Good afternoon. Good afternoon, ladies and gentlemen, dear fellow shareholders. I hereby open the meeting and welcome all of you. This is a hybrid meeting, meaning that shareholders and guests here in Heerlen, and those of you following this meeting virtually are present. For those who follow this annual general meeting of shareholders of Koninklijke DSM N.V. for the first time.
Well, this was decided a couple of years ago, and in previous years, the AGM was held in English. Says the chairman, Mr. Leysen. This decision was taken a couple of years ago, and we have to take into account that we have international shareholders who are following the meeting remotely and who prefer the meeting to be held in English. We are an international company, so we have a reputation to uphold. Comment off-mic. Mr. Leysen, we have simultaneous translation, interpretation, and you can listen to simultaneous interpretation. Another comment off-mic. The interpreter cannot hear what is being said if the speaker's speaking without a microphone. The chairman: Obviously, you are at liberty to ask your questions in Dutch. No problem whatsoever.
We will continue. As I explained, we have decided some time ago to have these meetings in English, and so this is to accommodate an international shareholder base. I was introducing myself. My name is Thomas Leysen, and I'm the Chair of the DSM Supervisory Board. Let me briefly introduce the people joining me in Heerlen today. Of the DSM Supervisory Board, here on the podium with me are John Ramsay, Chair of the Audit Committee, and Carla Mahieu, who chairs the Remuneration Committee. On the front row, you will see Eileen Kennedy, Chair of the Sustainability Committee, whose reappointment as Supervisory Board member is on the agenda today, and Erica Mann, Frits van Paasschen, and Corien Wortmann-Kool. Pradeep Pant will follow the meeting via the webcast. Of course, we're also joined by the co-CEOs of DSM, Geraldine Matchett and Dimitri de Vreeze.
Geraldine Matchett's reappointment as Managing Board member is also on the agenda of today. We're also joined by DSM's company secretary, Lindsy Veugen, who will draw up the minutes of the meeting after this meeting. I would also like to welcome Petra Groenland from KPMG Accountants, the external auditor. In line with the Dutch Corporate Governance Code, the auditor is present to briefly comment on the audit opinion provided on the financial statements. Moreover, a welcome to Joyce Leemrijse, the notary overseeing this meeting and partner with Allen & Overy. Voting for this hybrid annual general meeting was possible by written or electronic proxy, including voting instructions and granting your votes to the notary as independent party.
Voting is also possible during the meeting for those shareholders who have registered as such and for those voting online, who have signed in in a timely fashion via the ABN AMRO platform. The total number of shareholders present and represented will be announced later during this meeting. The notary received proxies and voting instructions for a total of 168.3 million shares, being 77.9% of the issued share capital eligible to vote. These votes have been entered into the electronic voting system. Today, the notary will supervise whether the conduct of this meeting is in line with all regulatory and statutory requirements. The agenda and notes to the agenda and other relevant information could be consulted on the company's website and were published on the 29th of March, 2022.
The registration date was Tuesday, April 12, 2022, in line with the statutory term of 28 days prior to this meeting. With this, I determine that the notice to convene this AGM has been given with due observance of all legal and statutory requirements, and that therefore, this AGM is qualified to take legally binding decisions. For the meeting of today, we have clustered the agenda items. After each block, there is an opportunity for the shareholders and shareholder representatives present in Heerlen or virtually to ask their questions. Agenda items 2 through 6 will constitute one block, so will items 7, 8, and 9, and finally, items 10, 11, and 12. The voting on these agenda items will be open throughout the whole meeting.
We will close the voting after the discussion on agenda item 12, collect all voting results and share them with you after the agenda item, Any Other Business, and before eventually closing the meeting. Before moving to the first agenda item, for those present in Heerlen, I would like to ask your attention for the following housekeeping rules. Please take note of where the emergency exits are located. These are indicated by green signs. In case of an evacuation, please follow the instructions of the DSM staff. The language, as we already touched upon, of the language of the meeting is in English. There will be simultaneous translation from English to Dutch, and if necessary, vice versa. If you wish, headphones are available to listen to the translation. As mentioned already, we will deal with the agenda items in clusters as much as possible.
I would suggest that, as usual, when the clustered agenda items are discussed, each speaker will be given the opportunity in the first round to ask a maximum of three questions. Then, in a second or following round, three questions may again be asked, so as to give all the speakers the opportunity to speak. An electronic voting system will be used during this meeting. The company secretary will explain the procedure shortly. She will also lead the voting. I would ask you to put your mobile phones on silent as well. Please note that it is not permitted to make audio or video recordings during the meeting. For the purpose of the notarial minutes, a tape will be made of the meeting. The meeting will also be broadcast on the DSM website. The recording will also be available for review afterwards on the DSM website.
After the introduction by the Co-CEOs, I will inform you which percentage of the issued capital with voting rights is present or lawfully represented at this meeting. I now give the floor to the company secretary, Lindsy Veugen, to explain the voting procedure.
Thank you, Thomas. Shareholders present in Heerlen have received their personal login details at the registration. Please use your mobile phone or the device provided to you at registration desk for voting. If you have logged in on time, you will see a welcome message on your screen. If this does not work, raise your hand so that the hostesses can assist you. It looks like it's working for everybody. I see that there are no problems. When you vote, you will see the options appear on the screen of your mobile phone to cast your vote. The voting procedure is as follows. To cast your vote, please select. Oh, I'm sorry, I'll pause for a second because I think there's one person, two persons with a question. Okay, I think there are no problems anymore. I'll we-
Mm-hmm.
Oh, okay. I'll wait one second, Mr. Spanjer. Okay, I'll continue with the voting procedure. When you vote, you will see the options appear on the screen of your mobile phone to cast your vote. The voting procedure will be as follows. To cast your vote, please select for if you wish to vote in favor, against if you wish to vote against the resolution, and abstain if you wish to abstain from voting. The display shows confirmation of your choice. You can change your choice by selecting another one. Your last choice applies. The voting is now open for all voting items on the agenda, and the voting will be closed after the last voting item on the agenda. For those shareholders who are logged in via the ABN AMRO portal, please select the option of your choice.
Select 4 if you would like to vote in favor of the proposal, select against if you would like to vote against the proposal, and select abstain if you would like to abstain from voting. Back to you, Mr. Chairman.
Thank you. I would like to inform the meeting that each share entitles its holder to cast one vote. In the results, you will see the votes in favor, the votes against, and the abstentions. As abstentions are regarded as votes not cast, in accordance with the regulations, you will see only the percentages of votes for and against. Now let's move to the second agenda item, the annual report, 2021 by the management, by the managing board. Before I now give the floor to the Co-CEOs, I would like to compliment them and the whole team with the results achieved in 2021. 2021 was again a record year for DSM, in which the company performed very well. The resilience that DSM had demonstrated during 2020 already in the face of the COVID-19 pandemic was shown once more in 2021.
Thank you, Managing Board and Executive Committee, for leading the company as you did and do, navigating so well through these challenging times. My colleagues and I on the supervisory board witnessed the company's care for its employees, its commitment to customers, and its determination to keep creating brighter lives for all. On behalf of the supervisory board, I would like to express our gratitude and respect for everyone working at, in DSM and with DSM. The resilience that you have shown during the past year, and still today, is impressive, and you can all be proud of the achievements in 2021.
Geraldine Matchett and Dimitri de Vreeze, the floor is yours to comment on the annual report 2021 by the Managing Board. Dimitri, over to you.
Purpose is found in every place on Earth, large and small. In children working hard in class and working even harder to get there. In parents working around the clock to give their family a better tomorrow. That purpose can be diminished, limited by hunger, and hidden by emergent health issues, by nutritionally incomplete foods that starves minds and bodies of vital vitamins and minerals, by unforeseen global health crises that amplify the dramatic need for better nutrition in the places and communities that need it most. A baseline of balanced nutrition is the foundation of opportunity for personal, sociocultural, and even economic development. Nutritional conditions in many communities around the world are anything but balanced. The children in these populations often have difficulty with their physiological development and frequently struggle to learn, resulting in a life marked by a lack of opportunities.
The world needs optimal, accessible, and affordable nutrition for all. Truly improving the future for billions of people takes much more than access to better nutrition staples. It takes a partner, a partner that can accommodate those needs while also driving improved educational outcomes and stimulated economic growth. That's the kind of commitment you'll get with DSM. For decades, our science-backed innovations have helped our partners fortify food staples, reduce nutrient deficiencies, and greatly improve the health and immunity of vulnerable communities in every corner of the globe. We're so much more than a provider of world-class nutrition improvement solutions. We're the end-to-end resource you can rely on to help deliver your next essential solution. We supply safe, high quality, and cost-effective products that are tailored to the dietary preferences and specific health needs of malnourished populations around the world.
Our partners are positioned at every stage of global public health, from governments to donors, as well as private companies, so we can together realize aspirational nutrition for all and further enable systemic change around the world. DSM doesn't stop there. Our work also affects the entire value chain, from removing technical barriers for fortified food producers to promoting the benefits of nutrition interventions and supporting education and behavior change initiatives. With DSM, you get a comprehensive, innovative, and purpose-led partner, readily able to help you keep the world's growing population healthy. Together, we can end hidden hunger. Together, we can change global nutrition for the better. Together, we can help change the world. Partner with us starting today, because where others see products, we see purpose.
Wow. What a beautiful company. Excuse me a little bit because as your Co-CEO, I'm slightly biased, but I hope you as shareholders are proud of this company as well. I see some of our colleagues in the room as well. Warm welcome. Finally back in Heerlen. I mean, I was always looking forward to these meetings, not only because of the meeting, but also because of the Limburgse Vlaai. I hope you really enjoyed it. I did. I tasted this morning, and I got an additional piece this afternoon. Super nice to see you, not only face to face, but also people on the digital highway. Fantastic to welcome you here at our annual general meeting.
Geraldine Matchett and myself are very happy to welcome you here and to give you some insights on the annual results for 2021. Let me start with where DSM started, far, far down the Rhine, more than 100 years old. The last two decades I've put on this slide. We've made a huge journey, and 2021 was an important year in that journey, an additional milestone for the journey of DSM, where we've decided as DSM to accelerate our journey to become a health, nutrition, and biosciences company. Therefore, also look for our fantastic colleagues in materials, a fantastic business, to search for a best new owner.
You have seen throughout the press releases and the communications that we found fantastic new owners for our Resins & Functional Materials business, as well as for our DSM Protective Materials/Dyneema business. We've announced that just one to two weeks ago. That accelerated journey started and was announced in 2021, but our journey goes back far, far, far more. Here you can see a little bit how the bioscience part of health, nutrition, and biosciences has been built up because of three legendary companies. It is Hoffmann-La Roche Vitamins, it is Gist-brocades, and it's Royal DSM. Where we are today is that we could synergize all that science, that bioscience, in one company. More than 1,250 scientists working for us today in about 20 bioscience research centers.
I think that is the key, the support staff to all we do in these markets. That is being strengthened by acquisitions we've done. Partly on strength, partly adding the acquisitions nicely into our strategy, and certainly, in 2021, three fantastic acquisitions. Let me give you a bit of flavor around these three acquisitions. Midori USA was a startup company, really focused on targeted good health probiotics to reduce the environmental footprint of the farming, spot on in our key strategic direction. Our First Choice Ingredients is adding dairy-based flavors to our portfolio, nicely helping our Food & Beverage unit, all focused on clean label and obviously fermentation. Spot on where we're good at, and it's a fantastic addition to what we are today.
