Sonova ESG Report 2022/23
Protecting the planet
PROTECTING THE PLANET
Sonova has made an explicit commitment to protecting the planet by pursuing environmentally friendly practices throughout the whole life cycle of products and services and across all business activities. We set the priorities and provide the resources needed to reduce our environmental impact through responsible and efficient management of our buildings and infrastructure, processes, products, and services. Since 2021/2022, our commitment has been reflected in Sonovaʼs revised Corporate Environmental Policy, which has become effective as of April 1, 2022 and substantiates our dedication to environmentally proactive behavior and defines the companyʼs environmental management organization and responsibilities. As in previous years, no fines or non-monetary sanctions were levied against Sonova in 2022/23 for non-compliance with environmental laws or regulations.
Among other tools, we use environmental management systems (EMS) to ensure that environmental considerations are taken into account when designing, manufacturing, and servicing products. Key manufacturing and distribution centers for our Hearing Instruments and Cochlear Implants business have ISO 14001 certified EMS:
- Sonova AG and Advanced Bionics AG (Stäfa, Switzerland)
- Sonova Communications AG (Murten, Switzerland)
- Sonova Operations Center Vietnam Co., Ltd. (Binh Duong, Vietnam)
- Sonova Hearing (Suzhou) Co., Ltd. (Suzhou, China)
- Sonova USA Inc. manufacturing and distribution centers (Warrenville/Aurora, USA)
- Advanced Bionics LLC (Valencia, United States)
For non-manufacturing sites, Sonova has adapted the environmental management systems to ensure that environmental factors are integrated into decision-making and that environmental performance continues to improve.
This “Protecting the planet” chapter comprises the following sections:
At Sonova, we acknowledge our responsibility to combat climate change. We recognize that a science-based approach and equitable transition to a zero-carbon economy are essential: for the planet, for the wellbeing of our employees and value chain partners, and for the continued success of our business. Our climate strategy addresses both mitigation of the causes of climate change and resilience to its effects, combining effective near-term actions to secure important long-term results.
Strategy and action plan
In 2022, we announced our commitment to the Science Based Targets initiative (SBTi) and submitted our near-term science-based targets. Our commitment is to reduce our combined absolute scope 1 and 2 greenhouse gas (GHG) emissions by 78.3% and 32.5% in scope 3 by 2032 compared to 2019, thereby aligning with the 1.5°C scenario for scope 1 and 2, and with the “well below 2°C” scenario for scope 3. These targets are currently under validation by the SBTi and are expected to be approved in the first half of the 2023/24 financial year. Sonovaʼs climate strategy defines our overall approach to reducing GHG emissions through actions of four types:
- Measure emissions and continuously improve the data quality.
- Avoid emissions by progressively adopting low-impact solutions.
- Replace energy sources with renewable ones.
- Engage and collaborate with value chain actors to drive actions.
Sonovaʼs action plan to address scope 1 and 2 emissions includes key measures such as further adopting energy efficient practices in our buildings, conducting energy studies across key sites, increasing the share of low-emissions vehicles in our company car fleet, and further incentivizing the use of renewable energy for electricity, vehicles, and heating wherever possible. We developed site-specific action plans for key locations. Sonovaʼs action plan for scope 3 emissions focuses on purchased goods and services, transport and distribution, and business travel. These categories make up over 80% of Sonovaʼs total scope 3 emissions across our value chain. Stakeholder engagement is key to drive emissions reductions, and we plan to work closely together with our suppliers toward a shared goal of a less impactful supply chain. Further priority tasks for the 2023/24 financial year are optimization of shipments, an increased shift from air to sea freight, and further development of internal travel policies.
GEERS environmental sustainability forum
In June 2022, approximately 20 GEERS employees ran a two-day brainstorming event in Dortmund, Germany to identify ways in which the German Audiological Care business could reduce climate impact and increase resource efficiency. They came up with suggestions that conserve energy, reduce packaging waste, and decrease paper consumption and marketing materials by digitalizing processes across the store network. The implementation of some of these actions began in October 2022 and is expected to generate noticeable reductions in energy consumption and related greenhouse gas emissions in 2023.
The total energy consumption of the Sonova Group in 2022 was 121,178 MWh. 51% was electricity consumption (for buildings and vehicles), 31% was for heating (using fuel oil, natural gas, biogas, and district heating), and 18% represented vehicle fuel (diesel, gasoline, liquefied petroleum gas, ethanol). Our Audiological Care business (AC) represented 56% of Sonovaʼs overall energy consumption, while shared business functions (e.g. headquarters, operation and repair centers, and other Group companies that perform tasks for multiple business units) and the Hearing Instrument business (HI) accounted for 17% each. Smaller proportions, 8% and 3% respectively, were attributable to the Cochlear Implants business (CI) and Consumer Hearing business. Total energy consumption increased by 21% in 2022 compared to 2021, with electricity consumption up 18% compared to 2021, heating consumption up 25%, and vehicle fuels consumption up 21%. The overall energy consumption increase was mainly driven by the addition of Alpaca stores and the Consumer Hearing business, which were included in our environmental data for the first time in 2022, as well as the opening of new Audiological Care clinics and increased mileage of our corporate car fleet.
