Focus Topics – Environmental matters

Climate action

Impacts, risks, and opportunities

Impacts

Our business contributes to global climate change, particularly through Scope 3 emissions generated during the use phase of our products, such as electric radiators, heating, and cooling systems. Our Scope 1 and Scope 2 emissions primarily stem from electricity and gas use in our production sites, particularly in energy-intensive processes like welding, drying, surface coating, and the generation of compressed air. Although these CO2e emissions represent a smaller share compared to Scope 3, their reduction is central to our internal decarbonisation efforts.

Our ventilation systems also create a positive environmental impact by improving energy efficiency. Compared to traditional ventilation systems, our systems with integrated heat recovery reduce heating energy demand by capturing and reusing heat from outgoing to incoming air that would otherwise be lost, heating costs and minimising heat loss and in summer times the cool loss. The systems we sold in 2024 will use approximately 11.1 times less energy compared to traditional ventilation systems, avoiding 27.5 million GJ of energy use and 1,298,464 t CO2e emissions over their lifetime, with an energy efficiency ratio of 1 to 7.3.1

1Emissions and energy consumption are calculated for the full product use phase, and do not include emissions at other phases such as production, transport, or disposal. Estimated product lifetimes vary between 8 and 20 years, depending on the product line. Grid emissions are split by country (source: International Energy Agency (IEA)). They are assumed to remain constant during product lifetime. Lost heat is replaced by heating systems, split between heat pumps (energy efficiency ratio of 3 as a conservative choice for renewables) and natural gas heaters (85% conversion efficiency). Natural gas heaters were selected as the conservative choice for non-electrical heating. Natural gas is assumed to have an emission factor of 182.9 g CO2e/kWh (source: DEFRA 2024 v1.0). The ratio of natural gas heaters to heat pumps is country-dependent and is generated using values provided by the Institute of Building Technologies and Energy at Lucerne School of Engineering and Architecture (HSLU), Switzerland, based on current national ratios of fossil-to-fossil-free heating methods.
Data sources for heating per country:
USA: US Energy Information Administration, Canada: Canada Energy Regulator, China: US Energy Information Administration, EU: Eurostat, UK: Statista, Switzerland: Energie Schweiz, Other: Assumption 80-20 split between fossil and fossil-free.
The ratio of CO2e consumption to an alternative system is calculated as 1 to 7.3. Assuming exclusively heat pump heating and considerable global grid decarbonisation (20 g CO2e/kWh) reduces the ratio to 1 to 3.7.
The original 2023 figures were incorrectly calculated due to an error in the calculation formula, and were originally reported as 1,921,578 t CO2e of avoided emissions, with a ratio of actual emissions to alternative system emissions with no HRV of 1 to 6.2. The corrected figure for 2023 is 1,703,587 t CO2e, with a ratio of 1 to 5.6. The difference from the corrected 2023 figure (1,703,587 t CO2e) to 2024 figures can be ascribed to changes in the countries where products were sold, affecting national grid emissions, as well as a general decline in HRV unit sales.

Risks and opportunities

The TCFD assessment of climate-related risks and opportunities identified that climate change presents physical risks to our operations that are expected to increase in both frequency and severity.

In the short-term (under 12 months), Zehnder faces risks from extreme weather events disrupting operations and supply chains and potentially causing facility damage. Rising energy and carbon costs due to tighter regulations pose immediate challenges. Opportunities include building trust through climate risk disclosure, leveraging incentives for sustainable projects, and adapting early to shifting market demands for sustainable products.

In the medium term (one to three years), with a continuing increase in carbon taxes, shifting to renewable energy sources and increasing energy efficiency, while beneficial in the long run, will require substantial investments in technologies and new product development, potentially impacting short-term profitability. Adding to this challenge, the upcoming F-gas regulation mandates a shift to natural refrigerants within two years to meet legal environmental standards. To comply with this requirement, we are phasing out synthetic cooling agents in our climate products and adopting natural alternatives, particularly R290 (propane). Despite these hurdles, our expertise in energy-efficient systems positions us to capitalise on growing demand from climate-conscious consumers.

Long-term risks (more than three years) include locked-in emissions from existing assets, which could slow down progress toward our CO2e reduction targets, especially if carbon costs rise. Retrofitting older facilities to reduce CO2e emissions may be necessary. Chronic climate risks, like increased heat and aridity, could also affect sites in high-risk areas, such as China and Canada.

As global temperatures rise, demand for solutions that mitigate overheating will likely grow, bolstering our market presence. Our proactive approach helps us anticipate potential impacts while capitalising on emerging opportunities for sustainable growth.

