Annual Report 2024

Metrics and Targets

PolyPeptide is committed to setting GHG reduction targets. It has established robust internal processes to track and monitor its GHG emissions, utilizing data-driven insights to assess performance against these targets. The Group is committed to promoting more sustainable manufacturing technologies with a focus on energy efficiency, waste reduction, and renewable energy sourcing.

The Group participates in the CDP Disclosure scoring a “B” rating in 2024, and improving for the third consecutive year versus the “B-” rating achieved in 2023 (2022: C). This is complemented by the EcoVadis ratings, where PolyPeptide received an “Advanced”³ rating for its carbon management program in 2024 and a “Bronze” rating for its ESG program.

The Group has set science-based targets for Scopes 1, 2 and 3 following the near-term target methodology of the Science-Based Target initiative⁴. Charts 1 and 2 illustrate the reduction targets which will be submitted to the Science-Based Target initiative for approval during 2025. For details on the targets, refer to Tables 6 and 7. Depending on the outcome of the validation procedure, the targets might have to be updated.

Chart 1:

PolyPeptide’s Scope 1 and 2 GHG emissions 2023–2030, t CO₂e/year

Chart 2:

PolyPeptide’s Scope 3 GHG emissions per USD value added, 2023–2033, t CO₂e/USD value added, year

An assessment is currently underway to define potential long-term objectives aligned with the Paris Agreement, as well as to explore the PolyPeptide’s involvement in setting net-zero targets.

Apart from the Scope 1 and 2 absolute near-term and Scope 3 intensity near-term target (refer to Table 6 and Table 7), the Group has set the following Scope 3 engagement target: “PolyPeptide Group AG commits that suppliers covering 45% of purchased goods and services by spend, will have science-based targets by FY2030 (baseline 2022).”

Greenhouse gas emissions

In 2024, PolyPeptide conducted its second global carbon footprint assessment (based on available numbers for 2023) in accordance with the GHG Protocol. The Group conducted the assessment according to the following parameters:

• Chosen organizational boundary approach: operational control
• Consolidation approach: the same as the financial accounting approach
• Standards applied: The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition), The Greenhouse Gas Protocol: Scope 2 Guidance, The Greenhouse gas Protocol: Corporate Value Chain (Scope 3) Standard
• Reporting period: calendar year 2023, same period as financial accounting year

For the reporting period 2025, PolyPeptide plans to calculate its 2024 and 2025 global carbon footprint. A digital reporting solution and processes are being implemented to enable PolyPeptide to have a complete 2025 carbon footprint available by the beginning of 2026.

In 2023, the Group decreased the GHG emissions by 18%, from 91,827 metric tons CO2e in 2022 to 75,001 metric tons CO2e in 2023. Thereby, Scope 1 and 2 emissions increased by 4.7%, whereas Scope 3 emissions decreased by 21.1%.

The substantial reduction in Scope 3 emissions primarily reflects the phasing of large capital expenditure projects across the manufacturing network of the Group.

The increase in Scope 1 and 2 GHG market-based emissions was mainly due to the use of diesel generators at one of the manufacturing sites for several months to bridge the interruption of the ordinary energy supply from renewable energies. Taking into consideration the increased manufacturing volumes during the reporting period, the electricity consumption per kilogram of manufactured product decreased by 26.8%, mainly attributable to energy efficiency measures applied by the Group.

Figure 2:

PolyPeptide’s GHG emissions 2023 (market-based) split by Scope

Figure 3:

PolyPeptide’s GHG emissions 2023 (market-based) split by geography

Figure 4

PolyPeptide’s Scope 3 GHG emissions 2023 split by category, in metric tons CO₂e

Scope 3 emissions calculation methods for each Scope 3 category are explained in Table 10. In 2023, Category 1 accounted for 32% of PolyPeptide’s Scope 3 emissions, with solvents constituting the most significant portion of the Group’s purchased goods. PolyPeptide is actively seeking supplier-specific emission factors from its tier 1 suppliers. With its Green Master Plan, the Group focuses on reducing the volumes of solvents and reagents relative to production volumes, substituting hazardous chemicals with more sustainable options, and advancing solvent recycling initiatives. The use and sourcing of recycled solvents instead of fresh solvents and the efforts of key-tier 1 suppliers to utilize renewable electricity favorably impacts emissions in Category 1. PolyPeptide is dedicated to fostering a culture of continuous improvement within its own operations and supply chain, which requires shared commitment of its suppliers and business partners.

Transition plan

In 2024, PolyPeptide continued to expand the sourcing of renewable electricity for its manufacturing sites. At the end of 2024, the manufacturing sites in Braine-l’Alleud, Malmo, San Diego, and Strasbourg operated with 100% of renewable electricity.

