Environmental

Basis for materiality

Industrial development has powered humanity’s journey towards a climate emergency. Now, smart science and collaboration are our most effective tools to start reducing our impact on the planet, society and our businesses and markets.

The need to address society’s impact on climate change through a global reduction in GHG emissions is a hugely important aspect of our strategy and ‘The Croda Difference’. Our work in this area is driven by our own operational emissions reduction targets, alongside an understanding that our impact on emissions also encompasses our upstream and downstream supply chain, which includes our high usage of bio-based raw materials. This is in addition to the emissions avoided through the performance benefits our ingredients offer when in use by our customers and their consumers.

Business stakeholders are increasingly focused on this issue: customers and end users are insisting on low-carbon alternatives to GHG intensive products. Financial actors are demonstrating a greater appetite for companies who demonstrate resilience to climate-related risks and opportunities over short, medium & long-term.

Our Purpose, Smart Science to Improve Lives^TM, sets out our ambitious goals to be Climate Positive, Land Positive and People Positive. We have a long history as a supplier of sustainable innovative ingredients. As we enter the new decade, we must further accelerate our positive impact by creating and delivering solutions to tackle some of the biggest challenges the world is facing.

Contribution to value creation

As well as reducing our own carbon emissions through the optimisation of its operations, we also contribute to avoided greenhouse gas emissions with our numerous sustainable products that deliver ‘in use’ benefits to our customers.  Inclusion of our products in customer formulations can offer many kinds of benefits in use: social, economic and environmental, for both our customers and their consumers. All new products launched during 2019, have a known sustainability benefit in use. Last year, we began to quantify the avoidance or reduction of GHG emissions associated with the use of our products by our customers or consumers in the end application.

Decreasing materials and energy consumption reduces cost and further increases the company’s competitiveness.

Read more: 2019 Croda Sustainability Report

Boundary

Climate change is relevant for our own operations, our global supply chains, our customers and the entire life cycle of our products.

Resources and Responsibilities

At Croda, our two most senior committees, the Board of Directors and Group Executive Committee are ultimately responsible for our economic, environmental and social performance and they maintain an active role in ensuring that sustainability remains an integral element of our business strategy. We are forming a Sustainability Steering Committee who will own the delivery of our strategy and guide our senior committees on future strategy development. Recently, we appointed a President of Sustainability to provide full time focus on sustainability and to offer direction for our Group Sustainability Team. We have also created a Product Sustainability Subgroup whose focus is to understand and meet the intrinsic and extrinsic product sustainability requirements of our customers and other stakeholders and align business and customer needs with corporate strategy in all aspects of product sustainability. However, our people recognise that mitigating climate change is the responsibility of all employees throughout the business. 

Goals and targets

In line with our Purpose, our Commitment is to become the most sustainable supplier of innovative ingredients. By aligning our smart science with the United Nations Sustainable Development Goals (SDGs) we will ensure that we are helping to tackle some of the biggest challenges the world is facing. In 2015 we set he following ambitious energy and carbon targets for 2020 compared to a 2015 baseline:

• Based on 2015, to reduce total Group energy intensity by 5% by the end of 2020
• Based on 2015, to reduce total Group carbon intensity by 10% by the end of 2020
• Based on 2015, to generate 27% of the Group’s total energy requirements from non-fossil fuel sources by the end of 2020.

Read more: GRI 302-1, GRI 302-3

Read more: pages of our 2019 Croda Sustainability Report

Evaluation and outcome

At Croda we monitor our climate impact by collecting and analysing data on energy consumption and greenhouse gas emissions across our business areas. Therefore, we track the trajectory necessary to achieve our 2020 environmental targets. We are well on track to meet these ambitious goals.

Since 2015, we also report on our Scope 3 emissions in order to meet growing expectations of external stakeholders regarding the development of a holistic climate strategy. This strategy includes a reduction in value chain emissions by opting for cleaner energy sources and engaging our supply chain using the CDP Climate Change questionnaire.

