SGS: Huge Diversity Means Interesting Challenges

Profile

  • World’s leading inspection, verification, testing and certification company
  • HQ in Geneva, Switzerland with 1650 offices and laboratories around the world
  • 80 000 + employees
  • Total revenue of 5.9 billion CHF (2014)

Daniel Rüfenacht - SGS Vice President of Corporate Sustainability

SGS: Huge Diversity Means Interesting Challenges

 

Profile

  • World’s leading inspection, verification, testing and certification company
  • HQ in Geneva, Switzerland with 1650 offices and laboratories around the world
  • 80 000 + employees
  • Total revenue of 5.9 billion CHF (2014)


Daniel Rüfenacht - SGS Vice President of Corporate Sustainability” for consistency with the other case studies


Vision

Achieve Executive Commitment

Top management commitment is an essential element for driving forward any energy efficiency programme. In 2015 SGS CEO Frankie Ng will announce internally the requirement for each SGS region to implement three landmark energy saving projects. This directive has already had an effect on energy management at SGS, with the approval of the Antwerp dock water cooling project estimated to save €56,778 and 342 tCO2e per annum.

“During 2014, our CO2 emissions decreased by 0.4% against 2013, despite sustained business growth and expansion of our business through acquisitions. This can be attributed to the many sustainability projects across our affiliates that are focused on energy reduction and efficiency. Maintaining a relentless focus on optimising energy efficiency in our buildings and through our supply chain will help to ensure that we effectively ‘de-couple’ our CO2 emissions from our business growth in the years ahead.” CEO and chairman joint statement from the SGS 2014 Sustainability report

The motivation behind the SGS energy efficiency programme is threefold: it reduces our operational expenditure, minimises our carbon emissions, and improves the capacity of our client facing business. Thanks to the understanding of climate change issues and impacts on our customers, we are today in a position to offer a large panel of standardised and tailor-made-services enabling customers to improve their environmental efficiency and reduce their carbon footprint. This is reflected in the growth of the SGS Environmental Services business, which delivered comparable revenue growth of 9.2% in 2014.


Write an Energy Vision

By aligning social and environmental outcomes with our business goals, we believe we can move closer to achieving our sustainability vision. At SGS we operate by our “10 guiding principles for sustainable business”, these govern the day to day actions of all of our employees and our long term corporate strategy. Principle 8 and 9 relate specifically to energy and climate change.

Principle 8: Doing More With Less
We are committed to achieving sustainable growth whilst managing the impacts of our business. We use natural resources efficiently and minimise waste.

Principle 9: Investing In A Carbon-Free Future
Our readiness to adapt to climate change will ensure the sustainability of our business. We are seeking to minimise our energy consumption, reduce our carbon intensity, and invest in new technologies and offsetting schemes.

- Excerpt from the SGS “10 Guiding Principles for a Sustainable Business”

Write an Energy Policy

The principles of increasing energy efficiency and reducing carbon intensity are further expanded upon in our “Building Policy” and “Environment Policy”, which provide a set of more detailed guidelines that all SGS employees are expected to follow.

Figure 1 SGS Building and Environment Policies

Planning

Benchmarking

SGS is not an energy intensive company, but with over 80,000 employees and more than 1,650 premises, targeting energy consumption at our offices and laboratories is the best way we can contribute to tackling climate change.

Our greatest challenge is the huge diversity of our company. We have a hub-and-spoke model, with a wide spectrum of intensities. The activities of SGS laboratories vary greatly; a consumer testing services laboratory, for example, is likely to have a lower energy demand than a geochemical laboratory with powerful crushing machines.

Within the business lines there are variations too; an industrial laboratory may be high-tech, or focused on more physical processes such as welding or extraction. This renders the process of benchmarking our energy use a challenging one. We are currently engaged in the process of constructing three different benchmarks that will be used to gauge the energy efficiency of our facilities.


Establishing an Energy Team

We cannot change the world alone; in fact we cannot even change our company alone, we have therefore developed our 2020 ambitions focused on customer, supplier, and employee engagement. It is the responsibility of all employees at SGS to help us achieve our environmental targets. All of our employees work hard to reduce consumption of electricity, non-transport fuels, and overall environmental impact and financial cost.

