Siemens AG

RATING

SECTOR

Telecommunications

WEBSITE

CONTACT

Siemens AG
Werner-von-Siemens-Str. 1
80333 München Germany

STOCK EXCHANGE

LISTING

  • Dow Jones Sustainability Indices – #2 in its Industry in 2019
  • CDP Climate Change A List
  • FTSE4Good Index
  • MSCI World ESG Index
  • EcoVadis – Silver recognition level
  • Sustainalytics Index 
  • Carbon Clean 200 list – #1 in 2017 
  • #1 in the Global 100 – Most Sustainable Corporations in the World within its Industry in 2019

EMPLOYEES

385,000 employees 

CHIEF SUSTAINABILITY OFFICER

Martin Powell

AWARDS

  • Awarded in Fortune magazine in the U.S. to be “the most admired company” in industry for the fourth year in a row.
  • SAM Gold Class Sector Leader 2012

CONTENT SOURCE

FURTHER READING

Report created by Muge Acar

Siemens

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch  •  Overview

Company Activity

Siemens is a technology company that is active in nearly all countries of the world. It focuses on the areas of automation and digitalization; manufacturing industries; intelligent infrastructure for buildings and distributed energy systems; conventional and renewable power generation and power distribution; smart mobility solutions for rail and road; and medical technology and digital healthcare services.

Siemens is a leading supplier of systems for power generation and transmission as well as medical diagnosis. It is one of the world’s largest producers of energy-efficient, resource-saving technologies.

Siemens is setting the course for long-term value creation through accelerated growth and stronger profitability with a simplified and leaner company structure.

The Siemens of the next generation will be inspired by its purpose and will be connected by its Ownership Culture.

The main aim of the Vision 2020+ company strategy is to give Siemens’ individual businesses significantly more entrepreneurial freedom under the strong Siemens brand in order to sharpen their focus on their respective markets.

Below the Group level, there will be three Operating Companies and three Strategic Companies. The realignment will enable Siemens to sharpen its customer focus and orient its activities on the requirements of the industries in which it operates.

Gas and Power

Gas and Power is the only company in the world that can offer the combined strengths of Oil & Gas, Power Generation and Transmission along the energy conversion chain – creating lasting value for its customers. As a technology leader, the breadth and strength of their portfolio remains critical to supporting the current electricity demands of society. Equally important are their proven project capabilities – not just for products, but also for solutions and services (including digital) and project financing. 

Smart Infrastructure

Smart Infrastructure intelligently connects energy systems, buildings and industries to adapt and evolve the way they live and work. They work together with customers and partners to create an ecosystem that intuitively responds to the needs of people and helps customers   to better use resources. It helps their customers to thrive, communities to progress and supports sustainable development. Creating environments that care.

Digital Industries

Siemens Digital Industries is a leading innovator in automation and digitalization. Siemens’s mission is to consult and support customers from the discrete and process industries in their digital transformation. They continually expand their Digital Enterprise portfolio to include cutting-edge technologies and offer industry-specific end-to-end solutions for companies of all sizes.

Siemens Mobility

The separately managed business Siemens Mobility is a leader in transport solutions. They are shaping connected mobility for rail and road, enabling mobility operators worldwide to make infrastructure intelligent, increase value sustainably over the entire lifecycle, enhance passenger experience and guarantee availability.

Siemens Gamesa Renewable Energy

Siemens Gamesa is a leading supplier of wind power solutions to customers all over the globe. A key player and innovative pioneer in the renewable energy sector, they have installed products and technology in more than 90 countries, with a total capacity base of over 89 GW and 23,000 employees. Siemens make real what matters and create clean energy for generations to come.

Siemens Healthineers

The separately managed business Siemens Healthineers AG is a leading medical technology company providing innovative technologies and services in diagnostic and therapeutic imaging, laboratory diagnostics and molecular medicine, as well as digital health and enterprise services.

Financial Services

The Siemens Financial Services Company (SFS) provides business-to-business financial solutions. Around the globe, Siemens supports customer investments with project and structured financing as well as leasing and equipment finance.