Last but not least, in the search and the build of the plant-based proteins business, we've acquired Vestkorn, which basically is plant and protein-based products, where we basically have pea and bean-derived ingredients adding to our portfolio. As you can see, our M&A targets are nicely fitting into what we would like to become strategically a health, nutrition and biosciences company. Next to that science base, next to that M&A portfolio, which is strengthening that strategy, we have truly a unique business model. Let me run you through the three components of that business model, which is really unparalleled. We are a company where we have a huge, broad global product portfolio with ingredients which are unparalleled in our industry. We also know the science behind these ingredients, and we use those global product portfolios to sell to our customers.
We don't sell directly one-on-one. We've done them in the past, but we have evolved over time to create a formulation, a premix, a solution to our customers where we really differentiate ourselves. To use this capability of application thinking, end use markets, to offer solutions to customers, combining all types of ingredients. I think that what we've done in Animal Nutrition & Health, Nutrition & Care, in our Food & Beverage unit, I'm very proud to say that we really make a difference there to our customers. I think what we see in the world is that there's an acceleration on the front of biosciences and data platforms. We all see that. We have a hybrid meeting here. I mean, digital is part of life nowadays.
Algorithms, data and digital is part of our common knowledge on how we talk about the business overall. That unprecedented precision is a huge opportunity for us. That coupled with trends and challenges in the market on the food system market, consumer preference, changing. I mean, I was having my beef every week, I'm now mixing that with plant-based. I'm mixing that with salmon. I mean, Ivo Lansbergen, who is heading the animal nutrition and health unit, is looking at me, "Well, mm-hmm." But we have a fantastic portfolio, not only for the diets of today, but also for the diets of the future. Therefore, we have added to our business model a third muscle, which is called precision and personalization.
Because every human being is different, every animal is different, and if we can make precise solutions for any individual, we can improve health for the animal or for the people, and we can reduce emissions, and therefore improve the health of our planet. This is the unique business model coupled with a fantastic strategy which makes DSM future-proof. Are we building DSM for today? Absolutely. How does DSM for the future look like? Very bright. Why it's very bright? Because we look at our innovation pipeline. That does mean that we invest in this company to create DSM in 3, 5 and 10 years from now. We have a very rich innovation pipeline. We not only have good performance today, but we also have a very rich innovation pipeline which established DSM for the future.
You can see it here, we target about 1.5% additional sales growth on top of our normal sales growth, due to innovation, with an EBITDA, with a profitability margin, which is, 2%-2.5%. It's really building on what we have today. That innovation pipeline creates DSM for the future. I would like to show you some examples, and I'm gonna mess up a little bit the formal approach by voting. In here, would you raise your hand if you took your dietary supplements this morning? Just raise your hand. Yeah. Sorry, Lindsy, but this is informal voting. Half of the room. Okay. For the half who didn't take their diet supplements this morning, it's important that you do.
It improves your health, it improves your immune system, it helps your cardiovascular system. Geraldine Matchett , myself, all the DSM colleagues in the room can help you with some advice, right? Maybe during the break, after the AGM, we're more than happy to help to improve your health. Linking to that, maybe two examples on this slide. One is, what we call vitamin D. That's the micronutrition supplement. What we have seen is that your immune system is strengthened if you're taking vitamin D. In other words, if you have a vitamin D deficiency. You are more open for infections, for diseases going forward. If you want to boost that, take vitamin D and then preferably the vitamin D of DSM. We will send you the brand names ampli-D, d.velop, Fortaro, Azem. Okay, you get it.
Another example, and now you've seen six of them. I will not go all through them. What is currently certainly in the Netherlands top of mind of everybody's Bovaer. It's the methane reduction for cows, right? We have a huge trial running with FrieslandCampina, our dear partner, in getting dairy with a reduced methane emission. What I would like to show you is algae-based fish oil in the salmon industry. Eating salmon has health benefits. If you forgot to take your dietary supplements this morning, take a salmon tonight just to compensate with Omega-3 DHA, EPA. However, what you perhaps don't know is that these salmon are fed with fish oil from fish captured from the ocean. You fish the ocean empty. Here our scientists came into play.
They have developed a technology based on algae, which makes this fish oil and then be fed to these fish. You have algae-based fish oil fed salmon, sustainable salmon. It's out there in the market. It is taking off. We're very proud to say that we have double-digit million EUR sales when we started, and the taste is also really fantastic. I would like to show you a little bit of the background of that fantastic innovation, which we call Innovation Venture Veramaris. Enjoy.
The ocean covers 71% of our planet, but most of this vast and incredible world is hidden from us. It's hard to appreciate the impact that we humans have on life below the surface. Between 1970 and 2012, marine life declined by almost 50%, driven mainly by commercial fishing. Almost one-third of all fish caught are caught for fish oil, a rich source of Omega-3, one of our world's most important nutritional components. Imagine this world beneath the waves wasn't hidden. What would be changed? Fish get Omega-3 from algae through eating krill or directly from algae itself. What difference would it make if we did the same and switched to 100% algal-sourced Omega-3? It would mean an extra 22 million tons of fish would survive every year.
60,000 whales and sharks would be saved from commercial nets, and countless amazing and diverse marine ecosystems could be preserved. If you could see it, the choice would be clear because the nutritional benefits of fish oil don't have to come at the cost of harming ocean life. By changing the way we source our Omega-3, we could make a world of difference and build a brighter future for all above the surface and below. Creating change on this scale takes more than an ingredient provider. It takes a partner. DSM, where others see products, we see purpose. See the impact we can make together by switching to algal-sourced Omega-3.
A little bit on innovation. If we as DSM have that capability to develop products which create brighter lives, we also have the responsibility to do that. That is how we strongly feel. Not only Geraldine Matchett and myself, but I think of all the 23,000 employees in DSM. We have that capability, but that capability comes with responsibility to create health for people and health for planet. Sometimes people say, "Could you explain me a little bit your sustainability strategy?" We always say, "This is the DSM strategy. We want to create health for people and health for planet." By doing so, we said we also need to anchor that in our organizational structure. Therefore, we have decided to install three business groups which are linked to create health for people and health for planet. That is what we've done.
We've created three business groups. First one, Animal Nutrition and Health, which is really geared to radically more go for sustainable animal farming and accelerate that journey. The second business group is Health, Nutrition, and Care, and that is to help the world's growing population to stay healthy. The third business group, which is a new business group, we've installed to be part of that strategy, which was a combination of three businesses. It was a hydrocolloids business, it was the DSM Food Specialties business, and the Food and Beverage business of the former DSM Nutritional Products. We merged that together in a fantastic business group, which is called Food and Beverage. That Food and Beverage unit is focused to create healthy diets for all through nutritious, delicious, and sustainable solutions.
Because we're all human beings, we only really take healthy stuff if it tastes nice, right? It could be nutritious, but if just the taste isn't right and the texture isn't right. It's very difficult to have these healthy components in. Food & Beverage is the new business group which we have installed and is active as per the first of January. To give a bit of background on what this business group is all about, I have a short video to introduce this new kid on the block.
Creamy. Crumbly. Bubbly. Eye-catchingly. Mouth-wateringly. Good food that is also healthy and sustainable. You can't have it all, right? You can with DSM in Food and Beverage. That's because as your reliable and trusted partner, we deliver more than just ingredients. You get our expertise in science-enabled solutions, so you can achieve delicious, nutritious food and beverages while also improving efficiencies, reducing waste, and supporting protein transition. We understand your business, your customers, and your challenges, and we share the same passion and dedication. Together, we can deliver taste, texture, and health. Enjoy it all.
With that, let's go to the 2021 performance. Geraldine Matchett, I invite you here.
Thank you, Dimitri. I do hope that this last video didn't make you too hungry. It was certainly appealing. Hello from me as well, and hello to everyone in the room, but also to everyone online to this very first hybrid AGM, which from all fronts seems to be working well so far. That is good news. Now, for all intents and purposes, I think we can really say that 2021 has been a pivotal year for our company. Not only because of the transformations that Dimitri just mentioned, the new strategic direction, the step up in our innovation programs, et cetera, but also remembering that this was a second year of COVID-19 pandemic. This has meant actually a lot of operational disruption, and despite that, we continued to move forward as a company strategically, and you will see delivered very strong results.
Now, before I actually run through some of the highlights of our 2021 performance, I would just like to use this one slide that captures so well the essence of how we think about the DSM strategy.
Now, we fundamentally believe that if you actually find the most critical challenges, societal and environmental, that as a company you can address, and that you then find a way through your own business model, your great people, your great innovation, your fantastic science, you're able to help address these fundamental challenges that are out there, then not only are you gonna have a positive impact on the world, and this is something we're extremely serious about, all of us, not only Dimitri and myself, our colleagues, but everyone that works for us around the world, but on top of that, it underpins our performance financially and really ensures that we have strong financial performance for the long term. Simply because when you're addressing things people really care about, if they care about them, it underpins trends.
If it underpins trends, it underpins consumer behavior, and therefore our customers care about it as well. Now, in the spirit of this logic, it's therefore normal that I would start by talking about our performance in terms of people and in terms of planet. Let me see if I can get the slide to me. There we go. As you know, we are triple P company, people, planet, profit, and have been for more than 20 years. If I start with people and planet, here you see a lot of KPIs, and I have to say we have extensive disclosures in our annual reports, our integrated annual reports, and on our website for all of these.
I really don't have time to go through all of it, but there's a few things that I think would be worth highlighting for you today, and I'll start with the green bubbles on the left, which are more related to the planet. Let me pick first our progress on renewable electricity. Now, we put out there an ambition of making sure that we source at least 75% of our electricity from renewable sources, and this is a target for 2030. Now, I'm happy to report that by 2021, actually, we're already at 72%, which is very nice because that means we're most likely going to overshoot, and we are looking at that. Now, we can't talk planetary health without talking climate change, and therefore greenhouse gas emissions.
What you see here as well is that we made very good progress in terms of reducing our Scope 1 and Scope 2 emissions, and there we are at a 23% reduction, and we're making good progress on our Scope 3. For those who are not so familiar with the scopes, Scope 1 and Scope 2 has more to do with what we do, and Scope 3 has more to do with our supply chain. Here we are also absolutely on track with our roadmaps. Now, something that's particularly nice is that we've actually upped our ambition. We've done a lot of work. You know that we're a company with a lot of engineers, and we never put a target out there without being pretty sure that we can deliver on it.
Up until recently, our target on Scope 1 and 2 was to reduce by 30% by 2030. Now, this is now 50%. This is because not only the progress that we've made, but also the fact that our roadmaps have been validated, have been elaborated even further, expanded, and that makes us very confident that we can deliver on this. Here are some of definitely highlights when it comes to the planet KPIs. When it comes to the people KPIs, again, there's a lot that we could be talking about, but I will start with our absolute most core value, and that is safety. Safety is an extremely serious topic at DSM. We don't compromise in any respect. We were extremely happy that in 2021 we've reached actually the best performance we've ever had as a company.
It's an incident frequency index of 0.21, which for those who don't follow these numbers, is a very, very good performance. We've not been in this place before, and we're extremely grateful to all of our colleagues because this is not something that gets achieved from a headquarters. This is achieved throughout the company every single day of the year. That's on safety, but also very nicely is our engagement. In 2020 through the pandemic, our engagement went up in the company to 76%. That was not only because of the way that we responded to all of the challenges linked to COVID, but also the pride that we all had as a company to be able to help the communities around us.
After a second year of pandemic and all of the complications that come with it operationally, we were a bit worried that maybe the engagement would feel a little bit harder to achieve. No, it remained equally high, and as you can see here, we have a 76% engagement as well in 2021. Last but not least, let me point to the blue bubble to the far right of the slide, and that is called Brighter Living Solutions. Now, as we've just both said, Dimi and I, we fundamentally believe that the way to have a positive impact in the world is to embed it in what we do as a company, not just manage our own footprint. Therefore, we measure how much of our sales is actually market-leading, either from an environmental benefit or a social benefit. You can see it here.
