Highlight from our ESG Research: Crafting Flavors and Fragrances

September 2023

At Domini, we conduct proprietary in-house research to evaluate the social and environmental performance of our investments. Our in-depth ESG research and standards help create value not only for portfolios but for people and planet, too. During our research process, we discover many innovative initiatives worth sharing.


Held in the Domini International Opportunities Fund

In the ever-evolving landscape of the flavor and fragrance industry, one prominent critical concern stands out—the impact on biodiversity. While the industry has long been associated with sensory experiences, the quest for unique flavors and captivating fragrances has led to significant repercussions in the world’s ecosystems. Unless done sustainably, harvesting primary ingredients often leads to habitat destruction, invasive species, and chemical pollution, issues these companies must address.

Swiss-based manufacturer Givaudan, specializing in fragrance and flavor products, stands out as an example of responsible corporate citizenship with a dedication to environmental preservation, ethical sourcing, and community development. The company serves various industries, including food and beverage, consumer goods, and fragrances. Approximately 85% of their ingredient palette is biodegradable, and an impressive 57% of their raw materials were classified as renewable in 2022.

The company has earned Fair for Life certification, a certificate that guarantees fair prices and directs a fair-trade premium toward community developments for products like yerba mate, guarana, and acai in 2021 and 2022. In Brazil, Givaudan collaborates with local companies to cultivate guarana using regenerative agricultural practices, emphasizing soil preservation initiatives such as pruning, using green manure instead of chemical fertilizers, and covering crops instead of herbicides. In Sulawesi, Indonesia, they actively support sustainable smallholder patchouli businesses by training producers and operators in environmentally friendly agricultural and distillation methods. In 2021, Givaudan introduced the Sourcing4Good program, cementing its partnerships with experts and communities in their priority natural supply chains. They actively enhance local practices through 25 ongoing projects across various natural ingredient supply chains. Their commitment also extends to Egypt, where they assist 240 jasmine producers in adopting 100% organic filtration systems, insect traps, and local compost production. This initiative not only promotes responsible farming but also contributes to environmental conservation.

Chemical manufacturers and distributors have a responsibility to take actions that minimize the impact of their operations and customer product use on biodiversity. The pollution from these chemicals is often less visible and has a delayed onset. For example, they can pollute waterways, impacting the soil and organisms in the area, and contribute to public health concerns. Unsustainable agricultural practices can harm the biodiversity of local regions, placing many animals and plants at risk of extinction.

Therefore, environmentally friendly solutions, such as alternative bio-based products helping to remove reliance on petrochemical raw materials, should be at the forefront of innovative decision-making in the chemical industry. Fairtrade practices, upcycling, responsible sourcing, community empowerment, and regenerative agriculture are blueprints for businesses seeking to impact the world positively, in an era where sustainability is the linchpin of the future.