We are committed to understanding and mitigating our impact on the natural environment. From our home-base and manufacturing hub in Reykjavik, Iceland, we can leverage the country’s abundant renewable natural resources, including clean water and renewable hydro- and geothermal energy that power a dedicated grid and supplies local industry and homes. This allows us to balance the growth of our operations and prosperity of our stakeholders, with the overarching objective of sustainability.
As a global company, we believe that 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 our energy use and CO2 emissions and continues with our dedication to mitigate the 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 heating and electricity. To further reduce our modest CO2 footprint, we have offset all of our Scope 1 (direct) and Scope 2 emissions as well as Scope 3 emissions that have been quantified. As Alvotech transitions from an R&D organization into one that commercializes product on a global scale, we expect our Scope 1 and 2 emissions to remain modest. However, we do expect our Scope 3 emissions to expand materially and are committed to further understanding and mitigating our Scope 3 emissions related to our upstream and downstream value chain as our sustainability efforts continue to mature. We are also committed to continuing to offset these emissions as our understanding of our impact related to Scope 3 evolves.
Iceland’s unique geology allows nearly all electricity in Iceland to be 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 mitigating our Scope 2 (indirect) emissions exposure. 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. For facilities in other countries (in Germany, the U.S. and Switzerland), which are in shared buildings, we rely on estimates based on the size of the facility and apply standard utilization rates per square meter and country specific emission factors for electricity and heat.
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. Additionally, water is a critical component in the production of safe and effective biologic medicines.
Alvotech has chosen Iceland as its R&D and manufacturing hub. Iceland 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.
Despite the abundance of water resources, Alvotech is committed to ongoing water preservation. We utilize single-use technology to manufacture our biosimilars, which greatly reduces both water and chemical consumption compared to multi-use systems. Additionally, our single-use technology is completely contained, which allows the company to switch from batch to batch and product to product more easily, conserving water throughout the entire manufacturing process, particularly during the cleaning phase.
Alvotech has primarily focused on research and development to date, however 2022 marked our ramp up of commercial production to support our first biosimilar launches. Alvotech aims to be a leading supplier of biosimilars in global markets both large and small, with expected commercialization of our portfolio and pipeline in over 90 markets around the world. This transformation carries material risk exposure with regards to waste.
It has been demonstrated that monoclonal antibody production in single-use technology reduces overall environmental impact when compared to more traditional durable process technology. However, single-use technology does create a material waste stream from single-use plastics, which is not present in traditional stainless-steel processes. We recognize that the 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 understanding and mitigating the impact of single-use plastics on the natural environment.