Our Audiological Care business consumed the most electricity, together with shared business functions, mainly due to the large building footprint of the clinics network, along with shared business functionsʼ corporate buildings and operation centers. The increase in electricity consumption mostly stems from the addition of Alpaca and the Consumer Hearing business. Over 80% of heating energy consumption can be attributed to the Audiological Care business. This is due to the larger presence in Europe and Northern America, where cold winters make heating more necessary. The increase compared to the previous year is largely driven by the addition of Alpaca stores and the opening of new Audiological Care clinics. All the other business units and shared functions recorded a reduction in heating energy consumption, due to a comparatively warm winter and a series of efficiency measures. For example, in our corporate headquarters in Stäfa, Switzerland, heating energy use was reduced by 20% compared to 2021 by setting thermostats to slightly lower temperatures. The Hearing Instruments business accounts for 50% of the vehicle fuel consumption, followed by Audiological Care (41%). The Hearing Instruments business saw a 43% increase in vehicle fuel consumption compared to the previous year, mainly due to the increased mileage driven as sales representatives increased the number of customer visits. Shared business functions reduced their use of fuels by 58% compared to 2021, due to the change from diesel shuttle buses to new electric ones at our operation center in Suzhou, China.
Energy consumption by business
Sonovaʼs energy intensity (energy consumption relative to revenues) increased by 8% in 2022 compared to 2021, but remained 19% lower than 2020. The main reason for the lower increase in energy intensity compared to absolute energy consumption is the lower energy intensity of the newly added Consumer Hearing business compared to the other Sonova businesses, as it has a relatively small vehicle fleet and most of the manufacturing activities are executed by third parties.
As part of our continuous improvement approach, we are committed to reducing our energy consumption. We have therefore set the new target to reduce Sonovaʼs energy consumption per employee by 10% from 2022 levels by the end of 2027. The 2022 baseline value is 7.1 MWh/FTE; the target value is therefore 6.4 MWh/FTE.
Energy consumption reduction target:
We aim to reduce our energy consumption per employee by 10% by 2027 vs. 2022.
Sonovaʼs overall share of renewable energy remained essentially stable at 51% in 2022 (52% in 2021). Sonova is committed to sustained efforts to increase the share of renewable energy in the total energy consumption. Sonova uses 100% electricity from renewable sources. We follow a three-fold approach to achieve this. Firstly, we invest in onsite electricity generation. In 2022, onsite-produced solar electricity consumption more than doubled (1,603 MWh in 2022 compared to 786 MWh in 2021), mainly due to new installations in our operation center in Vietnam and at our headquarters in Switzerland. Secondly, Group companies where onsite generation is not yet feasible are prompted to locally source certified renewable electricity. Lastly, for all those Group companies where renewable energy is not yet used or available, Sonova purchases unbundled Energy Attribute Certificates (EACs).
Greenhouse gas (GHG) emissions
We continued to make progress during the 2022/23 financial year on our journey towards decarbonization of our operations and value chain. We surpassed our five-year target of a 50% reduction in GHG emissions intensity from 2017 levels, which focused on scope 1, scope 2, and scope 3 air travel emissions. At the end of 2022, our GHG emission intensity stood at 6.7 tons of CO2e per million CHF revenues, compared with 18.6 in 2017, a 64% decrease. The main reason for this achievement is the switch to 100% renewable electricity in our operations.
As 2019 is the base year for our science-based scope 1-3 emissions reduction targets (currently pending validation), we recalculated our GHG emissions back to 2019, integrating the Consumer Hearing business and Alpaca data into the Sonova Group GHG accounting from 2019 – 2022. 2019 was selected as a base year as 2020 and 2021 scope 1-3 emissions were impacted by the Covid-19 pandemic. We also implemented various data quality and methodological improvements. As a consequence, our total 2022 scope 1-3 emissions amounted to 278,802 tons CO2e, a decrease of 8% from 2021. Overall, total emissions dropped by 22% compared to 2019. Compared to 2019, scope 1 emissions in 2022 declined by 10%, scope 2 emissions by 96%, and scope 3 emissions by 18%. Over 95% of our emissions are scope 3 emissions across Sonovaʼs value chain.
GHG emissions – Scope 1-31
In the table below, you find scope 1-3 emissions data for 2021 and 2020 that do not include the emissions from the Consumer Hearing business and Alpaca. The integration in 2022 is the main reason for the substantial increase of over 40% in scope 1-3 emissions compared to the prior year. The Consumer Hearing business is also more emission intensive than Sonovaʼs other businesses: high sales volumes of products that are significantly heavier than e.g. hearing instruments. Due to the addition of the Consumer Hearing business and Alpaca, the overall Sonova Group scope 1-3 emissions intensity increased from 58.8 to 74.6 tons CO2e per million CHF revenues in 2022.
