Climate change is one of the major challenges facing us in the 21st century. Because our company is no exception when it comes to generating greenhouse gases, we aim to reduce these emissions in order to mitigate our impact on the climate. This issue matters not only to us, but also to our customers and many other stakeholders. Changes in the climate can lead to planning and investment uncertainty. Regulations and legal requirements are also evolving in a bid to encourage climate-friendly behavior. We believe that climate action and energy efficiency will pay off in the long run, benefiting both the environment and our business.
Our contribution to climate action
We are taking action to mitigate our impact on the climate. In 2009, we set out to reduce our direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions by a total of 20% by the end of 2020 (2006 baseline), a goal that we achieved on schedule.
In 2020, we therefore drew up new objectives. By 2030, we intend to lower our direct (Scope 1) and indirect (Scope 2) emissions by 50% (2020 baseline), to be achieved by executing energy efficiency measures, reducing process-related emissions, and purchasing more electricity from renewable sources. We are also aiming to cover 80% of our electricity consumption with renewables by 2030. Moreover, we plan to set a new reduction target for our emissions from the upstream and downstream value chain (Scope 3). We are currently setting up processes to record non-reported Scope 3 data more precisely. We will validate the data basis for a specific target in 2021.
By 2040, we intend to achieve net zero carbon operations along our entire value chain. This target covers our Scope 1, 2 and 3 greenhouse gas emissions.
How we structure our climate action
Our Group Environment, Health, Safety, Security, Quality (EQ) function is responsible for overseeing climate action within our company, with our individual sites worldwide implementing the necessary measures at the local level. Further information can be found under Environmental stewardship.
Our commitment: Standards and legal frameworks
Two of our EHS standards, “Energy Management” and “Emissions of Refrigerants”, enable energy and process-related emissions to be managed consistently across the Group. We utilize an internal audit process to check compliance with all EHS standards on a random basis.
In addition to our own standards, we are subject to a wide array of national and international energy and climate regulations. At the 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 to ISO 50001.
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’s 2030 climate and energy framework is designed to achieve the objectives of the 2015 Paris Agreement, with EU emissions trading playing a key role in reaching the greenhouse gas emissions reduction targets. 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 emission allowances.
The German Fuel Emissions Trading Act (BEHG) stipulates the introduction of a national carbon pricing system for fuel in Germany starting in 2021. We therefore expect the cost of fossil fuels to increase.
Slight rise in energy consumption
We consumed 2,372 gigawatt hours of energy in 2020, versus 2,178 gigawatt hours in 2019. Our energy intensity relative to sales totaled 0.14 kilowatt hours per euro in 2020.
Our emissions
In 2020, we integrated Versum Materials, which we acquired in October 2019, into our reporting. Because Versum Materials has no data that dates back to 2006, we could not reflect these additional emissions in our 2020 climate action target.
We lowered the greenhouse gas emissions of our legacy business (excluding Versum) by roughly 25% from our 2006 baseline, thus achieving our overall reduction goal despite growth in our operating business.
The integration of Versum Materials caused our greenhouse gas emissions to rise sharply. In 2020, we emitted aproximately 2,010,000 metric tons of CO2 equivalents (CO2eq) (2019: 630,000). Our direct emissions (Scope 1) totaled 1,706,000 metric tons of CO2eq, with indirect emissions (Scope 2) of roughly 304,000 metric tons calculated according to the market-based method (2,101,000 metric tons according to the location-based method which does not specifically take renewable energy sources into account). Greenhouse gas emission intensity (Scope 1 and 2) amounted to 0.11 kg of CO2eq per euro of net sales in this period.
In 2020, we focused on creating more transparency on our Scope 3 emissions. Going forward, we will be including all Scope 3 categories in our reporting.
Greenhouse gas emissions, Scope 1 & 2 (metric kilotons)1
(Scope 1 and Scope 2 of the Greenhouse Gas Protocol)
1) In line with the Greenhouse Gas Protocol, for all previous years (up to the 2006 baseline), greenhouse gas emissions have been calculated based on the current Group structure in the fiscal year and retroactively adjusted for acquisitions and divestments of (parts of) companies, or for changes in emission factors (portfolio-adjusted).
2) Emissions including Versum materials. In blue:emissions excluding Versum materials.