Read more: page 2019 Croda Sustainability report

Partial reporting.

The foundation of our business rests upon natural ingredients, with a large percentage of our raw materials originating from organic, renewable sources. In 2019, 63% of our raw materials came from natural, renewable sources and biotechnology. The growth of crops from which many of our raw materials are derived, removes CO₂ from the atmosphere, resulting in low carbon footprints for many of our products.

At Croda, we have carefully measured emissions of gases implicated in climate change for more than 15 years and have consistently set targets for reduction. Increasingly demanding targets have been set for 2020 by our Group Executive Committee under the guidance of the SHEQ Steering Committee. To ensure actions can be taken to bring about change, all major SHE targets are set over a five-year time period. However, our new SHE targets have been set to a 2030 target deadline

Total energy consumption in 2019 was 3,640,416 GJ.

Energy intensity for 2019 was 6,207 per £1m turnover (6,790 GJ per £1m turnover in 2018). Energy intensity is based on our ’value added’, which is operating profit before depreciation and employee costs. To calculate energy intensity, we divide energy consumption by value added.  The types of energy included in the intensity ratio are electricity, fuel, steam consumed within the organisation.

In 2015, we set a target to reduce total group energy intensity by 5% by the end of 2020, using the 2015 baseline.

Energy intensity is based on our ’value added’, which is operating profit before depreciation and employee costs. To calculate energy intensity we divide energy consumption by value added, which for 2019 saw an 13% reduction compared to 2015, indicative of our efforts to reduce overall energy use by investing in more energy efficient processes, such as biotechnology and novel plant equipment, and running them more efficiently

During 2019, in line with our commitment to continue investing in energy saving initiatives, we mapped the steam and electricity distributions across some of our manufacturing sites to gain a greater understanding of the energy requirements of different processes. This data is used in our cradle-to-gate LCA calculations for new and existing products and will help us to evaluate which processes or chemistries have the greatest impact on our product carbon footprints. LCA data will also help to support capital expenditure proposals for investments in renewable energy generation or novel energy efficient processes. The mapping of our manufacturing sites will continue into 2019 and beyond.

 Further details on energy use can be found in our 2019 Sustainability Report.

A review of the locations of our 19 manufacturing sites did not identify any sites that are located in, or adjacent to protected areas, or in areas of high biodiversity according to the Ramsar Convention on Wetlands and UNESCO World Heritage Sites.

We have identified that six of our manufacturing sites are close to some areas of high biodiversity, which are Hull (UK), Rawcliffe Bridge (UK), Campinas (Brazil), Mevisa (Spain), Cikarang (Indonesia) and Shiga (Japan). We are managing the environmental impact of these sites at a local level and setting targets to ensure that we minimise our impact on the environment by effectively managing the material business risk of Environmental Impact.

Our operation at Hull is near the Humber Estuary, which is designated as a Special Area of Conservation (SAC) and a Special Protection Area (SPA), as well as being designated as a UNESCO Ramsar Wetland. The River Hull next to the site flows to the Humber estuary and we have a local team in place to continually monitor our effluent discharge. We have also instigated a number of projects on the site to encourage biodiversity including planting indigenous trees on the boundary of the site to support local wildlife and re-establishing a marsh and pond area on site to support local biodiversity. A biodiversity study has also been conducted at the site by an independent expert and we are in the process of implementing the recommendations.

Our operation at Shiga is near to Biwa-ko, the largest freshwater lake in Japan, which is designated as a UNESCO Ramsar Wetland. The river Uryu is next to the site and leads to Biwa-ko, but as at our Hull site, we have a local team in place that continually monitors our water usage and effluent discharge. Our management teams and SHE experts are working hard at Shiga to reduce our water usage, which will reduce our local environmental impact. A team from the site also volunteers every year to help manage the river weeds along the Uryu to support local biodiversity.

