Preserving the environment

Relevance to the business


Relevant strategic objective:

Climate change has potential environmental, social, political and economic implications. The Group recognises these direct and indirect implications and its effects on the Group’s sustainability. Climate change is therefore relevant to the Group’s sustainability objectives.

The Group’s environmental management principles, available online, promotes the monitoring of Aspen’s carbon footprint in its operations and across the supply chain in a technically and economically feasible manner. This objective is pursued through investment in energy efficient equipment and utilisation of greener energy technologies where feasible – Aspen Bad Oldesloe makes use of 100% renewable energy sourced from third parties. The Group measures its carbon emissions across all manufacturing sites, except for Aspen API, and stack emission surveys are conducted in South Africa.

The Group’s risk of harmful air emissions is low and, consequently, the Group has not prioritised the development of air emissions targets. The risk of harmful air emissions is monitored regularly. GMP regulations require that technically advanced air handling systems are installed in production areas to extract and filter harmful fumes, vapours and dust particles during the manufacturing process. The implementation of these systems significantly reduces the risk of employee exposure to harmful substances and further prevents the release of polluted air emissions into the atmosphere. An accredited third party conducts stack emissions tests every three years at the South African facilities to assess the risk of harmful emissions. Stack emissions were measured during 2013 and the concentrations of air pollutants were found to be negligible.

Aspen’s Board monitors the Group’s material environmental KPIs on a quarterly basis. The Social & Ethics Committee monitors environmental risks, the adequacy of environmental management systems and environmental legal compliance. Under the direction of the Group Strategic Operations Executive, the Group SHE Department develops and promotes Aspen’s environmental management principles and standards and monitors the alignment of business unit environmental management systems to the Group standards. Site management teams are responsible for implementing compliant environmental management systems on site.

As at year end, none of the Group’s business units were located in conservation areas or areas of biodiversity.

Managing emissions

Scope 2 emissions, comprising purchased steam and electricity, represents the largest source of emissions in the Group. The Group also emits Scope 1 emissions in the form of fuel, primarily, used for the production of steam, fuel used in Aspen owned vehicles as well as refrigerants and natural gas. Scope 3 emissions are measured in South Africa in respect of business-related air travel, car rentals and for the transport of inbound production materials.

The Group is reliant on national carriers and third-party freight forwarders for these transport requirements and, as a result, is not able to influence the selection of transportation vehicles in an attempt to reduce Scope 3 emissions. In respect of these sources of emissions, the promotion of electronic communication as an alternative to business travel and the use of consolidated shipments for inbound production materials, indirectly contributes to the reduction in carbon emissions.

Aspen participates in the annual CDP. Aspen’s 2015 CDP submission and the 2015 CDP assurance statement are available online.

Implementing environmental management systems

Aspen strives to align its environmental management systems to global standards. The Group’s manufacturing sites in South Africa (other than FCC), Germany and Vallejo in Mexico comply with the ISO 14001 environmental management system standard. Aspen’s Bad Oldesloe site in Germany has attained its ISO 50001 energy management system certification during 2014. A phased three-year plan is in place to align environmental management systems at other manufacturing sites to ISO 14001 by the end of 2017.

Responsible management of waste

Being in the pharmaceutical industry, a large portion of the Group’s waste comprises hazardous waste. The volume of waste generated has increased materially over the past year following the inclusion of the recently acquired sites in the Netherlands, France and Mexico. The sites in Oss, the Netherlands, manufacture specialist APIs and biological products which, due to the nature of the related manufacturing processes, result in a high generation of waste. Hazardous waste represents 45% (2014: 55%) of total waste generated by the Group during 2015. Specific systems and processes are in place to manage hazardous and non-hazardous waste in compliance with waste management legislation applicable to each territory. In addition, responsible waste management initiatives are targeted at reducing use of the landfill waste disposal method in favour of more eco-friendly alternatives. Waste is formally classified, recorded and validated for all sites, with the exception of the Shelys manufacturing site in Tanzania where no validation takes place. Waste recycling initiatives are promoted across all sites.

The Group uses specialist and licenced waste management service providers to manage the transportation, treatment and disposal of waste in accordance with contracted terms and relevant legislation.

