International Flavors & Fragrances Inc. (IFF) Earnings Call Transcript & Summary

At this time, I would like to welcome everyone to the IFF 2020 Sustainability Call. [Operator Instructions] I would now like to introduce Michael DeVeau, Head of Investor Relations and Communications. You may begin.

Good morning, good afternoon and good evening, everyone. Thank you for joining us today for our second annual webcast focused on IFF's sustainability and ESG efforts, a set of topics of increasing importance for all our stakeholders. One week ago, on May 13, we published our 2020 Sustainability Report, which provides the foundation for today's important discussion. The report can be found on our website at iff.com/responsibilities. This year's report covers our performance and progress for 2020 prior to IFF's merger with DuPont Nutrition & Biosciences, which was finalized on February 1, 2021. As such, this is the last sustainability report for legacy IFF, and we'll be reporting on a combined company basis in the 2020 period. Before we begin, I ask that you take a moment to review our forward-looking statements. During the call, we will be making forward-looking statements about our long-term environmental, social and governance or ESG targets and goals. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially from our forward-looking statements please refer to our cautionary statement and risk factors contained in our 10-K filed on February 22, 2021. Today, I'm joined by an excellent group of speakers that will highlight how IFF approaches our sustainability and ESG priorities. This includes IFF Chairman and CEO, Andreas Fibig; our Chief Research and Development, Global Integrated Solutions and Sustainability Officer, Dr. Greg Yep; Dr. Susana Suarez-Gonzalez, our Chief Human Resources and Diversity, Equity and Inclusion Officer; and our VP of Global Sustainability and EHF, Kip Cleverley, who each can speak to the significant progress made and the road map to achieving our sustainable purpose and vision. We will start with prepared remarks and then take any questions that you may have. [Operator Instructions] Now I'd like to introduce our Chairman and CEO, Andreas Fibig.

Thank you, Mike. During the presentation, we will highlight our sustainability-driven purpose and strategy and share a recap of our journey over the last 10 years since our sustainability program began. We will also provide an overview of our performance metrics in several key areas, including highlights from our 2020 reporting year, our last one as legacy IFF. Finally, we will look ahead to the exciting new chapter we are currently embarking on following our merger with DuPont Nutrition & Biosciences, including next steps for our new sustainability strategy that will carry us towards our ambitious goals and objectives. As ESG considerations continue to become increasingly critical to our business and the world around us, we are hosting this webcast again this year to share our perspectives and updates on key metrics for the ESG topics that are most material to our business and stakeholders. Thank you for joining us today, and we will be happy to answer your questions following remarks from our team. As someone who is deeply committed to sustainability on a personal level, I'm so proud of the progress that IFF has made to serve and protect our planet and people around the globe. As Mike noted earlier, you can find an overview of our 2020 accomplishments in our latest sustainability report, which was published last week and is available on our website. If you haven't had the chance to review it, I hope you will take the opportunity to do so. I must acknowledge our team that has worked so hard over the past year to create such an impressive report for our organization. Last year, when we envisioned the new IFF and what it would stand for once our historic combination with DuPont N&B was complete, we knew our purpose would have to be as bold as the merger itself. Our commitment to our employees, customers and stockholders was bigger, better than anything we ever attempted before. We are applying science and creativity for a better world. There is no aspiration higher or clearer when describing the purpose of a company, especially one as committed to sustainability as IFF and especially in these times such as these. As a guiding principle, our purpose inspires all of us at IFF to work towards a more sustainable future. And while IFF has accomplished so much throughout our more than 130 years history and in the 10 years since the start of our sustainability program in 2010, I believe that our success as a company and as individuals requires us to constantly challenge the status quo and be a driver of change. But our sustainability milestones are only made possible by the passion of our people. Our global teams work tirelessly to identify areas of improvement, strategize, plan and execute to the best of their ability. Our most recent sustainability report revealed some impressive progress. And these results are a direct reflection of the exceptional day-to-day commitment from IFFers. To provide additional context for our discussion today, it's worth reviewing how we define sustainability and ESG at IFF. As you know, sustainability is a very broad term. As such, we have conducted a materiality analysis to focus on topics of most relevance to us. This represents the risks, opportunities, priorities and concerns that are most important to our business and our stakeholders. In relation to the areas of environment, social and governance, or ESG, what you see here are the topics that we work to drive progress on and report on within these 3 categories. Environmental topics include those related to the conservation of our planet and its natural resources, such as climate change, water management and biodiversity. It also encompasses how we embedded sustainability into our research and development processes through the adoption of circular design principles. Within our social topics, we consider the health and wellness of consumers, ensure responsible sourcing and support strong employee and community engagement opportunities, including our commitments to diversity, equity and inclusion. Governance topics outline the standards we uphold for running a responsible company characterized by strong ethics and transparency, risk management practices and product responsibility. For instance, we have an Innovation and Sustainability Board Committee as well as our Sustainable Business Council that guide our efforts in embedded sustainability throughout the organization. We have refreshed our materiality assessment in 2019 to validate this latest list of ESG topics, and we plan to complete our next full year analysis later this year to reflect topics that are material to the new combined company. To manage our most mature ESG topics, our sustainability framework comprises 4 key pillars: reducing environmental footprint; strengthening responsible sourcing; driving sustainable innovation; and embracing people and communities. For these strategic pillars, we aim to achieve several concrete objectives. We aim to reduce our environmental footprint to help mitigate climate change, convert water and eliminate waste in our operations. This is good for the planet and our bottom line. We are increasing the responsible sourcing of our materials and ensuring an ethical, traceable and resilient supply chain, especially for our natural raw materials. We continue to invest regenerative approaches, sustainability and circular design into our sustainable innovation pipeline. And, we are focused on building a diverse, equitable and inclusive culture as we are ensuring a safe workplace while giving back to people and communities where we source and operate. These are the 4 areas in which we believe we can use our influence to help contribute the most to address global sustainability challenges. Our approach is based on the concept of a circular economy that is restorative and regenerative by design with a strategy that addresses the ESG topics most material to both our company and our stakeholders. In doing so, IFF can further support a triple bottom line approach to create value in line with our sustainability-led purpose. The key focus area for this strategy is to keep our customers at the center of all we do. IFF partners with some of the most sustainable and responsible companies in the world, which I expect that we can support their ambitions. And what should come as a surprise to no one, consumers are driving these goals in very real ways. They are demanding greater transparency throughout the supply chain and holding all of us accountable for our actions or inactions. They will vote with their wallets and with their voices, particularly on social media, which makes our support and alignment imperative to our business success. But there's another driver at play here, talent attraction and retention. The talent we seek are the same people who are attracted to responsible companies and who see our purpose as their purpose. All people understand that every day, they can have a positive impact on their communities and environment through the work that we do. So as we see it, IFF has a duty to answer to not only our customers and consumers, but also for our own people whose passion helps drive our achievements at a foundational level. With that, I would like to turn it over to Greg Yep, our Chief Research and Development, Global Integrated Solutions and Sustainability Officer.

