This report covers the reporting period from 1 January to 31 December 2022. It was prepared in reference to the GRI Standards, SASB and the GHG Protocol.
Since publishing its first environmental report in 1997, GF has continually expanded the scope of the sustainability data it records and collects. Initially, only environmental indicators were collected. Social indicators were added in 2005.
This sustainability report is based on the same reporting period as the Corporate Reports 2022. Sustainability reports from previous periods are available online on the GF website and in the Corporate Archives. GF has prepared this report in reference to the GRI Standards, as well as the SASB Standards. The company has conducted for the first time in 2020 a mapping exercise to align GF's sustainability disclosures with the SASB Standards (GRI/SASB Content Index). Emissions are reported in scope1, 2 and 3, in accordance with the Greenhouse Gas Protocol (GHG Protocol). Information on energy consumption, GHG emissions and GF’s management of water as a resource is also provided annually to CDP.
The list of entities included in this sustainability report follows the list of affiliated companies disclosed in Corporate Governance Report. This excludes companies that joined GF during the reporting period and have been associated with the company for less than one year. Companies with less than 10 employees only report data on the number of work-related accidents.
In 2022, the company again participated in the S&P Global Corporate Sustainability Assessment (CSA) with data for the 2021 reporting period.1 In addition, GF Piping Systems and GF Casting Solutions underwent an annual reassessment by EcoVadis in 2022.
More information on GF’s rankings can be found in the Sustainability governance chapter of this report and on the Investor Relations page of the corporate website.
Scope of data collection and reporting
In the year under review, GF had 138 affiliated companies. About 77% of them report their social and environmental indicators, which covers 78% of the total workforce and 93% of production facilities2.
In 2022, and in line with the organizational adjustments made at GF, the scope of reporting was adjusted as follows:
- In 2022, two of GF Piping Systems’ production sites in Brazil, and GF Casting Solutions' new production site in Shenyang (China) were included in the reporting from January 2022.
- The divested GF Linamar plant in Mills River, NC (US), was excluded from the reporting as of 1 April 2022. The GF Machining Solutions sales company in Turkey was excluded as of 31 December 2021.
As in previous reporting periods, the information presented in this sustainability report accounts for the equity stake that GF holds in the individual companies under its control. The criteria for the inclusion of companies in this report is in line with the approach used in financial reporting and is as follows:
- The scope of consolidation includes GF and all GF Corporate Companies, which GF controls directly or indirectly by either holding more than 50% of the voting rights or by otherwise having the power to control their operating and financial policies (GF and these GF Corporate Companies are also collectively referred to as the GF Corporation). These GF Corporate Companies are fully consolidated.
- For companies where GF has a joint venture participation of 50% or less, environmental and health and safety, workforce and financial data are weighted accordingly.
The financial performance indicators follow Swiss GAAP FER principles (Swiss Generally Accepted Accounting Principles Accounting and Reporting Recommendations) and are consistent with those reported in the Financial Report 2022. Economic performance indicators cover all of the companies within the scope of corporate consolidation, as reported in the Financial Report 2022.
The social performance indicators presented in this report are based on the data collected from all sales and production companies worldwide with more than 10 employees (106 legal entities in total). They report this information to the sustainability teams at the divisional and corporate levels on a monthly, quarterly or bi-annual basis using the Sustainability Information System (SIS). Environmental performance indicators are reported by the production companies according to the same reporting cycles (56 production legal entities in total). Depending on the company's contribution to the consolidated result and the figure, the reporting cycle differs. Fuel consumption of company cars is part of the social data reporting and is therefore also reported by sales companies. Sales companies report only social data, as the impact of their environmental data is negligible3. In addition, all GF entities, regardless of their headcount, report information about work-related incidents as they occur.
GF’s environmental indicators are energy and water consumption (on the input side), and air and GHG emissions, waste and wastewater (on the output side). In addition, GF has been calculating its scope 3 GHG emissions in accordance with the Greenhouse Gas Protocol Corporate Standard since 2019. These emissions are the result of activities that GF does not directly control, but that it indirectly impacts through its value chain.