GHG emission intensity
Scope 1 and 2 GHG emissions
Scope 1 emissions are direct CO2e emissions related to company vehicles, stationary combustion (e.g. heating), and fugitive emissions (e.g. from refrigerants), while scope 2 emissions relate to indirect GHG emissions (e.g. from electricity consumption and district heating). Sonova Groupʼs absolute CO2e footprint of scope 1 and 2 emissions for 2022 decreased by 5% compared to the previous year.
In 2022, overall scope 1 GHG emissions increased by 15%, or 1,569 tons CO2e, compared to 2021, originating from a rise in emissions from both heating of buildings (+17%) and the corporate car fleet (+16%). The increase in heating mostly stems from the opening of new Audiological Care clinics. We also implemented various energy conservation actions, including lower temperatures and activities to drive behavioral change of employees at audiological care clinics. The higher emissions from Sonovaʼs owned and leased corporate vehicle fleet were mostly due to increased mileage. Our global car policy limits the CO2e per km emitted to 95 grams for newly purchased or leased cars. Hybrid and electric vehicles now constitute more than 20% of Sonovaʼs car fleet, compared with less than 8% last year.
In scope 2, our GHG emissions declined by 75%, or 2,238 tons CO2e, from 2021. We further increased our onsite generation of renewable electricity in Vietnam and Switzerland, switched various local electricity contracts to 100% renewable sources, and sourced the remaining electricity through unbundled Energy Attribute Certificates (EACs). Since 2022, we also source renewable electricity for our global vehicle fleet. The remaining 739 tons CO2e emissions in our scope 2 derive from the use of district heating mainly in northern European countries.
Sonovaʼs own operations (scope 1 and 2) have been carbon-neutral since 2021. In 2022, Sonova offset its remaining scope 1 and 2 emissions of 12,467 tons CO2e through three projects: hydro power in China, solar power in Vietnam, and forest protection in the Brazilian Amazon. All three projects are either verified by the Gold Standard or VCS (Verified Carbon Standard), two of the worldʼs most widely used verifying bodies for carbon credits.
We continue to develop local carbon footprint reduction measures to improve energy efficiency in our infrastructure and production processes. Examples include identifying heat leakage, consolidating facilities, installing charging stations for electric vehicles, and further improvements in building automation to optimize electricity use in heating, ventilation, and air conditioning.
Scope 1 and 2 GHG emissions1
Scope 3 GHG emissions
Sustaining a sharp focus on reducing scope 3 emissions is crucial for Sonova, as our value chain accounts for 96% of our total GHG emissions in 2022. More than 90% of our total scope 3 GHG emissions derive from the following scope 3 categories: purchased goods and services, transport and distribution, employee commuting, business travel, and use of sold products. Of the 15 scope 3 categories defined by the GHG Protocol, 13 are applicable to Sonova. Those not currently applicable are downstream leased assets and franchises.
Sonovaʼs scope 3 emissions decreased by 22,105 tons CO2e or 8% in 2022 compared to the previous year, when including the Consumer Hearing business and Alpaca in both years. This decrease mainly stems from purchased goods and services, use of sold products, and transportation and distribution.
Scope 3 GHG emissions1
Category 1: Purchased goods and services
The largest source of Sonovaʼs GHG emissions derives from the procurement of direct and indirect materials and services. In 2022, 59% of scope 3 emissions arose from purchased goods and services. Compared to 2021, these emissions decreased by 11% in 2022. The majority of the reduction stems from the Consumer Hearing business, where sales of more CO2e intensive products declined. In the Hearing Instruments business, these emissions mainly originate from the procurement of electronic components, accessories, packaging, and batteries. Sonova has started to actively engage with key suppliers on GHG emission reductions during the 2022/23 financial year, and we are committed to further extend this engagement. We will also continue to improve the granularity and availability of data on our direct and indirect materials and services purchased across our business units.
Category 4 and 9: Transportation and distribution
Categories 4 and 9 include GHG emissions arising from the transport from supplier facilities to our operation centers, intercompany transportation, and from our distribution centers to audiological care clinics (owned and third-party) or other customers. Air freight in product distribution is the main contributor to our GHG emission footprint, accounting for around 88% of CO2e emissions from transportation and distribution. While overall shipping volumes (by weight) increased slightly during 2022, Sonovaʼs GHG emissions from transport and distribution decreased by 9% compared to 2021. In the Consumer Hearing business, freight transported by air decreased by 30% and was instead transported by sea. For the Hearing Instruments and Cochlear Implants businesses, air freight transportation remained unchanged. Sonova remains committed to switch to lower-polluting modes of transportation where this is feasible. We continue to work towards further reductions in packaging weight and volume, and are revisiting our global distribution network to shift towards more regional sourcing to reduce transportation distances.