Thanks, Andreas. As Andreas mentioned, sustainability is really core to IFF and deeply embedded into our corporate DNA and has been since we began our sustainability program in 2010. Over the last 10 years, we are thrilled with what we have been able to achieve. The level and maturity of our data disclosures and our annual sustainability reports has continued to advance over time, and we have consistently been recognized as global leaders in sustainability, receiving a range of accolades each year. We have worked hard to develop effective management approaches and accompanying metrics for most of important ESG topics, which have resulted in significant broad-based improvements. Now following IFF's merger with DuPont Nutrition & Biosciences, the decade ahead not only marks the next phase of IFF's sustainability journey but also represents a pivotal window of opportunity. By focusing on sustainability, innovation, circular design and integrated solutions, we look forward to leveraging our newly expanded suite of capabilities to provide end-to-end customer solutions while helping to address some of the world's greatest sustainability-developed challenges and living up to our company's purpose. We are pleased to have our work validated by a number of independent third-party providers of ESG research ratings and recognitions for our investors. Among rating and ranking providers such as Sustainalytics, MSCI and Bloomberg ESG, IFF is recognized as a leader. For example, Sustainalytics' ESG risk ratings measure a company's exposure to industry-specific material ESG risks and provide a quantitative measure of how well a company is managing those risks. As of April 2021, IFF received an ESG rating of 24.4 from Sustainalytics, placing us 33rd out of 437 in the chemical industry assessed by Sustainalytics and an 8th percentile. Similarly, in 2021, IFF received a rating of AA on a scale of AAA-CCC in the MSCI ESG Ratings assessment. We have held this position consistently for the last several years which is higher than the industry average in environmental topics such as water, waste and carbon emissions. Our performance on key ESG metrics not only translates to higher rankings, but also higher profile influential recognitions such as being named for the first time in 2020 to the Dow Jones Sustainability Indices for both the world and North America, placing IFF among the top 10% of sustainability performers in the world. On EcoVadis, which assesses companies on environmental, human rights, ethics and sustainable procurement, we received a new highly selective Platinum sustainability Rating in 2020, placing us among the top 1% of companies assessed. For CDP, we again earned a place for A list for climate change for the 6th consecutive year and an A list for water security for the 3rd consecutive year. We have also again been named to the FTSE4Good Index, Eiris and Euronext Vigeo World 120 Index for ESG performance and to the Barron's 100 Most Sustainable Companies in America list for the 4th consecutive year, a ranking based on ESG categories that cover more than 200 indicators. We have worked hard to achieve these recognitions and validations over the last several years. We don't plan to pause on these programs. But as we look ahead, I would like to remiss not to mention that we could see potential changes to IFF's ESG performance metrics following the N&B merger as we progress with their integration in the shorter term. Finally, as an additional demonstration of our commitment to key ESG issues, IFF is aligned with a number of initiatives, memberships and associations, including among the others, United Nations Global Compact and the World Business Council for Sustainable Development. Our strategy is also guided by the 17 UN Sustainable Development Goals. We have made significant progress in the work to support these SDGs, including gender equality, responsible consumption and production, climate action and life on land, which is outlined in a more detailed report. I will now turn it over to Kip to share more about our performance highlights during the year.

