Emissions

GRI 305-1,2

Oerlikon supports customers who share our commitment to achieving carbon neutrality and count on our innovations to help them advance toward their environmental goals. The products and services we bring to market are designed to minimize their environmental impact over the entire life cycle and along the value chain, encompassing direct and indirect customers.

Reducing Consumption and Emissions

We are equally aware of our own environmental obligations and have committed to achieving climate neutrality for Scope 1 and 2 in 100% of our relevant operations. We are measuring this based on GHG emissions in relation to sales. Thus, our goal is to achieve zero GHG emissions and emission intensity (in tons of CO₂ equivalents per million Swiss francs of sales) by 2030.

In service of this goal, we strive to optimize sustainable practices in our R&D and operations, such as switching to more efﬁcient boilers (see case example below). At the same time, we engage in practices that reduce our carbon footprint in sales, delivery, maintenance and service. This is one of our reasons for locating Oerlikon sites in close proximity to customers – an approach that strengthens customer service capabilities and helps to reduce emissions.

We also encourage individual employees to embrace sustainability through measures such as providing secure parking for those who choose to commute by bicycle and charging stations for those who drive electric or hybrid cars. At some of our sites, we have switched from diesel to electric forklifts, which eliminate the hidden dangers caused by diesel while also reducing pollution. At one site in China, this change led to 4 158 kg of CO₂ reduction per year.

Since our ﬁrst 2020 report, we have been communicating our Scope 1 and Scope 2 greenhouse gas (GHG) emissions, as well as the GHG emissions intensity levels.

Considering the different factors impacting emissions, we have mapped out a route on how we can help to reduce our climate impact across Scope 1 and Scope 2 and also Scope 3 (more here).

Scope 1 and 2

Our Scope 1 emissions are direct GHG emissions from owned or controlled sources of the Group, excluding emissions from small ofﬁces whose emissions are negligible. Scope 2 encompasses indirect GHG emissions from electricity, steam, heat and cooling purchased by the Group.

Our GHG emissions intensity levels are measured in tons of carbon dioxide equivalent (tCO₂e) per million of sales in Swiss francs for total Scope 1 and 2 emissions (see page 39 and 81 of the report). In 2022, emissions data from 166 operational sites were consolidated.

Our Scope 1 emissions increased (+28%) in 2022 compared to the baseline, mainly due to the increase in natural gas from the changed methodology as reported in 2021. Compared to 2021, Scope 1 emissions decreased by 3%, before accounting for the effect from acquired sites. Excluding acquisitions, Scope 1 emissions (18.3 kt) were reduced by 6% in 2022 compared to 2021.

In 2022, we reduced our Scope 2 emissions by 10% compared to our 2019 baseline and lowered the emissions by 9% compared to our 2021 level, before accounting for effects from acquired sites. Excluding acquisitions, Scope 2 emissions (121.7 ktCO₂e) were reduced by 14% in 2022 compared to 2021. The improvement in emissions levels is attributed mainly to the shift toward using renewable electricity.

In terms of GHG emissions intensity for Scope 1 and 2, which is the metric we are using for our climate neutral 2030 target, we have notably lowered the carbon intensity of our operations in 2022 (50.6) compared to 60.9 from the 2019 baseline year and also compared to 60.8 in 2021.

Among our 166 sites, 70 of them are using the market-based method to report on their Scope 2 emissions, while 96 sites are using the location-based method, as they do not have contractual information that meets the Scope 2 quality criteria.

Our indirect emissions are attributed mainly to electricity bought for all sites, heat bought at a few sites and cooling bought at a handful of sites. Our direct CO₂ emissions stem from the combustion of natural gas and oil for heating purposes, emissions from diesel and gasoline for vehicles (private use excluded) and hydrocarbon gases for specific production processes such as thermal spray.