The specific energy functions at SGS are overseen by energy management expert Eddy Van Eenoo, reporting to Daniel Rüfenacht, Vice President, Corporate Sustainability, but responsibility for sustainability also extends to the executive team.

The SGS Green Book, is a bi-annual environmental P&L intended for senior managers. It helps to assess and monitor the financial impact of our sustainability performance, including our carbon footprint. Inside the Greenbook we have specific KPIs related to electricity consumption and electricity price. Any reduction in consumption and costs leads to an increase in margin and thus to a potential discretionary cash bonus. In addition, we will introduce a specific sustainability KPI in top management remuneration as part of our 2020 ambitions; this KPI will be based on the achievement of our 2020 sustainability targets.

2015 has seen SGS implement extensive training and awareness programmes for roles interacting between our business and the environment. This year we have trained almost 40 Facilities Managers and Managing Directors; with further training scheduled for our offices in South America over the remainder of 2015.


Define programme objectives and goals

We are on a journey to reduce our carbon emissions and minimise our impact on climate change. By 2020, we plan to have reduced our annual CO2 emissions by 20% over a 2014 baseline. We will achieve this through improved energy efficiency and by switching to low carbon options including renewable energy sources.

In addition, we annually offset all residual CO2 emissions associated with operations in our major countries to maintain our status as a carbon neutral company. Underlining our commitment to a low carbon future, in December 2014, SGS signed the RE100 pledge to use 100% renewable power by 2020.

We set ambitious targets designed to challenge our practices and our thinking; however with a little thinking outside the box, and with the help of our dedicated sustainability team and the wider business, we are confident of achieving these ambitious goals.

Current SGS energy and carbon targets are as follows:

  • Achieving a 20% reduction in CO2 emissions per FTE (full time equivalent employee) by 2020 against a 2014 baseline
  • Achieving a 20% reduction in CO2 emissions per unit of revenue by 2020 against a 2014 baseline
    • Reduce CO2 emissions associated with SGS offices by 10% by 2014, and by 20% by 2020, against the 2010 baseline*
    • Reduce CO2 emissions associated with SGS laboratories by 10% by 2014, and by 20% by 2020, against the 2010 baseline*
  • Using 100% renewable power by 2020 (as part of our commitment to the RE100 initiative), and maintaining our status as a carbon neutral company
*for all offices and for all laboratories we own that are larger than 2 000 m2

Conduct Audits

Facilities are prioritized as potential “hot spots” requiring an energy efficiency audit if they are greater than 2,000m2 (SGS occupied) floor area, and are owned rather than rented buildings. SGS use the Sequentra database to collect, organize, and store information on our property portfolio; this greatly assists in planning our audit schedule.

 CountryStateTownBuildingFloor areaSGS occupied areaOwnership status
Western Europe Spain Talavera Del Reina   Portiña de San Miguel, 17 4,000 230 Leased
Central North Western Europe Germany Wörgl Wörgl (6,7) Fritz-Atzl-Strasse 8 (Teil 3 und 8 der Ordination) 4,000 356 Leased
Western Europe France Vitrolles Vitrolles Building 1, 3,993 599 Leased
Africa Algeria AIN DEFLA COTA Khemis Miliana Building 1, COTA Khemis Meliana 3,928 3,928 Leased
South East Asia and Pacific India Mumbai Vikhroli SGS House, 4B, A. S. Marg, Vikhroli (West)   2,003 Owned
Figure 2 An excerpt from the SGS building stock database
 CountryStateTownBuildingFloor areaSGS occupied areaOwnership status
Western Europe Spain Talavera Del Reina   Portiña de San Miguel, 17 4,000 230 Leased
Central North Western Europe Germany Wörgl Wörgl (6,7) Fritz-Atzl-Strasse 8 (Teil 3 und 8 der Ordination) 4,000 356 Leased
Western Europe France Vitrolles Vitrolles Building 1, 3,993 599 Leased
Africa Algeria AIN DEFLA COTA Khemis Miliana Building 1, COTA Khemis Meliana 3,928 3,928 Leased
South East Asia and Pacific India Mumbai Vikhroli SGS House, 4B, A. S. Marg, Vikhroli (West)   2,003 Owned
Figure 2 An excerpt from the SGS building stock database

In this sample of SGS buildings, the Mumbai offices would be targeted for an energy audit based on the above listed criteria.

