Climate change is one of the major challenges of the 21st century. Our company is no exception when it comes to generating greenhouse gases. We are therefore working to reduce these emissions to mitigate our impact on the climate. This course of action matters not only to us, but to our customers and many other stakeholders as well. Changes in the climate can lead to planning and investment uncertainty. At the same time, statutory and regulatory requirements are being modified 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. 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. Worldwide, 38 of our sites account for roughly 80% of our greenhouse gas emissions, which is why we are focusing our actions here. In 2019, we started developing a new climate target for the period leading up to 2030.
In past years, we focused our efforts on curbing greenhouse gas emissions through energy efficiency initiatives. By adapting and updating our systems and facilities, we are continually improving the energy efficiency of our research, production and buildings. We are also working to reduce process-related greenhouse gas emissions as well as emissions from our own power generation. When financially viable, we use renewable sources to generate our own power. Since 2019, we have been increasingly sourcing electricity from renewable sources.
How we structure our climate action
Our Group Environment, Health, Safety, Security, Quality (EQ) function is responsible for climate action within our company (Environmental stewardship), with our individual sites implementing the necessary measures at the local level.
Integration of Versum Materials and Intermolecular
In the course of integrating Versum Materials and Intermolecular, two companies we acquired in 2019, we are reviewing their existing management structures, policies, standards, and processes for climate action and energy management, and are implementing our internal Group-wide requirements if necessary. We are furthermore reviewing their current process for collecting greenhouse gas and energy consumption-related indicators and are working to harmonize methodologies and timelines. Starting in 2020, we will incorporate the greenhouse gas and energy efficiency indicators for Versum Materials and Intermolecular into our reporting.
Our commitment: Standards and legal frameworks
Energy Management and Emissions of Refrigerants, two of our Group EHS standards, enable energy and process-related emissions to be managed consistently across the Group. Through an audit process, we check compliance with all EHS standards on a random basis.
We know that efficient energy management plays a major role in climate action and is also important to our customers. With this in mind, 13 of our sites have decided to achieve ISO 50001 certification, the international standard for energy management.
In addition, we are subject to a wide array of national and international energy and climate regulations. In terms of energy efficiency and renewable energies, we are particularly impacted by the EU Energy Efficiency Directive (2012/27/EU), which stipulates that the affected 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 or external experts. The German federal Energy Services Act transposes the elements of the EU Energy Efficiency Directive into German law.
The EU Energy Performance of Buildings Directive (2018/844/EU) moreover sets the mandatory energy requirements for new buildings, for the major renovation of existing buildings, and for technical building systems. In Germany, this is also governed by the Energy Conservation Act and the Energy Conservation Ordinance, which were implemented by the operators of our plants and buildings with support from internal and external experts.
In Germany, our company is furthermore subject to additional statutory energy supply requirements such as the Energy Industry Act and the Renewable Energy Sources Act.
Our power plant in Darmstadt and our heating plant in Gernsheim (both in Germany) have made it necessary for us to participate in EU emissions trading since 2005. The European climate and energy policy up to the year 2030 is designed to achieve the goals of the 2015 Paris Climate Agreement, with EU emissions trading playing a key role in reaching the greenhouse gas 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 have to purchase emission allowances that we are still largely obtaining for free during phase three (2013 – 2020).
Slight rise in energy consumption
We used 2,240 gigawatt hours of energy in 2019, versus 2,227 gigawatt hours in 2018. Our energy intensity relative to sales totaled 0.14 kilowatt hours per euro in 2019.
Despite growth in our operating business, we managed to reduce our greenhouse gas emissions by 15% relative to the 2006 baseline. Our process-related emissions slightly rose from 90,000 metric tons in 2018, to 93,000 metric tons in 2019. In the reporting year, we emitted 665,000 metric tons of CO2 equivalents, versus 666,000 metric tons in 2018. Greenhouse gas emission intensity (Scope 1 and 2) amounted to 0.041 kg of CO2eq per euro of net sales in this period.
Between 2006 and 2019, we more than doubled our sales, which means that, relative to sales, our emissions dropped significantly.
These figures do not yet include the emissions associated with the acquisition of Versum Materials, which we completed in early October 2019. The corresponding emissions indicators have not yet been integrated into our reporting. Based on the figures Versum Materials reported for the previous two years (not calculated in accordance with our metrics), we are currently expecting this to add roughly 1.3 million metric tons of CO2eq per year to our carbon footprint. The majority of these are process-related emissions. During the integration process, we are examining the root cause of these high emissions along with ways to curb them. Because we have no data available for Versum Materials dating back to 2006, we cannot incorporate these additional emissions into our current climate action target. However, we will be integrating these into the scope of our next target, which will take effect in 2021.
