PROTECTING THE PLANET
We drive the transition to a resource-efficient and low-carbon future for our business and operations throughout the life cycle of our products and services.
Sonovaʼs commitment to reducing our environmental impact is reflected in our Corporate Environmental Policy, which substantiates our dedication to environmentally proactive behavior and defines the companyʼs environmental management organization, responsibilities, and priorities. These priorities are: to reduce our climate impact while ensuring our resilience to the effects of a changing climate; to become more efficient in our energy usage while increasing the ratio of our renewable energy consumption; to reduce our waste and water withdrawal, along with the use of hazardous substances in our products and processes; and thereby to become a more circular company over time. As in previous years, no fines or non-monetary sanctions were levied against Sonova in 2023/24 for non-compliance with environmental laws or regulations.
We use environmental management systems (EMS), among other tools, to ensure that environmental considerations are taken into account when designing, manufacturing, and servicing products. Five out of our seven key operations and distribution centers have ISO 14001 certified EMS.
In February 2024, we opened our new North American operations center in Mexicali, Mexico, which was designed and built using the LEED (Leadership in Energy and Environmental Design) Standard.
Group companies | Group company type | EMS ISO 14001 certified | ||
Sonova AG | Headquarters and operations center | Yes | ||
Advanced Bionics LLC | Operations center | Yes | ||
Sonova USA Inc. | Operations and distribution center | Yes | ||
Sonova Hearing (Suzhou) Co., Ltd. | Operations center | Yes | ||
Sonova Operations Center Vietnam Co., Ltd. | Operations center | Yes | ||
Sonova Consumer Hearing Ireland | Operations center | No | ||
Sonova North American Operations Center, S.A. de C.V. | Operations center | No |
In terms of employee coverage, by the end of the 2023/24 financial year, 90% of the employees in key operations sites were covered by the ISO certified EMS. Sonova also strives to continuously improve the environmental performance of non-manufacturing sites by monitoring relevant consumption data and integrating measures to reduce our environmental footprint.
The following chapters cover the different topics of the Protecting the planet pillar of our IntACT ESG strategy:
climate-change
strategy-governance-and-relevance
At Sonova, we acknowledge our responsibility to combat climate change. Multiple risks such as higher temperatures and extreme weather events related to climate change can negatively impact our business, along with wider society and nature. 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. Sonovaʼs climate strategy defines our overall approach to reducing greenhouse gas (GHG) emissions through four types of actions:
Sonovaʼs Board of Directors has ultimate oversight and responsibility for ESG, including climate change. 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. In addition, the ESG Council reviews progress against key targets, including scope 1-3 GHG emissions reductions and energy consumption. Within each region, dedicated environmental leaders are responsible for regional implementation of measures and discussion of progress with Group companies. This governance structure ensures global coherence in our approach toward GHG emissions reduction while allowing for targeted ad-hoc reduction activities relevant to the differing natures of each business unit.
Climate action has been at the top of Sonovaʼs environmental agenda for many years, in line with our corporate environmental policy. Key policy principles include continuous monitoring and improvement of our environmental objectives and performance across the Group; training our employees on the content and relevance of the policy while raising awareness on environmental topics; and consideration of environmental sustainability in business decisions and activities (such as product launches), facility construction and modifications, as well as mergers and acquisitions.
Sonovaʼs action plan to reduce energy consumption and scope 1 and 2 emissions include such key measures as further adopting energy efficient practices in our buildings (i.e., by identifying heat and compressed air leakage), improving building automation systems, and optimizing electricity use in heating, ventilation, and air conditioning. We also intend to increase the share of low-emissions vehicles in our company car fleet, install additional charging stations for electric vehicles, further increase the use of public transport, and incentivize the use wherever possible of renewable energy for electricity, vehicles, and heating. In the 2023/24 financial year, we developed site-specific action plans for 30 Group companies and monitored their monthly progress.
Our 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 along our value chain. Stakeholder engagement is the key to driving emissions reductions. We accelerated supplier engagement in 2023, working closely with our suppliers toward our shared goal of less impactful supply chains.
energy
Key ESG target:
We reduce our energy consumption per employee by 10% vs. 2022 by 2027.
Last year, we set a new target to reduce our energy consumption per employee by 10% from 2022 levels by the end of 2027. The 2022 baseline value was 6.87 MWh/FTE and the target value was therefore set at 6.18 MWh/FTE. In 2023, we achieved a reduction of 9% compared to 2022, representing an energy intensity of 6.22 MWh/FTE. This substantial reduction is largely attributable to lower heating energy requirements due to mild weather, along with various energy saving initiatives mainly in Audiological Care Group companies. Moreover, overall FTEs have increased with the integration of HYSOUND.
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Energy audits across Sonovaʼs key sites
We completed eight energy audits in as many sites during the past year to identify effective energy reduction strategies. The audits led to more than 50 identified measures with a total potential savings of more than 6,000 MWh per year, including both electricity and natural gas savings. Of these measures, eight have been implemented by the end of the 2023/24 financial year, and four are in progress.
MWh relative to million CHF net revenue and MWh relative to FTE1 | ||||||
2023 | 2022 2 | 2021 2 | ||||
Total energy consumption | 110,425 | 116,793 | 97,215 | |||
Net revenues | 3,627 | 3,738 | 3,364 | |||
FTE | 17,757 | 17,002 | 15,229 | |||
Energy intensity relative to revenues | 30.4 | 31.2 | 28.9 | |||
Energy intensity relative to FTE | 6.22 | 6.87 | 6.38 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
2)2022 figures do not include HYSOUND. 2021 figures do not include Consumer Hearing business, Alpaca Audiology or HYSOUND.