Target scope and calculation for the Sustainability Framework 2025
The Sustainability Framework 2025 was introduced in 2021 and is part of the Strategy 2025. Its targets must be achieved within five years, so by year-end 2025.
In order to provide companies with a realistic timeframe for reaching the targets, only those that have contributed to GF’s sustainability reporting for the entire year until the end of 2022 are included in the calculation of the progress made against the Sustainability Targets 2025. Companies that join the sustainability reporting later have individual targets.
Business acquisitions, divestments and closures can also affect the results. Organizational adjustments that took place in 2022 are explained in the section: Scope of data collection and reporting. For changes prior to this, please refer to the specific sustainability report for that year.
Progress against the Sustainability Framework 2025 targets for water and waste is calculated relative to production volume. The production volume is defined based on the activities of the individual divisions. For GF Piping systems, the production volume is defined as "produced tonnes"; for GF Casting Solutions, it is defined as "gross value added" (which includes all operating income minus the costs of materials and products, changes in inventory, and operating expenses); and for GF Machining Solutions, it is "hours worked".
In addition, for the Sustainability Framework, the CO2e emissions targets are calculated using adjusted 2019 GHG emissions as a baseline reference. The CO2e emissions targets were approved by the Science Based Target initiative in October 2022.
For the target regarding supplier sustainability assessments, GF Piping Systems used the 2020 purchase volume. The division has a conservative supplier base, and those suppliers do not, therefore, change often. For GF Casting Solutions and GF Machining Solutions, the purchase volume was updated in 2022, as the supplier base has changed compared to 2020. Both divisions will update the purchase volume data on an annual basis.
Environmental performance indicators
Forecasting of environmental data
In order to report environmental data in time for the publication of the Sustainability Report 2022, environmental data for the full-year 2022 have been forecasted based on historical data until 31 October 2022, the third quarter of 2022, or in some cases, 30 June 2022. As the reporting cycle varies based on a company's contribution to the consolidated result and the reported figure, the forecast is based on monthly, quarterly, half-yearly or annual data from 2022. The Sustainability Report 2022 discloses actual social data. In the first half of 2023, GF will publish actual environmental data. In the event that the actuals differ from the forecast by more than 5%, the respective figure will be restated. To ensure an earlier publication of the data, GF plans to continue applying forecasting of environmental data over a mid-term horizon.
The forecast is only relevant for environmental data, and it therefore covers production facilities only. The forecast consists of a best-fit model approach based on the following database:
- Option 1: all top contributing sites, if they accounted for more than 90% of the consolidated full-year 2021 result. This represents 60% of GF's production sites in SIS.
- Option 2: all top contributing sites and sites that report half-yearly, if the top contributing sites account for less than 90% of the consolidated full-year 2021 result. This represents 80% of GF's production sites in SIS.
- For both options, the figures for the remaining sites at group level are extrapolated to cover 100% of the KPI at group level.
- Out of eight different forecasting methods, the analysis delivers a best-fit model offering the highest accuracy compared to the last available reporting period for each KPI and site. The best-fit model is used to forecast data for the sites' respective reporting cycle.
- GF recognizes that the best-fit model for the third quarter is not necessarily the best-fit model for the fourth quarter. However, as there is insufficient historic seasonal data to verify this method, the company is relying on the fact that the fourth quarter seasonality is included in multiple forecast options.
- In 2022, four new sites joined GF’s SIS reporting. No historical data exist for those sites (see above). GF therefore decided to exclude these sites from the forecast.
- Data on air emissions (four figures) are reported annually, as they are generally small. For 2022, the company used prior-year data (full-year 2021) for forecast 2022.
Data are sourced from on-site meters, utility bills or environment management systems. Energy consumption is disclosed as gross and net energy consumption, the latter excludes energy sold. Energy sold includes only waste heat/steam sold and electricity. Renewable energy contains mainly purchased electricity and <0.1% biogas as disclosed in the Sustainability Report 2022.