Management approach

Governance

Zehnder Group integrates climate-related governance into its sustainability structure, employing tailored processes to address climate risks and opportunities effectively. The Sustainability Steering Committee, tasked with advancing the climate strategy, updates the Board of Directors on progress and challenges regarding CO2e emissions reduction, energy efficiency, and decarbonisation initiatives. As the Chairman of the Board of Directors is also a member of the Sustainability Steering Committee, a direct connection between the committee’s activities and the Board’s oversight is ensured. The Audit Committee reviews the effectiveness of climate risk management measures annually, ensuring their integration into the broader risk management framework.

The Board of Directors actively integrates climate-related considerations into strategic planning. Therefore, our climate targets are validated by the SBTi. Climate factors are incorporated into major action plans, risk policies, budgets, and business plans, aligning with long-term business objectives and guiding decisions on capital investments, acquisitions, and divestments. Furthermore, climate-related risks play a key role in setting performance objectives and monitoring overall progress.

Within our organisational structure, responsibilities are clearly defined. The Group Executive Committee, supported by the Sustainability Steering Committee, oversees the implementation of our climate strategy, ensuring we meet the SBTi targets. The Group Sustainability Manager coordinates the climate strategy, collects data, and ensures compliance with international standards. The Competence Centres handle the operational execution, tracking KPIs such as CO2e emissions and energy consumption, which are reported to the Steering Committee. This structured approach ensures consistency in executing the climate strategy across all levels, with comprehensive reporting up to the Board of Directors.

Strategy

We are committed to growth without environmental damage. In alignment with the SBTi, we have set reduction targets for Scope 1, 2, and 3 emissions, aiming for net-zero CO2e emissions by 2050, with interim targets set for 2033.

Our decarbonisation strategy, based on a comprehensive analysis of CO2e emission sources, is supported by a detailed roadmap outlining key actions. These include enhancing energy efficiency, transitioning to renewable energy, and advancing circular product innovation. Initial priorities focus on high-impact initiatives such as installing photovoltaic parks, transitioning from fuel-powered to electric vehicles, and adopting certified green electricity mostly in line with RE100 standards.

We will pursue more advanced technical projects, such as upgrading technologies in specific radiator production processes to achieve further emission reductions. At the same time, we are investing in equipment upgrades, optimising energy management systems, and developing low-carbon heating and cooling solutions, such as heat pumps and ventilation systems with integrated heat recovery. Approved by the Board of Directors, this strategy is fully aligned with our business objectives.

Our strategy is based on a scenario analysis to evaluate the effects of low-emission (+1.5°C) and high-emission (+4°C) pathways, assessing physical and transition risks on operations, finances, and supply chains. Investments in renewable energy and energy-efficient technologies aim to mitigate exposure to energy cost volatility and carbon taxes. Simultaneously, developing products that align with a low-carbon economy enables us to seize opportunities in shifting markets and regulations. The results of these scenario analyses are integrated into our financial planning, allowing us to proactively adjust our strategy and remain resilient.

We use various metrics to assess climate-related risks and opportunities, such as CO2e emissions, energy consumption, and the share of renewable energy in our operations. We also evaluate the potential financial impact of carbon pricing on our business. Climate-related performance metrics are linked to our remuneration policies, with 30% of the long-term bonus for the Group Executive Committee tied to sustainability targets, including climate goals. We are exploring the extension of similar incentives to other staff, reinforcing a commitment to sustainability across the organisation.

Risk management

Climate-related risks are fully embedded in our Enterprise Risk Management framework, enabling a systematic approach to their identification, assessment, and management. Zehnder actively monitors global climate regulations to maintain compliance and adapt to emerging requirements.

Risk materiality is evaluated based on potential cash flow impacts. Mitigation strategies include investing in energy-efficient technologies, retrofitting facilities, and adjusting supply chain practices to boost resilience. Management regularly assesses whether to mitigate, transfer, accept, or control risks, ensuring alignment with strategic objectives.

This integrated approach ensures climate-related risks are managed alongside other business risks, enabling informed decision-making, proactive risk management, and the ability to capitalise on emerging opportunities.

Implementation and outlook

To implement the above management approach and policies, we defined two ambitions, each supported by one or more targets and monitored via specific KPIs.

