Reducing GHG from manufacturing

Our approach

Lifecycle assessment shows that compared to other parts of our value chain, our manufacturing operations are not particularly energy intensive. However, because of the scale of our business, we continue to focus our efforts on reducing greenhouse gas emissions from energy used in manufacturing.

Targets & Performance

† To be independently assured by PwC in 2013

Progress on reducing greenhouse gases in manufacturing

We continued to make progress in reducing CO₂ in 2012, adding to savings since our 2008 baseline, which are now equivalent to taking around 200,000 cars off the road. We have also made good progress in increasing the energy from renewable sources at our manufacturing sites. All our sites in the US now purchase electricity from certified renewable sources, as well as those in Europe and Canada.

In 2012, we saw improvements in our two key performance measures expressed on a load per tonne of production basis: energy use (in gigajoules (GJ/tonne)) and CO₂ from energy (in kg CO₂ /tonne). PwC is independently assuring both of these indicators in 2013.

However, in some cases the cost of renewable energy is high compared to energy from non-renewable fuels. We continue to evaluate cost-effective and scalable renewable technologies that will contribute to our global target.

Over €300 million costs avoided

Since 2008, our manufacturing eco-efficiency programme has used a number of cost-effective investments to reduce our energy, water and waste. Initiatives range from encouraging people to adopt small actions that make a big difference cumulatively, such as ensuring lights are turned off, to larger investments such as biomass boilers. We have reduced our environmental footprint while avoiding cumulative supply chain costs of over €300 million.

• Water €17 million

• Energy €99 million

• Waste disposal €10 million

• Materials €186 million

2012 data to be independently assured by PwC in 2013 - see Independent assurance

In 2012, CO₂ from energy fell by 15.5% per tonne of production on 2011 and 30.1% compared to 2008†.

Our reduction of 31.5%† per tonne of production since 2008 has been achieved through energy reduction and supported by the purchase of renewable electrical energy and the use of biomass in our boilers.

† To be independently assured by PwC in 2013. All data is preliminary and will be updated with final figures by mid-2013.

The following are some of the biggest contributors to our reductions in CO₂ from energy during 2012:

• energy savings through adoption of a wide range of behaviours and technologies

• electricity purchased for all factories in Europe and North America – which represents more than one-third of our sites – is now from renewable sources

• a major renewable energy project at our Pouso Alegre foods site in Brazil. This project, combined with the full year benefits of investment in new boilers at Indian sites in 2011, will reduce greenhouse gas emissions from these sites by over 25,000 tonnes per year.

2012 data to be independently assured by PwC in 2013 - see Independent assurance

In 2012, energy use decreased by 3.5%per tonne of production compared to 2011 and was 11.6% lower than in 2008. Absolute energy use increased slightly in 2012 compared to 2011, but by less than the increase seen in production volumes.

Since 1995, we have achieved a 47% reduction in energy use per tonne of production (49% reduction in absolute terms) †.

†To be independently assured by PwC in 2013. All data is preliminary and will be updated with final figures by mid-2013.

The biggest contributors to our reductions in energy use in 2012 were:

• energy saving through efficient use of heat within manufacturing facilities, driven by a total productive maintenance approach (eg loss analysis and focused improvement projects)

• increased awareness and encouraging our people to adopt small actions, which collectively make a big difference such as ensuring lights and equipment are turned off when not being used

• adoption of ‘simple solutions’ for how we operate our sites.

We are collecting information regarding costs via our environmental performance reporting system from each manufacturing site for each energy type. This enables us to measure the financial benefits of our eco-efficiency programme. Reducing energy use has delivered cumulative supply chain cost avoidance of €99 million since 2008. This clear financial benefit reinforces our belief that sustainability is good for business.

How are we making it happen?

Our strategy is firstly to reduce our energy use and therefore the resulting greenhouse gas emissions.

For example, as new equipment or machinery is replaced in our factories, we ensure it meets the higher standards of eco-efficiency that we have specified. As we continue to grow our business, we continue to introduce more technology which can help to reduce our environmental footprint.

Many employees have sustainable business ideas and our Manufacturing team has set up a Small Actions, Big Difference budget to make them happen. Factory teams can apply for investment for their ideas which are evaluated on the basis of environmental benefit and financial return.

