In our industry and across those we serve, we’re helping to lead the development of a sustainable economy– one that is circular, regenerative, and lower carbon. Our sustainability goals include critical milestones for reaching net zero emissions by 2050, starting with our own operations and expanding to include our supply chain. We also support the global effort to reduce emissions as a World Wildlife Fund Climate Savers partner, as a member of the Renewable Energy Buyers Alliance, and as a signatory of the American Business Act on Climate Pledge.
The Avery Dennison Sustainability Council, which consists of a subset of our Company Leadership Team and leaders from our business units and functions, is responsible for advancing our sustainability strategy and objectives, including our GHG emissions reduction target and climate-related strategy. At least annually, the Sustainability Council reviews strategy, policy and performance with our Company Leadership Team.
In addition, we include the acute physical risks and and the transitional economic and social risks posed by climate change in our Enterprise Risk Management (ERM) framework, which our Board of Directors and Governance Committee review annually. Our ERM process informs the risks we describe in our quarterly and annual reports to the Securities and Exchange Commission and helps us refine our long-term strategies. As we identify business risks, we develop and implement mitigation strategies to address them.
Our Board of Directors reviews progress towards our sustainability goals annually and considers it when evaluating our Chief Executive Officer’s compensation. A portion of our CEO’s annual incentive award is dependent on delivering on our 2025 sustainability goals. Our CEO, in turn, provides guidance and direction to our Vice President and General Manager of our Retail Branding and Information Solutions (RBIS) business, who leads our Sustainability Council and is responsible for ensuring progress towards our goals.
For further discussion of our Climate Change strategy and performance, please see our 2022 CDP Climate Response.
Climate Change Policy
Our Climate Change Policy details our strategy for managing climate-related issues within our organization and throughout our value chain. The policy was approved by senior management, including our CEO, and made available to our employees and all stakeholders via our company website.
In 2015, we established our goal to reduce our absolute GHG emissions by 3% year-over-year, and by at least 26% compared to our 2015 baseline, by 2025. We exceeded that goal within five years of setting it, cutting emissions by approximately 42% compared to the 2015 baseline in YE 2020. We are confident that we can continue to make substantial progress, and have codified that expectation in our 2030 sustainability goals.
By 2030, we plan to reduce our Scope 1 and 2 GHG emissions by 70% from our 2015 baseline, and to work with our supply chain to reduce our Scope 3 GHG emissions by 30% from our 2018 baseline. Our ambition is to achieve net zero emissions by 2050. We intend to reach these goals by creating more sustainable products and processes, and by collaborating with customers, suppliers, and other stakeholders.
Increasing Energy Efficiency
Natural gas and electricity are the primary energy sources for our operations, accounting for 97% of our scope 1 and 2 energy emissions YE 2020. We implement energy efficiency projects to reduce our electricity and natural gas consumption, particularly where we do not have a viable alternative to natural gas. We have established several annual capital budgets for energy efficiency projects including the implementation of LED lighting and improvements in our HVAC systems. We also regularly improve energy efficiency in our manufacturing processes. As one example,we have executed multiple projects to reduce natural gas consumption in the process used for drying our pressure-sensitive label products after they are coated.
Sourcing Renewable Energy
Though electricity makes up a lower percentage of the total energy we consume, its emissions impact is higher than that of our natural gas consumption. To address this, we source renewable energy whenever feasible. In 2018, we committed to a Virtual Power Purchase Agreement (VPPA) supporting the construction of a wind farm in Wayne County Nebraska, which became operational in June 2020. The VPPA is a primary source of our renewable energy portfolio and covers 75% of our electricity consumption in the U.S. We also use on-site generation assets like rooftop solar where possible, and purchase renewable energy credits (RECs).
Reducing Our Scope 3 Emissions
In 2018, we completed our scope 3 GHG emissions inventory and determined that upstream goods and services is our largest category of scope 3 emissions, due to the volumes of paper, film, and chemicals to make our adhesives we purchase. Accordingly, we set a 2030 sustainability goal to reduce our scope 3 emissions by 30% and are partnering with CDP Supply Chain and EcoVadis to collect energy and emissions-related data from our key suppliers in order to partner with them to achieve our target.
To understand opportunities for reducing our carbon footprint, we use MatcheckTM, a lifecycle analysis tool we developed for the materials we source. Our analysis has shown that making significant reductions in our scope 3 emissions requires us to substantially reduce the volumes of materials we purchase while simultaneously switching to materials with a reduced carbon footprint. Our business units have begun making these adjustments, and, at the enterprise level, we are analyzing how to re-engineer and reduce material usage while maintaining or improving product quality. In partnership with Carbon Trust, we are working to create a tool that will enable us to capture our holistic carbon picture. This tool will provide specific carbon emissions information for our products based on their region of production, raw material sourcing, and different end-of-life scenarios. We plan to fully launch this tool in 2022.
In addition to reducing upstream emissions, we also see significant opportunities to reduce the downstream and end-of-life impact of our products through RFID and other digital identity technologies developed by our Intelligent Labels group. By giving each of our products a traceable identity, we might soon be able to ensure that the item is reclaimed or recycled at the end of its useful life. You can learn more about our technologies for enabling the circular economy in our section on Advancing the Circular Economy.
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Total self-generated energy
|Total scope 1 + scope 2 GHG emissions
|Direct (scope 1) GHG emissions
|Indirect (scope 2) GHG emissions, market-based
Label and Packaging Materials
Increasing our Solar Capacity
Our commitment to reducing emissions requires looking beyond energy efficiency to strategies such as generating energy from renewable sources like solar. In Kunshan, India, we installed solar panels covering about 10,000 square meters on the roof of our Label and Packaging Materials facility. The panels generate about 800,000 kilowatt-hours annually per our power purchase agreement, reducing coal consumption by 288 tons each year and avoiding 711 tons of resulting carbon dioxide emissions.
Leading by Example in Norway
Our Norway facility, which manufactures heat transfer labels and embellishments—including names and numbers for FC Barcelona uniforms— is located between glaciers and a raging river. We use cold water from the river to cool the facility, reducing its energy use by more than 95%.
The site is also certified by Eco-Lighthouse, Norway’s most widely used certification for companies seeking to document their environmental efforts and demonstrate social responsibility.
Using Wind in Belgium to Help Meet our Sustainability Goals
In 2017, in cooperation with Eneco, a supplier of renewable energy, our team installed its first on-site wind turbine. The tower went up at our Turnhout, Belgium, facility, which produces pressure-sensitive tapes and medical products. In just one year, our new wind turbine generated 4.3 gigawatt-hours out of a maximum capacity of 4.8, which is 25% of the Turnhout plant’s annual energy consumption.