Climate change is one of the major challenges facing society in the 21st century. In 2015, the United Nations collectively agreed to take action to significantly limit the rise in global temperatures. Since climate action and energy efficiency will pay off in the long run – both for the environment and our business – we have also made it our mission to help stem the tide of climate change.
How we are taking climate action
We want to do our part to preserve the climate and comply with the Paris Agreement on climate change. Therefore, we have set our own objectives:
By 2030, we intend to lower our direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions by 50% compared with 2020. We aim to achieve this mainly by reducing process-related emissions, implementing energy efficiency measures and purchasing more electricity from renewable sources.
In May 2022, this near-term goal for 2030 was approved by the Science Based Targets initiative (SBTi), which independently assesses and approves company targets based on its strict climate science criteria. With this confirmation, we are contributing to limiting global warming to 1.5 °C, thus complying with the requirements of the Paris Agreement.
We also aim to cover 80% of our purchased electricity with renewables by 2030.
Moreover, we aim to reduce our Scope 3 emissions across the entire value chain by 52% (per euro of gross profit) by 2030. This target was also approved by SBTi.
By 2040, we intend to have achieved climate-neutral operations throughout our entire value chain; this target covers our Scope 1, 2 and 3 emissions.
Roles and responsibilities
Corporate Sustainability, Quality and Trade Compliance (SQ) is responsible for overseeing all climate action efforts throughout the Group, with our individual sites and business sectors worldwide implementing the necessary measures at the local level. You can find more information under Environmental Protection.
Our commitment: Standards and legal frameworks
We have three EHS standards in place to manage energy and process-related emissions consistently across the Group, specifically “Energy Management”, “Emissions” and “Emissions of Refrigerants”. We utilize an internal audit process to randomly check compliance with all EHS standards.
In addition to our own standards, we are subject to a wide array of national and international energy and climate regulations. At European level, for instance, we are required to comply with the EU Energy Efficiency Directive (2012/27/EU), which stipulates that companies must conduct regular energy audits or implement an ISO 50001-certified energy management system. The sites subject to these requirements are responsible for taking the requisite actions and furthermore undergo audits conducted by internal and external experts. In total, 13 sites have been certified in accordance with ISO 50001 to date.
Our co-generation plant in Darmstadt and heating plant in Gernsheim (both in Germany) have made it necessary for us to participate in EU emissions trading since 2005. The EU 2030 Climate and Energy Framework is designed to achieve the objectives of the Paris Agreement, with EU emissions trading playing a key role in this. The amended EU Emissions Trading Directive (2003/87/EC) took effect in April 2018, thereby updating the legal framework for the fourth phase of the EU emissions trading program (2021-2030) and tightening the rules for free CO2 allowances. Going forward, we will therefore increasingly have to purchase CO2 emission allowances.
Emissions reduced further
In 2022, we reduced our greenhouse gas emissions by nearly 10%, emitting a total of approximately 1,667,000 metric tons of CO2 equivalents (CO2eq) (2021: 1,843,000 metric tons).
Our direct emissions (Scope 1) totaled 1,425,000 metric tons of CO2eq, with process-related emissions accounting for 1,167,000 metric tons of CO2eq and fuel use accounting for the remainder. Indirect emissions (Scope 2) totaled roughly 242,000 metric tons calculated according to the market-based method (approximately 377,000 metric tons according to the location-based method). Greenhouse gas emission intensity (Scope 1 and 2) amounted to 0.07 Kg of CO2eq per € of net sales in this period (2021: 0.09).
In 2022, we focused on creating more transparency on our Scope 3 emissions. The Greenhouse Gas Protocol defines 15 categories for Scope 3 emissions from upstream and downstream activities. In 2022, these emissions totaled around 6,616,000 metric tons of CO2eq. Categories 1 and 2 (Purchased Goods and Services and Capital Goods) accounted for 69% of our total Scope 3 emissions in this period. You can find more information on the Supplier Decarbonization Program under Sustainable supply chain.
