value for its stakeholders through its capital inputs and value outcomes can be found on page 22.

Stakeholders

Stakeholder group Employees − create value for DSM's stakeholders by helping them provide solutions to some of the world's greatest challenges

How DSM engages

Surveys, engagement events, - In October, DSM employees answered the Employeeintranet, internal campaignsInvestors - DSM aims to provide an attractive financial return to its shareholdersAnnual General Meeting, Capital Markets Day, conference calls, road shows, investor indices (e.g. DJSI), surveys

Examples 2015

Engagement Pulse Survey with a response rate of 78% and an engagement score of 69%. Local management teams will work with employees to improve on focus areas, such as valuing employees' diverse perspectives more.

-- In November, DSM organized a Capital Markets Day for financial analysts to discuss strategic progress and the improvement of financial performance.

-Science research institutes - DSM openly cooperates with renowned universities and science institutes

Financial support, knowledge - & research, sharing facilities, lectures

- Founded by DSM with Dutch universities and Provincie

Limburg, the Chemelot Institute for Science & Technology (InSciTe) opened a biomedical facility at Brightlands Chemelot Campus in September. This collaborative workspace will advance proven biomedical concepts to clinical applications through open innovation.

NGOs and civil society - DSM Meetings, discussion panels,works together with other organizations to jointly find solutions to societal challenges

philanthropic eventsCommunities - a good relationship with parties that are geographically close toOpen days, news bulletins, social media, education, support through localDSM's operations is important initiatives to maintain the company's license to operate

-

- Through its co-chair advisory role in the SUN Business

Network, DSM's advocacy helped lead to 186 companies making public commitments to improving nutrition and tracking progress annually.

-- In India, DSM partners with a local community radio station to raise awareness of health issues among adolescents and couples in Gurgaon. The region also provides educational support to girls living close to DSM facilities.

Governments - DSM engages Meetings with officials, with governments individually, publications, position papers as part of a coalition or through on DSM website, case

its memberships in relevant trade associations

studies, letters, reviewing proposed legislation, engagements in trade associations

DSM's young professionals network, DSM NEXT is committed to share knowledge and gain insight into DSM's businesses through many activities. In 2015, this included site visits, workshops, and webinars.

DSM defined a renewable energy strategy for its operations in the next strategic period taking into account concerns from Eumedion and VBDO. DSM also participates annually in socially responsible investment indices such as DJSI, FTSE4Good and Sustainalytics.

Led by the Circularity Center, DSM, together with Lankhorst Ropes, Van Gansewinkel and the Port of Rotterdam, investigated end-of-life solutions for maritime ropes, fishing nets and gloves made with Dyneema®.

DSM's involvement in Climate Week NYC included an eventon nutrition and the Sustainable Development Goals hosted by GAIN, SUN Business Network and Devex. DSM CEO/ Chairman of the Managing Board Feike Sijbesma took part in a panel discussion on ways to create successful multi-stakeholder partnerships.

DSM Food Specialties in Delft (Netherlands) publishes a twice-yearly news bulletin which keeps the community up to date on developments at the site.

- DSM led an initiative in which 78 companies formed a coalition and signed a joint letter urging the world's leaders to reach an ambitious climate deal at COP21 in Paris.

-DSM formed an ad hoc coalition with industry peers on the topic of the circular economy. A position paper was sent to a wide range of stakeholders in Brussels (Belgium) to encourage the European Commission to design an ambitious circular economy legislative package.

Partners in the value chain Customers

sustainable solutions that fulfill the needs of the market. DSM's brand value as assessed by Brand Finance has grown

DSM embraces customer centricity in its focus on excellence in consistently over the last five years and in 2015 increased by marketing and sales. The company is committed to becoming a 20% to € 729 million (2014: € 607 million).

part of the top quartile of customer-centric companies and has developed a roadmap to continuously improve its marketing and Customer loyaltysales capabilities. This roadmap includes how DSM engagesDSM uses the Net Promoter Score® (NPS), a customerwith its customers, taking into consideration digitization and new interaction cycle that has become the lead performanceways of connecting; measuring and tracking performance in customer loyalty and complaints; and business development projects with new and existing customers.

Engaging with customers

indicator for loyalty and advocacy tracking to measure its performance with customers. NPS equips the company with the processes to drive customer centricity across the business. DSM is a frontrunner in using the NPS methodology in its sector. The essence of the NPS methodology is to create a closed loopThe digital world plays an increasingly important role for DSM in to continuously improve the customer experience. DSM hasengaging with its customers and other relevant stakeholders. With over 90% of business-to-business decision makers orientating themselves online before making a purchase decision, DSM aims to provide its customers with good online experiences. By improving search engines with relevant keywords, for example, DSM has been able to bring additional traffic to specific market and product websites. A further example is a new online health benefit platform'Improve yourdeveloped a tailored NPS program that is used by all its business groups. In 2015, DSM finalized the implementation of NPS as the lead performance indicator of customer centricity in the organization, and maintained a high overall score for DSM of 35, remaining amongst the leading companies in its sector.

Business development projects

DSM's business development approach is to work with partnersdigestion'launched by DSM Nutritional Products in 2015, which within and across its value chains to focus on solutions thatprovides a unique range of solutions for customers to create customized products to support different requirements for digestive health. DSM also engages with its customers through

address societal challenges collectively, leading to shared value creation for all parties involved. Collaboration is an effective way to drive DSM's sustainability agenda and to come up with

more traditional means. In 2015 this included participation in 360 innovative solutions that benefit business and society. Antechnical seminars and congresses to discuss industry challenges and possible solutions with customers and thought leaders, and a presence at more than 400 tradeshows and exhibitions to showcase DSM's solutions for its markets.

A growing number of companies connect their brand to theirexample of this are lines made with Dyneema® to replace steel wire rope for use in heavy lifting and towing. Developed in close partnership with its customer Samson, the new solution leads to faster, more efficient rigging and the reduction of health, safety, security and environment issues.

In 2015, DSM further developed its approach with existing customers through its customer executive sponsorship program, which was launched in 2014. This program, which links senior executives to key DSM accounts, invites customers to have open discussions with DSM's top management in order to maintain strong relationships and enable the fulfilment of both companies' business and social responsibility visions. An example of how this program resulted in a strategic project with a customer is DSM's partnership with MedDay to produce pharmaceutical grade D-Biotin for use in the treatment of progressive multiple sclerosis. The partnership covers the manufacturing and exclusive supply by DSM for MedDay's lead product, which is currently being investigated in a series of clinical trials.

Close collaboration with customers allows DSM to tackle societal issues, such as climate change. Making carbon footprint declarations available to customers, as well as their customers in turn, provides transparency with respect to emissions and aidsbottom line, as evidence shows a compelling link between strong in efforts by DSM's customers to reduce carbon emissionsbrands and market performance. DSM considers its brand an important business asset and aspires to be a company with a strong brand and reputation for providing innovative and

across their own value chain. For example, DSM Engineering Plastics makes the carbon footprint of a number of main compounds available in a database that customers can access.

DSM also engages with customers and organizations across multiple sectors to combat malnutrition and to find solutions to treat diseases. As a strategic partner in the supply of micronutrient powders and supplements, DSM not only distributes these products through its partnerships (such as the UN World Food Programme), but also through other commercial channels. For example, the South African Department of Health distributes DSM's Mi-Vitamin™ and i-care™ ranges for use by patients in its national health system. In Asia, DSM focused its product and business development on consumers to develop fortified rice kernels with the look and taste of normal rice. DSM can now bring this concept to a wider market and contribute to addressing micronutrient deficiencies with this solution.

Customer complaints

In 2015, DSM continued its integrated complaint management process, which stimulates relevant continuous improvements in products, processes and services for the benefit of customers. As a learning and customer centric organization, DSM sees every customer complaint as an opportunity to further improve on the solutions it provides, as well as the corresponding processes. For this, DSM recognizes the importance of an effective customer dialogue.

An example of DSM's open handling of complaints is by DSM Food Specialties, concerning the specifications of one of DSM's preservation ingredients for a large beverage producing company. DSM's efforts to solve the issues through open communication and the optimization of quality test methods led to nomination by this beverage producer as a top-10 preferred supplier in 2015. The customer team was awarded a 'Hall of Fame' award and valued by the customer for their open and positive attitude and support.

Another example is at DSM Nutritional Products, which has found that its average investigation response time for product-related complaints can be reduced by 38%. This business has set targets for its operational teams to drive swifter responses and these are followed up on a weekly basis. Complaint investigators give incoming complaints their highest priority, and start immediate actions together with customer service agents and account managers. Close and active communication with customers enables DSM to better understand the issues and their impact for the customer, as well as to come up with satisfactory solutions.

Suppliers

DSM needs to be smart in how it engages with its 40,000 suppliers. DSM does this through a Supplier Sustainability Program (SSP), which is implemented through annual Supplier Sustainability Plans and Sustainability Roadmaps. Progress towards targets is shared on a monthly basis within Sourcing and on a quarterly basis with the Managing Board. The Supplier Sustainability Plan 2015 addressed a number of relevant topics for the materiality matrix: Sustainable & circular value chains, Bio-based economy, Responsible business practices and Climate change & renewable energy.

DSM Supplier Sustainability Program

Supplier Sustainability Program (SSP) strategy

In 2015, DSM assessed the maturity level of its SSP along four dimensions: Strategy/Plan; Supply Risk & Opportunity; People, Infrastructure & Measurements; and Processes. The maturity assessment was used to indicate areas of improvement to meet the ambition level for 2020. The SSP was also benchmarked against the practices of other leading sustainable companies. The results of the benchmark and the maturity assessment were incorporated in the Sustainable Purchasing Roadmap 2016-2020, which aims to anchor sustainability even more firmly in DSM's daily sourcing activities. More information about the maturity assessment of DSM's SSP can be found onthecompany's website.

Internal skills and capabilities

Good progress was made in 2015 in internal capability building. By the end of 2015, more than 300 employees in the sourcing community had participated in sustainability trainings. These trainings underpin the importance of sustainability, and provide practical tools to make it an integral part of daily work in sourcing. DSM once again organized an internal Strategic Sourcing Award and Key Supplier Management Award in 2015, in which sustainability was a key criterion for selecting the winners in both categories.

Collaboration

DSM works with external partners to enhance collaboration in the supply chain. These include the Roundtable for Sustainable Palm Oil (RSPO), Together for Sustainability (TfS) and Solidaridad. DSM joined RSPO as it is conscious of potential risks to the environment, human rights and labor practices in the palm oil supply chain, and palm oil is an ingredient that is used, albeit on a very limited scale, in DSM's human nutrition activities.

DSM has been sourcing sustainable palm oil derivatives for the DSM Nutritional Products Human Nutrition & Health business since 2014. Two key production sites were awarded RSPO Mass Balance Certification in 2015 and the ambition is for all remaining sites to achieve the same certification by 2017. DSM also anticipated and reacted to questions from the World Wide Fund for Nature (WWF) and SOMO on the use of palm oil and mica respectively in DSM processes or products, sharing information openly and transparently.

Compliance

DSM focuses on approximately 1,000 critical suppliers. Critical suppliers include those that are providing critical components, are located in potentially high-risk countries, supply a high volume of products or services, are non-substitutable, or have the potential to create shared value in areas of innovation and sustainability.

In 2015, DSM began actively collaborating with TfS. The purpose of this initiative is to develop and implement a global assessment and audit program to screen and improve sustainability practices within chemical industry supply chains. DSM benefits from

DSM uses itsSupplier Code of Conduct(SCoC) and carries out access to the higher standard and the larger number of assessments and audits to check suppliers' compliance with the assessments and audits which are executed by other TfS norms and values for doing business with DSM. In cases where members and shared on the TfS platform. Since the start of the risks or breaches are identified, DSM engages with the supplier initiative, the collective (potential) supply base of the TfS to set up and execute an improvement plan. Should the breach members has been rated by 4,600 EcoVadis assessments andor non-conformity persist, DSM will take measures to mitigate

446 TfS audits. In 2015, a total of 2,580 sustainabilitythe risks or ultimately terminate the relationship with the supplier assessments were shared among TfS members and 179 new in question. The proportion of DSM's spend covered by its SCoC TfS audit reports were received by the initiative.

remained at a high level of 95% in 2015.

• 1 Total number of DSM suppliers assessed by TfS members

• 2 The lower target set for Sustainability audits in 2015 resulted from DSM's membership of TfS

Using this collaborative approach in 2015, DSM was able to

Better business

screen more than 3,300 suppliers from its total base in 2015, of As part of its drive to foster better business through its supplierwhich 2% were identified as 'risk suppliers' with regard to environment, impact on society, human rights and labor conditions. In line with internal follow-up guidelines,

solution projects, Sourcing engages in proactive dialogue with suppliers in order to drive the business agenda on topics such as climate change, food & nutrition security, health and the

investigations were initiated with these suppliers. In one case this circular economy. In this context, Sourcing pursues initiatives toresulted in an audit in 2015. The assessments that were performed by other TfS members will be followed up in due course. DSM was able to screen 6% of new suppliers with regard to their environmental performance, impact on society, human rights and labor practices.

In 2015, sustainability compliance was also integrated into the standard supply risk management approach and the new supplier onboarding process. While compliance remains the cornerstone for DSM to achieve a sustainable supply base,create joint value, awareness and engagement in areas related to ECO+ and People+.

China Triple P Project

DSM has run the 'China Triple P Supplier Engagement and Capability Building' project since 2013. The project, which aims to engage suppliers to jointly create a more sustainable supply chain in China, is run in partnership with Solidaridad, a global non-governmental organization specialized in sustainability audits. Participating Chinese suppliers are provided with theprocurement activities will increasingly focus on so-called 'better knowledge, experience and tools to set up their own supplierbusiness'.

sustainability programs.

Phase 2 of the project was successfully executed from July 2014 People+to August 2015. Sustainability, productivity and human rights experts organized workshops and offered in-house technicalSuppliers play an important role in achieving DSM's People+ ambitions. DSM actively engages with its suppliers to build theirsupport to factories interested in making genuine improvements. capabilities, enhance working conditions and make safetyThe project supported DSM's suppliers with their own SHE programs, energy efficiency improvements and footprintimprovements, an example of which is the China Triple P project described above. DSM is also keen to improve the workingreductions, as well as communications between employees and conditions of its own employees and the surroundingmanagement. In this phase, approximately each € 1,000 invested by DSM triggered initiatives that resulted in an estimated € 60,000 in efficiency improvements at the participating suppliers. The five participating suppliers completed 38 improvement projects.

community. In North America, DSM Nutritional Products collaborated with one of its suppliers on Safety, Health, Environment and Quality to improve working conditions for its employees.

In China, DSM and catering service supplier Sodexo worked together on several programs to improve the provision of healthy meals and waste management, which was welcomed by DSM employees. In the Netherlands, DSM and an energy supplier provided the Ronald McDonald House for the families of seriously ill children in Maastricht with solar electricity. These savings on the energy bill mean that more can be spent on providing care and support to families with hospitalized children.

Collaboration in the value chain

ECO+

As part of its ECO+ approach, DSM continued to engage in joint DSM's ECO+ and People+ programs are instrumental for initiatives with suppliers that led to environmental benefits in the identifying and marketing DSM's sustainable solutions, and alsovalue chain, such as projects in packaging, logistics, and reduction in raw materials and carbon emissions. Via the CO2 Emission Reduction Initiative, the physical distribution team investigates suppliers' footprints in road transportation, marinesupport engagement with key external stakeholders, such as suppliers, customers, NGOs and sector associations. Discussing today's environmental and societal challenges and possible solutions brings in new perspectives and opportunitiesand packaging to explore opportunities for improvement. This is to the existing dialogues with business partners. Collaboration in a continuation of the Green Tender Initiative that began in 2012 the value chain has contributed to new innovations, value

with the aim of achieving a 20% reduction in emissions

proposition development, advancement of sustainability metricsassociated with logistics and packaging. Since 2012, over 25% and to DSM being given preferred business partner status. of global spend on physical distribution has been covered by the

Green Tender Initiative. The cumulative CO2 emission reduction In 2015, DSM and Nestlé joined forces to measure the per unit of measure compared to 2010 reached 14% at the end environmental, social and health impacts of a fortified milkof 2015.

DSM considers GHG impact in its global sourcing selectionproduct in the Asian market. The project resulted in insights and recommendations for the development of products with a better sustainability impact and for integrating sustainability into

process. Based on the insights of an LCA for supply of nitrogen, innovation and communication. DSM understands the impact of scope 2 and 3 GHG emissions for each supply option. This has enabled a sourcing process that

includes supply guarantee, quality and cost, as well as GHG impact. For example, the DSM Dyneema plant in Heerlen (Netherlands) will annually reduce 42% of its GHG emissions associated with nitrogen supply.

"The collaboration supports a mutual cross-fertilization of ways of working in the area of sustainability and innovation, beneficial for the early identification of new opportunities as well as mitigation of areas of risk." - Anne Roulin, Global R&D Sustainability Manager Nestlé

In another initiative, DSM scientists and suppliers facilitated by Sourcing delivered a process improvement for the production of vitamin E. This resulted in the use of fewer raw materials, which In another collaboration to tackle health issues, reducing saltenabled DSM to annually reduce 800 tons of CO2-equivalent emissions and improved the commercial agreement with theintake has been identified as an important and cost-effective measure to improve public health outcomes. Unilever and DSMsupplier, demonstrating that sustainability can be a real business collaborated on a modeling case study to assess the publicdriver for DSM. In 2015, Sourcing also helped shape DSM's Renewable energy strategy. See 'Planet' on page 49.

health benefit from salt reduction in soup. The study demonstrated that small actions, such as reducing salt in soup, can make a difference to human health.

A further example is a cooperation between DSM and Praxis. Praxis is one of the biggest DIY chains in the Netherlands. In October 2015, DSM and Praxis together launched a new high-performance paint for which DSM provided Decovery®, a bio-based component, which has no toxic emissions. This collaboration and joint marketing effort are new means to support DSM's market development.

Collaborative platforms and networks

DSM collaborates with like-minded peers from other sectors toProfit so that practical guidance can be provided for the finance and accounting community. Building on its 2014 contribution to the A4S guides'CAPEX: a practical guide to embeddingsustainability into capital investment appraisal'and'Enhancinginvestor engagement', DSM participated in the project 'Integrated Management reporting' in 2015. This project focuses on embedding environmental and social considerations into management reporting to enhance business decision making. Learnings from the Network's activities have led to further integration of sustainability considerations into DSM's business processes. For example, as a result of participation in the CAPEXcreate social and environmental measurement and performance project, DSM is starting to address specific criteria related to the standards. Together with cross-sector companies and business environment and people for large capital investment projects. organizations, DSM has been an advocate on urgent themes like climate change, nutrition and the pricing of externalities.

World Economic Forum (WEF)

DSM is a strategic partner of the WEF and is involved in initiatives including the New Vision on Agriculture platform and the Global Agenda Council on Food & Nutrition Security. At the Annual Meeting of the WEF in Davos (Switzerland) in 2015, DSM sponsored the UN World Food Programme (WFP) tent as in previous years, and organized events and discussions on hunger, malnutrition and climate change. The company was also represented at various regional meetings, including the Annual Meeting of the New Champions in Dalian (China).

World Business Council for Sustainable Development (WBCSD)

DSM is a member of the WBCSD, a business platform aiming to DSM's CFO Geraldine Matchett and HRH The Prince of Wales develop solutions that contribute to environmental and social

challenges. DSM takes a leading role in various projects. The company co-chairs the 'Reaching Full Potential' project to develop guidance on assessing the social impact of chemical projects in the value chain. This working group builds on experiences from DSM's People+ program and the Roundtable for Product Social Metrics. It is also active in the chemical sector working groups on the Low Carbon Technology Partnerships Initiative Framework and Low Carbon Transport Fuels. In November DSM announced, alongside AkzoNobel, Evonik, Solvay, and Mitsubishi Chemicals, a commitment to reduce emissions within the chemical industry by an additional 1.4 gigatons of CO2-equivalents by 2030 through advanced innovation and faster deployment of solutions at scale. DSM is closely involved in setting new standards for valuation methodologies in the multi-industry working groups 'Natural Capital' and 'Social Capital', bringing in its experiences with ECO+, People+ and internal valuation pilots.

Accounting for Sustainability (A4S)

DSM's CFO Geraldine Matchett takes an active role in the A4S Chief Financial Officer Leadership Network, launched by HRH The Prince of Wales in December 2013. The Network brings together leading CFOs from large businesses seeking to embed the management of environmental and social issues into business processes and strategy. DSM shares its own experiences and case studies on integrating People, Planet and

Valuing natural and social capital

DSM supports the movement towards greater transparency through valuing environmental and social impacts. In 2014, DSM signed a Green Deal with the Dutch Government, which is a collaboration on transparency of natural and social capital. An initiative of the nature conservation organization IUCN Netherlands, MVO Nederland and True Price, its purpose is to share and develop knowledge on the topic. In line with this commitment, DSM has been exploring the valuation of positive and negative environmental impacts at a product level. Over 2014 and 2015, DSM extended its study to valuing social impacts, with the product OatWell® from DSM Nutritional Products. DSM will use this case study to officially pilot test the Natural Capital Protocol in 2016. See also

'Review of business - DSM Nutritional Products' on page 69.

Dutch Sustainable Growth Coalition (DSGC)

The DSGC brings together a group of large Dutch multinational enterprises: AkzoNobel, DSM, Friesland Campina, Heineken, KLM, Philips, Shell and Unilever. They are recognized for their leading role in sustainable business development and seek to develop innovative strategies, business models and products that overcome societal challenges. In December 2015, the DSGC published its fourth report, which focused on the circular economy. DSM contributed product cases including its joint venture on the Niaga® technology, an innovation that enables

the industry to close the carpet materials loop through repeated Cross-sector nutrition partnershipsrecycling and re-use of materials.

Global Goals Charter

As a leading micronutrient provider, DSM develops innovative solutions for improved nutrition. In order for these solutions to have the broadest reach, DSM works with partner organizations

In the Netherlands, DSM partnered with Worldconnectors, True that have direct access to beneficiaries. DSM's nutritionPrice and others to found the Global Goals Charter, a platform with over 70 signatories representing business, public sectorpartnerships focus on the following objectives: wider base of scientific evidence and endorsement; increased market forand civil society including, among others, UNICEF NL and Oxfam nutrition products; and improved employee engagement. NL. In September 2014, DSM kicked off the'Charter on the roleBesides financial contributions, DSM also commits to

of business, civil society and cross-sector partnerships in thepost-2015 development agenda'. The charter describes whatcontributing its time, technical assistance, products and volunteers. DSM's main partners are described below. For asignatories can do to contribute and commits them to take joint more extensive list and description of DSM's other nutritionaction by creating partnerships. DSM will continue to play a leading role in the platform while evaluating the various new methods being introduced to demonstrate impact on the Global Goals for Sustainable Development.

Cross-sector nutrition partnerships

platforms and partnerships, seethe company's website.

PartnerPartnership benefits

Impact

• - Product development

• - Value chains for enhanced nutrition

• - Advocacy

• - Employee engagement and development

• - Corporate reputation

The DSM-WFP partnership 'Improving Nutrition, Improving Lives' aims to improve the nutritional value of the food that WFP distributes through product innovations such as fortified rice and a product aimed at people living with HIV/AIDS. The partnership now reaches over 25.1 million people per year with improved nutrition through the creation and reformulation of products. Additionally, DSM and WFP collaborate on training and development initiatives and on employee fundraising campaigns, including over € 145,000 raised by DSM and its employees for Nepal earthquake relief efforts in 2015.

• - Value chains for enhanced nutrition

• - Market-based solutions for improved nutrition

• - Advocacy

• - Corporate reputation

DSM and UNICEF collaborate to support micronutrient programs in Nigeria and Madagascar. The partnership helped build capacity by supporting the African Nutrition Leadership program, examined the supply chain of micronutrient powder sachets and advocated for the importance of nutrition-related indicators in the new Sustainable Development Goals.

• - Value chains for enhanced nutrition

• - Market-based solutions for improved nutrition

• - Advocacy

• - Corporate reputation

DSM and World Vision International collaborate on a flagship project in Tanzania called Miller's Pride, which creates shared value through fortifying hammer-mill produced maize flour with essential micronutrients, reaching a largely under-served population. In addition to fortification, the partners work with the millers to build business expertise, improve food safety and increase markets and profits for the millers.

