Heidelberg Materials

Heidelberg Materials commits to reducing its gross scope 1 and 2 emissions by 26.7% per tonne of cementitious material by 2030 from its 2020 base year. Furthermore, the company commits to reducing gross scope 1 emissions by 24% and scope 2 emissions by 65% per tonne of cementitious material within the same timeframe. It also commits to reducing absolute scope 3 emissions from purchased goods and services by 25% within the same timeframe. These targets are fully aligned with a 1.5°C scenario. Moreover, the company has achieved a 1.9% annual reduction in emissions intensity from 2017 to 2022.

Heidelberg Materials has oversight of climate issues at the board level, and the responsibility for its low-carbon transition lies with the Chief Sustainability Office that has low-carbon expertise. The company’s transition plan outlines both qualitative and quantitative success measures, detailing short- and long-term actions aligned with a low-carbon scenario, supported by financial estimates. It also incorporates a dynamic internal carbon price for cost calculations, serving as a key financial indicator. The company demonstrates transparency in the parameters and assumptions it uses in its climate scenario analysis as well as the specific scenarios it considers, and it presents the results in qualitative, quantitative and financial terms that are also translated into value-at-risk. The company is also working on low-carbon business models, such as developing carbon capture projects and expanding the use of biomass in its fuel mix, which are supported by ambitious growth trajectories.

In 2022, Heidelberg Materials disclosed using 28.7% alternative fuels in its total fuel mix, nearing the 30% threshold indicative of alignment with the low-carbon standards for the heavy industries sector.

Heidelberg Materials has a publicly available policy governing engagement with climate-focused alliances, associations, coalitions and think tanks across the company and its subsidiaries. Additionally, it conducts regular reviews of such memberships or supported entities, accompanied by an action plan outlining responses in cases of opposition to climate-friendly policies.

While Heidelberg Materials’ targets are aligned with a 1.5°C pathway, the company should consider setting intermediate targets at gaps of no more than five years to incentivise near-term action on its longer-term goals. There is a risk that the projected rate of decrease in the company’s future scope 1 and 2 emissions intensity may not be aligned with a 1.5°C pathway, which requires an annual emissions intensity reduction of 2.3% from 2022 to 2027. Furthermore, there is a risk that the company’s locked-in emissions from current and planned assets may exceed its carbon budget for the period between 2023 to 2037.

Heidelberg Materials has an opportunity to consider carbon price as a parameter in its climate scenario analysis. The company aims to achieve 50% of its revenue from sustainable products, including low-carbon or circular options, by 2030. This revenue can be aligned with the specified climate change mitigation criteria outlined in the EU Taxonomy for its sector. Furthermore, though the company targets a 30% reduction in materials through digital design, 3D printing and adoption of high-performance concretes, it can enhance transparency by sharing current and desired total full-time equivalent (FTE) figures, revenue or other relevant activity-based metrics related to its contribution to low-carbon construction optimisation. Additionally, it can invest in research and development (R&D) of zero-clinker cement.

No risks or opportunities were identified for this company.

Heidelberg Materials aims to reduce supplier-related scope 3 emissions by 25% by 2030. To bolster this ambition, it can integrate science-based emissions reduction targets in procurement templates, mandate emissions reporting for suppliers and enforce compliance through contract renewal criteria. Additionally, it can diversify low-carbon transition recommendations and leverage collaboration, compensation and marketing strategies in its client engagement efforts. The company should disclose a monitoring and review process to ensure that its policy positions align with the Paris Agreement goals.

Heidelberg Materials commits to reducing its gross scope 1 and 2 emissions by 26.7% per tonne of cementitious material by 2030 compared to 2020 levels. This includes reducing scope 1 emissions by 24% and scope 2 emissions by 65% per tonne of cementitious material. Additionally, it plans to lower absolute scope 3 emissions from purchased goods and services by 25% during the same period.

Although Heidelberg Materials has set scope 1, 2 and 3 targets for 2030 aligned with a 1.5°C scenario, the absence of targets for 2025 hinders monitoring the company’s near-term progress towards the 2030 goals. Additionally, the company’s emissions trend over the past five years does not align with the required trajectory, further underscoring the need for the company to establish intermediate targets between now and 2030 to manage emissions.

Between 2017 and 2022, Heidelberg Materials reduced its emissions intensity by 1.9% annually. The scope 1 carbon dioxide emissions for the company’s cement business fell from 69 to 65.4 million tonnes, and scope 2 emissions from 4.8 to 4.5 million tonnes, from 2021 to 2022. The company’s initiatives in 2022 included expanding carbon capture projects and increasing alternative fuel use. To stay on track with a 1.5°C pathway, the company must achieve a 2.3% annual emissions intensity reduction from 2022 to 2027.

In 2022, low-carbon revenue aligned with the EU Taxonomy accounted for 0.8% of the group’s total revenue, totaling USD 176.6 million. Further, 23.3% of its total capital expenditure, amounting to USD 385.3 million, was aligned with the EU Taxonomy. Moreover, approximately 66% of its total R&D budget, amounting to USD 129.9 million, was allocated to low-carbon technologies.

Heidelberg Materials plans to reduce its gross scope 1 and 2 emissions by 26.7% per tonne of cementitious material by 2030 compared to 2020 levels and reduce absolute scope 3 emissions from purchased goods and services by 25% during the same time period. Ultimately, the company wants to be net zero by 2050. To achieve these targets, the company aims to utilise various action levers including, among others, optimising the product mix and making process improvements through maximising the use of alternative fuels; switching to electricity from renewable energy sources; investing in plant efficiency; and using innovative carbon capture, utilisation, and storage (CCUS) technologies.

The company publicly discloses a commitment to engaging in social dialogue with workers and unions. However, no relevant disclosure was found regarding the categories of stakeholders it engages with on a just transition. Nor was there any evidence to show the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. No evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

The company discloses the actions it takes to ensure that they create jobs that embed equality of opportunity for women and vulnerable groups. In particular, it has a program to increase the proportion of women in trucking and has particular emphasis to create jobs in rural communities. However, no evidence was found of the company committing to create and support access to green and decent jobs as part of the low-carbon transition. Furthermore, no relevant disclosure was found of the company’s assessment of employment dislocation risks. No public commitment by the company was found stating its intention to re- and up-skill workers displaced by the transition to a low-carbon economy. Additionally, no evidence was found that the company re- and up-skills workers in a way that ensures gender balance and inclusion of vulnerable groups.

No relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights and the ILO fundamental rights at work. Furthermore, it has a human rights due diligence procedure that includes a process to identify human rights risks in its own operations and its supply chain. Additionally, the company has a grievance mechanism available to workers and external stakeholders to report human rights issues. However, it can further strengthen its disclosure on its human rights due diligence process and engagement with affected stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment from its business relationships. However, no evidence was found of the company having a time-bound target for paying all workers a living wage. The company discloses some indicators of workforce diversity, such as the age and gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity. The company can strengthen its disclosure on these and other key decent work issues, such as collective bargaining and women’s empowerment.

The company commits to protecting personal data and has a policy that prohibits bribery and corruption. Additionally, the company describes its process to identify bribery and corruption risks in its own operations. Furthermore, while the company discloses its global tax strategy, no relevant disclosure was found of the corporate income tax paid for each relevant jurisdiction. The company can strengthen its disclosure on these topics and other key ethical business topics, including lobbying and political engagement.