Climate impact mitigation
In 2019, our emissions reduction actions focused on purchasing power from renewable energies. Additionally, we utilize our own photovoltaic plants worldwide with a total output of approximately 2,300 kilowatts. Furthermore, we are taking steps to optimize the HVAC systems and heat exchanger networks at our global headquarters in Darmstadt (Germany), efforts that are already saving 1,100 metric tons of carbon dioxide per year. Improvements to the heat exchanger networks were initially carried out in a pilot plant and can be applied to other plants. Since 2012, our strategic Edison program has saved us approximately 89,000 megawatt hours of energy, the majority of which was electricity. In developing a new climate action target for 2030, we are revising our approach to promoting energy efficiency, including our Edison program, and therefore did not initiate any new measures in 2019.
Employees and climate action
We encourage our employees to do their part to protect the climate. Aside from regularly reporting on our Group-wide climate actions in our EHS newsletters, we also provide helpful information and tips on our intranet. Moreover, we support employees who prefer greener modes of transportation. For instance, we constantly update our pool of leased vehicles with more efficient models.
In recent years, we have significantly lowered the average CO2 emissions of our company car fleet. Nevertheless, we will not succeed in reducing these emissions as planned by 20% by the end of 2020 (2013 baseline). Currently, we are working on new Group-wide guidelines and a list of measures in order to rapidly include new engine types in our fleet. Going forward, we will set a new reduction target based on the requirements stipulated by the new worldwide harmonized light vehicle test procedure (WLTP).
The average emission rate of our company car fleet in Darmstadt and Gernsheim (both Germany) is currently 120 g/km. Starting in 2020, we will be calculating and reporting this figure according to the WLTP. Our company fleet at these two sites consists of 24 electric cars (As of: December 2019), representing 16% of the motor vehicle pool. To encourage green mobility, we have installed an extensive charging infrastructure at our global headquarters in Darmstadt, 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 in France, India, Ireland, Switzerland, the United Kingdom, and the United States.
Subsidies for employees
At our German subsidiaries, we offer a subsidy of € 100 towards monthly lease payments to employees who opt for a greener car model. In the United States, we provide our employees with 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. Employees are also eligible for as much as US$ 3,500 towards the purchase of a hybrid or electric vehicle that was designated as “SmartWay Elite” by the U.S. Environmental Protection Agency. To date, we have helped 59 of our U.S. employees install home solar power systems and motivated 366 people to purchase a qualifying hybrid or electric vehicle.
Job ticket and carpooling
We offer our workforce in Darmstadt a job ticket, an annual public transit pass whose cost we partially cover. In 2019, 4,265 employees made use of this option. They also have access to an online tool that helps them organize carpools.
Bike leasing and sharing in Germany
At our German sites, we also encourage our people to use eco-friendly forms of transportation through “bike4me”, a program enabling them to lease a bike at favorable rates with payments coming out of their pre-tax income. In 2019, 339 of our employees entered into leasing agreements.
Furthermore, our employees throughout Germany can also use the Call a Bike service offered by Deutsche Bahn, the German railway company, to borrow a bike free of charge for the first half hour. Deutsche Bahn has set up further bike sharing stations around our sites in Darmstadt. We sponsored 100 bikes in the city in 2019.
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. However, this is only an option for products that can withstand protracted transport times undamaged. At the same time, we cannot allow the quality of customer service to suffer due to lengthy transport. Given all these factors, raw materials such as mica are transported primarily by ship.
Transparency for CO2 emissions and energy consumption
The CDP (formerly the Carbon Disclosure Project) 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. The CDP rating scale ranges from A to D-, with A being the top score. In 2019, our company received a “C”, thus maintaining the result achieved in 2018 (likewise C).
Since 2008, we have been reporting in detail on our climate actions as stipulated by the CDP, particularly Scope 1 and 2. Regarding Scope 3, we only track emissions from business travel and employee commuting, from our waste management activities, and from the production and transportation of fuels and energy. We are working to create transparency for other Scope 3 categories such as the production of our raw materials, which we are not reporting because we lack sufficient data. However, we intend to remedy this issue in the coming years.