Greenhouse gas emissions in metric kilotons of CO2 equivalents, Scope 1 and 21
2) The increase in greenhouse gas emissions as of 2020 is attributable to the acquisition of Versum in 2019.
Greenhouse gas emissions 2022 in metric kilotons of CO2 equivalents, Scope 3
Reducing process-related emissions
With the integration of Versum Materials, acquired in 2019, into the Electronics business sector, our process-related emissions increased sharply – mainly in the production of special chemicals for the electronics industry. In 2022, our pilot exhaust gas abatement unit in Hometown (Pennsylvania, USA) reached operational readiness, achieving a high efficiency of almost 99%. Based on this technology we will invest in additional units in 2023 to reduce process-related NF3 emissions in subsequent years.
In our Life Science business sector, we are tracking process-related emissions primarily from the release of perfluorinated hydrocarbons (PFCs). Consequently, we already replaced several emission-intensive production lines with equipment that does not emit PFCs, resulting in a reduction of CO2eq by 40,000 metric tons between 2021 and 2022. In 2022, we also focused on developing the methods to eliminate the remaining PCF emissions from these processes, which we plan to implement and complete before 2030.
Reducing product-related emissions
Across all three of our business sectors, we aim to reduce the carbon footprint of our products. To achieve this, we have started a pilot project for an IT tool that will help us calculate the carbon footprint of our product portfolios. To ensure we work based on industry standards and can rely on comparable data analytics and expert analysis, we collaborate with our peer companies in industry initiatives such as Together for Sustainability (TfS).
Reducing emissions within our supply chain
You can find more information on the Supplier Decarbonization Program under Sustainable supply chain.
Shifting to ocean freight
In 2019, our Healthcare business sector initiated a major transformation of its means of transport, significantly reducing not only our CO2 emissions but also our logistics expenses. Our ambition was to reduce greenhouse gas emissions by switching from air to sea shipment wherever possible. We initiated two model projects on the use of biofuels for road transport – one in 2021 and another in 2022. The aim is to learn more about the sustainability of alternative fuels (biofuels) and the actual CO2 reduction. During the pilot phase in 2021, we reduced CO2 emissions by 70% (well-to-wheel analysis) for shipments to the Asia-Pacific region (excluding China).
Green business case
In 2022, we introduced a sustainability evaluation for all investment projects greater than € 10 million. The shadow price that must be considered for these investment projects is € 100 per metric ton of CO2eq. With these measures, we aim to establish a clear focus on reducing CO2 emissions in all our large capital expenditure projects.
Transparency on CO2 emissions and energy consumption
We report to the Carbon Disclosure Project (CDP) on an annual basis. This organization assesses the ways in which companies are working to lower greenhouse gas emissions and minimize the risks and consequences of climate change, along with their strategy for doing so. Companies are rated from A to D-, with A being the top score. In 2022, we scored B (2021: B) for climate change and B (2021: A-) for water security.
Green mobility
We aim to transition our car fleet primarily to lower emission engines by 2025 and are working to reduce the average emissions of our vehicles by approximately 50% relative to 2020 levels. Through our Green Fleet pilot, we help employees at our German sites make the change to electric vehicles. In 2022, we increased the number of charging stations where employees can recharge their company or personal cars to 88. We also provide our employees access to charging facilities in other countries, such as France, Switzerland, the United Kingdom, and the United States.
For those on the road, we offer the “Laden@road” program, which allows our employees to charge their company cars or personal vehicles at roughly 160,000 stations across Europe.
Climate-related risks and opportunities
In order to comply with all disclosure requirements of the Task Force on Climate-Related Financial Disclosure (TCFD), we started with a detailed assessment of climate-related risks and opportunities. In 2022, we conducted a qualitative scenario analysis, which will be followed by a quantitative study in 2023. Scenario analyses are among the key recommendations of the TCFD and are closely related to EU taxonomy. They are now a legal requirement in the United Kingdom. This endeavor is aimed at understanding the risks and opportunities our organization may face due to climate change. In our qualitative analysis, we have identified both the transition risks associated with a world moving towards net zero as well as the physical climate risks related to a society that does not commit to decarbonization. More information can be found in the TCFD index.
