Delivering consistent outperformance

Key performance indicators
The top half of the page shows our key performance indicators which are reviewed regularly by the Board and executive leadershipto monitor Group performance, and are linked to executive remuneration. Other metrics relevant to the implementation of our strategy,
including our sustainability strategy, are shown across the bottom.

Sustainability

Scope 1 and 2 emissions(‘000 tonnes CO2e)

200

47

38

150
100

104

212794

Land area saved2103

11113

110

5002018
Scope 12019
Scope 22020

2021

2022

Land area saved (’000 hectares)

Scope 1 & 2 emissions1150
12092146
126

108905360

1630020192020

Absolute land area saved

Science Based Target Trajectory

342021

2022

Land saved over 2019 baseline

Definition:

Definition:

Our operational greenhouse gas (GHG) emissions (associated withburning fuels onsite and purchased electricity) in absolute terms.

Land area saved through the application of our crop protection andseed enhancement technologies, using 2019 as our baseline year.

Target:Target:By 2030, we will have achieved our Science Based Target, reducing
scope 1 and 2 emissions by 46.2% from a 2018 baseline.

Throughout this decade, the land saved through the application of ourtechnologies will exceed any increase in land used to grow our raw
materials by at least a factor of two, and by 2030 we will save aminimum 200,000 hectares per year more than in 2019.

Performance:

Performance:

Since 2018, our baseline year, our total scope 1 and 2 GHG emissions
have reduced by 19.8%. Within this, scope 1 emissions have increased
by 6% and we have seen a 77% reduction in scope 2 emissions. This has
been driven by a switch to renewable electricity across our manufacturing
sites. We remain on track to achieve our Science Based Target, reducing
our emissions in line with limiting the global temperature rise to 1.5°C
above pre-industrial levels. For more detail see pages 23-25 of ourSustainability Report.

In 2022 the use of our agricultural ingredients and new technologies
saved 53,486 hectares of land compared to our 2019 baseline of 92,223
hectares, translating to a total land saving of 145,709 hectares in 2022.
We remain on track to hit our 2024 intermediate milestone of saving atleast 80,000 hectares per year more than in 2019, and our 2030
target of saving 200,000 hectares per year more than in 2019.
Read more on page 29 of our Sustainability Report.
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1. We have restated our historical scope 1 & 2 carbon emissions, removing thedivested PTIC operations. Our carbon reduction targets have been
re-baselined to ensure our level of ambition remains unchanged. Read moreon page 40 of our Sustainability Report.

2. PSP target for 2021-23. Read more on page 90 of the 2020 Annual Report.

Progress against our Commitment in 2022
Climate Positive

Land Positive

We continue to deliver absolute scope 1 and 2 emission reductions
in line with the trajectory of our Science Based Target (SBT) and haveseen the first scope 1 reductions in 2022 arising from new
decarbonisation investment. However, our Climate Positive ambition
goes beyond decarbonising our own operations and supply chain,
aiming for our products to help customers and consumers avoid fourtimes the carbon emissions (scope 1, 2 & upstream scope 3)
associated with our business (our Carbon Cover ratio) by 2030. In
2022, 687,926 tonnes CO2e were avoided through the use of ouringredients, giving a carbon cover ratio of 0.66:1. Additionally, by2030, over 75% of our raw materials by weight will be bio-based,absorbing carbon from the atmosphere as they grow. On an ongoingbasis (adjusting for the divestment of PTIC) our bio-based raw
materials as a proportion of total volumes increased from 57% to59% in 2022.

Compared to our 2019 baseline we have saved 53,486 hectares ofland through the application of our technologies. In addition to theland saved target we aim to bring an average of two crop
technological breakthroughs to market each year until 2030.
In 2022, we brought two such innovations to market which protect
biodiversity and mitigate the impact of changing climate and landdegradation, bringing our total launched since 2020 to four.
We acknowledge that our business activities have impacts on nature
and are committed to addressing them, announcing in 2022 ouraspiration to be Net Nature Positive by 2030. As a member of theScience Based Target Network corporate engagement programme,
we have worked in 2022 to better understand how each of our major
manufacturing sites, key bio-based raw materials and crop and seedtechnologies positively or negatively impact biodiversity and nature.