We are at 64% of our sales. Now, our target is to be at about 65. Our dream is to take this number a lot higher. The fact that we're able to systematically maintain this through our innovation, because of course, all of our competitors continue to move as well, is testament to the power of our innovation pipeline. These are a few of the highlights for 2021 on people and planet, and I really should highlight all of the logos at the bottom of this chart, and that is all of the ESG ratings that are out there. We have been really recognized as an ESG stock for many years, and the way that one has to demonstrate that is among others, through having a very good score on all of these ratings. Everyone here is scoring very high, and I engage.
If you are into these things, I encourage you to go and see on our website where you will see all of the detail, whether it be MSCI, CDP, et cetera. But it's all looking very good. Now, this of course makes us very proud, and we could say this is already very good. But we believe that as a company, we really have to go beyond taking care of our own footprint and our people, and also have a broader impact on the world around us. You got a little hint of this with the first video that we showed you. In 2021, we decided to announce what we call our food system commitments.
We had a look at the science that we have in our hands and thought, "Where can we have the most impact for the people that we serve?" That is basically, and it sounds grandiose, but it is true, humanity. We looked at the food systems. There are three categories of challenges when you look at the state of the food systems of the world today. One is the health of people, the health of the planet, and livelihoods. Now, we had a big pipeline of things we could have picked from, but we know that if we don't focus, then we will struggle to deliver. We picked out five, and these ambitions are as serious as our financial commitments and our people and planet KPIs, and we will be seeking to get reasonable assurance from our external auditors on these as well.
Now, in two words, let me cover them briefly. When we look at the health of people, we recognize that we have a responsibility to try and close the micronutrient gap of the most vulnerable populations in the world. We are already doing a lot of that, which is why the video that you saw earlier actually reflects who we are today already. We feel we should scale that further, and our target is to reach 800 million people with this ambition by 2030. We also, and we referred to it earlier, know that immunity is critical. I think we all learned that lesson with the COVID-19 pandemic. Of course, being the leading company in micronutrients, we should feel it as one of our responsibilities to make that even easier, even more relevant for the biggest number of people as possible.
Here we're aiming to reach 500 million people with improved immunity, thanks to the innovations that we bring forward, like Ampli-D that we just talked about. 2 KPIs on health of people, very much embedded in what we do. Now, when it comes to the health of the planet, this is about enabling our planet to continue to produce food sustainably into the future. We chose 2 here. One is looking at the sustainable production of animal-based protein, whether it be milk, whether it be meat, whether it be eggs. Most farms have emissions, and we know that those emissions can be challenging when it comes to the future of our planet. We are committed to ensure that our innovations can lead to a double-digit reduction in farm emissions.
Bovaer, that was just referred to earlier, is clearly a big element within this, reducing methane, which has a huge impact on climate change. The other target here is maybe the flip side of this, which is our diets. It has been shown that making our diets more varied and increasing the proportion of plant-based products available to as many people as possible can really help sustainably. Hence, we're committed here to reach as many as 150 million people through our customers, of course, because we don't sell directly, but with innovations that make these plant-based alternatives not only tasty, delicious, with a good mouth feel, but obviously nutritionally sound as well. And last but not least, livelihoods.
We do have a presence already in Africa, and through our activities with Africa Improved Foods, we have secured the livelihoods of 130,000 smallholder farmers in Africa. Here, we do feel that we can go further. Although we are not at the agricultural end of the food systems, we do think we can take that to 500,000, and that we should do everything we can to deliver on that. These are strong commitments based on what we already do today. Now, how does that then link to our financial performance? Well, I'm pleased to report that 2021 was a very good financial year as well. It's an and. You can see it from this slide, we have a sales growth organic of 13% in 2021, which led to an 18% step-up in EBITDA.
Importantly, we had a good cash generation, which, in a good way, is a good sign of the health of the company. That went up 9%. Now this performance is actually underpinned by all of our businesses. Let me show you that going through the next couple of slides. Our nutrition businesses in 2020 had a very solid year. Why? Because our activities are essential, whether there is a pandemic going on, whether there are lockdowns, we continue to have to eat and to be healthy. In fact, we had very good results in 2020, which made 2021 a challenge to grow even further. Yet, what you can see here is that all of our activities in the nutrition side of the company grew 8% organically, and the profitability went up 8% as well.
A very good performance in what was actually a very complicated year. You may have heard about supply chain disruptions, a lot of transportation issue, logistics, et cetera. It wasn't only about demand remaining strong, but the ability to serve our customers. It was really an amazing operational excellence from our teams. Now, if we have a look at our materials businesses, 2020, during the lockdown, had a very different impact. Here, some of the end markets that we serve, like automotive, ground to a halt. In 2021, we were expecting to be able to recover from that. Our businesses went a lot further. These numbers here that you see, the +28 in terms of top line or 60 in profit, is versus the low points. If you have a look in the text underneath, we actually delivered growth over 2019.
We actually grew as if the year 2020 didn't happen. This again, in a context of many force majeures in our industry. In fact, we were probably one of the rare companies that did not have to declare force majeure, and we were able to continue to supply the customers around the world in a very good way. In addition to this, and Dimitri mentioned it a second ago, we did some acquisitions, four key acquisitions, one related to animal nutrition, the other one to our personal care, and two in our food specialties, and had to integrate them in a remote way, as one does in a COVID-19 world, but that was okay, and we did very well. Of course, we also completed the divestment of our resins business, which was announced in 2020, but completed in 2021.
If we then look at a few other financial KPIs, what you see here is our working capital. Now, in a world that is very disruptive, and the priority isn't always to lower your inventory, the priority is to continue to supply your customers and to make sure that your suppliers actually deliver what you need in order to produce our products. Our working capital was a bit higher by the end of 2021, somewhat by design. This did not impact our cash generation as we increased it by 9%, as I said earlier. Also worth noting here as well is that our balance sheet remains very healthy.
We closed the year 2021 with EUR 1 billion of net debt, which is a lot lower than previous year and a very healthy position to have for a company like ours. This is what makes us comfortable in proposing a step-up in our dividend for your approval, of course, today. Now, before I go to the dividend, let me just summarize. In short, our financial performance is fully in line, if not actually ahead of our mid-term targets. Our mid-term targets were built from our past track record. We are committed as a company to deliver at least mid-single-digit organic growth, which means 5% or plus, that we are at high single-digit growth in our EBITDA, which means somewhere towards the 10%, and that we generate good cash generation in the process.
As I said, 2021 is yet another year where we have delivered very much in line with this. Coming back for a second to the dividends. Well, as I said, we are in a position to propose today a EUR 2.50 dividend. Now we have a policy of stable, preferably rising, and you see that through the charts. It has definitely always been either stable or rising, which is a proud history of our company. It's also nice to see that from a share price performance, all of this, good performance in terms of financials, but also, I have to say, the recognition for our innovation pipeline and our environmental impact is reflected in our share, price performance that you see on the graph here. Now to finish off, let me just say a couple of words on our performance so far this year.
When we look at our quarter one results, as you can see here on the graph, we had a good first quarter for 2022, and it's actually in the new setup that we just explained, the new three business groups. The middle column here, you have health, nutrition, and bioscience businesses grew 9% organically with a 9% EBITDA growth. A good solid start to this year. As you can see on the right, our materials businesses also had a very good start, despite the fact that last year was an excellent year, which makes it always harder to do even better. You see here an organic growth of 21% and 11% up on profit. Now, you may have a few thoughts in your mind around inflation and around the complications in the world around the Ukraine war.
Now, it is absolutely true that there's a lot of challenge out there in terms of making sure that we, A, are able to source what we need to produce our products, but also are able to reflect this inflation in our pricing to customers. This is something that we have been working on very diligently, adjusting prices where we need to in order to make sure that there is a fair reflection of this cost increases, be it energy costs, for example, through to our customers as well. Last but not least, we also announced on April 20 that we have found a great home for our great business that you would know as Dyneema, DSM Protective Materials, and that transaction should normally close in the months to come. To round off, what is our outlook for this year?
Well, on the back of our strong Q1, we're very comfortable despite the complicated world that we're living in to come up with this outlook here. It remains unchanged from the start of the year to Q1. Our outlook for the year is to deliver a high single-digit EBITDA growth for our nutrition, health, and bioscience businesses. To deliver at least a stable performance for our materials businesses, reflecting maybe there a bit of prudence in our outlook. With that, I thank you for your attention, and I hand over back to our Chairman.
Thank you. Thank you, Geraldine and Dimitri. In the meantime, I have received the data on attendance at this meeting, and I can inform you that today, at this shareholders' meeting, 5,753 shareholders are present or represented. In total, they represent a share capital of 168,534,083 shares, being 77.93% of the issued capital eligible to vote. We shall now proceed to item three on the agenda, the remuneration report for 2021. It is on the agenda with an advisory vote. Carla Mahieu, Chair of the Remuneration Committee, will provide a short overview of the implementation of the Remuneration Policy Managing Board Koninklijke DSM N.V., as well as the Remuneration Policy Supervisory Board Koninklijke DSM N.V. in 2021.
Her explanations will be based on DSM's 2021 Remuneration Report, as included in the integrated annual report on pages 159-174, and is available on the company website. The 2021 Remuneration Report, with the exception of the paragraph summarizing the respective remuneration policies, is presented to you for an advisory vote. Carla, the floor is yours.
Thank you, Mr. Chairman. As this is my first time speaking to the annual general meeting of DSM, you could call this my maiden speech, and I consider it to be a privilege to be a board, a supervisory board member at DSM, and to succeed Mrs. Pauline van der Meer Mohr, and to build on the strong foundation which was put in place under her leadership of the Remuneration Committee. She left big shoes to fill. In the meantime, I got to know DSM as a company where doing something meaningful is more than just words. I see passionate employees working hard to create a brighter living for all and proving that doing good for people and planet goes hand in hand with delivering solid results.
In the second half of the year, DSM announced the intention to accelerate its strategic journey and fully deploy its resources and capabilities to address crucial societal and environmental challenges around the health and well-being of people. This triggered a review of strategic options for the materials business and a simplification of the nutrition organizational structure. These considerations play an important role in the review of the remuneration policy. The Remuneration Committee initiated that process in 2021, and we are well underway. As highlighted by the two Co-CEOs, DSM delivered strong results over 2021, and that is reflected in the remuneration for the year. The short-term incentive scheme resulted in a higher payout of 82.5% of base salary in 2021 compared to 61% in 2020.
The payout was the result of achieving 165% of the target. As you will have noticed, a major step has been made in disclosing what actually has been achieved in view of the targets set in DSM's incentive schemes. Whereas the financial targets over 2021 were all achieved at maximum level, the achievements of the sustainability and individual goals in 2021 was slightly lower than compared in 2020. That confirms that the sustainability goals at DSM are taken very seriously and are indeed of a stretched nature. As in 2020, both Co-CEOs invested 50%, which is actually the maximum possible, of the short-term incentive deferral program, and underpinning with that their belief in the future of DSM. The short-term incentive can be invested in shares to a maximum of, in this case, 50%.
Due to the fact that the ROCE target was not achieved, the vesting of the long-term incentive grant implemented in 2018, so a couple of years before, stayed behind the 2020 vesting of the grant made in 2017. All in all, there were plenty of achievements to be proud of, and especially as they have been achieved, and that was already alluded to, under very dynamic market conditions. On the back of the short-term incentive payout, the Co-CEO average pay to the average full-time employee pay ratio did go up marginally from 33 to 34 in 2020. In relation to the five-year overview of the development in remuneration and key company parameters, the Remuneration Committee concluded that the remuneration of the managing board and the company performance are well aligned.
