Qualification of Sustainable Products

At Oerlikon, we see combating climate change as similar to engaging in groundbreaking R&D: if initial results are not fully aligned with expectations, we analyze the data and extract the lessons learned that we can use to attain optimal outcomes. As always, the process begins with data collection and development of methodologies. These empower us to assess where we are hitting our performance benchmarks and where the metrics signal challenges that require further efforts and investments in sustainable innovation solutions. 

In 2021, recognizing that a step toward improving is to measure, Oerlikon assigned the task to a team from the high potential talent program, Horizons, to define the criteria for categorizing what constitutes a sustainable solution – be it a coating, component, material or an equipment from Oerlikon. Their focus encompassed the direct and indirect impact of our products and operations. By formulating and executing a system, we are able to consistently and transparently report on our sustainable solutions and the progress that we make toward our target of investing 100% of our R&D in products that cover the ESG criteria. This target excludes our R&D investment for our defense and oil & gas customers, which contributes to less than 5% of our total revenue.

The team grouped our products into three cate­gories: 

•    Our tool coatings, whose objective is to improve customers’ production process from a sustainability perspective and so contribute to responsible consumption and production.

•    Our component and materials business, whose objective is to enable sustainable applications or improve the overall system with regard to sustainability and so contribute to climate action such as reduction of CO2 emissions in aerospace. 

•    Our equipment business, whose objective is to achieve more sustainable production.

For our tool coatings, we considered the coatings to be sustainable when they improve the production process of at least one of the following: raw material consumption, energy consumption, emissions or service time. At the same time, the coating must deliver the same or better performance than the industry standard. After consolidating the data, we found that all our tool coatings will definitely improve at least one of the environmental criteria, as tools with standard coatings or high-performance coatings can perform up to ten times better than an uncoated tool.

Upon comparing our tool coatings with industry standards, we identified some gaps – most of which were already known – and thus, we have been investing in R&D to develop next-generation coatings.

The component and materials business encompasses the broadest scope of our solutions. It includes our precision component, friction systems components, materials business and additive manufacturing. Given this breadth of scope, the team defined the first criteria based on the application of the product. If the solution was applied in a controversially discussed field in relation to sustainability, such as defense or oil & gas, it would not be considered sustainable. If the solution was applied in a sustainable field, such as renewable energy or medicine, then it would be considered sustainable. In addition, the solution needs to improve the overall system compared to the industry standards in at least one of the following areas: energy consumption, social impact, waste, emissions or service time. For the solutions in these criteria that do not have a comparable industry standard, they are not classified as sustainable.

It is important to mention here that Oerlikon serves customers in the aviation, space, automotive and tooling sectors, which have customers in the defense industry. Oerlikon also provides solutions to the oil & gas industry. In these industries, Oerlikon takes a best-in-class approach, with the aim to help these customers reduce their environmental or social footprint and meet their targets. Sales generated from both these industries comprise less than 5% of Oerlikon’s total revenues.

For our equipment business, the team defined a sustainable equipment as one that can reduce the environmental impact relative to that of the industry standard in terms of one or more of the following: raw material consumption, energy consumption, water consumption, social impact, waste, emissions or service time.

Overall, the categorizing and criteria developed by the team also identified areas of challenge that Oerlikon needs to address. In spite of some lag time between initiating those investments and seeing the new or enhanced products commercialized even accompanied with year-over-year fluctuations, we are already in the process of addressing these challenges and have ramped up our investments in sustainable products. Over the longer term, we will continue to engage in continual collaboration with our customers to upgrade and to deliver solutions that will strengthen our technology leadership and progress toward our 2030 R&D target where 100% of R&D spend is on sustainable products.