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: pages 12-15, 2020 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:

• • Reduce total Group energy intensity by 5% by the end of 2020 – Achieved: 10.5% reduction
  • Reduce total Group carbon intensity by 10% by the end of 2020 – Achieved:32.9% reduction
  • Generate 27% of the Group’s total energy requirements from non-fossil fuel sources by the end of 2020 – Not achieved: 25% of our total energy requirements were generated from non-fossil fuels.

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

Read more:2020 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 environmental targets.

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 and Ecovadis Assessments.

Read more: page 14, 2020 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.

The above data covers all external global spend on raw materials and process aids and is readily extracted from our SAP system and characterised as being renewable or non-renewable.  We do not report product tonnage because it is commercially sensitive. The data also does not include materials for packaging purposes as we currently do not have systems in place to record this data.

For more than 15 years, we have carefully measured emissions of gases implicated in climate change and have consistently set targets for reduction. Increasingly demanding targets have been set for 2030 by our Group Executive Committee under the guidance of the SHE Steering Committee. To ensure actions can be taken to bring about change, all previous major SHE targets were set over a five-year time-period. However, our new targets have been set to a 2030 target deadline with interim milestones to allow us to monitor progress and proactively respond to challenges.

Total energy consumption in 2020 was 3,640,416 GJ.

Energy intensity for 2020 was 6,263 per £1m turnover (6,207 GJ per £1m turnover in 2019). 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 and steam consumed within the organisation.

During 2020 our energy consumption increased due to new acquisitions.

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.

Throughout 2020 our 10 manufacturing sites that have the highest emissions have been developing decarbonisation roadmaps to ensure we can achieve our ambitious targets globally. We have set a milestone for all Croda locations to have completed a decarbonisation roadmap by the end of 2022. This year also saw us confirm, and start to implement, an internal carbon price of £50/tonne CO2e for all capital expenditure proposals, we believe this will continue to drive the right investment decisions to meet the challenging targets we have set.

Read more: page 14, 2012 Sustainability Report.

Includes consumption from our recent acquisition, Biosector.

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.  

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 2020, our sites were >94% compliant with liquid effluent discharge consents. We also reduced our waste to landfill by 22.8% in 2020 compared to 2019.

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. 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.

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.

Together for Sustainability

Operating since 2011, Together for Sustainability (TfS), is a joint initiative and global network of companies assessing the environmental, labour, and human rights, ethical and sustainable procurement performance of their suppliers. We have followed the progress and growth of TfS which is based on the UN Global Compact and Responsible Care® principles and now includes 29 chemical companies with which our supply chains increasingly interconnect. In 2020 we completed an assessment of membership criteria, including benefit to enhancing our sustainable supply chain metrics, and we shall join TfS early in 2021. In addition to our own supplier engagements, we seek third-party certifications to validate the sustainability credentials of our suppliers and their raw materials. These partnerships include International Sustainability and Carbon Certification (ISCC), Roundtable on Sustainable Palm Oil (RSPO), USDA BioPreferred®*, and the Union for Ethical BioTrade (UEBT).

Sustainable Palm Derivatives

Our leadership in supporting sustainable palm derivatives is acknowledged widely by customers and suppliers, and in 2020 our transformation to fully RSPO-certified physical supply chains was nearly complete, with just over 85% of our palm derivative volumes certified as we exited 2020. This covers over 100 suppliers and more than 300 raw materials into our 14 RSPO-certified manufacturing sites. Although the conversion was led by our Personal Care sector, the 85% achievement is across all our finished ingredients into all industries. Our joint venture in China, Croda Sipo, consumes four palm derivative raw materials for industrial applications which have not yet been converted but we expect this to be completed during 2021.

Action for Sustainable Derivatives

We are a founder member of Action for Sustainable Derivatives (ASD), a collaborative initiative that promotes responsible sourcing. ASD has accelerated the transformation of the palm derivatives industry towards compliance with ‘No Deforestation, No Peat, No Exploitation’ (NDPE) principles. Through ASD we work with a third-party consultancy, Transitions, to conduct supplier investigations to ensure full compliance with these principles.

We measure GHG emissions at all our manufacturing and non-manufacturing sites and until 2020 these were measured against a baseline year of 2015. From 2021 onward our emissions will be measured against a 2018 baseline in line with our recently set Science Based Targets (SBTs). Between 2015 – 2018 our Scope 1 GHG emissions have received limited verification in accordance with the requirements of the ISO 14064-3 standard by Avieco and in 2019 and 2020 we received reasonable verification by Avieco.

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 13.4% increase in Scope 2 CO₂ emissions.

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

Until 2020 we measured our GHG emissions at all our manufacturing and non-manufacturing sites against our baseline year of 2015. Between 2015 - 2018 our Scope 2 GHG emissions have received limited verification from Avieco in accordance with the requirements of the ISO 14064-3 standard and in 2019 and 2020 we received reasonable verification.

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 market-based emissions decreased by 32.1% during period 2019 – 2020.

There has been a 67.8% decrease in overall scope 2 GHG emissions based on a 2015 baseline.

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

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.

The 2018 and 2019 GHG emissions statements in the table above have been restated by Croda to incorporate the historic emissions from the new business acquisitions. This has resulted in an increase of 12% for 2018 and 2019 respectively compared to initial statements for scope 3 emissions (location-based).

In addition to the above stated scope 1, 2 and 3 emissions, Avieco has also verified the temporary biogenic carbon sequestration associated with one specific1 bio-based raw material Croda purchased in year ending 31st December 2020, as 226,943 tCO₂e. However, we note this figure does not consider the associated downstream emissions and therefore does not include any end-of-life emissions associated with its use.

We set a 2020 target to reduce total Group Scope 1 and 2 GHG emissions intensity by 10% from a 2015 baseline. We achieved this target with a reduction in GHG emission intensity of 32.8% in 2020 compared with 2015. Since our ECO bio-ethylene oxide plant came online in 2018 (production of our own ethylene oxide), and due to recent acquisitions, 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.

GHG emissions intensity for 2020 was 274 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 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 21.2%, given that our business has expanded, and new capacity has been commissioned. Within this, scope 1 emissions have increased by 13.4%, and location-based scope 2 emissions have increased by 3.2%. 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.

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

*LB = Location based

**MB = Market based

In 2015 we set a target to reduce total Group water withdrawal by 10%, based on 2015, by the end of 2020. We exceeded this target, with a 16% reduction in total water withdrawal in 2020 from our 2015 baseline, due to water-saving initiatives across our manufacturing sites., as detailed in GRI Specific Disclosure 303-1.

Our compliance with effluent discharge consents for 2020 was 94.2% down 5.6% 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. We achieved this target, with a 33.9% reduction in waste to landfill from a 2015 baseline. In 2020, 11 out of our manufacturing sites sent zero waste to landfill.

During 2020, we are happy to report that no significant spills occurred.

During 2020, a notice of violations was received relating to air permitting on the ethylene oxide plant at Atlas Point. Operation was ceased immediately pending corrective action.

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 by 2020 we had influenced 199 of our suppliers to complete the EcoVadis questionnaire.