THE USE OF ENERGY RESOURCES IN THE GROUP’S OPERATIONS
The total consumption of energy deriving from non-renewable resources can mainly be attributed to the consumption of grid electricity and, to a lesser extent, the consumption of natural gas and diesel used to heat the production and logistics sites within the reporting scope. Meanwhile, the total consumption of renewable energy is connected with hot water from biomass and electricity from photovoltaic energy and refers exclusively to the Italian sites.
Total energy consumption(a)
(a) Energy consumption refers to Luxottica manufacturing facilities in Italy, China, United States, Brazil and the main distribution centers in Italy, China and the United States. Data exclude electricity consumption from the grid by Data Centers, whereas the energy consumption by the US primary distribution center has been estimated. The conversion factor used to calculate energy consumption in GigaJoules is 1 kWh = 0.0036 GJ (source: International Energy Agency, www.iea.org). The consumption in TeraJoules was 1,162 TJ in 2015, 1,257 TJ in 2016 and 1,370 TJ in 2017
The general increase in energy consumption between 2015 and 2017 is due to a series of factors, such as:
- the increase in the product complexity and the different production mix, which resulted in an increase in the production of metal eyewear collections, whose processing involves around 70 different phases and the use of more energy-intensive technologies compared to other production technologies;
- the decision to carry out some production processes in Italy, China and the United States internally, with a consequent increase in installed capacity and the amount of fixed energy consumption;
- the construction, in 2016 and 2017, of the new logistics hubs in Sedico, Atlanta and Dongguan;
- the impact of the climate on electricity consumption (e.g. very cold winter in Italy and particularly hot summer in China).
Electricity and methane gas are the Group’s two main sources of energy and account for almost all of the energy consumption of the production sites and distribution centers in the reporting scope. Diesel is used in the event of problems with the supply of electricity to the Chinese production site, and to supplement the thermal energy produced by the biomass plant in the Cencenighe site during the coldest periods of the year, typically January and December.
Total energy consumption from non-renewable sources
(a) The conversion factor used to calculate methane gas energy consumption in Kilowatt hours is 1 sm3 = 10.944 kWh (Source: Stogit measures converter)
(b) The conversion factor used to calculate diesel energy consumption for heating in Kilowatt hours is 1 l = 10.005 kWh (Source:Italian Green-house Gas Inventory 1990 – 2014 – National Inventory Report 2016 Annex 6 National Emission Factors – Istituto Superiore per la Protezione e la Ricerca Ambientale - ISPRA)
THE GENERATION OF ENERGY FROM RENEWABLE SOURCES
Since 2013, Luxottica has been investing in manufacturing plants that run on renewable energy, with the objective of reducing its Carbon footprint across the value chain.
The first one was the solar panel system in the Lauriano factory. Between 2014 and 2017, approximately 2,000 sqm of solar panels enabled the Company to reduce emissions by approximately 80 t/ CO2 per year.
In 2014, the first biomass heating system was built in the Cencenighe factory, which is used for heating the premises. In July 2016, the solid biomass fueled trigeneration system next to the Agordo factory was started. The system became fully operational during 2017. Built by Enel Energia, it has an electrical output of 199 kW and a thermal output of 1,220 kW, which is able to satisfy 40% of the heating requirements and 60% of cooling requirements within the factory.
The gradual roll-out of these plants has enabled Luxottica to replace part of the energy from non-renewable sources consumed in its sites with a growing quota of clean energy which, in the case of the photovoltaic power plant in Sedico and the biomass plant in Cencenighe, is self-generated. More specifically, the continuous increase in thermal energy from renewable sources has gone hand in hand with the gradual implementation and roll-out of the biomass plants in Cencenighe and Agordo between 2015 and 2017. In 2017, renewable energy accounted for around 4% of total energy consumption at Italian manufacturing sites.
Consumption of renewable energy in Italy
Monitoring the CARBON FOOTPRINT
One of the cornerstones of the environmental impact monitoring system is greenhouse gas emissions (GHG), which are reported on the basis of the international classification proposed by the GHG Protocol standard and used by the Global Reporting Initiative.