Responsible management of effluent

The quality of effluent discharge is monitored and controlled across all sites in accordance with local municipal by-laws. Effluent samples that are found to deviate from regulated standards result in investigations to identify and address the root causes.

Environmental and safety risks related to the acquired MSD sites in the Netherlands

At the time of the acquisition of the API facilities from MSD during 2013, pre-existing soil contamination was identified at the Moleneind site in Oss, the Netherlands, which was disclosed to Aspen and discussed with MSD during the due diligence process. The risks relating to this soil contamination have been retained by MSD and Aspen is indemnified in accordance with the applicable share purchase agreement and MSD will, accordingly, remain responsible for the completion of the soil remediation project in compliance with the regulations and requirements of the Dutch environmental authorities. A Governance Steering Committee is in place to monitor progress of MSD’s soil remediation plan. In terms of the share purchase agreement, Aspen is accountable for any soil contamination issues that may arise as a consequence of its activities on this site post-acquisition.

Spills at the Moleneind site have occurred since Aspen’s acquisition of this site. A specific task team has been appointed to perform a root cause analysis of the material spills which have occurred. In addition, capital investment projects are in place that target enhancement of environmental compliance at the Moleneind and De Geer sites – most of the compliance-critical projects were completed by December 2014. A survey of the safety culture has been performed and required improvements are being addressed in accordance with a structured plan. Due to the configuration of the aged Moleneind site, there is inherent risk of spills. Consequently, there are concerns regarding ability to uphold site compliance should there be future enhanced environmental legislation. Technically competent safety and environmental management teams are in place and new systems have been implemented to enhance the ability to efficiently monitor the alignment of current SHE policies and procedures to updated legislative requirements. Aspen Oss executives, Group executives and Aspen’s Board continue to monitor the Moleneind site risk and the progress of related mitigation plans.

Soil contamination risks exist at the Boxtel site and this is being addressed, in part, through a new-build capex project plan which is pending approval. An official letter, received by MSD from the Dutch environmental authorities, prior to Aspen’s acquisition of this site, confirms that no further remedial work is required in respect of the soil contamination issue at Boxtel. However, in light of advancing environmental regulations in Europe, there is uncertainty whether this approval will remain valid until the new build project is completed. The situation is being monitored by Group executives and the Aspen Oss management team continues to engage with Dutch environmental authorities in the ordinary course of business.

Permit Foundations, in place at each of the Moleneind and De Geer sites, are the custodians of site-wide permits governing all relevant activities on those sites. Each Permit Foundation is responsible for monitoring compliance with environmental regulations on their sites across all site users which include Aspen, MSD and others. As a member of the Moleneind and De Geer Permit Foundations, Aspen has joint responsibility sanction for the Foundations’ liabilities.

During the year, Aspen was informed of a criminal investigation of an incident that occurred on 23 October 2013 at the De Geer site, subsequent to acquisition of the business by Aspen on 1 October 2013. The incident relates to maintenance that was allegedly performed without application of the required safety measures and for which requisite legislated approvals were not timeously requested. A transaction/sanction offer of EUR15 000 each was made to Aspen Oss and to the Permit Foundation De Geer with respect to this incident whereby the offender was required to pay a fine to avoid the prosecution of the matter. Aspen Oss and the Permit Foundation De Geer have subsequently rejected the transaction/sanction offers. A decision regarding prosecution is awaited from the public prosecutor.

On 22 July 2015 the Moleneind Permit Foundation received notice from the Regional Criminal Investigation Department of the Dutch law enforcement agency that it was investigating five separate spills that allegedly occurred at the Moleneind site during April and May 2014. One of the five listed spills has since been removed from the investigation by the public prosecutor. Simultaneously, the De Geer Permit Foundation received notice from the same authorities advising that it was investigating a spill that allegedly occurred on the De Geer site in May 2014. Each of Aspen, the Moleneind Permit Foundation and the De Geer Permit Foundation are cooperating fully with the authorities in respect of these investigations, which includes an inspection of relevant information and documents.

Review of 2015 performance

Material KPI

 

2015

2014

Change

Carbon emissions (tCO2e)

– Scope 1*

 

38 036

10 917

248%

Carbon emissions (tCO2e)

– Scope 2*

 

151 183

114 615

32%

Weight of waste recycled (tonnes)

 

34 360

3 496

883%

* Aspen API, a non-material site from a Group perspective, has been excluded from the calculation as a suitable local emission factor could not be sourced in time for this publication.