Gases like propane or acetylene that are used in the Oerlikon Balzers’ thin-film coating processes become part of the surface and are not combusted. Since these gases do not react with oxygen, they are not considered as a form of energy (but rather process gases) and therefore do not generate CO₂ and are excluded from the emissions measurements for the environmental metrics reporting.

In measuring our CO₂ emissions, we follow the defined unit by the GRI Standards, which is tCO₂e. Unlike a number of other industrial companies, we do not use F-gases in our production processes. For example, we do not use sulfur hexafluoride (SF₆) gas, which is an insulating gas for electrical equipment. These gases are considered much more damaging GHGs than CO₂, with a negative impact of about 22 000 times that of CO₂. Thus, our CO₂ emissions can be considered “real” CO₂ emissions and not CO₂-equivalent emissions (as SF₆ would be classified).

Emissions¹	Unit	2022² Total	2021³ Total	2019 Total
Direct CO₂ emissions (Scope 1)	kilotons CO₂ eq	19.0	19.5	14.9
Indirect CO₂ emissions (Scope 2)	kilotons CO₂ eq	128.1	141.5	143.0
Total Scope 1 and Scope 2 GHG emissions	kilotons CO₂ eq	147.2	161.0	157.9
Scope 1 and Scope 2 GHG emissions intensity	tons CO₂ eq per million CHF sales	50.6	60.8	60.9

¹ _{Differences in total reported figure due to rounding.}
² _{Including 2021 acquisitions.}
³ _{Excluding 2021 acquisitions.}

2030 Operational Environmental Targets (Scope 1 & 2)

Scope 3

In 2021, we took the first steps toward reporting on GHG Scope 3 and started the process with the appointment of an external partner to work with us on assessing the relevance of the 15 GHG Scope 3 categories.

The assessment involved first gathering data from subject-specific experts and having it evaluated, including performing a sanity check. Following that, the emission sources were compared to the emission factors in the ecoinvent database (life cycle inventory), the US Environmental Protection Agency’s (EPA) GHG Emission Factors Hub document and the UK government’s Department for Business, Energy and Industrial Strategy (DBEIS).

Following this assessment, we now have an understanding of Scope 3 emissions along our value chain. From this initial assessment, four of the 15 categories were considered not applicable while the other 11 were quantified. Considering that there are a lot of further steps and other stake-holders involved, our next step is to perform a more detailed analysis of the data, focusing specifically on the emissions that we can influence and identifying what actions are needed to address them.

We intend to do this systematically so that we can set a meaningful Scope 3 target over the next years.

Case Study: Reducing Water Consumption

Although water consumption is comparatively low and not considered material at Oerlikon, many of our sites do evaluate if and how water consumption can be reduced. For example, our site in Troy, Michigan, USA, achieved a target of 10% reduction in water consumption in 2021 via the implementation of automated valving and process improvements.

In 2022, Troy targeted an additional 5% reduction in water consumption. Overall, they successfully reduced consumption largely due to process changes that eliminated wasteful techniques of leaving ofﬂine furnaces unnecessarily connected to city water hose reels.

Case Study: New Hot Water Boiler in Suzhou Saves 25 000 m3 of Natural Gas

With the replacement of a water boiler with a cubic capacity of 2 cubic meters, Oerlikon Balzers in Suzhou, China, was not only able to significantly reduce costs, but also achieved an annual savings of over 25 000 m³ of natural gas, or the equivalent of 48.8 metric tons of CO₂.

After years of use, the existing boiler with its furnace chamber for storing hot water was heavily furred, which affected its thermal efficiency. The advanced boiler type, which was installed in 2022, uses pre-treatment of the water to prevent such furring, simultaneously improving the thermal output.

The significant savings are also attributable to the boiler's different mode of operation: instead of storing the hot water in a chamber, only the water needed is heated at any given time. This way, there is no longer energy consumed to keep water that is not needed warm.

Case Study: New Hot Water Boiler in Suzhou Saves 25 000 m3 of Natural Gas