Protecting the environment

Protecting the environment is a growing challenge and a priority for our company. Beyond initiatives deployed at the subsidiary level, our ambition lies in our proactive efforts to reduce the environmental footprint of all our activities and products.

 GOVERNANCE AND A GROUP ENVIRONMENTAL POLICY

At the organizational level, our global EHS department, attached to the Group executive committee, supports this trajectory. One of these initiatives involves re-framing scope and reporting methods, a precondition for gaining an overall perspective of exposure to environmental damage risks at the Group level. We have also committed to developing a training and awareness segment dedicated to environmental themes for both existing employees and for the new hires. External stakeholders were also involved in the effort, with the inclusion of environmental clauses in supplier assessment questionnaires. These initiatives, in conjunction with the rollout of audits throughout an expanded range of subsidiaries (Mexico, Taiwan, United States, Australia, New Zealand, Uruguay, Vietnam and Chile) demonstrate our desire for consistency in the deployment of a Group-driven strategy.

SUSTAINABLE USE OF RESOURCES

In the context of optimization of the resources we employ, we seek to control the consumption of energy, water and materials used in our manufacturing processes.

OUR KEY OBJECTIVES

  • Reduce energy consumption by 5% by 2025
  • Control water intake.
  • Reduce the overall share of materials, including all packaging placed on the market.

OUR ACTION PLANS

Energy

For several years, we have been working to reduce energy consumption by carrying out equipment replacement actions for better efficiency, thermal insulation and air-conditioning optimization. We have also established consumption indicators that are as close as possible to end users for better control of energy expenditures. At all of our industrial sites around the world, we strive to address energy consumption by using the Best available techniques (BATs) applicable to our activity, whether this is for choosing new equipment or through ongoing monitoring.

Some examples of achievement in 2021.

Virbac in France

In line with the actions taken for several years to reduce energy consumption, all the air-conditioning and heating systems in the industrial management offices in France have been replaced by more efficient systems that can be controlled remotely.

Virbac Australia

We have decreased the supply voltage of the Penrith site in Australia, reducing electricity consumption by approximately 7% with equivalent activity.

Reducing the energy intensity of our activities and our products is clearly a competitiveness lever, placing Virbac on a virtuous path, which will subsequently help reduce our overall CO2 emissions.

Water

We are also striving to lower water consumption at equivalent activity volumes by setting up recycling or production facilities for various BAT-compliant grades of water. Thus, the reduction of water consumption at French sites (representing more than 50% of the Group’s production) reached almost 25% over the past fourteen years.

We integrate the environmental context of the areas in which we operate into our analyses. Apart from the site in South Africa, located in a water stress area according to the criteria of the FAO (Food and agriculture organization) and the WRF (Water risk filter), none of the Group’s other production sites are situated in a water stress area identified as such.

Raw materials and packaging

Again with a view to the sustainable use of resources, we are committed to fine-tuning our consumption of active ingredients, excipients and packaging items as much as possible in order to avoid product wastage or packaging proliferation.

With the help of our strategic suppliers, we have also given a new impetus to innovation that can reduce wrapping and packaging. This requires optimized supply management to limit warehousing and internal transfers. We are also progressing on optimizing flows and the speed of shipments. Finally, we launched a project to minimize waste at all stages of the industrial process.

Primary packaging that comes in contact with medicines is subject to strict pharmaceutical industry quality standards that limit the use of materials originating from recycling channels. On the other hand, regarding non-pharma-regulated products for companion animals, we incorporate the principles of eco-design as early as possible into the creation process. These same principles are implemented for secondary or tertiary packaging, from the research and development stage, in partnership with our suppliers. 

In 2021, this mobilization allowed us to:

  • reduce the packaging of our dog and cat food by 20% on small packages (3 kg or less);
  • use recyclable cardboard packaging on a selection of dental products (toothpaste, dental kit);
  • interrupt the marketing of our individual chews in France to work on a version with recyclable packaging;
  • use recycled materials for 100% of the overpack boxes used at the main production sites in France.

Our other actions for the year focused on preparatory work aimed at:

  • strengthening the presence of natural ingredients in our products for companion animals;
  • raising awareness of the biodegradability of our hygiene and treatment shampoos;
  • increasing the proportion of recycled or recyclable materials in the packaging of our products for companion animals.
     