• - Market-based solutions for improved nutrition

• - Employee engagement and development

• - Corporate reputation

Partners in Food Solutions is a multi-sector partnership between the companies DSM, General Mills, Cargill, The Hershey Company and Bühler working in partnership with USAID, TechnoServe and Root Capital to serve more than 600 small and growing food companies throughout Africa. Employee volunteers dedicate their technical and business expertise to improving the performance of food processors and millers in Africa with the goal of improving food security, nutrition and economic development.

• - Advocacy

• - Market-based solutions for improved nutrition

• - Employee engagement and development

• - Corporate reputation

The SUN Business Network represents the private sector in the Scaling Up Nutrition Movement. The Network recruits and supports companies who pledge to contribute to the improvement of global nutrition. DSM advocates for business to take a leading role on this important issue, with CEO/ Chairman of the Managing Board Feike Sijbesma co-chairing the Advisory Group of the Network. DSM assists in the recruitment and management of this 186-company strong network of national and multinational companies by supporting workshops and seconding employee volunteers.

Philanthropy and sponsorships

Europe

Fundraising in support of the Nepal earthquake relief effort raisedDSM supports causes and initiatives that relate to its mission of over € 145,000 from DSM employees (of which € 50,000 wasusing Bright Science to create Brighter Living. It does so by providing products, expertise and funding. In 2015, DSM donated more than € 3.5 million to a range of initiatives. DSM

matched by DSM) for nutrition programming by WFP. In addition, DSM donated € 50,000 for emergency assistance by the Dutch Red Cross in Nepal. In December, DSM also supported the

makes no political donations, as outlined in its Code of Business Dutch Red Cross in the national annual fundraising campaignConduct. Seethe company's website.

China

As a global partner of the WFP, DSM in China has been taking part in the Walk the World fundraising event since 2007. With a theme of "Hunger is Solvable: Bright Experience", this year's event in September attracted 2,000 DSM employees and their families, as well as partners at 13 sites in 12 cities. Employees from DSM joined with WFP and China Foundation for Poverty Alleviation (CFPA) staff to raise funds.

Donations were given to WFP's School Feeding Programmes worldwide and the CFPA's school meal program in impoverished areas of China. In all, DSM and its partners were able to provide more than 50,000 nutritious meals with milk and eggs to children in poor areas of Yunnan and Sichuan provinces.

"In China, people in less-developed areas still need help; hunger and malnutrition remain key issues. As one of the global leaders in health and nutrition, we at DSM are responsible for leveraging our unique scientific expertise to develop micronutrient innovations to help address the issue." - Weiming Jiang, Regional President DSM China

Serious Request 2015. Together with its employees, the company raised over € 125,000 for the campaign in support of education for children from conflict areas.

Sight & Life

Through its continued support of the now independent (since 2015), non-profit humanitarian nutrition foundation Sight & Life (which became independent in 2015), DSM contributes to the body of knowledge and awareness of malnutrition & nutrition security. Sight & Life's main research topics are in the field of implementation science and leadership capacity development in nutrition.

External recognition

People at DSM are proud when DSM's sustainability and innovation efforts, either as a company or individual products and solutions, are recognized by the outside world. A selection of some of the awards and other forms of recognition that DSMreceived from non-governmental and trade organizations, customers, suppliers and the academic world in 2015 can be found in the table below. Other awards and external recognition for the business groups can be found in 'Review of business' from page 67.

Organization

Recognition

Association of International Chemical Manufacturers (AICM)Islamic Food & Nutrition Council of America (IFANCA)Carbon Disclosure Project (CDP)

RobecoSAMCannes Film FestivalEuropean Chemical Industrial Council (CEFIC)

Het Financieele Dagblad (FD)Global InitiativesIn March, IFANCA named DSM 'Company of the Year' for its outstanding compliance with Halal policies.

In June, DSM received AICM's Responsible Care Award with nine peers. AICM is an initiative with an aspiration to stimulate sustainability in China's chemical industry, as well as to support communities affected by the sector's operations.

In August, CDP reviewed 18 chemical corporations with a combined market capitalization of over USD 500 billion in seven categories with regards to environmental protection policies. With an A grade in three of the seven categories, DSM ranked second following DuPont. DSM also received the highest obtainable grade for carbon regulation readiness.

In September, DSM was once again named among the worldwide sustainability leaders in the Materials industry group in the Dow Jones Sustainability World Index (DJSI) and has returned to Gold Class in 2016.

In October, DSM was awarded two Silver Dolphin Awards at the Cannes Corporate Media & TV Awards. Unsung Heroes of Science, produced by DSM as part of its 'Science Can Change The World' campaign, is dedicated to all scientists and the impact they have on daily life, was awarded in the Corporate Films category. Hidden Hunger, produced by DSM Nutritional Products as part of its work raising awareness for global micronutrient deficiency, received an award in the Informational Films category.

In October, DSM won the environmental category at this year's European Responsible Care Awards in recognition of DSM's success in implementing a sustainability program at its Dalry facility in Scotland (UK). The plant is the last European manufacturer of vitamin C supplements, and received the award for safety, use of innovative technology, and mitigation of negative externalities.

In late October, DSM was awarded the FD-Henri Sijthoff prize for the best annual report by a company listed on the AEX stock exchange in the Netherlands for its 2014 Integrated Annual Report.

In November, DSM was recognized as Overall Winner of the Singapore Sustainable Business Awards. DSM received the award for its commitment to sustainability and for creating value for People, Planet and Profit throughout its supply chain. DSM also won awards in Supply Chain Management and Climate Change.

People in 2015

DSM aims to provide a healthy and safe working environment for its employees, and encourages its people to develop and build their careers by broadening their skills and knowledge. The company seeks to attract and retain people who can add value to the organization − original thinkers and doers who can stretch and move the company forward, in line with the organizational needs.

With 108 nationalities and more than 200 sites and offices in 48 countries, DSM's international profile allows it to bring its business closer to key markets and customers in order to achieve sustainable and focused business growth. Thus, it is important to create a shared culture that embraces differences. To this end, DSM seeks to stimulate inclusion, diversity and inspirational leadership through its human resources strategy. This is governed through a regional infrastructure with clear Managing Board-level accountability for performance.

This chapter outlines the general internal elements of DSM's approach to its own employees, which is embodied in the company's safety and health and human resources policies. DSM's approach to people affected by the operations in its value chain and civil society is reflected in the People+ program and the company's policies on human rights. The performance elements of this strategy are included in the 'Sustainability statements' on page 122. See also 'Stakeholder engagement' on page 24. A model of how DSM creates value for its stakeholders through the human and societal & relationship capitals is shown on page 22.

Safety and health Occupational safety

DSM has been fatality-free for the last four years. Rigorous application of DSM's Life Saving Rules has been an important factor in this. Nevertheless, the incidents that did occur and the severity of their consequences remain a cause for concern for the company. It is DSM's ambition to have an injury and incident-free working environment. The company has set itself the target of reducing the Frequency Index of Recordable Injuries by 50% or more by the year 2020 compared to 2010. DSM aims for an index score that is less than or equal to 0.25 by 2020, compared to the 0.57 achieved in 2010.

Over the years, DSM has made steady progress in improving occupational safety. Whilst there had been a rise in 2014, the company was once again able to resume the downward trend in 2015. The Frequency Index of Recordable Injuries for 2015 was 0.41 (2014: 0.47).

The Frequency Index measures Lost Workday Cases, Restricted further sharpened with the introduction of the Serious Injury andWorkday Cases, Medical Treatment Cases and fatalities. For a full description of the Index see 'Explanation of some conceptsFatalities (SIF) concept in 2014, which was rolled out in 2015. This concept uses a decision tree approach to identify alland ratios' on page 209. The Frequency Index of Lost Workday incidents and near-misses with the potential for severe injury, soCases for DSM employees was 0.13 (2014: 0.15).

In 2015, DSM's change in portfolio again influenced its resulting Safety and Health performance. DSM Fibre Intermediates and DSM Composite Resins were (partially) divested and their contribution will be phased out from the safety and health statistics. Most recently acquired units showed significant improvement in their safety records and DSM is confident that they will achieve the high level of safety at those sites that have belonged to DSM for a longer time.

Recently acquired units accounted for 32% of the total of 109 recordable injuries in 2015 (2014: 40%). These units account for 18.5% of the workforce.

See also 'What Still Went Wrong in 2015' on page 116.

DSM Responsible Care Plan 2016 - 2020

In 2015, a new five-year plan was approved to guide DSM's Responsible Care® priorities and to define indicators and internal targets. With regards to safety (occupational safety and process safety), the overall ambition remained unchanged: DSM's ambition is to have an injury and incident-free workplace. The targets in support of this ambition also remain valid. These are: a Total Recordable Injury rate (TRI rate) of 0.25 by 2020 and a 75% reduction in the Process Safety Incident rate in 2020 compared to 2010 (2015: 0.41).

DSM's focus on preventing serious accidents and potential fatalities was strengthened with the introduction of the Life Saving Rules in 2011, which has resulted in a significant improvement in safety performance in recent years. This wasthat improvement efforts can be concentrated on the prevention of such incidents.

After the successful introduction of the mandatory LOTOTO (Lock-out, Tag-out, Try-out) and 'Confined Space Entry' procedures in 2014, a new company-wide 'permit-to-work' standard was implemented in 2015, as a result of audits done by the DSM Corporate Operational Audit department. This new practice focuses on improving the existing work permit requirements within DSM by fostering better cooperation and communication between DSM and contractors in the execution of work. The 'permit-to-work' standard allows flexibility on details depending on the local situation.

Furthermore, DSM will prioritize improvements to its behavioral systems, supported by the Safety, Health and Environment (SHE) leadership team and SHE competence trainings.

With regards to occupational health, the new plan comprises objectives and targets in the areas of ensuring healthy working conditions (foundation) and driving healthy business (growth driver):

- In terms of healthy working conditions, actions have been defined to keep exposure to chemical, physical and biological factors below limit values, to ensure the availability and use of industrial hygiene competence, and to have an industrial hygiene control strategy in place on all sites. A key performance indicator measuring the quality and completeness of sites' Health Risk Assessments will be used to monitor progress.

-As regards driving healthy business, actions have been defined to deploy a vitality policy, to assess vitality and work performance, and to implement a mental resilience program. The key performance indicators used to measure progress will include the participation rate in the Vitality@DSM program as well as the Employee Engagement Index score.

Contractor safety

Contractors that work at DSM are about two times more likely to suffer a work-related accident than DSM employees. Almost half the fatalities that have occurred at DSM over the past 14 years have involved contractors. This can partly be explained by the fact that contractors sometimes carry out more hazardous activities.

For this reason, DSM pays special attention to contractor safety. The company strives for long-term partnerships with its contractors as it sees this as the foundation for good safety and health performance. Contractors must be well informed about the applicable rules and adequately trained, which is only

possible when contractors and DSM employees work closely together over a long period.

The number of contractor incidents remained at the level of the

SHE leadership development

DSM works to continuously improve leadership skills in SHE. In 2015, a new leadership program, Mindful Collaboration, was added to the SHE leadership training portfolio. The Mindfulpast few years. One highlight in 2015 was the building of a new Collaboration training provides participants insights to improvevitamin B6 plant in Xinghuo (China), which was completed without any recordable contractor safety incidents.

SHE integration of new sites

progress towards common team and company goals. 'Mindful' stands for being constantly alert and aware, being vigilant towards everything related to SHE and quality, and always striving for operational excellence and continuous improvement.

In 2015, DSM completed the acquisition of Aland, a producer of This ultimately leads to a safer and healthier workplace, bettervitamin C located in Jingjiang (China). The SHE integration program started immediately after the acquisition and willperformance, more efficiency and less stress.

continue in 2016. The other new sites acquired from 2012 have Employee health managementfinalized or are in the finalization stage of the SHE integration process.

Process safety

Until now, DSM has followed theEuropean Chemical IndustryCouncil (CEFIC) guidanceto define which incidents qualify as Process Safety Incidents (PSI). The total number of PSIs reported in 2015 was 109 (2014: 118).

Translated into a Frequency Index, PSIs totaled 0.41 in the year (2014: 0.40). The target is to reduce the index to 0.34 by 2015 and 0.17 by 2020. These targets represent improvements of 50% and 75% respectively compared to 2010, when the PSIDSM recognizes that healthy working conditions make a significant contribution to employee health and well-being and also have a significant positive impact on employee engagement and productivity. Both employees and the company benefit from healthy working conditions in today's increasingly fast-paced, challenging and competitive world. DSM has implemented policies and initiatives to safeguard employee health by controlling workplace risks (prevention) and to promote and support employee health and well-being.

With a view to prevention, in 2015, DSM reviewed its health risk assessment practices. This included a focus on creating more transparency and consistency on the rating of workplace healthFrequency Index was 0.68. Whilst performance up to 2015 has risks and emphasis on the implementation of control measuresshown improvement, the targeted intermediate reduction ofaround occupational hygiene. Dedicated regional health risk

50% by 2015 was not met. DSM will step-up its efforts in order assessment training programs were also organized; these wereto reach its 2020 goal of a 75% reduction.

DSM participated in efforts from the International Council of Chemical Associations (ICCA) to define a harmonized global standard for process safety performance reporting. A proposal defining a process safety event rate metric was approved by the ICCA Responsible Care Leadership Group and by the ICCA Board in 2015. Chemical Associations and companies will transition to the ICCA standard for performance data in the coming years. For DSM this will be implemented starting in 2016, thus replacing the current CEFIC guidance.

aimed at ensuring adequate competence in industrial hygiene and ergonomics. Industrial hygiene was further specifically addressed in training programs for managers and engineers. Potential health-related consequences of social and demographic trends (e.g. an aging workforce) were specifically addressed in the health module of DSM's SHE leadership programs.

DSM aims to foster a true culture of health among its employees. Vitality@DSM is a global health management program that provides employees with insights into their own lifestyle profile and explains the consequences of unhealthy lifestyle habits. It also stimulates them to take responsibility for changing their habits. To maximize engagement, cultural and regional differences are taken into account.

Over the last eight years, more than 15,000 employees worldwide have participated in the Vitality@DSM program, in line with the target the company had set. Vitality@DSM is based on the HealthyRoads (designed to be used in alignment with the health care system in the US) and Vitality Checkpoint (rest of the world) health programs.

Participating Vitality@DSM employees receive a general health check-up and fill in a self-assessment questionnaire to evaluate their profile across the dimensions of Nutrition, Recovery, Exercise and Mental health. A personal risk score and action plan

is provided so that employees benefit from awareness of their own health-related risks. Results from the self-assessmentsGlobally leveraging support functions is allowing DSM to capture scale-benefits and deliver high-quality professional support atemployees have completed since the start of the program show lower costs, among others via further standardization ofthat 54% have moderate to very high stress risk; 38% haveprocesses, delayering, and elimination of duplications, resultingmoderate to very high risk of poor eating habits; 27% seldom or in a more efficient pooling of resources with clearernever exercise; and 27% are overweight or obese.

accountability for performance. This is leading to a reduction in size of the support functions, also in view of the transfer intoKnowing the health risks its employees face allows DSM to better partnerships of the Pharma, Polymer Intermediates andsupport them with targeted health programs. For example, for the period 2013-2015, DSM has been able to lower the overall stress risk of participants in the US to below 30%, which is significantly lower than in other regions due to 92% of the participants having participated in stress coaching during this period.

In 2015, the Vitality@DSM tool was upgraded to enable improved tracking of changes over time for groups of participants. Because this improved functionality directly impacts the calculation of productivity gain, the 2015 data forComposite Resins businesses.

These initiatives will result in a reduction in headcount of 900-1,100 FTEs, of which approximately half in the Netherlands, with the remainder spread proportionally across the other countries where DSM operates, to be fully implemented by the end of 2017.

In implementing the adjustments, DSM is actively applying its 'work-to-work' philosophy by supporting redundant employees in finding new employment. This happens differently in eachthe total rise in productivity cannot be directly compared with the country, according to local legislation and proven practices.

data published by DSM in previous years. Recalculating the 2014 figure with the current method shows a productivity gainExamples are outplacement services by an external partner or active support through an internally managed mobility center.

of approximately € 102,500. In 2015, this came to approximately DSM provides employees with a fair severance compensation

€ 172,500. This is based on self-reported changes in lifestyle health-risk factors (alcohol consumption, eating habits, lack of exercise, smoking, stress and obesity) for participating employees in Europe, North America and Asia.

Occupational health cases

A total of five occupational health cases were reported in 2015. DSM continued to increase employee awareness of occupational health issues and to further improve the reporting of all occupational health cases the company encounters (2014: 11).

New organizational and operating model

allowing them to bridge the period until their next employment. In this process, DSM honors the good relationship with employee representation bodies and actively seeks the endorsement of works councils in those countries where an FTE reduction applies.

DSM is implementing a culture and change program alongside the ONE DSM Culture Agenda to give managers and employees specific support in making the transition to the new operating model and new way of working. DSM recognizes that the period of reorganization that the company is undergoing puts employees under stress, which continues to be an area of attention.

As described on page 21, in 2015, DSM began implementing adjustments to its organizational and operating model to support

ONE DSM Culture Agenda

its growth ambitions and create a more agile, focused and cost- The ONE DSM Culture Agenda was designed in 2012 in efficient organization, with a stronger business and market focus conjunction with DSM's Leadership Model and aims to supportand globally leveraged support functions. By becoming more agile and focused, the company will be better able to respond to market dynamics, capture opportunities and deliver on itsthe company's strategic alignment with the needs of an ever-changing world by focusing on four themes: External Orientation; Accountability for Performance (and learning); Collaboration withaspirations. Furthermore, the company is establishing a new way Speed and Trust; and Inclusion & Diversity. This focus seeks to of working in support of its strategic targets, driving a change in create a common language across the organization, andmindset and culture aimed at establishing DSM as a results-enhance ONE DSM. Through its implementation, DSM aims todriven, high-performance organization, both in terms of top-line become a high-performance organization. and bottom-line growth and talent development.

Cross-company supporting functions in areas including HR,

Building on the progress made since its introduction, in 2015,the emphasis was on the need for line managers to visibly roleIndirect Sourcing, Communications, Finance, Legal and ICT are model and champion behaviors in support of the four themes.

being optimized, thus freeing up capacity at DSM's businessThis is particularly important with a view to DSM's new operatinggroups to focus on their primary functions: Innovation and R&D, model. Successful implementation and adoption of theseDirect Sourcing, Manufacturing & Operations and Marketing & Sales.

themes and behaviors will be instrumental to achieving the company's strategic goals.

ONE DSM Culture Agenda themes External Orientation

In 2015, a total of 14,452 employees, including 222 contractor employees, completed the questionnaire, which was distributedDSM recognizes that in order to execute its growth online and on paper in 21 languages to all DSM employees. Thisstrategy and adapt to changing customer and industry requirements, its employees must be aligned with the realities of a rapidly changing world. External Orientation also helps to broaden DSM's networks and engage with stakeholder groups.

Accountability for Performance (and learning)

DSM expects its employees to set themselves ambitious targets and to deliver on these. Accountability for Performance (and learning) is about people taking responsibility for their actionsrepresents a very high response rate of 78%. The main element in the survey is the measurement of DSM's Employee Engagement Index, which is the percentage of employees scoring favorably on a combination of four attributes: commitment, pride, advocacy and satisfaction. The Employee Engagement Index measured in 2015 was 69% (2014: 70%). This is broadly in line with the overall global norm of 70%. For the highest-performing companies around the globe, the benchmark number is 81%. This is the league DSM aspires to be part of.

and for the performance of their teams. It also means recognizing Talent managementand celebrating successes, while viewing problems and mistakes as individual and collective learning opportunities.

Collaboration with Speed and TrustDSM Leadership Model

DSM has clear ambitions for the future supported by its new organizational and operating model. To meet these future ambitions, the organization needs a strong ONE DSM Culture

In an ever more connected world, collaboration has and excellent leaders to shape this culture, develop talents, and become an important competitive advantage. DSM create an environment of collaboration and high performance. encourages employees to actively (co-)create, and Talent management is consequently one of DSM's key focuses

to share and build on the ideas, information, knowledge and expertise of their colleagues and the outside world.

Inclusion & Diversity

Fostering an inclusive culture that embraces differences is consistent with DSM's corporate values and helps it create the high-performance organization it requires as a truly global company.

DSM Employee Engagement Survey

An engaged workforce is critical for DSM to achieve its ambitions. The DSM Employee Engagement Survey, which the company has conducted since 2007, is an effective tool for understanding what employees need to feel engaged. The goal is to create a company in which employees feel proud to work, and where they feel they can excel. Its use is instrumental to becoming a high-performing company. Since 2015, DSM has moved this survey into a two-year cycle with a full survey in one year and a shorter pulse survey the next, in order to have more time to follow up on results and actions and achieve meaningful change. The next full survey will take place in 2016.

The Employee Engagement Pulse Survey 2015 was a short, focused survey that gave the company essential informationin support of its strategic targets for 2018.

The DSM Leadership Model specifies the characteristics expected from leaders now and in the future in a simple, understandable and compelling way. It provides a common vision and language regarding the leadership that DSM requires to succeed. The model sets out the expectation for leaders to be role models and developers of a sustainable and successful organization for the future. It is the basis for DSM's processes to hire, grow and develop talent and build high-performing teams.

about safety, engagement, inclusion and other key topics, such The further roll-out of the model to all employees in senioras 'Purpose and Inspiration in the Job' and 'Part of a Winningmanagement roles commenced at the end of 2014 andTeam'. The data from the pulse survey are crucial to measuring continued throughout 2015. The goal is to train 50% of the targetprogress on DSM's strategic priorities. In business units and teams, the results of the pulse survey can be used to check progress on Employee Engagement Survey action plans.

group by end of 2015 and to finalize the roll-out by mid-2016.

Improving nutrition for vulnerable communities

DSM employee Grace Kuo talks about her voluntary assignment with the World Food Programme.

"On my assignment, I was given the opportunity to help improve the nutrition of vulnerable communities. My task was to support the establishment of the Scaling Up Nutrition (SUN) Business Network in Zambia. In addition to setting up a multi-stakeholder event to kick-off the Network, I also helped to build up the local Network's knowledge and market intelligence around food in the country.

As part of this, I conducted a worldwide review of food fortification practices and the lessons learned. This will be further used in advice and advocacy material to help the Zambian government design and implement policy. I also executed a market study of food consumption and purchasing behavior among the urban population in Zambia. Together with a small team, we visited 600 households and 50 small-scale retailers to better understand consumers in the Zambian food market, to provide better consumer understanding to producers about nutritious food products.

It has been very motivating to see how our work at DSM has an impact on improving nutrition and changing lives.

I came to appreciate even more than before that what we do as an organization - and together in our partnership with the WFP - helps people to live brighter lives."

DSM uses the Leadership Model behaviors in its recruitment processes while attracting new talents for the company. In performance management, the company assesses what and how employees perform in terms of the behaviors. Elements of the model are already integrated in the Performance Development Review (PDR) of executives; as of 2016 this will be rolled out further within DSM's management population. Individual development starts with awareness workshops and continues with 360 degree feedback. In addition, the Leadership Model intranet site has been renewed so that leaders can refresh their understanding of the model, watch inspiring leadership videos, learn from the most frequently asked questions and develop themselves and others by using an online toolkit. In team development, DSM uses the Leadership Model to review the strengths and weaknesses of its management teams as it looks to build high-performance teams.

Using the Leadership Model for career management helps to drive the organization forward and ensure that DSM finds and develops the right people for the organization. In September, DSM's top management was given an update on how DSM has been rolling out the model and how it is embedded in talent development processes. Their feedback is being used to improve the implementation of the Leadership Model going forward into 2016.

Talent attraction

DSM adopted a new recruitment model in 2015 to outsource the recruitment of all permanent hires below executive level across the globe. This process better serves DSM's businesses through increased professionalism in recruitment, reduced 'time to fill', better market information and delivery of the best talent. Improved assessment and selection is necessary to attract tomorrow's leaders. In addition to state-of-the-art recruitment tools and technology, an enhanced employer brand experience and improved transparency of the recruiting process, the new recruitment model is anticipated to deliver annual savings of € 6 million through improved processes and reduced headcount.