Category 6: Business travel
Air travel accounts for more than 90% of business travel emissions. Compared to 2021, our GHG emissions from business travel have significantly increased after the easing of COVID-19 related restrictions. However, business travel emissions still remain 49% below pre-pandemic levels. In the coming financial year, we will identify systematic measures, guidelines, and rules for more responsible business travel.
Category 7: Employee commuting
Sonovaʼs GHG emissions from employee commuting remained stable compared to 2021. Sonova launched a hybrid working guideline for office-based employees in August 2021, which was rolled out across the Group in the 2022/23 financial year. Local commuting options differ greatly from region to region, so localized solutions are essential for minimizing commuting related GHG emissions. Several Sonova Group companies have launched mobility programs to promote environmentally friendly commuting. These include financial incentives for public transport, installment of charging stations for electric vehicles, or provision of electric shuttle buses.
Category 11: Use of sold products
Almost 80% of emissions in this category stem from the Consumer Hearing business product portfolio, as audiophile and other headphones and soundbars require more energy over their life cycle than do hearing aids. The CO2e emissions related to Sonovaʼs hearing instruments and cochlear implants during their use phase are low, as these devices generally use little energy. GHG emissions compared to 2021 decreased by 31%, mostly due to changes in the Sennheiser product portfolio.
Climate-related risks and opportunities (TCFD)
The implications of a changing climate are far-reaching and complex, posing risks and opportunities to societies and businesses. These risks and opportunities can be broadly sorted into two categories:
- Physical risks from impacts of climate change on the environment: chronic, such as sea level rise; or acute, such as more frequent and severe weather events. These risks can lead to significant economic and social impacts, such as property damage and disruptions to supply chains.
- Transition risks and opportunities: the changes needed to move to a low-carbon economy (e.g. on legal, policy, market, or technology level), which can have negative or positive effects on businesses, investors, and governments.
The Sonova Board of Directors has ultimate oversight and responsibility for climate-related risks and opportunities. The Board of Directors and its committees receive updates on climate change topics at most of their regular meetings, and also receive a monthly written update from the CEO on overall progress in selected ESG topics, including climate-related matters.
On the Management Board level, responsibility for environmental sustainability is assigned to the GVP Operations, who monitors progress on a monthly basis. The regional leads are responsible for implementation of measures. The ESG Council reviews progress on climate action in the quarterly meetings.
Strategy and risk management
Sonova recognizes that an effective climate strategy requires systematic climate change scenario analysis. We initiated this during 2021/22 with a pilot scenario analysis project across seven countries where Sonova has a larger footprint: Vietnam, United States, China, Switzerland, Germany, United Kingdom, and Canada. During the 2022/23 financial year we extended the assessment to include an additional two countries – Australia and Brazil – and also performed a business impact assessment of one physical and one transition risk. The analysis comprised two scenarios: a “high-mitigation” below 2°C scenario, which is relevant to assess risks related to the transition to a low-carbon future, and a “business as usual” 4°C scenario, which helps to comprehend the physical risks associated with the intensification of widespread climate hazards. The high-mitigation scenario covered the short-term horizon (next 5 years) and both scenarios included a medium-term (2030) and a long-term horizon (2050). We are guided by the following four-steps approach:
- Screening and prioritization of risks and opportunities
- Hotspot analysis
- Deep-dive analysis of physical risks
- Identification of financial impacts
1. Screening and prioritization of risks and opportunities
Based on interviews with relevant internal stakeholders in the countries of focus, we conducted an assessment identifying a broad set of physical and transition risks that could potentially affect Sonovaʼs current business and value chain. This extends from our supply base all the way to our end-consumers. For potential physical risks, we used the EU Taxonomyʼs classification of climate-related hazards (2021) to generate a list of seven risks to which Sonova would be most vulnerable.
TCFD – Potential physical risks
Five areas were screened to identify transitional risks and opportunities: policy, litigation, technology, market, and reputation – all in the context of the transition to a low-carbon economy. Four key transition risks and two opportunities were identified:
TCFD – Potential transition risks
TCFD – Potential transition opportunities
2. Hotspot analysis
For the physical risks, a literature review was conducted on the latest climate-science and relevant climate policies on a country-by-country base. This hotspot analysis gave us insights on the expected conditions and change of underlying risks and opportunities in the medium-term (2030) and long-term (2050) compared to the baseline period1 for each country considered. The expected change compared to the baseline period risks were classified as follows:
TCFD – Risk classification
The assessment results of nine countries showed that the physical hazards in the long-term (2050) represent a higher risk than in the medium-term (2030). The table below therefore highlights the long-term identified changes (2050 vs. baseline).