In accordance with the regulatory and corporate governance framework, the remuneration of the members of the supervisory board only concerns fixed items. Compared to 2020, the total amount involved remains practically the same. In looking for possibilities to further strengthen transparency, and as indicated, a major step has been made in disclosing the achievement of performance targets included in our incentive programs. In the best interest of all stakeholders, we refrained from disclosing the individual goals, as they are considered to be really business sensitive. In executing its tasks and responsibilities, the Remuneration Committee will continue to work in the tradition of applying best practices in corporate governance. With this, my maiden speech comes to an end. I thank you for your attention, and it's back to you, Mr. Chairman.
Thanks, Carla. The next agenda item is the adoption of the financial statements for 2021. Financial statements drawn up by the managing board were approved by the supervisory board on the first of March, 2022, and are now on the agenda for adoption by this meeting. The financial statements 2021 have been audited by the external auditor. I would now like to invite Petra Groenland, the auditor, to give a brief presentation on the audit work of KPMG. Petra, the floor is yours.
Thank you, Mr. Chairman. Ladies and gentlemen, good afternoon. My name is Petra Groenland, and I'm the external auditor on behalf of KPMG for DSM. KPMG has been the external auditor for DSM as from 2015. This was our seventh year and my second year. I'm happy to have been provided the opportunity to stand here before you and elaborate on our audits and our auditor's report on the financial statements. As shareholders, you're an important user group of our auditor's reports. I therefore thank you for your trust. My presentation will cover the key elements of our audit approach and findings, as shown here on this slide. These elements are covered in more detail in our independent auditor's report, as included on pages 278 through 288 of the 2021 integrated annual report.
I'd like to make two overall comments as an introduction of what an audit entails. Our objective and responsibility is to plan and perform an audit such that we obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high level of assurance, but not an absolute level of assurance, which means that we may not detect all material errors or fraud during our audit. What have we audited? As mentioned by the Chairman, we have audited the consolidated financial statements and the parent company financial statements of DSM. In addition, we have audited the sustainability information and issued a reasonable assurance report thereon. Our presentation will continue with the audit of the financial statements. Our audit resulted in an audit opinion that we issued on the first of March 2022.
We issued an unqualified audit opinion, which implies that the financial statements give a true and fair view, and have been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and Dutch law. We furthermore assessed the report by the managing board and other information included in the integrated annual report. Based on our knowledge obtained throughout the audit, or otherwise, we assessed that the report is consistent with the financial statements and does not contain material misstatements. In our audit approach, certain elements are of importance. First of all, we determine materiality, the level at which we believe misstatements will reasonably influence users of the financial statements, such as yourselves, the shareholders. Materiality is of importance to us in the determination of the nature, timing, and extent of audit procedures that we perform, and the evaluation of any identified audit misstatements.
For the 2021 audit of DSM, we determined a materiality for the financial statement as a whole at EUR 45 million, and this was consistent to the prior year. We evaluated our materiality against normalized profit before tax, which was 4.8% from continuing operations. Misstatements in excess of EUR 2 million were reported to management and the supervisory board. After determining materiality, we then performed a risk assessment by identifying areas where the risk of material misstatements in the financial statements, whether caused by error or fraud, is the highest. In our auditor's report, we have included further details as to how we assessed risks of error, risks of fraud, and non-compliance with laws and regulations. In addition to last year, we also included in our auditor's report how we assessed the risks in the areas of going concern and climate-related risks.
In line with the presumed risks laid down in our auditing standards, we identified fraud risks with respect to management override of controls and revenue recognition. In our auditor's report, we have included and listed out the procedures that we performed to respond to those risks. Going to group audit. From an efficiency point of view, we assessed which procedures would be performed centrally by us, and which would be performed at a local component level. Audit procedures mostly performed centrally by us included goodwill impairment testing, other assets impairment trigger testing, income tax for the Dutch fiscal entities, acquisitions of subsidiaries, and accounting for divestments. In certain countries, as selected by us, local component auditors from KPMG performed audits for the purpose of our audit of the consolidated financial statements.
The scoping of which local components that was based on the size and the risk profile of those entities. These local component auditors worked in accordance with our instructions and under our supervision. As the Group Audit T eam, we scheduled site visit meetings with our local component auditors, as well as with local component management in the United States of America, Switzerland, Austria, China, and the shared service center in India. In view of travel restrictions due to the COVID-19 pandemic, we only visited in person component auditors and DSM's locations in the United States of America and Austria. Instead, we increased the use of alternative methods of communicating with our local auditors and local management. I personally attended the visit to Austria, as well as virtual meetings with several of our component auditors and component management.
We also obtained remote access to audit work papers for a selection of component auditors to evaluate the adequacy of their work. For more complex audit areas, we included KPMG specialists. This relates to specialists in the areas of valuations, IT, tax, and forensic specialists. Our audit coverage was reaching 79% of total assets and 76% of net sales. The audit of DSM has been performed throughout the year, and on a periodic basis, we've discussed our audit observations with management and the audit committee. There's an active engagement with the audit committee, and our observations are taken seriously. We attended all audit committee meetings and one meeting with the full supervisory board. We communicated our audit observations to the supervisory board in writing, in our management letter, and our reports on the audit. Going to those findings, the key audit matters.
We have included two key audit matters in the auditor's report that you see in the integrated annual report, which is a subset of observations that we discussed with the supervisory board. These two key audit matters have been included given their financial impact and their significance to the audit of the 2021 financial statements. Compared to last year, the key audit matter that we reported then on impairment of certain cash-generating units is not included for 2021, as this was specifically related to impairments recognized in the financial year of 2020. Similar to last year, we did include a key audit matter for the accounting for acquisitions, as the financial impact and complexity of the accounting for the acquisitions in 2021 was significant to our audits.
Lastly, as the second key audit matter, we included a key audit matter about the divestment of DSM's Resins & Functional Materials and associated businesses that was completed during 2021. This was significant due to the amount involved and the impact on the financial statements. Furthermore, the transaction is non-routine and involved a certain level of management judgment, especially as it relates to calculating a capital gain tax that was part of the net book result. Our audit procedures were determined in the context of the audit of the financial statements as a whole, for which we issued an unqualified audit opinion.
My observations here, but also in the auditor's report, in the auditor's opinion with respect to the key audit matters, but also fraud and noncompliance with laws and regulations, going concern, and climate-related risks should be viewed in that context and not as separate opinions or conclusions. This covers my prepared notes on the 2021 audit and the audit opinion, but I'm happy to take any questions that you may have when we get to the Q&A. On behalf of KPMG, I would like to thank you for your attention and thank you for your trust. Back to you, Geraldine.
Thank you, Petra. Please do not forget to vote on the adoption of the financial statement and any of the other items. As said, voting is open until after discussion of agenda item 12, but so you can start now. Next on the agenda is the reserve and dividend policy, as well as the adoption of the dividend on ordinary shares for 2021. The reserve policy is unchanged compared with last year. The reserve policy is closely linked to the dividend policy. Every year, the Managing Board, with the approval of the Supervisory Board, decides which part of the profit is to be appropriated to the reserves. The portion of the profit then remaining, and after deduction of the dividend on the cumulative preference shares A, is at the disposal of the general meeting.
The dividend that the company pays its ordinary shareholders depends on business conditions, the company's financial performance, and other relevant factors. As you know, DSM aims to provide a stable and preferably rising dividend. The managing board, with the approval of the supervisory board, may propose that the dividend will be distributed in cash or in ordinary shares of DSM at the discretion of the ordinary shareholder. We come to the adoption of the dividend. The financial statements show that for 2021, a net profit was achieved of EUR 1.68 billion, of which EUR 4 million was attributable to non-controlling interests. Based on the statutory requirements, the managing board, after approval of the supervisory board, determines which part will be reserved.
For the year 2021, it has been determined that EUR 1,238 million will be reserved. From the remaining profit, EUR 6 million dividend will be paid to the cumulative preference shares A. The remaining part of EUR 432 million is at the disposal of the General Meeting. With the approval of the Supervisory Board, the Managing Board is presenting to the General Meeting for adoption the proposal that the dividend per ordinary share to be paid for 2021 will be EUR 2.50. Keeping in mind an interim dividend of 80 euro cents per ordinary share that was paid in August 2021, the final dividend does amount to EUR 1.70 per ordinary share.
Optional to the shareholder, the final dividend will be made available in cash or in ordinary shares of DSM, under the condition that a maximum of 40% of the total dividend amount is available for stock dividend. If shareholders in total wish to receive in aggregate a distribution in shares which exceeds this maximum percentage of the total dividend, those shareholders who have opted for distribution in the form of shares will receive their stock dividend on a pro rata basis, with the remainder being distributed in cash. The dividend will be payable as from the third of June 2022. In the explanatory notes to the agenda, you will find further information and relevant data on the payout of the dividend. This brings us to agenda item six, the release from liability.
That is the release from liability for the members of the managing board and the members of the supervisory board. This agenda item comprises two voting items, the release from liability of the current and former members of the managing board, and of the current and former members of the supervisory board. This release from liability relates to information resulting from the financial statements otherwise known to the general meeting before the financial statements were adopted. Now that we covered all items looking back at 2021, I think it is a good time to pause and to see if the shareholders and shareholder representatives that are joining us today have any questions about these agenda items. Let us start with questions from the shareholders present in Heerlen. Are there any questions? Yeah. Please come to the lectern.
My name is Michiel van Esch. I work at Robeco, and today I also represent a group of other institutional investors, being APG, Achmea Investment Management, Triodos and MN. First of all, it's good to be here. I'm glad that we can meet again in person after two AGMs with alternative meeting setups. Looking back on the last year, DSM made further progress on delivering its updated strategy, made their sustainability targets more ambitious and more concrete while managing the company through a very difficult economic and social environment. That deserves a compliment. My questions are on DSM's financial outlook, its approach to climate change, and on remuneration. In your Co-CEO letter, it is mentioned that inflationary pressures required pricing action last year, and that positive results can already be noticed since Q4 of last year in the cash flow figures.
Can you further elaborate on your expectations for long-term inflation and the effects on free cash flow and profitability? Specifically, what can management do to ensure that inflationary pressures on the cost side do not surpass your ability to step up pricing actions? My next question is about the company's climate ambition. Last year, DSM further enhanced their climate ambition with an absolute reduction target of 50% for Scope 1 and 2 emissions and a Scope 3 intensity reduction target of 28%. We are happy to see that step up. Can you explain what net zero means for DSM in 2050 in practice? For example, do you expect to need carbon offsets? Is there a concrete roadmap for the longer run between the 2030 and 2050 targets?
Finally, can you explain why DSM has chosen for an intensity target for Scope 3 rather than an absolute target? I also have a question on remuneration. We note that all financial KPIs have been achieved with significant outperformance against the targets. Can the remuneration committee explain how targets are set? Is the trend of previous years used as a proxy, or are changes in economic conditions and changes in portfolio, products also taken into account? Next year, the remuneration policy will be up for a vote and a review will be done. As in previous policy updates, we are willing to provide feedback on a draft updated plan. In our opinion, DSM's updated sustainability ambitions can be further improved in the long-term incentive plan.
Additionally, DSM, remuneration practice have always stressed moderation, and we hope that this quality can remain intact while also addressing the challenges around talent attraction. We're looking forward to being part of your consultation.
Thank you. Geraldine, you will take the first question.