Over recent years, our Mevisa manufacturing site in Spain has gone through major expansion, requiring the site’s utilities to undergo several upgrades. These upgrades have included an expanded effluent treatment plant to increase the volume of water that can be treated daily, whilst maintaining a COD discharge level well below the legal limit. They have invested in improved cooling and refrigeration systems to increase the re-circulation of cooling water from approximately 55% to approximately 75%. This has reduced water extraction by the site from the stressed local aquifer.  

Further details on how we are tackling key environmental issues can be found in our 2019 Sustainability Report.

We understand that our operations may have an impact upon local biodiversity, and we take the stewardship of our own land very seriously. Therefore, we will continue to review our impact on land, water and air.

For more than 15 years we have carefully monitored our environmental impact and set targets to reduce this at all our manufacturing sites. Reductions in energy and water usage, emissions to air and water and waste production, which has a continuing positive effect in reducing our impact on biodiversity in the areas in which we operate.

Our emissions and waste production have been carefully monitored by our Safety, Health and Environment (SHE) group to ensure that we reduce our impact wherever possible and are responsible in the disposal of liquid effluent or solid waste. In 2019, our sites were >94% compliant with liquid effluent discharge consents. We also reduced our waste to landfill by 17.7% in 2019 compared to 2015.

In 2014, we completed pilot biodiversity surveys at two of our operations. At our Cowick Hall headquarters in the UK we have 40 hectares of varied use land, which is already diverse in the valuable habitats and species it contains.  However, we are determined to achieve the next level in terms of our stewardship of the natural environment.   To this end, in 2017 we formed the Cowick Biodiversity Committee who are embarking on a long-term project to enhance the valuable habitats we have and to restore those habitats which have been lost to us over time and which are absent in the wider geographical are.  We aim to provide valuable refuge and focal points for our native species, thus contributing to ecosystem resilience and safeguarding the services they provide.  We will put into place an action plan to enhance and protect biodiversity at the site, based on recommendations from our biodiversity survey and working with local experts. 

Our new product development teams are committed to making our products as environmentally friendly as reasonably practicable and each year we measure and report new launches against the 12 Principles of Green Chemistry. A number of these principles relate to potential environmental effects that could harm biodiversity including, toxicity, hazardous by-products, persistence and chemical accidents. We aim to reduce the use of environmentally harmful chemicals by finding greener, safer alternatives and always take precautions with any chemicals that could pose a risk to the environment, often going beyond the standards required by legislation. In 2019, the average score for our new product launches was 9.3.

There are several key areas where we have influenced our suppliers and customers to provide sustainably sourced raw materials to ensure the preservation of biodiversity.

Further details on how we are tackling the issues of Sustainable Product Innovation can be found on page 24 of our 2019 Sustainability Report

Case Study – Sustainable Palm Oil

Our preference is in using bio-based feedstocks that deliver a lower carbon footprint than fossil-based alternatives. These natural feedstocks are sourced from crops that are well established and widely grown. However, the potential environmental issues of deforestation and loss of biodiversity surrounding palm oil production make end-to-end engagement in supply chains vital to ensure transparency and sustainable practices throughout. RSPO-certified palm is recognised to deliver a 35% lower global warming impact than non-certified. *

We fully support the RSPO, and all our relevant manufacturing sites processing over 99% of our global palm derivative volumes are RSPO Supply Chain Certified. In 2019 we also became founder members of the Action for Sustainable Derivatives (ASD).

* Jannick Schmidt and Michele De Rosa, the LCA consultants, Denmark.

“The home and personal care industry has made enormous progress in supporting sustainable palm and extending positive influence beyond its own supply chains. The ASD is a perfect example of businesses coming together to complete the industry transformation to sustainable palm and partnering to meet the United Nations Sustainable Development Goals.”

