Focus Topics –  Environmental matters

Environmental matters:
Introduction

Charting a sustainable future

As a manufacturer of indoor climate solutions, we have a special responsibility towards the environment. Our ambition goes beyond selective improvements, as we aspire to decouple growth from environmental harm, while working towards net zero by 2050 and circularity. Already today, our heat recovery ventilation systems help our customers save heating energy, while our ventilation-as-a-service models for clean air solutions reduce the demand for new resources and embedded greenhouse gas (GHG) emissions.

During the 2023 reporting period, we structured our actions to reduce our environmental impact in four topics: Circular products and innovation, Climate action, Resource-efficient production and Biodiversity. These topics address several matters identified in our double materiality assessment. 

Impacts, risks and opportunities

Impacts

Starting from raw material extraction and production, extending through operations in our supply chain, to our in-house assembly and the use phase, our products entail diverse ecological impacts. Our biggest environmental impacts stem from raw materials and the use phase of our electrical products during their lifetime. The primary raw materials we use are aluminium and steel, both extracted in energy intensive processes causing high GHG emissions and pollution. However, the fact that our products, such as radiators, are made from durable materials ensures a long product life cycle. With clean air solutions, Zehnder is able to create a positive impact by ensuring greater reuse of our products. These solutions are almost completely offered through a subscription model, operating as a “product as a service” business. The service includes all equipment, installation, air filters and regular filter changes, maintenance, repairs as well as air quality measurements for as long as customers desire. If a customer cancels the service agreement, Zehnder uninstalls its equipment and refurbishes the air cleaning units, making them ready for reuse at another customer installation.

Our CO₂e emissions contribute to global climate change. Zehnder’s principal climate impact originates from the energy consumption during the use phase of Zehnder’s sold electrical radiators, heating and cooling systems throughout the lifetime of these products (Scope 3 emissions – use phase). This is by far the biggest impact in terms of emissions. The Scope 1 (direct emissions from the production) and Scope 2 (indirect emissions from purchased energy) CO₂e emissions are mainly caused by the consumption of electricity and gas for processes such as welding, drying, surface coating, generation of compressed air and heating for coating or injection moulding in Zehnder’s production sites. Since ventilation system production is mainly an assembly operation, their Scope 1 and 2 emissions are comparably low. Climate change also impacts human rights as it affects people’s rights through its effects. Compared to the carbon footprint laid out above, Zehnder’s products have a positive impact on GHG emissions during the use phase which is not reflected in GHG accounting. Zehnder’s controlled ventilation systems with integral heat recovery generate a positive impact and contribute to a more sustainable living. Our customers benefit from the reduced demand for energy, as our systems recover a significant amount of the heat that would otherwise be lost during ventilation. This avoids emissions throughout our products’ lifetime, when compared to alternative baseline ventilation.

Our production also has impacts in terms of waste, wastewater, hazardous substances, polluting air emissions and water consumption. Our chroming facilities generate substantial amounts of wastewater and sludge. At all our sites comprehensive wastewater treatment is implemented. Wastewater and solid waste can include contaminated quartz sand, ammonia and production waste, which can harm human health and the environment. Our radiator production, including metal manufacture, assembly and painting, is quite resource-intensive, especially regarding energy, water and waste and entails higher potential impacts concerning hazardous substances. In contrast, our ventilation system units focus on assembly and therefore require fewer natural resources. Further relevant waste products stem from packaging such as protective film that is wrapped directly around the radiators to protect them against damage and contamination during transportation and installation. Reducing materials and waste in our own operations as well as in the supply chain has therefore been identified as a potential improvement.

Our activities also have an indirect impact on biodiversity despite intact and biodiverse ecosystems being vital to successful business practices. The key drivers of potential impact on biodiversity include land-use change associated with the construction of buildings that use our products, pollution of air, soil or water and direct exploitation of natural resources, such as metals and minerals. We are also aware of the interdependency between ecosystem loss and human rights, as adverse impacts on biodiversity also negatively affect rights holders in local communities.

Risks and opportunities

Failing to manufacture in an ecological manner entails several risks, including increased operational costs, supply chain vulnerability, regulatory compliance issues, reputational damage and reduced market competitiveness. Long-term resource scarcity and employee dissatisfaction are further potential risks. Climate-related physical risks such as extreme weather events or water scarcity might lead to disruption of our own operations or our supply chain. The fact that our main emissions stem by far from Scope 3 presents a risk, as our influence on up- and downstream activities is limited. For ventilation products, in particular, the potential shift from new construction to renovation due to climate change and saving embedded carbon stored in buildings is a major risk as our current products are often targeted in new construction projects.

With changing customer demands, opportunities for Zehnder include product design for energy efficiency, durability and repairability, working towards circularity and general business models based on circularity. In addition, given climate change is leading to rising temperatures, there is a growing market for cooling solutions for indoor climates.