With pleasure, and thank you very much for your question and for being here in person. It's nice to see you too. Now, to the question on inflation, as we all know, this has been a topic that started already last year indeed, and in particular, we saw the inflation in Q4 start to accelerate. Already in Q4, you saw that our ability to adjust prices accordingly was already visible. For instance, with 4% up in pricing in our animal nutrition business, for instance. Now, when we issued our guidance for the full year 2022
We indicated that we were taking into account about 5% of inflation for the year 2022, and that we were very confident that with our ability to price, and our relationship with our customers and the strength of our product portfolio, we're very confident that our outlook for the year is underpinned, including that inflation. Now, what happened, of course, since then is the conflict in Ukraine, which has not helped the inflationary situation. You know, we don't have a crystal ball, but one can estimate maybe another 2-3% of inflation on top of what was already estimated. Now, we've done a lot of work to make sure that this is taken into account as well. Now, one thing that happens with inflation is that it always has a time delay before it actually impacts.
There's the whole sourcing, producing, distributing, and ultimately selling, which does give a bit of time as well to do the necessary pricing adjustments to mitigate that inflationary effect. All in all, we are very confident that the outlook that we've given for this year is well underpinned, including this element of inflation.
Okay. Take the question.
I think it was smart, three questions, but in question two, there were three sub-questions. Maybe, Mr. Chairman, I still can answer, right? Don't worry, we do the same trick when Geraldine are on the roadshows. We'll also answer lots of questions. Nevertheless, thanks for that question, because in the heart of what we believe in. I think net zero 2050, I've said it several times. In all fairness, it's a bit of a joke, right? CEO is committing to net zero in 2050, because I think I will be in retirement when I'm in 2050. It's more important that in the line-up to zero in 2050, you have short-term commitments and plans, and that we do have as DSM.
You've seen that our SBTi targets are set for 2030, which is a ramp-up towards net zero in 2050. Secondly, you've seen that we have improved our targets on Scope 1 and 2, because we are also on a learning trajectory here. DSM wants to commit to targets where they have genuine roadmaps. It's not just belief, it's a roadmap which is thought through, and by the way, also being audited by KPMG, because as you know, people and planet numbers are reasonably assured. I sometimes have to smile a little bit. If shareholders would have reasonably be assured profit numbers, most probably, I will not have a long lifetime as a CEO, but for people and planet, reasonably assured is the maximum assured. The world is learning, and we are part of that learning.
I think we're even leading that learning trajectory. For us, it is absolutely key that it's not only 2050, but a roadmap short-term. The second question is, do we need carbon removals to do that? Not necessarily, but eventually it could be. If it's the case, then those will be at the highest quality criteria, so, and those will be audited and checked. On Scope 3, very good question. I think Scope 3, certainly if you look at overall the greenhouse gas emissions, is the majority of what's happening. I mean, our part of Scope 1 and 2 is relatively small. Scope 3 is absolutely key.
I still remember we had a suppliers meeting four years ago where we said that performance is important from suppliers to us, that innovation is important from suppliers to us, but above all, sustainability is important. Therefore, we started a project, which we call CO2REDUCE, to really help our suppliers to reduce their greenhouse gas footprint and emissions. That Scope 3 is helping us to move that forward. We definitely feel responsible for that, and we also take responsibility. To your point, why is it an intensity target? That's the SBTi methodology. We moved Scope 1 and 2 to absolute targets. We follow the SBTi guidelines there. If there's a new methodology, then obviously we'll be part of that game. For the time being, that is the common methodology going forward.
Thank you. Carla, will you take Mr. Van Esch's last question?
Yes, indeed. Thank you very much for your question. The way we set our targets is basically that we use a balanced scorecard where we cover two areas, financial targets and sustainability targets. Those targets are really targets that are related to our company strategy and to our business objectives, and they are not any different than the numbers that Geraldine has been reporting on. For instance, for the short-term incentives, we look at adjusted EBITDA, we look at adjusted net operating free cash flow, we look at net sales. Those are exactly the numbers that Geraldine has also shown. On the sustainability side, we have also a number of targets for the short-term incentives. Then we look at our methodology of Brighter Living Solutions.
The products that we believe or we have reason to believe that they have a superior impact compared to mainstream solutions. We look at safety, we look at engagement, and then there is an individual goal. What you see is a 50-50 split in terms of weight between financial goals for the short-term incentives and for the sustainability targets that we actually use in managing the company performance. Similar target split you see for the long-term incentives, and that's where you kindly offered some feedback. Perhaps after the meeting, there's that opportunity.
There we look at also, again, financial targets and sustainability targets. On the financial side we have relative TSR, we have ROCE, and on the sustainability side, we look at energy efficiency index and greenhouse gas reduction. Now, the way it is set, because that was also your question, is that we actually take the objectives that we believe are important in managing and monitoring our company performance. We believe also, therefore, that it is necessary to take objectives that reflect also our long-term ambition in terms of value creation. Of course, yes, we also look at historic performance, the context in which we operate, what matters at that point in time, the business outlook and also stakeholder expectations. That's what we all take together.
The metrics itself are prepared by the organization, discussed extensively, and then for each of the targets, we attach a certain value to determine what the objective for the coming year is. That's how the process works. The Remuneration Committee then takes a stand on the kind of objectives and the metrics, the values, and is then giving a recommendation to the Supervisory Board and the Supervisory Board then decides. The external auditor, by the way, also reviews the target setting process and also the determination of the achievements. That's part of the process as well.
Thank you. Okay, I look for other questions in the room. Mr. Stevense.
Thank you, Mr. Chair. Stevense, Stichting Pensioenfonds Schering. To start with, you are working on selling another part, and it will bring EUR 3 billion. You already have EUR 6 billion, so that means we will have EUR 9 billion available. Our question is, are you thinking about recapitalization to returning part of this money tax-free to shareholders? The danger of the huge amount money that you have in the bank is that takeovers are becoming too easy. We've been in this business for some time, and I've seen something already. On the other hand, DSM is an easy prey for takeover itself. An example of a takeover of what we believe that was rather fierce is the takeover of First Choice Ingredients. We realize that it is a perfect fit within DSM, but we believe that the price was rather high.
Takeovers may cause that when you find it difficult to reach organic growth, that a takeover is done easily to achieve that growth. That was the first item that we wanted to raise. The second item is, well, producers of Food and Beverage often try to reach partners with ingredient suppliers to make a difference in the market. Also expectations of consumers and society develops towards products with authentic taste, texture, food profile, and little impact on the climate. To what extent does DSM have an opportunity to grow organically? Something was said already about this, but perhaps you can elaborate on that. A next item is the factory in Dalry, in Scotland. The new product, Bovaer, was mentioned, and we wonder why this factory. How much money was invested in expanding this factory? Wouldn't it have been better to centralize this manufacturing process?
That's the questions we have for right now, Mr. Chair. Well, thank you.
First question will be taken by Dimitri, and I think the others.
I will do the-
Yep.
I will do the First Choice Ingredients, and then Geraldine can say something about the EUR 9 billion. We are very happy to see your calculation on the EUR 9 billion, but okay, I'll leave that for Geraldine. Maybe on the First Choice Ingredients. Good to see you, Mr. Stevense. I hope you enjoyed your Limburgse vlaai. Maybe I should answer in Dutch.
Yes.
Zal ik in het Nederlands antwoorden?
Ja.
Beter? Ja.
Well, First Choice Ingredients is a great company that is in the field of Food and Beverage, the third unit. It fits really well into food and health. When you look at the sums we pay for businesses like that, it's more than 20 times profit, and we paid 19.8 times, so below 20, not over 20. I'm also happy to say that First Choice Ingredients, and we reported about it in the last quarter, it performed really well. Besides the fact that they perform really well, it's very important for the strategic future of Food and Beverage. We see that what we paid for it was an excellent price, not overpaid. We are very transparent about it, how the business is performing. We report about it mainly in the first year, and you see that it was absolutely a good acquisition.
It's very close to the core of us. Maybe 10 years ago, we did Martek, Ocean Nutrition. These were takeovers with a higher risk profile because we were a lot smaller in food and health at the time. We are now one of the leading companies in the business. You see that acquisitions we do can easily be fitted into what we do right now. The risk profile is a lot smaller. I think that what we do at First Choice Ingredients is really a good fit and not overpaid. Maybe let's move on to the EUR 9 billion.
Hello, and thank you for your question. I'm afraid I'm unable to answer in Dutch, so I will do it in English. I think it's important to first. Oh, sorry, I thought there was a sound issue. Is it okay? Yeah.
Mm-hmm.
First, we ended the year 2021 with EUR 1 billion of net debt, so we are in a net debt position. Indeed, we've announced recently that we will be divesting our DPM business, and this is going to bring in about EUR 1.3 billion in cash. We have a very structured approach to deploying capital, and it's important to do that in that way. You talked about our organic growth, and our allocation policy is first we invest in organic growth, then we guarantee a strong dividend, then we do M&A, and as a fourth, we may give liquidity back if none of the above seem to be the most value-generating thing to do. When you say, you know, should we be growing organically? Absolutely.
In fact, if you look at our results of 2021, we had a 13% organic growth as a company, which is well above the kind of markets that we serve. We are growing much faster than the markets that we serve, and that is thanks to these great innovations, for example, that you've seen, and thanks to these acquisitions that actually turn into organic growth. We have a very strong history of doing bolt-on acquisitions. We talked about the four this year. The year before we had another four acquisitions, like Erber, for instance, very good synergies. This is where the capital really helps us grow the company in a combination of organic and inorganic, backed by a lot of investments in our R&D.
For instance, we invest about between EUR 400 million and EUR 450 million a year in our research and development, which is what underpins our innovation pipeline. We're very confident that we have multiple opportunities of making very good use of the capital that will be freed up by a divestment such as DPM to ensure that we continue to grow DSM organically as much as inorganically going forward. I hope that this helps address your concern.
I would like to address that please. When you would do recapitalization, it would always be possible, if you need money, to collect it once again from your shareholders, and we would be rather in favor of that.
Indeed, the best way of looking at it is value creation. To the extent that we are in a position as a company to deploy the capital in a very value-creative way for our shareholders, we feel we're doing the right thing. Should we ever find ourselves in a position where we do not have a strong belief that neither the organic growth nor the investment in R&D or innovation, nor these acquisition deliver the right kinds of returns, then it is always our full capital allocation option, which would be to return capital to shareholders.
Okay. Now, we had another question about Dalry. Yes. Would you like me to take that? We believe that Dalry is rather close. When you talk about centralized, what we talk about when we do investments so big as this one is to address where we can manufacture, where there is an existing manufacturing facility, so that you don't have to invest in utilities and in sewers, et cetera. But also with regard to the processes that we have. Now, Scotland, Dalry, we have a great site, have had a great site for a long time, vitamin C, the only vitamin C factory outside China with great quality, so it's a fantastic facility. They have the infrastructure ready to expand. So that's why with regard to infrastructure, but also the people that are employed there, the Bovaer product would be very well-suited. It's very synergetic.
That's why we chose Dalry. It's not that we scrutinize the location. Dalry is focused on Europe, and we said that we will cooperate with Elanco. We will do the same in America, but for Europe, Dalry was a great location for us. We are already there as DSM, and we can link up very easily. That's the line of thinking why we chose Dalry in Scotland. Yes, to come back to that, Scotland and the south of Europe, that is quite a distance. We would rather think more central Europe. Well, Mr. Stevens, says Mr. de Vreeze, the product Bovaer is a premium product, I can tell you. Luckily, the transport costs are not the biggest part of the cost, and we are happy about it. Yes. Well, we have considered that, says Mr. Stevens. Thank you. Thank you, Mr. Stevens.
A question there at the back.