Thank you, Greg. The first of our 4 pillars is environmental footprint, and I am pleased to say we have not only been executing on our 2020 objectives, but we also remain on track to achieve our 2025 ambitions. To provide some additional context for these goals, we have noted here on the left, some of our external commitments towards environmental progress and climate action. We have aligned with a number of well-respected organization and signed on to several key initiatives to support wider industry action on environmental issues. For example, in 2019, we joined other companies in signing the United Nation's Business Ambition for 1.5 Degrees: Our Only Future pledge, a campaign to limit global temperature rise through science-based targets. We are also a member of RE100, a leadership initiative for businesses committed to 100% renewable electricity. On the right, as you can see by the green checkmarks, we met and surpassed 3 out of our 4 2020 intensity-based goals against a 2010 baseline. The fourth of those 2020 goals, to reduce our energy intensity by 20%, is noted here with the orange box with 3 dots. We did not achieve this goal by 2020 but we continue to drive energy efficiency forward. Over the past 5 years, we learned that energy intensity is mostly driven by product mix. So as we look forward, our metrics are moving to increase renewable energy and reduce absolute emissions as a more effective and comprehensive way to mitigate climate change. This is a good transition to our next set of EcoEffective+ 2025 goals. We are on track to meet these goals against the 2015 baseline as depicted here with the green circles. This includes our approved science-based target to reduce our absolute greenhouse gas emissions by 30%. We are already more than halfway there with a 19.7% emissions reduction since 2015 and a 4.7% reduction from prior year. Increasing renewable electricity and minimizing our reliance on fossil fuels is another key area of our environmental pillar. I am pleased to report that 52% of our operations are now run on clean, renewable electricity. Importantly, all of these efforts are in line with our triple bottom line approach that is not only good for the environment, but also for reducing costs. As a critical partner in the global consumer goods supply chain, we are constantly sourcing raw materials required to deliver our broad offering across business segments. Our responsible sourcing pillar is all about accelerating ethical standards to ensure a resilient and diverse supply chain. Although we use less than 0.1% of the palm oil produced worldwide, we are members of the Roundtable on Sustainable Palm Oil, or RSPO. I am proud to report that we met our goal to have 100% of the palm oil used in our products certified according to the RSPO Mass Balance model by the end of 2020, a great achievement. Looking ahead with our expanded supply chain in mind, we will be refreshing our palm oil commitment. We also have rigorous quality, sustainability, and diversity, equity and inclusion expectations for our suppliers, as outlined in our vendor code of conduct. We have multiple systems and partners in place to help us assess, prioritize and drive ESG considerations throughout our supply chain, including carefully screening our suppliers using environmental and social criteria. For example, approximately 90% of IFF's business-critical suppliers were assessed through EcoVadis or Sedex, 2 well-respected supply chain platforms that help us drive improvement in labor standards, health and safety, environmental management and ethical business conduct. We also use EcoVadis' platform to assess ourselves as a supplier to our customers and as Greg mentioned earlier, we were pleased to receive Platinum status in 2020. Certifications are also an important consideration for how we source materials, and we strive to align ourselves with the most credible, internationally recognized, third-party certification standards such as For Life, FairWild and EVE VEGAN. In our Naturals division, LMR, we currently have 33 botanical families and 49 natural ingredients that are certified through the For Life program, such as rose from Turkey and geranium oil from Egypt. We also have an industry-leading number of 149 natural extracts in our portfolio that are certified by EVE VEGAN. Having these partners and third-party verification ensures that we have visibility all the way to the farm level for these critical natural materials. Finally, an important part of building a resilient supply chain is making sure we are supporting our small holder farmers and grower communities. We work with industry partners and local, on-the-ground experts to help us set up and execute these programs, and we have several great examples of this work in our report. We would particularly highlight here our Vetiver Forward program in Haiti, which launched in 2020 as a second phase to the successful pilot program, Vetiver Together that began in 2016. Working together with our partner, Heifer International, the new 3-year initiative will support more than 3,000 independent smallholder vetiver farmers across 6 cooperatives that are part of IFF's supply chain. Similarly, with a key customer and other innovation partners, we launched a program in 2020 to leverage blockchain technology as a tool to ensure ingredient traceability for our vanilla supply chain in Madagascar, our second natural ingredient blockchain to date. This tool allows us to accurately track the flow of raw materials from the crop all the way to the customer while increasing trust and transparency at every stage of the process. Sustainable innovation is all about driving differentiation through regenerative approaches and circular design. We are always seeking to set a higher bar for environmental and social sustainability, and this also extends to our approach to innovation and product development. We embrace circular economy principles to design waste out of the processes and create closed-loop systems in which materials are constantly reused. It's about shifting towards a restorative and regenerative world and moving away from a traditional and unsustainable take-make-dispose approach. Pictured here are 2 examples of how we applied this concept in both our Scent and Nourish divisions. For Scent, as depicted on the upper left, we apply circular design by first designing with the planet in mind at the early stages of our product development processes. We then seek to source raw materials that are renewable or repurposed in responsible ways. Next, we manufacture those products with renewable energy, zero waste and efficient use of water. We then create our products with consumer benefits in mind, such as health and wellness. Finally, after the product delivers positive outcomes, our ingredients are designed to biodegrade back into the ecosystem as much as possible, completing the circular economy cycle. IFF is proud to work with our customers to help them meet their goals in circular design and transparency. As the first in our industry to embark on the circular design certification journey, and now with significant experience in leading product standards, we have a sizable and growing subset of our ingredient catalog that is pre-assessed to meet circular design objectives such as the Cradle to Cradle certification for Material Health. In 2020, for example, we continue to collaborate with Henry Rose founded by actress Michelle Pfeiffer as the first fine fragrance to disclose 100% of its ingredients. The collection now comprising 8 distinct genderless scents is both EWG VERIFIED and Cradle to Cradle Certified, which has set a new precedent for circularity and transparency. We also embrace circular design principles in our Nourish business. For example, as depicted in the graphic on the right, we are thinking about how we can address the challenge of food waste through upcycling, a circular design principle of reusing products from typically discarded side streams. We are leveraging our green chemistry principles to pioneer the development of new upcycled ingredients as part of our environmentally conscious and vertically integrated supply chains around the world. For example, we have developed the upcycled extracts collection, an Ingredients portfolio that utilizes several types of waste, such as harvest byproducts from seeds; scent extraction materials, such as pulp; or side streams from processing facilities such as waste water. Similarly, we have also been working to reduce food waste by converting excess fruits and vegetables, such as those directly from a farm or leftover at a food processing facility into nutritious, value-added food ingredients for consumers. Our sustainability report includes several other innovative examples of upcycling. These innovative processes embody the kind of thinking we will need as we move towards a world with more people and less resources. And now to share more about our people and communities pillar, I'd like to turn it over to Susana.