TCFD – Hotspot analysis of physical risks (2050 scenario)
On the transition risks and opportunities, we determined their likelihood of materializing and affecting Sonova in the short-term (2025), medium-term (2030) and long-term (2050). The scenarios considered in this analysis are: the International Energy Agencyʼs (IEA) Stated Policies Scenario (STEPS), which projects a temperature increase of approximately 3°C by 2100 based on the current GHG emissions growth rate, and the Sustainable Development Scenario (SDS) that predicts global warming to be 1.75°C as strong international policy supports the transition to a low-carbon economy. In addition, national scenarios, policies and long-term strategies were reviewed for each of the assessed countries. The risks and opportunities were assigned a qualitative rating based on Sonovaʼs footprint within the respective jurisdiction and the likelihood that the identified topics would materialize. The matrix below shows the highest risks that were identified across all timeframes (2025, 2030, and 2050) and scenarios. The 2025 timeframe was included because transition risks and opportunities could materialize within a relatively short period.
TCFD – Hotspot analysis of transition risks (2025, 2030, and 2050 scenarios)
The results show a low risk in most cases, except for 1) challenges that Sonova may face in reducing scope 3 emissions, especially for suppliers in China, due to relatively underdeveloped regulatory frameworks failing to stimulate emissions reductions at the desired rate; 2) potential increases in Sonovaʼs operating costs from stricter aviation sector policies resulting in higher air-transportation fares and 3) the risks related to carbon pricing schemes in Australia and Brazil. The assessment also identified governmental incentives and support to reduce emissions in the building sector to be further potential opportunities.
3. Deep-dive analysis of physical risks
To better understand how physical climate related risks could affect Sonovaʼs operations and business in the long-term (2050), we performed a data-driven in-depth analysis for the four physical risks that scored very high in the hotspot analysis. The deep-dive focuses at risks at facility level, not only at country level as in the hotspot analysis. For Australia, Brazil, and China no physical risks emerged as being material to Sonova.
TCFD – Summary deep-dive analysis results1
The continued execution of Sonovaʼs omnichannel strategy, which includes increased online sales and service presence, can help to mitigate some of the identified physical climate risks. Physical climate risks are also considered when opening new facilities and in the design of our supply chain.
4. Identification of financial impacts
During 2022/23, we started to assess the potential financial impacts of two specific climate-related risks:
- Increasing heavy precipitation and flooding risks in the vicinity of our operation centers in Vietnam and China that could cause supply chain and operational interruptions (physical risk)
- Increasing carbon prices impact on air-transportation fares (transition risk)
The “business as usual” 4°C scenario is likely to see heavy precipitation and substantially increased flooding risks around our operation center in Vietnam and, to a slightly lower extent, at our operation center in China. Such flooding events could potentially directly impact our production sites and indirectly lead to production interruptions, as flooded road networks, airports, or ports could prevent delivery of input materials to our operation centers. The in-depth analysis however showed, that the flood risk at the locations of our operation centers in Vietnam and China is not increasing, and local teams already have precautions in place for potential adverse weather events. The focus of the analysis was therefore extended to assess the potential flooding risk at the locations of critical suppliers, not just our own operation centers. We assessed the most critical suppliers for each operation center and determined criticality of suppliers by the ease of replacing them and by their sourcing volumes per operation center. The results showed that four supplier locations are at risk for river flooding and two supplier locations are at risk of coastal flooding. Under the applied scenarios, flood risk increased for one supplier that provides components for less than 1% of our manufactured products in China and Vietnam. For suppliers whose components are integrated in a large share of our Hearing Instruments, river flooding risks are expected to even decrease due to climate change. To calculate the potential financial impact on Sonova, we estimated the supplierʼs forced operational downtime, impact of supply shortage on our stock levels of key components, and revenue impact based on number of days the operation centers would not be able to produce goods. The assessment showed that there is a low risk today, in 2030, and in 2050 – in both the 2°C “high mitigation” and 4°C “business as usual” scenarios. The findings will feed into Sonovaʼs activities related to supply chain and inventory management as well as supplier engagement.
The second risk we analyzed was a transition risk: the potential financial impact of increasing carbon prices on air-transportation cost in Switzerland, Germany and the United Kingdom, as we had identified the highest potential risk in these three countries. We included both business-related air travel and air freight in our analysis. To calculate the financial impact, we modelled different scenarios, which were based various assumptions related to regional carbon price developments, aviation sector decarbonization path, development of global warming, Sonova business growth and our own greenhouse gas reduction pathway. The analysis showed that potential financial impacts from air freight are higher than those related to air travel. We further found that achieving our current science-based target (under validation) would lower potential carbon costs by 70% compared to a business as usual trajectory. As part of our climate strategy, Sonova aims to decrease its proportion of shipments by air freight relative to road or sea freight. Furthermore, Sonova is reviewing current travel policies to drive reductions in business-related air travel.
In the coming financial year, Sonova will continue to align closely with TCFD recommendations and increase the number of countries assessed to identify climate-related risks and opportunities in other geographies where Sonova is represented, as well as further advance on quantifying the financial impacts from climate-related risks and opportunities.