With reference to Scope 1 (direct greenhouse gas emissions from proprietary installations or installations controlled by the organization), the greenhouse gas emissions (in CO2eq) are calculated on the basis of the emission factors applied to methane gas and heating fuel taken from the dedicated “GHG Protocol tool for stationary combustion”33 made available by GHG Protocol. As for Scope 2 (indirect greenhouse gas emissions deriving from electricity generation, heating, cooling and steam energy, imported and consumed within the organization), the emissions deriving from electricity consumption are calculated using the emission factor corresponding to the energy mix of each of the countries in which Luxottica operates. The emission factors applied here come from the dedicated “GHG Protocol tool for purchased electricity34”, also made available by GHG Protocol.
In 2017 Luxottica extended and consolidated the monitoring and reporting scope of energy data and therefore of direct and indirect greenhouse gas emissions, laying the foundations for the monitoring and management of its carbon footprint at global level. CO2eq emissions deriving solely from the Group’s manufacturing activities and logistics hubs (Scope 1 and Scope 2) came to 153,205 tons in 2017, an increase of around 11% compared with 2016 due to the same factors that led to the increase in energy consumption previously discussed.
Greenhouse gas emissions
(a) Company car fuel is excluded from the calculation as this information is only partially available in the reporting scope. F-Gas emissions are included.
PROGRESSI IN ITALY
The Italian manufacturing facilities were the first to be subject to non-financial reporting in 2016. In fact, this is where the Group’s energy efficiency and environmental sustainability path began, a path that reached the important milestone of a 15% reduction in CO2 emissions per unit between 2012 and 201535.
In 2017 emissions rose to 1.05 kg CO2eq per unit from 1.02 kg CO2eq in 2016. On a like-for-like basis with 2016, i.e. excluding variations in the production mix, the impact of the lower product volumes and the growth in production capacity that negatively influenced environmental performances, the indicator would have fallen below 1.0 kg CO2eq, underlining the validity of the initiatives undertaken.
MEASUREMENT OF THE CARBON FOOTPRINT IN THE GROUP’S DISTRIBUTION SYSTEM
In recent years efforts have been made to simplify the logistics chain. The review of delivery flows has been based on the close evaluation of the specific needs of the markets in order to better configure the transport service in terms of procurement times and frequencies, and the streamlining of delivered volumes. The effectiveness of the logistics process is even more crucial given the initiatives to optimize the levels of product stock along the supply chain, which require the operating model for the entire system to be increasingly synchronized. The main changes regard:
- the ongoing streamlining of the logistics network. In the last 10 years the number of distribution centers has gradually fallen to a total of 10 in 2017. The subsequent centralization of logistics activities, with volumes taken from secondary distribution centers and concentrated more heavily in primary distribution centers, has led to improved efficiency, speed and the quality of customer services;
- the construction of three logistics-production hubs in Sedico, Atlanta and Dongguan in 2016 and 2017, genuine service centers, including a laboratory for the production of ophtalmic lenses, making it possible to truly integrate logistics, lens production and the creation of complete pairs. The resulting extension of their scope of activity also includes services for the personalization of logistics or the finished product (e.g. Ray-Ban Remix), confirming their evolution from distribution centers to service centers. This is joined by the gradual centralization of the Oakley-branded apparel, footwear and accessories (AFA) business and, in some cases, of advertising material.
MONITORING SERVICE LEVELS: THE LAUNCH OF CO2 CALCULATIONS
indicators that measure service levels globally. As part of its initiatives to improve the monitoring and control of logistics, in 2017 Luxottica launched a project to measure CO2 emissions stemming from the transportation of its products in order to monitor their environmental impact.
The first phase of the project, carried out in 2017 and reported in this Statement, quantified the emissions deriving from the transportation of finished products (eyewear) between the primary distribution centers of Sedico, Atlanta, Dongguan and Jundiaì (mapping of reorder flows). For such deliveries the service is provided by international transport suppliers known as “global forwarders” and takes place exclusively by air. The scope of analysis covers the entire flow, from the original distribution center to the destination distribution center, including emissions generated both through air transport and road transport between the distribution center and the airport. In fact, the transport service involves the transfer of the goods along a roughly defined route, as illustrated in the figure.
The calculation process has made it possible to estimate the energy consumption and relative CO2 emissions deriving from deliveries of eyewear (reorder flows): during the year 70,716 tons of CO2eq were consumed.