Inclusion & Diversity

In order to better reflect the company's global presence, DSM continues to engage in a targeted Inclusion & Diversity strategy. For Diversity, the immediate focus is to increase the number of women and under-represented nationalities in DSM's executive positions. The number of female executives has been increasing steadily, and reached 15% in 2015, up from 12% in 2014. The current composition of the Supervisory Board is well balanced and in line with Dutch legislation. More than one third of the members are women (of the seven members, three are female and four are male). The current composition of the Managing Board with one female and three male members comes very close to the aspired composition of the Managing Board in terms of gender balance. Furthermore, in the

Supervisory Board of DSM Nederland B.V., a subsidiary of Koninklijke DSM N.V., one of the three members is female.

globe. DSM is currently reviewing these mentoring programs to capture the best practices from each individual program to combine with external best practices in an open globalGender balance will continue to require attention going forward. mentoring platform. This online platform will allow all DSMDSM's CEO/Chairman of the Managing Board Feike Sijbesmaemployees to become either a mentor or mentee (or both) andhas signed the CEO Statement of Support for the United Nations will be launched in 2016. Women's Empowerment Principles, signaling the company's

support for gender equality and the guidance provided by the principles. The company is taking concrete steps to realize these

Organizational learning

principles through its Inclusion & Diversity strategy. In addition to DSM fosters a culture of continuous learning, discovery and recruiting female executives from external talent pools, DSM also improvement. The organization strongly believes in the need tofocuses on developing female executives from its internal pool of candidates, and engages in various activities that foster new ways of working and changes in mindsets.

The expansion of the executive population from emerging economies equally demands continued attention. There was a decline in the proportion of BRIC+ nationals (from 12% in 2014

invest in the knowledge, skills and experience of its employees to ensure their long-term employability and to achieve its strategic objectives. It is vital for strengthening the talent pipeline and for developing inspiring and collaborative leaders.

At DSM learning goes far beyond the classroom. The most valuable lessons are often learned by employees on the job, fromto 10% in 2015) and North Americans (from 13% in 2014 to 10% other co-workers or from mentors and coaches. Learningin 2015) in executive positions as a percentage of the total number of executives. This development is being addressed. The number of 'other nationals' in the executive population increased to 29% in 2015, and the number of Dutch executives went from 50% to 51% of the executive population. See also 'Sustainability statements' on page 122.

DSM's inclusion efforts are reflected in an improving

Inclusion Index, which has continued to increase year on year,together allows DSM to create communities across the breadth of the organization, foster collaboration and promote an inclusive working environment.

The DSM learning architecture consists of four program clusters: executive programs, management programs, functional programs and e-learning programs. These are designed and delivered in close cooperation with leading international business schools and global training providers including the Whartonreaching 72% in 2015 (2014: 70%). The consistent improvement School of Business of the University of Pennsylvania (USA),

of this index suggests that sustained progress is being made in Babson College (Massachusetts, USA) and Erasmus Universitycreating and maintaining inclusive environments across the company. Going forward, DSM continues to address the geographical distribution of executives and other key functions, with a keen eye on gender and nationality balance, as these remain, at this stage, the key diversity aspects to foster.

At the end of 2014, new diversity targets were set for 2015 and 2016 to accelerate progress. DSM aspires to reach an incremental growth of 2% for both gender and under-represented nationalities for the executive population. The DSM Inclusion & Diversity Council, chaired as of 2015 by Managing Board member Stephan Tanda, plays a leading role in driving the achievement of the Inclusion & Diversity targets at DSM, and in supporting all DSM businesses in creating an inclusive environment in which diversity is embraced.

Mentoring

Mentoring forms an integral part of DSM's learning and development programs. In 2015 a number of successful mentoring programs continued to run in different regions, businesses and functions. All programs provide trainings for mentors and mentees, have a matching procedure and an evaluation that takes place at the end of the mentoring relationship. In 2015, 183 mentees and 159 mentors participated in various mentoring programs around the

(Netherlands), and are supported by a diverse internal faculty, primarily consisting of DSM's top management.

In 2015, the company organized DSM Leadership Model workshops and rolled out the Bright Talent Program. In order to better serve regional learning and development needs, a Global Learning and Development Portal was launched in the year. DSM employees can now access all programs from a single point. The Global Learning and Development center of expertise provides consistent content for all the regions where DSM offers learning and development programs.

International Labour Standards

DSM supports the work-related rights defined by the International Labour Organization (ILO) and recognizes and applies the International Labour Standards. In countries or businesses where employees have third-party representation via a works council or collective bargaining, DSM respects these relationships and works constructively together with these third parties. In the event of an organizational restructuring that results in the loss of a significant number of jobs such as the adjustment to its organizational and operating model currently ongoing, DSM develops and implements either a social program (aimed at assisting employees to continue in employment, whether inside or outside the company) or a severance program. DSM promotes employee empowerment and human rights protection and therefore seeks dialogue with its employees and their representatives (works councils, labor unions).

People in DSM's value chain and civil society People+

DSM is committed to improving peoples' lives and strives to have a positive social impact. The company measures its impact on the lives of consumers, employees and communities to develop solutions that have a better societal impact than competing alternatives in the market with its people LCA methodology. In 2014, DSM, together with a group of 12 European industry leaders, launched the'Handbook for Product Social ImpactAssessment'. The Handbook provides a clear framework through which companies can analyze life-cycle data and calculate the impact products have on the health and well-being of people across its value chains. In 2015, the company further harmonized with its industry peers through co-chairing the World Business Council for Sustainable Development's 'Reaching Full Potential' project to develop guidance on assessing social impacts of chemical projects in the value chain. This working group built on experiences from DSM's People+ program and the Roundtable for Product Social Metrics.

People+ enables DSM to identify new levers for innovation, to develop value propositions and engage with partners in the value chain. By concentrating on the impact that its products have on the lives of people involved in making and using the product, the People+ program is an incentive for innovation and R&D across the company. An example of a People+ product is Maxarome® from DSM Food Specialties. This natural yeast-based food ingredient enables food producers to reduce the salt used in foods whilst maintaining authentic taste. A study published in September showed that using this in soups and bouillon can have an impact on public health and healthcare costs. Reducing salt intake is proven to be a good way to reduce high blood pressure, and is also linked to lower risks of stroke, cardiovascular and kidney diseases.

Human rights

Respecting human rights is essential in all of DSM's activities. The company has a longstanding commitment to theUNUniversal Declaration of Human Rights, is a signatory to the UN Global Compact and recognizes theOECD Guidelines forMultinational Enterprises. Furthermore, DSM supports theUNFramework and Guiding Principles on Business and HumanRights (the Ruggie Framework), and the ILO International Labour Standards.

Respecting human rights is already an integral part of theDSMCode of Business Conduct,Supplier Code of Conduct, and DSM's sourcing policy. In addition, DSM's risk assessment on human rights has shown that the category of human rights most relevant and applicable to DSM relate to employees' working conditions, such as the right to social security. These rights are addressed through the ongoing update of the company's HR policies and procedures. In addition, DSM addresses the universal right to food and freedom from hunger by taking a leading role in the private sector to tackle the problem of malnutrition and nutrition security in both the developed and the developing world through its cross-sector nutrition partnerships and solutions.

In 2015, to continue underlining the company's commitment to human rights, DSM published a human rights position paper and developed a Human Rights Policy for further implementation within the business groups and regions. The policy will form the basis to further embed the responsibility to respect human rights in all business functions. In 2016, DSM will use its Human Rights Risk Assessment to set priorities and start implementing the policy, with a focus on monitoring human rights within the company and its value chain. See DSM's position paper on human rights onthe company's website.

How DDSSMMcrrecaotegsnivzaelsuethe environmental impact of its business operations and is committed to taking measures to protect the planet for future generations. Within the Planet dimension of its Triple P (People, Planet and Profit) approach, DSM delivers activities, solutions and innovations that improve the environmental footprint of its business and its value chains. This chapter describes the material environmental issues that have been identified through DSM's stakeholder consultation in the DSM materiality matrix: Climate change & renewable energy, Water security, Biodiversity, and Sustainable & circular value chains; as well as other topics DSM considers to be relevant and important to the company's operations. The topics Bio-based

Planet in 2015

People

f 28% / m 72%

People

economy and Sustainable animal protein are described in

Ratio 'Stakeholder engagement' on page 27. A model of how DSM female/male creates value for its stakeholders through its natural capital is employees shown on page 22.

Targets 2010-2015

69%

Within the framework of its corporate strategy, DSM defines long-term sustainability aspirations, which include targets to

Employee Engagement

72%

Inclusion improve the eco-efficiency of its operations. These targets are

index

favorabtrlaensclaotreed into plans and activities within a corporate multi-year (EEI) plan. The plan provides the necessary guidance to each of the business groups.

29 The eco-efficiency targets for the period 2010-2015 were based

0.41

on the ambition that by the end of 2015, all DSM sites in the world should meet minimum standards applied within the EU or Average training Frequency index of

hours tpheer US, via the use of Beresct oArvdaailbableleinTjuerciehsniques. All new plants employaened major plant modifica(ptieorns10m0uDstSmMeemt tphleosyeeeresquirements annualflryom the start. and contractors)

All of DSM's 2010-2015 environmental targets, except for

25 million

greenhouse-gas (GHG) emissions, were efficiency targets inwhich performance is related to production volumes. The target Beneficfoiar rGieHsG emissions was an absolute reduction of DSM's direct

DSM-WCOFP2 and N2O emissions and other gases, as well as of indirect annually

CO2 emissions. The base year for this target, and for the energy efficiency target, was 2008. The divested units DSM Agro, DSM Melamine, DSM Elastomers, Citrique Belge and DSM Special Products were excluded from this 2008 base year, but the impact of all other acquisitions and divestments is reflected in the total GHG emissions (scopes 1 and 2).

Energy and GHG have a target period of 2008-2020 and are on track to be met by 2020 or have already been met (the GHG absolute reduction target was achieved after the (partial) divestment of DSM Fibre Intermediates). The other six environmental indicators have a target period of 2010-2015 and, except for water and Chemical Oxygen Demand (COD), the targets for these other indicators (volatile organic compounds (VOC), SO2, NOx and waste) have been met.

The COD target was not met mainly due to a planned improvement project at DSM Fibre Intermediates in North America having not been implemented. An explanation of why DSM did not reach its water targets as well as the associated learnings can be found in the section 'Water security' on page 52 and in 'What still went wrong in 2015' on page 116.

target. Both the performance and the target are expressed as percentage of efficiency improvement, except for GHG which is an absolute reduction. See also 'Sustainability statements' on page 123.

DSM publishes detailed information and supporting calculations on the environmental performance of all its production sites onThe table below shows the 2015 performance against the basethe company's website.year of the key environmental indicators and the corresponding

The GHG efficiency, which accounts for changes in production volume, has improved by 20% in 2015 compared to 2008

1

DSM follows the GHG-protocol of the World Business Council for Sustainable Development (WBCSD) for reporting GHG emissions, except for the fact that emissions related to on-site generated electricity and steam that is sold on a very limitedwhich was approved by DSM's Managing Board and is considered an integral part of the company's Strategy 2018: Driving Profitable Growth.

number of sites are excluded from the total GHG-emissions. The In the field of resource efficiency, the main corporate target is aoverall impact of this deviation in 2015 is in the order of 3% offurther reduction of the GHG emissions per unit of product: GHGDSM's total GHG-emissions. This relative impact is significantly efficiency improvement of 45% by 2025 compared with 2008.

larger than in previous years, due to the (partial) divestment of DSM Fibre Intermediates and DSM Composite Resins and the divestment of Synres in 2015. In order to ensure objectiveThis target is an update of the previous GHG reduction target, which ran until 2020 and was an absolute reduction target. Updating the target was necessary, as the (partial) divestment ofcomparison with DSM performance in previous years, the 2011 DSM Fibre Intermediates meant the company immediately International Energy Agency conversion factors have been used achieved its absolute reduction target. DSM believes that trueas in previous years.

DSM Responsible Care Plan 2016-2020

climate commitment should not be dependent on divestments or partnering and has thus set a new, equally ambitious, GHG efficiency improvement target for 2025.

DSM has developed a new Responsible Care Plan for the period In addition, DSM has defined a renewable energy strategy for its 2016-2020. This plan comprises ambitions, targets and actions operations and set a target to source 50% of its electricity needs in the field of safety and health, resource efficiency (environment), from renewable sources by 2025, with the aim of becoming

sustainable value chains (Product Stewardship and sustainable products) and security.

100% renewable thereafter.

New targets have also been defined on several other supportiveThe development of the new plan started in 2014 and continued indicators. The table on the next page gives an overview of theinto 2015. Many people, with different backgrounds and responsibilities, were involved in the development of the plan,targets on all environmental indicators.

The target for the reduction of emissions to air will focus on a limited number of sites which make the largest contribution to DSM's total emissions to air, or on those sites which are yet to apply Best Available Techniques (and thus have relatively high emissions to air).

The target for waste aims to reduce the amount of waste that is landfilled or incinerated without heat recovery, either through the reduction of the generation of waste or through a shift to an outlet with higher added value, such as recycling or recovery.

The target for water acknowledges that water issues (scarcity, pollution) are usually local or regional. Going forward, DSM will focus on sites in scarcity regions and sites that have a relatively high groundwater consumption or waste water discharge. Appropriate measures will be taken at site level in order to mitigate any risks identified in water risk assessments. DSM is convinced that this local approach fits better with the specific characteristics of water security than a company-wide, global target on reduction of water consumption or discharge to water.

DSM completed the acquisition of vitamin C-producer Aland in 2015. As a result, the facility at Jiangjing (China) will also be incorporated in DSM's environmental performance as of 2016 and it is expected that this will significantly impact some of the absolute numbers of the environmental indicators.

Climate change & renewable energy

and adaption. In the run-up to COP21, DSM initiated and joined several initiatives to reassure governments that key global business leaders would be highly supportive of a strong agreement:

• - DSM's CEO/Chairman of the Managing Board Feike Sijbesma led the development of anopen letter to the world'sgovernmentsfacilitated by the World Economic Forum, which was signed by 78 CEOs from around the world (representing USD 2.1 trillion in revenue) stressing that business was ready to partner on climate action.

• - Mr. Sijbesma supported the World Bank as 'private sector ambassador' of the Carbon Pricing Panel, which includes heads of Government of, amongst others, Germany, France, Ethiopia and Mexico. This group, convened by the heads of the International Monetary Fund, World Bank Group and OECD, urges countries and companies to put a price on carbon.

• - DSM North America was invited by President Barack Obama to join 80 companies (with a combined market capitalization of over USD 5 trillion) in the American Business Act on Climate Change, to demonstrate business support for climate action.

The outcome of COP21 was a legal agreement signed by nearly 200 countries, which set ambitious goals to limit average global temperature rises to well below 2 degrees and reach net zero emissions in the second half of the century. Governments agreed to periodically review and improve national climate action plans.

It is now widely accepted that human activity is responsible for global warming, resulting in climate change. Without an urgent change in mindset and behavior to break with fossil-fuel dependencies, the planet is set to exceed the so-called '1.5 to 2 degree ceiling': the global average increase in temperature defined by the UN as the upper threshold to avoid a potentially devastating impact on people.

DSM acknowledges that the world must urgently shift its energy mix from fossil-based fuels towards renewable energy, while continuing to secure its energy supply. DSM has undertaken an advocacy role to cooperate with energy suppliers, co-leaders in industry and regulatory bodies to enable the necessary shift towards more renewable energy. In 2015, DSM became a signatory to the Climate Group's Renewable Energy 100 (RE100), an initiative that brings together leading companiesDSM aims to be a front-runner in climate action. Next to reducing worldwide that commit to powering 100% of their electricityits own carbon footprint, the company enables a low-carbon, bio-renewable economy through its innovative solutions and advocates climate action.

At COP21 in Paris, national governments adopted an

needs from renewable sources. DSM has set a target of sourcing 50% of its electricity needs from renewable sources by 2025. In addition to defining its own renewable electricity use, DSM provides solutions for the renewable energy industry, such as technologies to produce cellulosic bio-ethanol from agriculturalunprecedented global agreement on climate change prevention residual developed together with POET, and anti-reflective coatings for solar panels.

Energy-efficient chillers

Energy conservation has become a key business focus for many companies across the globe including DSM. Reducing energy usage not only helps the environment but helps the bottom line as well.

The DSM Nutritional Products facility at Belvidere (New Jersey, USA) produces, among other things, arachidonic acid, natural beta-carotene and trienol for customers in North America and other markets. The fermentation processes involved in production require a continuous supply of chilled water in order to maintain them at design temperatures.

One of the projects at the site to reduce energy consumption and associated costs analyzed the chiller systems used in this process. The evaluation showed that considerable gains could be made by switching to new higher-efficiency units.

In an initial deployment in 2015, one new chiller unit was installed, which assumed part of the loads of four existing units. The new chiller provides a 25% reduction in energy consumption as compared to the existing units. The resulting energy cost savings allow for pay-back in roughly four years and will reduce CO2 emissions by over 850 tons per year as well as provide a more reliable operation.

A second new unit is being installed to complete the upgrade and will bring similar benefits, thereby doubling the CO2 reduction, improving reliability and further reducing operating costs.

DSM's approach to addressing climate change involves quantifying and tracking GHG emissions, as well as monitoring its energy consumption. Where feasible, projects are initiated that benefit both the environment and financial performance.

In 2015, DSM joined the UN 'Caring for Climate' initiative and became a so-called Carbon Pricing Champion. To identify the risks and opportunities emerging from increased carbon pricing in many countries, DSM has set an internal carbon price of € 50 per ton CO2 for reviewing large investment decisions. Last year, DSM was amongst the highest scoring companies in the Carbon Disclosure Project Leadership Index, which demonstrates the company's leading approach with respect to climate change disclosure practices.

Energy

In determining energy efficiency, DSM measures its energy consumption in relation to the production volume of each production site. In 2015, DSM's energy efficiency performance improvement reached 19%, which was 2% above the 2014 level, and well on track to meet the 20% target in 2020. The main energy efficiency improvements were realized at the DSM Nutritional Products sites in Belvidere (New Jersey, USA) and in Sisseln (Switzerland). In Belvidere the installation of a new chiller (see description on the left) and the full utilization of a combined heat and power unit (cogen) were the main contributors for the efficiency improvements. In Sisseln the change in product mix towards less energy-intensive products, as well as several technical improvements in the infrastructure, contributed to the energy efficiency improvements.

In 2015, DSM executed a variety of investment projects with the aim of increasing energy efficiency in its own operations. These projects included the replacement of an air compressor at DSM Resins & Functional Materials in Parets (Spain), improved heat recovery and several other measures at DSM Nutritional Products in Dalry (UK), the new chiller in Belvidere and lighting replacement on several sites. These projects with 2015 investments totaling € 2.4 million will not just improve the company's energy efficiency but also lead to annual cost savings of approximately € 1.7 million.

DSM's total annual energy consumption decreased from 39.1 to 20.9 petajoules. The main reason for the sharp decrease is the (partial) divestment of DSM Fibre Intermediates and, to a lesser extent, of DSM Composite Resins and the divestment of Synres.

Greenhouse-gas (GHG) emissions

There is scientific consensus that certain gases (e.g. carbon dioxide, methane, nitrous oxide) have contributed significantly to human-induced climate change. These gases, which are emitted during the course of a wide range of human activities, magnify the planet's natural greenhouse effect and cause the atmosphere to retain more heat than it otherwise would. This in turn results in a series of wide-ranging and inter-linked changes

to the earth's climate, with negative consequences for human health and well-being.

forward, which will focus on the material areas where the biggest improvements are possible.

Since 2008, DSM has appliedthe Greenhouse Gas Protocol'sstandards for reporting GHG emissions (scopes 1, 2 and 3). DSM does not yet follow the latest (2015) GHG Protocol scope 2 guidance, an amendment to the GHG Protocol's corporate standard. DSM's target was to achieve a 25% reduction in scope 1 and 2 GHG emissions by 2020, compared to its 2008 emission levels.

GHG emissions scope 1 & 2

In 2015, DSM emitted a total of 1.1 million tons of CO2-equivalents, which is a reduction of 75% compared to its emissions in 2008 (the total reduction target was 25% in 2020), which is almost fully attributable to the (partial) divestment of DSM Fibre Intermediates.

GHG emissions scope 3

The Greenhouse Gas Protocol Corporate Value ChainStandarddefines scope 3 emissions as 'all other indirect emissions that occur in a company's value chain'. DSM has reported on its scope 3 emissions since 2012. Scope 3 reporting can be considered as complementary to reporting on scope 1 and 2 emissions. Taken together, they reflect all the GHG emissions associated with DSM's business activities. Inevitably, the calculation of scope 3 emissions is largely based on estimates, extrapolations and assumptions. In 2015, in keeping with the WBCSD 'Guidance for Accounting & Reporting Corporate GHG emissions in the Chemical Sector Value Chain', DSM prioritized reporting on three scope 3 categories that are most relevant and applicable to DSM's business, and for which data are available. In 2016, DSM will focus on designing a relevant and useful scope 3 reporting process for DSM goingThe main difference between the scope 3 emissions of DSM in 2014 and 2015 is the effect of the (partial) divestment of DSM Fibre Intermediates and DSM Composite Resins. As other changes are assumed to be relatively minor and within the limits of scope 3 reporting accuracy, the scope 3 emissions for 2015 have been derived from the 2014 Report, correcting for the deconsolidation of these two businesses. The purchased goods and services category accounted for DSM's highest scope 3 emissions in 2015, but declined by approximately 18% compared to 2014 due to the (partial) divestment. On the other hand, scope 3 emissions in the investments category were more than 16 times higher due to DSM's 35% shareholding in ChemicaInvest, which now comprises these businesses.

DSM strives to achieve a sustained reduction of its carbon footprint across the value chain, for example through the DSM Supplier Sustainability Program. See also 'Stakeholder engagement − Suppliers' on page 32.

Avoided emissions

With a strong contribution from DSM, in 2013 the WBCSD and International Council of Chemical Associations (ICCA) publishedguidelineson reporting of avoided emissions for companies in the chemicals sector. According to these guidelines, avoided emissions are defined as the difference between the life cycle GHG emissions from the solution of the reporting company, and the comparable solution (i.e. a conventional product or market average).

DSM supports the guidelines and is starting to apply them through its ECO+ program in order to credibly capture the effectsof its products in the value chain. Applicable DSM products and Consequently, DSM did not meet its targeted 20% improvementsolutions for which avoided GHG emissions may be evaluated include advanced surfaces for solar panels, cellulosic bio-ethanol and enzymes. An example where DSM helps its customers avoid emissions are in jeans blended with

in COD discharge by 2015, ending the year on a 17% overall improvement.

Waste

Dyneema®, which can result in 50% added strength and a 30% DSM had set itself a target of 15% efficiency improvement inlifetime decrease in carbon (and ecological) footprint.

Water security

Water and waste water

DSM had previously set a company-wide target to reduce its water usage by 15% between 2010 and 2015. DSM has cometerms of waste to landfill. In 2014, it had already made a relative improvement of 54%; in 2015, this was further increased to 67%. The main improvements came from the DSM Nutritional Products sites at Dalry, where two main waste streams were recycled for use in land restoration and agriculture, and at Kingstree (South Carolina, USA), where the shift to alternativeto the conclusion that it would be more effective to concentrate waste outlets was completed. DSM has set a new target forits improvement efforts on businesses that operate in regions where water is scarce.

waste and aims to recycle 80-90% by 2020, which reflects the ambitions in the field of the circular economy. The aim is to reduce the amount of waste that is landfilled or incineratedDSM implemented a number of water-saving projects during the without heat recovery, either by reducing the amount of wasteperiod. These had relatively little effect on the overall water-efficiency performance, as the improvements were largely realized at sites that contribute very little to the total water consumption. That notwithstanding, a small improvement was achieved in 2015. The main contribution came from the DSM Nutritional Products site in Sisseln where, besides operational improvements, a collaboration with two external partners on acidic waste water treatment resulted in a reduction in watergenerated or through a shift to an outlet with a higher added value, such as recycling or recovery.