The total energy consumption of the Sonova Group in 2023 was 110,425 MWh, down 5% compared to the previous year. 54% represented electricity consumption (for buildings and electric vehicles), 25% was for heating (fuel oil, natural gas, biogas, and district heating), and 21% represented vehicle fuel (diesel, gasoline, liquefied petroleum gas, ethanol). Our Audiological Care business represented 53% of Sonovaʼs overall energy consumption, the Hearing Instrument business accounted for 29%, and smaller proportions – 9%, 6%, and 3% – are attributable respectively to the Cochlear Implants business, shared business functions (e.g., headquarters, operations and repair centers, and other Group companies that perform tasks for multiple business units), and the Consumer Hearing business. The main contributors to the overall consumption decrease have been mild winters which, in combination with energy efficiency initiatives taken both within Audiological Care and larger sites in the Hearing Instruments and shared business functions facilities, reduced Sonovaʼs heating energy consumption by 21%.
MWh1 | ||||||
20231 | 20221 | 20211 | ||||
Total energy consumption | 110,425 | 116,793 | 97,215 | |||
Onsite energy generation1 | 2,043 | 1,603 | 786 | |||
% of onsite energy generation over total energy consumption | 1.9% | 1.4% | 0.8% |
1)Only 2023 data part of the 2023/24 external assurance. For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
Renewable energy represented 56% of Sonovaʼs overall energy consumption in 2023, increasing by 4 percentage points compared to 2022. Our renewable energy derived from hydro (52%), solar (17%), wind (10%), biomass / biogas (3%), geothermal sources (>1%), and mixed sources (17%) where the renewable energy source detail is not available. We are committed to keep increasing the share of renewable energy in our total consumption.
We source 100% electricity from renewable sources following a three-fold approach. Firstly, we invest in onsite electricity generation. 1.9% of our total energy consumption was produced onsite thanks to the solar panels installed at our premises in Alicante (Spain), Ho Chi Minh City (Vietnam), Suzhou (China), and Murten and Stäfa (Switzerland). In absolute terms, onsite energy generation increased by 27% (+440 MWh) in 2023 compared to 2022. Where onsite generation is not yet feasible, Group companies are prompted to locally source certified renewable electricity. In 2023, 39% (23,293 MWh) of the total electricity consumption was sourced locally via bundled certified renewable electricity. Lastly, for all those Group companies where renewable energy is not yet used or available, Sonova purchases unbundled Energy Attribute Certificates, which amounted to 58% (34,317 MWh) of total electricity consumption for the calendar year.
MWh1 | ||||||
2023 | 20222 | 20212 | ||||
Total energy consumption | 110,425 | 116,793 | 97,215 | |||
Non-renewable energy consumption | 49,081 | 55,814 | 44,625 | |||
Crude oil and petroleum products | 23,280 | - | - | |||
Natural gas | 21,897 | - | - | |||
Purchased electricity, heat, steam, or cooling from fossil sources | 3,904 | - | - | |||
Renewable energy consumption | 61,344 | 60,979 | 52,590 | |||
Share of renewable energy | 56% | 52% | 54% |
1) For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
2)Breakdown of non-renewable energy sources reported as of 2023.
Sonovaʼs electricity consumption remained stable compared to 2022. Our Audiological Care business consumed the most electricity, followed by the Hearing Instruments business, mainly due to the large footprint of the store network, along with operations and distribution centers. The Hearing Instruments business accounts for 51% of the vehicle fuel consumption, followed by Audiological Care representing 44%.
MWh1 | ||||||||||||
20231 | 20221 | 20211 | ||||||||||
Vehicle Fuels 2 | Heating 3 | Electricity | Vehicle Fuels4 | Heating5 | Electricity | Vehicle Fuels6 | Heating7 | Electricity | ||||
Total | 22,870 | 27,902 | 59,653 | 21,915 | 35,301 | 59,577 | 18,055 | 28,416 | 50,744 | |||
Hearing Instruments business | 11,713 | 2,297 | 18,557 | 11,142 | 2,801 | 19,199 | 8,273 | 3,071 | 18,885 | |||
Audiological Care business | 9,961 | 21,814 | 27,173 | 9,090 | 28,426 | 26,351 | 8,655 | 21,316 | 19,695 | |||
Consumer Hearing business | 501 | 504 | 2,101 | 359 | 617 | 2,172 | n/a | n/a | n/a | |||
Cochlear Implants business | 684 | 1,936 | 6,901 | 1,315 | 1,634 | 6,915 | 1,114 | 1,785 | 7,213 | |||
Shared business functions | 11 | 1,351 | 4,921 | 9 | 1,823 | 4,939 | 13 | 2,244 | 4,952 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter. Only 2023 data part of the 2023/24 external assurance.
2)2023 sources: 75% gasoline, 25% diesel, <1% liquefied propane gas, <1% ethanol.
3)2023 sources: 78% natural gas (75% within scope 1, 3% within scope 3 - cat. 8), 14% district heating (scope 2), 6% biogas (scope 1), 1% fuel oil (scope 1).
4)2022 sources: 61% gasoline, 38% diesel, 1% liquefied propane gas, <1% ethanol.