In 2012, over 600 projects were identified and the best 100 will be implemented in 2013. Their combined benefits will deliver savings of around 1% of our global energy and water use and achieve an average payback of less than two years. We also aim to use less carbon-intensive forms of energy, including energy from renewable sources where possible. This includes installing on-site renewables where it is cost-effective such as biomass, biogas and solar thermal technologies.

Energy efficiency & new technology

As we grow our business, new factory design is playing a significant role in delivering our eco-efficiency targets. All newly built factories will aim to have less than half the GHG impact of those in the 2008 baseline – much of which will be achieved through minimising energy use.

Our new factories now have sustainability built into their core designs. In addition to eco-efficient design of production processes, we are using certification systems such as LEED and BREEAM environmental assessment methods and rating systems for buildings. Our seven new factories in 2013 will achieve a rating of LEED Silver or above.

In Europe we have combined heat and power (CHP) plants operational at a number of sites including Caivano in Italy, Heppenheim in Germany and Port Sunlight in the UK. These are more environmentally efficient than importing electricity from the national supplier because they utilise the waste steam and hot water from electrical power generation.

At our Wall’s and Magnum ice cream factory in Gloucester, UK, we are reducing CO₂ from energy by more than 3,000 tonnes a year following the installation of a CHP plant. The 2.4 megawatt plant is primarily fuelled by natural gas, with heat in the form of hot water and steam produced as a by-product. This heat is reused in the manufacturing process.

As a result of initiatives like these, we are achieving emissions reductions of over 45,000 tonnes and delivering savings of over €10 million per year at ten of our European factories with CHP. We are currently assessing further opportunities to adopt CHP technology.

CO₂ emissions from different energy sources

Our manufacturing sites use different sources of energy depending on their production processes and also their geographical location. The following chart shows the CO₂ emissions from our different energy sources between 2002 and 2012.

Emissions associated with the use of biogenic fuels shown above are not included in our performance metrics. This approach is consistent with the internationally recognised Greenhouse Gas Protocol.

Renewable energy

At the end of 2012 renewable energy contributed 26.3% of our total energy use compared to 15.8% in 2008 and 20.2% in 2011.

In some cases the cost of renewable energy remains high relative to non-renewable alternatives. The opportunity to introduce renewable technologies on a scale that significantly contributes to our global target is also a challenge.

Therefore, we continue to evaluate renewable technologies that are scalable and cost effective to keep us on track to meet our target to double our use of renewable energy by 2020.

Reducing GHG emissions through biomass

Sustainable sources of biomass present a significant opportunity to increase our use of renewable energy in manufacturing and help us reach our renewable energy target.

Investment in biomass boilers is therefore an integral part of our wider manufacturing sustainability strategy to reduce greenhouse gas emissions.

We are now using bio-energy at 30 of our 252 manufacturing sites, providing around 7% of the energy we use. This reduces our annual emissions from fossil fuels by over 150,000 tonnes of CO₂. We are planning to install additional boilers at sites in Latin America, Africa and Asia.

In 2012, we commissioned a new biomass boiler at our Pouso Alegre site in Brazil which produces our AdeS and Knorr products. This burns recycled wood rather than oil and will reduce emissions by around 80%.

Other sources of bio-energy include biogas from the on-site treatment of process wastewaters by anaerobic digestion. Our Marmite factory in the UK uses this technology. In 2012 we commissioned a new anaerobic digestion plant to generate biogas used to produce energy at our ice cream factory in Banino, Poland.

Renewable energy in Europe & North America

The way we buy our energy is a key consideration. In 2012, we increased the proportion of energy we purchased from verified renewable energy schemes. All manufacturing sites in Europe, Canada and the US – more than one-third of all of our manufacturing sites – purchased electricity from renewable sources during 2012. The only exception to this is where a site sources electricity from energy-efficient combined heat and power plants.

The resulting reductions in CO₂emissions are estimated at over 500,000 tonnes, equivalent to 22% of our total emissions worldwide. The approach we took to achieve this in Europe included:

• power purchase agreements (PPAs) with national renewable energy producers in countries where liberalised energy markets, governmental incentives and the size of Unilever’s electricity consumption in that country allows it

• purchase of national renewable electricity certificates (RECs) generated in individual countries from a dedicated renewable electricity source

• purchase of RECs from a dedicated hydro power producer which will cover all electricity consumption of those sites where we are not able to implement national renewable electricity initiatives.

Each year, an independent certification company validates the approach we have taken in Europe.