Thank you, Mr. Chairman. My name is Dries Verhaeghe , and I served DSM in various positions for several decades. I'm retired now, but still feel a close bond to DSM, and not only as a happy shareholder. Most of the years I worked for DSM, my office was here in this building. DSM was founded some 120 years ago, and all this time, the head office of the company was located here in Heerlen. For more than 100 years, DSM was at home in Heerlen, and Heerlen was proud to have the seat of this fine company within the town limits. Therefore, it came as quite a shock that the board decided last year to relocate the global head office to Maastricht. The reasons for this move, given in the press release of July 15th last year, are less than convincing.
Maastricht should offer, and I quote, "A vibrant urban environment in Maastricht city center with a train station, hotels, and other services in close proximity." End of quote. Heerlen offers all those elements as well, and it's an undeserved offense to Heerlen by the two co-CEOs of DSM to state that only Maastricht can offer this, and Heerlen apparently not. Adding insult to injury, the press release stated further that a choice for Maastricht, quote, "Will reflect the company's historic roots." End of quote. Heerlen was good for DSM for more than a century. It does not deserve such an affront. Dear Geraldine Matchett and Dimitri de Vreeze, you don't become brighter when you spit in the nest you were born in. That is exactly what you did with this decision and these arguments. There are also a number of good business reasons to offer Heerlen over Maastricht.
In the years I worked here at the head office, it housed, roughly speaking, two types of colleagues, a significant group of executives and academics, supported by a much larger backbone of administrative and logistical staff. I suppose that among the first group, there might be a preference for Maastricht, as Maastricht offers indeed more Michelin star restaurants and plenty expensive boutiques. Is that a compelling argument? For those more fortunate employees, most of them have a company lease car. The 20-kilometer commute from the Maastricht region to Heerlen will hardly be a problem. That is less the case for the administrative and logistical staff. For many of them, this move will be pretty painful. If they want to follow their work by relocating also to Maastricht, they will face the prices of houses in Maastricht are significantly higher than in the Heerlen region.
Added to this, the labor market for administrative staff in Heerlen is quite bad, and in Maastricht, overheated. As real estate prices in Heerlen are considerably lower than in Maastricht, a new office in Heerlen will probably be less expensive as well. I ask the board to reconsider its plan for the relocation of the head office to Maastricht. The mayor of Heerlen will gladly help to find a suitable location here if DSM wants to leave this building. There are ample opportunities in the vibrant urban environment of Heerlen. Brighter Living is certainly possible in Heerlen. The town hall of Heerlen was never even asked about the possibilities. How disloyal can you be to your host town that was for a good century, good for you.
Dimitri.
Well, thank you, Dries, and thank you for the emotions and the warm feelings you have for DSM when I heard you. Also for DSM in Heerlen.
If you want to. Is this pure regional thing? Okay. No problem.
Well, for Mr. Stevens, I did so, and I would like to do it for you, says Mr. Dimitri de Vreeze, but if you want me to reply in English, that's also fine. I will leave that to you, and then you can ask me to do it again in Dutch. Home in Heerlen. Absolutely. That's how we always looked at it. Let's be very clear, to find a very good link for the head office in Heerlen, and of course, in cooperation with the government and the local government to find a good alternative. That's what we expressed. That's what we committed to. I think it's truly a pity that you feel offended. That was not the intention of the press release. Well, maybe you would allow me to finish my story.
We never intended, because you address this remark personally to us, I would like to respond personally. Of course, we checked with our employees. Maybe you don't like to hear this, but nearly all employees of DSM in Limburg and in Sittard think that it's great that we are moving to Maastricht. For our staff members, it's good news. I do agree absolutely with you that it's a difficult decision for Heerlen, and we will cooperate on that to make sure that we can solve this as well as we can. I expressed that commitment. I want to do it once again to you personally, but also to all shareholders, all the people present in the room.
What we will also do is that because houses are more expensive in Maastricht, it's not true that if you want to stay in Heerlen that you can't work at DSM anymore. We never said that people had to move. There are rules in the Netherlands, schemes in the Netherlands, that if we would have to adapt the commuting system, that we have good schemes for that. Personally, but that's my personal preference, I would take a bike in the morning because it's 19 kilometers only to Maastricht, and it's healthy for people, for mind, for body. I would like to say I feel what you feel partly, and we will make sure to work out a good solution for everybody. I believe that Heerlen doesn't own DSM. Heerlen doesn't determine what must happen with DSM.
I can feel along in the bottom of my heart for the 32 years that I've been working at DSM, that DSM has a commitment to Limburg. That's why Geraldine and myself were very happy that we can maintain the commitment to Limburg. Okay, Dimitri, thank you for your reply, and I hope that the commitment, and I know I can trust you, that the commitment will make sure that you compensate Heerlen in some way. Thank you for your reply, and it's still a great company. Thank you, Miss Janssens.
Yeah.
Yes.
Yeah.
Yes, Chairman. My name is Pania. For the minutes, because we don't want more questions about that. First of all, I'd like to congratulate you. Bovaer has been given the approval, European authorization for it to be distributed across Europe. I can imagine it's not clear to me in Ireland and the U.K., because that's... Do you have approval for that? Because that is outside the E.U., beyond Brazil. That's my first question. My second question, about the minutes, the annual report. In the 309 pages, of course, I read all of them, but there's nothing at all about COVID-19, what the costs of COVID-19 were in 2020. I know that there was another company that had costs to the tune of millions. So what would be the order of magnitude of the cost of COVID-19 for this company? Couldn't find it anywhere.
Page 15, Chairman, you are officially offering the report. Page 15, it says that you have three business groups as per January 1, 2022. That's marvelous. One is Animal Nutrition & Health, and the other one is Health, Nutrition and Care, and the third one is Food and Beverage. My question is, why should an animal be represented in two business groups? I really don't understand that. There may be a typo, a mistake, an error, some mistaken reference. Perhaps you should take a closer look at this, because at the end of the day, if you give a business unit a name, you have to give it a name very consistently. I don't think this is consistent. I think that's just about it. Could you take those two questions? Well, Geraldine can do COVID. I'll do the approval, the ESG approval.
Well, ordinarily, the U.K. will follow the EFSA approval, but given the current Brexit, they have their own procedure. Ordinarily, they would follow the EFSA approval. Now, the business units, we have three business groups. They're called in English. Animal Nutrition & Health, that's one business group. There are two business groups concerning the human health, nutrition and care.
The third one is everything and anything that has to do with taste. Mr. Swania, yes, but the second one, why don't you add health? One of the business units has animal, and why don't you say health with the second business unit? Mr. de Vreeze, yes, that is the case in English, but perhaps not in Dutch. Geraldine, COVID.
The cost of COVID. Now, that is a very interesting question because COVID has impacted the world so profoundly and in so many diverse ways that there comes a point where it's extremely difficult to ring-fence what is the cost of COVID. As a result, we didn't even attempt to do that. What we have done, of course, as you remember in 2020, was to, on the one hand, first and foremost, take care of our colleagues and our people and the communities around us. Secondly, make sure that our innovations address as much as we can, challenges like immunity. This was our main focus, and the absolute cost in, out, plus, minus, et cetera, is not something that we have attempted to ring-fence in 2021 because of its multifaceted elements.
I think hopefully where you can rest assured is that we have managed to find our way through, and I will give you an example. For example, supply chain. A lot of transportation costs have gone up, right, in terms of shipping, et cetera, partly because of labor shortages in ports. Now, can we fully attribute an increase in cost of transport of our goods directly to COVID? It certainly is an element, but we can't ring-fence it. There you go. It could be. We could spend a lovely evening discussing, you know, how to split the different pieces, but, all in all, of course, 2021 was a very good year for DSM, so the costs were absorbed.
I understand what you're saying. I understand that you're trying to take a sideline here, but I mean the cost for staff. Staff costs for DSM. Were there people on your payroll who fell ill, who couldn't work, who needed to be replaced by temporary workers? That's what I was referring to. Were there people who had family suffering from COVID, who they had to take care of? And did you say, "Okay, you go take care of your family members with COVID. I will make sure that you're replaced at work." And the cost thing, well, listen, that's an external thing, but I was actually referring to people on your payroll because you can pinpoint that as a specific amount. No, we can't. But I can indicate what the components were.
In COVID, we saw a number of issues concerning the wage cost, overall cost increase, supply chain interruptions, distortion, et cetera, logistics, and we're gonna set that aside here. With respect to wage costs, people started to work at home, which is about one-third of our workers. Two-thirds continued to work in the plants, in the labs, and did, et cetera. We clearly see that this was not at the expense of productivity. The past 2 years, actually, we've seen a wonderful productivity generated by our people. We're absolutely really proud of what our people have done. We helped our workers to, in fact, work at home. We gave them the possibility to work from home, desk, computers, et cetera, and that did add to our cost.
Also our commuters' costs, we continued to pay for those expenses. The cost is the people who we did continue to compensate. At the end of COVID-19, we saw that there was more absenteeism due to illness, so there were extra costs, but that was more or less offset by the fact that travel costs were less. People didn't travel as much. Ordinarily, people travel. A lot of people travel to internal meetings and also to see customers, but those travel costs were much lower over the past 2 years. Net-net, it's not that we had higher cost items, but we did take these two components and put them together. Thank you. Thank you. Are there any other questions here in the room? I don't see any questions.
Those who are virtually present?
Let me check. Yes, I have Mr. Van den Hudding, who has a question.
Go ahead, Mr. Van den Hudding.
Yes, thank you, Mr. Chairman, and good afternoon, Geraldine and Dimitri. My name is Eric van den Hudding on behalf of European Investors, VEB. I have three questions. My first question relates to the announcement two weeks ago of a strategic alliance with Bovaer. You will receive royalty income from Elanco's U.S. sales. Now traditionally, DSM had very little royalty income, just EUR 15 million last year. Do you foresee doing more of these type of alliances that result in the receipt of royalty income, specifically for Bovaer, but maybe also other products? That's my first question. Second question, when I look at DSM's full year results, there's a slide on M&A and on an EBITDA contribution for the acquisitions in 2020, which I really appreciate.
Now, just zooming in on specifically CSK, Glycom and Erber. Can you talk a little bit about what has gone above expectations, what has gone below expectation? Then specifically also looking at Glycom, which is active in the weak infant nutrition market. My third question relates also to the proceeds of about, yeah, I think after you also, as you say, become net cash after the divestment of Protective Materials, maybe another EUR 3 billion from Engineering Materials. In the past, you've done a lot of these bolt-on acquisitions. Should investors maybe also keep an eye out for larger investments, or do you maybe foresee doing share buybacks, given the amount of cash that will come in after the divestment of Materials in full? Thank you.
I propose I'll do Elanco and then the M&A, and then you do proceeds, and can also build on the M&A. Elanco, indeed, thanks for that question. As you've seen, Mr. Stevens was already asking why we do it in Scotland, that we do ourselves. We produce ourselves, we also sell. For the U.S., we basically looked at our own footprint, our route to market, and said that maybe it's better to do it with a partner. Also to look at our business model. We're very happy with that Elanco leader in the U.S. We're very good positioning. We still need the FDA approval for that. Based on EFSA, hopefully we can use the same documents to go through, but they have their own process.
Elanco, certainly, we expect can accelerate that process. We're looking in terms of alliances more into case by case. It's not that we have a strategy that everything needs to be via royalties licensing packages. No. We basically look at case by case and region by region what's best for DSM in the long term value creation. In this particular case, it's a fantastic product which helps the health for the planet and therefore, we also look at partnership to accelerate the rollout of this fantastic product. That was the reasoning behind Elanco and the alliance. Maybe the acquisitions. What went really well above business case was CSK and Erber. Like you said, it's nicely fitting into our strategy.