5)2022 sources: 82% natural gas (78% within scope 1, 4% within scope 3 - cat. 8), 12% district heating (scope 2), 4% biogas (scope 1), 1% fuel oil (scope 1).
6)2021 vehicle fuels consumption sources: 70% diesel, 29% gasoline, 1% liquified propane gas, <1% ethanol.
7)2021 sources: 70% diesel, 29% gasoline, 1% liquified propane gas, <1% ethanol.
GHG-emissions
Key ESG targets:
We reduce scope 1 and 2 greenhouse gas emissions by 78.3% vs. 2019 by 2032.*
We reduce scope 3 greenhouse gas emissions by 32.5% vs. 2019 by 2032.*
* Approved by the Science Based Targets initiative (SBTi) in 2023. The target boundary includes biogenic land-related emissions and removals from bioenergy feedstocks.
In 2023, the Science Based Targets initiative (SBTi) approved our near-term science-based targets, which guide our GHG emissions reduction efforts: our goal is to decrease our combined absolute scope 1 and 2 emissions by 78.3% by 2032, from 34,747 metric tons of CO2-equivalents (t CO2e) in 2019, and by 32.5% for our scope 3 emissions until 2032, from 296,337 t CO2e in 2019. During 2023, we continued to make progress on our journey towards the decarbonization of our operations and value chain. In 2023, our scope 1 and 2 emissions dropped by 67% (–23,157 t CO2e) compared to 2019 and by 16% (–2,194 t CO2e) compared to 2022. Scope 3, which covers more than 95% of Sonovaʼs overall emissions, decreased by 23% (–68,560 t CO2e) compared to 2019, and by 12% (–29,598 t CO2e) compared to 2022. Our total 2023 scope 1-3 GHG emissions amounted to 239,367 t CO2e, a decrease of 12% compared to the previous year, and 28% vs. 2019. The key reasons for the reductions in scope 1, 2, and 3 GHG emissions compared to the previous years were a decrease of emissions from purchased goods and services, a shift from air to sea and ground freight for large shares of the Consumer Hearing business, increased use of renewable electricity, and reduced heating consumption. Total GHG emission intensity decreased to 66 t CO2e per million CHF revenues for 2023, compared with 70.5 in the prior year.
metric tons CO2e1 | ||||||||||
2023 | 20222 | 2021 3 | 20204 | 2019 | ||||||
Scope 1-3 | 239,367 | 271,160 | 278,776 | 248,246 | 331,084 | |||||
Scope 1-2 | 11,590 | 13,784 | 14,372 | 28,621 | 34,747 | |||||
Scope 1 | 10,889 | 11,271 | 9,942 | 11,256 | 12,828 | |||||
Scope 2 (market based) | 701 | 2,514 | 4,430 | 17,365 | 21,919 | |||||
Scope 3 | 227,777 | 257,375 | 264,404 | 219,625 | 296,337 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
2)2022 values restated: scope 2 increased by 240% (+1,775 t CO2e) due to the integration of HYSOUND.
3)2021 values restated: scope 2 increased by 49% (+1,453 t CO2e) due to the integration of HYSOUND.
4)2020 values restated: scope 3 decreased by -10% (-23,578 t CO2e) due to methodological improvements.
metric tons CO2e relative to million CHF revenue1 | ||||||
2023 | 20222 | 20212 | ||||
Net revenues | 3,627 | 3,738 | 3,364 | |||
Total scope 1-2 GHG emissions | 11,590 | 12,004 | 10,037 | |||
Scope 1-2 GHG emission intensity | 3.2 | 3.2 | 3.0 | |||
Total scope 1-3 GHG emissions | 239,367 | 263,560 | 191,142 | |||
Scope 1-3 GHG emission intensity | 66.0 | 70.5 | 56.8 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
2)2022 GHG emissions do not include HYSOUND and 2021 GHG emissions do not include HYSOUND, Consumer Hearing business and Alpaca Audiology to maintain consistency between net revenues and GHG emissions during these reporting periods.
N2O and CH4 emissions from biogenic sources are included in scope 1, while the related GHG emissions are excluded in accordance with the GHG Protocol. Outside-of-scope CO2e emissions from biogenic sources increased by 21% compared to 2022 due to the proportional increase in biogas consumption. 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-based approach, Sonovaʼs scope 2 emissions increased by 4% compared to 2022.
t CO2e1 | ||||||
20231 | 20221 | 20211 | ||||
Total location based scope 2 emissions | 18,917 | 18,196 | 17,313 | |||
Total outside-of-scope emissions | 337 | 279 | 367 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter. Only 2023 data part of the 2023/24 external assurance.
Scope-1-2
Scope 1 emissions are direct GHG 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 scope 1 and 2 GHG emissions decreased by 16% (–2,194 t CO2e) compared to the previous year.
In 2023, overall scope 1 GHG emissions decreased by 3% (–382 t CO2e) compared to 2022, mainly due to the reduction of GHG emissions-intensive heating consumption. Emissions deriving from Sonovaʼs car fleet remained stable (+1%) although there was an increase in the number of kilometers driven and the number of vehicles. 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 40% of Sonovaʼs car fleet, compared to about 20% last year and only 8% in 2021.
Throughout the past year, scope 2 emissions declined by 72% (–1,813 t CO2e) from 2022. The reduction stems mainly from switching to renewable electricity for acquired Group companies, in this case HYSOUND. Since 2022, we also source renewable electricity for our global vehicle fleet. The remaining 701 tons in scope 2 derive from the use of district heating in northern European countries.
