NF8 Environmental footprint

Management systems

Every non-administrative Sandvik location with more than 25 people is mandated to obtain external ISO 14001 certification within two years of commencement or acquisition. By year-end 2023, 92 percent of the sites within scope had obtained certification in accordance with ISO 14001.

Greenhouse gas emissions and energy

Sandvik is actively working to ensure that each individual site in the company has an action plan in place to enhance energy efficiency and reduce greenhouse gas (GHG) emissions.

In 2023, there were over 200 Environmental Improvement Projects (EIPs) and contributions in progress, with many focused on reducing greenhouse gas (GHG) emissions and promoting circularity. These projects target the most material topics for each business area, division, or site. Initiatives such as improved insulation in buildings, implementation of LED lighting, switching to electric forklifts, and the installation of solar rooftop panels exemplify the ongoing efforts.

Our transition plan to net zero

In 2023, our GHG reduction targets were endorsed by the Science Based Targets initiative (SBTi), confirming their alignment with the latest climate science and adherence to the objectives of the Paris Climate Agreement. The baseline for our GHG emissions reduction targets is set at 2019, and our 2030 objectives encompass a 50 percent reduction in absolute scope 1 and 2 (own operations respective heating and electricity) GHG emissions, along with a 30 percent reduction in absolute scope 3 GHG emissions (customers, suppliers and transport).

We have a number of activities, so called decarbonization levers, that support us in our transition plan towards net-zero. In scope 1, fuel switching and electrification of transportation and production processes are essential in order to reach our targets. For instance, diesel forklifts were replaced by electric forklifts at several sites during 2023, for example in Khanbogd (Mongolia), Patancheru (India), Luoyang (China) and Santiago (Chile). Our sites in Lahti (Finland) and Svedala (Sweden) continued to replace natural gas with biogas.

To reduce emissions in scope 2, we build upon activities such as energy efficiency measures, power purchase agreements (PPAs), roof-top solar panels and sourcing of fossil-free electricity. In 2023, our own renewable electricity production increased by 64 percent, compared to 2022.

Reductions in scope 3 are enabled by our development of more sustainable solutions across all our industries, including battery-electric mining equipment, energy-efficient rock processing solutions and productivity-enhancing manufacturing and machining solutions for optimized energy and resource efficiency.

We see a clear trend towards battery electric mining equipment (BEVs), now accounting for more than 10 percent of orders. During the year, we launched new electric mining and rock processing equipment, see Sandvik Mining and Rock Solutions – Innovations and Sandvik Rock Processing Solutions – Innovations. Sourcing of low-carbon materials and circularity/ecodesign initiatives are other integral parts of our transition. We create circular business models to keep valuable materials in circulation and, in 2023, we introduced an industry-first "opt-out" recycling program for carbide drill bits.

The acquisition of Buffalo Tungsten will increase our local production of metal powders in the US, reduce transport and become a hub for recycling of used tools. We also signed a letter of intent with steelmaker SSAB for the purchase of fossil-free steel.

For a more detailed transition plan to net zero, visit our website home.sandvik/net-zero.

2023 developments

In 2023, GHG emissions within scope 1 and 2 increased by 1 percent, compared to the preceding year. This increase can be attributed primarily to lower sourcing of low-emission electricity, such as certificates. Scope 1 emissions decreased by 3 percent. Compared to our 2019 baseline, we have decreased our scope 1 and 2 emissions by 23 percent. We are on track to meet the ambitious 2030 goal for scope 1 and 2 emissions. Within scope 2, we monitor both location-based and market-based greenhouse gas emissions, where the difference is mainly due to the purchase of renewable or fossil-free energy via renewable energy certificates and/or guarantees of origin. Location-based emissions decreased by 4 percent compared to the previous year.

Below lies our scope 3 baseline inventory alongside our most recent scope 3 inventory. The primary scope 3 categories are "Purchased goods and services" and "Use of sold products". The ‘Purchased goods and services’ category is primarily influenced by the procurement of steel and cemented carbide. The "Use of sold products" category relates to fuel consumption, including diesel, and electricity in our sold mining and rock processing equipment.

It is important to apply caution when analyzing scope 3 data, as it represents a complex methodology and includes data uncertainty. The increase in category 1 emissions between 2019 and 2022 is primarily attributable to inflation and currency exchanges. The influence of inflation and currency fluctuations introduces a notable level of data uncertainty, and we are moving away from spend-based data in order to enhance data reliability. We are cultivating closer relationships with key suppliers to obtain emission factors specific to each supplier, which offer greater precision compared to general spend- or weight-based emission factors. Our emphasis on key suppliers is driven by the challenge of obtaining supplier-specific data from 46,000 suppliers spanning 104 countries, from whom we source raw materials, components, products, and services.