Thank you, Kip. Our pillar on people communities includes both our commitments to diversity, equity and inclusion as well as occupational health and safety. First, a word on health and safety during this unprecedented year. Nothing is more important than the health and safety of our employees. We remain fully committed to ensuring that all our working environment at sites around the world are safe for our employees and contractors. In 2020, amidst the COVID-19 pandemic, we focused on protecting our employees, supporting our customers and doing our part to support our communities as an essential business creating solutions for some of the world's most important consumer products manufacturers, including vital disinfection and sanitation supplies. We were able to implement a range of preventative and protective measures to ensure employee safety while maintaining virtually uninterrupted business operations. Our COVID-19 crisis task force was responsible for establishing management guidelines for all sites, including a crisis response toolkit designed to provide site leaders with important guidance on preventing or minimizing workplace exposures to COVID-19. On safety management, we continued to focus on our commitment to continuous improvement, including strengthening our safety programs at all locations and continuing to work toward zero injuries and incidents in the workplace. We do this by focusing on 3 main areas: First, governance, including comprehensive policies and procedures, underscored by our safety management system; second, mandatory training, which focuses on safety priorities reflective of shared best practices, regulatory expectations in our existing set of IFF policies; and last but certainly not least, culture, supporting awareness and communication of proactive behavior-based safety practices, which helps to prevent accidents. As we look ahead, we are excited to continue driving our safety efforts forward and enhancing our world-class safety systems across the combined company. At IFF, we believe that every colleague must have the confidence that their full authentic selves belong at IFF. This belief is grounded in our diversity, equity and inclusion vision: Your uniqueness unleashes our potential. With this mantra always in our mind, in 2020 we continue to make excellent progress on our DE&I strategy. We further solidified our strong commitment to gender parity as an organization this year. We were pleased to earn a Global EDGE Move certification, which confirmed equal pay for equivalent work in 21 countries effect. EDGE holds a leading methodology and certification process to guide organizations on gender representation, pay equity, effective policies and practices and the inclusiveness of an organization's culture. EDGE sets the minimum threshold of targeting at least 30% of either gender at all levels of the organization. And as of the end of 2020, IFF met that threshold with women making up 38% of IFF's global workforce, 33% of our Executive Committee and 31% of upper management. Elsewhere on the DE&I front, we continue to support the UN Global LGBTI standards of conduct for business, and we are again recognized by the Human Rights Campaign as a Best Place to Work for LGBTQ equality, following our perfect score on the 2020 Corporate Equality Index for the second year in a row. We were also named for the first time amongst the 2020 Best Places to Work for Disability Inclusion by Disability:IN after scoring 100% on the Disability Equality Index. Looking ahead, we will be taking several important steps to better understand those colleagues at IFF who are living with disabilities, as well as launching an internal disability inclusion task force that further support inclusiveness of people with disabilities. As proud as we are to make great progress this year, we know we have more work to be done. In 2020 and continuing now in 2021, we have all seen an incredible social justice movement ignite in the United States, but also around the world. For our part, IFF remains steadfast in our commitment to inclusion within our ranks as well as opportunity and diversity within our practices. In the United States, IFF's diversity by employee category has a mixed story of both success and opportunity for improvement. As of 2020, 36.3% of our employees and 18% of our Board of Directors represented minority groups as defined by the U.S. Equal Employment Opportunity Commission. We also have significant room to improve the ratio diversity across all levels of management and operations. In 2020, we continue to roll out our inclusion competency model globally and launched global unconscious bias training as part of the series of steps we are taking to set us on a path towards more inclusive representation in the future. Earlier this year, we also hired a university relations lead whose charge is to identify new pools of diverse talent. And now I will turn it back to Andreas to share a recap and more about what is ahead for IFF.