48

Croda International Plc Annual Report and Accounts 2022

Strategic report

Key

Purpose and Sustainability
Commitment (PSC) Score

R

Links to bonus remuneration

R

Links to PSP remuneration

Total recordable injury rate

68%

0.60

In 2022 we started to measure employees’ engagement with our
Purpose and Sustainability Commitment (PSC), leading to the creationof the PSC score. This is used internally to understand employee
sentiment and how we can make Croda a better place to work, andwill be reported as a non-financial KPI in future years. Further detailon the implementation of the PSC score can be found on page 20.

2018

0.76

0.74

2021

2022

0.61
0.50

2019

2020

Definition:

Definition:

The PSC score is a gauge of employee satisfaction measured throughemployee surveys and expressed as a percentage.

The number of incidents per 200,000 hours worked where a person
has sustained an injury, including all lost time, restricted work andmedical treatment cases (excludes COVID-19 cases).

Target:Target:Improve the PSC score by 8 percentage points against the 2022
baseline by 2025.

Achieve TRIR of 0.3 by the end of 2024.

Performance:

Performance:

Our baseline score for 2022 is 68%, with a participation rate of nearly
80%. The overall score is ‘good’ with encouraging scores in areas suchas employees enjoying their work and those who would recommend
Croda as a great place to work. There are areas that require improvement,
including colleagues feeling their workload is manageable and ensuring
we learn from mistakes without placing blame.

The headline TRIR decreased marginally to 0.74 (2021: 0.76 restated).
Injury rates at the sites of recently acquired businesses are typically higher
than established Croda sites and the underlying TRIR excluding sites
acquired less than three years ago is 0.63. Reducing injury rates at both
existing Croda sites and newly acquired sites is a top priority.
Read more about performance and safety initiatives on page 21.

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People Positive

Fundamentals

Our People Positive commitment impacts both our employees
and wider society. In 2022, through the use of our solar protection
ingredients, Croda contributed to protecting more than 61 million
people from potentially developing skin cancer caused by harmful
UV rays. This is seven years earlier than our 2030 target to protect
at least 60 million people annually. We are also moving closer toour target of contributing to the successful development andcommercialisation of 25% of WHO-listed pipeline vaccines and haveachieved our 2024 milestone of ten clinical phase III trials two years
ahead of schedule. Having established Croda Foundation in 2021
to help sustainably improve one million lives, by the end of 2022,
300,000 lives had been sustainably improved with 14.9 million
lives benefitting in some way from Croda Foundation projects.

The Fundamentals element of our Commitment represents the social
licence required for a multinational company such as Croda tooperate in 2030. Across the nine Fundamental objectives, we haveidentified some notable activities and progress in 2022. To enable us
to meet our personal safety targets, we focused attention on thetheme of ‘Safety is a Value’ with leadership teams across Croda.
In a year where cost-of-living dominated public discussion aroundthe globe, we confirmed that all employees globally receive the Living
Wage in their country as a minimum and began the process ofensuring all our regular contractors are paid a Living Wage to meetour 2024 milestone. We updated our Supplier Code of Conduct andintroduced Supplier Scorecards to raise the profile of environmental
integrity and social accountability in our upstream supply chains,
and are working with several supply chain consortia to increasetransparency and drive action to improve environmental and socialoutcomes particularly for farmers in our crop-based supply chains.
Croda International Plc Annual Report and Accounts 2022

49

Delivering consistent outperformance

Key performance indicators continued

Innovation
New and Protected Products sales %NPP Sales

28.2%

27.6%

2017

Performance:

36.6%
28.1%

2018

2019

34.7%

27.4%

2020

2021

2022

Definition:
New and Protected Products (NPP) are sales protected by virtue of being
newly launched, protected by intellectual property or by unique quality
characteristics. Measuring NPP is our established KPI for innovation.
Historically the KPI has been defined as sales from NPP as a proportionof total sales in constant currency.

The proportion of sales from NPP has grown over the last decade from20.5% in 2012. There was a significant increase in 2021 to 36.6%
following the Avanti and Iberchem acquisitions, and strong sales of lipid
systems for COVID-19 applications. The small reduction to 34.7% in
2022 reflects lower lipid systems sales and strong growth in Crop
Protection which has a lower proportion of NPP.
NPP is a KPI that is used for remuneration. Going forwards, the NPP
measure will focus on growth in NPP over the performance period, rather
than growth relative to non-NPP sales. As well as simplifying the measure,the new approach reflects the importance of our non-NPP sales,
especially those relating to sustainable products. In 2022, NPP sales
grew at 2.6% in constant currency, adjusting for the impact of the PTIC
divestment.
Read more about the important role that innovation plays in creating newmarket and technology niches on pages 22 and 23.
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The list of New and Protected Products is reviewed annually, in line with
the Group’s policy. This process is overseen by a non-Executive Director
before approval by the Remuneration Committee.