Energy efficiency
In 2022, a variety of energy efficiency initiatives helped us save around 3,000 metric tons of CO2eq at our global headquarters in Darmstadt (1,700 metric tons of CO2eq in 2021). For instance, we improved heating, ventilation and air conditioning systems and reduced base loads for compressed air systems.
As part of the energy and water efficiency program of our Life Science business sector, we rolled out new tools and governance structures in 2022 to help us assess projects to save energy and water. The energy and water efficiency program had a capital expenditure budget of € 4.6 million in 2022, which we will increase to € 9.3 million in 2023. In 2022, we formally trained 18 Facility, Plant Engineering, and EHS Managers from sites globally on energy management.
As part of our ongoing effort to expand renewable energy, our Life Science business sector initiated the installation of a 700 kW solar photovoltaic (PV) system at our Darmstadt site and an additional 100 kW solar PV system at our site in Bangalore, India. We also entered into a 30-year land lease agreement with the local electric company that serves our Sheboygan, Wisconsin (USA) site to install a 2,250 kW solar PV system on our land. We will receive and retain the renewable energy certificates generated by these projects.
In 2022, several of our energy efficiency investment projects at our Healthcare sites achieved double-digit percentage point scope 1 emissions reductions. In Vevey, Switzerland, we invested in replacing the natural gas-fueled white steam generator with an electrical model, achieving a reduction of 15%, and in Aubonne, Switzerland, we upgraded coolers and installed heat pumps, achieving a reduction of 25%. We also put in place heat pump technology in one of our core development sites in Ivrea, Italy, which counterbalances the GHG emissions associated with a major expansion.
Slight decline in energy consumption
We consumed 2,432 gigawatt hours of energy in 2022, compared with 2,454 gigawatt hours in 2021. Our energy intensity relative to sales totaled 0.11 kWh/€ in 2022 (2021: 0.12 kWh/€).
Purchasing electricity from renewable sources
In 2022, we further strengthened our focus on purchasing electricity from renewable sources. In this period, we sourced 47% of our purchased electricity from renewable energies, meaning direct supply contracts and energy attribute certificates (2021: 30%). The share of our total energy consumption by renewable energies increased to 20% in 2022 (2021: 13%). After signing a 12-year Virtual Power Purchase Agreement (VPPA) with the Azure Sky Wind and Storage project, the project went into commercial operation in May 2022. Furthermore, in 2022, we expanded our renewable energy commitment through another VPPA with a 16-year term. With these two deals, we cover 90% of the company’s electricity consumption in the United States and 55% globally.
We are covering the power needs of multiple South American sites (for example Argentina, Chile, Guatemala) through renewable energy certificates. The same applies to several of our sites in China. In line with our renewable energy strategy, we completed an assessment of the European renewable electricity markets to determine our best path forward. This assessment will guide our renewable electricity purchasing strategy in the coming years. We are currently in the process of selecting project developers to achieve our green electricity sourcing objective.
Employee incentives
We encourage our people to do their part to preserve the climate through helpful information and tips on our intranet. In our newsletter we regularly report on group-wide climate protection measures. Moreover, we support members of our workforce who are seeking greener modes of transportation:
- At our German subsidiaries, we offer a subsidy of € 150 towards monthly lease payments to employees who opt for an electric company car.
- At our German sites, we also encourage workers to use climate-friendly forms of transportation through “bike4me”, a program enabling them to lease a bike at discounted rates with payments coming out of their pre-tax income.
- In the United States, our Life Science employees can choose from several subsidies including up to US$ 3,500 towards the purchase or lease of qualifying hybrid or electric vehicles, US$ 1,000 towards the installation of solar photovoltaic systems or solar thermal collectors at their homes, and US$ 100 towards the cost of a home energy assessment.