Sonovaʼs commitment to operating carbon neutral operations (scope 1 and 2) remains intact. We source 100% renewable electricity and purchase carbon credits to offset the remaining emissions in scope 1 and 2. We have contractual agreements in place until the end of 2025 to support three projects for which carbon credits are generated: 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.
metric tons CO2e1 | ||||||||||||
2023 | 2022 2 | 20213 | ||||||||||
Scope 1-2 | Scope 1 | Scope 2 | Scope 1-2 | Scope 1 | Scope 2 | Scope 1-2 | Scope 1 | Scope 2 | ||||
Total | 11,590 | 10,889 | 701 | 13,784 | 11,271 | 2,514 | 14,372 | 9,942 | 4,430 | |||
Hearing Instruments business | 3,748 | 3,713 | 34 | 3,295 | 3,253 | 42 | 2,777 | 2,728 | 49 | |||
Audiological Care business | 6,940 | 6,301 | 639 | 9,461 | 7,026 | 2,434 | 9,588 | 6,179 | 3,409 | |||
Consumer Hearing business | 230 | 224 | 6 | 211 | 207 | 4 | 1,199 | 261 | 938 | |||
Cochlear Implants business | 552 | 547 | 5 | 664 | 659 | 5 | 655 | 651 | 5 | |||
Shared business functions | 121 | 104 | 17 | 154 | 125 | 29 | 153 | 124 | 29 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
2)2022 values restated: scope 2 increased by 240% (+1,775 t CO2e) due to the integration of HYSOUND.
3)2021 values restated: scope 2 increased by 49% (+1,453 t CO2e) due to the integration of HYSOUND.
Scope-3
Sustaining a sharp focus on reducing scope 3 emissions is crucial for Sonova, as our value chain accounts for 95% of our total GHG emissions in 2023. 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, and business travel.
Sonovaʼs scope 3 emissions decreased by 12% (–29,598 t CO2e) in 2023 compared to the previous year. This decrease mainly stems from purchased goods and services, transport and distribution, and fuel-and energy-related activities as a consequence of our reduced energy consumption.
metric tons CO2e1 | ||||||||||
2023 | 2022 | 2021 | 2020 | 2019 | ||||||
Scope 3 | 227,777 | 257,376 | 264,404 | 219,625 | 296,337 | |||||
Category 1: Purchased goods and services | 130,241 | 155,003 | 164,669 | 133,151 | 168,583 | |||||
Category 2: Capital goods | 2,605 | 2,124 | 2,353 | 1,352 | 3,073 | |||||
Category 3: Fuel- and energy-related activities (not included in scope 1 and 2) | 7,375 | 9,284 | 8,717 | 7,220 | 8,076 | |||||
Categories 4 and 9: Upstream and downstream transportation and distribution | 47,992 | 49,991 | 54,695 | 44,986 | 57,235 | |||||
Category 5: Waste generated in operations | 541 | 467 | 630 | 1,089 | 1,246 | |||||
Category 6: Business travel | 11,643 | 12,183 | 4,363 | 5,878 | 23,524 | |||||
Category 7: Employee commuting | 21,079 | 21,557 | 21,338 | 18,229 | 26,986 | |||||
Category 8: Upstream leased assets | 438 | 851 | 1,165 | 1,280 | 1,419 | |||||
Category 11: Use of sold products | 2,758 | 3,041 | 3,700 | 4,015 | 3,588 | |||||
Category 12: End-of-life of sold products | 2,753 | 2,601 | 2,677 | 2,334 | 2,521 | |||||
Category 15: Investments | 353 | 276 | 97 | 93 | 87 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
The largest source of Sonovaʼs GHG emissions is the procurement of direct and indirect materials and services. In 2023, 57% of scope 3 emissions arose from purchased goods and services. These emissions mainly originate from the procurement of electronic components such as chargers, printed circuit boards, batteries, microphones and receivers, transistors, and packaging. Category 1 emissions decreased in 2023 by 16% (–24,762 t CO2e) compared to 2022. The majority of the reduction stems from direct material purchases by the Hearing Instruments and Cochlear Implants businesses (–10,773 t CO2e) and overall Group indirect purchases of materials and services (–9,370 t CO2e).
Categories 4 and 9 include GHG emissions arising from the transport from supplier facilities to our operations centers, intercompany transportation, and from our distribution centers to audiological care stores (owned and third-party) or other customers. Sonovaʼs GHG emissions from transport and distribution decreased by 4% compared to 2022. The main driver of the reductions has been the increased use of shipping by ground and sea instead of air. These changes helped us to reduce emissions despite the fact that overall shipping volumes by weight increased by 26% in 2023 vs. 2022. 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 and enhance our supply chain resilience.
Category 6 includes emissions deriving from air travel and car allowances. Air travel accounts for 98% of business travel emissions. Compared to 2022, our GHG emissions from business travel decreased by 4% (–540 t CO2e), representing an overall decrease of 51% (–11,881 t CO2e) compared to the pre-COVID level of 2019.
Sonovaʼs GHG emissions from employee commuting slightly decreased by 2% compared to 2022 (–478 t CO2e). During the 2023/24 financial year, Sonova maintained the hybrid working guidelines for office-based employees that were 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 Group companies have diverse initiatives in place to promote more environmentally friendly commuting. These include financial incentives to use public transport, installment of charging stations for electric vehicles, and awareness campaigns.
