Biodiversity and Ecosystems (E4)

General information related to biodiversity and ecosystems

As part of our sustainability strategy review, we identified biodiversity to be an integral part of our defined strategic focus area of water and resource use. In addition, the topic of biodiversity is also linked to our strategic focus areas of sustainable innovations and technologies for our customers, a sustainable and transparent supply chain, climate change, and emissions. Our initial steps to determine the link between our business activities and their impact on biodiversity were also a decisive factor for this classification. A key component of this was gaining a better understanding of the existing frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Science Based Targets Network (SBTN). On this basis, we developed our roadmap for biodiversity. The aim of our roadmap is to integrate biodiversity into our business activities. The roadmap is divided into six focus areas to understand factors including dependencies as well as financial risks and opportunities in the context of biodiversity, which will enable us to formulate specific objectives for the future.

We have not yet comprehensively analyzed the resilience of our strategy and business model with regard to biodiversity and ecosystems; this is planned for 2025. In the current reporting year we wanted to gain a better understanding of biodiversity in the context of our business activities based on data analyses.

We have carried out initial assessments for relevant individual aspects relating to biodiversity, such as water withdrawal. For example, we use a water risk factor to determine whether a production site is located in a water stress area. Further information can be found in “Water and Marine Resources (E3)”. In 2022 we carried out a qualitative assessment of climate risks and dependencies, which included upstream and downstream risks and dependencies as well as activities in our own operations. We supplemented this qualitative assessment with a quantitative climate scenario analysis in 2023 and 2024, which focused on upstream activities and our own operations. These assessments identified climate-related risks and opportunities considering two climate pathways: a 1.5°C scenario and a 4°C scenario, over different timeframes (2030 and 2050). Further information on our climate resilience analysis can be found in “Climate Change (E1)”. To date, we have not identified any transitory or physical risks and opportunities in connection with biodiversity and ecosystems.

Taking into account the future requirements of society, our stakeholders and our own ambitions, we plan to develop and implement a biodiversity strategy for all business sectors and their supply chains. Affected communities have not yet been taken into account.

Our material impacts, risks and opportunities related to biodiversity and ecosystems (E4 SBM-3)

We conducted a materiality analysis in accordance with ESRS 1 and analyzed our value chain and the respective impacts, risks and opportunities (IROs). The identified IROs were then assessed accordingly. As a result, we identified one potential negative impact for the topic of biodiversity. The process for determining IROs is described under ESRS-2 IRO-1. Our biodiversity reporting focuses on the following impact:

In order to gain a better understanding of the influence of our sites on biodiversity and to monitor their development, we analyze the environment around our sites in relation to key biodiversity areas on a regular basis using data from the Integrated Biodiversity Assessment Tool (IBAT). We took the ecosystem’s performance into account in our analysis. This enables us to determine both the number and the area of sites located in the vicinity of key biodiversity areas. At the same time, this analysis serves to prepare the determination of relevant influencing factors with regard to land use change, freshwater and marine use change. According to IBAT, key biodiversity areas are defined as areas worldwide that are of crucial importance for the conservation of biodiversity in terrestrial, freshwater and marine ecosystems. IBAT’s assessment is based on the “World Database of Key Biodiversity Areas”, which assigns characteristics from five categories to key biodiversity areas: irreplaceability, threatened biodiversity, geographically limited biodiversity, ecological integrity, and biological processes. The required information is mainly provided by the national governments and may be incomplete. Furthermore, this process has not yet been completed in all countries. IBAT uses the data to identify the key biodiversity areas. The method has only been validated by the external body responsible for quality assurance, IBAT.

For our analysis, we selected the sites that are classified as production sites according to ISO 14001. To determine whether a production site is close to a key biodiversity area, IBAT analyzes the surrounding area within a radius of one kilometer. The chosen radius to be used depends on the industry sector. As a chemical-pharmaceutical company, we can limit the radius for the analysis so that no production sites of other companies are included in the zone to be analyzed. The result of our analysis is that 10 of our 108 production sites worldwide, with a cumulative area of 135 hectares, are located within a one-kilometer radius of key biodiversity areas. Determining the proximity to a key biodiversity area gives us an initial indication of potential impacts on biodiversity. Based on this initial indication, we will carry out more in-depth analyses in 2025 in order to develop further specific parameters.