Global Business Services

Global Business Services innovates, designs, transforms and efficiently operates business services for Siemens units and external customers. They create valuable impact specific to their customers’ needs with unique expertise in business services. Their competitive service offering includes digital end-to-end process solutions as well as expertise-driven services.

Real Estate Services

Siemens Real Estate is responsible for the management of Siemens’ global real estate holdings and supports the Company with forward-looking strategies for tapping markets worldwide.

Company Sustainability Activity

Siemens focuses on three broad categories – Environment, People & Society, and Responsible Business Practices. 

Siemens aligns itself with the goals of the UN’s 2030 Agenda for Sustainable Development while, internally, striving to balance people, environment and profit. They are involved in decarbonization and aim to achieve a worldwide net-zero carbon footprint by 2030. They are careful about their usage of resources such as water and waste.

Highlights

  • Between fiscal 2016 and 2020 Siemens is investing €100 million to improve energy efficiency on their own premises. 
  • The overall coverage of “green” electricity was 58% in fiscal year 2019.

Targets

Environmental Impact

  • By 2030, Siemens aims to achieve a worldwide net-zero carbon footprint
  • They aim to investing 100 million Euros in energy-efficient projects at production facilities and buildings. Siemens expects this to result in approximately €20 million worth of energy cost savings per year once the program is completed

Siemens is committed to making an important contribution to the decarbonization and here are several main ways to reach this goal:

→ use energy as efficiently as possible
→ increase the share of renewable energy and accelerate the switch from the remaining conventional electricity generation to low-carbon fuels
→ redesign electricity markets to ensure sufficient investment into a sustainable, secure and energy-efficient system
→ accelerate the uptake of highly flexible technologies to integrate renewable energies and ensure system stability
→ accelerate the decarbonization of other sectors with sector integration, including Power-to-X technologies

  • Siemens is working to reduce the emissions of their fleet of around 50,000 vehicles. Siemens’s goal is to reduce emissions and related fuel costs by 33% by 2025, i.e. a reduction to approximately 200,000 metric tons CO2.
  • The Siemens Water Strategy aims to reduce the local negative impact of their water use

Progress

Decarbonization

  • By fiscal 2019, 28 projects were completed in Europe, North America and Asia. In addition five energy efficiency projects are ongoing.
  • Since 2014, the company has eliminated almost all GHG emissions at Siemens facilities in five focus countries by switching to green sources when purchasing electricity. These five countries – the United States, the United Kingdom (UK), the Czech Republic, Austria and Germany – account for more than 60 percent of Siemens’ total electricity consumption.
  • 60 % of the electricity consumption of their sites globally is covered by renewable energy
  • 41 % of CO2 emissions reduced since the launch of Siemens’ CO2 neutral program
  • Siemens considers carbon pricing a must-have for effective decarbonization and putting a price on carbon should capture the true cost associated with carbon emissions.Accordingly, Siemens joined the Carbon Pricing Leadership Coalition of the World Bank (CPLC) in 2016 to advocate the introduction of carbon pricing globally and has launched two internal carbon pricing pilot projects.
  • Siemens UK has launched a carbon reduction Investment Fund of £240k.
  • Siemens Brazil has launched a carbon reduction Investment Fund as part of a pilot project launched in October 2019. 

CO2-neutral Siemens

  • With regard to their own operations, Siemens launched the global CO2-Neutral Program in September 2015. 
  • By fiscal 2019, Siemens managed to reduce their CO2 emissions by around 900,000 metric tons versus 2014, putting them well on track to meet their 2020 interim goal. Siemens’s CO2-Neutral Program not only enables them to protect the environment and reduce costs, but also to gain experience and strengthen their expertise in environmentally friendly technologies that may well be useful for their suppliers and customers. The emission reductions are coming from a series of ongoing initiatives. Leverage distributed energy systems
  • Siemens is expanding their use of distributed energy systems at company’s own sites through combined heat and power plants, solar panels, wind turbines, small gas turbines, intelligent energy management systems, and energy storage solutions. Their long-term target is to satisfy 10% of their electricity demand through onsite power generation with a high renewable energy share. The Siemens Campus Erlangen will be one of the first showcases and will be carbon- neutral from day one. Another nine projects were completed in fiscal 2019 and a further seven are in concept development.