TCFD
The following section is structured to align with the framework recommended by the Task Force on Climate-Related Financial Disclosures (TCFD): governance, strategy, risk management, and metrics and targets.
TCFD-governance
The Sonova Board of Directors has ultimate oversight of and responsibility for climate-related risks and opportunities. More information on Board oversight and the role of management is provided in the Strategy, governance, and relevance section of the Climate change chapter.
TCFD-strategy
Since the 2021/22 financial year, Sonova has adopted a systematic approach to climate-related risks and opportunities, performing an analysis to identify potentially relevant climate-related risks and opportunities over the short (to 2025), medium (to 2030), and long term (to 2050). This analysis currently covers nine countries in different regions where Sonova has operations and stores. We use two different scenarios in a qualitative and quantitative climate-related scenario analysis to assess potential impact on Sonovaʼs business and resilience:
Sonova used the International Energy Agency (IEA) Stated Policies Scenario (IEA STEPS), the Sustainable Development Scenario (IEA SDS), the Net Zero Emissions by 2050 scenario (IEA NZE), as well as the Representative Concentration Pathway (RCP) 8.5 scenario.
To identify potential physical and transition risks and opportunities across Sonovaʼs operations and value chain, we interviewed relevant internal stakeholders. Organizing the results of these interviews using the EU Taxonomyʼs classification of climate-related hazards (2021), we identified seven physical risks to which Sonova would be most vulnerable. To identify risks and opportunities specific to transition, we screened five areas of interest – policy, legal, technology, market, and reputation – all in the context of the transition to a low-carbon economy. We identified four transition risks and two opportunities as potentially relevant for Sonova, leading to a total of thirteen potential climate-related risks and opportunities.
Category | Type | Description | Explanation | |||
Physical risk | Acute | Heatwaves and extreme temperatures | Prolonged periods of abnormally hot weather | |||
Physical risk | Acute | Wildfires | A large, destructive fire that spreads quickly over woodland or brush | |||
Physical risk | Acute | Extreme cold | A spell of cold weather over a wide area | |||
Physical risk | Acute | Heavy precipitation and flooding | The covering or submerging of normally dry land with a large amount of water | |||
Physical risk | Acute | Heavy winds and storms | A violent disturbance of the atmosphere with strong winds and usually rain, lightning, thunder, or snow | |||
Physical risk | Acute | Tropical cyclones | A localized, very intense low-pressure wind system, forming over tropical oceans accompanied by strong rainfall and winds | |||
Physical risk | Chronic | Sea level rise and coastal flooding | An increase in the level of the world's oceans due to the effects of global warming | |||
Transition risk | Policy & legal | Carbon pricing schemes | Carbon pricing schemes for the building sector | |||
Transition risk | Policy & legal | Net zero retrofit requirements | Net zero retrofit requirements for commercial buildings (incl. rented facilities) | |||
Transition risk | Policy | Scope 3 reduction challenges | Lack of stringent policies to constrain suppliers to use low-carbon energy sources, thereby putting our scope 3 target potentially at risk | |||
Transition risk | Policy | Increase in airfares | Potential cost increases for air travel resulting from carbon schemes and more stringent policy requirements | |||
Transition opportunity | Market | Energy savings due to net zero retrofits | Energy savings due to net zero retrofits and consumption of energy from low-carbon sources | |||
Transition opportunity | Market | Electrification of transportation sector | Cost savings due to the electrification of transportation sector as fuel costs increase |
As a next step, we performed a country-by-country analysis for the identified potential physical risks by reviewing literature on the latest climate-science and relevant climate policies. This analysis gave us insights into expected changes in risks and opportunities during the medium-term (to 2030) and long-term (to 2050) compared to the baseline period for each country considered. The results showed that the physical hazards in the long-term represent a higher risk than those in the medium-term. The table below therefore highlights the long-term identified changes (2050 vs. baseline).
Country | Heatwaves and extreme temperatures | Wildfires | Extreme cold | Heavy precipitation and flooding | Heavy winds and storms | Tropical cyclones | Sea level rise and coastal flooding | |||||||
Vietnam | Not relevant | Not relevant | Not relevant | Very high | Not relevant | Low | Very high | |||||||
United States | Very high | Very high | Low | Not relevant | High | Not relevant | Not relevant | |||||||
China | Not relevant | Not relevant | Not relevant | High | Low | Low | Not relevant | |||||||
Switzerland | Very high | Not relevant | Low | Not relevant | Low | Not relevant | Not relevant | |||||||
Germany | Very high | Not relevant | Low | Not relevant | Low | Not relevant | Not relevant | |||||||
United Kingdom | Very high | Not relevant | Low | Not relevant | Low | Not relevant | Not relevant | |||||||
Canada | Very high | Not relevant | Low | Not relevant | Not relevant | Not relevant | Not relevant | |||||||
Australia | Not relevant | High | Not relevant | Moderate | Not relevant | High | High | |||||||
Brazil | Not relevant | Not relevant | Not relevant | Moderate | Not relevant | Not relevant | High |
1)The risks are classified based on the projected changes until 2050 vs. baseline: Low = below 10%, moderate = 10-20%, high = 20-30%, very high = above 30%. The baseline period 1976 – 2005 was derived from the Coupled Model Intercomparison Project Phase 5 (CMIP5) data set. Where the supporting literature used different baselines or different future timeframes, we adjusted the baselines and/or the relative change accordingly.
