Energy use and CO2 emissions
As a global company, our impact on the environment correlates strongly with our long-term success and value as an enterprise. We are committed to minimizing the impact we have on natural resources and climate change and recognize that this commitment starts with understanding our contribution through energy use and CO2 emissions and continues with our dedication to decrease energy intensity and emissions intensity of our operations.
Alvotech is a global company, with employees based all over the world. Our R&D and manufacturing platform is based in Iceland, one of the countries with the highest share of renewable energy use and lowest emission intensity for both heat and electricity. To further reduce our modest CO2 footprint, we offset all our Scope 1 (direct) and Scope 2 and 3 (indirect) emissions in 2021 and 2022. Emissions rose between 2021 and 2022 as our activity and organization grew, but emissions per employee were stable. As our revenue grows with launched products, we will in the future be able to track and report our energy use and emissions in relationship to value creation.
We chose to locate Alvotech’s corporate headquarters and manufacturing hub in Iceland, where we have launched our vertically integrated global platform dedicated to biosimilars research, development, and manufacturing. Iceland’s unique geology provides the company a bountiful source of renewable energy. Nearly all electricity in Iceland is generated from renewable sources (hydro and geothermal) and all district heating is from renewable geothermal sources, where naturally occurring steam from geologic activity is harnessed as a heat source. These renewable energy sources are used to run Alvotech’s manufacturing engine, significantly reducing our Scope 2 (indirect) emissions, which currently correspond to 94% of Scope 1 & Scope 2 emissions.
Indirect emissions from purchased electricity and thermal energy make up most of our Scope 2 emissions. We can meter the use of these energy sources and the associated emission factors directly in our facilities in Iceland, but for facilities in other countries (in Germany, the U.S. and Switzerland), which are in shared office buildings we rely on estimates based on the size of the facility and apply standard utilization rates per square meter and emission factors for electricity and heat, which are country dependent.
We have also started to track Scope 3 emissions, related to activity under our own control such as business travel. In the future, our ambition is to include in these numbers indirect emissions related to our upstream and downstream value chain, which becomes more relevant as our production starts ramping up with launched and delivered products.
The availability of fresh water is essential for public health and economic development. Lack of fresh clean water presents global macro and micro economic risks for all companies and is a threat to the sustainable development of healthy societies.
Alvotech has chosen Iceland as its R&D and manufacturing hub, a country that is endowed with plentiful supply of naturally occurring cold and geothermal (hot) water. According to the World Bank, Iceland ranks #2 in the world for highest renewable freshwater resources per capita, second only to Greenland. Iceland boasts 495,050 cubic meters (139.7 million gallons) of water per inhabitant as compared, for example, to the United States, which ranks number 57 with 8,670 cubic meters (2.3 million gallons) per person. For the European Union the same measure is 7,012 cubic meters of freshwater resources per person.
As a means of restricting water usage, Alvotech uses single use disposable technology, which greatly reduces both water and chemical consumption compared to multi-use technologies. The newer disposable technology is completely contained, which allows the company to switch from batch to batch and product to product easily, conserving water while ensuring the quality and safety of our products.
Because our manufacturing is not limited by water availability, short- and long-term water risk is mitigated. Nevertheless, Alvotech considers water conservation a key environmental priority and has taken steps to ensure that the use of water is minimized throughout the company’s processes and will continue to implement policies to further conserve water resources.
Alvotech is in the process of transitioning from an R&D only company, into an enterprise with a globalized commercial portfolio of biosimilars. This transformation carries material risk exposure with regards to waste. Our main waste stream results from single use plastics, which are integral to the single use disposable technology we utilize. Disposable technology also reduces greatly the use of water and chemicals, compared to multi use technologies and therefore limits the resulting disposal of wastewater and chemical waste. Based on comprehensive environmental life cycle assessment, this leads to substantial reduction of environmental impact. We are constantly looking for improvements within our manufacturing processes that will further lower our rate of consumption of single-use plastics and resulting waste disposal.
We recognize that industry must play an active role in moving from a linear plastic system into a circular economy for plastics. To accomplish this, Alvotech must not only improve internal processes, but cooperate with and demand more from our vendors in the future. A key part of maturing our sustainability program will be focused on reducing the impact of single use plastics on the natural environment.
Alvotech target is that only 10% of waste or less ends up in a landfill and that all wastewater discharged is fully compliant with our environmental permit. We are approaching the waste landfill ratio target (14% in 2021) and already meeting the wastewater goal.