We are committed to minimizing the impact on the environment and human health of our products and packaging throughout their entire life cycle, and to fostering the transition to a more circular economy. Our environmental actions cover different life cycle stages of our products, ranging from materials processing, to procurement and manufacturing, packaging and distribution, consumer use, and end-of-life handling.
Sonova aims to reduce the use of hazardous substances, avoid other environmental risks, minimize consumption of resources, and design for recycling and easy end-of-life treatment. As a medical and consumer device manufacturer, Sonova takes a proactive approach to evaluating materials in products and components to assess environmental, health, or safety risks. This evaluation process is continuous and applies to all stages of production. Employees who work with chemicals and hazardous substances, or come into contact with them, are trained annually in their safe handling.
Sonova complies with the EU directive on Restriction of Hazardous Substances (RoHS 2015/863/EU), which governs the use of heavy metals and halogenated compounds in electrical and electronic equipment, and with the EU regulation on the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH EC 1907/2006) for the safe manufacture and use of chemical substances throughout their life cycle. Sonovaʼs suppliers are also required to prove their compliance with the RoHS directive and the REACH regulation in their respective processes and supply chains.
In accordance with REACH regulation, Sonova continuously updates the list of substances of very high concern (SVHC) that may be present in products above the regulatory threshold level of 0.1% by weight of the article. By the end of 2022 there were three SVHC substances requiring communication in accordance with the REACH regulation: 1,3-propanesultone, lead titanium trioxide, and lead. We had set a target to have zero SVHCs present in Sonova products by the end of 2022, which has not been achieved. Additional substances were added to the REACH SVHC candidate list after the target was set, and it remains challenging to replace these with alternative materials that provide equivalent properties. Sonova will continue to ensure compliance with the necessary reporting requirements under the REACH regulation and the Waste Framework Directive (EU) 2018/851 whenever the use of SVHC compounds exceeds the 0.1% threshold.
Procurement and manufacturing
We insist on environmentally friendly business practices throughout our value chain. The Sonova Group Supplier Principles recommend that suppliers use the international ISO 14001 standard as the starting point for their work. Since a large share of our environmental impact stems from our supply chain, we have started to engage with the most significant suppliers on such topics as greenhouse gas emissions accounting and setting emission reduction targets.
Packaging and distribution
Sonova is committed to reduce the environmental impact of our packaging. That is why we set the target to reduce product and transport packaging waste by 20% in terms of weight, compared to our 2019 baseline by 2023.
Packaging reduction target:
We aim to reduce packaging waste by 20% by weight by the end of 2023 (vs. 2019 baseline)*
*Includes transport packaging (excl. external distribution centers) and hearing instruments product packaging
Overall packaging weight increased by 4% in 2022 compared to 2021, and by 15% compared to 2019. This increase is mostly due to strong business growth. We are therefore unlikely to reach our target of a 20% reduction in packaging by the end of 2023. Despite challenges to achieving our target, we made progress on product and transport packaging during the 2022/23 financial year: we reduced the weight of several types of transport packaging box, resulting in overall savings of approximately 12 tons, and initiated further improvement actions. To accelerate the transition to eco-design principles for our packaging, we have appointed a Senior Packaging Designer.
The Sustainable Product Packaging Policy, effective since 2021/22 and covering our Hearing Instruments business, provides general guidance on use of fully recyclable materials, the minimization of weight, volume, and hazardous materials, and suitability for reuse and recyclability.
To better understand the potential environmental impact of packaging choices, we commissioned a team of external experts to make an in-depth analysis of representative product packaging systems, focusing on environmental indicators over the whole packaging life cycle and including GHG footprint, plastic leakage, recyclability, water footprint, and land use. The results of the assessment inform Sonovaʼs efforts toward a lower-impact packaging approach.
Packaging workshop focused on environmental sustainability
A three-day cross-functional packaging improvement workshop at the end of the 2022/23 financial year brought together participants from Sonova headquarters in Switzerland, and our operation centers in the United States and Vietnam. Focusing on both product and transport packaging, the team developed a roadmap of actions aimed at reducing packaging waste across Sonovaʼs value chain in 2023/24 and beyond. The actions proposed include packaging simplification and harmonization among operation and distribution centers, better process definition, enhanced data management, and eco-design guidelines.
Rechargeable batteries help to reduce the use of disposable batteries, increasing the lifetime of the product and reducing often hard-to-recycle waste. Since 2016, Sonovaʼs Phonak, Unitron, and Hansaton brands have continuously expanded their portfolios of hearing aids with a lithium-ion rechargeable battery. In the 2022/23 financial year, 59% of total sold behind-the-ear and receiver-in-canal hearing instruments were rechargeable, representing an 80% increase compared to 2020/21. Advanced Bionics also offers rechargeable battery options for cochlear implant sound processors.
We also provide a broad range of repair and refurbishment services to lengthen the life cycle of our products and their components. In 2022/23, we further improved our processes related to testing of used devices at the repair centers of our Hearing Instruments business. This is expected to have a positive impact on reuse of devices and reduce electronic waste in the 2023/24 financial year.