Thank you, Susana. To summarize our progress on sustainability strategy, I wanted to show you how each of these pillars is helping us to do more good while creating both short and long-term shareholder value. In short, we believe our sustainability-led innovation and integrated solutions will accelerate value creation for customers and ultimately lead to strong growth prospects. First, we are driving top line growth from within our sustainability innovation pillar. A big part of our customers are engaged and require that we uphold the sustainability initiatives and performance necessary to sustain inclusion on core lists and suppliers' forecast as trusted and ethical company with responsible products. Next, we are cutting costs within our environmental pillars through triple bottom line, eco efficiency and energy projects. We are not only managing our footprint by reducing our reliance on critical natural resources and making our operations more cost efficient. As we noted earlier, for example, we have reduced absolute greenhouse gases by 4.7% from last year, and we are powering more than 50% of our operations with clean, affordable, renewable electricity while returning a good ROI on these investments. Third, we are reducing supply and ingredients risks through our responsible sourcing pillar, which is all about creating a more resilient supply chain and winning business with ethically-produced hero ingredients like patchouli and Fair for Life vanilla. We are achieving this by strengthening our supplier relationships and ingredient supply chains through our systems, partners, certifications and industry-first blockchain technology. And finally, our people and communities pillar is about being a responsible company that ultimately enhances our brand for current and potential employees as well as with investors and other stakeholders like you. Advancing diversity, equity and inclusion as well as a culture of safety at IFF is critical. While we are so proud of our achievements thus far, it is in our company's DNA to have a constant eye towards improvement in every facet of our business, and this is no exception. As you can see, we are very proud of our results, not only this year but over the past few years. As Chairman and CEO of IFF and as an executive committee member of the World Business Council on Sustainable Development, I know sustainability continues to be a top priority for the business community. And at IFF, we intend to continue our history of sustainability leadership. Put it simply, sustainability is a key enabler of our corporate strategy. We also know how important sustainability is to address the unprecedented challenges in the world today, from the climate emergency and a major loss of mounting inequality, all accelerated by the COVID-19 crisis. In fact, the pandemic has shown us how environmental and social systems are critically interconnected. In line with IFF's purpose of applying science and creativity for a better world, we intend to do our part by focusing our efforts on several key areas. First, understanding how sustainability can and will play a role in the post COVID-19 recovery period. We will be identifying and implementing innovative industry-leading opportunities to update our processes with a focus on efficiency and sustainability. The COVID-19 crisis has also shown us that the future of work may look different with more flexible schedules and work-from-home opportunities that improve work-life balance and reduce emissions. We recently held a global town hall with our entire workforce on the future of work following the evaluation of our current HR protocols and infrastructure. We believe that rethinking how we manage our workforce, giving employees more options to be successful as we reduce our carbon footprint, we will retain key talent and attract more of the best. Next, now that we have completed the merger with the DuPont N&B business, we are currently evaluating and baselining our combined environmental footprint and workforce metrics to identify a new strategy to strengthen IFF's leadership position and accelerate the transition to a sustainable and equitable world. We are in the process of developing an interim ESG strategy in 2021 as we progress with N&B integration and will launch our new ambitious 2030 strategy in Q2 2022. It will include ambitious, short-, mid- and long-term ESG goals, including our plan to reach net zero greenhouse gas emissions and to improve diversity, equity and inclusion. I also see the continual and steady increase in transparency and disclosures as a key to productive stakeholder engagement. We included an industry-specific disclosure aligned with the Sustainability Accounting Standards Board, or SASB, in our sustainability report for the second time this year. And for the first time this year, we disclosed climate-related risks in line with the recommended of the Task Force on Climate-related Financial Disclosures, or TCFD. We plan to continue aligning with these reporting frameworks in the future and continuing to strengthen our disclosure for each. And lastly, we will continue to accelerate our sustainability programs as the company grows and evolves. With the completion of our announced merger with DuPont N&B now complete, we believe the possibilities for sustainable innovation are unbounded. But one thing is for certain, success in our journey will require sustainability at the essence of everything we do. Now I will turn it back to Mike to lead the Q&A portion of our call.