Our renewable energy portfolio

We make a distinction between our on-site initiatives that generate and use renewable energy and renewable energy purchased from the national electricity grids in the countries where we operate. Of the total energy we used, 26.3% came from renewable sources in 2012, an increase of 15.8% from 2008.

Of our total, approximately 28% came from our on-site initiatives, largely in developing countries. This included the burning of fuel crops, wood from managed plantations and waste materials, such as spent coffee husks and sugar cane bagasse, as well as solar technologies, hydro-electricity and biogas.

The purchase of certified renewable energy, predominantly in Europe and North America, accounted for approximately 59%, with the remaining 13% coming from the national electricity grids in the countries where we operate.

The table below shows the different types of renewable energy we used in 2012.*

* The 2012 data is preliminary, and the table will be updated with final 2012 data in mid- 2013

However, in some countries there is a lack of options for purchasing renewable energy due to either availability or prohibitive costs. This is one constraint on our progress but we expect the situation to improve. We are currently investigating other renewable energy opportunities better suited to local conditions, such as our recent investments in biomass boilers.

In 2012, we commissioned a new biomass boiler at our Pouso Alegre site in Brazil. This burns recycled wood rather than oil. Combined with the full year benefits of investment in new boilers at our Goa, Mysore and Nashik manufacturing sites in India in 2011, these projects reduce greenhouse gas emissions by over 25,000 tonnes per year.

CO₂ emissions from different energy sources

Our manufacturing sites use different sources of energy depending on their production processes and also their geographical location. The following chart shows the CO₂ emissions from our different energy sources between 2002 and 2012.

Sources of greenhouse gas emissions by type

The chart below shows in more detail our GHG emissions from the energy sources used by our manufacturing sites, together with other site GHG emissions (refrigerant losses, effluent treatment and waste to landfill).

Non-energy sources account for only approximately 6% of our greenhouse gas emissions from manufacturing.*

Note: The chart does not include GHG emissions from biogenic material 234,990 tonnes CO₂ which are reported separately from these emissions, in line with the GHG protocol.

_{* The chart will be updated with 2012 data by mid-2013.}

We did not measure levels of three other major GHGs because Unilever’s emissions are negligible. These are: nitrous oxide (produced mainly in nitric oxide manufacture), perfluorocarbons (mainly associated with aluminium and magnesium production) and sulphur hexafluoride (used in some electrical equipment).

The importance of behaviour change

Everyone in our company has a part to play in reaching the targets that form our Sustainable Living Plan.

Simple, small actions that make a big difference, such as switching off machinery when not in use or turning off lights, combined with better planning and improved efficiency, have helped to reduce our energy consumption.

Making small continuous improvements, such as introducing more natural lighting and solar tubes (focused natural lighting), has helped us achieve our targets. We have set ourselves challenging energy and emissions reduction targets. By making these improvements integral to the way we do things in our factories, we are able to demonstrate continuous improvement.

Our people have a significant role to play. In 2012, our European team led a targeted engagement programme to raise awareness and invite ideas for further reduction projects. We plan to extend this programme to other regions during 2013.

External recognition

Unilever has led the Food Producers sector of the Dow Jones Sustainability Indexes for 14 consecutive years and was also named leader of the Food and Beverage super-sector in 2012. In 2012, we also achieved the highest score in our sector for operational eco-efficiency.
 
Unilever was recognised for its climate change disclosure and carbon performance in October 2012 when Carbon Disclosure Project (CDP) published its annual FTSE 350 Climate Change Report. We scored 84 out of 100 for our Disclosure (up from 79 in 2011 and achieved the top category, placing us in the Carbon Performance Leadership Index of the consumer staples sector.

In 2012, Unilever topped the Climate Counts Scorecard(Link opens in a new window) for the second consecutive year. Climate Counts ranks the largest 145 companies worldwide on their actions to address climate change. Unilever was awarded 91 out of 100 points – an increase of three points on our 2011 score, and eight points on our 2010 score.

Many of our country teams are also recognised for their achievements. In 2012, our Indonesian team won a Sustainability Report Award, and the Indonesian Ministry of Environment awarded Gold status for eco-efficient manufacturing practices to our Rungkut factory in Surabaya.

Our Amli and Haldia factories in India were recognised for their adoption of sustainable manufacturing practices in the 2012 Frost & Sullivan Green Manufacturing Excellence awards. The award celebrates energy efficiency and emission reductions as well as other eco-efficiency improvements.