Based on the Taskforce on Nature-related Financial Disclosures (TNFD) framework, we conducted a further preliminary analysis to identify and assess our influence and dependence on water use and land use. We used purchasing data from 2023 for this. An external software solution was used to analyze this data and create a profile for the respective region. These profiles gave us a first impression of the regions in which we have a dependence as well as influence on biodiversity. We were able to identify a possible dependence and influence on water and land use in Asia and in North and South America.

The following table shows the production sites located near key biodiversity areas as analyzed by IBAT and their area.

The analyses described give us indications of our influence and dependencies regarding biodiversity. However, we cannot make any statement based on this data as to whether we have negative ecological impacts on affected areas, in the form of soil degradation, soil sealing and desertification, or whether they affect threatened species. Therefore, we plan to conduct further analyses to determine our actual dependence and influence on biodiversity.

Our sites worldwide are ISO 14001 certified, which means that our production processes are designed and carried out in such a way as to exclude negative impacts on biodiversity in normal business operations as far as possible. We have also taken precautions to prevent negative impacts on the environment, also on biodiversity, in the event of incidents.

Our policies related to biodiversity and ecosystems (E4-1; E4-2)

The policies related to biodiversity and ecosystems (E4) are regularly monitored and updated.

Our Group policy on Access to Genetic Resources is directly linked to immediate factors that contribute to the loss of biodiversity. These include changes in land use, water use and sea-use. The policy explains the procedure that we are obliged to follow when using genetic material or genetic resources and regulates access to genetic resources and the fair and equitable sharing of the benefits arising from the use of genetic resources. When we use genetic material, including genetic resources for research projects, we aim to return the commercial benefit to the ecosystem in a fair and reasonable way. Furthermore, our policy on Access to Genetic Resources promotes the conservation and sustainable use of genetic resources. Our aim is to support research that contributes to the conservation of biological diversity and the protection of species. So far, we have not included the social consequences of impacts related to biodiversity and ecosystems. The policy is based on the provisions of the Nagoya Protocol.

It is not only our business sectors that have an impact on the ecological system through their business activities – the impact of our suppliers’ manufacturing and production must also be taken into account. Therefore, we expect our suppliers to take appropriate actions to protect the environment. In accordance with our Supplier Code of Conduct, our suppliers are responsible for ensuring the protection of biodiversity and ecosystems as well as the natural environment in which they operate, including air, water, land, natural resources, flora, fauna, people, and their interactions. The sourcing of materials that could lead to the loss of biodiversity (e.g., genetic diversity, species diversity, or ecosystems diversity) or deterioration of ecosystem conditions must be avoided. Our suppliers are called upon to implement and maintain an environmental policy.

We are obliged to comply with a multitude of laws and regulations both at the sites at which we operate and in our supply chain. We have implemented policies related to water, pollution, emissions, and waste and monitor these to help minimize our impact on ecological systems. Our policies and ISO certifications help us to ensure that our production sites comply with regulations to protect ecosystems. We plan to implement a biodiversity policy from 2025 onwards which specifically refers to our activities in land, water and sea use.

Our business activities may have a potentially negative impact on ecosystems. That is why we are working on a “biodiversity roadmap”. This includes a biodiversity policy that addresses topics such as direct biodiversity loss, such as land use change, freshwater and marine use change, as well as sustainable agriculture and water use management, sustainable seas and deforestation. The policy is to come into effect in 2025. The provisions of the biodiversity policy will be integrated into the existing policies that are relevant to biodiversity-related topics. We are also working on implementing the Deforestation Regulation adopted by the European Commission for 2026.

Our actions and resources related to biodiversity and ecosystems (E4-3)

The Group Corporate Sustainability unit is responsible for developing and shaping the biodiversity strategy. It is also responsible for integrating the strategy into the company's objectives, identifying and assessing risks, and cooperating with various stakeholders. Group Corporate Sustainability is also responsible for preparing reports on our impact on biodiversity and the progress made in implementing the objectives.

