Emissions

GRI 103-1 Explanation of the material topic and its boundary
The manufacturing processes and technologies used at SFS are extremely efficient. Cold forming, one of the Group’s core technologies, in particular is a highly energy and material-efficient approach compared with alternative manufacturing technologies. However, since the combustion of fossil fuels to generate energy in addition to other direct and indirect sources of emissions found in the manufacturing process have a negative impact on both the environment and the climate, SFS strives to continuously reduce its emissions – in compliance with the Paris Climate Agreement. The boundaries of this topic can be defined as follows:

Scope 1: Emissions from sources within the company. At SFS, direct emissions are generated mainly by heat treatment systems and the company’s own heating systems.

Scope 2: Emissions from the generation of energy purchased from an external source. At SFS, these arise mainly through energy consumption (electricity) and industrial gases attributable to manufacturing activities at the individual sites..

Scope 3: Emissions that arise as a result of the company’s operations but are generated by sources not controlled by the organization (for example, emissions originating from suppliers or service providers). At SFS, materials such as steel, non-ferrous metals, plastic and packing materials are procured from external sources. Other significant sources of emissions include the transport of materials and products, and employee business-related travel and commuting.

During the year under review, data was collected at 34 locations (2019: 33 locations) with 8,956 FTE employees (SFS Group employees, 2019: 9,047). This corresponds to about 84% (2019: 86%) of the entire workforce of SFS Group. The goal is to include all relevant locations by 2025 and reach a coverage level of more than 95%.

GRI 103-2 The management approach and its components
As a leading technology-driven company, SFS not only strives to make its own processes as energy and resource-efficient and environmentally friendly as possible, but also to provide solutions that offer customers long-term advantages in terms of procurement, use, assembly, reliability and performance. Since environmental management at SFS takes the entire supply chain into account, it contributes to the achievement of both its own environmental goals and those of its customers.

The overarching principles of environmental management are set forth in the «Policy on Quality, Environmental Protection and Occupational Health and Safety». Here, SFS promises to manufacture and/or offer all its products and services in a manner that complies with legal and official requirements governing environmental protection, health and safety.

ISO 14001 certification of the Group’s production sites forms part of its management approach and its comprehensive environmental management system. Currently, 20 production sites (previous year: 15) have an ISO 14001-certified environmental management system. The goal is to expand this system to all significant production sites by 2025 (see GRI 102-45 for more information) and certify these according to ISO 14001. The following table shows the current status with regards to planning and actual certification according to divisions:

Target achievement for 2) and 3) is measured using the “Percentage of renewable energy sources” indicator. SFS’ goal is to achieve at least 50% by 2025 and more than 90% by 2030. Efforts to optimize the company’s performance 1) are aimed at reducing CO₂ emissions (Scope 1 & 2) by at least 3% per year (measured against the contribution margin). The starting point for each target is fiscal year 2020.

Each program begins with an evaluation of the available potential in order to systematically document any initiatives already implemented in the individual facilities and to generate additional points of leverage. Some examples from the plants include optimization of the compressed air and vacuum systems, modernization of the lighting systems (LED), optimization of the heating, ventilation and air conditioning systems, material recycling and wastewater treatment.

To improve its performance, SFS follows the Lean & Green program, which combines lean management approaches with environment and sustainability-related aspects. Here, a material flow analysis is performed to look for further potential within the processes, while simultaneously incorporating the use of lean methods. This approach focuses on recycling opportunities and seven possible sources of waste: energy, water, materials, waste, transport, emissions and biodiversity.

To generate renewable energy, SFS is examining the extent to which production and office buildings and other outdoor areas can be equipped with solar power systems. The next step will be to examine the possibilities offered by other manufacturing processes or collaboration.

To optimize its supply chain in terms of emissions, SFS has launched its “Supplier Material” initiative to assess how it can exert a positive influence, including the use of transport that relies on alternative fuels.

By participating in the “Plant-for-the-Planet” initiative, SFS aims to reduce its negative impact on the environment and society, and also make a positive contribution.