Chris Sayner

Vice President Customer Alliances, Corporate Sustainability

We measure GHG emissions at all our manufacturing and non-manufacturing sites compared to a baseline year of 2015, against which all our current environmental targets are set. Since 2015 our Scope 1 GHG emissions have received limited verification in accordance with the requirements of the ISO 14064-3 standard by Carbon Smart and in 2019 received reasonable verification. 

Types of GHG included, as applicable: CO₂, N₂O, CH₄, HFCs, PFCs and SF₆. The baseline year data is 2015 for the current five year target period and is recalculated when we acquire or shed sites. Emissions factors are calculated using the GHG Protocol and International Energy Agency’s published conversion factors and the methodology used is as per GHG Protocol Corporate Standard. Manufacturing and non-manufacturing sites which we have financial control of are included.

Since 2015, we have seen a 7.2% increase in CO₂ emissions. In 2019, our use of non-fossil fuels and renewable energy has eliminated 23,009 tonnes of CO2 emissions, which is equivalent to taking 11,563 cars off the road for a year.  For further details on our GHG emissions, please see our CDP Report.

We measure GHG emissions at all of our manufacturing and non-manufacturing sites against our baseline year of 2015. Since 2015 our Scope 2 GHG emissions have received limited verification in accordance with the requirements of the ISO 14064-3 standard by Carbon Smart.

Scope 2 GHG emissions (TeCO2e):

*Location-based emissions **Market-based emissions

Types of GHG included, as applicable: CO₂, N₂O, CH₄, HFCs, PFCs and SF₆. The baseline year data is 2015 for the current five year target period and is recalculated when we acquire or shed sites. Emissions factors are calculated using the GHG Protocol and International Energy Agency’s published conversion factors and the methodology used is as per GHG Protocol Corporate Standard. Manufacturing and non-manufacturing sites which we have financial control of are included.

Scope 2 GHG location-based emissions decreased by 6.1 % during period 2015 to 2016.

Scope 2 GHG market-based emissions decreased by 29.3% during period 2017 – 2019.

There has been a 52.6% decrease overall in scope 2 GHG emissions based on a 2015 baseline.

For further details on our GHG emissions, please see our CDP Report.

In 2015, we began measuring scope 3 carbon emissions. Between 2015 - 2018 our Scope 3 GHG emissions have received limited verification in accordance with the requirements of the ISO 14064-3 standard. The materiality and accuracy of these reported emissions underwent significant development by us and Carbon Smart’s observations on development needs were actively incorporated into our approach for future reporting. As a result of this effort, in 2019, we received reasonable verification, the highest level of verification awarded by Carbon Smart.

Read more: https://www.croda.com/en-gb/sustainability/transparency-traceability-and-regulatory/carbon-verification

Scope 3 GHG sources included in the verification process:

Raw materials; water supply and treatment; legal services; capital goods; well to tank fuels; well to tank electricity; electricity transmission and distribution (T&D), waste; air travel; car travel; other travel; employee commuting; upstream T&D.

Types of GHG included, as applicable: CO₂, N₂O, CH₄, HFCs, PFCs and SF₆. The baseline year data is 2015 for the current five year target period and is recalculated when we acquire or shed sites. Emissions factors are calculated using the GHG Protocol and International Energy Agency's published conversion factors and the methodology used is as per GHG Protocol Corporate Standard. Manufacturing and non-manufacturing sites which we have financial control of are included.

In addition to these asserted scope 3 emissions, Carbon Smart has also verified the temporary biogenic carbon sequestration associated with one specific bio-based raw material Croda purchased in year ending 31 December 2019, as 233,257 tCO₂e. However, they note that this figure does not consider downstream emissions associated with this raw material and therefore does not include any end of life emissions associated with its use.