Target:We seek to drive NPP sales growth at least as fast as total sales overthe cycle, targeted at mid to high single digit percentage growth.

Delivering innovation in 2022
Our innovation partners are a core part of our innovation ecosystemand our collaboration with universities and SMEs helps drive
innovation and grow NPP sales. We continue to build our Open
Innovation network, particularly in priority areas such as Pharma,and in 2022 added 11 innovation partners and initiated 10 innovation
projects. Our Open Innovation network is global, with new innovation
partners in Brazil, South Africa and India, as well as a growing
network in the United States, enabling us to leverage the ideas,
expertise and resources that exist in all regions.

Open innovation partners and initiated projects
No. of projects initiatedNo. of partners

600
500

352

400

269

300

172

200
100 610421

456

111

2010-15 2016

50

501

200

231

146

170

2017

2018

2019

2020

548

559

266

276

2021

2022

Croda International Plc Annual Report and Accounts 2022

Innovation priorities include investing in biotechnology andsustainable chemistry, and accelerating the delivery of platform
technologies in areas such as synthetic biology, biocatalysis,and downstream processing. Biotech innovation is led by fivespecialist biotechnology facilities, with increasing expertise and bettercollaboration from across the Group leading to the launch of novel
ingredients that are derived from plant and marine sources.
As we pursue more sustainable manufacturing processes, while
continuing to meet performance expectations, in 2022 we acquired
intellectual property that will help us transition to manufacturing key
Beauty Actives ingredients using more sustainable techniques.

Strategic report

KeyFor more information, see the Finance review
Pages 44-47

RLinks to bonus remuneration

RLinks to PSP remuneration

Delivering consistent outperformance
Sales growth (%)

Return on sales (%)
40

43.2%

CC 22.8%

LS 33.6%

IS 15.9%

Group total 24.7%

2018

2019

2020

2021

35
30
25

2.9%

-2.6%

5.2%

1.1%

20
15102018

2019

2020

2021

2022

2022

Definition:

Definition:

Total sales growth measured at constant currency.

Adjusted operating profit as a percentage of sales.

Target:Target:Mid-single digit percentage growth in Consumer Care and high-single digit
percentage growth in Life Sciences.

Return on sales over the medium term at or above 25% in Consumer
Care and over 30% in Life Sciences.

Performance:

Performance:

Sales growth in 2022 was 5.2%, comprising underlying growth of 4.6%
and acquisition impact of 0.6%. Underlying growth was principally driven
by price/mix, with successful recovery of input cost inflation more thanoffsetting volume declines that were principally driven by the PTIC
divestment. Underlying sales growth was 9.7% in Consumer Care and13.9% in Life Sciences.

Group return on sales was broadly flat at 24.7% (2021: 24.8%). This
reflects an improved margin mix from the reduced share of industrial sales
and a lower variable remuneration charge offset by normalisation of theLife Sciences margin, after an exceptional 2021, and a lower Consumer
Care margin due to the gearing effect of lower volume and a weakerproduct mix.
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Return on invested capital(ROIC) (%)
19.2%

2018

17.0%

2019

Adjusted basic earnings per share(pence)
250.0p

14.6%

14.2%

14.1%

190.2p185.0p175.5p

2020

2021

2022

2018

2019

2020

2021

272.0p2022

Definition:

Definition:

Adjusted operating profit after tax divided by the average adjusted
invested capital. Adjusted invested capital represents net assets adjusted
for net debt, earlier goodwill written off to reserves and accumulated
amortisation of acquired intangible assets.

Adjusted profit after tax divided by the average number of shares in issue.

Target:ROIC of at least twice two times cost of capital.

Performance:
The post-tax return on invested capital (ROIC) was broadly flat at 14.1%(2021: 14.2%), with good profit growth offsetting an increase in average
invested capital, partially due to the inclusion of a post-tax asset on
retirement benefits plan of £75m.

Target:At least mid-single digit percentage EPS growth per annum.

Performance:
Adjusted earnings per share increased by 8.8% to 272.0p. This growth
was driven by good profit growth across all sectors, partially offset bya marginal increase in the tax rate on adjusted profit to 22.8% (2021: 21.2%)
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