We conducted 34 energy audits in major facilities around the world in 2014 and so far in 2015 we have evaluated and proposed actions on a further 19 buildings. Capital expenditure and Return on Investment (ROI) has been calculated for more than 50 actions covering 14 of the buildings assessed in 2015.

SGS audit individual facilities with the help of the facilities managers in each location. The main challenge is electricity consumption. Heating typically uses natural gas or gas oil, and we often reduce consumption by upgrading to more efficient boilers.

Proposed energy efficiency measures for 2015 span lighting, HVAC, cooling, building envelope (window thermal coating), renewable energy, free (evaporative) cooling, and improved pump efficiency. Investment on these projects varies from €10,000 to €1m; with most prospective project ROI’s falling below three years (as is consistent with SGS energy saving projects implemented in previous years).

We always include water in the audits, to address concerns of future scarcity. SGS have signed the WBCSD WASH pledge; guaranteeing the provision of and access to safe water, sanitation and hygiene (WASH) to our employees in the workplace.


Sustainability Strategy

The SGS internal strategy on climate change performance is overseen by the Corporate Sustainability Steering Committee which meets bi-annually. Sustainability services are part of ‘business as usual’ for us and are totally integrated into the strategy of each business line, instead of needing a separate sustainability strategy and accounting line.


Communications Strategy

SGS recognize the importance of communication as part of any successful sustainability programme. For this reason we have undertaken the following actions in 2014:

  • We promoted the Green Building guidelines and sustainable CAPEX projects as part of our sustainability workshops
  • We established our network of facility managers engaged in Energy Efficiency in Buildings throughout the company
  • We shared best practice with other WBCSD members on green buildings through our membership of the EEB project

We report progress on energy matters and broader sustainability issues both internally and externally in the “SGS annual sustainability report”.

Figure 3 SGS Sustainability report 2014, 2013, 2012, 2011

Implementating

EEMS- VALUE, COST, COMPLEXITY

Our unique Green Book translates our sustainability performance into financial values, enabling us to focus management attention on priority areas such as energy consumption. Efficiency measures are then prioritized based on both the environmental impact and the business case. ROI is the chosen measure of evaluation for SGS energy projects. A 3-4 year payback period is usually considered as a good return and will result in project approval, however projects with longer paybacks are also considered in order to boost efforts to promote sustainability; especially in SGS owned buildings or those with a long lease.


Common EEMs


Figure 4 SGS Antwerp Site

SGS are always looking to expand the range of our energy efficiency projects. We have included examples of some of our current and previous projects below:

Antwerp dock-water cooling project

The current cooling system at the Antwerp site is 16 years old: end of life; 2 out of the 4 compressors are no longer functioning effectively and the 3rd one is running on half power.

The cooling gas used in this system is R22, a powerful greenhouse gas that can no longer be purchased as of 1/1/2015.

The replacement options available to us were:
1 to 1 replacement Sustainable solution: dock water cooling
- Replacement of the current installation by a similar one - Sustainable long lasting solution
- Based on cooling gas - Based on cooling by dock water
- No significant energy savings: only 7% (61 MWh/year, 43 tC02e) - 55 % energy savings (462 MW/h per year, 323 tC02e)
- No subsidies - Subsidies available

Project cost
Extra sustainability cost 464.837 €
One time subsidy from regional government - 41.260 €
One time subsidy from energy supplier - 16.000 €
Corporate tax reduction - 20.220 €
Price can still be negociated -40.000 €
Final anticipated cost increase for sustainable option 347.357 €
Figure 5 Dock Water Cooling cost calculation

ROI after negociation: 347.357/45.117 = 7,7 year

Including 5% yearly increase of energy prices = 6,1 year

SGS approached GDF Suez-Fabricom-Cofely (now trading as Engie) as a contractor for this project. Cofely were prepared to sign an Energy Performance Contract (contactual guarantee) for the calculated savings. As such any underperformance of this solution in comparison to the expected level of savings would be refunded to SGS. This renders the project very low risk, and assisted a great deal in obtaining CFO approval.