For the transition risks and opportunities, we determined their likelihood and affect on Sonova in the short-term (2025), medium-term (2030) and long-term (2050). The scenarios we used in this analysis are: the IEA STEPS, which projects a temperature increase of approximately 3°C by 2100 based on the current GHG emissions growth rate; the IEA SDS, which predicts global warming to be 1.75°C assuming that strong international policy supports the transition to a low-carbon economy; and the IEA NZE net zero by 2050 scenario. We also reviewed national scenarios, policies, and long-term strategies for each of the countries we assessed. The risks and opportunities were assigned a qualitative rating based on Sonovaʼs footprint within each jurisdiction and the likelihood that the identified topics would materialize. The matrix below shows the highest risks and opportunities that were identified across all timeframes (2025, 2030, and 2050) and scenarios on which they are based.
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 that fail 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) risks related to carbon pricing schemes in Australia and Brazil. The assessment also identified potential opportunities from governmental incentives and support to further reduce emissions in the building sector.
Country | Carbon pricing schemes | Net zero retrofit requirements | Scope 3 reduction challenges | Increase in airfares | Energy savings due to net zero retrofits or electrification of transportation sector | |||||
Vietnam | Not relevant | Low | Not relevant | Not relevant | Low | |||||
United States | Not relevant | Low | Not relevant | Not relevant | High | |||||
China | Not relevant | Low | High | Not relevant | Medium | |||||
Switzerland | Low | Low | Not relevant | High | High | |||||
Germany | Low | Low | Low | High | Low | |||||
United Kingdom | Low | Low | Not relevant | High | Low | |||||
Canada | Not relevant | Low | Not relevant | Not relevant | Low | |||||
Australia | Very High | Very High | Not relevant | Not relevant | Very High | |||||
Brazil | Very High | Not relevant | Not relevant | Not relevant | Not relevant |
To better understand how potential physical climate-related risks could affect Sonovaʼs operations and business in the long-term (2050), we performed a site-level assessment of the four physical risks that scored very high in the country-level assessment. The concrete potential impacts on Sonova are summarized in the table below. 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 and strengthen resilience. Physical climate risks are also considered when opening new facilities and in the design of our supply chain.
Potential risk | Country | Potential threat | ||
Heatwaves and extreme temperatures | United States, United Kingdom, Germany, Canada | The frequency and duration of heatwaves are projected to increase significantly, especially in the south and east of the US. Heatwaves may cause higher cooling costs and increase heat stress conditions for employees and consumers. As elderly people are the most common demographic that experiences hearing loss and are also most affected by heat stress during heatwaves, they may not come to the stores, thereby affecting sales. | ||
Wildfires | United States | Average and maximum temperatures during wildfire season are projected to increase significantly, which leads to an increased risk in wildfires that may affect our production sites in California. | ||
Heavy precipitation and flooding | Vietnam | Heavy precipitation is expected to increase substantially in the Ho Chi Minh City region, which may cause supply chain and operational interruptions in our operations center due to flash and sustained flooding. | ||
Sea level rise and coastal flooding | Vietnam | As our operations center in Vietnam is located far inland, the projected sea level rise and coastal flooding is expected to pose no substantial risk. |
1)For this assessment, we used various datasets derived from General Circulation Model (GCM) and simulations conducted under the Coupled Model Intercomparison Project, Phase 5 (CMIP5).
We provisionally quantified the potential financial impact of two of these climate-related risks: increased heavy precipitation and flooding near of our operations centers in Vietnam and China (a physical risk that could cause supply chain and operational interruptions), and increasing air-transportation fares due to carbon schemes and more stringent policies (a transition risk).
Our assessment suggested that the flood risk to our operations centers in Vietnam and China is not projected to increase; moreover, local teams already have precautions in place for potential adverse weather events. The focus of our analysis therefore shifted to the flooding risk to the most critical suppliers for each operations center in Vietnam and China: the results showed that four supplier locations are at risk for river flooding and two supplier locations are at risk of coastal flooding. We calculated the potential financial impact on Sonova based on the suppliersʼ estimated forced operational downtime, impact of supply shortage on our stock levels of key components, and revenue impact based on number of days the operations 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 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: the three countries where we calculated the highest potential risk. We included both business-related air travel and air freight in our analysis, modelling a range of scenarios based various assumptions about regional carbon price developments, the aviation sector decarbonization path, development of global warming, Sonovaʼs 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 would lower our potential carbon costs by 70% compared to a business as usual trajectory.
Sonova uses a variety of methods to identify and assess climate-related risks and opportunities, including desk research, interviews, climate expert advisory, qualitative and quantitative scenario analysis, and financial quantification. We use a phased, risk-based approach and try to focus our efforts on areas with highest potential risks and opportunities. Outcomes from the assessment are presented to relevant internal stakeholders and accountability for mitigation measures is assigned accordingly. The results of the climate-related risk assessment feed into Sonovaʼs overall strategic risk management process together with all other business risks.
Information on scope 1, 2, and 3 GHG emissions, related risks, as well as climate targets and performance are described in the Performance measurements and targets section of the Climate change chapter in this ESG Report. To date, Sonova is focusing on climate change mitigation and has not yet set any further public targets related to how we manage climate-related risks and opportunities.