OUR RESULTS

Performance indicators 2019 2020 2021
Gas consumed (MWh) 32,515 32,338 30,437
Electricity consumed (MWh) 47,176 46,161 44,732
Energy intensity 600 603 538
Water sampled by source (m3) 234,691 226,608 226,323

Energy intensity is the ratio between energy consumption (gas and electricity) and the value added in thousands of euros at the Group level (direct labor costs + indirect production costs).

In 2021, our consumption of gas and electricity continued to fall more significantly than in 2020, by 5.9% and 3.1%, respectively. The decrease in gas consumption was due to the optimization of boiler pipes at the sites in France and Mexico. Compared to activity, this decrease in total energy consumption was more than 10%. Our water consumption at the Group level remained stable but decreased sharply (-7%) when compared to 2021 activity.

DISCHARGES INTO THE ENVIRONMENT

As part of our veterinary medicine manufacturing business, we use substances that present health, fire and/or explosion, emission and discharge risks during the various phases of development and marketing, from R&D and manufacturing to storage and shipping.

To limit these risks, which could cause harm to people, property and the environment, we comply with the safety measures prescribed by the laws and regulations in force, implement current Good manufacturing practices and Good laboratory practices, and provide training to our employees. Our manufacturing sites and research and development facilities are also regularly inspected by regulatory authorities.

Due to the nature of our pharmaceutical manufacturing activity (especially confining technologies), we do not generate any visual, noise or olfactory pollution. Therefore, we are focusing on the real impacts of our activity, atmospheric emissions, effluents or hazardous waste resulting from our activities or products by increasingly investing in environmental compliance: taking into account EHS impacts in the management of industrial projects, improvements in the environmental performance of existing facilities, etc.

Furthermore, the Group’s environmental principles are adapted to countries according to different local regulations. Here again, the objective is to identify good practices at the subsidiary level to be consolidated within the Group context.

OUR KEY OBJECTIVES

  • Limit the volume of water discharged and its COD (Chemical oxygen demand) content.
  • Reduce the total amount of waste generated by 5% by 2025.

OUR ACTION PLANS

Effluents

For effluents as well as other environmental releases, our goal is to facilitate consolidation across the Group of the various local initiatives carried out locally and subject to specific regulatory frameworks, in particular on the optimization of the cleaning frequency of our facilities. In this sense, our vigilance translates into conservative guidelines. For example, many sites must recover and treat a large portion of manufacturing water discharges in accordance with related standards for hazardous waste. 

The incident that occurred on part of the industrial water networks of a production building at the Carros site in France required numerous controls and a restoration of all the networks on the site. This work continued in 2021. Following the 2020 completion of studies for the installation of a new treatment plant at the historic Virbac site in Carros, France, we were able to implement it at the end of 2021. Due to this facility’s high performance level, we received assistance from the Agence de l’Eau Rhône, Méditerranée et Corse.

Hazardous waste

In addition to constant research to control the volumes generated and improve collection for maximum treatment and recycling, we ensure traceability of all our hazardous waste up to the point of disposal: soiled packaging; laboratory, production, medicinal or infectious wastes; and chemical effluents (mostly incinerated and therefore thermally treated or recycled for solvent recovery).

Controlling waste volumes also begins at the research and development stage by considering treatment application methods so as to limit wastage and residues that could harm the environment (targeting/optimizing sprays, for example).

OUR RESULTS

Performance indicators 2019 2020 2021
COD (metric tons) 93 81 113
Volume of hazardous industrial waste (metric tons) 2,493 2,254 2,153
Volume of non-hazardous industrial waste (metric tons) 2,376 2,751 2,646
Intensity of ordinary and hazardous industrial waste 37 38 34

The intensity of industrial waste is the ratio between the waste generated (ordinary and hazardous) and the added value in thousands of Euros at the Group level (direct labor costs + indirect production costs).

The two main reasons for the significant increase in COD (+40%) are the increase in the quantity of water released (+13%) and the measurement frequencies that have changed at our St. Louis site in the United States and the Carros site in France (which represent 83% of the quantities released). The total amount of waste generated decreased by 4% for each of the two categories: hazardous and ordinary. Compared to activity, the decrease is even sharper, with a drop of nearly 11%. This decrease is particularly visible on our Australian, American and Vietnamese sites, with reductions of 24%, 17% and 54%, respectively, for ordinary industrial waste. 