Transparency on CO2 emissions and energy consumption
Since 2008, we have been reporting to the 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 success and strategy for doing so. Companies are rated from A to D-, with A being the top score. We improved to a B in 2020 (2019: C).
Climate action
In 2020, our emissions reduction efforts focused on purchasing electricity generated from renewable energy sources. In 2020, we sourced 27% of our purchased electricity from renewables (2019: 19%). Renewables represented 12% of our total energy consumption.
Driving energy efficiency in Darmstadt
In 2020, a variety of energy efficiency initiatives helped us save around 1,700 metric tons of CO2eq at our global headquarters in Darmstadt. For instance, we updated heating, ventilation and air conditioning systems, implemented energy-saving lighting concepts and optimized cooling lines.
Reducing process-related emissions
Several of our production lines record high levels of process-related emissions. In our Life Science business sector, this is first and foremost caused by the release of perfluorinated carbons (PFCs). In 2020, our Jaffrey plant (New Hampshire, USA) replaced two emission-heavy production lines with equipment that does not emit PFC. Thus, a total of four out of 14 production lines at the site now operate PFC-free. As a result, we anticipate a 28% reduction from existing PFC emissions in 2021 compared to 2020. Furthermore, four additional PFC-free production lines are ready to be placed into service in 2021. Two of these are new assets built for increased production capacity.
With Versum Materials now integrated into our Performance Materials business sector, our process-related emissions have risen sharply. A large percentage of these emissions arises from the production of specialty chemicals for the electronics industry. We are currently looking into ways to lower these emissions.
Switching to sea freight
In an effort to lower greenhouse gas emissions resulting from the transport of our products, we use sea freight rather than air shipping whenever possible. To this end, in 2019 our Healthcare business sector launched the transformation program “Spezzatino”. One of its objectives is to transport less than 10% of our Healthcare products by air by 2023, converting a majority of transport lanes to sea freight. This will lower our annual CO2 emissions by 10,000 metric tons. Between 2019 and 2020, we achieved a reduction of 5,000 metric tons.
Green mobility
In recent years, we have significantly lowered the average CO2 emissions of our company car fleet. Nevertheless, we did not achieve the 30% reduction in these emissions by the end of 2020 as originally planned (2013 baseline). In 2020, we drafted a new Group-wide guideline and an action plan aimed at making our fleet more eco-friendly. These will both take effect in 2021. Our objective is to transition most of the vehicles in our car fleet to lower emission engines by 2025, enabling us to reduce the total emissions of our vehicles by 25% compared to 2020. This would equal approximately 733 metric tons of CO2. In this endeavor, we are basing our calculations and measurements on the worldwide harmonized light vehicle test procedure (WLTP).
The average emission rate of our company car fleet in Darmstadt and Gernsheim (both Germany) is currently 111 g/km. The fleet features 26 electric and hybrid cars, representing a share of 16%. To facilitate this shift, we have installed an extensive charging infrastructure at our global headquarters, part of which is available to our employees for their own personal use. In addition, we also provide charging stations for company and personal vehicles at sites in France, India, Ireland, Switzerland, the United Kingdom, and the United States.
Employee incentives
We encourage our employees to play their part in preserving the climate. Aside from regularly reporting on our Group-wide climate actions in our EHS newsletter, we also provide helpful information and tips on our intranet. Moreover, we support employees who are seeking greener modes of transportation.
- At our German subsidiaries, we offer a subsidy of € 100 towards monthly lease payments to employees who opt for a greener company car model.
- Our workforce in Darmstadt also has access to a “Jobticket”, an annual public transit pass whose cost is partially covered by our company. Additionally, we also make available an online tool that helps our people arrange carpools.
- 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. Furthermore, employees throughout Germany can also take advantage of the Call a Bike service offered by Deutsche Bahn (the German railway company). This gives them access to a shared bike that is free of charge for the first half hour and can be borrowed and/or returned in the immediate vicinity of our sites.
- In the United States, we also offer our workforce financial incentives to choose a more sustainable lifestyle. For example, employees can receive up to US$ 1,000 in subsidies towards the installation of solar power on their home and up to US$ 100 towards the cost of an energy audit. They are also eligible for as much as US$ 3,500 towards the purchase of a hybrid or electric vehicle that has been designated as “SmartWay Elite” by the U.S. Environmental Protection Agency.