Higher quality data for greater transparency
A solid set of data for the roadmap is essential in order to develop targeted environmental and climate protection measures, monitor their effectiveness and initiate any corrective or supplemental measures. During the year under review, 34 locations (2019: 33 locations) and additional sources of emissions were included in the data compiled on Scope 1 emissions. Since the data quality and coverage of the emission sources for Scope 3 emissions (other indirect GHG emissions) were not sufficiently conclusive during the year under review, SFS has opted not to publish this information. Data collection will be improved further by 2025 and cover all significant sources of emissions.

Target achievement through joint responsibility
In order to give greater weighting to environmental and social aspects in the context of corporate governance, the target agreement for the Group Executive Board will include specific ESG targets as part of the individual targets from 2021.

The divisions are responsible for reducing emissions in accordance with the defined targets by 2030, 2035 and 2050. They define measures that take the characteristics of the different organizations into account. The performance assessment employs a management-by-objectives approach. A peer-group approach is used to help the divisions plan and implement the measures. The Group EHS (environment, health, safety) manager works together with the divisional and site EHS managers to define general approaches. Peer group meetings are held on a monthly basis to monitor progress, take any corrective measures deemed necessary and exchange best practices.

Implementation of specific measures initiated
Several sites were able to introduce some initial measures during the year under review, including installation of a new LED lighting system, installation of a modern direct heating system and implementation of a 100% waste recycling management system at the Leeds (UK) site. These sustainable modernizations resulted in substantially lower energy consumption and reduced CO₂ emissions. Production sites in Switzerland have relied exclusively on climate-neutral electricity since 2021. To that end, the existing photovoltaic system at the main site in Heerbrugg (Switzerland) was significantly expanded in autumn 2020 and has been generating some 8.5% of the current energy requirements of the Swiss production sites since spring 2021. SFS has been using hydropower to cover all its remaining electricity requirements since 2021.

Stakeholder involvement ensured through continuous dialog
SFS seeks out and offers its stakeholders opportunities to communicate with the Group on a regular basis via various physical and digital platforms, including an active complaints management system; see GRI 102-43 and GRI 102-44 for further details.

GRI 103-3 Evaluation of the management approach
The emissions-related management approaches and measures described in GRI 103-2 are presented annually to the Group Executive Board by the Group EHS manager. Achievement of the roadmap targets and initiatives is assessed and adjusted on that occasion, and includes a review of the Group’s environmental performance. ISO 14001-certified sites provide status updates on topics such CO₂ emission reductions. "Streamlined Energy & Carbon Reporting (SECR)" requirements provide another summary of progress and changes made. Due to country-specific requirements, these are prepared by the sites responsible in the UK.

In addition to the criteria governing ISO 14001 certification, the management approach was also expanded during the year under review to include the relevant environmental initiatives. Initial measurements or information on target achievement and progress, where applicable, will be compiled during financial year 2021 and published in the Sustainability Report 2021.

GRI 305‑1 Direct (Scope 1) GHG emissions
Since the previous year, this has been expanded to cover additional sources of emissions and another site, which has resulted in a sharp increase (22%) in the emissions reported. More extensive data collection is an important driver of increased transparency, which in turn is important in defining appropriate measures and verifying their effectiveness. Against this backdrop, the figures are not comparable with the figures published in the previous year.

Expansion of the scope of data collection has now enabled information about all common gases to be included. No biogenic CO₂ was emitted during the period under review. According to in-house estimates, the data collected at the production sites represented a coverage level of 80%-90% of the sites’ data potential. Gaps relating to the collection of refrigerant data and information on fuel consumption for the in-house fleet of vehicles should be closed by 2023, thus boosting data quality to 100%. That means that SFS will be able to completely map all significant sources of emissions through its data acquisition efforts over the next two years.

GRI 305-2 Energy indirect (Scope 2) GHG emissions
Indirect emissions include emissions from purchased electricity and all types of district heating. The emission profiles of purchased energy are included in the evaluation during the procurement process. Absolute indirect CO₂ emissions (Scope 2) dropped by about 2% over the previous year. At several sites, this reduction was attributable in part to optimization measures such as implementation of the LED lighting concepts, new energy suppliers and optimization of heating and air conditioning systems. However, energy consumption continued to rise as a result of good business performance, particularly in Asia. The percentage of renewable energy used in the period under review amounted to 4% (2019: no data available).