The company follows the GHG Protocol Corporate Accounting and Reporting Standard (GHG Protocol Corporate Standard).
Scope 1 and 2 emissions
Scope 1 and 2 calculations are based on site-specific data for fuel consumed and utilities purchased. These calculations, apply published emissions factors and global warming potentials (GWPs) in accordance with the GHG Protocol Corporate Standard. Biogenic CO2 emissions and process emissions are not material (<0.2% of total scope 1 emissions) and therefore part of the total scope 1 emissions. Scope 1 emissions are reported as total, because the majority thereof stems from CO2, and the remaining five GHGs make only a minor contribution (<1%). GHG emissions from processes are also reported annually as scope 1 emissions. Those emissions are either measured or calculated and a GaBi (a life cycle assessment modeling software) emission factor – v13.0 (12/2020) – is applied.
The company calculates scope 2 GHG emissions using the location and market-based methods, and includes the impact of renewable energy certificates (RECs) in accordance with the GHG Protocol. Market-based scope 2 emissions are used in GF's science-based targets and calculated in accordance with GHG protocol prioritization using emission factors derived from energy attribute certificates, from contractual instruments with energy suppliers or residual mix factors from GaBi (v13.0 (12/2020)). In the absence of contractual agreements or residual mix factors, GF uses location-based emission factors.
Scope 3 emissions
GF calculated its scope 3 emissions in all 11 categories in accordance with the GHG Protocol and the Science Based Targets initiative criteria V4.2. Category 1 (Purchased goods and services) and category 11 (Use of sold products) were identified as material in the 2019 emission inventory, as they contribute to 90% of GF’s scope 3 emissions.
Four categories – specifically, 8 (Upstream leased assets), 13 (Downstream leased assets), 14 (Franchises) and 15 (Investments) – were excluded due to their irrelevance to GF's business model.
In addition, two categories – category 2 (Capital goods) and category 5 (Waste generated in operations) – were calculated and deemed irrelevant due to their very low contribution. Purchased services and traded gas meters were excluded from the inventory. In total, the exclusions amount to 5% of total scope 3 emissions in 2019. (The exclusions consists of: excluded services: 3%; excluded traded meters: 2%; category 5 (Waste generated in operations) and category 2 (Capital goods): <1%.)
Category 1 (Purchased good and services) and category 11 (Use of sold products) were identified as material in the 2019 emission inventory, as they account for 90% of GF’s scope 3 emissions.
In general, scope 3 emissions data were calculated using a combination of methods for each category, as prescribed by the GHG Protocol.
Category 1: Purchased goods and services
For GF Piping Systems, the amounts of purchased raw material, pipes, glue, copper wires and other raw metals for fittings are included in the calculation. For GF Casting Solutions, the amounts of purchased aluminum (primary, secondary), magnesium (alloy, pure), iron (scrap, pig), steel, alloys, inoculants and other consumables are included in the calculation.
Both divisions review their calculation annually and include annual updates.
For GF Machining Solutions, emissions from purchased goods and services are included. In addition, for GF Machining Solutions, emissions were derived from five representative machines based on the share of sales per machine type. As GF Machining Solutions contributed 2% to the total amount of category 1 emissions in 2019, the emissions from this category are calculated based on the share of sales per machine type; the representative machine types remain unchanged for the Strategy 2025 period.
For all three divisions, a combination of ecoinvent, supplier declarations and third-party research was used as the source for emission factors. Services were excluded from the purchased goods and services category due to the low emission intensity compared to the raw materials purchased for all three divisions.
Category 11: Use of sold products
GF Machining Solutions' electrical discharge machining (EDM), milling and laser machines consume energy and are therefore the main source of GHG emissions in this category. The figure for electricity consumption was calculated based on the electricity consumption of a selection of representative machines using the ISO 14955 standards and on the depreciation tables taken from the German Federal Ministry of Finance, while emission factors for electricity, including CH4 and N2O, were taken from the International Energy Agency. In addition, for GF Machining Solutions, emissions were derived from five representative machines based on the share of sales per machine type.