Targets

Ambition: Reduce greenhouse gas emissions and achieve net-zero emissions by 2050 for Scope 1, 2, and 3

Target: Submit science-based targets for validation by the SBTi

Target: Reduce Scope 1 and 2 emissions

Target: Reduce Scope 3 emissions:

Ambition: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters

Target: Analyse the recommendations of the TCFD and further embed climate risks into risk management process and internal control system

Metrics

GRI 302: Energy 2016
Disclosure 302-1 Energy consumption within the organisation

Indicator description

Unit of measure

2024

2023

Change from prior year

Total fuel consumption from non-renewable sources1

GJ

150,417

163,855

–8.2

%

Total fuel consumption from renewable sources

GJ

52

41

25.8

%

Total electricity consumption2

GJ

141,500

147,180

–3.9

%

Total heating consumption

GJ

12,058

13,264

–9.1

%

Total cooling consumption

GJ

-

-

-

Total steam consumption

GJ

-

-

-

Total electricity sold3

GJ

3,161

3,675

–14.0

%

Total heating sold

GJ

-

-

-

Total cooling sold

GJ

-

-

-

Total steam sold

GJ

-

-

-

Total NET energy consumption4

GJ

304,027

324,340

–6.3

%

The methodology follows the GHG Protocol. Scope 1 and 2 activity data has been centrally collected through Zehnder’s Hyperion Financial Management system (consolidation tool). Reporting units were pre-defined and data collection adhered to the operational control approach.

The source of the conversion factors used was DEFRA 2023 v1.0.

1The 2023 figure has been restated due to changes in company structure. The original reported figure for 2023 was 165,077 GJ.

2The 2023 figure has been restated due to changes in company structure. The original reported figure for 2023 was 145,123 GJ.

3Sold electricity is excluded from NET energy consumption.

4The 2023 figure has been restated due to changes in company structure. The original reported figure for 2023 was 323,506 GJ.

GRI 302: Energy 2016
Disclosure 302-2 Energy consumption outside of the organisation

Indicator description

Unit of measure

2024

2023

Change from prior year

Energy consumption outside of the organisation

GJ

24,252,961

26,633,917

–8.9

%

The energy consumption information only encompasses the use of sold and leased products. Data for other up- and downstream categories is unavailable. The estimated highest energy consumption is based on the use of sold products, calculated over their product lifetime. On the other hand, the energy consumption for leased products is calculated solely for the reporting year (12 months).

The 2023 figure has been restated due to changes in company structure and errors in reported activity data. The original reported figure for 2023 was 36,855,652 GJ.

GRI 302: Energy 2016
Disclosure 302-3 Energy intensity

Indicator description

Unit of measure

2024

2023

Change from prior year

Energy intensity ratio for the organisation using energy consumption within the organisation1

GJ/TEUR

0.43

0.43

-

Energy intensity ratio for the organisation using energy consumption outside of the organisation2

GJ/TEUR

34.36

34.95

–1.7

%

Energy intensity ratio for the organisation using energy consumption both within and outside of the organisation3

GJ/TEUR

34.79

35.37

–1.6

%

The energy included in the intensity ratio is fuel, electricity and heating.

The energy consumption outside of the organisation only encompasses the use of sold and leased products. Data for other up- and downstream categories is unavailable. The estimated highest energy consumption is based on the use of sold products, calculated over their product lifetime. On the other hand, the energy consumption for leased products is calculated solely for the reporting year (12 months).

The organisation-specific metric (the denominator) chosen to calculate the ratio was net sales (EUR 705.8 million in 2024 and EUR 762.1 million in 2023).

1The 2023 figure has been restated due to changes in company structure. The original reported figure for 2023 was 0.42 GJ/TEUR.

2The 2023 figure has been restated due to changes in company structure and errors in reported activity data. The original reported figure for 2023 was 48.70 GJ/TEUR.

3The 2023 figure has been restated due to changes in company structure and errors in reported activity data. The original reported figure for 2023 was 49.12 GJ/TEUR.

Energy circularity
Renewable energy

Indicator description

Unit of measure

2024

2023

Change from prior year

Energy circularity: Renewable energy in % of total net energy consumption

%

23.3

21.6

1.7

pp

Energy circularity only refers to energy consumed within the organisation.

The 2023 figure has been restated due to changes in company structure. The original reported figure for 2023 was 21.7%.

GRI 305: Emissions 2016
Disclosure 305-1 Direct (Scope 1) GHG emissions

Indicator description

Unit of measure

2024

2023

Change from prior year

Gross direct (Scope 1) GHG emissions in metric tons of CO2 equivalent1,2

t CO2e

8,377

9,223

–9.2

%

Biogenic CO2 emissions in metric tons of CO23,4

t CO2

177

184

–3.7

%

Scope 1 emissions consist of 65.7% heat and cold from fossil fuels, 33.3% fossil fuel for vehicles, and 1.0% others.