Data representing the Aspen Oss, Vallejo in Mexico and Aspen NDB entities have a significant impact on the 2015 environmental KPIs. Consequently, the consolidated environmental data totals for the Group, excluding these entities, have been separately reflected to aid meaningful analysis of the 2015 data for the established entities against the related 2014 comparative.

Carbon emissions

The total amount of Scope 1 emissions generated during the year increased to 38 036 tCO2e and Scope 2 emissions increased to 151 183 tCO2e. The increase in carbon emissions is due to the expanded reporting scope which was limited to the South African operations, Aspen Australia and Aspen Bad Oldesloe in the prior year. The scope for emissions now includes all manufacturing facilities except Aspen API, a non-material manufacturing site of the Group.

Group emissions (tCO2 e)

Scope 1 emissions from the comparative scope have decreased by 3% due to further factory closures in Australia, with a decrease of 258 tCO2e and reduced usage of refrigerants at the Port Elizabeth site of 932 tCO2e.

Scope 2 emissions in the comparative scope have increased by 3%, mainly as a result of increased electricity and steam usage in the South African operations, particularly in respect of the additional production capacity introduced at FCC. The use of green zero-carbon, emission-free electricity by Aspen Bad Oldesloe during 2015 and closure of sites in Australia resulted in a total decrease of 2 685 tCO2e, a 2% decrease in the overall level of Scope 2 emissions.

2015 Scope 1 emissions: 38 036 tCO2 e

 

2015 Scope 2 emissions: 151 183 tCO 2 e

Waste generated by geography: 52 502 tonnes

Waste management

Total waste generated during the year amounted to 52 502 tonnes (2014: 8 449 tonnes), comprising 23 388 tonnes (2014: 4 612 tonnes) of hazardous waste representing 45% (2014: 55%).

Two waste streams at Aspen API, a non-material manufacturing site of the Group, have been excluded due to a misinterpretation of the Aspen Group waste definition and as a result the quantities could not be validated. Measurement techniques are being investigated to ensure the accurate recording of all waste streams. The impact of this site on the overall data is negligible.

The increase in waste recycled is largely due to the inclusion of data for the Aspen Oss, Vallejo in Mexico and Aspen NDB facilities which contribute 90% of the Group’s total.

The comparative business units’ recycled waste decreased by 222 tonnes. This is attributed to the reduced production volumes at the Port Elizabeth site, in addition to the return of expired S-26 stock at the infant nutritionals site in Johannesburg in the prior year.

Responsible waste management practices which promote recycling and reduction of waste to landfill are ongoing.

 

Waste management (tonnes)

 

The Group’s detailed waste register for 2015 is available online.

Effluent management

Aspen Brazil experienced deviations from their targeted waste water quality standard during the first three quarters of the year. An investigation was conducted to measure the amount of ammoniacal nitrogen in the facility water treatment process. Subsequent to the investigation and the implementation of corrective action, monitoring of the quality of the waste water showed continuous improvement.

A limited number of minor non-compliances with local municipal standards were experienced at the South African sites which were investigated and corrective actions were put in place. No fines have been issued in this regard.

Environmental management training

During the year, environmental training was conducted at the existing and new manufacturing sites to ensure consistent application of environmental principles, standard operating procedures and compliance with legislative requirements.

Key environmental training initiatives which took place have been summarised in the table below:

 

Region

 

Key environmental training interventions implemented

 

South Africa

 
  • All South African sites – Global warming training
  • Port Elizabeth site – Management of hazardous substances training
  • East London site – Waste management training
  • FCC – Environmental legal liability for managers training
 

East Africa

 
  • Shelys – Waste and environmental management training as well as water quality regulation training
 

Europe

 
  • Aspen Bad Oldesloe – Hazardous substances and disposal, safety, standard operating procedure, waste management and energy conservation training
  • Aspen NDB – Induction training, sustainable development training and chemical risk training
  • Aspen Oss – Prevention and reduction of spills and lead auditor training
 

Latin America

 
  • Aspen Brazil – Safety integration and waste management training
  • Vallejo in Mexico – Hazardous and environmental aspects identification training, waste and chemical management training

 

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