Okay. Thanks, Andreas. So we have 2 similar ones to start. So maybe I'll just jump right into it. What differentiates you in your industry as it relates to sustainability? And how does IFF's ESG positioning compare versus immediate F&F peers?

Mike, thank you for the question. This is Andreas. And I'll take the first part. And then Kip, please add on. So first of all, I would say, sustainability has been in the DNA of IFF since our origins. If you look at the environment, we are a leader in renewable energy with the industry largest solar array in our Union Beach, New Jersey site. And the industry's first wind turbine at our Tilburg, Netherlands facility. And that's not just since last year, that's already for a couple of years. Responsible sourcing, I think you've heard it. We are an industry leader in using blockchain technology as a tool while really ensuring ingredient traceability, such as our vanilla supply chain in Madagascar. And then what really differentiates us as well, unlike others in our industry, we have embedded our commitment to circular design across our business. So we have it within R&D to start with. So for example, we developed the first fine fragrance collection to be the EWG VERIFIED and Cradle to Cradle Certified ingredients. And I think that makes a big difference compared to others. And for the people and our talents, we are the first company to earn the EDGE Move level certification following our assessment on gender equality in 21 countries. And on governance, we're certainly a leader in transparency in our disclosures in terms of SASB reporting since 2019 and TCFD reporting since 2020. That's what I think makes a big difference. But Kip, please add on because you know the details very, very well.

Okay. Thank you very much, Andreas. So yes, I think you covered all the top ones. And maybe I'll just talk to the performance part of it. All of the flavors and fragrances companies, they compete very well here, and our customers are leaders. If I had to look to like third-party verification of how things rank, I would say that we're also really well positioned. And if you look at like third-party verification, we're the only flavors and fragrances company that has been named to the world as well as the North American Dow Jones Sustainability Index. It's a first in our industry. And I think that's a really great achievement in third-party verification of our efforts.