Other emissions to air

DSM was again able to improve its efficiency in terms of VOC in 2015. The company had achieved an improvement of 50% versus 2008 by year-end, up from 35% in 2014 and clearly ahead of its 40% target. The further improvement in 2015 wasconsumption of about 300,000 m3 per year and a net saving of largely due to the fact that an abatement system to reduce the

€ 90,000. At the DSM Nutritional Products site in Lalden (Switzerland), water consumption went up due to increased once-through cooling; this did however contribute to a reduction in energy consumption.

DSM supports UN CEO Water Mandate

"Water availability is a worldwide concern. Many areas in the world are increasingly facing water scarcity, water pollution and water damages by natural disasters. A more sustainable management of water is therefore a must in our society. Individual and collective actions are necessary to mitigate adverse effects on water quality and availability in the regions and businesses where we operate. DSM truly values initiatives like the United Nations Global Compact CEO Water Mandate and its principles. The topic of water and sustainable water management has our continued full attention."

Feike Sijbesma, CEO/Chairman Managing Board

DSM's water pollution reduction programs aim to reduce totalemissions of dichloromethane (DCM) at the Laiwu (China) site became operational.

For NOx, the efficiency improvement at year-end 2015 was 31%, meaning that the target of 30% was achieved. This figure did however come down during the year (2014: 42%), mainly as a consequence of a change in the law in Germany, which affected the way in which emissions from on-site energy generation are accounted for. This was relevant to the DSM Nutritional Products site in Grenzach (Germany) as there is a power station on its property, which is operated on behalf of a consortium with other partners. At the Dalry site, an increase in the amount of electricity produced on site using gas led to a reduction in NOx efficiency. The 70% target for SO2 reduction had already been realized in 2012 and since then, the performance improvement was at or above 90%, without significant changes at the DSM sites.

Biodiversity

In its bid to protect biodiversity − the variety of life on earth − DSM identifies and monitors protected areas in the vicinity of its sites and the impact that it has on them. Some 58% of sites have been identified as being located in or adjacent to high biodiversity value areas. In all cases, production sites are operating within applicable limits, as defined by local authorities. DSM's

water pollution, mainly through reductions in COD. Performance Biodiversity position paper can be found onthe company'son this measure decreased during 2015, mainly as a result of product mix changes and extremely high summer temperatures at the DSM Nutritional Products site in Sisseln. In addition, a planned improvement project at the DSM Fibre Intermediates site in Augusta (Georgia, USA) was not implemented.

website.

Sustainable & circular value chains

True sustainability can only occur when all parts of the value chain work together towards the same goals. To this end, DSMseeks to develop and promote products and solutions that help 52% of ECO+ innovation launches were supported by reduce GHG emissions and energy usage across its value chains comparative LCAs as was 30% of the ECO+ running business. through its ECO+ program. DSM requires its suppliers to meet its sustainability standards and minimize their own environmental An example of an ECO+ solution is Maxiren®, an enzyme-basedfootprints so that all downstream players, from customers to end-users, can improve their environmental footprints as well. See also 'Stakeholder engagement − Suppliers' on page 32.

ECO+

ECO+ is DSM's program for the development of sustainable, innovative products and solutions with environmental benefits. Products qualify as ECO+ when their environmental impact is lower than competing mainstream products that fulfill the same function. When considered over their entire life cycle, ECO+ solutions offer superior performance with a lower eco-footprint. The ecological benefits can be created at any stage of the product life cycle, from the raw materials through to manufacturing and potential re-use and end-of-life disposal. DSM uses comparative Life Cycle Assessments (LCAs) and/or expert opinions to determine whether a solution should be considered ECO+.

A circular economy is a system in which resources in the value cycle can be used and re-used again and again. This requires a different way of thinking compared to linear value chains. For example, resource use, production and end-of-life waste management would all be taken into account in the ingredient and material design stage. DSM is strategically positioned and committed to increase durability of products, and to enable the recovery of valuable materials after use. By using safer and bio-based ingredients in the design phase, DSM can positively influence the circular economy of its customers and consumers.

To this end, the company is chairing the work of the WBCSD Chemical Sector working group. In 2015, DSM and a number of other players in the chemical sector began consistently applying the harmonized LCA methodology set out in the guidance'LifeCycle Metrics for Chemical Products', which DSM published together with nine industry peers in 2014. This is setting a new standard and creating additional transparency to the benefit of the chemical sector, its business partners and consumers.

ECO+ solutions can be found across all of DSM's business groups with many more under development. They now account for 57% of total sales, exceeding the company's ECO+ sales target of towards 50% of the running business by 2015. In 2015,coagulant ingredient for cheese making. By using this product, less of this type of ingredient is needed, and the cheese has a longer textural shelf life. Another ECO+ example is DSM's anti-reflective coating for solar panels. Whenever glass meets air, a portion of light hitting the glass is reflected; wasted sunlight means wasted energy. The innovative coating applied on solar panels minimizes reflection and enables a power gain of up to 4% over uncoated modules. Its smooth closed structure and surface enable solar panels to withstand most extreme weather conditions, contributing to longer durability.

Circular economy

In addition, DSM is a member of the Ellen MacArthur Foundation CE100, a group of companies working together to create solutions for the circular economy. DSM's CEO/Chairman of the Managing Board Feike Sijbesma is a member of the steering committee of Project Mainstream, an initiative of the Ellen MacArthur Foundation and the World Economic Forum (WEF) aimed at accelerating cross-sector engagement for a circular economy.

The company adopts a multi-faceted approach to sustainable and circular value chains. In 2015, DSM developed a circular economy roadmap, detailing the role of all business groups and

identifying relevant key products that can facilitate DSM's customers in pursuing their ambitions as regards the circular

- anticipating upcoming regulation and societal needs.

economy. DSM's major complementary initiatives, in addition to The progress of the multi-year plan is monitored by DSM'sthe ECO+ program and its contribution to the bio-based economy through its activities in its Emerging Business Area DSM Bio-based Products & Services, are discussed below.

'Product Safety Network', which is being transformed into a 'Product Stewardship Network' by expanding its scope and members to properly drive Product Stewardship competence.

Renewable raw materials

To maintain continuity of DSM's operations, company-wideIn the control of SVHCs, DSM has started to assess, before the end of 2020, all substances of which more than 1 ton per yearaspirations are in place to secure future availability of resources. is used in its processes to identify and monitor long-term humanThis not only reduces DSM's exposure to supply chain risks, itand environmental hazards. Identified SVHCs need to bealso contributes to the preservation of biodiversity on the planet. reported in a DSM Priority Substance List and their useSecuring future availability of resources can partly be achieved by relying on renewable energy rather than fossil fuels. DSM is exploring ways to gain access to renewable raw materials with

challenged by an internal justification process by a multidisciplinary team. The final goal is the phase-out of toxic substances, not only from DSM's own portfolio but from the fulla lower carbon footprint than the fossil equivalents they replace. life cycle of its products, in line with the company's commitment Membership of the Ellen MacArthur Foundation CE100 provides to bringing more sustainable alternatives to the market. WhereDSM with valuable insights into ways to incorporate renewable raw material usage in the company's operations.

substitution is not currently possible, a risk assessment is performed following industry standard procedures. If safe use cannot be shown, the SVHC is prohibited from further use orDSM is also carefully selecting renewable raw materials suppliers production within DSM. as a technology provider to support the establishment of new value chains based on biomass feedstocks. These include waste DSM is committed to delivering high-quality products to the coming from operations in the agricultural industry, and are key market while complying with global and local product safetyingredients for fuels such as bio-ethanol. Bio-based fuels emit significantly less carbon dioxide, supporting DSM's efforts inregulations (e.g. ARECS, K-REACH and Turkey REACH), in line with the Responsible Care® principles. DSM supports the UNreducing climate change. In 2015, approximately 16% of DSM's initiative to implement aGlobally Harmonized System oftotal spend on raw materials related to renewable raw materials.classification and labeling of chemicals(GHS), for which anThis represents an increase compared to 2014 (11%), which is mainly due to the deconsolidation of DSM Fibre Intermediatesinternal e-learning has been developed. DSM closely follows developments on health exposure scenarios for mixtures thatand DSM Composite Resins. See also DSM's position paper on need to be implemented in the industry's product safetysustainable biomass onthe company's website.

systems.

Product Stewardship

DSM recognizes both the impact and the benefit of a Product Stewardship strategy as part of its own responsibility in the full

In 2015, regulatory changes meant that DSM had to adjust its automated systems to ensure that all products are accompanied by mandatory information in the form of compliant Safety Datavalue chain, in line with the principles of Responsible Care®. This Sheets and Labels. These were successfully implemented. Thestrategy is embedded in the company's Safety, Health and Environment (SHE) requirements, sustainability programs (ECO+ and People+), and is closely linked to LCA activities to evaluate toxicological profiles throughout the value chain. This strategy provides for the longer-term management of risks and opportunities in the area of chemicals management.

In 2015, DSM sharpened its own ambitions in Product

most significant changes related to the implementation of GHS in Brazil and in the US and the implementation of the new European directive on the Classification, Labeling and Packaging (CLP) for mixtures.

DSM is working to meet the 2018 deadline of the EU regulation on the Registration, Evaluation, Authorization and Restriction of Chemical substances (REACH), by registering allStewardship to address societal requirements and expectations. substances of which between 1 and 100 metric tons per year isThe overall ambition for the period 2016-2020 is detailed in aproduced. At the same time, DSM continuously updates existingfive-year plan which defines DSM's vision and major objectives, dossiers and supports authorities in EU member states indrawing together existing programs and initiatives:

• - implementing a continuous improvement program to control Substances of Very High Concern (SVHC) in DSM products and the supply chain;

• - promoting active connections between Product Stewardship and Direct Sourcing, Innovation and Marketing & Sales in the business groups; and

evaluating an increasing number of substances. DSM is in continuous dialogue with its raw materials suppliers to guarantee sustainable business through REACH compliance along the value chain.

Net sales, continuing operations

Profit in 2015

How DSFMinacnrecaiatel rsevsaullutse

Within the Profit dimension of DSM's Triple P approach, DSM delivers a sustainable financial return. This ensures business continuity and allows the company to grow, while at the same time providing a good financial return to its shareholders. This Planecthapter reports DSM's financial perPfolramnaentce and provides an overview of the key financial metrics of the company. A model of how DSM creates value for its stakeholders through the financial, intellectual and manufactured capitals is shown on page 22.

Operating profit before depreciation and amortizationOperating profit before

Share of the profit of associates Profit attributable to non-

Net profit continuing operations

ECO+ before exceptional items solutions*

Net profit from discontinued operations before exceptional items

Net result from exceptional items, continuing operations

Net result from exceptional items, discontinued operations

Total net profit attributable to equity holders of Koninklijke DSM N.V.

ROCE, continuing operations (in %)

EBITDA / net sales, continuing operations (in %)

• 1 Restated due to the disposal of the caprolactam, acrylonitrile and composite resins business

• 2 From continuing operations

* As % of total sales

Net sales and EBITDA

At € 7,722 million, net sales from continuing operations in 2015 were 10% higher than in 2014 (€ 7,051 million). Volume development accounted for a 3% improvement, with strong growth in Nutrition, while price/mix was on average 2% down on 2014, due to lower input prices being partially passed on down the value chain in Performance Materials. Exchange rate fluctuations had a positive impact of 8%, while other effects such as acquisitions contributed 1%.

Net sales

EBITDAx € million

DSM, continuing operations

Nutrition

Performance Materials Innovation Center Corporate Activities

2015	2014 % change	2015
7,722	7,051 10%	1,075
4,963	4,335 14%	822
2,528	2,460 3%	384
155	154 1%	(9)
76	(122)

2014 1,038

% change 4%

850 323 (18)

(3%) 19%

(117)

EBITDA, operating profit from continuing operations before depreciation and amortization (before exceptional items), grew by 4% or € 37 million, from € 1,038 million in 2014 to € 1,075 million in 2015. Nutrition EBITDA declined by 3% as good organic growth and the positive impact of the strengthened US dollar were more than offset by the negative impact of significantly lower vitamin E prices, the appreciation of the Swiss franc and the weakening of the Brazilian real. Cost savings and good margin management as well as support from lower input prices and currency effects led to a strong increase in EBITDA for Performance Materials of 19%. DSM's overall EBITDA margin (operating profit before depreciation and amortization as a percentage of net sales) was 13.9% (2014: 14.7%).

Operating profit from continuing operations before exceptional items went from € 587 million in 2014 to € 573 million in 2015, down 2%.

Net profit

Net profit from continuing operations attributable to shareholders DSM (before exceptional items) decreased by € 31 million to € 383 million. Expressed per ordinary share, net earnings from continuing operations before exceptional items amounted to € 2.14 in 2015 (2014: € 2.34).

Net finance costs rose by € 47 million compared to the previous year to € 149 million. This was mainly the consequence of unfavorable hedge results and higher interest expenses.

The effective tax rate (before exceptional items) for 2015 was 23% (2014: 17%), with a limited cash outflow impact. The increase was due amongst others to a one-time tax settlement related to the internal transfer of a business and a somewhat less favorable geographical mix.

Total net profit for the full year came to € 88 million compared to € 145 million in 2014. This decrease was mainly caused by € 47 million higher net finance costs and € 47 million higher exceptional items, partly offset by a € 46 million higher share of the profit of associates.

Exceptional items

Total exceptional items from consolidated companies for the full year amounted to a loss of € 361 million (€ 304 million after tax) consisting of a € 130 million book result on the deconsolidation of the caprolactam, acrylonitrile and composite resins business, € 102 million restructuring costs related to the cost-reduction programs announced in the year, € 92 million impairments and € 37 million acquisition-related and other costs.

Cash flow statement

Cash flow provided by operating activities of which provided by continuing operations

Cash from / used in investing activities

Cash used in financing activities

Effect of exchange differences

Cash and cash equivalents at 31 December

Cash flow provided by operating activities is driven by the EBITDA over the year (€ 1,170 million) and offset by various cash-out items including the settlement of derivatives of -€ 218 million. The focus on cash flow and total working capital resulted in a strong full-year operating cash flow from continuing operations of approximately € 800 million.

The cash used in investing activities includes capital expenditures (-€ 543 million) and the settlement of the net investment hedge (-€ 136 million), partly offset by the proceeds from disposals (€ 297 million) and the dividend received from associated companies (€ 144 million).

The cash used in financing activities consists mainly of dividend paid (-€ 174 million), interest paid (-€ 303 million) and repayment of commercial paper (-€ 250 million), partly offset by the increase in loans (€ 351 million). For the full cash flow statement, see 'Consolidated financial statements' on page 135.

Balance sheet

The balance sheet total (total assets) reached € 11.7 billion at year-end (2014: € 12.1 billion). Equity decreased by € 305 million compared to the position at the end of 2014. This decrease was due to the fact that the net profit for the year and the proceeds from reissued shares were more than offset by the dividend, the repurchase of shares, the impact from deconsolidation and the net actuarial losses on defined benefit obligations. Equity as a percentage of total assets went from 49% at the end of 2014 to 48% at the end of 2015.

Compared to year-end 2014, net debt went down by € 99 million to € 2,321 million. The gearing was 29% at year-end, the same as in the prior year.

Capital expenditure on intangible assets and property, plant and equipment amounted to € 570 million in 2015 and was above the level of amortization and depreciation.

Total working capital amounted to € 1,343 million compared to € 1,587 million at year-end 2014, which represents 17.4% as a percentage of annualized sales 2015. Total working capital at year-end 2015 included cash-related liabilities of joint ventures and associates of € 137 million. Excluding these liabilities, total working capital as a percentage of annualized sales amounted to 19.2%. The operating working capital (continuing operations before reclassification to 'held for sale') was € 91 million lower than in the previous year and came to 24% of annualized net sales (2014: 26%). Cash and cash equivalents came to € 665 million at the end of the year; including current investments this came to € 674 million (2014: € 675 million).

Balance sheet profile

Intangible assets

Property, plant and equipment Other non-current assets Cash and cash equivalents Other current assets

Total assets

Equity Provisions

Other non-current liabilities Other current liabilities

Total liabilities

2015 x € million

2014

in %x € million

in %

11,743

100

12,126

100

Outlook

DSM expects to make further progress with its growth initiatives in 2016 both in Nutrition and Materials, although the macro-economic context remains challenging. These will be underpinned by the group-wide cost and productivity improvement programs as well as the company's disciplined focus on capital allocation and working capital.

DSM aims to deliver increased full-year EBITDA and ROCE in line with the targets set out in its Strategy 2018: Driving Profitable Growth.

DSM Code of Business Conduct

Business principles

The DSM Code of Business Conduct ('the Code'), as introduced are expected to act in accordance with the Code, and theand rolled out from 2010, contains the company's businessManaging Board holds DSM's unit management accountable forprinciples across the three dimensions of People (11 principles), compliance with the Code. The Code is now available toPlanet (5 principles), and Profit (15 principles). These principles translate DSM's mission and core value − sustainability − into daily practice across its business operations. All DSM employeesemployees in 19 languages and the full text of the Code can be found onthe company's website.

Umbrella function

published onthe company's website. For more information, see 'Human Rights' on page 46.

The Code serves as an umbrella for several other DSM regulations and together form the basis for the company's ethical The Unlawful Harassment Prevention e-learning emphasizes thebusiness behavior. These regulations are often supported byimportance of the cultural, diversity and non-discriminatione-learning programs to train relevant people within the company. aspects of the Code and focuses on effective employeeIntegration and compliance plans, comprising amongst othersrelations, communications, and non-discriminatory practices inrisk management and training on values, are being rolled-out for the workplace. DSM's new acquisitions in Latin America and China. Depending

on the subject, this concerns all employees or selected employees with a specific role in the organization. DSM regulations cover the three dimensions of People, Planet and Profit, of which the most important are listed below:

People: To support DSM's ambition to create an incident-free and injury-free workplace, the Life Saving Rules specify the 12 most important rules that must be followed by all employees to prevent serious or fatal incidents. In 2015, the Human Rights project further elaborated the business principles on diversity and non-discrimination, forced labor and child labor, fair remuneration and standards of business partners. An overarching Human Rights position paper bringing together existing human rights-related policies and procedures has beenThe DSM Privacy Code for Employee Data and the DSM Privacy Code for Customer, Supplier and Business Partner Data came into force during 2014. These codes prescribe a mandatory training for Privacy Officers, human resources employees, legal counsels and employees who work with personal data on a regular basis. DSM began to roll out the related Privacy e-learning in 2015.

Planet: The Basic Course Responsible Care® addresses the elements of the Responsible Care® Program: Safety, Health and Environment, Product Stewardship, Security and Sustainability. Because of the importance of the Responsible Care® principles for all functions and roles within the company, this course is

mandatory for all DSM employees, as well as for selected contractor employees.

Profit: DSM uses the e-learning trainings Global Competition Law Principles and Practices and Global Trade Controls. Compliance with these subjects is structurally embedded in DSM's systems and processes. As part of the global trade controls compliance process, DSM master data is screened to check customers and suppliers against embargoes and lists of sanctioned parties.

The DSM Anti-Bribery and Corruption (ABC) Policy and Compliance Manual has been communicated to targeted employees in commercial and business roles since 2014. Supporting classroom training and an ABC e-learning was further rolled out in 2015. Special attention has been given to DSM's employees and businesses in China, including the provision of a Chinese translation of the DSM ABC Policy andnumber of acquisitions (e.g. Latin America) for the first time in 2015, meaning that all regions are now covered. At year-end well over 90% of all DSM employees had completed (or refreshed) their training, excluding employees of some businesses acquired recently. The training program is also offered by the business units to selected contractor employees as well as to employees in DSM's joint ventures. A Code Review Team, chaired by the Vice President Risk Management, monitors implementation of the values training program as well as internal and external developments concerning corporate ethics to promote and safeguard the Company's values and reputation. In 2015, the Code Review Team initiated a project to apply global monitoring and reporting − already in place for the Code training since 2014 − to all of the values trainings in DSM's learning management system.

People: At the end of 2015, well over 90% of all DSM employees had completed the Life Saving Rules training, underlining theCompliance Manual, an easy-to-use ABC checklist for business importance of safety within DSM. people, and ABC classroom trainings in addition to the

Competition Law classroom program.

The Security e-learning covers all key security topics relevant to

Planet: The Basic Course Responsible Care® has now been successfully followed by over 90% of the employee population.

DSM's business, including DSM's seven Key Security Behaviors. Profit: Further implementation of the ABC program also

To complete the e-learning, participants are required to read and progressed well in 2015. Employees within the ABC target groupsign-off on the DSM Code of Conduct for Information Security. A classroom version of the training is available for locations without access to e-learning facilities.

DSM also has rules in place on the holding of and execution of transactions in DSM financial instruments and certain other financial instruments related to trading in DSM shares, and if applicable, shares and related financial instruments in other companies, which apply to all relevant DSM employees, including the members of the Managing Board and the Supervisory Board.

Value chain

The business principles most relevant for the supply chain are brought together in the Supplier Code of Conduct and also structured along the three sustainability dimensions of People, Planet, and Profit. The Supplier Code of Conduct (available on the Company's website in eight languages) is signed-off by suppliers in framework contracts, whereby they confirm their commitment to sustainability amongst other things. For distributors' and agents' contracts, the ABC Policy is being translated into terms and conditions to ensure ethical businesshave been identified and invited to complete the ABC e-learning; over 90% had already done so by year-end. The training for Global Trade Controls and Security has been in place for longer and implementation levels remain good at 90% and 93% respectively. Additional training on Trade Controls Compliance has been given to zoom-in on various business specific aspects of this topic.

Those employees for whom competition laws are most relevant must complete an annual statement to confirm their compliance with the rules set forth in the DSM Competition Law Compliance Manual. In this statement they confirm that they are not aware of any violation of competition laws by DSM. Sign-off levels are excellent. Alleged breaches are reported to and discussed with Group Legal Affairs. In 2015, no breaches were reported and DSM was not subject to any investigation by competition authorities related to potential anti-competitive behavior.

Dilemmas

Living the Code can sometimes result in dilemmas that do not have a quick or clear answer. Dilemma workshops are held to prepare for these cases using the UN Global Compact Dilemma

conduct when these third parties are acting on behalf of DSM or Game as a tool. The workshops build on DSM's companydealing with DSM's products further down the value chain.

Training and awareness

DSM employees must refresh their training on the Code every two years. The implementation of this training program continues to progress well. The Code training was rolled-out within aculture, which is based on openness, fairness and trust. The aim is to create an open-minded atmosphere in which dilemmas can be discussed. These discussions are used to calibrate 'what is right' and 'what is wrong' in order to continuously improve business integrity in daily operations.

Letter of Representation

At the end of each year, the management of all 33 operationalThe table on the next page gives an overview of all reported Code violations, with a breakdown per Triple P dimension and per region. Proven serious violations of the Code can result inunits directly reporting to the Managing Board (business groups, dismissal or other forms of consequence management. In line regions, others) sign-off on a Letter of Representation. With this with this policy, 38 employees were dismissed in 2015 as a resultthey confirm the compliance of the unit and its employees with applicable laws and regulations, the Code and related values training as well as corporate policies and requirements.

Consequence management

of breaches of the Code or other legal or local company regulations. In addition, 51 cases were reported that have led to other kinds of consequence management (official warning or suspension). Overall this is a decrease compared to 2014, to which portfolio changes have also contributed.

DSM applies zero-tolerance consequence management toPeople: Most of the cases in the People dimension are relatedviolations of the Code. Most Code incidents are reported to, and to violations of the Life Saving Rules or inappropriate behavior.

dealt with by, local line management. If reporting to line management is not considered possible, the whistleblower procedure (DSM Alert) is used. Complaints received by DSM Alert are dealt with via the DSM Alert Officer. In all cases, consequence management practices are in place (e.g. official warning, temporary suspension, dismissal) to support

Safety and health in the workplace has a priority for the company and incident-reporting channels are well-known.

