Climate change is one of the most pressing challenges of the 21st century. Thus far, it has only directly impacted us to a minor extent. Nevertheless, because our operations generate greenhouse gas emissions, we intend to do our part to mitigate our impact on the climate. In view of burgeoning regulations and rising energy costs, climate impact mitigation is also becoming an increasingly smart investment.
Our principles
Doing our part
We are taking action to mitigate our impact on the climate. Our goal for 2020 is to reduce our direct greenhouse gas emissions (Scope 1) and indirect emissions (Scope 2) by 20% relative to the 2006 baseline. Scope 1 covers emissions that we produce ourselves, for instance by burning fossil fuels to generate power, while scope 2 pertains to emissions from the consumption of purchased energy, such as electricity or district heating. Across the globe, 37 of our sites account for roughly 80% of our greenhouse gas emissions, which is why we are focusing our efforts here.
Energy conservation represents an important component of our climate impact mitigation activities. By adapting and modernizing our technology, we are improving the energy efficiency of our R&D operations, our production processes and our buildings.
We are further lowering greenhouse gases by increasing our use of renewable energies. Moreover, we are also reducing emissions that stem directly from energy generation and manufacturing operations.
Our Group function Environment, Health, Safety, Security, Quality (EQ) is responsible for globally overseeing all climate impact mitigation measures (see Environmental stewardship). At our individual sites, operating units are responsible for implementing the actions and initiatives stipulated by EQ.
Regulatory framework for climate impact mitigation
We are subject to a wide array of national and international energy and emissions regulations, such as the German Energy Conservation Act, the German Renewable Energy Sources Act and the European Union emissions trading system. For instance, EU Directive 2012/27/EU stipulates that we must establish energy management systems and regularly audit our energy consumption. The sites subject to these requirements are responsible for implementing them and furthermore undergo audits conducted by internal or external experts.
With the 2015 Paris Agreement on climate change now in place and phase four (2021-2030) of the EU emissions trading program due to start soon, we expect to see a tightening of greenhouse gas emission regulations. Going forward in phase four, we foresee having to purchase the emissions allowances that we're still mostly obtaining for free during phase three (2013-2020).
Strategic approach to climate impact mitigation
In 2009, we launched our strategic Edison program to consolidate all our initiatives for improving energy efficiency and reducing process-related greenhouse gas emissions. Under Edison, our Group function EQ collaborates with a working group comprising representatives from all business sectors. Any site can propose a project. The working group assesses the proposals according to three criteria: 1.) the total absolute CO₂ savings, 2.) the potential cost savings, and 3.) the ratio of CO₂ savings to required spend.
Internal standards and external certification
Our Corporate Environment, Health and Safety (EHS) standards on energy management and emissions from coolant ensure that energy and process-related emissions are managed consistently across the Group. In 2016, these standards were also implemented for Sigma-Aldrich sites. Site management conducts local audits at random to verify compliance with all EHS standards.
Efficient energy management plays a particularly important role in climate impact mitigation and is also increasingly important to our customers. With this and other reasons in mind, 13 of our sites decided to obtain ISO 50001 certification, the international standard for energy management, by the end of 2016. Further facilities are currently preparing for this certification process.
Educating employees on climate impact mitigation
We encourage our employees to do their part to preserve the climate. We regularly report on our Group-wide climate impact mitigation activities in our employee magazine “pro” and in our employee newsletter, while also providing helpful information and tips on our Intranet. Moreover, we support employees who prefer greener modes of transport. For instance, we are constantly updating our pool of leased vehicles with more efficient models to reduce the average CO₂ emissions of our business car fleet by 30% by 2020, relative to 2013. We also provide further incentives in the form of the Jobticket for public transport and attractive deals for leased bicycles.
Switching to sea freight
In an effort to reduce greenhouse gas emissions resulting from the transport of our products, we utilize sea rather than air freight whenever possible. However, this is only an option for products that are not damaged by protracted transport times. At the same time, we cannot allow the quality of customer service to suffer due to extended transport times.
Transparency for CO2 emissions and energy consumption
Since 2008, we've been reporting in detail on our climate impact mitigation efforts as stipulated by the CDP (previously Carbon Disclosure Project). We track our greenhouse gas emissions in line with the Greenhouse Gas (GHG) Protocol, an internationally recognized standard, reporting on scopes 1 and 2, as well as parts of scope 3. Scope 3 includes other indirect emissions, such as the extraction and production of purchased materials, transport-related activities, waste disposal, and employee travel. Tracking scope 3 emissions is a rather complex undertaking. We track emissions from business trips and employee commuting, from waste management, and from the manufacture and transport of fuel.
Besides emissions, we also measure energy consumption at our sites. This does not, however, include energy use outside our field of activity, such as the production of our raw materials, as we do not have sufficient data available to perform these complex calculations.
Progress
Slight drop in energy consumption
In total, we used 2,253 gigawatt hours of energy in 2016, versus 2,256 gigawatt hours in 2015. Our energy intensity relative to sales totaled 0.150 kWh/€ in 2016.
Emissions lowered despite growth
Despite growth in our operating business, we managed to reduce our greenhouse gas emissions by 10% relative to the 2006 baseline. In 2016, we emitted 715,000 metric tons of CO₂ equivalents, with 729,000 metric tons in 2015.