(% on 2017 total)
|Total distance covered|
(% on 2017 total)
(% on 2017 total)(a)
|China - Italy||30%||16,805,495||15%||21,374||30%|
|China - United States||
|Italy - United States||
|Italy - China||
|United States - Italy||
|Italy - Brazil||
(a) “Tank-to-wheel” emissions, i.e. emissions generated through the use of vehicles
Being the first measurements, the appropriateness of introducing alternative solutions for reducing environmental impact is currently undergoing assessment.
Projects aimed at improving the saturation of delivered volumes continue as do activities to redesign shipping flows in order to continue to streamline deliveries. The second phase of the project, already launched, involves the extension of the scope to quantify the emissions deriving from the deliveries and the transport services between the distribution centers and the final customer.
CONSUMPTION AND RESPONSIBLE MANAGEMENT OF WATER RESOURCES E
The consumption of well and network water is monitored promptly, on a monthly basis, thanks to the presence of meters installed in all production sites and logistics hubs.
Over the years Luxottica has invested in the management and optimization of the use of water resources, consumption of which has fallen year on year, from 3.4 million m3 in 2015 to 3.1 million m3 in 2017. This fall is the result of the gradual redevelopment of the main galvanizing plants with the aim of reducing consumption and flows of discharge water, beginning with the plants in Dongguan (2014) and Agordo (2016).
The new eco-sustainable galvanization technique, researched and adapted by Luxottica for the specifics of eyewear production, is an integrated water treatment and recycling system used to turn all three phases - washing, nickel-plating and finishing – into a continuous linear flow. This system fitted with a purification plant that allows the water to be reused in the process and in the heating of the tanks by cogeneration. The result was a reduction in the industrial consumption of water of around 80-90% on average in the first year of implementation. This has been joined by a reduction in CO2 emissions with the tanks having been equipped with a thermal energy heating system that uses the energy produced by an integrated cogeneration plant.
In 2017, the Group focused on improving the process for the continuous monitoring of consumption, undertaking specific management and technical actions to promote the correct use of water in the Italian sites and logistics hub, where around 50% of the Group’s overall water consumption takes place.
The introduction of closed circuit water systems in the galvanizing plants and in painting processes inside the other Group sites dedicated to the processing of metal in Italy is planned for 2018.
In line with the Group’s policy concerning the overall reduction of the environmental impact along the value chain, Luxottica has implemented policies to manage and recover waste materials from the production activities, as well as initiatives to recycle and reuse materials. The stations for the separate collection of waste in the distribution hubs for recycling packaging materials and the use of plastic instead of wooden pallets are just another example of these efforts.
Disposed and recovered wastei(a)
(a) The breakdown between disposed and recovered/recycled waste is not available for the Foothill Ranch site
(b) 2015 waste data were not available for the Dongguan site, as their monitoring activity started in 2016
In 2017 the amount of waste generated by the Group’s activities fell by 5.4% compared with the previous year. In addition, the quantity of waste recovered or recycled rose to 21.5% of all waste, proof of the effectiveness of the actions adopted by the Group.
More specifically, in 2016 and 2017 a waste water treatment system was installed at the Agordo site in order to reduce the quantity of waste produced. This led to a reduction in the total quantity of waste produced in 2017 and, as a result, a fall in the impact of its transportation for disposal. The number of lorry journeys fell by over 50% compared with the previous year, corresponding to a total of 33,000 km.
Waste by type(a)
a) This fi gure was estimated for some types of waste and some geographies, such as China and the US, where the legislation in this area is different. For the Chinese sites the fi gure was estimated on the basis of the average volume of waste transported and the number of journeys made by waste transportation vehicles. Both information have been available since 2016. As regards the US, no information is available for the Atlanta logistics hub.
(b) 2015 waste data were not available for the Dongguan site, as their monitoring activity started in 2016
Hazardous waste represents around 61% of the total. Its increase in 2017 is mainly due to the gradual internalization of some production processes in China and to legislative changes in the classification of waste made by individual legislations.
No significant accidental leaks took place in the Group’s facilities in 2017.
33. Version 4.1, World Resources Institute (WRI), 2015
34. Version 4.8, World Resources Institute (WRI), 2017
35. This figure refers to Italia Manufacturing, which includes all production sites and excludes the logistics site and headquarters in Milan