Planet: There were no violations of the Code reported in the Planet dimension. Investigations of serious environmental incidents have shown that none of these occurred due tocompliance with the Code. The DSM Alert Officer reports to the seriously negligent or irresponsible behavior by employees. MoreManaging Board and is invited to report independently to thedetails on serious environmental incidents are provided in theSupervisory Board at least once a year. As of 2014, people who chapter 'What still went wrong in 2015' on page 116. are not DSM employees but wish to raise a concern regarding a

violation of the Code can also contact the DSM Alert Officer viathe company's website. In 2015, one external report of a potential violation was received.

Profit: There were fewer violations of the Code reported in the Profit dimension in 2015 compared to 2014. The cases that were reported related to matters including a number of fraud and falsification of time records cases.

Code of Business Conduct Training and awareness e-learning: % of targeted employees trained General

- Code of Business Conduct People

- Life Saving Rules Planet

- Basic Course Responsible Care® Profit

-Global Trade Controls

- Anti-Bribery and Corruption (introduced 2014)

- Security

DSM Competition Law: % of targeted employees signed-off

- DSM Competition Law compliance annual statement Violations of the Code:

Number of dismissals/other consequence management Triple P breakdown

• - People

• - Planet

• - Profit

Regional breakdown

• - Europe & Africa

• - Americas

• - Asia-Pacific

Total

Alert cases (whistleblower procedure):

Number substantiated/not substantiated/under investigation Triple P breakdown

• - People

• - Planet

• - Profit

Regional breakdown

• - Europe & Africa

• - Americas

• - Asia-Pacific

Total

1

No overall global data available for this period

Review of business in 2015

In 2015, DSM's activities were grouped into three clusters: Nutrition, Performance Materials and Innovation Center. In addition, DSM reports separately on Corporate Activities. Results presented in this section (and elsewhere in the management report) are before exceptional items, and are relating to consolidated activities only (therefore non-consolidated Partnerships are excluded).

Net sales

Nutrition

Performance Materials Innovation Center Corporate Activities

Total continuing operations Discontinued operations

Operating profit (EBIT)

Nutrition

Performance Materials Innovation Center Corporate Activities

Total continuing operations Discontinued operations

EBITDA

Nutrition

Performance Materials Innovation Center Corporate Activities

Total continuing operations Discontinued operations

Capital expenditure

x € million	2015	2014
Nutrition	322	330
Performance Materials	98	71
Innovation Center	34	27
Corporate Activities	24	49
Total continuing operations	478	477
Discontinued operations	92	139
Total, accounting based	570	616
Non-cash items	(27)	37
Customer funding	(7)	(25)
Total, cash based	536	628

R&D expenditure (including associated IP expenditure)

2015	2014	2015
223	206	4.5
143	135	5.7
82	82	52.9
16	28	21.1
464	6.0

as % of net sales 2014

x € million

Nutrition Performance Materials Innovation Center Corporate Activities Total continuing operations

4.8

5.5 53.2 27.5

6.4

Workforce at 31 December

Nutrition

Performance Materials Innovation Center Corporate Activities

Total continuing operations Discontinued operations

BNruintrgitiniognNutrition Solutions Closer to the Mouths that Need Them

Based on a deep understanding of customer and market needs, DSM has built up a unique position in its Nutrition businesses. With the broadest portfolio of specialty nutritional ingredients, a global presence and an unparalleled local network, DSM is developing forward solutions throughout its Nutrition value chains, bringing tailored products and services closer to the mouths that need them and capturing a greater share of value.

Unique global premix network

New channels and segments

DSM is also developing and opening new channels and segments in Human Nutrition & Health. i-Health is DSM's fast-growing business-to-consumer unit, which over recent years has established market-leading brands in North America in probiotics, urinary health, menopause symptom relief and vegetarian omega-3. The company is also broadening its reach with additional forward solutions to support customers in providing high-quality solutions tailored to local consumer preferences. These include retail-ready solutions for both brands and white-label products and complete premix product solutions with micro- and macronutrients, flavors, textures, sweeteners and colors in a variety of packaging options.

One of DSM's key strengths in Animal Nutrition & Health is its unique global premix network, which enable the company to locally produce precisely-tailored formulations of its products and deliver solutions to customers - ranging from feed-mills to farmers - exactly when they need them. DSM will further expand this core network of 44 plants to tap into increasing demand for specialty products, in particular in Asia, North America, Russia and also Africa. Bringing these advanced capabilities closer to customers will also open new channels and new segments; DSM is currently developing a dedicated new brand of premix for mid-sized pig farms in China, a segment which it has previously not directly served. It will provide farmers with solutions for animal productivity and health, including support and service, under a dedicated brand.

Nutrition

Net sales:

DSM Nutritional Products:

• - Animal Nutrition & Health

• - Human Nutrition & Health

• - Personal Care

• - Aland

DSM Food Specialties

Total

Organic sales growth (in %) Operating profit plus depreciation and amortization (EBITDA) Operating profit

Capital expenditure

Capital employed at 31 DecemberROCE (in %)

5,309

EBITDA as % of net sales R&D expenditure

Workforce at 31 December (headcount)

5,034

Business

The Nutrition cluster is made up of DSM Nutritional Products and DSM Food Specialties. These businesses serve the global industries for animal feed, food and beverage, pharmaceutical,DSM's Nutrition cluster achieved total sales of € 4,963 million in 2015, up 14% from € 4,335 million in the previous year. Organic sales growth was 6%, driven by higher volumes. Sales furthermore benefited from currency effects. Animal Nutrition & Health delivered strong growth throughout 2015. Human Nutrition & Health started 2015 weak but stabilized during the course of the year, showing progress in the second half and posting a solid fourth quarter.

EBITDA declined by 3% to € 822 million in 2015, as good organic growth and the positive impact of the strengthened US dollar were more than offset by the negative impact of significantly lower vitamin E prices, the appreciation of the Swiss franc and the weakening of the Brazilian real.

Trends

The fundamental growth drivers in nutrition and health remained as relevant as ever in 2015, despite challenging and varied macro-economic conditions. The population continues to grow and the majority of people around the globe now live in urban environments. Consequently, there is a growing need for convenience and processed food. This matches DSM's ability to deliver tailor-made local applications solutions and blends to its customers the world over.

Rising standards of living especially in emerging economies are driving growth in the consumption of fish, meat, poultry and dairy products, which requires improved efficiency and more sustainable systems and value chains for animal proteins.

People are on average living longer and are better informed about matters concerning health and well-being throughout life,infant nutrition, dietary supplements and personal care. DSM has which is fuelling demand for infant nutrition products, dietary a unique position across the feed and food value chains, with a supplements and healthier choices in food and beverages. Thereglobal and highly diversified portfolio of products, services andis also a trend towards increasing popularity for natural andend-markets and provides solutions to the benefit of customers organic products in Western food and beverage markets, whichand other stakeholders.

presents a challenge for many of DSM's traditional customers.

Nutrition cluster performance

The need to address malnutrition, both in terms of hunger as well as micronutrient deficiencies, in the developing and the developed world, is evident. This is increasingly being translated into regulatory as well as market-driven actions to encourage healthy, nutritious and balanced diets, where necessary bolstered by fortified foods and supplements.

Public concerns around food safety, quality and sustainability are leading to a stricter regulatory climate. Health authorities prefer producers to work with suppliers such as DSM, who are rigorous in their application of science and have state-of-the-art quality assurance systems. Environmental sustainability is also a key factor, particularly in countries with low-cost producers.

In the coming period, DSM expects customers across the globe to intensify their demand for deeper insights and customized

solutions, increasingly tailored to local consumer preferences and market and channel structures.

Sustainability

Sustainability is one of the key business drivers in DSM's nutrition markets, with demand continuing to increase for solutions that are more efficient and have distinct environmental advantages. Appreciation is also beginning to grow for products that offer benefits to individual people or communities. DSM's Nutrition cluster contributes to the development of ECO+ and People+ solutions, helping to drive the uptake of these Brighter Living Solutions.

DSM is convinced that good nutrition is fundamental to the realization of the full physical, mental and economic potential ofrenewed for a further three years in December 2015, DSM reaches more than 25 million people per year with improved nutrition. See 'Cross-sector nutrition partnerships' on page 36.

Strategy

The Nutrition cluster's unique business model aims to capture opportunities arising from global megatrends by combining global production capabilities with customized local formulations. DSM delivers the broadest portfolio of high quality and competitive active ingredients and formulations at a global scale while offering maximum differentiation through industry and segment-specific formulations. As a local solutions provider with strong market intimacy, its focus is on customer-driven solutions.

everyone on the planet. It views the elimination of malnutrition as DSM has grown into one of the strongest players in the industrya key societal priority and a shared global responsibility. DSM wholeheartedly supports the fact that 'zero hunger' is the second of the United Nations' 17 Global Goals for Sustainable Development between now and 2030. The company uses its leading position to help address malnutrition, both in terms of advancing understanding of the intrinsic relationship between nutrition and health as well as by helping customers improve the nutritional content of their products.

Since 2007, DSM has been proud to be a strategic partner ofby addressing growth opportunities through expanding and extending its offering across the value chain. The Nutrition cluster has operations in over 60 countries, with unparalleled customer access, a complete product portfolio and advanced skills and capabilities. It has significantly expanded its premix footprint, in particular in emerging economies, and will continue to do so.

Over recent years, the cluster has further built-out its product portfolio, adding capabilities in cultures, textures, trace minerals, marine and microbial polyunsaturated fatty acids on top of itsthe UN World Food Programme, the largest provider of food aid unrivalled position in vitamins, carotenoids, eubiotics, enzymesto the world's hungry. Through the partnership, which was

Established a unique business in Nutrition

Pure Actives

Formulations

Global products

Broad portfolio providing resilience

Broadest portfolio of ingredients

2015

■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Fat soluble vitamins (e.g. A,D,E)

Water soluble vitamins (e.g. B,C)

Carotenoids

Marine PUFAs

Microbial PUFAs

Enzymes & Cultures

Minerals & DCP

Savory / yeast extracts

Nutraceutical ingredientsAroma intermediates Other blend ingredients Other

and yeasts.

Premixes & Solutions

Local solutionsSales, split over value chain steps

Access & Insights

■ Active ingredients ■ Forms ■ Premixes ■ i-Health/B2C

2015

The combination of its strong global position and integratedWhilst successful acquisitions have been the main vehicle forbusiness model has enabled DSM to become a leader in quality adding new growth platforms over recent years, going forward and innovation, with deep regulatory, technical and sustainability the cluster aims to drive profitable growth by leveraging the expertise and a clear understanding of customer and consumer position that has been created. It will expand its core capabilities,needs as well as regular investment in quality management.

bringing them to more of the markets and territories it serves.

DSM will continue to add new products and solutions to its portfolio, making full use of the company's expertise in sustainable innovation. The Nutrition cluster will also expand inDSM continued to see demand for its tailored nutritional solutions increase, as the market sought to further improve the efficiency of animal production as well as to bolster producersegments and markets in which it is currently under-represented profitability. This led to strong growth, particularly in the specialty such as in ruminants. It aims to continue to develop and further portfolio. Moreover, there was an increased focus on alternativesimplement new business models to complement its positions across its value chains.

The Nutrition cluster's business strategy to accelerate organic sales growth will be supported by cost savings and operationalto antibiotic growth promoters. This has created new business opportunities that DSM, with its broad portfolio and application knowledge, is well positioned to capture.

DSM's strong focus on customer-led innovation continued toexcellence measures which will boost efficiency and productivity bear fruit during the year and its enzyme and lipid alliances and drive cash generation. The cluster has started implementing strengthened this. In July, DSM entered into a joint developmenta performance improvement program with the aim of delivering cost savings versus 2015 of € 130-150 million by 2018. It willagreement with Evonik for algae-based omega-3 fatty acid products for animal nutrition, in particular for use in aquaculturealso benefit from the DSM-wide adjustment of the organizational and pet food applications. and operating model, allowing it to focus more on serving its

customers and markets. Together with increased capital efficiency, the cluster will deliver improved financial returns.

DSM Nutritional Products

DSM Nutritional Products has three market-facing entities: Animal Nutrition & Health, Human Nutrition & Health andThe Tortuga business continued to perform well. New nutritional programs and product launches enabled DSM to continue delivering greater value to its Brazilian beef and dairy customers. DSM is expanding these capabilities beyond Brazil into other markets in Latin America.

During the year, DSM was able to benefit from the world-classPersonal Care. DSM Nutritional Products achieved total sales of capabilities of its new R&D center in China. Further investments

€ 4,439 million in 2015; in 2014 this was € 3,862 million.

Animal Nutrition & Health

were also made in the premix business in Asia, including in India and Indonesia.

In 2015, DSM successfully developed and launched the first feed enzyme for the ruminant segment. RONOZYME® RumiStar™ is an amylase that increases the utilization of the starch in cow feed, leading to increased milk efficacy (the volume of milk produced for a given amount of feed) in dairy cows.

DSM has made a breakthrough discovery in developing an innovative product that persistently decreases methane emission in cows - Clean Cow. Since methane is the second most important human-induced greenhouse gas after carbon dioxide, this innovation has the potential to help reduce the impact of methane emissions to the environment, as well asThe Animal Nutrition & Health business achieved sales of € 2,359 benefiting the animals themselves. In 2015, an international teammillion in 2015 compared to € 2,084 million in 2014.

of researchers led by academics from Pennsylvania State University, published a successful study together with DSMThis business addresses the global feed ingredients markets for describing the effect of the Clean Cow compound on thepoultry, swine, aquaculture, ruminants and pets. In all these species, DSM is a full value chain player, providing active ingredients, delivery systems, and nutritional and premixreduction of methane emissions from enteric fermentation in dairy cows in the Proceedings of the National Academy of Sciences of the United States. It was the largest and longest trialsolutions globally and at a local level. Its focus is on the nutritional of its type in lactating cows. ingredients and additives segments of these markets.

Animal Nutrition & Health was able to deliver strong growth in 2015, despite lower prices in vitamin E; the effects of headwinds in certain currencies, which to an extent off-set the benefit of the strengthened US dollar; and challenging macro-economic conditions in a number of markets. Nevertheless, the societal megatrends including population growth and rising standards of living continued to drive this business in the year.

Exploring the natural and social capital of OatWell®

DSM carries out pilot studies to assess its impact upon natural and social capital, assigning an economic value to the environmental and social impacts across the value chain for specific product and market applications.

In this pilot, DSM teamed up with True Price to quantify the environmental costs and benefits associated with OatWell®, including the effect on the occurrence of cardiovascular diseases. OatWell® is an active ingredient derived from oatmeal that helps lower cholesterol levels and control blood glucose. A complimentary social capital study linked with DSM's People+ program was also carried out.

Results show that the positive environmental and social effects are substantially higher than the environmental costs associated with OatWell®'s value chain. Producing OatWell® incurs environmental costs, mainly in water, energy and land use. A part of that cost is compensated because OatWell® replaces wheat that no longer has to be produced. Further significant environmental benefits are expected as a result of reduced food production, since research suggests that people eat considerably less when OatWell® is part of a healthy diet. The final effect is the expected social and economic benefit of reduced cardiovascular diseases, a specific health benefit of OatWell®.

Additional positive economic values were calculated in the People+ areas of Better Health (reduction in other diseases); Working Conditions (safety and health, as well as remuneration); and Community Development (local employment, local sourcing, and education).

This comprehensible presentation of combined environmental and social impacts allow comparison with economic costs, and encourages thinking about business models that capture societal value.

True value creation of OatWell®

True value creation of 1 kg OatWell® replacing wheat flour in cereal

SocialEconomic

Truevalue(€/kgOatWell®)

Sum

Environmental
OatWell®	Avoided wheat	Avoided food	Effects decreased
production	production	production	cholesterol levels

Human Nutrition & Health

Human Nutrition & Health reported 2015 sales of € 1,845 million compared to € 1,626 million in 2014.

This business provides nutritional solutions for the food and beverage, dietary supplements and early-life nutrition markets, with an additional focus on pharmaceutical and aroma ingredients. The business also strives to help eliminate micronutrient deficiencies amongst the four billion people at the Base of the Pyramid. Its fundamental drivers are the link between nutrition and health, supported by a number of global megatrends.

DSM continued to encounter headwinds that had a negative impact on performance in the year, with North and Latin America in particular providing challenging market environments in some segments, whilst the Asia-Pacific and EMEA regions performed robustly, as did the i-Health and aroma ingredients businesses.

The US market for fish oil-based omega-3 dietary supplements contracted further, although as the year progressed, DSM was able to increase its market share somewhat. Outside the US, the segment performed well in 2015, particularly in Europe and Asia. Multivitamin consumption in the US showed some growth during the year with consumers increasingly favoring new delivery formats such as gummies.

Food and beverage markets remained relatively weak in the US and elsewhere in the Americas, with the economic downturn in Latin America being felt in low consumer spending and a consequent prioritizing of more basic products and formulations by both customers and consumers. DSM has launched a multi-stakeholder engagement initiative in the region to reinforce the value of fortification.

DSM's i-Health dietary supplements consumer business again performed strongly, recording double-digit growth during the year. This is being supported by the high aspirations held by increasing numbers of consumers around topics such as immunity and gut-health. The i-Health business is predominantly based in the US where its now highly-regarded consumer brands such as Culturelle®, AZO™ and Estroven® were first launched. Its strong performance was driven by expanded

distribution and new innovations, as well as by international expansion to China, South Korea, Malaysia and the UK.

DSM has seen a positive trend toward higher dosage vitamins for pharma applications alongside the already significant omega-3 active pharmaceutical ingredient (API) market. DSM has targeted the Pharma segment as one the priorities for the Human Nutrition & Health business; this will be supported amongst other things by a new facility in Mulgrave (Canada) offering advanced omega-3 refinement capabilities from both

Personal Care

Sales in Personal Care came to € 172 million in 2015, up from € 152 million in 2014.

Personal Care provides ingredients and innovative solutions for some of the world's best-selling beauty products. DSM's extensive portfolio of key ingredients includes peptides, natural bio-actives, UV filters, hair polymers and vitamins; this is complemented by a range of services. The business is driven by global megatrends, local consumer beauty regime insights andfish and algal sources, which is scheduled to come on stream in tapping growth opportunities in emerging economies. the first half of 2016.

In 2015, DSM took a number of measures to boost its position

Also planned to begin operations in the first half of 2016, is a new in the UV sun-filters category, focusing in particular on highervitamin B6 facility in Xinghuo (China), which was mechanically completed at the end of 2015. This will complement DSM'svalue specialty filters. As a result, there was a steady improvement in performance in this segment, despite someglobal manufacturing footprint and support growth in the region. price pressure in the market for non-specialty filters.

DSM furthermore opened a state-of-the-art Nutrition Innovation DSM's ability to deliver regional innovations based on localCenter in Singapore in March. The month also saw the finalization of DSM's acquisition of Aland, a producer of vitaminconsumer insights fuelled significant growth in the skin care category, in particular in emerging economies, with tailoredC in China; this business has subsequently been renamed DSM products such as SYN®-COLL for the Chinese marketJiangshan.

performing very well. Increased demand for locally-tailored solutions was also noticeable in hair care.

The Human Nutrition & Health business engaged in a number of innovations during the year, both in terms of the development of Overall, market conditions in Europe were challenging, whilstnew products as well as in establishing and growing new business models. In June, DSM entered into a partnership and co-investment with MedDay, a bio-technology company focused on the treatment of nervous system disorders, for the manufacture of pharmaceutical grade D-biotin for use in the treatment of multiple sclerosis. The company also made furtherconsumer demand in North America recovered in the year, fuelling improved performance. Growth continued to be strong in many emerging economies, especially China, although the fragile economic environment in various countries in Latin America hampered growth in that region.

progress with its retail-ready solutions. This is an example of an During the year, Personal Care moved the production ofarea in which DSM is leveraging its full value chain presence to provide a one-stop shop for ready to sell products for use by both established brands and private labels.

In October, the government of Rwanda announced that it had invited DSM to participate with the Africa Improved Foods Ltd. consortium in a joint venture to improve the nutritional status of the Rwandan population and help address malnutrition. The joint venture partners are investing in a factory to be built in the capital Kigali to produce fortified foods for pregnant and breastfeeding women and for older infants and young children. The Africa Improved Foods Ltd. business will create 230 direct jobs while offering 9,000 local farmers a stable, sustainable income for a proportion of their harvest. By 2017, Africa Improved Foods Ltd. aims to reach more than one million people annually with effective nutrition interventions through its products.

synthetic peptides from a site in Switzerland to a larger facility in Village-Neuf (France) to make it possible to scale up production of new and existing peptides while maintaining high quality and service to customers around the globe.

DSM Food Specialties

Highlights 2015

• - Solid organic sales growth

• - Strong performance in enzymes and cultures

• - New hydrocolloids product platform performed wellIn 2015, sales for DSM Food Specialties amounted to € 524 million, compared to € 473 million in 2014.

appealing to customers. Producers are also looking to improve processes and reduce costs. Specialty food ingredients can have a significant, direct impact on the efficiency of the production process and the end-product itself.

The enzymes business focuses on the food and beverage industry, where DSM enables customers to innovate products and production processes. Sales in enzyme solutions were supported by surging global demand for reduced-sugar products in dairy such as DSM's Maxilact®. This growth was further supported by continued take-up of DSM's beer stabilization solution as well as by the introduction of a new baking enzyme.

DSM Food Specialties is a leading global supplier of food enzymes, cultures, yeast extracts, flavors and other specialtiesCultures provides the dairy industry with a unique toolkit to create the desired texture, surface and flavor for their productsfor many of the leading global and local dairy, baking, beverages while increasing yields from the milk used. The segment is drivenand savory food brands. It aims to enable the production of better foods, helping to make diets healthier and more sustainable. Its advanced ingredients and applied knowledge help to make better food available and affordable to more people across the world.

by new product developments including advanced cultures for thick, indulgent and high-protein yoghurts as global demand for fermented milk products increased.

In Savoury Ingredients, DSM offers a range of yeast extracts and process flavors that allow for authentic, intense, natural-tastingThe food industry increasingly requires sustainable, higher value- savory foods with the possibility of reduced salt. A key driver inadded products that are healthier, better tasting and morethis segment is demand for healthier alternative ingredients.

The video 'DSM in 3 minutes' introduces DSM and its portfolio of science-based, sustainable solutions that nourish, protect and improve performance

DSM has established a new growth platform in hydrocolloids following the acquisition of a stake in Andre Pectin and its grouping with DSM's gellan gum assets. Based in China, the unit, which provides DSM with new texturing capabilities, progressed very well during the year. In October, work began on a significant expansion of its facility in Tongxiang (China), with the aim of establishing a world-class development center for hydrocolloids including gellan gum.

All regions contributed to DSM Food Specialties' growth, with Latin America in particular performing well, posting double-digit growth for the fourth year in succession.

DSM Food Specialties focuses its innovation efforts with market-led innovation projects driven by sound market, customer and consumer insights. Healthier options are an important driver in the food industry and sugar reduction is one of the key elements in this respect. This is an area in which DSM Food Specialties is uniquely positioned to leverage the breadth of its portfolio to offer solutions for taste and texture as well as salt and sugar reduction. In addition, DSM Food Specialties continued to make progress with the development of its fermentative stevia platform in 2015 and with several other innovative concepts to enhance product appeal or quality.

PTheerfoSrumbsatnitucteioMn aEtffeerciat ls

One of the key trends that will continue to fuel growth in the Performance Materials cluster is substitution. Customers are increasingly looking to replace existing parts and materials with newer, more sustainable alternatives, for example replacing metals with lighter, high-performance plastics to reduce the weight of vehicles; replacing heavy and high-maintenance steel cables with Dyneema®; or using waterborne resins instead of those based on solvents. With its strong focus on sustainable innovation and collaborative development, DSM is using the substitution effect to drive the uptake of new applications that offer advantages for all, helping to power growth in the cluster.

Decovery®: a new standard in sustainable decorative paintsStanyl® Diablo - high performance at 250°C

Praxis, one of the leading chains of DIY stores in the Netherlands, was looking for a sustainable solution for its premium range of private-label decorative paints. In close cooperation with DSM, Praxis was able to further improve quality and sustainability using Decovery®. Decovery® plant-based resins are based on a novel process of converting renewable materials into a durable polymer. It is free of Volatile Organic Compounds (VOCs) and has an extremely low odor, as well as offering additional benefits for end-products.