Sonova complies with the EU directive on Waste Electrical and Electronic Equipment (WEEE), which requires such equipment to be returned to the manufacturer for recycling or environmentally friendly disposal.
Selected Sonova Group companies in the Audiological Care business offer battery collection programs, in which customers can bring their used hearing aid batteries back to the store. The batteries collected are disposed of through officially authorized disposal agents. In 2022, more than four metric tons of batteries were collected at different stores worldwide, doubling the results of the previous year.
At Sonova, we support the transition towards a circular economy by optimizing the way we use materials, minimizing the extraction of natural resources, generation of waste, and related disposal costs. Sonova is committed to avoiding and reducing operational waste wherever possible, separating materials to enable recycling, and disposing of hazardous waste in environmentally compatible ways. Sonova complies with legal requirements in countries where we operate to transport and dispose of hazardous waste solely through officially authorized disposal agents. The main categories of hazardous waste substances are solvents, washing fluids, acids, oil emulsions, paints, adhesives, soldering paste, and filters.
Our five-year target from 2017 to 2022 was to increase the operational waste recycling rate to 60%. Due to data availability, the scope of the target was limited to headquarters, operation, distribution and repair centers, as well as larger Group companies. In 2022, the recycling rate remained unchanged from 2021 at 53%. We did not reach the target within the expected timeline, but group-wide efforts continue to be deployed to achieve better waste separation and establish new collaborations with waste management suppliers to increase the recycled share of various waste streams.
Waste – limited scope1
We further enhanced the scope of 2021 and 2022 waste data collection to the full Sonova Group and improved data granularity, especially a more detailed breakdown of prevalent disposal methods. Total waste increased by 11% to 3,260 tons during 2022 compared to the previous year, primarily due to the data integration of the Consumer Hearing business and Alpaca, and secondarily because of the progressive relaxation of COVID-19 restrictions (especially remote work). While hazardous waste remained stable, the overall waste increase was driven by the 14% growth of recycling waste, and by the 8% growth of non-hazardous waste compared to 2021.
Waste – full scope1
Sonova is committed to reducing the amount of waste that is generated by our operations. We have therefore set ourselves the new target to reduce our operational waste intensity by 5% by 2027 compared to 2022. The 2022 baseline value is 191.7 kg/FTE; the target value is therefore 182.1 kg/FTE. We intend to achieve this by optimizing and digitalizing processes, reducing packaging in transit between our operation, distribution and repair centers, and reusing materials where possible.
Operational waste reduction target:
We aim to reduce our operational waste per employee by 5% by 2027 vs. 2022.
Environmental Kaizen at Repair Center
In September 2022, employees in our Repair Center for Southern Europe in Alicante, Spain, conducted an environmental Kaizen (a continuous improvement workshop) focused on reducing waste by optimizing packaging size, minimizing repair byproducts, and switching to recyclable packaging materials whenever possible. The actions identified by the team are expected to significantly reduce plastic and foam waste from the repair center.
Although we do not require significant amounts of water in our manufacturing processes, we are committed to reducing our withdrawal of fresh water, especially in water-stressed regions. We use water primarily for sanitary services, building automation systems, kitchens, and garden areas – and therefore focus our conservation efforts on our office buildings, monitoring per-capita consumption to identify potential areas for improvement. The sources of all water withdrawal are municipal water supplies or other public or private water utilities.
Our five-year target from 2017 to 2022 was to reduce water consumption by 5% per full-time equivalent employee (FTE). Due to data availability, the scope of the target was limited to headquarters, operation, distribution and repair centers, as well as larger Group companies. Sonova achieved the target: water consumption decreased by 7%, from 18.2 m3/FTE in 2017 to 16.9 m3/FTE in 2022.
Water withdrawal - limited scope1
We further enhanced the scope of 2021 and 2022 water data collection to the full Sonova Group. Overall water withdrawal increased by 17% compared to 2021, primarily due to the data integration of the Consumer hearing business and Alpaca, and secondarily due to the progressive relaxation of COVID-19 measures (especially remote work).
Water withdrawal – full scope1
Freshwater withdrawal remains an increasing concern for the worldʼs ecosystems and the human societies that rely on them. We therefore remain committed to reducing our water withdrawal. Over the next five years, we aim to decrease our water withdrawal intensity across the entire Group by 5% per employee, aiming at reaching 13.1 m3/FTE in 2027 from a baseline of 13.8 m3/FTE in 2022. The main focus will be on upgrading our infrastructure and setting up rainwater recycling systems where appropriate – especially at sites that are located in areas with high or very high water stress.
Water withdrawal reduction target:
We aim to reduce our water withdrawal per employee by 5% by 2027 vs. 2022.