The base year for the calculation is 2023.

Emission factors for the base year (2023) are taken mainly from DEFRA 2023 v1.0 and emission factors for the current year (2024) are taken mainly from DEFRA 2024 v1.0. Biogenic CO2 emissions are not included in gross direct (Scope 1) GHG emissions.

Data is consolidated according to the operational control approach as per GHG Protocol.

The methodology follows the GHG Protocol and the calculation was performed in Microsoft Excel. There were no specific assumptions made for the calculation of Scope 1 emissions.

1The 2023 figure (base year) has been restated due to changes in company structure. The original reported figure for 2023 was 9,290 t CO2e.

2As a result, the total impact of the 2023 restated figure amounts to 67 t CO2e.

3The 2023 figure (base year) has been restated due to changes in company structure. The original reported figure for 2023 was 186 t biogenic CO2 emissions.

4As a result, the total impact of the 2023 restated figure amounts to 2 t biogenic CO2 emissions.

GRI 305: Emissions 2016
Disclosure 305-2 Energy indirect (Scope 2) GHG emissions

Indicator description

Unit of measure

2024

2023

Change from prior year

Gross market-based indirect (Scope 2) GHG emissions in metric tons of CO2 equivalent1,2

t CO2e

7,670

8,457

–9.3

%

Gross location-based indirect (Scope 2) GHG emissions in metric tons of CO2 equivalent3,4

t CO2e

13,356

14,545

–8.2

%

The base year for the calculation is 2023.

Emission factors for electricity consumption are mainly taken from the latest available and completed dataset from IEA (IEA 2024, for base year: IEA 2023) and if available supplier-specific emission factors provided by energy suppliers or the residual mix from Association of Issuing Bodies (from the same year as IEA data) was used as per GHG Protocol Scope 2 Guidance (only for marked-based). For district heat from fossil fuels DEFRA 2024 v 1.0 (for base year: DEFRA 2023 v 1.0) was used and for district heat from renewable sources ecoinvent 3.10 (for base year: ecoinvent 3.9.1) (modified to fit Scope 2 definition) assuming 25.0% each biogas, biomass (wood chips), solar collector, and geothermal was used. It was calculated with Intergovernmental Panel on Climate Change (IPCC) 2021 100a Global warming potential (GWP). Biogenic CO2 emissions are not available separately and therefore cannot be reported. Biogenic CO2 emissions are not included in gross energy indirect (Scope 2) GHG emissions.

Data is consolidated according to the operational control approach as per GHG Protocol.

1The 2023 figure (base year) has been restated due to changes in company structure and formula errors within the calculation file. The original reported figure for 2023 was 8,290 t CO2e.

2As a result, the total impact of the 2023 restated figure amounts to 167 t CO2e.

3The 2023 figure (base year) has been restated due to changes in company structure and formula errors within the calculation file. The original reported figure for 2023 was 14,410 t CO2e.

4As a result, the total impact of the 2023 restated figure amounts to 135 t CO2e.

GRI 305: Emissions 2016
Disclosure 305-3 Other indirect (Scope 3) GHG emissions

Indicator description

Unit of measure

2024

2023

Change from prior year

Gross other indirect (Scope 3) GHG emissions in metric tons of CO2 equivalent

t CO2e

1,602,591

1,874,862

–14.5

%

Scope 3 emissions consist of 22.8% purchased goods from third-party suppliers (364,863 t CO2e), 74.1% use of sold products (1,187,482 t CO2e) and 3.1% other categories (fuel- and energy-related activities (5,640 t CO2e), upstream transportation (10,891 t CO2e), generated waste during operations (1,435 t CO2e), business travel (1,796 t CO2e), employee commuting (3,687 t CO2e), downstream transportation and distribution (1,149 t CO2e), end-of-life treatment of sold products (5,594 t CO2e), and downstream leased assets (20,054 t CO2e)).

Included in the calculation are all relevant categories as per GHG Protocol: purchased goods, fuel- and energy-related activities, upstream transportation, generated waste during operations, business travel, employee commuting, downstream transportation and distribution, use of sold products, end-of-life treatment of sold products, and downstream leased assets.

Based on calculations for 2023, emissions from purchased services and capital goods are excluded as they do not contribute more than 1.0% to total emissions and are calculated based on monetary spend contrary to all other categories. Emissions from upstream leased assets are already included in Scope 1 and 2 emissions. As Zehnder does not manufacture intermediate products, emissions from the processing of sold products are not applicable. There are no franchises and no investments.

The base year for the calculation is 2023.