Reduce fleet emissions

  • In fiscal 2019, emissions stood at approximately 300,000 metric tons CO2. On the basis of a survey of mobility requirements, e-car options are being given greater support. In some countries, individual economic behavior is coming into focus. They will continue to include CO2 emission factors as an integral part of their local car fleet policies around the world.

Purchase “green” energy

  • Siemens is increasing the share of electricity that they purchase from renewable sources such as wind farms. In fiscal 2019, a significant share of sites in Germany, the United States, the United Kingdom, Austria, Spain, Portugal, the Czech Republic, the Netherlands and Denmark were already supplied with “green” electricity. The overall coverage of “green” electricity was 58% in fiscal year 2019. From this results that CO2 emissions could be reduced by more than 550,000 metric tons through purchasing electricity from renewable sources.

Environmental Portfolio

  • Siemens has an Environmental Portfolio as part of its response to global challenges such as climate change, scarcity of natural resources and environmental pollution.
  • The Environmental Portfolio consists of products, systems, solutions, and services that meet one of its selection criteria, namely energy efficiency and renewable energy.
  • With their Environmental Portfolio, Siemens intends, among other things, to help their customers mitigate their carbon dioxide footprint, cut their energy costs and improve their profitability through an increase in their productivity.
  • In addition to its environmental benefits, their Environmental Portfolio enables the company to compete successfully in attractive markets and generate profitable growth, underlining Siemens’ strategic focus on technologies for energy efficiency and climate and environmental protection.
  • For fiscal 2019, about 70% of the revenue from their Environmental Portfolio was generated by products and solutions for energy efficiency.

Greenhouse gas emissions

  • In 2018, the company reduced its emissions by more than 10%.
  • Since fiscal 2014, emissions have dropped by around 41 percent – from 2.2 million tons to 1.3 million tons in fiscal 2019 – so Siemens are on track to reach its intermediate goal to reduce emissions by half by 2020.
  • They report their greenhouse gas emissions on the basis of the Corporate Standard of the Greenhouse Gas Protocol of the World Resource Institute (WRI) and of the World Business Council for Sustainable Development (WBCSD). Direct greenhouse gas emissions (Scope 1) arise from sources in the company’s ownership or under its control. Indirect greenhouse gas emissions (Scope 2) refer to the consumption of purchased electrical energy and district heating.
  • Since fiscal 2016, they have also been reporting on upstream Scope 3 emissions from their supply chain, such as business travel, capital goods, fuel and energy-related activities and transportation. 
  • For Scope 1 and 2 combined, they achieved a reduction in emissions by 177 kt CO2 e. Compared with fiscal year 2018, this signifies a reduction of 12%. Direct greenhouse gas emissions (Scope 1) have been reduced by 6%. For the other Kyoto gases, including sulfur hexafluoride (SF6), they have also seen a reduction. For SF6 alone, they recorded emissions of 95 kt CO2e (without SGRE), which is a reduction of close to 6%.This reduction results from an improved handling and emission control approach.
  • The significant reduction of Scope 2 emissions by 20% is mainly a result of their continued power purchasing policy.

Atmospheric pollutant emissions

  • Other industrial emissions are also relevant to environmental protection. Volatile organic compounds (VOCs) contribute to the formation of ozone close to the Earth’s surface and are responsible for what is known as summer smog. They use these organic compounds as solvents in paints and adhesives, in impregnation processes, and for surface cleaning. They monitor ozone-depleting substances (ODSs) and comply with the Montreal Protocol, the international convention on the protection of the ozone layer, in addition to various national laws.
  • The volume of emissions of volatile organic compounds increased by 2% mainly due to increased production. The volume of ODS emissions increased as well.
  • Overall, they are aware of the need for phase-out plans and substitution.