Figure 6 SGS French building stock consolidation

Property Portfolio controls

With more than 1650 locations effective management of our extensive property portfolio is one way we are looking to reduce our impact on the environment. In 2015 we undertook analysis of our French building stock. From an economic and from an energy perspective, we will now look to consolidate our occupied sites and make optimal use of the space we occupy; reducing our requirement for heating and air conditioning.

Smart buildings

Our recently acquired company, SGS Search, based in the Benelux region puts sustainability high on their agenda and this is reflected in the construction of their new offices, two of which are energy positive (producing more energy than they use on site).

Our sustainable office buildings were inspired by the world in which we live, with one eye firmly on the future. No detail was neglected with regard to sense of responsibility, choice of materials and the environment.”SGS Search

The SGS Search offices in Amsterdam and Heeswijk are good example of how sustainable buildings work and banish all prejudices such as ‘too expensive’, ‘unrealistic’ and ‘too complicated’. Thinking outside the box, taking risks and having the confidence to put ideas into practice opens the door for all kinds of new initiatives.

Search BV applied the concept to external building materials, opting for FSC-certified wooden building panels that can be assembled and disassembled easily, without the loss of quality and for which no nails are used; the buildings have been designed to be entirely energy self-sufficient through the installation of on-site wind turbines and an energy roof with photovoltaic cells.

Optimum energy efficiency is ensured through the use of triple glazing, wooden fiber insulation, heat recovery and thermal energy storage systems, and, in Amsterdam, the innovative use of wooden panels which fully enclose the building in the evening; the re-use of rainwater in toilets and for cooling our laboratory equipment via a greywater circuit; and the interior building components are made from re-used and re-usable materials. Not only do we have amazingly innovative and healthy buildings for our employees, we are also proud to have two of the most sustainable buildings in the Netherlands.

Behaviour Change

Alongside our sustainability programmes, we encourage employees to save energy and resources through our popular “Do more with Lëss” campaign, resulting in higher than ever awareness levels and real evidence of behaviour change in our offices and laboratories. The campaign features Lëss the polar bear visiting different countries and encouraging simple changes has now reached more than 12,000 employees worldwide.

Do more with Lëss in France:

“In July 2014, SGS France launched the campaign across three pilot sites: Arcueil (our head office housing 350 employees) and our laboratories in Evry (91 employees) and Harfleur (76 employees). The campaign focused on energy reductions and improved waste management with key messages delivered via posters and orange stickers and a specially-branded Lëss the polar bear eco-cup.

Campaign ambassadors were nominated on each of the four floors at our head office, and at our laboratories we had one ambassador on each site. Every month we collectively decide on a theme, which is then honed for the next month with the support of the Sustainable Development team in France. September focused on electricity consumption. With around one-third of our consumption coming from lighting, we looked carefully at where we could make savings. It has been such a simple thing to do and yet we have already achieved savings of 6%, reversing an upward trend in electricity consumption that we were beginning to see earlier in the year.

October was hailed as ‘waste sorting’ month. Our aim was to demystify thoughts on what happens to waste once it has been placed in a bin, and to address widespread convictions that all waste ends up in the same place – a landfill site – irrespective of which bin is used. To help improve attitudes and awareness around recycling, we organised a trip to a local waste and recycling facility.

On our return, having been reassured about the efficient handling of waste, we revised our guidelines for waste sorting and we encouraged people to bring in spent batteries and coffee capsules from home in order to reinforce the message that environmental behaviour applies in the workplace as much as it does at home, and vice versa.”

JEAN-BAPTISTE MOLLET - Director Eco-design, SGS France

As a start of the campaign, orange dots are placed on equipment – light switches, monitors, and printers – to remind colleagues to be mindful of energy consumption and has so far demonstrated energy use reductions of up to 12%. Additionally the SGS 2014 employee survey demonstrated that 75% of SGS staff were aware of how sustainability supports our business growth.