The BMW i8 is a plug-in hybrid with the appearance and the breathtaking performance of a sports car, which at the same time exhibits the consumption and emissions of a compact car. The performance of the i8 required a high-heat thermoplastic solution for its air intake manifold with integrated liquid-cooled charged air cooler (AIM/CAC). DSM's Stanyl® Diablo offered superior performance as well as thermal stability and stiffness, leading to the world's first high-heat plastic AIM/CAC combination. Stanyl® Diablo enabled BMW to come up with a revolutionary lightweight design without the use of metals. With a weight reduction of up to 40% compared to aluminum, it helped BMW create a higher-performing engine while still meeting new emission limits.

Performance Materials

Net sales:

DSM Engineering Plastics DSM Dyneema

DSM Resins & Functional Materials

Total

Organic sales growth (in %) Operating profit plus depreciation and amortization (EBITDA) Operating profit

Capital expenditure

Trends

Capital employed at 31 DecemberROCE (in %)

1,723

EBITDA as % of net sales R&D expenditure

Workforce at 31 December (headcount)

1,744

Business

The Performance Materials cluster is made up of DSM Engineering Plastics, DSM Dyneema and DSM Resins & Functional Materials. DSM Engineering Plastics is a global player in specialty plastics. These materials are used in components for the electrical and electronics, automotive, flexible food packaging and consumer goods industries. DSM Dyneema is the inventor, manufacturer and marketer of Dyneema®, the world's strongest fiber™. DSM Resins & Functional Materials is a global player in innovative, sustainable resins solutions for paints and industrial and optical fiber coatings.

In 2015, total sales for the Performance Materials cluster were up by 3% from € 2,460 million to € 2,528 million. This was driven by a positive 7% currency effect on overall flat volumes, while lower input costs led to a 4% decrease in prices.

Total EBITDA for the full year 2015 increased by 19% to € 384 million from € 323 million in 2014. The cluster benefitted from the efficiency and cost-saving programs that have successfully been implemented over recent years, as well as good margin management. This positive development was further supported by lower input costs and currency developments.

Resource scarcity and climate change have become key drivers in the materials industry. In nearly every market, customers demand products and solutions that help to reduce energy consumption and harmful emissions, both within their operations and across the value chain. Legislators are increasingly driving this agenda with more stringent regulatory requirements. DSM addresses these needs through innovative materials that offer the same or better functionalities whilst being lighter and more versatile with a lower environmental footprint than metals and other conventional materials. These include high-performance plastics; waterborne resins; and bio-based and renewable plastics and resins.

The use of hazardous substances is a further topic of concern for consumers and regulators, which is driving demand for safer alternatives. In response, DSM Engineering Plastics and DSM Resins & Functional Materials offer products and solutions that eliminate or reduce the use of substances including halogens and volatile organic compounds (VOC).

Substitution of existing materials through better performing alternatives is therefore a major growth driver in the Performance Materials cluster's businesses, alongside the overall development of their respective markets and segments.

Sustainability

DSM delivers innovative solutions that make a positive difference to people's lives and reduce the environmental footprint. Sustainability is a significant driver of new business and innovations in Performance Materials.

Sustainable innovation is consequently one of the cluster's cornerstones and leads to the development of new applications that address key challenges. DSM has shifted its materials portfolio to a higher added-value mix by introducing innovative and more sustainable solutions, some examples of which are described elsewhere in this chapter and the Report.

Strategy

DSM applies a differentiated strategy in its Performance Materials portfolio based on its positions in various market segments. In the period 2010-2015, this strategy aimed to restructure, strengthen or accelerate its businesses. This approach has enabled the cluster to successfully upgrade its portfolio and DSM will continue to differentiate its Performance Materials business strategies in the coming years, focusing on well-defined, higher-growth specialty segments, while maximizing returns in PA6 Polymers and Powder Coating Resins. See 'Strategy 2018' on page 17.

In 2015, the company completed the strategic actions it was pursuing for Composite Resins, which became part of the ChemicaInvest partnership with CVC Capital Partners alongside the Polymer Intermediates businesses, thereby finalizing the restructuring aspect of its strategy for the period.

Whilst not part of the cluster, the Emerging Business Areas of DSM Biomedical and DSM Advanced Surfaces are also related to Performance Materials and represent promising growth platforms for the longer term.

DSM Engineering Plastics

Highlights 2015

• - Specialty portfolio upgraded with PPS and PA66 compounds

• - Stanyl®ForTii™ selected for new USB-Type C connectors

• - New office on US West Coast to support growth in consumer electronics

DSM Engineering Plastics booked full-year sales of € 1,378 million in 2015 compared to € 1,324 million in 2014.

The markets for engineering plastics increasingly require sustainable, innovative solutions that make people's lives safer,concern, use recycled content or offer improved recyclability, and use content that is entirely or partly bio-based.

DSM Engineering Plastics targets three key industries: automotive; electrical and electronics; and flexible food packaging. It has a focused portfolio with global leadership positions in many of its products in the areas of high-performance plastics such as Stanyl®, Arnite® and Akulon®. DSM seeks to continually shift its portfolio towards higher-value, specialty materials, introducing more advanced grades to its offering.

In automotive, vehicle and parts manufacturers seek to lower fuel consumption and emissions by reducing weight and friction as well as through the use of alternative energy systems such as electric and hybrid technologies. They also look to fulfill regulations on end-of-life vehicles and reduce vehicle footprints with the use of bio-based or recycled materials, while improving safety and comfort. Furthermore, vehicles are becoming

more convenient and healthier, while addressing climate change increasingly 'connected', enhancing the use of electronics.

and food waste. DSM aims to create shared value by providing high-performance materials and solutions to help lower carbon footprints over the life cycle, eliminate the use of substances of

DSM's expertise and broad portfolio of advanced and sustainable solutions enable customers to meet these requirements, reduce vehicle footprints and drive downstream innovation.

DSM's high-performance plastics are being used in an increasing number of innovative applications by vehicle manufacturers. DSM's Diablo range of high-temperature resistant Stanyl® and Akulon® polyamides are aimed at applications in automotive engine compartments. Diablo has been used in the world's first high-heat plastic air-intake manifold on BMW's electric i8 vehicle. Together with its partner ZKW Group, DSM also developed a new lightweight LED lighting module for the Audi Q7 using DSM's Arnite® XL-T, which is able to withstand the intense heat the prisms used in these modules can generate.

The electronics industry is particularly dynamic and continually demands improvements in terms of functionality, miniaturization and process efficiency, for example for use in smartphones, tablets and ultrabooks, as well as looking for ways to address the issue of e-waste, which is also relevant for producers of electrical goods. DSM offers a unique portfolio of materials and technical expertise and assistance to support thesecomplement DSM Engineering Plastics' existing range of materials, particularly for use in the automotive and electrical and electronics segments.

DSM Dyneema

DSM Dyneema reported total sales of € 284 million in 2015 compared to € 264 million in 2014.

developments. At the end of 2015, DSM opened an office on the Dyneema® is the world's strongest and lightest fiber. It isUS West Coast to be able to give closer support to major consumer electronics customers and brands in and around Silicon Valley.

Introduced in 2014, DSM's Stanyl®ForTii™ has been selected for use by customers in key applications such as in the new generation of USB connectors; USB Type-C will become the universal standard connector in consumer electronics. Stanyl®ForTii™ offers an unparalleled combination of strength,15 times stronger than steel on a weight-for-weight basis and 40 times stronger than aramid. Yet it can float on water. This combination of extreme strength and low weight makes it suitable for a wide and expanding range of applications such as commercial fishing and aquaculture nets; ropes, slings and synthetic chains; vehicle and personal multi-threat protection; radomes; high-performance fabrics in apparel; cut-resistant gloves; as well as medical sutures. Applications with Dyneema® push the boundaries of light-weight strength, offerdurability and aesthetics in miniature applications and during the comfort and safety and are inherently more sustainable than theyear it was selected by Xiaomi, the world's fastest growingmaterials they substitute. Products with Dyneema® weigh less,manufacturer of mobile handsets, for the antenna splitters used use less material, need less energy to process and deploy in theirin its Mi4 device.

final application, and have longer lifetimes.

In November, DSM announced a capacity expansion for

DSM Dyneema has a well-established Fiber Solutions businessproduction of the Akulon® XS polyamide at its facility in Emmen serving the high-protection textiles and commercial marine &

(Netherlands) to meet strong-growing market demand for this material, which has been specifically developed for blown filmssports segments. It has also started entering and forward integrating into new segments in performance apparel, syntheticused in flexible food packaging. Demand is rising in response to chains and radomes. The Fiber Solutions business is driven bythe growing need to reduce food waste and longer shelf-life. Akulon® XS was also introduced in the Chinese market during the year.

DSM's 70% bio-based engineering plastic EcoPaXX® found acustomers' needs for light-weight, sustainable solutions offering extreme durability coupled with improved safety and ergonomics. DSM is well positioned to address these demands. It has global product leadership with the lightest, strongest fiber available; unique, IP-protected technology platforms; and annovel application in 2015 in a range of innovative mountaineering increasing range of end-use applications for its segments, oftenfootwear. The material's properties give climbers more stability on smaller stances coupled with improved comfort when walking.

DSM formed partnerships during the year to strengthen its position in polymer compounds. It entered a global strategic alliance with Ascend for the supply of compounds based on polyamide 66 and announced the formation of a joint venturedeveloped in collaboration with industry partners.

The Dyneema® Diamond Technology platform, which offers maximum protection with no loss of comfort in applications like cut-resistant gloves, showed strong sales growth in the year. Good progress was also made with developing solutions based on Dyneema® Max Technology; this technology has for example been applied in the offshore market to provide best-in-classwith NHU in China for the development and manufacture of high permanent subsea anchoring for a major floating productionperformance plastic compounds based on polyphenylene sulfide (PPS compounds). These additional capabilitiesstorage and offloading vessel.

A helping hand for safety and business

Protective Industrial Products Inc. is a leading supplier of Hand Protection and Personal Protective Equipment in North America, and aims to provide the highest value safety products available to workers in the Industrial, Construction and Electrical industry. Amy Taft is the Hand Protection Product Manager at PIP.

"PIP is the first licensing partner to offer cut-resistant products with Dyneema® Diamond Technology in the North American market. Using the Dyneema® Diamond Technology fiber in our 3GX line gives us the ability to offer superior cut-resistant products that also provide excellent fit, feel and function, without adding bulk, which is a major plus over competitive materials.

Statistics from the US Occupational Safety and Health Administration on hand injuries in the workplace show that 70% of injured workers report not wearing gloves at the time of the incident. Injuries to the other 30% often involve gloves that are inadequate, damaged, or the wrong type for the hazard present.

It is essential that all personal protection products provide the wearer with all day comfort. This is especially true for hand protection products that are typically used in a wide variety of environmental conditions. If the product fits well and is comfortable, the user will continue to wear it.

By offering products made with Dyneema® Diamond Technology, we provide our customers with hand protection that is 40% lighter than traditional aramid products with greatly improved cut performance.

We wish to be the number 1 supplier of hand protection to the industrial market in North America. We now offer the widest selection of cut-resistant products made with Dyneema® materials in the market and we will continue to enhance our cut-resistant product line with new offerings made with Dyneema® and Dyneema® Diamond Technology."

In 2015, Black Dyneema® was introduced to the market. The Fiber Solutions portfolio was further boosted during the year with the acquisition of Cubic Tech, a company specialized in the custom design, development and production of innovative high-performance ultra-lightweight flexible fabrics. This acquisition accelerates DSM Dyneema's entry into the performance apparel market and is also expected to enable additional developments and revenue streams in existing markets. In 2015, there were also initial sales in the new markets for radomes and synthetic chains.

The Life Protection business provides personal and vehicle protection solutions to the law-enforcement, peace-keeping and defense sectors. One of the key drivers in personal protection is wearability. DSM's Force Multiplier Technology offers the lightest and most flexible solution on the market, without compromising protection for the user. This technology platform delivered strong sales growth during 2015. The company furthermore expanded its portfolio in the year by bringing the innovative Dyneema® Anti Stab technology to market.

DSM Dyneema increased its cooperation with key value chain partners in sustainability-related programs, an example being the Circular Ropes project, addressing end-of-life solutions for mooring ropes. DSM Dyneema was also granted membership of the Sustainable Apparel Coalition during 2015.

During the year, brand licensing partnerships expanded significantly in both existing as well as new markets.

DSM Resins & Functional Materials

Highlights 2015

• - Growth in China in sustainable coatings, both waterborne and powder

• - Capacity expansion for waterborne urethane resins at Wilmington (Massachusetts, USA) facility

• - DSM and Dutch DIY-retailer Praxis launch high-quality paint with plant-based resins

DSM Resins & Functional Materials reported sales of € 866 million in 2015 compared to € 872 million in 2014.

The key trend in coatings markets worldwide is the shift away from traditional solvent-based coatings that contain hazardous materials to the use of more sustainable coating technologies. Besides end-user preference, legislation on the reduction of substances such as VOC will continue to be an important driver for this substitution world-wide.

DSM is a global leader in the coatings industry in the development and production of waterborne coating resins and

powder coating resins with clear sustainability advantages. In functional materials, DSM is the global leader in fiber-optic coatings. In additive manufacturing, DSM offers highly efficient and effective prototyping technologies, and supports the industry in accelerating the pace at which new products are designed and brought to market.

DSM finalized the divestments of Euroresins and the solvent-based coatings business Synres during the year, whilst the Composite Resins business became part of the ChemicaInvest partnership.

DSM Coating Resins

DSM Coating Resins focuses on products for three types of sustainable coatings: waterborne coatings, powder coatingstechnologies, the venture will enable carpets to be created and re-created from waste to close the carpet materials loop.

In October, DSM and the Dutch retail organization Praxis introduced a quality paint with DSM's Decovery® plant-based resins. This unique paint, a combination of high performance and sustainability, is available at all Praxis DIY stores in the Netherlands.

The Taiwan-based DSM-AGI business for certain UV-curing resins continued to face very challenging market conditions throughout the year.

DSM Functional Materials

DSM's UV-curable materials for optical fiber are recognizedand UV-curable coatings. These resins are used in a wide range worldwide as the standard-bearer for fiber protection andof applications, such as architectural, industrial wood, flooring, graphic arts, can, coil and powder coating applications.

In China, the trend towards increased attention for reduction of the environmental impact of paint and coatings manufacturingidentification. They help to ensure greater signal reliability and field performance within fiber-optic networks, which remains highly relevant as global bandwidth demand continues to surge.

DSM offers telecommunications network owners a broadhas accelerated, supported by the introduction of new standards portfolio of DeSolite® Supercoatings. It added a new class ofand legislation in this area. Having anticipated these changes, DSM was able to capture growth in all segments.

In the US, vigorous commercial efforts resulted in above-average market growth. The business is well-positioned to capture further growth with its innovation portfolio, which has been developed together with customers.

The European market for building and construction remained relatively weak in 2015.

DSM Coating Resins measures the carbon footprint of its innovations and conducts multiple Life Cycle Assessments (LCAs), using the data generated to stimulate cooperationproducts to the portfolio in 2015, known as High Efficiency DeSolite® Coatings, which provide enhanced processing robustness with excellent on-fiber performance and durability.

DSM is also actively developing, protecting and where needed defending its intellectual property position to support the significant research and development investment for its telecommunications portfolio.

A capacity expansion to increase production of Somos® 3D printing materials at the Hoek van Holland (Netherlands) site was announced in the year.

DSM Functional Materials furthermore announced a

across the value chain. One example in 2015 was an LCA study collaboration between DSM Somos and EnvisionTEC, a world for Uralac® Ultra, a powder coating technology that enables fast leader in 3D printing equipment, for the development of highcuring at low temperatures. This technology has a significantly lower environmental footprint by reducing processing steps, avoiding waste by regaining overspray and using less energy for curing.

In February, driven by its commitment to grow the sustainable coatings market, DSM announced an investment in its manufacturing facility in Wilmington (Massachusetts, USA), allowing for production of an extensive portfolio of state-of-the-art waterborne resins for ink and coatings. These resins are used in a wide range of applications, from packaging, textiles and flooring to automotive, adhesive and general industry segments.

DSM's joint venture with Niaga entered a new phase in the development of sustainable carpet technology in the year. Successful tests were held at scale with leading industry partners and the Niaga® technology is now ready for full-scale implementation. Based on proprietary and complementaryperformance materials to enable the production of industrial parts at much faster speeds.

IHnenaoltvhaytiVoanluCe eCnhtaeirns, Healthy Populations

DSM Biomedical supplies innovative materials that enable medical device manufacturers to make more minimally invasive devices. These can speed up recovery, shorten hospital stays and minimize reoperations, lowering health costs and helping people to lead longer, healthier and more active lives. The company's solutions also help medical device manufacturers to enhance their own operational processes and efficiency, improving business outcomes and contributing to the further development of sustainable value chains for high-quality healthcare.

Clearly visible benefits to contact lens production

An evolution in bioresorbable drug coating technology

Sometimes, re-thinking processes can be just as impactful as coming up with completely new materials. One example of a process innovation is DSM Biomedical's 'Project Emerald'. DSM re-engineered the process used in producing a critical ingredient for a customer to be used in the manufacture of contact lenses. The new process improves yields, meaning that fewer raw material inputs need to be used to produce the same amount of product. This enables DSM not only to become more lean in its manufacturing but also to deliver products to its customer 'just in time'. Furthermore, the new process eliminates the use of solvents, improving its environmental footprint. Moreover, supporting the customer's competitive position by enabling improved efficiencies for device manufacture will help make contact lenses more affordable for the wearer. Project Emerald was qualified by the customer for commercialization towards the end of 2015.

When coronary arteries (arteries that feed the heart muscle) become narrowed by a build-up of fatty deposits called plaque, this can reduce blood flow, which can lead to chest pains and potentially to heart attacks. One means to address this and help prevent complications is through the insertion of a stent, a tube that can be placed in a passageway such as an artery to keep it open. Stents can have their effectiveness increased by including a special coating to release medicines that support arterial functioning. DSM Biomedical supplied Svelte Medical Systems with an innovative proprietary bioresorbable carrier technology made of naturally occurring amino acids, which Svelte has used in its DISCREET™ drug coating. With DISCREET™ bioresorable, carrier and drug are mixed together and applied to the stent in a single application. It is designed to provide high mechanical integrity and optimize healing while delivering desired drug dose to the local tissue in controlled fashion. The special characteristics of DSM's carrier ensure relatively constant delivery over time, without the sudden changes that are often the case with other technologies.

Innovation Center

DSM Innovation Center

The DSM Innovation Center has two main functions. In the first place, it serves as an enabler and accelerator of innovation power and speed in DSM's core businesses as a center of excellence. In this role it also focuses on adjacent technologies for growth through its Corporate Research Program, which is steered by the Chief Technology Officer through the DSM

• - DSM Biomedical;

• - DSM Bio-based Products & Services; and

• - DSM Advanced Surfaces.

Combined, the EBAs are already EBITDA positive, and DSM expects this contribution to continue to grow, bringing the Innovation Center to break-even overall in 2016.

DSM Biomedical

DSM Biomedical is a leading development partner, trusted by the medical industry to shape the future of biomaterials and regenerative medical devices that improve and brighten patients' lives throughout the world. From its facilities in the US and the Netherlands, it provides medical device materials development and manufacturing to medical device companies. These products address key trends in medicine, from treating an aging population to caring for more active lifestyles − meeting the need for safer, less invasive procedures that are also more cost-effective.

By using its wide range of state-of-the-art capabilities, DSM is able to develop and produce innovative materials, as well as components, sub-assemblies and full medical devices for its customers. Its broad portfolio of biomedical materials,Science & Technology Department, as well as through the DSM technologies and capabilities includes biomedical polyurethanesVenturing & Licensing activities. In its second function, DSM Innovation Center has a clear business development role, focusing on areas outside the current scope of the business groups. It identifies and invests in new and innovative growthand polyethylenes, resorbable polymers, ceramics, collagens, extracellular matrices, silicone hydrogels, device coatings, and drug delivery platforms. These products are used in applications in some of the most attractive high-growth markets, includingoptions, initially through the DSM Business Incubator. Moreover, orthopedics, sports medicine, ophthalmology, general surgeryDSM Innovation Center is responsible for developing and extracting value from the company's Emerging Business Areas (EBAs).

and cardiology.

Whilst the global market for medical devices continues to grow, the healthcare sector as a whole is undergoing a period of

In 2015, strong sales development at DSM Advanced Surfaces unprecedented change. Spiraling healthcare costs areand positive currency effects were offset by lower volumes at DSM Biomedical as a consequence of weak biomedical device markets driven by the health care reforms in the US. EBITDApressuring healthcare providers, who are consolidating and maturing their supply chains in response. Their key drivers when purchasing medical devices are clinical outcomes, healthcareshowed an improvement driven by focused innovation activities, economic outcomes and patient satisfaction. Traditional medicalcost savings, currencies and license income from bio-succinic acid technology.

device companies are developing into overall solutions providers to hospitals and are focusing less on internal R&D, preferring to acquire novel innovations. These players are also further

DSM filed more than 400 patents in 2015, in line with 2014. The maturing their supply chains, choosing to work with a smaller company also continued its Excellence in Innovation program in number of stronger suppliers.

order to maintain its leading position as an innovator and to

improve its capabilities.

Emerging Business Areas

DSM's EBAs provide strong long-term growth platforms in promising end-markets that are based on the company's core competences in health, nutrition and materials. DSM has three EBAs:

These dynamics present medical device suppliers, such as DSM Biomedical, with new prospects but also new uncertainties. These companies have an opportunity to capture the R&D gap that is becoming available in the market. However, pricing pressure is increasing and supply chains becoming more exclusive. Medical device suppliers need to forge stronger, long-term partnerships to continue to prosper.

Winning Together

At the start of 2015, DSM and professional cycling Team Giant-Alpecin entered into an innovation partnership aimed at giving the team and its athletes an edge in one of the toughest and most competitive team sports around - as well as ultimately benefiting cyclists of all levels the world over. Team Giant-Alpecin manager Iwan Spekenbrink: "In the first year of our partnership, a number of innovations have already had a positive impact on the Team's performance.

One is the protective cycling clothing we have developed incorporating Dyneema® fibers. Crashes are unfortunately a fact of life in professional cycling. The key is to minimize the impact that they have, which is important not just in terms of the severity of the immediate injury but also in terms of recovery time. When the body needs energy to repair itself, that's energy you can't use to ride your race.

The new shorts are comfortable, breathable and have an aerodynamic fit - and at the same time provide unrivalled protection. They have given the riders extra confidence, a competitive advantage for us. We are very proud that this innovative clothing won an award at Eurobike, the world's most prestigious cycling trade show.

A further area of innovation revolves around nutrition, in other words the fuel our athletes take on board. We have integrated DSM's Culturelle® and PeptoPro® products into the Team's diet to aid the digestion and provision of energy from food and to support the riders' immune systems during training, racing and recovery.

Our motto at Team Giant-Alpecin is 'keep challenging'.

Everyone in the team is committed to a constant process of improvement and development to achieve our collective goals, winning together.

There is a clear natural fit between our culture and way of working and DSM. DSM is all about innovation. They understand, like we do, that there is no single finish line, but that you always need to keep improving."

During the year, DSM Biomedical initiated the first commercial activities in its in-house medical coating service plant following its launch in 2014. It also had an advanced new material qualify to be clinically tested by a market-leading customer in nephrology, expanding its business.

Progress was made in partnerships in new devices and clinical trials, as well as in the development of DSM Biomedical's own proprietary medical device product concepts, such as an implantable drug delivery device for treatment of glaucoma.

The DSM-DuPont joint venture, Actamax, took further steps in bringing its novel sprayable adhesion barrier device to the US market for clinical testing.

The Dyneema Purity® portfolio of medical fibers was expanded with the introduction of colored variants; this can greatly aid recognition during complex surgical procedures. Dyneema Purity® Radiopaque fibers were featured on a leading Dutch business TV series about impactful innovations with considerable potential.