Emission factors are taken from ecoinvent 3.10 (for base year: ecoinvent 3.9.1) calculated with IPCC 2021 100a GWP, DEFRA 2024 v1.0 (for base year: DEFRA 2023 v1.0), IEA 2024 (for base year: IEA 2023) and EPA 2023 emission factors for GHG inventories. Biogenic CO2 emissions are not available separately for all Scope 3 categories and are not included in gross other indirect (Scope 3) GHG emissions.

The methodology is based on the GHG Protocol and the calculation was performed in Microsoft Excel and SimaPro 9.6.0.1.

Assumptions:

Purchased goods: When the material composition was unclear, the highest emission factor within the category (e.g. plastics) was utilised. Zehnder estimated the percentage of recycled input materials purchased from European suppliers for certain metals and packaging materials, which were applied if business units did not provide a percentage of recycled content but the material was reported as produced in Europe.

Purchased services and capital goods: Both categories were computed for 2023 using a spend-based methodology and collectively contribute less than 1% to the total footprint. Consequently, they are not included.

Fuel- and energy-related activities: Emissions from the upstream value chain of electricity production were calculated with IEA 2024 factors (for base year: IEA 2023) (as also applied for Scope 2). For all other inputs, well-to-tank (WTT) emission factors were utilised from the same sources employed for Scope 1 calculations.

Up- and downstream transport: If there was no lorry size given then 16-32 metric tonnes were assumed, and if no emission standard was provided then EURO5 was assumed. The average weight of a parcel sent by Zehnder was assumed to be 4.5 kg/parcel based on the average given by some business units. In cases where it was not possible to distinguish between transport distances from different suppliers, the average one-way distance was assumed and applied as the one-way distance for aggregated suppliers.

Generated waste: Following the cut-off by classification approach emissions from waste treatment processes from preparation for reuse, recycling and other recovery operations are cut-off and do not contribute to the carbon footprint.

Business travel: To calculate emissions from the use of private and rental cars for business travel the emission factor was assumed to be 50% diesel and 50% petrol.

Employee commuting: Emissions from the use of electric cars and scooters for commuting are calculated using basic assumptions from ecoinvent for kWh/km and calculated using the country-specific emission factors from IEA.

Upstream leased assets: This Scope 3 category is not applicable for Zehnder.

Processing of sold products: This Scope 3 category is not applicable for Zehnder.

Use of sold products: The emission factor for electricity used by sold products throughout their lifetime is not adjusted for possible future changes in emissions per kWh. For certain projected sales numbers, it was not possible to allocate predicted sales quantities by country. Therefore, a weighted emission factor, based on electricity consumption of sold products per country from January to September, was applied.

End-of-life: The end-of-life treatment for sold products only considers the non-recyclable parts, following the cut-off by allocation approach. This is based on the assumption that recyclable components will undergo recycling.

Downstream leased assets: Emissions from the use of leased products are only calculated for one year, unlike the use of sold products where the entire lifetime of each product is considered.

Franchises: This Scope 3 category is not applicable for Zehnder.

Investments: This Scope 3 category is not applicable for Zehnder.

The 2023 figure (base year) has been restated due to changes in company structure, formula errors within the calculation file and errors in reported activity data. The original reported figure for 2023 was 2,723,347 t CO2e emissions.

As a result, the total impact of the 2023 restated figure amounts to 848,485 t CO2e.

GRI 305: Emissions 2016
Disclosure 305-4 GHG emissions intensity

Indicator description

Unit of measure

2024

2023

Change from prior year

GHG emissions intensity ratio for the organisation (Scope 1 and 2)1

t CO2e/ TEUR

0.02

0.02

-

GHG emissions intensity ratio for the organisation (Scope 3)2

t CO2e/ TEUR

2.27

2.46

–0.19

GHG emissions intensity ratio for the organisation (Scope 1, 2 and 3)3

t CO2e/ TEUR

2.29

2.48

–0.19

Direct Scope 1, indirect Scope 2 (market-based) and/or indirect Scope 3 emissions were included in the intensity ratios.

The organisation-specific metric (the denominator) chosen to calculate the ratio was net sales (EUR 705.8 million in 2024 and EUR 762.1 million in 2023).

1The 2023 figure (base year) has been restated due to reasons explained above. However, the original reported figure for 2023 was also 0.02 t CO2e/TEUR (rounded).

2The 2023 figure (base year) has been restated due to reasons explained above. The original reported figure for 2023 was 3.57 t CO2e/TEUR.

3The 2023 figure (base year) has been restated due to reasons explained above. The original reported figure for 2023 was 3.60 t CO2e/TEUR.

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