“By the end of 2015, all affiliates in Europe will have run the campaign.”Chairman’s statement from the SGS annual report 2014

 

Taunusstein project

Our laboratory in Taunusstein, Germany replaced an oil-fired heating system with a gas one and introduced a combined heat and power generator, condensing boilers as well as an energy management system. The installation was completed in 2014 and these measures have delivered a 20% reduction in CO2 emissions, equivalent to one-third of the building’s energy costs.

The Taunusstein programme was undertaken in partnership with Siemens, who assessed the project savings and provided SGS with a guarantee that projections would be met (Energy Performance Contracting); minimizing any risk to SGS.

Energy efficiency measures undertaken in this project include the following:

  • Exchange of heat supply from oil to gas
  • Base load is covered by a combined Heat- Power Plant with 200kW electricity, Peak load is covered by a condensing boiler
  • Installing of two 6000L buffer storages
  • Modification of the heating water distributor with optimization of hydraulic system in the heating-centre
  • Implementation of two high efficiency heating boiler
  • Use of building automation system to improve efficiency
  • Recording and entering consumption data by using a web based IT platform
  • Green Building Monitor (GBM)
  • Monitoring and Controlling by Siemens
Figure 7 Taunusstein energy costs Figure 8 Taunusstein project timeline Figure 9 Taunusstein Project Savings Figure 10 Taunusstein energy use monitoring system Figure 11 Taunusstein CHP engine


Figure 12 Data Centre Assessment Classification

Figure 13 New Data Centre Cooling System

Figure 14 Energy use reduction at the Gigaplex Data Centre

GreenIT

Our Green IT policy requires us to procure equipment responsibly, use IT to enable greening of our operations, optimise the energy efficiency of our data centres, and implement responsible disposal practices.

In 2014, we completed an assessment and classification of 97 SGS data centres (representing around 90% of SGS revenues) using a standardised assessment methodology and toolkit, which included Green IT as one of five dimensions. All sites are now aligned with our defined SGS Green IT label, which awards a ranking of between A and F to sites based on their energy efficiency. Sites must meet criteria on five dimensions covering energy monitoring, recycling of IT equipment, cooling optimisation, virtualisation and use of renewable power, with a ‘Green A’ label awarded to sites fulfilling five criteria and ‘Green F’ not fulfilling any criteria.

Virtualisation and centralisation are used to reduce energy demand in our major data centres. Cold aisles are used to contain the temperature-sensitive equipment in one chilled compartment, instead of air conditioning an entire room. Excess heat extracted from the cold aisle in Geneva, Switzerland is used to warm our offices. Where data space is rented, options for energy efficiency include virtualisation and purchasing renewable power; a leased data centre at our Geneva HQ for example uses 100% hydroelectric power.

A number of affiliates across Europe have seen significant improvement in electricity consumption following improved heating, ventilation and air conditioning (HVAC) systems. Specifically, free cooling of server rooms provides an economical method of using the lower external air temperatures in Europe – particularly in winter – to assist in chilling water, which is then used in air conditioning systems. When outdoor temperatures are lower relative to indoor temperatures, the system utilises the cool outdoor air as a free cooling source. In this manner, the system replaces the chiller in traditional air conditioning systems while achieving the same cooling result. The chilled water can either be used immediately or stored.

Re-use of warm air from IT cooling for space heating in our Geneva offices-

The results of our efforts to improve the energy efficiency of our IT network has been impressive, with a 25% decrease in energy use due to virtualization at the SGS Gigaplex data centre, and significant energy consumption decreases globally.


Evaluating and Measuring

Progress against our EEB targets is tracked via the SGS Energy Rating Tool for Offices and Laboratories; in 2014 we expanded the coverage of the data collection from 23 to 39 buildings.


Figure 15 Energy use reduction at the Geneva Data Centre

Centralized energy monitoring is highly valuable in alerting us to spikes in energy use that require further investigation, and in measuring the performance benefit as a result of efficiency projects. The graphs above are sourced from the SGS offices in Antwerp before and after the implementation of the SGS “Spot the Orange Dot” campaign, and demonstrate energy consumption savings of 12%.