The determination of the emissions of use of sold products, such as mining and rock processing equipment, is based on sales volumes and the anticipated lifespan of these products. Collaborating closely with quality assurance, services, and repair teams allows us to extend the operational lifespan of our products. However, it is crucial to acknowledge that a longer product lifetime contributes to increased GHG emissions in category 11, accounting for the entire life expectancy of the product.

For battery electric vehicles (BEVs), the GHG emissions are closely linked to the electric grid mix of the country where the product is sold to. BEV sales to countries with cleaner electric grids result in lower GHG emissions. Additionally, GHG emissions are influenced by available emission factors. As an example, emission factors for electricity within category 3 have increased by about 47 percent due to a modification in emission factor methodology.

Despite the uncertainties associated with these data points, it is imperative to calculate and report scope 3 GHG emissions. This practice not only identifies emission hotspots but also guides the formulation of targeted reduction initiatives necessary to achieve our net-zero goals.

Other emissions to air

Emissions to air of nitrogen oxides (NO_x) and sulfur oxides (SO_x) from usage of fossil fuels are material for Sandvik. Emissions of NO_x and SO_x are managed via our GHG reduction commitments and as we decarbonize our own operations, the emissions of NO_x and SO_x decrease.

Water

Water usage is carefully monitored, and steps are taken to minimize withdrawal, including the circulation of process and cooling water to reduce the reliance on fresh water. The company’s emissions to water primarily include nitrogen compounds, oxygen-consuming substances, and metals. As part of our commitment to environmental stewardship, all wastewater from production processes undergoes treatment before release to ensure that all discharges adhere to acceptable limits.

In manufacturing operations, particularly in hot environments, a certain amount of water will naturally transpire and evaporate. However, the volumes evaporated are negligible in comparison to overall production and water quantities. All withdrawn water is either released back to recipients following appropriate treatment (either in our own facilities or through third-party treatment operations) or is circulated and reused. Water withdrawal and discharges are executed with control and adhere to applicable permits.

Sandvik employs the WWF tool, the Water Scarcity Risk Map, to identify sites situated in water stress areas. We have mapped sites representing 95 percent of our water consumption, with 10 facilities located in areas experiencing high to very high water stress risk. These specific sites account for approximately 6 percent of our total water consumption.

Waste

Circularity is a material topic for Sandvik and we reuse and recycle to offset the use of raw materials and reduce waste. Our most significant waste input is various forms of metal raw materials as our products are refined products based on metal handling. A metal raw material can be melted down and used many times, without compromising quality, which creates favorable conditions for circular material handling. We strive to increase recycled material in our products.

We systematically collect and categorize waste generated from our production processes to facilitate the reuse or recycling of the materials. Through buyback programs with our customers, we actively retrieve and reintegrate the collected material back into our production cycles. Our commitment to sustainable waste management includes partnerships with external entities, including waste service companies, with whom we collaborate to explore innovative recycling methods for our waste streams. Each of our locations bears the responsibility of ensuring that third-party waste companies handle the waste in strict accordance with contractual and legislative obligations. Further, all employees and contractors are responsible for accurate waste sorting and disposal.

Total actual waste decreased by 21 percent to 336 ktons in 2023, primarily driven by reduced amount of tailings, digestion sludge and slag. With a few exceptions, waste is predominantly treated off-site.

Our overarching objective is to achieve a waste circularity of 90 percent by 2030. The current waste circularity rate stands at 71 percent (73). Circular waste is defined as reuse and recycling. In circularity rate reporting, we exclude tailings, digestion sludge and slag because we assess that it is not feasible in the foreseeable future to take further actions to avoid sending these fractions to landfill.

Disclosure related to sustainability linked loan

In 2022, Sandvik signed a SEK 11 billion revolving credit facility with a group of 14 banks. The new credit facility has a clear link to our sustainability targets for 2030 with regards to the ambitions to reduce carbon emissions by 50 percent and increase waste circularity to 90 percent. The annual KPIs are aligned with those goals and the interest margin on the facility is affected positively or negatively depending on whether the KPI levels are met. The targets are based on comparable data, which means we adjust the data for a more accurate reflection of the outcome. Acquisitions are included once their historical baseline data has been recalculated. At the end of 2023, we reached a 46 percent reduction in scope 1 and 2 GHG emissions, compared to the 2019 baseline (using the comparable dataset). Waste circularity reached 73 percent (using the comparable dataset).