Between 2006 and 2016, we more than doubled our sales, which means that, relative to sales, our emissions have dropped significantly. Due to the previously mentioned acquisitions, we set an interim goal for the sites of our Life Science business sector of lowering the greenhouse gas emissions of our former EMD Millipore business (now MilliporeSigma) by 10% by 2015, relative to 2006. By the end of 2015, we had even managed to surpass this target by achieving a reduction of 11%.
Hundreds of climate projects initiated
Through the approximately 270 Edison projects initiated since 2012, we aim to annually save around 94 metric kilotons of CO₂ in the medium term. Since the program's launch, these efforts have conserved around 82,000 MWh of energy in total. At nearly 64,000 MWh, electricity use accounted for the greatest savings. For 2017, 81 new projects have been approved, in the hopes of achieving additional savings of around 34,000 metric tons of CO₂ annually.
In 2015 and 2016, we carried out projects such as:
- Our site in Onahama, Japan is one of the highest energy consumers within our Group, requiring large quantities of steam for pigment production. In 2015, we therefore switched process steam generation for production from kerosene to natural gas combustion. In addition, our pigment kilns are now fired with natural gas instead of liquefied gas. These changes will reduce CO₂ emissions by approximately 3,200 metric tons per year. In 2016, we successfully replicated this change at other facilities. At our Shizuoka site, for instance, we switched from heavy oil to natural gas for steam generation while also revamping the boiler and conduit system. In doing so, this site cut back its CO₂ emissions from the manufacture of high-tech chemicals for the microchip and display industry by approximately 850 metric tons per year.
- Our production sites in Darmstadt and Gernsheim, Germany account for approximately 29% of our global energy consumption, which led us to invest roughly € 27 million in the construction of two state-of-the-art energy stations, one of which went online in 2014 and the other at the end of 2015. These energy stations provide our pharmaceutical production operations, pharmaceutical research facilities, chemical plants, and chemical labs with electricity, heating and cooling. The new installations will reduce our CO₂ emissions by around 2,500 metric tons per year.
- In Shanghai, China, we commissioned a new photovoltaic plant in 2015 that is lowering this site's CO₂ emissions by roughly 280 metric tons annually.
Total greenhouse gas emissions (metric kilotons)1
(Scope 1 and 2 of the Greenhouse Gas Protocol)
1 In line with the Greenhouse Gas Protocol, for all previous years (up to the 2006 baseline) the greenhouse gas emissions have been calculated based on the current corporate structure of the reporting year and retroactively adjusted for acquisitions (e.g. Sigma-Aldrich in 2015) or divestments of (parts of) companies, or for changes in emission factors (portfolio-adjusted).
Green mobility: Jobtickets, leased bikes and subsidies
We offer our workforce in Darmstadt a “Jobticket”, an annual subscription to use local public transportation for which we cover part of the cost. In 2016, more than 3,800 employees made use of this option. Since 2016, our people have also had access to an online tool that helps them organize carpools.
Our Life Science employees in the United States can charge their electric vehicles for free at special charging stations directly on site. Our Darmstadt facility introduced such charging stations in 2016. Individual sites in France and Ireland likewise offer this service.
As of January 2017, we further lowered the CO2 emission rate for newly registered company cars from 150 g/km to a maximum of 135 g/km. At most of our German subsidiaries, we offer a subsidy of € 100 towards monthly lease payments to employees who voluntarily choose a greener car model. Relative to 2013, we have managed to decrease the CO₂ emissions of our company car fleet by 12%, and intend to expand this incentive to include all employees in Germany.
Our workforce in Darmstadt and Gernsheim also have the option of leasing a bike with payments coming out of their pre-tax income (bike4me). In 2017, we intend to offer this option to all employees in Germany.
Furthermore, our employees can also use the Call a Bike service throughout Germany at reduced prices to rent a bike for short periods of time. Deutsche Bahn, the German national rail company, is also setting up further rental stations all around our sites in Darmstadt. In support of this initiative, we are sponsoring an additional 50 bikes in the city.
In the United States, too, we provide our people with financial incentives to live greener. For instance, they receive up to US$ 1,000 in subsidies towards the construction of a private solar power unit and up to US$ 100 towards an energy consultant for their private home. They are also eligible for as much as US$ 3,500 towards the purchase of a hybrid or electric car, an incentive that has motivated more than 200 employees to switch to one of these types of vehicles.
Reduction in transport-related CO₂ emissions
In 2016, we switched additional transport routes from air transport to sea freight. Our Performance Materials business sector is now shipping its products between Germany and Japan, as well as between Japan and Korea, by boat instead of plane. Our Life Science business sector has also switched transport between the United States and Argentina to sea freight. These changes are cutting our annual CO₂ emissions by a total of 300 metric tons.
Positive rating from the CDP
In 2016, the CDP reworked its scoring methodology and now only gives one rating per company. The score incorporates more than just successes in and strategies for reducing greenhouse gas emissions. The CDP also assesses the ways in which companies are working to minimize the risks and consequences of climate change. The rating scale ranges from A to D-, with A being the top score.
According to this new methodology, we received an A- in 2016. As a Sector Leader for the DACH Region, we rank among the top 16% of companies in the Healthcare, Pharma & Biotech category in Germany, Austria and Switzerland. In 2015, when the CDP was still using the old evaluation model, our performance scored a C and our reporting was rated 98 out of 100 points, putting us in sixth place in the Healthcare category in Germany, Austria and Switzerland.