It's nice fitting into our existing infrastructure, so that makes it a bit easier to quickly synergize on the acquisition. Erber in our Animal Nutrition & Health portfolio, I think we are absolutely market leader in that space. We added mycotoxin to our premix ingredients play. That was, in terms of route to market, I'm not saying easy. I see Ivo here, Ivo Lansbergen, who's President Animal Nutrition & Health, so I wouldn't say it easy. In the grand scheme of things, in terms of strategic fit, it was a fantastic fit. CSK, the same. In our DSM Food Specialties, currently Food and Beverage. It's in cheeses. We are in cheeses. It was enzymes and cultures. Spot on. Then Glycom. That's the one where you've all seen that birthrates went down during COVID.
Glycom is HMO, the next generation into infant nutrition. The moment that we acquired them and COVID came, I think we even acquired it during COVID, at that time, we quickly tried to find other application areas outside early life nutrition because it's a fantastic molecule. It's a fantastic innovation. We've been successful in the gut health space, also in the U.S. If you wanna help us, then buy Culturelle with HMOs. It's good for your health. It's a fantastic product. We could partly mitigate the lower birthrates, which was slowing down a little bit the introduction of the HMOs. What you see today is that birthrates are going up again, certainly in the U.S.
We track pregnancy tests sales because there's a direct relation between the number of pregnancy tests sold and number of babies born. That's definitely going up. We're very positive on the outlook on the HMO going forward. Although, over the last few years that has been slowing down. That is a step up to be made.
Hello there. Thank you for joining us. By the way, you're on a huge screen here, so you're certainly very present in the room, in case you felt you were not. In terms of use of proceeds, I mean, I understand the question coming up. You know, firstly, the proceeds have to come in, so that's one thing. But I think it's important to always remember that we are a long-term growth company, and that we will always look at how do we maintain this long-term growth, this long-term value creation. We have indeed, as you correctly said in your question, a pretty healthy track record of being able to deploy capital in a very value-creating way, and that is what we will continue to seek to do.
If the timing, for some reason, does not allow us to find those great opportunities, then we will consider align with this capital allocation policy that we haven't deviated from, for many, many years. Which is that if we, through organic investments, through, of course, the dividends, through bolt-ons or, you know, M&A opportunities that we have, if we come to the conclusion that we do not find the right opportunities to create that long-term growth momentum and that value creation, then at some point we would consider a share buyback or some return of capital. Now, you may recall that we actually have done that in the past, so it's not just a vague promise that we have never done.
At one point we were faced with, I would say, the luxury of having capital to deploy on all four priorities, and we had announced a EUR 1 billion share buyback. In the end, we actually paused after EUR 750 million because we found great acquisitions, to be able to then use the capital there. Our commitment remains the same, which is being very careful, very cautious, very considerate in the use of capital as we go forward.
Yes. Maybe I can respond to two answers very swiftly. Just maybe coming back to Glycom. Can you share some more insights on what you're thinking about this in the long term, in terms of sales growth, in terms of where you're going with EBITDA margin, just in terms of where this ROIC is going over time? Just looking back at. You paid a trailing multiple of over 20x. Just looking at this being value creative, what type of sales growth are you expecting here? Is that double-digit 10%, double-digit 20%, EBITDA margins of 30% or 40%? What are we talking about?
Yeah. Thanks for that question. I think you will appreciate that we don't give all type of detailed information in terms of sales, profitability per every individual segment, because I think that will not help our success for the future. Nevertheless, it's clear that this product is absolutely a growth promoter for the early life nutrition in the next phase, because DHA is a fantastic product. ARA is a fantastic product in the early life nutrition space, where we're definitely leader. What we see is innovation is absolutely key to the game. Premiumization is key to the game. I don't know if you're a young father. I'm father of four kids, so you don't take any risks in terms of quality, and you want the best for your kids, right?
That absolutely is the case for early life nutrition. What we also see is that in China, that premiumization is also key. Their HMOs, we are currently in the process of getting qualification. You need to go through the same process. I'm very happy to say that it is progressing as planned. We have definitely a fantastic growth outlook to be expected for HMOs going forward.
Thank you.
Okay. Anyone?
Let me check. Yes, we have Miss Laskewitz from VBDO.
Miss Laskewitz.
Good afternoon.
Good afternoon.
Good afternoon. I'm the director of VBDO, the Dutch Association of Investors for Sustainable Development. We have a question about some issues, human rights, diversity, and let me start with the first one. As a company specializing in solutions for health, nutrition, and bioscience, DSM has a considerable impact on nutrition and health choices made for humans and animals globally. Through pricing, nurturing, and marketing, DSM has the possibility to lead customers towards more sustainable choices. Could DSM provide insight into how it measures the impact made through the sales of sustainable solutions provided by the company, such as Maxavor? And would DSM be willing to commit to setting targets on the impact made through sales of its sustainable products? Now, let me continue with the second question related to human rights.
Could DSM share how the new human rights roadmap will be addressing various topics as child labor, human rights, well, health and safety, living wage, and what VBDO can expect in terms of next steps and targets for next year? Will you be sharing the results of your new human rights approach and the way in which the most salient issues are addressed in next year's annual report? Reporting will allow stakeholders to gain a better insight into the progress made by DSM on the topic. The last question, would DSM be willing to commit to setting targets for the three main aims of its diversity and inclusion strategy and report transparently on the progress in next year's annual report? Thank you.
Thank you, Miss Laskewitz. Geraldine, you want to start on some of these questions?
Yeah. I will do the first.
We need Lindsy.
I will do the first, or you could ask to do Geraldine first, and I can think about the answer on the first, but no. Miss Laskewitz, nice to see you. Next time, I would like to see you here face-to-face. I'm promoting already a Limburger supply, maybe for next year. Thanks for that question because it's actually the core of DSM, so I'd love to answer that one. As you've seen is that we have our Brighter Living Solutions. I think Geraldine eloquently explained a little bit that it's core of our target setting and how we do things. We're working on a methodology to create a bit more transparency.
That new methodology will be provided for as of January 1, 2022, where we still would look for superior environmental or social impact. At the moment in time, we don't do that per end use segments or products, but we do that for where we make a difference as DSM. That is something which we will continue, and we'll create a bit more transparency going forward as of next year.
Secondly, on the promotion of more sustainable products, I think it's in the heart and soul of what we do. In my presentation, I talked about health for planet, health for people. The businesses are geared around those elements. Our animal nutrition solutions really help to decrease emissions. Our other human-related business groups really improve on the health of people. We'll continue to do so, and that's also what we're advocating, not only what we're doing, but also what we're advocating. To your last point, are we willing to commit to set targets? I think we just recently did. We have our food system commitments, which we quantified. I mean, for instance, we aim to reach 150 million people with nutritious plant-based protein foods in having that dietary change.
Secondly, we also committed to enable our farmers to reduce double-digit on-farm livestock emissions with all our products. We're gonna measure that. We're gonna ask KPMG to measure and assure that. This is not a loose commitment. This is something where we strongly feel about, that we also will transparently report and be audited about.
Thank you.
Hello there. Let me address your other two questions, which are two very topics that I care a lot about. Let me put it that way. Human rights. You may have noticed in our integrated annual report that we actually have a new policy, and this policy is gonna be evolving. It's underpinned by four elements. We look at assessment, we look at integrating, monitoring, and then reporting on and communication. When it comes to assessment, of course, we're doing this very much in line with the UN general guidelines. This is also an area where we have been looking at, for instance, the sustainable procurement programs, where audits also give us some insights, and these are audits via TfS or via Sedex.
A lot of assessment will continue to enrich our picture of where the human rights challenges may be and how to tackle them. When it comes to integrating, once we have the awareness, it's really about our DSM Code of Business Conduct, which is very essential that our own people are made maybe even more aware of human rights challenges around us. That's internally, but also it's very much embedded in our supplier code of conduct. It's probably good to point out that about 95% of our suppliers are covered under this supplier code of conduct. Now, of course, we would love to get to 100, and we will continue to push on that. Of course, there's monitoring. That's the third element.
Now we are monitored by our own customers on human rights because, as you correctly raised the subject, it is something whereas luckily and a good thing that there's more and more scrutiny around that. We are subject to these same audits under Sedex, for example. We will audit increasingly our supply chain as well. Of course, the outcome of all of this, we will continue to report in our integrated annual report. It is a journey because it is a very broad topic, but one that we're very committed to continue to progress on. That is on human rights.
On inclusion and diversity, here we have a rich agenda when it comes to ensuring that DSM is not only a safe place physically to work, but also psychologically, and that everyone feels very included. Now we were pleased to see a 2% step up in the inclusion index in our ESG last year. We have five pillars of inclusion and diversity. When it comes to targets, the targets tend to be more on gender and on underrepresented nationalities at present, because this is where we have the integrity of the data really under control.
Now, we would love all the time to embed all of the five pillars with clear targets, and we need to see if over time we are in a position to do that with the same degree of credibility and auditability of the data as we go forward. Two very essential topics that underpin actually something that we call our DSM Culture Compass. We like to talk about the three Cs, being courageous, caring, and collaborative. To do that, you certainly need to take this topic into account.
Thank you for your clear answers.
I see no further questions here for the room. We proceed with the agenda. Please do not forget to vote on the agenda items 3-6. Of course, you may already also vote on the other items on the agenda. The next agenda items are the proposed reappointments, after which there will be again an opportunity to ask questions. We will start with the reappointment of Geraldine Matchett as a member of the managing board. In accordance with Article 17, Section 2 of the Articles of Association, the supervisory board nominates Ms. Geraldine Matchett for reappointment as member of the managing board. DSM has greatly benefited from Ms.
Matchett's qualities as an all-around and international CFO, as well as her overall leadership skills and her extensive experience with external stakeholders during her second tenure as a Managing Board member, of which the last two years as a Co-CEO.
In accordance with Article 17, Section 1 of the Articles of Association, it is proposed that the general meeting reappoints Mrs. Geraldine Matchett as a member of the Managing Board of Koninklijke DSM N.V., in accordance with the nomination by the Supervisory Board, with effect from May 10, 2022, for a period of 4 years, ending by the close of the AGM to be held in 2026, in accordance with the Dutch Corporate Governance Code. The next agenda item is the proposed reappointment of Eileen Kennedy as a member of the Supervisory Board. According to the rotation schedule in 2022, Mrs. Eileen Kennedy is due to resign, but available for reappointment. In accordance with Article 24, Section 2 of the Articles of Association, the Supervisory Board nominates Mrs.
Kennedy for reappointment as a member of the Supervisory Board of DSM on the basis of her broad and in-depth nutrition knowledge and her qualities as Supervisory Board member, as demonstrated during her past period as member of the DSM Supervisory Board. With the nomination of Mrs. Kennedy, the Supervisory Board maintains a strong profile in the areas of DSM's health, nutrition and bioscience businesses, R&D, and sustainability. I refer to the explanatory notes into the agenda for further mandatory details regarding Mrs. Kennedy. It is proposed, therefore, that the annual general meeting reappoints Mrs. Kennedy as a member of the Supervisory Board of DSM in accordance with the nomination by the Supervisory Board, with effect from today, for a period of two years, ending by the close of the AGM to be held in 2024, in accordance with the Dutch Corporate Governance Code.
This brings us to the agenda item nine, the reappointment of the external auditor. KPMG Accountants N.V. has been appointed as the independent auditor for Koninklijke DSM N.V. as of 2015. Following the recommendation of the Audit Committee and the Managing Board, the Supervisory Board proposes to reappoint KPMG Accountants N.V. as the independent external auditor for the year 2023. The proposal to reappoint KPMG is based on the Audit Committee's own assessment of KPMG, among others, through discussions with KPMG in the absence of management, as well as the outcome of an evaluation among DSM executives. The Audit Committee conducts a more in-depth evaluation once every three years. In the two other years, a lighter evaluation is performed. For 2021, the lighter evaluation was performed.