Thank you, Kip. Mike?

Great. Thanks, guys. And the next question is what is the status of Frutarom and DuPont N&B integration in your sustainability strategy? And how is it impacting your goals/performance?

Actually, a very good question because we have grown as a company in the last couple of years, and we have onboarded other organizations. And I hand it over to Kip because he is basically front and center to make sure that we get everybody on board and basically acclimated with our methodology and make sure that we have a good impact. But please, Kip, tell us.

Yes. Thank you, Andreas. So let me start off with Frutarom. Note that the 2020 Sustainability report that we just launched is the second consecutive year we have reported as a combined company with Frutarom, and this includes the environmental, the workplace, the diversity and safety data. And Frutarom is now included in our 2025 EcoEffective goals, which we talked about during the webinar. And I'm very pleased to say that we are on track to meet those goals. Now For DuPont N&B, we plan to begin reporting integrated environmental and workforce data for the combined company in the 2021 reporting year. And right now, we're in the process of developing an interim ESG strategy for 2021 as we progress with the N&B integration, and we'll launch our new and ambitious 2030 strategy and goals in Q2 of 2022. So we see really great opportunity for the combined company, but I'll also note that we know that there's a lot of work ahead of us, but it's really exciting. So stay tuned.

Great. Thanks, Kip. Next question, how has the COVID-19 pandemic impacted your sustainability strategy, including goals and performance?

Let me start with the first part, and then I hand it over to Susana. So despite all these challenges to the pandemic, we remain really steadfast in our commitments to people and planet. And we really remained on track with our 2020 and 2025 metrics, performance and the goals. I think that's super important that even during the times of pandemic, we made actually really, really good progress. But in terms of COVID, we have made a lot of adaptations and measures to keep our people safe. But I hand this over to Susana, and you can give us an overview what we have done here. Susana?

Thank you, Andreas. First and foremost, I would like to thank every IFFer around the world for abiding and supporting our COVID-19 program. As Andreas was saying, in 2020 we focused on protecting our employees, supporting our customers and, of course, doing our part to support our communities. But in addition to the following requirements that governmental authorities were indicating, we took additional preventative and protective measures such as establishing rotating schedules to limit the number of essential creation, application and innovation professionals on-site at one time. So a lot of work went into executing thorough sterilization protocols across all manufacturing and creative centers. We restricted travel, updated internal protocols, and we also provided mandatory personnel protective equipment for all on site. I would just like to add that implementing the return-to-work plans in region-specific phase 3 opening in alignment with global guidelines was extraordinarily critical, and now we're looking forward to continuing this progress under what we call the future of work.

Thank you, Susana. Next question. Can you please elaborate on Dupont N&B's ESG position?

Kip, can you take that?

Yes, sure. So as we work through the merger, what we found is that IFF has some areas that we are very strong from a sustainability and safety and workplace standpoint. And N&B has some areas where they are very strong. And what I found is that they are very complementary. There are some areas where we're going to learn a lot and get some really great capabilities from N&B, especially like on life cycle analysis. And then N&B has some areas where we can leverage some of the work that we've done over the last 10 years, especially in the environmental area, green teams, renewable energy. So I just see this fantastic opportunity to kind of tell the story of 1 plus 1 equals 3, right? So we're putting together 2 that are very complementary, and we expect to be a powerhouse in sustainability and safety going forward. So it's really exciting for us. But to note, there's a lot of work in pulling those together. So we're very excited.

Thank you, Kip. Next question, what are IFF's plans moving forward to further strengthen the diversity of its Board structure?

Yes. That's a very, very good point. And I can tell you, diversity is one of the factors that the Nominating and Governance Committee considers and really identifying the right candidates for the Board. And we have made good progress over the last couple of years. And the Board is really committed, actively seeking out diverse candidates, which is -- includes qualified women and individuals from minorities and other groups just described. So in connection with the N&B transaction, we have refreshed our Board by appointing 6 new members. And we're increasing the size of the Board from 11 to 13 members. And as a result of this process, 23% of our directors are female, 15% are racially diverse and 31% are non-U.S. citizens. So we continue that process and this journey and we'll strengthen the diversity of our Board, certainly going forward. Maybe just one remark as well. We highlight diversity in our proxy along with other skills and experiences. So in addition, we disclosed diversity data, including gender, age and ethnicity for the entire company in our sustainability report, which you can find on our website. So we are very transparent about that very topic.