Neither GF Piping Systems' nor GF Casting Solutions' products consume energy in the use phase. For GF Piping Systems, "the process automation portfolio," comprising all products with energy consumption, was excluded, as this was estimated to consume <0.1% of electricity during the use phase over a 10-year period.
Remaining scope 3 categories
Emissions from Business Travel (category 6) are calculated annually based on travel data from GF’s travel management system. All remaining scope 3 categories were calculated or estimated for 2019 and are multiplied by sales increase/decrease on an annual basis.
GF monitors halogenated and non-halogenated volatile organic compounds (VOCs), sulfur oxide (SOx), nitrogen oxide (NOx) and particulate matter (PM 10 and PM 2.5), heavy metals and persistent organic pollutants (POPs) that occur during manufacturing or due to infrastructure.
VOCs mainly originate from the use of halogenated and non-halogenated solvents, cleaning agents, diluents, propellants and paints in production processes. These emissions are not considered material and have therefore not been included in GF’s environmental targets.
Water and wastewater
GF classifies water withdrawn by source (public water supply, ground and rainwater), and wastewater by channel (sewage systems, unpolluted to nature). The water directly abstracted from the environment is used mainly for cooling purposes in closed-loop cooling cycles. Cooling with water enables the company to reduce its energy consumption because it does not require mechanical chillers. Data for water withdrawals are sourced from meters on-site, utility bills or environment management systems.
The water intensity target is binding for 14 sites that are located in water-stressed areas and have a significant annual water consumption of at least 10’000 m³. Water-scarce and water-stressed areas are defined using two different scenarios from the Aqueduct Water Risk Atlas developed by the World Resources Institute. Average consumption from 2018–2020 serves as a baseline to reflect a more realistic consumption trajectory. Progress made against the Sustainability Framework 2025 water target is calculated relative to production volume.
Waste and recycling
GF classifies waste by type (normal waste, non-hazardous waste) and according to the disposal routes: recycling, landfill or incineration, storage or incineration. Included are all waste/recycling materials from production as well as any other waste from maintenance, offices, canteens, warehouses, etc.
Energy utilization of waste is not counted as recycling. Ultimately, GF aims to reduce the amount of waste sent to landfill and disposal and to increase the recycling rates.
The waste target is binding for all production companies. Average consumption from 2018–2020 serves as a baseline to reflect a more realistic consumption trajectory. The progress made against the Sustainability Framework 2025 waste target is calculated relative to production volume.
Recycled input material
Data on recycled input material is collected from GF Piping Systems production companies. Due to the different nature of their business and negligible relevance, the other two divisions are excluded from this reporting.
Supplier sustainability assessments
Data on supplier sustainability assessments is reported by each divisional procurement department based on an agreed process, and consolidated by Corporate Sustainability.
Social performance indicators
Employees, governance bodies, training and professional development
Employee data are disclosed according to age group, gender, full- or part-time employment, and management level, as well as departures and new hires with breakdowns, according to age group and gender. Data on interns, students and apprentices is also disclosed.
Management positions are defined as members of the management board of each business entity or managers who report to a managing director.
Employee data breakdown by age group and gender cover all GF sites and operations around the world. Data to disclose full- or part-time employment, management level, new hires and departures are reported by sites with more than 10 employees.
The turnover rate is calculated based on by dividing the number of departures by the average headcount in previous period.
Disclosure on training data follows the total number of training days and number of GF employees receiving training in the reporting period.
Health and safety
GF reports work-related injuries and illnesses for GF and leased employees, and other third parties (eg, visitors) from all operations and sites (106 legal entities in total). The accident rate target is binding for all sites globally with more than 10 employees, and GF includes employees and leased employees in the KPI accident rate per 1 million working hours (LTIFR). Work-related fatalities are reported internally for all different employee types and disclosed in one consolidated number. In addition, GF collects data on days of absence for GF employees, which are separated into absences due to accident or illness, and total absence days.