Message from Our CEO on Sustainability.
To our employees, customers, shareholders, and communities:
Balchem is committed to making the world a healthier place by delivering trusted, innovative, and science-based solutions for the health and nutritional needs of the world. We accomplish this while operating our facilities and businesses to meet the expectations of our employees, customers, shareholders, and communities.
Balchem’s sustainability efforts are fully integrated into our business strategy as we remain focused on our two main sustainability objectives: providing innovative solutions for the health and nutritional needs of the world and operating with excellence as strong stewards of our stakeholders. Our areas of priority are included in this report, and we remain focused on our three sustainability pillars: People, Planet, and Profit.
Overall, 2023 marked another successful year for Balchem as we made significant progress relating to the company’s corporate social responsibilities while continuing to deliver strong business results. As we worked toward making the world a healthier place, we delivered record adjusted EBITDA and generated record free cash flow, allowing us to further strengthen our balance sheet while returning $25.4 million to our shareholders in a double-digit increase to our dividend. We completed the integration of the Kappa Bioscience and Bergstrom Nutrition acquisitions; shared exciting new studies that support the supplementation of our portfolio of minerals, nutrients, and vitamins for both human and animal nutrition; and expanded production capacity to better meet the rising demand for human choline, an essential nutrient well known in the supplement industry in relation to cognitive, liver, and overall health.
In 2023, Balchem celebrated the third anniversary of our commitment to the United Nations (“UN”) Global Compact. As a participant member, we are aligned with the Ten Principles on human rights, labor, the environment, and anti-corruption and are proud to support several of the UN Sustainable Development Goals (“SDGs”). We have made good progress toward our 2030 goals for both energy and water usage reduction, as further detailed in this report. Our continued commitment to the UN Global Compact is another step in our journey relative to our corporate social responsibilities and achieving our higher purpose of making the world a healthier place.
We remain focused on our 2030 environmental goals to reduce both greenhouse gas (“GHG”) emissions and water usage by 25%, on an absolute basis from a 2020 baseline. Building on the success we had in 2022, Balchem is pleased to announce that we again exceeded our GHG emissions goal, with a 31.6% absolute reduction in 2023 from our 2020 baseline. This puts us in a position to execute on our strategic growth plans and achieve our 2030 emissions reduction goal.
Balchem is excited to announce the reporting of our Scope 1, Scope 2, and Scope 3 GHG emissions for 2023. This is the first report that includes our Scope 3 emissions, which is the result of careful and diligent internal data collection and analysis.
Additionally, in 2023, Balchem reduced its water withdrawal by 7.6% compared to the 2020 baseline, representing significant progress toward our water usage reduction goal. We are excited to see a trend of improvements in our absolute water usage, and we are confident that our future planned efficiencies and changes in our use of process water will ensure that we achieve our 2030 water usage reduction goal.
In 2023, Balchem was recognized for our commitment to diversity hiring, and we were awarded the “Top Diversity Employer” award by Circa, a leading job board for underrepresented groups. This award is a testament to our hard work and dedication to creating a more diverse and inclusive workplace. As a signing member of the CEO Action Pledge, I am committed to building a diverse and inclusive culture in which everyone at Balchem feels welcomed, valued, and appreciated.
I am proud of the advancements of our Balchem Helping Hands initiatives, which encompasses all of our philanthropic activities. In 2023, we partnered with the American Nutrition Association (“ANA”) and joined the ANA Nutrition Leaders Council (“NLC”). The NLC is a group of rigorously vetted, visionary companies in the nutrition ecosystem partnering with the ANA to move nutrition to the core of the healthcare system and culture. This partnership will involve creating evidence-based content to increase consumer awareness about the health benefits of our minerals and nutrients portfolio.
Our employees participated in various volunteer activities throughout the year and supported annual volunteer events, including National Volunteer Week, Giving Tuesday, and National Breast Cancer Awareness Month. Our employee matching donation program has helped support more than 75 different organizations in our communities.
Additionally, Balchem was named one of “America’s Most Responsible Companies” by Newsweek® for the fourth consecutive year. This list, compiled by Newsweek in partnership with Statista Inc., recognizes the most responsible companies in the US across a variety of industries. We are pleased to be recognized by Newsweek and Statista for our leadership in corporate responsibility. This recognition is a reflection of the hard work of the broader Balchem team as we strive every day to make the world a healthier place.
Balchem is well positioned within the markets we serve, we are making good progress on our broad-based sustainability efforts, and we look forward to another strong year for the company in 2024. We are very appreciative of the support we receive from all of our stakeholders as, together, we strive to make the world a healthier place.
Ted Harris
Chairman, President and Chief Executive Officer