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Firmenich, the world’s largest privately-owned perfume and taste company, is the winner of the inaugural 2019 IMD-Pictet Sustainability in Family Business Award. The Geneva-based company is recognized for its reach, innovation and impact of its sustainability initiatives. In particular, the award jury praised the family owners for their role in setting the company’s sustainability agenda and acknowledged the ability of the family business to inspire others.
“We embrace an inclusive capitalism business model to create value for all our stakeholders,” said CEO Gilbert Ghostine. “By exchanging best practices, we can accelerate change towards a more sustainable world.”
Firmenich’s customer list includes the world’s largest food and beverage, beauty, and household care and fabric companies. About four billion people worldwide use a product containing a fragrance, flavor or an ingredient manufactured by Firmenich (from yoghurt or cereals to shampoo or fine fragrances). It is active in more than 100 markets, operates 82 facilities and has 39 manufacturing plants world-wide. Firmenich recorded revenues of US$3.9 billion in its fiscal year 2019 and has more than 8,000 colleagues.
The company was founded in 1895 by Philippe Chuit, Martin Naef, and moved into Firmenich family hands in 1934. Since 2014, the company has been run by Ghostine, its first non-family CEO. It is fully owned by family members with the vision to stay independent. Firmenich’s Board of Directors is led by a family Chairman, former CEO Patrick Firmenich.
Firmenich has a strong culture of innovation. An early R&D director, Leopold Ruzicka won the Nobel Prize for Chemistry in 1939 and the company currently counts more than 3,700 patents. Firmenich spends 10 percent of its total revenue on R&D with key centers in Switzerland, the US, China, and India.
Leadership in sustainability
Firmenich also has a long history of embedding sustainability in its business model. The company was among the pioneers who in 1991 signed the first International Chamber of Commerce Business Charter for Sustainable Development. Sustainability is also reflected in its corporate governance structures, including its Global Ethics Committee, Human Rights Committee, Biodiversity Committee and Global Sustainability Team. Progress is reviewed and measured quarterly by the CEO and the Chairman, and annually by the family shareholders. Firmenich has been publishing an annual sustainability report since 2006, which is fully audited by a third party.
The company’s Pathways to Positive 2015-2020 sustainability strategy is based on three strategic pillars:
The associated objectives take into account issues such as responsible sourcing, environmental responsibility, fair work practices, and its responsibility to the communities in which it operates. In each of these areas, innovation takes center stage. For example, Firmenich’s Green Gate process ensures that all new perfumery molecules are biodegradable.
The company is also helping to address the world’s malnutrition crisis. It’s TastePRINT™ technologies can reduce up to 100% of added sugar naturally while keeping an equal taste experience. In 2019, Firmenich removed 1 trillion calories from a range of food and beverages products. Its Smart Protein solutions support the growing vegan and flexitarians diets by bringing appealing taste and texture to plant-based proteins, which not only good for health, but also for the planet.
Meanwhile, the company’s Naturals Together™ Community works with 250,000 farming families to ensure its natural ingredients are ethically and sustainably harvested, encouraging regenerative agriculture processes to preserve biodiversity.
Firmenich supports the livelihoods of its communities of smallholder farmers by pre-paying all harvests and guaranteeing the purchase of crops. It pays a 5% premium on all its crops to invest in projects benefitting local communities. For instance, in Haiti, the Group opened a school and in Madagascar it set up a medical dispensary and over 40 clean water wells.
In 2007, the company launched its Ugandan Vanilla Project, which provides education, knowledge transfer, micro-finance support, fair-pricing agreements and disease prevention to vanilla farmers and their communities.
Supporting the environment and employees
Firmenich also has ambitious environmental targets, with a strategy focused on decoupling its growth from its CO2 emissions. The company’s manufacturing output has grown by 18% since 2015, while its CO2 emissions have been cut by 30%. The company aims to use 100% renewable electricity world-wide by 2020, as well as reduce water use, improve waste efficiency and preserve biodiversity.
Firmenich is the first Swiss company in its industry - and seventh world-wide - to become globally certified by EDGE as a Gender Equality Employer, ensuring equal pay and gender balance across recruitment, promotion, and training. Firmenich also signed the Valuable 500 pledge on disability inclusion, counting 2% of its workforce with different abilities, such as 100 visually-impaired sensory panelists around the world. It is also an active signatory of the United Nations LGBTI Standards.
Firmenich actively encourages employee engagement in innovation to help solve some of the world’s greatest challenges. Firmenich 4 Society, an employee recognition program, encourages its colleagues to drive sustainability efforts around the world.
Firmenich engaged in a research partnership with the Bill & Melinda Gates Foundation to reinvent toilets from an odor perspective. This led to Firmenich developing a range of breakthrough malodor control technologies to make clean toilets smell good in an affordable and sustainable way. Today Firmenich solutions are currently reaching populations in need through toilet cleaning products in India, South Africa and Bangladesh. Firmenich is also a founding member of the Toilet Board Coalition (TBC), a business-led public-private partnership, launched in 2014, which connects large and small companies to accelerate new sanitation economy and achieve universal access to sanitation before 2030.
“We believe in constantly stretching our goals and strategy to keep on raising the standards for ourselves and our industry,” Ghostine said. “We are creating new markets at the same time as we are helping to solve serious societal challenges. Our commitment to sustainability is rooted in our values and is a source of pride for everyone in our organization.”