At Sonova, we support the transition towards a circular economy by optimizing design for recycling, minimizing the extraction and consumption of natural resources, and addressing end-of-life treatment. Thanks to cross-functional efforts, Sonova has fostered circularity by reducing packaging waste, enhancing product reliability, and optimizing servicing processes.
Key ESG target:
We reduce packaging waste by 20% by weight vs. 2019 baseline* by the end of 2023.
*Includes transport packaging (excl. external distribution centers) and hearing instruments product packaging.
We are committed to reducing the environmental impact of our packaging. Our target was to reduce by the end of 2023 our transport and hearing instrument product packaging waste by 20% by weight compared to our 2019 baseline. We did not meet this ambitious target: overall, we reduced packaging compared to 2019 by 0.1%. Keeping absolute packaging weight flat despite solid business growth over the past four years can be considered a good achievement, and compared to the previous year we made substantial improvements and reduced the total packaging weight by 9.4%. This was achieved by eliminating layers of transportation boxes, standardizing order quantities, bundling shipments, and innovating product packaging for new product lines. We also trialed reusable shipping boxes but have currently put the project on hold due to increased potential CO2 impact.
We remain committed to reducing our packaging waste and have therefore set a new target: by the end of the 2026/27 financial year, we aim to reduce the packaging waste from our Hearing Instruments product and transport packaging by weight by 20% compared to the 2023/24 financial year. Our continued focus on decreasing packaging weight supports Sonovaʼs ambition to curb greenhouse gas emissions from transport and distribution.
metric tons1 | ||||||
2023 | 2022 | 2021 | ||||
Packaging weight | 1,225 | 1,352 | 1,306 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
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Packaging Kaizen focused on transport packaging
During the 2023/24 financial year we held two week-long cross-functional Kaizen workshops in our operations centers. The focal points of the two workshops were product packaging on one side, and transport packaging on the other. While the product packaging team was able to deliver significant results yet to be integrated across the Group operations, the transport packaging team implemented a reduction in packaging weight by more than half (for the packaging in scope) by eliminating packaging layers, while also reducing costs in the material handling process. The improvements generated by these workshops will be applied at the other Hearing Instruments operations centers through improved packaging solutions.
product-use-repair-and-refurbishment
Newly launched standard operating procedures for service have further integrated service and repairs into the Hearing Instruments product development process. We also launched several projects to extend the lifecycle of our products and components e.g., optimizing spare parts usage of electronic modules, extending repair services, testing used devices, and enhancing reliability. Each improvement in product reliability leads to several associated, positive environmental impacts e.g., less material use for replacements, less transportation to our repair centers, and fewer trips by consumers to return devices. As an example, the service rate for the rechargeable Audéo Lumity hearing aid was 17% lower than that of the previous generation Audéo Paradise one year after their respective launches. We have also rolled out proprietary diagnostic equipment across all Sonova Service Centers to test the functionality of our hearing instrument chargers, thereby decreasing the number of chargers that need replacement rather than repair.
We have expanded our rechargeable product portfolio in the 2023/24 financial year. Rechargeable batteries, by reducing the use of disposable batteries, help to conserve precious materials and reduce waste. Since 2016, Sonovaʼs Hearing Instrument brands have continuously expanded their portfolios of hearing aids with a lithium-ion rechargeable battery. In the 2023/24 financial year, 63% of total behind-the-ear (BTE) and receiver-in-canal (RIC) hearing instruments sold were rechargeable, representing an increase of 7% over the 2022/23 financial year. Advanced Bionics also offers rechargeable battery options for cochlear implant sound processors.
in %1 | ||||||
2023/241 | 2022/231 | 2021/221 | ||||
% of total sold RIC and BTE hearing instruments being rechargeable | 63% | 59% | 56% |
1)Only data from financial year 2023/24 part of the external assurance.
product-end-of-life
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, which enables consumers to bring their used hearing aid batteries back to the store. The batteries collected are disposed of through officially authorized disposal agents. In 2023, more than three metric tons of batteries were collected at different stores worldwide.
waste-and-pollution
We are committed to minimizing the generation of operational waste wherever possible, separating materials to enable recycling, and disposing of hazardous waste in environmentally compatible ways. We also aim to minimize the use of hazardous substances and their impact on the environment and human health.
Key ESG target:
We reduce our operational waste per employee by 5% vs. 2022 by 2027.
Our target commits us to reduce the waste generated at our sites by 5% per full-time employee (FTE) by 2027 from the 2022 figure of 213.1 kg/FTE. We intend to achieve this by optimizing and digitalizing processes, reducing packaging in transit between our operations, distribution, and repair centers, and reusing materials where possible.
While we saw in 2023 an increase in the absolute amount of operational waste of 26 metric tons (+1%) to 3,648 metric tons, the waste per FTE decreased to 205.5 kg/FTE (–3.6%). Absolute non-hazardous waste increased due to the integration of HYSOUND; it slightly decreased across the rest of the business.
Hazardous waste increased by 10 tons (14%) vs. 2022, mainly due to changes in the waste labelling policies of waste management third parties and the cyclical replacement of air filters. 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 such as isopropyl alcohol, washing fluids, acids, oil emulsions, paints, adhesives, soldering paste, and filters.