During the 2022/23 financial year, we further extended our physical water risk analysis for selected Sonova sites, using the WWF Water Risk Filter. The baseline water stress analysis (based on geographic water-catchment area – basin level) reported 24 sites out of the 57 assessed as being located in high or very high water stress risk areas. These 24 sites withdrew 52,641 m3 water during 2022, accounting for 22% of the overall Group water withdrawal. The sites with the highest water withdrawal in these areas are located in China, the United States, Germany, Spain, Israel, and Brazil. Primary sources of water withdrawn were groundwater (40,668 m3) and surface water (6,796 m3). Figures were partially extrapolated due to limited data availability.
Over past years, the nature of our global activities, products, and services has not shown to significantly influence biological diversity directly. Nevertheless, in light of the rapid global decline of biodiversity and the threats imposed on natural ecosystems by climate change, we recognize the importance of formally assessing Sonovaʼs biodiversity dependencies and impacts. In the 2023/24 financial year, we are planning to further analyze Sonovaʼs biodiversity-related risk and to mapping potential impact hotspots across our operations, using a location-specific approach. The aim of the assessment is to support future identification of key measures to mitigate Sonovaʼs potential biodiversity dependencies and impacts, building on the “avoid, reduce, regenerate, restore, and transform” AR3T Action Framework presented by the Science-based Targets Network (SBTN). Sonova is monitoring the development of recommendations from SBTN and the Taskforce on Nature-related Financial Disclosures (TNFD).
Third-party stakeholders along our value chain are also deemed material to Sonovaʼs potential biodiversity impacts; we are currently re-evaluating our procurement practices to ensure our value-chain partnersʼ commitment to the protection of ecosystems and biological diversity.
Environmental reporting and system boundaries
Sonovaʼs environmental data monitoring and reporting includes energy consumption, CO2e footprint, materials, waste disposal, and water consumption, and is based on the calendar year. Sonova reports environmental performance to the limits of the available data. Actual data is collected whenever possible, and estimated if data collection is not feasible given the decentralized organizational structure of these businesses and their small, often rented, facilities.
The tables in the section ‘Protecting the planet’ show environmental data from Sonova Group companies that operate as headquarters, operation, distribution or repair centers, wholesale distributors, as well as Group companies with audiological care activities. CO2e footprint, energy consumption, waste, and water data are provided for all entities in the 2022 environmental data reporting. Data from the Consumer Hearing business and Alpaca Group Holdings LLC (Alpaca), which became part of the Audiological Care business in the 2021/22 financial year, are included in the figures from 2022 onwards. Sonovaʼs science-based target base year for greenhouse gas (GHG) emissions is 2019, so the Consumer Hearing businessʼs and Alpacaʼs GHG emissions are included for the years prior to their acquisition, unless otherwise stated. HYSOUND Group, acquired in the 2022/2023 financial year, is not yet included in the environmental reporting. Acquired businesses are only included in the Group environmental reporting after a full calendar year within Sonova.
Sonova differentiates between direct GHG emissions (scope 1) deriving from the combustion of fossil fuels; indirect GHG emissions (scope 2) from sources such as using electricity or district heating; and indirect emissions (scope 3) that arise from our value chain. 13 out of the 15 scope 3 categories defined by the GHG Protocol are currently applicable to Sonova. Sonova monitors scope 1 and 2 GHG emissions arising from consumption of heating oil, natural gas, biogas, vehicle fuels such as diesel and gasoline, refrigerants, as well as district heating and electricity. N2O and CH4 emissions from biogenic sources, e.g. biogas, are included in scope 1, while the related CO2 emissions are excluded in accordance with the GHG Protocol. Outside-of-scope CO2 emissions from biogenic sources amounted to 296 tons CO2 in 2022.
We measure our electricity-related footprint using country-specific grid emission factors. scope 2 emissions were calculated using the ‘market-based’ approach in accordance with the GHG Protocol scope 2 Guidance. When reported according to the ‘location-basedʼ approach, the scope 2 emissions were 18,973 tons CO2e. Sonova purchased 34,463 MWh as unbundled Energy Attribute Certificates (EACs), which were accounted for under the market-based approach for scope 2. Scope 3 Categories 4 and 9 (Transportation and distribution) as well as 6 (Business travel) include non-CO2-related emissions deriving from aviation. A radiative forcing multiplier of 1.9 is currently applied as recommended by the UK Department for Business, Energy & Industrial Strategy (BEIS).
The measurement methodology and reporting format for the carbon footprint are based on the standards and guidance of the Greenhouse Gas (GHG) Protocol. Sonova follows the financial control consolidation approach for setting organizational boundaries. Global warming potentials (GWP) from the IPCCʼs fourth assessment report (AR4) are applied to calculate CO2 equivalents. Relevant gases included are CO2, CH4 and N2O. Key emission factor sources for calculating GHG emissions can be found in the table below:
Emission factor sources for environmental reporting
All conversion factors are presented to convert 1 input unit. The source for all conversation factors is BEIS Department for Business, Energy & Industrial Strategy.