The auditor evaluations in prior years were positive, and the outcome of 2021 evaluation was positive as well. Now that we covered all the reappointment items, let me see if anyone has questions about these agenda items. I already saw Mr. Van Es. Afterwards, Mr. Stevense.
Chair, I do have a question for the auditor. I did read the report of the auditor, and I heard the presentation. Nowadays, we have cybercrime, et cetera. We are buying businesses, selling businesses. That's great. We all have passwords. I didn't hear anything. I didn't read anything about how, what is the reply of the auditor? What did the auditor tell you, the Supervisory Board, and the Managing Board about cybersecurity? How do they deal with that? They said in their story, "Well, we have somebody from the business who knows more about it." Well, that's great, isn't it? What did that person do? I can't discover it. I would like to know how is the manual report or the passwords, how is it constructed? How do we check that every three months?
Are materials made standalone so that people cannot go into the system? How will it happen? What will happen to the platforms of the new businesses? How can they be added to the platform of DSM? Or would we have, similar to banks and the tax authorities, a thousand and one platforms and software, and that one software program at the tax service, only one person knows about how that program is operated. How will you structure that program, that platform? What's the advice? Well, it's a question that the auditor may indeed reply to, or the Managing Board, perhaps. Petra, would you like to give a first reply, please?
Thank you for your questions, thank you. With regard to the audit, as part of our audit of the financial statements, we look whether there are risks of material errors in the financial statements. That's how we audit the financial statements, right? We look at risks there, risks of fraud, risks because there might be cyber incidents that materially impact the financial statements. We consider all these risks, and that's how we do our audit. We also look, as part of that, at general IT controls. Looking at passwords, for example, that's part of what we audit.
When we rely on certain automated controls. That's really the extent I can answer you on what we do. We assess whether there's a risk of material misstatement and look at that, and include cyber risks, potential cyber risks on that.
Yeah.
Yes. Okay, I do understand that. It's a similar general reply. I heard that from various colleagues of you in other meetings. That's not what I'm asking. It's how do you deal with IT? There are different countries. How do you deal with IT? How do you manage that? How do you say the platforms you buy businesses, how are you engaged? How do you say the manuals about the passwords, how do you really guarantee that? Because you have an IT specialist, you just said in your story. But what did this person, man or woman, find? It's not clear to me at all.
Also, John Ramsay, as Chair of the Audit Committee, may comment on that because it's certainly a topic that comes back at the Audit Committee quite regularly.
Absolutely. Maybe I can't provide answers to all of the questions, 'cause I heard, I think, a lot of questions in your question. Let me give you at least some insights as to how we look at this, because there's absolutely a threat for any company out there. If any company says they haven't got a cybersecurity threat, they just haven't realized yet that they have a cybersecurity threat. Now, what we have been doing over time is looking at it in multiple areas. Firstly, of course, what tends to be the center is your IT colleagues, your IT platforms, and we put a lot of effort on our controls, our firewalls, spreading, all these kinds of things.
We got to the point of realizing, well, we have to be careful because it's not only the IT systems, it's the OT, the operational systems. Actually the plants, the equipment in a production plant is increasingly automated. You can even access it remotely. You can put a USB key in. All of these are very potential threats. We've done a whole set of investment on upping our security around OT systems. The third pillar, which is critical when you're thinking cybersecurity, is what is the most valuable information that a company holds? In our case, very much it's our IP, it's our research, it's our knowledge base. Here we did a third pillar of work on cybersecurity around all of our R&D facilities. Where do we have this very precious IP?
How do we protect it? Those are the areas. Over that we have what we call the control tower, an overarching umbrella that manages not only issues in terms of if there's a crisis, but also makes sure that we deploy our capital in the right way. That's where we are investing in cybersecurity. Now, when it comes to controls, we have a lot of discussions with KPMG. You need several lines of defense. The first line of defense is the front line, and that is every single human being in the company. Now, the biggest failure in cyber world is clicking on a link in an email. It opens phishing. It opens ransomware. It can do all these kinds of things.
What we've been investing in is upping the awareness of each and every colleague on being the first firewall for DSM is us as people. We have phishing tests that become increasingly difficult, and if you fail, it actually closes the loop. You get a phone call, say, "Did you not realize what you were doing?" First line of defense, our own people and the management. Second line of defense is actually sitting on the second row right here, which is our risk management department, which works very closely with KPMG. If you'd like to speak with Micah, in fact I have the second and the third line of defense sitting side by side, which must be a good sign. That is really about internal controls.
Internal controls have to be also monitored by a team, and that is our risk management team that do a lot of work on cyber threats as well. The third line of defense, and that is Mr. Josaphat who is sitting here, and this is our internal audit and our alerts and our whistleblowing structures. If people feel, see something on cyber threats, they can elevate it well above the heads of Dimitri and myself directly to the chairman if necessary. I hope it gives you some insight of what is a very vast topic.
John, you want to add to that?
Not really. I think Geraldine explained it far better than I ever could. Just to add, from an audit committee perspective, we take it very seriously. It's right at the top of our agenda in terms of risks. The only thing I'd add to what Geraldine says, we also benchmark what management is doing with other companies. I can tell you that DSM comes out very highly in terms of comparison in our cybersecurity.
Thank you. Mr. Stevense.
Well, we have a question to Mrs. Matchett and Mrs. Kennedy in their own positions, and that is why do you want to commit once again for four years or two years respectively to DSM? Is your-
After that.
I would like to thank you for asking me the question. I have to say, if my recollection is right, you asked me the same question eight years ago, and the same question four years ago. That's what I had anticipated a little bit, but maybe you would do me the honor of asking it again. In simple words, it's an absolute privilege to work for DSM. I don't know many companies who genuinely are purpose-led and performance-driven. We believe in a world where it's not a trade-off, a world where we can do the right things, have very positive outcomes, and do very well. When one is offered the chance to do this and to continue to do this with fantastic colleagues, wonderful products, innovation, there's not a moment of hesitation.
Thank you.
Very nice. Eileen?
I'll probably echo some of what Geraldine has already said. Many of you may not know, but before I joined the board, the supervisory board, I was a huge fan of DSM. Impeccable record in its portfolio, and of course, I'm pleased that over the years the nutrition component has become only stronger. Why another two years? I think there's several things that are happening. One is, as an independent person, not as a member of the supervisory board, I was actively involved in the recently 2021 Food Systems Summit. DSM, and you can look at this, I mean, it can be shown from facts.
DSM was one of the companies at the forefront to make specific and measurable commitments, and the next 2 years, I think, my input could be helpful, but I. It was a pleasure to be asked to extend. Secondly, a lot of my work involves interactions with UN institutions. I was at a virtual meeting not so long ago, talking about, I don't want to get down in the weeds, but Sustainable Development Goal 17, which is collaborations, partnerships. A comment was made that we've had a really hard time globally in effective public-private sector partnerships.
Geraldine already talked a little bit about this, but not by me, not prompted by me, was a comment from somebody else in the call, on the virtual call that one of the few examples of public-private partnerships has been the partnership DSM has had with World Food Programme. It's impressive. Didn't come from me as a DSM board member, although I sort of puffed up and was very proud. For me, another two years is a pleasure, but I also think it's a period where I hope my expertise will be helpful.
Thank you very much, Eileen.
I do have another question, Mrs. Matchett. We are always anxious to learn how the market situation of board members is. My question is, did other companies ask you to join them?
It's a very hot labor market out there. I know a lot of people. Sometimes some people may suggest, you know, "Would you be interested?" When they see the passion with which the two of us, but all of our colleagues, et cetera, represent DSM out there, I think they kind of realize that it's a bit of a pointless question, but it can happen from time to time.
Thank you.
Thank you, Mr. Stevense.
Thank you, Mr. Stevense.
Gives us all the input if you still needed it to make a decision on those voting items, and we can go on to the last agenda items on the agenda, which are of a more technical nature. The authorization of the managing board to issue up to 10% of the ordinary shares and to exclude preemptive rights. Authorization of the managing board to issue additional 10% ordinary shares in connection with the rights issue. The authorization of the managing board to have company repurchase shares. Reduction of the issued capital by canceling shares. In the explanatory notes to the agenda, you can find further information on these agenda items. We start again with questions from the shareholders present here in Heerlen on this last block. Are there any questions on these more technical matters?
I don't see any here in the room. Are there any questions online, Lindsy?
Let me check. No.
Okay. With this, we have discussed all agenda items. May I please ask those shareholders that vote electronically during the meeting to make sure you have entered all your votes. You have had some time now, and we will be closing the voting within a moment.
Okay, let's wait a few seconds to give all shareholders the opportunity to vote.
While these final votes are entered.
Thomas, sorry to interrupt you. I think we have one question.
Okay. We take a look at that quickly.
One device that needs support.
Okay. Thank you for your patience. While these final votes are entered now or have been entered, I would like to inform you that the voting results will be processed during the next agenda item, any other business. Please make sure you have now entered all votes as we will now close the voting system. In the meantime, let's see if there's anything to address under any other business. Are there any questions from the shareholders, present here in Heerlen? No, I don't see any questions here in Heerlen. Lindsy?
Also no questions from the virtual platform.
Okay, we can go to the voting results. I want to inform you once again that each share gives right to one vote. Our company secretary will now share the voting results. The results include votes in favor and votes against, and votes abstained. According to the statutory regulations, votes abstained are considered non-casted votes. Lindsy, can you now please share the results?
I will. For agenda item three, 95.35% for, and 4.65% against. Agenda item four, 99.29% for, 0.71% against. Agenda item 5-B, 100% for.
Nobody minds the dividends.
I'm just waiting for the next result. There they are. Agenda item six-A, 97.71% for, and 2.29% against. Agenda item 6-B, 97.68% for, and 2.32% against. Agenda item 7, 99.99% for. 0.01% against.
The last one must be the headhunter.
Agenda item 8, 98.5% for, 1.5% against. Agenda item 9, 99.59% for, 0.41% against. Agenda item 10-A, 96.62% for, 3.38% against. Agenda item 10-B, 98.89% for, 1.11% against. The last, agenda item 11, 99.07% for, 0.93% against. Agenda item 12, 99.44% for, 0.56% against.
Thanks, Lindsy. Based on these results, I conclude that the general meeting has given a positive advice on the remuneration report. That the financial statements for 2021 have been adopted. That the dividend on ordinary shares for 2021 has been adopted. The general meeting has released the current and former members of the managing board from liability. That the general meeting released the current and former members of the supervisory board from liability. That Geraldine Matchett has been reappointed as a member of the managing board, and that Eileen Kennedy has been reappointed as member of the supervisory board. That also the external auditor, KPMG, has been reappointed. That also the managing board has been authorized to issue up to 10% ordinary shares and to exclude preemptive right.
That the managing board has been authorized to issue an additional 10% ordinary shares in connection with the rights issue. That the managing board has been authorized to have the company repurchase shares. That the reduction of the issued capital by canceling shares has been adopted. Thank you for that. Thank you to our shareholders and for their votes. Congratulations, Geraldine and Eileen, on your reappointment. Ladies and gentlemen, this brings us to the end of this meeting. Would like to mention that the draft minutes of this meeting will be available on our website at the latest 3 months after today. After that date, you have another three months to submit your comments prior to the adoption of the minutes. I'm looking forward to welcome you again next year on the 9th of May, 2023. Thank you very much.
Stay safe and healthy. Thank you for your attention, and goodbye. We will still have a drink together. Thank you.