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.