Examples of Supplier Engagement in 2020

Energy Efficiency and CO2 Reduction

For more than eight years, NSG Group has been implementing a globally co-ordinated and supported energy efficiency program across its operations. Procurement together with other central resources from Research and Development, Manufacturing Excellence and local management teams are focused on reducing our energy consumption and costs across the entire Group. In October 2019, in alignment with the Paris Climate Change Agreement, NSG Group committed to Science Based Targets (SBT) to reduce absolute Scope 1 and 2 CO2 emissions from glass manufacture by 21% of CY2018 baseline levels by 2030.

Please refer to the "Reduction target of CO2 emission".

In addition to Scope 1 and 2, NSG Group is also committed to reducing its Scope 3 CO2 emissions. Scope 3 emissions include other CO2 emissions in NSG's value chain, for example, raw materials, transportation, services, business travel, employee commuting, emission by our JV investments and certain emissions by our customers in the processing of our glass.

Scope 3 CO2 emissions

In 2017, NSG Group started the process to improve the quantification of its Scope 3 emissions. The 2020 Scope 3 emissions can be seen in the table above. We also started an engagement with key suppliers to better understand the CO2 in our supply chain and to identify and share best practices with our partners.

Energy

Energy represents one of the largest spend areas for NSG; In CY20 it was 15% of the total Procurement spend for the group. In addition, scope 1 and scope 2 energy consumption represents 53% of the CO2 emissions of NSG Group. Consequently NSG Group has for some years been implementing a global energy management programme aimed at reducing our energy consumption and emissions. To date, this programme has been implemented in 25 of our sites representing 75% of our energy based scope 1 ,2 and 3 emissions. In every individual site project we engage with our supply base to identify a range of projects to reduce energy consumption and CO2 emssions or to introduce renewable energy generation within the Group.

In 2019 the NSG Global Energy Management Programme was re-launched as the Energy and Carbon Management programme to reinforce the emphasis on CO2 reduction, in support of NSG's Science Based Targets (SBT) for carbon reduction, which were externally announced in October 2019. In parallel with these SBT's, NSG decided to set targets for renewable electricity to be used across the Group's operations. In 2020 the proportion of the Group's electricity coming from renewable sources grew to 25%, an increase of 5% vs 2019. The commitment to increase this to 50% by 2024 remains. During 2020 NSG Group signed its first offsite Power Purchase Agreement (PPA) covering approximately 25% of electricity demand in Argentina and this project is expected to reduce carbon emissions by 5,000 tonnes per year. Additionally, renewable electricity grid supply contracts were signed in Chile and Poland to further reduce scope 2 carbon emissions. Following on from the renewable electricity grid supply contract signed in 2019, NSG Group's Settimo site in Italy was connected to a supplier's local district heating network, making it the first major manufacturing facility in NSG Group to be net zero for its energy consumption. In Japan NSG Group has signed an agreement with Osaka Gas for the supply of "carbon offset" gas to its Kyoto automotive facility.

Synergies with Strategic Raw Material Suppliers

Batch Materials used in the manufacture of 'Float Glass' represent around 10% of total Procurement spend. The manufacture and processing of raw materials contribute 975 thousand metric tonnes of scope 3 emissions or 15% of total NSG Group CO2 emissions. Of the total CO2 emissions from any given float line, on average, around 17% comes purely from the decomposition of carbonate raw materials, with the remainder coming mainly from the melting of these and other raw materials, including cullet, to make glass, and a smaller amount from the forming and annealing processes. Evaluating alternatives to carbonate raw materials has, therefore, been a key focus in NSG’s efforts to reduce the CO2 emissions from glassmaking.

We are working with a number of strategic suppliers on projects to reduce CO2 emissions and at the same time reduce enery consumption. In summer 2019 discussions commenced with a strategic soda ash supplier to the Group. Soda ash acts as a fluxing agent during glass manufacture playing a vital role in reducing the furnace temperature necessary to melt silica and therefore reducing the energy required. However, the production of soda ash also releases a significant portion of CO2 into the atmosphere. NSG and the supplier are evaluating potential synergies between our two high energy demanding - and hence high CO2 emitting - companies.

Low carbon raw materials

The manufacture and processing of raw materials (Scope 3) contribute slightly more CO2 emission so reduction of the raw materials CO2 burden is very important to achieving our SBT. R&D, in collaboration with Procurement, have been working to find viable low carbon batch materials that can be used to reduce these emissions and recently conducted trials of a calcined carbonate raw material, which contains no CO2. In 2020 our main activity has been focussed on preparing for a large scale trial of calcined dolomite on a float line in South America, where we have been working with the existing dolomite supplier and a new company which specialises in high quality calcination, enabling a suitable material to be produced for float manufacture. Calcined dolomite contains no CO2 in the form of carbonate species and current indications are that it will give a significant fuel saving as well.

Preparations are ongoing at the float line to commission engineering solutions required to carry out this trial safely, as well as ensuring a sufficient quantity of high-quality raw material will be available to trial. The aim is to conduct a trial lasting ~10 days, to enable NSG to gather all the required data and experience of working with this novel material, including energy and CO2 savings, but also any changes to the chemistry and mechanism of the production process, to evaluate if the technology is suitable for implementation across the Group. This trial has been, and continues to be, delayed by COVID, but we are optimistic the trial will be able to take place before the end of 2021.

Other activities in 2020 have included re-engaging with our existing soda ash suppliers, to better understand their plans for reducing CO2 emissions during manufacture, and the assessment of other alternative materials using new analytical methods which allow us to directly quantify the melting energy requirements of these materials relative to our existing raw materials. This data gathering will continue throughout the coming year, with the goal being to be able to propose the best suite of raw materials to achieve the desired glass properties, whilst minimising CO2 emissions and input costs.

Transport & Warehousing

Transport and Warehousing activities account for 16% of the NSG Group Procurement’s spend across its global operations with transportation alone accounting for 12% of this. The European road transport supplier costs account for 45%, SEA accounting for 17% and the Americas accounting for 38% of the Global Group road transport spend. The supplier engagement currently equates to 71% coverage in Europe, 37% coverage in Japan and 39% in North America. From these engagements we now collate detailed distance travelled data.

There is a strong emphasis on improving efficiency, reducing empty driven miles and increasing the weight of product carried. All of these initiatives will reduce our environmental impact. Many positive projects delivering environmental benefits are being actively managed. Our main focus is to work with our lead suppliers to drive sustainable improvement through network optimisation. This encompasses lane management, backloading and triangulation of flow leading to increased efficiency of vehicle utilisation which reduces the number of journeys we make as a business to fulfil customer demand. Working across multiple NSG Business Units we can drive synergies across our distribution profile.

In Europe we have been working with our partners to assess the use of Liquefied Natural Gas (LNG) as a replacement for diesel fuelled vehicles. A successful trial was completed in the UK in July 2020. On average we have the potential to save up to 92% of CO2 if Bio-LNG trucks can replace diesel fueled vehicles.

Across the world we are exploring more intermodal solutions as NSG’s rail distribution only accounts for 4% of our overall volume distribution but this program has been delayed due to the impacts of the global pandemic.

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