Results and Feedback

SGS internal strategy on climate change performance is overseen by the Corporate Sustainability Steering Committee which meets biannually.

Emissions data is collected from all our affiliates twice yearly in January and July. The data is then analysed and the operational actions required to meet the stated targets are reviewed by the Corporate Sustainability Steering Committee. The data is consolidated into regional or country factsheets and monetised into our Green Book (our Sustainability Profit & Loss), which is shared with our CEO, Chief Operational Officers, and country managers, who identify "hotspots" where action is required (e.g. increase in electricity consumption or excessive business travel).

Good monitoring of energy efficiency projects is essential in order to provide feedback on the results of our intensive efforts, and to secure management commitment for future projects. Some highlights from 2014 include the following:

  • At our laboratory in Taunusstein, Germany, we replaced the oil-fired heating system for a new gas one. We introduced a combined heat-and-power generator, condensing boilers, and an energy management system. This will save over 369,000 CHF per annum and 716 tonnes of carbon emissions.
  • At our Booysens facility in South Africa, upgrading our lighting, air conditioning and electric motor systems is expected to achieve annual savings of around CHF 50 000 and over 480 MWh
  • At our Geneva Switzerland, we have optimised light and heating levels as well as adjusting settings on all equipment to minimise energy use. The amount of air conditioning the data centre requires has been halved through the use of a ‘cold aisle’ to increase cooling efficiency. The building’s electricity consumption has been reduced by 22% against the 2010 baseline, saving 17 tonnes of CO2 per annum.

Figures such as these are vital in ensuring continued top management support for our energy efficiency programme as well as maximising the added value of measures by communicating our hard work to SGS external stakeholders.


Conclusion

Sustainability at SGS is embedded in both our day to day and our strategic operations. We have demonstrated that environmental sustainability makes business sense, through the rapid returns on investment achieved in our energy efficiency programme.

We work closely with international organizations such as the WBCSD (World Business Council for Sustainable Development), leading the local market engagement for EEB (Energy Efficiency in Buildings) in Bangalore, participating in events in Benelux, and reviewing the EEB toolkit. By working cooperatively and through multilateral engagement we diffuse our knowledge and experience on energy efficiency to the wider global population, doing our part to prevent dangerous climate change.

SGS have come a long way since the start of our sustainability programme. Despite our regular progress we are not complacent, and have big plans for the future. In 2016 we will continue our programme of energy efficiency auditing and investment, and will comprehensively report our performance in our Annual Sustainability Review.

“SGS has demonstrated through the application of our EEB programme that implementing sustainable business practices not only reduces our CO2e emissions; it also decreases operational costs, upskills our staff, reduces strategic risk, and helps to ensure compliance with environmental legislation. We are proud of the successes of our environmental programme, and it is a pleasure to share these results with our valued stakeholders.” Daniel Rufenacht, Vice President Corporate Responsibility SGS
“SGS is going beyond business as usual. We are on course for reducing electricity consumption in our offices and labs by a significant 20%. All of our residual energy use is then either procured from renewable sources or offset. Our performance and commitments were recognized in January 2015, when SGS was named RobecoSAM’s Industry Leader and Industry Mover, in the category of Professional Services, and received a Gold Class Sustainability Award, based on our performance on the Dow Jones Sustainability Indices (DJSI) World and Europe. We have since gone on to be named as an industry leader for the second year running in the prestigious Dow Jones Sustainability Indices (DJSI) World and Europe” Frankie Ng, Chief Executive Officer SGS
“SGS is not only a business taking action to minimize CO2 our own emissions; we are a Business Leading Action. SGS was delighted to take on the role of lead company in the WBCSD (World Business Council for Sustainable Development) EEB (Energy Efficiency in Buildings) Lab in Bangalore. This novel, action-oriented event brought together a diverse group of building sector stakeholders to define a set of ambitious, practical strategies for reducing building energy consumption by 30% or more.” Frankie Ng, Chief Executive Officer SGS