Water

  • Siemens Water Strategy takes into account factors such as water stress, water pollution, and flooding. They have analyzed 297 of their environmentally relevant sites using the Global Water Tool of the World Business Council for Sustainable Development (WBCSD) business association.
  • The results show that Siemens faces relevant risks. From the start of fiscal 2015 through the end of fiscal 2019, 97% of company’s sites have implemented the water strategy, excluding strategic companies.
  • Their total water volumes have increased significantly due to the intensified use of chemically unchanged cooling water as cooling demands of buildings increased.
  • Water consumption without chemically unchanged cooling water has remained more or less stable over the last two years.
  • Wastewater from manufacturing processes amounts to around 0.9 million cubic meters.

Waste

  • Year-on-year, their non-hazardous waste decreased by 1% and their Hazardous waste increased by 16%.
  • Including all waste types, they decreased their waste volumes by 7% compared with fiscal 2018.
  • The recycling and recovery rate decreased slightly by 3 percentage points to 89%

Certificates

  • LEED certificates i.e. LEED Gold label in the Hague in Netherlands
  • ISO 14001
  • ISO 50001

UN Sustainable Development Goals

UN SDGs Compliance

SDG 3

  • Siemens impacts SDG 3 through their business portfolio, be it by Siemens Healthineers or via the production technology Siemens provides to pharmaceutical companies. In addition to the impact of their portfolio.
  • They care about the health and safety of their employees and contractors, and they participate in health-related community engagement activities, such as cancer awareness campaigns and mobile clinics. 

SDG 7

  • Siemens impacts SDG 7, with their business portfolio being one of the largest providers of technologies along the energy value chain.
  • With their technologies, the company supports customers from various industries to provide reliable, affordable and low-carbon energy and to permanently improve energy efficiency with a positive business case.
  • They strive for energy efficiency internally, especially via their CO2-neutral program. 

SDG 9

  • Siemens impacts SDG 9 as a technological company and innovation leader in electrification, automation and digitalization.
  • Siemens supports sustainable industrialization, helping our business partners via engineering, domain and digital know-how across the entire value chain, from design to production, from operations to maintenance.
  • A large portion of their customers and suppliers are small and medium-sized enterprises (SMEs).
  • They believe in international partnerships as key to innovations that make real what matters. 

SDG 11

  • Siemens is a trusted partner to city authorities, offering solutions across many infrastructure domains to make cities more efficient, sustainable and resilient: for example, by means of intelligent transportation solutions, efficient and safe buildings, and smart cities initiatives leveraging the power of digitalization

SDG 13

  • Siemens is the first global industrial player that set itself the target of becoming CO2-neutral in all of its operations by 2030.
  • The company is underlining the need for businesses to lead by example and contribute to decarbonizing the economy in this century – as set out in the historic Paris Agreement.
  • With their technologies, they help customers across various industries permanently improve energy efficiency and reduce CO2 emissions with a positive business case.

Evaluation

Siemens has put many measures in place to make the business more sustainable including reducing GHG emissions, switching to renewable energy, recycling, and checking products for environmental impact.

As a result of Siemens’ sustainability policies, Siemens appears in multiple sustainability indices such as Dow Jones Sustainability Index, the CDP Climate Change A List, FTSE4Good Index, MSCI World ESG Index, and many more.

They are very transparent in their reporting and have clear targets and initiatives. In addition, Siemens complies with five out for the seventeen UN Sustainable Development Goals.

Siemens is rated a B.

Analyst Outlook: Neutral

Siemens has set the ambitious target to become carbon neutral by 2030, which they are currently on track to achieve.

Key Points

  • Siemens Energy has announced the closure of a €3 billion (£2.7bn) credit line with an international consortium of banks that is linked to sustainability. The financing costs are linked to the fulfilment of defined key performance indicators (KPI) referring to environmental, social and corporate governance criteria, which help to reduce greenhouse gas emissions.
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