We set a target to reduce total Group Scope 1 and 2 GHG emissions intensity by 10% from a 2015 baseline. We are currently on track to achieve this 2020 target with a reduction in GHG emission intensity of 21.9% in 2019 compared with 2015. Since our ECO bio-ethylene oxide plant came online in 2018 (production of our own ethylene oxide), our Group scope 1 and 2 emissions have increased, so whilst we are reducing carbon emissions elsewhere in our supply chain, we are taking on a greater burden ourselves. However, even with the inclusion of our ECO plant, other carbon projects taking place across the group, we anticipate meeting this target.

GHG emissions intensity for 2019 was 145.3 tonnes tCO₂e / £m.

Our chosen measure of GHG emission intensity divides our scope 1 and 2 GHG emissions by value added, defined as operating profit before depreciation and employee costs at 2015 constant currency. The 21.9% reduction in emissions intensity since 2015 illustrates how our business has grown without a negative impact on GHG emissions intensity.

Types of GHG included, as applicable: CO₂, N₂O, CH₄, HFCs, PFCs and SF_6.

As with all of our environmental impact targets, we report data for manufacturing sites against a baseline year of 2015.

Since 2015, our baseline year, total scope 1 and 2 emissions have risen by 7.5%, given that our business has expanded, and new capacity has been commissioned. Within this, scope 1 emissions have increased by 7.6%, whilst location-based scope 2 emissions have decreased by 11.7% We have been working on a project to increase the accuracy of our scope 3 emissions reporting, and this year used a hybrid model to calculate the emissions associated with our “Purchased Goods and Services” category, which provide the largest contribution to overall scope 3 emissions. With this increased accuracy, the total amount of scope 3 emissions has increased. Once we have an accurate measure of the scope 3 carbon associated with our raw materials, we will be able to work with our suppliers to reduce these emissions.

Types of GHG included, as applicable: CO₂, N₂O, CH₄, HFCs, PFCs and SF_6.The baseline year data is 2015 for the current five year target period and is recalculated when we acquire or shed sites. Emissions factors are calculated using the GHG Protocol and International Energy Agency’s published conversion factors and the methodology used is as per GHG Protocol Corporate Standard. Manufacturing sites and non-manufacturing sites which we have financial control of are included.

In 2015 we set a target to reduce total Group water withdrawal by 10%, based on 2015, by the end of 2020. We are on track to exceed this target with our total water consumption in 2019 being 17.4% lower than the baseline year of 2015, as detailed in GRI Specific Disclosure 303-1.

Our compliance with effluent discharge consents for 2019 was 94.3% down 5.5% based on our 2015 figures. There remain four sites that have occasional issues with wastewater, usually down to external factors such as weather. Therefore, in 2016 we took the decision not to continue with effluent discharge compliance as a public target. Internal monitoring continues to maintain tight control of our effluent treatment plants.

Data reported quarterly by our 19 manufacturing sites and is taken from utility company invoices or from direct reading. Compliance of samples analysed, and results are compared against consent limits issued by local regulators for those manufacturing sites which have a permit to discharge.

We recognise that the deposition of waste to landfill is not sustainable, permanently modifying land and potentially introducing contamination to both air and water. In 2015 we set a target to reduce Group waste to landfill by 10% by the end of 2020. As of the end of 2019 we are ahead of target having achieved a 27% reduction in waste to landfill since 2015.

During 2019, we are happy to report that no significant spills occurred.

During 2019, we are happy to report that no non-compliance notifications were issued to Croda International Plc.

We work hard to ensure that the social and ethical sustainability of our supply chain. In 2016, we began our partnership with Sedex (Supplier Ethical Data Exchange) Sedex Membership Number: ZC1010722. This involved asking 200 of our suppliers, based on their geographical location and raw material origin, to register with Sedex and complete their questionnaire, achieving a 70% completion rate. We are now working with EcoVadis and use Corporate Social Responsibility (CSR) Rating Methodology. In 2018 we carried out a pilot trial with them targeting our top 100 suppliers by value, plus a further 42 high risk suppliers from across all our regions. This work is currently ongoing, but 50% of the invited suppliers connected with us during the year through the platform.