The manufacturing site in San Diego signed up to a local voluntary program to become a “San Diego Community Power100 Champion”. This voluntary program is a San Diego specific initiative that allows businesses to transition from utilizing electricity generated by non-renewable energy sources to getting electricity that comes 100% from renewable, less greenhouse gas intensive energy sources. This means that currently 100% of the electricity purchased to operate the site, comes from renewable sources.

To reach the absolute Scope 1 and 2 near-term targets, PolyPeptide is striving to procure electricity from 100% renewable sources at all sites by 2029, as well as replacing the car fleet with electric cars. These two initiatives are crucial for reaching the 42% reduction target by 2030 versus 2023. Additional initiatives will be required to offset the impact of expected business growth. Consequently, PolyPeptide plans for energy audits across all manufacturing sites to identify and carry out energy-saving measures. During summer 2024, the Ambernath site was awarded an ISO 50001 certification for its energy management system.

In addition, PolyPeptide plans to replace its refrigerants with high Global Warming Potentials (GWPs) with alternatives of lower GWP, where feasible.

PolyPeptide expects that the financial impact for its climate transition plan will be mainly driven by initiatives related to scope 3 emissions reduction as highlighted in Table 11.

As depicted in Figure 4, PolyPeptide’s key sources of value chain emissions are primarily found in two categories: purchased goods and services (category 1), and capital goods (category 2). It is crucial to note that emissions from category 2 are rather volatile and can vary significantly over time, influenced by the Group’s capital investments and expansion. Currently, PolyPeptide is concentrating on reducing emissions from solvents, which constitute the primary raw material acquired. This approach also goes in line with the two most important climate-related transition risks (changing customer behavior and transition to increasing recycled content). For more detail, refer to the Strategy section. PolyPeptide anticipates a substantial decrease in these emissions through solvent recycling initiatives and by urging its top ten suppliers, in terms of expenditure, to set science-based GHG emission reduction goals.

Legend:

• Expected reduction of Scope 3 GHG emissions: +++ > -10% GHG emission reduction within the category; ++ impact > between -5 and -10% GHG emission reduction within the category; + impact < -5% GHG emission reduction within the category; 0 - no identified impact on PolyPeptide’s GHG emissions
• Financial investment: € < 1MEUR ; €€ 1–5 MEUR , €€€ > 5MEUR

The Group is currently tracking climate-related metrics (highlighted in bold in Table 13) and is revising and preparing others for potential inclusion in the annual monitoring process (indicated in italics in Table 13).

In alignment with PolyPeptide’s sustainability goals, capital deployment metrics focus on investments that drive long-term environmental benefits and support the transition to a low-carbon economy. The Group’s capital expenditure is significant, particularly in technologies related to green chemistry and solvent recycling. These investments aim to reduce the environmental impact of PolyPeptide’s manufacturing processes by promoting sustainable practices and circularity. Additionally, PolyPeptide is directing capital towards the exploration and adoption of alternative energy sources, further supporting the Group’s commitment to reducing greenhouse gas emissions and improving energy efficiency. These strategic investments demonstrate PolyPeptide’s proactive approach to embedding sustainability into its operations and ensure that its capital is deployed in a way that fosters both innovation and environmental responsibility.

At this time, PolyPeptide has not set an internal carbon price, as it has not been identified as a priority within the current climate strategy in accordance with the risk and opportunity assessment. The primary focus remains on the implementation of the established transition plan, which allocates resources to key initiatives that drive tangible emissions reductions. Specifically, the Group is prioritizing the sourcing of renewable electricity, fleet electrification, and the discovery as well as execution of energy efficiency measures through detailed energy audits. These actions are seen as the most effective means to reduce carbon emissions in the near term. While internal carbon pricing is a potential future consideration, the current strategy is centered on operational improvements that deliver measurable and immediate impacts on sustainability.

Regarding remuneration, PolyPeptide maintains a Global Balanced Scorecard (GBSC), annually approved by the Board of Directors, to aid the execution of its strategy and operational plans, as well as to determine executive compensation. The scorecard encompasses financial goals for a specified period and quantitative targets for non-financial metrics including ESG performance objectives. The Remuneration and Nomination Committee pledges to fortify the connection between sustainability goals and PolyPeptide’s Executive Management’s remuneration, aligning with the achievement of these objectives. In 2023, PolyPeptide incorporated the green chemistry program including initiatives with a positive impact on its corporate carbon footprint evaluation into its GBSC. This integration, accounting for 5.1% of the incentives in the GBSC, engaged selected PolyPeptide employees participating in the initiative. The green initiatives in the 2023 GBSC marked a pivotal step for PolyPeptide, initiating the journey towards setting reduction targets and crafting its GHG emissions reduction strategy.