Climate change is one of the most pressing challenges of the 21st century. Thus far, it has only directly affected us to a minor extent. Nevertheless, because our operations generate greenhouse gas emissions, we intend to do our part for climate impact mitigation, an approach that our customers and stakeholders expect of us. Shifting regulatory requirements can lead to planning and investment uncertainty. In view of burgeoning regulations and rising energy costs, however, climate impact mitigation is also becoming an increasingly smart investment.
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, an objective set by the Executive Board in 2009. 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, 38 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 updating our technology, we are improving the energy efficiency of our R&D operations, our production processes and our buildings. Just as important is the reduction of process-related emissions. Furthermore, we are working to lower the emissions resulting from energy generation. Where financially viable, we additionally utilize renewable energies to generate our own power.
How we structure our climate impact mitigation efforts
Our Group function Environment, Health, Safety, Security, Quality (EQ) is responsible for globally overseeing all climate impact mitigation measures (see also Environmental stewardship). At our individual sites, Facility Management is primarily in charge of implementing the specified measures.
Climate impact mitigation accounted for approximately 5% of our 2017 EHS costs, which do not include the spend on individual climate impact mitigation projects (Edison program).
Our commitment: Standards and legal frameworks
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. We conduct audits at random to verify compliance with all EHS standards.
We know that efficient energy management plays a major role in climate impact mitigation and is also becoming increasingly important to our customers. With this in mind, 12 of our sites decided to obtain ISO 50001 certification, the international standard for energy management.
Our company is subject to a wide array of national and international energy and emissions regulations such as the German Energy Conservation Act and the German Renewable Energy Sources Act. Our activities are also governed by EU Directive 2012/27/EU, which stipulates that relevant companies must establish energy management systems and regularly audit their energy consumption. The sites subject to these requirements are responsible for implementing them and furthermore undergo audits conducted by internal or external experts.
The 2015 Paris Agreement on climate change is expected to lead to even more ambitious climate targets within the EU. With 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 largely obtaining for free during phase three (2013-2020). A global set of climate change regulations could, however, reduce existing competitive disadvantages.
Slight reduction in energy consumption
We used 2,270 gigawatt hours of energy in 2017, versus 2,241 gigawatt hours in 2016. Our energy intensity relative to sales totaled 0.15 kWh/€ in 2017.
Emissions lowered despite growth
Despite growth in our operating business, we managed to reduce our greenhouse gas emissions by 8% relative to the 2006 baseline. In 2017, we emitted 731,000 metric tons of CO2 equivalents, with 711,000 metric tons in 2016.
Between 2006 and 2017, we more than doubled our sales, which means that, relative to sales, our emissions dropped significantly.
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).
Strategic climate program
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 this program, our Group function EQ collaborates with a working group comprising representatives from all our business sectors. Any site can propose a project, with the working group subsequently assessing 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.
Through more than 300 Edison projects initiated since 2012, we aim to save an annual amount of around 98,000 metric tons of CO2 in the medium term. Since the program's launch, these efforts have conserved around 75,000 MWh of energy in total, primarily from electricity.
By the end of the year, we had implemented or launched 40 of the 81 Edison projects approved for 2017. These initiatives are expected to achieve savings of around 4,100 metric tons of CO2 in the medium term. We thus failed to achieve our goal of cutting up to 34,000 metric tons of CO2. One reason is that technical issues forced us to postpone an initiative for reducing process-related emissions to 2018. As in previous years, we accepted project proposals for 2018. Through 30 new projects, we hope to realize potential savings of approximately 4,600 metric tons of CO2.
In May 2017, the Executive Board approved a roadmap for achieving the remaining savings needed to meet our climate target.
Modern energy and cooling systems
In 2017, we invested approximately € 700,000 in a state-of-the-art energy station for our site in Modugno, Italy. As part of this project, we installed a new refrigeration unit and cooling tower. The facility went live in October 2017. These efforts are expected to cut energy use by roughly 950,000 kWh per year.
In Milwaukee, WI (USA), we optimized our HVAC system and thereby lowered our carbon dioxide emissions by 721 metric tons. At our Sheboygan, WI (USA) site, similar updates also led to an emissions reduction of 372 metric tons of CO2. The systems were cleaned and new coatings applied, thus enhancing the efficiency of both plants.