Thanks, Andreas. Next question, where are the most attractive sustainability-driven opportunities for IFF? And what is the size/addressable market of these opportunities?

That's a great question. Kip, you are the right guy to give us a good answer on that one. So, Kip?

Yes. Let me start and then maybe I'll hand it over to Greg as well. When we see the opportunities for IFF, and I'll talk about the driving of growth area, it's really bringing together the capabilities and looking towards the future of embedding circular design, of working towards more sustainable products like plant-based proteins, leveraging things like circular design in both what we were saying in Scent, but also in the Nourish business. But I think there's great opportunities like the integrated solutions. But Greg, let me hand it over to you because I know you and I have been talking a lot about how we're embedding sustainability in the R&D innovation process and then driving it from a commercial standpoint.

Great. Thanks, Kip. There's a lot of great opportunities here, and there's a lot of great initiatives that we're working on, especially in the R&D organization, especially in innovation. And one of the big things when I took over R&D of the total company is how do we embed sustainability in the design of our products. And that's one of the big things that all of our scientists around the world have in their mind, starting with sustainability. It's not easy to do, but we believe it's the right thing to do, especially in a lot of these initiatives. One of the big ones is we're moving clearly away from microplastics. You'll see that clearly in a lot of our R&D initiatives, but also in the products and in the brands that our customers do have. Also about biodegradable, renewable starting materials and feedstocks, really looking at the right way to make a lot of these ingredients and a lot of these molecules that go into our customers' products as we move forward. So the green chemistry is always going to be very, very important to us. Another one is positive nutrition. We have a lot of projects and a lot of initiatives on alternative proteins, especially plant-based. And also continue our efforts to reducing salt, fat and sugar in our customers' products through our Modulation program. So it's very, very, very important that we continue that initiative. Also, clearly, with the N&B merger, we're into the positive nutrition, especially in the probiotics and also the microbiome. And these are exciting areas, not just in human nutrition, but also in animal nutrition. So we're excited about these areas, and we continue to put great effort into them and great resource in it. So thanks, Kip.

Great. Thanks, guys. Next question, how are your people measured on their progress? Are ESG metrics incorporated into management's compensation targets?

Yes, that's a good, good point because we have to measure to really make considerable progress here. And I can tell you it's certainly in my objectives, but in the objectives of our management teams as well. But Susana, give us some more details on that, how we do it and how we track it. Susana?

Yes. So Andreas, to your point, we certainly tie it directly to compensation. Just to give a couple of examples, exceeding EDGE benchmark this year for gender representation, over 30%. We are also, from an enterprise, committing to enacting the family leave. And we're also going to be looking, which we already are into the succession programs, challenging the gender representation to be over 50%. So these are possible examples, specific examples. We make sure, to your point Andreas, that it starts with you, but it's cascaded through your executive team and throughout the organization.

Thanks, Susana. Next question, maybe the last one, just given we're coming up on the top of the hour, but how have FMCG sustainability ambitions evolve over the last 12 months? What is customers' appetite for renewable solutions?

I think that's a good question for Greg, because Greg obviously talks to his counterparts in our customer world quite on a regular basis. So Greg, if you could give us your view, what you see with our customers?

Yes. I think it's exciting, especially what we're seeing post-COVID. As an environmental piece, we're very, very well aligned, which I mentioned earlier in the, for example, in the water stewardship, moving away from microplastics, but also the health and well-being of our employees, but also our customers are top of mind for us, especially in the positive nutrition space. I mentioned alternative proteins, which is very, very big. But also resources. We're really looking at resources together and how we can help conserve resources in many, many of the products that we have and really build that into our circular economy approach. And that's very, very important, especially as we address our biotechnology areas. As you know, we're very, very strong in the biotech field now. And this will help us conserve a lot of these resources, including these areas that we will study in nature but not take away from nature, especially the raw materials and things like that. So very, very important. So I believe we're very, very well on. We're excited about that, and we're excited about together, partnering to achieve a lot of these goals.

Okay. Andreas, I think we're at the top of the hour, so I'll turn it back to you for some closing remarks.

Yes. I hope that everybody sees that we have made, as IFF over the last decade, quite considerable progress. And we are in a phase right now to accelerate what we have done because we believe it's the right thing to do. And the levers we have now as a bigger company are much, much better and bigger than before. And you can count on us that we will continue this path and that we make -- we'll make a positive contribution and positive impact on our world. With that, I would like to thank everybody being on the call, and have a great rest of the day. Thank you. Bye-bye.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.