DSM Bio-based Products & Services1

As the world moves increasingly towards alternatives for its dependencies on fossil resources and towards a more sustainable, bio-renewable economy, there are significant opportunities in advanced biofuels and in renewable building blocks such as bio-based succinic acid. DSM Bio-based Products & Services is pioneering advances in biomass conversion and seeks to demonstrate the commercial viability of sustainable, renewable technologies in collaboration with strategic partners in the value chain. The development and supply of high-value knowledge, ingredients and expertise in the field of bio-conversion technology are critical success factors. DSM's strategy is to license its technology and expertise to bio-based entrepreneurs, enabling them to convert biomass in a commercially viable and sustainable way.

Cellulosic bio-ethanol (POET-DSM Advanced Biofuels)

The POET-DSM Advanced Biofuels joint venture inaugurated a commercial-scale production facility for cellulosic bio-ethanol, Project LIBERTY, in Emmetsburg (Iowa, USA) in 2014. It processes corn-crop residues through a bioconversion process using enzymatic hydrolysis followed by fermentation. The startup process for the plant is facing challenges, mainly in the pretreatment section of the plant, similar to other players in the industry. Small quantities of cellulosic ethanol have been produced to date. Up until year-end 2015, the joint venture partners had invested a total of € 287 million (capital employed) in the project.

The US regulatory environment around advanced biofuels remains dynamic. California's Low Carbon Fuel Standard provides an attractive market for cellulosic ethanol, and the

1 DSM's interest in the net result is reported as part of Associates in 2015

Environmental Protection Agency (EPA) has increased the finalgeographical and climate zones covered by its validationrenewable volume obligations for 2014-2016, although the levels facilities. are still below those called for by the original Renewable Fuels

Standard (RFS) legislation.

In 2015, DSM Advanced Surfaces also took steps in preparation for further innovative solar solutions. Its light trapping technologyGlobal support for and interest in cellulosic ethanol continues to has been made ready for validation under outdoor conditionsdevelop as climate change targets are driving attention for the advantages it offers in terms of greenhouse-gas emissions.

and is expected to be brought to market during the course of 2016. As DSM looks to increase the proportion of renewableClimate change targets also provide an important framework for energy in its own mix of sources, it will investigate options to hostgrowth of the POET-DSM licensing business in emerging economies.

Bio-succinic acid (Reverdia)

solar parks utilizing the company's yield-boosting technologies on its locations, like those already in operation in Pune, Sittard-Geleen and Belvidere (New Jersey, USA).

The Reverdia joint venture between DSM and Roquette operates DSM Business Incubator its Biosuccinium™ plant in Cassano (Italy), where it has been producing high-quality bio-succinic acid since 2012. Reverdia is The DSM Business Incubator explores business opportunities inrecognized as the technology leader in this field and there is growing interest in licensing the Biosuccinium™ technology, with Bio-Amber signed as the first licensee in December 2015. Market traction increased during the year and both sales volumes and order sizes went up. In October, Reverdia announced a collaboration with Covestro (formerly Bayeradjacent areas and future markets for DSM with a strong link to DSM's technologies and competence base. Platforms are created within the scope of securing food, health and energy requirements of society, in close collaboration with industry partners and existing and potential customers. DSM's Business Incubator has been instrumental in feeding the pipeline withMaterialScience), to develop thermoplastic polyurethanes based opportunities that address customer needs. on Biosuccinium™ for use in multiple applications, notably footwear and consumer electronics. This combination of a value In 2015, the DSM Business Incubator worked on a range of chain approach with in-house application development appears projects including plant-based proteins, energy storage andto be succeeding in engendering market pull for the category.

additive manufacture. Towards the end of the year, DSM andThe same approach is used in the polybutylene succinate (PBS, Syngenta established an R&D partnership to develop microbial-a bio-degradable polyester) segment, which predominantly focuses on renewable and bio-degradable packaging.

DSM Advanced Surfaces

DSM Advanced Surfaces aims to accelerate the uptake and effectiveness of solar energy by focusing on the development and commercialization of technologies and materials solutions that increase the efficiency of solar modules, reducing the cost of the energy produced.

During 2015, the EBA posted double-digit growth in sales and EBITDA as DSM continued to strengthen its position in anti-reflective coatings for the Solar PV (photovoltaic) panel market.

based agricultural solutions to protect crops from pests and diseases, combat resistance and enhance plant productivity and fertility.

DSM Venturing & Licensing

DSM Venturing invests in early to late stage innovative companies in areas strategically relevant to DSM's current and future businesses. The portfolio consists of 25 investment companies and each year DSM Venturing reviews well over 500 new candidates. In 2015, DSM Venturing added promising new investments in several Nutrition start-ups including Blue Prairie Brands, Natreon and NutriLeads as well as in NovoPolymers, a promising start-up company with an innovative encapsulent

It launched an engaging marketing strategy to support this with concept for solar. the promise 'Same Sun. More Power™'. DSM Advanced

Surfaces is known for its leading technological position andDSM Licensing consists of a group of Certified Licensingexpertise, which has put the business in the position to develop Professionals and offers professional licensing expertise acrossspecific, exclusive products for top-tier players in the market.

all DSM businesses for intellectual property-intensive deals, such as joint development agreements, technology acquisitions andValidation is a crucial aspect of bringing advanced technology to sales as well as in-, out- and cross-licensing deals. DSMmarket. The solar technology demonstration center in Pune (India) that opened in 2014 received many visitors during the year; DSM followed this up by signing a strategic partnership with the Chinese state testing organization CPVT and with the establishment of an outdoor test facility in Sittard-Geleen (Netherlands) in collaboration with Fraunhofer TechBridge. The company is evaluating possibilities in China to broaden theLicensing was involved in setting up several strategic partnerships for DSM, including the partnership with Syngenta to develop and commercialize biological solutions for agriculture.

Innovation Partnerships

'Science can change the world'

Among DSM's many innovation partnerships in various domains, In 2015, DSM launched a campaign to highlight the key role that two in particular achieved notable successes during 2015. These science can and must play in tackling the challenges societies innovation partnerships and others like them provide direct and face. Titled 'Science can change the world', it highlights theindirect business opportunities as well as support DSM inefforts and perseverance of a number of independent scientistsbuilding its corporate brand as well as individual product brands. to develop innovative solutions. The campaign underlines the value of science with a societal purpose and aims to inspire and

The first is a partnership with engineering students from the Nuon engage both scientists and the wider community. For moreSolar Team, which has been on-going for a number of years.

information and to join the discussion, visit the campaign websiteLast year, the team again won the World Solar Challenge, a long- (www.sciencecanchangetheworld.org). In 2016, the second distance race for solar powered cars. The winning 2015 vehicle phase of the campaign will put Open innovation into practice andfeatured resins from DSM as well as Dyneema® fabrics for structure and additional protection.

The second is a new innovation partnership formed in 2015 with professional cycling Team Giant-Alpecin. The team was supported with DSM's Culturelle® Probiotics to support the riders' immune system and general health. Moreover, the partners also collaborated closely in the development of special protective cycling shorts incorporating Dyneema® fibers. The shorts were introduced at the start of the Tour de France and proved to be very effective in reducing road rash during some of the crashes that occurred in this and later races. The innovation was recognized with a prestigious Eurobike Award.

use the campaign platform community to identify promising initiatives with the potential to benefit from support from DSM in being scaled up.

Dr. Bart Knols has dedicated his life to eradicating malaria. He heads a team of more than 40 researchers who have developed a number of life-saving innovations, helping people in Tanzania and other malaria-affected areas live healthier lives − and sleep more peacefully.

Corporate Activities

Sitech Services

Any consolidated activities and businesses that are outside the three reporting clusters are reported as Corporate Activities. These comprise operating and service activities, as well as a number of costs that cannot be allocated to the clusters. While this segment reports net sales from its service units to third parties, it normally has a negative operating result.

Corporate Activities includes various holding companies and corporate overheads. The most significant cost elements are corporate departments and the share-based compensation for the company.

DSM Insurances

The company retains a limited part of its material damage and business interruption and product liability risks via DSM's captive insurance company. In 2015, the total retained damages were € 24 million.

Corporate Research

The Corporate Research Program (CRP) is aimed at developing key Science & Technology competences. As compared to business group-funded Science & Technology activities, the CRP, which falls under the responsibility of the Chief Technology Officer, typically funds competence development programs with a longer time horizon and with focus on competences that have a broad relevance for DSM. The CRP also supports Science & Technology programs that are carried out with external parties and programs covering relevant new trends.

Share-based payments

Under the DSM Stock Incentive Plan, performance-based and non-performance-based stock options are granted to senior management. The costs of these share-based payments are reported under Corporate Activities. For detailed information see note 28 of the 'Consolidated financial statements' on page 184.

Sitech Services provides manufacturing services, park services and Safety, Health & Environment services for the Chemelot industrial site in Sittard-Geleen (Netherlands).

Sitech Services was reported under Corporate Activities until the end of July 2015, when the 65% stake in Sitech Services which DSM held via its caprolactam and acrylonitrile businesses was transferred to ChemicaInvest following the establishment of the partnership. DSM retains a 5% shareholding in Sitech Services via DSM Engineering Plastics.

Partnerships

As part of its 2010-2015 strategy DSM in motion: driving focused pharmaceutical industry. DSM has a 49% shareholding in growth, the company has established a number of partnerships Patheon.

for its Pharma and Bulk Chemicals activities over recent years in order to streamline and simplify its core portfolio around its more Patheon's strategy is built upon the collective reputations ofresilient, higher-value activities in Nutrition and Performancequality, innovation, customer service and operational excellence.

Materials, whilst at the same time maximizing the value of these The same core commitments are at the center of each of thebusinesses for its shareholders.

business units.

DSM Sinochem Pharmaceuticals

DSM Sinochem Pharmaceuticals (DSP) is a global leader inPatheon has continued to transform itself. Following various acquisitions in 2014, it acquired Irix Pharmaceuticals, Inc. and Agere Pharmaceuticals, Inc. in 2015. It has also divested its DPxgeneric anti-infective molecules formed in 2011 as a 50/50 joint Fine Chemicals division as well as operations in Capua (Italy) and venture between DSM and Sinochem. DSP develops, produces Mexico City (Mexico). The Banner Life Sciences business wasand sells intermediates and active pharmaceutical ingredients (APIs) as well as finished dosage. It is at the forefront of technological and process developments for anti-infectives and cholesterol-lowering molecules, using environmentally-friendly production technologies based on biotechnology.

DSP is a market leader in enzymatic beta-lactam APIs, with nearly 300 patented innovations in this field. It is also a B2B provider of generic drug products. Full backward integration and control of its supply chain with the advantage of using its own high-quality APIs delivers unique quality and performance in the finished dosage formulation and sets DSP apart from its competition.

Sustainability is a key driver in DSP's antibiotics business. Nearly all of DSP's high-quality APIs are manufactured using enzymatic processes, which allow the production of APIs with a much lower CO2 footprint versus comparable chemically manufactured products. DSP actively promotes the sustainable and responsible use of antibiotics throughout the value chain.

Patheon

Patheon (formerly reported as DPx Holdings) was formed in 2014 as part of a USD 2.6 billion transaction between JLL Partners and DSM, which combined the businesses of DSM Pharmaceutical Products and Patheon, Inc. The company is positioned to add scale, new value chain capabilities and technologies, as well as to expand its end-to-end service offerings as a comprehensive solution provider to the

spun off to Patheon's investors during the year and is now positioned as a specialty pharma player.

In the summer of 2015, Patheon filed a registration statement (Form S-1) with the US Securities and Exchange Commission (SEC), preparing itself for a public offering. To date, neither the timing of such a public offering, nor the number of shares nor price have been confirmed.

Book year 1 November until 31 October

1

ChemicaInvest

DSM completed its strategic actions for Polymer Intermediates and Composite Resins with the establishment of a new venture, ChemicaInvest, together with CVC Capital Partners. ChemicaInvest is a global leader in the production and supply of caprolactam and the leading European supplier of acrylonitrile and composite resins. DSM has a 35% shareholding in the company. As from 31 July, DSM reports ChemicaInvest as an associate in accordance with the equity method.

Caprolactam

Caprolactam is the raw material for polyamide 6 (PA6), also known as nylon 6. PA6 is used in diverse applications, ranging from carpets and textiles to car parts, electrical devices and packaging film. ChemicaInvest will continue to supply at least 80% of DSM Engineering Plastics' caprolactam needs in Europe and North America until 2030 via a drawing rights contract and in China via a continued supply agreement. This secures an

ongoing strategic and competitive position for the PA6 business in which DSM is a global leader. The caprolactam business has been renamed Fibrant.

Acrylonitrile

ChemicaInvest is also the leading supplier in the European merchant acrylonitrile market. Acrylonitrile is a raw material for acrylic fibers, plastics, rubber, water treatment chemicals and a wide range of specialty products. This business now operates under the name AnQore.

Composite Resins

Composite Resins is a leading supplier in the European market and provides resins solutions for lightweight composites used in trucks and trains, bridges, building facades, wind-turbine blades and trenchless pipe renovation. The Composite Resins business is branded Aliancys.

Net sales

Capital employed at 31 December

ChemicaInvest

Operating profit plus depreciation and amortization (EBITDA) Operating profit

1

Started 31 July 2015

Financial and reporting policy

Financial policy

companies are in principle required to contribute to DSM's cash earnings per share from the very beginning and to earnings perAs a basis for and contribution to effective risk management and share from the second year. In addition, they are required to to ensure that the company is able to pursue its strategies, even meet the company's profitability, sustainability and growthduring periods of economic downturn, DSM retains a strong balance sheet and limits its financial risks.

DSM's Strategy 2018: Driving Profitable Growth has ambitious strategic and financial targets that are outlined on page 17. DSM aims to maintain a strong investment grade long-term credit rating.

Most of DSM's external funding needs are financed through long-term debt. Debt covenants are not included in the terms and conditions of outstanding bonds and financing arrangements. DSM aims to spread the maturity profile of outstanding bonds in order to have adequate financial flexibility.

DSM has a commercial paper program of € 1,500 million that is available and two committed credit facilities totaling € 1,000 million, consisting of € 500 million until September 2018 and € 500 million until March 2020. For more details see note 24 to the 'Consolidated financial statements' on page 172.

An important element of DSM's financial policy is the allocation of cash flow. DSM primarily allocates cash flow to investments aimed at strengthening its business positions and to dividend payments to its shareholders. The cash flow is further used for Acquisitions & Partnerships that strengthen DSM's competences and market positions in health, nutrition and materials.

Should the occasion arise, the company may choose to return cash to shareholders if excess cash is available over a longer period to such an extent that the above-mentioned cash flow priorities can be satisfied without affecting the credit rating.

DSM aims to provide a stable, and preferably rising, dividend.

In order to cover its commitments under management and employee option plans, DSM buys back shares insofar as this is necessary and feasible. 2,300,000 shares were repurchased in 2015 (3,733,055 shares were repurchased in 2014).

It is DSM's policy to hedge 100% of the currency risks resulting from sales and purchases at the moment of recognition of trade receivables and payables. Additionally, operating companies may - under strict conditions - opt for hedging currency risks from firm commitments and forecasted transactions. The currencies giving rise to these risks are primarily USD, CHF, JPY and GBP. The risks arising from currency exposures are regularly reviewed and hedged when appropriate.

The most important acquisition criteria are strategic fit and financial condition. A business or partner should add value to DSM in terms of technological or market competences. Acquiredrequirements. There are, however, exceptions to this rule. For instance, such requirements may not be appropriate in the case of small innovative growth acquisitions, although the sustainability requirement will be upheld at all times.

DSM's policy in the various sub-disciplines of the finance function is strongly oriented toward solidity, reliability and protection of cash flows. The finance function plays an important role in business steering.

For detailed information on DSM's tax policy see 'Taxation at DSM' onthe company's website.

Reporting policy

Reporting policy and justification of choices made

In this Report, DSM reports for the calendar year of 2015. The company reports on its People, Planet and Profit information in

UN Global Compact

DSM has been a signatory to the UN Global Compact since 2007 and commits to annually report on progress in implementing the UN Global Compact's 10 Principles in the areas of human rights, labor, the environment and anti-corruption. This Report is DSM's

such a Report on an annual basis. The previous DSM Integrated Communication on Progress 2015 submitted to the UN GlobalAnnual Report was published on 3 March 2015.

In the Report by the Managing Board, DSM explains its visionCompact Office. DSM's Code of Business Conduct, its sustainability and Safety, Health and Environment (SHE) policies, and its Supplier Sustainability Program are the foundations onand policy with respect to sustainability practices and reports on which DSM applies the standards of the Global Compact. its activities in this field during 2015. In addition to disclosing data and developments in the categories of People, Planet and Profit, Following on from the United Nations' Millennium DevelopmentDSM also reports on its sustainability strategy, material topics, stakeholder engagement activities, and its sustainabilityGoals introduced in 2000, 17 Sustainable Development Goals (SDGs) were presented in New York late September 2015 duringgovernance framework. Furthermore, DSM discusses the global the Sustainable Development Summit to define global prioritiestrends that drive its strategy. It is DSM's policy to proactively canvas the views of its key stakeholders on issues of material importance to the company.

and aspirations for 2030. DSM is assessing how it can best measure and manage its contribution to the realization of the SDGs and expects to report more extensively about commitment and progress in 2016.

In 2015, DSM once again renewed its commitment to the UN Global Compact's CEO Water Mandate; see Planet in 2015 on page 52

1

Global Reporting Initiative

DSM bases its sustainability reporting on best practice standards and international guidelines. Most important are theguiding principles and content elements for an integrated report. Aligning with the framework allows DSM to better identify how it creates value for DSM's stakeholders in People, Planet, and

guidelines of the Global Reporting Initiative (GRI). For this Report, Profit, as well as the connection between these three the company used the GRI G4 guidelines. DSM is constantly (re-) dimensions.

assessing to what extent sustainability aspects become material to DSM and its stakeholders. In case specific indicators become Selection of topicsrelevant to the company's sustainability performance, appropriate actions are taken that allow the necessary data to be collected to disclose progress in the future. A detailed overview of how DSM reports according to the G4 comprehensive indicators, including a reference to relevant sections in this Report, is provided on the company's website.

International Integrated Reporting Framework

DSM aligns with the recommendations of the International Integrated Reporting Council (IIRC) Framework where possible. The intention of the IIRC Framework is to provide additionalThe topics covered in this Report were selected on the basis of input from stakeholders and the materiality analysis, the GRI G4 guidelines and DSM's own management systems and their relevance and impact for DSM and its various stakeholders. On the basis of the principle of materiality, DSM distinguishes between topics whose importance warrants publication in this Report (relevant to both DSM and its stakeholders), and topics whose importance warrants publication on the company website only (topics important to either DSM or its stakeholders). DSM reports on a selection of its external recognition in the chapters

'Stakeholder engagement' on page 38 and 'Review of business' Directors of the business groups and the Innovation Center. Allfrom page 64.

Scope

The People, Planet and ECO+ data in this Report cover all entities that belong to the scope of the consolidated financial statements, provided that DSM also has operational control. Planet reporting covers all operational sites of DSM.

Acquisitions and divestments

The HR data (People) for newly acquired companies are reported from the first full month after the acquisition date. The Safety, Health (People), Environment (Planet) and ECO+ data for newly acquired companies are reported at the latest in the year following the first full year after acquisition, because these companies' reporting procedures first have to be aligned with those of DSM. In the case of divestments, safety data are consolidated until the moment of divestment and planet data are reported to the last full year at DSM. In this respect, for 2015, the safety data relating to DSM Fibre Intermediates and DSM Composite Resins have been included up until the moment of deconsolidation, while the Planet data of these units are no longer included in 2015.

Planet methodology

The progress on the key environmental performance indicators is evaluated and established on a yearly basis. Data on these indicators are collected on a bi-annual basis. The data for the DSM sites are based on these sites' own measurements and calculations, which are based on definitions, methods and procedures established at corporate level. The site managers of reporting units are responsible for the quality of the data. Data are collected based on measurements and calculations in the production processes, information from external parties (e.g. on waste and external energy) and estimates based on expert knowledge.

Reporting units have direct insight into their performance compared to previous years and are required to provide justifications for deviations above the threshold. For most parameters the threshold is set at 10%. The year-on-year comparability of the data can be affected by changes in the portfolio as well as by improvements made in the measurement and recording systems at the various sites. Whenever impact is relevant, it is stated in the Report. Details for the individual sites as well as the methodology and calculations are published onthe company's website, together with an explanation of the definitions used.

People methodology

People and HR data are collected per business group and consolidated at corporate level.

ECO+

All financial ECO+ data are collected from the relevant financial and innovation systems by the controllers and Sustainabilityassessments of ECO+ involve internal Life Cycle Assessment experts. The data are internally validated with the Corporate Sustainability department and consolidated in DSM ECO+ key performance indicators. In addition, the Corporate Operational Audit department is involved with evaluating the robustness of the ECO+ assessments and reporting process.

Corporate governance and risk management

Introduction

Koninklijke DSM N.V. (Royal DSM) is a company limited by shares listed on Euronext Amsterdam, with a Managing Board and an independent Supervisory Board. Members of the Managing Board and the Supervisory Board are appointed (and,Managing Board. The clusters are the main organizational entities for external strategic and financial reporting. This structure ensures a flexible, efficient and fast response to market changes. Intra-company product supplies are contracted by the business groups on an arm's length basis.

if necessary, dismissed) by the General Meeting of Shareholders. DSM's business groups receive services from global support functions and functional excellence departments and are

The Managing Board is responsible for the company's strategy, supported by the regional organizations. This set up enablesits portfolio policy, the deployment of human and capital resources, the company's risk management system, the company's financial performance and its performance in the area of sustainability.

The Supervisory Board supervises the policy pursued by the Managing Board, the Managing Board's performance of its managerial duties and the company's general course of affairs, taking the interests of all the company's stakeholders into account. The annual financial statements are approved by the Supervisory Board and then submitted for adoption to the Annual General Meeting of Shareholders, accompanied by an explanation by the Supervisory Board of how it carried out its supervisory duties during the year concerned.

The company is governed by Dutch law and by its Articles of Association, which can be consulted onthe DSM website. The General Meeting of Shareholders decides on an amendment to the Articles of Association by an absolute majority of the votes cast. A decision to amend the Articles of Association may only be taken at the proposal of the Managing Board, subject to approval of the Supervisory Board.

DSM to create a global high-performing organization focused on meeting its targets and ambitions. The support functions and functional excellence departments are paid for the services they supply by the users, which are for the largest part the business groups and to a lesser extent other DSM units. Corporate departments are paid from a corporate budget.

Executive Committee

Part of the organizational adjustments announced on 25 August 2015 was a strengthening of the management structure with the establishment of an Executive Committee. The Executive Committee enables faster strategic alignment and operational execution by increasing focus on the development of the business, innovation and people. The members of the Executive Committee are the Managing Board members as well as four senior managers appointed by the Chairman of the Managing Board after consultation with the Supervisory Board. The Executive Committee focuses on topics such as the overall strategy and direction, review of business results, functional and regional strategies, budget setting and people & organization. The statutory responsibilities of the Managing Board remain unchanged.

DSM fully informs its stakeholders about its corporate objectives, Managing Boardthe way the company is managed and the company's performance. Its aim in doing so is to pursue an open dialogue with its shareholders and other stakeholders.

DSM has a decentralized organizational structure built aroundThe Managing Board consists of three or more members, to be determined by the Supervisory Board. The current composition of the Managing Board can be found in the chapter 'Supervisory Board and Managing Board' on page 115. Since 2005, members of the Managing Board have been appointed for abusiness groups that are empowered to carry out all short-term period of four years. and long-term business functions. On 25 August 2015, DSM

announced a number of adjustments to its organizational structure related in particular to its support and corporate functions as well as its regional organizations. The new organizational and operating model aims to create more clarity between businesses, regions and support and corporate functions. At the operational level, the business groups remain the cornerstones of the organization. As the primary organizational and entrepreneurial building blocks they focus on four primary business functions: Innovation and R&D, Direct Sourcing, Manufacturing & Operations and Marketing & Sales.

The members of the Managing Board are collectively responsible for the management of the company. Notwithstanding their collective responsibility within the Managing Board, certain tasks and responsibilities for business clusters and functional areas as well as regional responsibilities have been assigned to individual members. This distribution of tasks is published on theDSMwebsite.