In the reporting year, our actions relating to biodiversity focused on deepening our understanding of our impact on biodiversity and ecosystems in addition to the certification of one of our sites. The actions listed below are ongoing and have no fixed completion date.

Certification of one site

The Swiss Nature and Economy Foundation recertified our site in Vevey, Switzerland, and recognized the site as a pioneer for its commitment to biodiversity. This recertification confirms that at this site we are contributing toward maintaining and protecting the ecological system by planting native trees and plants. We do not use any crop protection products, but instead use goats to control the growth of brambles and weeds. To protect wildlife on our site, we monitor 53 species, build reptile and insect refuges, reserve areas for the preservation of endangered species, and have five beehives in place that require minimal human intervention.

Benefit sharing action

We source algae from Brittany for a RonaCare^® product from our Electronics business sector. In this region, we financially supported the Regional Marine Fisheries and Aquaculture Committee to preserve the algae stocks and to assess and understand the ecological functioning of algae in Brittany. In doing so, we implemented a benefit sharing action as part of our Group policy Access to Genetic Resources and successfully completed a case with the German Federal Agency for Nature Conservation (Bundesamt für Naturschutz, BfN) in accordance with current EU regulations.

Gaining knowledge of our impact on biodiversity

The Taskforce on Nature-related Financial Disclosures (TNFD) is an initiative that has developed a framework for organizations such as companies to assess and disclose their nature-related risks and opportunities. The TNFD places a significant emphasis on biodiversity, recognizing that the loss of biodiversity can pose substantial risks to businesses, including supply chain disruptions, regulatory changes and reputational damage. On the basis of this framework, we have taken the first steps toward a financial quantification of our biodiversity dependencies. Our ultimate objective is to use these data for our resilience analysis and to incorporate them in our business strategy.

As a first step, we analyzed the environment around our own sites using data from the Integrated Biodiversity Assessment Tool (IBAT). In a second step, we worked to analyze impacts and dependencies in our business sectors and supply chain. The aim was to gain a comprehensive understanding of how our supply chain can affect biodiversity. We used data from purchasing to gain an overview of the locations of our relevant suppliers in relation to our spending. We then compared this data with IBAT data and are now able to understand the biodiversity context of our suppliers’ locations. We plan to take this data into account in our supply chain management and continue this action during 2025. In a third step, we aim to carry out a final evaluation by the end of 2025.

Since our actions in 2024 focused mainly on understanding our impact on biodiversity, we are not currently making use of compensation. Instead, we are concentrating on avoidance, minimization and restoration. Nevertheless, we are discussing in external committees how we can include compensation in our actions in the future.

We have not included indigenous knowledge and nature-based solutions in our actions. In the coming years, we will further refine our actions.

In 2024, no significant capital expenditures (CapEx) or operating expenditures (OpEx) were allocated to the biodiversity actions. For 2025, we also do not intend to allocate any significant OpEx or CapEx.

Our targets and impact metrics related to biodiversity and ecosystems (E4-4; E4-5)

We did not set any biodiversity targets for the reporting year and are therefore unable to report on the performance and effectiveness of such biodiversity targets. We initially focused on understanding our impacts, risks and opportunities related to biodiversity. In 2025, we will be working on the implementation of a biodiversity roadmap. For this roadmap, we plan to consider targets at the interfaces with nature, operational targets and business model or implementation targets. Targets at the interface with nature relate directly to nature or to certain influencing factors (e.g., the amount of water used in water stress areas), to the state of nature (e.g., the state of biodiversity in the vicinity of a site) or to the extent and quality of an ecosystem service (e.g., available water). Operational targets refer to indicators that relate to nature but do not directly assess the impact or dependence on nature. An example of this is water efficiency in industrial processes. Business model or implementation targets relate to the implementation of actions (e.g., the share of the supply chain that is certified) and to changes in the business model (e.g., the degree of circularity). Our planned targets are to be confirmed by the Group’s Sustainability Board in 2025.