TCFD disclosures, greenhouse gas (SECR) reporting

Coats Group plc – Annual report – 31 December 2021

Industry: manufacturing

Our climate disclosures

Working responsibly (extract)

2. Energy

We use energy in our operations in two forms: heat energy, in the form of super-heated steam, which is normally generated by the burning of fuels in our boilers, and electrical energy that is mainly used for powering motors to run machines or drive pumps. The dyeing process utilises most of our heat energy, while spinning and twisting operations are heavy users of electrical energy, as is dyeing, both for running pumps and for powering dryers. Overall dyeing is our most energy intensive process and there is an obvious link between the above mentioned activities to reduce water use and a benefit in energy use reduction in dyeing. Our target is to reduce our energy intensity by 7% in 2022 compared to our 2018 baseline. During 2021 we have implemented a pilot programme for extensive metering and dynamic energy management across five major sites and are planning to extend this to additional sites in 2022. We also had a major focus on energy reduction on our Indian spinning sites, the single largest users of electrical energy in the Group, and through focussed team working across all areas to identify and measure savings opportunities a reduction of 9% of energy consumption had been achieved by year end, with further improvements expected in 2022. The work described above in terms of water saving has also had a significant impact in energy reduction as around 50% of our energy is used to heat water, so the savings have impacted both targets. Because of the pandemic, the focus of energy saving activities in 2020 were limited to smaller projects at individual site level rather than global projects, but in 2021 we have seen a significant recovery in energy saving work. Because of these projects we have made good overall progress in 2021 with a reduction of intensity of 6.9% compared to 2018, so we have nearly achieved our 2022 target a year early. Energy saving activities will continue to deliver further reductions during 2022.

We also have a commitment under our energy pillar to shift as much as possible of our sources of energy to certified renewables. While 34% of our energy in 2018 came from renewable sources according to our supplier data, only 3% was certified as renewable. We have been using energy contract negotiations to extend the certification cover we have for existing renewable sources and also pursuing new suppliers that are expanding renewable energy supplies in markets that allow that. We have an agreement in place in Mexico that will see us transition to renewable electricity there by the middle of 2022, although the government is showing signs of renationalising the energy market which could void this contract. We are in discussions with developers for off-site renewable electricity supply in Vietnam, Indonesia and the USA.

By the end of 2021, 7% of our electrical energy was certified as renewable.   Subsequent to our target setting in 2019 we made the commitment at the beginning of 2021 to develop Science Based Targets (SBTs) that align to the Business Ambition for 1.5°C pathway (under the Science Based Targets initiative (SBTi)) and to achieve net-zero by 2050. During 2021 we developed our baseline inventory and our targets for the 1.5°C pathway and submitted them to SBTi for validation. These targets were approved and published early in 2022. SBTi have also now established their framework for submission and validation of net-zero targets and we will be working on submissions for these during the early part of 2022.

Our roadmap to achieve reductions in our Scopes 1 and 2 are focused on energy and water reduction activities as outlined above, but principally also on the conversion of our Scope 2 energy to certified renewable sources. For Scope 3 the principal routes to reduction in the three categories mentioned in the table above are conversion to recycled materials, transitioning to renewable energy and switching to low or zero carbon transport.

In 2021 our absolute emissions for all three Scopes increased from the 2020 level as our industrial activity increased subsequent to pandemic disruptions in 2020. Our Scopes 1 and 2 absolute emissions were 7% below our 2019 baseline notwithstanding a 5% increase in production. Our Scopes 1 and 2 relative emissions (emissions intensity in kilos CO2e/ kilo of production and tonnes CO2e/$million of sales) reduced by 12% and 7% respectively against out 2019 baseline and 7% and 10% against 2020. These reductions have largely been achieved by energy saving activities as there has not been a significant transition yet to renewable energy sources. Scope 3 absolute and relative emissions increased mainly due to logistics challenges during 2021 leading to higher transport emissions and an increase in the upstream energy conversion factors. We expect to see the shift to recycled raw materials and the switch to renewable energy sources having an increasing impact on Scope 3 emissions in the near future.

The full detail of emissions both absolute and relative is shown below.

Scope 1 and 2 emissions from our five UK office locations in 2021 were 59 tonnes CO2e and represented 0.02% of our total global emissions.

Greenhouse gas emissions intensity1

Greenhouse gas emissions intensity per unit of production (kg CO2e per kg of finished product)

Greenhouse gas emissions intensity per sales value (tonnes CO2e per million $ sales)

Full details on emissions of all reportable greenhouse gas emissions and details on the reporting methodology used for the above figures can be found in our Sustainability Report online.

Energy consumption in our five UK office locations in 2021 was 0.312 million kWh and represented 0.04% of our global energy consumption.