CLIMATE CHANGE

The risks related to the effects of climate change encouraged us to contribute to the reduction in greenhouse gas emissions. In our company, the direct and indirect emissions of greenhouse gases (scope 1 and 2) represent emissions linked to the consumption of various forms of energy (in this case, gas and electricity) at all industrial sites worldwide, as well as the greenhouse gas emissions related to refrigerants. Other indirect greenhouse gas emissions (scope 3) reflect emissions linked to the shipping of finished products from all sites to the end-customer.

OUR KEY OBJECTIVES

  • Reduce scopes 1 and 2 greenhouse gas emissions by 10% by 2025.

OUR ACTION PLANS

Scope 1 & 2 greenhouse gas (GHG) emissions

Actions on direct and indirect emissions (industrial site consumption and GHGs related to refrigerant gases):

  • optimization of energy consumption: thermal insulation of installations, the energy recovery system on the wastewater treatment station for biological production units (Carros), solar boiler for industrial hot water (Mexico), generalization of plans to replace lighting with LED at almost all industrial sites;
  • concerning emissions related to refrigerant gases: reinforcement of maintenance plans at industrial sites in Australia and France, but also a replacement program for the most polluting fluids with low CO2 emissions.

Scope 3 greenhouse gas emissions

Actions on emissions resulting from the transport of finished products:

  • the new calculation method implemented since 2018 has enabled us to increase the reliability of subsidiary data based on emissions coefficients given by the French environment and energy management agency (Ademe), see site www.bilans-ges.ademe.fr;
  • shipping of finished products: destination grouping;
  • transporting employees: inter-site shuttles, external shuttles, incentive policies to limit the carbon impact of company vehicles, carpooling, etc.

OUR RESULTS

Performance indicators 2019 2020 2021
GES scope 1 & 2 (tons of CO2 equivalent) 22,200 21,007 21,814
GES scope 3 (tons of CO2 equivalent) 27,790 11,401 11,093
GHG intensity scope 1, 2 & 3 376 249 229

The intensity of greenhouse gases is the ratio between the GHGs emitted (scope 1, 2 & 3) and the added value in thousands of Euros at the Group level (direct labor costs + indirect production costs).

Scopes 1 & 2 emissions decreased by 0.9% this year. This slight decline is the result of a decrease in energy consumption and an increase in emissions related to refrigerant gases (in spite of plans for maintenance at facilities using greenhouse gases and that were put in place at our industrial sites in 2020). Our scope 3 emissions are down 2.7%. This decrease is linked to the increase in transport by boat (+14.8% of emissions related to this type of transport) to the detriment of air transport (-4.8% of emissions related to this type of transport). Compared to activity, greenhouse gas emissions decreased by 8.3% in 2021.

EUROPEAN GREEN TAXONOMY

As a result of the sustainable finance action plan launched in 2018 by the European Commission, European Regulation 2020/852 of June 18, 2020, establishes a framework to promote “sustainable” investments in the European Union, called the European Green Taxonomy. In accordance with this regulation, we are subject for the first time in the 2021 fiscal year to the obligation to publish the share of our taxonomy-eligible activity – revenue, capital expenditures (Capex) and operational expenditures (Opex), on the first two environmental objectives related to climate change. To be considered sustainable, an activity must contribute substantially to one of the six environmental objectives listed below, not hinder the other five according to the Do no significant harm (DNSH) principle and comply with minimum social standards. The taxonomy regulation is supplemented by two delegated acts: the first published in April 2021 specifying the technical environmental criteria for the first two objectives, the second published in July 2021 specifying the expected taxonomy reporting methods. It should be noted that to date, the indicators that we are publishing concern only the first two objectives.

The taxonomy’s six environmental objectives are:
- climate change mitigation (2021);
- climate change adaptation (2021);
- transition to a circular economy;
- pollution prevention and reduction;
- sustainable use and protection of aquatic and marine resources;
- biodiversity and ecosystem protection and restoration.

Taxonomy revenue

As defined by the regulation, an activity is deemed taxonomy-eligible if it is on the list of sectors covered by the climate change mitigation and adaptation objectives. The selection of covered sectors is based on two areas of consideration: sectors with high emission rates1 and sectors where economic activities have the potential to allow substantial reductions in greenhouse gas emissions in other sectors.

As a pharmaceutical group, Virbac does not belong to sectors with a high carbon impact, such as the energy, construction and transport sectors. Furthermore, as the products we offer do not contribute to reducing the emissions of other sectors, our Group does not have activities that are taxonomy-eligible.