Investing in renewable energies
At our Life Science facilities in Jigani and Peenya (Bangalore, India), we spent € 775,000 on solar power units. We installed solar collectors with a 920 kilowatt power rating. The plants produce 1,265,000 kWh per year and lower our emissions by approximately 1,200 metric tons per year, covering roughly 30% of the energy required by each site.
In August 2017, the Indian Green Building Council (IGBC) gave our facility in Peenya, (India) a gold rating (the second highest ranking) in its Leadership in Energy and Environmental Design (LEED) index. The site's energy and water reduction efforts garnered particular praise. LEED is the world's most commonly used evaluation system for sustainable buildings.
We also installed solar collectors in Burlington, MA (USA). With a power rating of 182 kilowatt, this system is expected to generate 218,000 kWh of electricity per year and thus reduce our emissions by roughly 60 metric tons.
Educating employees about climate impact mitigation
We encourage our employees to do their part to preserve the climate and regularly report on our Group-wide climate impact mitigation activities in our EHS newsletters while also providing helpful information and tips on our Intranet. Moreover, we support employees who prefer greener modes of transportation. 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.
Subsidies for our employees
In January 2017, we lowered the CO2 emission rate for newly registered company cars from 150 g/km to a maximum of 135 g/km. Starting in 2019, we plan to further cut this rate to 120 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. We intend to expand this incentive to include all subsidiaries in Germany.
The current average emission rate of our company vehicles is 131 g/km, with 10% of the fleet in Darmstadt and Gernsheim being electric.
In the United States, 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 audit for their home. They are also eligible for as much as US$ 3,500 towards the purchase of a hybrid or electric car. To date, we've helped 55 of our employees install solar panels and motivated 361 employees to switch to a hybrid or electric car.
Recharging infrastructure at our sites
In addition to promoting electric vehicles within our motor pool, we also want to encourage our workforce to use electric cars in their private lives. To this end, our Darmstadt site offers eight charging stations in the employee parking lot, where our employees can recharge their vehicles for free.
Furthermore, we are working on an overall concept to expand the charging infrastructure at our German sites. In doing so, we are investigating other potential locations for charging stations along with alternative options Germany-wide for public charging and charging at home.
We have 42 charging stations across 12 Life Science sites in the United States, Ireland and France at which our employees can charge their electric vehicles for free. These facilities are currently utilized at an average rate of 50%.
Jobtickets and carpooling
We offer our workforce in Darmstadt a “Jobticket”, an annual subscription to use local public transportation whose cost we partially cover. In 2017, more than 4,300 employees made use of this option. Our people also have access to an online tool that helps them organize carpools.
Leased bikes in Germany
We also encourage our people to employ eco-friendly forms of transport through “bike4me”, a program enabling them to lease a bike at special rates with payments coming out of their pre-tax income. In 2017, we expanded the program from employees in Darmstadt and Gernsheim to include all employees at German sites.
Furthermore, our employees can also use the DB Call a Bike service throughout Germany and borrow a bike for up to half an hour free of charge. Deutsche Bahn, the German national rail company, has set up further rental stations all around our locations in Darmstadt, and in 2017 we doubled the number of bikes we're sponsoring in the city from 50 to 100.
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 survive protracted transport times undamaged. At the same time, we cannot allow the quality of customer service to suffer due to extended transport times. The raw material mica, for instance, is transported primarily by ship. Furthermore, we have switched to using sea freight for shipping our Life Science products between France and Japan or the United States. These changes are cutting our annual CO2 emissions by 3,000 metric tons in total.
Besides transitioning from air to sea transport, in 2017 our Performance Materials business sector also tested using rail to ship goods to Asia.
Transparency of CO2 emissions and energy consumption
The CDP (formerly the Carbon Disclosure Project) assesses the ways in which companies are working to minimize the risks and consequences of climate change, along with their success and strategy for doing so. The rating scale ranges from A to D-, with A being the top score. We received a B in 2017 (A- in 2016), putting us among the top 37% of companies in the healthcare industry.
Since 2008, we've been reporting in detail on our climate impact mitigation efforts as stipulated by the CDP. 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. In terms of Scope 3 emissions, we only track emissions from business trips and employee commuting, from waste management, and from the manufacture and transport of fuel. Besides these emissions, we also measure energy consumption at our sites. However, this does not include energy use outside our field of activity such as the production of raw materials, as we do not have sufficient data available to perform these complex calculations.