Waste to be recycled decreased by 2% due to efforts such as transitioning to e-invoicing, repurposing supplier shipping packaging, and food waste reduction. The overall recycling rate decreased to 54%.
metric tons1 | ||||||
2023 | 2022 | 2021 | ||||
Total waste2 | 3,648 | 3,622 | 2,925 | |||
Non-hazardous waste | 1,590 | 1,530 | 1,415 | |||
Incineration with and without energy recovery | 617 | 693 | 514 | |||
Landfill | 973 | 838 | 900 | |||
Hazardous waste | 85 | 75 | 71 | |||
Recycling3 | 20 | 19 | 16 | |||
Incineration with and without energy recovery | 33 | 34 | 34 | |||
Landfill | 21 | 14 | 13 | |||
Other treatments | 11 | 8 | 8 | |||
Recycling waste | 1,973 | 2,017 | 1,439 | |||
Recycling rate | 54% | 56% | 49% | |||
Total waste per FTE [kg/FTE]4 | 205.5 | 213.1 | 192.0 |
1)For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
2)Increase in 2023 vs. previous year mainly due to the integration of HYSOUND.
3)Not included in recycling rate.
4)Only 2023 data part of the 2023/24 external assurance.
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Environmental Kaizen at Repair Center
In February 2024, employees in our Repair Center for Northern Europe in Warrington, UK, conducted an environmental continuous improvement workshop focused on reducing electronics and electronic equipment (WEEE) waste by optimizing the recycling process for credit returns and repairs, mainly of hearing instrument chargers. This Kaizen workshop resulted in an expected reduction of 74% local WEEE waste, by improved separation of materials.
For the first time, we assessed the global output of air pollutants derived from our facilities and our car fleet (scope 1 and 2 aligned in accordance with ESRS E2 Pollution), in preparation for the implementation of the EUʼs Corporate Sustainable Reporting Directive (CSRD). The assessment confirmed that Sonovaʼs levels of air emissions (SOx, NOx, PM10) are well below the regulatory thresholds outlined in Annex II of the Regulation (EC) No 166/2006 of the European Parliament and of the Council of 18 January 2006 concerning the establishment of a European Pollutant Release and Transfer Register ( ✔ Data externally assured (limited assurance)).
As a medical and consumer device manufacturer, Sonova takes a proactive approach to evaluating materials in its 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 the Restriction of Hazardous Substances (RoHS 2015/863/EU) and with the EU regulation on the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH EC 1907/2006). 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 the 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 2023 there were three SVHC substances requiring communication in accordance with the REACH regulation where Sonova AG is the legal manufacturer: 1,3-propanesultone, lead titanium trioxide, and lead. Sonova will continue to ensure compliance with the 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.
water
Although our manufacturing processes do not demand substantial amounts of water, we prioritize minimizing our consumption of fresh water, particularly in regions facing water scarcity. Sonova mainly uses water for sanitary services, building automation systems, kitchens, and garden maintenance. Our conservation initiatives therefore concentrate on monitoring per-capita water usage in larger facilities to pinpoint opportunities for improvement. Sonovaʼs water withdrawals originate from municipal water supplies or other publicly or privately managed water utilities.
Key ESG target:
We reduce our water withdrawal per employee by 5% vs. 2022 by 2027.
Our five-year water withdrawal target is to reduce water consumption by 5% per full-time equivalent employee (FTE) from 2022 to 2027. In 2023, Sonova increased its absolute water withdrawal by 9% vs. 2022, reaching 15.0 m3/FTE. This represents an increase of 4.4% over the 2022 baseline of 14.4 m3/FTE. The absolute water withdrawal increase, which occurred despite water reduction initiatives, was primarily due to the acquisition of HYSOUND (not included in the 2022 baseline), along with a defective pump at a key facility, which reduced our greywater recycling capacity. Water reduction measures include installing water-saving faucets at larger sites and enhancing efficient water use in our gardening areas. By 2027, we aim to have decreased our water withdrawal intensity across the entire Group to 13.6 m3/FTE from the 2022 baseline of 14.4 m3/FTE in.
m3 | ||||||
2023 | 2022 | 2021 | ||||
Total water withdrawal | 266,194 | 244,217 | 202,509 | |||
Water withdrawal per full-time employee (FTE) | 15.0 | 14.4 | 13.3 | |||
Total water withdrawal in water-stressed areas2 | 8.4% | - | - |
1) For restatements and calculation boundaries information please refer to the Basis for preparation chapter.
2)Only data from calendar year 2023 part of the external assurance.
During the 2023/24 financial year, we extended our physical water risk analysis to almost all Sonova sites (>99.8% of water withdrawal covered), including our Audiological Care stores. We use the WWF Water Risk Filter based on geographic water-catchment area at basin level and increased the scope of the assessment to the overall water scarcity risk as recommended by WWF. This analysis shows that 8.4% (22,397m3) of our water withdrawal is occurring in regions with high to very-high water stress. The sites with the highest water withdrawal in these areas are located in the United States, Israel, India, China and Spain. This data allows us to prioritize our future water withdrawal reduction efforts.
biodiversity
Sonovaʼs global activities, products, and services do not have significant direct influence on biological diversity. However, we recognize that formally assessing our impacts and dependencies on this topic is important in the global context of rapidly declining biodiversity and the threats imposed on natural ecosystems. Using the WWF Biodiversity Risk Filter we assessed all owned and leased sites in the 2023/24 financial year for potential biodiversity-related risks. This location-specific analysis showed that less than 0.1% of all assessed sites have potentially increased physical risks from extreme heat, local water conditions, and air conditions. Other environmental risk factors, such as impacts and dependencies on protected/conserved areas, key biodiversity areas, or ecosystem conditions, did not apply to any assessed site.