Over the 2021 fiscal year, revenue is therefore zero for climate change adaptation and mitigation objectives. Virbac could nevertheless be eligible for the other four objectives as listed in the preamble.

1quantitative data on GHG emissions by NACE code (Statistical classification of economic activities in the European Community).

Capex taxonomy

As defined by the regulation, the denominator of the “Capex taxonomy” corresponds to acquisitions of tangible assets (IAS 16) and intangible assets (IAS 38), the acquisition of rights of use (in accordance with IFRS 16). In addition, assets acquired through business combinations (IFRS 3), excluding goodwill, are included in the lines of the table below. It should be noted that the Virbac group has no investment processed according to Investment Property (IAS 40) and Agriculture (IAS 41) standards.

In 2021, the Capex taxonomy denominator totaled €61.2 million.

Investments  Total amount
(in millions of euros)2
Eligibility as a %
Tangible assets (IAS 16) 35,9 2,8%
Intangible assets (IAS 38) 13,2 0,0%
Rights of use (IFRS 16) 12,1 100%
Total Capex  61,2 21,4%

2 see the consolidated financial statements for the 2021 fiscal year notes A2, A4 and A5

Eligible Capex are mainly found in the list of the following Capex (the reference in parentheses corresponds to the classification by activity as defined by the taxonomy):

  • transport by motorcycles, private cars and light utility vehicles (6.5);
  • renovation of existing buildings (7.2);
  • installation, maintenance and repair of energy efficiency equipment (7.3);
  • installation, maintenance and repair of charging stations for electric vehicles in buildings and parking spaces attached to buildings (7.4);
  • installation, maintenance and repair of instruments and devices for the measurement, regulation and control of the energy performance of buildings (7.5);
  • installation, maintenance and repair of renewable energy technologies (7.6);
  • acquisition and ownership of buildings (7.7);
  • data-based solutions for reducing GHG emissions (8.2).

Over the 2021 fiscal year, total eligible Capex was €13.1 million, i.e., 21.4% of the total. They mainly concern long-term leases, vehicle rentals and, to a lesser extent, building renovations that help reduce our energy consumption (LED lighting, heat pump system, etc.).

Capex taxonomy

As defined by the taxonomy regulation, Opex classification corresponds to all the Group’s operational expenditures (purchases consumed, external expenses, staff expenses and other current operational expenditures). In 2021, the Opex taxonomy denominator totaled €874.1 million.

Over the 2021 financial year, the total potentially taxonomy-eligible Opex (R&D, maintenance and rental charges) represents less than 10% of the Group’s total operational expenditures. In view of this insignificant amount, which relates to expenditures that do not constitute the core of our activity, the work carried out concludes that this indicator is not material for our Group. In accordance with the regulation, the analysis of eligible Opex has therefore not been carried out.

We will adapt our methodology and our eligibility analysis as the taxonomy is implemented.


Methodological note
This first assessment was conducted on the basis of a detailed analysis of the Group’s activities, based on the processes, existing reporting systems and assumptions made with management. The whole consists of a methodology whose significant elements - assumptions, interpretations, clarifications and methodological limitations - are described below. The Group will review this methodology and the resulting figures based on changes in regulations, in particular with the publication of delegated acts relating to the four other environmental objectives in 2022.

Capex
In accordance with the definition in the appendix to article 8 of the delegated act, the Group’s eligible share of Capex within the meaning of the taxonomy is calculated by determining the ratio of the following financial aggregates:
– for the denominator: the sum of the increases in the gross value of intangible and tangible assets on the balance sheet and increases in the gross value of the right of use of long-term rental assets recognized under IFRS 16 (see notes A2, A4 and A5 in the consolidated accounts pages 158, and 161 to 163 of the annual report). We retained a materiality threshold of €0.5 million per subsidiary and, thus, covered 90% of the increases for the fiscal year ended 12/31/2021;
– for the numerator: the sum of Capex identified in the denominator as being linked to taxonomy-eligible activities according to the list described above.

Opex
The value of Opex (operational expenditure) in the denominator was calculated in accordance with the definition in the appendix to article 8 of the delegated act. The total costs of research and development, building renovation, short-term rental and maintenance and repair of the Group’s assets represented less than 10% of the total of the Group’s Opex as of December 31, 2021, which was not considered representative of its business model. 

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