The remuneration of the members of the Managing Board is determined by the Supervisory Board based on the

The business groups are grouped into clusters. Business groups remuneration policy approved by the General Meeting ofwithin a cluster report to one and the same member of theShareholders. The remuneration policy for the Managing Board

can be found in the 'Supervisory Board report' on page 107 under 'Remuneration policy'.

The functioning of and decision making within the Managingthird of the members are women (of the seven members, three are female and four are male). Given the relatively small number of Managing Board members, the current composition of the Managing Board with one female and three male membersBoard are governed by the Regulations of the Managing Board, comes very close to the aspired composition of the Managingwhich are in accordance with the Dutch corporate governance code and can be found on theDSM website.

In 2015, the Managing Board had 39 formal meetings and 12 Executive Committee meetings. On four occasions, one of its members was excused from the Managing Board meeting due to another commitment. In one Executive Committee meeting, one of the other members was excused due to another

Board in terms of gender balance.

General Meeting of Shareholders

The main powers of the General Meeting of Shareholders relate to:

-appointment. In all cases, members who were unable to attend -provided any input to the meeting in advance in writing or via other members.

Supervisory Board

The Supervisory Board consists of at least five members. The current composition of the Supervisory Board can be found in the chapter 'Supervisory Board and Managing Board' on page 114. Members of the Supervisory Board are appointed for a period of four years with a maximum of three four-year terms.

All current members of the Supervisory Board are independent in accordance with the Dutch corporate governance code. The remuneration of the members of the Supervisory Board is determined by the General Meeting of Shareholders. The

the appointment, suspension and dismissal of members of the Managing Board and the Supervisory Board; approval of the remuneration policy of the Managing Board;

• - approval of the remuneration of the Supervisory Board;

• - the adoption of the annual financial statements and declaration of dividends;

• - release from liability of the members of the Managing Board and the Supervisory Board;

-issuance of shares or rights to shares, restriction or exclusion of pre-emptive rights of shareholders and repurchase or cancellation of shares;

- amendments to the Articles of Association; and

- decisions of the Managing Board that would entail a significant change in the identity or character of DSM or its business.

The Annual General Meeting of Shareholders is held within six months of the end of the financial year in order to discuss and,functioning of and decision making within the Supervisory Board if applicable, approve the annual report, the annual accounts, are governed by the Regulations of the Supervisory Board, which any appointments of members of the Managing Board and theare in accordance with the Dutch corporate governance code and can be found on theDSM website.

In line with the Dutch corporate governance code theSupervisory Board and any of the other topics mentioned above.

The Annual General Meeting of Shareholders and, if necessary, other General Meetings of Shareholders are called by theSupervisory Board has established from among its members an Managing Board or the Supervisory Board. The agenda andAudit Committee, a Nomination Committee, a Remuneration Committee, besides which there is also a Sustainability Committee.

explanatory notes are published on theDSM website.

According to the Articles of Association, shareholders who, individually or jointly, represent at least 1% of the issued capitalThe task of these committees is to prepare the decision making have the right to request to the Managing Board or theof the Supervisory Board. The functioning and tasks of theseSupervisory Board that items be placed on the agenda. Suchcommittees are governed by charters that have been drawn up requests need to be received in writing by the chairman of thein line with the Dutch corporate governance code and can be found on theDSM website.

Managing Board or the Supervisory Board at least 60 days before the date of the Annual General Meeting of Shareholders.

Diversity

Since 1 January 2013, Dutch legislation requires that a large company, when nominating or appointing members of the

The Annual General Meeting of Shareholders was held on 30 April 2015. The agenda was to a large extent similar to that of previous years. Additional topics were the re-appointment ofManaging Board or Supervisory Board, should strive to achieve Stephan Tanda as member of the Managing Board and the re-a balanced composition of these Boards in terms of gender, to the effect that at least 30% of the positions are held by women and at least 30% by men.

DSM strongly values diversity and endeavors to reflect this in its Board memberships. The current composition of the Supervisory Board is in line with this legislation. More than oneappointment of Pauline van der Meer Mohr as member of the Supervisory Board. Further details can be found on theDSMwebsite.

Dutch corporate governance code

DSM supports the Dutch corporate governance code adopted in 2003 and amended in 2008, which can be found onwww.commissiecorporategovernance.nl.

DSM confirms that it applies all of the code's 113 Best Practices.

With respect to the appointment of members of the Managing Board for a period of at most four years (Best Practice II.1.1) it should be noted that DSM has adhered to this Best Practice since the introduction of the corporate governance code in 2004.

Since DSM respects agreements made before the introduction of said code, the current chairman of the Managing Board will remain appointed for an indefinite period.

With respect to the Dutch corporate governance code it should be noted that any substantial change in the corporate governance structure of the company and in the company's compliance with the code shall be submitted to the General Meeting of Shareholders for discussion under a separate agenda item.

All documents related to the implementation at DSM of the Dutch corporate governance code can be found in the Governance section ofthe company's website.

Governance framework

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.

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 and Executive Committee adhere to the Regulations of the Managing Board.

- The Managing Board and Executive Committee work according to the Management Framework for the corporate level. This implies among other things that they adhere 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 and Executive Committee, 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 support functions (including corporate staff departments), functional excellence departments and the regions as follows:

- Support functions have the responsibility for providing those services that can be provided more efficiently (in terms of total cost of ownership for DSM) by leveraging them across the company, capturing scale-benefits and delivering high quality at lower cost, rather than having them arranged in each business group separately. Within support functions, centers of expertise will provide specialist support. Shared service centers will provide standard transactional support. Business partnering is the concept that will act as the interface between the business groups and the support functions. Each support function reports to a Managing Board member. Support functions exist in the areas of Finance, People & Organization, Legal, Indirect

Sourcing, Communications and IT. In the new operating model corporate functions (small, high-level groups) supporting the Managing Board, are also seen as supportIn 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 withfunctions. Corporate departments are Corporate Strategy & the aim of reducing fraud risks. Acquisitions, Corporate Operational Audit, Corporate Risk

Management, Corporate Sustainability, Corporate Investor

Relations and Corporate Affairs.

- Functional excellence departments are mandated by the

Managing Board to help the businesses to achieve

excellence. Functional excellence departments support

businesses in improving their performance and provide

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. CEO/Chairman of the Managing Board Feike Sijbesma is the primary point of contact, overseeing the topics ofguidance in setting aspiration levels and targets for R&D and sustainability as business growth driver, as well as climateInnovation, Direct Sourcing, Manufacturing & Operations and Marketing & Sales; the primary business functions.

The company's strategic direction and objectives are set in a Corporate Strategy Dialogue. The outcome of the most recentchange, while also managing DSM's engagement with the United Nations and the strategic partnership with the World Economic Forum. Mr. Sijbesma furthermore heads the ONE DSM Culture Agenda. Other members of the Managing Board also chair sustainability topics and initiatives. Managing BoardCorporate Strategy Dialogue was presented in November 2015 member Stephan Tanda is responsible for Safety, Health andand is described in more detail from page 17.

The operational units conduct their business within theEnvironment, and is also the primary contact for DSM's partnership with the World Food Programme and other issues in relation to nutrition. In the new organizational model, Mr. Tandaparameters of the Management Framework for operational units. also chairs the Inclusion & Diversity Council (previously chairedThis implies among other things that they:

• - comply with the DSM Code of Business Conduct, Corporate Requirements and Directives;

• - establish the strategy, objectives and operational targets of their business according to the Business Strategy Dialogue, aligned with the Corporate Strategy Dialogue and in whichby Mr. Sijbesma). CFO Geraldine Matchett takes care of integrating sustainability into the finance discipline and represents DSM in the Accounting for Sustainability (A4S) CFO Leadership Network.

  Supervisory Board

  DSM's Supervisory Board recognizes sustainability as avarious scenarios and related risk profiles are investigated, and strategic value driver for the company and has appointed its ownreport on the achievement thereof;

• - implement risk management actions according to an Annual Risk Management Plan and in line with corporate policies;

  Sustainability Committee (previously called the Corporate Social Responsibility Committee) to oversee progress against targets and report on the embedment of sustainability across the

• - execute DSM-wide standards for support functions (systems, organization. For more details see 'Supervisory Board report' onprocesses, vendors, etc.); and

• - execute the annual functional improvement plans, and monitorpage 102.

the effectiveness of the risk management and internal control External Sustainability Advisory Boardsystem 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 ofDSM's Sustainability Advisory Board has been set up as a sparring partner for the Managing Board and senior executives in the company. It supports DSM in sharpening its focus on strategic issues, deepening its understanding of external stakeholder needs, conducting advocacy efforts and handlingCOA reports to the CFO and has access to the Chairman of the dilemmas. The board comprises a diverse international group ofManaging Board, 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 secretary of the Disclosure Committee, as well as being chairman of the DSM Alert Committee, which is responsible for the DSM whistleblower policy, systems and processes. Chaired by the CFO, the Disclosure Committee ensures the timely and accurate disclosure of share price sensitive information related to the Company and is responsible among other things for the implementation of the DSM rules on the holding and execution of transactions in DSM financial instruments.

thought leaders on key sustainability topics (see table next page). The company's external Sustainability Advisory Board met once in 2015 together with the Managing Board in the Netherlands. Subjects such as DSM's corporate sustainability strategy update, sustainable animal protein, biofuels, climate change (with focus on COP21) and the circular economy were discussed. During the year, two members have left the board after their contracts expired. They will be replaced in 2016.

Global network

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, who reportssustainability networks in China, India, Latin America, and Northdirectly to Feike Sijbesma. The aim of the corporate sustainability America. network is to support the business in achieving its sustainabilityaspirations.

The Vice President Sustainability chairs the Sustainability Leadership Team which includes the corporate sustainability network, as well as business managers dedicated to sustainability, known as Sustainability Champions. This leadership team supports line management in all business and functional groups and the DSM Innovation Center, and meets quarterly to monitor the progress of sustainability across the company. In addition, DSM has set up internal regional

Sustainability Advisory Board

Member

Background

DSM also has a dedicated DSM Operations & Responsible Care department, which, among other areas, is responsible for all corporate issues related to Safety, Health and Environment (SHE). The Vice President of DSM Operations & Responsible Care reports directly to Managing Board member Stephan Tanda. SHE managers provide support on a 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.

Paul Gilding (m)

Independent writer and corporate advisor on sustainability. Fellow at University of Cambridge Institute for Sustainability Leadership (UK). 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 (UK), Associate Professor at Columbia Business School (New York, USA) and founding partner of Volans Ventures. Nationality: American.

David King (m)

Special representative for climate change of the UK government since 2013. From 2008 to 2012, he served as the founding director of the Smith School of Enterprise and the Environment at the University of Oxford (UK). Chief Scientific Advisor to the UK government 2000-2007. 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 (China). Before he joined Tsinghua, he taught at Beijing Normal University, and the University of California at Berkeley (California, USA). Nationality: American.

Risk management

The Managing Board is responsible for risk management within DSM. With the support of the Corporate Risk Management department, which reports directly to the CFO, the Managing Board has designed and implemented a well-embedded riskas depicted in the figure below, and this section is structured accordingly.

A full description of DSM's risk management system and process together with a description of the identified risks is available on thecompany's website. These descriptions are tomanagement system and organization in all company units. Risk be considered an integral part of this Report. management at DSM is based upon the COSO-ERM framework,

Mission / Internal environment

-Values and business principles are a key element of the internal environment for risk management and form the starting point for the risk management cycle. DSM's core value is sustainability, which is directly related to its mission to create brighter lives for people today and generations to come. All DSM employees receive regular training in risk management, covering generic and specific elements as required. This starts with an overarching training in the DSM Code of Business Conduct (seethe company's website) and is then further developed along the Triple P principles, whereby either all or selected target groups of DSM employees are required to follow mandatory e-courses for risks related to People, Planet and Profit. See 'Code of Business Conduct' on page 60.

- DSM has appointed risk managers in its organizational units

(business groups, support functions, functional excellence and regions) to execute the risk management cycle, for example via risk management committees.

-DSM's ability to be a reliable business partner is further anchored in compliance with all applicable laws and regulations as well as the corporate requirements, which the company is currently simplifying to increase theireffectiveness. At the same time new requirements have also been developed in order to add People+ to DSM's Brighter Living Solutions alongside ECO+.

Strategy / Objective setting

• - During 2015, DSM completed its Corporate Strategy Dialogue (CSD) process and established the company's Strategy 2018: Driving Profitable Growth, which has set a number of corporate targets for the 2016-2018 period and thereafter. A corresponding corporate risk management plan has been developed to ensure in so far as possible the delivery of these strategic objectives. This plan also forms the basis for the individual units to define their risk management year plans at either business group, (support) function or regional level. This was also incorporated in the incentive system applicable to certain (senior) managers in 2015.

• - An important precursor to risk assessments is the company's overall risk appetite, which is defined by the Managing Board. Within the boundaries of that overall risk appetite, organizational units are encouraged to discuss their individual risk appetite depending on their specific situation.

• - In 2015, the Managing Board determined the following overall risk appetite:

DSM Risk Appetite 2015

Generic/strategic

(e.g.: Innovation, People/organization/culture, Intellectual property,

Raw material/energy price/availability, Sustainability, Joint Ventures/Alliances)

Operational

AverseMinimalistCautiousOpen

(e.g.: Reputation, Customer, Project management, Production process, Information Security,Business Continuity, Product Liability, Safety Health and Environment)

Financial and reporting

(e.g.: Liquidity and market, Reporting integrity, Pension, Financial risks (e.g. credit, tax))

Legal and compliance

(e.g.: Legal non-compliance, non-compliance with DSM Requirements)

Hungry

Risk Assessment and Response

Risk assessments and responses are carried out at various levels:

• - A Corporate Risk Assessment (CRA) is performed by the Managing Board, including the definition of and follow-up on mitigating actions. Besides the input from the Managing Board members themselves, input for the CRA also comes from other members of the Executive Committee, corporate staff and shared service departments, regions, internal risks and incident reports and external sources. All these elements are consolidated by the Corporate Risk Management department. This is followed by a final session in which the Managing Board reaches consensus about the top risks DSM is facing and how to mitigate these, as well as how to respond to other important

  • - DSM requires all units to sign a Letter of Representation (LoR) at the end of each book year, confirming their compliance with local laws, regulations and with corporate requirements. The LoR also confirms their reporting integrity and provides an additional platform to report material risks and incidents including possible reputational risks. In order to better monitor the company's risk pulse and to have more time to follow up on mitigating actions, a shorter and more qualitative version of the LoR was introduced mid-year.

  • - Besides numerous external audits, DSM's risk managers take the lead in instigating internal audits to check the effectiveness of the internal controls and risk and incident mitigations. Independent audits, including unannounced audits, were executed by the Corporate Operational Audit department in a program that was agreed with the Audit Committee of the Supervisory Board.

  risks. They also define monitoring actions for certain emerging - The consolidated overview of all aforementioned risks,risks which DSM might face in the longer term (see details below). Potential risk correlations were also discussed to prevent − as far as possible − a scenario with a potential 'domino effect' of risks.

• - Business Risk Assessments (BRA) and their equivalents for (support) functions and regions are carried out in cross functional teams. Challengers are invited to join these and improve the quality of these risk assessments.

• - Process Risk Assessments (PRA) are intended to make the DSM processes as robust, business-specific and fraud-resistant as possible.

-Project risk assessments are performed on an on-going basis - to secure successful delivery and value creation. This also forms part of the integration plan for new acquisitions, whichincludes a compliance program.

Monitoring and reporting

Various means of monitoring and reporting are in place, including the risk committees and ICT tools. These provide a robust and continuous overview of the functioning of the common controlsincidents, audits and mitigating actions is the basis for this risk section and the statements of the Managing Board in accordance with the Dutch Financial Markets Supervision Act at the end of this section as well as provided in the risk management section of the half-year figures.

Control activities

Control activities are carried out by the appointed risk managers and related risk committees who regularly review:

compliance aspects such as the implementation of training on values, segregation of duties, and follow-up of audits from various stakeholders;

- the execution, follow up and quality of the relevant set of risk assessments; and

-best practices from internal and external sources to further strengthen DSM's risk management cycle as well as to ensure appropriate risk management training for all employees at DSM.

and the mitigation of common risks. The following points should In 2015, new advanced ICT tools such as SAP-GRC coveringalso be noted:

access control, user provisioning and privileged user management have been implemented for the majority of DSM's

units. The Financial Shared Service Center is working on finalizing a pilot for financial process controls.

Information and Communication

Continuous efforts are made to inform employees about the DSM risk management system and train them in its use. Initiatives in 2015 included:

- improvements to the learning management system and its

The company's top and emerging risks

The preliminary outcome of the CRA as performed by the Managing Board was reported to and discussed with the Audit Committee of the Supervisory Board in the meeting of

7 December 2015. This 'top-down' outcome was compared with the 'bottom-up' risks and incidents as reported by all the individual units in their LoR, as well as with the findings from the internal and external audits. This final risk profile was reported to and discussed with the Audit Committee on 15 February 2016

implementation cycle for the DSM Code of Business Conduct and forms the basis for the main risks and responses as reportedtraining, bringing the number of employees who are fully trained above 90%;

• - the roll-out of updates to the DSM risk video and the basic (available for all employees) and advanced risk management courses, as well as the development of a new training for the risk management community on co-creating risk solutions inon the next page.

  Top risks

  The table on the next page shows the four most important risks for DSM not achieving its targets as defined in Strategy 2018: Driving Profitable Growth and the remedial actions to mitigatesupport of their role as a trusted advisor for the relevant units; them. Top risks have a potential impact on DSM's EBITDA of

• - the introduction of a more user-friendly risk management intranet site;

• - the preparation of a short five-page summary of the DSM corporate requirements to improve their use in managing risks and preventing risks from materializing at DSM sites around the world;

• - the provision of risk management webinars and other communications tools to address specific (new) risk topics, fraud cases, etc. DSM also facilitated dilemma discussions to improve general risk awareness within the company; and

• - the start of an initiative to simplify the DSM policies and requirements in order to improve the effectiveness of the risk management cycle by making the information and communication more concise and risk-based.

approximately € 25 million and over.

Top risks and related mitigating actions

Description of risks

Mitigating actions

Market environment

In 2015, DSM finalized important transformation steps, completing the creation of a streamlined and simplified business portfolio and a good platform for growth.

DSM leverages its innovation power to differentiate in the value chain and secure growth. Furthermore, DSM is broadening its offering in terms of products, applications and customer base.

Nonetheless the risk of facing increased competition for some Improved marketing and pricing management programsproduct-market combinations remains.

should contribute to enable DSM to increase the value it captures.

People, organization and culture

DSM's capabilities in certain disciplines and the way itDSM is adjusting its operating model and strengthened its topmanages talent may not be fully at the desired level to execute leadership structure to manage performance and drive the its plans for above-market growth or its cost and productivity achievement of its objectives. A culture change program is on-improvement programs.

going focused on a results-driven trust/support/can-do mindset. Moreover, DSM will implement a new talent management approach developed in 2015. DSM will improve its existing capabilities by training and attracting additional competences if required.

Global financial and economic developments

DSM's Strategy 2018 assumed no major economic downturn The same mitigating actions apply to macro-economicwith a global GDP growth-rate of 3.2%, although economic headwinds might occur.

DSM assumed exchange rates versus the euro of USD 1.10 and CHF 1.08, while future currency volatilities could have a significant detrimental impact on the achievement of DSM's targets; USD 0.01 volatility in the exchange rate has almost € 10 million EBITDA impact (before hedging).

developments as for risks related to the market environment. Furthermore, DSM continues to match cost and revenue currencies wherever possible, while the exchange rate risk is also reduced by DSM's acquisitions in China (Aland) and Latin America (Tortuga) which provide a measure of natural hedge with 'local for local' production.

The appropriateness of the DSM hedging policy will be reviewed.

Program and project management

Besides achieving above-market growth in the periodDSM's new way of working with its focus on Accountability

2016-2018, EBITDA improvements have to be generated via (delivering the results) and Collaboration (increase speed) incost savings to be derived from globally leveraging DSM'scombination with a new operating model and a newsupport functions and a Nutrition-specific cost and productivity strengthened top structure should enable faster and betterimprovement program. Although DSM has well-identifiedexecution of the strategic cost and productivity improvementinitiatives with targeted overall savings of € 250-300 million in programs. Moreover, DSM continues to invest in changeEBITDA by the end of 2018, the final delivery of the program will require strong program and project management.

management, strict project management and ongoing monitoring which includes taking corrective actions where needed.

In terms of possible risk correlations, the potential economic headwinds mentioned in the top risk 'Global financial and economic developments' might also impact the top risk of 'Market environment', for which the same mitigating actions as mentioned apply.

DSM's portfolio was strengthened, streamlined and made more resilient in 2015. Consequently a number of the top risks identified in 2014 no longer qualify:

• - The Market environment risk of increased competition/ reduced prices for vitamin E has materialized and stabilized, while the markets for a number of products from Human Nutrition & Health have shown signs of picking up again, driven by both industry campaigns and strengthening of the DSM Human Nutrition & Health organization.

• - The new DSM operating model, the implementation of which began, addresses the organization's regional and functionaladequate R&D and innovation budgets and customer alliances.

  • - DSM's Nutrition and Performance Materials markets may be disrupted by longer-term changes in food preferences/food systems and/or by innovations (such as 3D printing, new systems replacing fossil by renewable energy, new mobility and transport options, the circular and sharing economy). At the same time these changes might also offer new opportunities in the value chains DSM serves.

  • - Especially the Animal Nutrition & Health business may be affected by the global or regional spread of infectious diseases. However, DSM has a well-balanced portfolio delivering solutions to different species (including swine, poultry, aquatic and ruminants) and has a good regional spread, which intrinsically reduces this risk.

  Enhancement of the risk management system

  effectiveness in the category People, organization and culture. A number of improvements to the risk management system were

• - DSM successfully concluded its pursuit of strategic actions for developed and implemented during the year, some of whichPolymer Intermediates and Composite Resins in July 2015 with the establishment of the ChemicaInvest partnership.

• - In its new operating model, DSM has made the role of functional excellence departments more explicit and improved their ability to support the business groups in order to ensure that top quartile performance will be met.

Other important risks

Besides the top strategic risks reported above, the CRA has identified a number of other important (sometimes more operational) risks with a potential EBITDA impact of approximately € 5 million and over; these include business continuity, product liability, cyber security, ICT complexity, intellectual property and raw material prices. Some of these risks, such as tax risks, are managed at corporate level, whilst others are managed at unit level through rigorous application of the DSM risk management cycle and its risk management practices as explained above. Some risks with the potential to emerge in the mid and longer-term have been identified and discussed by the Managing Board and are reported in the following paragraph. The company's risk management and internal control system has been designed to monitor and respond to these developments in a timely manner, however 100% assurance can never be achieved.

Emerging & mid-term risks

The following emerging and mid-term risks have been reported by the Managing Board and are being carefully monitored so as to be able to mitigate them or use them as new opportunities in a timely manner:

- Slower development pace of some longer-term DSM

Innovation projects such as Clean Cow, new natural sweeteners, etc. To secure these key projects as early as possible, DSM must ensure strict project governance, staffing,have been mentioned above. The key improvements were:

• - Compliance: DSM made significant progress in improving the training of its employees, especially for the Code of Business Conduct training (>90%) and related e-learnings such as Anti-Bribery and Corruption. For a full overview, see 'Code of Business Conduct' on page 60.

• - Risk assessments: the quality of the assessments has been stepped up by involving internal and/or external challengers; awareness on reputational risks has been raised by introducing a new tool for the identification and ranking of these risks; and creating more focus by paying more attention to the top risks. DSM introduced a new and simple methodology for bringing emerging risks to light and also improved the monitoring of these risks to ensure timely action. Potential risk correlations were also discussed to prevent − as far as possible − a scenario with a potential 'domino effect' of risks.

• - Risk solutions: DSM updated its full suite of risk management trainings, including a behavioral training to become a more effective trusted advisor able to co-create risk solutions together with the relevant management teams. The inclusion of more outside-in views and sharing internal and external best practices also contributed.

• - Finally, an in-depth presentation of the evolution of the DSM risk management system was shared with the Audit Committee of the Supervisory Board. This ensured that they are fully involved and aware of the developments in enterprise risk management and how they contribute to the achievement of DSM's strategic objectives.

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